Through a Glass Darkly: Measuring Loss Under ... - Land Use Law

596 THE URBAN LAWYER VOL. 39, NO. 3 SUMMER 2007
for $1 million in 1995, augmenting this value using the Consumer Price
Index (CPI) (as the Plantinga/Jaeger formula requires) would provide
us with a current hypothetical value of $1,340,000. 117 In the example
above we suggested that the income stream at the date of the claim was
$45,000 per annum, with the current interest rate at 5%. This provided us
with a price with regulation (PWR) of $900,000, and a compensation package
of $440,000. However, let us assume instead that in the period intervening
between the purchase of the property in 1995 and the date of the claim
in 2006 an event wholly unrelated to the land use regulation 118 occurred that
dramatically reduced the property prices in Oregon. Let us also assume that
this event causes the income stream at the date of the claim to lower by
$15,000 to $30,000 per annum. In this case the PWR would be $600,000
and the Measure 37 compensation package would stand at a massive
$740,000. This despite the fact that the additional loss is in no way connected
with the land use regulation. It is surely impermissible that a measure
designed to provide compensation for loss caused by the enactment or
enforcement of land use regulations should ensure eligible claimants against
all loss to their property since, regardless of the source of that loss.
Of course, it may well also have the opposite effect to that depicted
in this scenario; that is, the Plantinga/Jaeger method is capable of
obscuring losses caused by the implementation of the land use regulation
by taking into account external events (which have no causal relationship
with the land use regulation) that have a positive impact on the
income stream of the land.
F. An Alternative Interpretation of the
Plantinga/Jaeger Method
It may be countered that this is a misinterpretation of the Plantinga/Jaeger
method, and that the use of the CPI as the multiplier is much more
than merely a device to reflect the equivalent purchasing power of the
OPP in today’s dollars. It may be argued that the correct interpretation
of their method would view the CPI as a multiplier, designed to plot the
inflation and fluctuations in the price of the affected land in a world
where the regulation was never enacted (the hypothetical). The multiplier,
on such an interpretation, would operate so as to ensure that the
hypothetical value of the land is affected by all the same variables/
117. Despite the reservations highlighted above, for reasons of consistency, the OPP
and not the Historical FMA is utilized as the multiplicand.
118. There are innumerable factors which affect land prices; however, for the sake
of argument let us assume it was a natural disaster on the scale of the recent Hurricane
Katrina tragedy.
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