(case no.

543)

PENN CENTRAL TRANSPORTATION v. NEW YORK CITY

438 US 104
June 26, 1978
Art. III
FACTS:
Over the years, the different States have enacted laws to encourage or require the
preservation of buildings and areas with historic or aesthetic importance. The respondent city of
New York, pursuant to a New York State enabling Act, adopted its Landmarks Preservation
Law in 1965. The law did not use acquisition as the primary method of achieving the goals but
involved public entities in land use decisions affecting the properties and providing services,
standards, controls, and incentives which should encourage preservation by the private owners
and users. The major theme of the law is to ensure the owners of the properties both a
reasonable return on their investment and maximum latitude to use their properties for
purposes not inconsistent with preservation goals. The administration of the law is vested
with the Landmarks Preservation Commission.
1. Commission designates a building to be a landmark situated on a particular landmark
site, or will designate an area to be a historic district
2. Citys Board of Estimate projects public improvements and any plans for the renewal
of the area involved
3. Final designation as a landmark will result in restrictions upon the property owners
options concerning the use of the landmark site
a. Duty to keep the exterior features of the building in good repair
b. 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
On August 2, 1967, the Grand Central Terminal, owned by the petitioner and its affiliates,
were designated as a landmark. And on January 22, 1968, the petitioner, wanting to increase its
income, entered into a renewable 50-year lease and sublease agreement with UGP Properties.
UGP was to construct a multi-story office building above the terminal and pay $1 million
annually during construction and at least $3 million annually thereafter. Petitioners applied
to the Commission for permission to construct an office building but it was denied. The reason
for the rejection was summarized as follows: to protect a landmark, one does not tear it down.
To perpetuate its architectural features, one does not strip them off.
Petitioners did not seek judicial review of the denial of the certificates but filed a suit in
the New York Supreme Court claiming that the application of the law had taken their property
without just compensation in violation of the 5th and 14th amendments and arbitrarily deprived
them of their property without due process of the law in violation of the 14th amendment.
The trial court granted the relief but the New York Supreme Court reversed the decision.
ISSUE:
1. Whether the application of the law with respect to the Terminal constitute a taking within
the meaning of the 5th Amendment
2. Whether the law can be invalidated because of the failure to provide a just compensation
whenever a law is designated to be a landmark

Prepared by: Cecille Diane DJ. Mangaser

(case no. 543)

HELD:
1. No. The 5th Amendments 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. Petitioners contend that their property is taken because
they were denied the ability to exploit their property interest cannot be sustained. The
Court opined that a taking may more readily be found when the interference with the
property can be characterized as a physical invasion by the government.
The landmark laws are not like discriminatory zoning. The New York law embodies a
comprehensive plan to preserve the structures of historic or aesthetic interest wherever
they may be found in the city, and there are over 400 landmarks and 31 historic districts
which was designated pursuant to the plan. There was no evidence that the decision to
designate the structure as a landmark is arbitrary, or at the very least subjective. The
Court also noted that legislation designed to promote the general welfare commonly
burdens some more than the others, but that fact does not necessarily invalidate the
law. Petitioners contention that they are solely burdened and unbenefited is inaccurate.
The law applies to vast numbers of structures in the city, in addition to the terminal.
2. No. The New York City law does not interfere in any way with the present uses of the
terminal. The designation as a landmark contemplates the continued use of the property
precisely as it has been used for the past 65 years. The law does not interfere with what
must be regarded as the primary use of the property. The restrictions imposed are
substantially related to the promotion of the general welfare. At the same time, it permits
reasonable beneficial use of the site and affords appellants opportunities to further
enhance the Terminal proper and other properties.

Prepared by: Cecille Diane DJ. Mangaser