Griffin Development Co. v. City of Oxnard , 39 Cal. 3d 256 ( 1985 )

Opinion

KAUS, J.

Appellant, developer and owner of an apartment complex in the City of Oxnard, appeals from a judgment upholding the city’s denial of a special use permit for the conversion of the apartments to condominium units. The primary issue is whether a city may—consistent with the requirements of due process—regulate the conversion of apartments to condominiums. If it may, did the city’s application of its condominium conversion ordinance result in a “taking” of appellant’s property?

We conclude that the ordinance before us is reasonably related to the accomplishment of a legitimate governmental objective within the scope of the city’s police power and that denial of the special use permit was not an unconstitutional taking of appellant’s property. We will affirm the judgment denying appellant’s petition for writ of mandate.

I

In 1979, appellant Griffin Development Company (Griffin) completed construction of a 72-unit apartment complex in the City of Oxnard. When built, the complex complied with all city standards applicable to apartments and condominium projects. Such projects were not then subject to special standards. In 1980, the city adopted new standards applicable to new condominium projects. Through ordinance and resolution, the city applied these new standards to condominium conversions as well. The regulations require a special use permit from the city as a prerequisite to conversion; one wishing to convert apartments to condominiums must meet certain mandatory standards and “substantially conform” to the city’s advisory standards.¹ Essentially, condominium conversions are subject to standards which apply to the construction of new condominium projects. The conversion regulations are not part of a comprehensive rent control scheme; rental housing in Oxnard is not subject to rent control.

The advisory standards incorporated into the ordinance are set forth in Resolution No. 7658, which applies to new condominiums as well as condominium conversions. The resolution requires, inter alia, that (1) a housing unit shall contain not less than two separate bedrooms; (2) a housing unit shall not be smaller than 1,000 square feet; (3) each unit shall contain adequate space for a washer, dryer, and water heater; (4) parking shall be provided at a ratio of two spaces in a garage per dwelling unit, such parking to be located no further than 50 feet from the unit served; (5) visitor parking shall be required at a ratio of one space per dwelling unit, such parking to be located no further than 100 feet from any unit; (6) major entrances to residences shall be separated from entrances of adjacent units; and (7) a private storage area shall be provided each residence. Requirements (4) and (5) are made mandatory by a provision in Oxnard Municipal Code section 34-226 to the effect that “no apartment building which is a non-conforming use or non-conforming structure because of parking . . . shall be eligible for conversion.”

Underlying these standards—which are more severe than those applicable to apartment structures—was the city’s conclusion that apartments and owner-occupied condominiums serve two distinct segments of the population, each with its own needs (e.g., parking requirements) and each imposing a different type of burden on the surrounding community. According to the city’s planning director, condominium conversions alter the social matrix of the community, which, in turn, affects the community’s growth pattern and need for services. In addition, the city was concerned about the possibility that such conversions would result in a diminution in the supply of available rental units.

Griffin applied for a special use permit to convert its apartment complex to condominiums. It is undisputed that the complex did not conform to the mandatory parking requirements and to five of the advisory standards. Because of this failure to satisfy the requirements for condominium conversion, the city denied Griffin’s application, refusing to grant a special use permit, variance, and tentative subdivision map.

Griffin then petitioned for a writ of mandate to compel the city to allow the proposed conversion. There were no disputed issues of fact. The trial court concluded that the city has the authority to regulate condominium conversions and that the applicable regulations—including the requirement of a special use permit—are a valid exercise of that authority. It also concluded that the regulations were fairly applied to Griffin, did not deprive it of its constitutional rights, and are not preempted by the Subdivision Map Act (Gov. Code, § 66410 et seq.).

On appeal, Griffin contends that the regulations are preempted by state law; that the city lacks authority to regulate condominium conversions; and that the regulations effect a confiscatory “taking” of property.

II

Griffin claims that the state Subdivision Map Act (Gov. Code, § 66410 et seq., hereafter Map Act) preempts the city’s condominium conversion ordinance. We disagree;

The state Constitution confers upon all cities and counties the power to “make and enforce within [their] limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.” (Italics added.) (Cal. Const., art. XI, § 7. See Santa Monica Pines, Ltd. v. Rent Control Board (1984) 35 Cal.3d 858, 868 [201 Cal.Rptr. 593, 679 P.2d 27].) Local agencies may, therefore, adopt regulations involving matters covered by the Map Act, as long as they are not inconsistent with it. (Friends of Lake Arrowhead v. Board of Supervisors (1974) 38 Cal.App.3d 497, 505 [113 Cal.Rptr. 539].) Certain provisions of the Map Act do, of course, pertain to condominium conversions. Section 66424, for example, includes condominium projects within its definition of “subdivision.” Tentative and final subdivision maps are required for conversion of five or more units under section 66426. Section 66427 limits the power of local government to disapprove tentative or final maps on the basis of the design or location of the units, absent an ordinance.

In any event, the city’s condominium conversion ordinance in no way conflicts with these or other relevant provisions of the Map Act. Nor does the Map Act itself evince a legislative intent to occupy the entire field of condominium conversion regulation. Indeed, as we noted in Santa Monica Pines, Ltd., supra, 35 Cal.3d at page 869, it affirmatively recognizes the power of municipalities to regulate condominium conversions by local ordinance. (See, e.g., Gov. Code, § 66427.2 [“this section shall not diminish, limit or expand, other than as provided herein, the authority of any city, county, or city and county to approve or disapprove condominium projects”].)²

As evidenced by provisions of the Map Act itself, local governments may adopt nonconflicting condominium conversion regulations. Like the regulation at issue in Santa Monica Pines, Ltd.,³ Oxnard’s regulations do not conflict with the policies or provisions of the Map Act. Accordingly, we hold that they are not preempted by state law.

Ill

Griffin challenges the authority of the city to regulate condominium conversions and, in particular, its power to require a special use permit to convert apartments to condominium units. Its underlying argument is simply that such a conversion involves no “change in use” but, rather, a mere change in the form of ownership. Where there is no “contemplated change in use,” according to appellant, the city’s requirement of a special use permit amounts to a violation of due process.⁴

Properly framed, the question raised is whether regulation of condominium conversions (which may or may not involve structural alterations) is consistent with the requirements of due process. In Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129 [130 Cal.Rptr. 465, 550 P.2d 1001], we restated the basic due process limitations on regulations affecting property interests: “ ‘So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it.’” (17 Cal.3d at p. 155, quoting Nebbia v. New York (1934) 291 U.S. 502, 537 [78 L.Ed. 940, 957, 54 S.Ct. 505, 89 A.L.R. 1469].)

The vast majority of cities and counties in California has adopted comprehensive schemes of land use regulation. Except where such regulations have infringed upon fundamental constitutional rights or relied on suspect classifications such as race, they have generally been upheld in the face of due process and equal protection challenges. Against this background, California courts have consistently treated condominium conversion regulation as a legitimate exercise of the police power. (E.g., Santa Monica Pines, Ltd., supra, 35 Cal.3d 858 [condominium conversion regulations upheld as part of city’s rent control law]; Kalaydjian v. City of Los Angeles (1983) 149 Cal.App.3d 690 [197 Cal.Rptr. 149] [ordinance requiring landlords who convert apartments to condominiums to furnish relocation costs to displaced tenants upheld against due process and equal protection claims]; Soderling v. City of Santa Monica (1983) 142 Cal.App.3d 501 [191 Cal.Rptr. 140] [city’s imposition of special requirements with respect to condominium conversion upheld as a presumptively valid exercise of the police power]; Norsco Enterprises v. City of Fremont (1976) 54 Cal.App.3d 488 [126 Cal.Rptr. 659] [condominium conversion ordinance upheld]. See, also, Rasmussen v. City Council (1983) 140 Cal.App.3d 842 [190 Cal.Rptr. 1]; Krater v. City of Los Angeles (1982) 130 Cal.App.3d 839 [181 Cal.Rptr. 923]; Hazon-Iny Development, Inc. v. City of Santa Monica (1982) 128 Cal.App.3d 1 [179 Cal.Rptr. 860].)

The standard of judicial review with respect to economic regulation has been clearly established: “[Legislation regulating prices or otherwise restricting contractual or property rights is within the police power if its operative provisions are reasonably related to the accomplishment of a legitimate governmental purpose.” (Birkenfeld, supra, 17 Cal.3d at p. 158.)⁵ This standard is consistent with the United States Supreme Court’s recent observation that “[w]here property interests are adversely affected by zoning, the courts generally have emphasized the breadth of municipal power to control land use and have sustained the regulation if it is rationally related to legitimate state concerns and does not deprive the owner of economically viable use of his property.” (Schad v. Mount Ephraim (1981) 452 U.S. 61, 68 [68 L.Ed. 671, 680, 101 S.Ct. 2176].) However, where a zoning law or other land use regulation infringes upon a constitutionally protected personal liberty or fundamental right, “it must be narrowly drawn and must further a sufficiently substantial government interest.” (Id., [zoning ordinance infringed upon First Amendment interests]. See City of Santa Barbara v. Adamson (1980) 27 Cal.3d 123 [164 Cal.Rptr. 539, 610 P.2d 436, 12 A.L.R.4th 219] [city ordinance infringed upon the right to privacy].)

Griffin in this case does not claim that the Oxnard condominium conversion ordinance restricts any fundamental right, such as freedom of expression or privacy. Rather, it asserts only that its property interests are adversely affected by the city’s denial of a special use permit to turn apartments into condominiums. Our review of the ordinance is therefore limited to the question of whether the ordinance is reasonably related to a legitimate governmental purpose.

Prefatory to our examination of the goals of the ordinance, we note that one obvious purpose in requiring a special use permit for condominium conversions is “to maintain a healthy rental housing inventory.” In Santa Monica Pines, Ltd., supra, we acknowledged that such restrictions on removal of units from the rental housing market through condominium conversion—even though conversion may not involve a “change in use” in the sense that appellant is apparently using the phrase—possess an “independent police power source and purpose.” (35 Cal.3d at p. 869. See, also, Norsco Enterprises v. City of Fremont, supra, 54 Cal.App.3d 488, 494-495 [city’s regulation of condominium conversion is valid, notwithstanding the fact that the conversion contemplated no physical change in the structure and added no new residents to the city].)

However, beyond the special purpose of preserving an adequate supply of rental housing, the ordinance shares with many other forms of land use control—zoning, height restrictions, etc.—the basic goal of assuring high standards of construction and adequate facilities in developing residential areas.⁶ Rationales behind specific standards which differ from those applicable to apartments are set forth in a memorandum from the city’s planning director to the city attorney. For example, with respect to the requirement that each unit have two parking spaces in a covered garage not more than 50 feet from the unit, the planning director stated: “Auto ownership statistics reveal that the average owner occupied unit has more than one auto. The City’s experience with residential crime shows that a high percentage of such activity occurs in multi-family projects having carports or other open parking and seems to be directly related to auto burglary.” Regarding the recommendation that each unit have at least two bedrooms, he reasoned that “Oxnard has shown a consistent statistical trend toward larger families than the County average and a lower median age. [t] Since condominiums, including conversions, are to provide the mainstream of our owner-occupied housing stock for low and moderate income families, they should have standards which are applicable to families. Therefore, in order to avoid overcrowding, it’s been our experience that they should have at least a minimum of two bedrooms.”

Griffin has specifically challenged the application of these standards to condominium conversions, arguing that such conversions are merely a change in the form of ownership.⁷ Because the conversion involves no “change in use” it is claimed to be unreasonable to apply the standards because they are not sufficiently related to the public welfare. However, this “change in use” approach simply ignores the legitimate concerns which may prompt a city to regulate condominium conversions. The city could reasonably conclude that over a period of time owner-occupied condominiums would serve a segment of the local population with distinct needs. Indeed, the planning director indicated this underlying concern in his memorandum: “Regulations which have been developed recognize the basic differences between owner occupied and rental housing. Oxnard and other cities have experienced that in the conversions of units for sale as condominiums, the buyer of that unit has sole discretion with respect to how the unit is occupied, whereas in a rental situation, the manager has a substantial degree of control over the occupancy. Therefore, our condominium standards are necessary to protect not only the buyer of that unit but to protect against overcrowding and impacts that adversely affect other units in the same complex.”

As we observed in Birkenfeld, supra, the police power “extends to objectives in furtherance of the public peace, safety, morals, health and welfare and ‘is not a circumscribed prerogative, but is elastic and, in keeping with the growth of knowledge and the belief in the popular mind of the need for its application, capable of expansion to meet existing conditions of modern life.’ ” (17 Cal.3d at p. 160, quoting Miller v. Board of Public Works (1925) 195 Cal. 477, 485 [234 P. 381, 38 A.L.R. 1479]. See, also, Fisher v. City of Berkeley (1984) 37 Cal.3d 644, 676 [209 Cal.Rptr. 682, 693 P.2d 261].) A city’s desire to “grow at an orderly pace and in a compact manner” is clearly encompassed within the concept of “public welfare” (Dateline Builders, Inc., supra, 146 Cal.App.3d at p. 528), as is a city’s attempt to preserve what it regards as an adequate supply of rental housing.

Our examination of Oxnard’s condominium conversion regulations plainly indicates legitimate governmental purposes. Moreover, the operative provisions of the regulations are directly and reasonably related to these goals. We conclude, therefore, that the regulations—reasonably related to legitimate governmental purposes—are a valid exercise of the city’s police power.

IV

Griffin also contends that the city’s condominium conversion ordinance, as applied, results in a confiscatory “taking” of property. A land use measure may be unconstitutional and subject to invalidation “only when its effect is to deprive the landowner of substantially all reasonable use of his property.” (Agins v. City of Tiburon (1979) 24 Cal.3d 266, 277 [157 Cal.Rptr. 372, 598 P.2d 25].)⁸ Under this test, Griffin has failed to make out even a colorable claim that application of the ordinance results in a “taking.” Griffin is free to continue to rent its apartments, unaffected by the ordinance; the regulations apply only to its plans to convert the apartments to condominiums.

Moreover, this case does not resemble those in which a city effects a taking through an overly zealous effort to eliminate an existing nonconforming use. We have held that in such cases the city may pursue two constitutionally equivalent alternatives: “It can eliminate the use immediately by payment of just compensation, or it can require removal of the use without compensation following a reasonable amortization period.” (Metro-media, Inc. v. City of San Diego (1980) 26 Cal.3d 848, 881 [164 Cal.Rptr. 510, 610 P.2d 407]. See Livingston Rock etc. Co. v. County of L. A. (1954) 43 Cal.2d 121, 127 [272 P.2d 4].)⁹ In the instant case, however, the city has in no sense attempted to eliminate an existing nonconforming use; the ordinance plainly does not affect Griffin’s continuing use of the 72-unit structure as an apartment complex.¹⁰

Any finding of a “taking” in this case would necessarily be based upon the claim that the regulations result in a diminution of the value of Griffin’s property. However, as we noted in Fisher, supra, most land use regulations have “the inevitable effect of reducing the value of regulated properties.” (37 Cal.3d at p. 686.) Such reduction in property value does not, by itself, render a regulation unconstitutional. “Even a significant diminution in value is insufficient to establish a confiscatory taking. (Euclid v. Ambler Realty Co. (1926) 272 U.S. 365 [71 L.Ed. 303, 47 S.Ct. 114, 54 A.L.R. 1016] [75 percent reduction in value because of zoning law insufficient to establish a taking]; Hadacheck v. Sebastian (1915) 239 U.S. 394 [60 L.Ed. 348, 36 S.Ct. 143] [nearly 90 percent reduction in value because of use restriction insufficient to establish a taking].)” (37 Cal.3d at p. 686.) In light of these considerations, it is clear that the city’s condominium conversion ordinance does not effect a taking of Griffin’s property.

In sum, we conclude that the city’s ordinance is not preempted by state law, that it is a legitimate exercise of the city’s police power, and that it does not result in a “taking” of property.

The judgment is affirmed.

Bird, C. J., Broussard, J., Reynoso, J., and Grodin, J., concurred.

1 Oxnard Municipal Code section 34-226 distinguishes between mandatory and advisory physical standards. Certain parking, setback, height, interior yard space and other zoning ordinance standards set forth in Resolution No. 7658 as advisory standards are incorporated into section 34-226 as mandatory standards. Section 34-226 also outlines other mandatory standards. In addition to meeting mandatory standards, the conversion project “shall substantially conform to any advisory standards for the construction of new community housing projects.” (Italics added.) Resolution No. 7658 also sets out the advisory standards.

2 See, also, section 66427: “Nothing herein shall be deemed to limit the power of the legislative body to regulate the design or location of buildings in [a condominium project] by or pursuant to local ordinances.” For further indication of legislative intent that local government entities maintain the authority to regulate condominium conversions, see sections 66427.1, subdivision (e), 66427.4, and 66452.8.

3 Unlike Oxnard’s regulations, the condominium conversion regulation in Santa Monica Pines, Ltd. was connected to the city’s rent control laws. In light of the Map Act’s recognition of the power of cities to regulate condominium conversions, we held that “[t]he restriction on removal from the rental housing market through condominium conversions . . . with its evident, independent police power source and purpose, is therefore not preempted by the Subdivision Map Act.” (35 Cal.3d at p. 869.) Our holding today makes it clear that the issue of state preemption under the Map Act is not affected by the fact that a city’s condominium conversion regulations are not related to an overall rent control strategy.

4 Griffin offers no support for this proposition other than the fact that the relevant article of the code of the City of Oxnard is entitled “Change of Boundaries and Uses.” As for the contention that a condominium conversion not involving major structural alteration constitutes merely a change in ownership and not a “change in use,” Griffin cites four out-of-state cases: Wentworth Hotel, Inc. v. Town of New Castle (1972) 112 N.H. 21 [287 A.2d 615]; City of Miami Beach v. Arlen King Cole Con. Ass’n., Inc. (Fla.App. 1974) 302 So.2d 777; Maplewood Village Ten. Assn. v. Maplewood Village (1971) 116 N.J.Super. 372 [282 A.2d 428]; Bridge Park Co. v. Borough of Highland Park (1971) 113 N.J.Super. 219 [273 A.2d 397],

5 (See, also, Dateline Builders, Inc. v. City of Santa Rosa (1983) 146 Cal.App.3d 520, 528 [194 Cal.Rptr. 258].) The various formulations of this standard of review are based upon that stated in Nebbia v. New York, supra: “If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio.” (291 U.S. 502, 537 [78 L.Ed. 940, 957, 54 S.Ct. 505].)

6 As stated in the preamble to the resolution adopting the advisory standards, such standards “are necessary for the promotion of high quality residential development and for the provision of safe and suitable housing for single family ownership within [the city].”

7 At oral argument Griffin attempted to attach constitutional significance to the fact that the city conceded that it would be essentially impossible for the 72-unit apartment building to meet the standards set forth in the condominium conversion regulations. In this respect, we perceive no meaningful distinction between Griffin’s situation and that of any other landowner whose existing structure—being used for one purpose—cannot be upgraded or modified to' meet the standards required for some other use.

8 Cf. Agins v. City of Tiburon (1980) 447 U.S. 255, 260 [65 L.Ed.2d 106, 112, 100 S.Ct. 2138]: “The application of a general zoning law to particular property effects a taking if the ordinance does not substantially advance legitimate state interests [cite omitted] or denies an owner economically viable use of his land, see Penn Central Transp. Co. v. New York City, 438 U.S. 104, 138, n. 36 (1978).”

9 The “existing non-conforming use” issue is usually framed in terms of equal protection. (See, e.g., Metromedia, supra, 26 Cal.3d at pp. 880-881.) Although it did not raise an equal protection argument in its briefs, Griffin did use the phrase “equal protection” repeatedly during oral argument.

10 As already noted, Griffin suggested during oral argument that it is somehow significant that the city admitted that it would be virtually impossible for the 72-unit apartment complex to meet the applicable condominium conversion standards. The impossibility of meeting the standards would be relevant to this case only if the ordinance eliminated or substantially interfered with an existing nonconforming use—which it does not.