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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.
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