City Attorney Mike Feuer expressed confidence Monday that the city would prevail in a $100 million lawsuit filed by a building-management company claiming severe losses due to Los Angeles’ eviction moratorium to protect renters during the COVID-19 pandemic,
“My office wrote a sound and lawful ordinance protecting vulnerable tenants from becoming homeless during the pandemic,” Feuer said in a statement Monday afternoon. “We defeated a previous attack on these crucial protections and will vigorously defend the ordinance again.”
GHP Management Corp. alleges in the lawsuit filed last week that 12 of its buildings lost more than $20 million in rental income due to the ordinance, according to the Los Angeles Times. GHP — which manages several large apartment complexes including Da Vinci, Ferrante, the Medici and the Orsini — is owned by developer Geoffrey Palmer. Other companies owned by Palmer joined the lawsuit. G.H. Palmer Associates owns more than 15,000 apartments in the Southland.
While Los Angeles County’s eviction moratorium is set to expire Sept. 30, the city’s moratorium is tied to its Emergency Declaration from March 2020, which is in effect until further notice. People who can’t pay rent due to the pandemic cannot be evicted for at least 12 months after the local emergency period expires.
The lawsuit claims that the companies are entitled to more than $100 million because the city violated the “takings clause” of the Fifth Amendment, which requires “just compensation” when private property is taken for public use, according to The Times.
“While the eviction moratorium ostensibly protects tenants who are unable to pay rent due to circumstances related to the COVID-19 pandemic, it arbitrarily shifts the financial burden onto property owners, many of whom were already suffering financial hardship as a result of the pandemic and have no equivalent remedy at law,” the lawsuit stated.
Landlords in Los Angeles are eligible to receive rent relief for back rent owed by tenants who couldn’t pay due to the pandemic. The city has received 113,000 applications and has about $235 million to distribute, with another $260 million expected. However, at the current pace, the program won’t complete payments for 18 months.
Councilman Kevin de León introduced a motion Friday to speed up the timeline for landlords to receive back rent, with Oct. 1 as the goal.
The Coalition for Economic Survival’s executive director Larry Gross told The Times the lawsuit would “wreak havoc” on Los Angeles if the management companies prevail, as money would be taken away from services for Angelenos.
Gross also said a previous lawsuit from Palmer — to overturn the city’s inclusionary housing rules — stopped Los Angeles’ momentum building affordable housing.
The Times noted that Palmer was a major donor to President Donald Trump and has donated at least $200,000 to the recall effort against Gov. Gavin Newsom and at least $110,000 to the recall effort against L.A. District Attorney George Gascón.
“I am not at all convinced that his right to profit by means of passive income should take precedence over the very lives of tenants in Los Angeles whose incomes were severed by the pandemic and by public health orders that directed them to isolate and quarantine,” Los Angeles Tenants Union member Tracy Jeanne Rosenthal told The Times.