PENN CENTRAL
TRANSPORTATION CO. ET AL. v. NEW YORK CITY ET AL.
438
MR. JUSTICE BRENNAN delivered the
opinion of the Court.
The 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 compensation." Specifically, 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 [**2651] of the Fifth and Fourteenth Amendments.
I
A
Over 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. n1 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 n2 without adequate
consideration of either the values represented therein or the possibility of
preserving the destroyed properties for use in economically productive ways. n3
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. "[Historic] conservation is but one
aspect of the much larger problem,
[***639] basically an
environmental one, of enhancing -- or perhaps developing for the first time --
the quality of life for people." n4
n1 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).
n2 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
n3 See, e. g.,
N. Y. C. Admin. Code § 205-1.0 (a)
(1976).
n4 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).
n5 See N. Y. Gen.
Mun. Law § 96-a (
The New York City
law is typical of many urban landmark laws in that its primary method of
achieving its goals is not by
[**2652] acquisitions of historic
properties, n6 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. n7
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.
n6 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 (1971).
n7 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),
[***640] a broad based, 11-member
agency n8 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), n9 situated [*111]
on a particular "landmark site," § 207-1.0 (o), n10 or will designate an
area to be a "historic district," §
207-1.0 (h). n11 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, n12 and the process is a continuing one.
n8 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 (1971).
n9
"'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." § 207-1.0 (n).
n10 "'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).
n11 "'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 § 207-1.0 (m).
n12 See Landmarks
Preservation Commission of the City of
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
[***641] 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 "appropriateness."
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, n13 to ensure
[**2654] that [***642]
designation does not cause economic hardship.
n13 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 differently.
They 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 121, 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 relief. Similarly, 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.
[*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
n14 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
B
This case involves
the application of
The Terminal is
located in midtown
n15 The Terminal's
present foundation includes columns, which were built into it for the express
purpose of supporting the proposed 20-story tower.
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 site." n16 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 decision.
n16 The
Commission's report stated:
"Grand Central Station, one
of the great buildings of
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
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, n17 called [***644] 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.
n17 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.
The Commission's
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
"[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.
"Landmarks
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
n18 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." Record 2251.
Appellants [***645]
did not seek judicial review of the denial of either certificate.
Because the Terminal site enjoyed a tax exemption, n19 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
approval. Instead, 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." n20
n19 See N. Y. Real
Prop. Tax Law § 489-aa et seq. (
n20 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."
[**2657]
Appellees appealed, and the New York Supreme Court, Appellate Division,
reversed. 50 App. Div. 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. n21 First, the
court rejected [***646] 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. n22 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.
n21 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.
n22 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,
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, 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.
n23 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 and 122, 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 "[on] the present record," and that its analysis had
not been fully developed by counsel at any level of the
II
[***LEdHR2B]
[2B] [***LEdHR3] [3]
[***LEdHR4A] [4A]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.
n24 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 landmarks?"
Jurisdictional Statement 3-4.
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.
n25
[***LEdHR4B]
[4B]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.
[*123]
A
[***LEdHR5]
[5] [***LEdHR6] [6]Before
considering appellants' specific contentions, it will be [***648]
useful to review [**2659] 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
(1960), [*124] 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
[***LEdHR7]
[7] [***LEdHR8] [8]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
considerations. See Goldblatt v.
[***LEdHR9]
[9]"Government 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 (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 (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 (1913) (no [***649] property interest can exist in navigable
waters); see also Demorest v. City Bank Co., 321 U.S. 36 (1944); Muhlker
v. Harlem R. Co., 197 U.S. 544 (1905); Sax, Takings and the Police
Power, 74 Yale L. J. 36, 61-62 (1964).
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.
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 (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."
Again, Hadacheck
v. Sebastian, 239 U.S. 394 (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 [***650]
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 (1953) (railroad may be required to share
cost of constructing railroad grade improvement); Walls v. Midland
Carbon Co., 254 U.S. 300 (1920) (law prohibiting manufacture of carbon
black upheld); Reinman v. Little Rock, 237 U.S. 171 (1915) (law
prohibiting livery stable upheld); Mugler v. Kansas, 123 U.S. 623
(1887) (law prohibiting liquor business upheld).
[***LEdHR10]
[10] Goldblatt v.
Pennsylvania
Coal Co. v. Mahon, 260 U.S.
393 (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 "taking." There the
claimant had sold the surface rights to particular parcels of property, but
expressly reserved the right to remove the coal thereunder. A
Finally, government
actions that may be characterized as acquisitions of resources to permit or
facilitate uniquely public functions have often been held to constitute
"takings."
B
[***LEdHR2C]
[2C] [***LEdHR12] [12]In
contending 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 (1976); Young v. American
Mini Theatres, Inc., 427 U.S. 50 (1976); Village of Belle Terre v. Boraas,
416 U.S. 1, 9-10 (1974); [**2662] Berman v. Parker, 348 U.S. 26,
33 (1954); Welch v. Swasey, 214 U.S., at 108, 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
n26 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.
[*130]
They first observe that the airspace above the Terminal is a valuable
property interest, citing
[***LEdHR13]
[13] [***LEdHR14A] [14A] [***LEdHR15A] [15A]Apart from our own disagreement with
appellants' characterization of the effect of the New York City law, see infra,
at 134-135, 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 (1962), and the lateral, see Gorieb v. Fox, 274 U.S.
603 (1927), development of particular parcels. n27 "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 "landmark site."
n27
[***LEdHR14B]
[14B] [***LEdHR15B] [15B]These
cases dispose of any contention that might be based on Pennsylvania Coal Co.
v. Mahon, 260 U.S. 393 (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.
[***LEdHR16]
[16]Secondly, appellants, focusing on the character and impact of the
Stated baldly,
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
[*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, n28 and as noted, over 400 landmarks and 31 historic
districts have been designated pursuant to this plan.
n28 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,
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., 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.
[***LEdHR17A]
[17A]Equally without 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 [***654] 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 [**2664]
context of classic zoning or indeed in any other context. n29
n29
[***LEdHR17B]
[17B]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.
[***LEdHR18]
[18]Next, appellants observe that
n30 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 [induced society] to shift the cost to a [particular]
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
In any event,
appellants' repeated suggestions that they are solely burdened and unbenefited
is factually inaccurate. This contention
overlooks the fact that the
n31 There are some
53 designated landmarks and 5 historic districts or scenic landmarks in
n32 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.
[***LEdHR19]
[19]Appellants' final broad-based attack would have us treat the law as
an instance, like that in
C
[***LEdHR1B]
[1B] [***LEdHR2D] [2D]Rejection
of 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 [***656] 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.
Unlike the
governmental acts in Goldblatt, Miller, Causby, Griggs, and Hadacheck,
the
Appellants,
moreover, exaggerate the effect of the law on their ability to make use of the
air rights above the Terminal in two respects. n33 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 [**2666] 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. n34
n33 Appellants, of
course, argue at length that the transferable development rights, while
valuable, do not constitute "just compensation." Brief for Appellants
36-43.
n34 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,
n35 [***657] 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.
n35 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' property. The 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.
n36
n36 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.
Affirmed.
DISSENTBY:
REHNQUIST
DISSENT:
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. n1 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
[**2667] 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.
n1 A large
percentage of the designated landmarks are public structures (such as the
Brooklyn Bridge, City Hall, the Statue 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 107, 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 "zoning."
n2 Typical zoning restrictions
[***658] 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]
properties. All 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 (1922), there is "an average reciprocity of
advantage."
n2 Even the New
York Court of Appeals conceded that "[this] 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, 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 (1960).
See discussion infra, at 147-150.
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, [***659] was placed under an affirmative duty,
backed [**2668] 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.
I
The Fifth Amendment
provides in part: "nor shall private property be taken for public use,
without just compensation." n3
[*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." n4
n3 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 (1897).
n4 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 (1952), for example, ante, at
124, 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.
A
[***660]
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 (1945). The term is not
used in the
"vulgar and untechnical sense of the physical
thing with respect to which the citizen exercises rights recognized by
law. [Instead, it] . . . [denotes]
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 [**2669] citizen may possess." Id., at
377-378 (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. n5 The property has been
thus subjected to a nonconsensual servitude not borne by any neighboring or
similar properties. n6
n5 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 (1946) ("air rights" taken by
low-flying airplanes); Griggs v. Allegheny County, 369 U.S. 84
(1962) (same); Portsmouth Harbor Land & Hotel Co. v. United
States, 260 U.S. 327 (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 taking).
n6 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 (1879)
(emphasis added).
B
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. See also United States v. Lynah,
188 U.S. 445, 469 (1903); [*144] n7 Dugan v. Rank, 372 U.S. 609,
625 (1963). Because "not every destruction or injury to property by
governmental action has been held to be a 'taking' in the constitutional
sense," Armstrong v.
[***661] United States,
364 U.S., at 48, 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.
n7 "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.
1
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.
"A prohibition 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 [**2670]
injury upon the community." Mugler v. Kansas, 123
U.S. 623, 668-669.
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 (1915), or forbids excavation for sand and
gravel below the water line, see Goldblatt v. Hempstead, 369 U.S.
590 (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. n8
n8 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 (1928); Goldblatt. See ante, at 125-127, 133.
The 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 (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.
"Such laws might be considered as [***662]
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.
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." Ibid.
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 ways. Instead, 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 (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 (1947). See also Dugan v. Rank, supra, at 625.
n9
n9 In Monongahela
Navigation Co. v. United States, 148 U.S. 312 (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. 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."
[*147]
[**2671] 2
Even 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 [***663] and thereby "[secures] an average
reciprocity of advantage." Pennsylvania Coal Co. v. Mahon,
260 U.S., at 415. n10 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.
n10 Appellants
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 (1954); United States v. Gettysburg
Electric R. Co., 160 U.S. 668 (1896).
For 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 Fifth
Amendment.
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
"prevents the 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 (1893).
Less than 20 years ago, this Court reiterated that the
"Fifth 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.
Cf. Nashville, C. & St. L. R. Co. v. Walters,
294 U.S. 405, 428-430 (1935). n11
n11 "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.
As 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. The benefits that
appellees believe will flow from preservation of the Grand [***664]
Central Terminal will accrue to all the citizens of New York City. There is no
[**2672] 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. n12
n12 The fact that
the Landmarks Preservation Commission may have allowed additions to a
relatively few landmarks is of no comfort to appellants. Ante, at 118 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
117-118.
Appellees in
response would argue that a taking only occurs where a property owner is denied
all reasonable value of his property. n13 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. 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. "[It] 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 (1917); United States v. Causby, 328 U.S., at 266. See
also Goldblatt v. Hempstead, 369 U.S., at 594.
n13 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 (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 127; at another point, the question is phrased
as whether Penn Central can obtain "a 'reasonable return' on its
investment," ante, at 136; and, at yet another point, the question
becomes whether the landmark is "economically viable," ante,
at 138 n. 36.
C
Appellees,
apparently recognizing that the constraints imposed on a landmark site
constitute a taking for Fifth Amendment purposes, do not leave the property
owner emptyhanded. As the Court notes, ante,
at 113-114, 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 [***665] this system "Transfer Development
Rights," or TDR's.
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.
"[If] the 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.
[**2673] See also United States v. Lynah,
supra, at 465; United States v. Pewee Coal Co., 341 U.S. 114,
117 (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 (1923).
The fact [*151] that appellees may believe that TDR's
provide full compensation is irrelevant.
"The 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, at 327.
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 compensation.
Because 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, 366 N. E. 2d 1271, 1277 (1977).
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, 350 N. E. 2d 381, 383, appeal dismissed, 429 U.S. 990 (1976).
On the other hand, there is evidence in the record [***666]
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." n14
n14 The Court
suggests, ante, at 131, that if appellees are held to have
"taken" property rights 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 § 17-23 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
preserving landmarks.
II
Over 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 change."
[***LEdHR11]
[11] Pennsylvania Coal Co. v. Mahon, 260 U.S., at 416. The Court's
opinion in this case demonstrates
[**2674] 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.