By: David A. Smith
I like you people, but you are sentimental shits. You fall in love with the poets; the poets fall in love with the Marxists; the Marxists fall in love with themselves.
While rummaging through the Yee v. Escondido decision in search of understanding why the Supreme Court had not found rent control Unconstitutional, I came across reference to Justice Rehnquist’s lonely dissent in Fresh Pond Shopping Center v. Callahan et al.:
464 U.S. 875 (104 S.Ct. 218, 78 L.Ed.2d 215)
FRESH POND SHOPPING CENTER, INC. v. Acheson CALLAHAN et al
No. 82-2151
Decided: October 11, 1983
dissent, REHNQUIST [HTML]
The appeal is dismissed for want of a substantial federal question.
Justice REHNQUIST, dissenting.
Decades in dissent before becoming Chief Justice (1986)
Naturally I had to dive into it, for both personal and intellectual reasons.
What’s under the surface, anyhow?
When, in the summer of 1975, I first moved into a rent controlled apartment, I became an unwilling beneficiary of said rent control in Cambridge – because at the time not only was it illegal for the landlord to charge more than the $202 I initially paid, it was likewise illegal for me to pay more. Back then the law was still relatively fresh (enacted 1972); over the next 22 years, it steadily extended its grasp and eventually reached the absurd end point where it was illegal either (a) for an owner to move into a rent-controlled apartment that he or she owned, and (b) it was a criminal offense to hold a rent-controlled apartment vacant for more than sixty days.
Just trying to cover all the contingencies
In fact, I witnessed first-hand what I later came to recognize was the self-perpetuating, city-destroying inescapable cycle of judicial rent control, summarized in the inset box.
Hence the Rehnquist dissent is both personally memorable and professionally prescient, for as we’ll see, Justice Rehnquist foresaw the encroachment of rent control long before anyone else did:
Oh, I’m not trying to take over the property, I’m just growing organically
Appellant, Fresh Pond Shopping Center, Inc., signed a purchase agreement in June, 1979 whereby it would acquire a six-unit apartment building located adjacent to some property it already owned.
The Fresh Pond Shopping Center is a classical 1960s’ strip mall layout, adjacent to Fresh Pond Parkway and at that time disconnected from the subway system, whose Red Line stopped in Harvard Square (it now continues up through the Alewife T stop).
Changing the traffic patterns: entrance to the Alewife T stop
It was one of Cambridge’s few large retail destinations, and an extremely convenient one because of the high-traffic Alewife Brook Parkway and connections to Route 2, and because it had and has acres of parking, no mean amenity in congested Cambridge.
Conveniently on an arterial commuting road
Appellant planned to demolish the building and pave over the lot to provide parking to a commercial tenant of the shopping center.
Under ordinary circumstances, this would be a reuse of property of the sort utterly uncontroversial throughout America (the land of the free ice tea refill and the clean rest room), and indeed it represented job creation, which at that time – coming out of a nasty recession, and in a city that hadn’t yet turned around – was something Cambridge actively sought.
Looking northwest out of the parking lot at Rindge towers
Because the apartment units were rent-controlled rental housing, under the terms of Cambridge City Ordinance 926 appellant first had to obtain permission from the Cambridge Rent Control Board to remove the property from the rental housing market.
Although at the time the removal permit was sought only one of the six units was occupied, the Board denied the permit.
Defenders of rent control, and for that matter of any restrictive regulations, like to argue that their ‘permit to act’ processes are merely administrative, and that of course a worthy proposal will be approved – and therefore, that any facial challenge to their statute is unripe because the plaintiff failed to exhaust administrative remedies.
The whole idea wearies me
The Superior Court for Middlesex County held that under the decision of the Massachusetts Supreme Judicial Court in Flynn v. City of Cambridge, 383 Mass. 152, 418 N.E.2d 335 (1981), the restrictions on removing the apartments from the rental market in Cambridge imposed by Ordinance 926 were constitutional. The decision of the Superior Court was affirmed by an equally divided Massachusetts Supreme Judicial Court. Fresh Pond Shopping Center, Inc. v. Rent Control Board of Cambridge, — Mass. —, 446 N.E.2d 1060 (1983).
This approach also allows the regulators a nice tactical trick: someone files and loses, then sues and wins, whereupon the authority says, Oops, sorry, we will grant you relief, in effect abandoning the game when it is on the verge of losing and finishing it only when it is winning.
Such game-planning was an early force turning me against rent control, because the shenanigans I witnessed first-hand, and the cynicism that lay behind them, convinced me such a system was inherently unfair, if not rotten.
I would note probable jurisdiction in this case because I believe the case presents important and difficult questions concerning the application of the Takings Clause of the Fifth and Fourteenth Amendments of the Constitution, which have not been decided before by this Court. They might be postponed or avoided if the case were here on certiorari –
By that phrase Justice Rehnquist is stating, correctly, that if the case has been adjudicated only in state court, not Federal, and hence if there are issues under the US Constitution, rather than the Massachusetts Constitution, they will not have been heard up to now, unlike in a certiorari application, where the issues would have been litigated in federal court, and hence would have generated a factual and testamentary record.
– but the case is an appeal; we act on the merits whatever we do.
“We act on the merits whatever we do.” In this the justice was right – failure to take up the issue would have the effect of adjudicating it against the plaintiffs, who would have, and in actual fact did have, no further redress.
I wish I knew what to do next
The primary feature of the Cambridge rent control statute, 1976 Mass. Acts, ch. 36, is to place virtually all residential rental property in Cambridge under control of the Cambridge Rent Control Board, whose members are appellees here.
As my forte is housing, not health care, I am trying not to read echoes of the ACA individual mandate issue so recently argued in the Supreme Court (and currently undecided), yet over and over I am struck by the parallels. When government regulation goes ‘too far,’ it shifts from being a disinterested referee or traffic cop and instead becomes an active and interested participant, and as it does it becomes increasingly prescriptive and proscriptive.
Owners of rent-controlled property are also prohibited from evicting tenants without first obtaining a certificate of eviction from the Rent Control Board.
Not only can the owner not convert the property to another use, the owner cannot evict the resident unless the Rent Control Board says so.
The statute limits issuance of eviction certificates to circumstances where tenants have committed certain improper acts.
Again, I have first-hand memories of the practical impossibility of achieving eviction. Landlords paid tenants to leave, even when the tenant was in default.
The statute preserves the landlord’s right to obtain a certificate of eviction to recover possession of the property only for occupancy by the owner or certain of his family members, or if the property is to be removed from the housing market through demolition or otherwise.
Each intervention, in turn, further distorts the market, and as the market becomes further distorted, participants seek to escape it, which triggers the next round of restriction:
I’ll untangle this any minute!
Although the state enabling statute preserves in limited fashion a landlord’s traditional right to evict a tenant in order to occupy a rental unit personally, Cambridge City Ordinance 926 eliminated the landlord’s right to evict a tenant save when the Rent Control Board first issues a “removal” permit. Ordinance 926 delegates virtually unfettered discretion to the Board to determine whether to grant a removal permit.
Eventually what had been private property is converted into a public utility, without the necessity of an eminent domain finding or of paying eminent domain compensation … provided that one takes care to leave one option that seemingly looks good:
This way, sir; it’s the way out
[Continued tomorrow in Part 2.]