Just Compensation in Condemnation Cases
| Publication year | 1989 |
| Pages | 1735 |
1989, September, Pg. 1735. Just Compensation in Condemnation Cases
In condemnation actions, a primary concern of the client is the amount of just compensation awarded. There are three key issues that generally determine the amount of the award.
The first issue is the market value of the property taken. Although market value frequently depends on expert testimony and evaluation of comparable sales by a qualified appraiser, the pivotal issue often will be the determination of the most beneficial use for the land. The "highest and best use" will dictate which sales are, in fact, comparable.
The second issue concerns the situation in which only a portion of a parcel is taken and the remainder of the parcel suffers damage. Colorado law determines just compensation for partial takings by adding (1) the loss in market value of the property actually taken to (2) the excess of damages over special benefits to the remainder of the property. By contrast, in federal condemnation cases the difference in the market value of the entire parcel before and after the taking establishes just compensation for complete and partial takings.
The third issue derives from Art. II, § 15 of the Colorado Constitution. Section 15 expands the circumstances for the award of compensation by providing that "private property shall not be taken or damaged" without just compensation (emphasis supplied). Accordingly, even if no portion of the parcel is taken, the landowner might receive just compensation for damage caused by a public project.
This article discusses these issues and the law that guides practitioners involved in condemnation cases.
A basic principle of eminent domain law is that market value is not limited to the current use of the property.(fn1) Rather, the court may consider the "highest and most profitable use to which the property is adaptable."(fn2) The Colorado Supreme Court has held that
any reasonable future use to which the land may be adapted or applied by men of ordinary prudence and judgment may be considered insofar as it may assist the jury in arriving at the present market value.(fn3)
A landowner, armed with this principle, views his or her farm as a potential residential subdivision. Conversely, the condemnor may view raw land surrounded by commercial development as mere grazing land. Thus, a critical question in a condemnation case is whether the jury will be permitted to hear evidence of potential uses. The following are some issues to be considered.
Highest and best use cannot be predicated on uses which are "speculative or prospective."(fn4) Rather, proof of two factors is required before the fact finder may consider a potential use: (1) that the land is adaptable; and (2) that there is a reasonable likelihood that the land would be so used in the reasonably near future.
Adaptability. In establishing that the land is adaptable for a potential use, several factors must be considered. The first is whether the physical characteristics of the land preclude development. For example, a parcel hardly can be considered a potential subdivision if water is unavailable or if the grade is too severe. Where physical adaptability is an issue, expert engineering testimony will be essential.
Even if problems of physical adaptability can be overcome, the cost of developing the land may be so substantial that, in an economic sense, the land may not be adaptable to the proposed use. In such cases, the condemnor is entitled to establish that the proposed use is not economically viable.(fn5)
Further, land may not be adaptable if development is prohibited by zoning regulations.(fn6) In such cases, the highest and best use of the property will turn on whether the landowner can establish the likelihood that the zoning board would rezone the property or permit a variance. In Stark v. Poudre School District R-1,(fn7) the Colorado Supreme Court authorized expert testimony on zoning practices only when the "likelihood of rezoning rises to the level of a probability." Federal courts apply a slightly different standard, requiring that the landowner
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