CAA victory spreads as court strikes down L.A. rent-triggered relocation mandate

A California appeals court has struck down the City of Los Angeles's rent-increase-triggered relocation assistance requirement, delivering another major win for the protections afforded to rental housing providers under the Costa-Hawkins Rental Housing Act.

The Los Angeles ordinance required housing providers to pay relocation assistance when tenants chose to move out after a rent increase above a specified threshold-even in units that are exempt from local rent control under Costa-Hawkins, such as single-family homes, condominiums and units built after 1978.

In a decision issued last week, the Court of Appeal ruled that the policy conflicts with Costa-Hawkins because it effectively penalizes housing providers for exercising their state-law right to set rents on those exempt units. As the court explained, the relocation requirement "is preempted because [of] the burden it places on the exercise of statutory rights under the Costa-Hawkins Act," despite the ordinance not directly capping rents.

The court relied heavily on its earlier decision in California Apartment Association v. City of Pasadena, which addressed a nearly identical ordinance. In that case, the court held that Pasadena could not require relocation payments tied to lawful rent increases on exempt units for the same reason: the payments functioned as a penalty on conduct that state law expressly allows.

That decision became final April 1 when the California Supreme Court declined to review or depublish it, leaving it in place as binding precedent. In its April 15 decision, the Court of Appeal treated the Pasadena ruling as controlling authority in striking down Los Angeles's policy.

Both rulings confirm that cities may not use financial mandates to do indirectly what state law forbids them from doing directly-regulate rents on properties that Costa-Hawkins exempts from local control.

The court did uphold a separate provision of the Los Angeles ordinance establishing a minimum debt threshold in eviction cases, finding it to be a valid exercise of the city's police power. That issue, however, was distinct from the relocation requirement.

It is not yet known whether the city will petition the California Supreme Court for review of the relocation ruling, or whether the plaintiff association will seek review of the eviction threshold ruling.

Broader implications for state law

The decision marks a significant reinforcement of Costa-Hawkins, at the same time that those protections are facing new challenges elsewhere.

In a separate case in Oakland, tenant advocates are attempting to use federal disability law to expand rent control to newer housing that is currently exempt under Costa-Hawkins. The California Apartment Association recently filed an amicus brief opposing that effort, warning that it would undermine a central feature of state housing law and discourage new construction.

Together, these cases highlight the continued centrality of Costa-Hawkins in defining the boundaries of local rent regulation-and the ongoing legal battles over how far those limits extend.

CAA has consistently championed Costa-Hawkins-a law the association helped get adopted in 1995-from threats in the Legislature, at the ballot box, and in the courts. CAA will continue to defend Costa-Hawkins wherever it is challenged.