Petition for Writ of Certiorari — City of New York v. Seawall Associates

as, Supreme Court, U.S.

FILED

89-388 SEP 5 1989

No. 88-

JOSEPH F. SPANIOL, JR.

CLERK

IN THE

Supreme Court of the United States

October Term, 1989

THE CITY OF NEW YORK, et al,

Petitioners,

against

SEAWALL ASSOCIATES, et al,

Respondents.

Petition for a Writ of Certiorari to the New York State

Court of Appeals

PETER L. ZIMROTH

Corporation Counsel of The City of New York

Attorney for Petitioners

100 Church Street

New York, NY 10007

(212) 566-6037 or 4338

LEONARD J.-KOERNER,*

ELIZABETH DVORKIN,

of Counsel. ~

*Counsel of Record

Dated: September 1, 1989

THE REPORTER COMPANY, INC., 30 Vesey St, New York, NY 10007—1989

NYC 212-732-6978 Westchester 914-681-1322 Long Island 516-222-0221

(7903)

i

Questions Presented

After finding that the loss of the 52,000 units of single

room occupancy (“SRO”) housing that still exist in New

York City would substantially contribute to homelessness,

the New York City Council enacted an emergency statute.

The law imposes a five year ban on demolition or conver-

sion of single room occupancy housing and a five year ban

on the warehousing of vacant rooms. It also contains a

hardship provision which ensures that owners will make a

reasonable rate of return on their property. The following

questions are presented:

1. Does the statute result in a physical occupation of the

subject properties violative of the Taking Clause of the

Fifth Amendment?

2. Is the statute invalid on its face as a regulatory taking

of property?

i

Parties

Petitioners, the defendants below, are the City of New

York, Edward I: Koch in his capacity as Mayor of the City

of New York, Abraham Biderman in his capacity as Com-

missioner of the Department of Housing Preservation and

Deveiopment of the City of New York! and Charles Smith

in his capacity as Commissioner of the Department of

Buildings of the City of New York.

Also petitioners, but not joining this petition for cer-

tiorari, are the Coalition for the Homeless and five individ-

uals, Richard Wilkerson, Edgar Ferrell, Frank Alicia, Tom

Williams, Danny Sogliuzzo and Nicholas Tallerico, who are

tenants in two of the SRO buildings owned by plaintiff

Seawall Associates. The Coalition and the five tenants

intervened as defendants below.

Respondents, plaintiffs below, are Seawall Associates,

459 West 43rd Street Corporation, Eastern Pork Products

Company, Durst Partners, Sutton East Associates—86,

Channel Club and Anbe Realty Co.

1Former Commissioner Paul Crotty was originally named in the

caption.

ili

Table of Contents.

Page

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rs eaei sche sv isaacdsdacasdes 1

EO eats kdeekebateacacee 2

EET Tee eT ee Tee ee 2

SEEM soe vs csc scccasncccscess 2

Reasons for Granting the Writ.................... 10

1. The Majority’s Extraordinary Extension Of The

Physical Taking Doctrine To Include A Tempo-

rary Law Regulating The Landlord-Tenant

Relationship Is Without Support In This Court’s

eee ele Me ae 10

2. The Majority Opinion Disregarded This Court’s

Standard For Determining When A Statute

Effects A Regulatory Taking On Its Face .... 14

3. The Majority Opinion Ignored This Court's

Decisions That Have Upheld Land Use Regula-

tions Similar To Local Law 9............... i7

iv

Page

4. The Majority Opinion Disregarded The Consid-

ered Legislative Judgment That Local Law 9 Is’

Necessary To Prevent Homelessness And To

Put Available Housing To Use.............. 20

5. This Court Has Jurisdiction To Hear This Case 22

Conclusion ene SOL Gs AKA Cla aa teehee 23

Vv

TABLE OF AUTHORITIES.

CASES:

Agins v. Tiburon, 442 U.S. 255 (1980)

Armstrong v. United States, 364 U.S. 40, 49 (1960) 19

Benson Realty Corp. v. Beame, 50 N.Y.2d 994, 409

N.E.2d 948 (1980), appeal dismissed, 449 U.S.

SRI 5 05 Ue aAcddveceunhasvs cates 12, 15

Block v. Hirsh, 256 U.S. 135 (1921) .............. 11

Bowles v. Willingham, 321 U.S 503 (1944)........ 11

Callahan v. Fresh Pond Shopping Center, Inc., 388

Mass. 1051, 446 N.E.2d 1060, appeal dis-

missed, 464 U.S. 875 (1983). ............ 11, 12

Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)

REE ee OPE ET ere me rT e 17, 18

First English Evangelical Lutheran Church of Glen-

dale v. County of Los Angeles, 482 U.S. 304

2 | ery eee MERE REANZRDAS Pe Sees eas 13

Goldblatt v. Hempstead, 369 U.S. 590 (1962) ...... 18

Hadacheck v. Sebastian, 239 U.S. 394 (1915) ...... 17

Keystone Bituminous Coal Association v. DeBene-

dictis, 480 U.S. 7 (1987).... 7,

14-15, 16, 18, 19

Loretto v. Teleprompter Manhattan CATV Corp., 458

U.S. 419 (1982)

“eee eee eeeeeeee

8, 11, 12-13, 18

vi

Page

Michigan v. Long, 463 U.S. 1032 (1983)

Na a eee eae a reg ar te ae 10, 22

New York v. Class, 475 U.S. 106 (1986). .......... 22

Nollan v. California Coastal Commission, 483 U.S.

Se as ea ce ail 7, 14, 15, 18, 20

Penn Central Transportation Co. v. New York City,

438 U.S. 104 (1978). ......... 7, 16, 17, 18, 19

Pennell v. City of San Jose, 485 U.S. 1 (1988) 8, 11, 15,

21

United States v. Central Eureka Mining Co., 357 U.S.

nn a te 14

United States v. Salerno, 481 U.S. 739 (1987)-

a Callas gs eek wen eke ok es eee ens 14, 16

STATUTES:

I tC red a er art 2

New YorK City ADMINISTRATIVE CODE

Sa rl as See er a y A

Ee ee NG eA

Se TSR er Pe Sgn crear 5

I al Nl eae nee

| SEEGER T CRE ECT ETT CTT Cry Tere 5

No. 89-

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1989

THE CITY OF NEW York, et al.,

Petitioners,

against

SEAWALL ASSOCIATES, et al,

Respondents.

Petition for a Writ of Certiorari to the New York State

Court of Appeals

The petitioners, the City of New York, et al, respectfully

pray that a Writ of Certiorari issue to review the judgment

of the New York State Court of Appeals entered on July 6,

1989 which declared unconstitutional a statute enacted by

the New York City Council.

Opinions Below

The opinion of the New York State Court of Appeals has

not yet been reported. It is reprinted in the Appendix at

page A-1. The opinion of the New York State Supreme

Court, Appellate Division, First Department is reported at

142 A.D.2d 72, 534 N.Y.S.2d 958. A copy is reprinted in

the Appendix at page A-107. The New York State Supreme

Court opinion is reported at 138 Misc.2d 96, 523 N.Y.S.2d

353. A copy is reprinted in the Appendix at page A-165.

2

Jurisdiction

The judgment of the New York State Court of Appeals

declaring New York City’s Local Law 9 unconstitutional

on the ground that it takes property without compensation

in violation of the Fifth Amendment was entered on July 6,

1989. The jurisdiction of this Court is invoked under 28

U.S.C. §1257.

Statutory Provisions

Local Law 9 is codified in New York City Administra-

tive Code §§ 27-198.2, 27-198.3, 27-2150-53. The law is

printed in the Appendix at page A-253.

Statement of the Case

(1)

This appeal raises the question whether New York City’s

Local Law 9, which bars demolition or conversion of single

room occupancy (“SRO”)! housing and forbids the

warehousing of vacant units for a five year period, consti-

tutes a taking on its face under the Fifth Amendment. Local

Law 9 was enacted after the New York City Council found

that the loss of SRO housing constituted “a serious public

emergency” (42).2

SRO’s have long provided inexpensive housing for New

York City residents on the fringe of society. SRO tenants

are poor. Those who work full time have a median income

1SRO’s are living units without a private bathroom or kitchen

(176).

2Numbers in parentheses refer to the Record on Appeal filed in the

Court of Appeals. Numbers preceded by “SR” refer to the Supplemental!

Record in the Court of Appeals. Numbers preceded by “A” refer to the

Appendix to the Petition for Certiorari.

3

of $14,000. One third of SRO tenants receive public assis-

tance or disability benefits (177). Many have other prob-

lems fending for themselves. Almost 30% are over 60 years

old (177). Over 11% have been hospitalized for mental

illness (SR 594).

SRO’s have been developed in New York City since the

turn of the century. Landlords have found them a profitable

way to break up larger units and earn more rent from the

same space. They used SRO’s to attract poor tenants who

could not afford better housing (684-85).

The number of SRO’s has declined significantly since

1960 due to the rise in value of New York City real estate

(692). Many landlords neglected their buildings and

harassed tenants to force them to move so that the builuings

could be razed or converted to other uses (221, 668). City

policy reflected the belief that SRO’s should be discouraged

as substandard housing (177). By 1986, only 52,000 SRO

units remained in New York City (447).

City policy changed in the 1980's to recognize that

SRO’s are a vital and irreplaceable part of the housing

stock. The City acted to preserve SRO’s because many of

the former SRO tenants became homeless. New York City

is facing a homeless crisis; the City takes in more homeless

people at its public shelters than at any time since the Great

Depression (178-79). More than one-third of the people

living in New York City shelters for the homeless last lived

in an SRO (200).

In 1985, the New York City Council determined that a

“serious public emergency” existed caused by the loss of

SRO’s. It enacted the first of three laws barring destruction

or alteration of SRO’s and commissioned a study of SRO

housing. The second law added a ban on warehousing

4

vacant units because many owners were keeping units

vacant in anticipation of a future conversion or demolition

(178). The vacancy rate for SRO’s, 12%, stood in sharp

contrast to the 2% vacancy rate for residential apartment

buildings (178).

The SRO study (“the Blackburn Report”) recommended

a major effort by the City to preserve SRO housing (647).

The Blackburn Report’s 140 pages detail the history of

SRO’s in New York City, analyze the need for SRO housing

and the current condition of SRO owners and tenants, and

contain extensive recommendations for preservation of

SRO’s. In response, the City Council enacted Local Law 9.

The law was based on findings of fact by the City Council

(A-315-17):

The Council finds and declares that a serious public

emergency . . . has been created by the loss of single

room occupancy dwelling units housing lower.

income persons; . . . that there is evidence to con-

clude that the ordinary operation of the real estate

market in this city will result in further reduction of

such units and that units which have been lost will

not be replaced; that many of the occupants who

have been or will be displaced . . . are elderly and

infirm persons of low income... that a considerable

number of such persons have become a part of a

growing homeless population and that, absent legis-

lative intervention in this process, others will follow.

(2)

Local Law 9

Local Law 9 preserves SRO housing while allowing

owners to put their SRO’s to other uses, as long as the lost

5

units will be replaced. The law establishes a five year

moratorium on demolition or conversion of most SRO

units. Admin. Code §27-198.2[a], [c]. SRO’s subject to the

law may not be warehoused; owners must make all SRO’s

habitable and rent them to bona fide tenants. Admin. Code

§27-2151[a]. These provisions carry civil penalties. Admin.

Code §27-198.2[g], §27-2152.

The law establishes three ways for owners who wouid

otherwise be subject to the law to demolish or convert their

buildings and avoid the anti-warehousing provisions.

Owners may be eligible for a complete or partial hardship

exemption, they may buy out their units or they may

replace their units.

The hardship provision, Admin. Code §27-198.2[d][4]

(b), was copied from the New York rent control law. It

applies if “there is no reasonable possibility” owners will ,

make “a reasonable rate of return” on their property. Rea-

sonable raie of return is defined as 8 !/2% of the building’s

assessed value as an SRO. Owners who qualify under the

hardship provision and wish to destroy or convert their

buildings may do so with a complete or partial exemption

from the buy out or replacement provisions.

The replacemént provision, Admin. Code §27-198.2[d]

[4](a)(Gi), allows owners to obtain a permit to demolish or

convert SRO units if they create new units. The replace-

ment units would be owned or operated by a not-for-profit

corporation.

As an alternative, owners can pay $45,000 a unit to the

SRO housing development fund company. Admin. Code

§§27-198.2[d][4\(aXi), 27-198.2[h]. The money will be

used to preserve, acquire and develop low and moderate

6

income housing (182).$45,000 represents the cost of

acquiring and rehabilitating an existing SRO unit (182).

Tenants whose buildings may be converted or demol-

ished are protected by the law. If a building is more than ©

50% occupied, replacement housing must be created. In

this way, even a temporary reduction in the housing stock

can be avoided. The law also requires owners seeking a

replacement or buy out exemption to offer their tenants an

opportunity to relocate to a comparable unit at a compara-

ble rent in the same borough. Admin. Code §27-198.3.

(3)

Proceedings Before the Trial Court

In Seawall Associates v. City of New York, the plaintiffs

sought a preliminary injunction against enforcement of

Local Law 9. They argued, among other things, that Local

Law 9 was invalid as a taking under the Fifth Amendment

(17-34).

Without notice to the parties, the trial court converted the

motion for a preliminary injunction into a motion for sum-

mary judgment (A-182). The Court granted the plaintiffs

summary judgment, declared Local Law 9 invalid and

enjoined enforcement of the law (A-250-51).

The Court reasoned that the law effected a taking

because it diminished the value of SRO properties (A-243).

The Court also held that the anti-warehousing provisions

denied plaintiffs due process because they destroyed the

properties’ economic value (A-219-20, SR 542).

7

(4)

The Appellate Division Decision

Citing the principles set forth by this Court in Nollan v.

California Coastal Commission, 483 U.S. 825 (1987); Key-

stone Bituminous Coal Association v. DeBenedictis, 480

U.S. 420 (1987); Agins v. Tiburon, 442 U.S. 255 (1980);

and Penn Central Transportation Co. v. New York City, 438

U.S. 104 (1978), the Appellate Division unanimously

declared Local Law 9 constitutional in its entirety (A-158). |

The Court found that the law substantially advanced a

legitimate state interest in preventing SRO-tenants from

becoming homeless (A-143-44, 152). The Court referred to

the Blackburn Report, which had recommended that the

City preserve SRO’s because SRO’s house a predominantly

poor population, who are frequently elderly and mentally or

physically handicapped with limited incomes (A-152). The

Appellate Division also upheld the validity of the anti-

warehousing provision of the law because it is “designed to

meet an immediate and pressing exigency” even if its effect

will be to require that a property owner remain in the

housing business (A-155).

The Court found that Local Law 9 did not deny plaintiffs

economically viable use of their property because its hard-

ship provision ensures that their properties retain value.

The Court held that the law did not work a taking merely

because it restricted owners from making the most profita-

ble use of their property (A-149-51).

8

(5)

The Court of Appeals Decision

The Court of Appeals reversed, declaring Local Law 9

unconstitutional on the ground that it takes property in

violation of the Fifth Amendment. Focusing on the anti-

warehousing provision, the Court found, citing Loretto v.

Teleprompter Manhattan CATV Corp. 458 U.S. 419

(1982), that the law constituted a physical taking of prop-

erty because it deprived owners of the right to exclude

others (A-13-14). In so holding, the Court noted that “the

Supreme Court has not passed on the specific issue of

whether the loss of possessory interests, including the right

to exclude, resulting from tenancies coerced by the govern-

ment would constitute a per se physical taking” (A-21). The

Court distinguished decisions of the Supreme Court and the

~ New York Court of Appeals which have consistently

upheld rent control statutes on the ground that the decisions

do not involve forcing property owners to rent their proper-

ties to strangers (A-23-26).

The Court stated that the law also effected a regulatory

taking. The Court found that the law deprived owners of

economically viable use of their property because it prohib-

ited owners from redeveloping their properties (A-33-39).

The Court also found that the law lacked a substantial

relationship to the purpose of preventing homelessness

(A-44-52).

In dissent, Judge Bellacosa and Chief Judge Wachtler

criticized the majority for ignoring the fact that this was a

facial challenge to the law. The dissent argued, relying on

this Court’s decision in Pennell v. City of San Jose, 485 U.S.

1 (1988), that a statute should not be struck down as

facially unconstitutional although it may deprive some

9

owners of economically viable use of their property

(A-84-86). It noted that (A-71-72):

Research reveals no cases in which the Supreme

Court or our Court have used the regulatory taking

theory to undo a legislative act on a facial attack.

Also, no precedents in the orbit of this case have

previously ventured into the per se taking universe to

declare a legislative act facially unconstitutional.

The dissent rejected the physical taking argument

because the law was temporary and because it was similar

to rent control in regulating the landlord-tenant relation-

ship (A-91-92). The dissenters also rejected the regulatory

taking theory. They would find that the law’s hardship

provision “guarantees a fair, minimum return” (A-98). The

- dissent reviewed the history of the City’s policy toward

SRO’s and its effect on the stock of affordable housing

(A-74-75). It found “self-evident” the established relation-

ship between the law and its purpose of preventing more

homelessness among SRO tenants (A-96-97):

[Pjreserving SRO housing stock and stanching the

growing ranks of the City’s shelter-less population is

a legitimate governmental interest of the highest,

most critical order. The SRO moratorium applies a

tourniquet to the loss of this part of the City’s hous-

ing stock and substantially advances the City Coun-

cil’s expressed legislative interest of preserving these

sheltering units and avoiding a further spillage of

homeless into the City’s street population.

10

Reasons for Granting the Writ

This case raises important questions regarding a munici-

pality’s ability to regulate land use to halt the spread of

homelessness among its poorer citizens without effecting a

taking of property. As the dissent in the Court of Appeals

pointedly noted, the majority’s decision that New York

City's Local Law 9 constitutes a physical taking is without

precedent. On both the physical taking and regulatory tak-

ing grounds, the decision below is inconsistent with this

Court’s decisions on land use regulation. Finally, the Court

of Appeals erred in sustaining a facial attack to the statute

without having any facts in the record to support a conclu-

sion that any property owner had been unfairly affected and

had been unable to obtain relief under the statute’s hardship

provision.

This Court has jurisdiction to hear this case because, as is

discussed infra at 22, the Court of Appeals majority did not

not rest its decision on an adequate and independent state

ground. See Michigan v. Long, 463 U.S. 1032, 1037-44

(1983). The majority opinion held, based on a misreading

of federal constitutional law, that Local Law 9 constitutes a

taking of property in violation of the Fifth Amendment.

1. The Majority’s Extraordinary Extension Of The Physical

Taking Doctrine To Include A Temporary Law Regulating

The Landlord-Tenant Relationship Is Without Support In

This Court’s Cases.

The majority’s application of the physical taking doc-

trine to a law regulating the landlord-tenant relationship is

unprecedented. This Court has never found that a law that

prevents landlords from excluding residential tenants from

rental units constitutes a physical taking.

1]

The majority below held that Local Law 9 effects a

physical taking because the anti-warehousing provision,

when applied to vacant units, requires creation of a tenancy

(A-21). In so ruling, the Court of Appeals ignored this

Court’s repeated adherence to the rule that landlord-tenant

regulations do not effect a taking per se. In Pennell v. City of

San Jose, 485 U.S. 1, 108 S. Ct. 849 (1989), this Court

reaffirmed that such statutes are a proper exercise of the

police powers:

We stated in Loretto v. Teleprompter Manhattan

CATV Corp. that we have “consistently affirmed

that States have broad power to regulate housing

conditions in general and the landlord-tenant rela-

tionship in particular without paying compensation

for all economic injuries that such regulation

entails.” And in FCC v. Florida Power Corp. we

stated that “statutes regulating the economic rela-

tions of landlords and tenants are not per se takings.”

108 S. Ct. at 857 n.6 (citations omitted).

In Loretto v. Teleprompter Manhattan CATV Corp., 458

U.S. 419, 426 (1982), this Court held that a “permanent

physical occupation” of land is per se a taking. This Court

has declined, however, to find that laws regulating tenan-

cies constitute a “permanent physical occupation.” See Pen-

nell, 108 S. Ct. at 857 n. 5 (1989) (challenge to rent control

law as a physical taking rejected as not ripe). Indeed, this

Court has repeatedly reaffirmed the validity of laws that

restrict landlords’ ability to determine whether their resi-

dential properties will be rented. See Bowles v. Willingham,

321 U.S. 503 (1944) (upholding rent control); Block v.

Hirsh, 256 U.S. 135 (1921) (same); Callahan v. Fresh Pond

Shopping Center, Inc., 388 Mass. 1051, 446 N.E.2d 1060,

appeal dismissed, 464 U.S. 875 (1983) (upholding rent

control statute that effectively eliminates right to evict

12

tenant); Benson Realty Corp. v. Beame, 50 N.Y.2d 994, 409

N.E.2d 948 (1980), appeal dismissed, 449 U.S. 1119

(1981) (same).

Under rent control, as with Local Law 9, owners lose

their right to exclude others from their properties. Owners

give up the right to eliminate an existing tenancy, even at

the end of a lease, thus eliminating the owners’ right to

exclude the tenants from the building. See, e.g., Benson v.

Beame; Callahan v. Fresh Pond Shopping Center, Inc.

Moreover, the practical effect of rent control is to require

the creation of new tenancies when existing tenants die or

move out. Landlords who cannot afford to maintain a

building without rental income will not be able to obtain

permission to raise rents for existing tenants if rentable

units are vacant because the landlord chooses to keep them

off the market. See New York City Administrative Code

§26-511 [c] (6). Thus, rent control statutes require that

properties be occupied without effecting a physical taking

of the property.

Even if this Court had not established that laws regulat-

ing landlords and tenants do not constitute a taking, the

anti-warehousing provisions would be constitutional. In

, Loretto this Court held that a law requiring owners to allow

cable companies to install cable equipment on their rental

buildings constituted a physical taking. Yet this Court care-

fury hypothesized and distinguished a law similar to Local

Law 9. A law requiring landlords to install cable television

for their tenants would not necessarily constitute a physical

taking, this Court stated, even though the landlord would

have to bring cable apparatus into the building. The fact

that the landlord would own, select and install the cable

was sufficient to take it out of the realm of a physical

taking. Loretto, 458 U. S. at 440 n.19.

fa anc Tie tay Aina nastiest seas

13

The anti-warehousing provision at issue here is similar to

the law hypothesized in Loretto. The law does not appropri-

ate the SRO units. It requires, instead, that owners rent out

their units to any bona fide tenant. Because owners retain

the right to choose their tenants, there is no physical taking.

See also Loretto v. Teleprompter CATV, 53 N.Y.2d 124, 159

n.2, 423 N.E.2d 320, 338 n2 (1981) (Cooke., C.J,

dissenting).

The Court of Appeals’ application of the doctrine of

physical taking to Local Law 9 was also unwarranted

because the law i is not permanent. As this Court explained

in Loretto, a physical taking is a permanent taking: “The

permanence and absolute exclusivity of a physical occupa-

tion distinguish it from temporary limitations on the right to

exclude.” Loretto, 458 U. S. at 435 n.12.

Local Law 9 provides for a five year limit on its restric-

tions. The law can be extended for further five year periods

only if the New York City Council finds that the “serious

public emergency” that led to enactment of the law con-

tinues to exist (A-312 §7).

The Court of Appeals accepted that the law is temporary

(A-27), but mistakenly read this Court’s decision in First

English Evangelical Lutheran Church of Glendale v. County

of Los Angeles, 482'U.S. 304 (1987), as holding that physi-

cal takings could be temporary. This expansion of the

doctrine of physical taking is unwarranted.

In First Lutheran Church, this Court held that damages

could be assessed if a regulatory taking occurred. This

Court did not hold that a physical taking could be tempo-

rary. First Lutheran Church did not even involve a physical

taking. 482 U.S. at 310. Thus, First Lutheran Church did

not extend the notion of a temporary taking to a physical

I

taking which this Court has defined, in part, by the perma-

nence of the physical occupation. See Nollan v. California

Coastal Commission, 483 U.S. 825, 832 (1987); Lorette,

458 U.S. at 427-35.

Finally, the Court below had no basis for its holding that

the provisions of Local Law 9 that bar demolition or con-

version of SRO housing effect a physical occupation of

property. In the absence of a physical entry, there cannot be

a “physical occupation.” See Nollan, 483 U.S. at 831-32;

Loretto, 458 U.S. at 435-36; United States v. Central Eureka

Mining Co., 357 U.S. 155 (1958).

In sum, the majority’s application of the doctrine of

physical taking to Local Law 9 had no basis in this Court’s

cases. Because the law is similar to rent control in regulat-

ing landlord-ienant relationships and because it is tempo-

rary in duration, it does not effect a physical taking.

2. The Majority Opinion Disregarded This Court’s Standard

For Determining When A Statute Effects A Regulatory Tak-

ing On Its Face.

To succeed in a facial challenge to a law’s constitu-

tionality, the plaintiffs must show that “no set of circum-

stances exists under which the Act would be valid.” United

States v. Salerno, 481 U.S. 739, 745 (1987). The majority

below ignored this standard and held that because some

aspects of Local Law 9 are improper in some circum-

stances, the law is facially invalid. The majority’s applica-

tion of an overbreadth analysis has no basis in takings

cases.

Moreover, the majority ignored this Court’s warning that

facial takings challenges are especially disfavored. See Pen-

neil, 108 S. Ct. at 856-57; Keystone Bituminous Coal Ass'n

15

v. DeBenedictis, 480 U.S. 470, 494 (1987). In Pennell this

Court explained:

Given the “essentially ad hoc, factual inquir[y]”

involved in the takings analysis, we have found it

particularly important in takings cases to adhere to

our admonition that “the constitutionality of statutes

ought not be decided except in an actual factual

setting that makes such a decision necessary” (cita-

tions omitted) 108 S. Ct. at 856. >

The Court of Appeals deemed Local Law 9 improper in all

circumstances without ever engaging in the “essentially ad

hoc factual inquiry” that determines a takings analysis.

This Court has held that a statute “does not effect a

taking if it ‘substantially advance[s] legitimate state inter-

ests’ and does not ‘den[y] an owner economically viable use

of his land.’” Nollan v. California Coastal Comm'n, 483

U.S. 825, 834 (1987); Keystone,.480 U.S. at 485. Local

Law 9 satisfies these tests on its face.

Local Law 9 contains a hardship standard that ensures

the properties it regulates remain economically viable. The

law provides that if owners cannot earn 8 '/2% on their

buildings’ assessed value as an SRO, they are exempted

from all portions of the law, including the anti-warehousing

provisions. Administrative Code §§27-198.2[d][4\(b),

27-2151[b][3]. The hardship standard ensures that all regu-

lated properties have at least one economically productive

use—the use they have always been put to as an SRO. This

hardship standard was derived from the New York rent

control law, which has been sustained against constitu-

tional challenge. Benson Realty Corp. v. Beame, 50 N.Y.2d

994, 409 N.E.2d 948 (1980), appeal dismissed, 449 U.S.

1119 (1981).

16

If an SRO owner anticipates that the law will eliminate

his or her property’s economic viability, the owner may

apply for a hardship exemption, just as an owner may apply

for hardship relief from 2 myriad of land use restrictions

including zoning regulations, rent control and New York

City’s Landmarks Law. Owners dissatisfied with the

administrative process may challenge the law as applied to

their property. A reviewing court can then analyze the

owner's “reasonable investment backed expectations” and

perform the “essentially ad hoc factual” inquiry into such

factors as how much an owner paid for the property and

with what expectations. See, e.g., Penn Central Transp. Co. v.

New York City, 438 U.S. 104, 124 (1978).3

This Court has never held, however, that a law may be

struck down as facially invalid because it may effect a

taking as applied to some owners. To the contrary, as long

as it is constitutional to apply the law to some owners, the

law is facially valid. See Salerno, 481 U.S. at 745. Thus, for

example, in Keystone this Court needed to look no further

than the plaintiffs’ own properties to determine that the law

did not deprive all owners of economically viable use of

their property. 480 U.S. at 496.

Instead of analyzing whether regulated SRO’s retain eco-

nomic value, the majority struck down the law because it

depresses the value of SRO’s (A-36). It is well established

3If plaintiffs challenged the law as applied to them, petitioners

could dispute the majority’s view that Local Law 9 effects a taking as

applied to owners who intend to develop their property (A-30). For

instance, Seawall plans to assemble a city block in midtown Manhattan

to build an office building (276). Because the trial court granted sum-

mary judgment without notice, petitioners never had the opportunity to

offer evidence tending to show that Seawall’s property will retain

economic value, and indeed Seawall will still be able to make a profit,

after complying with the law’s replacement or buy out provisions.

a A cc 2a st a

17

that a mere diminution in the value of property is insuffi-

cient to prove a taking. Penn Central, 438 U.S. at 131;

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

diminution in value); Hadacheck v. Sebastian, 239 U.S. 394

(1915) (92.5% diminution in value). Instead, the issue is

whether SRO properties retain economic viability, a ques-

tion that can best be resolved in a challenge to the law as

applied to particular properties. See Pennell, 108 S.°Ct. at

856.

The majority’s misconception of this Court’s standard for

determining whether a statute effects a taking is exem-

plified by its decision to analyze whether the hardship

provision saves a statute it had already determined to be

unconstitutional (A-53). In performing a taking analysis,

this Court has always analyzed statutes as a whole. For

instance, in Penn Central this Court considered the avail-

ability of hardship relief as part of determining whether the

Landmarks Law left the regulated property economically

viable. 438 U.S. at 136-38 This Court has never analyzed

a law by isolating particular requirements, determining

whether they effect a taking and then asking whether the

taking had been sufficiently mitigated by another provision.

The majority’s approach is inconsistent with this Court’s

takings cases.

3. The Majority Opinion Ignored This Court’s Decisions That

Have Upheld Land Use Regulations Similar To Local Law 9.

The majority held that the law denied owners economi-

cally viable use of their property because it eliminates the

right to develop SRO’s (A-35). This was factually inaccu-

rate; the law’s replacement and buy out provisions enable

owners to develop their properties while alleviating the

harm their development does to the people of New York

City.

18

Even if the !aw banned development, however, it would

not mean that Local Law 9 effects a taking. A law may

limit how property is used without taking property. See

Keystone, 480 U.S. at 491 (ban on mining coal support

estate); Goldblatt v. Hempstead, 369 U. S. 590, 592 (1962)

(ban on using gravel pit as quarry). {ndeed, ordinary zoning

would hardly be possible if this were not the case. Land

zoned for single family homes may not be developed for

other uses. It has been settled as long ago as Euclid v.

Ambler Realty Co., 272 U.S. 365 (1926), that this type of

development ban does not effect a taking, even if the owner

had bought the land with the intention of putting it to a

more lucrative use.

This Court reaffirmed in Nollan v. California Coastal

Comm'n that as long as a land use regulation substantially

advances a legitimate state interest, owners may be barred

from changing the use of their property. 483 U.S. at

835-37. Thus, “the submission that appellants may estab-

lish 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.

The majority’s theory that because Local Law 9 imposes

an affirmative duty it effects a taking (A-58), also ignores

this Court’s decisions. The Landmarks Law at issue in Penn

Central imposes the affirmative duty on owners to keep

their building “in good repair.” See Penn Central, 438 U. S.

at 111-12. Moreover, laws governing the landlord-tenant

relationship frequently impose affirmative duties on prop-

erty owners. As this Court stated in Loretto, such laws do

not effect a taking merely because they impose particular

requirements. 458 U. S. at 440.

19

The majority relied on this Court’s observation that the

Takings Clause was “designed to bar government from

forcing some people alone to bear public burdens which, in

all fairness and justice, should be borne by the public as a

whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960)

(A-60). But a takings analysis does not merely compare the

regulated group to some other group. The narrowness of

the burdened class is not enough to establish a violation of

theTakings Clause: “The Takings Clause has never been

read te require the States or the courts to calculate whether

a specific individual has suffered burdens . . . in excess of

the benefits received.” Keystone, 480 U.S. at 491 n.21.

In Penn Central this Court rejected the rationale relied on

by the Court of Appeals. “It is, of course, true that the

Landmarks Law has a more severe impact on some land-

owners than on others, but that in itself does not mean the

law effects a ‘taking.’ Legislation designed to promote the

general welfare commonly burdens some more than

others.” Penn Central, 438 U.S. at 133.

As long as owners benefit under the law, they have not

been singled out. In Penn Central, this Court accepted the

City Council’s judgment that the owners of 400 official

landmarks, out of the over one million buildings in New

York City, would benefit because the law “benefits all New

York citizens and all structures, both economically and by

improving the quality of life in the city as a whole...”

Penn Central, 438 U. S. at 134.

SRO owners are similarly benefited as New Yorkers by |

Local Law 9. The City Council has made a judgment that

the law will help everyone in New York City by halting the

growth of a “serious public emergency” caused by the loss

of SRO housing. By ending the increase in homelessness

attributable to the loss of SRO’s, the law will improve “the

quality of life in the city as a whole.” Penn Central, 438 U.

S. at 134.

20

4. The Majority Opinion Disregarded The Considered Legisla-

tive Judgment That Local Law 9 Is Necessary To Prevent

Homelessness And To Put Available Housing To Use.

The majority’s analysis of the purpose of the law was

similarly deficient. In Nollan this Court held that a land use

regulation must “substantially advance” a “legitimate state

interest.” 483 U.S. at 834. Local Law 9 satisfies this

standard.

Local Law 9 was enacted after the Blackburn study

confirmed that it was necessary to solve a “serious public

emergency” (A-315). The majority below ignored the

Council’s stated reasons for its actions and substituted its

judgment of the law’s utility for that of the legislative body.

This judicial legislation was improper.

The City Council’s statement of lcgislative findings

details two purposes. For the 88% of SRO’s that are occu-

pied (178), the purpose of the law is to prevent current SRO

tenants from becoming homeless (A-316). For the 12% of

vacant SRO units, the purpose of the law is to ensure that

solely needed housing is made available (149). The

replacement and buy out provisions allow owners to put

their properties to other uses, as long as they mitigate the

harm caused to the public by their destruction of SRO

housing.

The law substantially advances both legitimate state

interests in preservation of SRO housing. The ban on

warehousing, demolishing or converting SRO’s will save

current tenants from homelessness. Through bitter experi-

ence, New York City has learned that when owners empty

SRO’s in order to redevelop their properties, many of the

former tenants end up without a home (177-78). SRO

tenants are poor; many are elderly, many are mentally ill

21

(177, SR 594). Even if owners use legal means to empty

their buildings, SRO tenants have proven incapable of

resisting their landlords’ pressure to move and, once they

have left their homes, incapable of finding another.

The five year ban on demolition or conversion of SRO

housing helps preserve the buildings. The five year ban on

warehousing vacant units ensures that landlords will not

empty their buildings and wait out the moratorium, thus

subverting the purpose of the law.

The majority opined that rent control was sufficient to

protect existing SRO tenants (A-48). Local Law 9 was

enacted because the City Council found that rent control

was insufficient to protect SRO tenants from homelessness

(A-316-17). This Court has recognized that the rise of

homelessness justifies measures that go beyond traditional

rent control to serve rent control’s purpose of making

affordable housing available. Thus, in Pennell this Court

upheld a statute that set rents in part by reference to the

tenant’s ability to pay. The law was proper, this Court

stated, because “[pJarticularly during a housing shortage,

the social costs of the dislocation of low-income tenants

can be severe.” 108 S. Ct. 859 n.8. In enacting Local Law

9, the New York City Council was all too aware of the

severe social costs of dislocating SRO tenants. Local Law 9

ensures that SRO tenants will not be added to the ranks of

the homeless.

The majority was also wrong when it held that the ban on

warehousing currently vacant units does not further the

law’s purpose (A-49). As the City Council stated, this

aspect of the law will “maintain the availability of single

room occupancy dwelling units for low income persons

during the serious public emergency [caused by the loss of

SRO housing]” (149). Further, when anti-warehousing is

22

applied to partially occupied buildings, it protects existing

tenancies by ensuring the building remains viable as hous-

ing. Thus, anti- warehousing as applied to vacant units sub-

stantially advances the Council’s two purposes of making a

vital resource available and protecting existing SRO ten-

ants. The second guessing of the Council by the majority

below was unjustified and has no support in this Court’s

decisions.

5. This Court Has Jurisdiction To Hear This Case.

The Court of Appeals’ decision does not rest on an

adequate and independent state ground. In Michigan v. Long

this Court held:

[WJhen .. . a state court decision fairly appears to

rest primarily on federal law, or to be interwoven

with the federal law, and when the adequacy and

independence of any possible state law ground is not

clear from the face of the opinion, we will accept as

the most reasonable explanation that the state court

decided the case the way it did because it believed

that federal law required it to do so. 463 U.S. at

1040-1041.

The Michigan v. Long holding is implicated in the case at

bar. The Court of Appeals’ decision is based on an exten-

sive analysis of the federal constitutional law of takings as

developed in this Court’s decisions. The Court of Appeals

refers to a state constitutional ground only in three

instances and only in conjunction with the federal constitu-

tion (A-3, 12, 63).

Furthermore, the Court of Appeals did not include a

“plain statement” that federal law did not compel its result.

See Michigan v. Long, 463 U.S. at 1041; New York v. Class,

23 a

475 U. S. 106, 109-110 (1986). Indeed, the Court below

expressly stated that it would not reach the question of

whether the state constitution’s takings clause differed from

that of the federal constitution: “In view of this holding, we

need not decide the extent to which, if at all, the protections

of the ‘takings clause’ of the New York State Constitution

differ from those under the Federal Constitution” (A-63 n.

15). Thus, the Court below rested its decision on its inter-

pretation of the federal takings clause. Therefore, this

Court has jurisdiction to hear this appeal.

CONCLUSION

The Petition for a Writ of Certiorari should be granted.

Respectfully submitted,

PETER L. ZIMROTH

Corporation Counsel

of the City of New York

Attorney for Petitioners

LEONARD J. KOERNER,*

ELIZABETH DVORKIN,

of Counsel.

*Counsel of record