Guggenheim v. City of Goleta

GOODWIN, T. Bеfore ALFRED KLEINFELD, ANDREW J. and JAY S. BYBEE, Judges. Circuit BYBEE; Opinion by Judge Dissent Judge KLEINFELD BYBEE, Judge: Circuit taking had occurred. For the reasons ex- below, plained we agree with the district Guggenheim bring Daniel and others court that this case is properly brought challenge to the facial Goleta’s decision, ripe disagree we with Gug home rent control ordinance. mobile court district on the merits of the ordinance, argues that genheim which takings claim. Because we that a find nearly percent transfer of effects occurred, taking has re- reverse and property value from home park mobile mand to the district tenants, court to determine to mobile home constitutes owners compensation what is due. We affirm the regulatory taking under Penn Central judgment district court’s Transportation City, pro- Co. v. on the New York due 104, 2646, equal protection 98 L.Ed.2d cess and U.S. S.Ct. 57 631 claims. (1978). challenges We have fielded such I

before, but have never reached the merits See, e.g., Equity of claim. A Props., County Inc. v. Lifestyle San of Takings The Clause of the Fifth Amend ”), Obispo (“Equity Lifestyle Luis 548 F.3d ment, applicable made to the states (9th 1184, Cir.2008); 1190 n. 11 Carson Amendment, through the Fourteenth see Ltd., Carson, v. City Harbor Vill. 37 of Q.R. & Chicago, B. Co. v. Chicago, 166 (9th 468, Cir.1994), 475-77 overruled 236, 226, 581, U.S. 17 S.Ct. 41 L.Ed. 979 Techs., grounds by on other Inc. v. WMX (1897), provides that “private property Miller, 1133, (9th Cir.1997) 104 F.3d 1136 public use, [shall be taken for not] without (en Levald, banc); City Inc. v. Palm of just compensation.” The Takings Clause Desert, (9th 680, 998 F.2d Cir. 686-89 prohibit “does not the taking private of 1993); v. City Sierra Lake Reserve of property, places but instead a condition on Rocklin, 951, (9th Cir.1991), 955 power.” of that exercise English First vacated, 802, 31, 506 U.S. 113 121 S.Ct. Evangelical Lutheran Church Glendale (1992). 4 L.Ed.2d County Angeles, Los taking To determine whether has oc- (1987). 107 S.Ct. 96 L.Ed.2d 250 curred we must decide issues. several We Takings The Clause was drafted so “not as first must determine the mobile whether governmental to limit the interference with standing bring home owners have se, rights per but se rather to case. Additionally, this we must consider cure compensation the event of other ripe case is under William- wise proper amounting interference to a County Planning Regional son Commis- taking.” Id. 107 S.Ct. 2378. v. Hamilton Bank City, sion Johnson “ Takings Clause from ‘bar[s] Government U.S. 105 87 L.Ed.2d forcing people some alone to public bear so, If then we must determine which, in all justice, burdens fairness and city whether the ordinance constitutes a ” by should be borne public as a whole.’ regulatory taking under Penn Central. Inc., Lingle v. Chevron U.S.A. U.S. challenges also address to the ordi- We 528, 537, 161 L.Ed.2d 876 under the Equal nance Due Process and (2005) (quoting Armstrong v. United Protection Clauses. States, 40, 49, The district court did not address either (1960)). L.Ed.2d 1554 standing ripeness due to questions To case, determine whether a procedural the unusual mobile-home history implicitly rent properly taking found the case control ordinance constitutes a was Constitution, brought. The district court found no under the un- must first RCO, including provisional as its new characteristics unique some derstand (2008); § homes “The fact these code. See mobile homes. Cal. Gov’t Code mean that do City can moved does not of Goleta Ordinance No. 02-01. later, move.” John re- About two months Steinbeck, Travels With (Pen- Charley: provisions of adopted reference most In Search of America 1986) (1962). As guin described code, RCO, Books County as including Court: city ordinances. Goleta permanent “mobile home” somewhat The term No. 02-17. Ordinance misleading. largely homes are Mobile in the “Purpose” The statement of RCO matter, practical because immobile unchanged has remained since signifi- moving one is often a cost passed by County first of the mobile cant fraction the value purpose prevent was to mobile home They generally placed home itself. charging exorbitant park owners place, permanently parks; once exploit housing shortages rents to local every 1 in homes only about mobile fact mobile home owners owner is ever moved.... A mobile home easily could not move their homes: land, of called a typically plot rents a growing shortage housing A of units re- “pad,” of a home owner mobile vacancy sulting critically in a low rate park. park provides private owner rising rapidly and and exorbitant rents common facilities park, roads within exploiting shortage constitutes seri- machines a swim- washing such as or problems affecting ous sub- housing and often utilities. The mo- ming pool, portion stantial of those Santa Barbara bile owner often in site- home invests in County who reside rental residents specific improvements such as a drive- housing.... is Especially acute way, steps, walkways, or land- porches, and problem vacancy rapid- of low rates scaping. When the mobile home owner ly rising in and exorbitant rents mobile move, wishes to the mobile home is usu- parks in the County home of Santa Bar- ally place, the purchaser sold and bara. Because of such factors and the pad continues to rent the on which the high moving mobilehomes, cost of ... mobile home located. supervisors finds board of and de- Escondido, City Yee v. of necessary protect clares it the owners (1992) 1522, 118 L.Ed.2d and of from un- occupiers mobilehomes (citation omitted). reasonable rents while at the same time Barbara, County of Santa California recognizing the need for mobile home (the “County”), enacted its first Rent Con- park owners to receive a fair return on (the “RCO”) trol and Ordinance their and investment rent increases suf- City it in 1987. In amended ficient to cover their increased costs. incorporated County. Goleta within the § 11A-1.1 RCO law, As the new required California any City immediately by ref- The RCO limits increases mobile adopted of Goleta entirety, rents to 75 County’s per- erence the code home on an annual basis City adopted County Because the of Goleta the RCO Code ... it shall mean reference,” Goleta.”). “by copy the authoritative of the A of Santa Barbara’s current source may County http:// RCO RCO is found code. See version be found (adopting www.bpcnet.com/codes/stbarb/, by clicking Goleta Ordinance No. 02-17 most provisions “Chapter County "by of the code on the link titled 11 Mobilehomes.” reference” stating 'County' opinion and to the or The citations in this refer RCO "[w]henever 'County Santa Barbara’ used in as amended in 1987. in the local year ending, cent the increase Consumer then the arbitrator shall (“CPI”). §§ Price Index RCO 11A- offset against any the difference in- 5(a)(2), llA-5(a)(3), HA-5(g). This in- capital crease for expenses old unless crease is as the referred to “automatic such already difference has been used to park increase.” Mobile home owners offset an increase for a new capital ex- also rent an increase the additional pense or capital another old ex- pass through operat- amount to increased pense .... costs, ing capital expenses, capital im- (6) Finally, an amount add in- cover provements. This increase is referred to capital creased costs for improvements, “discretionary as the increase.” RCO if any. The arbitrator shall have discre- § HA-5(f)(l); 11A-6. The RCO sets out tion to justified add such amount as is process by arbitration which own- by the evidence and permitted otherwise ers must work the mobile with home own- by this ordinance. ers and an arbitrator determine the 11A-5(I). § RCO The RCO also contains total permissible amount of the in- rent a vacancy provision, control which limits 11A-4, §§ crease for year. each permissible rent increase to 10 percent 11A-5. The must arbitrator follow a com- § when a unit is sold. RCO 11A-14. plicated formula to determine amount sum, any increase in of the “just excess automatic RCO mandates that a increase: reasonable return” for the park owners

(1) First, grant always one-half automat- must than equal be less to exact- management just ic increase to as a ly percent one half of 75 of the annual reasonable return investment. The increase of permits the CPI. The RCO no arbitrator shall have discretion to park togo owners to arbitration pass just award additional amounts as a and costs, through additional but such costs reasonable return investment. on re-captured must be without any return on (2) Next, grant one-half the automatic investment. In the event a tenant his sells increase to management cover in- unit, or her park the owners are entitled to operating creased costs. The arbitrator percent; one-time rent increase of 10 shall have no discretion award less subsequent are capped by increases the than this for operating amount costs. regular formula. (3) Next, oper- add an amount cover costs, in ating any, if excess of B one-half of the automatic increase. The arbitra- tor shall have discretion to add such Appellants Guggenheim, Daniel Susan justified by amounts as are the evidence (col- Guggenheim, and Maureen H. Pierce by and this permitted chapter. otherwise Owners”) lectively, the purchased “Park (4) Next, add amount cover new the Ranch Mobile Estates mobile home capital expenses. Where one-half of the (“the Park”) in at which time automatic increase more than the ac- the Park in an unincorporated was located tual increase in costs operating for the part of the At County. the time of the year ending, then arbitrator shall purchase, therefore, subject the Park was against any offset the difference increas- County’s to the RCO as amended in expenses. es for capital new City incorporated When the in (5) Next, add an amount to cover old city’s Park fell new jurisdiction. within the capital one-half expenses. Where of the adopted Because the City by the RCO automatic increase more than the ac- reference, tual operating increase in costs for the continued to Park be sub- after in Santa Barbara incorporat- litigating claims City after the ject to the RCO Court, fed then returned to Superior and ed. for time.2 eral court a second City incorporated, A month after the court, in brought suit federal Park Owners challenges to the RCO. only facial alleging court, the Park Owners Back federal claimed, alia, vio- inter Park Owners partial summary judgment. moved for Clause, Due Takings

lations undisputed The district court reviewed the Equal Protection Clause, and Process also raised facts the affidavits documents Owners The Park Clause. claims, City claiming by proffered parties. found state law The court complex required procedures during the proper follow time the Park failed Owners when Code Government Park, by housing the California owned in the costs Park Apparently, the RCO. it enacted the approximately percent. increased Be- even the lawsuit Owners initiated RCO, by charged cause rents they though Park purchased with keep pace the Park Owners did they City adopted claimed because rents re- increase. The below-market “hearings any or studies RCO without mobile ability home owners sulted County’s to whether the investigations as significant premi- at a to sell their homes appropriate needed or Ordinance was (the The district premium). um transfer City.” complaint Owners’ found, report on a provided court based attempted “had represented that Owners, premi- the Park transfer with the officials-elect to discuss meet to, average, percent of um amounted adoption the Coun- City’s potential of’ words,” the dis- price. the sale “In other RCO, City for to the ty’s “applied and had found, home average “an mobile trict court vacancy control potential relief from the $12,000 for approximately would sell worth County restriction Ordinance^] $100,000.” court found that The district any adopted without it was nevertheless ... “the facts establish uncontroverted City.” The Park change Defendant premium,” of a that even existence adopted complained that when it City acknowledged existence “[t]he RCO, City failed to review “[t]he premium.” a of such any on County findings make Code or summary granted The district court need” for purpose there was of judgment real market. on the claim favor the RCO the current estate 29, At the Park on October 2004. stayed fed The district court the viable the time the district court made its deter doctrine, to eral claims under the Pullman mination, the was law the Ninth Circuit complex of certain permit resolution government regulation that a effected or nar might law claims that “moot state if did taking regulation such not “substan questions.” San row constitutional tially legitimate interests. advance” state City County and San Remo Hotel v. Tiburon, See, Francisco, (9th e.g., Agins 1095, v. Cir. 145 F.3d 1998). 255, 260, 2138, L.Ed.2d parties law The settled their state U.S. chal- particular appeal, begins passage with the of the Of relevance to this run 2. stipulated gap parties Lifestyle, that there in time lenged Equity was law. 548 F.3d at in effect when no control ordinance was rent "gap in clarified supposed The time” stipulated was neces- over the Park. This fact RCO, litiga- City’s purposes for sary support of the the timeliness Park tion, Thus, the Park was enacted in challenges to The Owners’ facial the RCO. suit, timely. Owners’ initiated claim of limitations for facial statute regulatory taking constituted a under City and Coun- v. (1980); Richardson Honolulu, 1165-66 Transportation Penn Central Co. v. New ty of Cir.1997) a condominium (9th (holding City, York permits incum- ordinance that rent control (1978). L.Ed.2d 631 The court reviewed capitalize owners condominium bent both parties’ expert reports found and of reduced land rent will present net value impact the evidence as to economic substantially goal its further of creat- regulation was “mixed”: owner-occupied ing housing affordable and Although Park [the en- Owners] taking). thus constitutes The district joyed a rate of return comparable to it undisputed court found that the RCO investments, other real estate [the effected a one-time wealth transfer suggest Owners’] evidence tends to the Park Owners to the ten- incumbent they would have earned perhaps more— ants, and that the RCO failed to substan- much more—in the absence of the RCO. tially purpose advance its stated of provid- ing found, housing. affordable court The district court also denied the Park therefore, that the RCO was unconsti- Owners’ motion summary judgment for on regulatory taking tutional and the Park their process substantive due equal just Owners were compensa- entitled protection The parties claims. continued City timely tion. appealed. prepare designating experts, trial — 23, 2005, agreeing lists, May On while the on witness and case was exhibit appeal, Lingle Court filing decided motions in limine. Inc., U.S.A. Chevron July 27, On the district court sua 2074, 161 Lingle L.Ed.2d 876 sponte issued an Order to Show Cause repudiated the “substantially advances” why not, the court should own mo- theory upon which the Park Owners had tion, summary judgment enter in favor of prevailed.3 light this development, City. On September after re- the parties stipulated to vacate the district viewing parties’ responses, the district judgment court’s return for what summary court entered judgment favor

would be their litiga now fourth round of on all of the Park Owners’ tion a trial before court. remaining causes action. The court stated: challenge Because this is a facial to the After some renewed pre-trial litigation, ordinance in question, the evidence [the court district issued series sum- present Park to at trial Owners] seek mary judgment rulings in which it found in Fifth vis[-]a[-]vis their Amendment favor of the on each of the Park [T]akings claim is irrelevant. [C]lause remaining Owners’ constitutional claims. facially To attack the ordinance as an 5, 2006, April On the district court denied uncompensated “taking,” the Park Park partial [the Owners’ motion sum- mary finding that must that judgment, Owners] the Park demonstrate Owners to judgment were entitled as a mere enactment the ordinance consti- law matter of as to whether a taking. tutes Dev., "substantially generally 3. The found ad- Court S.Ct. 2074. See Crown Point theory “prescribes inquiry Valley, v. vances” in the Inc. Sun 854- test, (9th Cir.2007) process, a due takings, (discussing Lingle’s nature of not a 56 reason- place proper ing Takings and that has no impact jurispru- it in our and its Clause dence). jurisprudence.” Lingle, U.S. at 125 Rather, that Park we complained then must first court determine whether a attempted to litigant “standing” has “impermissibly bring had suit in the into an action, facto, injury.4 as- forum alleged de federal for his convert this 471-72, 102 court did The district applied challenge.” id. at S.Ct. 752. however, it not, identify which evidence Court has defined stand “impermissible” in a or found “irrelevant” “the ing question as generally of ... court takings claim. The district facial litigant is entitled have it explicit whether incor- also not make did dispute merits of the court decide the or of April analysis Park porated its Seldin, v. particular issues.” Warth claim into final Penn Central Owners’ L.Ed.2d U.S. judg- it final

judgment or whether entered recognized have that a We ground the Park solely on the Own- ment minimum present must at plaintiff suit presenting ers were barred evidence in order to satisfy with “three elements” challenge. in a The Park Owners facial question us this can be that answered af timely appealed in manner. firmatively. Dep’t Colwell Health & Servs., 558 F.3d 1121-22 Human II Cir.2009) (9th Lujan v. (quoting Defenders already litigated This case has been 555, 560, Wildlife, 504 U.S. level, three full rounds at the trial through (1992)). plaintiff A L.Ed.2d including one in state court and two injury first “have suffered an must court, producing victory for the federal one protected a legally fact—an invasion of Owners, the City, Park one for and one tie (a) particu and interest which is concrete (the settlement). Accordingly, (b) imminent, and actual larized or we surprise before reach come as Lujan, conjectural hypothetical.” appeal, of the Park Owners’ we merits (internal 112 S.Ct. 2130 quota plaintiffs must consider whether omitted). “Second, tions there must be a standing to this case and whether bring injury connection causal between ripe for decision. case complained injury the conduct has of—the fairly challenged be traceable to the A defendant, of the not the result action III, adjudi- our power Under Article independent action of some third cate is limited to “cases” and “controver- (internal party not before the court.” Id. Const, Ill, 2, § art. sies.” U.S. cl. omitted). quotation marks and alterations Accordingly, are not authorized de- Finally, ‘likely,’ opposed “it must be “merely dispute party cide a because merely ‘speculative,’ injury will requests a court of the States to United ” a favorable decision.’ Id. ‘redressed legal rights, declare its couched 561, 112 S.Ct. 2130. historically request for forms relief no two question There is latter associated with courts of law terms that standing inquiry satis- elements ring have a familiar trained in the those by the Park Owners. The Own- fied Valley legal process.” Forge Christian comprehensive analysis of ers submitted a Separation Ams. Coll. v. United for Inc., State, 464, 471, effects of the RCO demonstrat- the which Church and 454 U.S. (1982). the the ed that the reduced rents 70 L.Ed.2d Village, standing, standing sponte.” Harbor Although party addressed sua Carson neither "[bjecause standing necessary ais element of 37 F.3d at 475. jurisdiction, we the issue of federal raise Park by approximate- Owners could collect standing takings not have to state a facial $10,000 ly per year. See n. 14. The claim. 37 F.3d at 476. We reasoned that infra link between the Park injury Owners’ park “necessarily owner’s claims rest the RCO is thus not “fairly “tenuous” but рremise on the that an in property interest City’s Tyler traceable” action. See was taken from property all mobile home (9th Cuomo, F.3d 1132-33 upon owners statute’s enactment.” Id. Cir.2000). If we were to determine that Accordingly, taking, because a facial “[i]n the RCO effected a taking, the Park Own- discrete, singular the harm occur- ers are due compensation their for loss— ring only at time the statute is enact- thus, “merely it is not speculative ... plaintiff] ed.... did [b]ecause [the not own injury will be redressed a favorable property when the statutes were en- decision.” Id. at 1133. alleged takings acted and when the facial occurred, injury incurred no enti- Nevertheless, we must still deter tling it to assert a facial claim.” Id. Like- mine whether have wise, in Lifestyle, Equity we dismissed injury” “actual they “alleged have —that park takings mobile home owner’s facial personal such a stake the outcome of injury claim because “the is treated as controversy assure concrete having previous occurred to the landown- sharpens adverseness which the presenta occupied er” who the mo- tion of upon issues which the court so allegedly ment the offending statute was largely depends for illumination of difficult enacted. 548 F.3d at 1193. Carr, constitutional questions.” Baker v. 186, 204, noted, 369 U.S. 82 S.Ct. L.Ed.2d deciding We have also without injury” This “actual require issue, opin Court’s ment legal Island, “tends assure that the ques ion Palazzolo v. Rhode presented tions to the court will be re 121 S.Ct. 150 L.Ed.2d 592 solved, atmosphere rarified of a (2001), question calls into principle debating society, in a concrete factual subsequent property owner does not context conducive apprecia realistic standing to challenge have assert a facial consequences judicial tion of the action.” statutory thought enactment effec Forge, Valley 454 U.S. at taking. Equity Lifestyle, tuate a 11, 1193 n. n. 15. In Palazzo lo, rejected only Court notion Although every this case there is the landowner the time of the statute’s (and indication that the Park Owners enactment could assert a valid City, who never raised question claim under Penn Central. See 533 U.S. standing) personal believed had (“[A 630, 121 S.Ct. 2448 claim] controversy— stake the outcome by the fact that not barred mere title was indeed, parties litigated both the merits of acquired after the effective date of the the claim times over—we pre- several restriction.”). state-imposed The Court viously standing plaintiffs denied to similar remarked that law “[a] does not become bringing takings challenges against facial background principal subsequent own rent Equity control ordinances. See Life- Id; Equity enactment see 1193; ers itself.” style, 548 F.3d at Carson Harbor Lifestyle, 548 F.3d at 1190 n. 11. These Village, 37 F.3d at 475-76. Carson statements, noted, previously as we have Village, held that a Harbor mobile Village’s cast doubt on Carson Harbor ra purchased home owner who had regulated allegedly denying standing un- tionale for subsequent after passed purchasers constitutional ordinance was did a indicate that subse- — a 105 S.Ct. 3108. William- a nied. Id. may have stake quent purchaser hurdle, id. an additional regulation. the See also set forth against son facial suit challenges: only as-applied applicable however, if rule case, even the In this must have received property owner the Palazzolo, Village Harbor survives Carson appropriate regu- the from “final decision” satisfy case Article Ill’s the Park Owners challenged the law latory entity as how Although controversy requirements. property applied the will be the issue. purchased Owners burdened the Park 192-93, the eighteen years after The latter property in Id. at S.Ct. 3108. ten the RCO and passed first County applicable is not here because requirement amended, the it was years after only a have raised facial Park Owners Park after the adopted RCO challenges exempt are challenge. “Facial Park. possession were in Owners prong decision”] from the [“final stipulated that Additionally, parties ripeness analysis because Williamson period time was some between there challenge by its nature does not facial City’s adop- City’s incorporation and the statute or applying involve a decision rent control in which no tion of Mobile Es- Valley Hacienda regulation.” 2.n. supra in effect. See ordinance was Hill, City Morgan tates Thus, that Harbor Vil- assuming Carson (9th Cir.2003) (citation omitted). law, though lage good even is still might standing to chal- Owners not that this The district court found RCO, they lenge County’s use of although slightly on a differ ripe, case was plaintiffs are the sort of Carson precisely theory. ent When the Park Owners filed facial Village bringing envisioned Harbor court, they ap district had suit federal challenge City’s to the RCO. See Carson to ask for proached of Goleta (“[Fjacial Village, Harbor 37 F.3d at RCO, brought not relief from the had necessarily rest on the [takings] claims suit in a Califor an inverse condemnation property premise an interest Thus, nia court. the Park Owners had property taken from all mobile home own- satisfy prong, first failed Williamson’s enactment.”). We upon ers statute’s owners exhaust state property find the Park Owners have therefore court found that remedies. district claim. standing bring takings their challenges the Park facial were Owners’ of a narrow ex ripe nevertheless because B requirement. ception to Williamson “[A] claim must[also] brought At the time the Park requirements. ... comply with timeliness suit, taking that a claim law constituted early (unriрe) It must be filed neither too “substantially because it did not advance” (barred by limita nor too late a statute of exempt purpose of that law was tions).” Equity Lifestyle, 548 F.3d Yee, requirement. the Williamson County Regional Williamson 533-34, U.S. at S.Ct. Planning Bank Commission v. Hamilton exception Court had created the for chal 172, 185, 105 City, Johnson “substantially the lenges on the advances” (1985), 87 L.Ed.2d 126 the Su “this de ory allegation because does preme Court held claim petitioners on the extent to which pend until owner has at ripe par their deprived of economic use of just tempted compensation obtain ‍‌​​​​​​‌​‌​‌​‌​​‌​​‌‌‌‌‌‌‌‌‌​​‌‌​​‌‌​‌‌​‌​​‌​‌‌​‍pieces ticular or the extent property through loss of his or her are com particular petitioners which these procedures provided the state for ob (cit- taining compensation pensated.” such and been de- Ass’n ing Keystone Bituminous Coal

DeBenedictis, 480 U.S. 107 S.Ct. In to determine the Park order whether (1987)). Thus, 94 L.Ed.2d the under William- ripe Owners’s claims are permitted to litigate Park were Owners son, so, and, if they whether have satisfied court; they federal through their claims Williamson requirements, we must Williamson and its eventually closely on look prevailed “substantially proge- ny- theory. advances” As the at oral contended repudiated Supreme When the Court argument, Williamson under come in Lin theory “substantially advances” scrutiny since it was decided. Counsel gle, presumably theory’s loop it closed this the Park Owners accused Williamson hole in the Williamson See requirements. having effectively “closed the federal Hotel, County L.P. v. City San Remo and litigants seeking courthouse doors” to to Francisco, 345-16 & San an important right vindicate embedded n. 125 S.Ct. 162 L.Ed.2d 315 the Fifth Amendment the United States (2005) Williamson did not (stating Constitution. He not the to was first level claims, “substantially reach advances” but fact, accusation. In Lingle, such claims were noting that after already Court has acknowledged foreclosed). Therefore, Lingle once effect Williamson is that practical plain- stipulated to parties

decided va alleging tiffs violations of Takings first of the district court judgment cate the Clause will almost opportu- never have the litigate court and return to that to nity litigate to their federal claims fed- Hotel, claims, eral court. See San Remo remaining the ripe Park Owners’ 337-41, 344-48, Wil- 125 S.Ct. 2491. these was unclear. ness of claims liamson requires plaintiffs go to first to court, returning to district After court, they state are likely gener- where to ripeness failed to raise the issue of to ruling ate a on the merits of their attention, district court’s instead claim from the state court that in turn will proceeded to defend RCO on mer- have preclusive opt effect should to court, too, its. district declined to court. return federal to ripeness proceeded raise the issue of Rehnquist, joined by Chief Justice three grant summary judgment in favor of the Court, of the specially members wrote parties’ filings on merits. San Remo Hotel why explain he be- court, appeal party on to this neither lieved Williamson wrongly have been ripeness. raised the issue of Unsure of decided. See id. 348, 352, ripe, whether this case was and unsure of C.J., (Rehnquist, concurring in the duty had a raise issue (“I judgment) joined opinion ourselves, parties we asked the discuss County. Williamson Court in But further at oral In addition ripeness argument. experience reflection and lead me to think presenting legal arguments we discuss justifications state-litigation for its below, parties represented both requirement impact while its suspect, brought dramatic.”). the Park Owners had not an in- plaintiffs verse action in a California concurring condemnation Justices stated: generally Kavanau v. Santa court. County Williamson all guarantees Bd., Rent Monica Control Cal.4th that claimants will be unable utilize the Fifth courts enforce Cal.Rptr.2d 941 P.2d federal 1008 case,” and the fact that he had not in this just compensation guaran-

Amendment’s “goes only state to principle pru- basic that the tee. The satisfied Williamson enforce federal competent to ‘ripeness’ challenge, courts are of Lucas’s and dential adjudicate federal to rights and the discussed we do not think for reasons sound, any apply and would claims is that apply prudential require- it prudent But that claims. of federal number 1003, 1012-13, 112 here.” 505 U.S. ment why federal explain does not principle 2886, 120 L.Ed.2d 798 Simi- S.Ct. be particular claims in should Regional v. larly, Suitum Tahoe Plan- court, singled out to be confined state ning Agency, distinguished the Court con- any justifica- the absence asserted Article III and ripeness stitutional under congressional tion directive. ripeness, and stated that prudential Wil- (citations 351, omit at 125 S.Ct. 2491 grounded exclusively ripeness liamson ted). Nevertheless, until the unless and considerations. 520 prudential U.S. issue, to reconsider Wil Court decides 7,& n. 137 L.Ed.2d 733-34 is the law which we liamson (1997) (stating undisputed that it 980 bound.5 “presents genuine ‘case or case controversy’ satisfy Article sufficient to III,” considering only and so far Although the Court has declined re- prudential case satisfied the plaintiffs Williamson, it has with some reconsider quirements). The Court itself called clarify modify frequency continued to and requirements ripe- “prudential Williamson provide the doctrine. These modifications Id.; ness see also San Remo principles.” we must deter- framework which Hotel, U.S. application mine of Williamson to the C.J., (Rehnquist, concurring judg- unusual case before us. ment) may (noting the Court explic- importantly, Most the Court has re- purported “divin[e]” the Williamson itly require- held Williamson of the Fifth quirements from text merely prudential requirements. ments are Amendment latеr held them to be had v. South Coastal Coun- Lucas Carolina merely prudential). cil, the stated that the Court Williamson The Court’s clarification that William- requirements were “Lucas has prudential: “prudential alleged injury require- Article III in fact son created mere properly however,” muse, injury. "We Clement into the definition of constitutional are free Glendale, 4n. respect, With all due we do not think the (9th Cir.2008), why as to an additional reason requires this result. “[PJrivate Constitution may Remo be incorrect. See San Williamson use, public just property[is] without taken Hotel, (Rehn- U.S. at 125 S.Ct. 2491 V, compensation,” Const, U.S. amend. J., quist, concurring judgment) (sug- in the C very government pri- moment takes the might appropriate gesting it to revisit property compensate vate fails addressed this issue if the "court below has property property owner who owner. ”). of Williamson Williamson correctness files an unsuccessful inverse condemnation does "[t]he reasoned that Fifth Amendment claim in state court and then somehow man- pro- proscribe taking property; ages claim in federal court to have the heard taking just compensation,” scribes without just compensation owed date therefore, property until the owner government’s taking action just compen- actually sought denied been owner, compensating not the date without court, state the Fifth Amendment sation in the which the owner received Williamson, U.S. been violated. has not denying in state the tak- final decision court analysis, 105 S.Ct. 3108. With this ing claim. requirement the Court read an exhaustion analysis our ments” is crucial to for two Day, waived or forfeited. See First, reasons. if Williamson were 1675 (holding ripeness, in Article III grounded would objections state waive to AEDPA’s required to sua sponte be raise issue limitations, which, statute of ex- like an party it. though even neither raised requirement, haustion nonjurisdictional); is Stewart, 1094, 117 Poland v. F.3d 1104 Queen Angels/Hollywood Presbyterian (9th Cir.1997) (“An appellate court has a Shalala, 1472, Med. Ctr. v. 65 F.3d duty sponte to consider an sua (9th Cir.1995) (holding that “Medicare’s review, for ripe issue is order to ensure requirements administrative exhaustion subject proper jurisdiction that matter ex jurisdictional but may nature” case.”). ists hear Because William by Secretary waived expressly “in- merely son been held to be a set of voluntarily, through mistake or omis- prudential, requirements, exhaustion-type sion”); Nelson, LaDuke v. 762 F.2d although parties asked the for their we (9th Cir.1985) & n. 4 (distinguishing views, obligated we were not raise prudential between Article III and stand- Compare Day McDonough, issue. v. requirements, ing noting pruden- that one 198, 202, 205, 209-10, U.S. 126 S.Ct. requirement by tial was waived the plain- (2006) (holding 164 L.Ed.2d 376 that AED- tiff, finding requirement not did PA’s statute of limitations akin was bar suit because the underlying justifi- requirement, exhaustion could be cations for that prudential limitation were state, waived and that “district absent); Zhong see also v. Dep’t permitted, obligated, courts are but not Justice, (2d Cir.2007) 117-25 ” consider, issue), sponte sua with (holding that issue exhaustion the con- R. John Sand & Co. v. United Gravel of immigration text is petitions “truly States, 750, 752-54, ‘jurisdictional’ in the Article III but sense” (2008) (holding 169 L.Ed.2d prudential rather a administrative exhaus- for statute of limitations cases Unit requirement, tion and therefore that Claims, ed States Court of Federal may defense be waived and that the court § jurisdictional is to a U.S.C. akin has discretion to review issues not ex- requirement, and therefore the Court of hausted where it underlying deems the for the Appeals Federal Circuit was obli (ci- prudential concerns have been satisfied gated despite to raise the timeliness issue omitted)). Here, post-Lingle tation in its it). government’s waiver As Lucas filings before the court district and its illustrates, clearly takings some cases will court, filings on appeal to this ju have undisputably satisfied Article III Goleta forfeited the claim that this case requirements will have risdictional for ripe failing review to raise satisfy prudential failed Williamson it. requirements. The Court has held that requirements ripeness constitutional where We note that there is in our tension met, have otherwise a court been point. recently decisions on this weAs consider whether to excuse the failure observed, “[ajlthough Supreme Court satisfy prudential requirements without ripeness has described claims as juris III exceeding concern of Article prudential than addressing rather Article Lucas, 1012-14, 112 505 U.S. at diction. III considerations ... our Circuit has ana- jus (citing practical S.Ct. 2886 concerns to lyzed ripeness raising claim merits). tify reaching the prudential III both and Article consider- Sumner, McClung City ations.” Second, exhaustion because Williamson (9th Cir.2008) (citing only, requirement may be F.3d prudential view. In case, considered more be as in is tension cases). there particular, In question there no McClung, of our decisions. three language tween have satisfied v. Park Owners Article III Estates re Valley Mobile Hacienda In (9th Cir.2003), including ripeness. Hill, quirements, F.3d 651 We have Morgan context, held, ... in another Hacien that “the “[b]ecause [Article concluded we inquiry ripeness affirm district III] we contains ripe, is not both a claim con da’s subject prudential matter lack stitutional and component.” dismissal court’s case, Anchorage Equal Thomas v. Id. at Rights jurisdiction.” Comm’n, (9th whether Wil discuss otherwise Cir. did not jurisdictional 2000) (en banc) and added); (emphasis both also embraced see liamson Colwell, nor did we dis requirements, doc at 1123(“[RJipeness 558 F.3d prudential of Palazzo pru impact the on Williamson trine both and cuss reflects constitutional contrast, considerations.”). Suitum, By in or lo, Lucas. dential We stated Honolulu, County City v. & Articlе of Thomas that the III component Richardson of Cir.1997), (9th we recited “can be ripeness inquiry F.3d the characterized timeline,” unripe, federal courts claim the standing is as that andthat “[i]f and the jurisdiction question in cases subject presenting matter real questions lack dismissed,” then and we is ripeness III must be of Article “there complaint takings landowners’ ‘case or that exists constitutional controver determined Id. “premature.” presented the issues “not and that are ripe” sy,’ was [and] claim concrete, marks ci and not (quotation hypothetical 1161-62 ‘definite and and at ” omitted), claim Although 220 F.3d (quota tation abstract.’ Williamson, omitted). we Colwell, ripe under also was F.3d tions upheld the anyway and the merits takings reached it is clear that Where constitutionality the ordinance. standing including “standing has plaintiff — inqui ripeness thus treated 1166. We “presentera has on a timeline”—and gen In our latest effort only. ry prudential as controversy sufficient to uine case or satis Sumner, area, City McClung v. in this III,” questions the further fy Article under then in our cases and the conflict we noted plaintiff has Williamson of whether “re an as jurisdictional concerns treated regarding appli final decision ceived a prudential III and of Article aspect challenged regulations cation of the inquiry under Wil as the sole concerns and whether the has property at issue” he (“[W]e at 1224 do 548 F.3d liamson. “sought through proce compensation ripe claim is under this resolve whether provided for doing so” dures the State Williamson, standards articulated ripeness merely “prudential require that deciding without instead assume and Suitum, 520 U.S. at 733n. ments.” ad ripe order to takings claim is (internal 117 S.Ct. 1659 alterationsand appeal.”).6 of the dress merits omitted). case, In quotation marks this then, Park Owners where the haveobvi Court’s unmis- Supreme light case ously presented controversy, a live think that pronouncements, takable II.A, any it is clear supra Part that see represent McClung and Richardson ripeness "may be raisedsua that the lack stems from dicta of the confusion 6. Much Transporta- parties.” sponte Id. at if not raised our decision in Southern Pacific Angeles, City Company previous Los tion decided 502. Southern Pacific (9th Cir.1990), Palazzolo, we noted in the where decisions in to the Court's "ripeness is takings that of a claim Lucas, context Suitum, language and in- question; it is procedural than mere more those decisions. consistent with jurisdiction” remarked determinative of questions further under do not yet Williamson whether the state compelled had spectre jurisdic- City raise the III provide just compensation Article to the Colwell, tional bar. See City not, fact, Owners. did (noting “[pjlaintiffs’ because stake in mention at all until ripeness prompted legal issues is concrete rather than an order from this court to discuss ripeness ... requirement abstract argument. issue at oral satisfied.”). III Article argument, At oral acknowl edged part appeal of its it had not even considered whether pre Williamson Having juris reviewed the Williamson vented us from the Park reaching Owners’ prudence, we find that we reach claims, came posi first to the merits the Park Owners’ claim. tion that so receiving Williamson did after reasons, For the following “we do not our order to be prepared discuss Wil prudent apply prudential think it argument. liamson at oral ar Lucas, requirement here.” 505 U.S. at gued to ripe us the case was not 1013, 112S.Ct. 2886. Williamson, under and offered support ing authority our First, opinions Lifestyle in Equity the claim City forfeited its that Prop and Carson Harbor Vil ripe the case was not for decision. Be- erties7 lage. cases, Neither these nor in fact requirements cause the Williamson are itself, appeared City’s Williamson Suitum, the “prudential ripeness principles,” appellate brief.8 In ques answer to our 733-34, at U.S. and not tions, City expressly the limitations, conceded that the jurisdictional III they Article requirements Williamson merely were may waived Lingle or forfeited. After prudential jurisdiction and not III Article parties stipulate the to to prompted vacate requirements. City al argued The judgment the initial that its district court claim level, was not at trial waived because we could litigation and return the still our City had exercise discretion to find any the burden raise re- case prudential ripe prudential was not because of maining concerns under Wil- Instead, City content City’s argument liamson. was considerations. The lacks merit, litigating continue claims on mer- however. Because Williamson City its. The expressed requirements merely no that prudential, doubts are in the fit by record case was for a decision claims can be waived. The fact that we Moreover, City federal court. our exercise discretion to find the not concerned that the Park fail- claims unripe change Owners’ does not that fact waivable, ure initiate an inverse condemnation the claims and that in this any action in state court left City doubt as to case the forfeited them.9 Equity Lifestyle Props., County Properties Lifestyle 7. Inc. v. San could have been offered in App. ”), Lifestyle Properties Obispo ("Equity 28(j). Fed. P. Luis letter under R. (9th Cir.2007), 505 F.3d 860 withdrawn and by superseded rehearing Equity Moreover, on denial Equity Lifestyle 9. and Har- Carson Lifestyle, 548 F.3d at Village bor do not control our decision here. general Those used principles cases opinion Equity Lifestyle Properties and found Williamson owners' 17, 2007, September as-applied takings filed prop- was not until and had not claims been City's erly Equity Lifestyle, not have included so could been exhausted. See F.3d brief, 1190-92; initially Village, filed at March 2007. Howev- Carson Harbor er, Village applica- dealt with the Williamson and Carson Harbor had 474-75. Neither case earlier, gov- years a case as had tion of Williamson in where the been decided several cases, ripeness Equity ernment numerous other Williamson failed raise issue court, ripe- They then returned to federal with- forfeited

The fact that additional, evidentiary having compensated out been for the tak- claim has ness that no property. confirms our belief There is doubt implication. ing It their ripe eminently unsuccessfully case is have now at- the record in this that have resur- just compensation could tempted for review. to obtain Williamson Lingle implicitly by time through provided faced State. procedures exception Owners’ foreclosed id. the “substan- based on Williamson Moreover, just question no there It It did not. tially theory. advances” parties fit for the case is review. certainly seem counter-intuitive

would through case full litigated now three had at that a case that us now to think There is no rounds at the trial court level. through already litigated been point there is sufficient evidence doubt that in federal court rounds —two three [the] the record “determine suddenly become one in state court—could ” Palazzolo, far.’ regulation goes ‘too City failed to “unripe.” The fact that the Mac- (quoting any suggests notice this as well us 2561). Donald, 477 U.S. at to be Wil- protected concerns meant below, addition, as we discuss sufficiently protected had liamson been (1) that: has caused undisputed lengthy development the unusual and to the Park significant loss of value Palazzolo, case. See (2) neither the property; Owners’ (holding that the purpose 121 S.Ct. 2448 has Goleta nor the State California in develop to the record Williamson is this in for loss compensation ever offered chal- to understand the effect of the order liti- contrary, has value. To regulation). lenged providing compensation con- gated against Second, find that the Park Owners we tinuously since 2002. substantially satisfied William- Given the Park com- Owners’ substantial important to requirements. son “[I]t pliance requirements, with the Williamson that purpose” bear in mind the the Wil- City’s the ripeness and the forfeiture of 622, requirement liamson serves. claim, compels us to we believe Lucas S.Ct. 2448. Williamson held “In reach the merits of this case. these takings claim not be until ripe facial could circumstances, ac- we think it would not “unsuccessfully at- property owner has process cord with sound insist that [the just tempted compensation obtain Park pursue Owners] the late-created” through procedures provided need tо file a formal inverse condemnation obtaining compensation.” such State for takings action in state court “before [their] Here, U.S. S.Ct. 3108. Lucas, ripe.” claim can considered did, fact, take case to Park Owners like U.S. at 112 S.Ct. 2886. Just Although they did file state court. Lucas, Park properly Owners “[have] proceeding, formal inverse condemnation injury in fact in this alleged Article III law they litigated and settled several state Any failure have filed a case.” Id. the alleged taking issues relevant to with inverse claim while including necessary to es- formal condemnation City, issues already “goes only claim. in state court takings tablish the timeliness of the stantially prudential appeal implicitly satisfied the concerns after the district court found takings ripe. Similarly, claims neither after three rounds of embodied Williamson question presented we case whether litigation state and federal court. trial-level find had sub- could owners prudential ‘ripeness’ expectations. addition, Owners’] backed [the for the reasons challenge, and discussed governmental character action— prudent apply we do not think it for instance whether it amounts prudential requirement here.” Id. at 1013. physical invasion or af- merely instead fects interests through some

Ill public program adjusting the benefits that we Having held reach the mer promote burdens of economic life to claims, its of the Park Owners’ good may the common be relevant — now turn to those claims.10 As we have discerning taking oc- has summarized, recently Court curred. The Penn Central factors— identified three basic categories reg though given vexing each has rise to ulatory takings claims: ^[1] where government requires the principal guidelines subsidiary questions —have served as resolving a permanent physical

owner suffer regulatory claims that fall do not of property, invasion see Loretto ‍‌​​​​​​‌​‌​‌​‌​​‌​​‌‌‌‌‌‌‌‌‌​​‌‌​​‌‌​‌‌​‌​​‌​‌‌​‍v. Tele- within physical takings or Lucas prompter Manhattan Corp., CATV rules.

use of olina Coastal an owner of all U.S. and where the Penn Central factors (1982); met, ^[3] property, [2] where 102 S.Ct. Penn Central Council, see Lucas v. South Car- economically L.Ed.2d 798 regulation deprives 505 U.S. 73 L.Ed.2d 868 Transp. beneficial (1992); Co. v. 2646. Before we can apply the Penn Cen what Penn We “essentially and then quotation marks and citations atU.S. must has famously Central, first address each factor in weigh 538-39, 125 ad-hoc, the factors been described as an factual S.Ct. 2074 together, inquir[y].” omitted). 98 S.Ct. (internal turn, City, New York factors, however, tral we must consider 2646, 57 L.Ed.2d 631 viability challenge a facial under Dev., Crown Point Inc. v. Sun Central, Penn and determine what facts (9th 851, Cir.2007); Valley, 506 F.3d 855 we engaging consider when in Penn 538, Lingle, see 544 U.S. 125 S.Ct. 2074. inquiry. Central’s ad-hoc factual appeal, On only the Park Owners raise A challenge facial under Penn Central. The Park brought only Owners have in Lingle,

As described challenge facial to the RCO under Penn Court Penn acknowl- Central brought a have not corol- edged that it hitherto had been unable Central — lary as-applied as-ap- claim. Unlike an develop any set formula for evaluat- challenge, plied which that a asserts ing claims, regulatory takings but identi- regulation “by terms, or statute its own fied particular several factors that have infringe[s] constitutional in the freedoms significance. Primary among those fac- case,” particular circumstances of the impact of reg- tors are the economic and, United States v. Christian ulation the claimant Echoes Nat’l particularly, Inc., Ministry, 561, 565, regulation the extent to which the 404 92 has U.S. 663, with (1972), interfered distinct investment- S.Ct. 30 L.Ed.2d 716 facial ruling light non-moving 10. We review a district court’s on sum- most favorable to the mary judgment regulatory taking party, any genuine that no has whether there are issues occurred de novo. Gammoh v. La material fact and whether the district court Habra, 1114, (9th Cir.2005). correctly applied 395 F.3d 1122 the substantive law.” Id. determine, (internal omitted). viewing quotation "We must the evidence in and citation 1014 reason, the Supreme For this reg- or Court statute alleges

challenge owners a fa- bringing noted abstract: unconstitutional ulation challenge “face uphill cial an bat- un- exists set of circumstances that “no Suitum, 520 U.S. at n. tle.” valid.” would [a]ct der which Keystone, see 1659; U.S. Salerno, 481 U.S. v. States United fact 1232. The the Park L.Ed.2d 697 745, 107 S.Ct. characterized their facial Owners have challenge under Penn Central creates fur- decision re Owners’ The Park typical Penn In complications. ther challenge has two as-applied frain claim, must fac- Central court consider First, as noted consequences. important usually be found that will in the tors the Park exempts Own above, the decision statute, such as the of the economic text prong Wil the “final decision” ers from and the claimant’s impact on claimant Valley Mobile Es Hacienda liamson. Never- expectations. investment-backed (“Facial challenges tates, at 655 theless, a facial chal- adjudicating when exempt [“final decision”] from the careful not to court must be lenge, analysis ripeness of Williamson prong application at “the effect of the simply look challenge by nature specific facial circum- regulation because Tahoe-Sierra, applying the not involve decision F.3d at 773. does stances.” Second, the Park Penn Central regulation.”). Owner’s facial statute The Park Cen Penn their apparent cast requires decision to claim us address Owners’ places question limits challenge as a facial must confront the tral paradox: claim we under Penn challenge can be con types of evidence that a facial on the claim; legal “In fa Central actually claim. a viable adjudicating sidered is, claims, must is limited to inquiry our if we determine cial the Park [regu what evidence the mere enactment then consider ‘whether ” prove their claim. taking.’ Tahoe-Sier may present constitutes a lation] Council, Reg’l Plan Inc. Tahoe ra Pres. (9th ning Agency, Cir.

2000) summary (quoting Agins, court’s district Hodel v. Va. 2138); the court see also ruling April judgment Surface Ass’n, in a de Mining & Reclamation engaged the record and reviewed Central analysis. party Each tailed Penn 264, 295, 69 L.Ed.2d expert report support proffered a chal an specifically, in facial had More proffered position: the Park Owners of its only regulation’s lenge “we look features, Quigley,11and report by Dr. John M. rath a scope and dominant general report by Mr. Wil with a City responded application than to the effect er al ruling, April Thomsen.12 its liam specific circumstances.” regulation rely on Tahoe-Sierra, (internal did though the district court 216 F.3d at in either omitted). figures presented detailed citation marks and quotation economics, Academy of the National Sciences/National Quigley professor Dr. Ur- National business, Council Committee on Research University of Cali- policy at the and Policy. fornia, ban Berkeley as the Director of and serves Housing Program and Urban Berkeley on with Director is an Policy. President and Mr. Thomsen He served as MBA/CFA Grobstein, & Horwath accounting firm Estate and Urban Eco- Real of the American Company, LLP. member of and has been nomics Association report, the district court reports. did credit the In defending the conclusion of (which findings report core of each the district court appeal, City ar- infra). discuss The district court found in gues: favor of the under Penn Central. district [T]he court concluded that ab- Subsequently, the district court an- issued Ordinance, sent the Park Owners would summary judgment ruling other on Sep- higher achieved rates of return. 6, 2006, in purported

tember which it This conclusion credits Park Owners’ address remaining Owners’ economic evidence essentially and claims. district court then reaffirmed agreed with Park Owners that the Ordi- ruling its that the Park Owners had not nance an impact had economic on their prevailed under Penn Central. The dis- operation. business It is difficult to ruling trict court’s ambiguous, howev- imagine how the analysis court’s er, as to the basis for its decision. The regarding conclusion the Ordinance’s court was unclear as whether it was impact economic can be found lacking. simply re-incorporating and reaffirming brief, analysis however, the Penn Elsewhere in its applied Central April ruling, or whether it now complains based its that the Park Owners have in- ruling ground on the new that the Park troduced much so try evidence as to precluded Ownеrs were from presenting turn a facial challenge an as-applied into any of the evidence the court had relied on challenge. The City does not point out April brought because the Park Owners which proper evidence is and which is im- only challenge. a facial The district court permissible in a challenge. facial stated that the evidence the Park Owners logic Both prece Court sought to present “at trial” was “irrele- support dent our conclusion that a facial ato challenge, complained vant” facial challenge under Penn Central must exist that the Park had “impermissibly as legal a viable claim. Certainly it is action, attempted to convert this facto, de apparent challenge that a facial is easier to into as-applied challenge.” Because of mount under either Loretto Lucas. It necessarily “ad hoc” nature a Penn is far to prove easier that a regulation challenge, Central if the district court was physical effects invasion or that it denies adopting rule that property owner an owner of all economically viable use of present no evidence of the effect of a his considering without evidence regulation on his in a facial chal- beyond the face of regulation than it is lenge, the court would essentially to demonstrate that the regulation’s effect adopting the rule that there is no such satisfies the multi-factor test of Penn Cen thing challenge facial under Penn However, tral. recently we have de Central. scribed the Loretto and Lucas tests as Similarly, City’s position our court categorical “exceptions to the application on the meaning a facial Penn Central regulatory the takings test” as set forth ambiguous. is challenge has nev- in Penn Central. Scheehle Justices argued er that a challenge facial under Ariz., (9th the Sup.Ct. 887, 894 Penn Central is not a legal viable claim. Cir.2007); 538, Lingle, see 544 U.S. at 125 contrary, theOn the devoted much of (“Outside S.Ct. 2074 these two relatively briefing argument and oral to defend- ..., categories regulatory narrow ing the district April ruling court’s on the challenges governed by are the standards Owners’ Penn Central facial chal- Central.”). fact, set lenge, including the forth Penn court’s reliance on the In the core parties’ expert Supreme conclusions the two emphasized Court has per se

1016 chal- disfavored, a facial Central suggests that Penn whereas claims are difficult, Similarly, in preferred. See but viable. lenge claims Penn Central Council, Guaranty Inc. v. Tahoe Pres. Connolly Tahoe-Sierra v. Pension Benefit 302, 321, 535 Planning Agency, U.S. Reg’l rejected a the Court considered Corp., 517 152 L.Ed.2d 122 S.Ct. with- challenge to the facial Penn Centrаl indeed incongruous It would seem of the Multiem- liability provisions drawal exceptions the to Penn only if disfavored Plan Amendments Act of ployer Pension brought as facial chal- could be Central 213, 224-28, 475 106 S.Ct. U.S. a the lenges, general claim under where (1986); Ta- 166 see also 89 L.Ed.2d could not. rule of Penn Central hoe-Sierra, 321, 122 at S.Ct. also demon precedent

Supreme Court the owners’ facial (holding property viability challenge of a facial the strates brought have been takings claim should Keystone, the under Penn Central. Hodel, Central); under Penn U.S. difficulty prevail emphasized Court 294-97, (ruling on a facial 101 S.Ct. 2352 challenge on a under Penn Cen ing facial Central). challenge Keystone Penn under tral, ultimately concluded that a facial demonstrate Connolly challenged of the statute mere enactment may dif- Penn Central challenge under taking. Keystone, did not effect ficult, mere fact that Penn Central but the 493-99, 1232. The U.S. requires balancing an ad-hoe multi-factor ruling implicitly recognizes that a Court’s challenge. a facial test does bar challenge facial Penn Central feasible. Moreover, in consid Keystone, Court that the property ered the limited evidence precedents ap- The fact that the Court’s including actual proffered, owners had challenge under Penn prove of facial challenged of coal that the stat tonnage requires what kinds us consider Central removing, the owners from prevented utes beyond the text of the chal- of evidence total coal in the percentage and the regulation reviewing may court lenged tonnage repre mine restricted challenge A facial seeks to consider. n. id. at 496-99 & sented. See prove that “the ‘mere enactment’ of 1232. The Court found that S.Ct. taking.” Key- [regulation] constitutes a challenge facial under property owners’s stone, 495, 107 S.Ct. U.S.

Penn Central failed because evidence Hodel, (quoting provided insuffi property owners 2352). up- Property owners “thus face an any demonstrate harm in cient to economic attack on making [a hill battle in facial Thus, significant amount. the Court regulation] taking.” Id. at against property owners not be found challenge reviewing 1232. In a facial permitted was not to con cause Court Clause, Takings only we “look under provided, sider the evidence but rather scope and regulation’s general domi- property owners’ evidence did because features, to the nant rather than effect that the mere enactment of the show specific taking.13 Keystone application regulation statute amounted to precise, Keystone, Court was not how much To be fore appealed only produce in a expressly a fаcial chal- evidence owner owners challenge, it lenge the ex- was how little evidence because wanted to avoid facial produce pre- pense producing they property and still of the detailed evidence owner could challenge. necessary The Court found an vail in a facial believed would be to mount as- produced challenge. Keystone, property owners had not applied See 480 U.S. at 494-502, 493-94, Thus, enough. S.Ct. 1232. the issue be- See id. at 107 Tahoe-Sierra, circumstances.” mining); 216 F.3d land related to coal Tahoe-Sier omitted). ra, In a (quotation marks at (using at 773 216 F.3d 776-77 academic however, case, takings cognizant we are analysis literature to an develop to deter regulation will text of the itself mine a temporary moratorium on effect rarely the actual economic describe taking). development effects In addi owners concrete terms. property on tion, a way there must be to understand Thus, takings inquiry of a very nature impact the economic on the complaining that we require would seem to consider property A property owner. owner who is of text evidence outside of the some at permitted present least to evidence at n. 24 (discussing statute. See id. proves actually that that he has suffered of the tension between demands the kind of of economic harm which he necessity dem challenge facial and the of complains precluded would be from even onstrating impact reg of the economic proving bring his own standing claim, takings suggesting ulation in a property claim—the per owner must be still open questions that there are mitted adduce evidence that he has may what kinds of information be consid injury suffered the for which he seeks claim); in a facial Garneau v. ered Lujan, redress. See 504 U.S. at (9th Seattle, 807-08 2130; Jose, S.Ct. v. City Pennell San Cir.1998) (evaluating regulatory facial 1, 6-7, 108 485 U.S. S.Ct. 99 L.Ed.2d 1 claim, stating plaintiffs that (1988) (requiring property owners to “introducing have the evidence burden allege standing bring a takings claim impact of the enactment economic alleging that likely to suffer eco property”). ... on their injury by nomic enforcement of the chal in facial chal proper inquiry ordinance). Thus, lenged even in a facial lenge not whether the property owners challenge, may the court consider evidence demonstrate that been can related to the individual owner beyond taken providing without evidence that illustrates the impact economic regulation; inquiry the text of the the mere enactment of the statute had on “mere reg whether the enactment” proves that owner and that the owner has Key taking. ulation constitutes а See injury complains. suffered the of which he stone, 107 S.Ct. 1232 U.S. 496-99, 107 Keystone, See omitted). Thus, (quotation marks in a tak (considering evidence the actual claim, ings only we must look not at what tonnage regulations of coal the rendered says, the statute but also at what its mere unremovable); Garneau, 147 F.3d at 807- Garneau, enactment does. F.3d 08 (stating plaintiffs bringing a facial minimum, at 807-08. At a we must look to challenge “must show value of general principles economic that allow their property diminished as a conse effect, interpret us statute’s so that Richardson, quence” of the regulation); regulation’s gener understand the (providing at 1154 n. 2 exam Yee, scope al and dominant features. Cf. ple using exact dollar amounts as “illustra (review 526-31, 503 U.S. impact regula tive” of the economic ing academic literature understand the challenge). tion in facial economic effects a mobile home rent case, Park Owners submitted ordinance); Keystone, control evidence of the effect the mere enact- 500-02, (using 107 S.Ct. 1232 economic property. ment of the RCO had on their impact of a principles understand the principally The Park Owners mining Pennsylvania coal relied regulation where unique, report by Quigley. law creates severable interests Dr. did not in property City values of Gole- object report; on the about to the use of this producing ta, City, contrary, City responded as these values affect the entire Thomsen. report its Mr. expert own subject City’s to the everyone and thus parties’ both court reviewed The district RCO, specific are not the RCO’s and for its sum- expert preparation in reports the Park Owners. With application to In con- April. in mary judgment ruling mind, limitations we consider these court did ducting analysis, the district analysis. the Penn three factors of Central pro- rely detailed information on the the actual eco- report vided each about B particu- of the on each impact nomic The three factors described Penn Park, did it lar within the nor mobile home (1) of impact are: the economic Central actual on the about the rely information (2) claimant; regulation on the Instead, a on the Park as whole. impact regulation which the has inter- extent to district court relied the core find- expecta- investment-backed fered with ings expert general reports and the (3) tions; govern- the character findings from studies and taken economic each in turn. literature about the effects of mental action. We consider academic generally. rent control ordinances mobile court, City has to this de- appeal

On analysis district court’s and its fended the The first consideration under Penn party’s findings of corе from each ex- use impact of the Central is the “economic however, report. argued, has pert It Lingle, on the claimant.” regulation attempts by provide Park Owners 538-39, (quoting 125 S.Ct. U.S. beyond findings evidence the core Central, Penn 438 U.S. at Quigley Report impermissible is an at- 2646). no formula There is mathematical into tempt challenge to convert a facial Constitution, provided by but “if [the] challenge. The has not as-applied regulation goes recog too far it will be identified which would be so evidence taking.” Pa. nized as Coal Co. Ma property-specific impermissible as ‍‌​​​​​​‌​‌​‌​‌​​‌​​‌‌‌‌‌‌‌‌‌​​‌‌​​‌‌​‌‌​‌​​‌​‌‌​‍to be hon, 393, 415, challenge. facial definition, By L.Ed. 322 under not, however, We need determine Central, the property Penn owners need permissible exact boundaries between complete deprivation of all show support impermissible kinds evidence to economically use the property. viable challenge. facial defended economically Deprivation of all viable use findings the district court’s use of core just would entitle the owners to Therefore, party’s report. from each we Lucas, compensation under and there will confine to review of these ourselves apply no would be need to Penn Central findings same core in our review of the Palazzolo, analysis. Penn chal- Owners’ facial Central (“Where a regulation places 121 S.Ct. 2448 provide figures will lenge. We additional limitations on land that fall short of elimi Report Quigley only purposes use, nating economically all beneficial demonstrating Park Owners taking may have oc nonetheless injury have suffered the actual economic ...”). sum, prevail curred. under illustrating complain which Central, must Penn owner impact concrete terms economic may demonstrate a loss of value that had in the “mere enactment” the RCO enough addition, percent, high less than 100 Goleta. In consider factual too far.” undisputed findings “go[ne] district court’s is a a higher price There broad consensus that mobile form of a purchase for the home. The net home rent control ordinance like the RCO effect is that cost the of approxi the home the rental causes a wealth transfer from the mobile site is mately the same whether there is an home to the incumbent mo- park owners not; or the difference is that under the The Quigley Report bile home tenants. RCO, the value of the capitalized rent is explained how the RCO affects the mobile paid to the mobile home owner instead of home market. Mobile homes have a divid- the park owner.14 in Accordingly, the ownership. A owner owns the ed end, the RCO not actually does decrease estate, sites, consisting rеal of the home housing costs at all for the new tenant. If while the home itself is owned the purchases home, a new tenant the the new juris- tenant a who rents site. When tenant will have to pay equal amount ordinance, diction enacts rent control the rental discount in the form of the right occupy mobile home site at premium. transfer acquires below-market rent its own intrin- distinct from the value of the sic value The Quigley Report summarizes ef- given land. The owner of a mobile home of fect the RCO: capital- at the time the RCO passed is will For every dollar housing which costs present ize of (equal this value to the value through are reduced lower mobile home discounts) the future stream of rent into rents, consumers forced to pay high- selling price of is the home. This purchase er prices for these mobile premium.” referred to as the A “transfer homes. These two effects roughly can- tenant, new Thus, mobile home anxious to ac- cel. the principal effect of the quire right regulated, below-market rent regulation control tois inhibit in- rent, pays premium the transfer in the creases in the supply affordable hous- Quigley Report points housing-related 14. The illustrated payments these al purchaser $13,968 figures average property with for the repayment in its would plus be: in loan $3,256 dwellings sample during in RCO, sold the Park regulated in rent. Without the period. Report the relevant The estimated because the same home have would sold for that, rates, comparable $105,054 less, based on land rental rent would have been unregulated the annual more, market rental rate average housing-related annual $13,344. average site in the Park would be $1,646 payments repay- would in be: loan RCO-regulated average rate rental on the $13,344 plus Quigley ment As rent. $3,256. Thus, only site pays home owner noted, Report particular example, in this $10,000 roughly less in annual rent actually mobile home would paying owner however, savings, Owners. This annual annually City's more under the RCO than he price selling reflected in the mobile unregulated would in an market. is due This Report average home. The estimated that the part mortgage to the fact that mobile home home, RCO, mobile but for the would be products higher tend to have interest rates $14,037. RCO, worth Because howev- purchasers and their often low asset er, average mobile home sold for general, levels or weaker credit histories. $119,091. $105,054, equals This difference however, Quigley Report suggests percent or a price, full 88 the entire sale mobile end up paying home owners will represents present the net value to the roughly expenses same amount in annual being mobile home owner of able to save the RCO is in effect. The $10,000 roughly year in rеnt. captures difference is in who the value of the hypothetical, Quigley Report rent-controlled site the Park. As a Without the then RCO, roughly happen the Park owners receive calculated what would aif mobile $10,000 RCO, year average home more a With owner financed the home with rent. typical mortgage product the incumbent mobile home used these owners receive a $105,054, purchases. premium Quigley Report captured kinds of one-time that, RCO, average found under the sale annu- value of their home. ordi- of the rent control consequently to effect [T]he ing in the market economy. nance, the local with the coupled rents in restrictions increase by those reject are borne The costs new principal park owner’s freedom the would have who otherwise consumers tenants, significantly is to increase the housing cost reside in lower been able to in- mobile home. This value of the region. in the normally only benefits the creased value Quigley Report possession estimated at the time the rent The tenant to rent the Park Owners RCO forced the cor- imposed. Petitioners are control percent an dis- close to entire Park at citing premi- of this rect in existence The the market rate. RCO count below alleged between um as difference of premiums ap- in transfer has resulted [challenged] ordinance and effect of of price of the sale percent proximately ordinary con- apartment that of an rent homes, by the incumbent enjoyed mobile apartment Most tenants do trol statute. tenants. anything to their successors sell Quigley court credited the district (and prohibited charging from are often findings and found RCO Report’s “key money”), typical so a rent control from the Park causes a wealth transfer will wealth from the statute transfer district to their tenants. The landlord to the incumbent tenant all City housing costs in court found By contrast, petitioners future tenants. “approximately 205% of Goleta increased the[ehallenged] contend that ordinance and increased another from 1997 only the incumbent transfers wealth rent on the rent- 21.1% in 2004. The mobile home owner. spaces in the Park [has] controlled (internal 530, 112 S.Ct. 1522 housing kept up with increase omitted). Yee, The Court in how- citation costs.” The court found: ever, question whether the open left of in what The RCO has resulted is known a regulatory wealth transfer constitutes premiums” in the sale of “transfer taking Penn because the under Central premi- These mobile homes. transfer only issue before the Court was whether approximately ums constitute 90% per the wealth transfer constituted a se Park. price sale of mobile homes taking under Loretto. Sеe id. prevents No provisions past Our cases have observed the wealth capturing of a seller mobile home well, posture but the transfer effect as premiums. transfer in takings those cases differences law “an simply, average More mobile home cases were decided made it when those $12,000 approximately sell worth would unnecessary question to reach the $100,000.” court concluded The district transfer a reg- wealth effected that “the uncontroverted facts ... estab See, ulatory taking under Penn Central. Indeed, premium.” lish of a the existence Richardson, 1165-66; 124 F.3d at Le- e.g., City found even acknowl “[t]he vald, Desert, City Palm Inc. edged premium.”15 of such a existence (9th Cir.1993); Hall v. 685-89 Court observed the same Barbara, 1270, 1276-77, phenomenon wealth transfer Yee: Santa Thomsen, City’s expert, capitalized 15. The own William fit in that economic benefit of recognized pre- existence the transfer this rent control could then be used to finance departed report: in his "residents who mium purchase another home or otherwise the Park and were able to sell their homes at help defray occupancy costs elsewhere.” premium received bene- an additional (9th (“[T]he Cir.1986) gets purpose tenant of transferring sole it to an B, liquidate he take with private party though interest that can other even A is paid just case, him or even property, compensation.”). when he leaves In this Barbara.”), slightly differently, of Santa overruled on the RCO works as the Yee, 529-30, grounds by government other 503 U.S. at does not act aas fiscal inter 1522; mediary. also Chi. Bd. Because the see of divided owner of Realtors, City Chicago, ship of Inc. mobile homes—the Park Owners of (7th Cir.1987) (separate real opin 741-42 own the estate and the tenants own Posner, J., ion the of with whom Easterbrook home itself—the transfer can be effect J., joined) directly (detailing empirical studies and ed the mere enactment of the analyses A, showing economic that rent con RCO. The wealth RCO takes from the regulations Owners, B, quantity trol reduce the and Park it transfers to the tenants, quality housing).16 of affordable incumbent who reap benefits in the form of mobile homes worth several The wealth from the Park transfer Own- original times their value.17 ers to their is a tenants naked transfer accomplished by of the mere enactment Incumbent only tenants are not By taking group the RCO. the value of the Park City’s that benefit from the passage Owners’ mobile home sites and transfer- of the RCO. The also RCO benefits anoth- tenants, ring group: it to the Park’s incumbent er support those who would like to the RCO effected of housing has “the distribution affordable pay- initiatives without group themselves, to opportunities ing example, resources or оne for it owners solely ground developers than of rather another forms of housing other apartments that those favored have exercised raw such as that might otherwise political power they to what provide obtain want.” be forced to subsidized housing, Sunstein, Cass R. Naked and taxpayers who want to subsidize af- Preferences Constitution, 84 Colum. L. Rev. housing actually fordable without increas- (1984). transfer, classic ing liability naked their own tax pay for it. Pennell, government takes from A to See U.S. at S.Ct. 849 J., give (Scalia, to B for the sole benefit of B. concurring part and dissent- London, (“The City Kelo v. New ing part) politically 545 U.S. attractive fea- (2005) regulation L.Ed.2d 439 ture of [rent control] is not that (“[I]t has long accepted been that the sov- it permits wealth to be transfers achieved ereign may otherwise; not take A for that could be achieved Goleta, widely-recognized Academic literature has also discussed for the rea- wealth transfer created mobile home rent Quigley Report. sons summarized See, e.g., control ordinances. William A. Fis- only portion affects a small of the total chel, Exploring Why Paradox: Is Kozinski housing City, market and because of Regulation Taking Proper- More a Efficient potential capitalize the value ty?, 67 Chi.-Kent. L. Rev. 872-75 regulated price rent into the sale of the mo- (1991);Werner Hirsch, Z. Hirsch & Joel G. home, bile even within the mobile home mar- Legal-Economic Analysis Rent Controls in ket, generate actually the RCO does not mo- Mobile Home Context: Placement Values and cheaper bile home sites that are to live on Decontrol, 399, 405, Vacancy L. 35 UCLA Rev. they unregulated. than would be if rents were (1988); Epstein, 423-31 Richard A. Rent Con- easy why It is to see mobile home tenants Theory Regulation, trol and the of Efficient encourage adopt would the Coun- L. 758-59 Brook. Rev. investigation ty's RCO without further as to result, regulation unlikely necessary whether such in the As the RCO is to increase availability housing of affordable in the real estate market of 2002. evidence, reason- all this Considering achieved permits them be rather drawn is Thus, “solely inference City, able budget,’----”) ‘off have received rate ground although those favored Plaintiffs have on the obtain power to political comparable the raw investment exercised of return on want,” give A to taken from investments, what and al- estate other real (the B, B incum- benefit of both for the significant though they enjoyed tenants) group, who larger and for bent property, their appreciation value of hous- support affordable wish does higher have received Plaintiffs could means. The Tak- politic more ing through in the absence rates of return use prohibit this does not ings Clause [regulations]. Kelo, 489- power, see police court concluded that The district Takings 90, but the Clause any greater than re- transfer was wealth a pretend us to that such not ask does turn on investment: severe, not cause a transfer does naked of return is The of the rate evidence impact proper- on the economic observable Although Plaintiffs have en- mixed. ty has been con- owner whose return to joyed comparable a rate of public’s scripted for the use. investments, estate Plaintiffs’ other real principal argument re City’s The to that suggest tends evidence that, conceding is the wealth even sponse perhaps earned much would have more— transfer, impact on the RCO’s economic more—in the absence RCO. to a Park does not amount Owners Nevertheless, court the district reasoned taking because the Park Penn Central the Park could re- that because Owners return on their can still earn a Owners return on investment —even ceive some City supplied some evi investment.18 The less, perhaps even substan- though was that Report the Thomsen show dence less, transfer tially than their wealth earned, depending Park Owners Park Owners had suffered loss—the percent analysis, roughly on the on taking. regulatory According annually. their investment is, the district court’s again depending disagree this with report, return We reasoning. to or occasion Park analysis, comparable on the The fact Owners ally not, than the return on investment better return on is earned some investment reasoned, real investment trusts earned estate court end of as the district according kinds and other of investments if claim. Even their Penn Central national indices. on in- Park Owners earned some return vestment, may If taking have occurred. court credited both Park district could show that the RCO of the wealth transfer Owners’ evidence investment, they all denies them return of return City’s and the evidence on invest- could, course, per on a prevail of se together it Reviewing reports ment. Lucas, and would not have claim under found: claimed, might, value in it. He for ex- also that incumbent ten- have realized ample, permitted against the necessarily to borrow ants do not benefit from one- value the home created in the the "trans- increased time wealth transfer form of the home. To use premium” not real- RCO while he remained in because the transfer is fer homes, figures, ten- district court's an incumbent until the tenants sell their ized pas- purchased who his home before they do all their homes. claim is ant sell This $12,000 could, sage after the point real wealth of the RCO for irrelevant to the RCO, equity passage take out home Even ten- been transferred. if incumbent $100,000 home, against may he loan house. not sell his mobile ant does through analy impact, labor the Penn Central illustrate Quigley Report possible did estimate losses for practically Penn Central thus as individual sis. Park, units in the figures some that the Park Owners sumes be able $100,000 run upwards per By any site. earn return on investment. Our some measure, is a significant economic challenge figure under Penn Central transfer the Park Owners to the ten- potential out what loss of return on invest ants, one must be characterized as a ment, greater than zero but less than 100 loss for the Park Owners. Cienega Cf. percent, significant enough to constitute States, Gardens v. United Tahoe-Sierra, regulatory taking. (Fed.Cir.2003) (finding that an ex- 330, 122 535 U.S. at S.Ct. 1465. The dis percent traction property’s trict court thus erred in the conclusion value enough was severe constitute plaintiffs that because can realize a “rate Central). taking under Penn The undis- return comparable to other real estate puted evidence shows that the mere enact- investments,” the Park Owners have not ment of the significant RCO has caused a significant suffered harm. economic Cf. economic loss for the Park Owners. This Hall, (“The city’s argu at 1278 weighs heavily factor in the Park Owners’ [the ment that home mobile owners] favor. adequately compensated by the rents they is receive irrelevant to the determina taking

tion whether a has occurred.... The next consideration is “the extent to compensation adequate Whether is is an which the regulation has interfered with inquiry distinct separate expectations.” whether there has investment-backed Lingle, 544 U.S. at taking.”).19 125 S.Ct. 2074 been a Central, (quoting Penn at U.S. may enjoyed The Park have Owners a 2646). Here, it is undisputed that return, positive perhaps rate of a even rate passed the was RCO Santa Barbara comparable of return to some other real County 1979 and amended in investments, estate but the district court that the Park purchased Owners the Park found, the nor City and neither the Thom- The purchase years 1997. was eighteen denies, Report sen that the after the passed by RCO was first the “would perhaps have earned much more — County, years five the before more” if not for Although the RCO. the adopted Goleta in 2002. We “much appear more” does not to have been agree court, finding with the of the district loss, a reduced to total dollars-and-cents therefore, “got Park Owners ex again the district court also with- actly found— they bargained what when out contradiction —that the loss be could as purchased the park Park —a mobile-home high price as almost 90 percent of sale subject to a detailed rent control ordi a site-by-site, home-by-home Thus, on basis. To pause nance.” we take at admits, 19. The dissent offers different rationale feld this were а new "[i]f rent control city might ordinance ... this be an Judge from the and the district court. actionable Dissenting Op. case.” 1037. It is a new argues nothing Kleinfeld is "[t]here that in the ordinance, ripe which what makes this case support Guggen- record to the notion that the supra for review. See We simply at 1006-13. park heims' interest in the trailer was worth disagree ''readoption merely that was a minis- more before than after the reenacted the terial re-enactment ... had no [and] econom- County Dissenting Op. ordinance." at 1037. impact Guggenheims.” Dissenting ic on the investment, question As with the of return on Op. at 1037. point question this is better as a addressed taking compensation due rather than parties stipulated 20. The in their state-court RCO, taking. Judge agreement whether there was a As originally Klein- settlement that potent so Hob- put The State can claim Park Owners notion into the Lockean bun- stick besian took be- regulation challenged accept the State’s we to Were dle.... out of percent of the value 80 and 90 tween rule, transfer of title the postenactment when, apparently, rental their obligation of its absolve State would they pur- before had extracted value been use, land any restricting action to defend park. chased how extreme or unreasonable. no matter controlled of this issue is analysis Our allowed, effect, to be A State would case, corporation In that by Palazzolo. Takings date put expiration govern- time at the property owned ought not rule. This Clause. challenged regulation. enacted ment too, right generations, Future Palazzolo limitations on challenge unreasonable property into possession came value land. the use and corporation’s charter was when the Further, 627-28, 121 Id. S.Ct. 2448.21 passed, property title to the revoked and out that State’s pointed “[t]he the Court law, Palazzolo as the operation rule would work critical alteration sole shareholder. newly regulated property, nature of as time, was al- At that ability stripped of the landowner is subject regulation desig- ready possessed interest transfer the which part protected nated A rule prior regulation.... to the blanket upon develop- which “coastal wetlands” no purchasers with notice have com Id. The Rhode would be limited. ment pensation ripe when a claim becomes right held that Palazzolo Island Court accord blunt an instrument with too therefore, not, bring takings claim could to for what is duty compensate taken.” aor successive title purchaser because “[a] 627, 121 Id. at S.Ct. like is deemed to have holder [Palazzolo] concern, pre- that a rule The Court’s notice of eаrlier-enacted restriction purchasers from cluding post-enactment that it a claiming is from effects barred taking claim would bringing regulatory 626, at 121 S.Ct. 2448. As taking.” Id. undesirably government insulate the Supreme Court described the state to “secure a liability and allow the state “by reasoning, prospective high court’s itself,” 627, at windfall for id. S.Ct. shape the State can and define legislation 2448, the facts particularly salient on rights and reasonable invest- property City before us. Goleta subsequent expectations, and ment-backed RCO, adopted County’s created to any injury claim from lost owners cannot problems as existed manage housing all, ... they purchased After with value. any in formal apparently without notice of the limitation.” problems of whether the still consideration the fact the Park existed. Were Court reversed: ordinance, reasoning regula- effect for a 21. The Court Comity limited to was not in claims; during City's process period of incor- tory takings physical brief claims noted, previously supra poration, as we have resulting from state’s direct condemnation to 2. This fact is relevant the timeliness of n. distinguished properly property were as Nonetheless, purposes for the the suit. by brought only property owner considering the Owners’ investment- Park U.S. time of the condemnation: 533 expectations, district court backed found S.Ct. 2448. had, practical purposes, all that the RCO for substance, "unchanged for been effect present to times relevant action.” all purchased deprived when the the prior owners already in County existence suf- RCO was easement without compensating claim, their them,” reasoned, ficient bar the Court “the prior liability of Goleta would be insulated from owners must be understood to have of adopting for the effects the RCO when transferred full property rights their City incorporated in 2002. All of the Id., conveying 2[, the lot.” n. existing park 3141], owners at time had bought parks their when the land was still Palazzolo, 121 S.Ct. 2448 part unincorporated Santa Barbara (internal omitted). citations The Court County. any park of these Unless owners rejected also analogies purchasing between prior their purchased park orig- had subject challenged land-use inal RCO enactment all the regulation purchasing purchased owners would have notice with whose contours shaped background original By of the theory, RCO. its own principles of state law: free adopt the law with It suffices say regulation that a impunity, notwithstanding its complete ob- otherwise would be unconstitutional ab- vious effects. compensation sent is not transformed explained why Court Palazzolo sub- background principle into a do not sequent property owners lose their State’s law pas- mere virtue challenge government’s ac- right sage of title. tions: ... regulation A or common-law rule Comm’n, Nollan v. Coastal California background cannot be a principle for 97 L.Ed.2d some owners not for others. (1987), presented question ... A law does become a back- it was consistent with the Tak ground principle subsequent owners ings regulatory agen Clause for a state by enactment itself. Lucas did not tocy require oceanfront landowners to Nollan, holding which, overrule our provide pub lateral beach access noted, as we have based essential development lic the condition for a Takings principles. Clause permit. principal dissenting opin Palazzolo, 533 at 121 S.Ct. 629-30, policy ion was a of the observed Cali by 2448. The Court remanding concluded require fornia Commission Coastal for consideration of Palazzolo’s Penn Cen condition, Nollans, the and that the who claim, stating, tral claim not “[t]hat is purchased policy their after the home by barred the mere fact that title was effect, went into were “on notice acquired after the date of the effective approved developments new would be state-imposed restriction.” at only provisions if were made for lateral 2448.22 Id., 860[, beach access.” 107 S.Ct. (Brennan, J., permits A We have held that Palazzolo dissenting).

3141] ma jority of rejected proposi property purchased the Court the owners who have long subject tion. “So as the property Commission could to the regulations Palazzolo, Finally, Properties, acquired we note that even before al its leasehold interest permitted property Court own- year Central Grand Terminal in purchased property subsequent ers who to the designated after the Terminal was as a land- challenged regulation enactment of Central, mark in 1967. Penn 438 U.S. at 115- bring regulatory takings claims. Cen- In Penn 16, 98 S.Ct. 2646. itself, appellants, tral one Union Gener- of Palazzolo’s the merits takings tions address bring regulatory challenge Equity Central. 533 U.S. Central. See claim under Penn under Penn claims (rejecting at 1190 circuits 2448. Our sister Lifestyle, 121 S.Ct. own argument county’s Penn Cen yet to address the issue. have takings claim because bring not er could sup aid it never will not us because tral ” prop its interest acquired the owner place. formula’ in the first “any ‘set plied be passed was erty the ordinance after Central, Penn 438 U.S. takings claim ‘is regulatory “a cause Instead, several fac it “identified by the mere fact title barred particular significance” have tors that effective date of acquired after the hoc, as an “ad what the Court described ” Palaz (quoting state-imposed restriction’ Palazzolo, we inquir[y].” factual Id. After 2448)); zolo, 630, 121 S.Ct. to consider economic “[t]he must continue Barbara, 288 Santa County v. Daniel on the claimant” impact regulation Cir.2002) (9th (holding that F.3d governmental and the “character Term Palaz decision last “[t]he Court’s action,” id., regu must not deem a but we in some circumstances indicates that zolo latory takings simply claim be forfeited claim may takings have valid purchaser after property changed hands cause the dis purchase price was even if his or her into regulations went effect.23 regula land-use existing counted to reflect to mean that even read Palazzolo We tions,” regu applied to and that Palazzolo purchased Park Owners though the claims). latory physical but not one regulated Park in a state similar have also observed Our sister circuits City, Park imposed Owners permits post-enact that Palazzolo dicta under Penn Central. prevail still prevail regulatory purchasers ment post to apply How we are Penn Central Morris, Inc. Philip claims. See (1st question clear. The Cir. Palazzolo less F.3d n. Reilly, 312 2002) (en banc) expectations yields (describing the Palazzolo investment-backed hand, acquired holding as “whether the one mixed results. On regulation after a is enacted does found, before or the Park Owners’ “ex district court rea the owner’s completely determine of the Park when pectations of value expectations”); investment-backed sonable income as well as the purchased, Inc., Pharmacy, Labs. v. Abbott CVS Park, been, should have received Cir.2002) (7th (analogizing times, knowledge tempered at all com plaintiff from Palazzolo to find that effect that the RCO would an adverse pany’s against claims another survive hand, On other on their investment.” entity). acquisition by another plaintiffs acquired prop when the erty, acquired prior also they arguably open question left Palazzolo including property, interest in the owner’s ex apply how the “investment-backed to right bring takings to action. See pectations” analysis property owners 2448; Palazzolo, 121 S.Ct. subject regulation. who to the purchased Corp., v. Hunter Tech. It the case with instruc- see also CAMSI IV merely remanded use, disagree any restricting land no matter how do with action 23. We thus not the dissent’s U.S. at suggest not extreme or unreasonable.” 533 statement that does Palazzolo ("[A] regulation that dead 121 S.Ct. 2448 otherwise the mere "transfer title revives compensa- Dissenting Op. as would be unconstitutional absent at 1038. But claims.” Palazzolo, background into a Kennedy "the tion is not transformed Justice stated in postenactment ought principle not of the State’s law mere virtue of title” transfer title.”). passage of obligation defend the State of "absolve

1027 Cal.App.3d Cal.Rptr. 282 some hope they 230 85 would be able to (“the (1991) implicit harm in tоrtious challenge the under Takings and, property is harm to the injury they here, Clause as have done itself, any and thus owner the prop- equal protection, process due and state law injured erty has been grounds. conclude, therefore, once We owner”). necessarily particular question and not expecta- of investment-backed very least, the At the Park Owners have determinative tions is not but must be right to bring takings action based in considered tandem with the economic City’s adoption on the of the impact regulation RCO. of the on the Park Own- ers, and character governmental two are in These interests tension and Palazzolo, action. See 533 U.S. at are, respects, in some self-referential: The J., (O’Connor, concurring) expecta new owner’s investment-backed (“[IJnterference with investment-backed depends any tion on the value of takings expectations is one of a number of factors claim, but there a regulatory examine.”). that a court must taking turns on the owner’s investment- words, expectations. in backed other this context we cannot address invest The final consideration “the character expectation prong ment-backed of Penn governmental Lingle, action.” referring Central without to the merits of U.S. at 125 S.Ct. (quoting Penn claim, but in order decide Central, 2646). 438 U.S. at claim, we must determine the divergent We have seen two interpreta expectat Park Owners’ investment-backed test, tions of this both appear of which easy out way ions.24 There is no of this derive from different portions of Penn acknowledge conundrum. For now we will Central. We consider each in turn.25 took pos dilemma: the test, knowing applied session the Park that was One frequently prac- less (but County’s tice, subject City’s) to the governmental considers [the “whether They ownership RCO. also assumed with physical action] amounts to a invasion or Judge applied yet Kleinfeld is concerned that the cur- 25. The district court a third ver- may rent mobile sion, home tenants not have re- anything whether there was "sinister City's adoption ceived windfall from of,” purpose "suspect” "pretextual” or or the RCO because invested in reliance on regulations. about the The court's use of this City’s Dissenting Op. ordinance. at 1038- error, analysis test in a Penn Central was in might 39. These are fair concerns that be although the test a due relevant to implicated repealed if the the RCO in the process equal protection claim. The dis- Palazzolo, future. See evidently trict imported require- court J., (O'Connor, concurring). On ment from our discussion Armendariz hand, the other as Justice O'Connor ex- Penman, (9th Cir.1996) (en 75 F.3d 1311 plained, the alternative is that "the State banc), part grounds overruled in on other powеr proper- wields far too much to redefine Point, stated in Crown at 853-56. Id..; ty rights upon passage of title.” see also discussion, That which considered 636-37, (Scalia, J., id. at 121 S.Ct. 2448 con- city's purpose passing whether the stated curring). We do think concerns over other, housing pretext code was a less (or not) go windfalls to there has purposes, noble was in the of context taking. a been Equal housing Protection claim that code questions, These are difficult ones that —so unfairly targeted property certain owners. far as know—are uncharted. To the ex- Armendariz, relevant, See 75 F.3d at 1326-27. We did questions they tent these should city’s purpose not consider the by be addressed district when under- court the first taking analysis. instance. our claim 1028 the Park Owners to the property interests from merely property affects

instead adjusting public program The Park Owners own the through ‘some tenants. life of economic rest, and burdens the benefits on which mobile homes ” Lingle, good.’ the common promote to the tenants have the but under RCO 538, (quoting 2074 at 125 S.Ct. 544 U.S. right right convey the home with the to to 124, Central, S.Ct. U.S. at 98 Penn at a much-reduced rent. remain on site 2646). of test to our application The taking a This looks much more like classic Yee, in which mobile is controlled case a This iter- regulatory than mere burden. rent claimed a park owners home governmen- “character ation of the to the identical ordinance almost control the Park weighs tal action” test favor of under taking to physical amounted RCO Owners. 529-30, at 112 S.Ct. Loretto. See U.S. second, it frequently applied The more held that the Supreme Court 1522. The govern the “character of the eration of to ordinance did amount rent control whether the mental action” test considers Id. imposition physical of a invasion. regulation places a challenged high burden Court, however, proceeded state private property on few owners fact that the uncertain terms no fairly apportioned more should more a one-time wealth regulations caused broadly among the tax base. Arm from landlord the incumbent See transfer States, “might bearing have some strong tenants v. United 364 U.S. regulatory (“The ordinance causes (1960) whether the 1563, 4 L.Ed.2d S.Ct. 530, 112 taking.” 1522. Id. S.Ct. [Takings designed was to bar Gov Clause] forcing people from alone to ernment some thought The district court “the character which, in public burdens all fairness bear governmental action is like less justice, public and be borne permissible should per taking se more like whole.”); shifting Lingle, of economic benefits and burdens.” as a also 544 U.S. at see disagree. Although we understand 542-13, We (discussing Arm S.Ct. physi- to a RCO does amount strong English with approval); First more taking, substantially cal the RCO is Evangelical Lutheran Church Glendale Yee, “regulatory taking,” like U.S. Angeles, 482 County Los than a “mere[diminu- S.Ct. 318-19, 107 S.Ct. 96 L.Ed.2d 250 inter- Owners’] tion (1987) in a (applying Armstrong regulatory adjust- through public program ests ‘some Central, claim); Penn 438 U.S. at ing the of economic benefits and burdens 123, 98 promote good.’” Lin- life to the common Cienega persuasive We find Gardens gle, (quot- Armstrong analy- to the application Central, ing Penn 438 U.S. at in this sis case. 2646). quite zoning The RCO unlike Cienega a Penn Central Gardens found broadly restrictions that apply other taking two federal statutes abro- where inevitably businesses residences gated property developers’ contractual property’s restrict uses. The Court forty-year rights prepay mortgage their explained that its various formulations twenty years. loans after See id. at 1323- “(re- for regulatory takings of the test pre- effect the statutes 34. The Loretto, Lucas, and Penn Cen- flected developers exiting vent the low- ) ... ac- identify regulatory tral aim[ ] housing in which were programs rent functionally equivalent that are to the tions required participate carrying while taking.” effects a classic right id. at 1323. These statutes led transfer of the to rents for the use loans. See equity return for percent property to 96 loss of on vate Congress’ objec owners. Cienega at developers. tive in passing ELIHPA[28] LIHP government found that the action Gardens preserving low-income RHA[29] — expense placed at issue of low-income housing forcing some —and method' — housing private property on few owners keep owners to accepting below-market (those in previously participated who had rents —is the kind of expense-shifting to program the federal loan but now wanted persons a few a taking. amounts to exit), distributing expense of to instead where, here, This is especially clear as among taxpayers all form incen taxpayers the alternative for all was to developers for tives to construct more low- shoulder the Congress burden. could apartments. rent See 331 F.3d 1338— simply have appropriated money more 39.26 mortgage for insurance thereby in Here, only to applies the RCO mobile developers duced more to build low-rent park home owners. The district court apartments the public housing pro City not impose compa found did replace gram housing, such as the any on rable costs other owners plaintiffs’, that no longer part was of the City, except in the as condition of new program. development.27 singled out 1338-39; Coal, 331 F.3d at see also Pa. Park imposed solely Owners and (“In general 260 U.S. at 43 S.Ct. 158 it support them burden to affordable hous plain that a man’s misfortunes or ing. We find the Federal Circuit’s reason justify necessities will his shifting the dam- ing persuasive appliсable to the facts ages neighbor’s to his shoulders.... [A] of this case: strong public improve public desire to Unquestionably, Congress acted for condition is not enough warrant (to achiev- public purpose benefit a certain ing desire a shorter than cut group people in need of lowcost hous- ing), just clearly, expense way as constitutional paying for placed disproportionately change.”). on a few pri- argues Cienega permit percent Gardens in- live tenants to rent- free). See, Yee, abrogation plaintiffs' volved an e.g., contrac- property rights (suggesting tual whereas this case involves that mobile home rent abrogation analogized right an of the Park be Owners' control ordinance to a charge referencing market rental rates. This distinction land-use extraction and Nollan v. Commission, Regulatory takings is not relevant here. Coastal cases California (1987)). necessarily analyses, L.Ed.2d 677 involve economic which the formal of the trans- characteristics Goleta, developers 27. For action are less relevant than the new economic burden case, substantially Although example, substance. For less severe. fact Owners must rent their entire Park Owners are allowed to raise discount, percent developers at an 80 new abrogation rents could also be are considered an only required percent to make 20 rights right their of contract contract for —their housing available at below-market rates. annual market-based rent increases. Similar- ly, analogized (creatively) case could be Emergency Housing 28. The a land-use extraction case: the Park Low Income § only permitted operate Act of a mobile Preservation U.S.C. home (1988). exchange agreement park in an note to rent percent existing below market rates (which analogized Housing in turn could 29. The Low-Income Preservation they may percent Homeownership extraction that rent 20 and Resident Act they agree etseq. §§ full market rates if U.S.C. strongly RCO has not inter- City’s objec- ‍‌​​​​​​‌​‌​‌​‌​​‌​​‌‌‌‌‌‌‌‌‌​​‌‌​​‌‌​‌‌​‌​​‌​‌‌​‍court that the the not doubt that

doWe increase with the Park Owners’ investment- was to fered passing the RCO tive Park housing. expectations Sin- because the availability of low-cost backed the owners, how- Park purchased mobile home when gling out Owners ever, prop- rent their forcing them to already regulated. Park Neverthe- its percent below erty less, at a discount fact that the Park Owners the mere value, expense- kind of market “is the bought regulated the Park in state does a that amounts to shifting persons ato few City has not mean that taken Gardens, taking.” Cienega by regulation or that the Park property Moreover, City numеr- 1338-39. a bring cannot such claim. See Owners affordable supporting alternatives for ous Palazzolo, 627-28, 121 U.S. at S.Ct. incentives, housing tax lowcost Finally, —such 2448. we conclude the RCO loans, supports, rent or vouchers—without than taking looks more like classic a limited at such directing the burden burdens, shifting mere of benefits and see sum, taking In account of group. Yee, 503 U.S. governmental action” “character of the out mobile home singles the RCO strongly case in the weighs also test and forces them to bear a park owners Park Owners’ favor. housing providing burden affordable fairly by born that should be C Armstrong, See taxpayers as whole. Having each factor indi reviewed 80 S.Ct. 1563. vidually, weigh together. we must them balance, City’s “goes On too RCO has caused conclude We regulatory taking far” and constitutes a hardship economic to the Park substantial under the Fifth and Fourteenth Amend Property have Owners. values the area just compensation ments for which must percent in the time that increased paid. If the Goleta wishes Park, yet the Park Owners owned the availability attempt increase af permitted Park have not been Owners by transferring housing fordable the value beyond percent rents to increase renting jurisdiction land within its in the This is a zero- annual increase CPI. Park Owners to incumbent ten game; sum loss Park Owners has to the ants, impediment there is no constitutional their The RCO gain become tenants. doing so.30 The Fifth Amendment of the Park to rent their has forced Owners however, Constitution, requires the U.S. percent at an discount below City compensate the Park Owners value, resulting pre the market transfer taking regulation. their equal approximately percent miums selling a mobile home. price of IV Thus, by these savings created below- us also ask directly market into rents transferred strike down RCO as violation of pockets of the incumbent mobile home Lingle, the Due Process tenants, Clause. who can now sell their mobile clarified the Court difference purchase ten homes for almost times their Yee, to a rent control or price. challenge between See Next, agree with the district dinance as a claim and as sub- Kelo, menu 545 U.S. at 30. The Park Owners have not claimed government impermissible be action “public require- cause it fails meet the use”

1031 claim, process police due and power, stantive affirmed ment’s if a and rational independent vitality of both theories. relationship existed the provi- between Takings designed “[The Clause] sions and purpose of the ordi- governmental limit interference with .... This nances deferential inquiry se, rights per but rather se- does not focus on the ultimate effective- compensation in the event cure of other- law, ness of the but on whether proper Lingle, wise interference.” 544 enacting body rationally could have be- at 2074. As we have lieved at the time of enactment that the explained: promote law would objective. process Due cannot violations be remed- (internal quotation and marks citations Clause, ied under the if Takings because omitted). action be im- government is found to permissible it instance because fails —for B ‘public meet requirement use’ The Park Owners also raise a second arbitrary so pro- as to violate due process due theory: the RCO is a cess—'that is the end the inquiry. No denial of substantive due process because compensation amount of can authorize guarantee it fails to will such action. earn a “fair and return” reasonable on their in- Point, 506 Crown F.3d 856 (quoting claim, vestment. For this the Park Own- Equity Lifestyle Properties, 505 F.3d at specifically §§ ers attack (citation omitted)). 11A-5 and 870 n. 16 The Park 11A-6. These sections detail the Owners have raised two different “automat- theories claim, ic support due process percent CPI, their which increase” we in turn. address the procedures requesting a “discre- tionary increase” where increased operat- A costs, ing capital expenses, capital im- The Park Owners’ more “tradi provements greater than the amount process theory tional” due is foreclosed of the automatic increase. See RCO precedent. The Court and we 11A-5, §§ argue 11A-6. Park Owners upheld have rent control laws as rationally provisions that these necessarily will lead legitimate public related to a purpose. See to a time when the Park Owners are de- Jose, 1, 13, v. City Pennell San 485 U.S. nied rent permit increases that a reason- (1988); Equity 99 L.Ed.2d able return on They their investment. 1194; Lifestyle, 548 F.3d at Carson Har provisions also claim that the are constitu- fact, Village, bor 37 F.3d at 472. tionally infirm they provide because no already park held that a mobile home mechanism which Park can Owners rent control ordinance similar to the one at such challenge caps rent and secure a rea- process challenge. issue survives due sonable return. Village, Carson Harbor at 472. case, in this challenged As the law in Car Village son Harbor pre ineffective rely thin, The Park

serving low-income housing merely viable line cases. In Sierra Lake Re- park caused wealth transfer from the Rocklin, serve owners incumbent tenants. we considered We held: another mobile home rent control generally applicable A rent-control ordi- that, issue, like the im- ordinance one nance will survive a substantive due posed caps process challenge if it is rent and caused a wealth trans- designed ac- complish objeсtive govern- within the fer to incumbent tenants. 938 F.2d Cir.1991), vacated, to render (9th cumstances is insufficient 506 U.S. ” Id; (1992).31 Keystone, wholly invalid.... see also L.Ed.2d (1987) provisions 493-95, plaintiffs argued 107 S.Ct. 1232 a only passing permitted that, ordinance challenge, in a (holding facial costs, of increased without allow through enactment of issue is whether “mere at n. 9. ing profit. a 958 for reasonable taking”). constitutes a the[regulation] Reversing on the district court’s dismissal argue The Park that the RCO Owners 12(b)(6) motion, held that a just them a necessarily denies reason alleged had a viable substantive due owner investments. capital able return on their to the extent that the rent process claim by the text This contention belied it of a “fair and deprived control ordinance that an provides Section 11A-5 provision. by its reasonable” return on investment may percent nual rent be increased 75 designed cap prohibiting rent increases increase”). (the of the CPI “automatic capital im a return on investment ture Owners, are The Park who not satisfied provements: RCO-prescribed rent increase with their Guaranty v. National Co. [Ins. Under may arbitration for more rent cov seek (9th Cir.1990) Gates, ], 916 F.2d 508 ev- expenses. er actual Such rents are ery puts dollar the landlord into a addition to the automatic increase as property by way capital improve- “just and reasonable return on invest ments constitutes an investment in enough plain ment.” It from this a property for which ‘fair reason- makes scheme that the RCO some allow Breaking return must be able’ allowed. profit ance a on one’s investment” and “for enough; pro- even is not law must “merely cost of offset [an] [for] for one’s profit vide investment.... Lake, improvements.” those Sierra 938 plaintiff alleges To the extent may Although F.2d cap- on account rent increases allowed full provide a return on investment ev merely improvements ital offset cost case, ery we are the RCO satisfied (or less), improvements of those it has in at provides profit for reasonable least a claim for a violation of substan-

stated recognize some circumstances. We Guaranty due under Na- process tive may imprecision there be between some tional. provide what the RCO will a return and (internal omitted). Id. at 958 citations might Park what the consider Park fails Owners’ claim because return, but the Due Process reasonable only challenge brought facial fit perfect does not be Clause demand challenge to the A facial to a law’s RCO. regulatory tween the economic scheme and constitutionality is “the difficult chal most Flores, v. 507 purpose. See Reno U.S. successfully, lenge to mount since the chal 292, 305, 113 123 1 S.Ct. L.Ed.2d lenger must establish that no set of cir (1993) (holding that the Due Process cumstances exists under which the [law] no than clause demands more a “reason Salerno, v. would valid.” United States governmental purpose fit” able between 739, 745, 107 481 U.S. S.Ct. means to advance that chosen fact [a L.Ed.2d 697 “The Lee purpose); Optical v. challenged might operate Williamson law] unconstitu Okla., Inc., 483, 487-89, tionally cir- under some conceivable set of 348 U.S. S.Ct. partial portions Subsequent to a reversal relevant to this discussion. See Sier Rocklin, grounds, we 987 F.2d Court on other vacated ra Lake Reserve v. Lake, (9th 1993). portion Cir. of Siena but retained (1955); having go through hearing Nat’l Ass’n L.Ed. Psychoanalysis provisions set out in the the Advancement RCO under the Psychology, “futility Bd. futility Cal. doctrine.” Under the doc (9th Cir.2000); trine, Carson Harbor bypass proce 1050-51 a claimant 472; v. Ba Morseburg Village, dures for relief included in challenged (9th Cir.1980). lyon, 621 F.2d 979-80 procedures law if such are shown to be under Because there circumstances inadequate.” Equity “unavailable or Life valid, which the law would be style, F.3d at 1191 (quoting William challenge 3108). Owners’ facial must fail. See son, 197, 105 Salerno, 2095.32 futility exception applies only if the challenger already attempted has to use procedures the state “and has shown pur- argue The Park also Owners suit of such remedies would be futile.” process pro- violates due because RCO Equity Lifestyle, 548 F.3d at 1191. The provides procedural vision no “mechanism” record contains no evidence that the Park can if they grievance they which file a attempted Owners have to use the RCO earning just a and reasonable re- procedures, proven much less them consti- turn, “discretionary such application as tutionally inadequate. It would mere llA-5(i)(l) § or See RCO provision.” speculation accept for Park us to Own- (“The shall no to arbitrator have discretion ers’ claims that a request unsubstantiated just amounts as a award additional and for a to rent increase sufficient secure a investment.”). on reasonable return This reasonable return would be denied. See creative, is an end-run argument, while Yee, (“Be- U.S. at S.Ct. 1522 previous argu- around Park Owners’ petitioners cause to do claim have run It for the same reason we ment. fails gauntlet, provides ... this case no rejected Although claim. prior to procedure occasion how the consider a process adjusting RCO lack for petitioners’ has applied property, been reasonable rate return similar accordingly and we confine ourselves for process adjusting arbitration dis- statute.”); the face also Equity see cretionary operating increase to cover Lifestyle, 548 F.3d at 1191. capital expenses, and costs the absence of only Park process is relevant when the Y they can actual- Owners demonstrate have Finally, the Park argue ly been denied reasonable return. This Equal violates the Protec as-applied claim must be as an addressed singles tion out Clause because mobile challenge, challenge. facial not a park owners, home as opposed to other sorts argument, housing providers, As an alternative bear the attempt “uphill housing burden of program. Park Owners to ease the affordable they challenge, argument governed by facial This our battle” face their decision case, Keystone, Equity 480 U.S. at held Lifestyle. by arguing should be excused that a rent mobile home control ordinance health, challenge safety, public 32. Because the Park Owners’ facial tial relation to the mor als, Lake, general we do fails not address the district welfare.” Sierra that, 957; holding erred F.2d Fed. court threshold see also Power Comm'n Co., requirement "just Pipeline to raise a and reasonable Natural Gas 581— claim, 82, 585-86, return” Park Owners must first 62 S.Ct. 86 L.Ed. 1037 Ins., (1942); (9th government's prove that the were "ar Guar. actions Nat’l unreasonable, 1990). bitrary having and Cir. no substan that “in all fairness support policies ers to Protection Equal does not violate public justice, and should be borne related to rationally it is because Clause whole,” requires that as a the Constitution promoting interest of public the legitimate just compensation. government provide Lifestyle, 548 housing. Equity affordable Lingle, if the This is true even at 1195. omitted). (citation pru- The Williamson park own- singles mobile home statute out have, for requirements ripeness dential ers, the amount avail- not increase does the court- us to close part, the most forced housing, and “serve[s] affordable able owners aggrieved property the value of house door transferring purpose sole Owners, close our Park and to to a like the select [the owners’] laws like the eyes effects of at 1193. extreme tenants.” private group of however, Owners, City’s RCO. VI open managed pry doors have these governments through their three by developing local bit case State increasing legitimate litigation interest state federal rounds housing court, any objec- availability of affordable forfeited not fit that interest tion that the case is for review. We Translating their citizens. therefore, however, not, has will throw these public policy, into effective out and slam the courthouse proven difficult. The Court owners back Today, eyes them. our regula- door shut behind our court have addressed and the open. weighed are We have Penn City’s like with some tions the RCO factors, that the consistently Central and find ques- have regularity; we taking. regulatory Just increasing at effected tioned their ineffeсtiveness housing, compensation is due. availability of affordable the perni- have on their and we commented the district court’s therefore reverse We See, Yee, 503 e.g., cious side effects. and judgment on the claim remand 1522; Sierra proceed- for to the district court further Lake, 953-55; Har- 938 F.2d at Carson remand, ings. may the court On district 472-73; Village, Rich- bor 37 F.3d cf. any presented course consider materials ardson, (reviewing con- F.3d 1150 party that are relevant deter- either dominium rent control ordinance with just compensa- amount of mining the total effects). Nevertheless, long so similar See, e.g., tion due the Owners. rent ordinances “de- these control Gardens, at 1354. As Cienega 331 F.3d signed objective an within accomplish III.A.1, Part in the district court noted police and if a government’s power, the figures the did not consider detailed here relationship the rational existed between the expert reports in either of included the provisions purpose the ordi- and it, presented possibly it before because nances,” the affords state Constitution precluded found that such evidence was flexibility to governments local takings challenge a facial under under approach to find a workable experiment have held Penn Central. We now problem. Village, to the Carson Harbor challenge under Penn Central exists facial at 472. therefore affirm We claim, legal supra pp. see 1015— as a viable findings that the district court’s prece- and affirmed that this court’s face, not, on violate City’s RCO does its of a inquiry and the nature dents Equal Due Process Clause or the text of for some evidence outside allow Protection Clause. admissible. Id. 1016- statute far,” prop- therefore too 18. The district court “go[ ] such ordinances When in however, erly figures,” own- consider such “detailed require some any Guggenheims bought addition other evidence deems the trail was, relevant, conducting park time, er analysis to as- which at the in an unincorporated part located precise just compen- certain the amount of See, County. Guggenheims bought When e.g., to the Park sation owed Owners. park, County long the trailer Richardson, had since n. (noting taken much away rising of the value of the example using exact dollar given fee from the it to landlord amounts is “illustrative” of the economic then tenants who owned trailers at the impact regulation a facial chal- park. By purchase price lenge). park trailer reflected lower value of part, AFFIRMED REVERSED park the trailer to the landlord under the part, and REMANDED. All Guggenheims paid ordinance.3 was a trailer burdened the rent KLEINFELD, Judge, Circuit control ordinance. when they bought, And dissenting: long statute limitations had since I respectfully dissent. run any takings claims arising from the agree majority pru I with the County’s 1979 and 1987 rent control ordi ripeness requirement dential of William nances. County Regional Planning son Commis parties stipulated there City1 sion v. Hamilton Bank Johnson period during was a short day Feb preclude merits, does not a decision on the ruary 1, day 2002—the of Goleta majority and I with agree rent (the “City”) incorporated —when to a regu control ordinance would amount County rent control ordinance not ap did latory taking Penn under Central Trans ply. that day, pursuant Later same portation Co. v. York City,2 New were it statute, City California the re-adopted the already not a in re-enactment of one effect rent Accordingly, control ordinance.4 the Guggenheims purchased when the the Guggenheims’ by lawsuit is not barred the agree trailer But I park. cannot statute they of limitations because chal there for taking anything was which lenge City’s adoption, part the as of its the Guggenheims would be entitled to incorporation, of County the rent control compensation, they purchased because the ordinance, which period followed the brief park regulatory after the mat when not in the ordinance was effect. Be tered. cause regulato the ordinance amounts to a challenged The rent control ordinance ry taking, physical taking,5 not a the passed by County was first Barbara Guggenheims’ analyzed Santa challenge must be (the “County”) in and revised in as regulatory taking. period days 1. 473 U.S. L.Ed.2d for a ordinances of 120 after (1985). incorporation, city or the until council has superseding county enacted ordinances the ordinances,

2. 57 L.Ed.2d 631 whichever occurs Cal. first.” (1978). § City Gov’t Code The 57376. did this on 22, 2002, February April 2002. On the Code, op. Majority re-adopted County including 3. 1020-21. entire ordinance, the rent control for an indefinite amend, period, subject City’s requires newly incorporat- power code California city adopt "prior performing any repeal, modify ed the Code. act, providing other [] official ordinance Escondido, county previously applica- that all ordinances Yeev. city ble shall remain in full force and effect as 118 L.Ed.2d 153 Palazzolo, (by title disagree apply on the con transfer of how We law) operation of no on decision, had effect Palazzolo trolling Court Island,6 plaintiff. merely gained He case, wealth a single In that v. Rhode personal previously to what he title owned that held corporation owned shareholder corporation as 100% shareholder of the by When the regulations.7 land burdened contrast, By held title.15 which dissolved, title to bur corporation was case, bought the trailer Guggenheims land to the sole shareholder pаssed dened park price presumably reflecting at a by operation government law.8 prior impact of the rent control on shareholder, claimed that because the sole owners, a price lower than what not when plaintiff, did own land pay would have had to without the rent restricted, he had no claim for use was pur Guggenheims control ordinance. The any taking on account of compensation length chased at arms a trailer al corporation his that had occurred when ready by devalued rent control. land circumstance, title.9 In this factual held was the chal Palazzolo devalued pur plaintiff the Court held that the could regulations lenged plaintiff while compensation, claim to 4. sue a for Five the impacted owned economic interest as a justices regula that a wrote the Court corporation shareholder hold 100% tory takings claim “is not barred ing the land.16 acquired fact that title after mere was state-imposed point. effective date of restric We two decisions Daniel County tion.” concurrence holds Justice O’Connor’s Santa Barbara although rejects states that the claim a rule barred Palazzolo that a presented purchaser existing circumstances that case.11 who is aware land- rejects pursue Her treating change regulations stated rule use never a tak claim, ings of ownership adopt before or after the enactment it “did converse regulation rule,” per barring se or not of that could the successor al Instead, barring ways distinguishes claim.12 courts recover.17 Daniel Pa grounds. “must that attend those circumstances which lazzolo two One is Pa (as are probative requires regulatory taking of what fairness was a is lazzolo bar), a given case.”13 The four at physical dissenters and case while Daniel was a agreed acquiring taking.18 Justice O’Connor that ti The second that full “the value taking tle after takings [taking] already could bar a had been taken claim.14 predecessors, from the Daniels’ it took 2448, 606, 635, 6. 533 121 S.Ct. 150 L.Ed.2d Id. at 2448. 121 S.Ct. 13. 641, (Stevens, J., at Id. 121 S.Ct. 14. concurring part dissenting part); and id. 613-14, 7. Id. at 2448. J., (Ginsburg, 654 n. at 654-55, dissenting); at id. 121 S.Ct. 2448 8. Id. at 121 S.Ct. 2448. J., dissenting). (Breyer, 121 S.Ct. 2448. 9. Id. (majority opin- Id. 15. ion). Id. 121 S.Ct. 2448. 10. Id. 16. 635-36, (O’Connor, 11. Id. at 121 S.Ct. 2448 J., concurring). (9th Cir.2002). 17. Id. at S.Ct. 2448. claim, nothing of value from the Daniels.”19 This might barred seller’s then this ground applies second to the case at bar. be an actionable But it case. is not. The wealth naked transfer was in the 1970’s. Lifestyle Properties, Equity Inc. v. The 2002 re-adoption merely a minis- Obispo County San Luis involved an terial re-enactment that did not transfer trailer control other rent ordinance.20 wealth from the Guggenheims. discusses, Our decision that case explicitly declines to decide Or, if there peri had been substantial plaintiff purchased who had after ordi time, od of day, instead less than one into hаd a nance went effect claim under when the rent control ordinance had not Instead, rejects takings Palazzolo.21 it effect, been in if the Guggenheims had claim as barred the statute of limitat bought price reflecting freedom to ions.22 claim an Since failed on rents, charge they market might have suf Lifestyle another not ground, Equity did impairment fered them investment- distinguish need to Daniel. expectations backed or a negative econom impact.25 ic But hypothetical that Our case fits the second Daniel distinc nor, circumstance argued neither on the “[bjecause Palazzolo, tion full from case, arguable. facts of this There is noth had [taking] already value of been ing support in the record to notion predecessors, taken from Daniels’ Guggenheims’ interest in the trailer nothing took of value from the Daniels.”23 park was worth more before than after the It also fits limitation Justice O’Connor County reenacted the ordinance.26 imposed in Her opinion, Palazzolo. impact reenactment had no economic Daniel, have us would both “attend Guggenheims.27 on the probative those circumstances which are requires given what fairness case.”24 Guggenheims cannot demonstrate Guggenheims Since the from a benefitted any investment expectations backed purchase price reflecting lower the burden were harmed reenactment of they of the rent control ordinance when they the ordinance unless breathe life into bought the trailer not park, fairness does prior claims that owners never require compensated. Taking brought. prior When the owners let the require does com giving Peter run statute limitations without challeng pensation to Paul. ing the 1970’s ordinance and the 1987 re enactment, expired. If this were a rent ordi- their claim new control Palazzolo previous nance owner had trans- does undermine the rule “a tak park Guggenheims ings ferred the trailer claim comply must with timeliness [ ] before statute of had requirements.”28 limitations The time-barred claims Seattle, 802, 19. Id. 26. Garneau v. 147 F.3d (9th 1998). 807-08 Cir. (9th Cir.2008). 20. 548 F.3d 1184 Inc., Lingle 27. See v. Chevron U.S.A. 544 U.S. 21. Id. at 1190 n. 11. 528, 538-39, 125 S.Ct. 161 L.Ed.2d 876 22. Id. at 1193 & n. 15. (2005) Central, (quoting Penn 438 U.S. 2646). Daniel, 23. 288 F.3d at 384. Palazzolo, Equity Lifestyle Props., County 28. Inc. v. 24. U.S. at S.Ct. 2448 J., (O’Connor, (9th concurring). Obispo, San Luis Cir.2008). supra accompanying 25. See note 4 and text. Palazzolo, forces us set forth which backed ex- investment could not establish requires given consider “what fairness suggest does Palazzolo pectations. way. dead Fairness cuts the other of title revives claims. case.”34 that a transfer Instead, holds that transfer Palazzolo quite arises in this case in Unfairness necessarily bar title- will not the market because of quarter another claim, proposition. quite different or by the rent control distortions created claim case, longer is no and one there during years after its enact dinance other, is a claim that has there majority explains, 'As the ment in 1979. changed hands. has had the rent control ordinance of the trail Guggenheims purchase The average price of a raising the effect of life into park in 1997 did not breathe er $105,054, park by in the 88% trailer dry claim that bones But for rent control ordi price.35 sale majority As the years-before.29 had died nance, average would worth trailer concedes, Guggenheims “got opinion $14,037. only people really who do they exactly they bargained for when what expectations in have backed investment Park-a mobile-home purchased the have are those who circumstance control ordi subject to a rent detailed control into bought trailers since rent went nothing nance.” took go, come and and even effect. Tenants bought. they what though rent control transfers wealth analyzed by majori The third factor while, tenants,” likely it is “the after a government ac ty, the “character from those who affect different tenants tion,” ordi is a continuation of old The present benefitted from transfer. nance, applied one that when the the same account nothing tenants lost on Guggenheims bought park. the trailer City’s County ordi reinstitution of reap did not gap readoption The brief lose, they average, But on nance. would burdens, portion public as did each, $100,000 if rent control ordi over 1979 ordinances.32 have repealed. They legal no nance were protection against invest repeal, rent did

Because the control ordinance ed, stability essentially, reliance Guggenheims, not harm the do not government mar decisions create regulatory takings have a claim under Repeal ket would not Transportation distortions.36 Penn Co. v. New Central taking, amount but continuation of the City,33 York or the test Justice O’Connor James). Op. Majority 35. (King 29. 1014 n. 11. 37:1-14 Ezekiel Hancock, Irrigation Lingle, 30. See 544 U.S. at 125 S.Ct. 2074 Madera Dist. (9th Cir.1993) Central, (holding (quoting Penn “[rjeasonable 2646). expectations arising past out of cognizable policy without a basis in Central, rights may prudent be honored (quoting Penn 438 U.S. at 2646). politicians, might otherwise because to do 98 S.Ct. unfair, government volatility or because States, 40, policy induc- Armstrong will reduce its effectiveness in 32. v. United 49, 1563, (1960) ing long changes vio- term in behavior. But 4 L.Ed.2d 1554 80 S.Ct. expectations give cannot lation of such rise claim.”); 2646, to a Fifth see also 33. 438 U.S. 57 L.Ed.2d Amendment ‍‌​​​​​​‌​‌​‌​‌​​‌​​‌‌‌‌‌‌‌‌‌​​‌‌​​‌‌​‌‌​‌​​‌​‌‌​‍States, Fire United Nat'l Union Ins. v. (9th Cir.1997); v. Peterson Palazzolo, Interior, Dep’t 812-13 34. 533 U.S. at 121 S.Ct. 2448 J., (O’Connor, (9th Cir.1990). concurring). one, plain- ordinance no not the deprives tenants, compensa- any

tiffs and not the

ble value. HUNTER; Benjamin

Dolores Estate of Francis, Plaintiffs-Appellants,

G. USA; Group,

PHILIP MORRIS Altria

Inc.; The Alaska Commercial Com-

pany, Defendants-Appellees.

No. 07-35916. Court Appeals,

United States

Ninth Circuit.

Argued Aug. and Submitted 2008.

Submission Vacated Deferred *.

Oct. Aug.

Resubmitted Sept.

Filed * Good, -, Group, Submission of case was and de vacated in Altria Inc. v. - U.S. pending ferred decision Court's 172 L.Ed.2d 398

Case Details

Case Name: Guggenheim v. City of Goleta

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Sep 28, 2009

Citation: 582 F.3d 996

Docket Number: 06-56306

Court Abbreviation: 9th Cir.