438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)
In 1965 New York City enacted the Landmarks Preservation Law, which created an eleven-member Landmarks Preservation Commission and authorized it to designate buildings at least thirty years old that possess special historical or aesthetic interest.1
The law required owners of designated landmarks to obtain Commission approval before altering exterior architectural features and imposed an affirmative duty to keep those features in good repair.2 In August 1967 the Commission designated Grand Central Terminal a landmark and the city tax block it occupies a landmark site; the Board of Estimate confirmed the designation the following month.3
Penn Central Transportation Co. and its affiliates owned the Terminal, an eight-story Beaux-Arts structure completed in 1913 that served as the main station for the New York Central and Harlem lines.4 On January 22, 1968, Penn Central entered a fifty-year renewable lease with UGP Properties, Inc., under which UGP agreed to construct a multistory office building cantilevered above the Terminal and to pay Penn Central at least three million dollars annually after construction.5
Penn Central and UGP submitted two plans prepared by architect Marcel Breuer: Breuer I, a fifty-five-story tower resting on the Terminal roof, and Breuer II Revised, a fifty-three-story building that would have removed part of the 42d Street facade.6 After four days of hearings at which over 80 witnesses testified, the Commission denied this application as to both proposals.7
Penn Central filed suit in New York Supreme Court, Trial Term, seeking a declaratory judgment, injunctive relief, and damages for a temporary taking.8 The trial court granted the injunctive and declaratory relief.9 The Appellate Division reversed, holding that Penn Central had failed to prove deprivation of all reasonable beneficial use.10 The New York Court of Appeals affirmed, concluding that the Terminal could still earn a reasonable return and that transferable development rights provided significant compensation. The Supreme Court noted probable jurisdiction.11
Whether the restrictions imposed by the New York City Landmarks Preservation Law on the development of the Grand Central Terminal constitute a taking of property without just compensation in violation of the Fifth and Fourteenth Amendments?12
The Fifth Amendment, made applicable to the States by the Fourteenth Amendment, provides that private property shall not be taken for public use without just compensation.13 Government may impose land-use regulations that substantially advance legitimate state interests without effecting a taking.14 Courts determine whether a regulation effects a taking by considering the economic impact of the regulation on the claimant, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the governmental action.15
No. The economic impact of the regulation on Penn Central is not severe.16 The Landmarks Law does not prevent the Terminal from being used as a railroad terminal.17 It does not prevent the use of the air rights above the Terminal for all purposes.18 Penn Central may continue to use the property as it has in the past.19 The law merely prevents construction of a fifty-five-story office building above the Terminal.20
Penn Central has not applied for a variance.21 It has not shown that the Terminal cannot earn a reasonable return on its investment.22
The regulation does not interfere with Penn Central's primary expectation concerning the use of the parcel.23 When Penn Central acquired the property, it knew or should have known that the Terminal was a historic landmark.24 It could not reasonably expect to construct a fifty-five-story office building above it without restriction.25
The character of the governmental action is regulatory.26 The law is part of a comprehensive program to preserve historic landmarks throughout the city.27 It applies to all structures that are similarly situated.28 It does not single out Penn Central's property for special treatment.29
The restrictions imposed by the law are substantially related to the promotion of the general welfare.30 The preservation of historic landmarks is a legitimate governmental objective.31 The law is a valid exercise of the police power.32
Related opinions on this issue
Joined by Burger, C. J., And Stevens, J.
Justice Rehnquist dissented.35 He argued that the Landmarks Law as applied to the Grand Central Terminal has the effect of appropriating the air rights above the terminal for the benefit of the public.36 The owners are forbidden to use those air rights for the construction of an office building.37
The air rights are transferred to the public without compensation.38 Rehnquist maintained that the fact that the regulation is part of a comprehensive program to preserve historic landmarks does not change the fact that the owners have been deprived of the use of their property.39 The judgment should be reversed.40
Whether the economic impact of the Landmarks Law on the owners of the Terminal, including any interference with investment-backed expectations or the character of the governmental action, effects a taking?41
A regulation effects a taking when it denies an owner economically viable use of land or interferes with distinct investment-backed expectations.42 The character of the governmental action must be taken into account.43 A physical invasion by government more readily constitutes a taking than a public program adjusting the benefits and burdens of economic life.44
No. The economic impact is not severe because the law permits continued operation of the Terminal as a railroad station and allows Penn Central to earn a reasonable return on its investment.45 Penn Central has not demonstrated that the Terminal operates at a loss after proper allocation of expenses.46 The regulation does not interfere with distinct investment-backed expectations because Penn Central knew or should have known of the landmark designation when it acquired the property and could not reasonably expect unrestricted development of the air rights.47 The character of the action is that of a comprehensive regulatory program rather than a physical invasion or enterprise use by the government.48
The economic impact of the Landmarks Law on the owners of the Terminal does not effect a taking.49
Whether the denial of certificates for construction of a multistory office building above the Terminal, while permitting continued use of the property and transfer of development rights, effects a taking of the owners' air rights?50
A taking does not occur merely because a regulation denies the ability to exploit a particular property interest such as air rights.51 The court examines the impact on the parcel as a whole.52 Transferable development rights may mitigate financial burdens even if they do not constitute just compensation.53
No. The denial of certificates for the proposed fifty-five-story building does not prohibit all construction above the Terminal because the Commission indicated that smaller additions harmonizing with the landmark might be approved.54 Penn Central retains the ability to use the Terminal for its historic purpose and the transferable development rights to at least eight nearby parcels provide valuable mitigation of any burden.55 The law regulates rather than appropriates the air rights for governmental use.56
The denial of certificates for construction of a multistory office building above the Terminal does not effect a taking of the owners' air rights.57