New High Water Mark for Expropriation Compensation in Nova Scotia

May 2017

For the first time, the Nova Scotia Utility and Review Board has based expropriation compensation on the reasonable probability that a property will be rezoned and redeveloped for a different use in the future.

In Re Jovin Enterprises Ltd., 2017 NSUARB 64, the Municipality of the County of Antigonish expropriated 14 acres of waterfront property in the Municipality of the Town of Antigonish.  Based on flood mapping adopted by the Town the property is located in the 1 in 20 year flood plain.  The property is zoned “Conservation Zone”, which restricts development to agricultural and limited public uses.

The main issue before the Board was determining the “highest and best use” of the property.  The Expropriation Act requires compensation to be based on market value considering the highest and best use of the land at the time it was expropriated.

The former property owner relied upon an expert appraiser who provided the opinion that the highest and best use was mid-density residential and that total compensation should be $339,000.  In his opinion the land will likely be rezoned when new flood mapping is adopted.  The Town recently updated (but did not yet adopt) its flood mapping.  The updated mapping determined that the property is less of a flood risk because it is in the 1 in 100 year flood plain.

The County’s appraiser argued that the highest and best use was single family residential and that total compensation should be $24,500.  The appraiser did not consider any expropriation principles in completing his report.  As a result the Board gave it no weight.

The Board held that it is not limited to current zoning in determining market value. Determining the “highest and best use” includes an analysis of the property’s present potential.  Potential future use cannot be speculative, a mere chance or an overly optimistic possibility.  It must be reasonably probable.

The Board found that it is reasonably probable that the land will be rezoned and redeveloped as mid-density residential.  This was based on evidence from the Town planner who testified that the Town and its Council were very interested in having the property developed in this manner.  In addition, the Town’s Municipal Planning Strategy allows for rezoning to mid-density residential and the new flood plain mapping identified the property as being a low flood risk.  The Board awarded total compensation of $309,000.

While the decision is significant it is also very fact specific.  Although it is unlikely to result in the Board routinely making similar compensation awards in future cases, this decision does provide a good blueprint for the type of evidence needed to succeed in obtaining compensation based on future rezoning and redevelopment.  Municipalities and other expropriating authorities should take note of this decision.  It remains to be seen whether the County will appeal.

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