Ninety cities across California joined LA in asking the state Supreme Court to uphold the unusual fee plan, which earlier had been tossed out by two lower courts. The state Supreme Court's reversal now becomes case law and can be cited in similar cases across the country.

"The fact that almost 100 cities backed LA in this suit tells you that owners are going to find themselves facing even more fees in the months ahead," an attorney who has represented several apartment investors over the years tells GlobeSt.com.

The case (Apartment Assn. of Los Angeles vs. City of Los Angeles) began in 1998, after LA's City Council approved a $1-a-month charge on each unit in a building to help fund the cost of paying for more inspectors. Under the program, the owner of a 75-unit apartment complex would pay $75 a month, or $900 annually, to offset the local government's cost of hiring enough staffers to ensure that every rental in the city is inspected at least once every three years.

The new fee was promptly challenged by some apartment groups, who claimed it violated a state law that requires any property-related fee be approved by a majority of property owners or by a two-thirds vote of the public. A lower court judge agreed with the owners, and in 1999, so did the Court of Appeal.

But the California Supreme Court has now overturned those rulings, saying the fee doesn't violate state law because it technically is not levied on people solely because they own property. "Rather, it is imposed because the property is being rented," Justice Stanley Mosk wrote for the majority. Once the apartment is no longer rented, Mosk reasons, the fee cannot be charged.

Los Angeles officials are happy that the fee has been upheld, as are the 90 other cities that backed LA's position. Many of those cities, including San Jose, which also is one of the state's largest and most expensive apartment markets, have already adopted similar fee programs. Others are likely do so now that the Supreme Court says it's OK.

Apartment owners and other property-rights groups, however, say the new decision essentially forces them to pay a tax that no one else has to pay. The ruling "is just another opportunity for local governments to single out a particular group to fund something that everybody else wants," says Stephen McCutcheon Jr. of the Pacific Legal Foundation, a conservative property-rights group that supported the owners in the suit.

Many multifamily investors also worry that the ruling may open the door for an even broader and more costly array of new charges. For example, cities could conceivably launch similar per-unit fee programs to beef-up their rent-control programs or to fund more police patrols of apartment neighborhoods, costs that today are usually paid for out of general funds.