City of Berkeley v. City of Berkeley Rent Stabilization Board

The ultimate legal question presented in this litigation is this: Did the City of Berkeley Rent Stabilization Board (Board) abuse its discretion, by exceeding the authority and powers imposed by its enabling ordinance, when it adopted new regulations it contends were designed to avoid unconstitutional confiscatory effects on landlords and to ensure landlords fair and reasonable levels of rents producing a fair return on their investment, as our Supreme Court has ruled to be constitutionally required? We will hold, in partially affirming and partially reversing the lower court, that the Board did not abuse its discretion in adopting these regulations and acted wholly within its authority in promulgating them.

The regulatory actions challenged here are as follows:

First, after public hearings and the receipt of expert economic evidence, the Board provided for a one-time increase in rent levels. It did so because it concluded its previous regulatory provisions had not adequately allowed rents to be adjusted for inflation, in accordance with the decision of our Supreme Court in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 169 [ 130 Cal.Rptr. 465 , 550 P.2d 1001 ]…

Although I fully concur in Justice Peterson's opinion, I write to emphasize the fundamental principles upon which my concurrence rests. First, as Justice Peterson states, it is undisputed that the sole authority in Berkeley to set and adjust rents, to ensure a fair return on investment in compliance with its constitutional mandate (Fisher v. City of Berkeley (1984) 37 Cal.3d 644 [ 209 Cal.Rptr. 682 , 693 P.2d 261 ]), and to promulgate regulations to accomplish those ends resides within the rent stabilization board (the Board). Second, since neither the state or federal Constitution nor any federal or state statute prohibits or preempts the regulations under attack (id., at p. 680), any limitation on the Board's discretionary power must come from the rent control ordinance itself. I do not find any language in the ordinance that specifically prohibits the subject regulations. In fact, there is nothing in the ordinance that assists or guides the Board in establishing or determining a fair return on investment except in regulation 1264, which was promulgated subsequent to the litigation herein and consequently not at issue in this case.

As Justice King notes in his dissent, the…

Thomas A. Seaton and Susan Burnett Luten for Intervener and Appellant.

Dagmar Searle, Lawrence & Harding, Christopher M. Harding, Kenneth L. Kutcher, Carl J. Lambert and Michael N. Koenig as Amici Curiae on behalf of Defendant and Appellant and Intervener and Appellant.

OPINION

PETERSON, P.J.

The ultimate legal question presented in this litigation is this: Did the City of Berkeley Rent Stabilization Board (Board) abuse its discretion, by exceeding the authority and powers imposed by its enabling ordinance, when it adopted new regulations it contends were designed to avoid unconstitutional confiscatory effects on landlords and to ensure landlords fair and reasonable levels of rents producing a fair return on their investment, as our Supreme Court has ruled to be constitutionally required? We will hold, in partially affirming and partially reversing the lower court, that the Board did not abuse its discretion in adopting these regulations and acted wholly within its authority in promulgating them.

The regulatory actions challenged here are as follows:

First, after public hearings and the receipt of expert economic evidence, the Board provided for a one-time increase in rent…