Page Mill Properties, which owns more than 1,600 apartments in East Palo Alto, will sue the city for passing an urgency ordinance Tuesday night that prohibits rent increases greater than 3.2 percent for the next six months, according to a company spokesman.
The moratorium on rent increases is illegal, according to Chris Giffith, an attorney for Page Mill Properties.
The city considered the rent moratorium because hundreds of East Palo Alto tenants received rent increases that exceed the currently allowed 3.2 percent, with many increases 15 percent or greater.
A company spokesman, Lance Ignon, also noted, however, that several hundred Page Mill Properties tenants did not receive any rent increase.
"By refusing Page Mill Properties' repeated offers to pursue negotiations and reach common ground, Page Mill Properties has no alternative but to seek legal action," Ignon said.
Both the company and city fully expected to end in court. Each had its own court reporter at the last two City Council meetings, recording every word spoken about the proposed rent moratorium.
The council failed to muster the necessary four votes to enact the moratorium last week as urgency item, with Councilman David Woods absent and Councilman Peter Evans abstaining.
But Woods voted for the moratorium Tuesday night and Evans, surprisingly, also supported it after criticizing it last week.
The way the city enforces its rent stabilization ordinance does not conform to state law, Griffith contends, an allegation that lawyers for the city strongly dispute.
Page Mill may also challenge Tuesday night's vote on the grounds that it was not properly noticed under the state open-meeting law, which requires 72-hour advance notice of agenda items. The City Council agenda had the rent moratorium on its agenda Tuesday night, but as a regular ordinance to go into effect 30 days later, not as an urgency ordinance.
The City Council enacted the rent moratorium as an urgency ordinance so it can go into effect immediately, before the scheduled Feb. 1 rent increases for Page Mill tenants go into effect.