U.S. Supreme Court Declines to Hear Landlords' Claim That Rent Stabilization Law Is Unconstitutional

Shortly after HSTPA was enacted in June 2019, the Community Housing Improvement Program (CHIP), Rent Stabilization Association of NYC (RSA), and several individual landlord entities sued the City of New York, the DHCR, and other government entities in two cases challenging the Rent Stabilization Law (RSL). They claimed that the RSL violated the Constitution's Takings Clause, Contracts Clause, and due process provisions. After dismissal by the lower court (see LVT #31025), CHIP and other plaintiffs appealed to the Second Circuit and lost again (LVT #32483).  The appeals court found that no provision of the RSL effected, facially, a physical occupation of landlords' properties in violation of the Fifth Amendment Takings Clause because landlords voluntarily invited tenants to use their properties. The RSL regulated land use rather than resulting in a physical occupation. Also, the RSL didn't effect a regulatory taking because landlords didn't plausibly claim that every owner of a rent-stabilized property suffered an adverse economic impact, and they failed to prove that the RSL interfered with every owner's investment-backed expectations. Finally, the character of the regulation didn't support the conclusion that the RSL effected a regulatory taking. The state legislature determined that the RSL was necessary to prevent serious threats to the public health, safety, and general welfare.

The plaintiffs then filed a petition to the U.S. Supreme Court to hear their appeal on the constitutional claims. The issues presented were whether the provisions of New York’s rent stabilization law that prevent a property owner from regaining exclusive possession and control of its property after the expiration of a lease effects per se physical takings; and whether, by mandating consideration of tenant ability to pay in setting maximum rents, the law 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. On Oct. 2, 2023, the Court denied the petition for certiorari. In other words, without further explanation, the U.S. Supreme Court declined to take on this appeal for consideration. 

CHIP v. City of New York: Docket No. 22-1095, Term OT 2023 (US Sup. Ct.; 10/2/23)