438 U.S. 104 (1978)
Tags: Property, Takings, Eminent domain
The case of Penn Central Transportation Co. v. New York City dealt with whether a city can impose additional restrictions on the development of historic landmarks without providing compensation. The court ruled that New York City's Landmarks Preservation Law did not violate the Fifth and Fourteenth Amendments by restricting the development of Grand Central Terminal. The law encourages preservation of historic properties by involving public entities in land-use decisions and providing incentives to private owners. The Landmarks Preservation Commission designates properties and areas with special historical or aesthetic value as landmarks or historic districts. Designation imposes restrictions on the property owner's use of the site, and the owner must obtain Commission approval for any alterations or improvements to the exterior. The court held that the law did not constitute a "taking" of property without just compensation and did not violate due process because the landmark regulation permitted the same use as had been made of the Terminal for more than half a century, the appellants could earn a reasonable return on their investment in the Terminal, and the development rights above the Terminal were valuable and provided significant compensation for the loss of rights above the Terminal itself.
The Supreme Court is considering whether New York City's law on the Terminal site constitutes a "taking" of the appellants' property for public use under the Fifth Amendment. The court upholds land-use regulations that promote health, safety, morals, or general welfare, even if they adversely affect recognized real property interests. Compensation is required if a restriction makes property wholly useless. The court rejects the appellants' claim that the New York City Landmarks Law constitutes a "taking" of their property by depriving them of the valuable property interest of the airspace above Grand Central Terminal. The court finds no merit in the appellants' argument that any restriction imposed on individual landmarks pursuant to the New York City scheme is a "taking" requiring the payment of "just compensation."
The New York City Landmarks Law benefits all structures and citizens, but the court must determine if the interference with property is significant enough to require compensation. The dissenting opinion argues that landmark designation imposes a significant cost on individual property owners with little or no offsetting benefit. The case involves a prohibition on a proposed addition to Grand Central Terminal that complies with zoning and safety requirements, but is prohibited for preservation reasons. This constitutes a taking of property, and the government must compensate the owner. The Fifth Amendment requires just compensation for property taken, and it is up to the courts to determine what constitutes just compensation. The case should be sent back to determine if Transfer Development Rights (TDRs) are a full and perfect equivalent for the property taken. The financial state of New York City and the burden on individual taxpayers do not justify ignoring past precedents construing the Eminent Domain Clause.
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