LAW OF THE LAND: Every breath you take – the government can take your air rights

William Martin

In law school, Property was my favorite class. Property rights exist in just about everything, from the design of a tie to the tune of a song. One of the most interesting cases involving property rights revolved around the air rights above Grand Central Station in New York City. The issue the court dealt with was whether the application of New York City's Landmarks Preservation Law to the parcel of land occupied by Grand Central Terminal had "taken" property in violation of the Fifth and Fourteenth Amendments. If so, then the city would have been obligated to pay for the property it had taken.

Grand Central Station opened in 1913 with its south façade facing 42nd Street. At street level, the Terminal is bounded on the west by Vanderbilt Avenue and on the east by the Commodore Hotel. Originally, a 20-story office tower was part of the design, but the office tower was never built. The Terminal itself is an eight-story structure used as a train station with space rented to a number of commercial enterprises, including a Michael Jordan restaurant. On Aug. 2, 1967, the Terminal was designated a “Landmark” and the city block it is located on was designated a “landmark site.”

The following year, Grand Central’s owners applied for permission to construct an office building atop the Terminal which was rejected based on its Landmark status. In so doing, the commission stated that: “"(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 a flamboyant Beaux-Arts facade seems nothing more than an aesthetic joke.” The owners of Grand Central sued to either get permission to construct the tower or to have the city pay for taking of the property for public use by designating it as a Landmark. Eventually the matter was decided by the U.S. Supreme Court.

Before reaching its conclusion, the Supreme Court noted 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," and 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.

The owners of Grand Central argued that the city had "taken" their right to the airspace above the Terminal, thus entitling them to "just compensation" measured by the fair market value of these air rights. In the end, the Court held that the city’s designation of the site as a Landmark constituted a taking and concluded by noting 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."

Bill Martin is a former B-52 and B-1B pilot and senior attorney for the Federal Deposit Insurance Corporation. He is currently a partner in the law firm of Keefe, Anchors & Gordon in Fort Walton Beach.