Findings

A HOUSING SHORTAGE

The California Supreme Court has ruled that rent controls must be justified by a housing shortage(1). Findings help provide the basis for concluding that a shortage exists and that rent control legislation is needed as a curative measure. Findings carry great weight in the courts, but are not binding.

SUPPORTED BY TESTIMONY


Often findings are copied from other ordinances. Each finding should be supported by oral or written testimony from mobilehome residents submitted during the public agency's public review of the proposed ordinance.

FAIR RETURN FINDING

Ordinances commonly include a finding (called a Fair Return Finding) which states that while rent controls protect tenants from unreasonable rent increases, they must also permit a "fair return on property" or "fair return on investment.” 

In light of the lack of clarity and certainty in constitutional doctrine regarding fair return, it is recommended that reference in the findings should be to a "fair return" without additional modifiers, such as "on investment" or "on property.” Without bringing additional clarity to an ordinance, such modifiers tend to create issues over which opposing interests may debate. (The details of fair return standards are discussed in the Fair Return post.)

References:

1. In Birkenfeld v, City of Berkeley, supra, the California Supreme Court ruled that the constitutionality of residential rent controls "depends upon the actual existence of a housing shortage and its concomitant ill effects of sufficient seriousness to make rent control a rational curative measure."  17 Cal.3d 129, 160 [130 Cal.Rptr. 465, 488].

Source: The GSMOL Mobilehome Rent Stabilization Ordinance Handbook, Second Edition: Guidelines for Drafting and Enacting a Mobilehome Rent Stabilization Ordinance.

Prepared by: Bruce Stanton, Esq., Corporate Counsel
Image courtesy of Carl Eric Leivo, Ph.D.