Is Santa Ana’s rent control law legal? OC Apartment Association says no

As Santa Ana prepares to create a new rental housing board and require landlords to register their apartments in a database, the Apartment Association of Orange County filed a lawsuit against the city.

Santa Ana’s new ordinance establishing local rent control and just cause eviction rules is illegal and unconstitutional, alleges a lawsuit filed on Feb. 14 in Orange County Superior Court.

The association, AAOC, seeks to halt the new law, adopted in 2021 and amended in October, that creates a seven-member board to oversee a new rentals registry and serve as a sounding board for both tenants and landlords. Parts of the law, like rent control, are already in place, while others, including the creation of a rental housing board, are still in the works.

The lawsuit alleges the new housing board “is by design imbalanced in favor of tenants and tenant interests” because it will include only two landlords but three tenants — as well as two at-large members with no financial interest in the matter. The ordinance, the lawsuit alleges, restricts the ability of property owners to receive a fair return on their investments and provide a safe environment to tenants.

Santa Ana’s ordinance — the first citywide rent control law in Orange County — caps rent increases to 3% annually or 80% of inflation, whichever is less, for buildings built on or before Feb. 1, 1995, and for mobile home parks established before 1990. The law also limits when landlords can evict tenants, calling for “just cause evictions” if a tenant has broken the rental agreement, including by failing to pay rent or committing a nuisance or criminal activity on the property.

Association officials said they sought to negotiate with city representatives.

“We tried repeatedly to work with the city to address these concerns prior to adoption, but the city refused to meet with us,” John Tomlinson, the group’s president, said.

Santa Ana spokesman Paul Eakins declined to comment on the lawsuit.

Councilmember Phil Bacerra, one of three on the dais who voted against the law and its subsequent amendments, said he was not surprised by the lawsuit.

“The rent control ordinance limits the ability for landlords to charge enough rent to cover sometimes even basic maintenance … and cover big repairs, like a new roof,” Bacerra said.

Bacerra also criticized the planned creation of a board, which involves hiring a manager.

“The council majority adopted an ordinance that they did not bother to vet the costs for,” he said. “We’re still seeing them go through the process of exploring what the costs will be. It will be very interesting to see how much this new bureaucracy will cost and how much will be paid by renters.”

Landlords will have to pay a fee with each registration, which is required. But those fees have yet to be determined and a part of it can be passed on to tenants.

Councilmembers who voted for the law could not be reached for comment Tuesday.

But former Mayor Vicente Sarmiento, who voted for it at the time, said Tuesday: “The rent stabilization ordinance doesn’t prevent landlords from increasing rent, just prevents them from increasing it excessively.”

“There are plenty of options included in the ordinance that will allow landlords to recover investments made, so long as they’re verified,” said Sarmiento, now an Orange County supervisor. “The intent of the ordinance is to keep people housed and prevent displacement.”

Rent control advocates have argued that housing is a human right, and without rent control and just cause eviction laws, many tenants face the threat of becoming homeless.

Santa Ana is one of 17 cities in California with citywide rent control measures, according to the association. Others in Southern California include Los Angeles, Santa Monica, West Hollywood, Pasadena and Beverly Hills.

Chip Ahlswede, the association’s vice president of external affairs, said this is the first time the group has sued a city where it represents property owners.

“This is the first time in our history we’ve had to go to this measure, and we’re not happy to go there,” he said.

The Apartment Association of Orange County, he said, represents some 1,875 members with about 100,000 units in the county. It provides members with “professional education and training, legislative advocacy and representation, resident screening services, operational assistance, networking and business development opportunities and other resources,” according to its website.