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Compensation for Acquiring Minor Partial Acquisition

The New Hampshire Department of Transportation requested a survey of the other states regarding:

When acquiring minor partial acquisitions from properties, where the Before and After value of the property remains unchanged, which of the two options below best describes the way your state calculates the amount of compensation:

  1. Area of acquisition multiplied by an average square foot value of land in the area.

  2. Area of acquisition multiplied by the actual square foot land value of the impacted parcel.

  3. Other, please describe.

ALABAMA

In actual practice, our review appraisers would probably never find the before and after values to be the same. But, if they should, the compensation would probably be determined according to your "B".

ALASKA

B. Area of acquisition multiplied by the actual square foot land value of the impacted parcel.

ARIZONA

In response to the inquiry below, the Arizona Department of Transportation (ADOT) utilizes Option B. ADOT does a before and after appraisal valuing the acquisition as a part of the whole property.

CALIFORNIA

California DOT's response is B. Please also see Section 7.04.11.00 of our R/W Manual. See link below:

http://www.dot.ca.gov/hq/row/rowman/manual/ch7.pdf

FLORIDA

Answer "B" is Florida's response. We base the Value of The Part Taken on the unit value for land (typically per square foot or per acre) as it relates to the highest and best use of the Parent Tract regardless of what the After Value analysis concludes.
Example:

Parent tract 20 acres @ $5,000/acre = $100,000
Value of the part taken 2 acres @ $5,000/acre = $10,000

If the taking is from a tract of land typically sold on a lot basis such as a residential or industrial lot where minor differences in size aren't necessarily recognized in the market, FDOT will base the Value of the Part taken on a pro rata share of the value of the whole. Again, this is regardless of what the After Value analysis concludes.

Example:

Parent tract 1 acre lot @ $30,000/lot = $30,000
Value of the Part Taken (3,000 SF)
3,000 SF / 43,560 = 6.89 % X $30,000 = $ 2,067
After Value as Part of the Whole = $27,933
After Value (based on market) = $30,000
Damages = $0

ILLINOIS

Assuming the total compensation is equal to or less than $10,000 and real damages would not exceed $5,000, Illinois would perform a waiver valuation. We would request the appraiser to do a cursory look at the part to be acquired as it relates to the whole property and value it at its contributory value. We want our appraisers to have enough market knowledge to be able to know the difference between the contributory values of various component parts of real property in a given area.

Should a waiver valuation parcel go to condemnation, an appraisal will be required and the appraiser is already a step ahead in his/her valuation process by knowing the market and the parcel in question.

IDOT has a minimum $300 total compensation requirement per parcel that can equal the playing field for smaller takings/easements that may not necessarily have as large of a contributory value as the overall value of the whole property.

LOUISIANA

A. LA. DOTD would base the compensation on the actual appraised market unit value of the area to be acquired. Should there be areas of varying unit values, those actual unit values would be used to calculate the value of the individual area to be acquired and submitted as a total recommended compensation.

MARYLAND

B. Area of acquisition multiplied by the actual square foot land value of the impacted parcel.

MAINE

In Maine, we would follow method "B" and would also add the contributory value of any improvements (such as landscaping, pavement or fencing) within the area acquired.

MISSISSIPPI

C. Other, please describe: Area of the acquisition multiplied by the adjusted unit value of the larger parcel, plus any improvements within the acquisition area and any loss in value to the remainder.

MISSOURI

In Missouri, most simple strip acquisitions are valued at the average indication for the overall land value of the subject. If there were some obvious premium situation in the area of the acquisition, the valuer should address it.

Missouri's Waiver Valuation (used up to $10,000) has the following entries for land acquired.

  1. Description of Property and Acquisition

Briefly state the major characteristics of the property which are pertinent to the value estimate, such as land area, land use and major improvements. Description of the acquisition should include area taken in R/W and easements, any improvements within the acquisition, and the effect, if any, on the remainder property. Plats, color photos and other illustrative materials may be attached at the preparer's option.

  1. Calculation of Value of Land to be Acquired

Right of Way:
____________________ (area) at $ ___________ = $ ___________

Basis for Value:

Appraiser shall cite one or more vacant land sales and make a brief statement comparing it (them) to the subject land as if it were vacant. Sales cited should meet the requirements for comparable sales as set out in Instructions For Preparing Standard Appraisal Format (Section 6-3.1 Paragraph 9.A.)

Missouri's simple appraisal format (used above the Waiver Valuation's $10,000 threshold) has the following entries for land acquired.

10. Analysis and Supporting Data for Compensable Losses

  1. Analysis of Overall Land Value:
    Conclusion-Overall Unit Value of Land: $______________

  2. Analysis of Value of Land Acquired
    (if different from overall value):
    Conclusion-Unit Value of Land Acquired: $______________

  3. Analysis of Value of Improvements in the Acquisition:
    Conclusion-Estimated Value of Improvements: $______________

  4. Analysis of Cost to Cure Items:
    Conclusion-Estimated Cost to Cure: $______________

  5. Analysis of Damage to the Remainder:
    Conclusion-Estimated Damage to Remainder: $______________

NEBRASKA

B.

NEVADA

Nevada generally uses Option B. We use the actual unit value of the land as well as the value of any impacted improvements such as irrigation systems or landscaping and any damages to the remaining parcel.

NEW YORK

In New York State we must pay for what we take so the answer would be:

B. We multiply the acquired land area by the actual land unit value for the subject plus any site improvements involved.

OREGON

Oregon is a "Taking" state so we are obligate to pay for the take regardless of the before and after values being the same. Our method of compensation is B. We determine the land value of the subject parcel and pay the per square foot value times the area of the acquisition. We also pay for any improvements taken based on their contributory value.

SOUTH CAROLINA

South Carolina uses the method identified as "B" in your email.

SOUTH DAKOTA

The answer for South Dakota is B.

TEXAS

In response to the appraisal questions below, Texas attempts to follow USPAP, and also based on some Texas court cases, pretty much would have to answer under C) Other, as follows:

Using assumptions associated with the examples provided, it is a legal requirement in Texas that the land in the part taken be valued at its market value.

It is also our (Texas') interpretation of appraisal procedure that a selected land unit cannot be averaged in valuing any property, rather the appraiser should select the value of a comparable that is the most representative of the characteristics of the subject being appraised, or the appraiser should select a unit within a range of values to produce a value.

UTAH

Our method would best be described by "B". We would assess the value of the "larger parcel," i.e. the entire property affected by the "taking". We would then multiply the land area (taken) by the appropriate factor (either a per square foot value or a per acre value--usually square foot). If the improvements are not affected in any way it may be acceptable to deal only with the land value.

Theoretical Example: UDOT is making a partial acquisition of a 13,000 square foot residential parcel (improved with a home) and it had determined that our proposed 500 square foot taking would not affect the remainder value of either the lot or the home (or any of the on-site improvements). Assume also that UDOT had determined the land value to be $100,000 and the total value of the property in both the before and after condition as $300,000.

UDOT would offer $7.69/square foot ($100,000/13,000sf = $7.69) for the land (500 square foot acquired): Calculated: (500sf x $7.69/sf = $3,845). This would be for a Fee Simple taking. In this example the After Condition of the property (value) would remain the same--$300,000. I would presume the land value would most likely remain about the same, but theoretically it would be diminished by the taking--say $3,845. When addressing your question where it states the before and after value are the same--I believe this may be asking, "if there are no damages". This assumes no damage from any sources--no proximity damage, no severance damage, no damages of any kind.

On this type of "taking" UDOT could (and often does) determine the value by Administrative Compensation Estimate utilizing the Appraisal Waiver program approved by FHWA. We are allowed to make an in-house Compensation Estimate on Non-Complex acquisitions under $10,000. In such a case one of our in-house agents or appraisers would determine the value of the property using market data in a manner similar to an appraisal, but not necessarily complying with all USPAP or other appraisal requirements. This study would be more of a CMA (competitive market analysis). This is a good tool we can use to save time and money in such cases. If we suspect damages, or if the property is complex we may have an appraisal made.

WASHINGTON

When faced with these situations, the State of Washington generally uses Option B, area of acquisition multiplied by the actual square foot land value of the impacted parcel.

WEST VIRGINA

Typically, the West Virginia DOT will approve, in the interest of just compensation and to give the owner the benefit of the doubt, the higher of either the average square foot price or the actual square foot price. It appears inconsistent to base an offer on an overall average unit value if the take is from a higher-value portion of the property as so determined in the appraisal. Conversely, if the taking is from a low-value, low-utility portion of the subject, it certainly makes the negotiator's job easier to show that the owner is being given the benefit of the doubt, especially if the current tax assessment is based upon an "average" unit value.

WISCONSIN

Option A probably best describes how Wisconsin values these properties. We typically develop a sales databook for a project that involves both minor and more complex acquisitions. We use these sales to come up with an average per acre or per square foot value to apply to the minor parcel acquisition in question. Of course, if the subject property had a recent sale, we include that sales information in our sales databook as one of our comparables.

For a project that only consists of minor partial acquisitions, a formal sales databook may not be required, but we still require that a compilation of similar sales data is gathered to come up with an average per acre/square foot value to apply to the subject property.

Updated: 04/02/2013
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