The property manager at the center of a tenant eviction dispute on Santa Barbara’s Westside has agreed to diversion for the next two years.

James Knapp and the City of Santa Barbara agreed on a settlement in Santa Barbara County Superior Court on Monday over alleged improper eviction notices sent to tenants at 215 Bath St. last May.

Knapp’s attorney, Rob Forouzandeh, called the settlement a victory for his client.

“We didn’t admit to any fault or wrongdoing,” Forouzandeh told Noozhawk. “For the next two years, he agrees to comply to all applicable laws related to residential real property. This is an easy no-brainer. We have always complied with the law, and we will continue to comply with the law.”

The settlement states that Knapp must obey all laws for two years; otherwise, the city may again pursue criminal charges.

Both sides have reason to be satisfied and unpleased with the settlement. For those who wanted a trial and criminal conviction of Knapp for allegedly serving improper eviction notices, the settlement falls short. However, it wasn’t as though the case was thrown out, and if Knapp slips up in any way, the city plans to pursue criminal charges again.

The settlement comes as Santa Barbara next month gears up for a City Council vote on a right-to-return ordinance that would allow tenants to return to their unit after a property owner makes a renovation, at no more than a 10% increase in the original rent they were paying. Most of the tenants at 215 Bath St. have long since moved, but nine remain, and three have unlawful detainers.

Forouzandeh said the entire situation has been politically motivated and that tenants have received misleading advice from the Legal Aid Foundation of Santa Barbara County, a group that he says is using the tenants and the property to build support for strengthening the city’s just-cause eviction ordinance.

“We believe that Legal Aid has given them the bad advice,” Forouzandeh said. “They are trying to make a political statement and are ending up costing their tenants.”

City Attorney Denny Wei did not discuss any politics behind the case.

“The defendant was placed on two years diversion, or else criminal proceedings will be re-instituted,” he said.

The hearing on Monday featured a packed room of tenants who testified. Forouzandeh appeared via Zoom from his vehicle about 40 minutes late.

The settlement was reached under California Penal Code 1001.95. Wei said the city has settled for diversion with property owners many times in the past.

The settlement includes many stipulations.

The property owners also must hire an on-site property manager and provide the person’s name, telephone number and email address to the tenants. Knapp must provide proof of taking that action within 30 days.

The settlement was agreed up on Monday in Superior Court Judge Raimundo Montes do Oca’s courtroom, but Knapp has been ordered to appear on April 28 to show proof that the site manager has been hired.

Forouzandeh said Knapp has already hired the manager.

“We hired an on-site manager many, many months ago and we gave them notice, and these folks continue to say there’s no on-site manager,” Forouzandeh said.

The settlement also states that Knapp must be directly accessible to City of Santa Barbara employees and have the authority to respond to any issues that those employees raise regarding the property.

In addition, the settlement states that the property owners cannot reduce or eliminate housing services required by a lease, contract or law, which includes the elimination of parking if provided in the tenant’s lease or contract, or access to common areas or amenities, “except as necessary to comply with court order or local or state law, or to lawfully create an accessory dwelling unit or additional housing.”

The City of Santa Barbara’s prosecution unit filed charges last May against the property manager alleging that he terminated 11 tenancies without just cause and failed to serve proper permits.

Knapp, who is an owner of the property along with Austin Herlihy and Chris Parker, had claimed that it was technical error, and that one permit record was not filed.

Forouzandeh said the city’s just-cause eviction ordinance is vague.

The apartment complex has emerged as a symbol of a fierce debate in Santa Barbara over housing and rising rental costs in a city that has the second-highest poverty rate in the state and that is in need of more affordable housing.

Some of the tenants at the three-building complex say they have been victims of harassment and systematically targeted for eviction so that the property owners could bring in international students and rent by bed, instead of room, which would rake in significantly higher rents.

Three of the tenants currently have unlawful detainers filed against them, in a civil manner, and those cases are moving forward moving through the discovery process.

There are about nine tenants left in the 52-unit building. Some of the others have received tenant displacement payouts of as much as $30,000, far higher than the $3,500 that the city requires.

Forouzandeh said all of the tenants have been offered the opportunity to move to other units that have already been renovated, but some have declined.

“Every single one has been offered a replacement unit and a similar unit in the complex,” he said. “Some of these folks, unfortunately, are trying to make a political statement and aren’t accepting.”

The situation, however, is more layered, and why the property owner is facing diversion.

According to what tenants allege in court records, they were offered to move into units, but it came with conditions, into units that were much smaller or needed repairs, or at significantly higher rents.

A least one of the tenants accepted a relocation offer, but the property owners rejected the move.

In addition, tenants were told in writing never to contact the onsite manager.

The owners bought the building in 2023 for about $16 million.

To read an overview of how the situation exploded, click here: