The standard of just compensation for the taking of property (as well as determining the indirect damages — see below) is valuation at the “highest and best use” of the property. Thus, even if property is being underutilized, the claimant is entitled to the value as if it was being used to its full reasonable potential. This does not mean, however, that the potential highest and best use can be speculative or hypothetical. It must be realistic based on the zoning (or potential re-zoning — see below) or the character and history of development of the surrounding area.

Often, this can result in a zoning issue. For example, undeveloped residentially zoned property in a valuable commercial zone may still be valued at its commercial value provided the claimant can show a high probability of re-zoning. The burden, however, is on the claimant to prove this probability and proof must be clear and convincing of the probability that such zoning change or approvals would have been granted.

Posted in: Condemnation