§ 1805

Citation: § 1805
Parent Document: Action Apartment Ass'n v. Santa Monica Rent Control Board, 114 Cal. Rptr. 2d 412 (2002)
Jurisdiction: California (state)
Effective Date: 2002-01-03
Original Source: https://www.courtlistener.com/opinion/2274225/action-apartment-assn-v-santa-m... ↗

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“ ‘[T]he only circumstances under which there is a possibility of a taking of investors’ property by virtue of rate regulation is when a [regulated firm] is in the sort of financial difficulty described . . .’ [as] ‘deep financial hardship.’ . . . The firm may experience such hardship when it does not earn enough revenue for both ‘operating expenses’ and ‘the capital costs of the business,’ including ‘service on the debt and dividends on the stock,’ of a magnitude that would allow a ‘return to the equity owner’ that is ‘commensurate with returns on investments in other enterprises having corresponding risks’ and ‘sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital.’ . . . ‘But absent [that] sort of deep financial hardship ‘there is no taking This follows from the fact that... a regulated firm may claim that a rate is confiscatory only if the rate does not allow it to operate successfully. In such circumstances, the firm is not inaptly characterized as experiencing ‘deep financial hardship’ as a result of the rate.

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