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Penn Central Transportation v. City of New York

From lawbrain.com

Penn Central Transportation v. City of New York, 438 U.S. 104 (1978), is a property law case heard by the United States Supreme Court in which the court examines restrictions on use as applied to landmarks and whether such restrictions can effect a taking requiring just compensation.

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Summary of Case Facts

New York City adopted the Landmarks Preservation Law in 1965 with the goal of identifying and preserving historic and scenic landmarks. A commission would be in charge of identifying certain properties as landmarks subject to enhanced protections (or restrictions on use). The law also allowed for affected property owners to appeal decisions by the commission at several levels, including judicial review. In addition, the law allowed owners of affected properties to sell or “transfer development rights” (TDRs) to owners of other properties in the city should they not be able to use them. TDRs might relate to air rights – the sale of which could be applied to another property to allow that owner to build higher than originally permitted. In 1968, the owners of Grand Central Terminal, Penn Central Transportation, began exploring designs to construct a multi-story office building over the top of Grand Central Terminal. Grand Central Terminal had previously been identified as a property subject to the Landmark Preservation Law. The commission rejected several proposed designs submitted; Penn Central filed suit against the city, arguing that the Landmarks Preservation Law, as applied to their property, had effected a taking without just compensation in direct violation of the Fifth and Fourteenth Amendments.


Can a regulation restrict development on properties deemed landmarks without effecting a taking requiring just compensation?

Holding and Law

Yes. The examination of whether a regulation has effected a taking depends not only on the nature and extent of the rights interfered with, but also on the character of the action. In the present case, the regulation has placed more restrictions on some properties than others, but that is not uncommon in any regulation enacted for the general welfare. The Landmarks Law’s effect on Penn Central is to prohibit the building of a structure in the airspace above Grand Central Terminal. However, the law does not interfere with any present use of the terminal – it still permits Penn Central to use the remainder of the property, and use it to the extent originally contemplated and used for the past sixty-five years. Furthermore, the law allows for Penn Central to sell its currently unusable air rights, and as such, they are not worthless.

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