|
Planning magazine — June 2003 Celebrating Penn Central How the Supreme Court's preservation of Grand Central Terminal helped preserve planning nationwide. By Jerold S. Kayden Can a local government legally rezone land if that action decreases the land's market value by 75 percent? Can the federal government prohibit an owner from building on wetlands totaling 80 percent of the property? Is a four-year building moratorium valid? What happens when a builder buys a dilapidated warehouse in order to demolish and replace it with new housing, only to be stopped when the historic preservation commission later designates the building as a landmark and prohibits the demolition? For planners and lawyers, answering these questions, and hundreds like them, requires the wisdom of Solomon, the patience of Job, and the calculation of U.S. Supreme Court Justice William J. Brennan. For the man who once wrote, "After all, if a policeman must know the Constitution, then why not a planner?" also wrote the most encyclopedic, influential judicial opinion on what is now known as regulatory takings. Penn Central Transportation Co. v. New York City, the 1978 decision that established the modern framework for constitutional takings analysis of all land-use and environmental laws, celebrates its 25th anniversary this month. Despite criticism from expected (pro-private property) and, occasionally, from unexpected (pro-government regulation) quarters, this agenda-setting opinion remains in remarkably good health and has been fortified by the Court's latest decision on regulatory takings, the 2002 Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency case, involving a government-imposed development moratorium at Lake Tahoe. From out of left field In many ways, Penn Central came out of nowhere. After a flurry of cases in the 1920s addressing the constitutionality of zoning (Euclid, Zahn, Gorieb, Nectow) and other land-use restrictions (Pennsylvania Coal), the Court stayed off the playing field for the next half century. That made sense, as long as planning regulations more or less followed the traditional zoning model approved in the Court's 1926 decision, Village of Euclid v. Ambler Realty Co. Even when such innovations as planned unit developments, cluster zoning, subdivision exactions, and incentive zoning emerged in the middle of the 20th century, the Court appeared satisfied with the treatments administered by state judges. But historic preservation laws pushed new buttons. The dramatic losses of such architectural masterworks as New York City's Pennsylvania Station, in 1963, propelled political support for a regulatory technique preventing owners from demolishing, or even modifying, historically significant structures without the permission of the local agency that had designated them or their districts as such. To be sure, lawmakers proclaimed that historic preservation laws were just as litigation-proof as zoning laws, but in their hearts there must have been some question about whether the Supreme Court would agree. After all, it is one thing to impose uniform rules across a large, continuous zoning district, and quite another to pick out one building for special, harsher treatment than its immediate neighbors. Only after a favorable Supreme Court decision would local historic preservation laws gain the traction needed for enactments around the country. Whose rights are these, anyway? The facts of the Penn Central case reveal the high stakes at issue. In 1965, New York City enacted its Landmarks Preservation Law, creating a locally appointed commission with the power to designate buildings and neighborhoods as landmarks and historic districts. The law defined landmarks as buildings 30 years old or older, with special character or special historical or aesthetic interest. Historic districts were areas containing buildings with special character or historical or aesthetic interest, and representing styles of architecture typical of the city's history. The crux of the law, though, was the impact of designation on what owners could subsequently do with their private property. An owner would lose the right to change a property's exterior appearance without commission approval. Activities ranging from replacing windows to total demolition would now be subject to the control of government overseers. Grand Central Terminal, that 1913 Beaux Arts masterpiece sitting astride Park Avenue in the heart of midtown Manhattan, was designated a landmark by the preservation commission in 1967. The terminal's owner, the Penn Central Transportation Company, entered into an agreement with a private developer called UGP Properties, Inc., to build an office skyscraper above the terminal that would generate millions of dollars annually in extra rental income for Penn Central. The tower complied with applicable zoning, but required permission under the landmarks law. Penn Central and the developer submitted two Marcel Breuer-designed proposals to the landmarks preservation commission in 1968. In one, a 55-story tower would sit cantilevered above the terminal and its 42nd Street facade. In another, a 53-story structure would rise above the terminal, but would also destroy part of the terminal and the facade. The commission rejected both proposals, citing harm to the terminal's landmark qualities. Penn Central and its development partner then sued New York City in state court, claiming a taking of property in violation of the federal constitution's Fifth Amendment command, "nor shall private property be taken for public use, without just compensation." The trial court ruled in favor of Penn Central; the two state appellate courts ruled for the city. In court By the time the case arrived at the Supreme Court in 1978, the arguments were crisply drawn. Penn Central emphasized the unfairness of being burdened with losing millions of dollars annually so the public could enjoy the benefits of its landmark building. If the public wanted to preserve landmarks, argued Penn Central, let the public pay for it. For its part, New York City emphasized the importance of public efforts to preserve selected elements of its built environment. It maintained that the burden of historic preservation was spread comprehensively enough throughout the city to escape the company's claim of unfair impact. Comprehensiveness was a main sticking point between Justice Brennan's majority and Justice William Rehnquist's dissent. (Rehnquist is now Chief Justice of the Court.) Generally in land-use cases, the broader the application of a rule, the more acceptable it becomes under the constitution because the wider scope reduces the chances of arbitrary picky-choosy outcomes. At the time the Penn Central litigation began, the commission had designated not only Grand Central Terminal, but also more than 400 other landmarks and 31 historic districts. Justice Rehnquist wasn't satisfied. Scoffing at any notion of comprehensiveness, he observed that New York City imposed landmark designations on "less than one one-tenth of one percent of the buildings in New York City for the general benefit of all its people." The landmark owner's pride of designation would quickly turn to horror once he or she understood the true import of designation, Justice Rehnquist said. With candor, Justice Brennan's six-to-three majority opinion conceded that the Court had 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." He could have added that there had been little movement beyond Justice Oliver Wendell Holmes's statement in the 1922 Pennsylvania Coal Co. v. Mahon decision that "if regulation goes too far it will be recognized as a taking." Right off the bat, the Brennan decision swiftly disposed of the public interest issue, declaring that landmarks preservation laws are an appropriate means of preserving the character and aesthetic features of a city. If there had been any lingering question about whether aesthetic goals were legally legitimate underpinnings for regulatory action, that doubt was ended once and for all. As to the meatier question of whether the New York law placed too great a burden on Penn Central, the Court found that the city's actions did not breach the economic protections afforded property rights by the just compensation clause. In place of set formulas, the majority announced that three factors would have to be taken into account on a case-by-case basis. These were the economic impact of the regulation on the claimant; its effect on his or her distinct investment-backed expectations; and finally, the character of the governmental action. The Court provided no general guidance about how to weight such factors; it instead demonstrated their application to facts in the Penn Central case itself. Relying on the first two factors, the Court enumerated three facts that worked in the city's favor. First, the Court noted that Penn Central had conceded in state court that rental income from existing terminal activities produced a reasonable return on its terminal investment. Second, the Court emphasized that Penn Central's primary investment-backed expectation was tied to the terminal itself, not to the construction of an office building above it, and that the landmarks law did not affect that expectation. Third, the Court noted the possibility that Penn Central might be able to gain some revenue by using a feature of the city's landmarks law known as "transfer of development rights," allowing the owner to take the zoning-defined air rights above the terminal and have them used on surrounding sites. The majority also insisted that its three-factor analysis should be applied to the "parcel as a whole," meaning that courts should consider the economic value associated with the usable portion of the parcel (the terminal), as well as the economic value, or lack thereof, associated with the restricted portion of the parcel (the air rights above the terminal). In many cases, the "parcel as a whole" concept would mean that the owner had not suffered as much as he or she claimed. How would Penn Central change the definition of private property? The short answer is, very little. After half a century of inaction, the Court recapitulated its core conclusion, registered in the 1920s, that government regulation could significantly cut into private property rights in order to bolster public interests without violating the constitution. Consistent with the 1926 Village of Euclid v. Ambler Realty Co. case and its progeny under the due process clause, Penn Central (under the just compensation clause) would treat the financial value of private property as its most malleable aspect, especially when that value was speculative rather than firmly grounded. Newly ascertained public goals, such as preservation of historic buildings and neighborhoods, would be no more troubling to the justices than the newly ascertained goals served by zoning in the 1920s. Teeth gnashing Over time, the opinion would be criticized from right, left, and center. Not surprisingly, the idea that millions of dollars of value could be eliminated by government regulation to procure public benefits rankled property rights advocates. Acceptance by the Court of the constitutional concept of a regulatory taking, in effect giving gold-plated legitimacy to Justice Holmes's "goes too far" formulation articulated more than 50 years before, troubled a number of planning and environmental activists and some constitutional scholars. The notion that the best the Court could do was a three-factor inquiry — what some would call situated judgment and others might deride as the "what the judge had for breakfast" test — would exasperate anyone seeking predictability, if not certainty, in judicial decision-making. If political action is the guide, this opinion most disturbed the property rights supporters. They shook all three branches of government, starting with the judiciary. A series of lawsuits challenged property rights infringements by land-use and environmental regulation. Starting in 1987, almost a decade after Penn Central, the Court appeared receptive, issuing a steady stream of opinions that, with few exceptions, favored private property owners. The list would include First English Evangelical Lutheran Church v. County of Los Angeles, Nollan v. California Coastal Commission, Lucas v. South Carolina Coastal Council, Dolan v. City of Tigard, Suitum v. Tahoe Regional Planning Agency, City of Monterey v. Del Monte Dunes, Ltd., and Palazzolo v. Rhode Island. Although close readings of the Court's opinions showed that they did not erode the fundamental architecture of Fifth Amendment jurisprudence as erected in Penn Central, their cumulative impact did imply a new judicial concern for private property rights. That genie has been put back in the bottle, at least for now, by the 2002 Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency case. There, the Court held that a 32-month moratorium, temporarily denying a landowner all economically viable use of land, is not an automatic taking. Although the decision surely pleases moratorium practitioners, its true significance lies in its jurisprudential choices and rhetorical positioning. Indeed, Tahoe-Sierra is an unapologetic, unabashed champion of Penn Central's ad hoc, no-set-formula, factual decision-making approach. Writing for the majority, Justice John Paul Stevens invoked Justice Sandra Day O'Connor's words of praise for Penn Central, first announced in her concurring opinion in Palazzolo v. Rhode Island. Anything less than a complete elimination of value must be adjudicated under the Penn Central multi-factor inquiry, Stevens wrote. The "parcel as a whole" rule was, and is, good law. For Justice Stevens, who had joined Justice Rehnquist's dissent in Penn Central, and who now is the Court's most reliable vote in favor of land-use planning and regulatory values, this could be called judicial redemption. Tahoe-Sierra is a beacon, in and out of court, signaling that land-use regulation is constitutionally alive and well, and that owners cannot count on reflexive obedience to property rights from a majority of the justices. For a quarter century, Penn Central has remained the Supreme Court's most prominent and complete constitutional statement on the meaning of the just compensation clause. Later cases have elaborated on its basic analytical approach, even taken bites from its constitutional margins, but none have contradicted it. That property rights advocates eventually sought legislative and administrative remedies from the other branches of government merely underscores Penn Central's enduring constitutional power. In short, when it affirmed New York City's decision to save Grand Central Terminal, the Supreme Court also affirmed a nation's broad ability to use land-use and environmental planning to enhance — and preserve — its built and natural environment. Jerold S. Kayden is an associate professor of urban planning at the Harvard Design School. He was Justice Brennan's law clerk during the Supreme Court's 1980-1981 term, two years after Penn Central was decided.
Court decisions. Justice Brennan wrote "After all, if a policeman must know the Constitution, then why not a planner?" in a dissenting opinion in San Diego Gas & Electric Co. v. City of San Diego, 450 U.S. 621 (1981). Other important decisions are:
APA amicus briefs. Click here for APA's amicus curiae briefs in the cases of Tahoe-Sierra, Palazzolo, and City of Monterey. Readings. Jerold Kayden and Charles Haar coauthored Landmark Justice: The Influence of William J. Brennan on America's Communities (Preservation Press, 1989). They coedited Zoning and the American Dream: Promises Still to Keep (American Planning Association, 1989).
| ||
Printer-Friendly Format
