Valley Investments-Redwood LLC v. City of Alameda
| Decision Date | 10 April 2023 |
| Docket Number | 22-cv-06509-DMR |
| Parties | VALLEY INVESTMENTS-REDWOOD LLC, Plaintiff, v. CITY OF ALAMEDA, Defendant. |
| Court | U.S. District Court — Northern District of California |
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS RE DKT. NO. 10
Plaintiff Valley Investments doing business as Barnhill Marina & Boatyard alleges that three ordinances enacted by Defendant the City of Alameda (the “City”) violate its constitutional rights. The City now moves to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). [Docket No. 10 (“Mot.”).] Plaintiff opposed and the City replied. [Docket Nos. 15 (“Opp'n”), 16 (“Reply”).] The court held a hearing on January 12, 2023. For the reasons discussed below, the motion is granted.[1]
The following facts are derived from the complaint.[2] Barnhill Marina is a private marina located in the City of Alameda. Compl. ¶ 21. In December 2021, Plaintiff purchased Barnhill Marina “with the intent to rehabilitate and manage” it. Id. ¶ 24. The marina has fifty-six berths and accommodates dozens of floating homes and liveaboard vessels owned by third parties.[3] Id. ¶¶ 22, 25. Each owner is contractually obligated to pay Plaintiff a monthly berthing fee for their use of the berth connection and other land-side common facilities or amenities. Id. ¶ 28. The California Floating Home Residency Law (“FHRL”), Cal. Civ. Code § 800, et seq. governs the relationship between Plaintiff and residents of the floating homes. Id. Under the FHRL, owners are required to provide thirty days' notice before increasing the monthly berthing fee. Id.
In January 2022, Plaintiff notified each floating homeowner and liveaboard resident of its intent to increase berthing fees “to maintain the marina's solvency and functionality.” Compl. ¶ 30. These increased fees were to take effect on or before April 1, 2022. Id. ¶ 32. Prior to the scheduled increases, the berthing fees averaged $574 and were approximately 60-71% below market rate. Id. ¶ 31. According to Plaintiff, the prior owners were able to keep these low rates because they did not adequately maintain the premises, failed to procure flood insurance, enjoyed lower property tax obligations, and did not have the same debt service obligations. Id.
Plaintiff calculated a fee increase for each of the floating homes and vessels based on several factors, including their location and size. Compl. ¶ 32. Most berths saw a fee increase between 0-80% while the average fee increase was 30%. Id. One floating homeowner had his berthing fee raised by 178%. Id. Plaintiff alleges that it tried to minimize the financial strain on floating homeowners by, for example, accepting to suffer a net monthly loss and extending residents' deadline to pay the increased fee by thirty days. Id. ¶ 33. Plaintiff also offered to meet with homeowners and the Alameda Floating Home Association, which represents marina residents' interests, to discuss any concerns. Id. ¶ 34.
Around the same time, residents were asking the City to intervene and extend rent control provisions to Barnhill Marina. Compl. ¶¶ 34-35. On April 26, 2022, Plaintiff learned that the City was holding a Special Council Meeting to consider the adoption of an urgency ordinance to extend the City of Alameda's Rent Control, Limitations on Evictions, and Relocation Payments to Certain Displaced Tenants Ordinance (the “Rent Control Ordinance”) to “maritime residential tenancies including floating homes.” Id. ¶ 36.
The City's Rent Control Ordinance (Ordinance No. 3250) was first enacted in 2016 and is codified at Alameda Municipal Code section 6-58.10 et seq. Mot. at 3. It originally provided an exemption to “houseboats” without defining the term. See AMC § 6-58.20.L. According to the recitals, the Rent Control Ordinance has several key features:
(a) procedures for the review of rent increases applicable to all rental units, (b) procedures for the stabilization of rent increases above 5% for certain rental units, (c) limitations on the grounds for which landlords may terminate tenancies for tenants in all rental units and (d) a requirement that landlords pay relocation fees when terminating a tenancy for certain reasons, such as a “no cause” tenancy termination.
In addition, section 6-58.75 (Petition Process) allows “[a] Landlord or a Tenant [to] file a petition with the Program Administrator to request an upward or downward adjustment of the Maximum Allowable Rent or Certified Rent” and provides that “[i]n making an individual upward adjustment of Rent, the Hearing Officer shall grant an upward adjustment only if such an adjustment is necessary in order to provide the Landlord with a constitutionally required fair return on property.” AMC § 6-58.75(A), (G).
There are three ordinances at issue. The first was enacted at a Special Counsel Meeting on April 28, 2022 (the “April 28 Special Counsel Meeting”). It is titled “An Uncodified Urgency Ordinance to Take Effect Immediately Upon its Adoption Concerning Rent Control and Limitations on Evictions Applicable to Maritime Residential Tenancies Including Floating Homes.” [Docket No. 1-3 (“Ordinance No. 3317”).] Ordinance No. 3317 provides in relevant part that “a Rental Unit lawfully docked at a Marina shall be subject to, and a Tenant shall have the protection of, the City's Rent Control Ordinance, and the City's COVID-19 eviction moratorium.” Ordinance 3317, Section 2(A). It further states that “[f]or Rental Units subject to this Ordinance, no person who imposes rent for a Rental Unit shall increase the rent that was in effect on April 14, 2022 . . . Any notice of a rent increase served prior to (or after) April 14, 2022, which increase was to take effect on or after April 14, 2022, shall be void and have no force or effect.” Ordinance 3317, Section 2(E).
Plaintiff alleges that the latter provision-defining rent as “rent that had been paid on or before April 14, 2022”-was not included in the draft ordinance prepared by the City leading up to the April 28 Special Counsel Meeting. Id. ¶ 43.
Under Ordinance No. 3317, a Rental Unit is defined as “a Floating Home, other maritime residential tenancies, or other real property in the City of Alameda offered or available for Rent, and all other Housing Services in connection with the use or occupancy thereof.” Ordinance 3317, Section 1. “Floating Home” is given the same meaning as in Health and Safety Code section 18075.55(d): a floating structure which is (1) designed and built to be used, or is modified to be used, as a stationary waterborne residential dwelling; (2) has no mode of power of its own; (3) is dependent for utilities upon a continuous utility linkage to a source originating on shore; and (4) has a permanent continuous hookup to a shoreside sewage system. Id.
Plaintiff alleges that around April 14, 2022, the City's special counsel shared a proposed version of Ordinance No. 3317 with several of the floating homeowners at Barnhill Marina, but not with Plaintiff. Compl. ¶ 37. Plaintiff did not receive a letter, notice, or request for input from the City concerning the proposed ordinance or the April 28 Special Counsel Meeting. Id. Plaintiff asked the City to continue the Special Council Meeting by sixty days, but the City “refused or ignored” the request and proceeded with the meeting. Id. ¶ 38.
Plaintiff's counsel, Galin Luk, and a representative for Plaintiff, Drishti Narang, both attended and testified at the April 28 Special Council Meeting. Compl. ¶ 39. The City's mayor, Ezzy Ashcraft, also spoke at the meeting and stated that “she has heard many alarming accounts from residents of Barnhill Marina . . . [and] the owner's background does not excuse the kind of behavior experienced by the residents of Barnhill Marina.” Id. ¶ 40. The mayor asked the city attorney whether the proposed ordinance could be applied retroactively “to the date the ordinance was purportedly first published on April 14, 2022” or to April 1, 2022. Id. ¶ 41. Plaintiff alleges that the mayor sought to apply the ordinance retroactively to ensure that Plaintiff's fee increases, which were to take effect on April 1, 2022, “would be rendered ineffective.” Id. The mayor further indicated that “she expects the owners of Barnhill Marina to challenge the ordinance in court” and asked the city attorney about “the safest course of action with respect to the ordinance's retroactivity.” Id.
On May 17, 2022, the City Council approved and adopted Ordinance No. 3321, titled “An Uncodified Ordinance Concerning Rent Control and Limitations on Evictions Applicable to Maritime Residential Tenancies Including Floating Homes.” Id. ¶ 44; [Docket No. 1-4 (“Ordinance No. 3321”).] The substantive portions of Ordinance Nos. 3317 and 3321 are “identical or substantially identical.” Id. ¶ 44.
Although the Ordinances' findings differ in some ways, both state that “most floating home owners are older residents[,] many are on fixed income and there are few slips for floating homes in the Bay Area other than the ones in the Alameda marinas, rendering floating home owners an extremely vulnerable population, and easily subject to exploitation.” Ordinance No. 3317 at 2; Ordinance No 3321 at 2. The findings further assert that “recently floating homeowners with floating homes in the City of Alameda have been advised that the owner/operation of at least one marina in Alameda intends to increase their monthly rent by as much as 178%.” Ordinance No. 3317 at 3; Ordinance No. 3321 at 2. In addition, “the City of Alameda faces a . . . housing shortage and has declared a shelter crisis since 2018,” and “if floating home residents are not provided with [rent control]...
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