Penn Central Transportation Co. v. New York City

Brief Fact Summary. The Respondent, New York City (Respondent), passed a regulation that prevented the Petitioner, Penn Central Transportation (Petitioner), from adding an office building structure to the top of Grand Central Station.

Synopsis of Rule of Law. If the restriction is reasonably related to a legitimate public interest, then it does not result in a taking. Diminution in property value alone does not establish a taking.

Facts. In 1968, the Petitioner entered into a 50-year lease agreement with a British company to construct a multistory office building on the top of the existing terminal. The plan was to increase revenue by renting the office space. But, the application to build was denied.

Issue. May a city place restrictions on the development of individual historic landmarks without effecting a taking requiring just compensation?

Held. Yes. The restrictions do not interfere with the present use of the Terminal. It still allows Petitioner to profit from the Terminal and obtain a “reasonable return” from its investment.

Dissent. This is a taking because the Respondent is asking companies like the Petitioner to bear the cost of maintaining designated historical landmarks throughout the city. The cost should be borne by the citizens of the city that insists these locations remain unchanged.

Discussion. The Petitioner’s argument that it is being denied the opportunity to further develop the property for economic gain is not a sufficient intrusion upon the property. The Respondent is not interfering with the current use or economic value of the property. Furthermore, the Respondent has a legitimate interest in preserving the general welfare by continuing the current use of the Terminal as-is.