An Orange County landlord group is seeking to overturn the protections against rent increases and evictions enacted by Santa Ana, Calif., in 2021.
The Apartment Association of Orange County—who filed a complaint in the Orange County Superior Court against the city on Feb. 14—called the city’s rent control ordinance “unconstitutional” in a statement.
“The city’s establishment of a rental housing board … is by design unconstitutionally biased against property owners in the city,” the Feb. 14 statement read. “Furthermore … the city’s rent control scheme [will] necessarily deprive property owners of a fair return on their investments – a standard that the United States and California Supreme Courts have consistently held to be a constitutional guarantee.”
Under the city’s law, landlords can’t raise rents by more than 3 percent per year.
In years with high inflation, rent increases will be limited to three percent maximum—and to 80 percent of the inflation rate in years with low inflation, according to the ordinance.
For example, when inflation is 1 percent, a maximum of 0.8 percent rent increase is allowed. When inflation is 10 percent, property owners can raise rents by 3 percent.
“The ordinance’s rent control scheme is most pernicious in years where the need to raise rents is the highest for property owners,” the complaint stated. “But even if inflation is low, property owners will never be able to increase rents commensurate with inflation.”
The association’s president, John Tomlinson, said in the statement that the group has tried to work with the city prior to the law’s adoption, but the city refused to meet with the organization.
“We could have avoided this lawsuit – and most likely found better solutions, had we been able to work with the city,” Tomlinson said. “Their exclusion of our industry is why we are now in this situation.”
Despite this, the city has offered several alternate options for property owners.
Landlords may petition to raise the rent beyond the 3-percent limit if they prove they can’t get a “fair and reasonable return” on their properties.
Additionally, come July, landlords can petition to pass their apartment’s renovation and installation expenses onto tenants.
The complaint is also challenging the Rental Housing Board, a seven-member board appointed by the city last year that would enforce rent control policies and oversee disputes between landlords and tenants.
A spokesperson for Santa Ana was not immediately available for comment.