(CN) - The 9th Circuit agreed to reconsider its finding that a rent-control ordinance in Goleta, Calif., amounts to an unconstitutional taking of property.
Last September, a three-judge panel ruled that the city must compensate mobile home park owners Daniel and Susan Guggenheim and Maureen Pierce for capping the amount of rent they could charge tenants.
Goleta had adopted Santa Barbara County's rent-control ordinance in 2002, when it became part of the county. The ordinance was first enacted in 1979 to increase the availability of low-income housing and to prevent mobile home park owners from exploiting local housing shortages by jacking up the rent.
The Guggenheims and Pierce, owners of the Ranch Mobile Estates, claimed the ordinance was adopted without any hearings or studies to determine if rent control was necessary.
The district court sided with the city, but the 9th Circuit panel revived the park owners' Fifth Amendment takings claim.
"Singling out mobile home park owners ... and forcing them to rent their property at a discount of 80 percent below its market value 'is the kind of expense-shifting to a few persons that amounts to a takings,'" Judge Jay Bybee wrote, quoting Federal Circuit precedent.
The panel affirmed dismissal of the owners' due process and equal protection claims.
Dissenting Judge Andrew Kleinfeld argued that park owners aren't entitled to compensation, because the mobile home park was already under the county's rent-control ordinance when they bought it in 1997.
The case also raises the issue of when property owners can sue over their alleged loss.
Bybee said Supreme Court precedent "forced us to close the courthouse door to aggrieved property owners" until owners have been denied compensation for their property loss. But he said the plaintiffs "have managed to pry these doors open a bit" by developing their case through several rounds of litigation.
Without commenting on the panel's decision, the 9th Circuit voted to rehear the case en banc.
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