Along
with the development of the state and local laws discussed in the preceding
section, frequent litigation over the past 30 years has done much to
shape the operation of the Rent Guidelines Board and the rent stabilization
system. What follows is a list of court decisions and some notes on
how these decisions may have reinforced or changed the system and the
Board's role in it. Some of the cases involve Rent Guidelines Boards
that operate outside of the City under a mandate similar to that of
the N.Y.C. Rent Guidelines Board. The cases themselves should be directly
consulted for further information on the facts and issues involved
in each.
8200
Realty Corporation v. Lindsay
27 N.Y.2d 124, 313 N.Y.S.2d 733 (1970)
- The New York Court of Appeals upheld the constitutionality of the
real estate industry self-regulation system. Although noteworthy from
a historical perspective, this case is no longer directly relevant
to rent stabilization since the Rent Stabilization Association is no
longer statutorily involved in administration of the rent regulations.
Associated
Builders/CHIP v. N.Y.C. Rent Guidelines Board
Supreme Court N.Y. Co., Special Term Part I (1974) Index No. 11928/74
- The court rejected RGB guidelines on the grounds that they were not
accompanied by a detailed explanatory statement.
Strausman
v. Herman
52 A.D. 2d 882, 383 N.Y.S.2d 59 (2d Dept.1976), aff'd 42 N.Y.2d 1053
(1977)
- The Appellate Division found that an affidavit by the Chairman of
the Nassau County RGB stating that a DHCR ruling was consistent with
the intent of the rent guideline it was interpreting was sufficient
to support the validity of the ruling. Thus, the annulment of that
ruling by a lower court was reversed. Therefore the courts will give
the Board's interpretation of its own orders great weight.
Allyn
Realty Corp. v. Herman
56 A.D.2d 626, 391 N.Y.S.2d 685 (2d. Dept. 1977) [Involves Nassau County
RGB]
- The court ruled that the literal meaning of Board orders should be
adhered to unless the literal interpretation of such meaning would
lead to an absurd result.
Incorporated
Village of Great Neck Plaza v. Nassau Co. Rent Guidelines Board
60 A.D. 2d 593, 400 N.Y.S.2d 120 (2d Dept. 1977)
- The Appellate Division ruled that the Nassau County RGB's failure
to consider financing costs, vacancy rates and data reasonably available
with respect to owners' net incomes, as required by 4(b) of the Emergency
Tenant Protection Act of 1974 (a provision corresponding to 26-510(c))
resulted in the invalidation of its guidelines.
Rent
Stabilization Association v. N.Y.C. RGB
98 Misc 2d 312, 413 N.Y.S.950 (1978)
- The Supreme Court, New York County, ruled that the Open Meetings
Law applies to RGB Meetings. Because of violations of this law, the
court ordered that the RGB hold further meetings to promulgate new
guidelines but refrained from establishing court ordered guidelines
in the interim period.
Coalition
Against Rent Increase Passalongs v. Rent Guidelines Board of N.Y.C.
104 Misc 2d 101, 427 N.Y.S.2d 660 (Sup. Ct. N.Y. Cty. 1979) aff'd 176
A.D.2d 343 (1980)
- The Supreme Court, New York County, ruled that reopening of RGB guidelines
for adjustments after the July 1, annual adjustment was permitted.
This, however, is no longer permissible under the Omnibus Housing Act
of 1983. - Also, the court noted, "...all rent controls in the City
of New York [citations omitted] have a twofold purpose: to limit profiteering
in a market marked by housing shortage and to conserve and improve
the housing stock of the City of New York."
Incorporated
Village of Great Neck Plaza v. Nassau County RGB
69 A.D. 2d. 528, 418 N.Y.S.2d 796 (1979)
- The court ruled that Nassau County RGB is not a state agency and
therefore is not subject to the State Administrative Procedure Act
(SAPA). Following the same rationale, the New York City RGB is also
not subject to SAPA.
Liotta
et. al. v. RGB
547
F. Supp. 800 (S.D.N.Y. 1982)
-
Property owners argued in federal court that a loud and boisterous
atmosphere at an RGB meeting precluded fair and rational
deliberations and resulted low rent increases which constituted
a denial of due process to the owners. The United States
District Court for the Southern District found that in instances
where state law provides an adequate remedy to initially
seek redress of alleged due process violations, a plaintiff
must seek state court review of the issue before it seeks
review in federal court.
Matter
of Muriel Towers Co.
117
Misc. 2d 837 (Sup. Ct. N.Y. Co. 1983)
-
The Supreme Court, New York County, found that the "circus
atmosphere" (created by the exercise of constitutional rights
by a "vocal citizenry") at an RGB meeting did not prevent
rational deliberations by the Board. The Court also found
that the Board's consideration of tenants' ability to pay
in setting guidelines is proper.
METHISA
v. RGB
Supreme Court N.Y. Co. Index No. 21444/84(1984)
- A 0% adjustment guideline for hotel rents following hearings in which
evidence of extensive neglect and deprivation of services in these
buildings was presented was upheld. According to the court, the RGB
is permitted to consider the nature of the services provided as part
of its examination of expenditures. Such consideration is not penal
nor quasi-judicial in nature and thus does not exceed the RGB's jurisdiction.
Stein
v. RGB
127 A.D. 2d 189, 514 N.Y.S.2d 222 (1st Dept. 1987)
- The Appellate Division, First Department ruled that supplementary
Board orders or re-openers are permissable to protect the public from
the impact of changed economic conditions in the housing market. [Reopening
the guidelines in the same guideline period is no longer permissible
since the passage of the Omnibus Housing Act of 1983. See #7]
RSA
v. Dinkins, RGB / Gesmer
Sup. Ct., N.Y. Co., Index No. 11506/90; 167 A.D.2d. 179, 562 N.Y.S.
2d 411 (1st Dept. 1990), app. den. 77 N.Y.2d. affd. 809 (1990)
- The Supreme Court, New York County, ruled that absolute impartiality
in landlord-tenant matters is not a prerequisite to appointment as
a public member of the RGB. In addition, the court held that the qualifications
of Ellen Gesmer, which included 11 years experience as an attorney
handling housing related matters, met the statutatory requirement of "at
least five years experience in either finance, economics or housing." (See
note in next case)
RSA
v. Dinkins, RGB / Friedheim
Sup. Ct., N.Y. Co. - N.Y.L.J. 4/3/91 p.22, col. 1
- The Rent Stabilization Association (RSA) sought to have Oda Friedheim,
a tenant member of the RGB removed, alleging that she was an officer
in a tenant organization in violation of the Rent Stabilization Law.
The court ruled that a Quo Warranto action brought by the Attorney
General was the exclusive means for contesting title to a public office
in New York State. [Note: The exclusive right of the Attorney General
to contest title to office was raised on appeal in the Gesmer case
as well. The Appellate Division chose to follow the lower court's ruling
on the merits - and never addressed this standing issue.]
23
Realty Associates v. Tiegman et al.
Sup. Ct., Co. of N.Y. Index No. 12465/91 App. Withd. 176 A.D.2d. 1251
(1st Dept. 1991)
- A rent stabilized hotel owner claimed that hotel guidelines from
1984 through 1990, were adopted without any lawfully required investigation,
or proper consideration of all guideline components and criteria. The
court ruled that the City had "marshaled considerable data to show
that RGB enacted its guidelines after giving due consideration to the
[required] criteria". - The Court also ruled that all challenges except
the challenge to the most recent guideline were time barred by a four
month statute of limitations.
RSA
v. Dinkins / RGB
U.S. District Court, S.D.N.Y. (J. Stanton) 805 F.Supp. 159 (S.D.N.Y
1992), affd. 5 F.3d 591 (2d. Cir. 1993)
Note: Since this case directly concerns the RGB's methodology, a summary
of the District Court's opinion is provided. This summary is for informational
purposes only. The plaintiff dropped the challenge against the RGB
methodology on appeal, and the Second Circuit Court of Appeals reviewed
the case de novo. Therefore, the decision of the District Court is
not binding precedent.
The District Court Opinion
- The RSA initiated a challenge in federal court alleging inter alia
that the guidelines over several years failed to account for the effects
of inflation on owners net operating income. They argued that this
failure, along with an inadequate hardship mechanism, resulted in an
unconstitutional taking of property because such adjustments were essential
to maintaining a "reasonable return on the property as an investment." The
court stated that "a 'reasonable return' is not protected by law in
this circuit" (p.163). Instead, the court made clear that the relevant
test at issue is whether or not economic viability is impaired. Citing
a prior case the court noted, "the crucial inquiry...is not whether
the regulation permits plaintiffs to use the property in a 'profitable'
manner, but whether the property use allowed by the regulation is sufficiently
desirable to permit property owners to sell the property to someone
else for that use." Id. The court did not conclude that the RGB failed
to provide owners with a reasonable return, but found that even if
the RSA's allegations to that effect were true, an unconstitutional
taking would not necessarily have occurred. The court also emphasized
the difficulty of mounting a facial challenge to rent regulations,
noting that unlike an "as applied" challenge where a concrete injury
to an individual plaintiff is demonstrated, in facial challenges plaintiffs
must "establish that no set of circumstances exists under which the
act would be valid."
The Opinion of the Second Circuit Court
of Appeals, 5F 3d 591(2d. Cir. 1993)
- On appeal to the Second Circuit, the plaintiff dropped the challenge
against the RGB's methodology but pressed the claim that DHCR's hardship
rent increase procedures (explained in detail at 74 to 76) were facially
unconstitutional because such procedures did not guarantee an adequate
return. The appeals court concluded that such claims could only be
framed in an "as applied" challenge, and that "the proper recourse
is for the aggrieved individuals themselves to bring suit" (p. 595).
The court noted that although such an approach to a suit "may appear
inefficient and burdensome, it is the only way to present a federal
court with the type of live 'case or controversy' demanded by the Constitution.
Moreover, it is the only realistic way to be able to resolve it fully
and fairly." Finding that the RSA lacked proper standing to bring an
as applied challenge, the Second Circuit unanimous affirmed the District
Court's decision.
The
Greystone Hotel v. City of New York, the Rent Guidelines Board
et al.
98-9116 (2d. Cir 1999) (unpub. op.) affg. 13 F. Supp. 2d. 524 (S.D.N.Y.
1998)
- The owner of a "Class B" hotel argued that the RGB violated its rights
to due process and equal protection by granting lower rent increases
than those given for apartments. The owner also argued that the rent
stabilization law and code effected a physical and regulatory taking
of its property. Because the property retained some economic value
no regulatory taking was found. Because the owner initially chose to
use the hotel as a rental property, no physical taking was found. With
respect to the relatively lower rent adjustments given to hotel owners
the owner claimed that it was being forced to address the affordability
problems of lower income tenants. The court found that the "RGB considered
tenant hardship in accordance with a statutory scheme that mandated
this consideration in conjunction with a host of other factors that
explicitly weigh landlord costs" (p.3). Because the RGB made "a rational
attempt to accommodate the conflicting interests of protecting tenants
from burdensome rent increases while at the same time ensuring that
landlords are guaranteed a fair return on their investment" no due
process or equal protection violation was found, citing Pennell v.
City of San Jose, 485 U.S. 1, 13 (1988). Notably, the Court declined
to permit this decision to be used as a precedent in subsequent proceedings.
Thus, while it resolved the dispute between the parties, it may not
be cited as precedential authority in future legal proceedings.
Benroal
Realty LP v. Nassau County Rent Guidelines Board
Supreme Court, Nassau County, N.Y.L.J. 2/14/01 p.31, col. 6
- The Nassau County Rent Guidelines Board linked its rent adjustments
to whether or not each affected community under its jurisdiction offered
a Senior Citizen Rent Increase Exemption (SCRIE). Tenants in communities
without a SCRIE program received higher rent increases than tenants
in communities with a SCRIE program. The Supreme Court, Nassau County,
ruled that the Nassau County RGB had "no statutory or inherent authority
to extend the state statutory benefits of SCRIE for eligible seniors
to non-eligible tenants generally."
The
Constitutionality of Rent Regulation
The
constitutionality of rent regulation is an issue commonly raised in
discussions about the RGB's orders. Because it is rarely analyzed,
an extensive treatment of the issue is provided below.
The
Takings Clause of the Fifth Amendment to the United States Constitution,
made applicable to the states through the Fourteenth Amendment, provides
that private property shall not be taken for public use without just
compensation. The Takings Clause has been a source of great dispute
and scholarly debate for over a century. Today, the relevant test is
whether the law advances a legitimate state interest and does not deny
all economically viable use of property.
Generally
speaking, constitutional scholars have all but given up arguing that
rent regulations inevitably result in an unconstitutional taking of
private property.56 The
few scholars who persist in such attacks often founder on definitional
grounds. If even the smallest degree of price or rent regulation results
in an unconstitutional taking because the "natural" order of the market
is altered in a way which favors one party over another, every act
of government which economically disadvantages someone to the benefit
of another becomes suspect. Virtually every law has some burden shifting
economic impact. Economic interests, as measured in pure market terms,
are constantly being diminished or enhanced by governmental action.
Only property rights, a limited subset of such interests, receive constitutional
protection. As Harvard law professor Frank Michelman has explained,
if every existing "legally sanctioned advantage is property" we are
gradually "forced to recognize in every act of government a redefinition
and adjustment of a property boundary [for which compensation must
be paid]. The war between popular self government and strongly constitutionalized
property now comes to seem not containable but total."57
Constitutional
norms shaped by settled precedent and adjusted by evolving practical
concerns are precisely what prevent this "war" from spreading. Within
our democratic system, property (and the power that attaches to it)
is thus treated as a legal norm - informed but not controlled by economic
analysis.58 The reasonable
expectations of property owners are supported by legal protections
that operate outside of any abstract or purely economic definition
of property. But expectations alone do not define property rights.
As constitutional scholar Laurence Tribe has observed:
Grounded
in custom or necessity, these expectations achieve protected status
not because the state is deigned to accord them protection, but because
constitutional norms entitle them to protection. These norms, however,
cannot be expressed entirely within the language of expectations;
that path is a circular one inasmuch as expectations are themselves
subject to governmental manipulation. Instead, the norms must reflect
a mix of several concerns -- including regularity... autonomy ...and
equality. Without appeal to such concerns we are defenseless against
the alluring but fatal argument that, since it is government that
gives, government is free to take as well.59
Some
scholars have suggested that we should look back to the original intention
of the Framers to determine what was meant by the term property at
the time the Bill of Rights was adopted. Even if the Fifth Amendment's
prohibition against taking property terminated the conceptual development
of what is meant by "property", thereby freezing what was included
in the term in 1791, locked in with it would be the operative meaning
property received under the common law - a meaning which, as previously
discussed, failed to immunize against price and rent regulations.60
As
with all language, what is meant by a legal term or phrase is inseparable
from the experience of its users. A legal term which remains in use
for centuries is subtly remolded by the evolving culture, manipulated
by pressing interests, nuanced by changing contexts and animated by
the unique frame of reference brought to bear by each new interpreter.
No special exception exists for the term property. Thus, "property" may
one day incorporate within its meaning an inviolable right to demand
any price that a market might allow; or it may include fewer rights
than are presently secured. In any reasonable construction of the term
property and the rights it implies, the correct constitutional balance
will hang somewhere between established understandings and emerging
practical concerns. As Professor Michelman puts it, "balancing - or,
better, the judicial practice of situated judgment or practical reason
- is not the law's antithesis but a part of law's essence."61
Scholarly
disputes about the nature of property and the extent of constitutional
protections are likely to continue as long as scholars, property and
the Constitution are around. There is, however, a rather large body
of authoritative court decisions that deal with the "takings" issue,
along with a number of other constitutional concerns raised by the
regulation of rents.
While "takings" claims
have presented the most notable challenge, rent regulations have also
been attacked as violative of substantive and procedural due process,
equal protection, the Contracts Clause, as exceeding Congressional
war powers, violating the doctrine of separation of powers, imposing
involuntary servitude, and as an unconstitutional quartering of troops.62 Few
such challenges have been successful.
The
U.S. Supreme Court's Treatment of Rent Control Laws
The
first significant constitutional challenge to rent controls followed
the adoption of post World War I controls in Washington D.C. and New
York City. These "due process" challenges were rejected in an opinion
written by Justice Oliver Wendall Holmes in 1921.63 Notably,
Justice Holmes' recognition of the concept of what is now referred
to as a "regulatory taking," postdated these decisions by one year.64 The
only instance where the United States Supreme Court has stricken a
rent control statute came in 1924 when Justice Holmes found that the
wartime justification of the rent controls had come to an end.65 On
two occasions World War II era rent controls were unsuccessfully challenged
before the U. S. Supreme Court.66
The
most recent Supreme Court decision on a rent control ordinance, Yee
v. City of Escondido,67 involved
a physical takings claim. In Yee the U.S. Supreme Court held that where
owners of rent regulated mobile home lots or "pads" had opened their
property to occupation by others (the initial pad renters), they could
not "assert a per se right to compensation based on their inability
to exclude particular individuals", including those who purchased mobile
home units from prior tenants, and thus succeeded them in their right
to a rent controlled pad. The court explicitly decided not to review
a regulatory takings claim which had not been raised at trial.
In Pennell
v. San Jose,68 the
court found no constitutional infirmity in a rent control ordinance
which permitted the consideration of tenant hardship in a mechanism
for special rent adjustments. Applying a rational basis standard
of review, among other things, the court held that the hardship provision
neither rendered the ordinance facially invalid under the Due Process
clause, nor violated the Equal Protection Clause. The court recognized
that "a legitimate and rational goal of price or rate regulation
is the protection of consumer welfare."69 Perhaps
most importantly, the Court declined to consider the appellant's
claim that the hardship provision resulted in a regulatory taking.
Finding that there was "no evidence that the 'tenant hardship clause'
[had] in fact ever been relied upon by a hearing officer to reduce
the rent below the figure it would have been set at on the basis
of other factors set forth in the Ordinance"70 the
majority declared the regulatory taking claim premature. In a notable
dissent, Justice Scalia, joined by Justice O'Connor reached the regulatory
takings issue and concluded that, because the hardship provision
forced some individuals (landlords) to bear a public burden alone
(i.e. support low-income tenants), the hardship provision resulted
in a regulatory taking.
The
dissent in Pennell suggests that policy makers should be wary
about the constitutionality of any measure that imposes a discrete
regulatory burden on owners due to the fact that they may have low
income or hardship tenants in their building. It implies that the elimination
of abnormal rents through rent controls is clearly constitutional.
However, imposing a public welfare burden on individual owners may
not be.71
In Greene
v. Mirabel 72 the
court dismissed for want of a substantial federal question a takings
claim challenging the 7 1/2% statutory limit on annual rent increases
under New York's rent control law. While the statute in question
permitted a higher increase if landlord's could prove that the return
on their investment was less than 8 1/2%, the landlords asserted
that they were denied "hardship" adjustments before the Division
of Housing and Community Renewal and in state courts.
Challenges
to Rent Regulation laws before the New York Court of Appeals
Extending
the application of recent U.S. Supreme Court decisions in the regulatory
takings area, the New York Court of Appeals struck down two rent protection
measures between 1989 and 1995, and upheld two others.
In Federal
Home Loan Mortgage Corporation v. New York State Division of Housing
and Community Renewal,73 the
New York Court of Appeals held that units in a formerly rent stabilized
building which underwent cooperative conversion regain the protection
of rent stabilization if the building loses its cooperative status
upon foreclosure of an underlying mortgage. This result was particularly
unwelcome in the banking community. The market value of properties
foreclosed upon could be expected to vary significantly depending
on whether the property experienced free market rents or regulated
rents following foreclosure. Hence the Court's decision to recognize
a reversion to rent regulated status effectively raised the incentive
on the part of financial institutions to arrange for workouts - as
an alternative to foreclosure in financially troubled cooperatives.
Although
the court in Federal Home Loan Mortgage Corp. appeared to have
responsibility for addressing the narrow question of whether the building
reverted to rent stabilized status,74 it
also considered constitutional objections to the law which permitted
this reversion.75 First,
it addressed the plaintiff's claim that the law effected a physical
taking. Recognizing that "the essence of plaintiff's dispute is not
that it is being forced to use the property in a new or undesirable
manner, but that the rent it charges in terms of the rental leases
should be market based and not subject to regulation under the [Rent
Stabilization Law]" the court found that "no new use of the property
had been forced upon plaintiff, and no unconstitutional physical taking
has been effectuated."76
The
court also rejected a regulatory takings claim. Notably, in addressing
the regulatory takings claim the court reiterated its recognition of
the legal framework for finding a regulatory taking used in Manocherian
v. Lenox Hill Hospital,77 and
earlier in Seawall Assocs. v. City of New York.78
In Federal
Home Loan Mortgage Corp., the Court of Appeals wrote:
The
legal framework for finding a regulatory taking is well settled in
this State. As we recently reiterated in Manocherian v. Lenox Hill
Hospital regulation of private property rises to the level of an
unconstitutional taking if the regulation (1) denies the owner all
economically viable use of the property or (2) does not substantially
advance a legitimate State interest. 87 N.Y.2d at 335.
Unlike
the Manocherian case, however, [discussed below] the Court found
that extending the protection of the Rent Stabilization Law to the
former cooperative shareholders would "serve the same legitimate State
interest served by application of the RSL in a housing shortage - 'preventing
eviction and resulting vulnerability to homelessness of the identified
beneficiaries"'. Having found the proper nexus, the court rejected
the plaintiff's regulatory taking claim.
Manocherian
v. Lenox Hill Hospital,79 is
a rather complex case which held that the extension of rent stabilization
protections to leases held by not-for-profit hospitals for ultimate
use by hospital employees (as subtenants) resulted in a regulatory
taking.
With
the adoption of the Omnibus Housing Act of 1983 the New York State
Legislature tightened rules with regard to sublets by, among other
things, limiting the right to sublet to tenants who intended to return
and occupy their units at the termination of the subtenancy. Since
not-for-profit hospitals could not be prime/occupying tenants, the
effect of this law was to terminate the rent stabilized status of leases
held by such entities. As a result, a number of hospital employee/subtenants
faced eviction. To remedy this unintended consequence the New York
State Legislature adopted Chapter 940 of the laws of 1984, which restored
rent stabilized status to these leases.
This
re-establishment of rent protection for a non-occupying corporate entity
was challenged by the plaintiff as a regulatory taking. Relying upon
the takings standard articulated in Seawall, and finding that
the Chapter 940 did "not protect and benefit specific occupant subtenants,
but rather erect[ed] a subsidized housing regime for Lenox Hill Hospital's
preferential allotment" the New York Court of Appeals held that Chapter
940 "suffers a fatal defect by not substantially advancing a closely
and legitimately connected State interest."80 The
court thus drew a distinction between a non-occupant corporate entity
and housing consumers who intended to occupy their apartments. The
court appeared to be influenced to some degree by the perpetual status
of the hospital as a corporate tenant and by the fact that the hospital
employees could be evicted upon discharge from their employment. These
facts, the court ruled, contravened two key goals of rent protection "occupant
protection and eventual market redemption."81
Notwithstanding
the various considerations which appeared to weigh in the court's finding,
this was the first time that the New York Court of Appeals ruled that
a rent law produced unconstitutional subsidies. The ruling appears
to suggest that any legislative attempt to protect non-occupying consumers
(e.g. business and not-for-profit entities) in a market where rents
are effected by a legislatively recognized housing shortage, will run
into constitutional difficulties.
In Rent
Stabilization Assn. v. Higgins,82 the
New York Court of Appeals upheld an administrative regulation promulgated
by the New York State Division of Housing and Community Renewal which
granted unmarried partners of a permanent character succession rights
of the same type enjoyed by surviving spouses. Among other claims
raised by the appellants, the regulation was challenged as permitting
a forced physical occupation of the property resulting in a per
se taking. Relying upon Yee, the court concluded that "[b]ecause
the challenged regulations may require the owner-lessor to accept
a new occupant but not a new use of its rent-regulated property,
we conclude that appellants have failed to establish their claim
that, facially, a permanent physical occupation of appellant's property
has been effected." The appellants also raised a regulatory taking
claim. Dismissing the claim, the court found no deprivation of an
economically viable use of the property and no failure to advance
the legitimate state interest of protecting persons against the possible
loss of their homes.
Although
not directly addressing a rent regulation law in the same sense as Higgins,
Manocherian and the Federal Home Loan Mortgage cases, these
decisions have been influenced to some degree by Seawall Associates
v. City of New York.83 Seawall
involved an attempt to prevent the further decline and loss of single
room occupancy housing by imposing a moratorium on the alteration,
conversion or demolition of such housing. The law allowed an exemption
for those who were willing to pay $45,000 dollars per unit into a low-income
housing fund. In addition, the law mandated that unused units be repaired
and rented out. Finding that the buy- out provision amounted to a form
of "ransom" and that the rent up provision resulted in a forced physical
occupation of the property, the New York Court of Appeals ruled that
the law resulted in an unconstitutional taking. The foregoing developments
suggest that long established, traditional rent control measures appear
likely to survive judicial scrutiny against takings claims. On the
other hand, new and novel extensions of such protections have met with
mixed success. Particular care should be given to whether there is
a clear nexus between such measures and previously established or recognized "legitimate
state interests." The noteworthy aspect of some of these cases, particularly Manocherian,
is that they suggest that the legislature's identification of new or expanded state
interests are subject to close judicial scrutiny.
56 But
see Epstein, Rent Control and the Theory of Efficient Regulation, 54
BROOKLYN L. REV. 741 (1989) and Responses by various authors in 54
BROOKLYN L. REV. 1215 (1989).
57 Quoting
Michelman, Takings, 1987, 88 COLUMBIA LAW REVIEW 1600, 1627-28 (1988).
58 As
Justice Holmes put it in his famous Lochner dissent, "... a constitution
is not intended to embody a particular economic theory, whether of
paternalism and the organic relation of the citizen to the State or
of laissez faire. It is made for people of fundamentally differing
views, and the accident of our finding certain opinions natural and
familiar or novel and even shocking ought not to conclude our judgment
upon the question of whether statutes embodying them conflict with
the Constitution of the United States." 198 U.S. 45, 75 (1905).
59 Tribe,
American Constitutional Law, pp. 608-609.
60 See
text at page 16.
61 Supra,
note 57 at 1629.
62 See
Radford, Regulatory Takings Law in the 1990's: The Death of Rent Control?,
21 SOUTHWESTERN UNIVERSITY LAW REVIEW 1019 (1992) (internal citations
omitted).
63 Block
v. Hirsh, 256 U.S. 135 (1921) (dealing with Washington, D.C.'s rent
control laws); See, also, Marcus Brown Holding Co. v. Feldman 256 U.S.
170 (1921) dealing with New York City's rent control laws.
64 In
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922), (Justice
Holmes recognized that if a regulation goes "too far" it will be recognized
as a taking).
65 Chaselton
Corp. v. Sinclair 264 U.S. 543 (1924).
66 Bowles
v. Willingham, 321 U.S. 503 (1944) and Woods v. Cloyd W. Miller Co.,
333 U.S. 138 (1948).
67 503
U. S. 519, (1992)
68 485
U.S. 1 (1987)
69 Id.
at 13.
70 Id.
at 11.
71 Compare Parrino
v. Lindsay, 29 N. Y. 2d 30 (1971). In Parrino the New
York State Court of Appeals had occasion to consider whether a temporary
local law which generally froze rents for elderly persons with household
incomes of less than $4,500, was unconstitutional. In citing the
temporary nature of the measure and the fact that the rent levels
paid had already been upheld as constitutionally valid, the Court
of Appeals refused to find a denial of equal protection. The court
also found that a regulatory taking had not occurred. This portion
of the decision was criticized in a case that went before the Supreme
Court of New Jersey a few years later. In Property Owners Association
of North Bergen v. North Bergen, 378 A.2d 25 (1977) a North Bergen
ordinance which provided that elderly tenants earning less that $5,000
annually would be immune from rent increases was found to result
in an unconstitutional taking. There the Court held,
"A
legislative category of economically needy senior citizens is sound,
proper and sustainable as a rational classification. But compelled
subsidization by landlords or by tenants who happen to live in an
apartment building with senior citizens is an improper and unconstitutional
method of solving the problem." 378 A.2d at 31.
Justice
Scalia quoted this passage approvingly in his dissent in Pennell noting
that the Supreme Court of New Jersey was dealing with "the same vice
I find dispositive here" 485 U.S. at 23. Perhaps the Parrino case
can be distinguished on the grounds that it dealt with a temporary
measure and that the rent levels had already been found constitutional.
The New Jersey Supreme Court was clear in its disagreement with Parrino,
however, and passed over the opportunity to distinguish it from the
North Bergen case. After noting that Parrino's "factual circumstances
are not present here" the Court added, "and we do not find Parrino persuasive." 378
A.2d at 31.
72 485
U.S. 983 (1988).
73 87
N.Y. 2d 325 (1995).
74 This
question had been certified from the United States Court of Appeals
for the Second Circuit where the case had been under consideration.
Id.
