ELR Citation: ELR 20234
No(s). 06-56306 (9th Cir. Sep 28, 2009)

The Ninth Circuit held that a city's mobile home rent control ordinance, which effects a transfer of nearly 90 percent of the property value from mobile home park owners to mobile home tenants, constitutes a facial regulatory taking under Penn Central Transportation Co. v. New York City, 438 U.S. 104, 8 ELR 20528 (1978). The owners of a mobile home park brought a facial challenge to the ordinance as opposed to an as-applied challenge. Thus, the proper inquiry is not whether the owners can demonstrate that property has been taken, but whether the "mere enactment" of the regulation constitutes a taking. Applying the three factors set forth in Penn Central, the court found that a taking occurred. Although the owners purchased the park several years after the county passed the ordinance but five years before the city adopted it, the court decided that the issue of investment-backed expectations is not determinative but must be considered in tandem with the economic impact of the regulation on the park owners and the character of the governmental action. Here, the undisputed evidence shows that the ordinance has caused a significant economic loss for the park owners. The mobile home rent control ordinance causes a wealth transfer from the mobile home park owners to the incumbent mobile home tenants. This transfer is accomplished by the mere enactment of the ordinance. The "character of the governmental action" test also weighs in favor of the park owners. The park owners may own the property on which the mobile homes rest, but under the ordinance the tenants have the right to convey the home with the right to remain on the site at a much-reduced rent. This looks much more like a classic taking than a mere regulatory burden. Moreover, the ordinance applies only to mobile home park owners. In so doing, the city has singled out the park owners and imposed solely on them a burden to support affordable housing. The case, therefore, was reversed and remanded to the district court to determine what compensation is due.