Brief Fact Summary. The government condemned property on which a nonprofit summer camp was situated.
Synopsis of Rule of Law. The fair market value, and not the replacement cost, will be used to determine just compensation for a taking of property, even when that property is used for the public good by a nonprofit organization.
Issue. Does just compensation require payment of replacement cost rather than fair market value of the property taken from a private nonprofit organization, which is used for a public purpose?
In determining just compensation, the court seeks to put the owner of condemned property in as good a position as if his property had not been taken. The concept of fair market value is used to determine the loss.
But, the fair market value does not include the special value of property to the owner arising from its adaptability to his particular use. Even so, the special loss is properly treated as part of the burden of common citizenship. The concept of fair market value has been chosen to strike a fair balance between the public’s need and the claimant’s loss upon condemnation of property for a public purpose.
The fair market value would be inappropriate to use when it would be impracticable or whether an award of market value would diverge so substantially from the indemnity principle as to violate the Fifth Amendment.
Here, the property had a readily discernible market value. Also, it is not unusual that property adapted to the owner’s use had a market value, which falls short of enabling the owner to preserve that use. Nontransferable values arising from the owner’s unique need for the property are not compensable, and this divergence from full indemnification does not violate the Fifth Amendment.
Even though the camps may have benefited the community does not warrant compensating Respondent differently from other private owners. To make the measure of compensation depend on a jury’s subjective estimation of whether a particular use benefits the community would conflict with the Court’s effort to develop relatively objective valuation standards.
There is no reason here to suspend the normal valuation rules. Respondent is not entitled to recover for nontransferable values arising from its unique need for the property. Allowing the fair market value as the measure is consistent with the basic principles of fairness.
Discussion. Awarding the replacement cause instead of the fair market value rarely happens when deciding just compensation. If there is any way to determine fair market value without causing a large injustice to the owner, that sum will be used as just compensation for a taking.