The California Supreme Court has declined to review a critical case related to the Costa-Hawkins Rental Housing Act, the state’s most important law governing local rent control policies.  

The case, NCR Properties v. City of Berkeley, centers on a dispute over Berkeley’s implementation of its local rent control ordinance for several housing units that were extensively renovated and granted new certificates of occupancy.  

The property owner contended that Costa-Hawkins – which exempts properties with certificates of occupancy issued after Feb. 1, 1995 – should have prevented the city from applying rent control to the rehabilitated units. Both the trial court and court of appeal, however, sided with the city, saying that Costa-Hawkins’ exemption was only intended to apply to newly constructed units, not units that were substantially renovated and received new certificates of occupancy. 

CAA filed a “friend of the court” letter urging the court to accept review, arguing that it presented an important public policy issue as the lower court rulings set a precedent that will worsen the state’s housing crisis by discouraging investment in California’s aging housing, preservation of which is key to ensuring enough homes for all Californians. 

“It’s hugely disappointing,” said Whitney Prout, CAA’s policy and compliance counsel. “As concerning as the specific facts of this case are, my biggest concern is that the courts are giving local governments discretion to decide when Costa-Hawkins – a law intended to limit local government power – does and does not apply.” 

The California Supreme Court was the last court to which this case could be appealed, meaning that the Court of Appeal’s unfavorable decision will now remain law unless or until the California Supreme Court takes up a different case in the future on this issue.