Pennell v. City of San Jose

Supreme Court of the United States · 1987 · Property

485 U.S. 1 (1988)

Updated July 23, 2026

PropertyRent controlTakingsDue ProcessEqual Protectiontenant hardshipfacial challengeripeness

Facts

San Jose enacted a rent-control ordinance to prevent excessive and unreasonable rent increases, alleviate undue hardships on tenants, and assure landlords a fair and reasonable return. Landlords could automatically raise rent up to eight percent, but if a tenant objected to a larger increase, a hearing officer would determine whether the increase was reasonable under several listed factors, including hardship to the tenant. The ordinance required the hearing officer to consider tenant hardship and allowed the officer to disallow part of an excess increase if the increase would impose an unreasonably severe financial or economic hardship on a particular tenant. Appellants brought a facial challenge, but the record contained no evidence that any hearing officer had actually used the hardship factor to reduce a rent increase below what would otherwise have been allowed under the other factors.

Issue

Whether San Jose's rent-control ordinance is facially unconstitutional because its tenant-hardship provision effects a taking without just compensation, violates due process, or violates equal protection. More specifically, the Court considered whether the takings claim was ripe on this record and whether the ordinance's consideration of tenant hardship was irrational on its face.

Rule

A facial takings challenge to a statute should not be decided without an actual factual setting showing how the challenged provision operates, especially where the provision merely requires consideration of a factor and there is no evidence that it has actually reduced the claimant's rent. A state price-control regulation complies with due process if it is not arbitrary, discriminatory, or demonstrably irrelevant to a legitimate policy the legislature may adopt, and an equal protection challenge to such an ordinance is reviewed under rational-basis scrutiny.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Madison Property Owners Guild, an association representing apartment owners in Toledo, Ohio, sues to challenge a city rent ordinance. The complaint alleges that most member buildings are covered by the ordinance and that many members rent to tenants whose incomes would qualify them for hardship review if they objected to rent increases above the automatic cap.

Does the association most likely have standing to bring a facial constitutional challenge to the hardship provision?

Explanation. The majority held that when a complaint plausibly alleges that members' properties are subject to the ordinance and that the ordinance is likely to be enforced against them, that likelihood creates a sufficient threat of actual injury. Standing does not require proof that a hearing officer has already reduced rent in a particular case. The realistic danger of enforcement is enough for a facial challenge.