In a decision anxiously awaited by advocates of historic preservation and land use planners, the Supreme Court on June 26 upheld the consituationality of both New York City's Landmarks Preservation Law and the city's refusal under it to permit construction of a 50-story office building above Grand Central Terminal. The Court's ruling in Penn Central Transportation Co. v. New York City¹ establishes that the imposition of developmental restrictions on individual parels of private property for the purpose of preserving buildings of historic interest lies within a municipality's police power and that "takings" challenges to such actions are to be evaluated under the legal tests traditionally applied to disputed zoning measures. By holding that historic preservation measures are analogous to traditional zoning actions rather than to governmental appropriations of private property for public use, the Court laid to rest a ghost that has deterred many municipalities which have historic preservation statutes from designating buildings as historic structures or landmarks under them.

In addition to its validation of a city's power to impose developmental restrictions on property in order to preserve historic buildings without necessarily having to compensate the owner for whatever diminution in value this action causes, the Court's opinion also indicates a hospitable attitude toward the use of transferable development rights (TDRs) as a mechanism for mitigating the economic impact of such measures on property owners.