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Penn Central Transportation Co. v. New York City

Law Dictionary
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Law Dictionary

Featuring Black's Law Dictionary 2nd Ed.
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Constitutional Law Keyed to Stone

Citation. 438 U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631, 1978 U.S. 39.

Brief Fact Summary. Penn Central’s property was designated as a landmark under New York law and therefore subject to city preservation restrictions. As a result, Penn Central was prohibited from building two structures on top of its building. Penn Central sued alleging that the restrictions constituted a “taking” within the meaning of the Fifth Amendment to the United States Constitution.

Synopsis of Rule of Law. A city may, as part of a comprehensive program to preserve historical landmarks, place restrictions on the development of individual historical landmarks without effecting a “taking” requiring the payment of “just compensation” within the meaning of the Fifth Amendment to the United States Constitution.


Facts. Acting pursuant to The New York City Landmarks Preservation Law, the Landmark Preservation Committee (“Committee”) designated certain structures as landmark sites. The Grand Central Terminal, owned by Penn Central Transportation Co. (“Appellants”), was designated as such a site. Designation as a landmark cite meant that a structure was burdened with certain strictures concerning a property owner’s use of the site. Appellants requested permission from the commission to build two 50-plus story office buildings above the Grand Central Terminal. The Commission denied this request citing the adverse effect the buildings would cause on the view of the Terminal. Thereupon, Appellants sued, claiming that the regulation depriving it of the gainful use of its “air rights” above the Terminal, thus, constituting a taking.

Issue. Did the restrictions imposed by New York City’s law upon Appellants’ exploitation of the Terminal site effect a taking of Appellants’ property for public use within the meaning of the Fifth Amendment?

Held. No. Affirmed.
Appellants may continue to use the property precisely as it has in the past. So, the law does not interfere with Appellants’ primary expectation concerning the use of the Terminal. In addition, the restrictions imposed did not prevent Penn Central from all construction on top of the terminal.
The prevention of the construction of the 50-plus story buildings above the Terminal was a reasonable restriction substantially related to the promotion of the general welfare. Just compensation need not be paid.
Moreover, Appellants’ property was not “singled-out” to endure financial hardship. New York has a comprehensive scheme to preserve landmark structures under which 400 structures have been designated landmarks.
Several factors must be weighed to determine what is essentially an ad hoc factually based determination: (1) The economic impact of the regulation on the claimant and the extent to which the regulation has interfered with distinct investment backed expectations. (2) The character of the government action. A taking is more readily found when the government has physically invaded the property than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.
To consider whether a “taking” has occurred the Supreme Court of the United States takes into account several factors, namely (1) the nature of the interference with a property interest; (2) the extent of the interference with the same; (3) the number of units affected by the interference; (4) the ability of the property owner to continue to put the subjected property to its intended use; and (5) the legitimacy of the State’s interest in restricting the property’s use.

Dissent. Justice Rehnquist: A multimillion dollar loss has been imposed on Appellants; the loss is uniquely felt and is not offset by any benefits flowing from the preservation of the other 400 landmarks. Moreover, Appellees have imposed a substantial cost on les than one one-tenth of a percent of the buildings of New York City. It is exactly this type of imposition the “taking” protections are directed.

Discussion. The Court upheld the New York law based on a finding that no taking had occurred by the application of the law to the Appellant’s property. Note that in this case the Appellant’s were not deprived of all economic use of their land, only the right to build upwards on top of an historical site.

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