Owners Seek U.S. Supreme Court Review of Constitutional Challenge to HSTPA

Owners and owner organizations sued the State of New York in federal court in 2020, claiming that the HSTPA effected a physical and regulatory taking of their property in violation of the Takings Clause of the Fifth Amendment of the U.S. Constitution. The Southern District Court dismissed the complaint, finding no physical taking because the owners entered the rental housing market voluntarily and could exit the market at any time. The court also held that a regulatory taking hadn't occurred because the owners didn't show that every owner of a rent-stabilized property suffered adverse economic impact under the HSTPA.

Owners appealed and lost before the Second Circuit Court of Appeals. On April 18, 2024, the owners then filed a petition for a writ of certiorari with the U.S. Supreme Court, seeking review of a case challenging rent stabilization that was denied by the federal Circuit Court. The owners asked SCOTUS to provide guidance on whether HSTPA provisions constitute a physical or regulatory taking under the Constitution. Issues presented were: (a) whether New York's rent regulation laws, and in particular its new restrictions on owner reclamation and condo/co-op conversions, effect physical takings in violation of the U.S. Constitution; and (b) whether the U.S. Supreme Court should overrule the case of Penn Central Transportation Co. v. City of New York or at least clarify the standards for determining when a regulatory taking occurs. Owners argue that HSTPA gives tenants the right to renew their leases continually and can pass that right on to a wide range of successors. They also argue that HSTPA restricts the circumstances under which property owners can reclaim units for personal use, and that HSTPA no longer requires that the city classify an ongoing housing "emergency" to justify rent control.

In October, SCOTUS held its first meeting to discuss cases for its 2024-2025 new term and, after the Court's initial "long conference" on Oct. 18, 2024, the case wasn't included on the list with others that would be heard by SCOTUS this term, although the case may still be under consideration to be heard with a decision still forthcoming. 

G-Max Management, Inc. v. State of New York: Index No. 20-cv-00634 (SDNY), Index No. 21-2448 (2d Cir., 3/12/24), Dckt No. 23-1148 (USSC)