EAST PALO ALTO, CA-After buying up more than 1,600 apartment units in this working-class Bay Area city over the past 15 months, Page Mill Properties of Palo Alto has won a court battle over apartment rental rates. A San Mateo Superior Court judge this week overturned a temporary ordinance passed by the East Palo Alto City Council that restricted rent increases beyond that laid out by its long-standing voter-approved rent control program.

The City’s rent control program, initiated in 1988, issues to apartment owners annually a certificate that states what the maximum rent owners can charge for each of their units based on a set formula that applies a CPI increase to the previous year’s rent ceiling. Beyond the year it was implemented, however, the program does not take into consideration the actual market rent being charged at the property, and because the owners who sold their properties to Page Mill hadn’t maxed out the rents – either because the properties’ condition didn’t warrant it or prospective tenants could not afford it – the difference between the rent ceiling and market rents had grown to about 37%.

The City Council, apparently concerned that Page Mill might try to max-out rents, passed an “urgency ordinance” that restricted rent increased to 3.2% above the actual rent being charged at the properties. This week, Judge Beth Larson Freeman ruled the temporary ordinance unenforceable for several reasons, not the least of which is that the voter-approved rent control program, known as the Rent Stabilization Ordinance, cannot be modified but by the voters.

According to the court decision, the City argued that its temporary ordinance merely clarified an ambiguity in the ordinance; the judge was not convinced. “This court accords great weight to the consistent application of the RSO by the Rent Board for 20 years and is not persuaded by the City’s change in view,” she states in her decision. City officials did not respond to a request for comment.

Prior to the passage of the temporary ordinance, Page Mill offered on multiple occasions to sit down with the City to discuss a voluntary moratorium on rent increases. “Page Mill has no desire to enter into litigation with the City, but if the City continues on this path, Page Mill will have no choice,” states a letter sent to the City Council in early January, shortly after the City Council failed to pass the temporary ordinance on its first attempt. The City Council passed the temporary ordinance earlier this month.

Page Mill has notified residents that it plans to raise rents by an average of 9% but also has voluntarily lowered rent increases for residents who have demonstrated special needs, and says it will continue to evaluate additional requests for such decreases. The increased rents will be used to offset the cost of improving living conditions at the properties, which to date have included new roofs, new security measures, seismic upgrades, dry rot repairs and rodent and pest control.

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