The admissibility of dedication requirements in condemnation cases: No Longer the Road Less Traveled.

• Author: Herman, Debra

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When the government acquires property from a private owner in eminent domain proceedings, the owner is entitled to full and fair compensation. (1) In this manner, the government can efficiently satisfy public needs, while compensating the private owner for the acquisition of the property necessary to fulfill such needs. In Florida, full and fair compensation to the owner is typically achieved by the payment of the fair market value of the property. (2)

Fair market value is defined as what a willing buyer would pay to a willing seller, neither party being obligated to act. (3) Importantly, this concept assumes that the buyer and seller are aware of all relevant facts regarding the property, including restrictions legally imposed on the property by the government, such as zoning and use regulations. (4)

In condemnation cases, fair market value is determined not only by looking at the existing zoning and use of the property, but also any change in zoning or use that is reasonably probable. (5) Thus, under Florida law, the property owner is permitted to argue that the property should be valued at a higher or better use than that which exists on the date of acquisition. For example, an owner of property zoned and used for agricultural purposes may appraise the property under a different use, such as commercial, if it is reasonably probable that the more profitable use of the land is feasible at the time of the condemnation. Likewise, even if no change in zoning is required, a property owner may assert a change in use that is higher and better than the existing use, such as a change from office to commercial retail.

Sometimes, however, such proffered changes trigger the application of zoning restrictions, including the required dedication of property to the public. Whether and how such dedication requirements for the proffered change in use affect fair market value in condemnation cases remains an unsettled question in Florida. This article explores the history of dedication requirements in Florida, discusses the current open questions in Florida law regarding this issue, reviews how other jurisdictions have addressed this issue, and analyzes the applicability of national caselaw to current Florida law and policy.

"Zoned Right-of-Way" Caselaw in Florida

In condemnation cases, the interplay between zoning restrictions and compensable damages is most likely to occur in the taking of private property for the construction and expansion of public rights-of-way. In Florida, counties and municipalities plan for future roadway expansion by establishing minimum right-of-way widths for both current and planned roads. (6) These widths, defined in local zoning ordinances, are usually referred to as "zoned right-of-way." Property identified as zoned right-of-way is still owned and may be used by a property owner prior to its development as a road, usually subject to a restriction regarding placing permanent structures within this area in anticipation of the eventual taking. Zoned rights-of-way are often the subject of condemnation proceedings, because these areas, by their very nature, are typically needed to expand existing roadways.

The Florida Supreme Court has upheld the establishment of minimum right-of-way requirements and held that these requirements generally do not constitute a taking until actual acquisition by the government. (7) Florida courts have, however, achieved some balance for property owners by prohibiting the introduction of certain types of evidence in condemnation proceedings. (8) For example, the Florida Supreme Court has held that, during the actual condemnation of such zoned right-of-way, the government cannot benefit from the depression in property value caused by the earlier designation of the property as zoned right-of-way. (9)

This approach makes sense from the standpoint of both common sense and equity. Governmental entities benefit from the imposition of zoned right-of-way restrictions by limiting construction within these areas, which concomitantly limits subsequent acquisition and construction costs. Property owners, however, do not derive any benefit from the designation of their property as zoned right-of-way until the roadway is built. Thus, to allow the government to benefit from the designation of property as zoned right-of-way by discounting the property's value at the time of taking, without providing any benefit to property owners in exchange, would result in an inequitable reduction in the compensation due to property owners.

A Change in Use or Zoning Requires the Dedication of Property to the Public

Florida cases addressing the condemnation of zoned right-of-way have been limited to cases involving property where the existing use of the property is already the highest and best use. (10) But when a property owner in a condemnation case seeks to argue the reasonable probability of a change in use or zoning, an additional factor should be considered. This additional factor is the requirement that property owners developing property must dedicate, or convey...