Supreme Court rejects rent-control challenge

Justices' refusal to hear the case, brought by a pair of New York City landlords, is a setback for property rights activists.

April 24, 2012|By David G. Savage, Washington Bureau

WASHINGTON — The Supreme Court rejected a constitutional challenge to New York City's famed rent-control ordinance, a post-World War II housing measure that limits the rents of more than a million apartments.

The court's refusal Monday to hear the case is a setback for property rights activists, who had hoped a more conservative court would protect landlords and a free market in rentals. For decades, critics have said rent-control laws deny property owners the right to fully profit from their investments.

But the high court has been reluctant to second-guess zoning or property regulations unless they deny the owner all use of his land.

The justices, four of whom grew up in New York City, turned away an appeal from James and Jeanne Harmon, who own a five-story brownstone building on West 76th Street in Manhattan. The couple said they had no choice but to rent three apartments on the upper floors for less than half of their market value. They also said that one of their longtime tenants could pay a $1,500-a-month mortgage on a Long Island house because he paid only $951 a month to rent a unit in the Harmons' building.

In his appeal, James Harmon said the rent-control law violated the 5th Amendment, which says "private property [shall not] be taken for public use without just compensation."

"Contrary to the popular myth, the Rent Stabilization Law is not targeted to help the needy," James Harmon wrote, representing himself in his appeal to the high court. "A person could make millions of dollars annually and still qualify for a rent-stabilized apartment. It is all about luck, a racket in which property owners and market-rate tenants always lose."

He also noted that the former chairman of the House Ways and Means Committee, Rep. Charles B. Rangel (D-N.Y.), had four rent-stabilized apartments in the city.

City officials denied that the benefits of rent control went mostly to those who were well off. Instead, they said, the persistent shortage of affordable housing gives landlords undue leverage to charge exorbitant rents. By limiting the annual rise in rents, the ordinance permits middle-class residents to continue living in the city, they said.

The U.S. appeals court in Manhattan ruled against Harmon last year and said rent regulation was not a "taking" of private property. It requires the votes of four justices to grant an appeal. Without comment Monday, the court said it would not hear Harmon's case.

Since World War II, the state and city have adopted a series of rent-control measures. New York Gov. Andrew Cuomo, a Democrat, called Monday's decision good news. "Rent regulations are very important to the tenants of New York," he said.

Since the 1920s, the high court had upheld city zoning laws as reasonable regulations of property, even though they could be costly to landowners. In 1992, the court ruled for a developer who was told he could not build on two beachfront lots. But the justices have emphasized that an unconstitutional "taking" of private property is limited to situations where the owner is deprived of all use of his land.

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