The Spectacle Blog

Challenge to Manhattan’s Rent Control Laws Goes to Supreme Court

By on 12.21.11 | 12:49PM

A challenge to New York City's onerous rent control laws has been granted cert by the Supreme Court according to the New York Times. The plaintiff, James Harmon, a former lawyer in the Reagan adminisration and an alumnus of West Point, inherited the house from his grandparents, who worked long hours as a governess and a waiter to afford the home. Harmon argues that the rent stablization laws amount to the government taking his property without properly compensating him for it.

Harmon has taken to the Supreme Court because the lower courts, and even his assemblywoman, Linda B. Rosenthal, are fine with the current regime. Rosenthal herself is quoted in the Times sounding a bit like an Occupy Wall Street devotee:

Ms. Rosenthal said Mr. Harmon had asked for an exception to rent regulations for his building, which she found untenable because it would, she said, extend to thousands of other people in “the vanishing middle class.”

“I understand he thinks he could make more money, that he is being deprived,” she said. “But I have so many constituents who would willingly trade his problems for theirs.”

As for luck, she said, Mr. Harmon was “lucky enough to inherit a town house.”

She said her views had nothing to do with the fact that she lives in a rent-regulated apartment, though she added, “If I didn’t, I probably wouldn’t be representing tenants in this district because I couldn’t afford to live in the city.”

The chilling note here is that the assemblywoman appears unaware that we have a system by which hardworking parents can designate their belongings to children after their deaths. Ownership is ownership, regardless of the role of "luck." But in this account, Harmon is just lucky to have had hardworking grandparents, and he himself is not entitled to keep what was legally transferred to him in a will. Assemblywoman Rosenthal, however, is arguing that she is entitled to her cheap rent because her political worldview demands that others make accommodations so she can do the job she likes. 

It's moments like these you realize that the conservative preoccupation with the federal government, though correct, just might be diverting resources from an ultimately more winnable fight against local despots who put their feet up on the backs of taxpayers.

While the lower courts have ruled against Harmon, the Supreme Court has asked that the city and state file answers to Harmon's petition to have his case heard. Asked about their chances at winning, an attorney for the city boasted his confidence that the lower courts' rulings would stand.

Rent stabilized tenants are paying 59 percent below market rates to live in Harmon's house, and one tenant even maintains a house on Long Island. This is reminiscent of a famous scandal in which then-UN Secretary General Kofi Annan maintained a riverfront rent-subsidized apartment in the Mitchell-Lama complex managed by New York City, designed to provide assistance to "moderate" and "middle-income" families. Whatever salary Annan was making, it surely didn't leave him in such poverty as to require a $10,000 subsidy from taxpayers.

Annan's case, however, was one in which he was bilking taxpayers by taking advantage of a generous and poorly regulated subsidy. Thanks to rent control laws, private landlords are bilked by New York City to the benefit of well-to-do tenants, hiding the difference between the market rate they are owed and the rent they actually get paid.

What's most interesting about this case is that Harmon is demanding compensation -- rightly so -- for a mandate imposed on him by a local government. Is Harmon entitled to the value of the property the government is letting go for cheaper?

Imagine the disastrous consequences to the New York City budget if they had to compensate landlords for the difference, and keep in mind this fact: There are over a million rent controlled or rent stabilized units in New York City. It's no wonder the lower courts passed the buck and the Supreme Court won't.

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