## Facts

- Berkeley adopted a rent-control ordinance in 1980 and created an independent Rent Stabilization Board to administer the program through regulations.
- The Board adopted Regulation 1100, which authorized an annual general adjustment (AGA): a formula-based rent increase tied to changes in the Consumer Price Index.
- Regulation 1100 permitted landlords subject to rent control to take the AGA without distinguishing between owners who bought before rent control and those who bought after 1979.
- The City sued the Board, challenging several implementing regulations, including the legality and scope of Regulation 1100’s across-the-board AGA.
- The superior court largely upheld Regulation 1100 but limited its application, ruling it could not be applied to landlords who purchased after 1979.
- Both the City and the Board appealed: the City challenged the regulation’s validity, and the Board challenged the acquisition-date limitation.

## Issues

1. Whether Regulation 1100’s CPI-based AGA system was a valid exercise of authority delegated to the Rent Stabilization Board under the rent-control ordinance.
2. Whether the Board could apply the AGA uniformly to all covered landlords, including post-1979 purchasers, or whether the ordinance required differential treatment based on acquisition date.
3. Whether the AGA mechanism, as part of the rent-control framework, was consistent with the ordinance’s “just and reasonable” rent standard and avoided confiscatory results.

## Decision

- The Court of Appeal upheld the basic validity of Regulation 1100 and the Board’s authority to adopt a CPI-based AGA mechanism.
- The court rejected the trial court’s limitation excluding post-1979 purchasers from AGA eligibility.
- The court held the Board could grant AGAs to all covered landlords regardless of acquisition date, so long as the overall scheme remained consistent with the ordinance and did not produce confiscatory rents.
- The disposition effectively affirmed the regulation’s validity while reversing the acquisition-date restriction imposed by the superior court.

## Legal Principles

- A rent board acting under a broadly worded local rent-control ordinance may adopt formula-based, generally applicable rent-adjustment regulations to carry out the ordinance’s purposes.
- Absent textual support, courts should not impose acquisition-date classifications that materially rewrite the regulatory framework; changes of that kind are for the ordinance-maker or the authorized agency acting within delegated power.
- A rent-control program is evaluated by whether permitted rent levels and adjustment mechanisms maintain “just and reasonable” rents and preserve a constitutionally adequate opportunity for a fair return, rather than by focusing on an individual owner’s purchase price or entry date into the market.

## Conclusion

The court sustained Berkeley’s CPI-linked annual general adjustment regulation as a lawful implementation of rent control and held it could be applied uniformly to all regulated landlords, including those who acquired properties after 1979, because the ordinance did not mandate acquisition-date distinctions and the key constraint was avoiding confiscatory outcomes while maintaining just and reasonable rents.


City of Berkeley v. City of Berkeley Rent Stabilization Bd., 27 Cal. App. 4th 951, 33 Cal. Rptr. 2d 317 (Cal. Ct. App. 1994)