Condemning Conservation Easements Protecting the Public Interest & Investment in Conservation Nancy A. McLaughlin Professor of Law University of Utah College.

Condemning Conservation Easements Protecting the Public Interest & Investment in Conservation

Nancy A. McLaughlinProfessor of Law

University of Utah College of Law

©2008 by Nancy A. McLaughlin. All rights reserved

Who should get what when land encumbered by a conservation easement

is condemned in whole or in part?

Conservation Easement-Encumbered Land

Takings Clause of theFifth Amendment to U.S. Constitution

“…nor shall private property be taken for public use without just compensation”

When land encumbered by a conservation easement is taken…

1) Does the conservation easement constitute compensable “property”?

2) How should the conservation easement be valued for purposes of compensating its holder?

Does a Conservation Easement Constitute Compensable Property?

Virginia Conservation Easement Act…the holder of the conservation easement should be compensated for the “value of the easement”

Open Space Land Act…the public body must receive substitute property “of at least equal fair market value” to the land converted or diverted

How should a conservation easement be valued for purposes of compensating its

holder upon condemnation?

First Eminent Domain Valuation Principle

The Meaning of “Just Compensation”Normal Standard

“Fair Market Value” Willing Buyer/Willing Seller

Open and Competitive Market

FMV is not an absolute standard

Where property is not bought & sold in an open and competitive market

other valuation methods are employed

Non-Possessory Partial Interests in Land(easements and restrictive covenants)

The “Before & After Method” is used

FMV is generally not the appropriate standard(No open and competitive market)

Second Eminent Domain Valuation Principle

Majority Rule -- Just Compensation for the Taking of Property Held Subject to a Restriction on its Use

is the Property’s Unrestricted Value

Board of County Commissioners v. Thormyer 169 Ohio St. 291 (1959)

Fairfax County Park Auth. v. Virginia Dep’t of Transp. 247 Va. 259 (1994)

Total Taking At the Time of the CondemnationFMV of land if not encumbered by the easement: $5 millionFMV of land encumbered by the easement: $3 million

Unit Rule (aka the Undivided Fee Rule)

Step 1: Total Compensation Award = $5 million

Owner of encumbered land $3 million (FMV of the encumbered land)

Holder of easement $2 million

(value of CE/B&A method)

1) Property valued as unencumbered whole = Total Comp. Award 2) Total Comp. Award apportioned among owners of interests in the land in accordance with their respective rights

Partial Taking At the Time of the CondemnationFMV of land if not encumbered by the easement: $5 million FMV of land encumbered by the easement: $3 millionValue of the easement: $2 million 40%

60%

Partial Taking At the Time of the CondemnationFMV of land if not encumbered by the easement: $5 million FMV of land encumbered by the easement: $3 million

Step 1: Total Compensation Award = $2.5 million

60% ($1.5 million) Owner of encumbered land

40% ($1 million)Holder of easement

Value of the easement: $2 million

Unit Rule (aka the Undivided Fee Rule)

40%60%

1) Total Comp. Award (Before & After/Sev. Damage Method)(Property Valued as Unencumbered Whole)

2) Total Comp. Award apportioned among owners of interests in the land in accordance with their respective rights

Partial Taking

Partial TakingScenic Conservation Easement

Purpose Destroyed