# Appendix — Penn Central Transp. Co. v. New York City > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2575%3A03 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1978 - **Citation:** 438 U.S. 104 ## Text { VUPICHIe UUUTL, UV. we FILED } JAN 18 1978 MICHAEL RODAK, JR., CLERK APPENDIX — IN THE Suprenw Court of the United States Octoser Term, 1977 No. 77-444 Penn CentTraL Transportation Company, THE New York AND Hartem Rarroap Company, THe 51st Street REatty Corporation, UGP Propertigs, Inc., Appellants, v. Tue Crry or New York, et al., Appellees. On Appeal from the Court of Appeals of the State of New York os Jurisdictional Statement Filed September 20, 1977 Probable Jurisdiction Noted December 5, 1977 EE re a ee INDEX Page Docket Entries in the Supreme Court of New York (Trial Term and Appellate Division) .......... 1 Docket Entries in the Court of Appeals of the State RRR DRY ny ct La ga gd 5 Pleadings: Pe WE kis cc bdwedccdceveceecs 7 Defendants’ Verified Answer .................. 21 Testimony: i ee EES 27 Herbert Beckhard ...............ccccccccccce. 35 I 37 SP ee ene eae 51 i 53 OE SI Sa ch ode iwedeunbeuiebonedveck.. 60 Harmon M. Goldstone ........................ 66 I og OE ta sn. 5 67 Jacquelin T. Robertson ....................... 72 I 80 Exhibits : OM” TING on vc ccccecccceceeec. eveces 90 Rr I ae ase oa 90 8. Assessed Valuation and Rates from Tax Block 1280 Lot 1 and Grand Central Terminal I a pe 91 9. Net Transferable Zoning Floor Area From Grand Central Terminal Parcel A ........ 92 10. Diagram of Portion of Manhattan Island .. 93 Index Continued Page Possessed by Penn Central Trans- ” whi a Company in Grand Central avon" nal Area Subject To Long-Term Groun Leases and Contracts of Sale .........---- 94 . h Flow From Barclay, Biltmore, Commo- " Gore and Roosevelt Hotels (1965-1971) ..... 98 . Relating to Grand Central Terminal = el of Revenues and Costs—Year 1969 100 35b. Grand Central Terminal Statement of Reve- nues and Costs—Year 1971 ........+-+++++5 102 36. Deferred Maintenance Costs for Grand Cen- -— tral Terminal ..........-00eeeeeeeeeeereeee Defendants’ Exhibits ......-..-+eeeeeeeereeers 108 C. Photo of Grand Central Terminal ......... 108 D1. Photo of Grand Central Terminal ........-. 109 D4. Photo of Grand Central Terminal ......... 110 : . a V. artial) Von Ancken Appraisal Report an pce ie sat Central Terminal ........ 111 DOCEET ENTRIES IN THE SUPREME COURT OF NEW YORE (TRIAL TERM AND APPELLATE DIVISION) County Clerk, New York County Clerk’s Minutes of Supreme Court Actions and Proceedings 1969 Inpex No. 14763 Penn Cenrrat Transportation Co., Plaintiff AGAINST City or New York, Defendant Atrorneys: Dewey B., BP&W, 140 Brwy [Penn Central]; Corporation Counsel, Municipal Bldg. [City of N.Y.] Month, Day, Year—Index Number Assigned Oct. 7, 1969—Summons and Complaint Oct. 7, 1969—Affidavit of Service Dec. 24, 1970—Note of Issue Aug. 18, 1971—Statement of Readiness Aug. 24, 1971—Order P. I Time to Serve Interrogatories Mar. 8, 1972—Consent to Withdrawal of Atty. May 9, 1972—Order spec. File Brief Amicus Curiae granted Sept. 6, 1972—Def’ts Reply Memo, Supp’! Proposed Findings, in File Folder Jan. 21, 1975—Memorandum Decision and Large Envelope Exhibits Jan. 21, 1975—Minutes (6 Volumes) Feb. 4, 1975—Judgment #3001 Feb. 28, 1975—Notice of Appeal Mar. 7, 1975—Notice of Appeal 2 3 ; Penn Centra. et aL UGI Properties, April 18, 1975—Order of Severance Plaintiff-Respondent June 24, 1975—Exhibits . against July 28, 1975—[init. SP] 2 Order Exhibits to De Crry or New York, ET AL, Apr. 8, 1976—Remittitur (4) Defendant-Appellant Dewey, Attorney for P-R UGI June 7, 1976—Notice Bernard Richland, Attorney for D-A June 24, 1977—Remittitur (4) White & Case, Attorney for P-R Penn Central N.Y. Co. & Court—Saypol, J. Index No. 14763/69 Notice of Appeal 3/7/75 & 2/28/75 Date—Aug. 14, 1975 Date—Aug. 15, 1975 Record Filed (22 copies); Printed 4 vols & 2 entered; Judgment Order, 1 entered Jan. 21, 1975—serving Pltf. cause of action Feb. 4, 1975—awarding judgment to Pltfs. Aug. 14, 1975—Note of Issue for Appellant Brief, Oct. 75 Term Sept. 25, 1975—Respondent Brief Oct. 14, 1975—Reply Brief Other—Aug. 28, 1975—Amicus; Sept. 2, 1975—Amicus Sept. 3, 1975—[illegible] Oct. 21, 1975—Argument (No. 1305, 1306), Stevens Markewich Kufferman Murphy Lupiano Dec. 16, 1975—Decision—O & J reversed on law. $60 C & D to App. Opinion by Murphy, J; All concur except Markewich, J, & Lupiano, J, (opinion) who dissent. (SOON) April 7, 1976—Order of reversal settled and filed. April 7, 1976—Remitted (No. 628A) to 60 Centre St. Sept. 8, 1977—Notice of Appeal 4 Motions Date Date Aug. 28, 1975—Amicus granted Oct. 31, 1975 Sept. 11, 1975—Adj. to Nov. 75 Term Nov. 13, 1975 —C/A. Affd Opinion by ae ety we Nov. 13, 1975 Jacoss, Perstnczr & Parsons 5 DOCKET ENTRIES IN THE COURT OF APPEALS OF THE STATE OF NEW YORE [485] Penn Centrat Transp’n Co. & ors. (As) vs. Crry N.Y. & ano. Order Appealed from 5 6 76 (1st) Order Granting lv Notice of Appeal 6 7 76 (s) Statement 500.2 6 17 76 (OK) Record 8 26 76 (4 Vol’s) (24+1) File Apptsbrf 8 26 76 (24+1) Respbrf 1 17 77 (19+1) AC (Com’e to Save Grand Central Sta) 2 11 77 (19+1) Replybrf 3 30 77 (19+1) AC AG 2 25 77 (19+1) Requests 60 day card 7 6 76 Motions 1 6 77—Mot. withdrawn 92 AC (AG) granted—file in 20 days (Tu 8 Fe 77) 94 AC (Com’e Save Grand Central Sta) granted—file in 20 days (Tu 8 Fe 77) Corres’e 2 9 77 Ltr fr A cfmext A to 3 14 77. [ ATTORNEYS] A Dewey, Ballantine, Bushby, Palmer & Wood 140 Broadway NYC 10005 139 344 8000 for UGP Properties, Inc. John Friedman Jr. ce City Att’s write confirming letter White & Case 14 Wall Street NYC 10005 139 732 1040 for Penn Cent, NY & Harlem Rys & 5ist St Realty R. W. Bernard Richland Corp. Counsel, NYC Municipal Bldg. NYC 10007 (485a] Penn Cenrrat Transp’N Co & ors (As) vs. Crry NY & ano. ScHEDULED FOR ARGUMENT: 4 27 77 Arcuep By: A—John C. F. Wood (Both appellants) R—Leonard Kaerner Deciwep June 23, 1977 12 21 76 Ltr to Dewey &c. accepting stip’n received inoffice 12 17 76 setting 1 14 77 for R and 2 1477 for reply. Motion to preclude R is marked withdrawn. Decision: Order affirmed, with costs. Opinion by Breitel, Ch.J. All concur. 6/23/77 REM sent To: NY Co. Clerk 60 Center St. NYC 10007 Date: 6/23/77 PR 7 Complaint. SUPREME COURT OF THE STATE OF NEW YORK County or New York (SAME TITLE] Plaintiffs Penn Central Transportation Com pany, The New York and Harlem Railroad Company, The 51st Street Realty Corporation and UGP Properties Inc., by their at- torneys, allege as follows: Fist Cause or Action 1. Plaintiff Penn Central Transportation Company is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania and has a general office at 466 Lexington Avenue, Borough of Manhattan, City, County and State of New York. All references to Penn Central Transportation Company hereinafter made and concerning any time prior to February 1, 1968, relate to The New York Central Railroad Company which was merged into the Pennsylvania Railroad Company (the name of which was later changed to Penn Central Trans- portation Company) as of February 1, 1968. 2. Plaintiff The New York and Harlem Railroad Com- pany is, and at all times hereinafter mentioned was, a@ cor- poration organized and existing under the laws of the State = New York, and has a general office at 230 Park Avenue, -~ rough of Manha ttan, City, County and State of New ork. Approximately 95% of the stock of The New York and Harlem Railroad Company is, and at all times herein- after mentioned was, owned by P ay y Penn Central Transporta- 8 Complaint. 3. Plaintiff The 51st Street Realty Corporation is, and at all times hereinafter mentioned was, a corporation organ- ized and existing under the laws of the State of New York, and has a general office at 466 Lexington Avenue, Borough of Manhattan, City, County and State of New York. The 51st Street Realty Corporation is, and at all times herein- after mentioned was, a wholly-owned sub-subsidiary of Penn Central Transporation Company. 4. Plaintiff UGP Properties Inc. is, and at all times since its formation on December 5, 1967 was, a corporation organized and existing under the laws of the State of New York, and has a general office at 277 Park Avenue, Borough of Manhattan, City, County and State of New York. 5. Defendant The City of New York (the “City”) is a municipal corporation of the State of New York. 6. Defendant The Landmarks Preservation Commission of the City of New York (the “Commission”) is a commis- sion of the City of New York, established pursuant to Sub- section 25-a of Section 20 of the General Citv Law, and Local Law 46 of the City of New York for the year 1965, which amended the Charter of the City of New York and the Administrative Code of the City of New York so as to add to each of them a new Chapter 8-A entitled “Preserva- tion of Landmarks and Historic Districts” (the “Land- marks Law”). 7. The subject matter of this complaint is Grand Cen- tral Terminal (the “Terminal”) and the land on which it stands (the ‘‘ Property”). The ownership and leasehold interests in the Terminal — and the Property, held by the respective plaintiffs, are as follows: (a) The New York and Harlem Railroad Company owns the fee. 9 Complaint. (b) Penn Central Transportation Company has a lease, expiring in the year 2274 A.D., from The New York and Harlem Railroad Company. The interests referred to in the foregoing subparagraphs (a) and (b) have been as there described at all times here- inafter mentioned. (c) The 51st Street Realty Corporation has a grant of term, from Penn Central Transportation Company, coterminous with the lease referred to in the following subparagraph (d). (d) UGP Properties Inc. has a lease, hereinafter described, from The 5lst Street Realty Corporation, under which UGP Properties Inc. is to erect and oper- ate a multi-story office building on the Property. Penn Central Transportation Company, The New York and Harlem Railroad Company and The 51st Street Realty Corporation are hereinafter collectively called ‘‘Penn Central.’’ UGP Properties Inc. is hereinafter called the ‘ ‘Lessee. 9? 8. The Property is located in the heart of Manhattan, in one of the most valuable commercial areas in the world, and in the midst of a host of multi-story office buildings and similar structures. 9. The Property, presently improved with the Terminal, is in fact zoned for other structures as well, including in particular multi-story office buildings. Penn Central’s rights in regard to such utilization of the Property, includ- ing in particular the space above the street grades, are recognized and defined in the applicable zoning law and regulations with mathematical precision. Application of the prescribed mathematics, including the Floor Area 10 Complaint. Ratio and the Height and Setback requirements, shows that Penn Central is entitled to construct on the Property an office building at least fifty-six stories high. The Ter- minal occupies but a small fraction of the space, above the street grades, which Penn Central is thus by law entitled to utilize. 10. The entire mid-Manhattan area in which the Prop- erty is located, running from about 40th Street to 57th Street and from Fifth Avenue to Third Avenue, is likewise zoned for multi-story office buildings. Owners and lessees of many of the parcels of land in that area have already utilized their rights in full or substantially so. Others are now in the process of doing so, or are planning to do so. 11. Penn Central has determined to exercise its right to improve the Property with a multi-story office building. To that end The 5lst Street Realty Corporation has en- tered into an Agreement of Lease (the ‘‘Lease’’) with the Lessee, under which the Lessee is to erect and thereafter to operate a multi-story office building on the Property. The Lessee is to pay rent to The 51st Street Realty Corpo- ration at the rate of $1,000,000 net per year in respect of the period between the commencement date of the Lease and the completion of the building; and thereafter is to pay rent at a rate which will never be less than $3,000,000 net per year and may be more, depending upon the amount of the Lessee’s income from the building. It is estimated that the Lessee’s net income from the building, after its completion, will be at least $5,000,000 per year. The Lease is for a term of 50 years after its commencement date, and the Lessee has an option to renew for another 25 years thereafter. The Lessee has commissioned Marcel Breuer and Associates, one of the world’s most renowned archi- tectural firms, to design the building. 11 Complaint. 12. On August 2, 1967 the Commission, acting under the purported authority of the Landmarks Law and having previously held a hearing, and over Penn Central’s objec- tion, designated the Terminal a landmark and the Property as its landmark site. 13. Such designation having been made, the Landmarks Law purports to make it unlawful, and subject to criminal penalties, to do anything with either the land or the build- ing which would in any way change the exterior of the building, without the Commission’s permission. 14. Further, the Landmarks Law purports to impose upon Penn Central an affirmative and apparently perpetual obligation to keep the exterior of the Terminal in good repair, at Penn Central’s own expense and without reim- bursement or compensation. 16. Thus continuously since August 2, 1967 the Com- snission, acting under the purported authority of the Land- marks Law, has imposed prohibitions and restrictions on Penn Central’s use of the Property. In particular, the Commission has continuously since January 22, 1968 (the date of the Lease) prevented and prohibited Penn Central and the Lessee from going forward with the building pro- vided for in the Lease. 16. The Landmarks Law makes available to the plain- tiffs two procedures for seeking the Commission’s permis- sion to construct a multi-story office building on the Prop- erty. The plaintiffs have pursued and exhausted both of these procedures. In both cases the Commission has re- fused to grant the requested permission. 17. The first of such procedures is to request a ‘‘certi- ficate of no exterior effect.’’ In order for the plaintiffs 12 Complaint. to be in a position to make that request, the Lessee com- missioned Marcel Breuer and Associates to design a struc- ture which would leave the Terminal, including its exterior as well as the Main Concourse, substantially undisturbed ; but which, through an innovative architectural concept, would rise above the Terminal without making any physi- cal change in the exterior thereof. This design (‘‘Breuer I’’) was not regarded by the plain- tiffs as the most suitable structure from an economic point of view. Rather, it represented a genuine effort by the plaintiffs to afford to the Commission the opportunity to accomplish the substance of the objectives of the Land- marks Law, without attempting to inflict upon a single piece of private property the enormous costs which give rise to this present lawsuit. On July 18, 1968 the plaintiffs submitted Breuer I to the Commission and applied for a certificate of no exterior effect to enable them to build it. After holding a hearing the Commission on September 20, 1968 denied the applica- tion. 18. The other procedure made available to the plaintiffs by the Landmarks Law for seeking the Commission’s per- mission to construct a multi-story office building on the Property is to request a ‘‘certificate of appropriateness. R On January 20, 1969 the plaintiffs applied for that cer- tificate, and submitted a design for a building which, exter- nally, would be entirely new. This design (which with the minor modifications made during the proceedings before the Commission is herein- after called ‘‘Breuer II”) has been the subject of exten- sive consideration and comment by the architectural pro- fession and others, and widely acclaimed. Marcel Breuer and the plaintiffs regard Breuer II as the truly approproiate building, architecturally and commer- 13 Complaint. cially, for this prime location at the center of the world’s greatest city. The plaintiffs, in their application for a certificate of appropriateness, also resubmitted Breuer I to the Commis- sion, as an alternative. While noting their strong prefer- ence for Breuer II, the plaintiffs continued to express their willingness to go forward with Breuer I in order to bring — the accommodations referred to in paragraph 17 above. After holding hearings the Commission on August 26, 1969 denied in its entirety, and as to both alternatives, the plaintiffs’ application for a certificate of appropriateness. 19. The only other procedure provided for in the Land- marks Law, for seeking the Commission’s permission to build, is to make an ‘‘insufficient return’’ application—i.e., to request a ‘‘certificate of appropriateness authorizing demolition, alterations or reconstruction on ground of in- sufficient return.’’ By the terms of the Landmarks Law itself, this proce- dure is available to others similarly situated but is not available to the plaintiffs. 20. The ‘‘landmark”’ character of the Terminal is highly debatable and at best doubtful. The aesthetic quality of the south facade is obscured by its engulfment among nar- row streets and high-rise buildings. It is hardly seen at all except for a short distance to the south on Park Avenue, and even here the view of the facade is intersected by the encircling roadway and by the tall buildings that line Park Avenue. Moreover the Terminal is set against the back drop of the harsh and contrasting lines of the Pan-Am Builing which appears to hang over the Terminal and to dwarf it. 14 Complaint. 21. There is a widely held view that what is most nota- ble and worth preserving about the Terminal is not its exterior but its interior—i.e., the Main Concourse. In con- nection with their application to the Commission for a cer- tificate of appropriateness the plaintiffs specifically offered to commit themselves not merely to preserve but also to restore and maintain the Main Concourse. The Commis- sion rejected the offer. 22. Essentially the only legislative standard contained in the Landmarks Law, for the guidance of the Commission in determining which of the thousands upon thousands of structures in the City shall be designated as landmarks (and thus subjected to the drastic prohibitions and restric- tions of the Law) and which ones shall not, is that “any” improvement, thirty years old or older, may be designated by the Commission as a landmark if it “has a special char- acter or special historical or aesthetic interest or value as part of the development, heritage or cultural character- istics of the city, state or nation.” 23. The Landmarks Law and the Commission’s acts in purported reliance thereon deprive Penn Central of rent at the rate of $1,000,000 per year in respect of the period commencing on January 22, 1968 and continuing until the date when the building provided for in the Lease would in normal course and in the absence of such prohibitions and restrictions have been completed. 24. The Landmarks Law and the Commission’s acts in purported reliance thereon further deprive Penn Central of rent at the rate of at least $3,000,000 per year, in respect of the period after the building would in normal course have been completed, and continuing until such prohibitions and restrictions are set aside or restrained. 15 Complaint. 25. The Landmarks Law and the Commission’s acts in purported reliance thereon deprive the Lessee of income at the rate of at least $5,000,000 per year commencing as of January 22, 1968 and continuing until such prohibitions and restrictions are set aside or restrained. 26. With respect to other owners of landmarks a point is reached, under the procedures provided for in the Land- marks Law, where just compensation is to be paid by the City for the takings of private property for public use that are involved in the application and enforcement of the Landmarks Law. Unless such compensation is paid, the Commission is required to permit the otherwise lawful pec of the property, through issuance of a “notice to pro- ceed.” With respect to the plaintiffs, these procedures are un- available, and no point ever can be reached under the provisions of the Landmarks Law at which compensation to the plaintiffs is to be provided for and paid; nor has the City or the Commission in any other way provided for or offered to pay compensation to the plaintiffs. 27. The deprivations of property described in para- graphs 23, 24 and 25 above constitute the real economic cost of preserving the exterior of the Terminal as a land- mark and thus of forwarding the objectives which the Com- mission deems to be embodied in the Landmarks Law. ! Such benefits, if any, as may derive from such preserva- tion are for the public as a whole; but the Landmarks Law and the actions of the Commission thereunder extract the entire cost from the plaintiffs alone. 28. On September 2, 1969 the demands and claims upon which this action is founded were presented by the plain- tiffs to the Comptroller of the City of New York for ad- justment; and for more than 30 days after such present- 16 . Complaint. ment the Comptroller has neglected and refused to make an adjustment or payment thereof. 29. As applied to the plaintiffs, the Landmarks Law and the actions of the Commission thereunder go beyond the scope of any permissible regulation and constitute a taking of the plaintiffs’ private property for public use without just compensation, in violation of the Constitution of the United States, most particularly Amendments 5 and 14, and the Constitution of the State of New York, most particularly Article I, Section 7. 30. The plaintiffs have no adequate remedy at law for the irreparable harm inflicted upon them. Seconp Cause or ACTION inti the allega- 31. The plaintiffs repeat and reallege each of tions contained in paragraphs 1 through 28 and 30 of this complaint. 32. The Landmarks Law and the actions of the Commis- sion thereunder have heretofore deprived, are now de- priving and until set aside or restrained will continue to deprive the plaintiffs of their property without due process of law, in violation of the Constitution of the United States, most particularly Amendment 14, and the Constitution of the State of New York, most particularly Article I, Sec- tion 6. Turrp Cause or ACTION 33. The plaintiffs repeat and reallege each of the alle- gations contained in paragraphs 1 through 7, 12, 13, 28 and 30 of this complaint. ~~ ‘rte edat Wen ee oe a of genet er 17 Complaint. 34. The designation of the Terminal as a landmark and of the Property as its site, and resulting subjection thereof to the prohibitions and restrictions contained in the Land- marks Law, constitutes a taking of the plaintiffs’ private property for public use without just compensation, in viola- tion of the Constitution of the United States, most particu- larly Amendments 5 and 14, and the Constitution of the State of New York, most particularly Article I, Section 7. Fourts Cause or Action 35. The plaintiffs repeat and reallege each of the alle- gations contained in paragraphs 1 through 28 and 30 of this complaint. 56. The Landmarks Law denies to the plaintiffs the equal protection of the laws in violation of the Constitution of the U. .ted States, most particularly Amendment 14, and the Constitution of the State of New York, most particu- larly Article I, Section 11. Firra Cause or Action 37. The plaintiffs repeat and reallege each of the alle- gations contained in paragraphs 1 through 28 and 30 of this complaint. 38. The Landmarks Law attempts to provide for an ad- ministrative prescription of the aesthetically good, and is unconstitutional because it fails to provide adequate legis- lative standards by which the Commission is to make such decisions or by which the action of the Commission can be judged, and is an unlawful delegation of legislative author- ity, in violation of the Constitution of the United States, 18. Complamt. most particularly Amendment 14, and the Constitution of the State of New York, most particularly Article I, Section 6 and Article ITI, Section 1. Srmtu Cause or AcrIon 39. The plaintiffs repeat and reallege each of the alle- gations contained in paragraphs 1 through 7, 12, 13, 14, 28 and 30 of this complaint. 40. Within the Terminal there are various railroad facil- ities, including passenger terminals, passenger ticket offices, switch yards, and other transportation equipment and facilities, which Penn Central uses in intrastate and interstate carriage of passenges. 41. The railroad facilities located within the Terminal and used in both intrastate and interstate commerce are subject to the regulatory jurisdiction of the New York Pub- lie Service Commission pursuant to the provisions of the Public Service Law of the State of New York and of the Railroad Law of the State of New York, and the regulatory jurisdiction of the Interstate Commerce Commission pur- suant to the provisions of the Interstate Commerce Act, U.S.C.A., Title 49. 42. Under Section 50 of the Public Service Law of the State of New York, the Public Service Commission is given the power to order repairs or changes in terminals or ter- minal facilities. The legislative body of the City of New York is expressly forbidden, under Section 11 of the Muni- cipal Home Rule Law, to adopt any law which applies to or affects any provision of state law providing for regula- tion or elimination of terminal facilities within the City of New York. eee pethin Shes ~teet. Se BO ek ak ares OP ah Mh I Re Ce, OT ha oD ae ge 19 Complaint. 43. The Landmarks Law has no application in respect of the Terminal or the Property, and the Commission’s actions are null and void. Seventy Cause or Action 44. The plaintiffs repeat and reallege each of the alle- gations contained in paragraphs 1 through 28, 30, 40, 41 and 42 of this complaint. 45. The Landmarks Law, as applied in respect of the Terminal and the Property, has a substantial adverse effect upon Penn Central’s operations and charges as an inter- state carrier, and constitutes an unreasonable burden upon interstate commerce, in violation of the Constitution of the United States, most particularly Article I, Section 8. Waueneror:, the plaintiffs pray that this Court enter its judgment: 1. Declaring that the Landmarks Law, as applied to the plaintiffs, violates the Constitution of the United States and the Constitution of the State of New York; that neither the City nor the Commission had or has any power or ju- risdiction to enact or enforce such Law, through designa- tion of the Terminal as a landmark or otherwise; and that such Law is null and void and of no force or effect in re- gard to the plaintiffs or the Terminal or the Property. 2. Permanently enjoining the defendants from using or threatening to use the Landmarks Law or any provision thereof or any action or regulation thereunder to prevent, impede, obstruct or in any way have any bearing with re- spect to the construction, use and occupancy, on the Prop- erty, of Breuer I or Breuer II or any other structure which 20 Complaint. may otherwise lawfully be erected on the Property or any other use which may otherwise lawfully be made of the Property. 3. Declaring that the prohibitions and restrictions im- posed by the defendants, during the period between the designation date (August 2, 1967) and the date when all such prohibitions and restrictions shall have been finally set aside pursuant to this Court’s order, constitute a tem- porary taking of the Property for which just compensation must be paid by the City; and ordering the City to pay such compensation, computed at the rates set forth in para- graphs 23, 24 and 25 of this complaint. 4. Granting to the plaintiffs such other and further re- lief as to this Court may seem just and reasonable. Dated: New York, New York October 7, 1969 Dewey, BaLLantine, Bususy, Patmer & Woop Murray DraBKIn Waite & Case Attorneys for Plaintiffs 21 Verified Answer. SUPREME COURT OF THE STATE OF NEW YORK County or New Yorx (SAME TITLE} Defendants, answering by their attorney J. Lee Rankin, Corporation Counsel, respectfully allege: First: Deny that they have any knowledge or informa- tion sufficient to form a belief as to each and every allega- tion set forth in paragraphs ad bak oe “ug” “6g” a ha “g?? “10”, “11, “93”, ‘694” and “25” of the complaint. Seconp: Deny each and every allegation contained in paragraphs “13”, “14”, and “15” of the complaint, and re- spectfully refer the court to § 207-4.0, § 207-9.0, § 207-10.0 and § 207-16 of the Administrative Code of the City of New York for the full text and meaning thereof. Tump: Deny that they have any knowledge or informa- tion sufficient to form a belief as to each and every allega- tion set forth in paragraph ‘‘17” of the complaint, except admit that on July 18, 1968 plaintiffs submitted “Breuer I” to the Commission and applied for a certificate of no exterior effect to enable them to build it, and that after holding a hearing the Commission on September 20, 1968 denied the application. Fourtu: Deny that they have any knowledge or informa- tion sufficient to form a belief as to each and every allega- tion set forth in paragraph “18” of the complaint, except admit that on January 20, 1969 plaintiffs applied to the Commission for a certificate of appropriateness and sub mitted “Breuer II” and resubmitted “Breuer I”, and that 22 Verified Answer. after holding hearings the Commission on August 26, 1969 denied in its entirety, and as to both alternatives, the plain- tiffs’ application for a certificate of appropriateness. Firra: Deny each and every allegation contained in paragraph “19” of the complaint, and respectfully refer the Court to § 207-8.0 of the Administrative Code of the City of New York for the full text and meaning thereof. Sixto: Deny each and every allegation set forth in paragraphs “> “'. a ot a ot < “34”, - “38” “43”, and “45” of the complaint. SeventH: Deny each and every allegation set forth in paragraph “21” of the complaint except admit that the Commission rejected plaintiffs’ application for a certificate of appropriateness. EicutH: Deny each and every allegation contained in paragraph “26” of the complaint, and respectfully refer the Court to § 207-8.0 of the Administrative Code of the City of New York for the full text and meaning thereof, except admit that neither the City nor the Commission has in any way provided for or offered to pay compensation to the plaintiffs. Nintao: Except as hereinbefore admitted or otherwise pleaded, deny each and every allegation repeated and re- alleged in paragraphs gu”, “33”, “35”, -— sw" “39”, and “44” of the complaint. AS AND FOR A FIRST FULL, COMPLETE AND SEPARATE DEFENSE, THE DEFENDANTS ALLEGE: TentH: The membership of the Landmark Preservation Commission includes among others architects, realtors, an historian, a city planner, and an attorney. 23 Verified Answer. ELEVENTH: The Landmark Preservation Commission has conducted extensive studies of places and buildings in the City of New York for the purpose of designating such places and buildings as landmarks and historic districts. TweELFTH: An exhaustive study of Grand Central Station was conducted by the Landmarks Preservation Commission for the purpose of determining if Grand Central merited designation as a landmark. : THIRTEENTH: A public hearing on the proposed designa- tion of Grand Central was held on May 10, 1966, and was continued to subsequent meetings of the Commission and closed January 31, 1967. FourteentH: The plaintiff New York and Harlem Rail- road Company, and New York Central Railroad Company, appeared by its attorney, at the public hearing and fully presented its views to the Landmarks Preservation Com- mission regarding the proposed designation of Grand Cen- tral as a landmark. FIFTEENTH : A memorandum to the Commission where- — in the plaintiff’s position regarding the proposed designa- tion was extensively set forth was submitted. SrxTEeNTH: The Landmarks Preservation Commission after considering all of the evidence found that among all its important qualities, Grand Central is a magnificent ex- ample of French Beaux Arts architecture, that it is one of the great buildings of America, that it represents a creative engineering solution of a very difficult problem, combined with artistic splendor, that as an American Railroad Sta- tion it is unique in quality, distinction and character, and that this building plays a significant role in the life and development of New York City. 24 Verified Answer. SEVENTEENTH: On August 2, 1967 the Landmarks Pres- ervation Commission designated Grand Central a land- mark. EIGHTEENTH: On October 7, 1969, the Landmarks Pres- ervation Commission and the City of New York were served with a copy of the complaint. NINETEENTH: The right to review the factual determina- tion made by the Commission in designating Grand Central a landmark, in that it found that Grand Central has a spe- cial character, special historical and aesthetic interest and value as part of the development, heritage, and cultural characteristics of New York City, did not accrue within four months before the commencement of this action, and is, therefore, barred by the limitation of time contained in Section 217 of the Civil Practice Law and Rules which provides that a proceeding against a body or officer must be commenced within four months after the determination to be reviewed becomes final and binding upon the inter- ested party. AS AND FOR A SECOND, FULL, COMPLETE AND SEPARATE DEFENSE, THE DEFENDANTS ALLEGE: TwentretH: The defendants repeat and reallege each of the allegations contained in paragraphs ‘‘10’’ through ‘17’ of this complaint. Twenty-First: On July 18, 1968 application was made to the Landmarks Preservation Commission by plaintiffs for a Certificate of No Exterior Effect for work to be done at Grand Central Terminal (hereinafter referred to as ‘*Breuer I’’). Twenty-seconp: After holding a hearing, the request was denied by the Commission on September 20, 1968. ct, a wield be a Arid ne a eee Rt a Ant Be Lis Ato dealt si itt Sie AAD B® 25 Verified Answer. TweNtTy-THIRD: On January 20, 1969 the Landmarks Preservation Commission received the application of plaintiffs for a Certificate of Appropriateness for the work that had been proposed under the application of July 18, 1968 (‘‘Breuer I’’), as well as for an alternative proposal (hereinafter referred to as ‘‘Breuer II”). Twenty-FourTH: On April 10, 11 and 14, 1969 a hearing was held as advertised and testimony was presented as to ‘*Breuer I’’ and ‘‘Breuer IT’’. TwentTy-FirtH: Plaintiffs submitted further revised proposals to the Commission on June 23, 1969, and a final and complete set of drawings was received on August 1, 1969 (hereinafter referred to as ‘‘Breuer II” Revised). Twenty-sixtH: A hearing was held on August 5, 1969. TWENTY-SEVENTH: It was agreed that, except insofar as testimony was directed towards an element in which ‘‘BreuerLl’’ specifically differed from ‘‘Breuer II’’ Re- vised, all oral and written arguments received at or sub- sequent to the April 1969 hearing might be considered by the Commission in reaching its determination. Twenty-EichtH: The Commission, after careful con- sideration, on August 26, 1969 denied plaintiffs’ applica- tion for a Certificate of Appropriateness as to both ‘*Breuer 1’’ and ‘‘Breuer II’’ Revised. Twenty-NIntH: The proceedings of the Landmarks Preservation Commission in designating Grand Central as a landmark, and in denying plaintiffs’ applications for a Certificate of No Exterior Effect and a Certificate of Ap- propriateness were in all respects in accord with the law. 26 Verified Answer. Wuererore, defendants ask for a judgment of this Court declaring: 1. The designation of Grand Central a landmark is valid and constitutional. 2. The Landmark Law as applied to plaintiffs is valid and constitutional. 3. That the Landmark Law is valid and constitutional. 4. That the defendants have the costs and disbursements of this action and such other relief as this Court deems just and proper. sa a J. Lez Rankin Corporation Counsel Attorney for Defendants Dated: New York, N.Y. November 5, 1970 (Verified by Harmon Goldstone on November 5, 1970.) SO ee hes tae ee Ot abe 27 TESTIMONY [20] Frepertck Rover, residing at 2 Gramatan Drive, Yonkers, New York, called as a witness on behalf of the plaintiffs, having been first duly sworn, testified as follows. Direct ExaMINaTION By Mr. Stewart: Q. Mr. Rovet, what is your present occupation? A. I am Assistant Vice President real estate of Penn Central Transportation Company. Q. Do you hold any other positions with the Penn Cen- tralf A. I’m an officer and director of the 51st Street Realty Corporation. I am also president of the Realty Hotels, Inc., the eompany which operates Penn Central’s four hotels, the Biltmore, Barclay, Roosevelt and Commo- dore Hotel. Q. Do you hold a position with the New York & Harlem Railroad Company? A. No, I do not. Tue Court: I don’t think he was around then. Tue Wrrness: I was an officer and director in April of this year and I resigned. : [21] THe Covrt: But you weren’t around when it was New York & Harlem Railroad? Tue Wrirwness: It still is. Q. Are you a lawyer? A. Yes, sir. Q. When were you admitted to practice? A. In Decem- ber of 1956. Q. And was that in New York? A. Yes, sir. Q. When did you join the Penn Central? A. August 6 of 1956 I joined the General Counsel’s office of the New York Central Railroad Company. Q. And what jobs have you had since then down to date? A. I was an attorney from December of 1956. Two years 28 after that I received different titles, but remained an attor- ney until October 31st of 1968 in the General Counsel’s office of the New York Central Railroad Company and then subsequent to merger, the Penn Central Transportation Company. [24] By Mr. Stewart: Q. And what building did these plans provide for? A. Provided for an office building over the existing Grand Central Terminal. Q. How many stories? A. I believe it was 20 stories. Q. Was any provision made in the terminal [25] building itself for supports for this building? A. Yes. The present terminal building has foundations which were designed to accommodate the 20-story office building over the terminal. They are still located in the Grand Central Terminal today. [64] THe Wrrness: If I may try to describe it more ac- curately, your Honor, you’re concerned with the place where OTB now occupies the former ticket windows, you’re concerned with the westerly side of the ticket windows that you referred to before, you’re concerned with the interior of that ticket office, until you reach the waiting room on the southerly side. The tower would proceed, under the terms of the lease—— Tue Court: All right, those rented facilities are subject to termination in the event of the consummation of this lease. Tue Witness: Yes. Tue Court: That’s your testimony. Tue Witness: Yes. [66] Q. Does the Railroad pay any real estate taxes on the land on which Grand Central Terminal is located? A. Dee ee ee” ee ee ie See Pa Ab 00) tan htt lea A Ba Rd one 9% ee ed Laer R> Agta gh BOE LRB ON PO, lepine a ALERT wait ANd whet ee eh 29 The Railroad presently is not paying real estate taxes pur- suant to an order of the Federal Court in Philadelphia, pursuant to which the Penn Central is in reorganization. + e * [70] Q. Under the lease, Exhibit 2, who is responsible for paying real estate taxes? A. UGP Properties, Inc. would be obligated to pay as additional rental 100 per cent of the tax on the new building, 100 per cent of the tax on that portion of the old building which is within an area defined under the lease as the enclave, and 100 per cent of the tax rate applied to the total assessment on the land of Parcel A. [84] Tse Court: And so between the two million [85] four total available here, total usable area, legal usable area, and the actual area used, you’re got about two million plus square feet to give away? Tue Wrrvess: Yes, your Honor. Tue Court: All right. Now, I understand it.' Mr. Stewart: This chart, your Honor, just to make it probably unnecesarily clear was prepared not primarily to indicate what size building could be put on the Grand Central site, but, rather, to indicate what rurtion of the air rights could be transferred to another location. [96] Q. I hand you Plaintiffs’ Exhibit 11 for identification and ask you, Mr. Rovet, who prepared that? A. This ex- hibit was prepared under my jurisdiction and supervision. Q. And is the information contained therein true and correct? A. The information is correct. Q. And taking the first page or the heading on the left as ‘“‘property subject to long-term ground leases,’’ which properties are those on the plaintiffs’ exhibit? 30 Tue Covrt: I can see at once, Mr. Stewart. If I may interrupt you, the details of the occupancy shown on Plaintiffs’ Exhibit 10 are detailed, as I say, on Plain- tiffs’ 11 for identification; is that the short of it? Mr. Stewart: That is correct, sir. [99] Tse Covrtr: That is shown on the legend. I take it the only available properties for transfer of their air rights are in red. They are not subject to ground leases or con- tracts of sale? Tue Wrrness: That’s correct, your Honor. Tue Covrt: You have complete control there. All right. The only ones available for transfer are the red build- ings. The Biltmore is one of them. That is No. 2 in Plain- tiffs’ Exhibit 10? Tue Witness: Yes, your Honor. [101] Tse Covrr: Just clear me on this. In what circumstances is the transfer, air rights transfer, available, adjacent properties? These rights cannot be sold, is that right? They cannot be conveyed, as a matter of bargain and sale? Tue Wrrness: I think they can be conveyed, your Honor, provided the owner, as defined in the zoning law, which includes not only a fee owner but an owner of a term of 50 years with one renewal of 25 years, provided that owner and the ownder [sic] of the candidate for transfer are the same. Tue Covrt: In other words, the idea is to obviate hard- ship. Tue Wrrness: Yes. POE en eee ee ee ee ree ee le ew a ee Se ee ee eee Pee See eee ae Ai 86 i teh AARNE ash ih a mL Re. i hh wa tg SO 31 Tue Court: Is that singular to the Landmark Law or is it applicable in other circumstances? THe Wiryess: It may be applicable in other circum- stances. [102] Tse Court: In other words, forget for a moment that we’re involved with the landmark problem. As the owner of Grand Central Station, as a matter of hardship, could you conceivably or legally avail yourself of that unused area? Tae Wrrness: We could. Tue Court: —With some other adjacent site? Tue Wrrness: We could do that without using the Land- mark Law. Tue Court: Assume Grand Central Station was not des- ignated as a landmark area—— Tue Wrrness: Yes, sir. Tue Court: —could you utilize the unused air rights on some other property that you own, on some other adjacent property that you own, increasing the otherwise available area? Tue Wrryess: Yes, your Honor, only in one case, and that would be the Commodore Hotel, which is marked as No. 7 on this exhibit. Tue Court: As an adjacent site. THe Witness: Yes. e s o [140] Te Covrr: Let’s take the Biltmore. 7 aa e (141] Tue Covrt: Now, if you took the Grand Central rights and transferred them, what did you do? Tue Wrrness: You could add the two million one over Grand Central to that seven seventy-nine, assuming that 32 you could get bonuses, and you’d have a monumental figure of two million eight. Txe Court: That’s a pretty big building. THe Wrrness: Yes. Tre Covrt: A lot of space. Tue Wrrness: It would be like an obelisk. {142] Tue Court: What’s wrong with that? Tue Wrrness: It would be infeasible to go beyond a cer- tain number of floors because you’d have to have one ele- vator bank going all the way up to the top and you’d find that the lower floors were almost fully covered by elevators, so there comes a point of no return in building a structure like that. It seems to me that you have to stop at 59 stories or 60, and beyond that it’s economically infeasible to go. [148] Q. With respect to the Roosevelt Hotel, Plaintiffs’ Exhibit 14 indicates that the lot area is the same as that for the Biltmore. Do the same considerations apply with respect to the transfer of the air rights to the Hotel Roosevelt site as you have testified applied in the case of the Hotel Biltmore except for this series point? A. Yes, sir. [151] THe Covrtr: You said that would be with a 52-story building? Tue Wrrness: More than 70, your Honor. Tue Court: What about the Roosevelt in 1968? THe Wirvess: The considerations are almost exact, your Honor, as the Biltmore. — ell alee WP ee ail) eed ae 2 op? 33 [169] Q. In your direct testimony, Mr. Rovet, you testi- fied that in 1962 the Railroad considered the use of the waiting room for a bowling alley, is that correct? A. That’s what I testified to, yes. Q. Now, since that time, has the Railroad ever consid- ered the use of the waiting room for [170] any other com- mercial purpose? A. No, we regarded ourselves as being frustrated. Q. You regarded yourself as being frustrated since 1962, is that it? A. Yes. [183] Q. Isn’t it a fact that the decision to [184] build on the Biltmore site was not made public because of the feared effect upon the labor force in the Biltmore Hotel? Is that a fact or not? A. There was no decision ever to build on the Biltmore site. Q. Has there been any attempt, since 1970, to discuss building on the Biltmore site with any of the defendants? A. Yes. Q. When were those discussions had, if you know? A. In the latter part of 1970 and the early part of 1971, UGP Properties, Inc., and the Railroad attempted to negotiate a lease of the Biltmore site, but the lease never came to fruition, we never came to terms. Tue Court: You mean a lease with a prospective builder. [185] Tse Wrrness: With UGP Properties, Inc., your Honor. Q. Are those the only discussions had with respect to building on the Biltmore site other than what you just told ust A. Yes, absolutely. Tue Court: Who are the principals in UGP? Tue Witness: Morris Saady is the President of the UGP Properties, Inc. 34 Tue Court: He has no connection with the plaintiffs as such. Tue Wirvyess: Other than being the President of one of the plaintiff companies. Tue Court: Not part of the New York Central complex. Tse Wrrness: No, sir. Tue Court: When these discussions went on with Saady of UGP about building on the Biltmore site, did that in- clude a consideration of the transfer of the Grand Central air rights? Tue Wirwness: Oh, yes, sir. [186] THe Court: Go ahead. How far did those discussions get, can you tell me that? Tue Witness: They were bogged down in considerations of the rent. Saady would not pay the $5,000,000 rent that I referred to previously in my testimony, your Honor, be- cause he felt it was too high to make the project feasible. Tue Court: What were the details of the project, do you know? What did he propose to do? What did he have in mind? Did he say? Tse Wrrness: He had in mind making the transfer, knocking down the Biltmore and putting up a large office building on the Biltmore site. Tue Cover: How large? How high? Tre Wrrvess: I’ve forgotten, your Honor. I believe it’s something like 59 to 61 stories. Tue Court: Office building? Tue Wirness: Yes, your Honor. — LS ne i SL ss Ne Or Soil he, ee LL ia oe eT eS a ee eee eal Nar ee a ee ee g | : 4 35 [187] Tse Court: You wanted $5,000,000. Tue Witness: We wanted $5,000,000 for the combina- tion. We also wanted certain indemnities in the event that the project would not go through, in order to make us whole on the Biltmore Hotel. Tue Court: You mean five million a year. Tue Wrrwness: Yes. Tue Court: How many years? Tue Witness: We would want that $5,000,000 for an ini- tial term of at least 50 years with a renewal of 25 years subject to increasing for hedges against inflation over the term. Tue Court: The other parties make a counter-offer? Tue Wrrness: They made counter-offers from time to time but we regarded them as—— Txe Court: How near five million a year did they come? Tue Wrirness: Not close at all. Tue Court: Do you know how much [187A] was offered? Tue Wrrvness: Three million seven, three million eight. {200] Henrserr Becxuasrp, residing at Red Spring Lane, Glen Cove, Long Island, New York, called as a wit- ness on behalf of the plaintiffs, having been duly sworn, was examined and testified as follows: Dmect ExaMrInaTIoNn By Mr. Stewart: Q. Mr. Beckhard, what is your occupation? A. I’m an architect. 36 Q. Where do you work? A. I work in the firm of Marcel Breuer & Associates, located at 635 Madison Avenue, New York. Q. Is that a partnership? A. It is. Q. Are you a partner? A. I’m a partner. Q. When did you become a partner? A. In 1964. Q. When you you join the organization? A. In 1951. Q. Would you tell us your professional training? A. I went to the Pennsylvania State University, studied archi- tectural engineering there and did graduate [201] work at Princeton University in 1949 and ’50. [382] Q. Did you prepare any plans for any construction on any alternate site in the Grand Central area for UGP other than the site on Grand Central Terminal? A. Yes. Q. Where was that site? A. We investigated several sites, starting with the Commodore, then the Roosevelt Hotel site, 466 Lexington Avenue site, and lastly, the site of the Biltmore Hotel. Q. Did you prepare plans for all these sites? A. To varying degrees of thoroughness. Q. Was the Biltmore site the most advanced set of plans you had? A. Yes. Q. What degree of planning did you reach with [383] the Biltmore plans? A. A state comparable to these three projects. Q. And what date did you prepare those plans? A. I don’t recall the exact date. Excuse me, you have the drawings in evidence. If you would let me look at the drawings, I could give you the date. These drawings bear the date 15 December 1969. Q. Are those the only drawings you prepared for con- struction on the Biltmore site? A. These were not draw- ings for construction. Cats Sahih ik tae Oat AE RI adalah s (0 asin Dl ete eo BRE OA) Ge ene ath wee Te 37 Mr. Nespote: Question withdrawn. Q. Are those the only plans you prepared for building on the Biltmore site? A. Well, we prepared quite a few sketches and we discussed with the Planning Commission whether or not we would have a park on Madison Avenue or one of the side streets. We went through quite a few sessions with them in deciding things of that nature. We discussed a bridge with them, and so on, and this represents the final product, I guess. Q. Do those plans reflect the total number [384] of floors? A. Yes. Q. Do they reflect the distribution of arcades, plazas, and so forth? A. Yes. Q. Were these part of the conversations had with the representatives of the City Planning Commission? A. Yes. Q. According to plans, what was the gross building size for the building on the Biltmore site? A. Again it was approximately two million. [385] Q. Did these plans assume the transfer of the devel- opment rights over Grand Central Terminal to the Bilt- more site? A. Yes. [434] Murray Drasxrn, residing at 1814 24th Street, N.W., Washington, D.C., called as a witness on behalf of the Plaintiffs, having been first duly sworn, testified as follows: Drrect EXAMINATION By Mr. Stewart: Q. What is your occupation? A. I’m a lawyer. Q. When were you admitted to the Bar? A. I was ad- mitted to the Bar of the District of Columbia in 1953 and to the Bar of the State of New York, I believe it was in 1966. 38 Q. Are you an officer of UGP Properties, one [435] of the plaintiffs in this case? A. Yes, I am. Q. What is your position? A. I’m vice president and secretary to the corporation, and general counsel. [444] Q. Taking that procedure in account, was UGP in a position to use that procedure to attempt to obtain permission to transfer? A. Not at any point. It is neces- sary to have not only an originating site—and by that I mean the [445] landmark site which generates the air rights —which, of course, UGP had under its lease with the Rail- road, but it also must have what I would call a transferee site, UGP’s only property interest in Manhattan throughout this entire matter has been its leasehold interest on Grand Central Terminal. It did not have at any point, and does not have now, a possible transferee site. . . . [463] Tue Wrrness: Yes, we are co-plaintiffs in this, and the discussions were with myself and UGP. Tue Court: Whatever you say, using the word ‘‘amen- able,’’ applies to Penn Central. Tae Wrrness: We work as a team, the Penn Central people and ourselves. Tax Covert: All right, that would not have been an ob- stacle, if something agreeable had been arrived at. Tae Wrrness: Correct. Tue Cover: What happened after that? You now have this zoning resolution, is that right, and does it contain the provisions that were directed toward this problem? i ee ee ee eee a. 39 Tue Wrrness: The Planning Commission staff then went about getting the resolution adopted, and our position was, that is, we made no commitment that we would, in fact, build this building or that building. [464] We investigated various buildings with them and we said, if it was feasible, we would do so, and so in Decem- ber of '69, the change in the law was, in fact, enacted, and after it was enacted we continued to investigate in con- siderable depth and considerable expense the possibility of transferring the air rights to any number of alternative sites. Tue Court: It never worked out. Tue Wirness: Every site we investigated turned out to have obstacles which resulted in it not being an acceptable substitute, even a reasonable substitute for what we have. Indeed, it turned out that none of them were really feasible. Tue Court: The transfer of air rights is available if you picked a suitable site. Tue Wrrness: Well, they’re available, I think, in a highly risky and speculative way. Could I take a moment and go through some of the prob- lems that confronted us in this regard? To say that the transfer is available is [465] easy, but when you start trying to work it out, you really run into some very serious problems. [467] Now, we, as a developer, have to make a choice about whether we’re going to try to transfer air rights. We have 2,000,000 square feet of air rights on Grand Central Terminal, and we start thinking about where we could possibly transfer and how long and what are the problems. 40 First of all, it requires a special permit from the Land- marks Preservation Commission, from the City Planning Commission. In order to get that special permit, we first have to satisfy the Landmarks Commission that this is a program for continuing maintenance of the landmark, which is satis- factory to them, and what that constitutes and what the cost of it will be is entirely up in the air and conjectural. Secondly, we have to satisfy the City Planning Commis- sion that the transfer will not result in undue density or not result in an increase in bulk or any of these other things [468] that are stated in the statute; and then, if we've satisfied the staff as to that, the matter then goes to the City Planning Commission, which by majority vote can decide either way on the thing, If it survives the City Planning Commission, it then is subject to hearings before the Board of Estimate, and the decision by the Board of Estimate as to whether it will authorize the transfer. Now, in that kind of proceeding, there is often many a slip between the cup and the lip, and for the developer such a procedure is fraught with peril and risk. When you add to that the fact that the transfer, once made, is irrevocable, you have some real problems which are far less than a full right to develop. {[469] Tue Covrr: Who made the suggestion? Tae Wrrness: Mr. Robertson of the Planning Commis- sion that we transfer F.A.R. to the Biltmore or Roosevelt Hotel or 466 Lexington Avenue or the Commodore Hotel. We systemmatically [sic] examined every one of these proposals. Let’s look at the Biltmore and Roosevelt and these present very similar problems. ee ee ee — 41 Suppose, in fact, we had managed to get all of the ap- provals required by this statute, we would have then pro- ceeded to build a building of some 2,000,000 square feet or attempted to build a building of some 2,000,000 square feet on a site which was 43,000 square feet. That means that that building would have had to have gone out to the build- ing line on at least three sides, and it would have had to go up about 60 stories. I think the number was, in fact, 63, if my recollection serves me correctly. The streets around the Biltmore and the streets around the Roosevelt are narrow streets, if you will recall 45th, 46th, Vanderbilt and Madison, and it seemed [470] to us that there was a tremendous risk that an owner of a neighboring building would take a look at this statute, and so, well, how could we say that this building does not unduly increase the bulk of a new development with regard to air rights? How can we not say that the transfer of air rights to this new site does not result in density of popula- tion or undue density in the use of the block, with the re- sult, your Honor, that we would have been confronted with taxpayers’ suits by neighboring property owners, which would either have prevented or totally impeded or totally prevented this development. Now, I mentioned earlier irrevocability. We would then find ourselves in the net position of having transferred the air rights from Grand Central, and if the taxpayer—a tax- payer’s suit, with air rights irrevocably transferred to that site, and never be able to develop these, with risks which seemed to us that a developer ought not to take. They were — not a substitute for what we had at Grand entral. , Tue Court: Continue. [471] Q. I take it from your testimony that during 1969 and 1970 you were actively considering the possibility of transferring air rights. 42 You indicated two reasons which suggest how UGP felt about this, that is, the delays and uncertainty in the admin- istrative process and also the risk, serious risk of tax- payers’ suits, Are there any other general considerations that went into your planning? A. Yes. Another important consid- eration, of course, was that of obtaining vacant possession. At Grand Central we had a site in which we could obtain vacant possession in which we could proceed with develop- ment within 90 days. Each of the concessionaire leases at Grand Central have a clause which allows the railroad to terminate on 90 days’ notice. So, once we had the go ahead we could begin con- struction no later than 90 days thereafter. On the other hand, if you look at the alternative site, you don’t have that kind of thing. At the Roosevelt Hotel, if my recollection serves me correctly, I believe there were then leases outstanding until—— (472] Tue Court: We have that in the record. We already have that. Tue Wrrness: There were also problems of vacant pos- session in the Biltmore and at the Commodore. So that— and at 466, where I believe there were also space leases outstanding. Q. With respect to the Hotel Commodore, did you en- counter any problems with respect to the possible transfer of air rights to that site? [473] Tue Wrirness: There were, of course, the general problems to which I have already alluded, the problems of getting vacant possession, the administrative obstacles, the possible taxpayers’ suits and the Commodore presented a special problem in its sub-surface conditions. 43 As was mentioned earlier, the Commodore sits astride the loop track of the Penn Central system. It also sits astride two levels of the subway system, the Flushing line and the Lexington Avenue, and these presented enormous problems in construction and in time and course, which seemed to us to be insurmountable. By Mr, Srewart: Q. Were there any other considerations with respect to the Biltmore site other than those you just mentioned? Were there any financial considerations? [474] A. Yes. There were certainly very serious financial considerations at the Biltmore site. The Biltmore is a going hotel. It is, in fact, one of the most profitable of hotels which is owned by the railroad. Its earnings over the past few years range anywhere from about—I think the low is probably around a million two up to perhaps a million eight; in that range; and if we were to build an office building on that site it would have been necessary for us to, in fact, acquire a going business; it would have been necessary for the railroad to give up a going business, Now, people are willing to give up going businesses if they get a good enongh price for them, and this was, in fact, reflected in the railroad. It’s a position on the Biltmore. We conducted extensive and serious negotiations with the railroad in the hope that we could acquire a site and make this thing work. Our attitude was not negative about it. Our attitude was constructive and positive. We wanted to make it work, we wanted to go ahead with the building if we could [475] possibly do it. So we spent an awfully long time dickering back and forth with the railroad to try to work out a lease that we could live with, and when the whole thing broke down finally, the last figure that we had was $5,000,000 a year rental for the Biltmore Hotel. That, plus the other obstacles, just made it a completely unacceptable risk. 44 Q. Did the—— A. Excuse me. My I just add one thing which might give us some perspective? ya At Grand Central we were talking about a rental which was around three million as opposed to a rental of around five million for a site which we could not consider to be nearly as attractive. The economics of it are more important not only in terms of what it cost us but also in terms of what we could hope to get out of it. We start out with a big minus on the Bilt- more site and we start out paying perhaps $2,000,000 a year more in rental. On the other side of the ledger it was our view that we could get anywhere from 50 cents to a dollar a square foot more rent on the Grand Central Terminal site. Well, let’s say it isn’t 50 cents or [476] a dollar. All right, take the difference of perhaps 75 cents a square foot. So, two mil- lion square feet times 75 cents a square foot is a million and a half dollars a year. It was our view that the Grand Central Terminal site would produce perhaps a million and a half dollars a square foot more than the Biltmore, in addition to which the Bilt- more would cost us $2,000,000 more in rental. So there was a three and a half million dollar disadvantage that you start out with on the Biltmore site compared to Grand Central. I would add a couple of more considerations. We were prepared to go ahead with Grand Central in 1968. The zon- ing transfer which would have allowed us to move ahead on the Biltmore, if it were feasible, did not pass until the end of 1969. If everything had gone perfectly and if we had been able to go ahead with the Biltmore, it would not have been until well into 1970 because of the administrative pro- cedures that we had to go through. By that time real estate ratings had gone up, operating costs had gone up; none of these things [477] could have 45 been reflected in escalation clauses as they would have been at Grand Central, with the result that there would have been a substantial additional difference in the cost of doing the Biltmore, in the course of operating the Biltmore, all of which would have inured to the detriment of the land- lord, and, finally, at the Grand Central site we had this building with the spectacular views down Park Avenue right on top of Grand Central Terminal, a unique and a very distinguished office building, and we think—we think that the vacancy problem which you have to take into ac- count with these buildings, of course, would have been con- siderably jess than it would have been at the Biltmore. So we are talking in hard dollars and cents, an economic disadvantage on the Biltmore site, which was well over $4,000,000, plus the intangibles of vacancy rates, and things of that sort, all of which militated against it. Overall, in economic terms, this was just a completely unacceptable level of risk and it could hardly be considered to be a substitute for Grand [478] Central Terminal for which it was offered. Q. Did the Railroad indicate that they would want any indemnity with respect to the Biltmore? A. Yes, the Rail- road did indicate that, and this is another one of those problems that confronted us in the course of these negotia- tions. The Biltmore is a going hotel. The Railroad took the position that once it became public knowledge that the Biltmore would get torn down, the hotel business would completely deteriorate, and the reason for this is that that hotel, like the Biltmore, there is considerable dependence on the convention business, and that kind of business is booked one to three years in advance. If a convention manager is faced with the prospect that a hotel is going to—may be torn down, he isn’t likely to book his convention there. So the Railroad took the position, with considerable justification, that they could not possibly take 46 the risk that a transfer would not materialize or that the developer, for some reason, would otherwise be unable to go forward with the project. The Railroad, therefore, insisted that before it would allow a transfer of air rights from [479] Grand Central to the Biltmore or the Roosevelt, the developer would have to enter into an indemnity or a liquidated damages provision, if you will, which would compensate them for the possible loss of business as a result of the announcement that the building might get torn down. And I think the amounts that we talked about were very, very large. They ranged anywhere from a half million to $2,000,000, depending upon the period of time involved. So that if we had applied for the transfer and for any reason the Planning Commission or the Board of Estimate had turned us down, UGP would have had to pay over to the Railroad as much as a half million dollars to $2,000,000. Q. Were the considerations with respect to the Roose- velt any different from those with respect to the Biltmore? A. They were substantially the same, Mr. Stewart, with, perhaps, one position additionally, and that is the Roose- velt is further away from the transportation hub. It does not have as ready access to Grand Central, although there is a rather narrow passageway to the Terminal, but it was certainly a less attractive site in items of proximity to the [480] transportation hub. Q. And you mentioned one other building, 466 Lexing- ton Avenue. What about that one? A. 466 Lexington Avenue is the old headquarters of the New York Central Railroad. We looked into that problem. We instructed our architect to look into 466 as we, indeed, instructed them to look into all of those other sites, and it soon became very apparent that the Railroad had substantial problems with giving up that building because of the location there of the very ex- ON VIDE een UO Mr eee OTe ete Oe eT ne — 47 tensive railroad communications and computer network, which, I think, was discussed at some length here before, I don’t see any need for me to dwell on it. Q. Mr. Rovet testified that when the Railroad—that the Railroad offered all of its properties in the Grand Central Terminal area for sale last year and that UGP had sub- mitted bids on the Roosevelt and the Biltmore. Did you, in fact, submit bids on the Roosevelt and the Biltmore? . * . [481] Q. Did the Railroad offer its properties in the Grand Central Terminal area for sale in 19717 A. Yes, it did. Q. Approximately when? A. I believe it was about the middle of the year. Q. And did UGP submit bids on any of those [482] prop- erties? A. Yes, UGP did submit some bids. Q. And what were your bids? A. UGP submitted two alternative package bids. The first—the first package bid was for the—for the fee interest in air rights at Grand Central—the fee interest in the Grand Central develop- ment site. It has all those things which were included in the enclave in parcel A, and the Biltmore, that is—it was a package bid for the Grand Central Terminal area, plus the Biltmore. The second alternative bid, in the event that the first was rejected, was for the Grand Central development site and the Roosevelt. These were both package bids in the sense that both the air rights and the hotel would have to be accepted, or neither. Q. How much did you bid on each? A. We bid three and a half million dollars for the Grand Central develop- ment area or the air rights. In each bid—It was the same in both bids, and we bid $11,650,000, I believe, for the Biltmore, and we bid $9,000,000 for the Roosevelt. Q. And were your bids accepted? [483] A. Both of our bids were rejected. 48 Q. Why did you submit these bids? A. We submitted the bids for these reasons: Our present interest in Grand Central Terminal is that of a lessee. The Railroad was putting on the block—strike that—was putting up for sale the fee interest in those rights. It seemed to us that this was a 00d occasion to try to round out our interest in those air rights in the development at Grand Central. The lease relationship is a complicated one. Much turns on its administration. We know who we had when we had the railroad and we had worked out a pretty good working relationship. We do not know who we would get if somebody else acquires the air rights, so we though it would be a protective measure and perhaps a good opportunity to pur- chase the fee interest. We thought we would rather be our own landlord, so we bid on the air rights, and that was our primary interest in making these bids. Q. Why did you include in each of your bids the two hotels, or one hotel, and one bid and the other hotel in the other bid? [484] A. Well, the reason we included the hotel —the hotels is that we recognize that litigation is uncer- tain. We hope that we will prevail in our challenge to the Landmarks restrictions. On the other hand, we were concerned with the possi- bility that we might not prevail. We have invested thus far a very large amount of money in developing the Grand Central site, in architectural fees, in development fees of various kinds, in the course of a $1,000,000 deposit which we have had with the Railroad now since 1968, I believe. This has been an expensive undertaking and it was our thought that if we were ultimately unsuccessful, we would like to be able to salvage something out of this long-term effort of ours so that our bid for the hotel was really in the nature of a salvage operation. It would have allowed us to, at least, have a hotel on the site. It would have allowed us a number of options. We might have been able to do a building, perhaps a smaller ee a eet) Te kT et eee Mee ELIE eo Ok ieee se 49 building, on the site, but, at least, it would have given us some sort of salvage out of this effort. It was not a substi- tute for Grand Central Terminal. [513] Tse Court: Can we sum it up this way, that in or- der to avoid the confiscatory experience, this availability of air rights as was proposed, it was your position that after air rights became available as a matter of amend- ment to this statute, the position of your people was that economically you couldn’t utilize them, you couldn’t utilize the air rights, the transfer of air rights from your economic advantage, so you remained in the same position as you were originally economically, and the position is that the property was being taken without compensation? Tse Wrrness: Your Honor, I wish I could have said it that briefly. That is essentially it. [530] Q. When did your discussions with representatives of the City Planning Commission and the Office of Mid- town Planning commence in respeet to developing the con- cept of building on the Biltmore site, do you know? A. Well, first, I think we have to make a distinction which I can’t make, and that is the distinction between the City Planning Commission staff and the Office of Midtown Plan- ning did not exist when this project was initiated. I believe that the Office of Midtown Planning was created somewhere down the road, and the same players were involved on both teams, so I don’t know at which point they were wearing which uniform. Q. When did your discussions with the representatives of the City Planning Commission commence in respect to de- veloping the concept of building on the Biltmore site? A. As near as I can put it, there were generalized discussions about building on a number of alternative [531] sites which included the Biltmore site, and I think those discussions began around the time of the hearings on our certificate 50 of appropriateness before the Landmarks Preservation Commission. Q. UGP retained Mr. Max Siegel of 1841 Broadway, did it not, to assist in the formulation of the zoning resolution regarding transfer of development rights? A. Yes. Q. When did you retain Mr. Siegel? A. Mr. Siegel had been retained—well, I think I should revise that answer. Mr. Siegel was not retained for the purpose of assisting in the drafting of the zoning resolution. Mr. Siegel had been retained by UGP before I came aboard. He had been re- tained—he was already retained by UGP when I became associated with the project, and he was retained as a zoning consultant to UGP to provide it with advice on what it could or could not do on designing the building. Q. When was he retained, do you know? A. He was retained before April 1968. Whether it was in January, February or March, I don’t know. I wasn’t there. Q. You say you reviewed a certain draft of Mr. [532] Siegel with respect to a proposed amendment to Section 74-79, is that correct? A. I think I reviewed more than one draft. Q. Do you know if Mr. Siegel ever submitted a draft of a proposed resolution to the City Planning Commission for their consideration? A. I believe that he did. Mr. Nespote: May I have this marked for identification, your Honor? If the Court pleases, may I also have the en- velope marked? Tue Court: Is it important? Do you need it? Mr. Nespote: The man’s name is on it. Tue Covrt: If there will be no issue as to its source, then it seems unnecessary. Mr. Nespoue: All right. (Draft of Zoning Resolution by Max Siegel, marked De- fendants’ Exhibit A for identification.) 51 Q. Mr. Drabkin, would you take a moment and look through Defendants’ Exhibit A for identification. (Short pause.) Q. Have you read through Defendants’ Exhibit A for identification, Mr. Drabkin? A. Yes. [533] Q. Is that the draft that Mr. Siegel submitted to the City Planning Commission in respect to the proposed amendment to Section 74-79? A. I don’t know whether this is the draft that Mr. Siege] submitted or not. This is pretty much the law as it is now. Q. You don’t know of your own knowledge if that is the draft that was submitted with your approval. A. I don’t know whether this was the draft that Mr. Siegel submitted or not. I recall that Mr. Siegel submitted to me a draft which was substantially the same as this or may have been the same as this, which I reviewed and which I said under the circumstances would be acceptable to us. [559] Wri F. L. Turrzz, residing at Mayfair Lane, Greenwich, Connecticut, called as a witness on be- half of the plaintiffs, having been duly sworn, was examined and testified as follows: Drrect ExaMINAaTION By Mr. Stewart: Q. Mr. Tuttle, what is your occupation? A. I am presi- dent of Collins, Tuttle & Company, a real estate company. Q. Could you tell us a little bit more about the operations of Collins, Tuttle & Company? Where is it located and what does it do? A. Collins, Tuttle & Company is a Dela- ware corporation. Our main office is at 261 Madison Av- enue. It’s a trademark for a series of corporations which engage in the real estate business and brokerage manage- ment, investment, and promotion. We have operations out- side of New York, in Chicago, Illinois, in Los Angeles, and 52 in Paris, France. We are specialists in the, among [560] other things, specialists in the development and promotion and management of the construction of speculative office buildings. . Q. When did you join Collins, Tuttle & Company? A. I formed a predecessor partnership called Collins, Tuttle & Company with my late partner, Arthur Collins, on July 1, 1954, I assumed the presidency of the company in 1958 upon his death. . 7 . [584] Q. With respect to those three factors, I want to ask you how they apply with respect to the proposed build- ing on the Grand Central Terminal site—first, with the location. A. There is no location in the United States of {585] America, in my judgment, which will be more attrac- tive to the headquarters of major national corporations, to law firms, accounting firms, the companies that serve and support those major national corporations, There would be no more attractive location in the United States of America, in my judgment, than this building and its ad- dress. . ° 7 [617] Q. So what was your conclusion as to the economic feasibility of going ahead at the Biltmore site? A. I wanted to finish with the financing. I couldn’t get, without tenants, I couldn’t get financing, particularly, again, the three factors, I had to get a much higher rental level. The market was nowhere near as good. The site was nowhere as good and a very important factor is that the ground rent was $2 million higher and that became, by a long shot, the highest ground rent ever paid, and that was a serious factor, mitigating, and I was unable, and I tried for two years—the companies with whom I worked, not just the companies who were willing to furnish me the financing in 1968 for 175 Park Avenue, but I went to just about every source that was imaginable, domestic and even foreign. I went to the City of New York’s [618] Comptroller’s Office, 53 I went to the State of New York’s Investment Office, I went to the New York State Teachers’ Retirement Associ- ation, I went to the fifty major insurance companies, I tried to put together a consortium of savings banks, New York savings banks. They have an organization. I tried to get them to do it on the basis that they would be helping New York by having this building built. I tried just about every imaginable way—I tried every way that I could imagine, and I have a good imagination, I think, to get this—— Tue Court: Shall we stop and take a vote? Q. I think you’ve made the point, Mr. Tuttle. So, is it a fair statement—a fair summary of what you have been saying that it was your conclusion that this proposal was not economically feasible? A. Yes, sir. - * co [684] Lawrence Garnes, residing at 140 Fallon Avenue, Elmont, New York, called as a witness on behalf of the Plaintiffs, having been first duly sworn, testified as follows: Drrect Examination By Mr. Stewart: Q. Mr. Gaines, what is your occupation? A. Vice presi- dent for Cushman & Wakefield, Inc., 529 Fifth Avenue. Tue Court: A little louder, please. Tue Wrirness: 529 Fifth Avenue, New York, New York, primarily engaged in the appraisal of real property in the Metropolitan area of New York and throughout the country. [727] Q. Now, I hand you Plaintiffs’ Exhibit 10. You will notice that many of the buildings are colored in yellow, which, of according to the code at the [728] top of the page are properties subject to long term ground leases. 54 Would it be feasible to purchase the ground lease—strike that question. You'll also notice that all of the properties colored in orange are also subject to long term ground leases except for No. 4, which is 52 Vanderbilt Avenue. Now, if you will look at building No. 20, 245 Park Avenue, would it be feasible to purchase the ground lease at that site and then using air rights from the Grand Central Terminal site, redevelop that location, that is, 245 Park Avenue, with a new building? A. No. Q. In this connection I also hand you Plaintiffs’ Exhibit 11 where the ground lease at 245 Park Avenue is described. A. No. This is a new office building over a million square feet in it, I believe, and it certainly would not be feasible to purchase the ground lease for redevelopment. Q. Why not? [729] A. We have the highest and best use of the property, in my opinion, with the existing structure. Q. Would you explain that, please? A. Well, it’s the best use that you could put to the land site, and it would return the greatest return on your investment. You would derive the greatest future benefits from that. Q. Now, would you also look at Exhibit 10, at the other sites on Park Avenue, which includes No. 21, No. 22, 24, and then running across to the other side of the street, 12, 13, 14, 15, 16 and 17, and would you also examine Ex- hibit 11 which describes the ground leases on those locations and tell us whether it would be feasible to buy the ground leases at those locations and redevelop the site, using air rights in Grand Central Terminal? A. It would not be feasible to purchase the air rights under these Park Av- enue buildings for the purpose of redevelopment—— Q. You said to purchase the air rights. A. The underly- ing ground lease. For the purpose of redevelopment of property and demolishing these massive structures, includ- ing new office buildings, we have long term which they them- selves are undoubtedly encumbered profitably, I presume, ee ae co One 55 with long term leases to major corporate tenants, and then redevelop the same site with the same building, it would be the same type of building—would be suicide. (738) Te Courr: We’re still sitting here the same as we started this talk between us, and that is, I take ‘t, really, you wouldn’t know what to do with these air rights outside of the plan to utilize it over Grand Central Station. Tue Wrrwess: Outside of the plan to utilize the air rights over Grand Central Station, the owner of these air rights would have a problem conveying them—I should use the word ‘‘conveying’’ them—utilizing them—on another site at a price anywhere near the price which he could receive from the conveyance or leasing of the air rights over the existing site. This results from the lack of marketability at the time of the particular market because of the particular market in 1969 and °70, the discounting effect which we would have to discount these air rights over the term of years that would be required to actually utilize them, [739] because there isn’t a builder around that’s going to pay you the full amount for those air rights until he’s got a building up and producing income. We've got to confront ourselves with a long period of time on each one of these sites. The minute we get into the area of pulling away from our immediate site, which is im- mediately available, which is the best site, in the best loca- tion available, at that particular time, and one of the bases for builders and one of the reasons that a market heats up is timing. A builder will build at an appropriate time. He will not build when timing is against him. This is the im- portant aspect of putting up a building or an apartment house or anything. It’s timing. You can’t get away from timing. I’m putting my money up. I’ve got to produce a building within a certain length of time. If I’ve got to wait 56 four or five or six or seven or eight or nine or ten years to put that building up, I could put that money in the bank and accumulate an awful lot of money. So, therefore I can only pay a discounted amount for that, and that discounting would run [740] havoc with the amount of money that somebody would be willing to pay for the total package that’s available for sale over the period of years that it would take to develop it. The idea that you can go in and just take two or three million square feet of available air rights and put it out immediately on the market and sell it immediately is a very difficult thing for me to comprehend. (741) Q. Mr. Gaines, going back to the hypothetical ques- tions which the Judge was asking you just before our re- cess, if UGP had come to you in '69 or 1970 and asked you your advice as to whether or not it was feasible to consider transferring these air rights to any of these sites which we have been discussing for redevelopment, what would your answer have been? A. That it was economically not feas- ible to do so. Q. Now, will you take the Biltmore sites, specifically, and explain your answer. A. In the case of the Biltmore site, we have a 22-story operating hotel which is producing an income for the Railroad, and the Railroad’s fee—not fee, but the Railroad rental would include the replacement to them of the loss of income from this hotel, were it con- veyed to a third party who’s to redevelop it. I was advised that the rental in total to any developer as at June 1970 would be approximately $5 million, which is over $1.00 a square foot more, I believe, or approximately $1.00 a square foot more than the rental that would be charged over the Terminal. In addition to that, this would involve the erection [742] of a major structure on a lot of 44,000-some-odd square — 57 feet fronting on substantially narrower streets, as compari- son to the development of the Grand Central Terminal site, which involved the erection of a building on a 146,000- plus square foot lot. The Biltmore site not only involved the demolition of a substantial 22-story building, but it involved the elimina- tion of certain leases which were in existence at that time and could delay the development of the project—protract it. The economics with reference to operating expenses, rental value that might be attainable, the leasehold rent that was prescribed by the Railroad, or the owner of these rights, and the cost of construction, were of such a combi- nation as to preclude the demolition and redevelopment of that site at that particular moment in time. Q. What, in your opinion, is the maximum size of a viable building for that site? A. In my opinion, there was sub- stantial FAR available within the site—— Q. Substantial—— A. —F AR, floor area ratio, so that you could develop without any air rights almost 800,000 square feet of area [743] above grade—I think, approxi- mately, 760,000-some-odd feet, adding in your lower area another 50 or 100,000 square feet additional, so you’re going over 100,000 square feet. To go over the million mark would put a burden on the site. Most buildings that run into a million four, a million five and a million two, or two million square feet, are situated on sites substantially larger than this site. This would require, from a point of view of construction, a sub- stantial variance in the zoning code, and it’s my under- standing that this particular aspect of the project was dis- cussed and that preliminary plans, or interim plans, were drawn which would have provided a tower structuring covering approximately 80 percent of the lot area, which was approximately 100 per cent more than you would nor- mally be permitted under the existing code, or normal con- 58 struction, would run in the area of approximately 40 per cent. This, in itself, creates a bulk hazard and confronts us with the probability, and a very reasonable one, that we would have objection, strenuous objection, from people in the area—Canadian Pacific Building and other Madison Avenue buildings, to this project, and at the very least [744] would have caused six months to a year delay which would have thrown us smack into the worst part of the rental market—in addition, the worst part of the mortgage market. Confronted with these problems, a builder would have found himself in a position of making practically no re- turn on his money. He’d have done better if he went into a bank and put it in a savings account as far as his net overall return was. These are some of the factors that concern us with the Commodore Hotel, and this does not take into considera- tion an important factor, which we must never lose sight of, is the superiority of the location over Grand Centra! Terminal with its broad vista looking down Park Avenue, with its great distance from the Pan Am Building, with its unique stature as an office building potential, as an image-building for corporate headquarters, and also the flexibility because of 146,000 square-foot lot, of laying out a building for executive offices, in comparison with the laying out of a building on the Biltmore site, which would have more of a square shape, substantially more depth be- tween the wall and the core, and substantially more lower real space, which would be—I mean, [745] lower rent in the sense of the type of client that would purchase that space, would want to pay a lower rental as the result of that one factor, also. So that in any projection for the Biltmore site, we would have to reduce the rent, raise the ground rent, in- Se — 59 crease the construction cost, increase the financial] aspects of the project, and increase the vacancy allowance—and also throw in the probability that we are not ready to move ahead immediately as we were in the Grand Central Ter- minal, and in that respect we’re talking about timing, which is the essential of the industry. The availability of a piece of property, the ability to move ahead with your project, the ability to deliver within a prescribed period of time, these are very important func- tions to a builder, to a project developer, to a tenant rent- ing space. Q. Are the considerations for the Hotel Roosevelt the same as those you’ve just now stated with respect to the Biltmoret A. I would say the considerations are relatively the same except that the Biltmore Hotel has a closer prox- imity to Grand Central, 42nd Street. It’s somewhat closer to subway transportation and it might command a slightly [746] better rental value than that which might be derived from the Roosevelt Hotel. I don’t recollect what the lease problems are, but there might be some longer term leases at the Roosevelt. I don’t recollect. Q. And what about the Hotel Barclay? A. Well, the Hotel Barclay, in this location, is a viable property, as I can see, and it is in a good location, it has good potential for development, in its present form—upgrading, or what- ever else they might want to do. It does not have the Park Avenue frontage because there is a new office building fronting on Park Avenue which blocks its development out in conjunction with a new Park Avenue building, which might have given some impetus to a higher rental. Also, the fact of timing and leases preclude the economic development of the site in the latter part of ’69 or at the 60 time we’re talking about, ’70, ’71, because of the problems which might ensue. Also, the fact that here again arises, that we have narrow streets on Lexington Avenue; we don’t have as good a rental probability on Lexington Avenue that we even do on Madison Avenue, no less than that of 175 Park Avenue, [747] so that these are basic problems for a project that can not just be shunted off. You just cannot go out, pick up air rights and scatter them throughout the city with- out giving very intensive thought to the basic underlying economics of each individual building that these air rights are to be transferred to. It’s fundamental economics that’s involved. It’s dollars and cents and the bottom line that has to be reached. Many forces come into play in this, and one of the primary things, and I must go back to that, is timing. When you have a site that’s available to go, you pretty well know what your problems are and you can face them. When you have sites that are not available to go, you don’t know what’s going to happen. o * [883] Frank Mrinano, residing at 29 Turner Lane, Mt. Kisco, New York, called as a witness on behalf of the plaintiffs, having been duly sworn, was examined and testi- fied as follows: Drrect ExaMINATION By Mr. Stewart: Q. Mr. Milano, what is your occupation? A. I’m the regional controller of the metropolitan region of Penn Central Transportation Company. Tue Court: Say that again, please. Tue Wirness: Regional controller of the metropolitan region, Penn Central Transportation Company. a ba a ee om ge . so ee 61 Q. What is the metropolitan region? A. The metropoli- tan region is concerned with the operation of passenger trains in and out of Grand [884] Central Terminal. It in- volves a service as opposed to strictly a geographical area. Q. What are your responsibilities in that position? A. I’m responsible for the accounting costs and revenues in the metropolitan region. Q. Does that include Grand Central Terminal? A. That’s correct. * * ° [887] A. They were prepared by members of my staff under my supervision at my direction. o . . Q. Now, the heading of each of these is ‘‘Grand Central Terminal.’’ Exactly what is meant by that phrase? A. For purposes of this exhibit, it would include the station building and the subsurface area of the station building, including the platform. Q. The title also refers to ‘‘Revenues & Costs.’’ What costs are included? [888] A. Basically, these are costs of maintenance and maintaining and operating the station building. Q. Does it include any revenues or costs with respect to transportation operations? A. No, sir. [890] Q. Will you refer, please, to 35-B, the chart for the year 1971. Please explain the first item, ‘‘Rents and Concession Revenues.’’ A. These are the amounts that are received from tenants and concessionaires situated in Grand Central Terminal. Q. Then turning to ‘‘Costs’’—first, let me ask you, are there any other revenues or rents which are received from any source from the Terminal building, or is this all that there is? A. Well, there are revenues which are derived 62 from the sale of tickets, but, of course, they’re not included in this statement. Q. Turning now to ‘‘Costs of Maintenance & Operation,’’ the next heading, would you take each item under the head- ing label and explain what each one is? A. The first item involves a force of employees who are concerned with main- taining and repairing the [891] station structure. Tue Court: Excuse me. These things are self-explana- tory. I don’t think we have to have any detail, Mr. Stewart. Mr. Stewart: I think that’s correct, your Honor. Let me just review them. There may be one or two that need explanation. Tue Court: I think this is fully explanatory, Mr. Stewart, for the purposes of your case. [896] Q. When was Plaintiffs’ Exhibit 35A and 35B pre- pared, Mr. Milano? A. In the early part of this year. Q. In the form that Exhibit 35A is before the Court, was that document in existence prior to that time? A. In this form? No, sir. Q. Same as to 35B; is that correct? A. That’s correct. Q. You went through certain records of the Railroad and culled certain information, is that correct, from those records to put it together; is that correct? A. That’s cor- rect. . * . [898] Q. Tell me, has the Railroad ever considered uti- lizing the waiting room for commercial purposes? A. I understand it was considered several years ago, yes: Q. Do you know when it was considered? A. I really don’t know. I was in Detroit at the time it was under con- sideration, I believe. Q. As controller of the Metropolitan Region, do you know if the Railroad has considered any plans for com- 63 mercial use of the waiting room space in the last five years? A. I know of no specific situations, no. [909] Q. Do you know that the Railroad has received that exemption since 1959? A. Yes, I do. [910] Q. Under the column entitled, ‘‘labor, maintenance repair and service plant operation,’’ under 35B, what spe- cific crafts are included in that account? A. That includes such people as pipe fitters, sheet metal workers, iron work- ers, painters, carpenters, electricians. Most of them. Q. Any other craft, sir? A. Ventilation cleaners or vent cleaners, plumbers, machinists, refrigeration operators, ele- vator machinists, masons—Did I mention that? [913] Q. What are the recurring items of maintenance and repair that that labor account reflects? A. Recurring? Q. Yes. A. There’s always something that has to be done. I don’t quite understand your question, Mr. Nespole. Q. What items recur on a regular basis that are incor- porated as a labor cost under that account? A. We’ve got plumbers, we’ve got carpenters. There is always something that has to be done. Just replacing light bulbs, I would imagine is quite a job. Q. Doesn’t that maintenance and repair item include costs related to the platforms? A. It may, yes. Q. There are platforms that do not exist completely under the terminal, isn’t that correct? A. The platforms do extend out possibly as far as 45th Street, but under ICC accounting the platforms are considered part of the station facility. Q. Does the maintenance and repair account for labor there include costs for any work on any structures located outside of Grand Central Terminal [914] building? A. Outside of the building? 64 Q. Yes, sir. A. Well, we already talked about the pos- sibility that they might work on the platforms, we talked about the possibility that they might be servicing the steam lines, which, of course, extend beyond the building boun- daries. There is that kind of work that is included there. Q. Are there any yard expenses subsumed in that ac- count? A. There should not be. Q. I agree there should not be, but are there any yard expenses subsumed in that account; do you know? A. There may be, Mr. Nespole. There may be some small amount where some of these people had to get out into, let us say, one of the towers, but they would be reasonably insignificant charges. Q. Where are the yards located, Mr. Milano? A. I guess we’ve got a yard there around 49th Street. There’s a yard, we call it the Madison Avenue yard, near below ground in the terminal complex. [915] Q. How far north does the yard on Madison Avenue run, sir? A. I couldn’t say. Q. Does the Railroad use any space in the building for offices? A. In Grand Central Station? Yes, we do. Q. Does the Railroad use any space in the building for storage? A. Probably some subsurface areas may be used for storage, yes. Q. Do you use space for employee amenities? A. There are some small areas. There might be a locker room, I believe. Q. Does the maintenance repair and service item include any costs related to maintenance of these areas that the Railroad uses in Grand Central Terminal? A. Yes, they would. Q. Will you tell me approximately how much of that item is so included? A. No, I couldn’t, but again I think it would be a relatively minor amount. Q. Mr. Milano, in terms of the accounting [916] method- ology employed here, does the maintenance repair and service account reflect the cost of only those items which 65 can be attributable to the income generated by the com- mercial use and concession use of the terminal? A. No, but I don’t think they should be. [919] Q. Were these statistics prepared for purposes of this litigation? A. Yes, sir. [920] Q. Does the cleaning item reflected there relate to any costs involved in cleaning platforms? A. Probably not the platforms. I would probably—it probably would include the ramps to the platforms and possibly the stairs to the platforms. Q. How about railroad cars? A. No, sir. Q. Ticket booths? A. No, sir. Q. Is there any space that the railroad utilizes in the building for its own purposes that you indicated earlier? A. Well, I guess it would include, for example, the cleaning of the station master’s office and—— Q. Does the cleaning item there reflect only those items of cost which are attributable to the income generated by the rental and concession use of Grand Central Terminal? A. These costs represent the cost of cleaning Grand Cen- tral Station. Q. The whole terminal, right? A. The whole terminal. Q. The top to the bottom, right? [920-a] A. Yes. Q. Are there any areas outside of the terminal that are cleaned which is subsumed in that account? A. I would say not. * * ° [931] Q. Can you tell me what portion of that account is reflected in respect to cleaning the transportation portion of the terminal? A. How do you describe the transporta- tion—— Q. Tell me, Mr. Milano, has there been any effort to al- locate to the commercial use of the terminal a percentage of the total amount of water that’s consumed in that ter- minal? A. No, sir. 66 Q. I direct your attention to ‘‘Other Direct Costs.’’ I notice on the second sheet that item includes rubbish re- moval. Where is the rubbish removed from in Grand Cen- tral Terminal reflected in that cost item? A. All over the terminal building. . . . [933] Q. As to the ‘‘Overhead Charges,’’ Item (E) on the second page, sir, those represent labor costs for supervisors involved in supervising the labor that is distributed under the Labor column, is that correct? A. Basically, that’s it, yes, Q. There has been no allocation of the supervision cost item there in respect to the commercial use of the terminal, has there, Mr. Milano? A. No, it followed the direct cost. [942] Q. I believe you also testified that it was conceiv- able that some of the labor in this item might have been done in the yard. Can you give us an example of the kind of work you were thinking off A. Well, it would certainly not include any work on the tracks. There might have been a yard structure, a replacement of a light bulb in the yard structure, the re- placement of a doorknob; something [943] of that nature could conceivably have been performed by some of these people under maintenance repairs and service plant opera- tion. Q. Is there any way to separate out such items of work if they had occurred? A. Under our present code structure there is not, but we considered it so minor that we never made the attempt to segregate such costs. They are rela- tively minor, . 7. . [997 } By Mr, Nespo.e: Q. Mr. Goldstone, what is your position with the City of New York? A. I am Chairman of the New York City Landmarks Preservation Commission. ee eT ee enna OT. ua Oe 67 Q. And when were you appointed chairman? A. On October 21, 1968. . . . [1006] Q. In respect to his Honor’s question, Mr. Gold- stone, in regard to thirty years from now, every [1007] building presently existing in the City of New York is eligible for landmark designation. Can you answer that question that the Court posed to you at this point, sir? A. I can answer it very clearly and both from policy and ex- perience. The Commission is highly selective in what it designates. I would imagine if I made a count through our files, we have rejected at least as much as we have designated, constantly getting requests to designate buildings that may have some local interest or some sentimental interest to a particular community or group, but are not of sufficient importance or not the best representative example or not the most viable example of the period that the Commission wants to main- tain. + . os [1175] Donaip H. Ex.iort, Chairman, City Planning Com- mission, City of New York, 2 Lafayette Street, New York, New York, called as a witness on behalf of the defendants, having been duly sworn, was examined and testified as follows: Drrect ExaMINATION By Mr. Nespoie: Q. How long have you been Chairman of the City Plan- ning Commission, Mr. Elliott? A. Since November of 1966. [1186] Tse Covrr: Had Breuer I been passed upon at the time of that amendment? 68 Tue Wirness: I don’t believe it had. Tue Court: Let’s start it this way. As I understand it here, preceding the Grand Central Breuer No. I, by statute, by resolution of the Board of Estimate, an alternative was involved for the benefit of landowners who might be affected by the landmarks—by a landmark designation, in effect, to give such a landowner an opportunity to utilize the air rights which otherwise would be affected—which would be enjoined by the appli- cation of the landmarks law. Tae Witness: That’s correct, your Honor, but it was after—I believe it was after Breuer I was first made public. [1197] Q. Commissioner Eliott, the 1969 amendment was intended to expand the number of sites that could be the recipient of the Grand Central Terminal air right, [1198] was it not? A. It clearly was. Q. There was no effort to, in any way, limit, was there? A. No, it did not. We certainly did not intend that. Q. Are you familiar with the circumstances leading up to the enactment of the 1969 amendments to Section 74-79 of the Zoning Resolution? A. I am. Q. Did the City Planning Commission have any discus- sions with representatives of the Penn Central or UGP con- cerning any proposals to amend Section 74-79 prior to its actual amendment in 19691 A. Yes. Q. Can you tell us when these discussions were had and with whom? A. Well, there were numerous discussions which went on all through 1969 and in the latter part of 1968, and they were held between members of my depart- ment and representatives of Penn Central and of the de- veloper and with the office of Midtown Planning & Develop- ment, and, of course, discussions also with the Landmarks Preservation Commission staff. a me ee Sm EM [1199] Q. Did any representatives of UGP or Penn Cen- tral ever submit to the City Planning Commission a pro- posed draft of the amendment? A. Yes. A representative of those organizations did submit such a proposal. Q. Is that representative Mr. Max Siegel? A. He was. [1202] Q. Mr. Elliott, did there come a time that Mr. Siegel told the City Planning Commission the purpose of the submission of Defendants’ Exhibit A [1203] in evi- dence? A. We had been working with him and with other representatives of the plaintiffs on the details of this trans- fer legislation. That is why he redrafted the proposal, and there was a meeting which included a substantial number of the persons interested in this matter in September of 1969 when agreement was reached on the legislation. [1205] Q. Has the City Planning Commission ever ap- proved an air rights transfer under the 1969 amendment to Section 74-791 A. I’d have to check the records to be sure. Tne Court: Do you know of any now? Tar Witness: We have discussed a number of them. Q. Was the Amster Yard transaction ever approved? A. Yes, it was. [1206] Q. And where is the Amster Yard located, sir? A. It’s in—it’s right in midtown Manhattan, and I can’t give you the exact block, but it is on Second Avenue, and in a very—it’s a sophisticated, very much loved historic district, low-rise district, and we did approve a transfer off of that district. ° . 7 Q. Can you tell us the circumstances, as you recall them, of the Amster Yard transfers? A. The Amster Yard had a very substantial amount of unused air rights. It’s a court- yard with small two story buildings around it, and the trans- 70 fer was to [1207] take the air rights off of that and to trans- fer them to an office building on the end of the block so as to—well, it’s to use the rights which made it easier to pre- serve the Amster Yard and to continue its maintenance just as the statute provides. Q. The transfer was approved, was it not? A. It was approved. Q. The building was not built, however; is that correct? A. That is correct. The building was not built but the transfer was approved and was greeted very enthusiastic- ally. 7 7 * [1217] Q. After the amendment to Section 74-79 of the zoning resolution, did the City Planning Commission ex- pect an application to transfer from Grand Central Ter- minal to the Biltmore site? [1218] A. We did. We worked out virtually all of the details of that application prior to the time the legislation was taken, the hearing, and sub- sequently passed. Tre Court: You may tell me what the record is in your department of those activities and their status at the time the amendment was proposed. How far had it gone? Tue Wrrness: Well, it had gotten down to the discussion as to the location of the plazas, the location of the escala- tors, the question of whether there should be a one or two- foot setback on certain streets. What I would consider design details had been discussed at length by members of my department and presented to the Planning Commission for its review prior to the time that we took the legislation to public hearing. Tur Court: Let me ask you this. Assuming consummation of such an agreement between the pe. ties, as the Landmarks Commission on the one hand and the plaintiffs on the other, the agreement to utilize the air (1219) rights over Grand Central on the Biltmore site, 71 did that require any formal action on the part of your Commission? Tue Wrrwess: It would. Tue Court: Would it require a hearing, too? Tue Wrrwess: It would. Tue Court: A public hearing. Tue Wrrwess: A public hearing. Tre Covrr: All right. It got to the point where, assuming that the amendment was adopted, you’d be ready to go toa hearing on the plaintiffs’ proposal. Tue Witness: The proposal had been made in generali- ties in April of ’69 and our testimony before the Landmarks Preservation Commission. The statute, when it was taken to hearing, was unopposed at the public hearing and passed the Board of Estimate in the same manner, and we were confident that any application which flowed from it would be treated exactly the same way. Tue Court: So that now the situation is [1220] this, as far as the City is concerned—when I say the City, I mean the Planning Commission and the Landmarks Authority— were ready to have the proposal effectuated and then some- thine happened, as a result of which nothing happened, is that it? Tae Wrrness: That is correct. Tne Court: Go ahead, Mr. Nespole. By Mr. Nespoie: Q. Mr. Drabkin, counsel for UGP in this case, the plain- tiff, has testified that the transfer of development rights, once effected, is irrevocable. Is such a transfer irrevocable under Section 74-791 A. If they use the rights on a transferee site, they can’t come back and use them over again on the landmarks site. 72 Q. Other than under that set of circumstances, is the transfer ever irrevocable? A. If they don’t use them, then it is not. 7 . - [1254] Jacquvetin T. Rosertson, Director of the Office of Midtown Planning & Development, City of New York, 220 West 42nd Street, New York, New York, called as a witness on behalf of the defendants, having been duly sworn, was examined and testified as follows: [1255] Direct EXAMINATION By Mr, Nespo.e: Q. Mr. Robertson, what is your present position? A. I’m the Director of the Office of Midtown Planning & De- velopment. Q. How long have you held that position, sir? A. Since April of 1969. Q. Were you employed by the City of New York prior to that time in any other position? A. I was a principal urban designer in the City Planning Commission. Q. How long were you so employed, sir? A. Since the spring—May of 1967. Q. What is your academic background, sir? A. I’m an architect. I was trained as a political scientist. I have a Bachelor of Arts degree in political science; a Master’s degree in politics, philosophy and economies; and Bachelor of Architecture. That’s it. Q. Are you a licensed architect, sir? A. I am. Q. Licensed by the State of New York, sir? A. Yes. [1267] Q. Did you attend any meetings with representa- tives of Penn Central and UGP regarding construction over Grand Central Terminal? A. I did. Q. When did these discussions commence? A. I think my first meeting was in March of 1968, and these meetings continued through until the end of 1969. 73 Q. Who attended these meetings? A. Aside from mem- bers of my own staff and the City Planning Commission, Norman Marcus, Richard Buford, the members of the Penn Central Railroad, real estate division, Sam Hellenbrand, the architects, Mr. Breuer, Mr. Beckhard, Murray Drabkin, representing the developer, Max Siegel, a zoning consultant for the developer. Q. Did Mr. Saady ever attend any of these meetings, sir? A. Yes. Q. How many of those meetings did he attend, do you recall? [1268] A. One that I’m sure of, and I know that I met with Mr. Saady on at least two other occasions. [1288] Q. Did there come a time during the course of the discussions that representatives of the Railroad in UGP that transferring the developments from Grand Central Terminal to another site was discussed? A. Yes, there did. Q. When was that discussion had? A. Specifically—the first specific proposal was on September 11th—— Q. And what—— A. —1969. Q. What sites were discussed? A. The Biltmore site. [1289] Q. Who was present at the meeting? A. Mr. Saady, Mr. Drabkin, Mr. Hellenbrand, I think Max Siegel, the architect, myself, Mr. Marcus, Mr. Ba ‘ell, my deputy. There may have been someone else. That is the best of my recollection. Q. Did there come a time during the course of that meet- ing that an agreement was reached in respect to transfer- ring the development rights from Grand Central Terminal to the Biltmore site? A. Yes. Q. What was that agreement, if you recall? A. The agreement was that we would—we, being the City, would move to—as quickly as possible to get the necessary trans- fer legislation through the Planning Commission of the 74 Board of Estimate. The agreement on the part of the de- veloper was that he would move along the lines of develop- ing a transfer of about, as I remember, a million three, a million four, from Grand Central site to the Biltmore site, the Biltmore would be demolished, a new building would be built on the Biltmore site and he would make an applica- tion for that building once the legislation was approved. There are a lot of details that we [1290] worked out. Tre Court: To whom do you attribute that accord? Who particularly said that? Mr. Nespo.e: May we get to that next at this point? Tue Court: That is what I am interested in knowing. The witness said the developer agreed. I wonder who spoke for the developer. Q. Which member of the developer’s party indicated this agreement to you? A. Mr. Saady. Q. And how did he indicate the agreement to you, Mr. Robertson? A. At the end of the meeting we shook hands that each would do his part to bring this to fruition. Q. And what was the understanding in respect to the obligation of the developer and what was the understand- ing in respect to the obligation of the City? A. The City was to prepare the necessary transfer legislation—legis- lation that was subsequently approved. The developer was to develop along the [1291] lines that we discussed during that meeting, a specific proposal which he had brought to that meeting to build a building on the Biltmore site of, roughly 2,100,000 square feet. Tue Court: What you are telling me by ‘‘legislation,’’ you’re referring to eventually the amendment of the zoning resolution to incorporate the extension of the transfer of air rights to a so-called adjoining owner? ~ Tue Wrrness: That’s correct. Me eR ee ee eee cies 75 Tue Court: You are speaking specifically of the 1969 amendment? Tre Wirvess: Right. Tue Court: And on that question is it your position and do you say that that amendment was entirely or mainly the product of these discussions and the agreement to which you’ve referred? Tue Wirness: Yes, sir. Q. Did Mr. Saady tell you at that time that he thought a building on the Biltmore site was not economically feas- ible? Tre Witness: No, he did not. [1292] Q. Did they operate under any assumption in re- spect to the feasibility of the Biltmore building? A. Not that I know of. They expressed willingness to put a lot of detailed work into trying to make that viable proposition. Q. Did there come a time when you saw certain plans proposed by the developer in respect to the Biltmore site? A. We saw detailed plans over a two-month period of time. Q. Did there come a time as to whether or not any agree- inent—withdrawn. Did there come a time that any agreement was reached in respect to specific proposals about a building on the Biltmore site? A. Yes. Q. What kind of an agreement was reached and in respect to what proposal, sir? A. Well, the agreements were, roughly, in relation to the open space, the Plaza that is— that would qualify the site for Plaza bonuses where the Plaza would be its size, the kinds and numbers of trees that would be planted in it, the kinds of access that [1293] would be made to the subway and the Grand Central Station concourse, the potential of building a bridge above the street level connecting into Grand Central Station itself. A whole variety of detailed architectural planning questions 76 was discussed and agreed upon as we went along in these negotiations. Q. Approximately what period of time are we talking about now, Mr. Robertson? A. Between September and the end of October. Q. Did Mr. Hellenbrand, whom you have indicated was the representative of the Railroad, ever state that he ap- proved of the agreement to build on the Biltmore site? A. I can’t remember whether he ever said that he approved. He certainly negotiated in the vein that would lead us to believe that this was his intention. Yes, we worked pretty hard on those negotiations. [1294] Q. Was the decision to build on the Biltmore site announced publicly? A. No, it was not. Q. Why was it not announced publicly? A. It was mu- tually agreed, at the request of the developer, that it would be inadvisable to talk about tearing down the Biltmore at that time, there were certain union contracts and problems associated with those and they didn’t want to alert anyone to the fact that they may be tearing down the Biltmore. Q. Was that in respect to the union, sir, representing the employees of the Biltmore Hotel? A. That’s correct. Q. During the course of these negotiations, were there any other sites other than the Biltmore discussed? A. As I said earlier, we looked at a variety of sites: the Com- modore, the Roosevelt, 466 Lexington, any number of pos- sible sites to which Grand Central square footage could be transferred, yes. Q. Were you present this morning when Mr. Elliott tes- tified? A. Yes, I was. [1312] By Mr. Nespo.e: Q. Based upon your experience as Director of the Office of Midtown Planning, Mr. Robertson, can you tell us what major American corporations have their headquarters on Madison Avenue? 77 Tue Court: Wouldn’t it be a form of free advertising? We know there are a lot of big corporations there. A. Union Carbide, IBM, Look, Newsweek. [1330] Q. Prior to the passage of the amendment in August, 1969, of Section 74-79, did you or anyone under your direction make any effort to determine if the air rights over the Grand Central Terminal were marketable? A. Yes. Q. What efforts did you make? A. Dick Buford and I contacted a major real estate developer in New York, to see if he would be interested, theoretically, in that kind of transfer deal. [1331] Q. Who did you contact? A. Harry Helmsley. [1344] THe Court: Let me interrupt you. At that stage, you were then to go forward with remedial legislation. Tue Wrrness: Yes, sir. Tue Court: To possibly accomplish the air rights. Tue Witness: Yes. Tse Court: To have a building on the present site of the Biltmore. Now, what happened after [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2575%3A03. Public record. Not legal advice.