Penn Station was demolished in 1965 to make way for several new developments. The city of New York was devastated, and they formed a commission with the purpose of preserving city landmarks. Among other things, the commission sought to oversee the restoration of Penn Station. In an attempt to rectify its mistakes, the city went through some interesting choices.
The commission attempted to restore Penn Station by hearing proposals for new structures to replace it. Two major proposals made their way through the process. The first aimed to place a 55-story office building over Grand Central Terminal, cantilevered over the existing Grand Central Terminal.
The second plan was to demolish a portion of Grand Central, creating a separate space that would be shared with the existing plans. Both were rejected outright, leading to a lengthy court battle. The first plan would have blocked the view of Park Avenue South, something the commission saw as a non-starter. The second was rejected on the grounds that it would have defeated the purpose of preserving a landmark.
Penn Central sued, arguing that it was essentially forced to operate a railroad it could not turn a profit from. The trial and judge agreed, but on appeal the courts overturned that decision. Penn Central, the courts argued, used bogus accounting methods to prove its case. When the numbers shook out, they didn’t add up to total financial turmoil.
That loss drove Penn Central further into bankruptcy, which gave the Metropolitan Transit Authority the ability to step in and recover the station. Penn Station was eventually rebuilt on tax payer dollars, which was the desired result. Just not the desired outcome.
About the Author: Phineas Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Phineas Upham website or Twitter page.