Lawyers conclude arguments in East Palo Alto rent board hearing involving 136 complaints against Page Mill Properties

Lawyers for East Palo Alto's biggest landlord and 136 tenants who contend the company raised their rents unlawfully concluded their arguments before the city's rent stabilization board Tuesday.

At the end of the five-hour proceeding, Hearing Examiner Peter Labrador said he would review the transcript when it becomes available in about two weeks and reconvene the parties for further discussion.

Much of the case centers on whether Page Mill Properties was correct in charging tenants the maximum legal rent that appeared on certificates kept by the city. Those amounts were sometimes hundreds of dollars above what tenants were actually paying when the Palo Alto-based company bought about 1,700 units in the city of 32,000. Some tenants moved out because they couldn't afford the new rents.

Tenants and others have suggested the higher rents on the certificates effectively expired when the previous landlord charged a lesser amount - a claim Page Mill rejects.

In November, East Palo Alto dropped a request for a permanent injunction against Page Mill's rent increases. A judge had already denied the city's requests for a temporary restraining order and a preliminary injunction.

"The rent ceiling on a given certificate is by its very nature the maximum legal rent a landlord can charge," said Corinne Calfee, an attorney for Page Mill, at Tuesday's hearing. "It wouldn't make sense for the certificates to expire. The old certificate is good until it is superseded by a new certificate with a new certified rent ceiling."

Unlike Berkeley and San Francisco, East Palo Alto has a cumbersome procedure that requires city workers to issue certificates yearly for each unit covered under its rent stabilization ordinance. Employees apparently made errors processing the certificates, and landlords didn't always let the city know when an apartment became vacant or a new tenant moved in.

In addition, East Palo Alto never updated its ordinance to comply with a state law that took effect in 1996, leading to a situation former city employees testified they found confusing at times.

Under that California law, a rent-stabilized apartment goes up to market value when a tenant moves out, with the new rent serving as the base amount for further increases.

The city council is considering making changes to East Palo Alto's ordinance to bring it up to date, clarify vague sections and provide better protection for tenants and landlords. Voters will likely approve or reject those changes later this year.

Larisa Bowman, a law student with the Stanford Community Law Clinic representing the 136 tenants, asked Labrador to use the 1996 state law to re-calculate the maximum legal rent for her clients.

In her closing argument, Bowman described the rent increases as part of a scheme to increase the properties' values and then sell them off at a huge profit.

"We think that this scheme actually has a name, and it's called predatory equity," she said. "This is a close-knit community of people who know each other and look out for each other, and Page Mill shouldn't be allowed to come in and walk all over them."

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