Court Opinion

ID: 9548374
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:02:31.434626+00
Date Added: 2024-06-11T15:18:52.342694
License: Public Domain

MOSK, J.
I dissent.
Satisfying the housing needs of persons in lower economic strata is necessary, but the issue is whether that obligation can be thrust upon private property owners rather than remain a responsibility of society as a whole through tax-supported government agencies. The majority have selected an *376alternative they concede is unprecedented—no other city ordinance has been so written and no California case has approved a comparable technique— and I am convinced this scheme is unconstitutional.
The ordinance exhibits constitutional infirmity on its face. While the ordinance allows both automatic and cost-related increases to the landlord (§§ 5703.2, 5703.5, 5703.28, subds. (a) & (b)), section 5703.28, subdivision (c)(6), makes the additional rent increase dependent on the tenant’s financial hardship. (§ 5703.29.) This criterion is entirely arbitrary and unjustifiable; indeed, it runs counter to a legitimate purpose of rent control regulation, i.e., assurance of a fair and reasonable return on the owner’s investment.
As the majority themselves point out, tenant hardship is given potentially overriding weight under the ordinance. Thus, tenants qualifying under certain federal standards—a large category made up of all families in San Jose whose income is less than 80 percent of the median—are “deemed” to suffer economic hardship “which must be weighed” in the hearing officer’s determination. (Ibid.) Giving meaningful weight to that factor necessarily results in depriving landlords of what the hearing officer would otherwise calculate as a reasonable return, based on the particular rental history of the unit, its condition, housing services provided, financial information such as debt service, and existing market value for comparable units. (§ 5703.28, subd. (c)(l)-(5).)
The majority simply beg the question when they treat the portion of the rental determination that subdivision (c) might permit as in effect a bonus for landlords with nonhardship tenants. It is true that such rents exceed those permissible as a matter of right under the other provisions of the ordinance. (§ 5703.28, subds. (a) & (b); § 5703.2.) Nevertheless, the hearing officer is required by the clear language of the provision to determine if a rental increase is “reasonable under the circumstances,” not to authorize the receipt of more rents than a landlord is due. If a proposed rent is truly in excess of his due, it will be unreasonable by definition. Indeed, the stated purpose of the section is to provide a means by which a landlord can receive a fair return on his particular unit when the increases permissible by right are deficient, inadequate and therefore “[unreasonable under the circumstances.”
Simply on the basis of the hardship status of his tenant, one landlord will receive a significantly lower rent than another landlord in identical circumstances if the latter merely had the good fortune of renting to a nonhardship tenant. That disparity is untenable when it means that the former landlord is deprived of the reasonable return on his property to which he would *377otherwise be entitled. Such uneven treatment amounts to a forced subsidy imposed on the landlord in violation of the due process clauses of the United States and California Constitutions, which prohibit the taking of property without just compensation. (See Prop. Owners Ass’n, Etc. v. Tp. of No. Bergen (1977) 74 N.J. 327 [378 A.2d 25, 29, 5 A.L.R.4th 908].)
Moreover, although we have repeatedly upheld rent control ordinances that apply to landlords as a class, this measure goes a critical step further by requiring individual landlords to reduce rentals for individual tenants with financial hardship. There is no rational link, either in the benefit gained or the burden created, which would justify imposing that welfare obligation as a one-on-one subsidy, rather than spreading the imposition fairly through the class of landlords generally or taxpayers as a whole.
The majority discount the obvious analogy to our reasoning in Dept. of Mental Hygiene v. Kirchner (1964) 60 Cal.2d 716 [36 Cal.Rptr. 488, 388 P.2d 720, 20 A.L.R.3d 353], because we have not previously extended that case explicitly to rent control matters. I believe, on the contrary, that Kirchner is on all fours with the unusual circumstances of this case: a small class of persons, here landlords of hardship tenants, are required to shoulder what is essentially a public burden, in this case the social necessity of easing the plight of economically depressed citizens. Such a subsidy—like the requirement in Kirchner that relatives of persons committed involuntarily to mental institutions pay the costs of treatment—amounts to involuntary taxation. As we held in Kirchner, “A statute obviously violates the equal protection clause if it selects one particular class of persons for a species of taxation and no rational basis supports such classification.” (Id. at p. 722.)
The tragic aspect of the provision is that it will likely prove detrimental to the very interests it seeks to protect. Landlords, who will have a great deal to lose by renting to economically marginal tenants, hereafter will carefully screen potential tenants to assure themselves of remaining entitled to a fair return on their properties. It is ironic that in upholding this unconstitutional ordinance the majority accede to a counterproductive result.
Lucas, J., and Saldamando (Alexander E.), J.,* concurred.

 Judge, San Francisco Municipal Court, assigned by the Chairperson of the Judicial Council.