The Fifth Amendment's guarantee is designed to bar a government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole. There is no "set formula" for determining when "justice and fairness" require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons. Whether a particular restriction will be rendered invalid by the government's failure to pay for any losses proximately caused by it depends largely upon the particular circumstances in that case.
In accordance with procedures established by New York City's Landmarks Preservation Law, a law enacted out of the city's conviction that its standing as a world-wide tourist center and capital of business, culture, and government would be threatened unless the city's historic landmarks and neighborhoods were protected from precipitate decisions to destroy or fundamentally alter their character, the Landmarks Preservation Commission, as the agency vested with primary responsibility for administering the landmarks law, designated Grand Central Terminal to be a "landmark." The owner of the terminal, a private corporation which opposed the landmark designation but which did not seek judicial review of the designation as authorized under the landmarks law, subsequently entered into a lease agreement whereby the lessee would construct a multistory office building in the space above the terminal. The owner and lessee then sought the Commission's approval for the contemplated construction as required under the landmarks law. The Commission disapproved. The owner of the terminal and the lessee brought an action in the New York Supreme Court claiming that application of New York City's landmarks law had "taken" private property without just compensation in violation of Fifth and Fourteenth Amendments, and had violated the Fourteenth Amendment as constituting a deprivation of property without due process of law. The trial court held that the landmarks law, as applied to the plaintiffs' property, was unconstitutional, and the court enjoined the city from using the landmarks law to impede construction of any structure that might otherwise lawfully be constructed at the site of Grand Central Terminal. The New York Supreme Court, Appellate Division, reversed, and the Court of Appeals of New York affirmed, rejecting any claim that the landmarks law had "taken" property without just compensation. On Appeal, the US Supreme Court affirmed.
Did the application of New York City's landmarks law "take" private property without just compensation in violation of Fifth and Fourteenth Amendments, and in violation of the Fourteenth Amendment as constituting a deprivation of property without due process of law?
The application of the Landmarks Preservation Law preventing use of the air space above Grand Central Terminal did not effect a "taking" of private property by the government without just compensation in violation of the Fifth and Fourteenth Amendments, since (1) the law did not interfere with the present uses of the building, but allowed the owner to continue using it as had been done in the past, permitting the owner to profit from the building and obtain a reasonable return on its investment, (2) the law did not necessarily prohibit occupancy of any of the air space above the landmark building, since under the procedures of the law, it was possible that some construction in the air space might be allowed, and (3) the law did not deny all use of the owner's preexisting air rights above the landmark building, since under a transferable development rights program, it was possible for the owner to transfer the development rights it was foreclosed from using as to Grand Central Terminal to other neighboring properties which it owned.