Domestic Scan Program: Best Practices in Right-of-Way Acquisition and Utility Relocation

2.0 Recent Research, Best Practices Guidelines, and Emerging Issues

A number of research and demonstration efforts have been undertaken in recent years by state and Federal agencies in the United States on the topics of ROW acquisition and utility relocation. These efforts, and their findings, are summarized below. Issues of current interest to state DOTs also are identified, as they serve as the basis for the topics discussed in this scan.

2.1 Recent Research and Best Practice Guidance

NCHRP Synthesis 292: Innovative Practices to Reduce Delivery Time for Right-of-Way in Project Development

NCHRP Synthesis 292: Innovative Practices to Reduce Delivery Time for Right-of-Way in Project Development was developed in 2000 and is available from the Transportation Research Board.¹ This report summarizes project practices which were in use at that time or were being developed to improve project delivery. The report includes the results of surveys taken by canvassing state transportation agencies regarding their current practices and plans for changing practices.

The report was based in part on a survey of right-of-way managers, who identified several factors which help to assure success in expediting delivery of the ROW phase of the projects. These suggestions involve participation in a "system" approach to project development. Some of the specific recommendations of the report include:

• Include right-of-way in setting and revising project schedules;
• Perform right-of-way activity as much as possible in parallel with other functions, rather than wait for a "hand-off" from an upstream function;
• Delegate authority for project decisions to project personnel, rather than retaining authority at a more remote level;
• Encourage a collaborative atmosphere, where actions that affect more than one discipline would receive full consideration from all affected parties; and
• Train staff in new project development roles and relationships that extend beyond their traditional core job competencies.

The successful use of project management teams was reported in California, Utah, Florida, Iowa, and Washington State. These project management teams were typically created in the mid to late 1990s. Best practices developed as part of the process typically included either appraisal waivers for property with an estimated value under $10,000 or reduced documentation and approval steps for low-valued property. Most states reported that the team approach worked well in improving communication among various disciplines. Of particular benefit was the recognition that delays in upstream efforts such as delayed design plans will adversely impact acquisition, relocation, and property clearance functions.

FHWA - European Right-of-Way and Utilities Best Practices Scan

This scan, conducted in 2000, included visits with transportation officials in Oslo, As, and Moss, Norway; Bonn, Germany; The Hague, Netherlands; and London, England. The report, published in 2002, is available on the FHWA Office of International Programs web site.²

The scan provided some interesting insights. For example, the team concluded that in all the countries visited the sense of community welfare resulted in transportation decisions not limited to bottom line costs. One example was the construction of a bridge to allow access to a farm when it would have been less expensive to purchase the farm. Early involvement of property owners in the design process and extensive interviews with property owners also was recognized as a positive influence on project acceptance. Limited use of appraisal review was noted along with the appraisal and negotiation function being performed by the same person. Prompt payment once negotiations are completed also was noted as a useful technique.

One significant solution involved the subject of land consolidation. Land consolidation is an effort made to eliminate the damage to owners and their communities when road projects divide property, leaving portions on each side of a road. Land consolidation pools and redistributes the land, helping to assure viable ownerships. These concepts are most important for agricultural lands when major access control projects are initiated.

In many countries visited, utilities are often located underground for safety and landscape aesthetics.

FHWA - Right-of-Way and Utilities Pilot Project Summary and Evaluation

Following the field visit phase of the European Right-of-Way and Utilities Best Practices scan, an implementation team was formed to encourage states to pilot the procedures identified through the scan tour. Several states initiated pilot projects in 2001 which included completed evaluations of the process and a "lessons learned" analysis. The pilots covered: waiver of appraisals, modified appraisal reviews, acquisition and relocation incentive payments, conflict of interest, land consolidation, and preliminary engineering cost reimbursement for utilities. Summary reports on these pilot projects describe the procedures followed, method of evaluation, results, implementation methods, cost savings, and the current status.³ Pilot states and projects included:

• California: Conflict of Interest;
• Florida: Appraisal Review Modification;
• Florida: Incentive Offer;
• Florida: Incentive Offer Procedures;
• Florida: Appraisal Waiver;
• Michigan: Appraisal Review Modification;
• Mississippi: Land Consolidation;
• North Carolina: Appraisal Waiver;
• South Florida Water Management Acquisition/Relocation Incentive;
• Virginia: Preliminary Engineering Cost Reimbursement;
• Virginia: Relocation Incentive;
• Washington State: Appraisal Review Modification; and
• Wisconsin: Appraisal Review Modification.

A brief review of these pilot projects confirms that benefits can be derived from adopting alternative methods of conducting project functions, although findings on some methods were inconclusive. The "conflict of interest" waiver in California evaluated allowing the same right-of-way agent to appraise and acquire parcels valued up to $25,000. While in theory this technique could save time and money, the evaluation of the project did not document savings in either category.

Florida initiated a pilot incentive program which offered property owners additional compensation to sell property to the State without proceeding to costly and time-consuming litigation. The initial conclusions are that the incentive offer program decreases project costs and shortens the time required to acquire the property. Customer surveys concluded that property owners were satisfied with the level of customer service as well.

Appraisal waivers and/or appraisal review modifications were tested in Florida, Michigan, North Carolina, Wisconsin, and Washington for property valuations that do not meet a certain dollar value threshold. For example, in lieu of formal appraisals Florida implemented a provision for the use of an Agent's Price Estimate (APE). Use of this technique produced significant time savings and a relatively high rate of settlement (avoidance of condemnation). Additionally costs savings associated with the elimination of the appraisal and modification of appraisal review process exceeded $2 million. Florida also noted good success with waiver of technical review and use instead of a computer generated statistical process control program. Modification of review for small appraisals also demonstrated time and/or cost savings in Michigan, North Carolina, and Wisconsin.

Virginia had good success with reimbursing utility companies for 100 percent of their preliminary engineering cost in an effort to accelerate development of utility plans and cost estimates. Virginia also piloted a relocation move incentive payment to encourage timely tenant relocations. This program was highly successful and resulted in the relocation of over 400 tenants in eight months. The additional cost of $1.2 million was offset by construction-related savings of $6 million.

Mississippi initiated a pilot project relating to land consolidation following the European model. The State held numerous public hearings offering to broker land exchanges on the I-69 corridor. The evaluation found that that no one to date has taken advantage of land consolidation, and suggested that new ideas often take years to fully develop.⁴

Some of these techniques were discussed in greater detail as part of the current scan tour, and their applications and benefits are described later in this report.

FHWA - Geographic Information System Implementation of State Department of Transportation Right-of-Way Functional Areas

In 2004, FHWA published a report on the use of Geographic information systems (GIS) as a right-of-way decision support tool. This report, based on the case study of eight state DOTs, documents the extent to which GIS technology is used in the various ROW functional areas, and the pros and cons associated with such endeavors. The report found that although the use of GIS technology is still very much localized and in its infancy, state DOTs are aware of the opportunities GIS presents in streamlining the implementation processes of right-of-way programs. Currently, GIS application in ROW largely involves mapping and inventory activities. A frequently cited hindrance to large-scale GIS application in the state DOTs is the lack of time and personnel resources. The report also documents best practice methods of GIS implementation for the ROW functional areas most likely targeted for GIS application.⁵

AASHTO - Right-of-Way and Utilities Guidelines and Best Practices

The AASHTO Subcommittee on Right-of-Way and Utilities prepared recommended guidelines and best practices for the major functional activities for right-of-way and utilities. Right-of-Way and Utilities Guidelines and Best Practices, published in 2004, is a major source of guidelines and best practices.⁶ The report is the result of an assignment of the AASHTO Standing Committee on Highways (SCOH) Strategic Plan. Strategy 4-4 of that plan requires the subcommittee to take primary responsibility to "Develop and advocate guidelines and best practices to assure timely procurement, clearance of rights-of-way and adjustment of utilities."

AASHTO - Accelerating Project Delivery: It's About Time

In 2005, AASHTO published a report entitled, "Accelerating Project Delivery: It's About Time."⁷ The report summarizes some of the previously noted methods that may be considered to speed up the ROW acquisition process, including:

• Signing bonuses;
• Raising nominal dollar thresholds for low-cost parcels;
• Allowing negotiators to offer above fair market offers; and
• Letting the landowner select the appraiser from an approved list.

The report highlights California's Project-Acceleration Toolbox which lists steps that Caltrans has taken to speed up the process. These steps include designating a single agent to negotiate the acquisition and relocation. California also uses multifunctional teams of designers, planners, and engineers to take charge of all aspects of construction from inception to construction. Taxpayers can track project status on a program data base.

Washington State will be preparing for the Olympics in 2010 across the border in Whistler, British Columbia using design build techniques. This is a high-visibility project where design build techniques are expected to shave five years from the project's target opening date.

In the past two years, FHWA and AASHTO's Technology Implementation Group have sponsored 15 Accelerated Construction Technology Transfer (ACTT) workshops. As a result of these workshops most participants have found ways to reduce construction time by 30 percent.

FHWA - 2006 Future Needs of Public Sector Real Estate

In 2006, FHWA published an assessment of expected future operational needs of public sector real estate, specifically as they relate to transportation projects, through the year 2035.⁸ The goal was to identify what new ideas, concepts, and technologies can be utilized to meet present and future needs of public sector real estate. The assessment was based on an on-line stakeholder survey as well as a focused brainstorming session. The assessment resulted in a number of recommendations for FHWA and state DOT actions, technical assistance and training support, and changes to legislation, regulation, and policy. Recommendations for state DOTs specifically included:

• DOTs need to integrate the right-of-way function early in the project development process, elevate the importance of the right-of-way process with upper engineering management, encourage long-range planning and coordination with metropolitan planning organizations and local public agencies in the preservation of future right-of-way, and provide the necessary experts for the project development process.

• DOTs need to implement partnering from the top down, gain "buy-in" and understanding from engineering management of the priority of right-of-way in the project development process, and be responsible for providing the necessary resources to elevate training and education within their organizations. ROW managers also need to create a grass roots effort and form informal networks between attorneys, engineering management, planners, environmental, and ROW staff.

• DOTs need to create a public-private partnership between agencies and consultants to provide cross training that builds stronger experience levels and aids in the utilization and retention of institutional knowledge on both sides.

• DOT ROW managers should work with public relations experts and be present at public meetings early in the project development process to answer questions and address the public's concerns regarding right-of-way impacts. Landowners and the surrounding community also need to be informed and involved from the beginning and throughout the project development process.

• DOTs need to utilize alternative technologies such as GIS to develop a more efficient and effective program.

Examples of recommendations for FHWA include: promoting flexibility in the law to allow states more authority regarding administration of their right-of-way programs; advocating for integrating the right-of-way function early in the planning, project development, environment, and final design phases of projects; and advocating for development of the right-of-way profession as a career path, including developing partnerships with educational institutions.

2.2 Ongoing Research and Pilot Program Efforts

A number of states have taken advantage of the flexibility allowed by current Federal regulations and encouraged by FHWA. Pilot projects have been initiated since 2001 to explore a variety of techniques to expedite the ROW acquisition and relocation process while continuing to provide constitutionally guaranteed benefits to property owners and tenants. Some of the initiatives are aimed at reducing costs by eliminating unnecessary and/or redundant activities, while others may increase ROW acquisition costs while shaving time off the process with resulting cost savings associated with earlier construction completion. In addition, FHWA continues to undertake its own research on specific topics.

Incentive Offer

The Florida DOT initiated an incentive offer pilot project in November 2001. The purpose of this pilot was to assess the potential to reduce overall project costs, expedite ROW acquisition, and produce early settlements while reducing condemnation and litigation expenses. The incentive offer program provides for an additional payment over and above the fair market value if the property owner agrees to a settlement. When a settlement cannot be reached, property is condemned based on the fair market value without the incentive payment. Recent follow-up reviews by the FDOT have confirmed that the incentive offer program is working and should be continued on selected pilot projects.

Team Approach to Project Management

California uses multifunctional teams made up of various disciplines to take charge of a project from the beginning of the project to the construction. Under this approach all functional areas have a place at the table and the use of teams assures that everyone understands the issues of the other members of the team.

Appraisal Waivers

This FHWA study will identify and evaluate if the appraisal waiver is accomplishing the intended goals of minimizing administrative costs and expediting the acquisition of real property. The study also will determine which proportion of each state DOTs' acquisitions are valued with the appraisal waiver process, and what the associated DOT organizational consequences of the use of the appraisal waiver may be, including the impact on the DOTs' appraisal capabilities.

Mortgage Interest Differential Payment (MIDP)

An FHWA research study is underway to look at various types of mortgages available today, including reverse, pick-a-pay, and adjustable rate mortgage plans. This study explores various methods of determining the mortgage interest differential payment using a simple Excel spreadsheet format. Information from the study will be used to develop guidance that will be posted on the FHWA Office of Real Estate Services web site.

Innovative GIS Corridor Assessment and Land Acquisition Management Tools

Phase 1 of this FHWA study is complete. A prototype tool was developed to create a GIS-based linkage between environmental hazard analysis and land acquisition estimates for transportation projects. The tool is compatible with existing geospatial, imagery, and analysis tools. The initial phase of the research explored development of a system to assist transportation decision-making by incorporating comparative right-of-way land values and natural hazard risk assessment data. A second phase of the research is being considered to produce effective analytical tools and processes that are tied to right-of-way decision-making needs.

Turbo Expert Electronic Relocation System

The objective of the Turbo Expert Electronic Relocation System project is to provide a tool to the state DOTs, FHWA divisions, and other Federal agencies that will help ensure that relocation calculations are accurate, in accordance with current regulations, and completed in a uniform manner. This system will help to ensure that those relocated for federally aided programs or projects are receiving proper relocation benefits in a timely manner. This system is being developed by FHWA.

Additional FHWA Resources

Comprehensive information on FHWA right-of-way and utilities programs, requirements, guidance, and research can be located on the respective FHWA program office web sites:

• FHWA Office of Real Estate Services
• FHWA Utilities Program

2.3 Current Issues Identified by State DOTs

While an increasing number of resources are available on best practices in right-of-way acquisition and utility relocation, these topics are still viewed by many states as critical areas needing further development. In response to a 2005 request from AASHTO for domestic scan topics, three separate proposals were received related to ROW acquisition and utility relocation, demonstrating the depth and breadth of interest in these topics. These proposals served as the basis for the current scan described in this report. The topic proposals included:

• Best management practices in utility and right-of-way clearances - Specific items suggested for review included incorporating utility relocation services in the construction contract, the long-range planning and coordination of projects between the states and utilities, and use of Subsurface Utility Engineering. Delaware, Indiana, Florida, California, Texas, and Washington, D.C. were mentioned as having addressed some or all of these issues. The need to address accelerated negotiation and relocation processes for ROW acquisition also was noted.

• Integration of the Right-of-Way and Design processes to decrease right-of-way costs and length of time to purchase right-of-way - This proposal identified the need to address improper coordination between ROW and design which can result in increased costs and delays to projects.

• Integrating project delivery to meet accelerated project delivery schedules - Issues identified in this proposal include: Integrating the project delivery process, improving multidisciplinary coordination throughout all stages of the planning and project development process, balancing timely acquisition with the rights of property owners, accomplishing expeditious coordination of utility relocation, securing adequate staff resources to meet accelerated schedules, and addressing the advantages and disadvantages of utilizing design-build to meet accelerated schedules. Suggestions for states to examine included Arizona, Louisiana, Oklahoma, Oregon, South Carolina, and Utah.

An especially important emerging topic involves evolving project delivery practices, including design-build contracting and public-private partnerships (PPP). Many states are beginning these practices to take advantages of inherent opportunities and incentives for time and cost savings, as well as to leverage dwindling resources through innovative finance techniques. Design-build contracting techniques are being applied in many states on major contracts to speed the project development and delivery process. More states also are experimenting with PPPs in order to engage the private sector not only in the development and construction but also in the finance, maintenance, and operations of transportation projects. An important question is how to revise ROW and utilities practices to ensure that these new arrangements can be utilized to their maximum advantage.

Design-Build Projects

Design-build is a method of project delivery in which the design and construction phases of a project are combined into one contract, usually awarded on either a low bid or best-value basis. This is in contrast to the more traditional design-bid-build (D-B-B) approach used in transportation agencies that outsource project design work, in which two different contracting efforts must be undertaken in sequence to procure architecture/engineering services on a negotiated-price basis and construction services on a lowest-responsible bid price basis. Design-build for major transportation projects has become an increasingly popular approach since it was first authorized by FHWA on an experimental basis in 1990, with the primary benefit being the achievement of time savings in project delivery.⁹ This approach allows some tasks to be undertaken in an overlapping rather than sequential manner and provides incentives for the contractor to incorporate alternative technical concepts at the design and construction phases to more efficiently deliver projects and provide cost savings. While not all states have adopted the statutory authority for design-build, the majority of states have adopted such authority and undertaken one or more design-build projects.

The treatment of ROW in design-build projects varies. Federal regulations require completion of the National Environmental Policy Act (NEPA) environmental clearance process prior to the release of the final request for proposals. In most states, ROW has been acquired by the state before letting the design-build contract, ensuring that major environmental clearances are obtained and reducing the potential risk incurred by the contractor in ROW acquisition. However, some states, including Arizona and Texas, are now tasking the design-build contractor with ROW acquisition. While this second approach allows ROW acquisition to benefit from the efficiencies and incentives built into design-build contracting, it also requires that NEPA environmental clearances be obtained in advance of ROW acquisition, and furthermore that state policies related to ROW acquisition provide some level of certainty regarding acquisition authority and timeframe. ¹⁰

At the current time a unique aspect of the design-build process is that Federal regulations allow for construction clearance approvals on a parcel-by-parcel basis. A 2006 report by FHWA recommends that regulations be changed in the future to allow this provision for all projects.

Public-Private Partnerships (PPP)

FHWA's Special Experimental Program No. 15 (SEP-15) permits experimentation in the project development process. One goal is to attract private investment leading to more innovation, improved efficiency, and timelier implementation.¹¹ A successful PPP project, Pocahontas Parkway in Virginia, was previously visited as part of the FHWA Domestic Scan on Advance Acquisition and Corridor Preservation. The project was delivered at a cost of $314 million with only $27 million of public funds. The majority of the funding was raised through the sale of private bonds to be repaid with tolls. The project was projected to take 75 months to complete but was actually completed in 48 months. Florida DOT, the Florida Turnpike Enterprise, and Texas DOT also are considered to be PPP leaders nationwide.

2.4 Overview of Scan Findings

Before drawing cross-cutting findings and conclusions, the next three sections of this report provide a detailed review of the scan's findings in each of the three states visited. While every state has a different legislative and statutory framework, different internal organizational structures, and unique transportation issues, they all share some common traits which led to their selection for inclusion in the scan. In particular, each state has chosen to leave the familiar path in one or more areas and abandoned the tried and true method of conducting business to explore new, innovative, creative, and collaborative methods of acquiring ROW, advancing construction completion, and facilitating utility relocation or avoidance. The states have each approached the issues in a somewhat different manner, depending upon their own unique circumstances.

1 http://www.nationalacademies.org/trb/bookstore.

2 http://international.fhwa.dot.gov/eurorightofway/.

3 The summary results of these pilot projects, along with state and FHWA contacts, may be reviewed at http://fhwa.dot.gov/realestate/pilotsum04.htm.

4 For a broad framework for land consolidation, see: http://www.fhwa.dot.gov/realestate/rowi69lc.htm.

5 Saka, Anthony A (2004). Geographic Information System Implementation of State Department of Transportation Right-of-Way Functional Areas. Prepared for FHWA by Institute for Transportation, Morgan State University, Baltimore, Maryland.

6 The report may be viewed at: http://rightofway.transportation.org/. (Select "documents" and Strategy 4-4.)

7 http://bookstore.transportation.org.

8 Federal Highway Administration (2006). FHWA Office of Real Estate Services Research Results: 2006 Future Needs of Public Sector Real Estate.

9 FHWA Design-Build Effectiveness Study, January 2006. FHWA's Design-Build Contracting Final Rule was published in the Federal Register on December 10, 2002 (Volume 67, No. 237, pages 75902-75935) and became effective on January 9, 2003.

10 For a full discussion and case studies of the relationship between design-build and the environmental permitting process, see: Louis Berger Group, Inc. (2005). Design-Build Environmental Compliance Process and Level of Detail: Eight Case Studies. Prepared for AASHTO Standing Committee on the Environment, NCHRP 25-25 Task 12.

11 FHWA's PPP web site provides resource information on public-private partnerships. See: www.fhwa.dot.gov/ppp/.

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