A judge ruled that the government has the power to make laws that hurt real estate values as he dismissed challenges to last year’s rent reforms, paving the way for the fight to head to a higher court.
In a decision filed Wednesday in New York’s Eastern District Court, Judge Eric Komitee wrote that legal precedence supports the government’s right to pass rent regulations — even if those regulations lead to a fall in real estate values.
“Rent regulations have now been the subject of almost a hundred years of case law,” Komitee wrote. “That case law supports a broad conception of government power to regulate rents, including in ways that may diminish — even significantly — the value of landlords’ property.”
Komitee’s decision wiped out each of the claims brought forth by the Community Housing Improvement Program (CHIP) and the Rent Stabilization Association (RSA). It did not dismiss all the claims brought by 74 Pinehurst and a number of LLCs owned by landlords including Michael Vinocor, Dino Dimos and Vasiliki Panagoulias.
“We recognized when we began this case that the district court might interpret prior decisions by the Court of Appeals, and even older rulings by the Supreme Court, to preclude our claims,” said a spokesperson for CHIP and RSA. “As the opinion states, it’s not for a lower court to reverse this tide — so while we respectfully disagree with the decision, we aren’t surprised by it.”
Those involved in the push for last year’s changes were not fazed by the plaintiffs’ plans to appeal. “We’re confident that the laws we passed are legally sound,” said Cea Weaver, who coordinated the tenant-led effort to change the rent law.
Ellen Davidson, a staff attorney at the Legal Aid Society, which is a party to both cases, said that the judge “quickly and easily” dismissed the claims, and that even conservative justices at the Supreme Court, where the plaintiffs hope to eventually argue their case, have found rent regulations to be constitutional.
“I wasn’t worried when the case was filed and I continue to not be worried,” Davidson said.
Although Komitee’s decision reiterated the government’s power to pass rent laws regardless of their impact on property values, it dismissed the claim that the Housing Stability and Tenant Protection Act, signed into law last year, interfered with investor expectations. Those can change, the decision reads, based on when investors buy properties and what business plan they execute.
The ruling cites a previous decision, which found that the changes to the rent law did not amount to a “physical invasion by government,” and instead adjusted the “benefits and burdens of economic life to promote the common good.”
The landlord groups’ challenges to the rent law have another chance at success with a planned appeal to the Second Circuit.
“We look forward to pursuing our claims on appeal, followed by a briefing process in the Second Circuit and then oral arguments,” said a spokesperson for CHIP and RSA. “We think the appeals process will bring about success for the case — and at a time where fundamental questions about the future of housing in New York are being driven by current events, that success can’t come soon enough.”
After they appeal the decision to the Second Circuit, the plaintiffs expect oral arguments to begin as soon as next spring.