Is Rent Control A Taking? NY Owners Ask Supreme Court to Decide

by: Joseph Grather
17 Aug 2023

Catching up on my summer reading.  I stumbled across a great law review article by Michael Berger entitled, The Joy of Takings (Journal of Law & Policy 2017), which is recommended reading for any condemnation practitioner and may be the subject of a future blog.

But today, I wanted to share a Petition for Certiorari filed by the Community Housing Improvement Program.  The petition presents two questions for the United States Supreme Court:

1. Whether the provisions of the NY Rent Stabilization Law (“RSL”) that prevent a property owner from regaining exclusive possession
and control of her property after the expiration of a lease effect per se physical takings.

2. Whether, by mandating consideration of tenant ability to pay in setting maximum rents, the RSL
forces a subset of owners “alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” and thereby effects a regulatory taking as Justices Scalia and O’Connor concluded in Pennell v. City of San Jose, 485 U.S. 1, 22 (1988).

The internal citation is, of course, from Armstrong v. United States, and is one of my favorites:

“The Fifth Amendment’s guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” 364 U.S. at 49.

The simple proposition is that the rent control regulation has “gone too far” and therefore amounts to a regulatory taking of private property without just compensation. Pennsylvania Coal v. Mahon.  To date, no constitutional challenge to rent control has succeeded.

The fact is that the government restricts the amount of rent that can be charged for renting private property.  If the government wants to be in the business of operating public housing, it can do so on its own dime, it doesn’t need to confiscate private property for those public uses.  But, if it does, the Constitution demands that it pay just compensation. “Private property shall not be taken for public use without just compensation.” (U.S. Const. 5th Amend).

The governmental retort: we have NOT taken your property – absurd!  When the regulation limits the amount of rent to be collected, and prevents the owner from evicting the tenant or from raising the rent to market value, it has damaged the value of the property.

Perhaps the last great case to not be granted cert was the Guggenheim Case out of the 9th Circuit about 12 years ago. (mobile home rent control challenge in California).  Maybe this one will fare better…. I hope so.