City vs. Builders on `Air Rights' Use

WHEN New York City decides to preserve a historic structure, blocks of air space above the buildings are shuttled around like huge economic chips. If a property owner is prevented from building as high as zoning would ordinarily permit, he may transfer the development rights on the unused air space to an adjoining property.

Now, a battle royal over the technicalities of ``air right'' transfers is brewing between the city and Penn Central Corporation, which owns the historic Grand Central Terminal railroad station at 42nd Street and Park Avenue in Manhattan.

In 1967, the city designated the station a historic landmark, and in doing so told Penn Central to forget about putting a 53-story office tower on top of the lavish beaux-arts structure. After the United States Supreme Court backed the city in 1978, Penn began looking for other ways to make money from its property. The company decided to sell the air rights above the station to a developer of a parcel of nearby land. The developer wanted to take 800,000 square feet and add it to a property located several blocks from Grand Central. The result would be a 72-story, 1.4 million-square-foot building that would become Manhattan's fourth-tallest.

No go, said the city. According to zoning regulations, to transfer air rights a receiving property must be adjacent, across the street or cater-cornered from the original parcel. The developer's property was none of those; it was about two blocks away. Further, the plots between the two properties were not owned by either party.

But the would-be transferees haven't give up. They now have pointed out to the city that they do own an unbroken string of properties between the two sites. There's just one catch: the properties are underground.

Sprawling beneath the streets of midtown Manhattan are the 123 tracks built by the Vanderbilt rail empire, 33.7 miles of which lie below Grand Central or in adjoining yards.

PENN CENTRAL and the developer, G. Ware Travelstead, have told city officials in no uncertain terms what will happen if their subterranean connection is not deemed acceptable.

``The first landmark case will be revisited if the city does not permit rational planning for the transfer of development rights,'' says Fred Rovet, Travelstead's general counsel. That means the whole issue of ``landmarking'' private property could go back to the courts for a massive battle.

So far, the city is not buying either the argument or the threat. But Debra Silberstein, assistant supervising attorney in the Department of City Planning, does say Penn Central could still ``theoretically get to 383 Madison [the proposed site], by obtaining the approval of the owners of the above-ground properties between the two lots. [But] they have chosen not to do that.''

Kent Barwick, president of the Municipal Art Society, an influential civic group that often sets the tone for city planning discussions, doubts the developers have much chance of winning on this one, and that's fine with him. He says the proposed building would thrust an enormous amount of additional bulk and population into an already jammed area.

But Mr. Barwick sees a larger issue: the city's right to control growth in a fashion that prevents deterioration of the quality of life in New York. ``Just because the railroad has the right to transfer air rights doesn't mean the city has to permit it all to go to one site, especially if it has adverse effects,'' he says. Taking it a step further, Barwick says he would like to see the planning-shy city begin considering preservation of the immediate area around the Grand Central Terminal, which he calls ``one of the world's leading complexes.''

Barwick and other preservationists say the complex works on two levels: practically and aesthetically. The original Grand Central development included a number of elegant hotels, apartments, and office buildings, some of which still exist. The buildings are linked through a series of passageways that permit thousands of rail commuters to go to and from work without leaving the station.