Penn Central Transportation Co. v. City of New York

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438 U.S. 104 (1978), argued 17 Apr. 1978, decided 26 June 1978 by vote of 6 to 3; Brennan for the Court, Rehnquist in dissent. This key decision on the regulatory taking doctrine originated several important principles. New York City's Landmarks Preservation Committee designated Grand Central Terminal a landmark. Consequently, the plaintiff was denied permission to build a fifty-story office building (supported by arches) above the terminal. However, the city allowed “transferable development rights,” by which the plaintiff or an assignee could make excess development on certain nearby “transfer” sites. Penn Central challenged the restriction as a denial of due process and a taking.

In a wide-ranging opinion, the Court held that the development restriction was not a taking because it did not impede existing uses or prevent a reasonable return on investment. The opinion emphasized that the restriction did not unduly “frustrate distinct investment-backed expectations” (p. 127), a phrase that appears in subsequent takings decisions. While the Court did not consider the mitigating effect of the transferable development rights, it was suggested that such transferable rights might mitigate loss to prevent a taking or might, if there were a taking, provide a form of compensation. The Court also rejected the argument that airspace be considered a separate parcel of property for taking purposes. Underlying the opinion is the notion that aesthetic values, particularly historic preservation, are important public interests that justify restrictions on private land.

William B. Stoebuck

Subjects: Law.

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