Matter of Penny Port, LLC v. New York City Department of Health

In Matter of Penny Port, LLC v. New York City Department of Health (Sup Ct, NY County, Sep. 14, 1999, Sklar, J., index No. 109291/99), a restaurant in Grand Central Terminal, which allowed smoking, brought an Article 78 proceeding to declare that the City of New York lacked jurisdiction over the restaurant to enforce the City's anti-smoking regulations. The restaurant argued that, because the City's anti-smoking regulations conflicted with the MTA's own regulations, which permitted smoking in specifically designated areas, the City had no jurisdiction under Public Authorities Law 1266 (8). The City argued that the restaurant was not exempt from the City's anti-smoking regulations because its premises were not devoted to "transportation purposes." The court rejected the City's argument. The court in Matter of Penny Port, LLC noted that the Appellate Division, First Department had previously ruled that the portions of Grand Central Terminal being used as food stores, drugstores, and other commercial enterprises were incidental to the use of Grand Central Terminal's use for transportation purposes, and thus were tax exempt under Public Authorities Law 1275. Because Matter of Penny Port, LLC involved another commercial enterprise within Grand Central Terminal, the court saw no reason to treat the restaurant differently for the purposes of Public Authorities Law 1266 (8). The court stated, "This argument is foreclosed by the First Department's holding in Metro. Transp. Auth. v. City of New York, 70 AD2d 551, 416 N.Y.S.2d 612 (1st Dept), lv denied 48 NY2d 607 (1979). In that case, the court considered a similarly-worded provision in PAL 1275, which grants tax exempt status to property leased by the [MTA] and used for transportation purposes.' The Appellate Division agreed with the court below that those portions of [Grand Central] which are used as food stores, drugstores, and other commercial enterprises, and which cater to both commuters and passersby, are nonetheless being used for transportation purposes' (Metro. Transp. Auth., 70 AD2d at 551) (emphasis supplied). The court reasoned that the commercial enterprises create revenue for the MTA and are incidental to transportation upon railroad facilities.' (Id.) Although the City contends that the First Department was construing the term transportation purposes' only in the context of PAL 1275, there is no reason why the same definition should not apply equally to its use in PAL 1266."