Category: Bay Area

Mountain View’s Measure V seeks to impose rent control on pre-1995, multi-unit buildings (keyed to CPI but nonetheless between 2 and 5%). It also requires “just cause” for evictions. However, shortly after Measure V was approved by Mountain View voters, the California Apartment Association filed a lawsuit challenging its constitutionality, among other things, on the basis that it constitutes an “‘unlawful taking’ under the United States and California constitutions”.

Part of the dispute is that, in an effort to ease the burden of recent rent increases, Measure V rolls back rents to October 19, 2015 levels. It is difficult to imagine why this should be a problem, as retroactive rent ceilings were approved in the seminal case, Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129. Further, fighting over the end of 2015 as a benchmark may be futile, as this actually seems to have marked a turning point in the market. Birkenfeld also approved rent ceilings themselves, so long as they provided a “just and reasonable return”. The “CPI standard” employed by Measure V seems to have been sufficient in several Bay Area cities.

Further, a takings claim on the mere imposition of a rent control regime is a tough sell. While the eviction protections will remain intact during the challenge, a “physical takings” argument is unlikely to be successful where landlords have some method (like an owner move-in eviction) to recover possession for personal use (and the “just cause for eviction” provisions will go into effect notwithstanding the injunction). Meanwhile, “regulatory takings” require evidence of significant diminution in value. However, the disruptive effect of rent control on markets tends to actually increase the prices of rental property over time.

The most interesting thing about this lawsuit may be the allegation by Daniel DeBolt of the Mountain View Tenants Coalition (a group that promoted Measure V) that the City of Mountain View won’t be defending the measure against the California Apartment Association. Although, he has indicated that the Mountain View Tenants Coalition will defend the measure itself when it is allowed to intervene.

The City of Oakland has passed an emergency interim ordinance to curtail the effects of rent increases. While Oakland’s rent ordinance already prohibited rent increases exceeding the allowable annual rate (keyed to CPI adjustments), landlords could impose rent increases exceeding this rate (up to ten percent) for things like capital improvement passthroughs. (After all, everybody likes living in apartments that have roofs.) Also, two and three-unit, owner-occupied buildings had been exempt. Under Ordinance 13360, the owner-occupied exemption and CPI-exceeding increases are eliminated during the 90-day moratorium period. The moratorium also prevents unauthorized increases for substantially rehabilitated buildings.

There is, perhaps, a difference of opinion about whether constraining housing supply (by creating price ceilings and disincentives for tenants to move) actually puts upward pressure on housing prices overall. And, for now, this moratorium prevents covered rent increases for only 90 days. Maybe the moratorium will meet falling prices in a cooling market and have the desired effect of preventing displacement. Or, if the prohibitions become permanent, maybe we can track their effects in the next housing crisis.

The City of Berkeley follows Santa Monica and San Francisco in enacting regulations governing landlord-tenant “buyout” agreements.

Among other things, the new legislation requires disclosure to tenants of their rights under the ordinance, and it allows tenants to rescind an executed buyout agreement for up to thirty days. The ordinance was adopted on March 31, 2016 and becomes effective April 30, 2016. The Berkeley Rent Board has also generated required forms to comply with the ordinance.