The Santa Monica City Attorney’s Office has filed a criminal complaint against local landlords accused of unlawfully raising a tenant’s rent by more than is allowed during the pandemic.
The criminal complaint levies three counts of price gouging against the owners of the local multi-unit apartment building located at 1433 Euclid Street in Santa Monica, City officials said in a news release Friday. “The landlords WS Communities, LLC and 1433 Euclid Street, LLC, are charged with unlawfully raising a tenant’s rent by more than the allowed 10 percent during a declared emergency.”
California law prohibits businesses and owners from advertising, offering, or charging a rental price for housing to existing or prospective tenants, that has been increased by more than 10 percent upon a proclamation of a state of emergency, or during a period the proclamation is extended by the President of the United States, Governor of California, or local officials.
In 2017, due to the devastating wildfires that caused massive property destruction, threatened homes, and required residents to evacuate, then-Governor Brown declared an emergency in various counties in California, the news release states. The emergency has been extended several times, including in December 2019 when Gov. Gavin Newsom issued an order extending price gouging protections related to the wildfire emergency to Dec. 31, 2020, in the counties of Los Angeles, Ventura, Santa Barbara, Napa, Mendocino, and Butte.
Prior to the expiration of the extension, Newsom issued an order that further extended the price gouging protections of the wildfire emergency to December 31, 2021, which ensured rent gouging protections would remain in effect in Santa Monica and in the rest of Los Angeles County for the remainder of 2021.
Despite the protections, the complaint alleges that a tenant at 1433 Euclid Street was paying rent in the amount of $865 a month until the defendants increased her rent to $2,336 in February 2020, and $3,000 in March and April 2020, city officials said. “The tenant paid the increased rental amounts under protest.”
A violation of California’s price gouging law is a misdemeanor punishable by imprisonment in a county jail up to one year, a fine up to $10,000, or both a fine and imprisonment. Additionally, a violation of the law is deemed to constitute an unlawful business practice and an act of unfair competition, which is subject to civil penalties of up to $2,500 per violation, injunctive relief, and restitution.
WS Communities was created as a spin-off of Neil Shekhter’s NMS Properties in 2017. While NMS was mired in a legal fight with a former partner over ownership of several apartment buildings, WS Communities was able to secure several additional projects including six micro-apartment developments in the Downtown area.
The company has since put its entire 23-parcel portfolio, which is entitled for the development of over 2,100 units and more than 200,000 square feet of commercial space, up for sale.
The defendants are scheduled to be arraigned on March 24, in Los Angeles Superior Court, West Judicial District, in People v. 1433 Euclid Street, LLC, WS Communities, LLC, Case. No. 1AR 21055.
Brennon@smdp.com
