Landlords Are Pushing the Supreme Court to End Rent Control
Two landlord lobbying groups are petitioning the Supreme Court to overturn New York City’s rent stabilization law, which would allow further countrywide challenges to rent control. Real estate billionaires friendly with court justices are backing the move.
A “For Rent” sign outside an apartment building in the East Village neighborhood of New York City, July 12, 2022. (Gabby Jones / Bloomberg via Getty Images)
As the national housing crisis deepens, corporate lobbyists and conservative groups with ties to two Supreme Court justices’ billionaire benefactors are pushing the court to let landlords hike rents.
At issue is a petition from two landlord lobbying groups asking the high court to overturn New York City’s rent stabilization law, which has been on the books since 1969 and limits annual rent increases for more than one million units in the city — nearly half of all rentals.
Samuel Stein, a housing policy analyst at the Community Service Society, an anti-poverty organization in New York, said that if the Supreme Court were to overturn the rent stabilization law, “It’s the end of New York City.”
“Rents would go up significantly around the city,” he continued. “There will be a tremendous amount of displacement. You will have a lot of people leaving New York City, you will have a lot of homelessness, you’ll have a lot of overcrowding.”
A high court ruling wouldn’t just reshape New York, but would also pave the way for legal challenges to the dozens of rent control laws that exist around the country, and many more currently being considered. For example, in 2024, Californians will vote on a ballot measure to repeal the state’s ban on rent control.
At least one group petitioning the court to take the case has substantial ties to both Harlan Crow, the GOP megadonor and Justice Clarence Thomas benefactor, and Paul Singer, the hedge fund billionaire who provided an undisclosed private jet flight to Justice Samuel Alito.
The petition to the right-wing court comes as the economic orthodoxy on rent control is shifting, with decades of empirical data showing that limiting rent increases does not get in the way of new construction, as economists long argued. A broad coalition of economists, Senate Democrats, and tenants are calling on the Biden administration to regulate rents in units with government-backed mortgages.
“Invariably Be Outvoted in the Political Process”
The challenge to New York’s rent stabilization law was brought by two major New York landlord lobbying groups: the Rent Stabilization Association (RSA) and the Community Housing Improvement Program (CHIP).
The two organizations spent a combined $4.7 million lobbying as they pushed to block the passage of a sweeping tenant protection law in 2019. The law, which expanded rent stabilization from just New York City to any locality in the state that chooses to opt in, made it more difficult for landlords to remove units from rent stabilization and added new protections to rent-stabilized units.
Just after the law passed, the groups sued the city and state, arguing that the new law and New York City’s existing 1969 rent stabilization law are unconstitutional.
The lawsuit from RSA and CHIP was dismissed by lower courts, most recently the federal Second Circuit Court of Appeals. But the groups claimed that their intention was always to reach the Supreme Court.
“We always expected these issues to be decided by the Supreme Court and are confident we will ultimately prevail, and finally compel leaders around the country to create real and fair solutions for our nation’s housing challenges,” CHIP and RSA said in a statement after the Second Circuit upheld a lower court’s dismissal of their case.
Two other individual corporate landlords challenging the law have separate petitions before the Supreme Court.
The petitioners and amici — “friends of the court” who aren’t CHIP or RSA but weighed in with amicus briefs — argue that the rent stabilization law constitutes an illegal seizure of property from landlords in violation of the Fifth Amendment’s takings clause: “Nor shall private property be taken for public use, without just compensation.”
They also claim it violates the Fourteenth Amendment’s due process clause.
According to the RSA and CHIP petition, the law infringes upon landlords’ “rights to exclude, occupy, use, change the use of, and dispose of their property.”
New York City’s rent stabilization law prohibits landlords from doing certain things with units they have chosen to lease in rent-stabilized buildings: leave the apartments vacant; change them from residential to commercial use; or kick out tenants who are complying with the terms of their lease, even after their lease has ended.
In a reply brief, RuthAnne Visnauskas, the commissioner and CEO of New York State Homes and Community Renewal, the state agency that supervises rent regulations, pointed out that “[n]one of the petitioners allege that they wish to exit the residential rental market and are precluded from doing so” by the rent stabilization law.
An amicus brief drafted by community groups representing tenants and homeless people noted that the law allows landlords to decline to renew a lease with agency approval, allows landlords to “recover an apartment for the personal use of the landlord or her immediate family upon a showing of immediate and compelling necessity,” and does not force landlords to offer vacant apartments for rent.
Landlords are “choosing to use their property as residential real estate,” said Ellen Davidson, a staff attorney at the Legal Aid Society, who helped draft the community groups’ amicus brief opposing the petition. “The government is not physically taking the property away from the landlord.”
The landlord lobbying groups asked the Supreme Court to defend them against a government program that has popular support.
“Subsidizing needy tenants as part of a ‘public assistance’ program is a public good that should be paid for with public funds,” the CHIP and RSA petition says. Property owners, they say, need a court ruling because they otherwise “will invariably be outvoted in the political process by the many constituents they are forced to subsidize.”
“Friends of the Court” Weigh In
Over the summer, a flurry of corporate lobbying groups and conservative think tanks submitted amicus briefs urging the Supreme Court to take the case. One of these think tanks has close financial ties to the Supreme Court’s billionaire benefactors.
The ties to Crow, a Texas real estate mogul, are salient as Congress urges the Justice Department to investigate Thomas’s alleged repeated violations of federal ethics laws, in part by accepting a series of undisclosed luxury gifts from Crow over two decades.
In 2021, Thomas voted to overturn the federal COVID-19 eviction moratorium; Crow’s business later noted to investors that eviction moratoriums threaten its bottom line.
The Manhattan Institute, a conservative think tank with financial ties to Crow and Singer, has urged the court to take the rent stabilization case.
“The extreme nature of the city’s regulatory scheme . . . calls for this court’s intervention,” argued a brief coauthored by Ilya Shapiro, a senior fellow and director of constitutional studies at the Manhattan Institute. Shapiro has been publicly defending Crow’s gifts to Thomas as well as Singer’s gift to Alito.
Crow’s wife sits on the Manhattan Institute’s board of trustees. Singer, who has donated millions to the Manhattan Institute, is the organization’s chairman.
The National Multifamily Housing Council, a national landlord lobbying group with close ties to Crow’s real estate company, Crow Holdings, had previously filed a brief in favor of CHIP and RSA at the federal circuit court level, but has not filed a new one within the Supreme Court.
Crow Holdings executive Ken Valach is the council’s chairman, and numerous company subsidiaries are dues-paying members. Crow himself has donated $47,000 to the National Multifamily Housing Council’s political action committee since 1995, and he’s also hosted numerous fundraisers for the committee, according to the Revolving Door Project.
“The breadth and depth of amicus support from across the business, real estate, and think tank community underscores the validity and urgency of our Supreme Court petition,” CHIP and RSA told Fox News in a joint statement in July.
CHIP and RSA themselves represent major corporate landlords in New York, even as they have often claimed to be the voice of mom-and-pop landlords. (The two groups are reportedly considering merging.)
Major real estate and corporate lobbying groups are urging the high court to hear the case, including the California Business Roundtable, the Real Estate Board of New York, the US Chamber of Commerce, the National Apartment Association.
The Supreme Court will decide on the petition on September 26. If they accept it, justices will decide the case during their 2023–2024 term.