LOS ANGELES — The State Court of Appeals has ruled that rent decreases ordered by the Rent Control Board be paid retroactively to a landlord almost three years after the board decreased the rents of two tenants who complained that the communal hot tub was too cold and sauna access was restricted.
The decision overturned a lower court’s ruling that the rent decreases — amounting to $48 and $25, respectively — were justified because landlord Santa Monica Properties stopped heating a Jacuzzi during working hours and installed a timer on the complex’s sauna that let it run for at most 25 minutes.
“… [W]e find that all decreases in rents ordered by the hearing examiner’s decision should be retroactively paid to (Santa Monica Properties),” the judges wrote in the decision. “No decreases should have been ordered on the evidence presented at the administrative hearing in this case.”
According to the decision, two tenants of a 32-unit apartment building under rent control in Santa Monica, R. Liza Salvatore and Roberta Rosskam, filed petitions for a decrease in rent because the building owner reduced the number of hours that a Jacuzzi was heated from 9 a.m. to 9 p.m. to 5 p.m. to 9 p.m.
The company also installed a sauna timer that cut the amount of time the sauna heated from one hour to 25 minutes.
On Oct. 14, 2008, the hearing examiner hired by the Rent Control Board issued a 99-page decision reducing Salvatore’s rent on a 1,200-square-foot unit by $48 from $1,214.25 per month and Rosskam’s rent on her 1,300-square-foot unit $25 from $1,440.33 per month.
The hearing examiner awarded both tenants a $25 decrease because of the reduction of hours that the hot tub was heated. Salvatore was awarded an additional $20 for the loss of the sauna and an additional $3 for an unrelated matter.
All decreases were effective Dec. 1, 2008.
Santa Monica Properties fixed the situation with the hot tub, and the hearing examiner agreed to restore the $25 cut in both rents that related to the hot tub beginning June 1, 2009.
The $20 reduction in Salvatore’s rent relating to the sauna, however, remained in place.
The property owner went to the courts, asking for a review of the Rent Control Board’s final decision on the rent decrease and asked that the court force the board to make a decision on any rent decrease within 120 days.
The trial court ruled against Santa Monica Properties on both counts, but the appeals court reversed the decision on rent decreases, saying that there was no evidence that the tenants’ rent had become excessive as a result of the changes to the hot tub and sauna.
It also required that all rent reductions be repaid to the landlord.
The ruling troubled Rent Control staff less for its impact on this case and more for the potential precedent that it sets, said Stephen Lewis, spokesperson for Rent Control.
“It went way beyond expressing a concern about the amount of the decrease,” Lewis said. “They could have just said the amount of the decrease is too much.”
Instead, the court said that the reduction in services was so minor that no decrease in rent was warranted.
The decision evoked two different provisions of rent control law. The first is called “fair return,” which promises that the property owner can expect a fair return for the use of their property, but not necessarily a profit or maximum return, Lewis said.
The second is rent decrease, which is applied to even things out when a landlord takes away services like a parking space but tries to charge the tenants the same amount as always.
“The decision jumbled these two concepts up, and that creates a big conceptual problem for dealing with rent decrease,” Lewis said.
The Rent Control Board will have to decide in a future meeting how they want to respond to the court’s ruling.
Staff is working on defining those options, which could include a request that the court reconsider its position, an appeal to the California Supreme Court or a request that the decision no longer be published.
If the decision was not published, it could not be used as a precedent in a future case, Lewis said.