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Landlords Press Ninth Circuit to End Oakland Tenant Relocation Payments

Three Ninth Circuit judges heard arguments Tuesday over the constitutionality of an Oakland ordinance requiring landlords to pay relocation costs for tenants displaced by evictions when property owners move back in.

SAN FRANCISCO (CN) — Three Ninth Circuit judges heard arguments Thursday over the constitutionality of an Oakland ordinance requiring landlords to pay relocation costs for tenants displaced by evictions when property owners move back in.

The city’s 2018 ordinance targets property owners who repossess their own homes, and is modeled after similar actions taken by San Francisco and other cities to provide renters facing an abrupt reentry into the Bay Area’s ruthless housing market with some cushion.

Military couple Lyndsey and Sharon Ballinger rented out their house in Oakland when an Air Force transfer necessitated a temporary move to the Washington, D.C. area. The city passed the ordinance while they were away, and the Ballingers found themselves suddenly on the hook for $6,582 when they tried to move back in— “a substantial sacrifice for a young Bay-area family on a military salary,” their lawsuit against the city says.

In 2019, the Ballingers lost their court battle challenging the ordinance as an unconstitutional taking of private property for a public use under the Fifth Amendment. A federal judge dismissed the case, prompting the homeowners to appeal to the San Francisco-based Ninth Circuit.

At oral argument Thursday, attorney David Breemer with the Pacific Legal Foundation said the ordinance runs afoul of the Fifth Amendment’s takings clause as the city’s demand for money is tied to the Ballingers’ property.

“What authority do you have to support a conclusion that money in and of itself is property under the Fifth Amendment?” asked a skeptical U.S. Circuit Judge N. Randy Smith, a George W. Bush appointee.

Breemer pointed to the U.S. Supreme Court’s 2013 ruling in Koontz v. St. John's River Water Management, in which a Florida landowner successfully challenged a city’s condition that he turn over part of his land for conservation in exchange for a development permit. In a decision penned by Justice Samuel Alito, the high court held that the city’s demand for money burdened Koontz’s ownership of that specific piece of land.

But Smith said unlike the Ballingers’ situation, Koontz’s case “doesn't have anything to do with just money.”

Breemer defended his position, saying, “We’re not claiming that a monetary obligation that’s imposed by statute or regulation is a taking. What we’re claiming is that a discreet fund of money that is linked to a specific parcel of property, like the Ballingers’, is a per se taking.”

Breemer also distinguished Oakland’s ordinance from property taxes, which U.S. Circuit Judge Ryan Nelson noted also qualify as a government fund tied to property. 

“We know that taxes that put money into a general fund that burden all people generally are not takings. That doesn’t mean that a specific taking of a specific sum cannot be a taking,” Breemer said. “That’s what the court said in Koontz.” 

The Ballingers, he added, have enough of a property interest to trigger a per se takings analysis under Koontz, as well as the Supreme Court’s landmark decisions in Nollan v. California Coastal Commission and Dolan v. City of Tigard, which he said dealt with “extortionate” government demands for property to pursue governmental ends.

"Our argument is not that every monetary obligation, or that even any relocation scheme is unconstitutional, but that this taking of a sum of money— the Ballingers’ savings—as a ransom for them to get back in their homes, is subject to a per se takings analysis,” Breemer said.

But Nelson, a Trump appointee, said he had a problem with Breemer’s application of the ordinance to case law dealing with the use of the property.

“Where they’ve just conditioned it as ‘pay this money,’ I don't see how that's conditioned on the use of the property,” he said.

Breemer said from the Ballingers’ point of view, the demand is intertwined with their use of their home.

Judge Smith compared the ordinance to any other landlord-tenant regulation on the voluntary use of a property, similar to the Supreme Court’s finding that a moratorium on development around Lake Tahoe did not constitute a taking in constitutional terms.

He also likened the case to Pakdel v. City and County of San Francisco, in which the Ninth Circuit found that a local rule requiring property owners to offer tenants lifetime leases are not exactions under Nollan and Dolan.

U.S. Circuit Judge Richard Clifton, also a George W. Bush appointee, said he found the case “very frustrating," as Breemer seemed to be trying to turn what looked like a regulatory taking into a physical taking.

"For the life of me I can’t figure out why. What supports the notion that extracting money becomes a physical taking?” he asked.

Breemer referred the judge back to Koontz and the taking of money linked to the use of physical property.

Koontz is about getting a permit,” Clifton said. "That's not what we're talking about here.”

The judge said Breemer was trying to put his case “into a box where it really doesn’t fit.”

Senior Deputy City Attorney Kevin McLaughlin said money alone cannot constitute a property taking, drawing a distinction between the right to possess a specific piece of real property “versus an obligation to simply pay money.”

McLaughlin further contrasted the Ballingers’ case with Koontz by saying the Oakland ordinance applies to all landlords in the city, whereas Koontz was concerned with a single permit application for one property.

He also said the ordinance does not dispossess the Ballingers’ of their home since under the law, they could move in without paying their tenant a relocation fee. But their failure to do so would not be a defense to any civil action the tenant may file against them.

“I don't see that that argument holds much water. This is not as innocuous as you're making it sound,” Nelson said. "You’re putting significant coercion behind it and the Supreme Court does seem to be concerned when the government uses coercive power to obtain the rights to land. The question is whether this is tied enough to the land.”

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