Supreme Court Rules New York Cannot Compel Landlords to Rent Units to Poor

In a setback for advocates of the homeless, the Supreme Court on Monday let stand a state court decision that New York City cannot force property owners to maintain one-room units for poor tenants.

The decision was not expected to have a broad and immediate impact across the nation because the New York City law went well beyond other city ordinances, including one adopted in Los Angeles a few months ago.

The Los Angeles law prevents speculators on Skid Row and in other areas from turning out the homeless and then converting badly needed residential hotels into commercial structures or market-rate housing. Los Angeles’ ordinance stops short of the New York law, which actually forced hotel owners to rent out their units to tenants. Owners in Los Angeles are allowed to leave their units vacant, although most choose to rent them to the poor.

But the action makes clear that the high court will not let local governments compel private property owners to rent to the poor.

“No one minimizes the tragic reality of homelessness,” said the New York Court of Appeals, whose ruling was upheld Monday. “But the city’s response--to foist its responsibility on private property owners--simply does not meet the requirements of the federal and state constitutions.”

The lower court ruling declaring New York City’s law unconstitutional relied heavily on two Supreme Court rulings in 1987, both of which arose in cases from Southern California. In those 5-4 rulings, one involving a church camp in Los Angeles County and the other a beachfront dispute in Ventura, the justices said that the government may not make use of private property unless it wants to pay for it.

The New York City ordinance, deemed an “emergency” response to the homeless crisis, violated the standards set by those rulings, the state court said.

For decades, New York City had tried to rid itself of “single-room occupancy” units, believing they blighted neighborhoods and discouraged new development.

In 1985, however, the city reversed course. Only 52,000 SROs were then left in the city. In order to preserve housing for the poorest residents, the council passed a strict law forbidding building owners from converting SROs to other uses. But, unlike Los Angeles, vacant units in New York must be upgraded and made available for rent, the law said. If any owner made any change in his building that lessened the number of available SROs, he was subject to a $150,000-per-building fine.

Several property owners cried foul. Some had bought nearly vacant, deteriorating hotels in mid-Manhattan with the intent of demolishing them and building high-rise office towers in their place. Instead, they found themselves forced into the low-income housing business.

In a suit against the city, they contended the ordinance violated the Fifth Amendment, which says that “private property (shall not) be taken for public use without just compensation.”

On July 6, New York state’s highest court agreed and struck down the law on a 5-2 vote.

In appeals to the Supreme Court, lawyers for New York City, joined by advocates for the homeless, contended the law should be reinstated as a “national model” for coping with homelessness. Their legal briefs noted that state courts in California had upheld laws in Santa Monica and San Francisco which sharply restricted an owner’s authority to evict low-income tenants.

Nevertheless, without dissent, the high court dismissed the appeals. (City of New York vs. Seawall Associates, 89-388).

Patricia Friedel, an attorney with O’Melveny & Myers who helped draft Los Angeles’ hotel preservation law, said the Supreme Court’s ruling will not affect the local ordinance.

“We knew about the New York (state court) opinion before drafting our ordinance and we carefully avoided the problems their law encountered,” Friedel said. “The Supreme Court is saying this was a taking (of private property)--that New York’s law was unconstitutional.”