OneLBriefs

Penn Central Transportation Co v. City of New York

After a building is designated a landmark, there are restrictions upon a property owner's options concerning use of the landmark site.

The Landmarks Preservation Commission must approve in advance any proposal to alter the exterior architectural features.

Grand Central Terminal is owned by Penn Central and is a landmark under the preservation law.

Penn Central contracted with UGP to allow UGP to construct a multistory office building above the terminal.
UGP promised to pay $1M for each year of construction and $3M for each year thereafter.
Penn Central and UGP then applied to the commission for permission to construct the office building.

The first plan (Breuer I) was rejected since the Commission thought it would look silly to balance a 55-story building atop an 8-story history landmark.
The second plan (Breuer II Revised)was also rejected since it would strip off the exterior architectural features of the terminal.

Does the Landmarks Preservation Law as applied to Grand Central Terminal constitute a taking?

The Landmarks Preservation Law as applied to Grand Central Terminal does not constitute a taking because it does not impede existing uses or prevent a reasonable return on investment.

However, the Court has recognized several factors that have particular significance…

The economic impact of the regulation on the claimant.
The extent to which the regulation has interfered with distinct investment-backed expectations.
If the taking can be characterized as a physical invasion by gov't.

The gov't can, however, execute laws or programs that adversely affect recognized economic values.

Even if economic harm is present, it is not a taking if it did not interfere with interests that were sufficiently bound up with the reasonable expectations of the claimant to constitute property for 5th amendment purposes.
When the state has reasonably concluded that the public welfare would be promoted by prohibiting particular contemplated uses of land, this Court has upheld land-use regulations that destroyed or adversely affected recognized real property interests.
In Miller v. Schoene, Court concluded that the state had not exceeded its powers by deciding upon the destruction of one class of property without compensation in order to save another which was of greater value to the public.
In Hadacheck v. Sebastian, Court upheld ruling that prohibited operation of brickyard since it was inconsistent with neighboring uses.
In Goldblatt v. Hempstead, Court held that a use restriction may constitute a taking if not reasonably necessary to the effectuation of a substantial public purpose or if it has an unduly harsh impact upon the owner's use of the property.
In Pennsylvania Coal Co. v. Mahon, Court said that a state statute that substantially furthers an important public policy may so frustrate distinct investment-backed expectations as to amount to a taking.

The airspace surrounding a parcel of land cannot be considered a separate parcel for purposes of taking.

Taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated.

The fact that the law has a more severe impact on some landowners than on others does not in itself mean that the law effects a taking.
The law does not interfere with any of the present uses of the terminal.
Additionally, Penn Central might still be able to build some sort of building on top that would be approved; it just might not be able to be 50-stories high.

The law imposes on Penn Central a substantial cost and no benefit except for the honor of the designation of a landmark.
Two key words in the Takings Clause need to be examined…

The property has been subjected to a nonconsensual servitude not borne by any neighboring or similar properties.

There are two exceptions where the destruction of property rights does not constitute a taking…

The gov't may take property to prevent the property owner from using his property to injure others.

The question is really one of nuisance and whether the forbidden use is dangerous to the safety, health, or welfare of others.
Here, NYC is not prohibiting a nuisance.

The gov't may prohibit a use if the prohibition applies over a broad cross section of land and secures an average reciprocity of advantage.

This is why zoning regulations are not takings.
Here, a multimillion dollar loss is imposed on Penn Central and is not offset by any benefits flowing from preservation of the 400 buildings in NYC.