UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

EQUITY LIFESTYLE PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Maryland (State or other jurisdiction of incorporation or organization)		1-11718 (Commission File No.)		36-3857664 (IRS Employer Identification Number)

Two North Riverside Plaza, Chicago, Illinois (Address of principal executive offices)		60606 (Zip Code)

(312) 279-1400
(Registrant’s telephone number, including area code)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 8.01 Other Events

     On April 17, 2009, the United States District Court for the Northern District of California issued an “Order for Entry of Judgment,” and an “Order” relating to the parties’ requests for attorneys’ fees (the “Fee Order”), in connection with Equity LifeStyle Properties, Inc.’s lawsuit against the City of San Rafael, challenging the City of San Rafael’s rent control ordinance.

     The Order for Entry of Judgment is included in this Form 8-K as Exhibit 99.1.

     The Fee Order is included in this Form 8-K as Exhibit 99.2.

     The information in Item 8.01 of this Form 8-K, including the Exhibit 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Item 8.01 of this Form 8-K, Exhibit 99.1 and Exhibit 99.2 attached hereto shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

     (d) Exhibits

Exhibit 99.1		April 17, 2009 “Order for Entry of Judgment” of the United States District Court for the Northern District of California regarding Equity LifeStyle Properties, Inc. and the City of San Rafael.
Exhibit 99.2		April 17, 2009 “Order” of the United States District Court for the Northern District of California regarding Equity LifeStyle Properties, Inc. and the City of San Rafael.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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	1
	2
	3
	4
	5
	6
	7
	8
	9
				IN THE UNITED STATES DISTRICT COURT
	10
				FOR THE NORTHERN DISTRICT OF CALIFORNIA
	11
	12
				MHC FINANCING, LTD, et al,		No		C 00-3785 VRW
	13
				Plaintiffs,				ORDER FOR ENTRY OF
	14							JUDGMENT
				v
	15
				CITY OF SAN RAFAEL,
	16
				Defendant,
	17
				CONTEMPO MARIN HOMEOWNERS
	18			ASSOCIATION,
	19			Defendant-Intervenor.
					/
	20
	21			In the eight or so years this litigation has been
	22			pending, the takings jurisprudence of the United States Supreme
	23			Court and the Ninth Circuit has transformed. The market for
	24			housing now differs dramatically from that at the inception of this
	25			litigation. Before these changes, the extremely able lawyers at
	26			bar and the involvement of a renowned mediator were unable to find
	27			a resolution. Emotional and political obstacles to a resolution on
	28			one side and weighty constitutional issues on the other then worked

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	1			against a resolution. Current conditions may afford a new
	2			opportunity for the parties to achieve a fair and practical outcome
	3			consistent with constitutional standards. This order seeks to
	4			encourage those efforts.
	5			More than a year ago, on January 29, 2008, the court
	6			issued its findings of fact and conclusions of law on claims by MHC
	7			Financing (“MHC”) that the City of San Rafael’s mobilehome rent and
	8			vacancy control ordinance (“Ordinance”) effected an
	9			unconstitutional taking. Doc #554 (“Findings”). MHC owns the
	10			Contempo Marin Mobilehome Park (“Contempo Marin”) in San Rafael,
	11			California. The Contempo Marin Homeowners Association (“Homeowners
	12			Association”) defended the Ordinance along with the City of San
	13			Rafael (“City”). The court found that the Ordinance effected a
	14			regulatory taking and a private taking. Findings at 34, 51. The
	15			Homeowners Association and the City now bring separate motions to
	16			stay enforcement pending appeal of any judgment (so far none has
	17			been entered) based on the court’s findings and legal conclusions.
	18			Doc ##561, 576.
	19			Although the case presents unsettled issues of takings
	20			law, the violation of MHC’s constitutional rights seems no less
	21			plain to the court now than when it entered its findings and
	22			conclusions of law. A stay of relief pending appeal would,
	23			therefore, continue in effect a constitutionally infirm ordinance.
	24			But invalidating the ordinance as to all affected residents of
	25			Contempo Marin may impose a hardship for which they are not
	26			directly responsible. It is, after all, the City, not the Contempo
	27			Marin residents, that enacted the Ordinance. Rather than enter a
	28			judgment that immediately invalidates the Ordinance and then stay

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	1			enforcement pending appeal to avoid an immediate hardship to
	2			Contempo Marin residents, the court will deny a stay but frame the
	3			injunctive relief in a manner that provides for an orderly remedy
	4			for the constitutional violation found here. Under terms of the
	5			judgment the court frames, the constitutional infirmity of the
	6			Ordinance will dissolve gradually, minimizing possible hardships to
	7			Contempo Marin residents while still vindicating the constitutional
	8			interests at stake.
	9			The judgment to be entered here will gradually phase out
	10			the pad rent regulation scheme that the court has found
	11			unconstitutional. Existing residents of Contempo Marin will be
	12			able to continue to pay pad rentals as if the Ordinance were to
	13			remain in effect for a period of ten years. Enforcement of the
	14			Ordinance will be immediately enjoined with respect to new
	15			residents of Contempo Marin and expire entirely ten years from the
	16			date of judgment. During this ten year period, the only “hardship”
	17			current residents of Contempo Marin will suffer is the inability to
	18			capture the artificial premium in the resale price of their
	19			mobilehomes that the Ordinance creates. As this premium represents
	20			the unconstitutional taking of MHC’s property interest, its denial
	21			to Contempo Marin residents deserves little weight in the balance
	22			of equities employed to frame the injunctive relief afforded here.
	23			The court’s reasoning for this result follows.
	24
	25			I
	26			At Contempo Marin, MHC leases plots of land, called
	27			“pads” for the purpose of installing a mobilehome on each plot.
	28			MHC furnishes and maintains private roads and other community

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	1			facilities within the park. Findings at 4-5 ¶7. MHC holds legal
	2			title to the pads, and pad lessees pay monthly rent to MHC for use
	3			of their respective pads and the facilities and services that MHC
	4			provides. Id at 5 ¶9. Pad lessees at Contempo Marin who wish to
	5			relocate usually sell their mobilehomes in place to the new
	6			resident, and the purchaser — in addition to acquiring the
	7			mobilehome — takes over the pad leasehold. Id at 5 ¶8, 8-9 ¶18.
	8			The mobilehomes at Contempo Marin are not, in fact, very mobile.
	9			In 1989, the City enacted the Mobilehome Rent
	10			Stabilization Ordinance. The 1989 Ordinance imposed rent control
	11			for the pad rents and provided that rents could increase only
	12			according to a sliding scale tied to an inflation index prescribed
	13			in the Ordinance. The mobilehome resale prices were left
	14			unregulated. If the change in inflation was five percent or less,
	15			the park owner was entitled to increase pad rents by a percentage
	16			equal to the change in inflation. But if the change in inflation
	17			was greater than five or ten percent, rents could increase only at
	18			75 or 66 percent, respectively, of the change in inflation. Id at
	19			9-10 ¶20. In no year from 1993 to 1999 did the inflation index
	20			rise at an annual rate greater than 5 percent. Accordingly, rent
	21			increases could essentially keep pace with the inflation benchmark
	22			used in the Ordinance. Id at 14 ¶38.
	23			In 1993, the City amended the Ordinance to add “vacancy
	24			control.” Under vacancy control, any new resident taking over a
	25			mobilehome pad lease in Contempo Marin had the right to rent the
	26			pad at the same rate as the previous tenant. Thus, after the
	27			vacancy control amendment, the park owner could no longer raise the
	28			pad rent charged to a new pad lessee who took over the prior lease.

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	1			Findings at 10 ¶22.
	2			After the City imposed vacancy control, the then-owner of
	3			Contempo Marin sued in state court, alleging that the combination
	4			of pad rent control and vacancy control in the amended Ordinance
	5			was an unconstitutional taking. The superior court upheld the
	6			Ordinance. While on appeal, MHC purchased Contempo Marin. The
	7			court of appeal later reversed the superior court judgment on other
	8			grounds. Id at 12-13 ¶¶26-33.
	9			In 1999, the City amended the Ordinance yet again. The
	10			City replaced the sliding scale formula that provided for graduated
	11			pad rent increases depending on the magnitude of inflation with a
	12			single formula that limited increases to 75 percent of any change
	13			in the inflation index. For that reason, the 1999 amendments
	14			imposed an ever-growing gap between the fair market rental value of
	15			a mobilehome pad lease and the rent MHC could charge. Id at 14-15
	16			¶39. The 1999 amendments alone reduced MHC’s revenue streams from
	17			Contempo Marin and the value of its property by a present value at
	18			the time of trial of $10,609,136. Id at 16 ¶42. Prior to the 1999
	19			amendments, it was at least theoretically possible for pad rents to
	20			keep up with inflation. The 1999 amendments eliminated that
	21			possibility.
	22			The market did not ignore the significant change that the
	23			1999 amendments wrought. Future pad rents at Contempo Marin were
	24			depressed because pad rents could not under any circumstance keep
	25			up with the general level of inflation as represented by the index
	26			used in the Ordinance. Accordingly, in order to obtain the benefit
	27			of lower future rent payments, prospective buyers were able to —
	28			and did — pay a higher price to purchase the mobilehome itself

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	1			from the existing tenant than the value of the mobilehome divorced
	2			from the below-market-value pad rental. In this manner, the
	3			reduction in rents was “capitalized” into the value of the
	4			mobilehome. Thus, the 1999 amendments created an inevitable
	5			premium in the resale prices of mobilehomes in Contempo Marin.
	6			Findings at 15-16 ¶41.
	7			The only beneficiaries of that premium were the residents
	8			of Contempo Marin at the time the 1999 amendments went into effect.
	9			Id at 19 ¶52. These residents benefitted from the Ordinance if
	10			they continued to reside in Contempo Marin or if they sold their
	11			mobilehome plus pad leasehold to a new resident. Because the 1999
	12			amendments did not change the total amount that future tenants
	13			would pay to live at Contempo Marin (mobilehome price plus pad
	14			rent), the 1999 amendments themselves did not contribute to the
	15			availability of low-cost housing in the City, which was a stated
	16			objective of the Ordinance. Id at 19 ¶51. Meanwhile, the whole
	17			Ordinance reduced MHC’s net operating income by 75 percent and
	18			reduced the value of the park from $120 million to $23 million. Id
	19			at 24-26 ¶¶69-73.
	20			Based on the foregoing findings of fact, the court
	21			concluded that the Ordinance as amended in 1999 effected a
	22			regulatory taking under the Penn Central test (id at 21-34) as well
	23			as a private taking under the Public Use Clause of the Fifth
	24			Amendment (id at 34-51). The court concluded as a matter of law
	25			that the 1999 amendments were not severable from the previous
	26			version of the Ordinance. Id at 74-79. Accordingly, the court
	27			held that the Ordinance was invalid in its entirety.
	28			//

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	1			After the court issued its order, MHC submitted a
	2			proposed form of judgment requesting that the court enjoin the
	3			Ordinance effective immediately. The City and the Homeowners
	4			Association filed objections (Doc ##555, 556), and the court took
	5			the matter under submission. On February 12, 2008, the court
	6			requested further briefing by March 14 on the question whether to
	7			stay its judgment pending appeal. Doc #558.
	8			On February 20, 2008, before the court entered judgment
	9			or issued an injunction, MHC sent the Contempo Marin residents a
	10			letter regarding their leases. Doc #564, Exh A. The letter stated
	11			that monthly rents would increase to $1,925.00 beginning in March
	12			2008. Id. The letter stated that “Chief Judge Walker’s January
	13			29, 2008 Order” is a “binding federal court Order” and thus “the
	14			City has no legal authority to enforce the Ordinance.” Id.
	15			At the City’s request, the court held a telephone
	16			conference on February 22, 2008, to discuss MHC’s letter. The
	17			court clarified that its order did not invalidate the Ordinance
	18			immediately. MHC agreed to refrain from raising its rents until
	19			the court ruled on the motion for a stay. The Homeowners
	20			Association contends that even after that conference call, MHC
	21			persisted in charging its residents $1,925.00 in rent but only
	22			demanded payment of current rent amounts, with rent invoices
	23			categorizing the difference between the two as “amount in dispute.”
	24			Doc #569, Exh B. MHC has thus appeared to communicate to Contempo
	25			Marin residents that they are racking up debt by remaining at the
	26			park and will be liable for the “amounts in dispute” if MHC wins a
	27			final judgment. Id. Pad lessees have reacted predictably.
	28			//

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	1			After the conference call, the parties submitted their
	2			memoranda addressing whether enforcement of the court’s order
	3			should be stayed. Doc ##561, 577, 581. In those memoranda, the
	4			City and the Homeowners Association (in the following discussion,
	5			the court refers the City and the Homeowners Association
	6			individually when appropriate or together as “defendants”)
	7			challenge the court’s findings of fact and conclusions of law. Doc
	8			##561, 577. Defendants claim that because most Contempo Marin
	9			residents live on low or fixed incomes, the proposed rent is so
	10			high that most residents “will be forced to relocate or be evicted
	11			nearly immediately * * * .” Doc ##561 at 3, 577 at 25-27. MHC, on
	12			the other hand, is anxious to get out from under an ordinance found
	13			to be unconstitutional.
	14
	15			II
	16			The Ninth Circuit reaffirmed recently the standard for
	17			granting a stay pending appeal. See Golden Gate Restaurant Ass’n v
	18			City and County of San Francisco, 512 F3d 1112, 1115-16 (9th Cir
	19			2008). The party requesting a stay must show either (1) “a
	20			probability of success on the merits and the possibility of
	21			irreparable injury” or (2) that “serious legal questions are raised
	22			and that the balance of hardships tips sharply in its favor.”
	23			Lopez v Heckler, 713 F2d 1432, 1435 (9th Cir 1983). These are “two
	24			interrelated legal tests” that “represent the outer reaches of a
	25			single continuum.” Lopez, 713 F2d at 1435. “[T]he required degree
	26			of irreparable harm increases as the probability of success
	27			decreases.” NRDC v Winter, 502 F3d 859, 862 (9th Cir 2007).
	28			Lastly, the court should “consider where the public interest lies”

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	1			as a factor independent of the parties’ interests. Golden Gate
	2			Restaurant Ass’n, 512 F3d at 1116. “The relative hardship to the
	3			parties is the critical element in deciding at which point along
	4			the continuum a stay is justified.” Lopez, 713 F2d at 1435.
	5			Defendants’ better argument for a stay is not that they
	6			have a strong likelihood of success on appeal, but that the
	7			relative hardships tip in their favor. Defendants argue that
	8			Contempo Marin residents may suffer irreparable injuries if the
	9			court does not grant a stay because an injunction against
	10			enforcement of the Ordinance will cause MHC to increase pad rents,
	11			forcing some Contempo Marin residents to move. Doc ##561 at 12-12,
	12			577 at 25-27. The court will, therefore, analyze defendants’
	13			motions under the “serious legal questions” test.
	14			As the following demonstrates, there are serious
	15			hardships on both sides. While Contempo Marin residents face the
	16			prospect of a sudden increase in their pad rents, MHC has long been
	17			deprived of its significant property interests, and a stay will
	18			prolong the taking MHC has suffered. The appropriateness of a stay
	19			turns on the weight of these hardships. Central to consideration
	20			of the balance of hardships here is that the party primarily
	21			responsible for creating MHC’s hardship — namely, the City — will
	22			not immediately suffer any hardship.
	23			The party seeking a stay “must demonstrate that serious
	24			legal questions are raised and that the balance of hardships tips
	25			sharply in its favor.” Lopez, 713 F2d at 1435. Defendants can
	26			demonstrate a “serious legal question” by showing that they have a
	27			“fair chance of success” on appeal. National Wildlife Federation v
	28			Coston, 773 F2d 1513, 1517 (9th Cir 1985). Serious questions are

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	1			“substantial, difficult and doubtful, as to make them a fair ground
	2			for litigation and thus for more deliberative investigation.”
	3			Republic of Philippines v Marcos, 862 F2d 1355, 1362 (9th Cir
	4			1988). “For purposes of injunctive relief, ‘serious questions’
	5			refers to questions which cannot be resolved one way or the other
	6			at the hearing on the injunction and as to which the court
	7			perceives a need to preserve the status quo lest one side prevent
	8			resolution of the questions or execution of any judgment by
	9			altering the status quo.” Gilder v PGA Tour, Inc, 936 F2d 417, 422
	10			(9th Cir 1991) (quotation marks omitted).
	11
	12			A
	13			Defendants challenge the court’s finding of a private
	14			taking. Doc ##561 at 10-11, 577 at 22-23. In its findings of fact
	15			and conclusions of law, the court determined that the “public
	16			purposes” the City asserted for the Ordinance — protecting
	17			homeowner equity, creating affordable housing and protecting fixed-
	18			income residents — were “palpably without reasonable foundation”
	19			and were mere “pretext[s]” that masked a private taking intended to
	20			enrich the Contempo Marin residents. Findings at 49-51 ¶¶152-57;
	21			see Kelo v City of New London, 545 US 469, 478 (2005).
	22			In their motions for a stay, defendants argue the court’s
	23			finding of a private taking is in tension with its conclusion that
	24			the Ordinance survives rationality review under the Due Process
	25			Clause. Doc ##561 at 11, 577 at 22-23. Although the court found
	26			the Ordinance operated so far afield from its stated purposes as to
	27			be pretextual, the court also found that the Ordinance was
	28			rationally related to its stated purposes. The court held that the

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	1			Ordinance was permissible under the Due Process Clause because “a
	2			rational legislator could have believed that the rent control
	3			ordinance would further the stated goals, at least insofar as the
	4			purpose is to protect existing tenants.” Findings at 54 ¶169, 56
	5			¶171, quoting Levald, Inc v City of Palm Desert, 998 F2d 680, 690
	6			(9th Cir 1993). Defendants argue that if the Ordinance is
	7			rationally related to its stated public welfare goals as required
	8			by due process, then those same public welfare goals cannot be
	9			pretextual. Doc ##561 at 10-11, 577 at 22-23; see also Kelo, 545
	10			US at 490-92 (Kennedy, J, concurring), citing Cleburne v Cleburne
	11			Living Center, Inc, 473 US 432, 446-47, 450 (1985). Defendants
	12			misapprehend the court’s findings and the governing test for a
	13			stay.
	14			In the context of a private taking claim, neither the
	15			Supreme Court nor the Ninth Circuit has addressed a rent control
	16			ordinance that purports to reduce rents but creates instead an
	17			unavoidable one-time premium. Other cases raising taking and due
	18			process claims are distinguishable. Mobilehomes at parks like
	19			Contempo Marin are highly unusual because new buyers obtain a
	20			unitary ownership interest in a divided asset. Buyers obtain
	21			ownership of the mobilehome unit and a pad leasehold interest, but
	22			negotiate one price with the mobilehome owner and pad lessee.
	23			Buyers do not negotiate with or arrive at a pad rental price with
	24			MHC, the pad lessor. The price paid to the mobilehome owner
	25			incorporates the market value of the mobilehome unit and the value
	26			of any premium inherent in the depressed pad rents resulting from
	27			the Ordinance. Even though MHC is not a party to these
	28			negotiations, its interests are nonetheless affected. Price

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	1			regulation in this context is rare and, although there have been a
	2			number of cases involving mobilehome pad rent regulation or
	3			somewhat analogous regulation, no definitive guidance has emerged.
	4			Previous judicial attempts to address the problem have
	5			failed, leaving the question unsettled. The Supreme Court
	6			encountered the “premium” issue in Yee v City of Escondido, 503 US
	7			519 (1992), but that ruling is not helpful here because plaintiffs
	8			in that case had raised a physical taking claim. Yee stated
	9			specifically that the case might have turned out differently had
	10			the court granted certiorari on the regulatory taking claim. 503
	11			US at 530, 533.
	12			In Richardson v City and County of Honolulu, 124 F3d 1150
	13			(9th Cir 1997), the Ninth Circuit picked up where Yee left off.
	14			The court found that a rent control ordinance that created a
	15			premium caused an unconstitutional regulatory taking. Richardson,
	16			124 F3d at 1165-66. That ruling does not apply here because the
	17			court relied on the now-defunct “substantially advances” test,
	18			which the Supreme Court spurned in Lingle v Chevron USA, Inc, 544
	19			US 528 (2005).
	20			Lingle addressed yet another rent control ordinance that
	21			did not reduce rents but instead created a premium. 544 US at 534-
	22			36. The plaintiff in Lingle — like the plaintiff in Richardson —
	23			claimed that the ordinance did not “substantially advance” a
	24			legitimate public interest and therefore effected a regulatory
	25			taking. The Court held that the “substantially advances” test
	26			could not apply to a regulatory taking claim, and the Court
	27			reversed the district court’s judgment that the ordinance was
	28			unconstitutional. 544 US at 548. Instead, the Court held that the

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	1			“substantially advances” theory is “an inquiry in the nature of a
	2			due process” test. 544 US at 540, 542. Justice Kennedy’s
	3			concurrence emphasized that even though plaintiff had not made out
	4			a regulatory taking claim, the ordinance might “be so arbitrary or
	5			irrational as to violate due process” if it “fail[s] * * * to
	6			accomplish a stated or obvious objective * * *.” 544 US at 548-49
	7			(Kennedy concurring). See also Kelo, 545 US at 490-92 (Kennedy
	8			concurring) (arguing the same point in the context of public use).
	9			Each of these cases tried to address the type of
	10			ordinance encountered here. But each court never made it past the
	11			preliminary step of clarifying the applicable legal test. None of
	12			the cases determined whether a rent control ordinance like the one
	13			at bar effects a private taking. The Ordinance creates an
	14			inevitable premium attributable to one property interest and
	15			transfers that premium to someone else. In doing so, the Ordinance
	16			shuts out from participation in the transaction the owner who loses
	17			the premium — in this case, MHC. The validity of such an
	18			Ordinance remains unsettled and presents a serious legal question
	19			on appeal. The fact that a city council may rationally have
	20			thought the Ordinance advanced its stated objectives should not
	21			rescue an enactment that does no such thing. The rational basis
	22			test does not insulate unsound public policy from attack. The
	23			rational basis test is, instead, a principle of judicial restraint
	24			— courts’ authority cannot and should not be invoked every time
	25			elected officials enact or enforce some unwise or perverse statute,
	26			ordinance or regulation. Williamson v Lee Optical of Oklahoma,
	27			Inc, 348 US 483, 488 (“The day is gone when this Court uses the Due
	28			Process Clause * * * to strike down state laws * * * because they

Case 3:00-cv-03785-VRW     Document 612     Filed 04/17/2009     Page 14 of 26

United States District Court
For the Northern District of California

	1			may be unwise, improvident, or out of harmony with a particular
	2			school of thought.”). But the judicial restraint embodied in the
	3			rational basis test does not warrant judicial indifference to the
	4			violation of important constitutional limitations.
	5
	6			B
	7			Defendants also challenge the court’s finding of a Penn
	8			Central regulatory taking. Doc ##561 at 7, 577 at 23. After
	9			Lingle, the Homeowners Association contends, a court reviewing a
	10			regulatory taking claim may not substitute its own findings about
	11			the reasonableness of an ordinance for the findings of a
	12			legislative body. Doc #589 at 6. Rather than consider the
	13			Ordinance’s reasonableness, according to the Homeowners
	14			Association, a regulatory taking claim focuses on “the magnitude or
	15			character of the burden a particular regulation imposes upon
	16			private property rights.” 544 US at 542 (emphasis in original).
	17			Accordingly, so this argument goes, the dearth of authority on
	18			“premium” rent control ordinances does not affect the court’s
	19			regulatory taking analysis because the crucial inquiry — the
	20			magnitude of MHC’s harm — is more economic and algebraic than
	21			legal. Only the amount of damage is important. All the
	22			considerations undergirding the private taking analysis — the
	23			effectiveness of the Ordinance, the motivations of the City
	24			Council, the peculiar unitary market for housing at Contempo Marin
	25			— are irrelevant under this view.
	26			The court’s finding that the Ordinance effects a Penn
	27			Central regulatory taking included findings of fact as well as
	28			conclusions of law. The court found that the 1999 amendments alone

Case 3:00-cv-03785-VRW     Document 612     Filed 04/17/2009     Page 15 of 26

United States District Court
For the Northern District of California

	1			reduced MHC’s revenue streams from Contempo Marin and the value of
	2			its property by $10,609,136. Findings at 16 ¶42. The Ordinance as
	3			a whole reduced the value of MHC’s land from approximately $120
	4			million to $23 million. Id at 25-26 ¶¶72-73. Based on those
	5			factual findings, the court concluded that the Ordinance was
	6			functionally equivalent to a physical taking of all or an
	7			overwhelming percentage of the value of MHC’s land. Id at 27 ¶80.
	8			“Findings of fact, whether based on oral or documentary
	9			evidence, shall not be set aside unless clearly erroneous.” FRCP
	10			52(a). The court of appeals should “accept [this] court’s findings
	11			of fact unless upon review [it is] left with the definite and firm
	12			conviction that a mistake has been committed.” United States v
	13			Doe, 155 F3d 1070, 1074 (9th Cir 1998). Under clearly erroneous
	14			review, this court’s findings of fact will likely be upheld.
	15			This court’s conclusion that the above facts constitute
	16			a regulatory taking is a mixed finding of law and fact because it
	17			involves a determination whether the reduction in value of MHC’s
	18			land satisfies an undisputed rule of law. Mixed questions of law
	19			and fact are generally reviewed de novo. Diamond v City of Taft,
	20			215 F3d 1052, 1055 (9th Cir 2000). This is even more true when the
	21			mixed question involves constitutional rights. United States v
	22			City of Spokane, 918 F2d 84, 86 (9th Cir 1990).
	23			The City argues that the court misapplied the Penn
	24			Central “economic impact analysis.” Doc #577 at 23. The City
	25			asserts that the court erred by considering the reduction in value
	26			caused by the entire Ordinance, instead of solely the reduction
	27			caused by the 1999 amendments. Only the 1999 amendments, according
	28			to the City, not the Ordinance as a whole, failed to advance the

Case 3:00-cv-03785-VRW     Document 612     Filed 04/17/2009     Page 16 of 26

United States District Court
For the Northern District of California

	1			City’s asserted public purposes. In essence, the City argues that
	2			prior to the 1999 amendments, the Ordinance was constitutional and
	3			therefore any harm to MHC’s constitutional rights did not accrue
	4			until 1999. Doc #577 at 23.
	5			If the court looks to the entire Ordinance in assessing
	6			the reduction in value, the argument goes, MHC realizes a windfall,
	7			benefitting from the invalidation of those portions of the
	8			Ordinance that were well within the City’s regulatory powers and
	9			well within MHC’s reasonable expectations at the time it purchased
	10			the park. See Doc #561 at 9. Had the court calculated the
	11			reduction in value caused by the 1999 amendments only, the City
	12			contends the court would not have found a regulatory taking because
	13			the reduction in value would have been approximately $10 million
	14			rather than $97 million. Doc #577 at 23.
	15			MHC responds that the court was correct to calculate the
	16			effect of the Ordinance as a whole rather than only the effect of
	17			the 1999 amendments. Doc #596 at 11. MHC asserts that calculating
	18			the effect of the entire Ordinance “is especially appropriate
	19			where, as here, the 1999 amendments are not severable from the rest
	20			of the regulation. Under the City’s theory, governments could
	21			immunize a law from a Penn Central claim by repeatedly amending the
	22			law so that the incremental economic impact of any one amendment,
	23			standing alone, is insufficient to give rise to a taking * * * .”
	24			Id.
	25			The only mentions in the Findings of any legally
	26			significant distinction between the entire Ordinance and the 1999
	27			amendments were in the court’s analysis of the statute of
	28			limitations (Findings at 66-69) and the court’s analysis of

Case 3:00-cv-03785-VRW     Document 612     Filed 04/17/2009     Page 17 of 26

United States District Court
For the Northern District of California

	1			severability (Findings at 74-79). Neither of those analyses is
	2			relevant to the economic impact test the City posits.
	3			The court’s statute of limitations discussion is only
	4			indirectly relevant to the economic impact test, and even if it
	5			were directly relevant, it would not provide a clear answer. For
	6			the purposes of the statute of limitations, the court found that
	7			the 1999 amendments “substantially altered” “the operation of the
	8			Ordinance” by causing “a fresh injury” to MHC’s property rights.
	9			Findings at 68-69. At most, the court’s conclusion would support
	10			the City only to the extent that it suggests the 1999 amendments
	11			caused a distinct injury which may have pushed the preexisting
	12			Ordinance from constitutional into unconstitutional terrain, and
	13			thus MHC’s harm equals the amount of the incremental injury only.
	14			The court, however, further stated in the context of the
	15			statute of limitations that MHC could still challenge the entire
	16			Ordinance (not just the 1999 amendments) because “[t]he
	17			constitutionality of an ordinance can only be determined by
	18			evaluating the totality of its provisions and effects” and because
	19			the 1999 amendments could not be “evaluated in isolation.” Id at
	20			69 ¶37, citing Richards v United States, 369 US 1, 11 (1962). MHC
	21			reads that statement beyond the statute of limitations context,
	22			arguing that the same principle must hold true for the purposes of
	23			the economic impact test. Doc #596 at 11. This reading stretches
	24			the court’s statement too far. The court’s holding implies only
	25			that the 1999 amendments changed “the totality” of the Ordinance
	26			and that the new “totality of the amended Ordinance” fell within
	27			the limitations period and did not bar MHC’s suit. Findings at 69.
	28

Case 3:00-cv-03785-VRW     Document 612     Filed 04/17/2009     Page 18 of 26

United States District Court
For the Northern District of California

	1			The court’s severability analysis does not settle the
	2			Penn Central question. See id at 74-79. For the purposes of
	3			severability, the court concluded that the 1999 amendments were not
	4			severable from the rest of the Ordinance because “[e]xcision of the
	5			75 percent language [introduced by the amendments] renders the
	6			Ordinance as a whole essentially meaningless.” Findings at 76.
	7			MHC argues that holding supports applying the economic impact test
	8			to the reduction in value caused by the Ordinance as a whole. Doc
	9			#596 at 21-22. The court made its severability finding months
	10			after it had determined that the Ordinance effected a regulatory
	11			taking. Moreover, severability might present its own serious legal
	12			question.
	13			But more fundamentally, California state law on
	14			severability has no relation to the Penn Central analysis. First,
	15			a finding that the unconstitutional 1999 amendments are not
	16			severable means that the full Ordinance may not be enforced; it
	17			does not imply that the Ordinance is otherwise constitutional or
	18			not. Second, merely because the severability analysis and the
	19			economic impact analysis both might mention carving up a statute
	20			does not mean that one rule of law controls the other. The court’s
	21			conclusion whether the 1999 amendments are grammatically,
	22			functionally and volitionally severable from the predecessor
	23			Ordinance says nothing about whether the City exceeded its
	24			authority to provide for its residents’ general welfare.
	25			Overall, the court’s conclusions on the statute of
	26			limitations and severability do not address a quite different
	27			question: how to measure whether a property regulation “goes too
	28			far” under the Fifth Amendment. Pennsylvania Coal Co v Mahon, 260