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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Here, the City’s rent control scheme is sufficiently flexible to permit the Rent Board to consider past confiscatory rent ceilings when evaluating a landlord’s petition for a rent increase. (Charter, § 1805(e).) Kavanau, of course, is not necessarily entitled to rent increases equal to the exact amount by which his past rents fell below some imagined constitutional minimum. *785Rather, he is merely entitled to future rent ceilings that will “maintain financial integrity, attract necessary capital, and fairly compensate [him] for the risks [he has] assumed, and yet provide appropriate protection to the relevant public interests, both existing and foreseeable.” (Permian Basin, supra, 390 U.S. at p. 792 [88 S.Ct. at p. 1373].) But, in measuring the future rent ceiling for a particular apartment, the Rent Board must take into consideration the effect on Kavanau, if any, of the temporary enforcement of its confiscatory regulation with respect to that apartment. In this regard, we note Kavanau’s actual loss in this case may be small or nonexistent. For example, the Rent Board arguably could have satisfied the Kavanau I mandate by waiving the 12 percent limit, but imposing a higher limit, under some other regulatory provision, that adequately accommodated Kavanau’s interest in a fair return. If, in response to Kavanau I, the Rent Board allowed Kavanau to increase rent in accordance with its maintenance of net operating income formula, but without any annual limit, it may already have enabled Kavanau to recoup his losses. In addition, the 12 percent limit was not confiscatory to the extent market conditions would have prevented Kavanau from increasing rent more than 12 percent even if the Rent Board had not enforced the limit.

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