Opposition Brief — City of New York v. Seawall Associates

( 6) ta 4 6 we

Nos. 89-388, 403, 552 NOV

In the Tipe

Supreme Court of the United States

OCTOBER TERM, 1989

THE CITY OF NEW YORK, et al.,

Petitioners,

VS.

SEAWALL ASSOCIATES, et al.,

Respondents.

RICHARD WILKERSON, et ai.,

Petittoners,

US.

SEAWALL ASSOCIATES, et al.,

Respondents.

THE COALITION FOR THE HOMELESS,

Petitioner,

US.

SEAWALL ASSOCIATES, et al.,

Respondents.

Brief for Respondents 459 West 43rd Street Corp.,

Eastern Pork Products Company and Durst Partners

in Opposition to Petitions for a Writ of Certiorari to

the New York Court of Appeals ’

Puitip H. SCHAEFFER

Counsel of Record

Wuirte & Case

1155 Avenue of the Americas

New York, New York 10036

(212) 819-8200

Ee oer oor

I

Question Presented for Review

If this Court grants the writs of certiorari sought, the

following question will be presented for review.

Is Local Law No. 9 of the Laws of The City of New York,

1987 (‘Local Law No. 9"°) unenforceable as a taking of

private property without just compensauon in violation

of the Constitutions of the United States and of the State

of New York to the extent that it mandates owners otf

buildings containing single room occupancy dwelling

units to rehabilitate and rent for an indefinite future

period aH present and future vacant units within thirty

days at governmentally controlled rents unless the owner

pays $45,000 to the City of New York for each such SRO

unit it wishes to keep vacant-or builds alternative units

and delivers them without profit or gain to governmentally

designated entities or persons, on the ground that Local

Law No. 9:

(a) is a per se violati in of the takings clause because it

denies the owners “‘the right to exclude others” from their

properties in violation of the principles stated in Hodel v.

Irving, 481 U.S. 704 (1987) and Nollan vy. California

Coastal Commission, 483 U.S. 825 (1987), o1

(b) otherwise violates “[o}ne of the principal purposes

of the Takings Clause [which] is 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

to whole.’ " Nollan v. California Coastal Commission,

483 U.S. at 835, n.4 (quoting Armstrong v. United States,

364 U.S. 40, 49 (1960))?

List of Parties

(a) Parties

The parties to the appeal before the Court of Appeals of

the State of New York which resulted in the order which is

the subject of the petitions for certiorari are: The City of

Ss

ll

New York, Edward I. Koch, in his capacity as Mayor of

the City of New York, Paul A. Crotty, in his capacity as

Commissioner of the Department of Housing Preservation

and Development of the City of New York, Charles Smith,

in his capacity as Commissioner of the Department of

Buildings of the City of New York, Richard Wilkerson,

Edgar Ferrell, Frank Alicia, Tom Williams, Danny Sogliuzzo,

Nicholas Tallerico and The Coalition for the Homeless,

Seawall Associates, 459 West 43rd Street Corp., Eastern

Pork Products Company, Durst Partners, Sutton East Asso-

ciates-86, The Channel Club, Anbe Realty Co., Jambod

Enterprises, Inc., Mygatt/Perry, Felix Ziade, Rocco Im-

perial and Testamentum.

(b) Statement Pursuant to Rule 28.1

of the Rules of this Court

459 West 43rd Street Corp. is a corporation incorporated

under the laws of the State of New York. The shares of 459

West 43rd Street Corp. are not publicly traded and are solely

owned by members of the family of the deceased Joseph

Durst (‘‘the Durst family’). 459 West 43rd Street Corp. has

no affiliates whose shares are not also held entirely by the

Durst family and it has no subsidiaries. Eastern Pork

Products Company and Durst Partners are both partnerships

organized under the laws of the State of New York, the

interests in which are entirely owned by members of the

Durst family.

Jambod Enterprises, Inc., Mygatt/Perry, Felix Ziade and

Rocco Imperial were also represented by the attorneys for

459 West 43rd Street Corp., Eastern Pork Products Company

and Durst Partners before the Court of Appeals of the State

of New York but will not participate in the proceedings

before this Court. Jambod Enterprises, Inc., is a corporation

incorporated under the laws of the State of New York. To the

best of our knowledge and information, it has no subsidiaries,

parent companies or affiliates. Mygatt/Perry is a partnership

organized under the laws of the State of New York engaged in

the practice of architecture.

lil

TABLE OF CONTENTS

Question Presented for Review ...................

TCE RG SG eC bse scccccrecsccscesececs

Cea a sabes dea vecsseeccece

(b) Statement Pursuant to Rule 28.1 of the Rules

EE

eee

I

REASONS FOR DENYING THE WRITS

Ce nen eceebveccces

I—The unique nature of both Local Law No. 9

and New York law of land use make this an

inappropriate case for review by this Court ...

II—The petitions for certiorari merely argue that

there has been a misapplication of principles

established by this Court; such an argument is

insufficient reason to grant review and, in any

event, there has been no such misapplication

ee ke ae

Ne eg nee necedbesncee

10

1]

19

iV

Table of Authorities

Cases

Armstrong v. United States, 364 U.S. 40 (1989)...... i

Benson v. Beame, 50 N.Y.2d 994, 431 N.Y.S.2d 475,

409 N.E.2d 948, (1980), app. dism., 449 U.S. 1119

(NES Naagateasd tierce ce ceekautannueweietes’ 13

Bowles v. Willingham, 321 U.S. 503 (1944) ......... 7

First English Evangelical Lutheran Church of Glen-

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

(IDET) bi diakvandoueecsshhhsansethcesantieaes 16

Foster v. Scott, 136 N.Y. 577, 32 N.E. 976 (1893)..... 13

Fred W. French Investment Company v. City of New

York, 39 N.Y.2d 587, 385 N.Y.S.2d 5, 350 N.E.2d

381 (1976), cert. denied and app. dism., 429 U.S.

te Pr re ren eer ey eee ee 13

Hodel v. Irving, 481 U.S. 704 (1987) .........ecee0. i, 18

Kaiser Aetna v. United States, 444 U.S. 164 (1979) ... 18

Kimball Laundry Co. v. United States, 338 U.S. 1

COU o's ook nk aie eee Ree eee 16

Loretto v. Teleprompter, Manhattan Cable TV,

S58 U.S: SID CRIRD 6 6c kicad sncuvnckcnccavaneees 18

Matter of Keystone Associates v. Moerdler, 19 N.Y.2d

78, 278 N.Y.S.2d 185, 224 N.E.2d 700 (1967) ...... 13

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

Oy Ck aks ca kao nicked ) repo sered eee 1, 18

Penn Central Transp. Co. v. City of New York, 438

US. FOU CIGe): winches buetansepenepesssbannnee 18

Pennell v. City of San Jose, 485 U.S. 1 (1988) ....... 18, 19

Rice v. Sioux City Cemetery, 349 U.S. 70 (1955)..... 12

eT ee eee ee ee

Vv

TABLE OF AUTHORITIES

United States v. Dow, 357 U.S. 17 (1958) ........... 16

United States v. General Motors Corp., 323 U.S. 573

PRP er yer eee eee eee ee eee 16

United States v. Petty Motor Co., 327 U.S. 372

Co eet ys Sere rn eT ee ee ee eee 16

Constitutions

United States Comstitution 0.0... cccccccceccecces i

New York State Constitution .................0055 1

Statutes

Local Law No. 9 (1987), City of New York........ passim

Law Review Articles

“The Jurisprudence of Takings,” 88 Colum. L. Rev.

Ns sachs chews enneeatenekea snes i4

Reports

A. Blackburn, Single Room Occupancy in New

rrr. ie ae

Books

O. W. Holmes, The Common Law (M. Howe ed.,

AUT ice eeay beste Sa eee eae s&s 6

R. Stern, Supreme Court Practice (6th ed. 1986) ...12, 14, 15

In the

Supreme Court of the United States

OCTOBER TERM, 1989

THE CITY OF NEW YORK, et al.,

Petitioners,

us

SEAWALL ASSOCIATES, et al.,

Respondents.

RICHARD WILKERSON, et al.,

Petitioners,

US.

SEAWALL ASSOCIATES, et al.,

Respondents.

THE COALITION FOR THE HOMELESS,

Petitioner,

US.

SEAWALL ASSOCIATES, et al.,

Respondents.

Brief for Respondents 459 West 43rd Street Corp.,

Eastern Pork Products Company and Durst Partners

in Opposition to Petitions for a Writ of Certiorari to

the New York Court of Appeals

Introductory Statement

This brief opposes the petitiens for a writ of Certiorari

submitted on behalf of the City of New York, its Mayor,

Commissioner of the Department of Housing Preservation

and Development, and Commissioner of the Department

of Buildings (“the Municipal petition’), The Coalition

for the Homeless (‘the Coalition petition’’) and Richard

2

Wilkerson, Edgar Ferrell, Frank Alicia, Tom Williams,

Danny Sogliuzzo and Nicholas Talerico (‘‘the MFY peti-

tion’’).

The parties on whose behalf this brief is submitted are

459 West 43rd Street Corp. (‘459’), Eastern Pork Products

Company (‘‘Eastern’’) and Durst Partners (‘‘Partrers’’).

The matter which is the subject of the petitions and this

brief in opposition is Seawall Associates v. City of New

York, 74 N.Y.2d 92, 544 N.Y.S.2d 542, 542 N.E.2d 1059

(1989).

Statutes Involved

Local Law No. 9 appears at R 151 et seq.!

Local Law No. 9 was enacted by the City Council of the

City of New York on March 5, 1987. That ordinance

established restrictions on certain owners of buildings in

New York City which contained single room occupancy

units. “Single occupancy units” (““SROs’’) are dwelling

units which lack kitchens, bathrooms or both within the

unit. The SRO units which are the subject of these

restrictions do not include the thousands of such units

owned by New York City or by various not-for-profit

‘stitutions. Generally, the limitations are only upon

those units which are owned by private (7.e., nongovern-

mental citizens.

Local Law No. 9 declared it to be both illegal and a

criminal act to demolish, alter or convert an SRO unit for

a minimum five-year period, with provision for unlimited

extensions of that moratorium for additional five-year

periods. Under the terms of Local Law No. 9, all SRO

units must be rented to tenants within 30 days. All SRO

units which are presently vacant must be rehabilitated and

made habitable. These too must be rented within 30 days.

' References preceded by ‘‘R”’ and ‘‘SR”’ are to the Record and

Supplemental Record before the New York Court of Appeals.

3

All such rentals of SRO units are to be governed by the

rent control and stabilization laws applicable in New York

City. These laws limit the amounts of rent that can be

charged and give each particular tenant the right to

continue in possession of the unit indefinitely, without

regard to the five-year period of the moratorium or any

extension thereof. Failure or refusal of the owner to

perform any of the foregoing is punishable by the imposi-

tion of substantial fines and criminal prosecution. The

civil fines to be imposed are $500 per SRO unit, com-

mencing ten days after service of a notice of the violation,

which penalty continues to accrue on a daily basis until

cured. Local Law No. 9 presumes that if a SRO unit

remains vacant for 30 days, the owner has violated the law.

If an owner of SRO units desires to use his or her

property in any manner other than for SRO units, he or

she must pay the City no less than $45,000 per SRO unit

to be freed from the restrictions of Local Law No. 9.

Under certain circumstances, the owner may alternatively

construct new residential units or buildings in lieu thereak

and immediately turn them over to a not-for-profit entity

approved by the City. In either event, the owners must

relocate their SRO tenants if the tenant is willing to be

relocated or if the tenant’s consent can be purchased by the

owner at whatever price the tenant demands.

Statement of the Case

Eastern, 459 and Partners (‘‘the Durst respondents’) are

each engaged in the business of acquiring real estate for

development and sale. Each Durst respondent owns a

building in Manhattan which contains SRO units. 459

owns a building known as the Hotel Diplomat located at

108 West 43rd Street. That property was acquired by an

affiliate of the Durst family in 1970. At the ume of its

| acquisition, it was operated as a residential hotel contain-

! ing 216 units. It continues to be so operated. Of the 216

4

SRO units in the Hotel Diplomat, (a) 48 units are occupied

by tenants covered by New York City’s rent stabilization iaw,

(b) two units are occupied by tenants covered by New York

City’s rent control law, (c) 56 units are occasionally let for

transient use and (d) 110 units have long been vacant,

uninhabitable and each would cost tens of thousands of

dollars per unit to rehabilitate.

In 1986, Eastern purchased real property at 611 Ninth

Avenue. Situated thereon is a three-story building which at

the time of its acquisition was operated, and continues to be

operated, as a multiple dwelling containing 18 SRO units.

Eight such units are occupied by tenants protected by New

York City’s rent stabilization and rent control laws. The

remaining ten units are vacant and uninhabitable.

Partners owns property at 147-151 West 43rd Street. The

six-story building was acquired more than ten years ago and

is entirely vacant.

Each of the foregoing properties was acquired for invest-

ment purposes before the enactment of Local Law No. 9.

After analyzing the costs of rehabilitation, the likely rents to

be earned in the event of the mandatory renovation, the

“rent-up”’ and expenses of operation, it is estimated that the

losses to the owners of the Hotel Dipiomat would exceed

$754,486 a year. (SR 251-258). With respect to all of the

presently vacant units, 611 Ninth Avenue would likewise

lose $61,994 annually on the units which would be the

subject of the mandatory renovation and rent-up under

Local Law No. 9 (SR 117, 258-261).

The history of SRO housing in New York City and-ts

decline in numbers—a decline previously encouraged by all

those who were interested in decent housing—is narrated in

the City’s own report, which was undisputedly the basis for

Local Law No. 9. That report, prepared by Anthony J.

Blackburn for the City in 1986, and entitled Single Room

eae SI AL BORN Aen ne rae

5

Occupancy in New York City (‘the Blackburn Report’),

states:

[P]Jublic policy has been consistently hostile to

single-room occupancy arrangements for almost

half a century.

There have been several reasons for the efforts to

curb the growth of single-room occupancies. First

and foremost is the long-standing commitment of

the housing and city planning profession to up-

grade the housing stock through restraint on the

development of “‘substandard’’ housing. The lack

of full plumbing facilities within a dwelling unit

has always been a key measure of substandardness

in housing. Absence of cooking facilities and very

small unit sizes also detract from the ‘‘quality”’ of

the housing stock as traditionally defined. For very

respectable reasons based on the long-standing

commitment to the elimination of substandard

housing, public policy has traditionally tried to

control, and occasionally eliminate, single-room

occupancy housing... .

The sordid conditions of many of the buildings,

the outrage of local residents at finding themselves

next door to concentrations of social misfits, and

the commitment of the housing professionals to

standard housing as a matter of principle evoked a

forcible reaction from Judah Gribetz, an aide to

Mayor Wagner ... he railed against the SROs:

“The SRO should not be accepted as lawful

housing for any segment of our citizenry. No

community should equate such housing with the

acceptable living standards of the 1960s. We should

2 The Blackburn Report is part of the Record on Appeal before

the New York Court of Appeals (R 673-808). Citations to the

Blackburn Report will be made to the pages of that Record.

6

seriously consider the possibility of phasing the

SRO out of existence by compelling its restoration

to apartment use. . . . The SRO is a vestigial

remnant of a past generation. Its history and use

demonstrate that the time has come for the SRO to

be regarded as extinct.” .

These sentiments found legislative expression

in amendments to the Housing Maintenance Code

which effectively prohibited further conversion to

rooming units and . . . discourage[d] subdivision

of buildings into rooming units.°

The Blackburn Report credits the City for the decline in

SRO housing:

[T]he City’s policy in the 1960s to retire the

inventory of single room housing . . . was conspicu-

ously successful. Since no new rooming units

could be legally created, it was inevitable that the

legal inventory would decline through conversion

and abandonment.‘

The recent decisions of City officials to safeguard single

room occupancy housing in New York City are a testament

to the indifference of that government to those who would

dwell therein. They are also a testament to the local

government's determination to avoid the political oppro-

brium associated with a general tax increase needed to help

the impoverished. Justice Holmes has written “that a

government ought not to be called ‘civilized’ if it sacrifices

the citizen more than it can help.’”’> Under that test, the

government that created Local Law No. 9 is uncivilized,

both by reason of its failure to serve the poor as well as its

3 R 685-687.

*R 688.

5 O.W. Holmes, The Common Law, at 37 (M. Howe ed., 1963).

7

effort to shift the burdens of housing the impoverished on to

the respondents’ shoulders.

Local Law No. 9 does not merely regulate relations

between tenants and landlords, as do rent control and rent

stabilization laws. Bowles v. Willingham, 321 U.S. 503

(1944). It also requires owners of SRO units to pay the City

for the right to make free use of their properties. It requires

owners of buiidings containing SRO units to (a) “rent up”’

any vacant units they may possess (‘‘the rent-up”’ or “‘anti-

warehousing provisions’’); (b) rehabilitate or repair such

vacant units; and (c) if the property owner desires to leave the

SRO business, or use his property in any other manner

whatsoever, he or she must either pay to the City of New York

$45,000 per unit or provide for construction of new dwelling

units in lieu thereof. Local Law No. 9 is thus fundamentally

different from laws which merely seek to regulate rents or

even to make indefinite the terms of residential tenancies.

The effect of the foregoing, particularly the “buy-out” or

replacement provisions of Local Law No. 9, is to conscript

the owners’ properties for use as the City Council wishes,

and, in addition, to compel the owners to engage in the SRO

business for as long as the City Council so pleases.°

If those of the Durst respondents who own the Hotel

Diplomat, a large property situated on West 43rd Street,

wished to make economic use of this site, whether for

residential or office use, they would have to pay the City at

least the sum of $45,000 per unit for each of 216 units, or

replace those units in other locations at what is presumably

a similar cost. The total amount due from such respondents

would be $9,720,000. If the entire vacant stock of privately

owned SRO units in the City (5,200 to 7,000 units) were to

6 Section 7 of Local Law No. 9 provides that it is effective for five

years and will continue to be effective for additional five-year

periods thereafter if the City Council so extends it.

8

be so “ransomed”’ by their owners at the $45,000 per SRO unit

“buy-out” price, the City would realize for itself the tidy sum

of $315,000,000! ”

The paying of such enormous sums to the City would still

not supply owners with the key to their freedom. They must

obtain possession of their units from the occupants thereof.

With respect to the Hotel Diplomat, the Durst respondents

would still have to buy out each of the 50 occupants who

remain at the hotel, as well as the 166 occupants who would

either replace the transient guests in the hotel or fill vacant

rooms as a consequence of the mandated “‘rent-up.”’ These

requirements of Local Law No. 9 destroy any possibility of

using the Hotel Diplomat in the future as anything other

than an SRO hotel.

The Blackburn Report made it clear that City policy

should favor requiring the owners of SRO units to so

purchase their freedom. With admirable candor, Blackburn

wrote:

The only way to secure the long-term availability

of single room occupancy housing for low-income

persons is to transfer the ownership of those

properties from for-profit to non-profit entities

and to establish the purposes for which they can be

used by deed restrictions or similar devices. . . .

om * *

7 Contrast this cumulative cost of “buy-out” with the current

financial plight of the SRO owners as described in the Blackburn

Report:

The previous owners of single room buildings gener-

ally express the view that this form of housing is

uneconomic, particularly in the light of rent regulation

and the typically low income of tenants. Many of them

left the business because of frustrations dealing with

tenants who frequently had emotional and psycho-

logical problems, were in arrears with the rent and were

difficult to evict for nonpayment or general property

abuse.

R 708.

9

This can only be accomplished by both allowing

buildings to be converted to more profitable use at

a price which more than adequately compensates

the city for the resulting loss of low-income units

and/or by transferring ownership to non-profit

entities which will operate the properties for the

benefit of poor single persons.*®

Local Law No. 9 is not truly directed at the problems

created by the decline in numbers of SRO units. As we have

seen, no civilized government official in modern history has

ever wished to permit development of such substandard

accommodations. The actual problem is the shortage of low

and moderate income housing in the City of New York.

Local Law No. 9 is intended to extract from the SRO owners

substantial cash contributions to build or maintain housing

units whicn hopefully will be affordable to citizens of

modest means.

The reality is that Local Law No. 9 places a unique

burden on only a small fraction of those owners whose

properties are usable as lower income housing units. That

burden is placed on them solely because their properties

contain what are classified as “single room occupancy

dwelling units.’’ The far more numerous owners of proper-

ties which are also appropriate for use as ‘‘dwellitig units for

persons of modest incomes,’’ however, are free to develop

their properties without restriction. That freedom is the

consequence of their having fortuitously not fallen within

the SRO classification.

An irony of the situation is that the City of New York is the

owner of the greatest number of vacant multiple dwellings

in the City, including those containing SRO units. Yet, it

has exempted itself from the requirements of Local Law No.

9. In the City’s view, what is sauce for the unfortunate

privately-owned goose is noi sauce for the municipally-

owned gander.

® R 734, 737.

10

REASONS FOR DENYING THE WRITS

Introduction

The questions sought to be presented to this Court by the

Municipal, Coalition and MFY petitions do not qualify

under the rigorous standards of Rule 17.1 for review by this

Court. The provisions of Local Law No. 9 are so unusually

overreaching that review by this Court thereof would require

devotion of substantial judicial and legal energies to con-

sideration of what will ultimately prove to be episodic and

fleeting. No other jurisdiction is likely to ever enact such

oppressive restrictions on property use. Moreover, the rigor-

ous features of Local Law No. 9 about which the respondents

complain and which the New York Court of Appeals

found abhorrent are, in major part, a function of the unique

nature of New York’s particular land!ord-tenant and land

use laws, not sufficiently national in interest to merit review

by this Court.

Two more reasons exist for denying the petitions. The

petitioners do not rea!ly argue that the highest court of New

York State invented or misconceived the constitutional

principles on which it based its decision. As we shall see, the

Municipal, Coalition and MFY petitions merely contend

that those previously enunciated principles were misapplied,

a conventional argument invariably asserted by unsuccessful

litigants and their counsel.

Finally, even cursory review of the petitions and the case

below indicates that, contrary to the assertions of petitioners,

the decision which is the subject of these applications was

properly decided. It is the petitioners who misstate previous

decisions of this Court and are in error, not the highest court

of the State of New York which ruled against petitioners.

Before proceeding to the merits of the matter, we wish to

take a moment to deplore the unseemly mischaracterizations

made in the Coalition and MFY petitions, mischaracteriza-

tions which are particularly surprising in view of the

11

eminence of the advocates whose names appear on the

petitions in question. It does little credit to its arguments

for the Coalition petition to deprecate respondents as

builders of ‘‘luxury housing” (Coalition Pet. at 9), suggest

(contrary to everything in the record) that respondents

have been in any way guilty of “harassment” of others

(7d.) or that they are collectively ‘“‘a group of real estate

developers” (Coalition Pet. at 7), as if respondents were.

less entitled to constitutional protection for that reason.

Even more egregious is the MFY petition which inaccur-

ately and impermissibly calls respondents ‘“‘commercial

real estate developers who wished to demolish or convert

their buildings to luxury offices or residences’”’ (MFY Pet.

at 5-6), dismisses respondents as mere seekers after “‘specula-

tive gain’”’ (MFY Pet. at 8) and again falsely suggests that

both the Court of Appeals and respondents ignore the

rights of poorer citizens “‘driven out of their homes by

absentee corporate owners of multiple dwellings who

sought financial gain without considering its human

costs’’ (MFY Pet. at 9).

Such mischaracterizations are inappropriate and refiect

badly on the arguments made by those who see fit to pepper

their petitions with such offensive materials.

The unique nature of both Local Law No. 9 and New

York law of land use make this an inappropriate case

for review by this Court.

The appeals which the petitioners seek to bring to this

Court do not meet the criteria of Rule 17.1 on at least two

grounds. First, Local Law No. 9 is so uniquely restrictive

and extreme, and is recognized to be so restrictive by the

petitioners themselves, that it is doubtful that any other

jurisdiction will adopt such laws. “[{T]he problem, though

intrinsically important... [is not]... ‘beyond the aca-

demic or the episodic.’’’ R. Stern, Supreme Court Practice

Eb eR TTC ee ee

12

212 (6th ed. 1986) (quoting Rice v. Sioux City Cemetery, 349

U.S. 70, 74 (1955)).

Each of the petitions for certiorari emphasizes in its

‘Questions Presented,”’ as well as in the body of its argu-

ments for review, that Local Law No. 9 is “emergency” and

“temporary” legislation. Each thereby concedes the consti-

tutional dubiousness of such a conscription of property

owners into operating such a business under such constraints

in ordinary circumstances (Municipal Pet. at 3, 21-22;

Coalition Pet. at 6, 31-37; MFY Pet. at 4, 7). By so conceding

that Local Law No. 9 is only justifiable as ““emergency”’ or

“temporary” legislation, petitioners implicitly admit that it

can only be justified if it is seen as transitory. Permanent

legislation with provisions such as those of Local Law No.

9 would apparently be unjustifiable, even adopting the views

of the petitioners. Why after the highest court of New York

has ruled on such ephemeral legislation, devoting substantial

judicial energy thereto, should the matter not be allowed to

rest? Certainly, this Court should not now devote its scarce

resources to further review of such a matter. Enough judicial

time has been devoted to resolution of an issue which

“though intrinsically important” is also admittedly ‘‘epi-

sodic.”’ R. Stern, supra, at 212.

Furthermore, the decision of the New York Court of

Appeals invalidating Local Law No. 9 is based on the

peculiarities of New York law. There is little reason for this

Court to wrestle with a municipal ordinance, the effect of

which is so intertwined with local issues of law and policy.

A basic assumption of the decision of the Court of Appeals

in holding Local Law No. 9 to be unconstitutionally

oppressive was that under New York law, “development

rights” (i.e., the right to erect substantial structures by

assembling parcels of land) occupy a key place in the bundle

of rights which constitute ownership of real property.

Citing its own particular decisions to that effect, the Court

of Appeals at 74 N.Y.2d at 109, 544 N.Y.S.2d at 550, 542 N.E.2d

13

at 1067, found that Local Law No. 9 “‘totally abrogated”’

such development rights and that under New York law such

rights:

“are an essential component of the value_of the

underlying property” and that “they are a poten-

tially valuable and even a transferable commodity

and may not be disregarded in determining whether

the ordinance has destroyed the economic value of

the underlying property.”

(quoting Fred W. French Investment Company v. City of

New York, 39 N.Y.2d 587, 597, 385 N.Y.S.2d 5, 350 N.E.2d

381 (1976), cert. denied and app. dism., 429 U.S. 990 (1976);

and citing Matter of Keystone Associates v. Moerdler, 19

N.Y.2d 78, 278 N.Y.S.2d 185, 224 N.E.2d 700 (1967) and

Foster v. Scott, 186 N.Y. 577, 32 N.E. 976 (1893)).

Few, if any, other jurisdictions so prize “development

rights’’ as does New York, which refuses to permit their

being disregarded in analyzing the constitutional propriety

of local legislation as either a violation of constitutional due

process or a wrongful taking. If this Court were to grant

certiorari and review all or any of the questions raised in the

petitions, it would be necessary, as part of the Court's review,

to undertake an analysis of the New York law of development

rights and the degree to which it assigns peculiar significance

thereto in evaluating the property rights of owners of New

York property. Such an analysis is hardly a matter of

national interest.

Similarly, the draconian effect of Local Law No. 9 upon

the unfortunate property owners who fall within its grasp

cannot be understood without reference to the parochial

New York laws of rent control and rent stabilization as well

as the “temporary emergency” which has justified their

continuation for the last half century.® It is that strait-

9° Benson v. Beame, 50 N.Y.2d 994, 431 N.Y.S.2d 475, 409 N.E.2d

948 (1980), app. dism., 449 U.S. 1119 (1981).

14

jacketing of rents, unique to New York, and the pretext that

such restrictions will only continue until the alleged “‘emer-

gency”’ is over, which effectively sentences owners of SRO

properties under Local Law No. 9 to a lifetime occupation

which they do not wish to undertake and which they cannot

avoid in the absence of paying ransom for their properties or

abandonment.

In summary, the decision of the New York Court of

Appeals setting aside Local Law No. 9 is one which is both

profoundly based on local conditions in New York itself

and the remarkable features of that ordinance. In either

case, it does not present an appropriate occasion for this

Court to address the developing law of takings.

Given the details and unusual nature of Local Law No. 9,

it may well be that in the efforts to obtain review, its

invalidation should be considered along with the caveat that

‘hard cases often make bad law’’—yet a further reason for

denying the petitions for certiorari. This Court has often

denied certiorari on the theory that definitive decisions on a

developing area of law should ‘“‘await the perspective of

time,” R. Stern, supra, at 214, or the work product of other

courts. Such restraint is highly appropriate in dealing with

such remarkably constraining legislation as Local Law No.

9. This is particularly so since that Local Law was challenged

on grounds that it constitutes an impermissible “taking,”’ an

area of constitutional jurisprudence that itself is still develop-

ing. See ‘““The Jurisprudence of Takings,’’ 88 Colum. L.

Rev. 1581 through 1794 (1988).

15

The petitions for certiorari merely arque that there

has been a misapplication of principles established by

this Court; such an argument is insufficient reason to

grant review and, in any event, there has been no such

misapplication presented.

R. Stern, supra, writes at page 203:

Lawyers, however, are likely to regard any case

that they have lost in a lower court as necessarily in

conflict with some Supreme Court decision or

doctrine; that is what makes the ruling below

arguably “erroneous.”’ But such a loose reading of

the Rule 17.1(c) reference to a decision “in conflict

with applicable decisions of this Court’’ does not

satisfy the Court’s own understanding of what

constitutes a conflict of this nature. To justify a

grant of certiorari, the conflict must be truly direct

and must be readily apparent from the lower

court’s rationale or result.

Examination of the petitions confirms that the substance

of each petitioner’s argument is that, im one way or another,

the New York Court of Appeals failed to apply this Court's

“takings” opinions as petitioners would like to see those

opinions applied and also failed to understand the pro-

visions of Local Law No. 9. For example, the Coalition

petition states at pages 30-31:

The court below failed to analyze properly the

character of Local Law 9, and it held erroneously

that its mere enactment constitutes a regulatory

taking because it denies the owners economicaliy

viable use of their properties, and does not sub-

stantially advance a governmental interest. In

reaching such conclusion, the court misread prior

decisions of this Court.

16

The Coalition petition does not contend that the principles

of what constitutes a regulatory taking were ignored or

erroneously restated by the Court of Appeals, only that they

were erroneously applied. The same contentions are made

by the Municipal petition. See, e.g., Municipal Pet. at 8, 17.

Ironically, it is petitioners who misapply the principles

already esiablished by this Court in “‘takings”’ cases in their

specious effort to persuade this Court that the decision

sought to be reviewed is erroneous.

For example, the Municipal petition at page 13 in-

accurately states that, because Local Law No. 9 purports to

be a “temporary emergency” measure, it cannot be a

“physical taking,” describing as “unwarranted” this “ex-

pansion” of the holding in First English Evangelical

Lutheran Church of Glendale v. County of Los Angeles, 482

U.S. 304 (1987). Presumably, the Municipal petition concedes

that there can be a “temporary regulatory taking” after First

English. No doubt the latter is true; however, the consti-

tutional infirmity of uncompensated-for “temporary physical

takings” long predates, and indeed was a basis for, the First

English decision. See First English Evangelical Lutheran

Church of Glendale v. County of Los Angeles, 482 U.S. at

317-18, citing and discussing as examples of “temporary

physical takings,” compensable under the Fifth Amend-

ment, United States v. Dow, 357 U.S. 17 (1958), Kimball

Laundry Co. v. United States, 338 U.S. 1 (1949); United

States v. Petty Motor Co., 327 U.S. 372 (1946); United

States v. General Motors Corp., 323 U.S. 373 (1945).

The petitions also overlook the gravamen of the constitu-

uonal infirmities found by the New York Court of Appeals.

Loca! Law No. 9 singles out a small class of real property

owners to meet a particular burden of solving a social

problem that is not necessarily related to any problem

caused by those owners. Those real property owners are

deprived of all development rights to their property, required

to spend unanticipated sums to rehabilitate those properties,

17

and rent them up to tenants who will obtain rights of

indefinite duration at limited rents under New York's rent

stabilization and control laws. No showing is made that the

particular persons who will become occupants of this SRO

housing so created by Local Law No. 9 are the class of

persons intended to be assisted (7.e., the homeless).'® Nor are

owners of other properties which could be used for solution

of these social problems affected; only those who happen to

own buildings with SRO units are required to participate in

the rehabilitation and rent-up of their buildings and to

continue doing so in the future. Owners of other structures

equally amenable to low income occupants are unalfected

by the ordinance even though there are no doubt hundreds

of thousands of such units. In order to avoid this singular

ordinance, only SRO owners, no other property owners,

must buy freedom either at $45,000 a unit or build alternative

units at their own expense and turn those new units over,

with no payment, to the municipality's designees. Otherwise,

those SRO owners who “qualify” can obtain their freedom

only upon proving that the owner is not earning a “‘suffi-

cient” rate of return (2.¢., an artificially low rate of return on

an artificially low assessed value of the property). In that

event, the “buy-out” price under certain circumstances (not

yet the subject of municipal regulations), may be reduced at

the discretion of the City.

The foregoing insufficiency of relationship between the

incidence of the burdens created by Local Law No. 9 with the

'© At pages 436-37 of the Supplemental Record, the attorneys

for the intervenors in this case (here represented by the Coalition

and MFY petitions) acknowledged that the rents to be charged

for SRO units to occupants who as a consequence of Local Law

No. 9 take possession thereof, although regulated, may stll be

too high for the homeless to pay. Consequently, the only effect

Local Law No. 9 may have is to furnish housing to the middle

class. Notwithstanding, the attorney justified the ordinance on

the “trickle down” theory that if young middle class citizens

were tempted to move into SRO units (ignoring the lack of

bathrooms and kitchens), New York City’s housing crisis might

be eased and the impoverished move into what were the units

occupied by those younger middle class individuals.

18

creation of the problem allegedly to be solved and the means

to solve it, makes the Local Law a “‘taking”’ under Nollan v.

California Coastal Commission, 483 U.S. 825 (1987), as the

Court of Appeals so found. Seawall Associates v. City of New

York, 74 N.Y.2d at 106, 111, 112, 544 N.Y.S.2d at 548, 551,

552, 542 N.E.2d at 1065, 1068, 1069. Proposed destruction by

Local Law No. 9 of two particular strands in the bundle of

rights which constitute “‘property’” under New York law—

the right to be free of strangers and the right to develop—

dictate the finding that Local Law No. 9 is an unjustified

‘‘taking”’ as described in Hodel v. Irving, 481 U.S. 704 (1987)

and Loretto v. Teleprompier, Manhattan Cable TV, 458

U.S. 419 (1982), as also found by the Court of Appeals.

Seawall Associates v. City of New York, 74 N.Y.2d at 102,

103, 104, 105, 106, 544 N.Y.S.2d at 546, 547, 548, 542

N.E.2d at 1062, 1063, 1064, 1065."

Finally, the basic unfairness of placing such a burden on

a discrete class of owners, prohibiting them (in the absence

of payment of ransom of huge proportions) from using their

properties in any way but the one way the municipal

government directs, violates the balancing approach set

forth in Penn Central Transp. Co. v. City of New York, 438

U.S. 104 (1978), as also stated by the Court of Appeals.

Seawall Associates v. City of New York, 74N.°¢.2d at 108, 111,

112, 544 N.Y.S.2d at 549, 551, 552, 542 N.E.2d at 1066, 1068,

1070. Nor can it be seriously believed that this ordinance is

a mere regulation of prices or other economic incidents of

rental accommodations, as was accepted in Pennell v. City

of San Jose, 485 U.S. 1 (1988), and as argued in the petitions.

'! The Coalition petition at pages 22-24 makes the peculiar

argument that governmental destruction of the right of property

owners to exclude others is a ‘‘taking”’ only if ‘personal privacy”’

is involved. It thus claims that such a “‘right’”’ does not exist in

favor of commercial owners, landlords and developers. Un-

accountably, the Coalition petition cites Kaiser-Aetna v. United

States, 444 U.S. 164 (1979), as authority for that position,

overlooking the status of the owner in that case as a developer who

successfully complained that its right to exclude the public from

its development was being infringed.

19

Nothing in Pennell (or any other case cited by petitioners)

even implies that the owners of properties can be so

conscripted into such a business with no avenue of escape

other than to buy themselves out or abandon their

properties.

In short and in conclusion, the New York Court of

Appeals has not misapplied any principles or authorities;

its decision is one which this Court would, in any event,

affirm. It is on this most fundamental level that we oppose

the granting of certiorari in this matter. The result reached

by the Court of Appeals was the correct result, one which

should not be, and which we are confident will not be,

disturbed by this Court.

CONCLUSION

The three petitions for certiorari should be denied.

Dated: New York, NY

November 4, 1989

Respectfully submitted,

PHILIP H. SCHAEFFER

Counsel of Record

WHITE & CASE

1155 Avenue of the Americas

New York, New York 10036

(212) 819-8200

JANE D. CONNOLLY

Joun S. WILLEMS

Of Coun<el