Landlords Embracing Airbnb Draw Fire in LA

LOS ANGELES (CN) — Citing a growing housing crisis in Los Angeles, the city attorney has begun targeting landlords who illegally convert their rent-controlled apartment buildings to short-term tourist rentals or hotels.

"In a city with a profound shortage of affordable housing, unlawfully converting rental units to operate [as] hotels has got to stop," City Attorney Mike Feuer said Monday.

Feuer said at a news conference that he has sued owners of three apartment buildings, in Hollywood and Venice, who turned their properties into hotels.

He filed criminal charges last week against owners of a rent-controlled building near Hollywood who allegedly kicked out all their tenants to replace them with a parade of high-paying, short-term customers brought in by online rental service Airbnb, all in violation of state and city laws.

"My office will continue to intervene to keep rent-stabilized units on the market and hold owners accountable for not complying with the law," Feuer said in a statement.

In the criminal case, the city attorney's office accuses Carol Jean Alsman and LSJB Investments of six misdemeanor counts, including zoning and building code violations and improperly withdrawing a four-apartment building from the rental market in violation of the Ellis Act. The state law prohibits landlords from evicting all tenants and re-renting the apartments within five years without notifying the previous tenants.

Alsman and LSJB officials could not be reached for comment late Monday.

Saman Behnam, an attorney defending the landlords in a civil suit by tenants, did not return a call seeking comment.

Feuer's civil lawsuits accuse landlords of violating the city's rent-stabilization ordinance by converting apartment buildings, with a combined total of 121 units, into hotels. All three properties have hotel websites and advertise on the Internet.

Feuer also accuses the landlords of unfair competition, false advertising and creating public nuisances. Named as defendants are:

Carl Lambert, the owner of Venice Suites, who was ordered to stop operating his building as a hotel in January 2015.

William Andrew Layman, Rose Layman and Matthew Moore, owners of the Venice Beach Suites, who also were ordered to stop operating their building as a hotel in January 2015.

George Panoussis and Novap Corp., owners of the Hollywood Dream Suites Hotel, who were warned to stop in January 2014. Panoussis and his co-defendants allegedly have denied inspectors access to the premises at least eight times since 2012.

None of the landlords could be reached late Monday through their hotels. Lambert, a real estate investor who is president of the Venice Chamber of Commerce, did not return a call to his office.

Feuer's legal actions highlight the growing problem in Los Angeles of affordable housing units being removed from the rental market. More than 1,000 rent-controlled apartments were withdrawn last year, according to news reports.

The civil suits say the loss of long-term rental units "has driven up total housing costs for L.A. renters by more than $464 million in the last year."

Similar losses are taking place in other cities with rent control, including Santa Monica and San Francisco, according to Randall R. Renick, a civil rights attorney who represents former tenants in a civil suit against Alsman and LSJB.

The conversion of apartment buildings to short-term rentals "is a pretty substantial problem here in L.A. and in other parts of the state," Renick said.

Landlords are under pressure from a tightening rental market, the inability to evict tenants from rent-controlled units and the lure of high returns from Airbnb customers, he said.

Renick's suit also names Airbnb as a defendant. Renick said the tourist-rental market leader continued to list the Alsman/LSJB units even after his lawsuit was filed in December.

The company said in a statement Monday that it would not comment on pending litigation. It said, however, that it "strongly oppose(s) real estate speculators who illegally evict tenants and abuse platforms like ours in search of a quick buck."

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