Facts
- New York City enacted local laws to address homelessness and preserve low-cost single-room occupancy (SRO) housing as the supply of such housing declined.
- After earlier legislation imposing affirmative rehabilitation and rental duties was partially invalidated, the City enacted Local Law No. 9 of 1987.
- Local Law No. 9 imposed a five-year moratorium (with potential unlimited renewals) on demolition, alteration, or conversion of SRO buildings.
- The law required owners to restore SRO units to habitable condition and lease them at controlled rents for an indefinite period.
- The law limited the time SRO units could remain vacant and imposed substantial monetary penalties for noncompliance.
- SRO owners and developers brought a facial challenge, alleging the law effected an uncompensated taking under the Federal and New York Constitutions.
Issues
- Whether Local Law No. 9, by requiring owners to rehabilitate and rent SRO units at controlled rents and restricting demolition/alteration/conversion, effects a taking without just compensation under the Federal and New York Constitutions.
- Whether the law is facially invalid as a per se physical taking, a regulatory taking, or both.
Decision
- The New York Court of Appeals reversed the Appellate Division.
- The court held Local Law No. 9 facially unconstitutional as both a physical taking and a regulatory taking.
- The court declared the law null and void for violating the federal and state constitutional takings provisions.
Legal Principles
- A law that compels property owners to accept and retain occupants and continue leasing indefinitely can constitute a per se physical taking because it mandates a continuing occupation and denies the owner the right to exclude.
- Even absent a per se physical occupation, regulation can be a taking when it is severe and open-ended, compels a particular ongoing use, and substantially interferes with owners’ reasonable investment-backed expectations.
- The police power to address serious public problems does not permit government to shift the cost of a public program onto a narrow class of property owners by imposing affirmative, indefinite duties without providing just compensation.
- A takings claim may be resolved on a facial basis when the law’s terms, by their nature and mandatory structure, effect an unconstitutional taking in all applications.
Conclusion
The court invalidated New York City’s SRO preservation scheme because it required owners to rehabilitate and rent units at regulated rates for an indefinite period and barred changes in use through renewable moratoria, thereby effecting uncompensated physical and regulatory takings.