Preview
State Bar # 137588
City Attorney
Mountain View, California 94041
State Bar #136253
ktiedemann@goldfarblipman.com
State Bar # 172981
clee@goldfarblipman.com
GOLDFARB & LIPMAN LLP
Facsimile: (510) 836-1035
CITY OF MOUNTAIN VIEW, MOUNTAIN
VIEW RENTAL HOUSING COMMITTEE
STATE OF CALIFORNIA
FOR THE COUNTY OF SANTA CLARA, UNLIMITED JURISDICTION
Plaintiff, AUTHORITIES IN SUPPORT OF
DEMURRER BY DEFENDANTS CITY
OF MOUNTAIN VIEW AND
MOUNTAIN VIEW RENTAL HOUSING
CITY OF MOUNTAIN VIEW, MOUNTAIN COMMITTEE TO COMPLAINT FOR
VIEW RENTAL HOUSING COMMITTEE and
Goldfarb &
1300 Clay Street
DATE: June 5, 2018
Eleventh Floor TIME: 9:00 a.m.
California
DEPT.: 13
JUDGE: Hon. James L. Stoelker
510 836-1035 FAX
Action Filed: February 6, 2018
[Exempt from Filing Fee (Gov. Code, §6103)]
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
TABLE OF CONTENTS
MMARY OF ARGUMENT ................................................. 5
II. MATERIAL ALLEGATIONS AND J .................. 6
A. The Act....................................................................................................................
Redwood Villa's Facility and the Allegations in the Complaint. ............................ 7
III. STANDARD OF REVIEW ................................................................................................ 9
IV. THE ACT IS UNDENIABLY CONS .............................. 9
V. REDWOOD VILLA'S AS-APPLIED
ERITS. ................................................. 11
A. In Bypassing the Petition Process, Redwood Villa Failed to Exhaust
Administrative Remedies ...................................................................................... 12
B. Redwood Villa's Claims Lack Ripeness. .............................................................. 13
C. The CSFRA is Entirely Consistent With the California and U.S.
Constitutions As Applied to Redwood Villa. ....................................................... 15
1. The CSFRA Does Not Result in a Regulatory Taking. ............................ 15
2. Plaintiff's Impairment of Contracts Claim is Equally Flawed, as
Rollbacks, are Constitutional. ................................................................... 16
Goldfarb & VI. PLAINTIFF'S "VESTED RIGHTS" ARGUMENT FAILS, AS ITS
1300 Clay Street ERMIT IS UNAFFECTED BY APPLICATION OF
Eleventh Floor THE CSFRA. ....................................................................................................................
California
VII. CONCLUSION ...............................................................................................................
510 836-1035 FAX
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
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TABLE OF AUTHORITIES
Page(s)
Action Apt. Ass'n v. Santa Monica Rent Control Bd
(2001) 94 Cal.App.4th 587 ................................................................................................12, 1
(1986) 184 Cal.App.3d Supp.1 ................................................................................................17
Birkenfeld v. Berkeley
(1976) 17 Cal.3d 129 ..........................................................................................................
(1985) 39 Cal.3d 311 .........................................................................................................
California Apartment Association v. City of Mountain View
urt Case No. 16-CV-304253 ...............................................................7
California Building Industry Assn. v. City of San Jose
(2015) 61 Cal.4th 435 .........................................................................................................
Cotati Alliance for Better Hous. v. City of Cotati
(1983) 148 Cal.App.3d 280 .....................................................................................................
Garavatti v. Fairfax Planning Commission
(1971) 22 Cal.App.3d 145 ......................................................................................................
Goat Hill Tavern v. City of Costa Mesa
(1992) 6 Cal.App.4th 1519 .....................................................................................................
Goldfarb &
1300 Clay Street
(1970) 9 Cal.App.3d 909 ...................................................................................................12,
Eleventh Floor
California
(1984) 155 Cal.App.3d 435 ...............................................................................................16, 18
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Kasler v. Lockyer
(2000) 23 Cal.4th 472 .........................................................................................................
(1997) 16 Cal.4th 761 .........................................................................................................
(1991) 54 Cal.3d 492 ..........................................................................................................
(2005) 544 U.S. 528 ...........................................................................................................
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MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
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Long Beach Equities, Inc. v. County of Ventura
(1991) 231 Cal.App.3d 1016 ...................................................................................................1
Malibu Mountains Recreation, Inc. v. County of Los Angeles
(1998) 67 Cal.App.4th 359 .....................................................................................................
Metcalf v. County of Los Angeles
(1944) 24 Cal.2d 267 .........................................................................................................1
(1984) 157 Cal.App.3d 887 .....................................................................................................
Pan Pacific Properties, Inc. v. County of Santa Cruz
(1978) 81 Cal.App.3d 244 ......................................................................................................
Pennell v. City of San Jose
(1988) 485 U.S. 1 .............................................................................................................
(1999) 19 Cal.4th 952 ........................................................................................................1
(1995) 9 Cal.4th 1069 .........................................................................................................
(1986) 185 Cal.App.3d 1232 ...................................................................................................1
California Civil Code section 827.............................................................................................
Other Authorities
Goldfarb & California Constitution Article I, Section 7 ..................................................................................
1300 Clay Street
Eleventh Floor California Constitution Article I, Section 9 ..................................................................................
California
Mountain View Community Stabil
510 836-1035 FAX
("CSFRA: or "the Act") ....................................................................................... 5, 6, 7,
U.S. Constitution Fourteenth Amendment...........................................................................9, 10, 11
U.S. Constitution, Article I, Section 10 ......................................................................................
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MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
INTRODUCTION AND SUMMARY OF ARGUMENT
Alarmed by rising rents and no-cau the City of Mountain View
("City") qualified and approved a ballot measure, Measure V, in November 2016 to protect
renters while guaranteeing that landlords will earn a fair return on their property. Measure V's
passage by City voters enacted the "Mountain View Community Stabilization and Fair Rent Act"
("CSFRA" or "the Act"), which amended the Carter to impose rent
ithin the City. The CSFRA, and
implementing regulations, contain clear provisio
petition the City for rent adjustments over and
te of return on their investment.
Redwood Villa, Inc., operates a forvice-enriched retirement home in
the City. The average age of its residents is 88 years. Unable to find an exemption in the CSFRA
received a letter from special counsel for the
City inviting a petition for individual rent adjustments, Redwood Villa instead filed this action,
seeking a judicial declaration of the CSFRA's invalidity overall and as applied to Redwood Villa.
While the great majority of Redwood Villa's complaint focuses on its insistence that its facility
"should be exempt from the Act" (Complaint, at ¶ 22, p. 5, lines 30-31), Redwood Villa also
challenges the CSFRA's validity under the U.S. and California Constitutions.
(hereinafter collecti
Goldfarb &
1300 Clay Street demur to Plaintiff's entire Complaint, as both the facial and as-applied challenges to the Act in
Eleventh Floor
California
Redwood Villa's pleading must fail. As an initial matter, the well-developed law on the
510 836-1035 FAX
t firmly establishes its validity
against any facial challenges. In terms of Redwood Villa's claims of the Act's invalidity as
applied to its own establishment, it is not entitled to the jurisdiction of this Court, as it failed to
exhaust its administrative remedies prior to filing suit and its complaint is not ripe for
al irregularities, it cannot show that the Act's
application to its business is unconstitutional. This Court should sustain the City's demurrer
without leave to amend.
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
MATERIAL ALLEGATIONS AND JUDI
The CSFRA restricts "excessive rent increase
extent allowable under California law," while also "ensuring Landlords a fair and reasonable
return on their investment…" (CSFRA, §1700; see City's Request for Judicial
"City's RJN"), Exhibit A.) It imposes a system of rent control on most multi-family properties
almost all landlords, with
, §§1703, 1704.) Some rental units are
fully exempt from both rent stabilization and ju
y, extended medical care facility, asylum, non-profit home for
the aged, or dormitory owned and operated by an accredited institution of higher education." (
§1703(a); Complaint, ¶19, at pp. 4:33-5:2.) The Ac
exempted. (§1702(d); Complaint, ¶6, at 2:18-19.)
To implement and administer this new system, the Act established a Rental Housing
Committee (the "Committee" or "RHC"), composed of five members appointed by the City
Council. (§1709.) The Committee is expressly empowered to "authoriz[e] Rent increases and/or
adjustments required by state or federal law." (§1709(d)(1) & (2).)
k, rents increases imposed between October 19,
Goldfarb &
1300 Clay Street (§§1702(b), 1708.) Landlords may raise the rent annually by the amount established by the
Eleventh Floor
California Committee. (§§1707, 1708.)
510 836-1035 FAX The Act specifically sets forth a procedure for landlords to petition the Committee for an
upward adjustment of rent "to en of return" on their investment,
while tenants may petition for reductions if the landlord fails to maintain habitability, decreases
Factors that must be
considered on a landlord's petition to determine a fair rate of retu
The CSFRA is also attached as Exhibit A to Plaintiff's Complaint. (City's Request for Judicial Notice,
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
increases or any decreases in maintenance and operating expenses, and increases or decreases in
Services" as including, but not limited to, "repairs, maintenance, . . .
facilities and privileges, janitor services
connected with the use or occupancy of any Rental Unit." (§1702(h), emphasis added.)
al rent adjustments,
all promulgate regulations regarding these
procedures. The Committee promulgated such
Interim Petition Regulations regarding Petition
Standard, promulgated via Committee Resolution No. RHC-4 on July 24, 2017; City's RJN, Exh.
C.) Notably, the Act the Landlord's right to a fair
(m) provides:
(m)
Article shall be applied so as to prohibit the Committee from
granting an Individual Rent Adjustme
Landlord to be necessary to provide the Landlord with a fair rate of
return.
specify conditions under which Landlords may terminate a tenancy and evict tenants.
Due to litigation by the California Apartment Association ("CAA") challenging the
Goldfarb &
validity of the CSFRA, the effective date was delayed. After the CAA filed a dismissal, the
1300 Clay Street Committee established the effective date of the CSFRA to be December 23, 2016. (Rental
Eleventh Floor
California d September 11, 2017; City's RJN, Exh. E.)
510 836-1035 FAX Redwood Villa's Facility and the Allegations in the Complaint.
The great majority of the allegations in Redwood Villa's Complaint are devoted to
describing the CSFRA, quoting select provisions, and describing the nature of Redwood Villa's
After the City prevailed on the CAA's motion for preliminary injunction to en
uit. See court docket for California Apartment Association v. City of
Mountain View, Santa Clara Superior Court Case No. 16-CV-304253; City's RJN, Exhibit D.)
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MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
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business. Paragraphs 5-8 and 14-19 describe the Act, notably omitting mention of the sections
vidual rent adjustments and procedures thereof.
Paragraphs 9-13 and 20-23 describe the Redwood Villa facility: a retirement community
of 81 units, each around 400 square feet in size, which houses residents who average 88 years of
age. Redwood Villa provides several services to residents, including meals, cleaning services,
recreational rooms, and a pool and sauna facilities, as well as recreational programs and
42 staff members, and has increas
three years; these increases are a direct result of the City's
minimum wage requirements. (¶¶12, 20-21.)
In late 2017, Plaintiff's attorney sent a lett
requesting that the City acknowledge that Redwood Villa's business be acknowledged as a type
responded that Redwood Villa did not meet any requirements for exemption, and suggested that
l rent adjustment. (See letters dated September 27, 2017 and
December 8, 2017, City's RJN Exhs. F and G.)
in the Complaint and characterizes its
(¶13, at 3:29), which it claims
not control," (¶26, at 6:22-24), it is undeniably senior housing according to its own description of
Goldfarb &
its business. ( Answer to Item 16 on Redwood Villa, Inc.'s Statement of Information, filed
1300 Clay Street
Eleventh Floor
California Housing;" City's RJN, Exh. H.) Plaintiff acknowle
510 836-1035 FAX language of the foregoing exemptions, and theref called out by exemptions
of the Act." (¶22, at 5:27-28.) Nonetheless, Redwood Villa insists it "should be exempt." (
5:30.) Plaintiff also claims that as the Act "s
administrative remedies which Plaintiff is required to exhaust." (¶27, at 6:27-28.) Redwood Villa
has not filed any petition for rent adjustment for any of its units. (City's RJN, Exh. I.)
Plaintiff asserts that unless the City's enforcement of the ordinance is enjoined, plaintiff
"will be deprived of its right to earn a living, will be deprived of its property without due process
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MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
of law, and may be subjected to a criminal pr
ms of the Act's unconstitutionality:
discrimination;" (¶19, at 5:8-9);
it violates the U.S. and California Constitutions which provide that there shall be
no "law impairing the obligation of
The Act is "invalid and unenforceable, both on its face and as construed by
defendants," in that it denies Redwood Villa of due process and equal protection
as protected by the Fourteenth Amendment of the U.S. Constitution and Article I,
Section 7 of the California Constitution (¶25, at 6:19-21, and ¶28, at 31-34); and
Defendants' enforcement of the Act will deprive Redwood Villa of its right to
on and judgment that the Act
STANDARD OF REVIEW
While the City would challenge some of Plaintiff's factual allegations at trial, for
purposes of its demurrer the City assumes the truth of all material facts "'properly pleaded, but
onclusions of fact or law.'"
tion omitted). The Court also may consider matters that are the proper
However, the court may not co
allegations which are contrary either to
Goldfarb &
1300 Clay Street This Court may sustain the City's demurrer if these facts—as pled, or as noticed—
Eleventh Floor
California or establish a complete defense.
510 836-1035 FAX Furthermore, the burden is on Petitioner to demonstrate that amendment
Petition's defects.
amendment would not cure the defects in the Complaint, the City asks this Court to sustain the
City's demurrer without leave to amend.
THE ACT IS UNDENIABLY CONSTITUTIONAL ON ITS FACE.
Redwood Villa asserts various conclusory cons
its face and as applied to Redwood Villa – throughout its Complaint, as enumerated in Part II.B,
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
. All of its constitutional challenges must fail. Due to jurisdictional issues with its as-
applied challenges resulting from the exhaustion and are not applicable in
the context of a facial challenge, the City addresses its facial chal
Memorandum; it addresses Redwood Villa's as-applied challenges in Part V,
As an initial matter, Plaintiff does not, and cannot plead a cognizable facial challenge to
the Act. The Act is a product of the initiative process, and thus comes before the Court with a
strong presumption of validity. "Such measures
mistakably appears."
An even higher bar exists for Redwood Villa in bringing a facial challenge. A facial
challenge to the constitutional validity of a statute or ordinance considers only the text of the
measure itself, not its application to the particular circumstances of an individual.
ntiff bringing a facial challenge cannot
me future hypothetical situation constitutional problems may
the statute…"
ther, the plaintiff must
either "demonstrate that the act's provisions inevitably pose a present total and fatal conflict with
applicable constitutional prohibitions" ( ) or, at a minimum, that it will result in legally
impermissible outcomes "in the Kasler v. Lockyer
Goldfarb &
Cal.4th 472, 502, emphasis in original.
1300 Clay Street While Redwood Villa is vague and unspecific regarding the nature of its facial claims,
Eleventh Floor
California n claims under the Fourteenth
510 836-1035 FAX Amendment as its facial challenges to the Act. (See Complaint, ¶¶ 25, 28.) However, its claims
with applicable constitutional prohibitions. In fact, the U.S. Supreme Court, in considering a
hardship as well as the individual circumstances of both landlord and tenant when determining
See Cotati Alliance for Better Hous. v. City of Cotati (1983) 148 Cal.App.3d 280, 285 at fn. 5;
Birkenfeld v. Berkeley (1976) 17 Cal.3d 129, 165.
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MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
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whether to approve a landlord's a certain percentage – similar
to the Act's provisions – held that the ordinance did not violate the Due Process Clause of the
Fourteenth Amendment.
Court also found that the rent ordina
eenth Amendment, noting that the standard is deferential.
, 485 U.S. at p. 14. The Court stated, "'we will not overturn [a statute that does not burden a
suspect class or a fundamental interest] unless the varying treatment of different groups or
persons is so unrelated to the achievement of any combination of legitimate purposes that we can
e's actions were irrational.'" Vance v. Bradley
440 U.S. 93, 97. Redwood Villa has not pleaded that it is a suspect class or a fundamental
interest is burdened; rather, it makes a vague allegation of "unjust discrimination" (Complaint at
¶19, 5:9) compared to the enumerated exemptions to the Act. This allegation is insufficient. The
Amendment.
REDWOOD VILLA'S AS-APPLIED CHALLENGES TO THE CSFRA FAIL
BOTH PROCEDURALLY AND ON THEIR MERITS.
At its core, the Complaint alleges a regulatory taking: it alleges that the Act, as applied to
Plaintiff, will deprive it of its right to earn a living and of its property without due process of law.
(¶32, at 7:17-20.) This is the very definition of a regulatory taking, also known as inverse
Goldfarb &
1300 Clay Street
condemnation.
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(rejecting an inverse condemnation claim against a rent control law). The California Supreme
California
510 836-1035 FAX
of price control regulating the
development and use of real property, is a permi at a municipality is
empowered to enact.
435, 455 ('[t]he variety and range of permissible land use regulations are extensive and familiar,
Notably, while Redwood Villa can be described as a home for the aged, it is not a "non-profit home for
the aged," which is one of the listed exemptions. (Act, §1703(a)(2), emphasis added.)
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
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including…price controls (for example, rent control)."). As such, Redwood Villa must – but
on of administrative remedies and ripeness.
In Bypassing the Petition Process, Redwood Villa Failed to Exhaust
Administrative Remedies
California law that "[a] part
of a statute or ordinance must invoke and exhaust the administrative remedies provided thereby
Action Apt. Ass'n v. Santa
prerequisite, not a matter
, the California Supreme Court consid
der to have their property excepted from
the restriction – an exception that the Metcalf,
the doctrine of exhaustion of administrative remedies did not apply, insofar as they claimed the
Goldfarb & quity's jurisdiction is limited by the existence of a tribunal"
1300 Clay Street
Eleventh Floor empowered to make "factual determinations and a
California
as applied to the facts related by each complainant."
510 836-1035 FAX
While the application of the exhaustion of administrative remedies doctrine (in addition to ripeness, see
in the rent control context in Action Apt. Ass'n v. Santa
Monica Rent Control Bd., that case concerned the legality of the interest rate on security deposits in a suit
filed by a large group of landlords – as opposed to Redwood Villa's claims about general applicability of
the rent control ordinance to its establishment and the economic insufficiencies it claims it will suffer
under the Act – and the doctrine was found not to be applicable in that situation.
This argument mirrors Redwood Villa's blithe assertion that as the Act "should" not apply to Plaintiff,
they are not required to exhaust administrative remedies. (Complaint at ¶ 27.)
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
administrative body. Metcalf, 24 Cal.2d at 272. In the instant case, Redwood Villa followed the
same faulty approach by not petitioning for any rent adjustment – and the result likewise should
be the same.
Similarly, in
of a general demurrer on the grounds that plaintiff's failure to exhaust administrative remedies
(applying for a conditional use permit) , plaintiff initiated
litigation instead of applying for a required conditional use permit – which the city attorney had
could apply to improve her parcels.
nverse condemnation, alleging the unconstitutional
Metcalf
"constitutional challenge must be preceded by an application to the zoning authorities for an
Cal.App.3d at 914. Thus, the action was premature; the doctrine of exhaustion of administrative
remedies is applicable whether the action is for declaratory relief or injunctive relief.
The doctrine should also apply to Redwood Villa's as-applied challenges here. The Act
on for a rent adjustment above annually allowed
guaranteed fair return on the Landlord's investment. (Act, §§1710-1711; City's RJN, Exh. C.)
Goldfarb &
Redwood Villa should exhaust the petition proceeding before resorting to litigation. The courts
1300 Clay Street Igna plaintiffs' positions to be erroneous in both of those cases, and
Eleventh Floor
California Redwood Villa's position is equally erroneous here. Redwood Villa should not be entitled to the
510 836-1035 FAX ministrative relief codified in the Act.
Redwood Villa's Claims Lack Ripeness.
Ripeness, which is similar but not the same as exhaustion of administrative remedies,
"The ripeness requirement, a branch of the doctrine of justiciability, prevents
courts from issuing purely adviso the fundamental concept that the
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
congealed" to permit an intelligent and useful decision to be made.
Thus, a claim that the application of governme
charged with implementing the regulations has
reached a final decision regarding the application of the regulations to the property at issue.
Williamson Planning Comm'n v. Hamilton Bank
for a challenge to a land use regulation as a
a final and authoritative determination; a court
cannot determine whether a regulation has gone 'too far' unless it knows how far the regulation
ative determination or decision, because
Redwood Villa has completely bypassed that step. Redwood Villa simply asserts that the Act
no exemption within the Act
ny petition for a rent adjustment
pursuant to the Act, there has been no decision by the City or the Rental Housing Committee
Goldfarb &
ion of the Act – namely, the nature and amount of any rent adjustments – to
1300 Clay Street nior tenancies that Redwood Villa
Eleventh Floor
California services fall squarely within the defin
510 836-1035 FAX the Act, and the Act mandates that the Hearing Officer or Committee "shall consider" them as
relevant factors on a petition for a rent adjustment pursuant to
Villa simply desires an advisory opinion – i.e., that the Act does not apply to its establishment –
without first reaching the point where the facts have "sufficiently congealed."
administrative solutions, wh
consider constitutional questions, renders a claim for inverse condemnation unripe for
adjudication."
14
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
takings cases to adhere to our admonition that the 'constitutionality of statutes ought not be
such a decision necessary.'"
452 U.S. at 294-295. Redwood Villa 's lawsuit clearly fails
both the exhaustion and the ripeness tests that it must fulfill before suing the City. As a result,
this Court lacks jurisdiction to hear this matter, and the City's demurrer should be sustained
without leave to amend.
The CSFRA is Entirely Consistent
Constitutions As Applied to Redwood Villa.
Despite the Complaint's grave procedural deficiencies in bringing this lawsuit which
s at this stage to any as-applied challenges, Plaintiff's as-
applied constitutional challenges – namely a takings claim (in veiled language) and an
impairment of contracts claim – lack merit in any event.
As described in Part IV, Redwood Villa's asser prive it of its right
claim. As the U.S. and California Supreme Courts
taking claims, considering factors such as '(1) '[t]he economic
impact of the regulation on the claimant'; (2) 'the
Goldfarb & with distinct investment-backed expectations'; and (3) 'the character of the government action.'"
1300 Clay Street
Eleventh Floor
California
510 836-1035 FAX
t, the inquiry focuses on the "regulation's
impact and investor's ability to earn a fair return see also
Kavanau Santa Monica Beach courts also noted that the c
process and takings protections in the context of price regulations, including rent control, and courts
sometimes employ overlapping terminology and standards, treating the two clauses as a single
constitutional protection of private property rights. Kavanau, 16 Cal.4th at 771; Santa Monica Beach,
Cal.4th at 967.
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
This standard dooms Redwood Villa's challenge, as the Act, on its face,
ct, §1710(a), §1711(m).) In the unlikely event that
some provision nevertheless applies in a way that interferes with a landlords' ability to earn a fair
return, the Rental Housing Committee is empowered to set th
eases and/or adjustments requir
, Redwood Villa has not attempted to
obtain a decision from the City about how to earn Act's context, thereby
failing to fulfill a jurisdictional prerequisite to filing suit, which also deprives the Court of the
facts and record necessary to adjudicate an as-applied takings claim.
Plaintiff's Impairment of Contracts Claim is Equally Flawed, as Generally
Constitutional.
Plaintiff alleges an impairment of contracts claim in reliance on the U.S. Constitution,
Article I, Section 10, and California Constitution Article I, Section 9. (Complaint, ¶24, at 6:9-
13.) Without explanation, Plaintiff implies
Plaintiff's contracts, presumably contracts with Plaintiff's tenants. It is
effective rent rollback required by CSFRA s
impair such contracts. An ordinance that serves a legitimate purpose is not an unconstitutional
impairment of contract even if it interferes with the rental Interstate
Goldfarb &
1300 Clay Street
Eleventh Floor Plaintiff's vague allegations, California courts ha
California
increases and rent rollbacks.
510 836-1035 FAX
nt increases does not unconstitutionally impair
n 827 already regulates the timing of future rent
increases. The CSFRA does not alter state law. Rather, CSFRA section 1706(b) identifies two
types of future rent increases that may be imposed for Covered Rental Units; the section affirms
that landlords may set the initial rent for new te
increases and does not alter, or unconstitutionally impair, the current terms of existing contracts.
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
nst claims that a rollback
unconstitutionally impairs contracts.
equal to the amount of rent previously charged for the same rental unit, and then mandates the
us any authorized increases. A
rollback in West Hollywood. Citing the U.S. Supreme Court, the
contract clause merely imposes 'limits upon the pow
its otherwise legitimate police power.'"
e enactment has in fact operated as a substantial impairment of a
at 6. "Minimal alteration of contractual obligations may end the
internal quotation marks and citation omitted. The
upheld rolling back rents by approximately 4 months.
The Court of Appeal upheld a mo
Park Owners' Association
mobilehome rents were rolled back to the amount charged on December 31, 1979, plus specific
annual adjustments. The Court lifted preliminary and permanent injunctions in June 1984,
Goldfarb &
to the amount charged 54 months prior, plus
1300 Clay Street authorized increases.
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California nt" as the amount charged for the rental
510 836-1035 FAX
creases authorized by the Act.
The CSFRA became effective on December 23, 2016. (Rental Housing Committee Resolution
No. RHC-6, dated September 11, 2017; City's RJN,
of 15 months, plus authorized increases – a significantly shorter effective rollback than that
Oceanside case.
17
MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT
795\12\2319671.4
Plaintiff's Complaint provides no information
A. Accordingly, this Court must sustain the
demurrer related to any claim of unconstitutional impairment of contracts without leave to
amend, in light of the extant
PLAINTIFF'S "VESTED RIGHTS" ARGUMENT FAI
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State Bar # 137588 City Attorney Mountain View, California 94041 State Bar #136253 ktiedemann@goldfarblipman.com State Bar # 172981 clee@goldfarblipman.com GOLDFARB & LIPMAN LLP Facsimile: (510) 836-1035 CITY OF MOUNTAIN VIEW, MOUNTAIN VIEW RENTAL HOUSING COMMITTEE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA, UNLIMITED JURISDICTION Plaintiff, AUTHORITIES IN SUPPORT OF DEMURRER BY DEFENDANTS CITY OF MOUNTAIN VIEW AND MOUNTAIN VIEW RENTAL HOUSING CITY OF MOUNTAIN VIEW, MOUNTAIN COMMITTEE TO COMPLAINT FOR VIEW RENTAL HOUSING COMMITTEE and Goldfarb & 1300 Clay Street DATE: June 5, 2018 Eleventh Floor TIME: 9:00 a.m. California DEPT.: 13 JUDGE: Hon. James L. Stoelker 510 836-1035 FAX Action Filed: February 6, 2018 [Exempt from Filing Fee (Gov. Code, §6103)] MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 TABLE OF CONTENTS MMARY OF ARGUMENT ................................................. 5 II. MATERIAL ALLEGATIONS AND J .................. 6 A. The Act.................................................................................................................... Redwood Villa's Facility and the Allegations in the Complaint. ............................ 7 III. STANDARD OF REVIEW ................................................................................................ 9 IV. THE ACT IS UNDENIABLY CONS .............................. 9 V. REDWOOD VILLA'S AS-APPLIED ERITS. ................................................. 11 A. In Bypassing the Petition Process, Redwood Villa Failed to Exhaust Administrative Remedies ...................................................................................... 12 B. Redwood Villa's Claims Lack Ripeness. .............................................................. 13 C. The CSFRA is Entirely Consistent With the California and U.S. Constitutions As Applied to Redwood Villa. ....................................................... 15 1. The CSFRA Does Not Result in a Regulatory Taking. ............................ 15 2. Plaintiff's Impairment of Contracts Claim is Equally Flawed, as Rollbacks, are Constitutional. ................................................................... 16 Goldfarb & VI. PLAINTIFF'S "VESTED RIGHTS" ARGUMENT FAILS, AS ITS 1300 Clay Street ERMIT IS UNAFFECTED BY APPLICATION OF Eleventh Floor THE CSFRA. .................................................................................................................... California VII. CONCLUSION ............................................................................................................... 510 836-1035 FAX MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 TABLE OF AUTHORITIES Page(s) Action Apt. Ass'n v. Santa Monica Rent Control Bd (2001) 94 Cal.App.4th 587 ................................................................................................12, 1 (1986) 184 Cal.App.3d Supp.1 ................................................................................................17 Birkenfeld v. Berkeley (1976) 17 Cal.3d 129 .......................................................................................................... (1985) 39 Cal.3d 311 ......................................................................................................... California Apartment Association v. City of Mountain View urt Case No. 16-CV-304253 ...............................................................7 California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435 ......................................................................................................... Cotati Alliance for Better Hous. v. City of Cotati (1983) 148 Cal.App.3d 280 ..................................................................................................... Garavatti v. Fairfax Planning Commission (1971) 22 Cal.App.3d 145 ...................................................................................................... Goat Hill Tavern v. City of Costa Mesa (1992) 6 Cal.App.4th 1519 ..................................................................................................... Goldfarb & 1300 Clay Street (1970) 9 Cal.App.3d 909 ...................................................................................................12, Eleventh Floor California (1984) 155 Cal.App.3d 435 ...............................................................................................16, 18 510 836-1035 FAX Kasler v. Lockyer (2000) 23 Cal.4th 472 ......................................................................................................... (1997) 16 Cal.4th 761 ......................................................................................................... (1991) 54 Cal.3d 492 .......................................................................................................... (2005) 544 U.S. 528 ........................................................................................................... 3 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 Long Beach Equities, Inc. v. County of Ventura (1991) 231 Cal.App.3d 1016 ...................................................................................................1 Malibu Mountains Recreation, Inc. v. County of Los Angeles (1998) 67 Cal.App.4th 359 ..................................................................................................... Metcalf v. County of Los Angeles (1944) 24 Cal.2d 267 .........................................................................................................1 (1984) 157 Cal.App.3d 887 ..................................................................................................... Pan Pacific Properties, Inc. v. County of Santa Cruz (1978) 81 Cal.App.3d 244 ...................................................................................................... Pennell v. City of San Jose (1988) 485 U.S. 1 ............................................................................................................. (1999) 19 Cal.4th 952 ........................................................................................................1 (1995) 9 Cal.4th 1069 ......................................................................................................... (1986) 185 Cal.App.3d 1232 ...................................................................................................1 California Civil Code section 827............................................................................................. Other Authorities Goldfarb & California Constitution Article I, Section 7 .................................................................................. 1300 Clay Street Eleventh Floor California Constitution Article I, Section 9 .................................................................................. California Mountain View Community Stabil 510 836-1035 FAX ("CSFRA: or "the Act") ....................................................................................... 5, 6, 7, U.S. Constitution Fourteenth Amendment...........................................................................9, 10, 11 U.S. Constitution, Article I, Section 10 ...................................................................................... 4 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 INTRODUCTION AND SUMMARY OF ARGUMENT Alarmed by rising rents and no-cau the City of Mountain View ("City") qualified and approved a ballot measure, Measure V, in November 2016 to protect renters while guaranteeing that landlords will earn a fair return on their property. Measure V's passage by City voters enacted the "Mountain View Community Stabilization and Fair Rent Act" ("CSFRA" or "the Act"), which amended the Carter to impose rent ithin the City. The CSFRA, and implementing regulations, contain clear provisio petition the City for rent adjustments over and te of return on their investment. Redwood Villa, Inc., operates a forvice-enriched retirement home in the City. The average age of its residents is 88 years. Unable to find an exemption in the CSFRA received a letter from special counsel for the City inviting a petition for individual rent adjustments, Redwood Villa instead filed this action, seeking a judicial declaration of the CSFRA's invalidity overall and as applied to Redwood Villa. While the great majority of Redwood Villa's complaint focuses on its insistence that its facility "should be exempt from the Act" (Complaint, at ¶ 22, p. 5, lines 30-31), Redwood Villa also challenges the CSFRA's validity under the U.S. and California Constitutions. (hereinafter collecti Goldfarb & 1300 Clay Street demur to Plaintiff's entire Complaint, as both the facial and as-applied challenges to the Act in Eleventh Floor California Redwood Villa's pleading must fail. As an initial matter, the well-developed law on the 510 836-1035 FAX t firmly establishes its validity against any facial challenges. In terms of Redwood Villa's claims of the Act's invalidity as applied to its own establishment, it is not entitled to the jurisdiction of this Court, as it failed to exhaust its administrative remedies prior to filing suit and its complaint is not ripe for al irregularities, it cannot show that the Act's application to its business is unconstitutional. This Court should sustain the City's demurrer without leave to amend. MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 MATERIAL ALLEGATIONS AND JUDI The CSFRA restricts "excessive rent increase extent allowable under California law," while also "ensuring Landlords a fair and reasonable return on their investment…" (CSFRA, §1700; see City's Request for Judicial "City's RJN"), Exhibit A.) It imposes a system of rent control on most multi-family properties almost all landlords, with , §§1703, 1704.) Some rental units are fully exempt from both rent stabilization and ju y, extended medical care facility, asylum, non-profit home for the aged, or dormitory owned and operated by an accredited institution of higher education." ( §1703(a); Complaint, ¶19, at pp. 4:33-5:2.) The Ac exempted. (§1702(d); Complaint, ¶6, at 2:18-19.) To implement and administer this new system, the Act established a Rental Housing Committee (the "Committee" or "RHC"), composed of five members appointed by the City Council. (§1709.) The Committee is expressly empowered to "authoriz[e] Rent increases and/or adjustments required by state or federal law." (§1709(d)(1) & (2).) k, rents increases imposed between October 19, Goldfarb & 1300 Clay Street (§§1702(b), 1708.) Landlords may raise the rent annually by the amount established by the Eleventh Floor California Committee. (§§1707, 1708.) 510 836-1035 FAX The Act specifically sets forth a procedure for landlords to petition the Committee for an upward adjustment of rent "to en of return" on their investment, while tenants may petition for reductions if the landlord fails to maintain habitability, decreases Factors that must be considered on a landlord's petition to determine a fair rate of retu The CSFRA is also attached as Exhibit A to Plaintiff's Complaint. (City's Request for Judicial Notice, MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 increases or any decreases in maintenance and operating expenses, and increases or decreases in Services" as including, but not limited to, "repairs, maintenance, . . . facilities and privileges, janitor services connected with the use or occupancy of any Rental Unit." (§1702(h), emphasis added.) al rent adjustments, all promulgate regulations regarding these procedures. The Committee promulgated such Interim Petition Regulations regarding Petition Standard, promulgated via Committee Resolution No. RHC-4 on July 24, 2017; City's RJN, Exh. C.) Notably, the Act the Landlord's right to a fair (m) provides: (m) Article shall be applied so as to prohibit the Committee from granting an Individual Rent Adjustme Landlord to be necessary to provide the Landlord with a fair rate of return. specify conditions under which Landlords may terminate a tenancy and evict tenants. Due to litigation by the California Apartment Association ("CAA") challenging the Goldfarb & validity of the CSFRA, the effective date was delayed. After the CAA filed a dismissal, the 1300 Clay Street Committee established the effective date of the CSFRA to be December 23, 2016. (Rental Eleventh Floor California d September 11, 2017; City's RJN, Exh. E.) 510 836-1035 FAX Redwood Villa's Facility and the Allegations in the Complaint. The great majority of the allegations in Redwood Villa's Complaint are devoted to describing the CSFRA, quoting select provisions, and describing the nature of Redwood Villa's After the City prevailed on the CAA's motion for preliminary injunction to en uit. See court docket for California Apartment Association v. City of Mountain View, Santa Clara Superior Court Case No. 16-CV-304253; City's RJN, Exhibit D.) 7 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 business. Paragraphs 5-8 and 14-19 describe the Act, notably omitting mention of the sections vidual rent adjustments and procedures thereof. Paragraphs 9-13 and 20-23 describe the Redwood Villa facility: a retirement community of 81 units, each around 400 square feet in size, which houses residents who average 88 years of age. Redwood Villa provides several services to residents, including meals, cleaning services, recreational rooms, and a pool and sauna facilities, as well as recreational programs and 42 staff members, and has increas three years; these increases are a direct result of the City's minimum wage requirements. (¶¶12, 20-21.) In late 2017, Plaintiff's attorney sent a lett requesting that the City acknowledge that Redwood Villa's business be acknowledged as a type responded that Redwood Villa did not meet any requirements for exemption, and suggested that l rent adjustment. (See letters dated September 27, 2017 and December 8, 2017, City's RJN Exhs. F and G.) in the Complaint and characterizes its (¶13, at 3:29), which it claims not control," (¶26, at 6:22-24), it is undeniably senior housing according to its own description of Goldfarb & its business. ( Answer to Item 16 on Redwood Villa, Inc.'s Statement of Information, filed 1300 Clay Street Eleventh Floor California Housing;" City's RJN, Exh. H.) Plaintiff acknowle 510 836-1035 FAX language of the foregoing exemptions, and theref called out by exemptions of the Act." (¶22, at 5:27-28.) Nonetheless, Redwood Villa insists it "should be exempt." ( 5:30.) Plaintiff also claims that as the Act "s administrative remedies which Plaintiff is required to exhaust." (¶27, at 6:27-28.) Redwood Villa has not filed any petition for rent adjustment for any of its units. (City's RJN, Exh. I.) Plaintiff asserts that unless the City's enforcement of the ordinance is enjoined, plaintiff "will be deprived of its right to earn a living, will be deprived of its property without due process 8 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 of law, and may be subjected to a criminal pr ms of the Act's unconstitutionality: discrimination;" (¶19, at 5:8-9); it violates the U.S. and California Constitutions which provide that there shall be no "law impairing the obligation of The Act is "invalid and unenforceable, both on its face and as construed by defendants," in that it denies Redwood Villa of due process and equal protection as protected by the Fourteenth Amendment of the U.S. Constitution and Article I, Section 7 of the California Constitution (¶25, at 6:19-21, and ¶28, at 31-34); and Defendants' enforcement of the Act will deprive Redwood Villa of its right to on and judgment that the Act STANDARD OF REVIEW While the City would challenge some of Plaintiff's factual allegations at trial, for purposes of its demurrer the City assumes the truth of all material facts "'properly pleaded, but onclusions of fact or law.'" tion omitted). The Court also may consider matters that are the proper However, the court may not co allegations which are contrary either to Goldfarb & 1300 Clay Street This Court may sustain the City's demurrer if these facts—as pled, or as noticed— Eleventh Floor California or establish a complete defense. 510 836-1035 FAX Furthermore, the burden is on Petitioner to demonstrate that amendment Petition's defects. amendment would not cure the defects in the Complaint, the City asks this Court to sustain the City's demurrer without leave to amend. THE ACT IS UNDENIABLY CONSTITUTIONAL ON ITS FACE. Redwood Villa asserts various conclusory cons its face and as applied to Redwood Villa – throughout its Complaint, as enumerated in Part II.B, MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 . All of its constitutional challenges must fail. Due to jurisdictional issues with its as- applied challenges resulting from the exhaustion and are not applicable in the context of a facial challenge, the City addresses its facial chal Memorandum; it addresses Redwood Villa's as-applied challenges in Part V, As an initial matter, Plaintiff does not, and cannot plead a cognizable facial challenge to the Act. The Act is a product of the initiative process, and thus comes before the Court with a strong presumption of validity. "Such measures mistakably appears." An even higher bar exists for Redwood Villa in bringing a facial challenge. A facial challenge to the constitutional validity of a statute or ordinance considers only the text of the measure itself, not its application to the particular circumstances of an individual. ntiff bringing a facial challenge cannot me future hypothetical situation constitutional problems may the statute…" ther, the plaintiff must either "demonstrate that the act's provisions inevitably pose a present total and fatal conflict with applicable constitutional prohibitions" ( ) or, at a minimum, that it will result in legally impermissible outcomes "in the Kasler v. Lockyer Goldfarb & Cal.4th 472, 502, emphasis in original. 1300 Clay Street While Redwood Villa is vague and unspecific regarding the nature of its facial claims, Eleventh Floor California n claims under the Fourteenth 510 836-1035 FAX Amendment as its facial challenges to the Act. (See Complaint, ¶¶ 25, 28.) However, its claims with applicable constitutional prohibitions. In fact, the U.S. Supreme Court, in considering a hardship as well as the individual circumstances of both landlord and tenant when determining See Cotati Alliance for Better Hous. v. City of Cotati (1983) 148 Cal.App.3d 280, 285 at fn. 5; Birkenfeld v. Berkeley (1976) 17 Cal.3d 129, 165. 10 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 whether to approve a landlord's a certain percentage – similar to the Act's provisions – held that the ordinance did not violate the Due Process Clause of the Fourteenth Amendment. Court also found that the rent ordina eenth Amendment, noting that the standard is deferential. , 485 U.S. at p. 14. The Court stated, "'we will not overturn [a statute that does not burden a suspect class or a fundamental interest] unless the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that we can e's actions were irrational.'" Vance v. Bradley 440 U.S. 93, 97. Redwood Villa has not pleaded that it is a suspect class or a fundamental interest is burdened; rather, it makes a vague allegation of "unjust discrimination" (Complaint at ¶19, 5:9) compared to the enumerated exemptions to the Act. This allegation is insufficient. The Amendment. REDWOOD VILLA'S AS-APPLIED CHALLENGES TO THE CSFRA FAIL BOTH PROCEDURALLY AND ON THEIR MERITS. At its core, the Complaint alleges a regulatory taking: it alleges that the Act, as applied to Plaintiff, will deprive it of its right to earn a living and of its property without due process of law. (¶32, at 7:17-20.) This is the very definition of a regulatory taking, also known as inverse Goldfarb & 1300 Clay Street condemnation. Eleventh Floor (rejecting an inverse condemnation claim against a rent control law). The California Supreme California 510 836-1035 FAX of price control regulating the development and use of real property, is a permi at a municipality is empowered to enact. 435, 455 ('[t]he variety and range of permissible land use regulations are extensive and familiar, Notably, while Redwood Villa can be described as a home for the aged, it is not a "non-profit home for the aged," which is one of the listed exemptions. (Act, §1703(a)(2), emphasis added.) MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 including…price controls (for example, rent control)."). As such, Redwood Villa must – but on of administrative remedies and ripeness. In Bypassing the Petition Process, Redwood Villa Failed to Exhaust Administrative Remedies California law that "[a] part of a statute or ordinance must invoke and exhaust the administrative remedies provided thereby Action Apt. Ass'n v. Santa prerequisite, not a matter , the California Supreme Court consid der to have their property excepted from the restriction – an exception that the Metcalf, the doctrine of exhaustion of administrative remedies did not apply, insofar as they claimed the Goldfarb & quity's jurisdiction is limited by the existence of a tribunal" 1300 Clay Street Eleventh Floor empowered to make "factual determinations and a California as applied to the facts related by each complainant." 510 836-1035 FAX While the application of the exhaustion of administrative remedies doctrine (in addition to ripeness, see in the rent control context in Action Apt. Ass'n v. Santa Monica Rent Control Bd., that case concerned the legality of the interest rate on security deposits in a suit filed by a large group of landlords – as opposed to Redwood Villa's claims about general applicability of the rent control ordinance to its establishment and the economic insufficiencies it claims it will suffer under the Act – and the doctrine was found not to be applicable in that situation. This argument mirrors Redwood Villa's blithe assertion that as the Act "should" not apply to Plaintiff, they are not required to exhaust administrative remedies. (Complaint at ¶ 27.) MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 administrative body. Metcalf, 24 Cal.2d at 272. In the instant case, Redwood Villa followed the same faulty approach by not petitioning for any rent adjustment – and the result likewise should be the same. Similarly, in of a general demurrer on the grounds that plaintiff's failure to exhaust administrative remedies (applying for a conditional use permit) , plaintiff initiated litigation instead of applying for a required conditional use permit – which the city attorney had could apply to improve her parcels. nverse condemnation, alleging the unconstitutional Metcalf "constitutional challenge must be preceded by an application to the zoning authorities for an Cal.App.3d at 914. Thus, the action was premature; the doctrine of exhaustion of administrative remedies is applicable whether the action is for declaratory relief or injunctive relief. The doctrine should also apply to Redwood Villa's as-applied challenges here. The Act on for a rent adjustment above annually allowed guaranteed fair return on the Landlord's investment. (Act, §§1710-1711; City's RJN, Exh. C.) Goldfarb & Redwood Villa should exhaust the petition proceeding before resorting to litigation. The courts 1300 Clay Street Igna plaintiffs' positions to be erroneous in both of those cases, and Eleventh Floor California Redwood Villa's position is equally erroneous here. Redwood Villa should not be entitled to the 510 836-1035 FAX ministrative relief codified in the Act. Redwood Villa's Claims Lack Ripeness. Ripeness, which is similar but not the same as exhaustion of administrative remedies, "The ripeness requirement, a branch of the doctrine of justiciability, prevents courts from issuing purely adviso the fundamental concept that the MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 congealed" to permit an intelligent and useful decision to be made. Thus, a claim that the application of governme charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue. Williamson Planning Comm'n v. Hamilton Bank for a challenge to a land use regulation as a a final and authoritative determination; a court cannot determine whether a regulation has gone 'too far' unless it knows how far the regulation ative determination or decision, because Redwood Villa has completely bypassed that step. Redwood Villa simply asserts that the Act no exemption within the Act ny petition for a rent adjustment pursuant to the Act, there has been no decision by the City or the Rental Housing Committee Goldfarb & ion of the Act – namely, the nature and amount of any rent adjustments – to 1300 Clay Street nior tenancies that Redwood Villa Eleventh Floor California services fall squarely within the defin 510 836-1035 FAX the Act, and the Act mandates that the Hearing Officer or Committee "shall consider" them as relevant factors on a petition for a rent adjustment pursuant to Villa simply desires an advisory opinion – i.e., that the Act does not apply to its establishment – without first reaching the point where the facts have "sufficiently congealed." administrative solutions, wh consider constitutional questions, renders a claim for inverse condemnation unripe for adjudication." 14 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 takings cases to adhere to our admonition that the 'constitutionality of statutes ought not be such a decision necessary.'" 452 U.S. at 294-295. Redwood Villa 's lawsuit clearly fails both the exhaustion and the ripeness tests that it must fulfill before suing the City. As a result, this Court lacks jurisdiction to hear this matter, and the City's demurrer should be sustained without leave to amend. The CSFRA is Entirely Consistent Constitutions As Applied to Redwood Villa. Despite the Complaint's grave procedural deficiencies in bringing this lawsuit which s at this stage to any as-applied challenges, Plaintiff's as- applied constitutional challenges – namely a takings claim (in veiled language) and an impairment of contracts claim – lack merit in any event. As described in Part IV, Redwood Villa's asser prive it of its right claim. As the U.S. and California Supreme Courts taking claims, considering factors such as '(1) '[t]he economic impact of the regulation on the claimant'; (2) 'the Goldfarb & with distinct investment-backed expectations'; and (3) 'the character of the government action.'" 1300 Clay Street Eleventh Floor California 510 836-1035 FAX t, the inquiry focuses on the "regulation's impact and investor's ability to earn a fair return see also Kavanau Santa Monica Beach courts also noted that the c process and takings protections in the context of price regulations, including rent control, and courts sometimes employ overlapping terminology and standards, treating the two clauses as a single constitutional protection of private property rights. Kavanau, 16 Cal.4th at 771; Santa Monica Beach, Cal.4th at 967. MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 This standard dooms Redwood Villa's challenge, as the Act, on its face, ct, §1710(a), §1711(m).) In the unlikely event that some provision nevertheless applies in a way that interferes with a landlords' ability to earn a fair return, the Rental Housing Committee is empowered to set th eases and/or adjustments requir , Redwood Villa has not attempted to obtain a decision from the City about how to earn Act's context, thereby failing to fulfill a jurisdictional prerequisite to filing suit, which also deprives the Court of the facts and record necessary to adjudicate an as-applied takings claim. Plaintiff's Impairment of Contracts Claim is Equally Flawed, as Generally Constitutional. Plaintiff alleges an impairment of contracts claim in reliance on the U.S. Constitution, Article I, Section 10, and California Constitution Article I, Section 9. (Complaint, ¶24, at 6:9- 13.) Without explanation, Plaintiff implies Plaintiff's contracts, presumably contracts with Plaintiff's tenants. It is effective rent rollback required by CSFRA s impair such contracts. An ordinance that serves a legitimate purpose is not an unconstitutional impairment of contract even if it interferes with the rental Interstate Goldfarb & 1300 Clay Street Eleventh Floor Plaintiff's vague allegations, California courts ha California increases and rent rollbacks. 510 836-1035 FAX nt increases does not unconstitutionally impair n 827 already regulates the timing of future rent increases. The CSFRA does not alter state law. Rather, CSFRA section 1706(b) identifies two types of future rent increases that may be imposed for Covered Rental Units; the section affirms that landlords may set the initial rent for new te increases and does not alter, or unconstitutionally impair, the current terms of existing contracts. MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 nst claims that a rollback unconstitutionally impairs contracts. equal to the amount of rent previously charged for the same rental unit, and then mandates the us any authorized increases. A rollback in West Hollywood. Citing the U.S. Supreme Court, the contract clause merely imposes 'limits upon the pow its otherwise legitimate police power.'" e enactment has in fact operated as a substantial impairment of a at 6. "Minimal alteration of contractual obligations may end the internal quotation marks and citation omitted. The upheld rolling back rents by approximately 4 months. The Court of Appeal upheld a mo Park Owners' Association mobilehome rents were rolled back to the amount charged on December 31, 1979, plus specific annual adjustments. The Court lifted preliminary and permanent injunctions in June 1984, Goldfarb & to the amount charged 54 months prior, plus 1300 Clay Street authorized increases. Eleventh Floor California nt" as the amount charged for the rental 510 836-1035 FAX creases authorized by the Act. The CSFRA became effective on December 23, 2016. (Rental Housing Committee Resolution No. RHC-6, dated September 11, 2017; City's RJN, of 15 months, plus authorized increases – a significantly shorter effective rollback than that Oceanside case. 17 MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT OF DEMURRER TO COMPLAINT 795\12\2319671.4 Plaintiff's Complaint provides no information A. Accordingly, this Court must sustain the demurrer related to any claim of unconstitutional impairment of contracts without leave to amend, in light of the extant PLAINTIFF'S "VESTED RIGHTS" ARGUMENT FAI