What’s New (and Old) in California Municipal Law? Rent Control Laws and Litigation

By Rachel H. Sommovilla^*

In recent years, residential rental prices have been rapidly increasing throughout the Bay Area. In response, a flurry of initiatives proposing rent control and just-cause eviction ordinances appeared on ballots in the November 2016 election. Voters approved these initiatives in Richmond (Measure L – the "Richmond Fair Rent, Just Cause for Eviction and Homeowner Protection Ordinance") and in Mountain View (Measure V – the "Mountain View Community Stabilization and Fair Rent Act").¹ The California Apartment Association (CAA) – a trade group representing owners, investors, developers, managers, and suppliers of residential rental properties – quickly and vigorously brought facial challenges to the approved measures in Richmond and Mountain View. The cities defended the ordinances, and CAA has since dropped both lawsuits.

While 2016 saw a sizeable uptick in local legislative activity surrounding rent control, rent control in California is nothing new. Cities across the state, including Berkeley, Santa Monica, San Francisco, and Los Angeles, among others, have had rent control since the 1970s and 1980s.² These laws provide for annual general rent increases and allow landlords to petition for individual adjustments in order to obtain a "fair" return. Courts have long held that rent control is a proper exercise of a city’s police power if the regulation is "reasonably calculated to eliminate excessive rents and at the same time provide landlords with a just and reasonable return on their property."³

Despite the longstanding consensus in the Courts regarding the legitimacy of rent control measures, CAA filed separate lawsuits asserting facial challenges to Measure L in Richmond and Measure V in Mountain View. In Richmond, CAA filed a complaint in January 2017 for declaratory and injunctive relief alleging: (1) unconstitutional taking; (2) due process violations; (5) equal protection violations; (4) unconstitutionally vague, ambiguous and overbroad; (5) unconstitutional exercise of judicial powers; (6) state law preemption; (7) violations of California’s Fair Employment and Housing Act; and (8) violations of the right to privacy.⁴ CAA asserted similar causes of action in its complaint against the City of Mountain View.