Rancho de Calistoga v. City of Calistoga
Facts: A mobile home park is subject to a local rent control ordinance that limits annual rent increases. The ordinance also permits the owner to petition the city for approval of higher rent increases to ensure a reasonable rate of return on their property. The mobile home park owner proposes to raise rents by an amount they deem reasonable yet exceeding the limit imposed by the ordinance. The city rejects the full increase but permits a lesser increase to the rent amount.
Claim: The owner seeks to enforce their proposed rental rate increase, claiming the rent control ordinance constitutes a regulatory and private taking under the Fifth Amendment since the city’s rent control ordinance provides financial benefit to tenants and deprives the owner of rental income.
Counter claim: The city claims the rent control ordinance is not a regulatory or private taking as the city is permitted to impose reasonable housing regulations and limit rent amounts without providing compensation for any resulting economic injuries to an owner.
Holding: A California court of appeals holds the city’s rent control ordinance is not a regulatory or private taking since a reduction in the rental value of the property does not constitute a taking and the city is permitted to create reasonable rent limits to adjust economic benefits and burdens with no requirement to compensate the owner for the resulting injuries. [Rancho de Calistoga v. City of Calistoga _CA4th_]