Background
Plaintiff 1210 Cacique Street, LLC, owner of the Flamingo Mobilehome Park in Santa Barbara, California, appealed the district court’s dismissal with prejudice of its regulatory takings claim. The plaintiff challenged the City’s reenactment of a vacancy rent control provision that imposes a 10 percent rent increase cap upon the transfer of mobile home ownership to a new tenant.
The court’s reasoning
The court applied the three-factor Penn Central test for regulatory takings. While assuming the first factor of economic impact was satisfied due to the alleged 92.5 percent diminution in value, the court found the second and third factors weighed decisively against the plaintiff. The court held that mobile home park owners cannot reasonably expect their property to be free from government regulation like rent control, and the specific vacancy control provision was not unforeseeable given the City’s history and the Supreme Court’s Yee decision. The court characterized the ordinance as an adjustment of economic benefits and burdens to promote the common good rather than a physical appropriation.
The dissent
Because Cacique’s complaint plausibly alleges a substantial diminution in property value, and no binding precedent forecloses a regulatory-takings claim when such a diminution has been properly pleaded, I would reverse the dismissal and allow the case to proceed to discovery.
Judge Miller
What it means going forward
The decision reinforces the Ninth Circuit’s precedent that mobile home park owners face significant hurdles in asserting regulatory takings claims against rent control ordinances, particularly at the pleading stage, even when alleging substantial economic losses.