Washington’s Supreme Court published a pair of opinions last Thursday that are likely to give much wider berth to state and local policymakers across the field of land use and environmental regulation. In examining a group of landlords’ challenges to two controversial Seattle housing ordinances, the Court took the opportunity to clarify, and arguably lessen, the constitutional limits of state and local governments’ ability to regulate the use of private property.

Regulatory Takings

In the first case, Chong Yim et al. v. City of Seattle (Yim I),¹ the Court examined Seattle’s "first-in-time" rule (FIT Rule), an ordinance that requires most residential landlords to offer their properties to qualified tenants on a first-come, first-served basis. The plaintiffs argued that the FIT Rule restricts an owner’s ability to choose freely among prospective occupants and was thus impermissible under the Court’s prior opinion in Manufactured Housing.²

In Manufactured Housing, the Court held that a regulation that "destroys one or more of the fundamental attributes of ownership" may constitute a taking. Manufactured Housing has long been regarded a high water mark in Washington state takings jurisprudence, as the "fundamental attribute of ownership" analysis in state regulatory takings cases was an additional limitation, in addition to Federal Constitutional limits, on the reach of local regulatory authority.

However, in Yim I, the Washington Supreme Court disavowed this line of legal reasoning and confirmed that Washington courts will apply the less stringent takings analysis set forth in Federal precedents.³

Substantive Due Process

In a related second case, Chong Yim et al. v. City of Seattle (Yim II),⁴ the Court examined Seattle’s Fair Chance Housing Ordinance, which in many circumstances prohibits a landlord from "requiring disclosure, inquiring about, or taking any action based on a tenant’s arrest record, conviction record, or criminal history."

The Plaintiffs challenged the Fair Chance Housing Ordinance as a violation of their substantive due process rights. Until Yim II, state court review of substantive due process claims was more searching and stringent than the "rational basis" standard that generally applies to substantive due process claims under the Federal Constitution.

The landlords in Yim II argued that instead of using the Federal "rational basis" standard of review, the state court should continue using a heightened standard of review to analyze the Fair Chance Housing Ordinance for violations of substantive due process. However, the Court disagreed. It disavowed the existence of any higher standard for state substantive due process claims, and confirmed that these claims would be evaluated under the less searching Federal "rational basis" standard.

Under this standard, land use regulations will be found unconstitutional only where they fail to serve any legitimate government objective or are "arbitrary or irrational." In other words, Washington courts will no longer engage in a heightened review of due process claims related to land use ordinances: moving forward, the land use regulations need to be only rationally related to a legitimate government objective to withstand a substantive due process claim.

Takeaways

After the Yim cases, state and local lawmakers have a lower bar to overcome in showing that their ordinances comply with state constitutional requirements. Courts analyzing regulatory takings claims will no longer examine whether an ordinance "destroys a fundamental attribute of property ownership." Instead, Washington courts will analyze regulatory takings under a less stringent standard.

Additionally, new land use regulations will need only be "rationally related" to legitimate government objectives to withstand substantive due process claims. These developments will likely result in state and local policymakers experimenting more aggressively in regulating housing, land use, and the environment.

If you would like further information about how these cases might influence public policy and law in your community, please do not hesitate to contact the authors.

FOOTNOTES

1  Chong Yim et al. v. City of Seattle, No. 95813-1 (Wash. Nov. 14, 2019).
2  Manufactured Housing Communities of Washington v. State, 142 Wash.2d 347, 13 P.3d 183 (2000).
3  The Court summarized the Federal standard: Regulatory takings may be either "per se" or "partial." A per se regulatory taking is found where a regulation’s impact is necessarily so onerous that the regulation’s mere existence is, "from the landowner’s point of view, the equivalent of a physical appropriation." Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1017, 112 S. Ct. 2886, 120 L. Ed. 2d 798 (1992). As a matter of federal law, such categorical treatment is appropriate for only "two relatively narrow categories" of regulations—regulations that "require[ ] an owner to suffer a permanent physical invasion of her property" and "regulations that completely deprive an owner of 'all economically beneficial us[e]' of her property." Lingle v. Chevron U.S.A., 544 U.S. 528, 538, 125 S.Ct. 2074 (second alteration in original) (quoting Lucas, 505 U.S. at 1019, 112 S.Ct. 2886). All other regulations are susceptible to partial regulatory takings claims, which federal courts decide based on a multifactor test (the Penn Central factors) applied on a case-by-case basis. Id. at 538-39, 125 S. Ct. 2074 (citing Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S. Ct. 2646, 57 L. Ed. 2d 631 (1978)).
4  Chong Yim v. City of Seattle, No. 96817-9 (Wash. Nov. 14, 2019).

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