Yee v. City of Escondido

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In Yee v. City of Escondido, 503 U.S. 519, 523 (1992), the U.S. Supreme Court emphasized a distinction between a physical taking of property, no matter how small, by the government as compared with a regulatory restriction on property, no matter how great, by government:

"The first category of cases requires courts to apply a clear rule; the second necessarily entails complex factual assessments of the purposes and economic effects of government actions."

In this case the petitioners owned mobile home parks in Escondido, California, and argued that a local rent control ordinance, when viewed against the backdrop of California's Mobilehome Residency Law, amounted to a physical occupation of their property entitling them to compensation under the first category of cases discussed above.

Justice Sandra Day O'Connor, writing for the court, held that:

"Because the Escondido rent control ordinance does not compel a landowner to suffer the physical occupation of his property, it does not effect a per se taking under Loretto."

Two Justices concurred, and none dissented.

Details of Case

The town of Escondido, California, enacted a mobile home rent control ordinance that was then challenged by owners of a mobile home park. As background to their challenge, the park owners pointed out that, despite their name, mobile homes are not mobile; once placed in a park, only about one mobile home in 100 is ever moved. See id. at 523. The park owners also pointed to California's Mobilehome Residency Law, which severely limited their ability to terminate mobile home owners' tenancies or prevent transfer of tenancies to purchasers of the mobile homes. The park owners contended that the rent control ordinance, when viewed against this background, amounted to a physical taking of their property. See id. at 525. The Court rejected this contention.

The park owners further contended that the ordinance constituted a regulatory taking, but the Court refused to consider the issue because it was not included in the grant of certiorari. However, in rejecting the plaintiffs' claim of physical taking, the Court wrote the following:

The effect of the rent control ordinance, coupled with the restrictions on the park owner's freedom to reject new tenants, is to increase significantly the value of the mobile home. This increased value normally benefits only the tenant in possession at the time the rent control is imposed .... Petitioners are correct in citing the existence of this premium as a difference between the alleged effect of the Escondido ordinance and that of an ordinary apartment rent control statute. Most apartment tenants do not sell anything to their successors (and are often prohibited from charging "key money"), so a typical rent control statute will transfer wealth from the landlord to the incumbent tenant and future tenants. By contrast, petitioners contend that the Escondido ordinance transfers wealth only to the incumbent mobile home owner. This effect might have some bearing on whether the ordinance causes a regulatory taking, as it may shed some light on whether there is a sufficient nexus between the effect of the ordinance and the objectives it is supposed to advance. See Nollan v. California Coastal Comm'n. But it has nothing to do with whether the ordinance causes a physical taking.

Id. at 530 (citation omitted).