Supreme Court Declines to Hear Rent-Control Challenge

New York Times
by Adam Liptak
April 23, 2012

WASHINGTON – The Supreme Court on Monday refused to hear a challenge to the constitutionality of New York City’s rent regulations. As is customary, the court’s order gave no reasons, and there were no noted dissents.

The case was brought by James D. Harmon Jr. and Jeanne Harmon, the owners of a five-story brownstone on West 76th Street near Central Park. They live on the lower floors and rent out six apartments, two to a floor, above them.

Three of the apartments are subject to New York’s rent-stabilization regulations, meaning that the government sets the maximum permissible rent increases and generally allows tenants to renew their leases indefinitely. The Harmons say the rent-stabilized tenants pay rents about 60 percent below the market rate.

The Harmons said that forcing them to accept below-market rents amounted to an unconstitutional taking of their property. The regulations subjected them, they told the Supreme Court, to the “unconstitutional burden of involuntarily and permanently renting a part of their residence to tenant-strangers whom the Harmons must subsidize for the rest of their lives.”

The Takings Clause of the Fifth Amendment says that private property shall not “be taken for public use, without just compensation.” The Supreme Court has said that government regulation of private property can be “so onerous that its effect is tantamount to a direct appropriation or ouster.”

But the court has upheld rent regulations, most recently in a unanimous ruling in a 1992 case concerning a mobile-home park in Escondido, Calif. The justices reasoned that regulation of the terms of a lease did not amount to the sort of complete government takeover of property that is barred by the takings clause.

Last year, the United States Court of Appeals for the Second Circuit, in New York, ruled against the Harmons. In an unsigned summary order, a three-judge panel of the appeals court said the couple knew what they were getting into when they acquired the building.

The panel added that the couple retained important rights under the regulations: they could in some circumstances reclaim the apartments for their own use; they could demolish the building so long as they did not replace it with housing; and they could “evict an unsatisfactory tenant.”

All of that meant, the panel said, that the city’s regulations did not amount to “permanent physical occupation of the Harmons’ property.”

New York City’s rent regulations cover almost half of the city’s roughly 2.2 million rental housing units. (Another million units are occupied by their owners.)

Last month, Mayor Michael R. Bloomberg signed a bill extending the regulations for another three years by re-declaring a state of housing emergency. The emergency has been in effect for more than 40 years.

In urging the justices not to hear the case, Harmon v. Kimmel, No. 11-496, state and city officials defended the rent regulations as a necessary response to a housing shortage and as a way to prevent “rent profiteering.”