U.S. Supreme Court Penn Central Transportation Co. v. New
York City, 438
U.S. 104 (1978) Penn Central Transportation Co. v.
New York City No. 77-444 Argued April 17, 1978 Decided June 26, 1978 438
U.S. 104 APPEAL FROM THE COURT OF APPEALS OF
NEW YORK Syllabus 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 Page 438 U. S. 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. Pp. 438 U. S.
123 -138.

															(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 ; Hadacheck v. Sebastian, 239 U. S. 394 ,
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 , and
government acquisitions of resources to permit uniquely public
functions constitute "takings," e.g., United States v.
Causby, 328 U. S. 256 . Pp. 438 U. S.
123 -128.

															(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 superjacent airspace, irrespective of
the remainder of appellants' parcel. Pp. 438 U. S.
130 -131.

															(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 Page 438 U. S. 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. Pp. 438 U. S.
131 -133.

															(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, ar 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. Pp. 438 U. S.
133 -135.

															(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. 438 U. S.
135 .

															(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 preexisting air rights are made
transferable to other parcels in the vicinity of the Terminal, thus
mitigating whatever financial burdens appellants have incurred. Pp. 438 U. S.
135 -137. 42
N.Y.2d 324 , 366 N.E.2d 1271, affirmed.

															BRENNAN, J., delivered the opinion of the Court, in which
STEWART, WHITE, MARSHALL, BLACKMUN, and POWELL, JJ., joined.
REHNQUIST, J, filed a dissenting opinion, in which BURGER, C.J.,
and STEVENS, J., joined, post, p. 438 U. S.
138 . Page 438 U. S. 107 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 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. [ Footnote 1 ] These
nationwide legislative efforts have been Page 438 U. S. 108 precipitated by two concerns. The first is recognition that, in
recent years, large numbers of historic structures, landmarks, and
areas have been destroyed [ Footnote
2 ] without adequate consideration of either the values
represented therein or the possibility of preserving the destroyed
properties for use in economically productive ways. [ Footnote 3 ] 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.
[ Footnote 4 ]"

															New York City, responding to similar concerns and acting Page 438 U. S. 109 pursuant to a New York State enabling Act, [ Footnote 5 ] adopted its Landmarks Preservation Law
in 1965. See N.Y.C.Admin.Code, ch. 8-A, § 201.0 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. § 201.0(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." § 201.0(b).

															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, [ Footnote 6 ] but rather by involving public entities in
land use decisions affecting these properties Page 438 U. S. 110 and providing services, standards, controls, and incentives that
will encourage preservation by private owners and users. [ Footnote 7 ] 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.

															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 [ Footnote 8 ] 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."

															§ 2071.0(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), [ Footnote 9 ]
situated Page 438 U. S. 111 on a particular "landmark site," § 207-1.0(o), [ Footnote 10 ] or will designate an area to
be a "historic district," § 207-1.0(h). [ Footnote 11 ] 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 judicial review
of the final designation decision. Thus far, 31 historic districts
and over 400 individual landmarks have been finally designated,
[ Footnote 12 ] and the
process is a continuing one.

															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 Page 438 U. S. 112 falling into a state of irremediable disrepair. See §
20710.0(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 §§ 207.0 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 § 207.0 -- provides special
mechanisms, which vary depending on whether or not the landmark
enjoys a tax exemption, [ Footnote 13 ] to ensure that designation does not cause
economic hardship. Page 438 U. S. 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 Page 438 U. S. 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 779 (emphasis deleted).
[ Footnote 14 ] In addition,
the 1969 amendment permits, in highly commercialized Page 438 U. S. 115 areas like midtown Manhattan, the transfer of all unused
development rights to a single parcel. Ibid. B 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. [ Footnote 15 ] 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.

															On August 2, 1967, following a public hearing, the Commission
designated the Terminal a "landmark" and designated the Page 438 U. S. 116 "city tax block" it occupies a "landmark site." [ Footnote 16 ] 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.

															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,
[ Footnote 17 ] called for
tearing Page 438 U. S. 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.

															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 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-American 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 Page 438 U. S. 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 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. [ Footnote 18 ]

															Appellants did not seek judicial review of the denial of either
certificate. Because the Terminal site enjoyed a tax exemption,
[ Footnote 19 ] 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 Page 438 U. S. 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." [ Footnote 20 ]

															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 Page 438 U. S. 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. [ Footnote 21 ] 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. [ Footnote 22 ] 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.

															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" Page 438 U. S. 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. Id. at 328, 366
N.E.2d at 1273. [ Footnote
23 ] 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 Page 438 U. S. 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, 366
N.E.2d at 1276-1278. Observing that its affirmance was "[o]n the preset 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, 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 affirm. II 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 , 166 U. S. 239 (1807), and, (2), if so, whether the transferable development
rights afforded appellants constitute "just compensation" within
the meaning of the Fifth Amendment. [ Footnote 24 ] We need only address the question whether a
"taking" has occurred. [ Footnote
25 ] Page 438 U. S. 123 A Before 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. Page 438 U. S. 124 40, 364 U. S. 49 (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 , 369 U. S. 594 (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 , 357 U. S. 168 (1958); see United States v. Caltex, Inc., 344 U.
S. 149 , 344 U. S. 156 (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 considerations. See
Goldblatt v. Hempstead, supra at 369 U. S. 594 .
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 (1946), than when interference arises from some
public program adjusting the benefits and burdens of economic life
to promote the common good.

															"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 , 260 U. S. 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 Page 438 U. S. 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 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, 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. Cambridge, 277 U. S. 183 , 277 U. S. 188 (1928). Zoning laws are, of course, the classic example, see
Euclid v. Ambler Realty Co., 272 U. S. 365 (1026) (prohibition of industrial use); Gorieb v. Fox, 274 U. S. 603 , 274 U. S. 608 (1927) (requirement that portions of parcels be left unbuilt); Welch v. Swasey, 214 U. S. 91 (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 at 369 U. S.
592 -593, and cases cited; see also Eastlake v.
Forest City Enterprises, Inc., 426 U.
S. 668 , 426 U. S. 674 n. 8 (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 (1928), is illustrative. In that case, a state entomologist, acting
pursuant to a state statute, ordered Page 438 U. S. 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 276 U. S.
279 .

															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 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). Goldblatt v. Hempstead, supra, is a recent example.
There, a 1958 city safety ordinance banned any excavations
below Page 438 U. S. 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 , 431 U. S.
513 -514 (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 (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 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 260 U. S. 414 ,
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 260 U. S.
414 -415, the Court held that the statute was invalid as
effecting a "taking" Page 438 U. S. 128 without just compensation. See also Armstrong v. United
States, 364 U. S. 40 (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 , 209 U. S. 355 (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).

															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." United
States v. Causby, 328 U. S. 256 (1946), is illustrative. In 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. at 328 U. S.
262 -263, n. 7. See also Griggs v. Allegheny
County, 369 U. S. 84 (1962)
(overflights held a taking); Portsmouth Co. v. United
States, 260 U. S. 327 (1922) (United States military installations' repeated firing of
guns over claimant's land is a taking); United States v.
Cress, 243 U. S. 316 (1917) (repeated floodings of land caused by water project is a
taking); but see YMCA v. United States, 395 U. S.
85 (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). B 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 Page 438 U. S. 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 , 416 U. S. 9 -10
(1974); Berman v. Parker, 348 U. S.
26 , 348 U. S. 33 (1954); Welch v. Swasey, 214 U.S. at 214 U. S. 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 New York City law. Finally, 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 [ Footnote 26 ] 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." Page 438 U. S. 130 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 superjacent 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 438 U. S.
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. [ Footnote 27 ] "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 ha
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 Page 438 U. S. 131 parcel as a whole -- here, the city tax block designated as the
"landmark site."

															Secondly, 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 (1926) (75% diminution in value caused by zoning law); Hadacheck v. Sebastian, 239 U. S. 394 (1915) (87 1/2% diminution in value); cf. Eastlake v. Forest
City Enterprises, Inc., 426 U.S. at 426 U. S. 674 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.

															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 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. Page 438 U. S. 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, [ Footnote 28 ] and, as noted, over 400 landmarks and 31
historic districts have been designated pursuant to this plan.

															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 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 Page 438 U. S. 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. [ Footnote 29 ]

															Next, appellants 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. [ Footnote 30 ] Similarly, zoning Page 438 U. S. 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.

															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. [ Footnote 31 ]
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 Page 438 U. S. 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. [ Footnote 32 ]

															Appellants' 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 (1976), or a safety regulation prohibiting excavations below a
certain level. See Goldblatt v. Hempstead. C Rejection of appellants' broad arguments is not, however, the
end of our inquiry, for all we thus far have established is Page 438 U. S. 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
appellant' 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 260 U. S. 413 .
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 Terminal site.

															Unlike 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.

															Appellants, moreover, exaggerate the effect of the law on their
ability to make use of the air rights above the Terminal in two
respects. [ Footnote 33 ]
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 Page 438 U. S. 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 ay
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. [ Footnote 34 ]

															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 preexisting 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, [ Footnote 35 ] 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 369 U. S. 594 n. 3. Page 438 U. S. 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. [ Footnote 36 ] Affirmed. [ Footnote 1 ] 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).

															[ Footnote 2 ]

															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.

															[ Footnote 3 ] See, e.g., N.Y.C.Admin. Code § 205-10(a) (1976).

															[ Footnote 4 ]

															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. 7).

															[ Footnote 5 ] See N.Y.Gen.Mun.Law § 9a (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.

															[ Footnote 6 ]

															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).

															[ Footnote 7 ] 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).

															[ Footnote 8 ]

															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).

															[ Footnote 9 ]

															"'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).

															[ Footnote 10 ]

															"'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).

															[ Footnote 11 ]

															"'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).

															[ Footnote 12 ] 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.

															[ Footnote 13 ]

															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 438 U. S. 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. See Lutheran Church v. City of New York, 35
N.Y.2d 121, 316 N.E.2d 305 (1974).

															[ Footnote 14 ]

															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.

															[ Footnote 15 ]

															The Terminal's present foundation includes columns, which were
built into it for the express purpose of supporting the proposed
20-story tower.

															[ Footnote 16 ]

															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."

															Record 2240.

															[ Footnote 17 ]

															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.

															[ Footnote 18 ]

															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.

															[ Footnote 19 ] See N.Y.Real Prop.Tax Law § 489-aa et seq. (McKinney Supp. 1977).

															[ Footnote 20 ]

															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."

															[ Footnote 21 ]

															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.

															[ Footnote 22 ]

															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.

															[ Footnote 23 ]

															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 438 U. S. 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).

															[ Footnote 24 ]

															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.

															[ Footnote 25 ]

															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.

															[ Footnote 26 ]

															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.

															[ Footnote 27 ]

															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.

															[ Footnote 28 ]

															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.

															[ Footnote 29 ]

															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 (1928). When a property owner challenges a
landmark designation or restriction as arbitrary or discriminatory,
a similar inquiry presumably will occur.

															[ Footnote 30 ]

															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 (1937).

															[ Footnote 31 ]

															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 Districts (1977).

															[ Footnote 32 ]

															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.

															[ Footnote 33 ]

															Appellants, of course, argue at length that the transferable
development rights, while valuable, do not constitute "just
compensation." Brief for Appellants 36-43.

															[ Footnote 34 ]

															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.

															[ Footnote 35 ] See Costonis, supra, n 2, at 585-589.

															[ Footnote 36 ]

															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.
423.

															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. [ Footnote 2/1 ]
The owner of a building might initially be pleased that his
property has been chosen by a distinguished committee of
architects, historians, and city Page 438 U. S. 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.

															Only in the most superficial sense of the word can this case be
said to involve "zoning." [ Footnote
2/2 ] 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 Page 438 U. S. 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 , 260 U. S. 415 (1922), there is "an average reciprocity of advantage."

															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 , 364 U. S. 49 (1960). See discussion infra at 438 U. S.
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 Page 438 U. S. 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. I The Fifth Amendment provides in part: "nor shall private
property be taken for public use, without just compensation."
[ Footnote 2/3 ] Page 438 U. S. 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." [ Footnote 2/4 ] A 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] . . . denote[s] the group of rights inhering in the
citizen's relation to the physical thing, as Page 438 U. S. 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 323 U. S.
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. [ Footnote 2/5 ]
The property has been thus subjected to a nonconsensual servitude
not borne by any neighboring or similar properties. [ Footnote 2/6 ] 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 323 U. S. 378 . See also United States v. Lynah, 188 U.
S. 445 , 188 U. S.
469 Page 438 U. S. 144 (1903); [ Footnote 2/7 ] Dugan
v. Rank, 372 U. S. 609 , 372 U. S. 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. United States, 364
U.S. at 364 U. S. 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. 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 anyone, 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 Page 438 U. S. 145 their property, to inflict injury upon the
community. " Mugler v. Kansas, 123 U. S. 623 , 123 U. S.
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 239 U. S. 413 .
[ Footnote 2/8 ]

															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 he 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 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 222 U. S. 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 Page 438 U. S. 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 , 328 U. S. 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 , 331 U. S. 748 (1947). See also Dugan v. Rank, supra at 372 U. S. 625 .
[ Footnote 2/9 ] Page 438 U. S. 147 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, and thereby
"secure[s] an average reciprocity of advantage." Pennsylvania
Coal Co. v. Mahon, 260 U.S. at 260 U. S. 415 .
[ Footnote 2/10 ] 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.

															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, Page 438 U. S. 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 , 148 U. S. 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 364 U. S. 49 . Cf. Nashville, C. & St. L. R. Co. v. Walters, 294 U. S. 405 , 294 U. S.
428 -430 (1935). [ Footnote
2/11 ]

															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 260 U. S. 416 .
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 Page 438 U. S. 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. [ Footnote 2/12 ]

															Appellees in response would argue that a taking only occurs
where a property owner is denied all reasonable value of
his property. [ Footnote 2/13 ] 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 188 U. S. 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.

															"[I]t is the character of the invasion, not the amount of damage
resulting from it, Page 438 U. S. 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 , 243 U. S. 328 (1917); United States v. Causby, 328 U.S. at 328 U. S. 266 . See also Goldblatt v. Hempstead, 369 U.S. at 369 U. S.
594 . 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 empty-handed. As the
Court notes, ante at 438 U. S.
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
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 148 U. S.
326 .

															"[I]f 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. See also United States v. Lynah, supra at 188 U. S. 465 ; United States v. Pewee Coal Co., 341 U.
S. 114 , 341 U. S. 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 , 262 U. S.
343 -344 (1923). The fact Page 438 U. S. 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 148 U. S.
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 that Penn Central
has been Page 438 U. S. 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." [ Footnote 2/14 ] 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." Pennsylvania Coal Co. v. Mahon, 260 U.S. at 260 U. S. 416 .
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 Page 438 U. S. 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.

															[ Footnote 2/1 ]

															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 438 U. S. 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."

															[ Footnote 2/2 ]

															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, 366 N.E.2d 1271, 1274 (1977).

															[ Footnote 2/3 ]

															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 , 166 U. S. 236 (1897).

															[ Footnote 2/4 ]

															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 State v. Caltex, Inc., 344 U.
S. 149 , 344 U. S. 156 (1952), for example, ante at 438 U.S. 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 344 U. S.
156 .

															[ Footnote 2/5 ]

															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 (190) (stringing of telephone wire across
property constitutes a taking).

															[ Footnote 2/6 ]

															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 , 98 U. S. 408 (1879) (emphasis added).

															[ Footnote 2/7 ]

															"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 188 U. S.
470 .

															[ Footnote 2/8 ]

															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 438 U. S.
125 -127, 438 U. S.
133 .

															[ Footnote 2/9 ]

															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 148 U. S. 337 .
Under the Court's rationale, however, where the Government wishes
to preserve a preexisting 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."

															[ Footnote 2/10 ]

															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.

															[ Footnote 2/11 ]

															"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 294 U. S.
429 -430.

															[ Footnote 2/12 ]

															The fact that the Landmarks Preservation Commission may have
allowed additions to a relatively few landmarks is of no comfort to
appellants. Ante at 438 U. S. 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 438 U. S.
117 -118.

															[ Footnote 2/13 ]

															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 438 U. S. 127 ;
at another point, the question is phrased as whether Penn Central
can obtain "a reasonable return' on its investment," ante at 438 U. S. 136 ;
and, at yet another point, the question becomes whether the
landmark is "economically viable," ante at 438 U. S. 138 n. 36. [ Footnote 2/14 ]

															The Court suggests, ante at 438 U. S. 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.

Summary: In *Penn Central Transportation Co. v. New York City*, the U.S. Supreme Court ruled that New York City's Landmarks Preservation Law did not constitute a "taking" of private property without just compensation, as it only restricted the owner's ability to exploit the property rather than transferring control to the city. The Court also found no denial of due process, as the same use of the property was permitted, and the owner could still earn a reasonable return on their investment. This case set a precedent for the regulation of historic landmarks and neighborhoods.