Source: https://law.justia.com/cases/california/supreme-court/3d/37/97.html
Timestamp: 2019-04-21 12:04:21+00:00

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Robert M. Myers, City Attorney, Stephen S. Stark, Assistant City Attorney, Karl M. Manheim and Susan L. Carroll, Deputy City Attorneys, Michael Heumann, Stephen P. Wiman, David Pettit and Mary Ann Yurkonis for Defendants and Appellants.
Natalie E. West, City Attorney (Berkeley), Penny Nakatsu, Terry B. Friedman, Elyse S. Kline, Jana Zimmer, Merced Martin, Marc B. Mihaly, Shute, Mihaly & Weinberger and James R. Grow as Amici Curiae on behalf of Defendants and Appellants.
Rich & Ezer and Mitchel J. Ezer for Plaintiff and Respondent.
Bonelli, Heib, Fuchs & O'Neal, Stanley Sapiro, Stacey & Jones, Stephen L. Jones, Ronald A. Zumbrun, John H. Findley, Robert D. Links, Andrew M. Colvin, Colvin, Martin & Links, Thomas L. Berkley, Latham & Watkins, Stephen L. Jones and George Kimball as Amici Curiae on behalf of Plaintiff and Respondent.
In this case we are called upon to determine the validity of Santa Monica City Charter section 1803, subdivision (t) ¶ which prohibits removal of rental units from the housing market by conversion or demolition absent a removal permit from the Santa Monica Rent Control Board ¶ as it applies to prevent the owner of an apartment building from evicting his tenants and tearing the building down. The trial court held that the ordinance, as so applied, constitutes a deprivation of property without due process of law in violation of the Fourteenth Amendment of the United States Constitution and article I, section 7, subdivision (a) of the California Constitution.
As is so often the case in constitutional litigation, the issues appear different depending upon one's perspective. For Santa Monica, the challenged provision is nothing more than a land use regulation designed to effectuate the purposes of the city's rent control ordinance of which it is a part, while Nash views it as a means of forcing him to remain a landlord despite his wish to "go out of business" ¶ an interest which he asserts is among the "basic values 'implicit in the concept of ordered liberty.' [Citations.]" (City [37 Cal. 3d 100] of Carmel-by-the-Sea v. Young (1970) 2 Cal. 3d 259, 266 [85 Cal. Rptr. 1, 466 P.2d 225, 37 A.L.R.3d 1313].) There is a degree of merit in both perspectives, but neither is adequate to resolve the issue presented. Rather, as we shall explain, what is required is a realistic appraisal of the impact of the challenged provision upon Nash and the alternatives available to him, on one hand, and of the relationship of that provision to the objectives of the rent control ordinance, on the other. On the basis of that appraisal, we will conclude that while the challenged provision may be said to implicate interests which are entitled to a high degree of constitutional protection ¶ including one's choice whether to remain in a particular business or occupation ¶ the actual limitation upon those interests posed by the challenged provision is minimal and not significantly different from other, constitutionally permissible, limitations upon the use of private property imposed by government regulation. At the same time, the provision, by protecting existing tenants against eviction and the scarce supply of residential housing in Santa Monica against further erosion, clearly serves important public objectives. Consistent with the settled precedent of this court, and the United States Supreme Court, we shall hold that section 1803, subdivision (t), is not constitutionally infirm.
In 1979, the citizens of Santa Monica by initiative added article XVIII to the city's charter. This new article provided for a rent control board with the authority to set and adjust maximum rents and to control the removal of rental units from the housing market. (§ 1803.) fn. 2 The rent control law also [37 Cal. 3d 101] regulates tenant evictions. (§ 1806.) Section 1803, subdivision (t) fn. 3 of the rent control law requires a landlord to obtain a permit before demolishing a building. Where the landlord both owns habitable property and does not wish to rebuild, a demolition permit will be granted only upon a finding that (1) the building is not occupied by persons of low or moderate income, (2) cannot be afforded by persons of low or moderate income, (3) removal will not adversely affect the housing supply and (4) the owner cannot make a reasonable return on his investment.
Respondent Nash was a 17-year-old student when, approximately a year before the rent and demolition controls were enacted, his mother obtained on his behalf a $260,000 apartment building in Santa Monica. fn. 4 He soon became disenchanted, however, with operating rental housing: "There is only one thing I want to do, and that is to evict the group of ingrates inhabiting my units, tear down the building, and hold on to the land until I can sell it at a price which will not mean a ruinous loss on my investment."
Nash began the process of filing for a removal permit, so that he might indeed destroy the building and allow the land to appreciate in value. Because he concededly could earn a fair return on his investment, however, it soon became clear to him that he would not be issued the permit. Thus, rather than complete the statutorily mandated, but probably, for him, futile removal permit application process, Nash sought to circumvent the regulations by filing a petition for writ of mandate in Los Angeles Superior Court.
At trial, Nash admitted that if the apartment were left standing and remained occupied, he could earn a fair return on his investment in the property. [37 Cal. 3d 102] He further conceded that demolition of his building would adversely affect the supply of housing in Santa Monica. The court found the units in Nash's building were occupied by persons of very low, low, or moderate income, and that the rents charged were affordable by them. Thus, the trial court found the prerequisites to the acquisition of a demolition permit had not been satisfied.
Based on these findings, the trial court accepted Nash's argument that the challenged provision operated to deprive Nash of property without due process of law. It also declared, sua sponte, that the provision resulted in a taking of his property without just compensation. It ordered a writ of mandate issue commanding the City of Santa Monica and the Santa Monica Rent Control Board to grant Nash a removal permit for his property.
Nash asserts that he is "not seeking compensation from the City of Santa Monica for being forced to stay in the apartment-rental business, but only the right to go out of that business." Conceding that there are no decisions precisely in point, and without identifying any particular constitutional provision, Nash contends that there must be limitations upon the power of the [37 Cal. 3d 103] state to compel a person to pursue a particular business or occupation against his will.
We agree. The Thirteenth Amendment to the United States Constitution prohibits involuntary servitude. This court has spoken of the basic liberty to pursue and obtain happiness by engaging in the common occupations of the community. (See Sail'er Inn, Inc. v. Kirby (1971) 5 Cal. 3d 1, 17 [95 Cal. Rptr. 329, 485 P.2d 529, 46 A.L.R.3d 351].) The exercise of state power to force upon an individual a career chosen by the state would surely raise substantial questions of constitutional dimension.
Nash seeks to elevate the standard of constitutional review from the "rational relationship" test normally used in appraising the validity of property regulation to a more restrictive "strict scrutiny" test, on the ground that the Santa Monica ordinance implicates his "fundamental right" to cease doing business as a landlord. His argument is that the city has conditioned the exercise of that "fundamental right" upon the relinquishment of his [37 Cal. 3d 104] right not to sell his property, and that this is constitutionally impermissible, absent a compelling governmental interest which, he asserts, does not exist.
Even were we to accept Nash's theory we would be hard pressed to say that there is no compelling governmental interest in the preservation of scarce rental housing against destruction. fn. 5 Chief Justice Bird's opinion presents a cogent argument that on the facts of this case the governmental interest is compelling indeed.
On the contrary, the one reported decision which does pass upon antidemolition controls similar to those contained in section 1803, subdivision (t) upholds their constitutionality against both taking and due process challenge. In Fresh Pond Shopping Center, Inc. v. Callahan (1983) 464 U.S. 875 [78 L. Ed. 2d 215, 104 S. Ct. 218], the plaintiff had purchased property, on which an apartment house was situated, that was located next to a Sears department store. Fresh Pond owned the shopping center in which Sears was located, and leased land to Sears for a store and a parking area. Part of the parcel of land that had been leased to Sears had been taken by eminent domain, reducing the size of the Sears parking lot. In order to replace the lost parking spaces, and pursuant to its lease agreement, Fresh Pond purchased the adjacent property with the intention of demolishing the building and paving over the entire parcel.
The purchase and sale agreement for the property at issue was executed in June 1979 before the enactment of the ordinance later challenged by Fresh Pond. The actual sale did not occur, however, until two days after the ordinance was enacted.
Within two months Fresh Pond was prepared to evict its new tenants and level the apartment in which they were living. The company sought removal permits from the Cambridge Rent Control Board to vacate the building ¶ only one of six apartments was actually occupied ¶ and demolish it according to its original purpose.
The rent control board denied the applications. On appeal, the United States Supreme Court left standing the decision of the Massachusetts Supreme Judicial Court, which earlier had affirmed the rent control board's denial of Fresh Pond's applications for removal permits. While the United States Supreme Court dismissed the appeal of Fresh Pond for want of a substantial federal question, the issues presented by the facts of the case fn. 8 were necessarily decided and the judgment has the force of binding precedent. As the sole dissenter from the judgment, Justice Rehnquist, wrote: "[The issues] might be postponed or avoided if the case were here on certiorari, but the case is an appeal; we act on the merits whatever we do." (464 U.S. at p. 875 [78 L.Ed.2d at p. 215, 104 S.Ct. at p. 218].) Thus, while Nash's contentions with respect to the California Constitution are left to this court for response, the United States Supreme Court has addressed the matter and found the assertion of the unconstitutionality of an ordinance nearly identical to Santa Monica's, by one in almost precisely Nash's position, unavailing for purposes of federal constitutional law. The views of Justice Rehnquist ¶ that the Cambridge ordinance represented a "taking" without just compensation ¶ were apparently rejected by his eight colleagues, and in any event form no part of Nash's contention here.
We conclude the questioned provision, as applied to respondent Nash, is valid. Accordingly, we reverse the judgment below.
Kaus, J., Broussard, J., and Reynoso, J., concurred.
I concur in the result. However, I would rest the holding on somewhat different grounds.
The majority attempt to finesse Nash's personal liberty claim by concluding that the ordinance is essentially an economic regulation which affects Nash's ability to use his private property as he wishes, not his right to cease performing the duties of a landlord. (See maj. opn., ante, at pp. 99, 103-104.) In my view, this line of reasoning elevates formal logic over practical reality.
Prior to the enactment of demolition controls, Nash could have razed his building and used the property for something other than residential leasing. Now, he is reduced to the single option of selling the property. Clearly, the ordinance has made it more difficult to cease being a landlord.
The demolition controls were enacted in response to a demonstrated propensity on the part of Santa Monica landlords to destroy rental housing units. During the so-called "Demolition Derby," landlords razed over 1,300 rental units in a 15-month period. The dissent's assertion that the city could have halted this march of destruction by less restrictive means is mere conjecture.
Further, the ordinance imposes only a minimal constraint on Nash's freedom. As the majority point out, he can escape from the landlord business by the simple expedient of selling his property or withholding rental units from the market as they become vacant. Nash does not contend that this particular piece of property is especially important to him or that a sale would harm his ability to provide for himself or his dependents. In short, [37 Cal. 3d 111] the ordinance burdens Nash's right to withhold personal services only by limiting his ability to maximize the profits from his property. Though this is a burden, it is not an unduly harsh one in view of the city's compelling interest in providing housing for its residents.
As Justice Frankfurter wrote in Bay Ridge Co. v. Aaron (1948) 334 U.S. 446, 484 [92 L. Ed. 1502, 1527, 68 S. Ct. 1186], "On the question you ask depends the answer you get."
In this case if the question is whether a municipality may exercise its police power to reasonably regulate the rental business, the answer is: generally it may do so. But if the question is whether a city may compel a landlord to remain in business against his will, and give him only the alternative of a forced sale, the answer is: not in a democratic society.
The majority primarily consider the former question. In my view the latter issue is relevant under the facts of this case. Thus our answers differ.
I begin with the disbelief of the United States Supreme Court that one may be prevented from going out of business. In Textile Workers v. Darlington Co. (1965) 380 U.S. 263, 270 [13 L. Ed. 2d 827, 834, 85 S. Ct. 994], Justice Harlan wrote for a unanimous court: "A proposition that a single businessman cannot choose to go out of business if he wants to would represent such a startling innovation that it should not be entertained without the clearest manifestation of legislative intent or unequivocal judicial precedent .... We find neither."
This is followed by the opinion of Judge J. Skelly Wright in Robinson v. Diamond Housing Corporation (D.C. Cir. 1972) 463 F.2d 853, 867: "None of this is to say that the landlord may not go out of business entirely if he wishes to do so or that the jury is authorized to inspect his motives if he chooses to commit economic harakiri. There would be severe constitutional problems with a rule of law which required an entrepreneur to remain in business against his will."
Curiously the city relies on the district court opinion in Flood v. Kuhn (S.D.N.Y. 1970) 316 F. Supp. 271, 274, affd. 443 F.2d 264, affd. 407 U.S. 258 [32 L. Ed. 2d 728, 92 S. Ct. 2099], in which it was held that a baseball player is bound by his contractual obligations "subject only to his right to retire from baseball." Here the petitioner is bound by the city rent ordinance, [37 Cal. 3d 112] but apparently not subject to his right to retire from the rental business.
Section 1803, subdivision (t) of the Santa Monica ordinance is in conflict with Bowles, in that the landlord is required to maintain his property as "accommodations for rent" and to offer the rentals under the terms ordered by the city. He is not permitted to opt out.
The city suggests that the property owner may avoid its draconian order by the forced sale of his property to another who would in turn be compelled to continue in the rental business. Assuming arguendo that such a person could be found ¶ a doubtful assumption under these circumstances ¶ the city's rationale leaves much to be desired. The city's theory is deceptively simple: "Once a landlord, always a landlord ¶ or sell the property." The contention is, in effect, that the property owner has a duty to relieve the municipality of its invalid order by dispossessing himself of his property. Or to put it another way: persons who do not choose to abjectly submit to the city violating their fundamental rights should get out of town.
If the city forces this owner to involuntarily transfer his property to a third person, the result is no less a taking than if the municipality itself were to assume title to the property. Thus if the city insists upon its asserted public purpose of maintaining these six rental units ad infinitum, it must condemn the building and pay just compensation therefor. Neither the federal nor state Constitutions permit the city to achieve its purpose by impressing this owner and his property into the mold of a public utility bound in perpetuity to provide, maintain, and operate a housing business.
Contrary to the city's contention, cases involving historical landmarks are not relevant to the rights of a property owner of a strictly commercial structure that is of no known historical value.
The majority rely on Fresh Pond Shopping Center v. Callahan (1983) 464 U.S. 875 [78 L. Ed. 2d 215, 104 S. Ct. 218], a case that has produced no prevailing written opinion at any level. The trial court published no opinion, the Supreme Court of Massachusetts summarily affirmed the judgment by a [37 Cal. 3d 113] tie vote (446 N.E.2d 1060), and the United States Supreme Court summarily dismissed a purported appeal for want of a substantial federal question. That scenario creates no persuasive, let alone binding, authority for anything.
The majority obtain the facts from the only opinion written in Fresh Pond: the dissent of Justice Rehnquist from the dismissal. But they ignore his conclusion: i.e., that he believes the rent control ordinance is the equivalent of "a physical occupation of the appellant's property," which, pursuant to Loretto v. Teleprompter Manhattan CTAV Corp. (1982) 458 U.S. 419 [73 L. Ed. 2d 868, 102 S. Ct. 3164], constitutes a taking without just compensation.
Since the Supreme Court majority declared there is no substantial federal question in Fresh Pond, we are free, as was Massachusetts in that case, to decide the present issue entirely on the basis of state authority. I am convinced that although petitioner has not asserted a taking by the city, the implications of California Constitution, article I, sections 1 and 19, cannot be avoided, and are controlling to prevent the arbitrary actions of the city herein. Also persuasive is Department of Public Works v. San Diego (1932) 122 Cal. App. 159, 169 [10 P.2d 102], in which an act was found to be within the city's police power, but its provisions "do not extend to the point where the owner ... may be compelled to continue its operation or directly compelled to perform specific work which might be necessary to any such continuance."
The foregoing cursory sampling of cases illustrates that being a landlord entails active and vigilant management. Thus when the city compels one to remain a landlord against his will, it is not merely freezing an investment, it is requiring him to perform constant personal services. Since 1865 involuntary personal service has been an anathema in a free society.
After relying on Fresh Pond, a case without a prevailing opinion, the majority seem to desperately seek some relevant authority; they therefore cite Hawaii Housing Authority v. Midkiff (1984) 467 U.S. 229 [81 L. Ed. 2d 186, 104 S. Ct. 2321]. That Hawaiian landowners may have their property taken upon payment of just compensation is small comfort to this plaintiff who must remain a landlord under compulsion and perform the personal services imposed on landlords by case law, or in the alternative involuntarily dispose of his property to someone willing to undertake the required duties of a landlord. Hawaii Housing Authority does not purport to approve of such draconian conduct by a public agency.
The City of Santa Monica and the Santa Monica Rent Control Board (collectively Santa Monica) appeal the issuance of a writ of mandate ordering them to give Jerome J. Nash (Nash) a demolition permit. The writ was granted on the grounds that section 1803, subdivision (t) of the Santa Monica Rent Control Charter Amendment which rendered Nash ineligible for a demolition permit was unconstitutional.
Because the demolition permit requirement of section 1803, subdivision (t) in its application to the fact situation before us violates article I, section 7, subdivision (a) of the California Constitution, we affirm.
In 1979, the citizens of Santa Monica by initiative added article XVIII to the city's charter. This new article provided for a rent control board with the authority to set and adjust maximum rents and to control the removal of rental units from the housing market. (§ 1803.) fn. 1 The rent control law also regulates tenant evictions. (§ 1806.) Section 1803 subdivision (t) fn. 2 of the rent control law requires a landlord to obtain a permit before demolishing a building. Where the landlord both owns habitable property and does not wish to rebuild, a demolition permit will be granted only upon a finding that (1) the building is not occupied by persons of low or moderate income, (2) cannot be afforded by persons of low or moderate income, (3) removal will not adversely affect the housing supply and (4) owner cannot make a reasonable return on investment.
On or about December 3, 1979, Nash petitioned the rent control board for a demolition permit. Although required to do so by regulation, Nash did not concurrently file a petition for rent increase. He justified this omission on the grounds that he did not want to change the rents; he wanted to destroy the structure. The rent control board returned his petition for a demolition permit as incomplete.
Based on those findings, the trial court concluded as a matter of law that the rent control board's refusal to issue the demolition permit amounted to a deprivation of property without due process of law, and a taking for public use without just compensation. A peremptory writ of mandate was issued commanding the rent control board to issue Nash a removal permit. An appeal was timely filed on September 1, 1980.
On appeal, Santa Monica claims that the demolition restrictions are squarely within the ambit of the police power. Nash contends that the restrictions exceed the bounds of the police power by impermissibly impinging on his right to go out of the landlord business.
1. Standard of review is strict scrutiny.
Under section 1803 subdivision (t) as long as the structure is habitable and low or moderate income people can afford the apartments, the owner cannot get a permit to withdraw the rental units from the market. A landlord cannot terminate his business fn. 4 by evicting all the tenants and letting the building stand empty, since evictions are carefully regulated. (See § 1806.) Additionally, because conversion permits are available only under the same conditions as demolition permits, an owner cannot cease being a landlord by selling the units as condominiums. fn. 5 The only possible way out is to sell to someone who is willing to be a landlord. To do so, however, may cause substantial financial hardship if the value of the property has dropped as a result of rent control. A landowner who wishes to keep the land is therefore compelled to stay in the residential rental housing business. Thus, the rent control law impinges upon the individual's right to go out of business.
Having demonstrated that the right involved is the right to go out of business, we must now determine whether infringements of that right are subject to strict scrutiny. The resolution of this issue turns on the nature of the right.
The right to cease operating a business has not been widely discussed, hence its contours and boundaries are not clear. We do not purport here to define fully the extent of the right to go out of business, since its very core is infringed upon by the statute before us. Generally speaking, it is the right of the individual to stop working in a given occupation or the operation of a given business. fn. 6 Although the right does not restrict the state's power to regulate the conduct of a business voluntarily engaged in, it restricts the government's ability to force the individual to participate in a particular enterprise. Because it touches the individual's ability to make a choice which greatly affects his or her life style, the right to go out of business is a personal freedom. Its title, which makes it sound like an economic right, is therefore deceptive.
The group of rights protected by strict judicial scrutiny is not limited to rights expressly set forth in the Constitution, but "extends to basic values 'implicit in the concept of ordered liberty.' [Citation.]" (City of Carmel-by-the-Sea v. Young (1970) 2 Cal. 3d 259, 266 [85 Cal. Rptr. 1, 466 P.2d 225, [37 Cal. 3d 118] 37 A.L.R.3d 1313]; Serrano v. Priest (1976) 18 Cal. 3d 728, 767 [135 Cal. Rptr. 345, 557 P.2d 929].) Therefore, that the right to go out of business is neither an express nor a widely acknowledged right does not bar the application of strict scrutiny.
Indeed, California courts have even been reluctant to force landowners to use property in a specified manner. In Dept. of Public Works v. San Diego (1932) 122 Cal. App. 159, 166-167 [10 P.2d 102], the court stated: "While the police power may limit and restrict the uses to which an owner may put his property, it may not compel him to use such property for a particular purpose if he prefers to abandon such a use thereof." The right to cease to operate a business, impacting as it does on the work efforts of the proprietor, is one aspect of this more general freedom.
Like the right to enter an occupation, the right to terminate a business involves a personal decision concerning the individual's role in the economy. Both protect the individual's ability to use his or her talents and resources in the manner best suited to bring life satisfaction and economic security.
Given the close relationship between the right to go out of business and other rights which are fundamental, the rational basis standard of review [37 Cal. 3d 119] seems improper. Accordingly, we shall use heightened scrutiny in evaluating laws which infringe upon the right to go out of business.
Here section 1803, subdivision (t) does not just make it hard for a property owner simultaneously to keep his land yet cease being a landlord, it makes it impossible. Therefore, although it appears on the surface that section 1803, subdivision (t) is a purely economic regulation, it fundamentally affects a personal right and strict scrutiny must be applied.
2. Section 1803, subdivision (t) fails to meet the strict scrutiny test.
"When rights of such fundamental nature are involved, 'regulations limiting these rights may be justified only by a "compelling state interest," [citations] and ... legislative enactments must be narrowly drawn to express only the legitimate state interests at stake.'" (Perez v. City of San Bruno, supra, 27 Cal. 3d 875 at p. 890, fn. 11.) Assuming arguendo that Santa Monica's interest in preserving the stock of rental housing is compelling, we must decide whether the statute is drawn closely enough to pass constitutional muster.
These other laws demonstrate that it is possible to pursue the goals of avoiding the depletion of the housing stock and preventing upward pressure on rents without forcing a landowner to be in the residential housing business against his/her will.
The Santa Monica law may be marginally more effective than those of other jurisdictions. Realistically, however, few landowners will prefer to see their land lying fallow instead of producing income; thus, the practical effect of such strong removal restrictions on the housing stock is probably minimal.
Additionally, we note that the vacancy rate in surrounding communities is higher than in Santa Monica. fn. 7 Therefore, a fractional decrease in Santa Monica's housing stock should not have a strong adverse effect on the public as alternative accommodations are available. While Santa Monica has the right to preserve housing regardless of what occurs in neighboring jurisdictions, greater housing opportunities in the surrounding areas make the Santa Monica controls less "compelling." On the other hand, the incursion on the right to go out of business is strong.
Santa Monica may be concerned that less stringent regulation of removals would permit the circumvention of the rent control law by allowing landlords to demolish their buildings and then replace them with newly constructed units which are not subject to rent control. While this concern is legitimate, (see discussion in Flynn v. City of Cambridge (1981) 383 Mass. 152 [418 N.E.2d 335, 339, 21 A.L.R.4th 1075]), less intrusive means may be found for achieving it. Santa Monica could make new construction on lots formerly containing rent controlled property subject to rent control.
FN 1. City of Santa Monica, Housing Element Technical Report (Jan. 1981) at pages 54, 142, 233.
FN 2. Unless otherwise indicated all section references are to Santa Monica City Charter, article XVIII.
FN 3. Section 1803, subdivision (t) provides as follows: "(t) Removal of Controlled Rental Unit From Rental Housing Market: Any landlord who desires to remove a controlled rental unit from the rental housing market by demolition, conversion or other means is required to obtain a permit from the Board prior to such removal from the rental housing market in accordance with the rules and regulations promulgated by the Board. In order to approve such a permit, the Board is required to make each of the following findings; [¶] (1) That the controlled rental unit is not occupied by a person of family of very low income, low income or moderate income. [¶] (2) That the rent of the controlled rental unit is not at a level affordable by a person or family of very low income, low income, or moderate income. [¶] (3) That the removal of the controlled rental unit will not adversely affect the supply of housing in the City of Santa Monica. [¶] (4) That the landlord cannot make a fair return on investment by retaining the controlled rental unit. [¶] Notwithstanding the foregoing provisions of this subsection, the Board may approve such a permit: [¶] (1) If the Board finds that the controlled rental unit is uninhabitable and is incapable of being made habitable in an economically feasible manner, or [¶] (2) if the permit is being sought so that the property may be developed with multifamily dwelling units and the permit applicant agrees as a condition of approval that the units will not be exempt from the provisions of this Article pursuant to Section 1801(c) and that at least fifteen (15) per cent of the controlled rental units to be built on the site will be at rents affordable by persons of low income."
FN 4. The apartment became respondent's when he reached the age of majority.
FN 6. Nash does not suggest that the parcel which he now owns in Santa Monica has some personal or sentimental value to him which distinguishes it from other property which Nash might purchase with the proceeds. Nash has not lived in any of the apartments, and his plans for the property do not include any personal use. Rather he has held the property, and plans to hold it, in the manner typical of personal or corporate investors in real estate, i.e., purely as a form of economic investment. To the extent that selling his property is Nash's only alternative to remaining in business as a landlord, the resulting detriment, if any, can only be economic in nature.
FN 7. Nash relies also upon Textile Workers v. Darlington Co. (1965) 380 U.S. 263 [13 L. Ed. 2d 827, 85 S. Ct. 994], which held that the National Labor Relations Act does not prohibit an employer, even for antiunion reasons, to go out of business entirely, and upon dicta in that opinion to the effect that the contrary proposition "would represent such a startling innovation that it should not be entertained without the clearest manifestation of legislative intent or unequivocal judicial precedent." (Id., at p. 270 [13 L.Ed.2d at p. 834].) Nothing in that opinion suggests that the contrary proposition would be unconstitutional, however, and in any event a rule prohibiting a landlord from demolishing a building is clearly of a quite different order from a rule which would require a textile manufacturer to continue manufacturing textiles. The Supreme Court's views as to the issue presented here are more accurately reflected in its opinion in Penn Central, supra, and in Fresh Pond, infra.
Finally, Nash relies upon Robinson v. Diamond Housing Corporation (D.C.Cir. 1972) 463 F.2d 853, which upheld limitations upon retaliatory evictions, and upon the following dicta in that case: "None of this is to say that the landlord may not go out of business entirely if he wishes to do so or that the jury is authorized to inspect his motives if he chooses to commit economic harakiri. There would be severe constitutional problems with a rule of law which required an entrepreneur to remain in business against his will." (Id., at p. 867.) The issue posed by the dicta was not presented in the case, however, nor was that issue considered in the context of an ordinance, such as Santa Monica's, aimed at preserving housing for low or moderate income tenants.
FN 8. These included both a takings and a due process challenge to the operation of the ordinance.
San Diego is clearly distinguishable on its facts. (People v. Greene (1968) 264 Cal. App. 2d 774, 779 [70 Cal. Rptr. 818].) Even on the facts of that case, the court's dicta concerning the taking of private property without compensation is dubious in light of cases like Penn Central, supra, 438 U.S. 104. Moreover, Nash asserts no takings claim here.
FN 1. For purposes of this discussion, I assume that Nash would, as a practical matter, have no alternative but to perform substantial personal services were he to continue in the apartment rental business. The record is not entirely clear on this point. Nash might have been able to avoid performing the services that were distasteful to him by, for example, placing his rental units in trust. However, in view of my conclusion that the ordinance passes constitutional muster under the standard of strict scrutiny, I find it unnecessary to delve further into this question.
FN 1. Unless otherwise indicated all section references are to Santa Monica City Charter, article XVIII.
FN 2. Section 1803, subdivision (t) provides as follows: "(t) Removal of Controlled Rental Unit From Rental Housing Market: Any landlord who desires to remove a controlled rental unit from the rental housing market by demolition, conversion or other means is required to obtain a permit from the Board prior to such removal from the rental housing market in accordance with the rules and regulations promulgated by the Board. In order to approve such a permit, the Board is required to make each of the following findings: [¶] (1) That the controlled rental unit is not occupied by a person or family of very low income, low income or moderate income. [¶] (2) That the rent of the controlled rental unit is not at a level affordable by a person or family of very low income, low income, or moderate income. [¶] (3) That the removal of the controlled rental unit will not adversely affect the supply of housing in the City of Santa Monica. [¶] (4) That the landlord cannot make a fair return on investment by retaining the controlled rental unit. [¶] Notwithstanding the foregoing provisions of this subsection, the Board may approve such a permit: [¶] (1) If the Board finds that the controlled rental unit is uninhabitable and is incapable of being made habitable in an economically feasible manner, or [¶] (2) if the permit is being sought so that the property may be developed with multifamily dwelling units and the permit applicant agrees as a condition of approval that the units will not be exempt from the provisions of this Article pursuant to Section 1801(c) and that at least fifteen (15) per cent of the controlled rental units to be built on the site will be at rents affordable by persons of low income."
FN 3. Nash did not seek to defend the trial court's conclusion that section 1803, subdivision (t) constituted a compensable taking. Because of our resolution of the due process issue, we need not consider whether the resolution of the taking issue was correct.
We take judicial notice of statistics from the department of city planning pursuant to Evidence Code section 452, subdivision (h).

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