WOW!  We are really being hit in 2018.  As the front cover depicts, many cities have raped housing providers and businesses by giving a monopoly to one trash company to pick up your trash.  Then, they empower their new trash company friends to double and quadruple your price thereby increasing the total tax that the city collects.  Now, the trash companies do not have to compete with price or service.  Of course, the trash companies and unions will financially support these “generous” politicians at election time – totally disgusting! 

As you know, AOA has filed a lawsuit against the City of Los Angeles PLUS David Hernandez has prepared a ballot measure to stop the trash companies.  To put it on the ballot, we need signatures.  To get the signatures needed, it takes a lot of money for the necessary campaign.  When and if enough housing providers put up the money the war will begin.  Until then, housing providers will continue to be treated like dirt!  We are now being treated worse than our trash by our anti-business city politicians.  I strongly encourage you to donate at least $100 to your Political Action Committee, especially this year, so that we can be empowered to fight this and other unjust proposals to steal our property.

An even more important and catastrophic attack on our property rights that we all need to fight is the following article in regard to vacancy decontrol.  Also, see the other article in the magazine about the repeal of vacation decontrol.  

The below article was written by Jeremy Talcott, Esq. of the Pacific Legal Foundation. 

Passage of AB 1506 Could Prompt First Credible Challenge to the Supreme Court of the U.S.’s Historic Position on Rent Control

The Costa-Hawkins Rental Housing Act affords critical protection for California landlords.  Adopted in 1995, it prevents local governments from enacting rent control laws that cover single-family dwellings or apartment buildings built after February 1, 1995.  It also prohibits the use of so-called “vacancy control.”  If tenant rights groups in California get their way, however, Costa-Hawkins could be repealed this year; a bill seeking to do just that – AB 1506, is set to be debated in the California Assembly early this year.

The Threat of Vacancy Control

Vacancy control (“strict” rent control), implements controls on rental prices that persist forever – the artificially low rental rate is established by government and remains in place when one tenant moves out and the next moves in.  In other words, while most rent control programs protect an incumbent tenant from yearly adjustments beyond a particular percentage, they do allow adjustments to the current market rate when that tenant voluntarily vacates the unit.  The new tenant then receives protections starting at the new market rate going forward.

But with vacancy control, the government takes absolute authority over pricing.  A landlord might never again have the chance to set the price of her rental unit at what it is actually worth, and her future income will forever be dependent on the government’s idea of a “fair price.”

The negative effects of rent control and especially of vacancy control are so well documented as to be almost indisputable.  Incentives to create new rental units are diminished, as are the incentives to improve, or even maintain, existing rent-controlled buildings.

Any existing non-controlled units soar in price.  As the prominent Swedish economist Assar Lindbeck once said, “In many cases, rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.”

Nor is rent control particularly effective at helping those most in need.  Rent controlled units often end up filled with middle or upper-class residents, who may stay for life.  For them, rent control is a massive lifestyle subsidy, effectively taking value from the landlord and giving it to the tenant.  The other beneficiary?  Politicians who pass these populist price controls.

Takings Clause Challenges to Rent Control

Rent control has been challenged before in the courts – usually under the theory that such laws take property rights from landlords and give them to tenants, in violation of the Fifth Amendment’s Takings Clause that requires government to provide compensation whenever it take property or property rights.  This clause constitutionally enforces notions of fundamental fairness; if the public wants to create affordable housing, the public, as a whole , should pay for it.  Rent control laws create affordable housing for the public, but force only one group – individual landlords – to bear the cost.

To date, most courts have rejected Takings theories and have noted the retained right to remove the units from the market.  But, if Costa-Hawkins is repealed and strict rent and vacancy control laws passed, the time may be right to bring another constitutional challenge to these laws.  Vacancy control removes permanently the right to set rental rates.  Government gets an important property right, and landlords never get it back.

Rational Basis Review Challenge

Violation of the Takings Clause is not the only way that vacancy controls are potentially unconstitutional.  Although Supreme Court has long given government the benefit of the doubt when reviewing most laws that restrict property rights, there are limits.  All legislation must – at a minimum- be “rationally related” to a “legitimate” governmental interest.  The court calls this “rational basis” review.

To be sure, rational basis review is an uphill battle.  The burden is on the challenger to prove that the government’s justifications are false or improper.  But no policy has been so well documented in its failures as rental control.  In every jurisdiction where rent control has been tried, supply stagnates, prices soar, and price-protected rental units either slowly crumble or are removed from the rental market and put to profitable use.

Neither of these challenges are a sure bet.  They may even be more accurately described as a long shot.  The precedent is bad and the courts have long acquiesced in what amounts to government-sanctioned theft.  But there is reason for hope.  The nomination of Justice Neil Gorsuch put a principled, originalist justice on the Supreme Court.  If another seat, or perhaps even two, becomes vacant during the Trump presidency, appointments in Justice Gorsuch’s mold could give challengers to rent control a more receptive audience on the high court.

Conclusion

Whether the Supreme Court could be persuaded that rent control is a taking under the Fifth Amendment or an irrational deprivation of property under the Fourteenth remains to be seen.  But if California’s tenant rights groups get their way by repealing the Costa-Hawkins Rental Housing Act and passing onerous and disastrous vacancy control laws, we may have our best opportunity in decades to ask the high court to reverse its past precedent and return rightful control of private property to property owners.

[Editor’s Note:  Here’s what you can do to help defeat AB 1506:  Call, write or email your state representatives.  Please phone both offices of our two California State Assemblymen David Chiu and Phil Ting.  Each office tallies the number of calls on all bills so calling both will have the most impact.]

Assemblyman David Chiu

Sacramento office: (916) 319-2017

San Francisco Office: (415) 557-3013

E-mail:  assemblymember.chiu@assembly.ca.gov

Address:  455 Golden Gate Avenue, Suite 14300, San Francisco, CA 94102

Assemblyman Phil Ting

Sacramento office: (916) 319-2019

San Francisco Office: (415) 557-2312

E-mail:  philting@asm.ca.gov

Address:  455 Golden Gate Avenue, Suite 14600, San Francisco, CA 94102

 

Founded in 1973, PLF litigates cases nationwide to vindicate the rights fundamental to a free society. With nine consecutive U.S. Supreme Court victories and counting, PLF fights on the front lines, ensuring individual liberty is secure. Donor-supported Pacific Legal Foundation (www.pacificlegal.org) is the leading watchdog organization that litigates for limited government, property rights, individual rights, and free enterprise, in courts nationwide. PLF represents all clients free of charge.  For more information, visit www.pacificlegal.org, call (916) 419-7111 or write PLF at 930 G. Street, Sacramento, CA 95814.