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Confusion About "Change in Value" and "Return on Equity" Approaches to the <i>Penn Central</i> Test in Temporary Takings

July 2008

Citation: 38 ELR 10486

Issue: 7

Author: William W. Wade

Editors' Summary: In this Article, William W. Wade evaluates the conceptual measurement of economic impact within the Penn Central test for income-producing properties recently adjudicated in the U.S. Court of Federal Claims and U.S. Court of Appeals for the Federal Circuit. The discussion considers measurement of the denominator of the takings fraction related to Penn Central's parcel as a whole and whether it differs between permanent and temporary takings. He concludes that the Federal Circuit's recent decision to rely on change in value appraisal methods upsets a strong line of precedent that relied on the more appropriate return on equity approach.


William W. Wade, Ph.D., is a resource economist and was an expert witness in Chancellor Manor and other takings cases, testifying on the economic elements of the Penn Central test. He owns the firm Energy and Water Economics in Columbia, Tennessee. He benefitted from helpful advice and comments from Mark J. Blando, Esq., Eckland & Blando LLP, Minneapolis, Minnesota, attorney for Chancellor Manor; Robert R. Trout, Ph.D., economist from San Diego, California; James S. Mattson, Esq., land use lawyer from Key Largo, Florida; Michael Malamut, Esq., former Deputy General Counsel, New England Legal Foundation; and ELR editors.

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