Rental Property Association Pursues Legal Action Over Temporary Rent Freeze
Tracy Lehr
SANTA BARBARA, Calif. (KEYT) – The city of Santa Barbara’s temporary rent freeze has led to a lawsuit.
On February 26th, the city’s temporary rent freeze went into place, officially capping rent for a good chunk of units through 2026.
Members of the Santa Barbara Rental Property Association and former city attorney Barry Cappello of Cappello & Noël LLP made an announcement on the steps of city hall on Tuesday.
But now, opponents are fighting back with lawsuits, claiming the freeze is “unconstitutional” and will only result in a deteriorating housing market.
Cappello said it won’t be filed this week, but will be filed soon.
“My clients want this council to back off and listen to them and give them an opportunity to prove to the city that rent stabilization, control ,whatever you call it is a very, very sensitive thing, you don’t jump into this, it is something that has been tested and it has failed,” said Cappello.
Attorneys David Edholm and Richard Lloyd are working for Cappello on this issue.
They call the rent freeze ordinance illegal and released the following:
“The Santa Barbara City Council voted at its January 13, 2026 meeting to enact a Temporary Rent Increase Moratorium Ordinance. The rent freeze began 30 days following the second City Council reading, and went into effect on February 26. The city also directed its staff to draft a permanent “rent stabilization” program that would go into effect by the end of the year.
The SBRPA contends that the rent freeze and proposed rent stabilization program represent an unconstitutional taking and violate the due process and equal protection clauses, as well as unlawfully interfering with private contracts prohibited by the Contracts Clause.”
SBRPA retained Cappello & Noël to pursue legal recourse to invalidate the temporary freeze, aswell as halt work on the permanent ordinance.
According to a statement by the SBRPA:
“In an astonishing display of constitutional disregard, the Santa Barbara City Council proposed in October rent control with a rent cap tied to just 60% of CPI—a policy that represents nothing less than the unconditional surrender of property rights. In addition, the City Council then passed, on a 4-3 vote, a rent freeze that deprives landlords of a Fair Market Return on investments. Wrapped in the language of ‘rent stabilization,’ the proposals directly violate established law, ignore economic reality, and mislead tenant advocacy groups into believing the city has authority it simply does not possess.”
“Rising taxes, insurance and maintenance costs are hitting property owners hard,” says Barry Cappello, Cappello & Noël managing partner. “Rent stabilization is bad economics. Owners need a return on their investment even as costs rise and must keep their property in a first-rate and safe condition. Rent control has proven over the years that when housing stock is not maintained, housing conditions for the tenants worsen.”
Cappello says, “We intend to follow this process through to the end and make sure either theCity Council rights this wrong or a court with proper jurisdiction orders it stricken.”
SBRPA President Betty Jeppesen said she rents out two units.
She believes the freeze or a future rent stabilization ordinance could lead to properties being put up for sale and fewer rental units in the city.
“We are trying to get justice for landlords, this is an unconstitutional imposition of government regulation that is not allowed and it is unjustly putting the burden on one industry instead of the public or the government,” said Jeppesen, who is also an attorney.
Tenants including Corina Svacina said a potential lawsuit would dash hopes of everyone coming to the table to work together.
“This lawsuit is going to cost the city money if the landlords are really going to go after them,” said Svacina, “all we are asking is for one pause of the rent, so we can all regroup and talk about what really works for the city and how we can improve the quality of housing here in Santa Barbara “
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