Chapter § 62.3 JUST COMPENSATION

• Jurisdiction: Oregon

§ 62.3 JUST COMPENSATION

§ 62.3-1 Just Compensation Defined

Just compensation is the fair market value of the property taken, or the fair market value of that which the owner has been deprived of by reason of the acquisition of the owner's property. City of Bend v. Juniper Util. Co., 242 Or App 9, 18, 252 P3d 341 (2011); State ex rel. Dep't of Transp. v. Alf, 165 Or App 162, 166, 995 P2d 1197, rev den, 330 Or 470 (2000); State ex rel. Dep't of Transp. v. Hughes, 162 Or App 414, 419, 986 P2d 700 (1999); State By & Through Dep't of Transp. v. Lundberg, 312 Or 568, 574, 825 P2d 641, cert den, 506 US 975 (1992); State Highway Comm'n v. Hooper, 259 Or 555, 560, 488 P2d 421 (1971); State Highway Comm'n v. Hazapis, 3 Or App 282, 286, 472 P2d 831 (1970); Tunison v. Multnomah Cnty., 251 Or 602, 604, 445 P2d 498 (1968).

A condemner cannot force a landowner to take other than money as compensation, and the landowner "is to be put in as good [a] position pecuniarily" as the landowner would have occupied if his or her property had not been taken. United States v. Miller, 317 US 369, 373, 63 S Ct 276, 87 L Ed 336 (1943); Monongahela Nav. Co. v. U S, 148 US 312, 326, 13 S Ct 622, 37 L Ed 463 (1893).

For partial takings, just compensation is the fair market value of the property taken plus the depreciation in fair market value caused by the taking of the portion not taken. Alf, 165 Or App at 167; Hooper, 259 Or at 560.

§ 62.3-2 Fair Market Value

"Fair market value is defined as the amount of money the property would bring if it were offered for sale by one who desired, but was not obliged, to sell and was purchased by one who was willing, but not obliged, to buy." State By & Through Dep't of Transp. v. Lundberg, 312 Or 568, 574, 825 P2d 641, cert den, 506 US 975 (1992); City of Bend v. Juniper Util. Co., 242 Or App 9, 18, 252 P3d 341 (2011); State ex rel. Dep't of Transp. v. Hughes, 162 Or App 414, 419, 986 P2d 700 (1999); State, By & Through Dep't of Transp. v. S. Pac. Transp. Co., 89 Or App 344, 346, 749 P2d 1233, rev den, 305 Or 671 (1988); In re Lebanon-Shea Hill Section of Santiam Highway, 135 Or 430, 437, 296 P 65 (1931). Inherent within fair market value are the ideas that the willing buyer and seller are "envisaged as intelligent business people expecting to pay and receive hard cash," and the property's exposure to the market for a reasonable period of time, including the "briskness of demand" for unimproved lots. Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land, 195 F Supp 2d 314, 320-21 (2002), aff'd, 315 F3d 279 (1st Cir Mass, 2003) (internal quotations omitted).

Fair market value is determined by considering all factors "that might fairly be brought forward and reasonably be given substantial weight in negotiations between the owner and a prospective purchaser." State By & Through State Highway Comm'n v. Superbilt Mfg. Co., 204 Or 393, 412, 281 P2d 707 (1955). Fair market value is measured "as of the date the condemnation is commenced or the date the condemner enters on and appropriates the property, whichever first occurs." Lund-berg, 312 Or at 574 n 6.

When no deposit of estimated compensation is made and property values increase between the date of filing and the date of transfer of title by payment of judgment, a powerful argument can be made for using the value on the date of trial. See § 62.4-4. For a discussion of valuation under abnormal market conditions, see Julius L. Sackman ed., 5 Nichols on Eminent Domain § 18.16 (rev 3d ed 1997) (citation not verified by publisher).

§ 62.3-3 Highest and Best Use

Just compensation requires that the valuation of real property is to be based on its highest and best use. State By & Through Dep't of Transp. v. Lundberg, 312 Or 568, 574, 825 P2d 641, cert den, 506 US 975 (1992); State By & Through State Highway Comm'n v. Superbilt Mfg. Co., 204 Or 393, 412, 281 P2d 707 (1955). Highest and best use is the use that will return the greatest economic benefit to the owner. It may also be defined as that available use and program of future use that produces the highest present land value. Lundberg, 312 Or at 574.

The highest and best use may be other than the current use of the property "if it is reasonably probable that the property has actual potential for higher and better use." Lundberg, 312 Or at 574; State By & Through State Highway Comm'n v. Arnold, 218 Or 43, 57, 341 P2d 1089, reh'g den and opinion modified, 218 Or 43, 343 P2d 1113 (1959) (future uses of the property may be considered "if the prospect of such uses is more than a speculative forecast and if the probability of such future use would be reflected in the value which a present purchaser would attach to the property"); State By & Through State Highway Comm'n v. Assembly of God, Pentecostal, of Albany, 230 Or 167, 176, 368 P2d 937 (1962); Unified Sewerage Agency of Washington Cnty. v. Duyck, 33 Or App 375, 377-78, 576 P2d 816 (1978) (jury was properly instructed that it could "consider prospective annexation and zone changes in determining the present value of the subject property only if it found a reasonable probability that such changes would occur in the near future"). "Although 'any evidence purporting to show the adaptability of land to a use not yet made of the...