Landlords Sue to Block Bay Area Rent Control

Thursday, January 12, 2017
Helen Christophi
Courthouse News Service

A powerful landlord’s group has sued to block a rent-control law passed by voters in the Bay Area city of Richmond this past fall, the group’s second fight in a month over voter-approved measures many believe could address the area’s housing crisis.

The California Apartment Association, an industry group that represents 50,000 landlords in the state, claims in a lawsuit filed Jan. 6 in Contra Costa County Superior Court that the Richmond law, known as Measure L, essentially steals from landlords and gifts the booty to tenants in a “windfall” that violates the U.S. and California constitutions.

The association wants the measure declared unconstitutional, and preliminary and permanent injunctions barring Richmond from enforcing it. It had also sought a temporary restraining order to immediately block the law, which took effect on Dec. 30, but Contra Costa County Superior Court Judge Judith Craddick denied the request.

Craddick, however, scheduled an expedited hearing on the association’s request for the restraining order for Jan. 27.

“We were obviously disappointed the judge did not grant the temporary restraining order,” Joshua Howard, the association’s senior vice president for Northern California, said. “However, we were encouraged that she recognized the various important issues raised in our complaint.”

Measure L caps rent increases on apartment units built before 1995 to the rate of inflation – about three percent – and requires landlords to provide a valid reason for evicting a tenant, such as not paying rent. The initiative passed with 64 percent of the vote.

Though the suburb 15 minutes north of Oakland has thus far evaded the staggering rents found in much of the Bay Area, Richmond could become the epicenter of a legal battle that could see rent control overturned nationwide, according to Richmond Mayor Tom Butt, who has opposed rent-control measures in the city.

If the association loses its lawsuit, Butt said, it could appeal to the state and ultimately, to a U.S. Supreme Court shaped by President-elect Donald Trump that will be friendly toward landlords, he said.

“If it does in fact make it to the Supreme Court, it will most likely see a court that has new members appointed by Trump, so it’s liable to be a conservative-oriented court,” he said. “So it may be that this lawsuit has the best chance to prevail at the Supreme Court level.”

Unless Craddick grants the association’s restraining order, however, rent control will move forward in Richmond while the case potentially winds its way up, a process that could take half a decade, Butt said.

Tenants’ rights attorney Joseph Tobener of Tobener Ravenscroft in San Francisco said the lawsuit will more likely be thrown out of state court, as courts have routinely held local governments have a strong interest in protecting residents, such as the elderly, from being displaced.

Nor does Tobener believe the U.S. Supreme Court will agree to hear the case, which he said has repeatedly upheld the legitimacy of rent control.

“I don’t see rent control being overturned,” he said. “It’s already well settled.”

Tobener instead sees the Richmond lawsuit and another the association filed against fellow Bay Area city Mountain View as bellwethers of a revival in rent-control laws, as landlords challenge a growing number of cities that pass measures to stanch displacement amidst California’s housing crisis. The two cities are the first in the state to enact rent control measures in three decades.

In December, the association sued to block Mountain View’s rent control initiative, which voters approved with 53.4 percent of the vote in the general election.

South Pasadena is also looking at rent-control options, as are several other Bay Area cities, according to Leah Simon-Weisberg, legal director for tenants’ rights group Tenants Together. She declined to say which cities.

“We’re definitely seeing a resurgence in rent control,” Tobener said. “We’re experiencing a housing crisis that’s unparalleled in recent history. We’re seeing this amazing switch here where residents in these local jurisdictions are fed up and saying they can’t live here anymore and are looking for controls on skyrocketing rent.”

For its part, Measure L is identical to rent-control ordinances in San Francisco and Berkeley, which have been on the books for decades and whose provisions have been upheld by the courts, including the U.S. Supreme Court, according to Simon-Weisberg.

“It’s just the next step in their battle,” she said of the association’s lawsuit over Measure L. “They’re trying to prevent cities from doing it and trying to make it a very scary policy to adopt.”

In its lawsuit, the association claims Measure L amounts to an unconstitutional taking of private property: the requirement that landlords roll back rents to previous levels is akin to taking their property for “public use” without compensating them for their investment.

Richmond City Councilwoman Gayle McLaughlin disagreed with that assessment in an email Wednesday.

“This is a solid, fair and fully constitutional ordinance that was approved by two-thirds of the voters because our community at large understands that tenants should not have to face huge rent increases and unjust evictions,” she said.

Advocates contend rent control is effective for quickly addressing housing shortages like the Bay Area’s, where the number of jobs has outstripped the number of rental units needed to house workers, creating high rents in the process.

According to research firm RealFacts, average rents in Richmond increased by more than 24 percent between 2010 and 2014.

Rent-control policies are free, Simon-Weisberg added, making them an attractive alternative to building affordable housing, which is expensive for cities and takes time.

“When we don’t have enough money in our local budgets anyway, it’s a way of addressing a huge need,” she said. “It stops displacement and creates economic stability for the community.”

However, the association maintains rent-control laws discourage developers from building new housing and landlords from upgrading existing buildings, creating housing shortages and onerous rents. And, it doesn’t guarantee that a poorer tenant will get a rent-controlled apartment over a tenant with a six-figure salary, according to Howard.

“Rent control does not solve the underlying problem facing our community, and that’s the lack of quality affordable housing and the lack of supply of affordable housing,” Howard said. “Rent control will not build new housing.”

Howard warned Wednesday more lawsuits could be on the way. A rent-control ordinance slated for the June ballot in Santa Rosa north of San Francisco contains a rent rollback provision that the association believes is legally questionable, and the group is planning to review its push-back options after the election.

“If a city adopts an ordinance we feel is unconstitutional, if we feel there are extreme legal questions about it, we will challenge that ordinance in the most appropriate way possible,” he said.

Regardless of the lawsuit, Richmond’s McLaughlin vowed that Measure L will move forward with the city working right now to create a rent board as part of the statute’s implementation.

“It is truly a shame that the big landlords attempt to use their money and influence to try and stop the voice of the people in cities like Richmond and Mountain View,” she said.

Issue: 
FAIR USE NOTICE. Tenants Together is not the author of this article and the posting of this document does not imply any endorsement of the content by Tenants Together. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.

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