Penn Central Take Two

Abstract

Penn Central v. New York is the most important regulatory takings case of all time. There, the Supreme Court upheld the historic preservation of Grand Central Terminal in part because the City offset the burden of the landmarking with a valuable new property interest — a transferable development right (TDR) — that could be sold to neighboring property. Extraordinarily, 1.2 million square feet of those very same TDRs, still unused for over 40 years, are the subject of new takings litigation. According to a newly filed complaint, the TDRs that saved Grand Central have themselves been taken by the government, which allegedly wiped out their value by permissively upzoning the neighboring property. The litigation is not only a captivating postscript to Penn Central, but also a compelling context for examining the category of regulatory property more generally. Regulatory property — like TDRs and pollution credits, for example — is increasingly important and valuable, but raises complicated trade-offs between the need for stability in property-based entitlements and policy flexibility in governance. This Essay ultimately argues that the creation of regulatory property should not prevent policy changes far into the future.