Rent control is literally a textbook example of bad economic policy. Economics textbooks often use it as an example of how price ceilings create shortages, poor quality goods, and under-the-table dealings. A 1992 survey revealed that 93% of economists believe that rent control laws reduce both the quality and quantity of housing. As expected, therefore, New York City's Rent Stabilization Law — the most (in)famous in the country — has led to precisely these effects: housing is scarce, apartment buildings are dilapidated because owners can't charge enough to fix them, and housing costs have only increased (in part because costs are transferred to non-rent mechanisms such as "non-refundable deposits"). Yet the RSL persists, benefiting those grandfathered individuals who rent at lower rates but hurting the city as a whole. Harmon v. Kimmel challenges New York's law on the grounds that it is an arbitrary and unsupportable regulation amounting to an uncompensated taking that violates the Fifth Amendment. Jim Harmon's family owns and lives in a five-story brownstone in the Central Park West Historical District. The Harmons inherited the building — and along with it three rent-controlled tenants. Those tenants have occupied apartments in the building for a combined total of 91 years at a rate 59% below market. In their lawsuit, however, the Harmons face many unfriendly precedents that have given states free reign to regulate property, to the point that it is occupied on an essentially permanent basis while surviving Fifth Amendment scrutiny. One way to challenge some laws is to argue they are so arbitrary and poorly justified that they violate the Fourteenth Amendment's Due Process Clause. Because this is an especially difficult type of challenge to bring, Cato joined the Pacific Legal Foundation and the Small Property Owners of San Francisco Institute on a brief supporting the Harmons' request that the Supreme Court review lower-court rulings against them. Although the Court has ruled that the Takings Clause does not permit challenges based on claims that the alleged taking fails to "substantially advance legitimate state interests," the Due Process Clause is an independent textual provision. We thus clarify the relationship between property rights and due process, arguing that a law which advances no legitimate governmental purpose can be challenged under the Due Process Clause. To hold otherwise would be to deny property owners any meaningful avenue for defending their property from onerous and irrational regulations.
Please see full brief below for more information.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.