Penn Central Transportation
Company v. City of
Supreme
Court of the
438
U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631, reh. den., 439
Johnson,
pp. 826-839
Facts: The owners of Grand Central
Terminal wanted to build a high-rise office tower on top of the station.
Issue: Did the Commission’s
application of the Landmarks Preservation Law constitute an unconstitutional
“taking” that violated the station owners’ Fifth and Fourteenth Amendment
rights?
Rule: Regulation authorized by statute
that sufficiently frustrates the rational expectations of investors in land
capital can amount to a “taking” even if it serves an important public purpose.
Analysis: The majority rejects
several contentions of the station owners:
1. The Court won’t consider
different parts of a property and look at the taking of one part as the taking
of 100% of a property interest. The
Court will look at the effect on the parcel of property as a whole. (C.f. Brandeis’s
dissent in Pennsylvania Coal)
2. The Court says that it won’t
entertain the idea that the only way to make the application of landmark laws
fair is to make all landmark regulations compensable takings. One reason they won’t consider this is that
this would invalidate all landmark preservation laws all around the country.
3. The Court finds that the
regulation of the Terminal is not an appropriation of property for a purely governmental
purpose. The Court thus distinguishes United States v. Causby.
Next,
the majority considers whether Pennsylvania Coal applies. If the government’s interference with the
station owners’ use of the property is sufficiently severe, it may be
classified as a compensable taking. The
Court notes that the regulation does not interfere with the owners’ present and
long-time past use of the property, and that the owners can still make a profit
on the terminal as just a plain old terminal and not an office building. The majority concludes that there was no “taking”.
Rehnquist’s
dissent argues that the government took away a substantial property right that
the owners previously had, and thus decreased the value of their property. It is argued that this would be okay if the government
was preventing a nuisance by restricting the use of the property, but no such
nuisance exists.
Alternatively,
the dissent says that regulations in the nature of “zoning” are acceptable because
they produce a net gain for society over a broad swath of affected properties
and property owners. Instead, the
dissent argues in this case that there is a big net transfer from the station
owners to the people of the city who are meant to benefit. The dissent says it’s not fair to have the entire
burden of preserving Grand Central fall on its owners. That cost is the opportunity cost of not
developing the airspace over the terminal.
The
dissent basically says that it wouldn’t be expensive for the people who will
benefit from the regulation to pay the burdened property owner such that the
whole thing is at least a wash.
Conclusion: The Court upheld the ruling
of the Court of Appeals of New York.