U.S. Supreme Court Pennell v. City of San Jose, 485 U.S. 1 (1988) Pennell v. City of San
Jose No. 86-753 Argued November 10,
1987 Decided February 24,
1988 485 U.S.
1 APPEAL FROM THE SUPREME COURT OF
CALIFORNIA Syllabus Under a San Jose, Cal., rent control ordinance (Ordinance), a
landlord may automatically raise the annual rent of a tenant in
possession by as much as eight percent, but if a tenant objects to
a higher increase, a hearing is required to determine whether the
landlord's proposed increase is "reasonable under the
circumstances," and the hearing officer is directed to consider
specified factors, including "the hardship to a tenant."
Appellants, an individual landlord and Tri-County Apartment House
Owners Association (Association), which represents owners and
lessors of real property located in San Jose, filed a state court
action seeking a declaration that the Ordinance, particularly the
"tenant hardship" provision, is facially invalid under the Federal
Constitution. The court entered judgment on the pleadings in
appellants' favor, and the California Court of Appeal affirmed.
However, the California Supreme Court reversed, rejecting
appellants' arguments under the Takings Clause of the Fifth
Amendment and the Equal Protection and Due Process Clauses of the
Fourteenth Amendment. Held: 1. Appellants have standing to challenge the Ordinance's
constitutionality, even though they did not allege that either the
individual appellant or appellant Association's members have
"hardship tenants" who might trigger the Ordinance's hearing
process, or that they have been or will be aggrieved by a hearing
officer's determination that a certain proposed rent increase is
unreasonable on the ground of tenant hardship. When standing is
challenged on the basis of the pleadings, all material allegations
of the complaint must be taken as true, and the complaint must
be Page 485 U. S. 2 construed in favor of the complaining party. Appellants alleged
that their properties are subject to the Ordinance, and stated at
oral argument that the Association represents "most of the
residential unit owners in the city and [has] many hardship
tenants." Thus, the likelihood of enforcement of the Ordinance,
with the concomitant probability that a rent will be reduced below
what the landlord would otherwise be able to obtain, is a
sufficient threat of actual injury to satisfy Art. III's
requirement that a plaintiff who challenges a law must demonstrate
a realistic danger of sustaining a direct injury as a result of the
law's operation or enforcement. Pp. 485 U. S. 6 -8.

															2. Appellants' contention that application of the Ordinance's
tenant hardship provision violates the Takings Clause -- since
reducing, because of tenant hardship, what would otherwise be a
"reasonable" rent under the other, objective factors specified in
the Ordinance relating to the landlord's costs or the rental
market's condition, accomplishes a taking and transfer of the
landlord's property to individual hardship tenants -- is premature.
There is no evidence that the tenant hardship provision has in fact
ever been relied upon by a hearing officer to reduce a rent below
the figure it would have been set at on the basis of the other
specified factors. In addition, the Ordinance does not require that
a hearing officer in fact reduce a proposed rent increase on
grounds of tenant hardship, but only makes it mandatory that tenant
hardship be considered. In takings cases, the constitutionality of
laws should not be decided except in an actual factual setting that
makes such a decision necessary. Pp. 485 U. S.
8 -11.

															3. The mere provision in the Ordinance that a hearing officer
may consider the tenant's hardship in finally fixing a reasonable
rent does not render the Ordinance facially invalid under the Due
Process Clause. The Ordinance's purpose of preventing unreasonable
rent increases caused by the city's housing shortage is a
legitimate exercise of appellees' police powers. Moreover, there is
no merit to appellants' argument that it is arbitrary,
discriminatory, or demonstrably irrelevant for appellees to attempt
to accomplish the additional goal of reducing the burden of housing
costs on low-income tenants by requiring that "hardship to a
tenant" be considered in determining the amount of excess rent
increase that is "reasonable under the circumstances." The
protection of consumer welfare is a legitimate and rational goal of
price or rate regulation. The Ordinance's scheme represents a
rational attempt to accommodate the conflicting interests of
protecting tenants from burdensome rent increases while at the same
time ensuring that landlords are guaranteed a fair return on their
investment. Pp. 485 U. S.
11 -14.

															4. The Ordinance, on its face, does not violate the Equal
Protection Clause. Its classification scheme is rationally related
to the legitimate Page 485 U. S. 3 purpose of protecting tenants. It is not irrational for the
Ordinance to treat landlords differently on the basis of whether or
not they have hardship tenants. Pp. 485 U. S.
14 -15. 42 Cal. 3d
365 , 721 P.2d 1111 ,
affirmed.

															REHNQUIST, C.J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, and STEVENS, JJ., joined.
SCALIA, J., filed an opinion concurring in part and dissenting in
part, in which O'CONNOR, J., joined, post, p. 485 U. S. 15 .
KENNEDY, J., took no part in the consideration or decision of the
case. Page 485 U. S. 4 CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.

															This case involves a challenge to a rent control ordinance
enacted by the city of San Jose, California, that allows a hearing
officer to consider, among other factors, the "hardship to a
tenant" when determining whether to approve a rent increase
proposed by a landlord. Appellants Richard Pennell and the
Tri-County Apartment House Owners Association sued in the Superior
Court of Santa Clara County seeking a declaration that the
ordinance, in particular the "tenant hardship" provisions, are
"facially unconstitutional and therefore . . . illegal and void."
The Superior Court entered judgment on the pleadings in favor of
appellants, sustaining their claim that the tenant hardship
provisions violated the Takings Clause of the Fifth Amendment, as
made applicable to the States by the Fourteenth Amendment. The
California Court of Appeal affirmed this judgment, 154 Cal. App. 3d
1019, 201 Cal. Rptr. 728 (1984), but the Supreme Court of
California reversed, 42 Cal. 3d
365 , 721 P.2d 1111 (1986), each by a divided vote. The majority of the Supreme Court
rejected appellants' arguments under the Takings Clause and the
Equal Protection and Due Process Clauses of the Fourteenth
Amendment; the dissenters in that court thought that the tenant
hardship provisions were a "forced subsidy imposed on the landlord"
in violation of the Takings Clause. Id. at 377, 721 P.2d
at 1119. On appellants' appeal to this Court, we postponed
consideration of the question of jurisdiction, 480 U.S. 905 (1987),
and now, having heard oral argument, we affirm the judgment of the
Supreme Court of California.

															The city of San Jose enacted its rent control ordinance
(Ordinance) in 1979 with the stated purpose of

															"alleviat[ing] some of the more immediate needs created by San
Jose's housing situation. These needs include but are not limited
to the prevention of excessive and unreasonable rent increases, the
alleviation of undue hardships Page 485 U. S. 5 upon individual tenants, and the assurance to landlords of a
fair and reasonable return on the value of their property."

															San Jose Municipal Ordinance 19696, § 5701.2. [ Footnote 1 ] At the heart of the Ordinance is
a mechanism for determining the amount by which landlords subject
to its provisions may increase the annual rent which they charge
their tenants. A landlord is automatically entitled to raise the
rent of a tenant in possession [ Footnote 2 ] by as much as eight percent; if a tenant
objects to an increase greater than eight percent, a hearing is
required before a "Mediation Hearing Officer" to determine whether
the landlord's proposed increase is "reasonable under the
circumstances." The Ordinance sets forth a number of factors to be
considered by the hearing officer in making this determination,
including "the hardship to a tenant." § 5703.28(c)(7). Because
appellants concentrate their attack on the consideration of this
factor, we set forth the relevant provision of the Ordinance in
full:

															"5703.29. Hardship to Tenants. In the case of a rent increase or
any portion thereof which exceeds the standard set in Section
5703.28(a) or (b), then with respect to such excess and whether or
not to allow same to be part of the increase allowed under this
Chapter, the Hearing Officer shall consider the economic and
financial hardship imposed on the present tenant or tenants of the
unit or units to which such increases apply. If, on balance, the
Hearing Officer determines that the proposed increase Page 485 U. S. 6 constitutes an unreasonably severe financial or economic
hardship on a particular tenant, he may order that the excess of
the increase which is subject to consideration under subparagraph
(c) of Section 5703.28, or any portion thereof, be disallowed. Any
tenant whose household income and monthly housing expense meets
[certain income requirements] shall be deemed to be suffering under
financial and economic hardship which must be weighed in the
Hearing Officer's determination. The burden of proof in
establishing any other economic hardship shall be on the
tenant."

															If either a tenant or a landlord is dissatisfied with the
decision of the hearing officer, the Ordinance provides for binding
arbitration. A landlord who attempts to charge or who receives rent
in excess of the maximum rent established as provided in the
Ordinance is subject to criminal and civil penalties.

															Before we turn to the merits of appellants' contentions, we
consider the claim of appellees that appellants lack standing to
challenge the constitutionality of the Ordinance. The original
complaint in this action states that appellant Richard Pennell "is
an owner and lessor of 109 rental units in the City of San Jose."
Appellant Tri-County Apartment House Owners Association
(Association) is said to be

															"an unincorporated association organized for the purpose of
representing the interests of the owners and lessors of real
property located in the City of San Jose."

															App. 2-3. The complaint also states that the real property owned
by appellants is "subject to the terms of" the Ordinance. But,
appellees point out, at no time did appellants allege that either
Pennell or any member of the Association has "hardship tenants" who
might trigger the Ordinance's hearing process, nor did they
specifically allege that they have been or will be aggrieved by the
determination of a hearing officer that a certain proposed rent
increase is unreasonable on the ground of tenant hardship. As
appellees put it, "[a]t this point in time, it is speculative" Page 485 U. S. 7 whether any of the Association's members will be injured in fact
by the Ordinance's tenant hardship provisions. Thus, appellees
contend, appellants lack standing under either the test for
individual standing, see, e.g., Valley Forge Christian College
v. Americans United for Separation of Church & State,
Inc., 454 U. S. 464 , 454 U. S. 472 (1982) (individual standing requires an "'actual injury redressable
by the court"'), or the test for associational standing, see
Hunt v. Washington Apple Advertising Comm'n, 432 U.
S. 333 , 432 U. S. 343 (1977) (an association has standing on behalf of its members only
when "its members would otherwise have standing to sue in their own
right"). [ Footnote 3 ]

															We must keep in mind, however, that "application of the
constitutional standing requirement [is not] a mechanical
exercise," Allen v. Wright, 468 U.
S. 737 , 468 U. S. 751 (1984), and that, when standing is challenged on the basis of the
pleadings, we "accept as true all material allegations of the
complaint, and . . . construe the complaint in favor of the
complaining party," Warth v. Seldin, 422 U.
S. 490 , 422 U. S. 501 (1975); see also Gladstone, Realtors v. Village of
Bellwood, 441 U. S. 91 , 441 U. S. 109 (1979). Here, appellants specifically alleged in their complaint
that appellants' properties are "subject to the terms of" the
Ordinance, and they stated at oral argument that the Association
represents "most of the residential unit owners in the city and
[has] many hardship tenants," Tr. of Oral Arg. 42; see also
id. at 7; Reply Brief for Appellants 2. Page 485 U. S. 8 Accepting the truth of these statements, which appellees do not
contest, it is not "unadorned speculation," Simon v. Eastern
Kentucky Welfare Rights Organization, 426 U. S.
26 , 426 U. S. 44 (1976), to conclude that the Ordinance will be enforced against
members of the Association. The likelihood of enforcement, with the
concomitant probability that a landlord's rent will be reduced
below what he or she would otherwise be able to obtain in the
absence of the Ordinance, is a sufficient threat of actual injury
to satisfy Art. III's requirement that

															"[a] plaintiff who challenges a statute must demonstrate a
realistic danger of sustaining a direct injury as a result of the
statute's operation or enforcement." Babbitt v. Farm Workers, 442 U.
S. 289 , 442 U. S. 298 (1979). [ Footnote 4 ]

															This said, we recognize that the record in this case leaves much
to be desired in terms of specificity for purposes of determining
the standing of appellants to challenge this Ordinance. Undoubtedly
this is at least in part a reflection of the fact that the case
originated in a state court where Art. III's proscription against
advisory opinions may not apply. We strongly suggest that, in
future cases, parties litigating in this Court under circumstances
similar to those here take pains to supplement the record in any
manner necessary to enable us to address with as much precision as
possible any question of standing that may be raised.

															Turning now to the merits, we first address appellants'
contention that application of the Ordinance's tenant hardship
provisions violates the Fifth and Fourteenth Amendments' Page 485 U. S. 9 prohibition against taking of private property for public use
without just compensation. In essence, appellants' claim is as
follows: § 5703.28 of the Ordinance establishes the seven factors
that a hearing officer is to take into account in determining the
reasonable rent increase. The first six of these factors are all
objective, and are related either to the landlord's costs of
providing an adequate rental unit or to the condition of the rental
market. Application of these six standards results in a rent that
is "reasonable" by reference to what appellants contend is the only
legitimate purpose of rent control: the elimination of "excessive"
rents caused by San Jose's housing shortage. When the hearing
officer then takes into account "hardship to a tenant" pursuant to
§ 5703.28(c)(7) and reduces the rent below the objectively
"reasonable" amount established by the first six factors, this
additional reduction in the rent increase constitutes a "taking."
This taking is impermissible, because it does not serve the purpose
of eliminating excessive rents -- that objective has already been
accomplished by considering the first six factors -- instead, it
serves only the purpose of providing assistance to "hardship
tenants." In short, appellants contend, the additional reduction of
rent on grounds of hardship accomplishes a transfer of the
landlord's property to individual hardship tenants; the Ordinance
forces private individuals to shoulder the "public" burden of
subsidizing their poor tenants' housing. As appellants point
out,

															"[i]t is axiomatic that the Fifth Amendment's just compensation
provision is 'designed to bar Government from forcing some people
alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole.'" First English Evangelical Lutheran Church of Glendale v.
County of Los Angeles, 482 U. S. 304 , 482 U. S.
318 -319 (1987) (quoting Armstrong v. United
States, 364 U. S. 40 , 364 U. S. 49 (1960)).

															We think it would be premature to consider this contention on
the present record. As things stand, there simply is no evidence
that the "tenant hardship clause" has in fact ever Page 485 U. S. 10 been relied upon by a hearing officer to reduce a rent below the
figure it would have been set at on the basis of the other factors
set forth in the Ordinance. In addition, there is nothing in the
Ordinance requiring that a hearing officer in fact reduce a
proposed rent increase on grounds of tenant hardship. Section
5703.29 does make it mandatory that hardship be considered -- it
states that "the Hearing Officer shall consider the
economic hardship imposed on the present tenant" -- but it then
goes on to state that if "the proposed increase constitutes an
unreasonably severe financial or economic hardship . . . he may order that the excess of the increase" be disallowed.
§ 5703.29 (emphasis added). Given the "essentially ad hoc, factual inquir[y]" involved in the takings analysis, Kaiser
Aetna v. United States, 444 U. S. 164 , 444 U. S. 175 (1979), we have found it particularly important in takings cases to
adhere to our admonition that "the constitutionality of statutes
ought not be decided except in an actual factual setting that makes
such a decision necessary." Hodel v. Virginia Surface Mining
& Reclamation Assn., Inc., 452 U.
S. 264 , 452 U. S.
294 -295 (1981). In Virginia Surface Mining, for
example, we found that a challenge to the Surface Mining Control
and Reclamation Act of 1977, 91 Stat. 447, 30 U.S.C. § 1201 et
seq., was "premature," 452 U.S. at 452 U. S. 296 ,
n. 37, and "not ripe for judicial resolution," id. at 452 U. S. 297 ,
because the property owners in that case had not identified any
property that had allegedly been taken by the Act, nor had they
sought administrative relief from the Act's restrictions on surface
mining. Similarly, in this case we find that the mere fact that a
hearing officer is enjoined to consider hardship to the tenant in
fixing a landlord's rent, without any showing in a particular case
as to the consequences of that injunction in the ultimate
determination of the rent, does not present a sufficiently concrete
factual setting for the adjudication of the takings claim
appellants raise here. Cf. CIO v. McAdory, 325 U.
S. 472 , 325 U. S.
475 -476 (1945) (declining to consider the validity of a
state statute when the record did not Page 485 U. S. 11 show that the statute would ever be applied to any of the
petitioner's members). [ Footnote
5 ]

															Appellants also urge that the mere provision in the Ordinance
that a hearing officer may consider the hardship of the
tenant in finally fixing a reasonable rent renders the Ordinance
"facially invalid" under the Due Process and Equal Protection
Clauses, even though no landlord ever has its rent diminished by as
much as one dollar because of the application of this provision.
The standard for determining whether a state price-control
regulation is constitutional under the Due Process Clause is well
established:

															"Price control is 'unconstitutional . . . if arbitrary,
discriminatory, or demonstrably irrelevant to the policy the
legislature is free to adopt.' . . ." Permian Basin Area Rate Cases, 390 U.
S. 747 , 390 U. S.
769 -770 (1968) (quoting Nebbia v. New York, 291 U. S. 502 , 291 U. S. 539 (1934)). In other contexts we have recognized that the government
may intervene in the marketplace to regulate rates or prices that
are artificially inflated as a result of the existence of a
monopoly or near monopoly, see, e.g., FCC v. Florida Power
Corp., 480 U. S. 245 , 480 U. S.
250 -254 (1987) (approving limits on rates charged to
cable companies for access to telephone poles); FPC v. Texaco
Inc., 417 U. S. 380 , 417 U. S.
397 -398 (1974) (recognizing that federal regulation of
the natural Page 485 U. S. 12 gas market was in response to the threat of monopoly pricing),
or a discrepancy between supply and demand in the market for a
certain product, see, e.g., Nebbia v. New York, supra, at 291 U. S. 530 , 291 U. S. 538 (allowing a minimum price for milk to offset a "flood of surplus
milk"). Accordingly, appellants do not dispute that the Ordinance's
asserted purpose of "prevent[ing] excessive and unreasonable rent
increases" caused by the "growing shortage of and increasing demand
for housing in the City of San Jose," § 5701.2, is a legitimate
exercise of appellees' police powers. [ Footnote 6 ] Cf. Block v. Hirsh, 256 U.
S. 135 , 256 U. S. 156 (1921) (approving rent control in Washington, D.C. on the basis of
Congress' finding that housing in the city was "monopolized"). They
do argue, however, that it is "arbitrary, discriminatory, or
demonstrably irrelevant," Permian Basin Area Rate Cases,
supra, at 390 U. S.
769 -770, for appellees to attempt to accomplish the
additional goal of reducing the burden of housing costs on
low-income tenants by requiring that "hardship to a tenant" be
considered in determining the amount of excess rent increase that
is "reasonable under the circumstances" pursuant to § 5703.28.
[ Footnote 7 ] As appellants put
it, "[t]he objective of alleviating individual tenant hardship is .
. . not a policy the legislature is free to adopt' in a rent
control ordinance." Reply Brief for Appellants 16. Page 485 U. S.
13 We reject this contention, however, because we have long
recognized that a legitimate and rational goal of price or rate
regulation is the protection of consumer welfare. See, e.g.,
Permian Basin Area Rate Cases, supra, at 390 U. S. 770 ; FPC v. Hope Natural Gas Co., 320 U.
S. 591 , 320 U. S.
610 -612 (1944) ("The primary aim of [the Natural Gas
Act] was to protect consumers against exploitation at the hands of
natural gas companies"). Indeed, a primary purpose of rent control
is the protection of tenants. See, e.g., Bowles v.
Willingham, 321 U. S. 503 , 321 U. S. 513 ,
n. 9 (1944) (one purpose of rent control is "to protect persons
with relatively fixed and limited incomes, consumers, wage earners
. . . from undue impairment of their standard of living"). Here,
the Ordinance establishes a scheme in which a hearing officer
considers a number of factors in determining the reasonableness of
a proposed rent increase which exceeds eight percent and which
exceeds the amount deemed reasonable under either § 5703.28(a) or §
5703.28(b). The first six factors of § 5703.28(c) focus on the
individual landlord -- the hearing officer examines the history of
the premises, the landlord's costs, and the market for comparable
housing. Section 5703.28(c)(5) also allows the landlord to bring
forth any other financial evidence -- including presumably evidence
regarding his own financial status -- to be taken into account by
the hearing officer. It is in only this context that the Ordinance
allows tenant hardship to be considered and, under § 5703.29,
"balance[d]" with the other factors set out in § 5703.28(c). Within
this scheme, § 5703.28(c) represents a rational attempt to
accommodate the conflicting interests of protecting tenants from
burdensome rent increases while at the same time ensuring that
landlords are guaranteed a fair return on their investment. Cf.
Bowles v. Willingham, supra, at 517 (considering, but
rejecting, the contention that rent control must be established
"landlord by landlord, as in the fashion of utility rates"). We
accordingly find that the Ordinance, which so carefully considers
both the individual circumstances of the landlord and Page 485 U. S. 14 the tenant before determining whether to allow an additional
increase in rent over and above certain amounts that are deemed
reasonable, does not on its face violate the Fourteenth Amendment's
Due Process Clause. [ Footnote
8 ]

															We also find that the Ordinance does not violate the Amendment's
Equal Protection Clause. Here again, the standard is deferential;
appellees need only show that the classification scheme embodied in
the Ordinance is "rationally related to a legitimate state
interest." New Orleans v. Dukes, 427 U.
S. 297 , 427 U. S. 303 (1976). As we stated in Vance v. Bradley, 440 U. S.
93 (1979),

															"we will not overturn [a statute that does not burden a suspect
class or a fundamental interest] unless the varying treatment of
different groups or persons is so unrelated to the achievement of
any combination of legitimate purposes that we can only conclude
that the legislature's actions were irrational." Id. at 440 U. S. 97 . In
light of our conclusion above that the Ordinance's tenant hardship
provisions are designed to serve the legitimate purpose of
protecting tenants, we can hardly conclude that it is irrational
for the Ordinance to treat certain landlords differently on the
basis of whether or not they have hardship tenants. The Ordinance
distinguishes between landlords because doing so furthers the
purpose of ensuring that individual tenants do not suffer
"unreasonable" hardship; it would be inconsistent to state that
hardship is a legitimate factor to be considered, but then hold
that appellees could not tailor the Ordinance so that only
legitimate hardship cases are redressed. Cf. Woods v. Cloyd W.
Miller Co., 333 U. S. 138 , 333 U. S. 145 (1948) Page 485 U. S. 15 (Congress "need not control all rents or none. It can select
those areas or those classes of property where the need seems the
greatest"). We recognize, as appellants point out, that in general
it is difficult to say that the landlord "causes" the tenant's
hardship. But this is beside the point -- if a landlord does have a
hardship tenant, regardless of the reason why, it is rational for
appellees to take that fact into consideration under § 5703.28 of
the Ordinance when establishing a rent that is "reasonable under
the circumstances."

															For the foregoing reasons, we hold that it is premature to
consider appellants' claim under the Takings Clause and we reject
their facial challenge to the Ordinance under the Due Process and
Equal Protection Clauses of the Fourteenth Amendment. The judgment
of the Supreme Court of California is accordingly Affirmed. JUSTICE KENNEDY took no part in the consideration or decision of
this case.

															[ Footnote 1 ]

															In order to be consistent with the decisions below, we refer
throughout this opinion to the sections of the Ordinance as
originally designated. We note, however, that the San Jose
Municipal Code has recently been recodified, and the Ordinance now
appears at Chapter 17.23 of the new Code.

															[ Footnote 2 ]

															Under § 5703.3, the Ordinance does not apply to rent or rent
increases for new rental units first rented after the Ordinance
takes effect, § 5703.3 (a), to the rental of a unit that has been
voluntarily vacated, § 5703.3(b)(1), or to the rental of a unit
that is vacant as a result of eviction for certain specified acts,
§ 5703.3(b)(2).

															[ Footnote 3 ]

															Our cases also impose two additional requirements for
associational or representational standing: the interests the
organization seeks to protect must be "germane to the
organization's purpose," Hunt, 432 U.S. at 432 U. S. 343 ,
and "neither the claim asserted nor the relief requested requires
the participation of individual members in the lawsuit," ibid. See also Automobile Workers v. Brock, 477 U. S. 274 , 477 U. S.
281 -282 (1986). Both of these requirements are satisfied
here. The Association was "organized for the purpose of
representing the interests of the owners and lessors of real
property" in San Jose in this lawsuit, App. 3, and the facial
challenge that the Association makes to the Ordinance does not
require the participation of individual landlords.

															[ Footnote 4 ]

															Appellees also argue that Pennell lacks standing individually
because, in early 1987, he sold the properties he owned at the time
the complaint in this action was filed. See Brief for
Appellees 8. In a declaration submitted to the Court, Pennell
admits that he sold these properties, but states that he recently
repurchased and now owns one of the apartment buildings in San Jose
that he formerly owned. Declaration of Richard Pennell 117. That
property was and still is "subject to the Ordinance." Id., � 8. Because we conclude that the Association has standing and that
therefore we have jurisdiction over this appeal, we find it
unnecessary to decide whether Pennell's sale and repurchase of the
property affects his standing here.

															[ Footnote 5 ]

															For this reason we also decline to address appellants'
contention that application of § 5703.28(c)(7) to reduce an
otherwise reasonable rent increase on the basis of tenant hardship
violates the Fourteenth Amendment's due process and equal
protection requirements. See Hodel v. Indiana, 452 U. S. 314 , 452 U. S.
335 -336 (1981) (dismissing as "premature" a due process
challenge to the civil penalty provision of the Surface Mining Act
because "appellees have made no showing that they were ever
assessed civil penalties under the Act, much less that the
statutory prepayment requirement was ever applied to them or caused
them any injury").

															Appellants and several amici also argue that the
Ordinance's combination of lower rents for hardship tenants and
restrictions on a landlord's power to evict a tenant amounts to a
physical taking of the landlord's property. We decline to address
this contention not only because it was raised for the first time
in this Court, but also because it, too, is premised on a hearing
officer's actually granting a lower rent to a hardship tenant.

															[ Footnote 6 ]

															Appellants do not claim, as do some amici, that rent
control is per se a taking. We stated in Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.
S. 419 (1982), that we have

															"consistently affirmed that States have broad power to regulate
housing conditions in general and the landlord-tenant relationship
in particular without paying compensation for all economic injuries
that such regulation entails." Id. at 458 U. S. 440 (citing, inter alia, Bowles v. Willingham, 321 U.
S. 503 , 321 U. S.
517 -518 (1944)). And in FCC v. Florida Power
Corp., 480 U. S. 245 (1987), we stated that "statutes regulating the economic relations
of landlords and tenants are not per se takings." Id. at 480 U. S. 252 .
Despite amici 's urgings, we see no need to reconsider the
constitutionality of rent control per se. [ Footnote 7 ]

															As we noted above, see n 5, supra, to the extent that appellants' due
process argument is based on the claim that the Ordinance forces
landlords to subsidize individual tenants, that claim is premature
and not presented by the facts before us.

															[ Footnote 8 ]

															The consideration of tenant hardship also serves the additional
purpose, not stated on the face of the Ordinance, of reducing the
costs of dislocation that might otherwise result if landlords were
to charge rents to tenants that they could not afford. Particularly
during a housing shortage, the social costs of the dislocation of
low-income tenants can be severe. By allowing tenant hardship to be
considered under § 5703.28(c), the Ordinance enables appellees to
"fine tune" their rent control to take into account the risk that a
particular tenant will be forced to relocate as a result of a
proposed rent increase.

															JUSTICE SCALIA, with whom JUSTICE O'CONNOR joins, concurring in
part and dissenting in part.

															I agree that the tenant hardship provision of the Ordinance does
not, on its face, violate either the Due Process Clause or the
Equal Protection Clause of the Fourteenth Amendment. I disagree,
however, with the Court's conclusion that appellants' takings claim
is premature. I would decide that claim on the merits, and would
hold that the tenant hardship provision of the Ordinance effects a
taking of private property without just compensation in violation
of the Fifth and Fourteenth Amendments. I Appellants contend that any application of the tenant hardship
provision of the San Jose Ordinance would effect an uncompensated
taking of private property because that provision does not
substantially advance legitimate state interests and because it
improperly imposes a public burden on individual Page 485 U. S. 16 landlords. I can understand how such a claim -- that a law
applicable to the plaintiffs is, root and branch, invalid -- can be
readily rejected on the merits by merely noting that at least some
of its applications may be lawful. But I do not understand how such
a claim can possibly be avoided by considering it "premature."
Suppose, for example, that the feature of the rental ordinance
under attack was a provision allowing a hearing officer to consider
the race of the apartment owner in deciding whether to allow a rent
increase. It is inconceivable that we would say judicial challenge
must await demonstration that this provision has actually been
applied to the detriment of one of the plaintiffs. There is no
difference, it seems to me, when the facial, root-and-branch
challenge rests upon the Takings Clause, rather than the Equal
Protection Clause.

															The Court confuses the issue by relying on cases, and portions
of cases, in which the Takings Clause challenge was not (as here)
that the law in all its applications took property without just
compensation, but was rather that the law's application in
regulating the use of particular property so severely reduced the
value of that property as to constitute a taking. It is in that
context, and not (as the Court suggests) generally, that
takings analysis involves an "essentially ad hoc, factual
inquir[y]," Kaiser Aetna v. United States, 444 U.
S. 164 , 444 U. S. 175 (1979). We said as much less than a year ago, and it is surprising
that we have so soon forgotten:

															"In addressing petitioners' claim, we must not disregard the
posture in which this case comes before us. The District Court
granted summary judgment to respondents only on the facial
challenge to the Subsidence Act. The court explained that ' . . . the only question before this court is whether the mere
enactment of the statutes and regulations constitutes a
taking. ' . . ."

															"The posture of the case is critical, because we have recognized
an important distinction between a claim that the mere enactment of
a statute constitutes a taking and Page 485 U. S. 17 a claim that the particular impact of government action on a
specific piece of property requires the payment of just
compensation. This point is illustrated by our decision in Hodel v. Virginia Surface Mining & Reclamation Assn.,
Inc., 452 U. S. 264 (1981), in which
we rejected a preenforcement challenge to the constitutionality of
the Surface Mining Control and Reclamation Act of 1977. . . . The
Court [there] explained:"

															" * * * *" "Because appellees' taking claim arose in the context of a
facial challenge, it presented no concrete controversy concerning
either application of the Act to particular surface mining
operations or its effect on specific parcels of land. Thus, the
only issue properly before the District Court and, in turn, this
Court, is whether the 'mere enactment' of the Surface Mining Act
constitutes a taking. . . . The test to be applied in considering
this facial challenge is straightforward. A statute regulating the
uses that can be made of property effects a taking if it 'denies an
owner economically viable use of his land.'. . ."

															"Petitioners thus face an uphill battle in making a facial
attack on the Act as a taking." Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U. S. 470 , 480 U. S.
493 -495 (1987). While the battle was "uphill" in Keystone, we allowed it to be fought, and did not declare
it "premature."

															The same was true of the facial takings challenge in Hodel
v. Virginia Surface Mining & Reclamation Assn., Inc.,
supra. It is remarkable that the Court should point to that
case in support of its position, describing the holding as
follows:

															"In Virginia Surface Mining, for example, we found that
a challenge to the Surface Mining Control and Reclamation Act . . .
was 'premature,' . . . and 'not ripe for judicial Page 485 U. S. 18 resolution,' . . . because the property owners in that case had
not identified any property that had allegedly been taken by the
Act, nor had they sought administrative relief from the Act's
restrictions on surface mining." Ante at 485 U. S. 10 . But
this holding in Virginia Surface Mining applied only to
"the taking issue decided by the District Court," 452 U.S. at 452 U. S. 297 ,
which was the issue of the statute's validity as applied. Having rejected that challenge as premature, the Court then
continued (in the language we quoted in Keystone ):

															"Thus, the only issue properly before the District Court and, in
turn, this Court, is whether the 'mere enactment' of the Surface
Mining Act constitutes a taking."

															452 U.S. at 452 U. S. 295 .
That issue was not rejected as premature, but was decided
on its merits, id. at 452 U. S.
295 -297, just as it was in Keystone, and as it
was before that in Agins v. Tiburon, 447 U.
S. 255 , 447 U. S.
260 -263 (1980).

															In sum, it is entirely clear from our cases that a facial
takings challenge is not premature even if it rests upon the ground
that the ordinance deprives property owners of all economically
viable use of their land -- a ground that is, as we have said,
easier to establish in an "as-applied" attack. It is, if possible,
even more clear that the present facial challenge is not premature,
because it does not rest upon a ground that would even profit from
consideration in the context of particular application. As we said
in Agins, a zoning law

															"effects a taking if the ordinance does not substantially
advance legitimate state interests, . . . or denies an owner
economically viable use of his land." Id. at 447 U. S. 260 .
The present challenge is of the former sort. Appellants contend
that providing financial assistance to impecunious renters is not a
state interest that can legitimately be furthered by regulating the
use of property. Knowing the nature and character of the Page 485 U. S. 19 particular property in question, or the degree of its economic
impairment, will in no way assist this inquiry. Such factors are as
irrelevant to the present claim as we have said they are to the
claim that a law effects a taking by authorizing a permanent
physical invasion of property. See Loretto v. Teleprompter
Manhattan CATV Corp., 458 U. S. 419 (1982). So even if we were explicitly to overrule cases such as Agins, Virginia Surface Mining, and Keystone, and
to hold that a facial challenge will not lie where the issue can be
more forcefully presented in an "as-applied" attack, there would
still be no reason why the present challenge should not
proceed.

															Today's holding has no more basis in equity than it does in
precedent. Since the San Jose Ordinance does not require any
specification of how much reduction in rent is attributable to each
of the various factors that the hearing officer is allowed to take
into account, it is quite possible that none of the many landlords
affected by the Ordinance will ever be able to meet the Court's
requirement of a "showing in a particular case as to the
consequences of [the hardship factor] in the ultimate determination
of the rent." Ante at 10. There is no reason thus to
shield alleged constitutional injustice from judicial scrutiny. I
would therefore consider appellants' takings claim on the
merits. II The Fifth Amendment of the United States Constitution, made
applicable to the States through the Fourteenth Amendment, Chicago, B. & Q. R. Co. v. Chicago, 166 U.
S. 226 , 166 U. S. 239 (1897), provides that "private property [shall not] be taken for
public use, without just compensation." We have repeatedly observed
that the purpose of this provision is

															"to bar Government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the
public as a whole." Armstrong v. United States, 364 U. S.
40 , 364 U. S. 49 (1960); See also First English Evangelical
Lutheran Church of Glendale v. Los Angeles County , 482 U.S. Page 485 U. S. 20 304, 482 U. S.
318 -319 (1987); Webb's Fabulous Pharmacies, Inc. v.
Beckwith, 449 U. S. 155 , 449 U. S. 163 (1980); Agins v. Tiburon, supra, at 447 U. S. 260 ; Penn Central Transportation Co. v. New York City, 438 U. S. 104 , 438 U. S. 123 (1978); Monongahela Navigation Co. v. United States, 148 U. S. 312 , 148 U. S. 325 (1893).

															Traditional land-use regulation (short of that which totally
destroys the economic value of property) does not violate this
principle because there is a cause-and-effect relationship between
the property use restricted by the regulation and the social evil
that the regulation seeks to remedy. Since the owner's use of the
property is (or, but for the regulation, would be) the source of
the social problem, it cannot be said that he has been singled out
unfairly. Thus, the common zoning regulations requiring subdividers
to observe lot-size and set-back restrictions, and to dedicate
certain areas to public streets, are in accord with our
constitutional traditions because the proposed property use would
otherwise be the cause of excessive congestion. The same
cause-and-effect relationship is popularly thought to justify
emergency price regulation: when commodities have been priced at a
level that produces exorbitant returns, the owners of those
commodities can be viewed as responsible for the economic hardship
that occurs. Whether or not that is an accurate perception of the
way a free market economy operates, it is at least true that the
owners reap unique benefits from the situation that produces the
economic hardship, and in that respect singling them out to relieve
it may not be regarded as "unfair." That justification might apply
to the rent regulation in the present case, apart from the single
feature under attack here.

															Appellants do not contest the validity of rent regulation in
general. They acknowledge that the city may constitutionally set a
"reasonable rent" according to the statutory minimum and the six
other factors that must be considered by the hearing officer (cost
of debt servicing, rental history of the unit, physical condition
of the unit, changes in housing services, Page 485 U. S. 21 other financial information provided by the landlord, and market
value rents for similar units). San Jose Municipal Ordinance 19696,
§ 5703.28(c) (1979). Appellants' only claim is that a reduction of
a rent increase below what would otherwise be a "reasonable rent"
under this scheme may not, consistently with the Constitution, be
based on consideration of the seventh factor -- the hardship to the
tenant as defined in § 5703.29. I think they are right.

															Once the other six factors of the Ordinance have been applied to
a landlord's property, so that he is receiving only a reasonable
return, he can no longer be regarded as a "cause" of exorbitantly
priced housing; nor is he any longer reaping distinctively high
profits from the housing shortage. The seventh factor, the
"hardship" provision, is invoked to meet a quite different social
problem: the existence of some renters who are too poor to afford
even reasonably priced housing. But that problem is no more caused
or exploited by landlords than it is by the grocers who sell needy
renters their food, or the department stores that sell them their
clothes, or the employers who pay them their wages, or the citizens
of San Jose holding the higher paying jobs from which they are
excluded. And even if the neediness of renters could be regarded as
a problem distinctively attributable to landlords in general, it is
not remotely attributable to the particular landlords that
the Ordinance singles out -- namely, those who happen to have a
"hardship" tenant at the present time, or who may happen to rent to
a "hardship" tenant in the future, or whose current or future
affluent tenants may happen to decline into the "hardship"
category.

															The traditional manner in which American government has met the
problem of those who cannot pay reasonable prices for privately
sold necessities -- a problem caused by the society at large -- has
been the distribution to such persons of funds raised from the
public at large through taxes, either in cash (welfare payments) or
in goods (public housing, publicly subsidized housing, and food
stamps). Unless we are to Page 485 U. S. 22 abandon the guiding principle of the Takings Clause that "public
burdens . . . should be borne by the public as a whole," Armstrong, 364 U.S. at 364 U. S. 49 ,
this is the only manner that our Constitution permits. The fact
that government acts through the landlord-tenant relationship does
not magically transform general public welfare, which must be
supported by all the public, into mere "economic regulation," which
can disproportionately burden particular individuals. Here the city
is not "regulating" rents in the relevant sense of preventing rents
that are excessive; rather, it is using the occasion of rent
regulation (accomplished by the rest of the Ordinance) to establish
a welfare program privately funded by those landlords who happen to
have "hardship" tenants.

															Of course all economic regulation effects wealth transfer. When
excessive rents are forbidden, for example, landlords as a class
become poorer and tenants as a class (or at least incumbent tenants
as a class) become richer. Singling out landlords to be the
transferors may be within our traditional constitutional notions of
fairness, because they can plausibly be regarded as the source or
the beneficiary of the high-rent problem. Once such a connection is
no longer required, however, there is no end to the social
transformations that can be accomplished by so-called "regulation,"
at great expense to the democratic process.

															The politically attractive feature of regulation is not that it
permits wealth transfers to be achieved that could not be achieved
otherwise; but rather that it permits them to be achieved "off
budget," with relative invisibility, and thus relative immunity
from normal democratic processes. San Jose might, for example, have
accomplished something like the result here by simply raising the
real estate tax upon rental properties and using the additional
revenues thus acquired to pay part of the rents of "hardship"
tenants. It seems to me doubtful, however, whether the citizens of
San Jose would allow funds in the municipal treasury, from wherever
derived, to be distributed to a family of four with income as Page 485 U. S. 23 high as $32,400 a year -- the generous maximum necessary to
qualify automatically as a "hardship" tenant under the rental
Ordinance. * The voters might
well see other, more pressing, social priorities. And of course
what $32,400-a-year renters can acquire through spurious
"regulation," other groups can acquire as well. Once the door is
opened, it is not unreasonable to expect price regulations
requiring private businesses to give special discounts to senior
citizens (no matter how affluent), or to students, the handicapped,
or war veterans. Subsidies for these groups may well be a good
idea, but because of the operation of the Takings Clause our
governmental system has required them to be applied, in general,
through the process of taxing and spending, where both economic
effects and competing priorities are more evident.

															That fostering of an intelligent democratic process is one of
the happy effects of the constitutional prescription -- perhaps
accidental, perhaps not. Its essence, however, is simply the
unfairness of making one citizen pay, in some fashion other than
taxes, to remedy a social problem that is none of his creation. As
the Supreme Court of New Jersey said in finding unconstitutional a
scheme displaying, among other defects, the same vice I find
dispositive here:

															"A legislative category of economically needy senior citizens is
sound, proper and sustainable as a rational classification. But
compelled subsidization by landlords Page 485 U. S. 24 or by tenants who happen to live in an apartment building with
senior citizens is an improper and unconstitutional method of
solving the problem." Property Owners Assn. v. North Bergen, 74 N.J. 327,
339, 378 A.2d
25 , 31 (1977).

															I would hold that the seventh factor in § 5703.28(c) of the San
Jose Ordinance effects a taking of property without just
compensation.

															* Under the San Jose Ordinance, "hardship" tenants include
(though are not limited to) those whose "household income and
monthly housing expense meets [ sic ] the criteria" for
assistance under the existing housing provisions of § 8 of the
Housing and Community Development Act of 1974, 42 U.S.C. § 1437f
(1982 ed. and Supp. III). The United States Department of Housing
and Urban Development currently limits assistance under these
provisions for families of four in the San Jose area to those who
earn $32,400 or less per year. Memorandum from U.S. Dept. of
Housing and Urban Development, Assistant Secretary for
Housing-Federal Housing Comm'r, Income Limits for Lower Income and
Very Low-Income Families Under the Housing Act of 1937 (Jan. 15,
1988).