Encinitas tenants speak out against “renovictions.”

By Stephen Wyer

ENCINITAS — An increasing number of longtime Leucadia residents are being priced out of their apartments through a controversial but legal practice that allows property owners to remove tenants under the auspices of remodeling their units.

“Renoviction” (a portmanteau of the words “renovation” and “eviction”) is not a new phenomenon nor is it unique to Encinitas. However, residents, city officials and local housing attorneys all agree the practice has been on the rise in recent months.

Mike Mager and his wife were model tenants at their two-bedroom unit on Phoebe Street. The couple said they never paid rent late, kept the unit in good order, and followed the terms of their lease.

But Mager said that didn’t seem to matter when the landlords decided to remodel their unit.

“After eight years of paying rent on time with no issues, I come back from work one day to find a notice taped on my door saying you have 60 days to move,” Mager said. “I mean, unless you’re made of money, it’s not the easiest to find a new place in 60 days. No explanation, nothing. Just we’re kicking you out, we’re redoing the unit, and we’re jacking up the price. It definitely leaves a sour taste in your mouth.”

Some Encinitas residents view renovictions as little more than an excuse for property owners to kick out tenants while adding little to the units in the way of actual improvements.

Patrick Reid, another former Pacific Villas resident, got his 60-day letter in October almost immediately after the statewide moratorium on evictions had expired.

After being forced out, Reid learned the “remodel” of his unit entailed a few relatively minor alterations, despite a significant increase in the rental price. His family was forced to find another place altogether.

“We asked them are you going to fix the plumbing, the electrical wires in the wall, etc,” Reid said. “But they said, ‘No, we’re just throwing up some paint and laminating the floors.’ To them, that was a major remodel I guess.”

Ari Marsh, a 33-year resident of Leucadia, recalled that just weeks after the statewide eviction moratorium ended, numerous residents at the Pacific Villas apartment complex, including himself, started to receive notices to vacate due to planned remodeling.

As Marsh and his neighbors moved out, they learned their former units were back on the market, only 50% more expensive than before.

“I got my letter to move out the week after Thanksgiving, I mean right in the middle of the holidays,” said Marsh. “With historically low vacancies in Encinitas, it’s pretty much impossible to find a new place to live at that point. They jacked up the price and said, ‘Well, if you want to stay now you have to completely move out and reapply, and then I wasn’t even approved to move back in.”

One of Marsh’s neighbors, a tenant who spoke with The Coast News on the condition of anonymity due to fear of reprisal, got their letter to vacate just before Marsh, with a move-out date of Dec. 26, the day after Christmas. Being forced to completely move out, and find a temporary place to live before reapplying to his own unit (rent was now 30% higher) was a stressful experience for the Leucadia retiree.

In response to the notices to vacate, Marsh, along with approximately 15 to 20 other tenants at Pacific Villas, wrote a letter to the owners of the apartment complex, entreating them to reconsider their decision.

“Please don’t forcibly evict us to remodel the apartments, we love living here and want to stay,” the letter reads. “We are all neighbors who have been loyally paying our rent for many years and love to call Pacific Villas our home.”

Pacific Villas owners and property managers declined to comment for this story, but according to Marsh, the letter did not alter their decision.

TENANTS AT Pacific Villas in Leucadia were asked to vacate their apartments for “substantial” renovations, only to learn their rent had increased by 50%. Photo by Anna Opalsky

What's the law?

In Sept. 2021, a statewide eviction moratorium, in place since the start of the COVID-19 pandemic in California, expired. Subsequently, residents countywide have experienced a rise in no-fault evictions from landlords seeking to take advantage of rapidly rising property values, according to Gilberto Vera, an attorney with Legal Aid Society of San Diego, a nonprofit law firm specializing in tenant advocacy.

A “renoviction” is a particular kind of no-fault eviction that is carried out in order to repair or renovate a housing unit. Under state law, renovictions are legal as long as the apartment landlord is making a “substantial” remodel that necessitates a vacating of the premises on the tenant’s part (tenants are typically served with a 60day notice to vacate to allow for the renovations).

However, Vera and others say the practice is commonly exploited by property owners who will often significantly increase rents after asking tenants to move out, while only making slight alterations to the unit itself.

Residents then are not only forced to move out but have to choose between finding another place altogether or signing a new lease on their former unit with substantially higher rents.

In Encinitas, renovictions have been on the rise significantly since the state moratorium expired in October, local real estate and tenant attorneys told The Coast News.

“It’s not anything new, but it’s become a growing issue,” Vera said. “About 23% of the people calling into the Legal Aid Society are dealing with a no-fault eviction stemming from a remodel. It’s the number one issue people are calling about.”

In California, the law is clear that in order to evict a tenant for renovation reasons, the landlord must conduct a “substantial” remodel of the unit. However, what qualifies as “substantial” is a legal gray area, according to Louis Galuppo, an attorney with Carlsbad’s G10 Law.

“When it comes to what’s ‘substantial,’ this is really a brand new field of law that needs to be tested in the courts,” Galuppo said. “(The term) ‘substantial’ in this particular statute has not been addressed in a manner where I could tell you where the lines are.”

Vera agreed, noting this gaping ambiguity in the law has turned into a statewide money-maker for property owners and real estate speculators eager to take advantage of rapidly rising property values.

“A ‘substantial’ remodel has become a winwin for landlords,” Vera said. “You can remove the tenant, remodel the property and add higher value, and then you can rent it out for a higher amount. I mean, it’s a no-brainer from that perspective, it’s really the right time for this for a landlord.”

Legal protections for tenants in California increased during the COVID-19 pandemic, as landlords were required to provide more substantive reasoning for a no-fault eviction than in the past, Vera said. However, once property management entities figured out they could exploit the vague language of “renoviction” law, the practice became increasingly common.

“Before 2020, your landlord could really evict you without almost any reason,” Vera said. “And now, they have to provide a reason but they’ve figured out which ones are easiest to use.”

However, Vera emphasized that cases of unlawful renoviction in San Diego County remain an exception.

“I mean this is a pretty big loophole in the law,” Vera said. “Most tenants don’t know what their rights are, and even with an attorney, you’ll have an

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Changing culture

To Marsh, Mager, Reid and other Leucadians, renoviction not only causes financial hardship and immense stress for tenants, but the practice is also fundamentally changing the city's unique makeup and character.

While Encinitas is known for its idyllic beach culture, surfing and artistry, critics say the city is becoming increasingly stratified in favor of the uber-rich, pushing many longtime, less affluent residents out.

“We’re ending up with a lot of newer Encinitas residents with a much higher standard of living, a lot of them coming from out of state places like Chicago, New York, San Francisco, who work in tech-related fields and whatnot, and they don’t bat an eye at these rent prices — it’s just a whole new crop of people,” Marsh said. “They’re homogenizing Encinitas, whitewashing our culture and the funk, taking away the interesting people that have been the spirit and essence of this funky beach town in many cases for decades.”

“It’s going to lose the vibe that it’s had,” Reid said of Leucadia. “It’s one of the last coastal cities in San Diego that’s still true to its roots and the vibe. And these property owners are forcing a lot of it out and creating lots of change.”

Councilwoman Kellie Hinze said renovictions seem to be increasing throughout the city and pose a growing threat to the beach town’s singular culture, particularly in Leucadia.

“It’s definitely a threat to our character as being a haven for artists and people who may not be in tech making a hundred grand a year,” Hinze told The Coast News. “I don’t think that it’s a new phenomenon in Encinitas. But we need to be continually aware of this as forces change, in order to protect those folks who bring us so much vibrancy.”

And it’s not just in Encinitas.

No-fault evictions have become a “vehicle for gentrification” throughout San Diego County, Vera says, with numerous coastal cities struggling to reconcile their traditional character with the reality of property values that rise faster than paychecks for most of the middle class.

“The real way to tackle this is not just through procedural steps,” Vera said. “We can encourage development and add property value without jacking up the rental prices and evicting tenants.”

But when it comes to renoviction, there are two sides to the story.

In comments made to The Coast News, multiple property managers in Encinitas expressed that far from being an exploitive tactic, renovictions are simply a perfectly legal way for owners to make needed repairs to their residences while keeping rents on par with rising property values.

“If you can’t afford to live in a place, you can’t afford to live there,” said Jerry Johnson, a broker with San Diego-based KW Commercial. “Just because you’ve lived there all your life that doesn’t really matter, I mean that’s just the market.”

Renovations and resulting rate increases for tenants are just a natural part of the real estate cycle, Johnson said.

Johnson said that many landlords conducting renovictions may also be trying to make up for financial losses suffered during the COVID-19 pandemic when property managers statewide were often unable to collect rents or evict tenants due to state restrictions.

“You have a lot of landlords that haven’t even gotten rents in two years; that have bent over backward to accommodate these tenants,” Johnson said. “The market’s hot now and they have the opportunity to recoup their profits. At the end of the day, everyone has the right to get the highest and best value for their property.

“It’s a business decision. We here in Encinitas have had the pleasure of living in the last little quaint city that is extremely commercialized, but that’s fading out, that’s changing. What to do about that, I really don’t know, there’s only so much you can do. It’s expensive to live here and there’s no two ways about it, but I don’t think that the solution is to change the laws and lock in the rates for landlords.” while the court has not determined for certain the request for proposal for this year’s county fair was created specifically to benefit Ray Cammack Shows, there is enough evidence to grant the injunction.

“With respect to RFP 21-03, there is a probability of prevailing on the claim that the bid was tailored specifically for one bidder,” Medel wrote. “There is at least the appearance of favoritism which is contrary to public policy.”

The 22nd DAA released a statement Tuesday following the ruling, stating they are “working to determine what this means for the 2022 fair,” which is scheduled to begin June 8 at the Del Mar Fairgrounds.

“We are very concerned by some of the contentions upon which the Court’s ruling is apparently based, which have not been proven,” the 22nd DAA’s statement reads. “With fewer than 10 weeks before the start of the fair, the 22nd DAA is committed to doing everything it can to save this beloved summer ritual that is enjoyed by 1.5 million San Diegans and Californians. Fair officials are considering all options and hope to make a determination about how to proceed in the coming days.”

Ray Cammack Shows was awarded a five-year contract, worth approximately $80 million and granted control of 100% of the games, rides and food concessions in the carnival portion, or midway, of the fair.

According to Moot, the injunction does not prevent the fairgrounds from operating a new midway contract with a different carnival operator for the fair or operating a joint contract with Ray Cammack Shows and another midway operator. The injunction also will not apply to the next four years of their contract.

Medel said he weighed the potential harm of eliminating the 22nd DAA’s carnival operator two months before the fair against the harm of denying Talley Amusements a fair and competitive bidding process in making his decision.

The judge acknowledged that Katie Mueller, the fairground’s chief operating officer, had shared that “there is no time left to issue a new RFP, solicit bidders, score, and resolve any protests associated with a new RFP for a Master Carnival Operator; that could take months.”

However, concerns about potential violations of the public bidding process by the 22nd DAA ultimately prevailed in his ruling.

“An injunction functions as a tool to uphold the safeguards to public bidding to prevent bias and arbitrary factors influencing bid selection,” Medel wrote. “The integrity of the public bidding process as well as the integrity of governing institutions themselves require preliminary injunctive relief.”

A JUDGE’S RULING requires the 22nd District Agricultural Association to find a new midway operator for the 2022 San Diego County Fair scheduled to start June 8. Courtesy photo

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