Block model shows the area
around Grand Central
Terminal. Above, the
existing buildings; at center,
the Breuer proposal,
plus expected future
development; then, below,
the Urban Design Group
proposal, using air-rights
transfer legislation.

The Chicago Plan

Courtesy Vlastimil Koubek, Architect

## DENSITY TRANSFERS WITHIN THE CENTRAL CITY: WASHINGTON, D.C.

Preservation of the Christian Heurich Memorial Mansion (at right in the model), built in 1892 and located near Washington's Dupont Circle, would be facilitated by the transfer of the landmark's unused development rights to an office building to be constructed nearby (center). Under a pending proposal, the Columbia Historical Society, owners of the landmark, will receive $525,000 from the transfer and have agreed both to devote these funds to the restoration and maintenance of the landmark and to record restrictions upon the landmark's interior, exterior, and grounds in accordance with the National Capital Planning Commission's plans for the area.

The Chicago Plan and Economics: Marketability

TABLE 17. Property Tax Collections, Landmark A Site

<table><tbody><tr><td>1. Present Building</td><td></td></tr><tr><td>Size:</td><td>295,000 gross sq. ft.</td></tr><tr><td>Present property taxes:</td><td>$246,173</td></tr><tr><td>2. Highest and Best Use (assumes proposed landmark structure demolished and replaced):</td><td></td></tr><tr><td>Estimated building size:</td><td>625,000 gross sq. ft.</td></tr><tr><td>Estimated effective gross income:</td><td>$4,037,500</td></tr><tr><td>Estimated property taxes:</td><td>$1,009,375</td></tr><tr><td>3. 330,000 gross square feet of development rights sold to developer and property taxes on landmark structure reduced by 25 percent:</td><td></td></tr><tr><td>a. Property taxes yielded from development rights: 330,000 gross sq. ft. × 81 percent efficiency = 267,300 net rentable sq. ft. At an average rental of $9.50 per sq. ft. yielding $3,489,350, less vacancy and credit loss factor of 5 percent = $3,314,883. Property taxes estimated at 25 percent, or $828,721.</td><td></td></tr><tr><td>b. Property taxes from landmark structure: $246,173 × 75 percent = $184,630.</td><td></td></tr><tr><td>c. a + b = $828,721 + $184,630 = $1,013,351</td><td></td></tr></tbody></table>

Source: Real Estate Research Corporation, 1972.

TABLE 18. Property Tax Collections, Landmark C Site

<table><tbody><tr><td>1. Present Building</td><td></td></tr><tr><td>Size:</td><td>65,800 gross sq. ft.</td></tr><tr><td>Present property taxes:</td><td>$109,444</td></tr><tr><td>2. Highest and Best Use (assumes proposed landmark structure demolished and replaced):</td><td></td></tr><tr><td>Estimated building size:</td><td>111,725 gross sq. ft.</td></tr><tr><td>Estimated effective gross income:</td><td>$764,200</td></tr><tr><td>Estimated property taxes:</td><td>$191,049</td></tr><tr><td>3. 45,925 gross sq. ft. of development rights sold to developer and property taxes on landmark structure reduced by 25 percent:</td><td></td></tr><tr><td>a. Property taxes yielded from development rights: 45,925 gross sq. ft. × 81 percent efficiency = 37,199 net rentable sq. ft. At an average rental of $9.50 per sq. ft. yielding $353,391, less vacancy and credit loss factor of 5 percent = $335,721. Property taxes estimated at 25 percent, or $83,930.</td><td></td></tr><tr><td>b. Property taxes from landmark structure: $109,444 × 75 percent = $82,083.</td><td></td></tr><tr><td>c. a + b = $83,930 + $82,083 = $166,013</td><td></td></tr></tbody></table>

Space Adrift

TABLE 3. Calculation of the Value of Preservation Restrictions — Four Chicago Landmarks

<table><thead><tr><th rowspan="2">Reference</th><th colspan="2">Landmark A</th><th colspan="2">Landmark B</th></tr><tr><th>Existing</th><th>Potential</th><th>Existing</th><th>Potential</th></tr></thead><tbody><tr><td>Gross Building Size (sq. ft.)</td><td>295,000</td><td>625,000</td><td>368,000</td><td>854,000</td></tr><tr><td>Efficiency Factor</td><td>.75</td><td>.80</td><td>.75</td><td>.80</td></tr><tr><td>Net Rentable Space (sq. ft.)</td><td>220,000</td><td>500,000</td><td>276,000</td><td>683,200</td></tr><tr><td>Average Rental</td><td>$ 6.50</td><td>$ 8.50</td><td>$ 6.00</td><td>$ 8.50</td></tr><tr><td>Gross Income</td><td>$1,430,000</td><td>$ 4,250,000</td><td>$1,656,000</td><td>$ 5,807,200</td></tr><tr><td>Vacancy and Credit Loss @ 5%</td><td>$ 71,500</td><td>$ 212,500</td><td>$ 82,800</td><td>$ 290,360</td></tr><tr><td>Effective Gross Income</td><td>$1,358,500</td><td>$ 4,037,500</td><td>$1,573,200</td><td>$ 5,516,840</td></tr><tr><td>Real Estate Taxes</td><td>$ 246,173</td><td>$ 1,009,375</td><td>$ 273,345</td><td>$ 1,379,210</td></tr><tr><td>Other Operating Expenses</td><td>$ 611,325</td><td>$ 1,211,250</td><td>$ 707,940</td><td>$ 1,655,052</td></tr><tr><td>Net Income before Recapture</td><td>$ 501,002</td><td>$ 1,816,875</td><td>$ 591,915</td><td>$ 2,482,578</td></tr><tr><td>Overall Capitalization Rate</td><td>.10</td><td>.09</td><td>.10</td><td>.09</td></tr><tr><td>Value Estimate - Income Approach</td><td>$5,010,000</td><td>$20,188,000</td><td>$5,920,000</td><td>$27,584,000</td></tr><tr><td>Loan-to-Value Ratio</td><td>.80</td><td>.90</td><td>.80</td><td>.90</td></tr><tr><td>Estimated Mortgage Amount</td><td>$4,008,000</td><td>$18,169,200</td><td>$4,736,000</td><td>$24,825,600</td></tr><tr><td>Interest Rate</td><td>8.75%</td><td>8.50%</td><td>8.75%</td><td>8.50%</td></tr><tr><td>Mortgage Term - Years</td><td>20</td><td>35</td><td>20</td><td>35</td></tr><tr><td>Factor - Installment to Amortize $1.00</td><td>.106080</td><td>.089616</td><td>.106080</td><td>.089616</td></tr><tr><td>Annual Debt Service</td><td>$ 425,168</td><td>$ 1,628,251</td><td>$ 502,394</td><td>$ 2,224,770</td></tr><tr><td>Cash Flow to Equity (NIBR - Debt Service)</td><td>$ 75,823</td><td>$ 188,624</td><td>$ 89,521</td><td>$ 257,808</td></tr><tr><td>Discount Rate</td><td>6%</td><td>6%</td><td>6%</td><td>6%</td></tr><tr><td>Projection Period - Years</td><td>20</td><td>35</td><td>20</td><td>35</td></tr><tr><td>Factor - Present Value of Annuity of $1.00</td><td>11.469921</td><td>14.498246</td><td>11.469921</td><td>14.498246</td></tr><tr><td>Present Value of Cash Flow to Equity</td><td>$ 869,683</td><td>$ 2,734,717</td><td>$1,026,798</td><td>$ 3,737,763</td></tr><tr><td>Estimate of Reversionary Value</td><td>$2,505,000</td><td>$10,094,000</td><td>$2,960,000</td><td>$13,792,000</td></tr><tr><td>Discount Rate</td><td>6%</td><td>6%</td><td>6%</td><td>6%</td></tr><tr><td>Projection Period - Years</td><td>20</td><td>35</td><td>20</td><td>35</td></tr><tr><td>Factor - Present Value of Reversion of $1.00</td><td>.311805</td><td>.130105</td><td>.311805</td><td>.130105</td></tr><tr><td>Present Value of Reversion</td><td>$ 781,071</td><td>$ 1,313,279</td><td>$ 922,942</td><td>$ 1,794,408</td></tr><tr><td>Present Value of Equity</td><td>$1,650,754</td><td>$ 4,047,996</td><td>$1,949,740</td><td>$ 5,532,171</td></tr><tr><td>Difference in Equity Values</td><td></td><td>$ 2,397,242</td><td></td><td>$ 3,582,431</td></tr><tr><td>Demolition Costs</td><td></td><td>584,220</td><td></td><td>605,000</td></tr><tr><td>Damages to Landmark Owner (without tax reduction)</td><td></td><td>$ 1,813,022</td><td></td><td>$ 2,977,431</td></tr><tr><td>Damages after 25% Tax Reduction</td><td></td><td>$ 1,107,128</td><td></td><td>$ 2,193,622</td></tr></tbody></table>

<table><thead><tr><th rowspan="2">Reference</th><th colspan="2">Landmark C</th><th colspan="2">Landmark D</th></tr><tr><th>Existing</th><th>Potential</th><th>Existing</th><th>Potential</th></tr></thead><tbody><tr><td>Gross Building Size (sq. ft.)</td><td>65,800</td><td>111,725</td><td>300,000</td><td>807,000</td></tr><tr><td>Efficiency Factor</td><td>.75</td><td>.80</td><td>.75</td><td>.80</td></tr><tr><td>Net Rentable Space (sq. ft.)</td><td>49,350</td><td>89,380</td><td>225,000</td><td>645,600</td></tr><tr><td>Average Rental</td><td>$ 7.00</td><td>$ 9.00</td><td>$ 7.00</td><td>$ 9.00</td></tr><tr><td>Gross Income</td><td>$ 350,000</td><td>$ 804,420</td><td>$1,575,000</td><td>$ 5,810,400</td></tr><tr><td>Vacancy and Credit Loss @ 5%</td><td>$ 17,000</td><td>$ 40,220</td><td>$ 78,750</td><td>$ 290,520</td></tr><tr><td>Effective Gross Income</td><td>$ 333,000</td><td>$ 764,200</td><td>$1,496,250</td><td>$ 5,519,880</td></tr><tr><td>Real Estate Taxes</td><td>$ 109,444</td><td>$ 191,049</td><td>$ 299,250</td><td>$ 1,379,970</td></tr><tr><td>Other Operating Expenses</td><td>$ 149,850</td><td>$ 229,259</td><td>$ 673,312</td><td>$ 1,655,964</td></tr><tr><td>Net Income before Recapture</td><td>$ 73,706</td><td>$ 343,889</td><td>$ 523,687</td><td>$ 2,483,946</td></tr><tr><td>Overall Capitalization Rate</td><td>.10</td><td>.09</td><td>.10</td><td>.09</td></tr><tr><td>Value Estimate - Income Approach</td><td>$ 740,000</td><td>$ 3,821,000</td><td>$5,237,000</td><td>$27,600,000</td></tr><tr><td>Loan-to-Value Ratio</td><td>.80</td><td>.90</td><td>.80</td><td>.90</td></tr><tr><td>Estimated Mortgage Amount</td><td>$ 592,000</td><td>$ 3,438,900</td><td>$4,189,600</td><td>$24,840,000</td></tr><tr><td>Interest Rate</td><td>8.75%</td><td>8.50%</td><td>8.75%</td><td>8.50%</td></tr><tr><td>Mortgage Term - Years</td><td>20</td><td>35</td><td>20</td><td>35</td></tr><tr><td>Factor - Installment to Amortize $1.00</td><td>.106080</td><td>.089616</td><td>.106080</td><td>.089616</td></tr><tr><td>Annual Debt Service</td><td>$ 62,799</td><td>$ 308,180</td><td>$ 444,432</td><td>$ 2,226,061</td></tr><tr><td>Cash Flow to Equity (NIBR - Debt Service)</td><td>$ 10,907</td><td>$ 35,709</td><td>$ 79,255</td><td>$ 257,885</td></tr><tr><td>Discount Rate</td><td>6%</td><td>6%</td><td>6%</td><td>6%</td></tr><tr><td>Projection Period - Years</td><td>20</td><td>35</td><td>20</td><td>35</td></tr><tr><td>Factor - Present Value of Annuity of $1.00</td><td>11.469921</td><td>14.498246</td><td>11.469921</td><td>14.498246</td></tr><tr><td>Present Value of Cash Flow to Equity</td><td>$ 125,102</td><td>$ 517,717</td><td>$ 909,048</td><td>$ 3,738,880</td></tr><tr><td>Estimate of Reversionary Value</td><td>$ 370,000</td><td>$ 1,910,000</td><td>$2,618,500</td><td>$13,800,000</td></tr><tr><td>Discount Rate</td><td>6%</td><td>6%</td><td>6%</td><td>6%</td></tr><tr><td>Projection Period - Years</td><td>20</td><td>35</td><td>20</td><td>35</td></tr><tr><td>Factor - Present Value of Reversion of $1.00</td><td>.311805</td><td>.130105</td><td>.311805</td><td>.130105</td></tr><tr><td>Present Value of Reversion</td><td>$ 115,367</td><td>$ 248,500</td><td>$ 816,461</td><td>$ 1,795,449</td></tr><tr><td>Present Value of Equity</td><td>$ 240,469</td><td>$ 766,217</td><td>$1,725,509</td><td>$ 5,534,329</td></tr><tr><td>Difference in Equity Values</td><td></td><td>$ 525,748</td><td></td><td>$ 3,808,820</td></tr><tr><td>Demolition Costs</td><td></td><td>123,000</td><td></td><td>270,000</td></tr><tr><td>Damages to Landmark Owner (without tax reduction)</td><td></td><td>$ 402,748</td><td></td><td>$ 3,538,820</td></tr><tr><td>Damages after 25% Tax Reduction</td><td></td><td>$ 88,920</td><td></td><td>$ 2,680,732</td></tr></tbody></table>

THE NEW YORK TIMES, SUNDAY, MAY 3, 1992

Grand Central Owner Asks Wider Use of Air

Continued From Page 1

legal groundwork is already being laid for a
tower that would be "in harmony" with the
existing Beaux-Arts facade.

"The city and community should not mis-
understand Penn Central's resolve," the Cin-
cinnati-based corporation said, "and that is
to realize the value of the air rights, which
value has been denied it for so long." Given
the magnitude of its holdings, and the desir-
ability — in a better market — of office space
around Grand Central Terminal, that value
could be in the many millions of dollars.

IN 1968, Penn Central proposed a 53-story skyscraper over the terminal. That was rejected by the Landmarks Preservation Commission, leading to a 10-year legal battle that, ended when the United States Supreme Court upheld the city's action and, indeed, the constitutionality of the landmarks law itself.

The court noted that Grand Central's
transferable development rights "undoubt-
edly mitigate whatever financial burdens the
law has imposed" on Penn Central and that
Penn Central's "ability to use these rights
has not been abrogated; they are made
transferable to at least eight parcels in the
vicinity of the terminal."

In the intervening years, however, a con-
sensus has grown that the current arrange-
ment, under which the air rights can move
only to sites directly across from Grand
Central or along a chain of lots in common
ownership, does not afford Penn Central
enough opportunities to sell these rights.

It also does not make any planning sense,
that it directs development by patterns of
ownership, rather than patterns of existing
and use, density and transportation.

(In 1989, the Planning Commission reject-
d Penn Central's attempt to transfer air
rights along a chain of subsurface lots to a
development site at 383 Madison Avenue,
between 46th and 47th Streets.)

The City Planning Department has pro-
posed a new zoning subdistrict from Madison
Lexington Avenue, 41st to 48th Street.
thin the core of this subdistrict, air rights
could be used to develop structures 21.6 times

Where Grand Central's Air Rights Might Go

City Planning Department Proposal

Penn Central Counter-Proposal

■ Sites where air rights could be used to attain a floor-area ratio of 21.6, by special permit only.

☐ Sites where air rights could be used to attain a
floor-area ratio of 16, as a matter of right.

 Sites where air rights could be used to attain a floor-
area ratio of 21.6, as a matter of right.

 Sites where air rights could be used to attain a floor-
area ratio of 18, as a matter of right.

 Sites where air rights could be used to attain a floor-
area ratio of 16, as a matter of right.

Sources: City Planning Department, Penn Central Corporation

mined from considering envi-
ronmental factors as well as
economic ones."

City planners say that an
environmental analysis of the
Grand Central area — partic-
ularly from the standpoint of
traffic volume and air pollu-
tion — would be virtually
meaningless, except on a
case-by-case basis through
the special-permit process.

"Even if we were able to do
a credible environmental re-
view now," said Robert E.
Flahive, director of the Man-
hattan office, "we'd be hard
pressed in five years to point
to a generic environmental
impact statement and say,
'We analyzed this in 1992.'
The background conditions
may be very different."

At a public forum tomor-
row, Mr. Flahive is scheduled
to discuss the subdistrict with
Frank S. Fish, a principal in
Buckhurst Fish. The session
begins at 6 P.M. in the Urban
Center, 457 Madison Avenue,
at 50th Street. A hearing by
the planning commission is
scheduled May 20, with a vote
expected in June. The matter
then goes to the City Council.

While the zoning saga
plays out invisibly to the trav-
eling public, another facet of Grand Central's
unfolding future is far easier to notice: the
restoration of the former main waiting room.

Although the room has not yet reopened to
the public, it is possible to see through the
enormous interior windows that the chamber
is glowing as it has not since Grand Central
opened in 1913. The luster seems to emanate
from the Caen stone walls themselves.

The M.T.A. has spent $4.3 million to strip
architectural accretions from the waiting
room, remove and store the great oak bench-
es, and restore the five

> 'It's clear that this is a real estate proposal, not a
> planning proposal,' says the planning agency chief.

The New York Times

embrace the city planning proposal.”

However, both Penn Central and the Met-
ropolitan Transportation Authority believe
that city planners have not gone far enough.

floor-area ratios of 21.6 would be allowed
automatically in the core of the subdistrict,
without need of a special permit. On three
sides of that core,

Continued From Page 1

"The city and community should not mis-
understand Penn Central's resolve," the Cin-
cinnati-based corporation said, "and that is
to realize the value of the air rights, which
value has been denied it for so long." Given
the magnitude of its holdings, and the desir-
ability — in a better market — of office space
around Grand Central Terminal, that value
would be in the many millions of dollars.

IN 1968, Penn Central proposed a 53-story
skyscraper over the terminal. That was
rejected by the Landmarks Preservation
commission, leading to a 10-year legal battle
that ended when the United States Supreme
court upheld the city's action and, indeed, the
institutionality of the landmarks law itself.
The court noted that Grand Central's
transferable development rights "undoubt-
edly mitigate whatever financial burdens the
has imposed" on Penn Central and that
Penn Central's "ability to use these rights
is not been abrogated; they are made
transferable to at least eight parcels in the
entity of the terminal."

In the intervening years, however, a con-
clusion has grown that the current arrange-
ment, under which the air rights can move
to sites directly across from Grand
Central or along a chain of lots in common
ownership, does not afford Penn Central
enough opportunities to sell these rights.

It also does not make any planning sense,
that it directs development by patterns of
ownership, rather than patterns of existing
land use, density and transportation.

In 1989, the Planning Commission reject-
Penn Central's attempt to transfer air
its along a chain of subsurface lots to a
development site at 383 Madison Avenue,
een 46th and 47th Streets.)

The City Planning Department has pro-
duced a new zoning subdistrict from Madison
lexington Avenue, 41st to 48th Street.

Penn Central Counter-Proposal

■ Sites where air rights could be used to attain a floor-area ratio of 21.6, as a matter of right.

■ Sites where air rights could be used to attain a floor-area ratio of 18, as a matter of right.

mined from considering envi-
ronmental factors as well as
economic ones.”

City planners say that an
environmental analysis of the
Grand Central area — partic-
ularly from the standpoint of
traffic volume and air poli-
tion — would be virtually
meaningless, except on a
case-by-case basis through
the special-permit process.

"Even if we were able to do a credible environmental review now," said Robert E. Flahive, director of the Manhattan office, "we'd be hard pressed in five years to point to a generic environmental impact statement and say, 'We analyzed this in 1992.' The background conditions may be very different."

At a public forum tomorrow, Mr. Flahive is scheduled to discuss the subdistrict with Frank S. Fish, a principal in Buckhurst Fish. The session begins at 6 P.M. in the Urban Center, 457 Madison Avenue, at 50th Street. A hearing by the planning commission is scheduled May 20, with a vote expected in June. The matter then goes to the City Council.

The M.T.A. has spent $4.3 million to strip
architectural accretions from the waiting
room, remove and store the great oak bench-
es, and restore the 17-foot gold-and

'It's clear that this is a real estate proposal, not a
planning proposal,' says the planning agency chief.

The New York Times

The wait is
restoring
the rest
of the

distance passed
wait hours for
become the
redundant spa
words of the

It was closed
1989. A plywood
keep a passage
main concourse
1991 and is se-


A new wait
west balcony,
commodating
about one-tent-
ing room. But
distance train-
mal (the last
travelers now
hours — in the
room is more
ers," Mr. Enn

S
over the
tourism
food ser-
gency gen-
and concept
quest for pro-
the wait
high quality
space.
Ideally,
restau-