Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)

Citation: Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)
Parent Document: Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)
Jurisdiction: California (state)
Effective Date: 1997-08-26
Original Source: https://www.courtlistener.com/opinion/5607899/kavanau-v-santa-monica-rent-con... ↗

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Moreover, the Court of Appeal assumed the City’s maintenance of net operating income formula without the 12 percent limit established the minimum “fair return” under the state and federal Constitutions. (Kavanau I, supra, 19 Cal.App.4th at p. 733.) Based on this assumption, the Court of Appeal concluded the 12 percent limit put Kavanau’s return below the constitutional minimum. But the court did not explain why the 12 percent limit could not be one aspect of a comprehensive scheme that as a whole provided landlords a fair return. (Cf. Pennell v. San Jose, supra, 485 U.S. at pp. 13-14 [108 S.Ct. at p. 858].) “The economic judgments required in rate proceedings are often hopelessly complex .... The Constitution is not designed to arbitrate these economic niceties.” (Duquesne, supra, 488 U.S. at p. 314 [109 S.Ct. at p. 619].) Thus, courts do not “examine[] piecemeal” the “subsidiary aspects of [a state agency’s] ratemaking methodology” (id. at p. 313 [109 S.Ct. at p. 618]), and flexibility in one part of a regulatory scheme may offset restrictiveness in another (id. at p. 314 [109 S.Ct. at p. 619]). We see no reason why a reasonable annual limit on rent increases cannot be consistent with a fair return.

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