NAA files “friend of the court” brief outlining the harm caused by rent control.
The court challenge to New York’s rent control regime has entered its second phase, as the interested parties are now filing their briefs before the U.S. Court of Appeals for the Second Circuit. The National Apartment Association (NAA) and National Multifamily Housing Council (NMHC) filed a “friend of the court” brief that alerted the judges to the harm caused by rent control as it reviews the ruling from a federal trial judge in Brooklyn who dismissed the case.
That ruling was expected, as New York has embraced rent control for almost a century now and numerous judges have found ways to justify continuing its existence. To make matters worse, in 2019, the New York General Assembly enacted the Housing Stability and Tenant Protection Act, which deprives property owners of the use of that property without compensation or due process of law. This compounds the regulatory damage of the New York Rent Stabilization Law, which had been in effect for years.
While we are pleased with the quality of the legal representation in the case to date, NAA believes that it is likely that the Court of Appeals will affirm the earlier dismissal of the case because it is based upon the legal precedent of many earlier cases that upheld the Rent Stabilization Act.
This case is designed to present a challenge to rent control before the United States Supreme Court. A few factors combined to provide for an optimistic outcome in that forum. The first is a complete lack of support among economists for any advantage to rent control. One would be hard pressed to find an economist who would support the continuation of rent control as responsible urban planning. In many cases, as the economist Assar Lindbeck said, “rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
The second reason for optimism is that the composition of the U.S. Supreme Court, which includes several justices who have criticized the evolution of the law of “Takings,” a guaranteed right under the Fifth Amendment of the United States Constitution that allows the government to “take” private property but only with “just compensation.” Those justices will hopefully soon have a case before them where they can correct years of abusive rent control regulation.
For years, courts have contorted opinions to avoid that last requirement of just compensation. If a government was required to compensate those it injured by using its regulatory policy, those regulations would evaporate. NAA will report on the Second Circuit’s opinion when it is issued later this year. Akin to “Rocky” movies, things are rarely decided until the last round. We look forward to completing this appellate journey and presenting our arguments to the U.S. Supreme Court.