One of California's major luxury real estate developers is suing the city of Los Angeles over its eviction moratorium connected to the COVID-19 pandemic.
GHP Management Corp., which is owned by billionaire real estate tycoon Geoffrey Palmer, alleges in its complaint that 12 buildings under its management have experienced more than $20 million in lost rent as a result of the city’s freeze on evictions.
The temporary moratorium was enacted in March 2020 in response to expected job losses and business shutdowns under nationwide quarantine rules. Where tenants could show an inability to pay rent due to the pandemic, they were legally protected from losing their housing.
Palmer is known for developing the distinctive “Renaissance Collection” of residential apartment buildings in Downtown Los Angeles; structures inspired by Italian architectural styles. He is a controversial figure in the city, given his vigorous public advocacy against mandatory affordable housing requirements for real estate development.
In 2007, he won a decisive court case that overturned L.A.’s zoning requirements mandating inclusion of affordable units in new developments.
In 2019, he was hit with a class-action lawsuit for allegedly pocketing millions of dollars in unreturned rental security deposits.
The affordable-housing nonprofit Housing Is a Human Right, part of the AIDS Healthcare Foundation, has described Palmer as “L.A.’s worst developer.”
GHP’s complaint is based on an interpretation of the U.S. Constitution’s Fifth Amendment, otherwise known as the “Takings Clause,” which prohibits the government from depriving citizens of private property without compensating them.
But the city’s Housing and Community Investment Department continues to distribute subsidies to landlords affected by the COVID-19 pandemic, including those who have been unable to collect rent as a result of the moratorium.
In the long run, Palmer will “receive every dollar that he is owed” from the city, Tracy Jeanne Rosenthal of the Los Angeles Tenants Union told The Los Angeles Times.
Larry Gross, executive director of the Coalition for Economic Survival, told The Times that GHP’s lawsuit stands to “wreak havoc” on L.A. if successful, as officials will be forced to redirect critical funds from city services to pay out damages, including those meant to deal with homelessness.
GHP and its co-complainants—consisting of Palmer’s other companies—said in their complaint they are entitled to compensation from the city of more than $100 million.
City Attorney Mike Feuer said in a statement that the eviction moratorium is a “sound and lawful ordinance” that has kept thousands of L.A. tenants from becoming homeless during the pandemic. “We defeated a previous attack on these crucial protections and will vigorously defend the ordinance again,” he added.