Bonderman, David

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Pace Law ReviewVolume 1Issue 3 1981Symposium on Historic Preservation LawArticle 8April 1981Consequences for Agencies and GroupsResponsible for Historic Preservation ProgramsDavid BondermanFollow this and additional works at: http://digitalcommons.pace.edu/plrThis Article is brought to you for free and open access by the School of Law at DigitalCommons@Pace. It has been accepted for inclusion in Pace LawReview by an authorized administrator of DigitalCommons@Pace. For more information, please contact cpittson@law.pace.edu.Recommended CitationDavid Bonderman, Consequences for Agencies and Groups Responsible for Historic PreservationPrograms, 1 Pace L. Rev. 605 (1981)Available at: http://digitalcommons.pace.edu/plr/vol1/iss3/8Consequences for Agencies and GroupsResponsible for Historic PreservationProgramsDAVID BONDERMAN*I would like to make a few remarks about the SupremeCourt and its decisions and about what they mean in the contextof historic preservation. You may remember that the SupremeCourt once had a case in which a property owner filed a lawsuitcomplaining that a city had applied its ordinances to forbid theowner from building an office tower in place of a small multi-story building; that this had been done for aesthetic purposes,which were not a permissible basis of land use regulation; that,as a result, the city's action was an unconstitutional taking ofthe owner's property; and that the Court should order that thepermit sought be granted. The case I'm referring to was notPenn Central,1 but Welch v. Swasey,3 decided in 1909.Thus, Penn Central is not the first land use planning caseof its kind, nor will it be the last. It thus seems to me that theeuphoria which has been rampant in preservation circles as a re-sult of Penn Central is misplaced. The case represents only oneaspect of a problem that the courts have been dealing with, notvery successfully, for the last seventy-five years. And, as far ashistoric preservation goes, Penn Central is only the opening shotin the battle.What did the Supreme Court do in Penn Central? On somepoints, the result is clear. First, the Court laid to rest the notionthat aesthetic considerations are not a proper basis for the use ofthe police power.8 The Supreme Court had previously impliedthat aesthetic considerations were a proper foundation for theexercise of regulatory power in City of New Orleans v. Dukes,'where New Orleans was successful in keeping a number of hotdog vendors out of the French Quarter because their stands wereinconsistent with the character of the Quarter. But Penn Cen-tral is the first case in which the Supreme Court explicitly heldthat aesthetic considerations alone were a valid basis for land1PACE LAW REVIEWuse regulation.Second, Penn Central also makes it clear that as far as thelaw is concerned, historic preservation is just another form ofland use regulation. Justice Brennan's decision does that by ap-plying the same concepts that have been used in the zoningcases since the turn of the century, citing the same cases, and soforth.5 Accordingly, we can expect the courts to apply the sameanalytical concepts to preservation cases as to other land usecases.Third, and perhaps the most significant new wrinkle toemerge from the Penn Central case, is that it is now plain thatprotection can be given to individual landmarks as well as tohistoric districts. The Court explicitly rejected the claim thatdesignating individual landmarks is akin to spot zoning and,therefore, improper."But on other points, because Penn Central involves peculiarfactual circumstances which may limit its use as precedent, theeffect of the decision is open to debate. As you may know, theSupreme Court is bound, in the absence of an appeal on thefacts, by the factual findings of the courts below. The New Yorkcourts7 had found as a matter of fact that Penn Central couldcontinue to use Grand Central Station and to earn a reasonablereturn in the same way it always had. In addition, New YorkCity has an unusual transfer of development rights, or TDR,program which allows an owner to move "development rights"from one site to another.8 There was strong argument by PennCentral that these TDRs were not very valuable or, at least,were not as valuable as the fifty-five story office tower that thecity rejected. Everyone conceded, however, that the TDRs didhave some value.These factors distinguish Penn Central from most preserva-tion cases insofar as the impact of a particular regulation uponan owner is concerned. No one knows what would have hap-pened in Penn Central had there not been TDRs or had thefactual findings in the New York Court of Appeals and the lowercourts been different. What happens, for instance, if the ownercan show that his return is only 1% or 2% or that he has noreturn? Should it make any difference if an owner with no re-turn on his investment has an offer to sell at a profit? Thesequestions are left unresolved, and so the application of Penn[Vol. 1:6052http://digitalcommons.pace.edu/plr/vol1/iss3/8HISTORIC PRESERVATION PROGRAMSCentral to particular fact situations that may arise in the futureis not clear.For example, the District of Columbia, where I live, hasdrafted a new historic preservation statute.9 Under the old law,there is no long-term protection for buildings, only the possibil-ity of a short delay in demolition. 10 In drafting the new law tolimit demolition of historic buildings, the City Council re-quested the assistance of people representing diverse points ofview, including real estate developers, the Board of Trade, com-munity groups, and an organization that I represent namedDon't Tear It Down. Everyone ultimately agreed in principlethat it would be appropriate to deny demolition permits for his-toric buildings if the economic impact was within constitutionalbounds-that is, if the hardship resulting from a denial of apermit would not amount to a "taking." On the other hand, noone could agree as to what that might mean in any particularcase. The result is that the statute is specifically written with aprovision authorizing issuance of demolition permits where thefailure to grant a permit will amount to a "taking,"" thus adopt-ing the Constitutional test. But it will take more litigation tofully confirm the meaning of the statute.What can we say about the effect of Penn Central in theshort term? Certainly by upholding New York City's action de-nying a permit to build a tower on top of Grand Central Station,Penn Central avoided what would have been an architecturaland planning disaster had the case come out the other way. Fur-thermore, there would have been no meaningful landmark pro-grams anywhere, had the Court accepted the view of the land-owner, who argued that it had to be paid the full value of itsproperty because the landmark restriction had prevented de-sired development. Considering the other necessary social ser-vices in financially hard-pressed cities, no historic preservationprogram can realistically expect sufficient municipal funds tobuy important buildings and sites from major developers. SoPenn Central has made it clear that landmark programs can, inprinciple, go forward.Penn Central has also provided an impetus for the passageof stronger preservation statutes around the country. Frank Gil-bert mentioned that there are more than 600 communities withhistoric district or landmark statutes or commissions,12 but at1981]3PACE LAW REVIEWthe moment, most of those are not very strong. They are like theold D.C. statute which says, basically, that if you want to demol-ish an historic building or a landmark you come in and argueabout it for nine months, and then you go ahead and do as youlike. The long-term prospects of such statutes for real historicpreservation are minimal. So Penn Central will have been veryuseful if it results in stronger statutes, which I think it will.In addition, Penn Central is, in my view, going to result inmore frequent future challenges to designations and to denialsof demolition permits, with a focus on the particular facts ofeach case. There will be litigation over the issues of reasonablereturn and potential use. The situation will be similar to thatunder the zoning laws in the 1930s and 40s, and to some extent,today. While it has been clear since at least 192618 that zoninglaws are constitutional in principle, it has never been clear whatthat means in any particular case. As a result, there have beenthousands of cases in the state courts involving zoning laws.Another result of Penn Central will be that those who par-ticipate in the designation process-National Register staff,State Historic Preservation Officers, and city and municipalcommissions-will have to be more careful in what they do andhow they designate landmarks and historic districts. When theonly thing that resulted from having a property designated as anhistoric landmark was a plaque that said "George Washingtonslept here," no one was too concerned about the fact or processof designation. But the position of the owner of a property isquite different when designation limits the ability to use or todevelop property. In such cases, care must be exercised to desig-nate only property that ought to be designated and to use ap-propriate procedures. This will mean greater numbers of hear-ings and litigated determinations on the issue of what is alandmark.On the other hand, having said this, I feel compelled to addthat there is a sense of d~ji vu about all this. Looking back atthe Supreme Court opinions in Welch v. Swasey 14 and Gorieb v.Fox,15 a 1927 case in which the Court held it permissible to limita landowner to building on only a small portion of his lot, onecannot escape noticing that the arguments in those old cases arevirtually the same as the arguments made in Penn Central. Per-haps the truth is that the legal principles really have not[Vol. 1:6054http://digitalcommons.pace.edu/plr/vol1/iss3/81981] HISTORIC PRESERVATION PROGRAMS 609changed in the last 75 years; only the focus has changed, fromtraditional zoning to historic preservation. And perhaps, thirtyyears from now, people looking back on Penn Central and to-day's preservation issues will wonder why there was any argu-ment at all, just the way that we now look back on these earlyzoning cases and think that the results were obvious.5NOTESConsequences for Agencies and GroupsResponsible for Historic PreservationProgramsDAVID BONDERMAN* LL.B., 1966, Harvard Law School; B.A., 1963, University of Washington; Member,Arnold & Porter, Washington, D.C.1. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).2. Welch v. Swasey, 214 U.S. 91 (1909).3. Penn Cent. Transp. Co. v. New York City, 438 U.S. at 129.4. 427 U.S. 297 (1976).5. Penn Cent. Transp. Co. v. New York City, 438 U.S. at 125-28.6. Id. at 131-33.7. The Appellate Division and Court of Appeals opinions in Penn Central are atPenn Cent. Transp. Co. v. City of New York, 50 A.D.2d 265, 377 N.Y.S.2d 20 (1st Dep't1975), aff'd, 42 N.Y.2d 324, 366 N.E.2d 1271, 397 N.Y.S.2d 914 (1977).8. NEW YORK, N.Y., ZONING RESOLUTION, art. 1, ch. 2, § 12-10, & art. VII, ch. 4, §§74-79 to 74-793 (1981).9. The new District of Columbia statute is known as the Historic Landmark andHistoric District Protection Act of 1978. D.C. CODE ANN. § 5-821 (Supp. VII 1980).10. D.C. Mun. Regs. No. 73-2511. D.C. CODE ANN. 5-822(n) (Supp. VII 1980).12. See Gilbert, Current Statutory and Case Law Developments in Historic Preser-vation, 1 PACE L. REV. 593, 597 (1981). NATIONAL TRUST FOR HISTORIC PRESERVATION, AGUIDE TO STATE HISTORIC PRESERVATION PROGRAMS (1976); NATIONAL TRUST FOR HIS-TORIC PRESERVATION, DIRECTORY OF LANDMARK AND HISTORIC DISTRICT COMMISSIONS(1976). See also Penn Cent. Transp. Co. v. New York City, 438 U.S. at 107.13. See Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926).14. 214 U.S. 91 (1909).15. 274 U.S. 603 (1927).Implications of the Grand CentralTerminal Litigation and Likely Effects onState and Municipal GovernmentProgramsHERBERT GLEASON* Harvard University, 1950; Harvard Law School, 1958; Corporation Counsel, Cityof Boston.1. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).2. Id. at 138 (Rehnquist, J., dissenting).3. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).4. Penn Cent. Transp. Co. v. New York City, 438 U.S. at 138-39 (footnote omitted).1981]6http://digitalcommons.pace.edu/plr/vol1/iss3/8

Consequences for Agencies and Groups Responsible for Historic Preservation Programs

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