Jul 23, 2008

East Palo Alto facing three legal suits

Page Mill Properties behind all cases

By Banks Albach / Daily News Staff Writer

East Palo Alto's rent control program is in legal trouble again, this time from three lawsuits filed by the city's largest landlord, Page Mill Properties.

Under the new name Woodland Park Management, LLC, Page Mill is challenging two recent actions by East Palo Alto's Rent Stabilization Board and one section of the long-standing stabilization ordinance. Page Mill filed the three suits earlier this month.

"They're assaulting the city on all fronts," Interim City Attorney Valerie Armento said.

On June 25, the stabilization board adopted new rules and regulations governing enforcement of the ordinance and raising annual registration fees for apartment owners from $135 to $240 per unit. Page Mill owns roughly 1,650 units and is contending that the hikes are illegal because the ordinance states that the board can only raise the fees by a "reasonable" amount each year.

In a separate action, the landlord is contending that the new rules and regulations, which change the way maximum legal rents are calculated, also break the law.

The third suit filed by 1643 Woodland Avenue, LLC alleges that the four-unit property should be exempt from the rent ordinance because it's not owned by Page Mill but by the limited liability corporation. The city ordinance exempts small property owners with four units or less. But Armento said it seems like Page Mill is trying to find a loophole by breaking apart its portfolio into separate properties. She said she's seen at least a dozen limited liability corporations managed by Page Mill under its new Woodland name.

A spokesman for Page Mill, however, said the company is mandated by lenders and investors to form the separate holdings.

"It's a common business practice," spokesman Lance Ignon said.
Ignon also said that Page Mill changed its management name to fit in better with the surrounding neighborhood, referred to by many residents as Woodland Park.

According to a June 10 letter that Page Mill sent to its tenants, "(Page Mill) wanted (its) business to better identify with the history and landmarks of (its) community."

Meanwhile, the city is considering its own legal action against Page Mill. Twice in the last 10 months Page Mill raised rents in hundreds of it units, the most recent by an average of around 8 percent. Some hikes were as high as 50 percent, though.

The landlord contends that the rents reflect fair market value, and the increases were legal under the ordinance because they were based off the city's own maximum rent for each unit.

Armento said she is considering filing an injunction alleging the hikes are illegal because the ordinance clearly states that the yearly increase should not exceed 3.2 percent of the previous year's rent. The rents are set to take effect Aug. 1 for hundreds of tenants, and an injunction would freeze the increases until a judge can make a ruling.


E-mail Banks Albach at balbach@dailynewsgroup.com.