Federal Court Upholds California Rent Control

The federal appeals court that covers nine western states has upheld a
California town’s rent-control law, overturning a lower-court ruling
that said it denied owners a fair return on their investment.

On
Dec. 22, the 9th Circuit Court of Appeals rejected a trailer-park
owner’s challenge to the law. Daniel Guggenheim, the owner of a
mobile-home park in Goleta, had sued the city, claiming that its
rent-control ordinance illegally restricted his profits.

The court
disagreed. “The Guggenheims bought a trailer park burdened by rent
control, and had no concrete reason to believe they would get something
much more valuable, because of hoped for legal changes, than what they
had,” Judge Andrew J. Kleinfeld wrote.

Goleta, a city of about
30,000 people near Santa Barbara, was not incorporated yet when
Guggenheim bought the mobile-home park in 1997, but the units were
covered by rent control. When the city incorporated in 2002, it adopted
an identical rent-control ordinance.

The decision is good news for
mobile-home residents across California. In the Napa Valley town of
Calistoga, the owners of two trailer parks are trying to get around
local ordinances that limit rent increases to the cost of living index,
unless the landlord can document expenses that prove they need more.
Spaces in the parks usually rent for about $400 a month. The owners
claim that market rents would be $600 or $700.

“There is no other
industry that claims it should have government-guaranteed profits each
year,” Calistoga mobile-home resident Lorry Hood told the Napa Valley
Register.  “Unless park owners now come to the table with proper
financial information showing they have legitimate expenses, they can no
longer expect to increase rents more than what is allowed by
ordinance.”