Will Next Year See SCOTUS Declare Rent Control Unconstitutional?

Late in June, on two successive days, the United States Supreme Court handed down three decisions 
which rocked the nation. The conservative majority on the Court clearly demonstrated it has control 
and that it is willing to use it. De- pending on one’s philosophical stance, partisans on either 
side of the political divide were either delighted or shocked; gleeful or apoplectic; or ready to 
move to Texas or to Canada. This editorial is not about those cases.
One of these cases, however, may imply something of immense import to the owners of rent-controlled 
property. The case involved a Colorado graphic artist who designs wedding invitations. She 
objected to a recently-enacted law because it precluded her from refusing to take business from 
same-sex couples. She objected to doing this on religious grounds. She also contended that her 
skills as a designer of wedding invitations was self-expression akin to speech. On these grounds, 
she sought to have the Colorado law declared unconstitutional. She succeeded.
What is of consequence to property owners is not the substance of this case but that the Court took 
it at all. The plaintiff was not yet in business; there was no complaining client to whom she had 
refused service; and she had not been sanctioned by the State of Colorado for violation of the law 
to which she objected. This is the kind of case which the Court routinely rejects because the issue 
is not ripe for review. Granting her standing in this case was a gift. It
is hard to believe anything other than that the conservative majority on the Court wanted this 
case. If so, this is likely a change in the way the Court does business. The Justices have not been 
known for embracing controversial issues when they have the option to punt.
In the June issue of your BPOA newsletter, we reprinted an article about a pair of New York cases 
which have been submitted to the Supreme Court for review next year. The cases are Community 
Housing Improvement Program, et al. v City of New York and 74 Pinehurst LLC, et al., v. New York.
Accepting the Colorado case lends credence that the Court will grant cert to, and hear, these New 
York cases. Before joining the Court, Chief Justice Roberts was counsel for the property owners 
in one of the landmark takings cases involving real estate. Justice Thomas has a habit of 
suggesting reconsideration of precedent in written opinions. In his opinions over the last five 
years, he has twice done so with respect to the takings clause. Justice Alito has a similar 
temperament to Thomas and would likely lean the same way. It is probably a good bet that the three 
Trump appointees would also go along. The votes of only four Justices are required to grant 
certiorari. Based on recent behavior, it is a good bet that the Court will likely take this case, 
and, if this Court takes this case, the constitutionality of rent control may well be toast!
How strong is the case? The New York rent control laws are being challenged on three grounds:
• Rent control is a per se physical taking based on the recent decision in Cedar
Point Nursery v. Hassid. In this case, the Supreme Court held that a California labor regulation that allowed union representatives to recruit on private farmland 
constituted a per se violation of the takings clause of the Fifth Amendment . The challenged law 
allowed union organizers access to private property three hours a day for 120 days a year. If this 
is a taking, what is a law that al- lows the full-time occupancy of an apartment for life, and even 
beyond that when rights extend to ancillary occupants such as relatives, roommates, even caretakers? The petitioners in the New York case posit that, under the Cedar Point standard, rent control 
is clearly a taking.
•  Over the years, numerous court decisions involving rent control have lamented that rent control 
creates a situation wherein one private party — at his/her expense — is compelled to provide a 
public good to another private party — to his/her benefit. In Arm- strong v. United States, 364 
U.S. 40, 49 (1960) the Court said: the Takings Clause ensures that the state may not “forc[e] some 
people alone to bear public burdens which, in all fairness and justice, should be borne by the 
public as a whole”. Lamentations aside, however, no court has ever applied this observation. The 
contention is that public benefits are appropriately assigned to the public at large. Food stamps 
and housing vouchers are publicly funded benefits; controlled rents are not.
•  Lastly is the contention that there is no reciprocity for the property owner under rent 
control. If the government takes your property, under eminent
domain for example, it gets the property and you get money. If I am subject to zoning controls, I 
give up my right to build an abattoir next to your house but in return I too am protected because 
you are similarly constrained. These are reciprocal agreements. Under rent control, the tenant gets 
a lower rent, the community gets benefits associated with more affordable housing and the 
neighborhood coffee shop does more business. The property owner, however, gets nothing in return.
As expected, the Second Circuit Court in New York ruled against the petitioners in this case. (See 
related articles on pages 7 & 12.) Hence the appeal to the Supreme Court. The arguments in this 
case are compelling, but that may not be crucial. Like it or not, courts do have political 
leanings. This can be critical at the Supreme Court level because, unlike lower courts, the high 
Court is not bound by precedent — it sets precedent. The pre-Trump Court might have taken this case 
and ruled against the petitioners. More likely, that Court would have passed. This Court, 
however, will likely jump on this case like cat on a mouse.