Grand Central Owner Sues Over Air Rights

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Metro North passengers wait for trains at Grand Central Terminal in New York, in this March 12, 2014, file photo. REUTERS/Brendan McDermid/FilesNEW YORK (Reuters) – The owner of Grand Central Terminal has filed a $1.13 billion lawsuit accusing New York City of taking away his air rights over the landmark train station and giving them to the developer SL Green Realty Corp to build a giant skyscraper.

The complaint filed late on Monday on behalf of owner Andrew Penson is the latest chapter over Grand Central, which was declared a landmark in 1967, four years after the demolition of Pennsylvania Station sparked a movement to preserve significant architectural works.

Two of Penson’s companies said the city rezoned the area around Grand Central to let SL Green build a roughly 1,400-foot tall tower – higher than the Empire State Building and Chrysler Building – known as One Vanderbilt across the street if it also made nearby transit and pedestrian infrastructure improvements.

They said the rezoning, with backing from Mayor Bill de Blasio’s administration and the City Council, effectively made Penson’s air rights “unsellable and therefore worthless” by transferring them “for free” to SL Green, one of the city’s biggest commercial developers.

This allegedly violated the Fifth Amendment of the U.S. Constitution by “taking the property of a private citizen for the benefit of another private citizen without any public purpose,” the complaint said.

The lawsuit seeks “the fair market value of the property prior to the taking,” estimated at $1.13 billion. Earlier talks to sell the rights to SL Green were unsuccessful, it said.

De Blasio’s office and the city’s law department had no immediate comment.

Jonathan Rosen, an outside spokesman for SL Green, in a statement said One Vanderbilt has received “broad” support because of the project’s “commitment” to adding office space and improving the commute.

“We are already hard at work delivering on those commitments and won’t be sidetracked by frivolous litigation,” he said.

Rezoning the Grand Central area for taller skyscrapers was proposed under the administration of de Blasio’s predecessor Michael Bloomberg, an independent. De Blasio is a Democrat.

Grand Central was the subject of a 1978 U.S. Supreme Court decision upholding the city’s landmark preservation law, which permitted the terminal’s owner at the time to generate a “reasonable return” on its investment.

Penson’s companies said that decision still allowed air rights to be sold to owners of nearby properties.

The case is Midtown TDR Ventures LLC et al v. City of New York et al, U.S. District Court, Southern District of New York, No. 15-07647.

(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)