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DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTO R N EYS AT LAW City Council of the City of Santa Ana City of Santa Ana September 16, 2021 Page 9 The Courts state that an inflation adjustment to the revenue stream is necessary because eventually the award of less than inflation will confiscate property. If partial CPI eventually confiscate property, the only question is when. From whom can the park owner seek and realize justice and the right to a fair return? Ultimately, it is the rent administrator and then the courts. The courts emphasize how essential such inflation -based adjustments are: 'It should be recognized in inflationary periods that the landlord's investment was made with dollars that were worth more at the time of the investment and therefore may deserve a greater present return. If the net operating profit of a landlord continues to be the identical number of dollars, there is in time a real diminution to the landlord which eventually becomes confiscatory.' 148 Cal. App. 3d at 293. A rent control ordinance is unconstitutionally confiscatory if its effect is to lower rents more than could reasonably be considered to be required for the measure's stated purpose. Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129, 130 Cal. Rptr. 465. Any attempt to discount the actual effect of inflation with a'partial indexing formula' will inevitably lead to a deterioration of profits in real terms. The legitimate purpose of a rent control ordinance has been identified by the California and United States Supreme Courts as being 'the prevention of excessive and unreasonable rent increases caused by the growing shortage of and increasing demand for housing in the City.' Inflation is caused not by any shortages or demand fluctuations in any particular industry, but rather by changes in the money supply. Partial indexing creates nominal increases that are, year after year, systematically kept below the inflation rate, and are thus actually decreases in real terms. Such decreases cannot be justified within the context of rent control's legitimate purpose of "preventing excessive and unreasonable rent increases" due to special shortage conditions. They are in effect lowering rents "more than could reasonably be considered to be required for the measure's stated purpose' and are thus 'unconstitutionally confiscatory" under seminal California Supreme Court cases. Even 99%-indexing for inflation would be, in theory, indefensible as a systematic means of forcing deterioration in the landlord's profits with no reasonable connection to any legitimate purpose of a rent control ordinance. In this case, the ordinance makes a mockery of the requirement that is clear in the case law that inflation be considered to avoid the confiscatory effect of ongoing rent reductions when considered in real terms. The uncontradicted evidence will be that the Santa Ana Rent Board will administer the ordinance that assures that the management's profits will decline in real terms with every passing year to the point of confiscation. The City of Santa Ana Rent Board becomes the taxpayer -funded "czar" of housing quality in the city. The linkage between adequate revenue to fund operations of a mobilehome park and housing quality is absolute. It is not price so much, but lifestyle, quality, ambience,