One Year In—A Progress Report on AAOC’s Lawsuit Against the City of Santa Ana

On Valentine’s Day last year, AAOC filed the first lawsuit in its 62-year history, against the city of Santa Ana over the unconstitutional elements of the city’s rent stabilization and just cause eviction ordinance. Anyone familiar with local rent control ordinances around California, who read the Santa Ana ordinance, knew exactly where the problems were—and where there were clear rationales for a legal challenge. Specifically—

• An unconstitutional limit to the rent control cap

• An illegal composition of the rent control board

• Potential for an overreaching rental registry

• Conflicts with federal, state, and local regulations

It was a poorly constructed ordinance that cut and paste from other city ordinances around the state, and it failed to acknowledge the lawsuits that altered those policies.

And that was before we even focused on the fact that the ordinance was approved by one vote, by a member of the city council who had a financial conflict of interest—or that the actions that the city has taken since have created further problems with the city policy.

So, on the first anniversary of the lawsuit being filed, AAOC thought it would check in with its lead attorney, Christopher Skinnell of Neilsen Merksamer, to see where things stand with its case.

AAOC: Tell us what you thought when we brought this lawsuit to you and your team at Neilsen Merksamer.

Skinnell: To be honest, the very first reaction I had was shock that rent control had finally come to Orange County—of all places. There were a handful of localities in California that adopted rent control in the late1970s and early 1980s, mostly in coastal areas, but then the forward momentum largely stopped for several decades. There is a pretty widespread consensus among economists across the political spectrum that rent control is a deeply counterproductive economic policy, often hurting the ones it is meant to help, and most local jurisdictions seemed to get that. But, in the last few years, we’ve seen renewed interest in rent control in places that we wouldn’t have previously imagined. I was also struck by how aggressive the measure—like a lot of the recent measures—is, purposely preventing landlords from even keeping up with inflation.

AAOC: How do you think things are progressing?

Skinnell: We had something of a victory last fall, defeating the City’s motion to dismiss our case right out of the gate, and right now we are in the discovery phase, preparing to move forward on the merits of our complaint.

AAOC: Why are we going to mediation? Is there anything you think we can negotiate with the city?

Skinnell: The short answer is, the judge assigned to our case requires mediation for all cases, without exception, but mediation may provide a useful forum for discussing some of the defects with the current measure.

AAOC: Assuming the mediation does not result in an agreement, what is the next step?

Skinnell: If mediation is unsuccessful, then the next steps are to finish the discovery process and likely move toward a motion for summary judgment this spring. Most of these claims are more legal than factual, and so are likely amenable to being resolved on motions. Failing that, the court has scheduled a jury trial in late July for any claims that remain at that point.

AAOC: In the California General Election this fall, there will be a statewide ballot initiative that seeks to expand rent control, and a city ballot measure that would codify Santa Ana’s rent stabilization and just cause eviction ordinance by making it part of the city’s charter, if passed. How will AAOC’s lawsuit be impacted by these measures?

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Skinnell: Of our four claims—two related to the composition of the rent board, one based on due process, and one based on the Political Reform Act—the statewide measure will not likely have a direct impact on any but the due process claim.

As for that one, if the statewide measure were successful, it would open the door to the application of rent control to units that are currently exempt, including “new construction”—units built after 1995—or single-family homes.

Our claim is that the rent board is unlikely to be able to keep up with landlord petitions, which are likely to grow more and more voluminous due to the sub-inflationary annually allowable rent increase, and expanding rent control to more units may further exacerbate that problem.

As for the proposed charter amendment, the text of the measure remains essentially the same, so our claims would, too. Our claims are based on federal and state constitutional and statutory law that would apply to a charter amendment just as much as they do to an ordinance.

AAOC: What do you think are the best outcomes possible for AAOC?

Skinnell: The best outcome, from a cost and timing perspective, would be for the City to understand—perhaps in connection with the mediation—how counter-productive this ordinance is in terms of actually contributing to affordable housing. But failing that, we hope that the court will enforce the constitutional constraints on this measure to ensure that property-owners’ constitutional rights are protected.

AAOC: How can AAOC members help out?

Skinnell: It would be helpful to receive any information that becomes avail- able regarding the enforcement of the measure, particularly with respect to the processing of landlord petitions under the ordinance.

AAOC: Thank you, Christopher. We appreciate your time, your insight, and your efforts on behalf of AAOC and its members who are impacted by Santa Ana’s rent control law.

Coming up on February 20th, the city of Santa Ana will be conducting a public hearing to discuss its proposed increase of sewer rates by 119% in the first year. We encourage our members to read more about the proposal on the AAOC website, then submit a petition to the city objecting to the increase given that rent increases are capped at 2.54% this year in Santa Ana. When you do, please send a copy of your objection to chip@aaoc.com. Additionally, please forward to us any petitions you make against the city of Santa Ana for any issue so that we can make sure these efforts are submitted to the courts.