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Court Orders Landlord To Follow Project Mitigations Despite Ellis Act

A state law that permits landlords to go out of the rental business does not trump the California Environmental Quality Act, the Second District Court of Appeal has ruled.

The court said that a Los Angeles County property owner cannot use the Ellis Act to avoid mitigation measures imposed on a plan to demolish apartment buildings and replace them with condominiums and new apartments.

The ruling came in the long-running battle to preserve the Lincoln Place apartments in Los Angeles's Venice district (see CP&DR Places, February 2007) and appears to be a significant victory for the few remaining Lincoln Place tenants, as well as hundreds of tenants who were evicted or relocated in less-than-voluntary fashion.

The court suggested that the property owner, Apartment Investment and Management Company (AIMCO), was playing a game to avoid the obligations that the city imposed while approving AIMCO's project at Lincoln Place. Those obligations are contained in the city's conditions of approval for AIMCO's vesting tentative tract (VTT) map.

"We reject any argument that because AIMCO complied with the RSO's [rent stabilization ordinance's] Ellis Act provisions and relocation benefits, it may go out of the rental business without reference to conditions 5b and 13 of the VTT. AIMCO specifically agreed to additional conditions in the VTT to mitigate the demolition of a very large apartment complex that has been part of the community for many years, the removal of more than 700 rent-controlled units from the marketplace, and the displacement of those tenants, in order to get permission to redevelop the land. It may not now act as if those events never occurred," Justice Laurie Zelon wrote for the court.

The Lincoln Place project has an extremely long administrative, political and legal history. Lincoln Place was designed by noted architect Ralph Vaughn and built during the late 1940s and early 1950s. The 52 minimalist buildings spread across 38 acres contained 795 apartments and were connected by extensive walkways and landscaping. In 1991, Denver-based AIMCO and a local developer (who is no longer involved) proposed demolishing the buildings and replacing them with 654 market-rate condominiums, 52 moderate-income townhouses and 144 low-income apartments. The city refused to approve the project and ultimately a court found that the city's regulations were a violation of the Ellis Act (Los Angeles Lincoln Place Investors, Ltd. v. City of Los Angeles, (1997) 54 Cal.App.4th 53 (Lincoln Place I); see CP&DR Legal Digest, May 1997). Partly because of Lincoln Place I, the Legislature amended the Ellis Act — a 1980s statute that ensures property owners may remove a property from the rental market — to make clear that local governments do have authority to regulate the demolition of rental properties.

In 2002, the city certified an environmental impact report and approved a vesting tentative tract map. Soon thereafter, the city approved demolition permits. Tenants and historic preservation advocates sued, and a court in 2005 ruled that the city had violated CEQA by not enforcing mitigation measures before approving the demolition (Lincoln Place Tenants Assn. v. City of Los Angeles, 130 Cal.App.4th 1491 (Lincoln Place II); see CP&DR Legal Digest, September 2005).

Although Lincoln Place II stalled the demolition of Lincoln Place apartments, AIMCO was already well into an aggressive tenant removal program. Starting in 2004, the majority of the remaining 350 households renting apartments in Lincoln Place signed "voluntary relocation agreements." However, others refused to go, and AIMCO began serving tenants with eviction and "Ellis" notices in early 2005. In July of that year, AIMCO took nearly 100 tenants to court to force their removal. In December of 2005, AIMCO attempted to lockout the remaining tenants of 52 apartments, an incident that led to an ugly and well-publicized confrontation between tenants and sheriff's deputies.

By the time the tenants association filed the present suit in June 2006, only 13 apartments remained occupied, although former tenants continue to be keenly involved in the controversy. The tenants association argued that AIMCO had not complied with two mitigation measures and a relocation plan approved as part of the subdivision map. The mitigations and relocation plan were intended to ensure that current tenants could relocate to a comparable or better unit within the new project, receive maximum relocation assistance under the city's rent stabilization ordinance, or accept one of the new affordable units with moving costs paid. Los Angeles County Superior Court Judge David Yaffe ruled against the tenants, but a three-judge panel of the Second Division, Division Seven, overturned the lower court.

AIMCO argued that the mitigation measures conflicted with its Ellis Act rights and that the conditions did not apply because AIMCO never recorded the vesting tentative tract map. The court dismissed those contentions without addressing whether AIMCO — which owns more apartments than any other entity in the country — is truly going out of the rental business at Lincoln Place.

The court found that the mitigation measures are within the Ellis Act's exceptions for local land use controls, that AIMCO agreed to the mitigations during the administrative process, and that AIMCO could not pretend evictions were not part of the overall project.

"Throughout the approval process, tenants were told they could choose to remain on site; this promise is memorialized in conditions 5b and 13. Eviction is inconsistent with these provisions," Justice Zelon wrote. "Furthermore, prior to commencing the evictions, AIMCO did not advise the city or the tenants that it intended to abandon the project; on the contrary, as its arguments concede, the evictions are a prelude to proceeding with the project."

"[T]he mitigation conditions and other conditions in the VTT constitute enforceable covenants under CEQA, to be fulfilled before the final map may be recorded," Zelon wrote. "AIMCO cannot attempt to defeat the conditions it imposed upon itself in order to obtain approval of the VTT by ignoring such conditions or attempting to render them meaningless by moving ahead with the project in spite of them. Such conduct amounts to ‘piecemealing,' a practice CEQA forbids."

In early October, the Los Angeles City Council voted not to appeal the ruling to the state Supreme Court. AIMCO could still file an appeal. In the meantime, the California Building Industry Association has asked the state high court to depublish the decision so that it may not be cited as precedent.

The Case:
Lincoln Place Tenants Association v. City of Los Angeles, No. B193235, 07 C.D.O.S. 11365, 2007 DJDAR 14722. Filed September 19, 2007. Modified October 10, 2007 at 2007 DJDAR 15586.
The Lawyers:
For the tenants association: John Murdock, (310) 450-1859.
For the city: Gerald Sato, city attorney's office, (213)
For AIMCO: Mark Schaeffer, Nemecek & Cole, (818) 788-9500.

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