New York Law Review

Tag: City of New York

  • Penn Central Transportation Co. v. City of New York, 42 N.Y.2d 324 (1977): Landmark Preservation and Reasonable Return on Property

    42 N.Y.2d 324 (1977)

    Landmark preservation laws are constitutional as long as they allow a property owner a reasonable return on the privately created ingredient of the property’s value, even if the owner is not allowed to exploit the property to its fullest potential.

    Summary

    Penn Central, owner of Grand Central Terminal, challenged New York City’s landmark preservation law after being denied permission to build an office tower above the terminal. Penn Central argued that the landmark designation constituted a taking without just compensation. The court upheld the law, finding that it allowed Penn Central a reasonable return on the terminal as it was, and the transferable development rights (TDRs) offered provided additional compensation for the inability to build upward. The court reasoned that society contributed significantly to the terminal’s value, and Penn Central was not entitled to profit solely from this societal investment.

    Facts

    Grand Central Terminal was designated a landmark in 1967 under New York City’s landmark preservation law. Penn Central, the terminal’s owner, sought to build an office tower above the terminal but was denied a permit by the Landmarks Preservation Commission. Penn Central argued that the landmark designation deprived them of the ability to exploit the air rights above the terminal, constituting a taking of their property.

    Procedural History

    Penn Central filed suit in New York State court, seeking a declaration that the landmark preservation law was unconstitutional as applied to the terminal. The trial court ruled in favor of Penn Central. The Appellate Division reversed, upholding the law. Penn Central appealed to the New York Court of Appeals.

    Issue(s)

    Whether New York City’s landmark preservation law, as applied to Grand Central Terminal, constituted a taking of Penn Central’s property without just compensation in violation of the Fifth and Fourteenth Amendments?

    Holding

    No, because the landmark preservation law allows Penn Central a reasonable return on its property and the transferable development rights provide reasonable compensation for any loss of development potential, there is no taking.

    Court’s Reasoning

    The court emphasized that government regulation is invalid if it denies a property owner all reasonable return, but there is no constitutional guarantee that the return include all attributes, incidental influences, or contributing external factors derived from the social complex in which the property rests. The court highlighted the significant public investment in the terminal and the surrounding area. “It is enough, for the limited purposes of a landmarking statute, albeit it is also essential, that the privately created ingredient of property receive a reasonable return. It is that privately created and privately managed ingredient which is the property on which the reasonable return is to be based.”

    The court distinguished this case from zoning cases, noting that landmark regulation is not designed to further a general community plan but to preserve a single piece of property. It also noted that this was not an eminent domain case requiring just compensation. The court found that Penn Central could still derive reasonable income from the terminal as a transportation hub and through its other real estate holdings in the area which benefited from the terminal’s presence.

    The transferable development rights (TDRs) were also a key factor. While acknowledging the imperfections in the TDR program, the court held that the availability of these rights provided reasonable compensation for the lost development potential above the terminal. “If the substitute rights received provide reasonable compensation for a landowner forced to relinquish development rights on a landmark site, there has been no deprivation of due process. The compensation need not be the ‘just’ compensation required in eminent domain, for there has been no attempt to take property.”

    The court distinguished this case from Fred F. French Investing Co. v. City of New York, 39 N.Y.2d 587 (1976), where the development rights were rendered valueless. Here, the court found that Penn Central could transfer its development rights to nearby properties it owned, making the regulation reasonable.

  • Patrolmen’s Benevolent Association v. City of New York, 41 N.Y.2d 205 (1976): Statute’s Reach Does Not Extend to Prior Judgments

    Patrolmen’s Benevolent Association v. City of New York, 41 N.Y.2d 205 (1976)

    A statute suspending wage increases pursuant to collective bargaining agreements does not apply to wage increases mandated by a prior judicial judgment.

    Summary

    The Patrolmen’s Benevolent Association (PBA) sought to enforce a judgment requiring New York City to pay a 6% salary increase. The City argued that a subsequent state law freezing wages prohibited this payment. The Court of Appeals held that the wage freeze legislation, which suspended wage increases pursuant to collective bargaining agreements, did not apply to the PBA’s salary increase, as that increase was mandated by a judicial judgment predating the legislation. The Court reasoned that the statute’s language did not explicitly include judicial judgments and that the Legislature was aware of the judgment when enacting the wage freeze.

    Facts

    The PBA and New York City, unable to agree on a collective bargaining agreement, submitted their dispute to an impasse panel. The panel recommended an 8% salary increase for the first year and 6% for the second year. Both parties accepted the findings, and they were incorporated into a tentative agreement. The City refused to sign the agreement, citing financial difficulties. The PBA then sought to confirm the impasse panel’s award via a CPLR Article 75 proceeding. The City’s motion to dismiss was denied, and the petition was granted upon default on July 1, 1975. The City began paying the retroactive salary increase. In September 1975, the state enacted wage freeze legislation, and the City stopped paying the 1975-1976 increase.

    Procedural History

    The PBA moved to compel the City to comply with the July 1, 1975 judgment. The lower court found the wage freeze inapplicable but stayed enforcement of its judgment. Both parties appealed. The Appellate Division also found the wage freeze inapplicable to judgments and removed the stay. The Court of Appeals granted leave to appeal and certified the question of whether the Appellate Division’s order was properly made.

    Issue(s)

    Whether a state statute suspending wage increases pursuant to collective bargaining agreements or other analogous contracts applies to a wage increase mandated by a judicial judgment entered before the statute’s enactment.

    Holding

    No, because the statute’s language does not explicitly include judicial judgments, and the legislative history does not indicate an intent to encompass such judgments.

    Court’s Reasoning

    The Court emphasized that statutory interpretation should effectuate the Legislature’s intent, and clear, unambiguous language should be given its plain meaning. The statute suspended wage increases “pursuant to collective bargaining agreements or other analogous contracts.” The Court found that the wage increase in this case resulted from a judicially mandated remedy, not a collective bargaining agreement. There was no language suggesting a legislative intent to suspend judgments. The Court stated, “[A]n irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded.” The Legislature was aware of the July 1 judgment when enacting the wage freeze. Other statutes enacted at the same time specifically applied to judgments, demonstrating that the Legislature knew how to include judgments when it intended to do so. The Court also noted that a judgment entered upon the confirmation of an arbitral award has the same force and effect as a judgment in an action. Finally, the Court agreed with the Appellate Division that the lower court lacked the power to stay enforcement of its order. The Court found no merit in the City’s other arguments.

  • Varsity Transit, Inc. v. City of New York, 38 N.Y.2d 632 (1976): City’s Authority to Tax Bus Companies Not Subject to State Utility Tax

    Varsity Transit, Inc. v. City of New York, 38 N.Y.2d 632 (1976)

    A city has the authority to impose a utility tax on bus companies with a seating capacity of more than seven persons, as these companies are expressly excluded from the state utility tax.

    Summary

    Varsity Transit, Inc. challenged New York City’s imposition of a utility tax, arguing that it was exempt due to limitations imposed by state law and the city’s administrative code. The New York Court of Appeals affirmed the lower court’s decision, holding that the city’s tax was valid because Varsity Transit was not subject to the state utility tax and the city’s “school bus operators clause” did not exclude Varsity Transit from the tax’s scope. The court reasoned that state law limitations on city taxation only apply to utilities subject to state tax, and Varsity Transit’s bus operations fell outside the state tax’s purview.

    Facts

    Varsity Transit, Inc. operated buses within New York City. The buses had a seating capacity of more than seven persons. New York City imposed a utility tax on Varsity Transit. Varsity Transit contested the tax, claiming exemptions under state law and the city’s administrative code.

    Procedural History

    The case originated in a lower court in New York. The Appellate Division affirmed the lower court’s decision in favor of the City of New York. Varsity Transit appealed to the New York Court of Appeals. The New York Court of Appeals affirmed the Appellate Division’s judgment.

    Issue(s)

    Whether New York City had the authority to impose a utility tax on Varsity Transit, given the state law limitations on city taxation of utilities and the city’s own administrative code.

    Holding

    Yes, because Varsity Transit was not subject to the state utility tax, and the city’s “school bus operators clause” did not exclude Varsity Transit from the tax’s scope.

    Court’s Reasoning

    The court reasoned that Section 20-b of the General City Law places limitations on a city’s power to tax utilities only when those utilities are subject to state tax under section 186-a of the Tax Law. Because Varsity Transit operates buses with a seating capacity of more than seven persons, it is expressly excluded from the state utility tax under Tax Law § 186-a, subd. 2, par. (a). The court cited Tax Law, § 1221, subd. (a), par. (3) and 58 N. Y. Jur., Taxation, § 674 to reinforce this point. Therefore, the City was free to levy a city utility tax pursuant to the authority granted by subdivision (a) of section 1201 of the Tax Law. The court also determined that the prohibition on taxation of “transactions” with certain exempt organizations (Tax Law, § 1230) is inapplicable to the tax on the privilege of doing business, which the city is empowered to impose. Regarding the “school bus operators clause” (City of New York Administrative Code, § QQ 46-2.0, subd. a), the court acknowledged its poor draftsmanship but reasonably interpreted it in light of its history (e.g., Local Laws, 1939, No. 104 of the City of New York), concluding that it does not exclude Varsity Transit from the measure of the tax, citing Children’s Bus Serv. v. City of New York, 190 Misc. 161, 166. The court stated, “However, no such limitation obtains where the utility is not within the purview of section 186-a”. The court concluded that Varsity Transit was indeed outside the purview of section 186-a, and therefore the city was within its rights to tax the company.

  • Fieldston Property Owners’ Assn. v. City of New York, 16 N.Y.2d 267 (1965): Municipality’s Power to Regulate Traffic on Private Roads

    16 N.Y.2d 267 (1965)

    A municipality’s power to regulate traffic on private roads open to public motor vehicle traffic includes the power to prohibit parking, but does not necessarily allow the municipality to permit parking contrary to the wishes of the property owner.

    Summary

    Fieldston Property Owners’ Association owned streets in fee and contracted with homeowners to maintain them. The City of New York regulated parking on these streets. The Association sued, claiming the city’s actions were a taking of private property without just compensation and an impairment of contract. The Court of Appeals held that the city could prohibit parking, but the Association retained the right to bar parking altogether. The city’s regulations were prohibitive, not permissive, leaving the Association free to use common-law remedies to enforce its own parking rules.

    Facts

    The Fieldston Property Owners’ Association, Inc. (Association) owned streets in fee simple. The Association had contracts with abutting homeowners to maintain and repair the streets until the City of New York acquired title. The Association allowed the public to use the streets for vehicular traffic for many years. The City of New York (City) had neither taken title to the streets nor maintained them at public expense. The City began regulating parking on these privately owned streets, both permitting and prohibiting it in certain areas.

    Procedural History

    The Association sued the City, claiming the parking regulations constituted a taking of private property without just compensation and an impairment of the contractual obligation with homeowners. The lower courts ruled in favor of the City, upholding its right to regulate parking. The Association appealed to the New York Court of Appeals.

    Issue(s)

    Whether the City’s regulation of parking on privately owned streets, by permitting as well as prohibiting parking, constitutes a taking of private property without just compensation or an impairment of contractual obligations, when the property owner has granted public access to the streets but retains ownership and maintenance responsibilities.

    Holding

    No, because the City’s power to regulate traffic includes the power to prohibit parking. However, the Association, as the owner of the fee, retains the right to bar parking altogether, as the city’s regulations were prohibitive and not permissive.

    Court’s Reasoning

    The court reasoned that the municipality’s authority to regulate traffic under the Vehicle and Traffic Law (§ 1642) and the New York City Charter (§ 435) includes the power to prohibit, restrict, or regulate traffic, including parking, on highways, even privately owned roads open to public traffic. The court cited People v. Rubin, 284 N.Y. 392, to support the notion that the power to regulate traffic includes the power to prohibit parking. The court emphasized that the city’s parking regulations were “prohibitive” rather than “permissive,” meaning they restricted parking in certain areas but did not affirmatively authorize it. Because the regulations were prohibitive, the court did not need to decide whether the city could constitutionally sanction parking on these private streets over the Association’s objection. The court stated that the Association retained its common-law rights as the fee owner. The court noted, “[T]he plaintiff is entitled to a declaration, therefore, that municipal regulation of parking on these streets does not prevent the plaintiff, as the owner of the fee, from barring parking altogether… [T]he plaintiff, on proper notice, may assure compliance with its rules by rigorous use of traditional common-law remedies.” Judge Burke dissented, arguing that the Association had previously acquiesced to the City’s authority and should not now be able to challenge it, invoking the principle that “one who has availed himself of the benefits of a statute cannot thereafter attack it.”