Posted by: Patricia Salkin | October 1, 2015

Ninth Circuit Court of Appeals Finds Even if Owner’s Claims Were Construed as an As-Applied Attack, No Regulatory Taking Occurred

Rancho de Calistoga (“the Park”) is a mobile home park located in Calistoga, California, which encompasses 26.5 acres, was originally developed by Hal C. Aguirre and R.C. Roberts. When the Roberts and Aguirre partnership dissolved in the mid–1970’s, one of the parcels was transferred to Aguirre, who formed Rancho de Calistoga (“Rancho”). The City of Calistoga had no form of mobile home rent control until 1984, when the City adopted an ordinance that enabled mobile home park tenants to challenge rent increases. The ordinance authorized a yearly rent increase equal to the lesser of 100% of the percent change in the Consumer Price Index or 6% of the base rent. In 2010, Rancho decided to notice a rent increase from $471.39 to $625 per month, but an administrative hearing officer, W. Scott Snowden, issued a decision in which he rejected Rancho’s request and instead allowed a rent increase to a total of $537.59 per space per month. Rancho filed a Petition for Writ of Administrative Mandamus in the Napa County Superior Court against the city and administrative hearing officer, asserting regulatory takings and separate “as-applied private takings” challenges to city’s mobile home rent control ordinance, as well as due process and equal protection claims against officer. The United States District Court for the Northern District of California, granted city’s motion to dismiss.

As to the as-applied regulatory takings claim, Rancho argued that even if the taking was for a public purpose, the rent subsidy should be paid by the government if the rent is neither excessive nor the result of monopoly power. The court found, however, that the argument was in fact just another formulation of a facial attack on the ordinance. Even if the claim were cognizable through an as-applied attack, the court found it would fail because it was not a regulatory actions that was functionally equivalent to a classic taking in which government directly appropriates private property or ousts the owner. Even though Rancho claimed the diminution in market value from $16,580,000 to $11,850,000 under rent control, or 28.53%, as well as lost income, the court found this economic impact was an inevitable consequence of the rent-control scheme but not an unconstitutional one. Rancho also filed a separate “private takings claim,” arguing that the application of Ordinance 644 to rent increases constituted an unconstitutional private taking because any purported “public use” is pretextual. However, this argument failed because it was simply a reframing of a facial challenge to the ordinance through an attack on the stated purposes of the rent-control scheme.

Rancho’s equal protection claim was analyzed under the rational basis review because mobile home park owners are not a suspect class. Here, the ordinance articulated just distinguishing characteristics, including the potential hardship posed by rent increases and the fact that mobile home park residents “are in a unique position in that they have made a substantial investment in a residence for which space is rented or leased” and the associated relocation costs. Furthermore, there was no evidence that Snowden’s decision was politically motivated or otherwise arbitrary. Accordingly, the court affirmed the district court’s dismissal of Rancho’s due process and equal protection claims.

Rancho De Calistoga v City of Calistoga, 2015 WL 5158703 (9th Cir. CA (CA) 9/3/2015)

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