RENT CONTROL AND PROPERTY RIGHTS

Nielsen Merksamer is expert on the complex constitutional and legal issues that govern rent control laws. The firm's lawyers have represented property owners and successfully litigated significant rent control and property rights issues for more than 20 years, both in the courts and before administrative agencies and rent control boards. After taking root in the East Coast, rent control ordinances were first enacted in California in the 1970s in communities with large student populations such as Berkeley. The first major rent control case decided by the California Supreme Court was Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, which struck down a Berkeley ordinance for failing to contain procedural safeguards. In 1977, Berkeley tenants placed another rent control measure on the ballot. Our firm represented the property owners who campaigned against the measure. In the course of that election campaign, the City attempted to take punitive action against certain property owners who contributed more than $250 (the limit imposed by Berkeley law) to the campaign committee opposing the rent control measure. On behalf of the property owners, we challenged the constitutionality of the $250 contribution limitation, representing the property owners all the way to the United States Supreme Court, where we prevailed in a frequently-cited eight to one decision which established the principle that limits on contributions to state or local ballot measure campaigns violate the United States Constitution (Citizens Against Rent Control v. City of Berkeley, 454 U.S. 290 (1981)). In 1980, the Berkeley voters approved another rent control law. We represented a group of property owners facially challenging that law in the case of Fisher v. Berkeley, 37 Cal.3d 644 (1985). The Supreme Court decision established numerous constitutional principles that still apply to protect property owners, including that owners are constitutionally entitled to periodic rent adjustments to offset the erosionary effects of inflation. Thus, the Fisher decision established the right of residential rental property owners to annual general adjustments, which are now common in rent control jurisdiction across the state. Fisher has been repeatedly cited and relied on in subsequent decisions by owners and property rights advocates. Over the past 20 years, a new and unique body of procedural and substantive law has developed governing the rights of property owners to fair rents and fair treatment in rent controlled jurisdictions. We regularly represent property owners in administrative proceedings before local rent control agencies and boards and in lawsuits involving rent control issues. A representative list of cases includes the following:

Levin Zemel Inc. v. City of Berkeley Rent Stabilization Board: We represented the owner of an apartment building who petitioned to the Rent Board for rent increases based on several theories, including maintenance net operating income; there were extensive administrative hearings including use of expert witnesses. After receiving an adverse decision from the Board, we filed a petition for writ of administrative mandamus in the Superior Court and prevailed; the Board appealed but shortly before oral argument settled by agreeing to the rent increases sought by the owner.

Hanerfeld v. City of Berkeley Rent Stabilization Board: We represented the owners of an apartment complex in administrative hearings and subsequent litigation seeking individual rent adjustments based on MNOI, inflation and capital improvements. We prevailed in Superior Court; the Rent Board did not appeal, and instead conformed its administrative decision to the court ruling. (1986 - 1990)

Mandacino v. Maggard: We represented a property owner/ realtor who signed ballot arguments against a proposed rent control initiative and against whom attorneys' fees were assessed in the Superior Court because of alleged misstatements in the argument. We were retained by a statewide association to represent the realtor on appeal and obtained reversal of the attorney fee award. (210 Cal.App.3d 1413 (1989).)

Yee v. City of Escondido: On behalf of the California Association of Realtors and National Association of Realtors, we filed an amicus brief in the United States Supreme Court supporting a mobile home park owner and arguing that a local rent control law governing mobile home parks "confiscated" a portion of the owner's equity in the property and transferred it to tenants. (503 U.S. 519 (1992).)

Munger/Berkeley Rent Stabilization Board: We represented the owners of an apartment building in two proceedings before the Rent Board seeking rent increases to offset the effects of inflation and to maintain net operating income, recovery for low rents in years before the imposition of rent control and recoupment of millions of dollars of capital improvements. After substantial administrative litigation, we prevailed in obtaining large rent increases for the client.

Rose Ventures III v. City of Oakland Housing, Residential Rent and Relocation Board: In this lawsuit in Alameda County Superior Court, we successfully represented the owner of luxury apartment buildings, obtaining a court order overturning a Rent Board decision granting tenants hundreds of thousands of dollars in rent reductions for alleged "reductions in service."

Munger v. City of Berkeley Rent Stabilization Board: As a result of prior administrative litigation (discussed above), the Rent Board had granted substantial rent ceiling increases to the property owner. However, when the Costa-Hawkins vacancy decontrol law went into effect, the Rent Board construed a provision of that law so as to extinguish some of the rent ceiling increases previously granted to the owner but which had not been implemented. We successfully represented the owner in administrative proceedings and a lawsuit challenging the Rent Board's interpretation of the Costa-Hawkins law. In January 2000, the Superior Court issued an extensive ruling in favor of the owner, rejecting the Rent Board's interpretation of the Costa-Hawkins law and safeguarding the owners' rent increases. The Rent Board has elected not to appeal and the decision is final.

Cwynar v. San Francisco: This is a lawsuit we filed challenging Section 209.10 of the San Francisco Planning Code and Proposition G, an initiative measure that amended the San Francisco rent control ordinance. We were successful in having the trial court enjoin and invalidate Section 209.10 which would have required property owners in San Francisco to obtain a so-called "conditional use permit" in order to move into their residences, in violation of the Ellis Act. The challenge to Proposition G involves complex constitutional issues, including takings claims. We successfully obtained a decision of the Court of Appeal recognizing a cause of action against Proposition G for constitutional relief and returning the case to the lower court for trial. This was a landmark opinion that addressed an owner's right to occupy his or her own residential apartment units. (90 Cal.App.4th 637 (2001).)

Quigg v. City & County of San Francisco: This is a lawsuit that we successfully filed challenging San Francisco Proposition H which amended the San Francisco rent control law to effectively eliminate the ability of rental property owners to obtain rent increases to compensate them for expenditures made for capital improvements. The trial court held that Proposition H was unconstitutional as it violated due process guarantees. The case is currently pending in the California Court of Appeal.

Berkeley Property Owners Association v. Berkeley Rent Stabilization Board: In this pending lawsuit, the firm represents property owners and a rental property owner association in challenging the legality of Rent Board practices over the past five years in setting annual general adjustments of rent for all owners in the City of Berkeley. Thus far the Superior Court and Court of Appeal have rejected the Rent Board's demurrer to the complaint and the case is proceeding towards trial.