A controversial decision that cast doubt on many mobile home rent control ordinances in California has been thrown out.
Last year, a divided Ninth U.S. Circuit Court of Appeals panel ruled the City of Cotati’s mobile home rent control law was unconstitutional because it potentially permitted mobile home owners to capture a premium — based on the value of the reduced rent — when they sold their homes. The court characterized this as a transfer of equity that caused the ordinance to fail the “substantially advances” test for determining whether a regulation intended serve a legitimate state interest amounts to a taking (see CP&DR Insight, October 2004; CP&DR Legal Digest, September 2004). The court based its decision on three Ninth Circuit rent control decisions from Hawaii.
However, the U.S. Supreme Court in June overturned one of those cases, specifically ruling “the substantially advances formula is not a valid takings test.” That decision came in Lingle v. Chevron USA, 125 S. Ct. 2074 (see CP&DR, July 2005).
After the Lingle decision, the Ninth Circuit withdrew its earlier decision and upheld Cotati’s mobile home rent control ordinance.
The case is Cashman v. City of Cotati, No. 03-15066, 2005 DJDAR 8511.