Property right taking and compensation: A further analysis

Abstract

A number of states have passed or are considering legislation which provides a framework for resolving land use planning issues and implementing land use restrictions. The purpose of this paper is to consider two related aspects of the land use issue: (1) to review the legal property rights issues regarding the need for compensation If property rights are restricted by a land use covenant; and (2) to suggest an extension of capitalized value theory as a method for conceptualizing the appropriate level of compensation if such is deemed appropriate in land use policy implementation.

In a growing number of cases, the courts are holding that unusual applications of police power may involve property right damage and “taking.” Therefore, such action may require compensation even though the normal exercise of police powers would not. In such instances, the appropriate level of compensation becomes a relevant consideration. By providing a conceptual framework for analyzing the level of compensation, when due, this paper contributes to the process of resolving the compensation issue. Whether or not compensation is required will depend on the specific issues and facts involved in zoning or land use cases. However, capitalized value provides an analytical basis for determining when “taking” has occurred and compensation may be due.