As the City of Santa Barbara moves forward with a permanent rent stabilization ordinance, it also faces a lawsuit for the temporary rent freeze.
Four property owners along with the Santa Barbara Rental Property Association filed a lawsuit on Friday claiming that the temporary ordinance is unconstitutional and doesn’t have a pathway for property owners to apply for exemptions based on economic hardships or emergency circumstances.
“Defendant City Council abused its discretion in introducing and adopting the ordinances and failed to technically comply with its own charter,” the lawsuit states. “Councilmembers (Meagan) Harmon, (Wendy) Santamaria, (Kristen) Sneddon and (Oscar) Gutierrez — each of whom voted in favor of the Ordinances — recklessly hastened the legislative process.”
City spokesman Bryan Latchford told Noozhawk that the city is aware of the lawsuit but has not been formally served or had time to “meaningfully review” the court filings.
“The temporary rent freeze remains in effect while the legal challenge proceeds,” Latchford said. “The City Attorney’s Office will be actively defending the lawsuit while also continuing to support the city as we move forward with the drafting of a permanent ordinance for review and approval.”
A former city attorney, Barry Cappello, is representing the Santa Barbara Rental Property Association and property owners in the legal challenge.
Cappello spoke about the lawsuit on Tuesday during the City Council’s discussion on the permanent rent stabilization ordinance.
Specifically, he noted that city staff recommended the stabilization plan to include a pathway for property owners to receive a “fair return” on revenue not received during the rent freeze, highlighting how the temporary rent freeze does not include a petition pathway or exceptions for property owners.
“This lawsuit that we filed, we’re happy to dismiss it,” Cappello said. “We’re happy not to take your money. We’re happy not to take the citizens’ money, and it will be significant, believe me.”
The lawsuit also alleges that property owners have no way to seek an allowance to raise rent based on economic hardships or an emergency situation.
“Take the time. Put your rent freeze ordinance aside,” Cappello said. “Make the proper decisions that you need.”
Cappello was the city attorney from 1971-77 and is now part of the law firm Cappello & Noël LLP.
He and members of the Santa Barbara Rental Property Association announced the intent to file a lawsuit last month on the steps of City Hall.
The lawsuit alleges that during ordinance hearings, concerns from property owners “fell on deaf ears” and that some council members “laughed, shook their heads or rolled their eyes” at public comments.
The four property owners involved in the lawsuit are Teresa Patiño; JKRK L.P., which lists Robert Kooyman as an agent; 3442 Richland LLC, run by Michael Cheng; and 1501 SB LLC, which is registered to John Youngson, according to the California Secretary of State business database.
The lawsuit states that Patiño rents out a duplex at 1315 Blanchard St. below the market rate. However, the rate has become “unsustainable” because of financial obligations and required repairs and improvements.
Due to the building being built in 1931, the lawsuit states that it is more susceptible to mold, structural issues and other required improvements.
“Ms. Patiño is required by law to make such repairs, but she may not be able to afford to make such repairs under the existing rent structure that is frozen based on the Rent Freeze Ordinance,” the lawsuit states.
Additionally, the lawsuit states that Patiño earned $80,000 from the Blanchard Street property in 2025, but because of “debt obligations and operating expenses,” she profited only $8,900 from the property.
The lawsuit states that planned repairs were put on hold for 123 E. Micheltorena St., owned by JKRK, because of the rent freeze.
Specifically, a roof replacement, a balcony repair project and a window replacement project are on pause because of the inability to raise rents, the lawsuit alleges.
In addition, 3442 Richland LLC represents a property at 3442 Richland Drive, owned by two senior citizens who also paused planned repairs because of the rent freeze.
The lawsuit also alleges that the owners for property represented by 1501 SB LLC expect to make negative income this year because of the inability to raise rent and the cost of keeping up with the property.
The temporary moratorium on rent increases for some properties went into effect at the end of February and will expire on Dec. 31 or when a permanent rent stabilization ordinance is adopted by the city, whichever is first.
The ordinance freezes the base rent for certain units and prevents the landlord from increasing it.
Base rent is defined in the ordinance as the rental amount in effect on Dec. 16, 2025, for rental agreements existing on or before that date, or the rent established upon initial occupancy for tenancies that started after that date.
The freeze does not apply to units built after 1995; single-family homes; most condos; transient occupancies, institutional and government housing; and units subject to a rent affordability covenant or the Section 8 Housing Choice Voucher Program.
