Valbridge Property Advisors Specialty Practice Spotlight: Right-of-Way
May 25, 2021
“The beauty of ROW appraisals is how different each one is, so they are all interesting in their own way,” reports Carolyn Van Hazel, MAI. All commercial real estate appraisers will tell you that each assignment is unique in some way, as no two commercial properties are identical, but valuations done for eminent domain acquisitions bring their own challenges and opportunities to see new and fascinating things.
“One of my top memorable projects involved a fiber optic right-of-way corridor across Native American land. Easement valuation on tribal lands adheres to a different value definition which requires the analysis from two perspectives: what the landowner is giving up, and what the easement holder is gaining,” Van Hazel recalls. “The easement value reflects more than just ‘across the fence’ value, but also includes analysis of through-put, go around costs, franchise fees, etc. By doing an analysis from both angles, and with consideration of the larger corridor beyond this segment, the appraiser gets a whole new perspective on all the factors at play.”
Right-of-Way, or “ROW” for short, work is complex and nuanced within the field of real estate appraisal. Valbridge Property Advisors has many ROW and Eminent Domain specialists in member firms across the country to serve clients with these unique needs. At its most basic root, Right of Way valuation provides support for condemnation-related projects that involve an entity acquiring property or property rights from individual property owners.
ROW clients are varied but are primarily public agencies looking to acquire property for a specific purpose such as a road widening or placing of utility lines underground. These can include transportation agencies, energy/pipeline companies, municipalities, counties, and federal and state government agencies. Clients also include the property owners who may want or need help navigating the eminent domain process or who believe their offer from the government for a property is not a fair market value offer.
Eminent Domain is a concept enshrined in the US Constitution and is a right enjoyed by local, state, and federal governments to develop infrastructure for the public good. This power is balanced by the Fifth Amendment in the Bill of Rights, which states “…nor shall private property be taken for public use, without just compensation.” In nearly every instance, “just compensation” is interpreted to mean fair market value, which must be determined by a qualified real estate appraiser. Because of the real and potential impacts to a property impacted by eminent domain, an appraiser must be highly skilled and attuned to the unique challenges of ROW work.
“ROW projects can be very complex, and they can be very emotional for the property owners, especially when involving condemnation. It is imperative that you have appraisers who know what they are doing to make sure the property owner is being properly compensated and the compensation paid by the acquiring entity accurately reflects what is being taken,” reports Van Hazel.
In addition, each client has specific requirements that must be met in their appraisal reports. “There are hundreds of potential concepts which need to be considered for application in any given ROW appraisal and a specialist will know which ones need to be applied and which ones are irrelevant. ROW experts know what factors can and cannot be considered in the valuation/compensation, project influence, and how to avoid it in the valuation. They understand what factors are necessary to determine the larger parcel and are familiar with corridor enhancement factors. They are more experienced at looking at the proposed easement and/or acquisition from all angles to accurately determine the existence of severance damages, and they understand the circumstances under which special benefits can be applied.”
In Houston and Dallas, the Right of Way Valuation team is led by Jason Mushinski, MAI. Jason’s team of six appraisers, four of whom hold the MAI designation, has over 18 years of experience in ROW valuation and litigation support across multiple states. Erin Pechal, MAI, is one of the specialists on the team.
“The basic theory of ROW appraising is generally easy to apply; however, in certain situations, eminent domain law is very specific and nuanced, and it helps to work with appraisers who have knowledge and experience with these situations,” reports Pechal.
Nearly all projects are unique in one way, and often more. One of her favorite aspects of the work is seeing the real impact that it has as a member of the community where the work is being done. “I worked on the initial appraisals for Segment F of a major highway being built in Houston called The Grand Parkway. It was interesting to be involved in such a large, important project from the ground up—to see the whole area when the road was just a drawing on a map to now being able to drive the roadway and know what it was like before it was built and remember specific properties I appraised for the project.”
Van Hazel has more memorable assignments under her belt as well. Eminent domain work stretches across all types of land, from dense urban cores of the largest cities to the most remote corners of the country.
“My second favorite ROW valuation was a small utility easement across National Parks land. When I looked at the assignment, I saw that it was a two-day drive through the most remote and beautiful areas of Arizona and Utah to reach the property. I ended up taking my dad on the inspection and we had a wonderful and memorable road trip, and we didn’t see another soul for four days. This property was also interesting because it crossed publicly owned land with permitted commercial uses near a marina at the north end of Lake Powell. There were no private lands for hundreds of miles around it to determine the value of the larger parcel, which made it tricky. It took a lot of creativity and fascinating comparisons of land sales to different recreational tourist areas to develop a credible value conclusion for the larger parcel.”
ROW specialists are adept at working with different types of clients and their individual needs according to the statutes and value definitions in play with their particular property. In more specialized cases such as easement acquisition, ROW specialists are experienced in the analysis of Intensity of Use factors. It can take years to learn the skills necessary to become strong in ROW work, and specialty teams, as well as internal collaboration across national Valbridge offices, help ensure that clients get the strongest valuations and litigation support.
So how do ROW appraisers differ from non-specialists in the field? Van Hazel believes that the work makes her a stronger appraiser overall. “I feel like ROW specialists have a much more thorough understanding of the nature of property rights and how they all work together within a single property, how they can be separated, and the results and impacts thereafter of such separation.” As automated valuation models become more common and more dependable for ordinary properties, the complicated and unique nature of Right of Way work will continue to require highly skilled professionals and well-resourced firms to best serve clients and the public interest.