Cotati Alliance for Better Housing v. City of Cotati

In this case we are asked to define the constitutional limits of economic regulation in the field of rental housing. We hold that a local rent control ordinance which requires that landlords receive a fair and reasonable return on their investment is constitutionally valid on its face as a form of economic regulation reasonably related to the furtherance of a legitimate governmental purpose. Further, we hold that provisions of the ordinance fixing the maximum rent which can be charged are reasonably calculated to eliminate excessive rents and, at the same time, provide landlords with a just and reasonable return on their property as that terminology was utilized by the California Supreme Court in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 165 [ 130 Cal.Rptr. 465 , 550 P.2d 1001 ], On its face the ordinance is not unconstitutionally confiscatory since it does not have a necessary effect of lowering rents more than could be reasonably considered to be required for its stated purpose.

On November 13, 1979, the City Council of the City of Cotati approved and adopted an ordinance entitled “Cotati Rent Stabilization Ordinance.” Cotati Alliance for Better Housing…