The site visit to Minnesota focused especially on the technology and processes that Mn/DOT has been developing to support ROW acquisition and utilities relocation and adjustment activities. These technologies and processes have been implemented not for the needs of any one particular project, but rather to improve overall agency efficiency and stakeholder communications. They also are serving as protection against the loss of institutional knowledge as many employees approach retirement age -; a challenge common to many state transportation agencies.
A number of projects in the Twin Cities (Minneapolis-St. Paul) region were used to highlight Mn/DOT's applications, including the I-494 Phase 2 reconstruction in the southwest portion of the region, the I-35W/State Highway 62 (Crosstown Commons) reconstruction south of Minneapolis, and the construction of I-394 west of Minneapolis.
The I-494 Phase 2 reconstruction was named '2005 Roadway Project of the Year' by Roads & Bridges Magazine. This $136 million project involves the reconstruction of I-494 for a length of 7.8 miles, including widening from 4 to 6 lanes to accommodate average daily traffic volumes of 90,000 vehicles. In addition to roadway renovations, the project includes reconstruction of two major interchanges, four miles of soundwall construction, creation of new storm drainage ponds, and major utility relocation work. The project is located primarily in suburban residential areas and as a result, minimization of ROW acquisitions was a high priority. A total of eight parcels were acquired for the project. The project was undertaken through a design-build contract with 28 months duration; the contract was let in May 2004 and the road opened to traffic in September 2006. The design-build contract was awarded on a combination of cost and technical factors.
Reconstruction of the Crosstown Commons (the interchange of Highway 62 and I-35W) south of Minneapolis similarly involved strict right-of-way constraints, as it is located in an older suburban neighborhood. This section of highway, where the two heavily traveled freeways overlap, has notoriously been a congestion bottleneck as well as a high-crash location due to complex weaving patterns. The $250 million project involves reconstruction to improve capacity and safety as well as the addition of high-occupancy vehicle (HOV) lanes connecting with adjacent segments of I-35W. As with the I-494 project, this project was bid as a design-build project. As a result of earlier financial shortfalls and bidding complications, the lead time for ROW acquisition was a short eight months. The design-build consultant completed the ROW plats, mapping, appraisals, and direct purchase of the properties with Mn/DOT oversight. ROW takings were minimized to the extent possible though the use of retaining walls and other design features. Construction began in summer 2006 and is scheduled for completion in fall 2009.
Construction of I-394 through Minneapolis western suburbs is an older project that was completed in the late 1980s and early 1990s. This project is noteworthy because of a business impact study that Mn/DOT undertook to examine the impacts of the project on businesses along the corridor. Before construction of the freeway, this highly developed commercial corridor was served by an arterial, U.S. 12. Businesses along the corridor feared a loss of business due to the new access restrictions posed by the freeway and to other ROW-related issues such as reduced visibility, and in some cases filed compensation claims that reflected an anticipated loss in the value of their business. The study was undertaken to determine whether these concerns were valid in retrospect and to inform future projects that required the taking of ROW or reduction access in conjunction with construction or expansion of a limited access highway.
The Minnesota right-of-way requirements are generally favorable towards landowners. With the "Loss of Going Concern" provision in state law, the burden is on Mn/DOT to prove that a landowner does not deserve compensation. New legislation passed in 2005 and 2006 further increased protections for landowners by providing for displacement compensation for businesses as well as other reforms to the use of eminent domain (see sidebar).
While Minnesota law allows for design-build contracting, the treatment of ROW within this process is different than in Texas. In particular, the State must acquire the ROW needed for the project prior to letting the design-build contract. Any final changes to design that would impact ROW needs would then be addressed during the design-build process.
The Mn/DOT standard ROW acquisition process specifies a 16-month timeframe for acquisition, once construction limits are received from design. The first step in the process is to meet with the various engineering disciplines to determine ROW acquisition needs and lay out the ROW. The process then involves multiple one-on-one contacts with property owners. The actions associated with each contact are as follows:
This process ensures that the State has correct title information concerning ownership of the property, who currently is in possession of the property, composition of families, and property owner input into the proposed design layout.
The approach of mailing the offer letter package in advance saves travel by the state agent and allows owners to be prepared to seriously discuss the offer.
Condemnation is not initiated for a minimum of 30 days after the offer of purchase has been made. The State continues to negotiate in an effort to reach a settlement until the date of the hearing on petition. Total negotiating time can be up to 180 days, including 30 days to update the attorney's title opinions, 60 days to establish a court date and send out notices, and 60 days to continue to negotiate direct purchase until the date of the hearing on the petition.
In part reflecting the nationwide reaction to the 2005 Kelo vs. New London decision, the 2006 legislature mandated some changes in the handling of eminent domain in Minnesota and in elements of compensation. The changes provide additional property owner protections and benefits. However, they are expected to increase the costs of ROW acquisition and pose additional challenges to Mn/DOT. Key changes include:
All appraisals obtained by the State must be given to the property owners (states are typically reluctant to provide appraisals that are considered to be deficient, defective, unsupported, or in other ways fail to meet state standards)
Reimbursement maximums are increased for owner-obtained appraisals
An exchange of appraisals is required prior to the commissioner's hearing
Landowners' legal fees may be reimbursed under some situations
A new benefit was established for "Loss of Going Concern" if the State's acquisition destroys the business
A nonresidential fee owner displaced by a taking is entitled to a separate payment to the owner to purchase a comparable property in the community
State authority for reimbursement of reestablishment expenses is reduced from $50,000 to $10,000 on Federally funded projects and the maximum is extended to state only projects
Payment provisions are established for a revenue loss due to a loss of driveway access
Minnesota law requires utilities to obtain a permit to place utilities on Minnesota trunk highway right-of-way. Mn/DOT's Procedures for Accommodation of Utilities on Highway Right-of-Way (revised November 2005) contains requirements for location, structure, design, construction, and other factors. The manual contains numerous updates to the previous procedures, issued in 1990, and also reflects recent legislative changes. In 2004, the legislature authorized two primary changes to projects involving excavation: 1) quality level based on subsurface utility engineering (SUE); and 2) preliminary design and preconstruction meetings. Additional rule changes in 2005 included a positive response requirement, increased accuracy requirements for mapping and locating, emergency excavation notices, and new requirements for meets and service laterals.
Minnesota allows for reimbursement of the costs of moving utilities required by transportation construction only under three conditions: 1) on Interstate highways; 2) municipal relocations that qualify as first move (i.e. the facility was within the limits of a municipal street when taken over by the State as a trunk highway); and 3) where utility owners have property rights.
Mn/DOT's innovations especially include the use of advanced technology and integration of this technology into information systems to support the ROW acquisition and utility relocation and adjustment processes. Mn/DOT also has worked to update its procedures and practices to facilitate timely relocation of utilities as well as right-of-way acquisition. A focus on best management practices has provided an important complement to these technological and process advancements. Mn/DOT emphasizes a team approach, internal and external stakeholder involvement, and comprehensive training. Introduction of new procedures and technologies is treated as a change management process. The agency emphasizes close coordination with stakeholders in order to ensure that new procedures and applications will be valued, effective, and widely used.
In 2003, recognizing that its utility procedures needed to be updated, Mn/DOT collaborated with private sector and university consultants to develop a new utility coordination process. The new process, finalized and documented in a new Utilities Manual in 2006, promotes communication and strengthens relationships among all parties whose work impacts utility coordination. The process also meets new statutory requirements established in 2004 and 2005. The end result of this effort was the creation of a 15-step process designed to minimize delays, construction costs and contractor claims while maximizing the numbers of utility relocations that can be completed before construction commences.
The key elements of Mn/DOT's new utility coordination process include:
The new policy requires utilities to submit relocation plans just after the 60 percent design stage, rather than the previous deadline of 30 days before project letting. This critical change allows the utility relocation plan to be included in the project construction contract.
Minnesota state law requires utility coordination meetings. In accordance with this law, Mn/DOT policy requires two utility coordination meetings. The first is when the design plans are at about the 20 to 45 percent stage. A subsequent meeting is held when the plans are in the 60 to 75 percent stage to discuss how the project will impact the utility and to explore possible ways to mitigate or minimize the impact. Mn/DOT seeks relocation of utilities before construction begins whenever feasible, with relocation agreements executed a minimum of 45 days before letting. Design and construction work together with the utilities to determine a relocation completion date.
Mn/DOT notes that certain implementation factors contribute to the success of any initiative, including proactive and ongoing stakeholder communication, management commitment, training, and technical support. The agency has undertaken initial training efforts on its new utilities manual and processes, reaching 280 stakeholders between August 2005 and May 2006. The training program was directed at a wide audience, including not only Mn/DOT utility staff but also construction and design staff, consultants, cities, counties, contractors, utility owners. Each training session started with a welcome and direction from upper-level management to reinforce the importance of the new process.
An implementation team is developing an implementation process that emphasizes stakeholder communication and addresses barriers to implementation. Team membership includes representatives of utility owners, consultants, and city and county agencies, as well as the Mn/DOT central office, district offices, and FHWA. The team has conducted surveys of project managers to determine the use of the new process and any problems encountered, and will use the feedback to fine-tune implementation. By the spring of 2007, Mn/DOT expects to be using the new process on all of its projects.
The team is developing dispute resolution procedures that will define points of utility owner involvement in the 15-step process, specify what happens at each point if a utility owner does not respond or cooperate, identify roles and responsible parties, and clarify consequences.
Mn/DOT's Utilities Manual: Process Steps
The 15 steps of Mn/DOT's utilities coordination process, as outlined in its manual, include:
Design-build contractors on the I-494 Phase 2 Reconstruction as well as other projects wanted legislation requiring all utilities to relocate before construction. As a compromise, in the absence of such legislation, Mn/DOT agreed to do a study report for the legislature, recommending improvements to the process. Meetings with utility owners and local agencies provided valuable feedback on issues that had held up projects in the past and should be addressed in the future.
Utility owners submit permits either as part of a highway construction project that requires utility relocation or to accommodate changes or additions to their facilities. A utility owner receives a permit application from Mn/DOT when a highway project necessitates a relocation of its facilities. The utility owner must contact Mn/DOT for a permit application or access a permit application on-line when it wants to make changes to its own facilities that are within Mn/DOT right-of-way and are not related to highway projects. Utility agreements are used when utility relocation costs are reimbursable, such as for work on an Interstate highway.
Mn/DOT has established a web site that contains a comprehensive set of information and forms related to utility agreements and permits. To facilitate and expedite the utility permitting process, Mn/DOT developed the Utility and Municipal Agreements Reporting and Tracking (UMART) system. UMART is an on-line system that manages and tracks data pertaining to the agreements entered into by the State with municipalities and utility vendors related to road construction. UMART tracks project information, location and type of agreement, vendor information, fulfillment of requirements, dates, and billing and payment information. UMART allows users to generate standard and ad hoc reports for the whole department or by district offices. UMART links to the statewide accounting data in the State of Minnesota Accounting and Payroll System (MAPS).
Master Utility Agreements (MUA) were successfully used in the I-494 design-build process. The MUA was a three-party agreement among Mn/DOT, the utility, and the contractor that established a framework for the relocation process. The project contractor was responsible for certain relocations as specified under state law -; in general, public utilities only. For other utilities, the contractor was given the decision of relocation and was given direction by Mn/DOT to make reasonable efforts to avoid relocation. As previously noted, state statutes require reimbursement to utilities for relocations required on Interstate highways.
Twenty-three utilities were found on the I-494 Phase 2 project and the total cost for the utility work on the project was approximately $2.5 million, of which approximately $170,000 was for betterments paid by the utility. Value engineering was encouraged under the design-build contract, and savings due to avoided relocations were split between Mn/DOT and the contractor. Other creative solutions also were implemented. For example, in one case, a railroad bridge was redesigned to avoid relocating a telecommunications transmission line. This line carries significant Federal data and voice traffic, and relocation would have been very expensive and time-consuming. Close cooperation between the contractor and utilities ensured that other utility relocations were made with minimal disruption.
Minnesota statutes require Subsurface Utility Engineering (SUE) on design-build projects, and Mn/DOT encourages the practice on others. SUE work is contracted prior to the issuance of a design-build contract. This provides better information and reduces risk when issuing a request for proposals for design-build. Mn/DOT completed its first SUE pilot project in 1991, and completed SUE work for the I-494 project in three months. Mn/DOT staff note that the mandate for early SUE work has helped bring utilities to meetings.
Mn/DOT has placed a strong emphasis on moving towards electronic data management systems, to provide easier access to data (including historical data), ensure consistency and linkage among data sources, facilitate tracking, and for other benefits. In 2002, Mn/DOT initiated a process to develop a comprehensive Electronic Data Management System (EDMS) that includes all historical permits. Approximately 80,000 permits were scanned. Current permits also are scanned and are placed on-line within two to three days of issuance, allowing owners and designers to check permits. While this was a massive technological undertaking, Mn/DOT noted that the primary challenge was that of institutional change management, including determining how the system could best benefit users and convincing people that the system would be beneficial.
Geographic information systems (GIS) integration is an important part of the EDMS initiative, with all data linking to a parcel number. Mn/DOT's ROW mapping was converted to GIS format in 1997, a year after the agency delivered its GIS base map. In 2003, Mn/DOT began delivering ROW maps via the web, and developed an interactive base map in 2006. The agency continues to work towards more complete integration of electronic data and information systems.
In the early 2000s, Minnesota recognized the critical need to implement an electronic GIS-based data system to maintain and track ROW functions. This need was not only the result of a large and expanding program but also the recognition that agency downsizing and staff retirements would result in the loss of significant institutional memory. In 2003, the State elected to purchase a software product used by Virginia DOT, the Right-of-Way and Utilities Management System (iRUMS) software, and to use it as a starting point to develop their own application. Mn/DOT estimates that starting with an existing product and vigorous vendor negotiations saved the State $500,000 in product investment, system design work, and internal resource time. The State implemented the first phase of REALMS in September 2005. Mn/DOT intends to require its use by all consultants, resulting in better pricing since consultants will not have to use their own database.
In implementing REALMS, the State anticipated the following uses and benefits:
Building on the REALMS system, REALMS Maps is an application that is available to the public via the Mn/DOT Office of Land Management web site. The system allows users to locate specific maps that are part of the State's mapping records. A mark-up feature allows drawing on the maps to illustrate current features or proposed modifications. These mark-up sessions do not change the permanent map residing in the state system. The availability of these official maps ends a problem long plaguing many states where the first critical step is to ensure that the State has the correct and latest map rendition before taking the next step.
Mn/DOT has initiated a pilot project using three-dimensional video to illustrate the "after construction" view of the highway and surrounding property. This video is aimed at helping landowners better understand how their properties will be impacted and how the new highway will appear in relationship to their remaining lands. In turn this is expected to support landowners in determining the fairness of the offer presented by Mn/DOT. The tool also may be proven useful in public information meetings.
The project uses an assemblage of electronic highway design files, including ROW limits determined from the final design process, and incorporates property lines and animation. State staff uses MicroStation (CADD), GEOPAK, and StudioMax software to build the visualization. The estimated cost of completing the work is approximately $477 per parcel, exclusive of software costs. For a small project of 1.5 miles the State estimates that approximately six weeks are required to create the three-dimensional model.
While initial landowner reaction has been very positive, the State will complete an analysis of the effectiveness of this tool in the fall of 2007. The criteria will include the number of negotiated settlements and the time required to reach settlement. An effort also will be made to evaluate subjective factors such as public relations, faith, trust, view of agency legitimacy, and technological requirements.
Minnesota is a leader in the area of professional training. Mn/DOT's Office of Land Management held its 14th annual Right-of-Way Professional Workshop in the fall of 2006. The workshop focus is on property valuation, regulations, technology, and procedural issues. The audience includes appraisers, real estate professionals, attorneys, engineers, and professionals engaged in property management activities related to ROW. These training sessions are typically attended by 300 participants. Applications will be made this year to the State Department of Commerce for 15 appraisal and real estate credits, and to the State Board of Continuing Legal Education for 15 legal credits. The workshop training is open to public and private participants, including consultants, to assure the ongoing development of both public and private sector personnel. FHWA awarded the 2006 Excellence in ROW Award for Stewardship to Mn/DOT for this program.
The Minnesota legislature established a special advance acquisition fund to be used in the seven-county Twin Cities metropolitan area, known as the Right-of-Way Acquisition Loan Fund (RALF). The fund is sustained through tax levies. Under the RALF program, local government agencies can apply for loans to be used to make early acquisitions of properties required for future transportation projects. These purchases are limited to hardship and protective buying, i.e., where imminent development is anticipated.
A significant element of this program involves public hearings to adopt an official map of planned projects. The official map is recorded and filed in the Office of County Recorder. This allows for appropriate notification of pending property development. All acquisitions are on a voluntary basis and condemnation powers are not used. Loans are paid back at the time the property is purchased by the State for a transportation project. The purchase price is for the amount that was paid for the property purchased by the local government agency under the RALF program. This program permits some corridor protection and reduces the problem of the local agency not being in a fiscal position to otherwise acquire property at an early stage.
Business owners in Minnesota often suggest that any change in the access to their property and/or alteration of the existing street network will result in detrimental and adverse impacts on the value and viability of their property. In Minnesota these purported losses have often taken the form of reduction in property value, reduction in retail sales, or even failure of their business.
Studies of highway impacts on adjoining property values and other business impacts have been made over the years in several locations. None of these studies were local, however, and accordingly a challenge could be made that the earlier studies were not applicable to Minnesota. The Mn/DOT project development, access management, and right-of-way staff decided to fill the information gap by conducting a comprehensive and systematic analysis of economic impacts at the local level for the I-394 construction project. This project was selected because it represents a major urban freeway construction (10 miles at a cost of $300 million) with ROW acquisition of 400 parcels at a cost of $125 million. This project, undertaken in the late 1980s and early 1990s, involved the conversion of U.S. Highway 12, a heavily developed suburban commercial corridor, to an Interstate-standard limited-access highway. The project involved a substantial reduction in access, from 100 intersections and slip ramps to 10 interchanges. Some owners in the corridor did not incur physical takings from their properties but had nevertheless brought mandamus actions against the State seeking compensation for alteration in general road access.
The study was completed 10 to 12 years after completion of the I-394 project and involved a sample of 22 properties and nine business types. Contrary to earlier business expectations, the study did not find a negative impact on corridor businesses. Instead, the study found that employment in the corridor had increased, land values increased, business turnover was less than average in the State, and development trends are positive. Auto dealers, restaurants, and specialty retail businesses in particular had a very low turnover rate. The study concluded that changes in roadway access appear to have less influence on business vitality than either regional/national economics or the skill of the individual business owner. The study also concluded that even though direct physical access to properties might be reduced, businesses benefited from increased traffic volumes and reduced congestion along the corridor, which allowed customers to travel from farther distances to access the businesses. State personnel noted that several property owners who believed that their properties would be irreparably damaged are thriving.
Mn/DOT notes the following benefits of its ROW and utilities process and technological innovations:
1 Operated by the Department of Public Safety, Gopher State One Call (GSOC) is the statewide one-call notification system for underground utilities.