Federal Court Finds No Fifth Amendment Taking of Property Resulting from HSTPA

A group of landlords owning rent-stabilized buildings in New York City sued the city, the NYC Rent Guidelines Board, and the DHCR in federal court. They claimed that the HSTPA effected, both on its face and as-applied, a taking of their property in violation of the Fifth Amendment of the U.S. Constitution. The U.S. Southern District Court ruled against landlords in 2021. Landlords appealed and lost. The appeals court pointed to its recent prior decision in CHIP v. City of New York (LVT #32483). 

As in the CHIP case, the court found that no provision of the RSL effected, facially, a physical occupation of landlords' properties in violation of the Fifth Amendment. The court noted that landlords didn't show that they attempted to use any of the available methods to exit the market or evict problematic tenants. So, unless and until they did so, it was impossible for the court to determine if the RSL effects an as-applied taking. The court also found that there had been no "confiscatory" taking under the RSL. The doctrine of confiscatory taking applies to private companies that are required to provide public utilities. Landlords didn't show that this doctrine should be applied to them. 

335-7 LLC v. City of New York: Index No. 21-823, 2023 WL 2291511 (2d. Cir., 3/1/23; Livingston, CJ, Parker, Robinson, JJ)