There is mounting pressure on state transportation agencies to expand road capacity to keep up with demand. The most expensive part of many transportation projects, especially roadway expansions, can be acquiring the rights-of-way (Williams and Frey, 2004). From 1988 to 2008, the Minnesota Department of Transportation (Mn/DOT) spent nearly $800 million acquiring rights-of-way (ROW). When and how Mn/DOT acquires ROWs to expand roadways is an issue with important financial and non-financial ramifications.
One approach for acquiring ROW is a process called advanced acquisition. Advanced acquisition is acquiring land prior to project design approval, which is the traditional trigger for ROW acquisition (Mn/DOT, 2008). Recently, Barnes and Watters (2005) conducted a study that questioned the wisdom of advanced acquisition. The study examined the primary financial benefits of advanced acquisition, specifically lower ROW costs. They concluded that the growth rate of property values is not high enough to support advanced acquisition as a general strategy. They placed this in context by showing that the interest rate on a medium-term bond is greater than the average appreciation rate of real estate. The significance of this is that state transportation agencies would receive a better return on their money by investing in bonds than buying property early (Barnes and Watters, 2005). Barnes and Watters highlighted the need for a more detailed analysis that would go beyond evaluating county-wide appreciation rates. They suggested examining property adjacent to transportation corridors since these properties are more likely to be intensely developed.
The goal of this report is to evaluate Mn/DOT’s current advanced acquisition practices and investigate the appreciation rate of parcels adjacent to transportation corridors. This report will address three major issues related to advanced acquisition. First, we assessed current advanced acquisition practices at Mn/DOT by surveying Mn/DOT district offices. Second, we conducted a survey of cities state-wide about the use of preservation tools to acquire ROW and strategies to improve the ROW process. Third, we investigated the claim that parcels adjacent to transportation corridors appreciate at a significantly different rate than the average parcel. We accomplished this by collecting property assessment data and calculating the appreciation rate for parcels adjacent to three corridors and comparing this to the appreciation rate of randomly selected parcels in the same county. We then used statistical analysis to evaluate which property characteristics are helpful in predicting properties that appreciate over 25% per year. Lastly, the findings from the two surveys and three corridors case studies were integrated into two recommendations.
Aultman, Sara. Advanced Acquisition of Right-of-Way: Best Practices and Corridor Case Studies. Jan 28 2009. Hubert H Humphrey Institute of Public Affairs
professional paper in fulfillment of the Masters of Urban and Regional Planning degree
Advanced Acquisition of Right-of-Way: Best Practices and Corridor Case Studies.
Hubert H. Humphrey Institute of Public Affairs.
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