Carson Mobilehome Park Owners' Assn. v. City of Carson

• Citation: 197 Cal.Rptr. 284,672 P.2d 1297,35 Cal.3d 184
• Court: United States State Supreme Court (California)
• Decision Date: 19 December 1983
• Parties: , 672 P.2d 1297 CARSON MOBILEHOME PARK OWNERS ASSOCIATION, Plaintiff and Respondent, v. CITY OF CARSON, et al., Defendants and Appellants. L.A. 31705.

Page 284

197 Cal.Rptr. 284

35 Cal.3d 184, 672 P.2d 1297

CARSON MOBILEHOME PARK OWNERS ASSOCIATION, Plaintiff and Respondent, v. CITY OF CARSON, et al., Defendants and Appellants.

L.A. 31705.

Supreme Court of California.

Dec. 19, 1983.

Rehearing Denied Jan. 18, 1984.

Rochelle Brown, Richards, Watson, Dreyfuss & Gershon, Los Angeles, for defendants and appellants.

C. Brent Swanson, Lazof & Swanson, Santa Ana, for plaintiff and respondent.

BIRD, Chief Justice.

The sole issue presented by this case is whether the City of Carson's mobilehome rent control ordinance is constitutional on its face.

I.

In May of 1979, the Carson City Council adopted a 90-day moratorium on rent increases in mobilehome parks. The moratorium was designed to preserve the status quo while the city council considered what legislative solution, if any, would be appropriate to combat rapidly increasing mobilehome rents and a serious shortage of mobilehome rental spaces.

Approximately three months later, the city council adopted ordinance number 79-485U regulating rent increases and evictions in mobilehome parks. The ordinance was adopted as an urgency measure which was effective immediately. ¹

The ordinance, designed in light of this court's decision in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 130 Cal.Rptr. 465, 550 P.2d 1001, sets the rent charged for any particular space on May 1, 1979, as the maximum rent which can be charged for that space absent application to a rental review board. Base rents were set at the May 1, 1979, level because the rents then in effect had been chosen by park owners on the basis of market factors without regard to city-adopted rent control legislation.

The ordinance directs the Mobilehome Park Rental Review Board (Board) to "approve such rent increases as it determines to be just, fair and reasonable." In making that determination, the Board is to consider 12 factors specified in the ordinance as well as "any other factors it considers relevant." ²

The ordinance permits park owners to submit one application for all the spaces in a particular park. The Board must hold a hearing within 90 days of the date on which the application is submitted, and a final decision must be rendered within 15 days. Thus, the Board has a total of 105 days in which to act on a rent increase application. In the event the Board is unable to make its decision within the prescribed period, the ordinance indicates that an interim increase should be granted. ³ The ordinance also mandates review by the city council of its terms, effectiveness and continued necessity.

In addition, the ordinance includes provisions protecting those tenants not already covered by the Mobilehome Residency Law (Civ.Code, § 798 et seq.) from retaliatory or unreasonable eviction.

The trial court granted plaintiff's motion for a preliminary injunction enjoining the application or the enforcement of the ordinance. The court held that "[t]he ordinance, on its face, fail [sic ] to provide sufficient guidelines to determine a just and reasonable return on the property," and is thus unconstitutional.

The Court of Appeal found the ordinance's guidelines constitutionally sufficient but held the ordinance unconstitutional on other grounds. The appellate court felt that the delays inherent in the procedure for notice, hearing and decision, combined with the lack of any mechanism for a general rent adjustment, made the ordinance unconstitutionally confiscatory under Birkenfeld, supra, 17 Cal.3d 129, 130 Cal.Rptr. 465, 550 P.2d 1001.

After a careful review of the ordinance, it appears that there are both sufficient standards for the guidance of the Board and a constitutionally adequate rent adjustment mechanism.

II.

The first issue this court must decide is whether the ordinance is unconstitutional because it lacks sufficient standards to govern its administration. ⁴

Plaintiff contends that the ordinance's provisions for adjustment of maximum rents fail to provide sufficient standards to guide the Board in acting on applications and, thereby, constitute an unlawful delegation of legislative power.

An unconstitutional delegation of authority occurs only when a legislative body (1) leaves the resolution of fundamental policy issues to others or (2) fails to provide adequate direction for the implementation of that policy. (Kugler v. Yocum (1968) 69 Cal.2d 371, 376-377, 71 Cal.Rptr. 687, 445 P.2d 303.)

The general standard set forth in the Carson ordinance is that rent increases shall be granted by the Board upon a determination that they are "just, fair and reasonable." In making its determination, the Board is directed to consider 12 specified, but nonexclusive, relevant factors.

In Birkenfeld v. City of Berkeley, supra, 17 Cal.3d 129, 130 Cal.Rptr. 465, 550 P.2d 1001, this court determined that a similar provision provided constitutionally sufficient legislative guidance to the rent control board. The charter amendment in Birkenfeld listed six nonexclusive relevant factors the board was to consider in reviewing rent adjustment petitions. ⁵ The board was given additional guidance by the charter amendment's stated purpose of "counteracting the ill effects of 'rapidly rising and exorbitant rents exploiting [the housing] shortage.' " (Id., at p. 168, 130 Cal.Rptr. 465, 550 P.2d 1001.)

As this court noted in Birkenfeld, "[s]tandards sufficient for administrative application of a statute can be implied by the statutory purpose." (Ibid.) The purpose of the Carson ordinance is similar to that of the Berkeley Charter amendment--to counteract the ill effects of "a shortage of mobilehome spaces which has resulted in a low vacancy rate and rapidly rising space rents." This court's conclusion concerning the sufficiency of the standards provided by Berkeley's Charter amendment is equally apt here. "By stating its purpose and providing a nonexclusive illustrative list of relevant factors to be considered, the [ordinance] provides constitutionally sufficient legislative guidance to the Board for its determination of petitions for adjustments of maximum rents." (Ibid.)

That the ordinance does not articulate a formula for determining just what constitutes a just and reasonable return does not make it unconstitutional. Rent control agencies are not obliged by either the state or federal Constitution to fix rents by application of any particular method or formula. As the United States Supreme Court has stated, "[t]he Constitution does not bind ratemaking bodies to the service of any single formula or combination of formulas." (Power Comm'n v. Pipeline Co. (1942) 315 U.S. 575, 586, 62 S.Ct. 736, 743, 86 L.Ed. 1037; accord Power Comm'n v. Hope Gas Co. (1944) 320 U.S. 591, 601-602, 64 S.Ct. 281, 287-288, 88 L.Ed. 333.) The method of regulating prices is immaterial so long as the result achieved is constitutionally acceptable. (Hope Gas Co., supra, 320 U.S. at p. 602, 64 S.Ct. at p. 287 ["it is the result reached not the method employed which is controlling"].) In Birkenfeld, supra, 17 Cal.3d at page 165, 130 Cal.Rptr. 465, 550 P.2d 1001, this court relied on these United States Supreme Court cases to expressly reject the notion that any particular formula must be used in determining a just and reasonable return.

Accordingly, this court concludes that the trial court erred when it determined that the ordinance lacked sufficient standards to govern its administration.

III.

The next question to be addressed is the constitutionality of the ordinance's provisions for adjusting maximum rents.

Plaintiff contends that the delay inherent in the procedure for notice, hearing and decision, combined with the lack of any mechanism for automatic general rent increases, makes the Carson ordinance unconstitutionally confiscatory under Birkenfeld, supra, 17 Cal.3d 129, 130 Cal.Rptr. 465, 550 P.2d 1001.

In Birkenfeld, this court noted that rent control legislation "may be invalid on its face when its terms will not permit those who administer it to avoid confiscatory results in its application to the complaining parties." (Id., at p. 165, 130 Cal.Rptr. 465, 500 P.2d 1001.) Where rent ceilings of an indefinite duration are established, a mechanism must be provided for granting those increases necessary to permit landlords a just and reasonable return. "The mechanism is sufficient for the required purpose only if it is capable of providing adjustments in maximum rents without a substantially greater incidence and degree of delay than is practically necessary. 'Property may be as effectively taken by long- continued and unreasonable delay in putting an end to confiscatory rates as by an express affirmance of them ....' " (Id., at p. 169, 130 Cal.Rptr. 465, 500 P.2d 1001, quoting Smith v. Illinois Bell Tel. Co. (1926) 270 U.S. 587, 591, 46 S.Ct. 408, 410, 70 L.Ed. 747.) Some delay is, of course, inherent in all rent control procedures. However, only those delays which are longer than practically necessary to achieve the legitimate purposes of the legislation are constitutionally proscribed.

The Berkeley charter amendment in Birkenfeld was held to have transgressed constitutional limits by requiring the rent control board to follow a procedure which would make unreasonable delays in adjusting maximum rents inevitable. (Id., 17 Cal.3d at p. 169, 130 Cal.Rptr. 465, 550 P.2d 1001.)

The Birkenfeld charter amendment suffered from a number of procedural infirmities not found in the ordinance now before this court. As an initial matter, it must be remembered that the mechanism for granting rent increases is to be "examined in relation to the magnitude of the job to be done." (Birkenfeld, supra, 17 Cal.3d at p. 169, 130 Cal.Rptr. 465, 550 P.2d 1001.)

The job to be done under the Berkeley rent control amendment was staggering. At least 16,000 rental units were subject to the provisions of the amendment. (Id., at pp. 169-170, 130 Cal.Rptr. 465, 550 P.2d 1001.) The Berkeley rent...