NEKRILOV v. CITY OF JERSEY CITY

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

GENNADIY NEKRILOV, EUGENE

Civ. No. 19-22182 (KM) (JBC)

NEKRILOV, KWAN HO TANG, JAYU

JEN, and ALEN SUEN

OPINION

Plaintiffs,

v.

CITY OF JERSEY CITY

Defendant.

KEVIN MCNULTY, U.S.D.J.:

Plaintiffs are individuals who operate short-term rentals in Jersey City.

In 2015, Jersey City passed an ordinance affirmatively permitting short-term

rentals in the City. In 2019, however, the city passed another ordinance which

limited such rentals. The 2019 ordinance, among other things, banned the

practice of subletting long-term lease properties as short-term rentals and

limited non-owner-occupied properties to hosting no more than sixty nights of

short-term rentals per year. The effect of this new ordinance has been to

significantly impair the plaintiffs’ short-term rental businesses.

Plaintiffs bring this suit pursuant to the Takings, Contract, and Due

Process Clauses of the United States Constitution, seeking an injunction and

monetary damages. Jersey City has opposed the motion for a preliminary

injunction and moved to dismiss the complaint for failure to state a claim. For

the reasons stated in this opinion, I will GRANT the motion to dismiss and

DENY the motion for a preliminary injunction.

I. BACKGROUND12

Plaintiffs operate short-term rentals which they market through online

home-sharing platforms. Home-sharing platforms permit individuals to lease or

sublease properties they own for days, weeks, or months at a time. (Compl. ¶

18.) The property owner creates a listing on the home-sharing platform offering

the property as a rental, and prospective tenants are then able to select the

listing and enter a short-term rental contract with the property owner. The

platforms do not offer their own properties, but rather function as brokers, and

collect commissions for transactions executed by their users.

Short-term rentals offered through home-sharing platforms tend to

compete with hotels, but offer a more residential setting, because they are

typically located in residential properties in neighborhoods. (Id. ¶¶ 17–18.) The

largest home-rental platform is Airbnb, which Plaintiffs used to rent out their

properties in this case. (Id. ¶ 19.) There are numerous other home-sharing

platforms, however, which are equally subject to Jersey City’s short-term rental

restrictions.

A. Plaintiffs

Plaintiffs all operated numerous short-term Airbnb residences in Jersey

City. They did so via two methods. The first was that each plaintiff purchased a

1 Certain key items from the record will be abbreviated as follows:

DE __ = Docket entry number in this case

Compl. = Complaint (DE 1)

2 Facts cited below, unless otherwise noted, are derived from the Complaint and

thus are accepted as true, with all reasonable inferences drawn in the plaintiffs’ favor.

New Jersey Carpenters & the Trustees Thereof v. Tishman Const Corp. of New Jersey,

760 F.3d 297, 302 (3d Cir. 2014). Additionally, attached as Appendix A is a chart

which sets forth the economics of each property owned by the plaintiffs; all

information in that Appendix is derived from the Complaint, but placed in chart form

for ease of comprehension.

property (or properties) and offered short-term rentals of that property through

Airbnb. (Id. ¶¶ 121, 132 (Gennadiy and Eugene Nekrilov), ¶ 204 (Kwan Ho Tang

and Jayu Jen), ¶¶ 251, 255 (Alan Suen).) The second was that the Nekrilovs,

Tang, and Jen, but not Alan Suen, all entered into long-term leases with other

property owners and then, with those property owners’ permission, sublet

those leases as short-term rentals through Airbnb. (Id. ¶¶ 111–15 145–152,

189, 194.)

The plaintiffs each allege that they chose Jersey City as a location to

focus their short-term rental business due to the City’s enactment of

ordinances permitting short-term rentals and its efforts to advertise those

ordinances. (Id. ¶¶ 105, 185, 233–35.) They claim that they are unable to make

a profit from their owned and leased properties unless they are permitted to

continue exploiting them as short-term rentals.

B. Jersey City’s Rental Ordinances

Jersey City has passed two rental ordinances relevant to this dispute.

The first, in 2015, legalized short-term rentals in the City, subject to certain

conditions; the second, in 2019, imposed quite significant restrictions on such

rentals.

Steven Fulop was elected Jersey City’s mayor in 2013. (Id. ¶ 28.) After his

election, Mayor Fulop began a public relations campaign designed to draw

development and young professionals into the city. (Id. ¶¶ 29–30.) As a part of

his development plan, the Mayor supported an ordinance which would

affirmatively permit home-sharing platforms such as Airbnb in Jersey City. (Id.

¶ 33.) The ordinance was to be the first of its kind in New Jersey. (Id. ¶ 34.)

The ordinance, Ord. 15.137, stated:

1. Short Term Rentals are permitted as an accessory use to a permitted

principal residential use in all zoning districts and redevelopment

plan areas where residential uses are permitted.

a. The person offering a Dwelling Unit for Short-Term Rental use

must be the owner or lessee of the residence in which the

Short-Term Rental activity occurs. Short-Term Rental activity

may occur in a habitable accessory building located on the

same premises as the residence.

b. No person offering a Dwelling Unit for Short-Term Rental use

shall be required to obtain any license for such use . . . unless

such person offers more than 5 separate Dwelling Units for

Short-Term Rental use in the City. Any person offering more

than 5 separate Dwelling Units for Short-Term Rental use in the

city must:

i. Obtain a license pursuant to Section 254-82 . . . .

ii. Ensure that the Short-Term Rental use is clearly

incidental to the principal residential uses permitted in

the zone where each such Dwelling United is located . . . .

. . . .

d. The Short-Term Rental use shall be conducted in a manner that

does not materially disrupt the residential character of the

neighborhood.

Jersey City Ord. 15.137. The proposal of the ordinance was accompanied by a

press release. The press release stated that Ordinance 15.137 would “make

Jersey City the first city in the Tristate area to formally embrace the popular

home-renting platform [Airbnb] by permitting city homeowners and certain

lessees to rent their home for less than 30 days.” (Id. Exh. 3.) The press release

also stated that “the measure . . . includes several commonsense protections. It

would prohibit homeowners and renters from ‘changing the character of the

neighborhood.’ It would also limit the number of properties one user could rent

on the platform to five, so as to prevent the formation of informal ‘Airbnb

hotels.’” (Id.)

In addition to the press release, Mayor Fulop made numerous public

remarks stating that he would prefer to work with, rather than against, Airbnb,

and that he hoped Jersey City would be a leader on home-rental platforms in

the Tri-State area. (Id. ¶¶ 40–41.) He said Airbnb was the “future” of Jersey

City’s economy and that “while some people might have concerns about the

sharing economy upending old ways of doing business, the best way to address

those concerns is by engaging with these companies, not pretending they do

not exist.” (Id. ¶ 42.) He wrote an article in Huffington Post stating that Jersey

City would embrace Airbnb and “make change our friend.” Steven Fulop, Why

Jersey City Will Allow Airbnb, HuffPost, Oct. 19, 2015,

https://www.huffpost.com/entry/why-jersey-city-will-allo_b_8331016.3

Mayor Fulop observed that permitting Airbnb rentals would allow

“middle-class folks [to] earn a bit of extra income by renting out their

apartments,” noting that the City could not realistically police Airbnb rentals in

any event. Id. He noted, however, that Ordinance 15.137 included “common-

sense ground rules: people can’t rent out so many rooms as to create an

informal hotel; they can’t change the nature of the neighborhood[,]” and Airbnb

would be obligated to pay a hotel tax. Id. Other Jersey City officials also praised

the ordinance as allowing the city to expand its tourism industry. (Compl. ¶¶

45–46.) The ordinance was unanimously approved by the Jersey City Council

on October 28, 2015, and signed into law by Mayor Fulop on October 30, 2015.

(Id. ¶ 47 & Exh. 2.)

In 2016, Mayor Fulop reportedly approached Airbnb and sought a

contribution towards his reelection campaign. Luis Ferre-Sadurni, Where a $5

Million War Rages Between Airbnb and the Hotel Industry, The New York Times,

Oct. 30, 2019, https://www.nytimes.com/2019/10/30/nyregion/jersey-city-

airbnb-vote.html (referenced in the Complaint at paragraph 58). The next year,

Fulop attended a fund-raising event at the company’s headquarters in San

Francisco. Id. A donation apparently was not forthcoming, so Mayor Fulop

emailed Airbnb expressing his frustration. Id. Twelve days later, Airbnb made a

3 This article, along with the other articles referenced in this section, were cited

by the complaint and as such were incorporated by reference. (Compl. ¶ 43); In re

Asbestos Products Liability Litig., 822 F.3d 125, 134 n.7 (3d Cir. 2016) (“In deciding

motions under Rule 12(b)(6), courts may consider ‘documents integral to or explicitly

relied upon in the complaint,’ or any ‘undisputedly authentic document that a

defendant attaches as an exhibit to a motion to dismiss if the plaintiff’s claims are

based on the document.’”) (cleaned up); see also In re Burlington Coat Factory Sec.

Litig., 114 F.3d 1410, 1426 (3d Cir. 1997); PBGC v. White Consol. Indus., 998 F.2d

1192, 1196 (3d Cir. 1993)).

$10,172 contribution. Id. Four months after that, the Hotel Trade Council

began donating to Mayor Fulop’s joint committee, in an amount totaling

$33,200 since late 2017. Id. Two years later, Mayor Fulop’s office initiated

Ordinance 19-077, which imposes significant restrictions on short-term rentals

in Jersey City.

Ordinance 19-077, while not banning short-term rentals, imposed

important new restrictions. First, it barred short-term rentals in non-owner-

occupied dwellings in excess of a total of 60 nights per year. (Compl. Exh. 1.)

Second, it no longer permitted short-term rentals as subleases; that is, only

property owners were permitted to rent their property on a short-term basis.

(Id.) To those restrictions, there were some exceptions. As relevant here, the

ordinance provided for a transition period of approximately 18 months;

through January 1, 2021, it exempted (i.e., allowed) short-term rental bookings

initiated prior to its effective date of June 25, 2019. (Id.) The Ordinance also

imposed permitting and registration fee requirements, and created a Division of

Housing Preservation, which was empowered to enforce the short-term rental

limitations set out by the ordinance. (See generally id.)

The Jersey City Council held a special meeting to vote on Ordinance 19-

077 on June 25, 2019. (Id. ¶ 63.) Several members of the City Council spoke in

favor of the ordinance at the meeting. Councilman James Solomon stated that

he supported the ordinance, for the following reasons:

[T]here [are] also people who have been harmed by the

introduction of Airbnb and there have been people

representing trade unions here and I don’t apologize

for being a proud supporter of unions in a progressive

city. That’s part of what the word progressive means.

And those people can be hurt as well by the

introduction of short-term rentals and their expansion.

(Id. ¶ 66.)4 Councilman Jermaine D. Robinson stated that he understood short-

term rental operators would lose money. That, he stated, was “the last thing

4 The plaintiffs cite to a video recording of the Council meeting which captures

Councilman Solomon’s statements, available on Youtube at

that [he] want[ed] to do,” and he “apologize[d] to anyone who’s going to lose

some money. Hopefully this is not going to get out, I mean, get out of hand and

that you guys can recoup some of your money.” (Id. ¶ 67.) The City Council

then voted 7 – 2 in favor of the ordinance. (Id. ¶ 69.) Three days later, on June

28, 2019, Mayor Fulop signed Ordinance 19-077 into law. (Id. ¶ 70.)

C. Effect on the Plaintiffs

Before Ordinance 19-077 was passed, each plaintiff made significant

investments in Jersey City real estate, for use in the business of short-term,

Airbnb-style rentals. Some of those investments consisted of purchases of

properties. The rest consisted of long-term leases; the terms of those leases are

not specifically stated, but the Complaint alleges that most will end in 2020

and 2021. (See, e.g., Compl ¶¶ 111–15, 146, 149, 191, 197.)

Gennadiy and Eugene Nekrilov entered into long-term leases for

seventeen different properties, and purchased two properties, to host their

short-term rentals. In each property, they earned much more via short-term

leases than they could have done by renting them out with long-term leases. In

the long-term lease properties, for example, they paid long-term rents totaling

$36,250 per month, and earned an average of $71,837 per month subletting

them short-term. (See Appendix A.) The two purchased properties have

mortgages of $2,500 and $1,725 per month, and they earned $9,500 and

$5,183 per month as short-term rentals. (Compl. ¶¶ 124, 129, 135, 139.) The

Nekrilovs assert that those two purchased properties, if leased out long-term,

would earn $3,800 and $1,800 monthly. (Id. ¶¶ 130, 140.) The Nekrilovs also

expended $60,000 and $40,000 to renovate the two purchased properties. (Id.

¶¶ 126, 136.)

Kwan Ho Tang and Jayu Jen leased two properties and purchased one,

operating short-term rentals out of each. They spent $6,600 and $8,900 to

https://www.youtube.com/watch?v=1aql4y5mRf8&t=30357s. (Compl. ¶ 66.) That

recording is incorporated by reference in the complaint and thus forms a part of the

record I consider on this motion to dismiss. In re Asbestos Products Liability Litig., 822

F.3d at 134 n.7.

furnish the two leased properties and approximately $40,000 to renovate and

furnish the purchased property. (Id. ¶¶ 190, 196, 211–12.) The long-term

leases, combined, cost $5,700 per month at market-rate rents, and earned

$9,000 a month in short-term rental income. (Id. ¶¶ 189, 190, 195, 197.) The

purchased property has a mortgage of $3,300, earned $4,500 a month in

short-term income, and, according to Tang and Jen, would earn $2,600 a

month as a long-term rental. (Id. ¶¶ 208, 215–16.)

Alan Suen purchased two properties out of which he operated short-term

rentals. One property has a monthly mortgage payment of $2,500 and the

other has a mortgage of $3,500. (Id. ¶¶ 254, 258.) Suen and his mother made

$383,000 in renovations to the properties, for which they used merchant cash

advances and lines of credit, as well as credit card debt. (Id. ¶ 263.) They also

spent $40,000 to furnish the properties, again financed with loans and credit

cards. (Id. ¶ 264.) They have also incurred other costs over the course of

renovating the properties in the range of approximately $130,000. (Id. ¶ 270.)

The renovations were financed at high interest rates, and the monthly debt

payments total approximately $35,000. (Id. ¶ 277.) Suen and his mother

earned approximately $30,000 a month in income in 2019 and claim they will

be profitable in the near future. (Id. ¶¶ 275, 278.)

A listing of the leases and properties of each plaintiff, and other

allegations of the Complaint concerning their profitability, are reduced to a

table in Appendix A to this Opinion.

D. Procedural History

Plaintiffs brought this action on December 31, 2019, seeking various

forms of relief, including a declaratory judgment that Ordinance 19-077 is

unconstitutional, an injunction against the enforcement of the ordinance,

compensatory damages, punitive damages, and attorneys’ fees and costs.

(Compl. Wherefore Clause.) They allege claims under various provisions of the

United States Constitution, including the Takings Clause, the Contract Clause,

and the Due Process Clauses of the Fifth and Fourteenth Amendments. (Id.

Counts One through Four.) Plaintiffs have moved for temporary and

preliminary injunctive relief. Defendant Jersey City has filed a motion to

dismiss and opposed the motion for injunctive relief. (DE 6.)

II. Discussion

a. Standards of Review

i. Rule 12(b)(6) motion

Federal Rule of Civil Procedure 8(a) does not require that a complaint

contain detailed factual allegations. Nevertheless, “a plaintiff’s obligation to

provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will

not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Phillips v.

Cnty. of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (Rule 8 “requires a

‘showing’ rather than a blanket assertion of an entitlement to relief.” (citation

omitted)). Thus, the complaint’s factual allegations must be sufficient to raise a

plaintiff’s right to relief above a speculative level, so that a claim is “plausible

on its face.” Twombly, 550 U.S. at 570; see also West Run Student Hous.

Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013).

That facial-plausibility standard is met “when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (citing Twombly, 550 U.S. at 556). While “[t]he plausibility standard

is not akin to a ‘probability requirement’ . . . it asks for more than a sheer

possibility.” Id.

Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a

claim upon which relief can be granted. The defendant, as the moving party,

bears the burden of showing that no claim has been stated. Animal Science

Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011).

For the purposes of a motion to dismiss, the facts alleged in the complaint are

accepted as true and all reasonable inferences are drawn in favor of the

plaintiff. New Jersey Carpenters, 760 F.3d at 302.

ii. Preliminary Injunction

“Preliminary injunctive relief is an ‘extraordinary remedy, which should

be granted only in limited circumstances.’” Ferring Pharms., Inc. v. Watson

Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer

Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578,

586 (3d Cir. 2002)). The decision to grant or deny a preliminary injunction is

within the Court’s discretion. See Am. Express Travel Related Servs., Inc. v.

Sidamon—Eristoff, 669 F.3d 359, 366 (3d Cir. 2012). The primary purpose of

preliminary injunctive relief is “maintenance of the status quo until a decision

on the merits of a case is rendered.” Acierno v. New Castle Cty., 40 F.3d 645,

647 (3d Cir. 1994).

In order to obtain a preliminary injunction, the moving party must show

the following:

(1) a reasonable probability of eventual success in the litigation,

and (2) that it will be irreparably injured . . . if relief is not granted.

. . . [In addition,] the district court, in considering whether to grant

a preliminary injunction, should take into account, when they are

relevant, (3) the possibility of harm to other interested persons

from the grant or denial of the injunction, and (4) the public

interest.

Reilly v. City of Harrisburg, 858 F.3d 173, 176 (3d Cir. 2017) (alteration in

original) (quoting Del. River Port Auth. v. Transamerican Trailer Transport, Inc.,

501 F.2d 917, 919-20 (3d Cir. 1974)). The movant bears the burden of

establishing “the threshold for the first two ‘most critical’ factors . . . . If these

gateway factors are met, a court then considers the remaining two factors and

determines in its sound discretion if all four factors, taken together, balance in

favor of granting the requested preliminary relief.” Id. at 179.

b. Takings Clause

The Takings Clause of the Fifth Amendment to the United States

Constitution provides that “private property [shall not] be taken for public use,

without just compensation.” U.S. Const. amend. V.5 Under that provision, I am

tasked with a two-step process: First, I must find that the plaintiffs have

asserted a “legally cognizable property interest.” Park Restoration, LLC v. Erie

Ins. Exch., 855 F.3d 519, 526 (3d Cir. 2017) (quoting Prometheus Radio Project

v. FCC, 373 F.3d 372, 428–29 (3d Cir. 2004)). Second, I evaluate the plaintiff’s

claim that their property was taken from them, asking: “(1) was there a

taking?; (2) was that taking for public use?; (3) did the claimant receive just

compensation?” Id. at 525. Though “[t]he paradigmatic taking requiring just

compensation is a direct government appropriation or physical invasion of

private property,” government regulation “may, in some instances, be so

onerous that its effect is tantamount to a direct appropriation or ouster,” and

“such ‘regulatory takings’ may be compensable under the Fifth Amendment.”

Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 537 (2005).

No physical invasion has taken place here; the claim is clearly one of a

regulatory taking. For a regulatory taking, there are two distinct tests. The first

is the so-called “per se” taking identified in Lucas v. South Carolina Coastal

Council, 505 U.S. 1003, 1015 (1992), pursuant to which “a regulation which

‘denies all economically beneficial or productive use of land’ will require

compensation under the Takings Clause” unless the challenged limitations

“inhere . . . in the restrictions that background principles of the State’s law of

property and nuisance already placed upon land ownership.” Murr v.

Wisconsin, 137 S. Ct. 1933, 1937 (2017); see also Lucas, 505 U.S. at 1015,

1029. This is a difficult test to satisfy: the court must find that the regulation

forces the plaintiffs to “leave [their] property economically idle.” 505 U.S. at

1019.

The second regulatory taking test is a more fluid evaluation known as the

Penn Central test, which evaluates the alleged taking based on “a complex of

5 The Takings Clause applies to state and local governments through the

Fourteenth Amendment. Chicago, B & Q R., Co. v. City of Chicago, 166 U.S. 226, 241

(1897).

factors,” including “(1) the economic impact of the regulation on the claimant;

(2) the extent to which the regulation has interfered with distinct investment-

backed expectations; and (3) the character of the governmental action.” Murr,

137 S. Ct. at 1937 (quoting Palazzolo v. Rhode Island, 533 U.S. 606, 617

(2001)); see Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124

(1978).

i. Legally Cognizable Property Interests

Before considering the two takings tests, however, I briefly discuss the

property rights asserted by the Plaintiffs. Most of them are uncontroversial,

including the right to use and enjoyment of their properties held in fee simple

interest, the right to use and enjoyment of long-term leases, and the

contractual interest in short-term rental bookings which would abrogated by

Ordinance 19-077. See ACRA Turf Club, LLC v. Zanzuccki, 2012 WL 2864402,

2012 U.S. Dist. LEXIS 96017 at *29–30 (D.N.J. July 11, 2012); Lynch v. United

States, 292 U.S. 571, 579 (1934) (“Valid contracts are property, whether the

obligor be a private individual, a municipality, a State or the United States.”).

Plaintiffs also claim, however, that they have a property interest

consisting of their forward-looking right to “pursue their short-term rental

businesses in Jersey City.” (DE 1-6 at 16; DE 10 at 10.) I disagree. As the

Supreme Court held in College Savings Bank v. Florida Prepaid Postsecondary

Education Expense Board, while “[t]he assets of a business (including its good

will) unquestionably are property, and any state taking of those assets is

unquestionably a ‘deprivation’ under the Fourteenth Amendment . . . .

business in the sense of the activity of doing business, or the activity of making

a profit is not property in the ordinary sense.” 527 U.S. 666, 675 (1999); see

also Antietam Battlefield KOA v. Hogan, 2020 WL 6777590, 2020 U.S. Dist.

LEXIS 215250 at *14–15 (D. Md. Nov. 18, 2020) (inability to conduct business

is not a taking); AJE Enter. LLC v. Justice, 2020 WL 6940381, 2020 U.S. Dist.

LEXIS 222186 at *20 (N.D. W. Va. Oct. 27, 2020); Savage v. Mills, 478 F. Supp.

3d 16, 31 (D. Me. Aug. 7, 2020) (“To state a taking claim, it is not enough to

allege that government conduct frustrated a business enterprise . . . . Takings

jurisprudence is directed at government conduct that denies beneficial use of

property, meaning things like legal interests in real or personal property, not

the liberty interest to engage in business activity.”); Talleywhacker, Inc. v.

Cooper, 465 F. Supp. 3d 523, 541 (E.D. N.C. 2020) (“the assertion of a ‘general

right to do business’ has not been recognized as a constitutionally protected

right”); Tuchman v. Connecticut, 185 F. Supp. 2d 169, 174–75 (D. Conn. 2002)

(ability to engage in a business is not a federally protected property interest).

Plaintiffs cite Longo v. Reilly, 35 N.J. Super. 405, 411–12 (App. Div. 1955)

and Di Cristofaro v. Lauren Grove Memorial Park, 43 N.J. Super. 244, 252–53

(App. Div. 1957) for the propositions that New Jersey courts recognize the

“right to pursue one’s business, calling, or occupation free from undue

interference or molestation,” Di Cristofaro, 43 N.J. Super. at 253, and that

violation of that right is an “actionable infringement of a property right,” Louis

Kamm v. Flink, 113 N.J.L. 582 (N.J. E & A 1934). Those cases were decided in

the context of tort law, however, not in the context of the Takings Clause. Di

Cristofaro, 43 N.J. Super. at 252–53. Not everything recognized as “property”

under state law is protected by the Takings Clause. While compensable

property interests are often created by state law, see Phillips v. Washington

Legal Foundation, 524 U.S. 156, 164 (1998), “whether a particular state-

created interest rises to the level of a ‘legitimate claim of entitlement’ is a

question of federal law,” Dibble v. Quinn, 793 F.3d 803, 808 (7th Cir. 2015)

(quoting Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9 (1978)).

Recognizing such a sweeping right would unreasonably broaden the scope of

the Takings Clause so that it applied to any instance of business regulation,

which the courts have steadfastly refused to do. See In re Premier Auto. Servs.,

Inc., 492 F.3d 274, 283 (4th Cir. 2007) (“The recognition of such a broad ‘right

to do business’ would be akin to that recognized in Lochner v. New York, 198

U.S. 45 (1905) and its progeny, which the Supreme Court has long since

refused to recognize.”).6

I thus find that although the traditional rights associated with real estate

which plaintiffs assert, enumerated above, are cognizable under the Takings

Clause, their ongoing right to pursue a short-term rental business is not.

ii. Per se Taking

Plaintiffs assert that Jersey City engaged in a regulatory taking under

both tests: (a) by denying all economically beneficial use of their property under

the Lucas test and (b) by causing a partial taking of their property under the

Penn Central test. In this subsection, I analyze the claim under the

“economically beneficial use” test set forth in Lucas, 505 U.S. at 1019.

“[A] regulation which denies all economically beneficial or productive use

of land will require compensation under the Takings Clause.” Ass’n of N.J. Rifle

& Pistol Clubs v. A.G. N.J., 910 F.3d 106, 124 (3d Cir. 2018) (quoting Murr, 137

S. Ct. at 1942)). Such “total taking[s]” occur where a regulation “declares ‘off-

limits’ all economically productive or beneficial uses” of property. Id. (quoting

Lucas, 505 U.S. at 1030).

Plaintiffs have not lost all economically beneficial use of their property.

First, plaintiffs assert that their short-term rental businesses “will be totally

lost as a result of Ord. 19-077” and that they have therefore lost all

economically beneficial use of their specific property right in the operation of a

business. (DE 10 at 11.) As stated in Section II.b.i, supra, however, plaintiffs

have no protected property right in the ongoing operation of their businesses

per se. Loss of the practical ability to carry on the business of short-term

rentals at a profit is not in itself a taking.

6 Plaintiffs also assert that Department of Homeland Security v. Regency of the

University of California, 140 S. Ct. 1891 (2020) established that the government must

take into account “legitimate reliance” interests and “expectation interests” on behalf

of regulated individuals. (DE 12.) Regents concerned the application of the

Administrative Procedures Act’s “arbitrary and capricious” standard and has no

applicability to Takings cases. See 140 S. Ct. at 1905, 1913.

Plaintiffs also assert that the short-term rental bookings they had

entered into before the Ordinance was passed were abrogated. Ordinance 19-

077, however, provides for a transition period. It exempts bookings entered into

before June 25, 2019 (the effective date of the Ordinance) if they were

scheduled for a date prior to January 1, 2021, which was then some eighteen

months in the future. Jersey City Ord. 19-077. Plaintiffs admit that the vast

majority of their “lost” rental bookings fall within that category (see DE 10 at

23–24), and hence were not lost at all.

In their opposition to the motion to dismiss, plaintiffs assert that

between 10 to 20 bookings per plaintiff did not fall within that transitional

exemption. (Id.) Ordinance 19-077, however, is not a total ban. It permits up to

60 nights per year of short-term rentals at non-owner-occupied properties.

Jersey City Ord. 19-077. Plaintiffs offer no allegations to support the

conclusion that their 10–20 bookings total more than 60 total nights in a year.

Thus, I cannot conclude that any of these bookings were abrogated by the

Ordinance.

I turn to the plaintiffs’ properties which are not owned, but held under

long-term leases. Plaintiffs do not specifically plead how long the terms on

these leases are, except where they note that most will end in 2020 and 2021.

(See, e.g., Compl ¶¶ 111–15, 146, 149, 191, 197.) Nothing in Ordinance 19-077

causes a total loss of plaintiffs’ long-term leases. The long-term leases

themselves are not abrogated by the 2019 ordinance. Nor is their economic

value destroyed. Plaintiffs still have use of the leased properties. For example,

they may occupy the properties for their own purposes; if not, they may use

them for businesses other than short-term leasing; if not, they may sublease

the properties to others. That is a viable, residual economic use of the

properties. See Greenblatt v. Klein, 2015 U.S. Dist. LEXIS 28769 at *16 (D.N.J.

Mar. 9, 2015) (the “alleged regulatory taking has not denied [plaintiffs] all

economically beneficial uses of their property—there is no reason why Plaintiffs

could not continue to use or rent it”). Such options might not be as profitable

as short-term rentals, but the property is clearly not rendered “economically

idle.” Lucas, 505 U.S. at 1019; see also Iron Bar, LLC v. Dougherty, 2021 WL

363706, 2021 U.S. Dist. LEXIS 20416 at *17 (D.N.J. Feb. 3, 2021) (revocation

of liquor license was not a Lucas taking where the building could be set to

other uses).7

More broadly, the plaintiffs have not been deprived of all economically

beneficial use of their real estate property. Those properties retain numerous

economic uses: the plaintiffs can sell them, rent them as long-term leases, or

use them as homes.

Plaintiffs assert, however, that they have nevertheless been deprived of

the profitable use of their properties. (DE 10 at 12.) That claim might be viewed

in two ways: first, that there has been a total taking of the expected profits

from short-term rentals, and second, that the property has no economically

viable use apart from such short-term rental profits.

Some cases have recognized a limited expectation interest in profits and

acknowledge that the deprivation of such interests can be a taking. Williamson

County Reg’l Planning Comm’n v Hamilton Bank, 473 U.S. 172, 191 n.12 (1985)

(property owner sought compensation for its expectation interest where it built

a golf course and installed water and sewer connections for large development,

but was then constrained by zoning changes to a small development which

would not support the initial expenditures). Here, however, such an interest is,

at best, just one of the bundle of property rights that the plaintiffs hold in their

long-term leases and fee simple holdings. Andrus v. Allard, 444 U.S. 51, 65–66

(1979) (no taking where government seizes only one “strand” in the bundle of

property rights; prohibition on business of selling artifacts not a total taking

where owners “retain the rights to possess and transport their property, and to

donate or devise” it); see also Penn Cent., 438 U.S. at 130–31 (“‘Taking’

7 The Nekrilovs complain that their landlords have refused or may refuse to renew

their long-term leases. (DE 16 at 2) Such refusals do not disturb a vested right and

would not deprive them of an identified property interest. See Webb’s Fabulous

Pharms. v. Beckwith, 449 U.S. 155, 161 (1980) (“a mere unilateral expectation or an

abstract need is not a property interest entitled to protection”). Non-renewal would

also, of course, relieve them of the expense of paying rent.

jurisprudence does not divide a single parcel into discrete segments and

attempt to determine whether rights in a particular segment have been entirely

abrogated . . . . [t]his Court focuses rather both on the character of the action

and the nature and extent of the interference with rights in the parcel as a

whole . . . .”); see also Crow-New Jersey 23 Ltd. P’Ship v. Clinton, 718 F. Supp.

378, 383–84 (D.N.J. 1989) (though “the loss of an expectation interest may be a

predicate for a takings claim,” such a claim is alone insufficient to establish

that the plaintiffs have been “deprived . . . of economically viable use” and thus

constitutes “mere diminution in the value of land . . . [which] does not

constitute a taking.”). This argument may, however, be more relevant within

the Penn Central framework. See Section II.b.iii, infra.

The second part of plaintiffs’ claim trades on the interpretation of the

phrase “economically viable use.” The argument would be that a property is not

“economically viable” unless plaintiffs can make a profit on it; a losing

investment, they say, is not an “economically viable” one. (DE 1-6 at 24

(claiming no “‘reasonable economic’ use” for properties because they cannot

receive a “reasonable return on their investments”); DE 10 at 11.) This

approach, however, finds little support in Lucas, which explains that an

“economically viable use” exists unless a property is rendered “economically

idle.” 505 U.S. 1019; see also Park Ave. Tower Assocs. v. New York, 746 F.2d

135, 139 (2d Cir. 1984) (“The crucial inquiry . . . is not whether the regulation

permits plaintiffs to use the property in a ‘profitable’ manner, but whether the

property use allowed by the regulation is sufficiently desirable to permit

property owners to ‘sell the property to someone for that use.’”) (quoting

Sadowsky v. New York, 732 F.2d 312, 318 (2d Cir. 1984)); Greystone Hotel Co.

v. City of New York, 13 F. Supp. 2d 524, 528 (S.D.N.Y. 1998) (“lack of a profit

does not establish a regulatory taking”).

The vast majority of takings jurisprudence examines . . . not lost

profits but the lost value of the taken property . . . . When the

Supreme Court has assessed the economic impact of a regulatory

taking, it has talked almost exclusively in terms of lost value rather

than lost profits . . . . Additionally, other federal circuits and the

state courts often take this approach . . . . Thus, when a court

considers only a profits-based approach, this precedent provides

limited guidance and constrains a factfinder’s ability to provide a

complete and fair assessment of the economic impact” of a

regulation.

Rose Acre Farms, Inc. v. United States, 559 F.3d 1260, 1268–69 (Fed. Cir. 2009)

Again, however, this argument may have more traction within the Penn Central

framework.

There are plainly other economic uses to which plaintiffs can put their

property. They have not adequately pled a Lucas per se taking claim.

iii. Penn Central Factors

Absent a per se taking, plaintiffs may attempt to show that their property

was taken under the more fluid factors set out in Penn Central. Those factors

are

(1) the economic impact of the regulation on the claimant;

(2) the extent to which the regulation has interfered with distinct

investment-backed expectations; and

(3) the character of the governmental action.

Murr, 137 S. Ct. at 1943; Penn Central, 438 U.S. at 124.

The function of the Penn Central test is to “identify regulatory actions

that are functionally equivalent to the classic taking in which government

directly appropriates private property or ousts the owner from his domain.

Accordingly, each of these tests focuses directly upon the severity of the burden

that government imposes upon private property rights . . . . the Penn Central

inquiry turns in large part, albeit not exclusively, upon the magnitude of a

regulation’s economic impact and the degree to which it interferes with

legitimate property interests.” Lingle, 544 U.S. at 539–40.

The government’s regulatory authority is broad, and the availability of

relief under Penn Central is correspondingly narrow. “‘[A] regulatory limitation

on the right to use and receive profits from property will not necessarily or even

usually establish that there has been a taking.’” Pinewood Estates of Michigan

v. Barnegat Township Leveling Bd., 898 F.2d 347, 351 (3d Cir. 1990) (quoting

Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 434–35 (1982)).

“[T]he submission that appellants may establish a ‘taking’ simply by showing

that they have been denied the ability to exploit a property interest that they

heretofore had believed was available for development is quite simply

untenable.” Penn Central, 438 U.S. at 130. Thus, courts tend to reject takings

claims where a law imposes restrictions “substantially related to the promotion

of the general welfare” and which, while ruling out some uses, nevertheless

“permit reasonable beneficial use.” Rogin v. Bensalem Township, 616 F.2d 680,

691 (3d Cir. 1980). In particular, states are afforded “broad power to regulate

housing conditions in general and the landlord-tenant relationship in

particular without paying compensation for all economic injuries that such

regulation entails.” Yee v. City of Escondido, 503 U.S. 519, 528–29 (1992).

1. The Economic Impact of the Regulation on the Plaintiffs

There is no question that Ordinance 19-077 adversely impacts the

plaintiffs by denying them profits, or even profitability, from the short-term

rental business. Nevertheless, a regulation which merely “adversely affect[s]

economic values” is not sufficient to constitute a taking. New Jersey v. United

States, 91 F.3d 463, 468 (3d Cir. 1996). “‘[E]ven a substantial reduction of the

attractiveness of the property to potential purchasers’ generally does ‘not

entitle an owner to compensation under the Fifth Amendment.’” Woodbridge

Ctr. Realty, L.P. v. Twp. Council, 2016 WL 1243952, 2016 U.S. Dist. LEXIS

41874 at *9 (D.N.J. Mar. 30, 2016). Thus, in Rogin v. Bensalem, the Third

Circuit considered a property in Bensalem Township which the plaintiff

purchased for $3 million. 616 F.2d at 692. Bensalem then implemented a new

amendment to the zoning law which reduced the value of the property to $2

million. Id. The Third Circuit found that a one-million dollar loss did not weigh

in favor of finding a taking, reasoning that the economic impact was not

sufficiently “drastic[].” Id. Rogin relied on decisions by the United States

Supreme Court which found no taking where a challenged law had reduced the

value of land by as much as seventy-five or eighty-seven percent. See Village of

Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (75% diminution); Hadacheck

v. Sebastian, 239 U.S. 394 (1915) (87.5% diminution). Similarly, in Penn

Central itself, Penn Central had entered into a 50-year lease by which it would

permit a United Kingdom corporation to build a multistory office building above

Penn Station Terminal, 438 U.S. at 116. Penn Central stood to earn $1 million

annually during construction of the building and at least $3 million annually

thereafter. Id. The City of New York, however, designated Penn Station

Terminal as a historic landmark, depriving Penn Central of that revenue

stream. Id. at 115–16.

Plaintiffs have not alleged the precise amount of diminution of value of

their property. It appears that their purchased properties and long-term leases,

if rented out under long-term leases or subleases, might earn between one-half

and one-third of what they could have earned as short-term rentals. (See

Appendix A.) Thus, even if the properties’ value derived solely from their ability

to earn income as short-term rentals, I could conclude that the properties have

lost between 50% and 66% of their value. Even that estimated diminution in

value, however, does not qualify as a “drastic” reduction under the Third

Circuit and Supreme Court precedents.8

I thus find that this factor weighs against finding a taking.

Plaintiffs suggest an alternative measure of evaluating their loss. The

practical impact of Ordinance 19-077, they say, has been to eliminate their

8 Nor, critically, does it equate to an equivalent drop in the value of the property. A

theoretical willing purchaser would pay a price reflecting its suitability for purposes

other than Airbnb-style rentals. Indeed, a purchaser who intended to own and occupy

the property might pay a premium; the 2019 Ordinance exempts owner-occupiers

from its most stringent restrictions. Thus the properties may be worth more in other

hands than they are in the hands of plaintiffs.

More generally, of course, the value of a property in Jersey City depends on a

variety of factors, such as desirable location, convenient commuting, and scarcity of

other nearby housing opportunities.

ability to turn a profit on their properties and long-term leases, thus denying

them a “reasonable return on their investments.” (DE 1-6 at 24; DE 10 at 11.)

The typical method a court uses in evaluating the impact of a taking is

diminution in property value, not profits, although the two are surely not

unrelated. United States v. 68.94 Acres of Land, 918 F.2d 389, 393 n.3 (3d Cir.

1990) (“just compensation is measured by the difference between the market

value of the entire holding immediately before the taking and the remaining

market value immediately thereafter of the portion of property rights not

taken.”); Rose Acre Farms, 559 F.3d at 1268–69. The Third Circuit has,

however, occasionally relied on profitable uses of the property in determining

the economic impact of a regulation. Pace Resources, Inc. v. Shrewsbury

Township, 808 F.2d 1023, 1031 (3d Cir. 1987) (rezoning reduced value of

acreage from $495,600 to $52,000, but no taking found); but see id. at 1031 &

n.4 (Pace “has not been deprived of all economically viable uses of this

property” because “[t]he rezoned value of $1,400 per acre compares favorably

with Pace’s original $515.07 per acre investment.”). Similarly, Penn Central

itself favorably noted that the landmark restriction in that case would “permit[]

Penn Central not only to profit from the Terminal but also to obtain a

‘reasonable return’ on its investment.” 438 U.S. at 136; see also Vasquez v.

Foxx, 895 F.3d 515, 525 (7th Cir. 2018).

Nevertheless, the profit measure of economic impact is a disfavored basis

for finding a taking. In Andrus v. Allard, the Supreme Court explained:

[L]oss of future profits – unaccompanied by any

physical property restriction – provides a slender reed

upon which to rest a takings claim. Prediction of

profitability is essentially a matter of reasoned

speculation that courts are not especially competent to

perform. Further, perhaps because of its very

uncertainty, the interest in anticipated gains has

traditionally been viewed as less compelling than other

property-related interests.

444 U.S. at 66; see also Phillips v. Wash. Legal Found., 524 U.S. 156, 168

(1998) (same); Help Hoboken Housing v. Hoboken, 650 F. Supp. 793, 798

(D.N.J. 1986) (same). Claims based on expectation interests are “fraught with

the difficulty of determining whether the reduced expectation rises to the level

of a taking.” Crow-New Jersey 23, 718 F. Supp. at 383. Thus, plaintiffs face the

challenge of establishing that the reduction to their expectation interest is not

“completely speculative.” Help Hoboken, 650 F. Supp. at 798.

I find plaintiffs’ projected lost profits, whatever their significance, to be

relatively speculative. It is not clear what plaintiffs’ profits would have been:

Suen, for instance, has not yet turned a profit on his investments and it is

unclear whether he ever will. The Nekrilovs, Tang, and Jen, who have earned

profits on their investments, cannot be certain that such profits would

continue into the future. Even if Ordinance 19-077 had never gone into effect,

the profitability of their busines would depend on factors such as the entrance

of other short-term rental operators into the market, reviews by tenants who

rented their properties, whether Jersey City increased its property taxes,

whether Airbnb demanded a greater share of their earnings per booking, or

whether Jersey City retains its reputation as a trendy location near New York

City. As this past year has demonstrated, completely unexpected occurrences

can have unpredictable impacts on the profitability of rental properties.

Plaintiffs acknowledge as much in their recent update letter. (DE 16 at 1

(“while, from March through May, the demand for short-term rentals dropped

significantly due to the COVID-19 crises, demand actually bounced back from

then going forward (and is currently very close to the level that existed prior to

the COVID-19 crisis)”)). These contingencies demonstrate the speculative

nature of any expectation interest the plaintiffs could assert. In short, it is

unrealistic to treat the 2019 Ordinance as if it were the only thing standing

between the plaintiffs and guaranteed profitability.

Nor is it clear that the plaintiffs will not be able to earn a profit from

selling the properties they own. Plaintiffs improved their properties via

renovations. Jersey City, a short commute from New York City, has a

notoriously tight housing market, to the point that it apparently has not been

harmed by the coronavirus pandemic. (Id.) There will certainly be parties

interested in purchasing plaintiffs’ property, but plaintiffs fail to allege—or

bring forth any facts—supporting the proposition that they could not sell the

property to those parties for a profit or at least largely breaking even. Plaintiffs

sidestep the issue by asserting that selling the property is not an “economic

use.” (DE 1-6 at 21 n.10 (citing Lost Tree Village Corp. v. U.S., 787 F.3d 1111,

1117 (Fed. Cir. 2015).) In that case, however, the Federal Circuit only

concluded that sale of land is not an economic use where land has “no

underlying economic uses.” 787 F.3d at 1117 (explaining that not “all sales

qualify as economic uses.”). Here, however, plaintiffs retain numerous

economic uses of their property, including renting it out as a long-term lease,

renting it as a short-term rental for 60 days a year, or occupying it. And the

value of the property to a willing buyer—even if only a theoretical one—remains

the ultimate measure of the property’s value.

Finally, focusing on the properties held under long-term leases, it is far

from clear, based on the allegations in the Complaint, that the plaintiffs will

lose money. They acknowledge that the leases were rented at market-rate

prices. If they are trapped in a long-term lease, they could presumably sublet

the premises at similar prices. The allegations do not suffice to support an

inference that any loss will be “drastic.”

I take into account the likelihood that Ordinance 19-077 will deny

revenues that plaintiffs hoped to reap from the short-term rental business.

Their allegations do not, however, take into account alternative means of

exploiting the properties, such as sale of the owned properties, subleases of the

lease properties, and alternative business or personal uses of the properties. A

Takings claim requires more than an allegation that the plaintiff has carried on

a particular kind of business at the property and can no longer do so, or can

no longer do so at a profit. The plaintiffs have not alleged sufficient facts to

show a diminution in their property values sufficient to weigh in favor of a

finding of a taking.

2. The Extent to Which Ordinance 19-077 Has Interfered With Plaintiffs’

Distinct Investment-Backed Expectations

Next, I consider the overlapping factor of plaintiffs’ reasonable,

investment-backed expectations in connection with the properties.9 Though

this factor presents a closer question, I also conclude it does not weigh in favor

of finding a taking. Jersey City’s regulation of short-term rentals has indeed

been inconsistent. I cannot conclude, however, that the plaintiffs have some

entitlement to operate short-term rentals with minimal regulation merely

because the City permitted it previously.

Laws change, and there is no general right to governmental consistency

over time. “[D]istinct, investment-backed expectations are reasonable only if

they take into account the power of the state to regulate in the public interest.”

Id. at 1033. Also relevant to the determination of reasonable investment-

backed expectations are “the law in force in the State in which the property is

located,” Ark. Game & Fish Comm’n v. United States, 568 U.S. 23, 38 (2012)

(citing Lucas, 505 U.S. at 1027–29)), as well as whether the government invited

the activity with promises that certain property rights would be protected,

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1010–1013 (1984) (taking where

statute explicitly assured that trade secrets submitted to EPA would be kept

confidential but subsequent enactment would remove confidentiality).

Nevertheless, “[t]he general expectation of regulatory change is no less present

where the value of the property interest is derived from the regulation itself.”

Newark Cab Ass’n v. City of Newark, 901 F.3d 146 (3d Cir. 2018).

Plaintiffs assert that Ordinance 15.137 gave them reasonable

investment-backed expectations that short-term, Airbnb-style rentals would be

allowed in Jersey City. (DE 10 at 13, 15.) As previously mentioned, that

Ordinance permitted short-term rentals “as an accessory use to a permitted

principal residential use in all zoning districts and redevelopment plan areas

9 Plaintiffs assert that this factor “takes precedence” in the Penn Central

analysis (DE 1-6 at 18), but “[i]nvestment-backed expectations, though important, are

not talismanic under Penn Central.” Palazzolo, 533 U.S. at 634. They are but “one

factor that points toward the answer to the question whether the application of a

particular regulation to particular property ‘goes too far.’” Id.

where residential uses are permitted,” required a license for the use of more

than five separate dwelling units, and directed that said rentals be “conducted

in a manner that does not materially disrupt the residential character of the

neighborhood.” Jersey City Ord. 15.137.

Plaintiffs also assert they had reasonable investment-backed

expectations of continuing their short-term rental operations because Jersey

City officials made numerous statements explaining that they intended to work

with, rather than against, home rental platforms such as Airbnb. (DE 10 at 15;

Compl. ¶¶ 41.) Specifically, Mayor Fulop stated that Airbnb was the “future” of

Jersey City’s economy and that, unlike other municipalities, Jersey City would

“make change our friend.” (Id. ¶ 42); Steven Fulop, Why Jersey City Will Allow

Airbnb.

City officials also, however, offered some qualifying statements. In a

press release accompanying the proposal of Ordinance 15.137, the City stated

that the ordinance “includes several commonsense protections. It would

prohibit homeowners and renters from ‘changing the character of the

neighborhood.’ It would also limit the number of properties one user could rent

on the platform to five, so as to prevent the formation of informal ‘Airbnb

hotels.’” (Compl. Exh. 3.) Mayor Fulop described the purpose of the ordinance

as allowing “middle-class folks [to] earn a bit of extra income by renting out

their apartments,” and explained that “people can’t rent out so many rooms as

to create an informal hotel; they can’t change the nature of the neighborhood.”

Steven Fulop, Why Jersey City Will Allow Airbnb.

This factor also overlaps with the prior analysis of the properties’

residual value, assuming short-term rentals are not allowed. Just because “a

property has been devoted to a particular use” does not mean “the owner has a

reasonable expectation of being able to continue with that use absent the

payment of compensation.” Pace, 808 F.2d at 1032 (emphasis added). If the

property retains value, then no expectation has been defeated by a regulation

that prohibits a particular kind of business being carried on there. A court may

assist a person denied the opportunity to clean floors, but not if he won’t do

windows.

I weigh this factor as leaning against, but not strongly against, the

plaintiffs. The allegations of the Complaint do not establish that plaintiffs had

reasonable-investment-backed expectations in continuing to operate their

short-term rentals, because they do not take into account the power of the

state to regulate in the public interest. Pace, 808 F.2d at 1033. Plaintiffs’

expectations regarding short-term rentals were always necessarily subject to

the possibility that the City would regulate those rentals in the future.

Plaintiffs rely on Monsanto v. Ruckelshaus10 for the proposition that

reliance on government actions can give rise to a reasonable investment backed

expectation. (DE 1-6 at 19; DE 10 at 14 n.6.) Ruckelshaus, however, only

highlights what is missing from plaintiffs’ allegations. In Ruckelshaus, a

regulated company submitted trade secrets to the EPA based “explicit

assurances” in the statute that they would be kept confidential. 467 U.S. at

1011. As the Court pointed out, the central value of a trade secret is the right

to exclude others. The government, however, disclosed and used the

information, thereby destroying its value.

No “explicit assurances” akin to those in Ruckelshaus were made here;

plaintiffs do not identify any provision in Ordinance 15.137 or statement by

Jersey City officials which offered assurances that short-term rentals would not

be further regulated by the City.11 Indeed, to the extent Jersey City permitted

short-term rentals, it did so with significant qualifications. For example, short-

10 They also rely on Washington Market Enterprises, Inc. v. City of Trenton, a wholly

inapplicable case involving a plaintiff who sought compensation after his property was

declared blighted by the city as a step towards an urban renewal project. 68 N.J. 107,

119 (N.J. 1975).

11 Plaintiffs cite a number of quotations from news articles which appear to contrast

Jersey City’s Ordinance 15.137 with New York’s rules, which do not permit short-term

rentals on properties which are not owner-occupied. (DE 10 at 19.) Plaintiffs are

unable, however, to attribute those quotes to any Jersey City official or press release.

They claim, invalidly in my view, that Jersey City must be presumed to have approved

the contents of any article in which a Jersey City official was quoted. (Id. at 19 n.8.)

term rentals would not be permitted to change the character of neighborhoods

or operate as informal hotels. Licenses for the maintenance of more than five

separate dwelling units as short-term rentals would be required, indicating

that large-scale operations would be subject to more onerous oversight. Indeed,

Mayor Fulop explained that the point of the ordinance was to permit

individuals to make extra income by renting out their apartments; he did not

state that the ordinance permitted large-scale short-term rental investments or

significant business operations.

To be sure, the plaintiffs’ reliance on Ordinance 15.137 is

understandable, and the City did impose onerous regulations on businesses

that it had welcomed just four years earlier. “[T]hose who do business in [a]

regulated field,” however, “cannot object if the legislative scheme is buttressed

by subsequent amendments to achieve the legislative end.” Connolly v. Pension

Benefit Guar. Corp., 475 U.S. 211, 227 (1986). In short, the municipality may,

for the general welfare, adjust and revise its prior regulations in light of

experience. Jersey City made clear in Ordinance 15.137 that short-term rentals

would be tolerated to the extent they did not change neighborhood character or

constitute informal hotels; Ordinance 19-077 puts teeth in those general

statements of purpose in a way that is consistent with the City’s statements of

purpose.

Mayor Fulop’s statements that home-rental platforms were the “future”

and that the City would be a “friend” to change were not specific enough to give

rise to a reasonable expectation that Ordinance 15-137 would not be revised.

They do not constitute “explicit assurances” that short-term rentals would

always be permitted in the City, on the same terms, into the indefinite future.

For completeness, I round out the discussion with some arguments by

the City which I found less convincing. They are set out in the margin.12

12 The City argues that the Nekrilovs lacked any reasonable expectation because

they never applied for a license with the City as required under Ordinance 15.137. See

Ord. § 15.137 (requiring license issued pursuant to Ordinance 254-82); Ord. § 254-83

(application need only state name and address of manager, location of establishment,

All in all, while plaintiff makes significant points here, on balance I find

for the City on this factor.

3. The Character of the Governmental Action

“A taking may be more readily found when the interference with property

can be characterized as a physical invasion by government . . . than when the

interference arises from some public program adjusting the benefits and

burdens of economic life to promote the common good.” Penn Central, 438 U.S.

number of units occupied, and must contain required fee); Ord. § 254-86 (license

contingent upon inspection of building); id. § 254-87 (license may be denied to

individuals who are unfit by reason of criminal convictions or mental or physical

unfitness). The City does not assert that this violation would have justified a forfeiture;

indeed, the City does not even assert that the Nekrilovs’ application would have been

denied. It is not enough to identify a violation, unless it was disqualifying in some way.

Compare Midnight Sessions, Ltd. v. Philadelphia, 945 F.3d 667, 678 (3d Cir. 1991)

(where code violations prevented dance hall from receiving certificate of occupancy, no

taking resulted from denial of license).

I also reject the City’s arguments based on a proposed Ordinance, No. 19-045.

Ordinance 19-045, introduced on April 24, 2019, was never enacted, but rather was

tabled on a motion by members of the Jersey City Council. (DE 6-3 at 44 (Exh. C).) It

would have imposed many of the same restrictions as Ordinance 19-077, which was

passed some months later, on June 25, 2019. (DE 11 at 4.) Tang and Jen purchased

their property in the interim, after Ordinance 19-045 was introduced but before

Ordinance 19-077 was enacted. (They entered into their long-term leases, however,

before Ordinance 19-045 was ever proposed. (Compl. ¶¶ 189, 194).) The City claims

that Ordinance 19-045, though not passed, should have placed Plaintiffs on notice

that regulatory changes were in the offing. I am unconvinced. While plaintiffs are

charged with knowledge of the law, they are not required to take into account laws

that were never enacted. Indeed, it is easy to argue the contrary, i.e., that an investor

might have been encouraged by the tabling of Ordinance 19-045.

Finally, I am not convinced by Jersey City’s argument that Ordinance 15.137

should have put plaintiffs on notice that their businesses were contrary to the purpose

of the ordinance because it solely permitted short-term rentals as “an accessory use”

to principal residential uses. This is misleading. An “accessory use” is a use of a

property “implied as a matter of law as a right which accompanies the principal use.”

Shim v. Washington Twp. Planning Bd., 298 N.J. Super. 395, 401 (App. Div. 1997); see

also Zahn v. Board of Adj., 45 N.J. Super. 516, 521–22 (App. Div. 1957) (allowance of a

primary use “generally authorizes all uses normally accessory, auxiliary or incidental

thereto.”). Thus, when Ordinance 15.137 permitted short-term rentals as an accessory

use to principal residential uses, it was not permitting short-term rentals as

“accessory uses” in the colloquial sense of person a partial or occasional use of the

property, but rather it defined short-term rentals as being a method of use of the

property which was permitted as a right accompanying any right to use a property for

residential purposes.

at 124; Midnight Sessions, 945 F.2d at 676. Thus, “in instances in which a

state tribunal reasonably concluded that ‘the health, safety, morals, or general

welfare’ would be promoted by prohibiting particular contemplated uses of

land, this Court has upheld land-use regulations that destroyed or adversely

affected recognized real property interests.” Penn Central, 438 U.S. at 125. In

the uncommon cases where such regulations have been disallowed, a key

consideration has been that they appeared to shift burdens between private

parties without any obvious connection to public interests. Compare

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) (taking where the

government passed law prohibiting mining coal so as to cause subsidence to

surface owners because the purpose of the law was solely to benefit the surface

owners at the cost of the mining companies), with Keystone Bituminous Coal

Ass’n v. Duncan, 771 F.2d 707, 716 (3d Cir. 1985) (distinguishing Mahon on

nearly identical facts because the law in Keystone had the public purpose of

shoring up municipal tax bases and preserving land). Finally, “if the law at

issue ‘applies generally to a broad class of properties,’ a court is likely to find

that no taking has occurred.” Sutton v. Chanceford Twp., 186 F. Supp. 3d 342,

349 (M.D. Pa. 2016) (quoting Rogin, 616 F.2d at 690).

Ordinance 19-077 is a generally applicable public program seeking to

adjust the benefits and burdens of economic life in order to promote the

common good. It is aimed at increasing the long-term housing stock in Jersey

City and reducing nuisances. I find this factor cuts in favor of a finding that no

taking has occurred.

Plaintiffs make two arguments to the contrary.

First, they accuse Mayor Fulop of enacting Ordinance 19-077 for the

improper purpose of punishing Airbnb for being insufficiently forthcoming with

campaign donations. (DE 1-6 at 26; see also DE 10 at 24.) Takings law, of

course, must be understood in the context of our political system, which, for

better or worse, runs on campaign donations. See, e.g., McCormick v. United

States, 500 U.S. 257, 272 (1991) (rejecting claim of extortion where legislators

“act for the benefit of constituents or support legislation furthering the interest

of some of their constituents, shortly before or after campaign contributions are

solicited and received from those beneficiaries,” reasoning that such conduct

has not only “long been thought to be well within the law” but “also conduct

that in a very real sense is unavoidable so long as campaigns are financed by

private contributions or expenditures, as they have been from the beginning of

the Nation.”). Indeed, as Justice Kennedy has opined,

Favoritism and influence are not . . . avoidable in

representative politics. It is in the nature of an elected

representative to favor certain policies, and, by

necessary corollary, to favor the voters and

contributors who support those policies. It is well

understood that a substantial and legitimate reason, if

not the only reason, to cast a vote for, or to make a

contribution to, one candidate over another is that the

candidate will respond by producing those political

outcomes the supporter favors. Democracy is premised

on responsiveness.

Citizens United v. FEC, 558 U.S. 310, 359 (2010) (quoting McConnell v. FEC,

540 U.S. 93, 297 (2003)).13 Plaintiffs’ evidence, moreover, falls short of

persuasive proof of any corrupt quid pro quo, or, to be more precise,

withdrawal of a quid for lack of a quo. They note that Mayor Fulop called

Airbnb to complain that he had not received any donations, and tie that by

innuendo to the Mayor’s decision to enact the 2019 ordinance. But this

narrative ignores key facts. To begin with, Airbnb sent the Mayor a significant if

not munificent donation twelve days later. Even more significantly, the

Ordinance was enacted, not by the Mayor himself, but by a “veto-proof” 7-2

vote of the Jersey City Council. (Compl. Exh. 1.) Plaintiffs attribute no

untoward motives to those seven Council members.

13 Those cases, of course, arose in different legal contexts. I cite them only for

their observations about the role of campaign contributions. Individuals may give

financial support to politicians who support their agendas and withhold it from those

who support their rivals’ agendas.

Plaintiffs’ second argument is that Councilman James Solomon of the

Jersey City Council admitted that his purpose in passing Ordinance 19-077

was to benefit trade unions at plaintiffs’ expense. (DE 1-6 at 26; DE 10 at 24.)

Councilman Solomon stated, among other things, that he was a strong

supporter of trade unions. There is nothing wrong, of course, with a particular

politician favoring trade unions over others—or, of course, the opposite.

Councilman Solomon’s statements, moreover, took the form of identifying

classes of individual who, in his opinion, were being injured by the Airbnb’s

style of short-term leasing. He explained that he was in favor of the 2019

Ordinance because: (1) he doubted that Airbnb tourism was significantly

benefitting Jersey City, when overnight tourists were far more likely to be

visiting New York City; (2) he believed in attracting long-term rather than short-

term residents, because long-term residents would be more motivated to

contribute to the culture of the city and the improvement of the community;

and (3) he thought Airbnb had a negative impact on housing supply and would

increase long-term rental prices. Jersey City Special Council Meeting, Airbnb

June 25, 2019, https://www.youtube.com/watch?v=1aql4y5mRf8&t=30357s

at 8:20:00–8:27:10.14 Those statements clearly express a legitimate public

purpose unrelated to merely rewarding one private party at the expense of

another. And in any event, Councilman Solomon’s vote was but one of nine; he

was explaining his individual vote, not speaking for the Council.

I therefore find that this third Penn Central factor, the nature of the

government action, counsels strongly against finding a taking here.

Weighing the three factors of the Penn Central test, I conclude that the

Complaint fails to allege a valid claim that Ordinance 19-077 effected an

unconstitutional taking. I therefore GRANT the City’s motion insofar as it seeks

to dismiss the Takings claim.

14 As mentioned previously, this video was incorporated by reference in plaintiffs’

complaint. In re Asbestos Products Liability Litig., 822 F.3d 125, 134 n.7 (3d Cir.

2016).

c. Contracts Clause

Plaintiffs assert that Ordinance 19-077 violates the Contracts Clause of

the U.S. Constitution because it impairs vested long-term leases and short-

term rental bookings. (DE 1-6 at 27; DE 10 at 23–24.) Specifically, they claim

the Ordinance abrogates the 14 short-term contracts for the Nekrilovs, 10

short-term contracts for Tang and Jen, and 20 short-term contracts for Suen.

(DE 10 at 23.)15 They also assert that Ordinance 19-077 will force the

Nekrilovs, Tang and Jen to break their long-term leases, which will no longer

be affordable unless they can sublease those properties as short-term leases on

the Airbnb model. (Id. at 23–24.)

The Contracts Clause of Article I of the United States Constitution

provides that “[n]o State shall . . . pass any . . . Law impairing the Obligation of

Contracts.” U.S. Const. Art. I § 10. The clause is not, however, as broad as it

may seem. ACRA Turf Club, LLC v. Zanzuccki, 724 F. App’x 102, 107 (3d Cir.

2018). It does not prevent states from “exercising the police powers vested in

them ‘for the promotion of the common weal, or [that] are necessary for the

general good of the public,’ even though the contracts previously entered into

are affected.” Id. at 107. Put another way, citizens have no general power to

privately agree to exempt themselves from governmental authority. Thus, to

“harmoniz[e] the command of the Clause with the necessarily reserved

sovereign power of the states to provide for the welfare of their citizens,” United

Steel Paper & Forestry Rubber Mfg. Allied Indus. & Serv. Workers Int’l Union

AFL-CIO-CLC v. Virgin Islands, 842 F.3d 201, 210 (3d Cir. 2016), courts apply

the following three-part test to determine whether legislation violates the

Contracts Clause:

15 As previously noted in Section II.b.ii, supra, plaintiffs originally sought

compensation for all of their short-term rental bookings (DE 1-6 at 27), but withdrew

that claim except as to short-term rental bookings they entered into after June 25,

2019. They acknowledge that Ordinance 19-077 exempted most bookings entered into

before that date, (DE 10 at 23.)

[1] [W]hether the law has operated as a substantial

impairment of a contractual relationship; [2] whether

the government entity, in justification, had a

significant and legitimate public purpose behind the

regulation; and [3] whether the impairment is

reasonable and necessary to serve this important

public purposes.

ACRA Turf Club, 724 Fed. Appx. at 108. With respect to whether a law is

reasonable and necessary, courts generally defer to legislative judgment. Id.

(citing Energy Reserves Grp. v. Kan. Power & Light Co., 459 U.S. 400, 412–13

(1983)).

“To determine whether legislation has substantially impaired contract

rights, ‘[courts] ask whether legitimate expectations have been thwarted.’” Id.

(quoting United Steel, 842 F.3d at 210). “After identifying a plaintiff’s legitimate

expectations, a court then determines ‘whether the modification imposes an

obligation or liability that was unexpected at the time the parties entered into

the contract and relied on its terms.’” ACRA Turf Club, 2012 WL 2864402, 2012

U.S. Dist. LEXIS 96017 at *22; see also U.S. Trust. Co. of New York v. New

Jersey, 431 U.S. 1, 19 (1977) (substantial impairment where repeal of security

provision in contract exposed Port Authority’s general reserve fund to

depletion).

If I find substantial impairment, my inquiry then “‘turns to the means

and ends of the legislation’; namely, ‘whether the state law is drawn in an

appropriate and reasonable way to advance a significant and legitimate public

purpose . . . . such as the remedying of a broad and general social or economic

problem.’” ASAH v. N.J. Dep’t of Educ., 330 F. Supp. 3d 975, 1015 (D.N.J.

2018) (quoting Energy Reserves Grp, 459 U.S. at 411). Once such a legitimate

public purpose has been identified, “the next inquiry is whether the adjustment

of ‘the rights and responsibilities of contracting parties [is based] upon

reasonable conditions and [is] of a character appropriate to the public purpose

justifying [the legislation’s] adoption.” Id. at 1016 (quoting Energy Reserves

Grp., 459 U.S. at 412). Where the government is not a party to a contract,

courts “properly defer[] to legislative judgment as to the necessity and

reasonableness of the act.” Keystone Bituminous Coal Ass’n, 771 F.2d at 718.

I will dismiss plaintiffs’ Contract Clause claims. Even assuming they

have demonstrated substantial impairment of their contracts, plaintiffs have

failed to show that Jersey City lacked a legitimate public purpose in enacting

the Ordinance or that the Ordinance was not a reasonable adjustment of the

rights and responsibilities of the contracting parties. As noted in Section II.b.iii,

supra, I do not credit plaintiffs’ allegations that Jersey City officials passed the

Ordinance for the purpose of retribution against recalcitrant donors or solely to

serve trade unions. Plaintiffs simply have not provided adequate support for

that proposition. In contrast, the City’s professed reasons for enacting the

Ordinance, including increasing the availability of long-term housing for Jersey

City residents and reducing nuisance violations, are entitled to deference and

appear well supported. (Compl. Exh. 1 at 1–2.)

For instance, a legislator could reasonably believe that Airbnb reduces

long-term housing supply and as a result increases long-term housing costs.

The Nekrilovs held 17 leases which they made available solely for short-term

rentals, (See Appendix A); those 17 properties by definition became unavailable

for long-term residents of the City. The aggregate effect of numerous

individuals going into the short-term rental business16 could reasonably be

expected to substantially impact the housing supply in the City. Basic supply-

and-demand economic principles suggest that a reduction in supply, assuming

stable demand, should increase prices, thereby increasing housing costs for

Jersey City residents. An increase in the percentage of short-term rentals,

driven by the higher rents in comparison to long-term rentals (see Appendix A),

could be expected to exert upward pressure on rents generally, as landlords

seek to maximize profits. A fortiori, a reasonable legislator could think so. The

16 Plaintiffs do not include any allegations regarding how many short-term rental

operators there were in Jersey City at the time Ordinance 19-077 was adopted. They

did mention in their brief in support of an order to show cause that they believe it is

“potentially [in the] thousands.” (DE 1-6 at 16 n.6.)

City, considering these possibilities, was well within its authority to opt to limit

short-term rentals, thus prioritizing the wellbeing of its long-term residents

over plaintiffs’ business interests.

Furthermore, the City concluded that the presence of short-term rentals

could create “nuisance violations, which include, but are not limited to,

excessive noise, on-street parking, accumulation of trash, and diminished

public safety,” and thus, in addition to increasing long-term housing supply,

the presence of short-term rentals reduced the quality of life of Jersey City

residents. The City was thus permitted to conclude that Ordinance 19-077 was

required to “minimize potential deleterious effects of short-term rental

properties on other properties in the surrounding neighborhoods in which they

are located.” (Compl. Exh. 1 at 1–2.) The City was entitled to prioritize its

residents’ quality of life over the plaintiffs’ business.

Last, I find that Jersey City’s adjustment of the rights and

responsibilities of the parties is of a character appropriate to the public

purpose. Again, the City is entitled to deference in its decision, and in any

event it appears Ordinance 19-077 was well-designed to serve the City’s

legitimate purpose. The provision limiting short-term rentals to owner-occupied

residences serves the purposes of limiting the total number of short-term

rentals. At the same time, owners are likely to be more discerning when

deciding whether to permit a tenant to stay in their home as opposed to in a

remote property, so the limitation should serve the Ordinance’s goal of limiting

nuisances, diminished public safety, and excessive noise. In light of the

deference Jersey City is entitled to under the framework for evaluating

Contract Clause violations, the City clearly acted permissibly here.

On this motion to dismiss, I have credited the plaintiffs’ allegations, but

considered them in the context of the Ordinance itself and the public purposes

therefor. The motion to dismiss is GRANTED as to the plaintiffs’ Contract

Clause claim.

d. Substantive Due Process Clause

Plaintiffs further claim Ordinance 19-077 violates the Substantive Due

Process guarantees of the United States Constitution. (DE 22–24.) “When a

party lodges a Due Process challenge to a legislative action, as here, the act is

subject to rational-basis review and, to establish its legality, ‘the defendant

must demonstrate (1) the existence of a legitimate state interest that (2) could

be rationally furthered by the statute.’” ACRA Turf Club, 724 Fed. Appx. at 111.

“[O]nly the most egregious official conduct can be said to be ‘arbitrary in the

constitutional sense.’” UA Theatre Circuit v. Twp. of Warrington, 316 F.3d 392,

399 (3d Cir. 2003). “[E]xecutive action violates substantive due process only

when it shocks the conscience.” Id. at 399–400.

As explained regarding plaintiffs’ assertions under the Contracts Clause,

the City had legitimate interests in increasing the long-term housing supply

and reducing public nuisances. Ordinance 19-077 rationally furthers those

interests by removing short-term rentals, which reduced the long-term housing

supply and made public nuisances more likely. The Ordinance passes rational

basis review.

Plaintiffs assert that Mayor Fulop and the City Council passed the

Ordinance to punish Airbnb for its late campaign donations and to benefit

trade unions. (DE 10 at 24.) Plaintiffs do not substantiate these claims

sufficiently to demonstrate “egregious official conduct” as explained in Section

II.b.iii, supra. More to the point, the public purposes of the Ordinance were

stated by its proponents and are obvious on its face.

The motion to dismiss is GRANTED as to the plaintiffs’ Substantive Due

Process claims.

e. Procedural Due Process Clause

Finally, the Plaintiffs assert that Ordinance 19-077 violates their due

process rights by failing to provide a remedial procedure for the deprivation of

their property. (DE 10 at 24–25.) Procedural due process claims are subject to

a two-stage analysis: (1) are “the asserted individual interests . . . encompassed

within the fourteenth amendment’s protection of ‘life, liberty, or property?’” and

(2) do the procedures available provide a plaintiff whose interests are deprived

“due process of law?” Robb v. City of Philadelphia, 733 F.2d 286, 292 (3d Cir.

1984). Remedial procedures are constitutionally inadequate if they “contain a

defect so serious [as to] characterize the procedures as fundamentally unfair.”

Giuliani v. Springfield Twp., 238 F. Supp. 3d, 670, 690 (E.D. Pa. 2017).

“‘[A] state provides constitutionally adequate procedural due process

when it provides reasonable remedies to rectify a legal error by a local

administrative body.’” Giuliani v. Springfield Twp., 726 Fed. Appx. 118, 122 (3d

Cir. 2018). “Thus, ‘when a state affords a full judicial mechanism with which to

challenge the administrative decision in question,’ [it] provides adequate

procedural due process, whether or not the plaintiff avails himself or herself of

the provided appeal mechanism.” Id.; see also Custin v. Wirths, 2020 WL

1466352, 2020 U.S. Dist. LEXIS 52318 at *20 (D.N.J. Mar. 25, 2020); DeBlasio

v. Zoning Bd. Of Adjustment for Twp of West Amwell, 53 F.3d 592, 597 (3d Cir.

1995).

Plaintiffs complain that there is no provision in Ordinance 19-077 which

creates a remedial procedure for the deprivation of their property interests. (DE

10 at 24–25.) The model of procedural due process is a poor fit for a challenge

to the substance of a municipal ordinance of general applicability. But no

matter. As it happens, New Jersey, provides that courts may review New Jersey

municipal ordinances pursuant to Article VI, Section V, paragraph 4 of the New

Jersey Constitution. Hills Development Company v. Bernards, 103 N.J. 1, 44–

45 (N.J. 1986). Furthermore, any fines issued by Jersey City municipal courts

pursuant to Ordinance 19-077 could be appealed to the New Jersey Law

Division under New Jersey Court Rules 7:13-1 and 3:23-1. State v. Diaz, 2008

WL 4345847, 2008 N.J. Super. Unpub. LEXIS 244 at *3 (N.J. App. Div. Sept.

25, 2008). There are therefore several adequate procedural methods available

to the plaintiffs.

The motion to dismiss is therefore GRANTED as to plaintiff’s Procedural

Due Process claim.

III. Preliminary Injunction and Temporary Restraining Order

Because I have granted Jersey City’s motion to dismiss as to all of

plaintiffs’ counts, I deny plaintiffs’ motions for a preliminary injunction and

temporary restraining order as moot. See Argen v. Kessler, 2018 WL 4676046,

2018 U.S. Dist. LEXIS 168238 at *32 (D.N.J. Sept. 28, 2018). I have examined

the complaint, and found that it fails to state a claim. Even as supplemented

by the arguments in favor of the preliminary injunction motion, it fails to set

forth an adequate showing of likelihood of success on the merits.

IV. Conclusion

For the reasons set forth above, I will grant Plaintiffs’ motion (DE 6) to

dismiss the complaint. I further deny plaintiffs’ motion for a preliminary

injunction and temporary restraining order.

An appropriate order follows.

Dated: March 24, 2021

/s/ Kevin McNulty

____________________________________

Kevin McNulty

United States District Judge

APPENDIX A

Gennadiy and Eugene Nekrilov:

Property Address Property Monthly Cost Monthly Monthly

Type Income (Short Income

Term Rental) (Long Term

Rental)

385 Monmouth Lease $4,800 $8,389.00

St. (Compl. ¶ 111.)

42 Mercer St. Lease $1,550 $3,045

(Compl. ¶ 112)

20 Poplar St. Lease $2,200 $5,700

(Compl. ¶ 113)

99 Court House Lease $2,700 $5,640

Pl. (Compl. ¶ 114.)

231 Bay St. Lease $1,250 $2,200

(Compl. ¶ 115)

851 Bergen Ave Lease $7,000 $12,500

(Compl. 145)

16 Poplar St. Lease $1,850 $4,370

(Compl. ¶ 146)

35 Alan Terrace Lease $1,650 $2,483

(Compl. ¶ 147)

304 2nd Street Lease $4,400 $8,117

(Compl. ¶ 148)

520 Manila Lease $3,000 $6,115

Avenue (Compl. ¶

149)

70 Astor Place Lease $2,000 $4,393

(Compl. ¶ 150)

110 Prospect Lease $2,250 $4,930

Street (Compl. ¶

151)

434 West Side Lease $1,600 $3,955

Avenue (Compl. ¶

152)

160 South St. Owned Purchase $9,500 $3,800

(Compl. 121) cost:

$489,000 +

13,570.33

(closing

costs) +

$60,000

(renovation

costs);

$2,500

mortgage

72 Virginia Owned Purchase $5,183 $1,800

Avenue (Compl. ¶ cost:

132) $310,000 +

$10,193.66

(closing

costs) +

$40,000

(renovation

costs);

$1,725

mortgage

Kwan Ho Tang and Jayu Jen

Property Address Property Monthly Monthly Monthly

Type Cost Income (Short Income (Long

Term Rental) Term Rental)

162 Steuben St. Lease $2,700 $4,500

Apt. 1 (Compl. ¶

189)

162 Steuben St. Lease $3,000 $4,500

Apt. 3 (Compl. ¶

194)

227 Bay St. Apt. Owned Purchase $4,500 $2,600

1B cost:

$570,500 +

16,502

(closing costs)

+ $32,574

(renovation

costs) +

$8,513

(furnishing

costs); $3,300

mortgage

Alan Suen

Property Property Type Monthly Cost Monthly Monthly

Address Income (Short Income (Long

Term Rental) Term Rental)

427 Liberty Owned Purchase $ 35,657 $10,000 total

Ave (Compl. ¶ cost: (2017) between the

251) $428,500 + $ 169,835.72 two

$10,195 (2018) properties

(closing costs) $176,970.21

+ $383,000 (2019)

(renovation

costs) + 40k

(furnishing

costs); $2,500

mortgage

212 Hopkins Owned $586,734.68 $17,626.71 $10,000 total

Ave (Compl. ¶ + $13,307.87 (2017) between the

255) (closing $82,078.57 two

costs); (2018) properties

mortgage $185,319.04

$3,500 (2019)