Santa Monica Loses Its Challenge of State Law on Apartment Rentals

The California Supreme Court on Wednesday rejected a constitutional challenge by Santa Monica authorities to a state law that bars cities from preventing landlords from going out of the residential rental business.

The law, enacted in 1985, was aimed at overturning a controversial ruling by the court the year before under Chief Justice Rose Elizabeth Bird. The Bird court had upheld a novel Santa Monica rent control law requiring property owners to obtain city approval before evicting tenants in order to demolish or otherwise remove rental units from the market.

The Santa Monica law was enacted to counteract a 15-month so-called “destruction derby” in which 1,300 rental units were razed in the late 1970s. Under its provisions, landlords were allowed to go out of business only if they could not earn a “fair return” on rental units, the property was uninhabitable, or if the owners planned to develop new units for low-income families.

The Bird court acknowledged that the city law might represent an intrusion on an individual’s choice to remain in a business or occupation, but concluded that the measure was a constitutionally permissible means of maintaining adequate rental housing.

After widespread protests by property owners, the Legislature passed the 1985 law, known as the Ellis Act, expressly stating an intent to overturn the justices’ ruling.

The act provides that no public entity may “compel the owner of any residential real property to offer, or continue to offer, accommodations in the property for rent or lease.”

The city and the Santa Monica Rent Control Board responded with an emergency measure, reasserting the city’s limitations on landlords on the grounds that without such controls renters would be unfairly uprooted from their homes.

After local landlords began evicting tenants under the 1985 state law, city authorities launched a legal attack on the Ellis Act, contending that it intruded on the home-rule authority that the state Constitution gives municipalities.

However, last July, a state Court of Appeal in Los Angeles upheld the validity of the state law, concluding that the Legislature was within its authority in protecting the ability of landlords to go out of business.

The panel, in a unanimous opinion by Appellate Justice Mildred Lillie, held that Santa Monica’s removal and eviction controls were preempted by the state law and thus were invalid.

In their appeal to the state Supreme Court, attorneys for the city and its Rent Control Board argued that the state law infringed on the right of municipalities to “fashion unique solutions” to local housing problems. By eliminating local protections for renters, the state law would inevitably result in the displacement of numerous poor and elderly tenants, the officials contended.

The high court refused to review the case in a brief order signed by Chief Justice Malcolm M. Lucas.

Christopher M. Harding, a Santa Monica attorney for a group of landlords involved in the case, welcomed Wednesday’s action by the court. “We felt all along that the Ellis Act was constitutional,” he said. “We’re pleased that that aspect of the act overturning the 1984 ruling has been upheld.”

Santa Monica Deputy City Atty. Barry A. Rosenbaum expressed disappointment. “We believe this is an important issue and that it was wrongly decided by the Court of Appeal,” he said. Rosenbaum noted, however, that the city is considering other measures. One would be an ordinance requiring landlords to take steps to replace rental units they remove.

In another action Wednesday, the justices left intact a state appellate court ruling last July that barred rock singer John (Ozzy) Osbourne and CBS Records from being sued by the parents of a 19-year-old youth who killed himself after he listened to an Osbourne recording allegedly urging suicide.