The County of Santa Barbara, California, adopted an ordinance that severely capped the rent that owners of mobile-home parks could charge tenants. Years later, Plaintiffs purchased a mobile-home park within the county, in the City of Goleta. Thereafter, the City adopted a rent control ordinance which was nearly identical to the ordinance the County had initially imposed. The landowners then filed suit against the City, alleging that the rent control ordinances amounted to an unconstitutional taking of their property in violation of the Takings Clause of the Fifth Amendment.
On appeal in the Ninth Circuit, a three judge panel held that the City's rent control ordinance violated the Takings Clause. The opinion characterized the rent control regime as a "naked transfer of wealth," which could not be allowed under the Takings Clause. This decision was subsequently reversed by the Ninth Circuit en banc. The majority opinion held that Plaintiff's takings claim must necessarily fail under the Penn Central regulatory takings test because they could have no reasonable investment backed expectation of obtaining higher rents in light of the fact that a rent control ordinance was already in effect at the time they purchased their property.
The NFIB Legal Center filed an amicus brief in support of the property owners in this case urging the U.S. Supreme Court to grant their petition for certiorari and to make clear that property rights are not extinguished when property is transferred between owners. If a land use restriction constitutes an unconstitutional taking of private property the owner can bring a takings suit at any point within the statute of limitations. The right to advance such a suit is transferred with the land if the property is sold to a new owner.
Status: Decided - Ninth Circuit Federal Court of Appeal.
Petition for certiorari denied in the U.S. Supreme Court.