Opinion ID: 1193965
Heading Depth: 1
Heading Rank: 2

Heading: City's Power to Provide for Rent Control by Initiative Amendment to Its Charter

Text: (1) It is contended that the defendant city was barred from imposing rent controls by the conceded absence of any state statute authorizing local legislation on the subject. As will be hereinafter discussed, the regulation of rents is proper only insofar as it is a valid exercise of the police power. (2) The Constitution itself confers upon all cities and counties the power to make and enforce within [their] limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws. (Cal. Const., art. XI, § 7.) A city's police power under this provision can be applied only within its own territory and is subject to displacement by general state law but otherwise is as broad as the police power exercisable by the Legislature itself. ( Stanislaus Co. etc. Assn. v. Stanislaus (1937) 8 Cal.2d 378, 383-384 [65 P.2d 1305]; In re Maas (1933) 219 Cal. 422, 425 [27 P.2d 373].) The decisions cited in support of the contended necessity for statutory authorization of municipal rent control measures are all from other jurisdictions and make clear that the involved cities did not have any broad grant of police power such as that enjoyed by California cities. (See Old Colony Gardens, Inc. v. City of Stamford (1959) 147 Conn. 60 [156 A.2d 515] (legislature's prior termination of municipal rent controls negated any implication of rent control power in city charter); City of Miami Beach v. Fleetwood Hotel, Inc. (Fla. 1972) 261 So.2d 801 (city charter powers strictly construed); Ambassador East, Inc. v. City of Chicago (1948) 399 Ill. 359, 365-367 [77 N.E.2d 803]; Marshal House, Inc. v. Rent Review, etc. Board (1970) 357 Mass. 709 [260 N.E.2d 200] (proscription against municipal enactment of private or civil law governing civil relationships except as an incident to ... an independent municipal power); Tietjens v. City of St. Louis (1949) 359 Mo. 439 [222 S.W.2d 70] ([a] city has no inherent police power); Wagner v. City of Newark (1957) 24 N.J. 467 [132 A.2d 794].) On the other hand, the decisions construing grants of municipal power comparable in breadth to the police power of California cities under article XI, section 7, of our Constitution hold that such powers encompass the imposition of local rent controls. (See Heubeck v. City of Baltimore (1954) 205 Md. 203 [107 A.2d 99] (grant of Police Power to the same extent as the State has or could exercise); Inganamort v. Borough of Fort Lee (1973) 62 N.J. 521, 534, 536 [303 A.2d 298] (grant of greatest power of local self-government consistent with the Constitution; `grant of broad general police powers to municipalities'); Warren v. City of Philadelphia (1955) 382 Pa. 380, 384 [115 A.2d 218] (grant of all powers relating to its municipal functions ... to the full extent that the General Assembly may legislate in reference thereto).) (3) Defendant and interveners properly concede that rent control is not a municipal affair as to which a charter provision would prevail over general state law under article XI, section 5 of the Constitution. [9] (See Bishop v. City of San Jose (1969) I Cal.3d 56, 61-63 [81 Cal. Rptr. 465, 460 P.2d 137]; Butterworth v. Boyd (1938) 12 Cal.2d 140, 146-148 [82 P.2d 434, 126 A.L.R. 838].) Accordingly the charter amendment cannot be given effect to the extent that it conflicts with general laws either directly or by entering a field which general laws are intended to occupy to the exclusion of municipal regulation. ( Lancaster v. Municipal Court (1972) 6 Cal.3d 805 [100 Cal. Rptr. 609, 494 P.2d 681]; City of Santa Clara v. Von Raesfeld (1970) 3 Cal.3d 239, 245-246 [90 Cal. Rptr. 8, 474 P.2d 976]; Galvan v. Superior Court (1969) 70 Cal.2d 851, 859 [76 Cal. Rptr. 642, 452 P.2d 930]; In re Hubbard (1964) 62 Cal.2d 119, 127-128 [41 Cal. Rptr. 393, 396 P.2d 809].) [10] The fact that the charter amendment prohibits landlords of residential units within the city from charging more than the maximum rents prescribed by a municipal rent control board under specified standards does not bring the amendment into conflict with general state law. California has no state rent control statute. There is of course extensive state legislation governing many aspects of landlord-tenant relationships, some of which pertain specifically to the determination or payment of rent. (See, e.g., Civ. Code, § 827 (changing rent terms in tenancies of one month or less); Civ. Code, § 1935 (apportionment of rent); Civ. Code, § 1942 (right to deduct from rent for cost of repairs); Civ. Code, § 1942.5 (restricting retaliatory rent increases); Civ. Code, § 1947 (when rent is payable); Civ. Code, § 1950.5 (advance payments of rent).) But neither the quantity nor the content of these statutes establishes or implies any legislative intent to exclude municipal regulation of the amount of rent based on local conditions. (See Galvan v. Superior Court, supra, 70 Cal.2d at pp. 860-864.) The charter amendment's purpose of preventing exploitation of a housing shortage through excessive rent charges is distinct from the purpose of any state legislation, and the imposition of rent ceilings does not materially interfere with any state legislative purpose. (See People v. Mueller (1970) 8 Cal. App.3d 949, 954 [88 Cal. Rptr. 157].) Whether the relevant field be deemed to be rent control as such or a broader aspect of landlord-tenant relations (see California Water & Telephone Co. v. County of Los Angeles (1967) 253 Cal. App.2d 16, 27-28 [61 Cal. Rptr. 618]), there is no legislative indication of a paramount state concern [which] will not tolerate further or additional local action. ( In re Hubbard, supra, 62 Cal.2d at p. 128.) [11] (4) It is contended that rent control is not within the municipal police power because it is private law purporting to regulate private civil relationships. Such an exception to municipal powers has received support from some commentators and was included in the home rule article of the Massachusetts Constitution in the form of a provision denying cities any inherent power to enact private or civil law governing civil relationships except as an incident to an exercise of an independent municipal power. (Mass. Const., Amends., art. 89, § 7, subd. (5).) The Massachusetts Supreme Judicial Court construed this provision as preventing cities from enacting rent control measures in the absence of enabling legislation. ( Marshal House, Inc. v. Rent Review, etc. Board, supra, 357 Mass. 709.) The California Constitution contains no such private law exception to municipal powers. The fact that municipal imposition of rent ceilings necessarily affects private civil relationships by no means makes it unique among city police regulations. For example, a city ordinance specifying the liability insurance to be carried by a bus operator may give rise to a direct right of action against the insurer for injuries caused by the operator's negligence ( Milliron v. Dittman (1919) 180 Cal. 443 [181 P. 779]), and violation of municipal building or housing codes may establish negligence in a tort action ( Finnegan v. Royal Realty Co. (1950) 35 Cal.2d 409 [218 P.2d 17]), render a lease unenforceable as an illegal contract ( Howell v. City of Hamburg Co. (1913) 165 Cal. 172, 176 [131 P. 130]), or give rise to a defense of breach of warranty of habitability in an action for rent or for recovery of possession based on nonpayment of rent ( Green v. Superior Court (1974) 10 Cal.3d 616, 637-638 [111 Cal. Rptr. 704, 517 P.2d 1168]; Hinson v. Delis (1972) 26 Cal. App.3d 62 [102 Cal. Rptr. 661]). Thus, the mere fact that a city rent control measure would nullify tenants' liabilities to landlords for rent in excess of stated ceilings does not render the measure invalid. [12] (5) It is contended that the charter amendment even if otherwise valid could not be adopted through the initiative process without the concurrence of the city council. Several arguments are advanced in support of this contention; none of them has merit. It is argued that the charter amendment's adoption violates the principle that the initiative is ordinarily deemed inapplicable where the inevitable effect would be greatly to impair or wholly destroy the efficacy of some other governmental power. ( Chase v. Kalber (1915) 28 Cal. App. 561, 569-570 [153 P. 397]; accord, Simpson v. Hite (1950) 36 Cal.2d 125, 134 [222 P.2d 225].) The governmental power that it is asserted the charter amendment would impair is the city council's power to raise tax revenues to carry on the municipal government. Past decisions invalidating initiative or referendum measures to repeal local tax levies have indicated a policy of resolving any doubts in the scope of the initiative or referendum in a manner that avoids interference with a local legislative body's responsibilities for fiscal management. ( Geiger v. Board of Supervisors (1957) 48 Cal.2d 832, 839-840 [313 P.2d 545]; Hunt v. Mayor & Council of Riverside (1948) 31 Cal.2d 619, 628-629 [191 P.2d 426]; Campen v. Greiner (1971) 15 Cal. App.3d 836, 843 [93 Cal. Rptr. 525].) Although the rent control measure in no way touches upon the city council's power to levy taxes, it is theorized that rent control would cause fiscal chaos in the long run by impairing the city's tax base. In support of this theory our attention is drawn to published articles depicting dire consequences attributed to rent control in New York City and other communities on the eastern seaboard. Interveners cite contrary material praising the effects of rent control. Although these disputed matters would be appropriate for consideration by a legislative body or the electorate in deciding whether to adopt a rent control proposal, they cannot be relied upon for the purpose urged here. Many sorts of initiative measures arguably affect the property tax base (e.g., the initiative zoning ordinances recently upheld in San Diego Bldg. Contractors Assn. v. City Council, supra, 13 Cal.3d 205, and Builders Assn. of Santa Clara-Santa Cruz Counties v. Superior Court (1974) 13 Cal.3d 225 [118 Cal. Rptr. 158, 529 P.2d 582]) but such speculative consequences do not constitute a prohibited interference by the initiative power with the function of a legislative body. Another objection raised to the use of the initiative procedure to adopt the charter amendment is that the amendment prescribes detailed procedures for carrying out its substantive provisions and thus violates a supposed rule that the initiative cannot deal with administrative (as distinct from legislative) matters. However, the decisions cited in support of this objection concern the entirely different situation of an initiative ordinance that is deemed an improper interference with the local legislative body's administrative functions assigned to it by a state statute or other controlling instrument containing the legislative policies to be administered. (See Simpson v. Hite, supra, 36 Cal.2d at pp. 133-135; Housing Authority v. Superior Court (1950) 35 Cal.2d 550, 557-559 [219 P.2d 457]; McKevitt v. City of Sacramento (1921) 55 Cal. App. 117, 124 [203 P. 132].) The present charter amendment interferes with no preexisting legislative policy but instead performs the purely legislative function of introducing a new regulatory scheme. (6) It is argued that the use of the initiative process to adopt a municipal rent control measure is precluded by the unavailability to the electorate of factfinding procedures by which a legislative body can ascertain the existence of facts that would warrant the imposition of rent controls. [13] However, the cases relied upon for the argument deal only with factfinding procedures that are attached as conditions precedent to particular grants of legislative powers. Thus the empowering provisions of the relevant statute or charter were construed in those cases as imposing such factfinding prerequisites as ascertainment of the prevailing wage before fixing county salaries ( Walker v. County of Los Angeles (1961) 55 Cal.2d 626 [12 Cal. Rptr. 671, 361 P.2d 247]), the holding of hearings before enactment of a zoning ordinance by a general law city ( Taschner v. City Council (1973) 31 Cal. App.3d 48, 61-64 [107 Cal. Rptr. 214]), or the declaration and existence of a great necessity or emergency before exceeding the maximum tax rate ( San Christina etc. Co. v. San Francisco (1914) 167 Cal. 762 [141 P. 384]) or of urgency necessitating putting an ordinance into immediate effect ( In re Hoffman (1909) 155 Cal. 114, 119 [99 P. 517]). The power of the Berkeley electorate to amend their city charter through the initiative is derived from article XI, section 3, of the Constitution and is free from any such factfinding prerequisite. Accordingly, as we said in another case with reference to an initiative city ordinance, the charter amendment must be deemed to have been enacted on the basis of any state of facts supporting it that reasonably can be conceived. ( Higgins v. City of Santa Monica (1964) 62 Cal.2d 24, 30 [41 Cal. Rptr. 9, 396 P.2d 41].) Even if the city council itself had proposed the charter amendment (Cal. Const., art. XI, § 3, subd. (b)), we could not probe the council members' motivations for doing so ( County of Los Angeles v. Superior Court (1975) 13 Cal.3d 721, 726-727 [119 Cal. Rptr. 631, 532 P.2d 495]) and would be required to judge the amendment's validity by its own terms rather than by the motives of or influences upon the legislators ( City and County of San Francisco v. Cooper (1975) 13 Cal.3d 898, 913 [120 Cal. Rptr. 707, 534 P.2d 403]). The subjective motivations of the voters who petitioned for and approved the amendment's adoption are similarly irrelevant to our inquiry, which is therefore unaffected by any comparison between the factfinding procedures available to the electorate and to the city council. (7) Finally it is argued that initiative enactment of local rent control measures violates landlords' due process rights because tenants are in the majority and will always vote in favor of rent control as a result of their direct economic interest in the outcome. [14] The fact that the initiative process results in legislation reflecting the will of the majority and imposing certain burdens upon landlords can hardly be deemed a ground for holding the legislation invalid. It is of the essence of the police power to impose reasonable regulations upon private property rights to serve the larger public good. ( Queenside Hills Co. v. Saxl (1946) 328 U.S. 80, 82-83 [90 L.Ed. 1096, 1097-1098, 66 S.Ct. 850]; Clemons v. City of Los Angeles (1950) 36 Cal.2d 95, 102 [222 P.2d 439].) Moreover, this can be accomplished by the initiative, as in the case recently before us in which a city electorate initiated and adopted an ordinance that in effect prevented the owners of lots near the ocean from building high-rise structures that would have blocked views from larger areas located farther inland. (See San Diego Bldg. Contractors Assn. v. City Council, supra, 13 Cal.3d 205.) We expressly recognized the propriety of using the initiative process to enact local legislation adversely affecting only a small minority of the population in Dwyer v. City Council (1927) 200 Cal. 505 [253 P. 932], where we rejected a claim that a Berkeley zoning ordinance was beyond the initiative and referendum powers because its sole effect would be to rezone a tiny fraction of the city. We said: It is a fundamental tenet of the American system of representative government that the legislative power of a municipality resides in the people thereof, and that the right to exercise it has been conferred by them upon their duly chosen representatives. By the enactment of initiative and referendum laws the people have simply withdrawn from the legislative body and reserved to themselves the right to exercise a part of their inherent legislative power.... It is a characteristic of much legislation, especially in this age of intense specialization of occupations and interests, that it operates, to a greater or less degree, more directly upon one group or section of the population than upon another.... (200 Cal. at p. 513.) The vice of respondents' argument consists in placing undue stress upon the sectional interest which residents of a particular district may be expected to have in restrictions more immediately affecting their district and in under-emphasizing the interest of the community as a whole in the existence of a comprehensive zoning plan. It must be presumed that the electorate will act in the interests of the entire city, and of the part to be affected by the proposed legislation. If the law operates more directly upon only a part of the citizens evil intent or design cannot be presumed. (Italics supplied; 200 Cal. at p. 514.) [15] The scope of the initiative power reserved to the people is to be liberally construed. ( Farley v. Healey (1967) 67 Cal.2d 325, 328 [62 Cal. Rptr. 26, 431 P.2d 650]; Blotter v. Farrell (1954) 42 Cal.2d 804, 809 [270 P.2d 481]; Ley v. Dominguez (1931) 212 Cal. 587, 593 [299 P. 713].) Judicial protection of landlords' rights with respect to rent control enactments such as the present charter amendment lies not in placing arbitrary restrictions upon the initiative power but in measuring the substance of the enactment's provisions against overriding constitutional and statutory requirements.