Penn Central Transportation Co. v. New York City

In 1968, the Penn Central Transportation Company applied to the New York Landmarks Preservation Commission for a “certificate of appropriateness” in order to construct a 50-story office building over Grand Central Terminal. The Commission denied the application on grounds that the proposed office building would overwhelm and otherwise interfere with the historic and aesthetic integrity of the landmark-designated terminal building. The plaintiffs filed suit against the Commission alleging that its application of New York City Landmark Preservation Law had effected a taking of property without just compensation and arbitrarily deprived the owners of their property without due process.

Issue
Whether the Commission’s application of Landmarks Law violated Penn Central’s Fifth and Fourteenth Amendment right against the taking of property without just compensation by arbitrarily limiting the development of a portion of their property and thereby preventing the owners from realizing a reasonable rate of return on their investment.

Holding
The Court found that the Commission’s application of Landmarks Law did not violate Penn Central’s Fifth or Fourteenth Amendment rights or constitute a “taking”.

Rationale
The Court grounded its decision on the basis that (1) the owners could not establish a “taking” simply by showing that they had been denied the right to exploit the superadjacent airspace, irrespective of remainder of the parcel; (2) landmark laws which embody a comprehensive plan to preserve structures of historic or aesthetic interest are not discriminatory; (3) that the law affected some owners more severely than others did not itself justify a “taking”; and (4) the law neither interfered with the owners’ present use nor prevented them from realizing a reasonable rate of return on its investment, especially since preexisting air rights were transferable to other parcels in the vicinity.