Formal DOJ Complaint Submitted August 22, 2024

Jason H. Tarricone
Deputy Attorney General
Consumer Protection Section
Office of the Attorney General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA 94102

Subject: Formal Complaint and Request for Re-Investigation of Green Valley Corporation’s Compliance with DOJ Settlement Agreement – Case No. 23CV417467

Dear Deputy Attorney General Tarricone,

We are writing to formally request that the Office of the Attorney General re-open its investigation into Green Valley Corporation (GVC) and its affiliate GVC St George, a Delaware LLC registered by Green Valley Corporation, including the management of St. George Apartments in Santa Cruz, CA. This request is based on new developments that strongly suggest Green Valley Corporation - GVC St George is attempting to circumvent the legally binding settlement agreement reached with your office in Case No. 23CV417467, which was intended to protect tenants from unlawful rent increases and evictions.

Background

On June 2, 2023, Green Valley Corporation was involved in a settlement agreement with the Department of Justice, signed by yourself, representing the plaintiff, and Scott M. Pearson, Attorney for Green Valley Corporation, along with Summer Ludwick, COO for Green Valley Corporation. The settlement was the result of an investigation that led to $60,000 in punitive damages and over $330,000 in restitution for illegal rent practices, including rent increases of up to 151% and six illegal evictions. As part of this pre-discovery settlement, GVC and its affiliates and their covered properties, of which St George Apartments is one, agreed to a five-year plan that included strict compliance with the rent caps established under AB 1482, specifically as codified in the agreement as Section 1947.12, specifically written into the agreement and permanent injunction.

Current Issue

Green Valley Corporation - GVC St George is now attempting to utilize a one-time rent reset under a different section of AB 1482—specifically, Section 1947.13—in an apparent effort to circumvent the agreed-upon permanent injunction. This maneuver has resulted in rent increases for the 70 affected and long time residents of the 124 unit, mostly studio St. George Apartments ranging from 60% to 255%, with the average rent increase being over 100%, as well as many constructive evictions. Such increases are egregious and directly contradict the terms of the settlement agreement.

It is important to note that the notices provided to the residents are seriously flawed. The 12-month and 6-month notices issued by GVC cite a deed restriction that may not have been recorded and expired in 2011. Furthermore, another deed restriction, which was recorded and valid until 2021, is being disregarded in GVC’s narrative. GVC’s claim that they voluntarily kept rents low during this period may be materially false. These defects render the notices legally insufficient, and their validity should be scrutinized under applicable case law.

The attempt to apply a one-time reset, under Section 1947.13, which was not part of the original settlement agreement in Case No. 23CV417467 signed on June 2, 2023, is a clear violation of the terms that Green Valley Corporation and their affiliate GVC St George agreed to follow. This attempt to bypass the legal protections in place could result in the displacement of long-term residents, many of whom have already faced significant housing instability in the past, including homelessness.

Request for Action

Given these circumstances, we respectfully request that the Office of the Attorney General re-open its investigation into Green Valley Corporation and its affiliates to determine whether they are in violation of the settlement agreement. Specifically, I urge you to examine:

• Whether GVC’s attempt to implement a one-time rent reset under AB 1482 Section 1947.13 violates the permanent injunction agreed upon in the settlement.

• The legality and validity of the 12-month and 6-month notices issued to residents of St. George Apartments, particularly in light of the materially false statements regarding deed restrictions.

• The broader impact of these rent increases on the residents, many of whom face the risk of displacement and potential homelessness.

Attached is an addendum to the formal complaint filed with Attorney General Rob Bonta's office regarding excessive rent increases at St. George Apartments. This addendum includes seventeen signatures of current St. George Apartments residents, many of whom are elderly and disabled. Twelve of the seventeen residents are stating that the excessive rent increases, ranging from 60%, 100%, 150%, 200%, and up to 255%, put them in danger of displacement, including the possibility of homelessness.

The needs of the landlord must be balanced against the rights and needs of the tenants, especially those who are most vulnerable. The actions of GVC threaten to undermine the very protections that were established through the settlement agreement, and it is imperative that these actions are subjected to legal scrutiny.

Thank you for your attention to this matter. I trust that the Office of the Attorney General will take the necessary steps to ensure that Green Valley Corporation complies fully with the law and the terms of its settlement agreement.

Sincerely,

St George Residents for Tenant Protections

www.fight4stgeorgesantacruz.com

CC:
Rob Bonta, Attorney General
Office of the Attorney General
1300 "I" Street
Sacramento, CA 95814-2919

Bree Baccaglini, Deputy Attorney General
Consumer Protection Section
Office of the Attorney General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA 94102

Tina Charoenpong, Deputy Attorney General
Consumer Protection Section
Office of the Attorney General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA 94102

Tony Condotti, City Attorney
City of Santa Cruz
333 Church Street
Santa Cruz, CA 95060

Scott Newsome, District 4 Councilmember
809 Center Street, Room 10
Santa Cruz, CA 95060