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CES In The News
Metropolitan News-Enterprise
April 20, 2009

C.A. Upholds Local Rent Control Ordinance on New Units

Sherri M. Okamoto, Staff Writer

This district’s Court of Appeal Friday upheld a Los Angeles municipal ordinance subjecting some newly constructed residential rental units to rent control laws.

Affirming the decision of Los Angeles Superior Court Judge Elizabeth A. Grimes, Div. Three ruled that the ordinance—codified as Los Angeles Municipal Code Sec. 151.28 and enacted pursuant to the Ellis Act—was neither preempted nor barred by the Costa-Hawkins Rental Housing Act.

While the Costa-Hawkins Act generally exempts residential construction with a certificate of occupancy issued after 1995 from rent controls, the Ellis Act authorizes cities to enact ordinances that impose rent controls on newly constructed buildings if they replace demolished residential rental units that had previously been subjected to rent controls.

The Apartment Association of Los Angeles County, Inc.—a trade association representing owners of rental housing—challenged the ordinance. They argued that the Ellis Act’s grant of municipal authority was overridden by the later enactment of the Costa-Hawkins Act.

The city demurred to the complaint on the ground that it failed to state a cause of action, and Grimes sustained the demurrer without leave to amend. She then granted judgment in favor of the city.

Writing for the appellate court, Justice Patti S. Kitching explained that absent an express declaration of legislative intent, the courts will presume that a statute was not impliedly repealed by a subsequent statute unless the two cannot be rationally harmonized.

By interpreting the Ellis Act as providing an exception to Costa-Hawkins, Kitching reasoned the conflicting statutes “can and should be harmonized in a manner that does not preempt City’s ordinance.”

She noted that the purpose of the Ellis Act was to allow landlords to exit the residential rental business by evicting their tenants and withdrawing those units from the rental market.

But in order to avoid efforts by landlords to thwart rent controls by evicting tenants under false pretenses and then re-leasing properties at market rates, the act expressly preserves the authority of local governments to “regulate or monitor the grounds for eviction,” Kitching said.

As the Costa-Hawkins Act specifically provides that it does not “affect the authority of a public entity that may otherwise exist to regulate or monitor the basis for eviction,” Kitching concluded that the Costa-Hawkins Act could not override the Ellis Act’s grant of authority for Los Angeles to enact the challenged ordinance.

Such an interpretation was consistent with the principle of reconciling statutes by giving a more specific provision precedence over a more general provision she added, since the Ellis Act deals only with new residential rental properties and the Costa-Hawkins Act applies more generally to all new construction.

Further, Kitching pointed out that the Ellis Act was amended after the Costa-Hawkins Act was enacted, which indicated that the Legislature did not intend to repeal the existing law.

Presiding Justice Joan D. Klein and Justice H. Walter Croskey joined Kitching in her decision.

Trevor A. Grimm and Craig Mordoh of the California Apartment Law Information Foundation represented the association against the city, which was defended by Deputy City Attorney Gerald M. Sato.

Bet Tzedek Legal Services, Coalition for Economic Survival, Inner City Law Center, Legal Aid Foundation of Los Angeles, Public Counsel, Western Center on Law and Poverty, and Tenderloin Housing Clinic all joined the case as amici curiae in support of the city.

The case is Apartment Association of Los Angeles County, Inc. v. City of Los Angeles, 09 S.O.S. 2143.

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