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.