438 U.S. 104
Argued April 17, 1978.
Decided June 26, 1978.
Rehearing Denied Oct. 2, 1978.
See 439 U.S. 883, 99 S.Ct. 226.
FN* The syllabus
constitutes no part of the opinion of the Court but has been prepared by
the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321,
337, 26 S.Ct. 282, 287, 50 L.Ed. 499.
Under New York City's Landmarks Preservation Law (Landmarks Law),
which was enacted to protect historic landmarks and neighborhoods from
precipitate decisions to destroy or fundamentally alter their character,
the Landmarks Preservation Commission (Commission) may designate a
building to be a "landmark" on a particular "landmark
site" or may designate an area to be a "historic district."
The Board of Estimate may thereafter modify or disapprove the
designation, and the owner may seek judicial review of the final
designation decision. The owner of the designated landmark must keep the
building's exterior "in good repair" and before exterior
alterations are made must secure Commission approval.
Under two ordinances owners of landmark sites may transfer
development rights from a landmark parcel to proximate lots.
Under the Landmarks Law, the Grand Central Terminal (Terminal),
which is owned by the Penn Central Transportation Co. and its affiliates
(Penn Central) was designated a "landmark" and the block it
occupies a "landmark site." Appellant Penn Central, though
opposing the designation before the Commission, did not seek judicial
review of the final designation decision.
Thereafter appellant Penn Central entered into a lease with
appellant UGP Properties, whereby UGP was to construct a multistory office
building over the Terminal. After the Commission had rejected appellants'
plans for the building as destructive of the Terminal's historic and
aesthetic features, with no judicial review thereafter being sought,
appellants brought suit in state court claiming that the application of
the Landmarks Law had "taken" their property without just
compensation in violation of the Fifth and Fourteenth Amendments and
arbitrarily deprived them of their property without due process of law in
violation of the Fourteenth Amendment.
The trial court's grant of relief was reversed on appeal, the New
York Court of Appeals ultimately concluding that there was no
"taking" since the Landmarks Law had not transferred control of
the property to the city, but only restricted appellants' exploitation of
it; and that there was no denial of due process because (1) the same use
of the Terminal was permitted as before;
(2) the appellants had not shown that they could not earn a
reasonable return on their investment
105 in the Terminal itself; (3)
even if the Terminal proper could never operate at a reasonable profit,
some of the income from Penn Central's extensive real estate holdings in
the area must realistically be imputed to the Terminal;
and (4) the development rights above the Terminal, which were made
transferable to numerous sites in the vicinity, provided significant
compensation for loss of rights above the Terminal itself.
Held: The application
of the Landmarks Law to the Terminal property does not constitute a
"taking" of appellants' property within the meaning of the Fifth
Amendment as made applicable to the States by the Fourteenth Amendment.
(a) In a wide variety of contexts the government may execute laws
or programs that adversely affect recognized economic values without its
action constituting a "taking," and in instances such as zoning
laws where a state tribunal has reasonably concluded that "the
health, safety, morals, or general welfare" would be promoted by
prohibiting particular contemplated uses of land, this Court has upheld
land-use regulations that destroyed or adversely affected real property
interests. In many
instances use restrictions that served a substantial public purpose have
been upheld against "taking" challenges, e. g., Goldblatt v.
Hempstead, 369 U.S. 590, 82 S.Ct. 987, 8 L.Ed.2d 130; Hadacheck v.
Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348, though a state
statute that substantially furthers important public policies may so
frustrate distinct investment‑backed expectations as
to constitute a "taking," e. g., Pennsylvania Coal Co. v.
Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322, and government
acquisitions of resources to permit uniquely public functions constitute
"takings," e. g., United States v. Causby, 328 U.S. 256, 66 S.Ct.
1062, 90 L.Ed. 1206. Pp. 2659-2662.
(b) In deciding whether particular governmental action has effected
a "taking," the
character of the action and nature and extent of the interference with
property rights (here the city tax block designated as the "landmark
site") are focused upon, rather than discrete segments thereof.
Consequently, appellants cannot establish a "taking"
simply by showing that they have been denied the ability to exploit the
super-jacent airspace, irrespective of the remainder of appellants'
parcel. Pp. 2662-2663.
(c) Though diminution in property value alone, as may result from a
zoning law, cannot establish a "taking," as appellants concede,
they urge that the regulation of individual landmarks is different because
it applies only to selected properties.
But it does not follow that landmark laws, which embody a
comprehensive plan to preserve structures of historic or aesthetic
interest, are discriminatory, like "reverse spot" zoning.
Nor can it be successfully contended that designation of a landmark
involves only a matter of taste and therefore will inevitably 106 lead to arbitrary results, for judicial review is available and
there is no reason to believe it will be less effective than would be so
in the case of zoning or any other context.
(d) That the Landmarks Law affects some landowners more severely
than others does not itself result in "taking," for that is
often the case with general welfare and zoning legislation.
Nor, contrary to appellants' contention, are they solely burdened
and unbenefited by the Landmarks Law, which has been extensively applied
and was enacted on the basis of the legislative judgment that the
preservation of landmarks benefits the citizenry both economically and by
improving the overall quality of city life.
(e) The Landmarks Law no more effects an appropriation of the
airspace above the Terminal for governmental uses than would a zoning law
appropriate property; it
simply prohibits appellants or others from occupying certain features of
that space while allowing appellants gainfully to use the remainder of the
parcel. United States v.
Causby, supra, distinguished. P.
(f) The Landmarks Law, which does not interfere with the Terminal's
present uses or prevent Penn Central from realizing a "reasonable
return" on its investment, does not impose the drastic limitation on
appellants' ability to use the air rights above the Terminal that
appellants claim, for on this record there is no showing that a smaller,
harmonizing structure would not be authorized.
Moreover, the pre-existing air rights are made transferable to
other parcels in the vicinity of the Terminal, thus mitigating whatever
financial burdens appellants have incurred.
42 N.Y.2d 324, 397 N.Y.S.2d 914, 366 N.E.2d 1271, affirmed.
M. Gribbon, Washington, D. C., for appellants.
J. Koerner, New York City, for appellees.
M. Wald, Washington, D. C., for the U. S., as amicus curiae, by special
leave of Court.
Mr. Justice BRENNAN delivered the opinion of the Court.
question presented is whether a city may, as part of a comprehensive
program to preserve historic landmarks and historic districts, place
restrictions on the development of individual historic landmarks -- in
addition to those imposed by applicable zoning ordinances -- without
effecting a "taking" requiring the payment of "just
we must decide whether the application of New York City's Landmarks
Preservation Law to the parcel of land occupied by Grand Central Terminal
has "taken" its owners' property in violation
of the Fifth and Fourteenth Amendments.
the past 50 years, all 50 States and over 500 municipalities have enacted
laws to encourage or require the preservation of buildings and areas with
historic or aesthetic importance. [FN1]
These nationwide legislative efforts have been
108 precipitated by two concerns.
The first is recognition that, in recent years, large numbers of
historic structures, landmarks, and areas have been destroyed
[FN2] without adequate consideration of either the values
represented therein or the possibility of preserving the destroyed
properties for use in economically productive ways. [FN3]
The second is a widely shared belief that structures with special
historic, cultural, or architectural significance enhance the quality of
life for all. Not only
do these buildings and their workmanship represent the lessons of the past
and embody precious features of our heritage, they serve as examples of
quality for today. "[H]istoric
conservation is but one aspect of the much larger problem, basically an
environmental one, of enhancing -- or perhaps developing for the first
time -- the quality of life for people." [FN4]
FN1. See National
Trust for Historic Preservation, A Guide to State Historic Preservation
Programs (1976); National
Trust for Historic Preservation, Directory of Landmark and Historic
District Commissions (1976). In
addition to these state and municipal legislative efforts, Congress has
determined that "the historical and cultural foundations of the
Nation should be preserved as a living part of our community life and
development in order to give a sense of orientation to the American
people," National Historic Preservation Act of 1966, 80 Stat. 915, 16
U.S.C. § 470(b) (1976 ed.), and has enacted a series of measures designed
to encourage preservation of sites and structures of historic,
architectural, or cultural significance. See generally Gray, The Response of Federal Legislation
to Historic Preservation, 36 Law & Contemp. Prob. 314 (1971).
Over one-half of the buildings listed in the Historic American Buildings
Survey, begun by the Federal Government in 1933, have been destroyed.
See Costonis, The Chicago Plan:
Incentive Zoning and the Preservation of Urban Landmarks, 85
Harv.L.Rev. 574, 574 n. 1 (1972), citing Huxtable, Bank's Building Plan
Sets Off Debate on "Progress," N.Y. Times, Jan. 17, 1971,
section 8, p. 1, col. 2.
FN3. See, e. g., N.Y.C. Admin. Code, § 205-1.0(a) (1976).
FN4. Gilbert, Introduction, Precedents for the Future, 36 Law &
Contemp. Prob. 311, 312 (1971), quoting address by Robert Stipe, 1971
Conference on Preservation Law, Washington, D. C., May 1, 1971
(unpublished text, pp. 6-7).
New York City,
responding to similar concerns and acting
109 pursuant to a New York State enabling Act, [FN5] adopted its
Landmarks Preservation Law in 1965.
See N.Y.C. Admin. Code, ch. 8-A, § 205-1.0 et seq. (1976). The city acted from the conviction that "the standing of
[New York City] as a world-wide tourist center and world capital of
business, culture and government" would be threatened if legislation
were not enacted to protect historic landmarks and neighborhoods from
precipitate decisions to destroy or fundamentally alter their character.
§ 205-1.0(a). The city believed that comprehensive measures to
safeguard desirable features of the existing urban fabric would benefit
its citizens in a variety of ways: e.
g., fostering "civic pride in the beauty and noble accomplishments of
the past"; protecting
and enhancing "the city's attractions to tourists and visitors";
"support[ing] and stimul [ating] business and industry";
"strengthen[ing] the economy of the city";
and promoting "the use of historic districts, landmarks,
interior landmarks and scenic landmarks for the education, pleasure and
welfare of the people of the city."
FN5. See N.Y.Gen.Mun.Law § 96-a (McKinney 1977).
It declares that it is the public policy of the State of New York
to preserve structures and areas with special historical or aesthetic
interest or value and authorizes local governments to impose reasonable
restrictions to perpetuate such structures and areas.
The New York City law
is typical of many urban landmark laws in that its primary method of
achieving its goals is not by acquisitions
of historic properties, [FN6] but rather by involving public entities in
land-use decisions affecting these properties
110 and providing services, standards, controls, and incentives that
will encourage preservation by private owners and users. [FN7] While the law does place special restrictions on landmark
properties as a necessary feature to the attainment of its larger
objectives, the major theme of the law is to ensure the owners of any such
properties both a "reasonable return" on their investments and
maximum latitude to use their parcels for purposes not inconsistent with
the preservation goals.
FN6. The consensus is that widespread public ownership of historic
properties in urban settings is neither feasible nor wise.
Public ownership reduces the tax base, burdens the public budget
with costs of acquisitions and maintenance, and results in the
preservation of public buildings as museums and similar facilities, rather
than as economically productive features of the urban scene.
See Wilson & Winkler, The Response of State Legislation to
Historic Preservation, 36 Law & Contemp. Prob. 329, 330-331, 339-340
FN7. See Costonis, supra n.2, at 580-581;
Wilson & Winkler, supra n.6;
Rankin, Operation and Interpretation of the New York City Landmark
Preservation Law, 36 Law & Contemp. Prob. 366 (1971).
The operation of the
law can be briefly summarized.
The primary responsibility for administering the law is vested in
the Landmarks Preservation Commission (Commission), a broad based, 11-member
agency [FN8] assisted by a
technical staff. The
Commission first performs the function, critical to any landmark
preservation effort, of identifying properties and areas that have "a
special character or special historical or aesthetic interest or value as
part of the development, heritage or cultural characteristics of the city,
state or nation." § 207-1.0(n); see
§ 207-1.0(h). If the
Commission determines, after giving all interested parties an opportunity
to be heard, that a building or area satisfies the ordinance's criteria,
it will designate a building to be a "landmark," § 207-1.0(n),
[FN9] situated 111 on a particular "landmark site," § 207-1.0(o ),
[FN10] or will designate an area to be a "historic district," §
207-1.0(h). [FN11] After the
Commission makes a designation, New York City's Board of Estimate, after
considering the relationship of the designated property "to the
master plan, the zoning resolution, projected public improvements and any
plans for the renewal of the area involved," § 207-2.0(g)(1), may
modify or disapprove the designation, and the owner may seek
**2653 judicial review of the final designation decision.
Thus far, 31 historic districts and over 400 individual landmarks
have been finally designated, [FN12] and the process is a continuing one.
FN8. The ordinance creating the Commission requires that it include
at least three architects, one historian qualified in the field, one city
planner or landscape architect, one realtor, and at least one resident of
each of the city's five boroughs.
N.Y.C. Charter § 534 (1976).
In addition to the ordinance's requirements concerning the
composition of the Commission, there is, according to a former chairman, a
"prudent tradition" that the Commission include one or two
lawyers, preferably with experience in municipal government, and several
laymen with no specialized qualifications other than concern for the good
of the city. Goldstone,
Aesthetics in Historic Districts, 36 Law & Contemp. Prob. 379, 384-385
FN9. " 'Landmark.'
Any improvement, any part of which is thirty years old or older,
which has a special character or special historical or aesthetic interest
or value as part of the development, heritage or cultural characteristics
of the city, state or nation and which has been designated as a landmark
pursuant to the provisions of this chapter."
FN10. " 'Landmark site.'
An improvement parcel or part thereof on which is situated a
landmark and any abutting improvement parcel or part thereof used as and
constituting part of the premises on which the landmark is situated, and
which has been designated as a landmark site pursuant to the provisions of
this chapter." § 207-1.0(o
FN11. " 'Historic district.' Any area which: (1)
contains improvements which: (a)
have a special character or special historical or aesthetic interest or
value; and (b) represent one
or more periods or styles of architecture typical of one or more eras in
the history of the city; and
(c) cause such area, by reason of such factors, to constitute a distinct
section of the city; and (2)
has been designated as a historic district pursuant to the provisions of
this chapter." § 207-1.0(h). The Act also provides for the designation of a
"scenic landmark," see § 207- 1.0(w), and an "interior
landmark." See §
FN12. See Landmarks Preservation Commission of the City of New
York, Landmarks and Historic Districts (1977). Although appellants are correct in noting that some of
the designated landmarks are publicly owned, the vast majority are, like
Grand Central Terminal, privately owned structures.
Final designation as
a landmark results in restrictions upon the property owner's options
concerning use of the landmark site.
First, the law imposes a duty upon the owner to keep the exterior
features of the building "in good repair" to assure that the
law's objectives not be defeated by the landmark's
112 falling into a state of irremediable disrepair.
See § 207-10.0(a). Second, the Commission must approve in advance
any proposal to alter the exterior architectural features of the landmark
or to construct any exterior improvement on the landmark site, thus
ensuring that decisions concerning construction on the landmark site are
made with due consideration of both the public interest in the maintenance
of the structure and the landowner's interest in use of the property.
See §§ 207-4.0 to 207-9.0.
In the event an owner
wishes to alter a landmark site, three separate procedures are available
through which administrative approval may be obtained.
First, the owner may apply to the Commission for a
"certificate of no effect on protected architectural features":
that is, for an order approving the improvement or alteration on
the ground that it will not change or affect any architectural feature of
the landmark and will be in harmony therewith.
See § 207-5.0. Denial
of the certificate is subject to judicial review.
Second, the owner may
apply to the Commission for a certificate of
See § 207-6.0. Such
certificates will be granted if the Commission concludes -- focusing upon
aesthetic, historical, and architectural values -- that the proposed
construction on the landmark site would not unduly hinder the protection,
enhancement, perpetuation, and use of the landmark. Again, denial of the
certificate is subject to judicial review.
Moreover, the owner who is denied either a certificate of no
exterior effect or a certificate of appropriateness may submit an
alternative or modified plan for approval. The final procedure -- seeking
a certificate of appropriateness on the ground of "insufficient
return," see § 207-8.0 -- provides special mechanisms, which vary
depending on whether or not the landmark enjoys a tax exemption, [FN13] to
ensure that designation does
not cause economic hardship.
FN13. If the owner of a non-tax-exempt parcel has been denied
certificates of appropriateness for a proposed alteration and shows that
he is not earning a reasonable return on the property in its present
state, the Commission and other city agencies must assume the burden of
developing a plan that will enable the landmark owner to earn a reasonable
return on the landmark site. The
plan may include, but need not be limited to, partial or complete tax
exemption, remission of taxes, and authorizations for alterations,
construction, or reconstruction appropriate for and not inconsistent with
the purposes of the law. § 207-8.0(c). The
owner is free to accept or reject a plan devised by the Commission and
approved by the other city agencies.
If he accepts the plan, he proceeds to operate the property
pursuant to the plan. If
he rejects the plan, the Commission may recommend that the city proceed by
eminent domain to acquire a protective interest in the landmark, but if
the city does not do so within a specified time period, the Commission
must issue a notice allowing the property owner to proceed with the
alteration or improvement as originally proposed in his application for a
certificate of appropriateness. Tax-exempt structures are treated somewhat
become eligible for special treatment only if four preconditions are
satisfied: (1) the owner previously entered into an agreement to sell the
parcel that was contingent upon the issuance of a certificate of approval;
(2) the property, as it exists at the time of the request, is not
capable of earning a reasonable return;
(3) the structure is no longer suitable to its past or present
purposes; and (4) the
prospective buyer intends to alter the landmark structure.
In the event the owner demonstrates that the property in its
present state is not earning a reasonable return, the Commission must
either find another buyer for it or allow the sale and construction to
proceed. But this is not the only remedy available for owners of tax-exempt
landmarks. As the case
at bar illustrates, see infra, at 2658, if an owner files suit and
establishes that he is incapable of earning a "reasonable
return" on the site in its present state, he can be afforded judicial
where a landmark owner who enjoys a tax exemption has demonstrated that
the landmark structure, as restricted, is totally inadequate for the
owner's "legitimate needs," the law has been held invalid as
applied to that parcel. See
Lutheran Church v. City of New York, 35 N.Y.2d 121, 359 N.Y.S.2d 7, 316
N.E.2d 305 (1974).
113 Although the designation
of a landmark and landmark site restricts the owner's control
over the parcel, designation also enhances the economic position
of the landmark owner in one significant respect.
Under New York City's zoning laws, owners of real property
who have not developed their property
114 to the full extent permitted by the applicable zoning
laws are allowed to transfer development rights to contiguous
parcels on the same city block. See New York City, Zoning Resolution Art. I, ch. 2, §
12-10 (1978) (definition of "zoning lot"). A 1968 ordinance gave the owners of landmark sites additional
opportunities to transfer development rights to other parcels.
Subject to a restriction that the floor area of the
transferee lot may not be increased by more than 20% above
its authorized level, the ordinance permitted transfers from
a landmark parcel to property across the street or across
a street intersection.
In 1969, the law governing the conditions under which
transfers from landmark parcels could occur was liberalized,
see New York City Zoning Resolutions 74-79 to 74-793, apparently
to ensure that the Landmarks Law would not unduly restrict
the development options of the owners of Grand Central Terminal.
See Marcus, Air Rights Transfers in New York City,
36 Law & Contemp. Prob. 372, 375 (1971).
The class of recipient lots was expanded to include
lots "across a street and opposite to another lot or
lots which except for the intervention of streets or street
intersections f [or]m a series extending to the lot occupied
by the landmark building [, provided that] all lots [are]
in the same ownership."
New York City Zoning Resolution 74-79 (emphasis deleted).
[FN14] In addition,
the 1969 amendment permits, in highly commercialized 115 areas like midtown Manhattan, the transfer of all unused development
rights to a single parcel.
FN14. To obtain approval for a proposed transfer, the landmark
owner must follow the following procedure.
First, he must obtain the permission of the Commission which will
examine the plans for the development of the transferee lot to determine
whether the planned construction would be compatible with the landmark.
Second, he must obtain the approbation of New York City's Planning
Commission which will focus on the effects of the transfer on occupants of
the buildings in the vicinity of the transferee lot and whether the
landmark owner will preserve the landmark.
Finally, the matter goes to the Board of Estimate, which has final
authority to grant or deny the application.
See also Costonis, supra n.2, at 585- 586 (1972).
This case involves
the application of New York City's Landmarks Preservation Law to Grand
Central Terminal (Terminal). The
Terminal, which is owned by the Penn Central Transportation Co. and its
affiliates (Penn Central), is one of New York City's most famous
buildings. Opened in
1913, it is regarded not only as providing an ingenious engineering
solution to the problems presented by urban railroad stations, but also as
a magnificent example of the French beaux‑arts style.
The Terminal is
located in midtown Manhattan. Its
south facade faces 42d Street and that street's intersection with Park
Avenue. At street
level, the Terminal is bounded on the west by Vanderbilt Avenue, on the
east by the Commodore Hotel, and on the north by the Pan-American
Building. Although a 20-story
office tower, to have been located above the Terminal, was part of the
original design, the planned tower was never constructed. [FN15]
The Terminal itself is an eight-story structure which Penn
Central uses as a railroad station and in which it rents space not
needed for railroad purposes to a variety of commercial interests. The Terminal is one of a number of properties owned by
appellant Penn Central in this area of midtown Manhattan. The others
include the Barclay, Biltmore, Commodore, Roosevelt, and Waldorf- Astoria
Hotels, the Pan-American Building and other office buildings along Park
Avenue, and the Yale Club. At
least eight of these are eligible to be recipients of development rights
afforded the Terminal by virtue of landmark designation.
FN15. The Terminal's present foundation includes columns, which
were built into it for the express purpose of supporting the proposed 20-story
On August 2, 1967,
following a public hearing, the Commission designated the Terminal a
"landmark" and designated the
116 "city tax block" it occupies a "landmark
The Board of Estimate confirmed this action on September 21, 1967.
Although appellant Penn Central had opposed the designation before
the Commission, it did not seek judicial review of the final designation
FN16. The Commission's report stated:
"Grand Central Station, one of the great buildings of America,
evokes a spirit that is unique in this City. It combines distinguished architecture with a brilliant
engineering solution, wedded to one of the most fabulous railroad
terminals of our time. Monumental
in scale, this great building functions as well today as it did when
built. In style, it
represents the best of the French Beaux Arts."
On January 22, 1968,
appellant Penn Central, to increase its income, entered into a renewable
50-year lease and sublease agreement with appellant UGP Properties, Inc. (UGP),
a wholly owned subsidiary of Union General Properties, Ltd., a United
Kingdom corporation. Under
the terms of the agreement, UGP was to construct a multistory office
building above the Terminal. UGP
promised to pay Penn Central $1 million annually during construction and
at least $3 million annually thereafter.
The rentals would be offset in part by a loss of some $700,000 to
$1 million in net rentals presently received from concessionaires
displaced by the new building.
Appellants UGP and
Penn Central then applied to the Commission for permission to construct an
office building atop the Terminal.
Two separate plans, both designed by architect Marcel Breuer and
both apparently satisfying the terms of the applicable zoning ordinance,
were submitted to the Commission for approval.
The first, Breuer I, provided for the construction of a 55-story
office building, to be cantilevered above the existing facade and to rest
on the roof of the Terminal. The
second, Breuer II Revised, [FN17] called for tearing
117 down a portion of the Terminal that included the 42d Street
facade, stripping off some of the remaining features of the Terminal's
facade, and constructing a 53-story office building.
The Commission denied a certificate of no exterior effect on
September 20, 1968. Appellants
then applied for a certificate of "appropriateness" as to both
proposals. After four
days of hearings at which over 80 witnesses testified, the Commission
denied this application as to both proposals.
FN17. Appellants also submitted a plan, denominated Breuer II, to
the Commission. However,
because appellants learned that Breuer II would have violated existing
easements, they substituted Breuer II Revised for Breuer II, and the
Commission evaluated the appropriateness only of Breuer II Revised.
reasons for rejecting certificates respecting Breuer II Revised are
summarized in the following statement:
"To protect a Landmark, one does not tear it down.
To perpetuate its architectural features, one does not strip them
off." Record 2255.
Breuer I, which would have preserved the existing vertical facades
of the present structure, received more sympathetic consideration.
The Commission first focused on the effect that the proposed tower
would have on one desirable feature created by the present structure and
its surroundings: the
dramatic view of the Terminal from Park Avenue South. Although appellants
had contended that the Pan-American Building had already destroyed the
silhouette of the south facade and that one additional tower could do no
further damage and might even provide a better background for the
facade, the Commission disagreed, stating that it found the majestic
approach from the south to be still unique in the city and that a 55-story
tower atop the Terminal would be far more detrimental to its south facade
than the Pan-American Building 375 feet away.
Moreover, the Commission found that from closer vantage points the
Pan Am Building and the other towers were largely cut off from view, which
would not be the case of the mass on top of the Terminal planned under
Breuer I. In
conclusion, the Commission stated:
"[We have] no
fixed rule against making additions to designated buildings -- it
all depends on how they are done .
. . . But to balance a 55-story
office tower above 118 a
flamboyant Beaux-Arts facade seems nothing more than an aesthetic joke.
Quite simply, the tower would overwhelm the Terminal by its sheer
mass. The 'addition'
would be four times as high as the existing structure and would reduce the
Landmark itself to the status of a curiosity.
cannot be divorced from their settings -- particularly when the setting is
a dramatic and integral part of the original concept.
The Terminal, in its setting, is a great example of urban design.
Such examples are not so plentiful in New York City that we can
afford to lose any of the few we have.
And we must preserve them in a meaningful way -- with alterations
and additions of such character, scale, materials and mass as will
protect, enhance and perpetuate the original design rather than overwhelm
it." Id., at 2251.
FN18. In discussing Breuer
I, the Commission also referred to a number of instances in which it had
approved additions to landmarks: "The
office and reception wing added to Gracie Mansion and the school and
church house added to the 12th Street side of the First Presbyterian
Church are examples that harmonize in scale, material and character with
the structures they adjoin. The
new Watch Tower Bible and Tract Society building on Brooklyn Heights,
though completely modern in idiom, respects the qualities of its
surroundings and will enhance the Brooklyn Heights Historic District, as
Butterfield House enhances West 12th Street, and Breuer's own Whitney
Museum its Madison Avenue locale."
did not seek judicial review of the denial of either certificate.
Because the Terminal site enjoyed a tax exemption, [FN19] remained
suitable for its present and future uses, and was not the subject of a
contract of sale, there were no further administrative remedies available
to appellants as to the Breuer I and Breuer II Revised plans.
See n. 13, supra. Further,
appellants did not avail themselves of the opportunity to develop 119 and submit other plans for the Commission's consideration and
appellants filed suit in New York Supreme Court, Trial Term, claiming,
inter alia, that the application of the Landmarks Preservation Law had
"taken" their property without just compensation in violation of
the Fifth and Fourteenth Amendments and arbitrarily deprived them of their
property without due process of law in violation of the Fourteenth
Amendment. Appellants sought a declaratory judgment, injunctive
relief barring the city from using the Landmarks Law to impede the
construction of any structure that might otherwise lawfully be constructed
on the Terminal site, and damages for the "temporary taking"
that occurred between August 2, 1967, the designation date, and the date
when the restrictions arising from the Landmarks Law would be lifted.
The trial court granted the injunctive and declaratory relief, but
severed the question of damages for a "temporary taking."
FN19. See N.Y. Real
Prop. Tax Law § 489-aa et seq. (McKinney Supp. 1977).
Although that court suggested that any regulation of private property to
protect landmark values was unconstitutional if "just
compensation" were not afforded, it also appeared to rely upon its
findings: first, that the
cost to Penn Central of operating the Terminal building itself, exclusive
of purely railroad operations, exceeded the revenues received from
concessionaires and tenants in the Terminal;
and second, that the special transferable development rights
afforded Penn Central as an owner of a landmark site did not "provide
compensation to plaintiffs or minimize the harm suffered by plaintiffs due
to the designation of the Terminal as a landmark."
and the New York Supreme Court, Appellate Division, reversed.
50 A.D.2d 265, 377 N.Y.S.2d 20 (1975).
The Appellate Division held that the restrictions on the
development of the Terminal site were necessary to promote the legitimate
public purpose of protecting landmarks and therefore that appellants could
sustain their constitutional claims only by proof that the regulation
deprived them of all reasonable beneficial use of the property.
The Appellate Division held that the evidence appellants
120 introduced at trial -- "Statements of Revenues and
Costs," purporting to show a net operating loss for the years 1969
and 1971, which were prepared for the instant litigation -- had not
satisfied their burden. [FN21] First,
the court rejected the claim that these statements showed that the
Terminal was operating at a loss, for in the court's view, appellants had
improperly attributed some railroad operating expenses and taxes to their
real estate operations and compounded that error by failing to impute any
rental value to the vast space in the Terminal devoted to railroad
purposes. Further, the
Appellate Division concluded that appellants had failed to establish
either that they were unable to increase the Terminal's commercial income
by transforming vacant or underutilized space to revenue-producing use, or
that the unused development rights over the Terminal could not have been
profitably transferred to one or more nearby sites. [FN22] The Appellate Division concluded that all appellants had
succeeded in showing was that they had been deprived of the property's
most profitable use, and that this showing did not establish that
appellants had been unconstitutionally deprived of their property.
FN21. These statements appear to have reflected the costs of
maintaining the exterior architectural features of the Terminal in
"good repair" as required by the law.
As would have been apparent in any case therefore, the existence of
the duty to keep up the property was here -- and will presumably always be
-- factored into the inquiry concerning the constitutionality of the
landmark restrictions. The Appellate Division also rejected the claim that
an agreement of Penn Central with the Metropolitan Transit Authority and
the Connecticut Transit Authority provided a basis for invalidating the
application of the Landmarks Law.
FN22. The record reflected that Penn Central had given serious
consideration to transferring some of those rights to either the Biltmore
Hotel or the Roosevelt Hotel.
The New York Court of
Appeals affirmed. 42 N.Y.2d
324, 397 N.Y.S.2d 914, 366 N.E.2d 1271 (1977).
That court summarily rejected any claim that the Landmarks Law had
"taken" 121 property
without "just compensation," id., at 329, 397 N.Y.S.2d, at 917,
366 N.E.2d, at 1274, indicating that there could be no "taking"
since the law had not transferred control of the property to the city, but
only restricted appellants' exploitation of it.
In that circumstance, the Court of Appeals held that appellants'
attack on the law could prevail only if the law deprived appellants of
their property in violation of the Due Process Clause of the Fourteenth
Amendment. Whether or
not there was a denial of substantive due process turned on whether the
restrictions deprived Penn Central of a "reasonable return" on
the "privately created and privately managed ingredient" of the
Terminal. Id., at 328, 397 N.Y.S.2d, at 916, 366 N.E.2d, at 1273.
[FN23] The Court of Appeals concluded that the Landmarks Law had not effected a denial
of due process because: (1)
the landmark regulation permitted the same use as had been made of the
Terminal for more than half a century;
(2) the appellants had failed to show that they could not earn a
reasonable return on their investment in the Terminal itself; (3) even if
the Terminal proper could never operate at a reasonable profit some of the
income from Penn Central's extensive real estate holdings in the area,
which include hotels and office buildings, must realistically be imputed
to the Terminal; and
122 (4) the development rights above the Terminal, which had been made
transferable to numerous sites in the vicinity of the Terminal, one or two
of which were suitable for the construction of office buildings, were
valuable to appellants and provided "significant, perhaps 'fair,'
compensation for the loss of rights above the terminal itself." Id., at 333-336, 397 N.Y.S.2d, at 922, 366 N.E.2d, at
FN23. The Court of Appeals suggested that in calculating the value
of the property upon which appellants were entitled to earn a reasonable
return, the "publicly created" components of the value of the
property -- i. e., those elements of its value attributable to the
"efforts of organized society" or to the "social
complex" in which the Terminal is located -- had to be excluded.
However, since the record upon which the Court of Appeals decided
the case did not, as that court recognized, contain a basis for
segregating the privately created from the publicly created elements of
the value of the Terminal site and since the judgment of the Court of
Appeals in any event rests upon bases that support our affirmance see
infra, this page, we have no occasion to address the question whether it
is permissible or feasible to separate out the "social
increments" of the value of property.
See Costonis, The Disparity Issue:
A Context for the Grand Central Terminal Decision, 91 Harv.L.Rev.
402, 416-417 (1977).
Observing that its
affirmance was "[o]n the present record," and that its analysis
had not been fully developed by counsel at any level of the New York
judicial system, the Court of Appeals directed that counsel "should
be entitled to present . . .
any additional submissions which, in the light of [the court's] opinion,
may usefully develop further the factors discussed."
Id., at 337, 397 N.Y.S.2d, at 922, 366 N.E.2d, at 1279.
Appellants chose not to avail themselves of this opportunity and
filed a notice of appeal in this Court.
We noted probable jurisdiction.
434 U.S. 983 (1977). We
The issues presented
by appellants are (1) whether the restrictions imposed by New York City's
law upon appellants' exploitation of the Terminal site effect a
"taking" of appellants' property for a public use within the
meaning of the Fifth Amendment, which of course is made applicable to the
States through the Fourteenth Amendment, see Chicago, B. & Q. R. Co.
v. Chicago, 166 U.S. 226, 239, 17 S.Ct. 581, 585, 41 L.Ed. 979 (1897),
and, (2), if so, whether the transferable development rights afforded
appellants constitute "just compensation" within the meaning of
the Fifth Amendment. [FN24] We
need only address the question whether a "taking" has occurred.
FN24. Our statement of the issues is a distillation of four
questions presented in the jurisdictional statement:
"Does the social and cultural desirability of preserving
historical landmarks through government regulation derogate from the
constitutional requirement that just compensation be paid for private
property taken for public use?
"Is Penn Central entitled to no compensation for that large
but unmeasurable portion of the value of its rights to construct an office
building over the Grand Central Terminal that is said to have been created
by the efforts of 'society as an organized entity'?
"Does a finding that Penn Central has failed to establish that
there is no possibility, without exercising its development rights, of
earning a reasonable return on all of its remaining properties that
benefit in any way from the operations of the Grand Central Terminal
warrant the conclusion that no compensation need be paid for the taking of
those rights? "Does the possibility accorded to Penn Central, under
the landmark-preservation regulation, of realizing some value at some time
by transferring the Terminal development rights to other buildings, under
a procedure that is conceded to be defective, severely limited,
procedurally complex and speculative, and that requires ultimate
discretionary approval by governmental authorities, meet the
constitutional requirements of just compensation as applied to
The first and fourth questions assume that there has been a taking
and raise the problem whether, under the circumstances of this case, the
transferable development rights constitute "just compensation."
The second and third questions, on the other hand, are directed to
the issue whether a taking has occurred.
FN25. As is implicit in our opinion, we do not embrace the
proposition that a "taking" can never occur unless government
has transferred physical control over a portion of a parcel.
considering appellants' specific contentions, it will be useful to review
the factors that have shaped the jurisprudence of the Fifth Amendment
injunction "nor shall private property be taken for public use,
without just compensation."
The question of what constitutes a "taking" for purposes
of the Fifth Amendment has proved to be a problem of considerable
difficulty. While this
Court has recognized that the "Fifth Amendment's guarantee
. . . [is] designed to
bar Government from forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the public as a
whole," Armstrong v. United States, 364 U.S.
 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960), this Court,
quite simply, has been unable to develop any "set formula" for
determining when "justice and fairness" require that economic
injuries caused by public action be compensated by the government, rather
than remain disproportionately concentrated on a few persons.
See Goldblatt v. Hempstead, 369 U.S. 590, 594, 82 S.Ct. 987, 990, 8
L.Ed.2d 130 (1962). Indeed,
we have frequently observed that whether a particular restriction will be
rendered invalid by the government's failure to pay for any losses
proximately caused by it depends largely "upon the particular
circumstances [in that] case." United
States v. Central Eureka Mining Co., 357 U.S. 155, 168, 78 S.Ct. 1097,
1104, 2 L.Ed.2d 1228 (1958); see
United States v. Caltex, Inc., 344 U.S. 149, 156, 73 S.Ct. 200, 203, 97
L.Ed. 157 (1952).
In engaging in
these essentially ad hoc, factual inquiries, the Court's decisions have
identified several factors that have particular significance. The economic impact of the regulation on the claimant
and, particularly, the extent to which the regulation has interfered with
distinct investment-backed expectations are, of course, relevant
Goldblatt v. Hempstead, supra, 369 U.S., at 594, 82 S.Ct., at 990.
So, too, is the character of the governmental action. A "taking" may more readily be found when the
interference with property can be characterized as a physical invasion by
government, see, e. g., United States v. Causby, 328 U.S. 256, 66 S.Ct.
1062, 90 L.Ed. 1206 (1946), than when interference arises from some public
program adjusting the benefits and burdens of economic life to promote the
hardly could go on if to some extent values incident to property could not
be diminished without paying for every such change in the general
law," Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413, 43 S.Ct.
158, 159, 67 L.Ed. 322 (1922), and this Court has accordingly recognized,
in a wide variety of contexts, that government may execute laws or
programs that adversely affect recognized economic values.
Exercises of the taxing power are one obvious example.
A second are the decisions in which this Court has dismissed
"taking" challenges on the ground that, while the challenged
government action caused 125
economic harm, it did not interfere with interests that were sufficiently
bound up with the reasonable expectations of the claimant to constitute
"property" for Fifth Amendment purposes. See, e. g., United States v. Willow River Power Co.,
324 U.S. 499, 65 S.Ct. 761, 89 L.Ed. 1101 (1945) (interest in high-water
level of river for runoff for tailwaters to maintain power head is not
property); United States v.
Chandler-Dunbar Water Power Co., 229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063
(1913) (no property interest can exist in navigable waters);
see also Demorest v. City Bank Co., 321 U.S. 36, 64 S.Ct. 384, 88
L.Ed. 526 (1944); Muhlker v. Harlem R. Co., 197 U.S. 544, 25 S.Ct. 522, 49
L.Ed. 872 (1905); Sax, Takings and the Police Power, 74 Yale L.J. 36,
More importantly for
the present case, in instances in which a state tribunal reasonably
concluded that "the health, safety, morals, or general welfare"
would be promoted by prohibiting particular contemplated uses of land,
this Court has upheld land-use regulations that destroyed or adversely
affected recognized real property interests.
See Nectow v. Cambridge, 277 U.S. 183, 188, 48 S.Ct. 447, 448, 72
L.Ed. 842 (1928). Zoning
laws are, of course, the classic example, see Euclid v. Ambler Realty Co.,
272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) (prohibition of
industrial use); Gorieb v.
Fox, 274 U.S. 603, 608, 47 S.Ct. 675, 677, 71 L.Ed. 1228 (1927)
(requirement that portions of parcels be left unbuilt);
Welch v. Swasey, 214 U.S. 91, 29 S.Ct. 567, 53 L.Ed. 923 (1909)
(height restriction), which have been viewed as permissible governmental
action even when prohibiting the most beneficial use of the property.
See Goldblatt v. Hempstead, supra, 369 U.S., at 592-593, 82 S.Ct.,
at 988-989, and cases cited; see
also Eastlake v. Forest City Enterprises, Inc., 426 U.S. 668, 674, n. 8,
96 S.Ct. 2358, 2362 n. 8, 49 L.Ed.2d 132 (1976).
Zoning laws generally
do not affect existing uses of real property, but
"taking" challenges have also been held to be without
merit in a wide variety of situations when the challenged governmental
actions prohibited a beneficial use to which individual parcels had
previously been devoted and thus caused substantial individualized harm.
Miller v. Schoene, 276 U.S. 272, 48 S.Ct. 246, 72 L.Ed. 568 (1928),
is illustrative. In
that case, a state entomologist, acting pursuant to a state statute,
ordered 126 the claimants to
cut down a large number of ornamental red cedar trees because they
produced cedar rust fatal to apple trees cultivated nearby.
Although the statute provided for recovery of any expense incurred
in removing the cedars, and permitted claimants to use the felled trees,
it did not provide compensation for the value of the standing trees or for
the resulting decrease in market value of the properties as a whole.
A unanimous Court held that this latter omission did not render the
statute invalid. The
Court held that the State might properly make "a choice between the
preservation of one class of property and that of the other" and
since the apple industry was important in the State involved, concluded
that the State had not exceeded "its constitutional powers by
deciding upon the destruction of one class of property [without
compensation] in order to save another which, in the judgment of the
legislature, is of greater value to the public."
Id., at 279, 48 S.Ct., at 247.
Again, Hadacheck v.
Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 (1915), upheld a law prohibiting the claimant from continuing
his otherwise lawful business of operating a brickyard in a particular
physical community on the ground that the legislature had reasonably
concluded that the presence of the brickyard was inconsistent with
neighboring uses. See
also United States v. Central Eureka Mining Co., supra (Government order
closing gold mines so that skilled miners would be available for other
mining work held not a taking); Atchison,
T. & S. F. R. Co. v. Public Utilities Comm'n, 346 U.S. 346, 74 S.Ct.
92, 98 L.Ed. 51 (1953) (railroad may be required to share cost of
constructing railroad grade improvement);
Walls v. Midland Carbon Co., 254 U.S. 300, 41 S.Ct. 118, 65 L.Ed.
276 (1920) (law prohibiting manufacture of carbon black upheld);
Reinman v. Little Rock, 237 U.S. 171, 35 S.Ct. 511, 59 L.Ed. 900
(1915) (law prohibiting livery stable upheld);
Mugler v. Kansas, 123 U.S. 623, 8 S.Ct. 273, 31 L.Ed. 205 (1887)
(law prohibiting liquor business upheld).
Hempstead, supra, is a recent example.
There, a 1958 city safety ordinance banned any excavations below 127 the water table and effectively prohibited the claimant from
continuing a sand and gravel mining business that had been operated on the
particular parcel since 1927. The
Court upheld the ordinance against a "taking" challenge,
although the ordinance prohibited the present and presumably most
beneficial use of the property and had, like the regulations in Miller and
Hadacheck, severely affected a particular owner.
The Court assumed that the ordinance did not prevent the owner's
reasonable use of the property since the owner made no showing of an
adverse effect on the value of the land.
Because the restriction served a substantial public purpose, the
Court thus held no taking had occurred.
It is, of course, implicit in Goldblatt that a use restriction on
real property may constitute a "taking" if not reasonably
necessary to the effectuation of a substantial public purpose, see Nectow
v. Cambridge, supra; cf.
Moore v. East Cleveland, 431 U.S. 494, 513-514, 97 S.Ct. 1932, 1943, 52
L.Ed.2d 531 (1977) (STEVENS, J., concurring), or perhaps if it has an
unduly harsh impact upon the owner's use of the property.
Pennsylvania Coal Co.
v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922), is the leading case for the proposition that a state
statute that substantially furthers important public policies may so
frustrate distinct investment-backed expectations as to amount to a
the claimant had sold the surface rights to particular parcels of
property, but expressly reserved the right to remove the coal thereunder. A Pennsylvania statute, enacted after the transactions,
forbade any mining of coal that caused the subsidence of any house, unless
the house was the property of the owner of the underlying coal and was
more than 150 feet from the improved property of another.
Because the statute made it commercially impracticable to mine the
coal, id., at 414, 43 S.Ct., at 159, and thus had nearly the same effect
as the complete destruction of rights claimant had reserved from the
owners of the surface land, see id., at 414-415, 43 S.Ct., at 159-160, the
Court held that the statute was invalid as effecting a "taking" 128 without just compensation.
See also Armstrong v. United States, 364 U.S. 40, 80 S.Ct. 1563, 4
L.Ed.2d 1554 (1960) (Government's complete destruction of a materialman's
lien in certain property held a "taking"); Hudson Water Co. v. McCarter, 209 U.S. 349, 355, 28 S.Ct.
529, 531, 52 L.Ed. 828 (1908) (if height restriction makes property wholly
useless "the rights of property
. . . prevail over the
other public interest" and compensation is required).
See generally Michelman, Property, Utility, and Fairness: Comments
on the Ethical Foundations of "Just Compensation" Law, 80
Harv.L.Rev. 1165, 1229-1234 (1967).
actions that may be characterized as acquisitions of resources to permit
or facilitate uniquely public functions have often been held to constitute
States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206 (1946), is
holding that direct overflights above the claimant's land, that destroyed
the present use of the land as a chicken farm, constituted a
"taking," Causby emphasized that Government had not "merely
destroyed property [but was] using a part of it for the flight of its
planes." Id., 328 U.S.,
at 262-263, n. 7, 66 S.Ct., at 1066.
See also Griggs v. Allegheny County, 369 U.S. 84, 82 S.Ct. 531, 7
L.Ed.2d 585 (1962) (overflights held a taking);
Portsmouth Co. v. United States, 260 U.S. 327, 43 S.Ct. 135, 67
L.Ed. 287 (1922) (United States military installations' repeated firing of
guns over claimant's land is a taking); United States v. Cress, 243 U.S.
316, 37 S.Ct. 380, 61 L.Ed. 746 (1917) (repeated floodings of land caused
by water project is taking); but
see YMCA v. United States, 395 U.S. 85, 89 S.Ct. 1511, 23 L.Ed.2d 117
(1969) (damage caused to building when federal officers who were seeking
to protect building were attacked by rioters held not a taking).
See generally Michelman, supra, at 1226-1229;
Sax, Takings and the Police Power, 74 Yale L.J. 36 (1964).
that the New York City law has "taken" their property in
violation of the Fifth and Fourteenth Amendments, appellants make a series
of arguments, which, while tailored to the facts of this case, essentially
urge that 129 any substantial
restriction imposed pursuant to a landmark law must be accompanied by just
compensation if it is to be constitutional. Before considering these, we
emphasize what is not in dispute.
Because this Court has recognized, in a number of settings, that
States and cities may enact land-use restrictions or controls to enhance
the quality of life by preserving the character and desirable aesthetic
features of a city, see New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513,
49 L.Ed.2d 511 (1976); Young v. American Mini Theatres, Inc., 427 U.S. 50, 96 S.Ct.
2440, 49 L.Ed.2d 310 (1976); Village
of Belle Terre v. Boraas, 416 U.S. 1, 9‑10, 94 S.Ct. 1536, 39
L.Ed.2d 797 (1974); Berman v.
Parker, 348 U.S. 26, 33, 75 S.Ct. 98, 102, 99 L.Ed. 27 (1954);
Welch v. Swasey, 214 U.S., at 108, 29 S.Ct., at 571, appellants do
not contest that New York City's objective of preserving structures and
areas with special historic, architectural, or cultural significance is an
entirely permissible governmental goal.
They also do not dispute that the restrictions imposed on its
parcel are appropriate means of securing the purposes of the New York City
appellants do not challenge any of the specific factual premises of the
decision below. They accept for present purposes both that the parcel
of land occupied by Grand Central Terminal must, in its present state, be
regarded as capable of earning a reasonable return, [FN26] and that the
transferable development rights afforded appellants by virtue of the
Terminal's designation as a landmark are valuable, even if not as valuable
as the rights to construct above the Terminal.
In appellants' view none of these factors derogate from their claim
that New York City's law has effected a "taking."
FN26. Both the Jurisdictional Statement 7-8, n. 7, and Brief for
Appellants 8 n. 7 state that appellants are not seeking review of the New
York courts' determination that Penn Central could earn a "reasonable
return" on its investment in the Terminal. Although appellants suggest in their reply brief that
the factual conclusions of the New York courts cannot be sustained unless
we accept the rationale of the New York Court of Appeals, see Reply Brief
for Appellants 12 n. 15, it is apparent that the findings concerning Penn
Central's ability to profit from the Terminal depend in no way on the
Court of Appeals' rationale.
They first observe that the airspace above the Terminal
is a valuable property interest, citing United States v. Causby, supra.
They urge that the Landmarks Law has deprived them of any gainful
use of their "air rights" above the Terminal and that,
irrespective of the value of the remainder of their parcel, the city has
"taken" their right to this superadjacent airspace, thus
entitling them to "just compensation" measured by the fair
market value of these air rights.
Apart from our
own disagreement with appellants' characterization of the effect of the
New York City law, see infra, at 2665, the submission that appellants may
establish a "taking" simply by showing that they have been
denied the ability to exploit a property interest that they heretofore had
believed was available for development is quite simply untenable.
Were this the rule, this Court would have erred not only in
upholding laws restricting the development of air rights, see Welch v.
Swasey, supra, but also in approving those prohibiting both the subjacent,
see Goldblatt v. Hempstead, 369 U.S. 590, 82 S.Ct. 987, 8 L.Ed.2d 130
(1962), and the lateral, see Gorieb v. Fox, 274 U.S. 603, 47 S.Ct. 675, 71
L.Ed. 1228 (1927), development of particular parcels. [FN27]
"Taking" jurisprudence does not divide a single parcel
into discrete segments and attempt to determine whether rights in a
particular segment have been entirely abrogated.
In deciding whether a particular governmental action has effected a
taking, this Court focuses rather both on the character of the action and
on the nature and extent of the interference with rights in the
131 parcel as a whole -- here, the city tax block designated as the
FN27. These cases dispose of any contention that might be based on
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322
(1922), that full use of air rights is so bound up with the investment-backed
expectations of appellants that governmental deprivation of these rights
invariably -- i. e., irrespective of the impact of the restriction on the
value of the parcel as a whole -- constitutes a "taking."
Similarly, Welch, Goldblatt, and Gorieb illustrate the fallacy of
appellants' related contention that a "taking" must be found to
have occurred whenever the land-use restriction may be characterized as
imposing a "servitude" on the claimant's parcel.
appellants, focusing on the character and impact of the New York City law,
argue that it effects a "taking" because its operation has
significantly diminished the value of the Terminal site.
Appellants concede that the decisions sustaining other land-use
regulations, which, like the
New York City law, are reasonably related to the promotion of the general
welfare, uniformly reject the proposition that diminution in property
value, standing alone, can establish a "taking," see Euclid v.
Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) (75%
diminution in value caused by zoning law);
Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348
(1915) (87 1/2 % diminution in value);
cf. Eastlake v. Forest City Enterprises, Inc., 426 U.S., at 674 n.
8, 96 S.Ct., at 2362 n. 8, and that the "taking" issue in these
contexts is resolved by focusing on the uses the regulations permit.
See also Goldblatt v. Hempstead, supra.
Appellants, moreover, also do not dispute that a showing of
diminution in property value would not establish a taking if the
restriction had been imposed as a result of historic-district legislation,
see generally Maher v. New Orleans, 516 F.2d 1051 (CA5 1975), but
appellants argue that New York City's regulation of individual landmarks
is fundamentally different from zoning or from historic-district
legislation because the controls imposed by New York City's law apply only
to individuals who own selected properties.
appellants' position appears to be that the only means of ensuring that
selected owners are not singled out to endure financial hardship for no
reason is to hold that any restriction imposed on individual landmarks
pursuant to the New York City scheme is a "taking" requiring the
payment of "just compensation."
Agreement with this argument would, of course, invalidate not just
New York City's law, but all comparable landmark legislation in the
Nation. We find no
merit in it.
132 It is true, as appellants emphasize, that both historic-district
legislation and zoning laws regulate all properties within given physical
communities whereas landmark laws apply only to selected parcels.
But, contrary to appellants' suggestions, landmark laws are not
like discriminatory, or "reverse spot," zoning:
that is, a land-use decision which arbitrarily singles out a
particular parcel for different, less favorable treatment than the
neighboring ones. See 2
A. Rathkopf, The Law of Zoning and Planning 26-4, and n. 6 (4th ed. 1978).
In contrast to
discriminatory zoning, which is the antithesis of land-use control as part
of some comprehensive plan, the New York City law embodies a comprehensive
plan to preserve structures of historic or aesthetic interest wherever
they might be found in the city, [FN28] and as noted, over 400 landmarks
and 31 historic districts have been designated pursuant to this plan.
FN28. Although the New York Court of Appeals contrasted the New
York City Landmarks Law with both zoning and historic-district legislation
and stated at one point that landmark laws do not "further a general
community plan," 42 N.Y.2d 324, 330, 397 N.Y.S.2d 914, 918, 366
N.E.2d 1271, 1274 (1977), it also emphasized that the implementation of
the objectives of the Landmarks Law constitutes an "acceptable reason
for singling out one particular parcel for different and less favorable
treatment." Ibid., 397
N.Y.S.2d, at 918, 366 N.E.2d, at 1275.
Therefore, we do not understand the New York Court of Appeals to
disagree with our characterization of the law.
merit is the related argument that the decision to designate a structure
as a landmark "is inevitably arbitrary or at least subjective,
because it is basically a matter of taste," Reply Brief for
Appellants 22, thus unavoidably singling out individual landowners for
disparate and unfair treatment.
The argument has a particularly hollow ring in this case.
For appellants not only did not seek judicial review of either the
designation or of the denials of the certificates of appropriateness and
of no exterior effect, but do not even now suggest that the Commission's
decisions concerning the Terminal were in any sense arbitrary or
unprincipled. But, in
133 any event, a landmark owner has a right to judicial review of
any Commission decision, and, quite simply, there is no basis whatsoever
for a conclusion that courts will have any greater difficulty identifying
arbitrary or discriminatory action in the context of landmark regulation
than in the context of classic zoning or indeed in any other context.
FN29. When a property owner challenges the application of a zoning
ordinance to his property, the judicial inquiry focuses upon whether the
challenged restriction can reasonably be deemed to promote the objectives
of the community land-use plan, and will include consideration of the
treatment of similar parcels. See
generally Nectow v. Cambridge, 277 U.S. 183, 48 S.Ct. 447, 72 L.Ed. 842
(1928). When a property
owner challenges a landmark designation or restriction as arbitrary or
discriminatory, a similar inquiry presumably will occur.
observe that New York City's law differs from zoning laws and historic-district
ordinances in that the Landmarks Law does not impose identical or similar
restrictions on all structures located in particular physical communities.
It follows, they argue, that New York City's law is inherently
incapable of producing the fair and equitable distribution of benefits and
burdens of governmental action which is characteristic of zoning laws and
historic-district legislation and which they maintain is a constitutional
requirement if "just compensation" is not to be afforded.
It is, of course, true that the Landmarks Law has a more severe
impact on some landowners than on others, but that in itself does not mean
that the law effects a "taking."
Legislation designed to promote the general welfare commonly
burdens some more than others.
The owners of the brickyard in Hadacheck, of the cedar trees in
Miller v. Schoene, and of the gravel and sand mine in Goldblatt v.
Hempstead, were uniquely burdened by the legislation sustained in those
cases. [FN30] Similarly,
zoning 134 laws often affect
some property owners more severely than others but have not been held to
be invalid on that account. For
example, the property owner in Euclid who wished to use its property for
industrial purposes was affected far more severely by the ordinance than
its neighbors who wished to use their land for residences.
FN30. Appellants attempt to distinguish these cases on the ground
that, in each, government was prohibiting a "noxious" use of
land and that in the present case, in contrast, appellants' proposed
construction above the Terminal would be beneficial.
We observe that the uses in issue in Hadacheck, Miller, and
Goldblatt were perfectly lawful in themselves.
They involved no "blameworthiness,
. . . moral wrongdoing
or conscious act of dangerous risk-taking which induce[d society] to shift
the cost to a pa[rt]icular individual."
Sax, Takings and the Police Power, 74 Yale L.J. 36, 50 (1964).
These cases are better understood as resting not on any supposed
"noxious" quality of the prohibited uses but rather on the
ground that the restrictions were reasonably related to the implementation
of a policy -- not unlike historic preservation -- expected to produce a
widespread public benefit and applicable to all similarly situated
property. Nor, correlatively, can it be asserted that the destruction or
fundamental alteration of a historic landmark is not harmful.
The suggestion that the beneficial quality of appellants' proposed
construction is established by the fact that the construction would have
been consistent with applicable zoning laws ignores the development in
sensibilities and ideals reflected in landmark legislation like New York
City's. Cf. West Bros.
Brick Co. v. Alexandria, 169 Va. 271, 282-283, 192 S.E. 881, 885-886,
appeal dismissed for want of a substantial federal question, 302 U.S. 658,
58 S.Ct. 369, 82 L.Ed. 508 (1937).
In any event,
appellants' repeated suggestions that they are solely burdened and
unbenefited is factually inaccurate.
This contention overlooks the fact that the New York City law
applies to vast numbers of structures in the city in addition to the
Terminal -- all the structures contained in the 31 historic districts and
over 400 individual landmarks, many of which are close to the Terminal.
[FN31] Unless we are to
reject the judgment of the New York City Council that the preservation of
landmarks benefits all New York citizens and all structures, both
economically and by improving the quality of life in the city as a whole
-- which we are unwilling to do -- we cannot
135 conclude that the owners of the Terminal have in no sense been
benefited by the Landmarks Law.
Doubtless appellants believe they are more burdened than benefited
by the law, but that must have been true, too, of the property owners in
Miller, Hadacheck, Euclid, and Goldblatt. [FN32]
FN31. There are some 53 designated landmarks and 5 historic
districts or scenic landmarks in Manhattan between 14th and 59th Streets.
See Landmarks Preservation Commission, Landmarks and Historic
FN32. It is, of course, true that the fact the duties imposed by
zoning and historic-district legislation apply throughout particular
physical communities provides assurances against arbitrariness, but the
applicability of the Landmarks Law to a large number of parcels in the
city, in our view, provides comparable, if not identical, assurances.
final broad-based attack would have us treat the law as an instance, like
that in United States v. Causby, in which government, acting in an
enterprise capacity, has appropriated part of their property for some
strictly governmental purpose.
Apart from the fact that Causby was a case of invasion of airspace
that destroyed the use of the farm beneath and this New York City law has
in nowise impaired the present use of the Terminal, the Landmarks Law
neither exploits appellants' parcel for city purposes nor facilitates nor
arises from any entrepreneurial operations of the city.
The situation is not remotely like that in Causby where the
airspace above the property was in the flight pattern for military
aircraft. The Landmarks
Law's effect is simply to prohibit appellants or anyone else from
occupying portions of the airspace above the Terminal, while permitting
appellants to use the remainder of the parcel in a gainful fashion.
This is no more an appropriation of property by government for its
own uses than is a zoning law prohibiting, for "aesthetic"
reasons, two or more adult theaters within a specified area, see Young v.
American Mini Theatres, Inc., 427 U.S. 50, 96 S.Ct. 2440, 49 L.Ed.2d 310
(1976), or a safety regulation prohibiting excavations below a certain
level. See Goldblatt v.
appellants' broad arguments is not, however, the end of our inquiry, for
all we thus far have established is
136 that the New York City law is not rendered invalid by its failure
to provide "just compensation" whenever a landmark owner is
restricted in the exploitation of property interests, such as air rights,
to a greater extent than provided for under applicable zoning laws.
We now must consider whether the interference with appellants'
property is of such a magnitude that "there must be an exercise of
eminent domain and compensation to sustain [it]."
Pennsylvania Coal Co. v. Mahon, 260 U.S., at 413, 43 S.Ct., at 159.
That inquiry may be narrowed to the question of the severity of the
impact of the law on appellants' parcel, and its resolution in turn
requires a careful assessment of the impact of the regulation on the
governmental acts in Goldblatt, Miller, Causby, Griggs, and Hadacheck, the
New York City law does not interfere in any way with the present uses of
the Terminal. Its
designation as a landmark not only permits but contemplates that
appellants may continue to use the property precisely as it has been used
for the past 65 years: as a
railroad terminal containing office space and concessions.
So the law does not interfere with what must be regarded as Penn
Central's primary expectation concerning the use of the parcel.
More importantly, on this record, we must regard the New York City
law as permitting Penn Central not only to profit from the Terminal but
also to obtain a "reasonable return" on its investment.
exaggerate the effect of the law on their ability to make use of the air
rights above the Terminal in two respects. [FN33] First, it simply cannot
be maintained, on this record, that appellants have been prohibited from
occupying any portion of the airspace above the Terminal. While the
Commission's actions in denying applications to construct an
137 office building in excess of 50 stories above the Terminal may
indicate that it will refuse to issue a certificate of appropriateness for
any comparably sized structure, nothing the Commission has said or done
suggests an intention to prohibit any construction above the Terminal.
The Commission's report emphasized that whether any construction
would be allowed depended upon whether the proposed addition "would
harmonize in scale, material and character with [the Terminal]."
Record 2251. Since
appellants have not sought approval for the construction of a smaller
structure, we do not know that appellants will be denied any use of any
portion of the airspace above the Terminal. [FN34]
FN33. Appellants, of course, argue at length that the transferable
development rights, while valuable, do not constitute "just
compensation." Brief for Appellants 36-43.
FN34. Counsel for appellants admitted at oral argument that the
Commission has not suggested that it would not, for example, approve a 20-story
office tower along the lines of that which was part of the original plan
for the Terminal. See
Tr. of Oral Arg. 19.
Second, to the extent
appellants have been denied the right to build above the Terminal, it is
not literally accurate to say that they have been denied all use of even
those pre-existing air rights.
Their ability to use these rights has not been abrogated;
they are made transferable to at least eight parcels in the
vicinity of the Terminal, one or two of which have been found suitable for
the construction of new office buildings.
Although appellants and others have argued that New York City's
transferable development-rights program is far from ideal, [FN35] the New
York courts here supportably found that, at least in the case of the
Terminal, the rights afforded are valuable. While these rights may well
not have constituted "just compensation" if a "taking"
had occurred, the rights nevertheless undoubtedly mitigate whatever
financial burdens the law has imposed on appellants and, for that reason,
are to be taken into account in considering the impact of regulation.
Cf. Goldblatt v. Hempstead, 369 U.S., at 594 n. 3, 82 S.Ct., at 990
FN35. See Costonis, supra n. 2, at 585-589.
138 On this record, we conclude that the application of New York
City's Landmarks Law has not effected a "taking" of appellants'
restrictions imposed are substantially related to the promotion of the
general welfare and not only permit reasonable beneficial use of the
landmark site but also afford appellants opportunities further to enhance
not only the Terminal site proper but also other properties. [FN36]
FN36. We emphasize that our holding today is on the present record,
which in turn is based on Penn Central's present ability to use the
Terminal for its intended purposes and in a gainful fashion. The city conceded at oral argument that if appellants
can demonstrate at some point in the future that circumstances have so
changed that the Terminal ceases to be "economically viable,"
appellants may obtain relief. See
Tr. of Oral Arg. 42-43.
Mr. Justice REHNQUIST,
with whom THE CHIEF JUSTICE and Mr. Justice STEVENS join, dissenting.
Of the over one
million buildings and structures in the city of New York, appellees have
singled out 400 for designation as official landmarks. [FN1] The owner of
a building might initially be pleased that his property has been chosen by
a distinguished committee of architects, historians, and city 139 planners for such a singular distinction.
But he may well discover, as appellant Penn Central
Transportation Co. did here, that the landmark designation imposes upon
him a substantial cost, with little or no offsetting benefit except for
the honor of the designation. The
question in this case is whether the cost associated with the city of New
York's desire to preserve a limited number of "landmarks" within
its borders must be borne by all of its taxpayers or whether it can
instead be imposed entirely on the owners of the individual properties.
FN1. A large percentage of the designated landmarks are public
structures (such as the Brooklyn Bridge, City Hall, the Statute of Liberty
and the Municipal Asphalt Plant) and thus do not raise Fifth Amendment
taking questions. See
Landmarks Preservation Commission of the City of
New York, Landmarks and Historic Districts (1977 and Jan. 10, 1978,
Supplement). Although the
Court refers to the New York ordinance as a comprehensive program to
preserve historic landmarks, ante, at 2651, the ordinance is not limited
to historic buildings and gives little guidance to the Landmarks
Preservation Commission in its selection of landmark sites. Section 207-1.0(n)
of the Landmarks Preservation Law, as set forth in N.Y.C. Admin. Code, ch.
8-A (1976), requires only that the selected landmark be at least 30 years
old and possess "a special character or special historical or
aesthetic interest or value as part of the development, heritage or
cultural characteristics of the city, state or nation."
Only in the most
superficial sense of the word can this case be said to involve
Typical zoning restrictions may, it is true, so limit the
prospective uses of a piece of property as to diminish the value of that
property in the abstract because it may not be used for the forbidden
purposes. But any such
abstract decrease in value will more than likely be at least partially
offset by an increase in value which flows from similar restrictions as to
use on neighboring 140
property owners in a designated area are placed under the same
restrictions, not only for the benefit of the municipality as a whole but
also for the common benefit of one another.
In the words of Mr. Justice Holmes, speaking for the Court in
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67
L.Ed. 322 (1922), there is "an average reciprocity of
FN2. Even the New York Court of Appeals conceded that "[t]his
is not a zoning case. . . .
Zoning restrictions operate to advance a comprehensive community
plan for the common good. Each property owner in the zone is both benefited and
restricted from exploitation, presumably without discrimination, except
for permitted continuing nonconforming uses.
The restrictions may be designed to maintain the general character
of the area, or to assure orderly development, objectives inuring to the
benefit of all, which property owners acting individually would find
difficult or impossible to achieve .
. . .
"Nor does this case involve landmark regulation of a historic
district. . . .
[In historic districting, as in traditional zoning,] owners
although burdened by the restrictions also benefit, to some extent, from
the furtherance of a general community plan.
* * *
"Restrictions on alteration of individual landmarks are not
designed to further a general
community plan. Landmark
restrictions are designed to prevent alteration or demolition of a single
piece of property. To
this extent, such restrictions resemble 'discriminatory' zoning
restrictions, properly condemned .
. . ." 42 N.Y.2d 324, 329-330, 397 N.Y.S.2d 914, 917-918, 366 N.E.2d
1271, 1274 (1977).
Where a relatively
few individual buildings, all separated from one another, are singled out
and treated differently from surrounding buildings, no such reciprocity
exists. The cost to the
property owner which results from the imposition of restrictions
applicable only to his property and not that of his neighbors may be
substantial -- in this case, several million dollars -- with no comparable
reciprocal benefits. And
the cost associated with landmark legislation is likely to be of a
completely different order of magnitude than that which results from the
imposition of normal zoning restrictions.
Unlike the regime affected by the latter, the landowner is not
simply prohibited from using his property for certain purposes, while
allowed to use it for all other purposes.
Under the historic-landmark preservation scheme adopted by New
York, the property owner is under an affirmative duty to preserve his
property as a landmark at his own expense.
To suggest that because traditional zoning results in some
limitation of use of the property zoned, the New York City landmark
preservation scheme should likewise be upheld, represents the ultimate in
treating as alike things which are different. The rubric of "zoning" has not yet sufficed
to avoid the well‑established proposition that the Fifth Amendment
bars the "Government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the public
as a whole." Armstrong
v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554
(1960). See discussion
infra, at pp. 2671-2672.
In August 1967, Grand
Central Terminal was designated a landmark over the objections of its
owner Penn Central. Immediately
upon this designation, Penn Central, like all
141 owners of a landmark site, was placed under an affirmative duty,
backed by criminal fines and penalties, to keep "exterior
portions" of the landmark "in good repair."
Even more burdensome, however, were the strict limitations that
were thereupon imposed on Penn Central's use of its property.
At the time Grand Central was designated a landmark, Penn Central
was in a precarious financial condition.
In an effort to increase its sources of revenue, Penn Central had
entered into a lease agreement with appellant UGP Properties, Inc., under
which UGP would construct and operate a multistory office building
cantilevered above the Terminal building.
During the period of construction, UGP would pay Penn Central $1
million per year. Upon
completion, UGP would rent the building for 50 years, with an option for
another 25 years, at a guaranteed minimum rental of $3 million per year.
The record is clear that the proposed office building was in full
compliance with all New York zoning laws and height limitations. Under the
Landmarks Preservation Law, however, appellants could not construct the
proposed office building unless appellee Landmarks Preservation Commission
issued either a "Certificate of No Exterior Effect" or a
"Certificate of Appropriateness."
Although appellants' architectural plan would have preserved the
facade of the Terminal, the Landmarks Preservation Commission has refused
to approve the construction.
The Fifth Amendment
provides in part: "nor
shall private property be taken for public use, without just
142 In a
very literal sense, the actions of appellees violated this constitutional
prohibition. Before the
city of New York declared Grand Central Terminal to be a landmark, Penn
Central could have used its "air rights" over the Terminal to
build a multistory office building, at an apparent value of several
million dollars per year. Today,
the Terminal cannot be modified in any form, including the erection of
additional stories, without the permission of the Landmark Preservation
Commission, a permission which appellants, despite good-faith attempts,
have so far been unable to obtain.
Because the Taking Clause of the Fifth Amendment has not always
been read literally, however, the constitutionality of appellees' actions
requires a closer scrutiny of this Court's interpretation of the three key
words in the Taking Clause -- "property," "taken," and
"just compensation." [FN4]
FN3. The guarantee that private property shall not be taken for
public use without just compensation is applicable to the States through
the Fourteenth Amendment. Although
the state "legislature may prescribe a form of procedure to be
observed in the taking of private property for public use,
. . . it is not due
process of law if provision be not made for compensation." Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226, 236, 17
S.Ct. 581, 584, 41 L.Ed. 979 (1897).
FN4. The Court's opinion touches base with, or at least attempts to
touch base with, most of the major eminent domain cases decided by this
Court. Its use of them,
however, is anything but meticulous.
In citing to United States v. Caltex, Inc., 344 U.S. 149, 156, 73
S.Ct. 200, 97 L.Ed. 157 (1952), for example, ante, at 2659, the only
language remotely applicable to eminent domain is stated in terms of
"the destruction of respondents' terminals by a trained team of
engineers in the face of their
impending seizure by the enemy."
344 U.S., at 156, 73 S.Ct., at 203.
Appellees do not
dispute that valuable property rights have been destroyed. And the Court has frequently emphasized that the term
"property" as used in the Taking Clause includes the entire
"group of rights inhering in the citizen's [ownership]."
United States v. General Motors Corp., 323 U.S. 373, 65 S.Ct. 357,
89 L.Ed. 311 (1945). The
term is not used in the
untechnical sense of the physical thing with respect to which the citizen
exercises rights recognized by law. [Instead,
it] . . .
denote [s] the group of rights inhering in the citizen's relation
to the physical THING, AS 143
THE RIGHT TO POSSESS, USE AND DISPOSE OF IT.
. . . the
constitutional provision is addressed to every sort of interest the
citizen may possess." Id.,
at 377-378, 65 S.Ct., at 359 (emphasis added).
While neighboring landowners are free to use their land and
"air rights" in any way consistent with the broad boundaries of
New York zoning, Penn Central, absent the permission of appellees, must
forever maintain its property in its present state. [FN5] The property has been thus subjected to a nonconsensual
servitude not borne by any neighboring or similar properties. [FN6]
FN5. In particular, Penn
Central cannot increase the height of the Terminal.
This Court has previously held that the "air rights" over
an area of land are "property" for purposes of the Fifth
Amendment. See United
States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206 (1946)
("air rights" taken by low-flying airplanes);
Griggs v. Allegheny County, 369 U.S. 84, 82 S.Ct. 531, 7 L.Ed.2d
585 (1962) (same); Portsmouth Harbor Land & Hotel Co. v. United
States, 260 U.S. 327, 43 S.Ct. 135, 67 L.Ed. 287 (1922) (firing of
projectiles over summer resort can constitute taking).
See also Butler v. Frontier Telephone Co., 186 N.Y. 486, 79 N.E.
716 (1906) (stringing of telephone wire across property constitutes a
FN6. It is, of
course, irrelevant that appellees interfered with or destroyed property
rights that Penn Central had not yet physically used. The Fifth Amendment
must be applied with "reference to the uses for which the property is
suitable, having regard to the existing business or wants of the
community, or such as may be reasonably expected in the immediate
future." Boom Co. v. Patterson, 98 U.S. 403, 408, 25 L.Ed. 206
(1879) (emphasis added).
Appellees have thus destroyed -- in a literal sense,
"taken" -- substantial property rights of Penn Central.
While the term "taken" might have been narrowly
interpreted to include only physical seizures of property rights,
"the construction of the phrase has not been so narrow.
The courts have held that the deprivation of the former owner
rather than the accretion of a right or interest to the sovereign
constitutes the taking." Id.,
at 378, 65 S.Ct., at 359. See
also United States v. Lynah, 188 U.S. 445, 469, 23 S.Ct. 349, 47 L.Ed. 539
 1903); [FN7]
Dugan v. Rank, 372 U.S. 609, 625, 83 S.Ct. 999, 1009, 10 L.Ed.2d 15
"not every destruction or injury to property by governmental action
has been held to be a 'taking' in the constitutional sense,"
Armstrong v. United States, 364 U.S., at 48, 80 S.Ct., at 1568, however,
this does not end our inquiry.
But an examination of the two exceptions where the destruction of
property does not constitute a taking demonstrates that a compensable
taking has occurred here.
"Such a construction would pervert the constitutional provision into
a restriction upon the rights of the citizen, as those rights stood at
the common law, instead of the government, and make it an authority
for invasion of private right under the pretext of the public good, which
had no warrant in the laws or practices of our ancestors."
188 U.S., at 470, 23 S.Ct., at 357.
As early as 1887, the Court recognized that the government
can prevent a property owner from using his property to injure others
without having to compensate the owner for the value of the forbidden use.
simply upon the use of property for purposes that are declared, by valid
legislation, to be injurious to the health, morals, or safety of the
community, cannot, in any just sense, be deemed a taking or an
appropriation of property for the public benefit.
Such legislation does not disturb the owner in the control or use
of his property for lawful purposes, nor restrict his right to dispose of
it, but is only a declaration by the State that its use by any one, for
certain forbidden purposes, is prejudicial to the public interests.
. . . The power
which the States have of prohibiting such use by individuals of their
property as will be prejudicial to the health, the morals, or the safety
of the public, is not -- and, consistently with the existence and safety
of organized society, cannot be -- burdened with the condition that the
State must compensate such individual owners for pecuniary losses they may
sustain, by reason of their not being permitted, by a noxious use of
145 their property, to inflict injury
upon the community." Mugler
v. Kansas, 123 U.S. 623, 668-669, 8 S.Ct. 273, 301, 31 L.Ed. 205.
Thus, there is no "taking" where a city prohibits
the operation of a brickyard within a residential area, see Hadacheck v.
Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 (1915), or forbids
excavation for sand and gravel below the water line, see Goldblatt v.
Hempstead, 369 U.S. 590, 82 S.Ct. 987, 8 L.Ed.2d 130 (1962).
Nor is it relevant, where the government is merely prohibiting a
noxious use of property, that the government would seem to be singling out
a particular property owner. Hadacheck,
supra, at 413, 36 S.Ct., at 146. [FN8]
FN8. Each of the cases
cited by the Court for the proposition that legislation which severely
affects some landowners but not others does not effect a
"taking" involved noxious uses of property.
See Hadacheck; Miller v. Schoene, 276 U.S. 272, 48 S.Ct. 246, 72
L.Ed. 568 (1928); Goldblatt. See
ante, at 2660-2661, 2664.
nuisance exception to the taking guarantee is not coterminous with the
police power itself. The
question is whether the forbidden use is dangerous to the safety, health,
or welfare of others. Thus,
in Curtin v. Benson, 222 U.S. 78, 32 S.Ct. 31, 56 L.Ed. 102 (1911), the
Court held that the Government, in prohibiting the owner of property
within the boundaries of Yosemite National Park from grazing cattle on his
property, had taken the owner's property.
The Court assumed that the Government could constitutionally
require the owner to fence his land or take other action to prevent his
cattle from straying onto others' land without compensating him.
might be considered as strictly regulations of the use of property, of so
using it that no injury could result to others. They
would have the effect of making the owner of land herd his cattle on his
own land and of making him responsible for a neglect of it."
Id., at 86, 32 S.Ct., at 33.
The prohibition in question, however, was "not a
prevention of a misuse or illegal use but the prevention of a legal and
essential use, an attribute of its ownership."
Appellees are not prohibiting a nuisance. The record is
146 clear that the proposed addition to the Grand Central Terminal
would be in full compliance with zoning, height limitations, and other
health and safety requirements. Instead, appellees are seeking to preserve
what they believe to be an outstanding example of beaux-arts architecture. Penn Central is prevented from further developing its
property basically because too good a job was done in designing and
building it. The city
of New York, because of its unadorned admiration for the design, has
decided that the owners of the building must preserve it unchanged for the
benefit of sightseeing New Yorkers and tourists.
Unlike land-use regulations, appellees' actions do not merely
prohibit Penn Central from using its property in a narrow set of noxious
appellees have placed an affirmative duty on Penn Central to maintain the
Terminal in its present state and in "good repair."
Appellants are not free to use their property as they see fit
within broad outer boundaries but must strictly adhere to their past use
except where appellees conclude that alternative uses would not detract
from the landmark. While
Penn Central may continue to use the Terminal as it is presently designed,
appellees otherwise "exercise complete dominion and control over the
surface of the land," United States v. Causby, 328 U.S. 256, 262, 66
S.Ct. 1062, 1066, 90 L.Ed. 1206 (1946), and must compensate the owner for
his loss. Ibid.
"Property is taken in the constitutional sense when inroads
are made upon an owner's use of it to an extent that, as between private
parties, a servitude has been acquired."
United States v. Dickinson, 331 U.S. 745, 748, 67 S.Ct. 1382, 1385,
91 L.Ed. 1789 (1947). See
also Dugan v. Rank, supra, 372 U.S., at 625, 83 S.Ct., at 1009. [FN9]
FN9. In Monongahela
Navigation Co. v. United States, 148 U.S. 312, 13 S.Ct. 622, 37 L.Ed. 463
(1893), the Monongahela company had expended large sums of money in
improving the Monongahela River by means of locks and dams.
When the United States condemned this property for its own use, the
Court held that full compensation had to be awarded. "Suppose, in the improvement of a navigable stream, it
was deemed essential to construct a canal with locks, in order to pass
around rapids or falls. Of
the power of Congress to condemn whatever land may be necessary for such
canal, there can be no question; and
of the equal necessity of paying full compensation for all private
property taken there can be as little doubt."
Id., at 337, 13 S.Ct., at 630.
Under the Court's rationale, however, where the Government wishes
to preserve a pre-existing canal system for public use, it need not
condemn the property but need merely order that it be preserved in its
present form and be kept "in good repair."
where the government prohibits a noninjurious use, the Court has ruled
that a taking does not take place if the prohibition applies over a broad
cross section of land and thereby "secure[s] an average reciprocity
of advantage." Pennsylvania Coal Co. v. Mahon, 260 U.S., at 415, 43
S.Ct., at 160. [FN10] It is
for this reason that zoning does not constitute a "taking."
While zoning at times reduces individual property values, the burden is
shared relatively evenly and it is reasonable to conclude that on the
whole an individual who is harmed by one aspect of the zoning will be
benefited by another.
concede that the preservation of buildings of historical or aesthetic
importance is a permissible objective of state action.
Brief for Appellants 12.
Cf. Berman v. Parker, 348 U.S. 26, 75 S.Ct. 98, 99 L.Ed. 27 (1954);
United States v. Gettysburg Electric R. Co., 160 U.S. 668, 16 S.Ct.
427, 40 L.Ed. 576 (1896).
the reasons noted in the text, historic zoning, as has been undertaken by
cities, such as New Orleans, may well not require compensation under the
Here, however, a multimillion dollar loss has been imposed on
appellants; it is uniquely
felt and is not offset by any benefits flowing from the preservation of
some 400 other "landmarks" in New York City.
Appellees have imposed a substantial cost on less than one
one‑tenth of one percent of the buildings in New York City for the
general benefit of all its people.
It is exactly this imposition of general costs on a few individuals
at which the "taking" protection is directed.
The Fifth Amendment
public from loading upon one individual more than his just share of the
burdens of government, 148 and
says that when he surrenders to the public something more and different
from that which is exacted from other members of the public, a full and
just equivalent shall be returned to him." Monongahela Navigation Co.
v. United States, 148 U.S. 312, 325, 13 S.Ct. 622, 626, 37 L.Ed. 463
Less than 20 years ago, this Court reiterated that the
Amendment's guarantee that private property shall not be taken for a
public use without just compensation was designed to bar Government from
forcing some people alone to bear public burdens which, in all fairness
and justice, should be borne by the public as a whole."
Armstrong v. United States, 364 U.S., at 49, 80 S.Ct., at 1569.
Nashville, C. & St. L. R. Co. v. Walters, 294 U.S. 405, 428-430, 55
S.Ct. 486, 494-495, 79 L.Ed. 949 (1935). [FN11]
FN11. "It is true that
the police power embraces regulations designed to promote public
convenience or the general welfare, and not merely those in the interest
of public health, safety and morals.
. . . But when
particular individuals are singled out to bear the cost of advancing the
public convenience, that imposition must bear some reasonable relation to
the evils to be eradicated or the advantages to be secured.
. . . While
moneys raised by general taxation may constitutionally be applied to
purposes from which the individual taxed may receive no benefit, and
indeed, suffer serious detriment, .
. . so-called assessments for
public improvements laid upon particular property owners are ordinarily
constitutional only if based on benefits received by them."
294 U.S., at 429-430, 55 S.Ct., at 494-495.
Mr. Justice Holmes pointed out in Pennsylvania Coal Co. v. Mahon,
"the question at bottom" in an eminent domain case "is upon
whom the loss of the changes desired should fall."
260 U.S., at 416, 43 S.Ct., at 160.
The benefits that appellees believe will flow from preservation of
the Grand Central Terminal will accrue to all the citizens of New York
City. There is no
reason to believe that appellants will enjoy a substantially greater share
of these benefits. If
the cost of preserving Grand Central Terminal were spread evenly across
the entire population of the city of New York, the burden per person would
be in cents per year -- a minor cost appellees would
149 surely concede for the benefit accrued.
Instead, however, appellees would impose the entire cost of several
million dollars per year on Penn Central.
But it is precisely this sort of discrimination that the Fifth
Amendment prohibits. [FN12]
Ante, at 2656 n. 18. Nor
is it of any comfort that the Commission refuses to allow appellants to
construct any additional stories because of their belief that such
construction would not be aesthetic. Ante, at 2656.
Appellees in response would argue that a taking only occurs where a
property owner is denied all reasonable value of his property. [FN13]
The Court has frequently held that, even where a destruction of
property rights would not otherwise constitute a taking, the inability of
the owner to make a reasonable return on his property requires
compensation under the Fifth Amendment.
See, e. g., United States v. Lynah, 188 U.S., at 470, 23 S.Ct., at
357. But the converse
is not true. A taking
does not become a noncompensable exercise of police power simply because
the government in its grace allows the owner to make some
"reasonable" use of his property.
"[I]t is the character of the invasion, not the amount of
damage resulting from it, 150
so long as the damage is substantial, that determines the question whether
it is a taking." United States v. Cress, 243 U.S. 316, 328, 37 S.Ct.
380, 385, 61 L.Ed. 746 (1917); United
States v. Causby, 328 U.S., at 266, 66 S.Ct., at 1068.
See also Goldblatt v. Hempstead, 369 U.S., at 594, 82 S.Ct., at
Difficult conceptual and legal problems are posed by a rule that a taking
only occurs where the property owner is denied all reasonable return on
his property. Not only
must the Court define "reasonable return" for a variety of types
of property (farmlands, residential properties, commercial and industrial
areas), but the Court must define the particular property unit that should
be examined. For
example, in this case, if appellees are viewed as having restricted Penn
Central's use of its "air rights," all return has been denied.
See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67
L.Ed. 322 (1922). The
Court does little to resolve these questions in its opinion.
Thus, at one point, the Court implies that the question is whether
the restrictions have
"an unduly harsh impact upon the owner's use of the property,"
ante, at 2661; at another point, the question is phrased as whether Penn
Central can obtain "a 'reasonable return' on its investment,"
ante, at 2666; and, at yet
another point, the question becomes whether the landmark is
"economically viable," ante, at 2666 n. 36.
Appellees, apparently recognizing that the constraints
imposed on a landmark site constitute a taking for Fifth Amendment
purposes, do not leave the property owner empty-handed.
As the Court notes, ante, at 2654-2655, the property owner may
theoretically "transfer" his previous right to develop the
landmark property to adjacent properties if they are under his control.
Appellees have coined this system "Transfer Development Rights,"
Of all the terms used in the Taking Clause, "just
compensation" has the strictest meaning.
The Fifth Amendment does not allow simply an approximate
compensation but requires "a full and perfect equivalent for the
property taken." Monongahela
Navigation Co. v. United States, 148 U.S., at 326, 13 S.Ct., at 626.
adjective 'just' had been omitted, and the provision was simply that
property should not be taken without compensation, the natural import of
the language would be that the compensation should be the equivalent of
the property. And this
is made emphatic by the adjective 'just.'
There can, in view of the combination of those two words, be no
doubt that the compensation must be a full and perfect equivalent for the
property taken." Ibid.
See also United States
v. Lynah, supra, 188 U.S., at 465, 23 S.Ct., at 355; United States v. Pewee Coal Co., 341 U.S. 114, 117, 71 S.Ct.
670, 671, 95 L.Ed. 809 (1951).
And the determination of whether a "full and perfect
equivalent" has been awarded is a "judicial function."
United States v. New River Collieries Co., 262 U.S. 341, 343-344,
43 S.Ct. 565, 566-567, 67 L.Ed. 1014 (1923).
The fact 151 that
appellees may believe that TDR's provide full compensation is irrelevant.
legislature may determine what private property is needed for public
purposes -- that is a question of a political and legislative character;
but when the taking has been ordered, then the question of
compensation is judicial. It
does not rest with the public, taking the property, through Congress or
the legislature, its representative, to say what compensation shall be
paid, or even what shall be the rule of compensation. The Constitution has declared that just compensation
shall be paid, and the ascertainment of that is a judicial inquiry."
Monongahela Navigation Co. v. United States, supra, 148 U.S., at
327, 13 S.Ct., at 626.
Appellees contend that, even if they have "taken"
appellants' property, TDR's constitute "just compensation."
Appellants, of course, argue that TDR's are highly imperfect
the lower courts held that there was no "taking," they did not
have to reach the question of whether or not just compensation has already
been awarded. The New York Court of Appeals' discussion of TDR's
gives some support to appellants:
"The many defects in New York City's program for development
rights transfers have been detailed elsewhere
. . . . The area to
which transfer is permitted is severely limited [and] complex procedures
are required to obtain a transfer permit."
42 N.Y.2d 324, 334-335, 397 N.Y.S.2d 914, 920, 366 N.E.2d 1271,
And in other cases the
Court of Appeals has noted that TDR's have an
"uncertain and contingent market value" and do "not
adequately preserve" the value lost when a building is declared to be
a landmark. French Investing
Co. v. City of New York, 39 N.Y.2d 587, 591, 385 N.Y.S.2d 5, 7, 350 N.E.2d
381, 383, appeal dismissed 429 U.S. 990, 97 S.Ct. 515, 50 L.Ed.2d 602
(1976). On the other hand, there is evidence in the record that Penn
Central has been 152 offered substantial amounts for its TDR's.
Because the record on appeal is relatively slim, I would remand to
the Court of Appeals for a determination of whether TDR's constitute a
"full and perfect equivalent for the property taken."
FN14. The Court suggests,
ante, at 2663, that if appellees are held to have "taken"
property sights of landmark owners, not only the New York City Landmarks
Preservation Law, but "all comparable landmark legislation in the
Nation" must fall. This
assumes, of course, that TDR's are not "just compensation" for
the property rights destroyed.
It also ignores the fact that many States and cities in the Nation
have chosen to preserve landmarks by purchasing or condemning restrictive
easements over the facades of the landmarks and are apparently quite
satisfied with the results. See,
e. g., Ore.Rev.Stat. §§ 271.710, 271.720 (1977); Md.Ann.Code, Art. 41,
§ 181A (1978); Va.Code §§
10-145.1 and 10-138(e) (1978); Richmond,
Va., City Code §§ 21-23 et seq. (1975).
The British National Trust has effectively used restrictive
easements to preserve landmarks since 1937.
See National Trust Act, 1937, 1 Edw. 8 and 1 Geo. 6 ch. lvii, §§
4 and 8. Other States
and cities have found that tax incentives are also an effective means of
encouraging the private preservation of landmark sites.
See, e. g., Conn.Gen.Stat. § 12-127a (1977);
Ill.Rev.Stat., ch. 24, § 11-48.2-6 (1976); Va.Code § 10-139 (1978).
The New York City Landmarks Preservation Law departs
drastically from these traditional, and constitutional, means of
50 years ago, Mr. Justice Holmes, speaking for the Court, warned that the
courts were "in danger of forgetting that a strong public desire to
improve the public condition is not enough to warrant achieving the desire
by a shorter cut than the constitutional way of paying for the
Coal Co. v. Mahon, 260 U.S., at 416, 43 S.Ct., at 160.
The Court's opinion in this case demonstrates that the danger thus
foreseen has not abated. The city of New York is in a precarious financial
state, and some may believe that the costs of landmark preservation will
be more easily borne by corporations such as Penn Central than the
overburdened individual taxpayers
153 of New York. But
these concerns do not allow us to ignore past precedents construing the
Eminent Domain Clause to the end that the desire to improve the public
condition is, indeed, achieved by a shorter cut than the constitutional
way of paying for the change.