Since its inception, CALIF has pursued its dual goals of providing an informational base for landlords and tenants on the workings of landlord‑tenant law in California, and challenging the state and local municipalities when they take actions that infringe upon the constitutionally‑guaranteed property and civil rights of California residents. Grimm is the CEO and Mordoh is Senior Attorney of the California Law Information Foundation (CALIF). CALIF is qualified to receive taxdeductible contributions under IRC Section 501(c) (3) and can be reached at (213) 251‑9665.

CALIF Files Section 8 Amicus Curiae Brief

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n the case of Sabi v. Sterling, currently before Division 8 of the Second Appellate District of the California Court of Appeal, tenant advocates are attempting to make the multi-family rental sector shoulder a disproportionate burden of the nation's affordable housing crisis by making it "discriminatory" for a housing provider to elect not to participate in the heretofore voluntary Section 8 program.

CALIF filed, and the Appellate Court accepted, an Amicus Curiae Brief arguing, on behalf of rental property owners, that the Section 8 program has long served as America's foremost rental subsidy program and has been fundamentally successful in providing decent, safe and affordable housing for low‑income families and the elderly.

Since its inception, the Section 8 program has been viewed as a voluntary program and premised on a cooperative and non‑coercive relationship between the federal government, rental property owners, and prospective renters.

CALIF further argued that any attempt to alter the voluntary nature of the Section 8 program, by employing so-called "source-of-income" non-discrimination statutes and ordinances to make participation mandatory on the part of rental property owners and managers, places the continuation of the successful relationship at risk.

Rental property owner participation in the Section 8 program cannot be voluntary and mandatory at the same time. Therefore, the argument put forth by some tenant activists conflict with the intent of Congress, undermine the methods it has chosen to implement this federal housing policy, jeopardize a successful program, and impose an unconstitutional burden on rental property owners. Stay tuned.

AAGLA and HJTA Get Judgement Against City of L.A.

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he City of Los Angeles proposed to transfer almost $30-million from the Department of Water and Power (DWP) to the General Fund for payment of, among other things, salaries, pensions and perks of municipal employees, all unrelated to any cost of the provision of water.

The City Attorney, to his credit, "smelled a rat" (a likely violation of Prop. 218, and demanded that the city get court "validation" (or approval) of the proposed transfer.

The city filed a lawsuit (a validation action) naming all DWP customers as defendants. The validation judgment the city sought would have made the proposed transfer bulletproof against any future customer attack.

AAGLA and the Howard Jarvis Taxpayers Association joined forces, answered the lawsuit, and argued in court that the proposed transfer clearly violated Proposition 218, an initiative passed by voters in 1996 adding Articles 13c and 13d to the state constitution. The AAGLA and HJTA argument was that the city pads its DWP water rates by charging more than it costs to provide water and water-related services to its customers, as specifically prohibited by Prop. 218.

After much legal maneuvering, the Los Angeles Superior Court issued a judgment in favor of AAGLA and HJTA on July 2, 2009. The court ruled as follows.

"1. Proposition 218 (Articles XlllC and MID of the California Constitution) prohibits the City and/or its Department of Water and Power (collectively 'City') from imposing fees or charges such that 'revenues... exceed the funds required to provide water and water‑related service,' Cal. Const., Art. XlllD, § 6 (b) (1). Proposition 218 also provides that revenues derived from fees or charges 'shall not be used for any purpose other than that for which the fee or charge was imposed,' Id. § 6 (b) (2). Thus, the City may not collect, either for retention or transfer, rates for water and water-related services that are designed to generate a surplus (i.e., 'revenues [that] exceed the funds required to provide [water and water-related] service' to its customer.)

"2. The City, which bears the burden of proof, ... failed to show that any portion of the proposed transfer of $29,931,300 in "surplus" funds via Resolution No. 007-1 06 and City Ordinance No. 178451 is for the purpose of recovering any General Fund costs related to the production or provision of water or water-related services for its customers. To the contrary, this court finds that the proposed transfer is for 'purpose[s] other than [the water and water-related services] for which the fee or charge was imposed.' Cal Const., Art., XIII D, § 6 (b) (2). Therefore, the proposed transfer is unconstitutional and void, and shall not be made.

"3. To the extent the City overcharged its customers by setting rates that generated a prohibited surplus in Fiscal Year 2005-06 or any subsequent fiscal year, the City acted beyond its authority as circumscribed by the constitution. The City is prohibited from transferring or expending this surplus revenue for 'purpose[s] other than [the water and water-related service] for which the fee or charge was imposed.' Cal Const., Art. Xlii D, § 6 (b) (2).

"4. The City and its Department of Water and Power are ordered to calculate future water rates consistent with the requirements of California Constitution, Article XIII D, § 6 (b) (1).

"5. This court retains jurisdiction over the parties in order to enforce compliance with this judgment."

 

That's great news. If the city complies with the judgment, this victory should save property owners millions of dollars in unnecessary water fees.

 

City of L.A. Ordered to Quit Draining DWP Coffers

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ince 1925, the city has used its Department of Water and Power (DWP) income to pay for the water and water delivery infrastructure that make up the city's water delivery service, and for other municipal services. Prior to an AAGLA/Howard Jarvis Taxpayers Association lawsuit, DWP contributed about $30 million annually to the city's General Fund to pay for "other municipal services." Not any more. AAGLA talks the talk and walks the walk. We do more for apartment owners than anyone else because your business is our business. That's all we do. Join us. Call 213-384-4131 for information or log on to AAGLA.org.

In 1996, by ballot initiative, HJTA got Prop. 218 added to the state's Constitution. In part, Prop. 218 provides the following.

"(b) Requirements for Existing, New or Increased Fees and Charges: A fee or charge shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements:

(1) Revenues derived from the fee or charge shall not exceed the funds required to provide the property-related service.

(2) Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed.

(5) No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners."

 

In 2001, in the case of Howard Jarvis Taxpayers Association vs. City of Los Angeles, HJTA complained about DWP overcharges for water, resulting in a surplus in the DWP's Water Revenue Fund, ultimately transferred to the city's General Fund and used for general city services. The Supreme Court held that water fees and charges were not property related services and HJTA lost the case.

In 2006, in the case of Bighorn-Desert View Water Agency vs. Verjil, the Supreme Court reversed its opinion in the HJTA case, disapproved that decision, and held that water provision was a property-related service subject to the prohibitions of Prop. 218.

In 2007, for the 2006-07 fiscal year, L.A. sought to transfer almost $30 million from its Water Revenue Fund to its Reserve Fund (and then to its General Fund, as it had for some 80 years). Because of the Bighorn decision, the City Attorney demanded that the transfer get court validation (approval). L.A. filed a validation lawsuit in which it was the plaintiff and all ratepayers were defendants.

AAGLA and HJTA contested the lawsuit. The court denied validation on procedural grounds. By agreement, the case was expanded to get at the substantive question of the validity of the proposed transfer since the issue was going to come up one way or another in the future.

The court's "Tentative Decision" is that L.A.'s proposed transfer of money, amassed through padded bills in fiscal year 2006-07 violates Prop. 218 and is unconstitutional and void. The decision, unless changed (which is unlikely since it is extremely well-reasoned), prohibits not only the proposed transfer but all like transfers in future years, and would require refunds or rate reductions for DWP customers who paid the $30 million.

The AAGLA case has saved DWP ratepayers some $30 million per year under current circumstances...a big win.

New BBQ Standards Adopted by at Least One Insurer

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s reported in an article by our editor, Kevin Postema, in the December 2008 issue of Apartment Age, entitled "Relatively New BARBECUE LAW Steams Some Apartment Residents," new state fire codes have been adopted by some cities. They prohibit "open flame grilling... within 10' of combustible surfaces." As yet, we do not have any reports of cities enforcing such a prohibition in L.A. or Ventura Counties. Nevertheless, to be safe AAGLA has added the following language to its "House Rules." "No BBQ may be used in or about the unit or its balcony."

 

This complete BBQ‑prohibition may not be useful, or wanted, by all owners, depending on how much their tenants use and rely on their BBQs, and on public relations considerations. But, then, those owners do not have to use AAGLAs House Rules to supplement AAGLA’s written month-to-month rental agreements or leases.

 

AAGLA felt it better to create a blanket prohibition subject to individual modifications rather than try to craft a prohibition that entails interpretation. For example, if you say no "open flame," one may interpret it

to mean a lid constitutes a flame being "closed."

 

The law also requires a 10' BBQ-setback from combustible materials. What are they? In general, we know that things that burn are combustible, but how do we know the make-up of building materials and whether they have been treated chemically to withstand combustion without some analysis?

 

All in all, a prohibition solves the problem for most owners.

 

Also, according to AAGLA Past President Bill Shaw, at least one insurance company has adopted these new fire codes. If you get such a notice from your insurance company, you may well be compelled to use this new House Rule, which, at least in rent-controlled areas, can be problematic at best.

 

Shake, Bake, Mud, Flood

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n this great state, shake (earthquakes), bake (fires), mud (landslides), and flood (water) all are potential sources of ruinous property damage. From personal experience in representing insurance carriers (although it was back in the '60s, so I guess things could have changed), I know that carriers primarily are concerned with keeping their loss pay-outs as low as possible.

When considering what to do when faced with a disaster, it is wise to have an expert on your side to assess the damages and your rights of recovery under the terms of your insurance policy. Natural (or otherwise) disaster experts are called "public adjusters." They are experienced in evaluating losses and presenting the best case you can make to your carrier for recovery on your insurance policy. If you have no insurance, an attorney can help flush out a culprit, such as a contractor responsible for shoddy construction, if one legally is responsible for all or a part of your loss.

If you have ever experienced significant property loss, you know the levels of contusion and chaos at the scene. Often, there are fire personnel, insurance representatives (if called), contractors to do preventive work, scam artists, and public adjusters, and they're all vying for your attention.

The need for fire, contracting and insurance reps is clear, but, why public adjusters? I asked some questions of W.J. (Bill) Kelso, a member of the Howard Jarvis Taxpayers Association Board of Directors, and a licensed public adjuster. Bill's resume includes 30‑years of settling hundreds of insurance claims, appraising property damage, and court appearances to testify as an expert witness in insurance claims litigation.

Here is Apartment Age's interview with Kelso.

Grimm: At a disaster, why public adjusters?

Kelso: Disaster assessment probably is the toughest part of our job. We are there to advise owners of the services we can provide. Also, we keep the scam artists who prey on unsuspecting insureds at bay.

Grimm: What services do you provide?

Kelso: We are licensed by the State of California to assist claimants in settling insurance claims. Most insureds are aware of the basic coverage provided by their policies, but they are unaware of possible extended coverage or what help is available from the Department of Insurance.

There is considerable interpretation of policy terms necessary to understand policy coverage. Because we must know and understand insurance policies and what coverage legitimately is provided, we can help determine a fair and equitable settlement quickly. Proper policy interpretation can increase one's recovery by 3040%.

Grimm: Is that the extent of your involvement?

Kelso: No. We take on the burden of processing the insured's claim. We work with the insurance adjuster to develop an estimate of the costs of repairs and scope of work covered by the policy. We also prepare detailed inventories of the personal property lost and the costs of replacement. We calculate and document the loss of income to a business or rental income to a residential building and provide the insurance carrier with the information it requires to activate payment to the insured.

Grimm: I know that a charge, agreed upon in advance, is made for your services, true? And won't the insurance carrier's adjuster do this work for free?

Kelso: The answer to both questions is, "Yes." The carrier's adjuster will do much of this work for free, with a natural bias in favor of his or her employer on disputed claims. A public adjuster can only work for the insured and constantly is looking out for his or her interests. If there is any doubt about how a structure can be repaired, we are there to cite any applicable codes, even though they may increase the cost of repairs.

Grimm: When it comes to repairs, doesn't the contractor decide the cost of the work?

Kelso: Good contractors can provide sound estimates of the cost or repairs but it is up to the insurance company's adjuster to determine the scope of the work. They can suggest a repair protocol to the contractor, who they pay. A public adjuster can demand certain work be done in a certain way if called for in the Insurance Code.

Grimm: Can't the insured just wait for the carrier's offer before considering hiring a public adjuster?

Kelso: Yes, if the insured is sophisticated in handling insurance settlements and construction work, he or she can wait and assess the company's offer before deciding on hiring an expert. But, it is beneficial to have a public adjuster's help early on. The reason is that the company's adjuster establishes a reserve for the claim. If for some reason he or she underestimates the actual costs of repair or replacement, the reserve can be amended by a supplement. But, before any change can be made in the reserve, approval must be obtained from a supervisor.

Because of the scrutiny supplements are given, many adjusters are hesitant to suggest them, leaving any possible dispute resolution to the lawyers. When we are involved from the start, we can make sure that the reserve established is sufficient for the work to be done. Any excess reserve is kept by the company. Our involvement just eliminates possible delay and embarrassment over loss assessment by the adjuster.

Depending on the type of loss involved, owners may not be mentally or physically ready to deal with all the minutia of claims settlement. My advice: Hire an expert if faced with a disaster.

 

For more information, Bill Kelso can be reached at: Metropolitan Adjustment Bureau, 818‑905­6800 or on their Website : www. metroadjusters. corn.

Beware of Bogus Forms

California Apartment Law Information Foundation Report

By: Craig Murdoh, Senior Attorney