Justices Uphold Apartment Inspection Fees

The California Supreme Court on Monday upheld a Los Angeles city program that imposes a fee on landlords to pay for building inspections.

The Los Angeles program, aimed at locating and repairing slum housing, had been struck down by a Court of Appeal in 1999 on the grounds it violated Proposition 218, an anti-tax measure passed by state voters three years earlier.

Ninety cities joined Los Angeles in asking the state Supreme Court to rule in favor of the inspection program. San Jose has a rental inspection law almost identical to Los Angeles’, and other cities have been following the legal fight in hopes of creating similar programs to combat deteriorating apartment buildings.

Proposition 218, passed by nearly 57% of voters, required that any property-related fee be approved by a majority of the property owners or two-thirds of the general electorate.

The Los Angeles fee, put into place by the City Council in 1998, assessed a $1 monthly charge on each apartment in buildings with two or more units. Landlords pay the fees but can recover the costs from tenants. The program’s creation followed a report that found building inspectors neglected the city’s poorest neighborhoods.

The California Supreme Court’s 5-2 ruling said the program did not violate Proposition 218 because it was directed at business operations rather than property owners.

Los Angeles Deputy City Atty. Miguel Dager said the ruling will protect programs in other cities, including rent control, that rely on regulatory fees paid by property owners.

But opponents of the program said the ruling ignored voter intent.

“It creates a big hole in the taxpayer protections that were enacted under Proposition 218,” said Stephen McCutcheon Jr., an attorney for the Pacific Legal Foundation, a conservative property-rights group.

He chastised the state high court for creating “another opportunity for local governments to single out a particular group to fund something that everybody else wants.”

The Apartment Assn. of Los Angeles County, which brought the case, argued that the inspection fees violated Proposition 218 because they were levied only on property owners.

Justice Stanley Mosk, writing for the court, said the inspection fee was not levied on people solely because they owned property, which would have violated Proposition 218.

“Rather, it is imposed because the property is being rented,” Mosk wrote in Apartment Assn. of Los Angeles vs. City of Los Angeles, S082645. Once the property is no longer rented, the fee cannot be charged, Mosk said.

Justices Janice Rogers Brown and Marvin R. Baxter dissented. Brown, who wrote the dissent, said Californians passed Proposition 13 in 1978 to restrict the ability of government to impose taxes and charges on property owners.

“For almost two decades, however, they witnessed politicians evade this constitutional limitation,” Brown wrote. “The message of Proposition 218 is that they meant what they said. With the majority [of the court] turning a deaf ear to that message, we may well expect a future effort to stop politicians’ end-runs around Proposition 13.’ ”

Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which sponsored Proposition 218, said the court ignored the plain wording of the initiative. “We drafted it as clearly and expressly as we possibly could,” said Coupal.

Craig Mordoh, who represented the Apartment Assn. of Greater Los Angeles in the case, said the ruling “could free up cities to impose more fees.”

Los Angeles Councilman Mike Feuer said the court’s decision will “pave the way for improved housing conditions throughout Los Angeles.”

The City Council adopted the fee as part of a sweeping anti-slum plan, which established the first routine inspection program for all apartments in the city.

Since its creation, the program has raised about $20 million. If the city had lost the case, it would have been forced to pay the money back to the landlords, said Garry Pinney, general manager of the city’s housing department.

Councilman Alex Padilla said the court decision “will mean safer, more livable housing.”

Padilla’s northeast San Fernando Valley district has the highest rate of building and safety code violations in apartments, according to a recent series by The Times.

The series found the city inspection program has been hampered by inadequate resources. At the program’s current pace, it will inspect buildings once every six years, instead of once every three years, the original goal. The city has about 750,000 apartments.

Padilla said the city needs to beef up its inspection program to avoid incidents such as the recent collapse of an apartment building in Echo Park that killed one person and injured 36.

“In the northeast Valley, and throughout the city, it’s a time bomb,” Padilla said of slum conditions. “These resources freed up by the court will help us remedy that.”

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Times staff writers Tina Daunt and Patrick McGreevy contributed to this story.