Attorney Barry Cappello announced on the steps of Santa Barbara City Hall on Tuesday that his firm plans to file a lawsuit to block the rent freeze put in place by the Santa Barbara City Council.
Cappello was flanked by a dozen property owners and members of the Santa Barbara Rental Property Association. The lawyer and the property owners say the rent freeze and a proposed rent stabilization ordinance represent an unconstitutional taking and violates due process laws.
“What the city has done here is not an emergency,” Cappello said. “It is a violation of a variety of different laws as well as the Constitution. We are going to do absolutely everything we can to try and set it right.”
The Santa Barbara City Council voted 4-3 in January to freeze rent increases while the city works on a rent stabilization ordinance. The rent freeze will last through Dec. 31, 2026.
The freeze does not apply to people renting from single-family homes or rental units managed by a public agency. It applies only to apartment buildings built before 1995.
Cappello is no stranger to litigation. He sued the city of Santa Barbara to institute district elections. He won a $70 million lawsuit against Sable Oil on behalf of property owners, and has had many other high-profile cases.
Cappello said he wants to stop the rent freeze and encourage the City Council to back away from a rent control ordinance.
“If this occurs in the city, we will see a very, very considerable adverse effect on housing stock,” Cappello said. “This is not something new. This is something that has happened in other places for many years and the result has been the deterioration of the housing that people are going to be living in.
He said the lawsuit would be filed soon. City Attorney John Doimas and City Councilwoman Wendy Santamaria declined to comment until they see a lawsuit.
Among the other speakers Tuesday was former Santa Barbara City Councilwoman Alejandra Gutierrez.
“Let’s be honest,” Gutierrez said. “Small landlords are not corporations. They are local families who invested in duplexes, small rentals, as a retirement plan, but more importantly, it was part of their American Dream.”
Gutierrez said some housing providers work with tenants who would not qualify elsewhere.
“Policies that ignore them will risk making our housing shortage worse,” Gutierrez said. “Housing for me is not political, it’s personal. It’s about sustainability for the families that are raising the future leaders for tomorrow.”
Gutierrez said the city of Santa Barbara should make it easier for developers to build housing.
“We cannot regulate our way to prosperity,” Gutierrez said. “We must build our way into opportunities.
The Santa Barbara Rental Property Association has about 1,200 members. Its president, Betty Jeppesen, said at the news conference that the rent-increase freeze is not permitted under the U.S. Constitution.
“A rent moratorium reduces the real property values, and thereby constitutes an illegal taking,” Jeppesen said.
Stanley Tzankov, co-founder of the Santa Barbara Tenants Union, said that the rent freeze is simply a temporary pause and that the tenants union “will not be bullied into abandoning working families.
“This lawsuit is a pressure tactic designed to weaken tried-and-true tenant protections and force taxpayers to bankroll unnecessary litigation at the worst possible moment,” Tzankov said. “Nearly all small property owners are already exempt, and using them as a prop is disingenuous. And if a business collapses over one paused rent increase, you have much larger problems in your business model. Instead of wasting money on litigation, these corporate landlords should use those funds to maintain their investment properties.”
Cappello said that rising taxes along with insurance and maintenance costs are hitting property owners hard and that “rent stabilization is bad economics.”
“We intend to follow this process through to the end and make sure either the City Council rights this wrong or a court with proper jurisdiction orders it stricken,” Cappello said.
