Penn Cent. Transp. Co. v. New York - 42 N.Y.2d 324, 397 N.Y.S.2d 914, 366 N.E.2d 1271 (1977)

Rule:

Discriminatory zoning is condemned because there is no acceptable reason for singling out one particular parcel for different and less favorable treatment. When landmark regulation is involved, there is such a reason: the cultural, architectural, historical, or social significance attached to the affected parcel. Even when regulation is designed to achieve such an acceptable purpose, however, the landowner must be allowed a reasonable return or equivalent private use of his property. That is, in the case of commercial property, the owner must be assured of a continued reasonable return on the property.

Facts:

Grand Central Terminal was formally opened to the public in 1913. Undisputed is its architectural, historical, and cultural significance. On August 2, 1967, in accordance with the provisions of the New York City Administrative Code, the terminal was designated a landmark by the Landmarks Preservation Commission, and the designation was confirmed by the Board of Estimate on September 21, 1967. On July 18, 1968, plaintiffs Penn Central Transportation Company and its affiliates submitted to the Landmarks Preservation Commission an application for a permit to construct the proposed office building, seeking a certificate that the work would have no exterior effect on protected architectural features. The request was denied on September 20, 1968.  Then plaintiffs applied to the commission for a certificate that the proposed building, even if it would have had an exterior effect, was appropriate to the site. Three separate alternative proposals, each calling for erection of a substantial office building atop the terminal, were submitted. On August 26, 1969, the certificate of appropriateness was denied. Not involved, because not raised in light of the denial of a certificate of appropriateness, are the plans for the interior of the terminal. None of these administrative determinations was ever directly challenged in the courts. Instead, on October 7, 1969, plaintiffs brought this action seeking judicial invalidation of the landmark preservation provisions of the Administrative Code as applied to the terminal. Plaintiffs also sought damages for a temporary "taking" of property from the time of original designation as a landmark to the time of the requested judicial invalidation. They also sought to enjoin defendants, the City of New York and the City Landmarks Preservation Commission, from enforcing those provisions against the subject property. Trial Term granted the requested relief, but a divided Appellate Division reversed and granted judgment to defendants. Plaintiffs appealed.

Issue:

Do the landmark preservation provisions of the Administrative Code of the City of New York, as applied to Grand Central Terminal to prohibit the building of an office tower over the existing building, violate the due process clause of the Constitution?

Answer:

No.

Conclusion:

Grand Central Terminal is no ordinary landmark. It may be true that no property has economic value in the absence of the society around it, but how much more true it is of a railroad terminal, set amid a metropolitan population, and entirely dependent on a heavy traffic of travelers to make it an economically feasible operation. Without people Grand Central would never have been a successful railroad terminal, and without the terminal, a major transportation center, the proposed building site would be much less desirable for an office building. Of course it may be argued that had Grand Central Terminal never been built, the area would not have developed as it has. Thus, the argument runs, construction of the terminal triggered growth of the area, and created much of the terminal property's current value. Indeed, the argument has some validity. But, in reality, it is of little moment which comes first, the terminal or the travelers. For it is the interaction of economic influences in the greatest megalopolis of the western hemisphere -- the terminal initially drawing people to the area, and the society developing the area with shops, hotels, office buildings, and unmatched civil services -- that has made the property so valuable. Neither factor alone accounts for the increase in the property's value; both, in tandem, have contributed to the increase. Absent heavy public governmental investment in the terminal, the railroads, and connecting transportation, it is indisputable that the terminal property would be worth but a fraction of its current economic value. Plaintiffs may not now frustrate legitimate and important social objectives by complaining, in essence, that government regulation deprives them of a return on so much of the investment made not by private interests but by the people of the city and State through their government. Instead, to prevail, plaintiffs must establish that there was no possibility of earning a reasonable return on the privately contributed ingredient of the property's value.