SANTA MONICA PINES, LTD., et al., Plaintiffs and Appellants, v. RENT CONTROL BOARD OF THE CITY OF SANTA MONICA et al., Defendants and Respondents.
L.A. Nos. 31615, 31616
Supreme Court of California
Apr. 20, 1984.
35 Cal. 3d 858
Royal M. Sorensen, Mark C. Allen, Jr., and Burke, Williams & Sorensen for Plaintiffs and Appellants.
Paul, Hastings, Janofsky & Walker, William B. Campbell, Peter K. Rosen, Boren, Elperin, Howard & Sloan, William Elperin, Tamila C. Jensen, Rhodes, Maloney, Hart, Mullen & Jakle, Christopher M. Harding, Mark Garrett, J. Charlton Wentz, Latham & Watkins, Stephen L. Jones, Alex M. Johnson, William A. Kerr, Peter A. Umoff, Lowell R. Wedemeyer, Richard Tanzer, Tanzer, Rosato, Samuels & Weisz, Rosario Perry and Peter L. Colt as Amici Curae on behalf of Plaintiffs and Appellants.
Ira Reiner, City Attorney (Los Angeles), Gary R. Netzer and Claudia McGee Henry, Assistant City Attorneys, Sharon L. Siedorf, Deputy City Attorney, George Agnost, City Attorney (San Francisco), Burk E. Delventhal, Alice Suet Yee Barkley and Thomas J. Owen, Deputy City Attorneys, Natalie E. West, City Attorney (Berkeley), and Penny Nakatsu as Amici Curiae on behalf of Defendants and Respondents.
OPINION
REYNOSO, J.—Appellants, the owners and prospective owner of a 42-unit apartment building in the City of Santa Monica,1 appeal from a judgment upholding the city‘s denial of their claim of a vested right to remove the apartments from the rental housing market by converting the apartments to condominiums, without obtaining a permit for such removal under Santa Monica‘s rent control law. Appellants rest their claim on the city‘s approval of a tentative subdivision map for the conversion prior to the adoption of the rent control charter amendment, and their alleged subsequent expenditure of considerable sums to effect the conversion.
We agree with the rent control board‘s and the trial court‘s conclusion that the amount of money actually spent by appellants in reliance on the tentative map approval—only about $1,700 was expended between the date the map was approved and the date the rent control law was adopted—was inadequate to predicate a vested right to complete the conversion free of rent control. Thus, we need not decide whether the vested right doctrine generally applies to condominium conversions. Appellants’ additional contention that the removal permit requirement conflicts with, and is accordingly preempted by, the state Subdivision Map Act is rebutted by language included in several provisions of the act. Those provisions explicitly disclaim any intention on the part of the Legislature to limit by implication local power to regulate condominium conversion.
We conclude that the judgment should be affirmed.
The calendar of events influences our result. That calendar follows.
On January 15, 1979, the Santa Monica Planning Commission approved appellants’ previously submitted tentative subdivision map. On February 27, 1979, appellants filed an application with the State Department of Real Estate for a final subdivision report. (
On April 10, 1979, article XVIII, an initiative rent control scheme, was adopted by the voters of Santa Monica as an amendment to the city‘s charter. Contained in the charter amendment is the provision challenged by appellants, section 1803, subdivision (t), which requires a landlord to obtain a permit from the rent control board before “remov[ing] a controlled rental unit from the rental housing market by demolition, conversion, or other means . . . .”2 (Italics added.)
On May 11, 1979, fulfilling a condition attached to the tentative map approval, appellants paid a $42,000 conversion tax to the city. (See The Pines v. City of Santa Monica (1981) 29 Cal.3d 656 [175 Cal.Rptr. 336, 630 P.2d 521].)
On June 26, the city council approved the final subdivision map, which was ultimately recorded on January 11, 1980.
On June 29, 1979, the city adopted ordinance No. 1127, in order to clarify and implement the rent control charter amendment. On the same day, appellants sought from the rent control board a vested right exemption from the removal permit requirement, pursuant to the provisions of the ordinance.3
The actual expenditures, like the calendar of events, are important. Appellants reported expenditures of $1,709 ($384 to the Department of Real Estate, $825 to the City of Los Angeles for “plan check fees,” and $500 to the City of Santa Monica for engineering fees) between January 15 (the date of approval of the tentative map) and April 10, 1979 (the date of adoption of the rent control law). Thereafter, they spent another $55,515.59 ($2,543 to an engineering firm, $42,000 to the City of Santa Monica for the conversion tax, $5,250 to the city for subdivision map fees, and $5,722.59 to another engineering firm). On July 19, 1979, the rent control board heard and denied appellants’ application for exemption.
Appellants subsequently petitioned the Superior Court of Los Angeles County for a writ of mandate pursuant to
On May 15, 1980, appellants commenced a separate action for declaratory relief, again asserting their claim of a vested right to complete the conversion of the apartments without being subject to the rent control law. (L.A. Super. Ct. No. C-322806.) On April 21, 1981, the second superior court issued an interlocutory judgment of abatement on the ground of another action pending. Appellants also appealed this ruling.
The above-mentioned appeals have been consolidated.
I
Appellants’ primary contention is that they acquired a vested right to complete the condominium conversion project, free of rent control, by allegedly expending over $40,000 following a tentative subdivision map approval of the project. The entire project was estimated to have a total cost of approximately $60,000. As will appear, this contention must be rejected because only about $1,700, an “insubstantial” amount in this context, was actually expended in reliance on the map approval.
Appellants acknowledge that the law of vested rights in California was recently and definitively enunciated by this court in Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785 [132 Cal.Rptr. 386, 553 P.2d 546].4 We held that acquisition of a vested right to construct a building required: (1) a building permit, and (2) substantial expenditures in reliance on the building permit. They argue that where, as here, the potential condominium converter seeks only to subdivide a previously constructed building, and, consequently no building permit is required (compare Hazon-Iny Development, Inc. v. City of Santa Monica (1982) 128 Cal.App.3d 1 [179 Cal.Rptr. 860]), the “final” government
Appellants rely heavily on Youngblood v. Board of Supervisors (1978) 22 Cal.3d 644 [150 Cal.Rptr. 242, 586 P.2d 556], in which we held that under the state Subdivision Map Act a county lacked discretion whether to approve a final subdivision map if the application showed the development substantially conformed to the tentative map and its attendant conditions. We explained that, under the act, “the date when the tentative map comes before the governing body for approval is the crucial date when that body should decide whether to permit the proposed subdivision. Once the tentative map is approved, the developer often must expend substantial sums to comply with the conditions attached to that approval. These expenditures will result in the construction of improvements consistent with the proposed subdivision, but often inconsistent with alternative uses of the land. Consequently it is only fair to the developer and to the public interest to require the governing body to render its discretionary decision whether and upon what conditions to approve the proposed subdivision when it acts on the tentative map. Approval of the final map thus becomes a ministerial act once the appropriate officials certify that it is in substantial compliance with the previously approved tentative map. (Great Western Sav. & Loan Assn. v. City of Los Angeles, supra, 31 Cal.App.3d 403, 411, 414 [107 Cal.Rptr. 359]; Longtin, Cal. Land Use Regulations, [1977] op. cit. supra, at p. 600.)” (Id., at pp. 655-656.) Appellants urge that recognition of the tentative map approval as the “final” required approval thus comports with the equitable estoppel rationale of the vested-rights rule. (See Raley v. California Tahoe Regional Planning Agency (1977) 68 Cal.App.3d 965, 974-978 [137 Cal.Rptr. 699]; Spindler Realty Corp. v. Monning (1966) 243 Cal.App.2d 255, 264-269 [53 Cal.Rptr. 7].)5
We are reluctant to conclude, however, that approval of a subdivision map for condominium conversion necessarily leads to a vested right to freedom from subsequent rent control legislation. In the first place, appellants’ argument seems based on the erroneous notion that they have a “vested right to obtain a vested right.” There is no dispute over their authority to subdivide their apartment building as provided in the approved tentative map, that is, to sell fee interests in single apartment units. Rather, appellants
But it is well established that the rights which may “vest” through reliance on a government permit are no greater than those specifically granted by the permit itself. (See Avco Community Developers, Inc. v. South Coast Regional Com., supra, 17 Cal.3d 785, 793; Spindler Realty Corp. v. Monning (1966) 243 Cal.App.2d 255, 264-265 [53 Cal.Rptr. 7].) In this case acceptance of appellants’ premise would place them, and the purchasers of their condominiums, in a uniquely favorable position.
By comparison, a sale of the fee interest in a rented single-family home in Santa Monica at any time, even if completed before the rent control ordinance became effective, would leave the purchaser subject to the ordinance. It would not matter that both seller and purchaser had intended to remove the house from the rental market or that they made substantial expenditures with that object in mind. If the premises were a “controlled rental unit” within the ordinance‘s definition on the day the law went into effect, they would be covered.
We see no material difference in appellants’ situation. For this reason alone, we question whether the approval of a subdivision map for condominium conversion can ever lead to a vested exemption from subsequent rent control laws.6
Furthermore, Youngblood‘s analysis of “fair[ness] to the developer and to the public interest” (22 Cal.3d at p. 655, supra), may not be fully applicable to condominium conversions. Such projects generally require no substantial new construction, unlike more traditional developments which may require vast expenditures to comply with conditions attached to the tentative map.
The vested rights doctrine is “‘predicated upon estoppel of the governing body.‘” (Avco Community Developers, Inc. v. South Coast Regional Com., supra, 17 Cal.3d at p. 793.) This is a principle of equitable
An equitable estoppel requiring the government to exempt a land use from a subsequently imposed regulation must include (1) a promise such as that implied by a building permit that the proposed use will not be prohibited by a class of restrictions that includes the regulation in question and (2) reasonable reliance on the promise by the promisee to the promisee‘s detriment. (See Avco, supra, 17 Cal.3d at p. 793.) Appellants here cannot have a vested right unless and until both of those elements of estoppel against the government are established.
As indicated, we need not decide whether we agree with petitioner that the tentative map approval may be considered akin to a building permit for construction. Even if the map approval is deemed tantamount to permission to withdraw the apartments from the rental market, the amount of money expended by appellants in reliance upon the tentative map approval was certainly inadequate in this case to predicate a vested right. Although they claim to have expended “over $40,000,” that figure includes a $42,000 condominium license fee paid after the rent control law was adopted. The record thus discloses that only $1,709 was expended by appellants between the approval of the tentative subdivision map and the adoption of the rent control law.7
After April 10, 1979, appellants’ expenditures were clearly a “calculated risk” (Spindler Realty Corp. v. Monning, supra, 243 Cal.App.2d at p. 265), since the charter amendment by its terms required without qualification that a permit be obtained for any removal of units from the rental market. That appellants were aware of the law‘s purported application to their building (none of the apartment units having been removed as yet) is demonstrated by their application for a vested rights determination on June 29, 1979, the very day the city promulgated regulations prescribing the manner of making such an application. That amount ($1,709) is clearly inconsequential when considered in light of the building‘s purchase price of $2.2 million. It does not appear that forcing appellants to absorb the $1,709 of legitimate reliance expenditures will cause them significant injury. Even as a percentage of the total cost of conversion (which mainly consisted of fees incurred in the course of obtaining various government approvals),
II
Appellants also contend that the state Subdivision Map Act preempts Santa Monica‘s attempt to regulate condominium conversions in connection with its rent control law. The state Constitution confers upon all cities and counties the power to “make and enforce within [their] limits all local, police, sanitary, and other ordinances and regulations not in conflict with the general laws.” (Italics added.) (
None of the statutory provisions directly conflicts with Santa Monica‘s condominium conversion removal permit requirements. The city argues persuasively that the removal permit requirement is crucial to the success of the rent control law, since large numbers of landlords might seek to avoid rent control by converting their units to condominiums. (See Comment, Conversion of Apartments to Condominiums: Social and Economic Regulations Under the California Subdivision Map Act (1980) 16 Cal. Western L.Rev. 466, 467-468; Note, Municipal Regulation of Condominium Conversions in California (1979) 53 So.Cal.L.Rev. 225, 228-229; see also Flynn v. City of Cambridge (1981) 383 Mass. 152 [418 N.E.2d 335, 338, 21 A.L.R.4th 1075].)
We have recently affirmed that the subject of rent control is within a city‘s police power. (Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129 [130 Cal.Rptr. 465, 550 P.2d 1001].) The permit requirement‘s purpose of ef-
The judgment is affirmed.
Bird, C. J., Broussard, J., Grodin, J., and Johnson, J.,* concurred.
Notes
MOSK, J.—I dissent.
The majority declare they “need not decide” whether the tentative map approval is the equivalent of a building permit, which under Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785 [132 Cal.Rptr. 386, 553 P.2d 546], would constitute acquisition of a vested right. They then proceed to deny relief to plaintiffs on the ground that expenditure of $43,709 is not a sufficient sum on which “to predicate a vested right.” Thus their opinion rests not on any sound principle of law but on dollars and cents. How much more plaintiffs should have spent to earn their vested right my colleagues fail to say.
The majority declare the expenditure of $42,000 for the condominium tax and $1,709 for other alteration fees is “inconsequential when considered in
*Assigned by the Chairperson of the Judicial Council.
It is significant that no further permits or approvals were required for an existing structure. Even if they were, as held unanimously by this court in Youngblood v. Board of Supervisors (1978) 22 Cal.3d 644 [150 Cal.Rptr. 242, 586 P.2d 556], it is the tentative map that is crucial: its approval, not any subsequent ministerial act such as approving a final map, determines when a developer may expend funds and achieve a vested right.
The majority choose in their calculations to denigrate the outlay of $42,000 to the city for the condominium tax. That the condominium tax was paid after the city rent control ordinance went into effect is of no consequence. The city accepted the payment and no part of it has been refunded. The city has had the use of that sum since it was paid. Conversely, the plaintiffs have expended that money and have been denied its use for the years during which this litigation has been pending. To accept the plaintiffs’ payment of the condominium tax and then deny their right to convert to a condominium is a strange concept of municipal morality. Stranger still is the majority‘s approval of this conduct.
In short, this appears to be a classic case of a vested right having accrued in these plaintiffs. I would reverse the judgment.
Richardson, J.,* concurred.
Respondents’ petition for a rehearing was denied June 21, 1984. Mosk, J., was of the opinion that the petition should be granted.
*Retired Associate Justice of the Supreme Court sitting under assignment by the Chairperson of the Judicial Council.