Eminent Domain Report

We've covered the Guggenheim v. City of Goleta regulatory takings case pretty exhaustively, most recently noting there is a pending petition for Supreme Court review.  While we wait for the fateful decision as to whether the Supreme Court will take up the Guggenheim case, the 9th Circuit Court of Appeals recently issued another mobilehome rent control regulatory takings decision in Colony Cove Properties v. City of Carson.  Like the 9th Circuit's en banc decision in Guggenheim, the park owner's regulatory takings claim was unsuccessful.

The owner in Colony Cove purchased the mobilehome park for $23 million in 2006, well after the implementation of the City of Carson's 1979 rent control ordinance.  However, the City amended the ordinance's "Guidelines" in 2006 subsequent to the owner's purchase.  The owner applied for a general rent increase of about $600 per space per month, and the City only approved an increase of $35.  To put the park owner's detriment into context, the owner claimed the ordinance resulted in a $30 million decrease in the property's value, and allowed the mobilehome owners to receive on average $118,000 for their $33,000 mobilehomes.

The owner filed suit in federal court, alleging that the City's rent control ordinance deprived the owner of the value of its property while allowing park residents to sell their mobilehomes at a premium (an argument similar to that put forth Guggenheims).  The owner made a facial and as applied challenge to the ordinance, claiming it violated the Fifth Amendment's Taking Clause.

As is the case with many regulatory takings challenges, the district court dismissed the facial takings claim as time-barred, and the as-applied takings claim as unripe.  The 9th Circuit agreed that the district court properly dismissed the case.

In particular, the owner's facial claim was time barred because the 2006 amendment to the ordinance's "Guidelines" was not a substantive amendment to the actual 1979 rent control ordinance, and therefore the owners were nearly 30 years late in challenging the ordinance enacted in 1979.  As to the as-applied claim, the owner failed to first file an inverse condemnation action in state court, which was a prerequisite to bringing the claim in federal court.

Colony Cove involves a slightly different set of circumstances than Guggenheim, but the end result (at least so far) is the same.  The owners' best option now may be to seek their own Supreme Court review and hope that this case, combined with Guggenheim, gets the Court's attention.  .