The state of Florida has phenomenal land from coast to coast. From the city to the countryside, land is a precious commodity that is always increasing in value. Here in Central Florida thanks to Walt Disney World and world-class attractions, land is becoming scarcer and more desirable. Urban sprawl and growth has been the result in Central Florida as land is purchased in Kissimmee, Clermont, Lake Mary, Longwood, Oviedo, Winter Garden, Ocoee, Davenport, Winter Springs, and wherever it is still available in the Orlando metropolitan area. .

Residential development, once a boom industry, has since slowed due to the contracting economy and the global credit crunch. However, government and eminent domain projects to improve the infrastructure of cities continue unabated. Eminent domain occurs alongside many highways that are being widened. For example, the eastern boundary widening of the 408 at Conway Rd. and Lake Underhill is an $84 million project that will take several months to complete. Affected homeowners in the vicinity will be compensated through eminent domain payments that will be disbursed by Central Florida (Orlando and Orange County) governmental authorities having jurisdiction in their respective area.

Although residential development comes with a lot of speculation, one thing is for sure is the value of the land before improvements are added. Undoubtedly, local and state governments realize the value of land, which they do not hesitate to seize through the exercise of expropriation when they see a public use that they want to implement.

In 1992, the United States Supreme Court case of Lucas v. South Carolina Coastal Commission, the developer purchased land pending future development. Before Lucas could erect permanent structures on the land, the state passed a law prohibiting any further development.

Lucas understandably sued the state alleging that the act constituted eminent domain because it extinguished the value of his property. Justice Scalia ruled that if a regulatory action deprives an owner of all economically viable use of his land, expropriation exists and the state must indemnify the owner, unless the prohibited use of the land constitutes a nuisance under the state common law.

Justice Blackmun’s dissenting opinion stated that a landowner does not lose all economically viable use of his land where, as here, numerous suits are still available in his bundle of rights, such as his right to use the land and the right to exclude others. . .

Justice Stevens, as cruel and sympathetic as Justice Blackmun, stated that the possibility of the property losing its value is an inherent risk of investment.

That being said, when evaluating land value and future development, it is incumbent on the investor to assess both the value and any future initiatives by state and local government. This makes working with a bona fide, expert appraiser with their hand on the pulse of government affairs all the more essential. Otherwise, an investor’s sizable investment can substantially reduce its value overnight at the stroke of a bureaucrat’s pen.