Carson Joins 19 Cities to Appeal Rent-Control Case

Carson, Los Angeles and 18 other cities are appealing a federal appellate decision that the cities say could lead to overturning all mobile-home rent-control ordinances in the state.

A three-judge panel for the U.S. 9th Circuit Court of Appeals concluded last month that Santa Barbara’s mobile-home rent control may violate the U.S. Constitution by giving tenants an interest in landlords’ property without just compensation for the landlords.

Part of the decision suggests that courts may review a law or ordinance to determine whether it achieved the effect intended by the legislative body that passed it.

Although the author of the ruling, Judge Alex Kozinski, has declared himself a committed opponent of judicial activism, his theory of judicial review of the effects of municipal laws would cede to courts a vast increase in power, according to an attorney who is appealing the decision of a three-judge appellate panel to the full 9th Circuit Court of Appeals.

“This decision suggests that the courts will sit as a super Legislature to see if the ordinance serves the purpose it is supposed to serve,” said Rochelle Browne, an attorney in the office of Carson City Atty. Glenn Watson.

“It would be a marked departure from existing law in place since the 1930s. The law in this state has been for many years (that) if there is any conceivable rational basis for what the Legislature has done, the courts won’t interfere.”

Watson said, “We don’t think that the entire 9th Circuit will permit the courts to sit as second-guessers of the Legislature.”

Carson, which has 28 mobile-home parks with a total of 2,700 spaces, joined the case, along with 19 other cities, in support of the Santa Barbara city government.

Kozinski wrote in his opinion for the appellate panel, which sent the case back to District Court, that Santa Barbara mobile-home park owners Williams and Jean Hall could win their challenge to the local ordinance if they can prove their 71 tenants have gained money at the landlords’ expense because of rent control.

U.S. District Court Judge Laughlin Waters in Los Angeles had dismissed the case, accepting the city’s contention that courts traditionally have upheld rent-control laws that provide landlords with a fair return on their investment.

Robert J. Jagiello, a Lake Tahoe attorney representing the Halls, had contended that residents whose mobile homes are located in parks under rent control can command a higher price for their dwellings than those who live in parks where there are no caps on rent.

Kozinski agreed, writing in his opinion: “In effect, the tenant is given an economic interest in the land that he can use, sell or give away at his pleasure; this interest (or its monetary equivalent) is the tenant’s to keep or use.”

At least 40 cities in California regulate rents in mobile-home parks, according to Ken Baar, a Berkeley-based rent-control consultant.

Rented Facilities

Mobile-home parks generally rent land and facilities--from electricity and running water to swimming pools and tennis courts--to tenants who have bought their mobile homes to the site.

Unlike apartment tenants, mobile-home residents can sell their dwellings to others.

Because mobile-home park vacancy rates are less than 2% in California, the houses rarely are moved. Owners can veto the sale of a coach to someone they deem a bad credit risk. But under state law, mobile-home tenants cannot be evicted from their site unless they miss rent payments, bother their neighbors or violate other laws concerning mobile homes.

“I think any time you have price regulation, whether it’s the price of apartments or the price of milk, the consumer is really profiting,” said Browne. “What’s different here is that mobile-home owners get to sell their (profit). But it’s not clear that this extra money is being taken from the park owner.

Increased Value

“After all,” she added, “the landlord invited these people to come and stay on his property and he’s getting paid for it. The park owner’s property has been going up (in value) too.”

Watson said the Carson mobile-home rent-control law, which has been ruled acceptable by the state Supreme Court, was put “in jeopardy, unquestionably” by the federal appellate ruling.

Kozinski also suggested that the trial court examine whether the rent-control law was achieving its purpose of providing affordable housing.

The decision “opens up the door for challenging all kinds of city legislation and certainly every mobile-home rent-control ordinance in the state,” said Browne.

Challenge to Santa Monica

In Santa Monica, which has only two mobile-home parks, City Atty. Robert M. Myers said this portion of the ruling could be the basis for a ruling against all forms of rent control. The city’s strict laws apply to apartments as well as mobile homes.

“The court called into question whether there was an adequate basis to defend rent control,” Myers said. “The court was suggesting a new test to determine whether rent control is a good idea. That’s the part of the case that was particularly troubling to Santa Monica.”

In Santa Barbara, the city council authorized rent caps for mobile homes to alleviate a shortage of low- and moderate-income housing, according to City Atty. Steven Amerikaner. Tenants requested the action; the Halls were among the leaders of the fight against it, Amerikaner said.

The ordinance limits rent increases to 3% per year, or 75% of the annual increase in the consumer price index, whichever is greater. A landlord can request a higher increase, but if a tenant refuses, the dispute is submitted to binding arbitration. When a coach is sold, the owner may impose an immediate 10% rent increase.

Increase Not the Issue

The Halls never requested a rent increase higher than that allowed by the law. “That really has nothing to do with it,” said their attorney, Jagiello. “We’re not asking for a rent increase. We’re saying that the tenant is selling something that’s ours.”

Other cities backing the request for a rehearing include Westlake Village, Oxnard, Ventura, Simi Valley, West Covina and Hemet.

If the appeals court turns down the request, “we have a choice, to appeal to the (U.S.) Supreme Court or proceed back to trial,” Amerikaner said.