Penn Central 2.0: The Takings Implications of Printing Air Rights

Abstract

This Note evaluates whether a municipal bonus system that competes with and devalues landowners’ unused transferable development rights (“TDRs”) constitutes a regulatory taking. Specifically, this issue will be analyzed through the lens of Grand Central Terminal’s potential claim against the City of New York, which is in the process of amending its Zoning Resolution to provide developers significant disincentives against purchasing TDRs from private property owners.

First, I will explain the background law leading up to Grand Central’s potential claim and aspects of takings law relevant to transferable development rights. I will also provide an overview of TDRs and New York City’s TDR landmark transfer program, and lay out the proposed bonus system as well as the terminal’s claim. Second, I will suggest a framework by which to analyze future cases involving the diminution in value of TDRs with respect to relevant case law and the concept of ‘investment backed expectations.’ I will ultimately conclude that while Grand Central’s position is not constitutionally protected, viable policy arguments exist for municipalities to provide incentives that support a robust TDR market.