Just Compensation & Public Use

What is just compensation and how is it determined? What is considered public use?

Public Use

According to the takings clause in the constitution, in order for a taking of property or condemnation to be considered legitimate, it must be for public use, or for the benefit of the public. Public uses can come in many different forms, the most obvious examples are things like roads, utilities, and parks. This requirement for takings is explicit and plainly stated in the constitution. Utah state code has provided a list of public uses (Utah Judicial Code, 2020).

Under Certain Circumstances, eminent domain can be exercised by private individuals for development. Also, rights of way may be obtained by anyone for purposes related to water. In both cases, the private property owner must be paid just compensation (State of Utah Office of the Property Rights Ombudsman, Takings, n.d.).

Just Compensation

In the context of the topic of takings and property rights, just compensation boils down to money (or something equitable) that is awarded to a property owner to recompense the owner due to injury or loss as a result of a taking by a public entity in a fair or equitable amount. Theoretically, compensation is just when the property owner is made whole in such a way that they are in an equal financial standing as they were prior to the taking (State of Utah Office of the Property Rights Ombudsman, Just Compensation, n.d.). However, the mere fact that the property owner likely did not intend to sell off property or property rights in the first place implies that the value of the land to the owner is likely higher than the fair market value of the property, therefore, whether the compensation is truly just is controversial.

How the amount of compensation is determined comes from a combination of different things, including the fair market value of the land, the fair market value of any improvements existing on the land, project damages caused by construction, temporary occupation or use during construction, severance damages, and offsetting benefits of severance damages. Any of these things or any combination of these things determine how much compensation is required. Compensation is due when the property is considered taken by the public entity.

To elaborate as to the meaning of some of those terms, as they are not all immediately obvious. Severance damages, for instance, are damages from when only part of a property is taken, but the remaining part of the property is damaged anyway. However, the amount of severance damages can be lessened by the benefit of the project being built for the public. This is referred to as “offsetting benefits”. Fair market value, on the other hand, cannot be reduced. Project damages are damages that can be awarded under specific circumstances when a project causes additional damages to a property or property owner, such as a loss of utility access, or perhaps loss of access to the property in general. Simple inconveniences, however, are normally not grounds for compensation for project damages. Oftentimes the construction of a project requires the temporary use of private property. When this occurs, compensation is also owed, but as stated earlier, it must be an actual interference with private property and not a mere inconvenience (State of Utah Office of the Property Rights Ombudsman, Just Compensation, n.d.).

Notes:

1. This article is part of a greater analysis, that analysis can be found in it's entirety here.

2. Disclaimer: The author of this article is NOT an attorney. The information provided in this document is provided for educational purposes only and is NOT considered legal advice.

References

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