April 23, 2012

Supreme Court won't vacate NYC rent controls

By Supreme Court won't vacate NYC rent controls

brownstonesWASHINGTON, D.C.; April 23, 2012: The U.S. Supreme Court announced today that it will not hear Harmon v. Kimmel, a suit targeting New York City’s rent stabilization law as a violation of the Fifth Amendment ban on the uncompensated taking of private property.

As the nation’s leading legal watchdog organization for property rights, Pacific Legal Foundation has been strongly supportive of the New York challenge, filing an amicus brief urging the justices to hear Harmon.

PLF Principal Attorney R.S. Radford issued this statement today:

“The Supreme Court’s announcement is unwelcome news, not just for New York City’s beleaguered landlords, but also for people who can’t find apartments in New York because rent control discourages construction of new units.  Indeed, this case was important for all Americans who understand the importance of property rights and the destructive social impact of rent control, wherever it is imposed. Instead of helping the poor or advancing any other legitimate policy goal, New York’s suffocating rent regulations deter the development of rental housing. And many tenants sheltered by rent control are wealthier than the landlords who they’re underpaying. In short, New York’s rent control is government-choreographed confiscation that cries out for Supreme Court review.

“New York City’s so-called rent stabilization rules are aggressively subversive of basic rights and rational public policy. Tenants in rent-stabilized units are allowed to stay for as many years as they like. They can even pass their units along to their heirs. For all intents and purposes, these units have been seized from the owners. The landlord isn’t just robbed of any say in who occupies the unit, but also of any freedom in pricing it. An arbitrary cap on rental rates ensures that they’re far below market.

“Since as far back as the World War II era, New York has always touted rent control as an ‘emergency’ response to housing shortages. But rent controls make things worse, not better. Squeezing landlords actually creates shortages by discouraging people from getting into the rental business. It’s as if the city’s firefighters showed up at a burning house with gasoline instead of water.”

The lawsuit was brought by 68-year-old James D. Harmon, who lives in a five-story brownstone that has been in the possession of his family for 63 years. He holds title, but his “ownership” is undermined by the fact that three of his six apartments are governed by the Rent Stabilization Law, meaning that the city has granted the tenants and their successors a permanent claim on the units. The three have already occupied their apartments for a cumulative period of 90 years. The government-set rates that they pay Mr. Harmon are 59 percent below market.

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