Regulatory takings, entitlement delay and unbuilt projects each carry a different measure. Using one number for all three is the characteristic error in this field.
Start a conversation with Cournot, the Institute’s damages concierge, already scoped to real property & land use. Select a subject area to prompt it, or describe the dispute directly.
Real property disputes produce a damages problem with a distinctive shape. The asset does not disappear; it sits there, often appreciating, while its owner is prevented from doing something with it. The injury is therefore usually a period rather than a destruction, and the measure has to price time rather than value a thing. That single feature explains most of what goes wrong here. A landowner denied approval for two years has not lost the land, and has frequently not lost its value either, so a claim built as though the property were destroyed will be met with the observation that the owner still owns it and it is worth more than when the dispute began. What the owner has lost is the use of the property during the period, the money spent carrying it while nothing could be built, and, if the evidence will support it, the profit on a project whose timing was pushed. Those are three different measures with three different evidentiary demands, and the law attaches them to different theories: a temporary regulatory taking is generally measured by the return on, or the rental value of, the property during the taking period; consequential delay damages are the costs actually incurred; lost development profit is a projection of a business that never operated. They are not interchangeable, they are not additive without care, and the most common error in this field is a single figure asserted across all of them. A second error follows close behind: gross revenue offered as a damages figure. Revenue is not a measure under any of these theories, because it ignores every cost that would have been incurred to earn it, and an income capitalization approach with cap rates and rent comps presumes a stabilized income-producing asset, which is simply the wrong instrument if the units were underwritten for sale rather than to hold. Meanwhile the component most often missing is the one most defensible: construction cost escalation across the delay period, measured against published indices rather than asserted, is frequently the largest thing a delayed developer can actually prove. Entitlement to any of these measures, and which theory supports which, is a question of law for counsel; what follows is what each requires in evidence and where each is attacked.
Three measures, three evidentiary problems, and a strong tendency to be collapsed into one.
What is actually measured when a regulation deprives an owner of use for a period, and why it is rarely the profit on the project that was blocked.
investigateThe costs actually incurred while the clock ran, and the escalation component that is usually the largest thing a delayed developer can prove.
investigateThe hardest measure in this field. Every link is a projection about a business that never operated, and each one is a place to be excluded.
investigateHow the Institute approaches a land use damages question.
It depends entirely on what the project was going to be, and it is the first thing a defense expert will test. An income capitalization approach values a stabilized income-producing asset by capitalizing the rent it throws off in perpetuity. That instrument fits a build-to-hold rental project. It does not fit for-sale product, where the developer builds, sells and exits, and where the economics are a development margin over a defined period rather than a perpetual income stream. Many mixed projects are part sale and part hold, and applying cap rate machinery across the whole of one is a visible error. Separately, and regardless of the instrument, a gross revenue figure is not a damages figure under any theory in this area: the construction, financing, marketing, sales and carrying costs that would have been incurred to earn that revenue come out of it, and the absence of that deduction is the easiest thing in the case to attack.
Generally the return on, or the rental value of, the property during the period of the taking, rather than the profit on a development that was never built. The intuition is that the owner was deprived of the use of the property for a period, so the compensation looks like what the use of that property was worth over that period, often expressed as a market rate of return applied to the property value or as the fair rental value of the land in the condition it was in. This is a materially different, and usually smaller, figure than a development profit projection, which is why the distinction matters so much: a claim that presents lost development profit as the taking measure has not merely overstated the number, it has answered a different question from the one the theory asks. Whether the theory is available at all, what period counts, and which measure a court will apply are questions of law and vary; that boundary belongs to counsel.
Because every link in the chain is a projection about a business that never operated. The project was never financed, never built, never leased or sold, and often never fully designed, so the expert has to establish that it would have been approved, that financing was actually available on the terms assumed, that construction would have completed on the assumed schedule and budget, and that the finished units would have sold or leased at the assumed prices into the market as it actually turned out. Each link invites the speculative profit objection, and courts in many jurisdictions treat unbuilt-project profits with particular caution for exactly that reason. It is not always unavailable, and a developer with a track record of comparable completed projects, committed financing and pre-sales stands in a far stronger position than a first-time applicant with a concept. But it is the measure most likely to be excluded, and building the case on it alone, when carrying costs and escalation are provable, is a strategic error as well as an evidentiary one.
Construction cost escalation across the delay period. It is measurable against published cost indices rather than asserted, it is often large over a multi-year delay in a market where construction costs moved sharply, and it is unusually defensible because it does not require any projection of a business that never operated: it is the difference between what the work would have cost then and what it costs now. Interest and carrying costs on land debt are the second omission, and the third is the professional fee stack, the architects, engineers, consultants and counsel who had to stay engaged while the clock ran. These are documented, provable and rarely disputed in existence, which makes them the floor an opinion should build from before it reaches for anything requiring a projection.
Describe the property, the period and the claims. The Institute will help you see which measures the facts can actually support.