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Office of Planning, Environment, & Realty (HEP)

Real Estate Acquisition Guide For Local Public Agencies

III. Project Development

In the preceding chapters, we discussed the purpose of this guide as well as the Constitutional, statutory (Uniform Act, found at 42 U.S.C. Chapter 61, and regulatory frameworks (23 and 49 CFR) in which the Federal-aid highway program operates. ; This chapter will provide an overview of the project development process, following which we will examine specific elements of the right-of-way function in more detail.


The project development process begins with the identification of a transportation need. ; The need may result from factors as diverse as planned or anticipated growth, obsolescence of the present roadway, or a change in the land use of the area surrounding a highway. ; In any case, appropriate authorities determine that addressing the need merits further study.
Figure 1 below indicates the main components of the project development process.

A Basic flow diagram depicting the sequencing of activity during project developement as including a Plan to assess needs, Analyze Impacts of project alternatives, Design the project, Acquire the lands needed, and then Build.
(Figure 1)

Determining the feasibility of a project is a complex process. ; It requires input from the public as well as many different transportation professionals (planners, engineers, right-of-way specialists, environmental specialists, and others). ; The process considers the potential environmental impact of the project, examines the agency's ability to financially support the project, and determines the priority which the project should be assigned relative to other planned or potential projects. ; Due to the many elements in the project development process and because each project is unique, the process may vary somewhat from project to project and from agency to agency.

The first component of the project development process is planning where projects are prioritized based on needs and funding capabilities. ; The other components in the project development process include a group of activities which we will refer to as the "typical project development cycle."


Pictue of three individuals in a meeting discussing project planning documents.

The transportation planning process is an ongoing, multi-layered process. ; It involves both system and project level analysis to determine and evaluate needs and set priorities based on fiscal capabilities within the statewide and metropolitan areas.

Within metropolitan areas larger than 50,000 in population, a Metropolitan Planning Organization (MPO) is responsible for developing a long-range transportation plan and transportation improvement program (TIP) for the region. ; The long-range transportation plan addresses all elements of the transportation system within the planning area regardless of jurisdictional boundaries. ; The TIP ;identifies how transportation projects both local and regional will be funded to support the implementation of the ;long-range transportation plan. ; Transportation projects and programs for which Federal-aid funds are anticipated within the region and any non-federally funded project considered significant to the transportation system within the region must be included in the TIP.

The State is also responsible for developing a long-range transportation plan. ; Statewide long-range transportation plans ;can be either a policy oriented or a project specific document ;that provides a vision for the development and implementation of the intermodal transportation system of the State. ; The plan should demonstrate transportation needs and address the ;goals, policies, objectives, and strategies to meet the needs. ; The State also is responsible for programming funding for transportation projects through the Statewide Transportation Improvement Program (STIP). ; The STIP includes all projects identified in the MPO TIPs and all federally funded and all non-federally funded regionally significant projects across the state. ; Projects ;identified for Federal-aid funds must be included in ;the STIP in order to receive the Federal-aid funding anticipated. ;

Local agencies within an MPO planning area should work with ;the MPO ;for all transportation projects for which Federal funding is anticipated in order to ensure their project is included in the long-range transportation plan and TIP. ; If ;a local agency ;is located outside an MPO area and ;anticipates the use of Federal-aid Highway funding, the ;agency should work with the State DOT to ensure the project is consistent with the statewide long-range transportation plan and is included in the STIP.

Environmental Coordination

Another requirement for funding involves compliance with the National Environmental Policy Act of 1969 (NEPA). ; NEPA requires Federal agencies to adopt policies, regulations, and laws in such a manner that the agencies programs and projects address protection options for the human and natural environment.

FHWA policies in implementing NEPA are linked to the planning and project development process. ; The approach integrates the environmental investigations, reviews, and consultations into a coordinated process to achieve the best overall balance between the public interest in a safe and efficient transportation system and protecting the environment. ; The NEPA process is critical to
successful project development and provides the framework for FHWA's project development process.

Note: ; ; Your SDOT should be contacted for any assistance needed in the NEPA process coordination.

Public Involvement

Public involvement is necessary throughout the planning process and during the environmental coordination process. ; Public involvement may take place through the public's attendance at meetings of the local governing body, newspaper articles and advertisements, letters and newsletters, and certainly in public meetings held expressly to discuss the project. ; It is the public's right to know about and comment on proposed programs and projects and their potential benefits and impacts. ; However, the level of public participation will be based on the project's size and its impact on the surrounding community and the natural environment.

Typical Project Development Cycle

Development of Project Alternatives.

Once the need for a highway project has been identified, the agency determines a broad, general location (the corridor) where the potential road may be constructed. ; A number of alternate routes (alignments) within the corridor will be considered. ; Once the alignments have been identified, a more detailed study of each will be undertaken. ; From a property acquisition point of view, key elements of the study are the number of people and businesses which will be displaced, the estimated cost to acquire the real property for the project, and the estimated costs to relocate those eligible and/or to move personal property from the right-of-way.

Hazardous Materials and Contaminants.

One concern that should be addressed early in the project development process is the possible presence of hazardous material, waste, or other contaminants on the sites that you are considering for your project. ; If you suspect that a site is contaminated, preliminary surveys should be performed. ; If hazardous materials or waste are detected, you may want to do an in-depth survey to determine the cost of clean-up. ; If you ultimately decide to use one or more contaminated sites, you should include an estimate of clean-up costs in your overall project cost.

Environmental Assessment.

NEPA requires an environmental analysis for any major Federal action; typically a Federal-aid highway project requires such an analysis. ; The analysis is a broad consideration of the social, economic, and environmental impacts which would be caused by construction of the various alternate alignments being considered. ; The number of people and businesses which would be displaced by potential construction; the effects on community facilities and services; and potential impacts on wetlands, parklands, and wildlife habitat (especially endangered species) are among the many effects examined as part of the analysis. ; Consideration is given to physical impacts on facilities as well as their ability to continue serving the community effectively after construction. ; Examples of such facilities include police and fire stations, hospitals, places of worship, community centers, and local shopping centers. ; Special consideration of potential impacts to public parks, recreation areas, wildlife and waterfowl refuge and historic sites are required by Federal law and by Federal regulations found at 23 CFR 771.135 (commonly referred to as "Section 4f").

At a minimum, the funding agency (typically your SDOT) will provide you the guidelines for performing the environmental analysis. ; If the project is complex, requires acquisition of many parcels or the displacement of people, or has known impacts on the natural environment, your agency may tell you the level of environmental analysis that must be performed. ; If the project impacts an area occupied by members of minority and/or low income groups, the requirements for environmental justice will have to be met. ; Information on environmental justice is available on FHWA's website at:

Public Involvement.

As indicated previously, public involvement is an essential part of the planning and NEPA coordination processes. ; The purpose of public involvement during project implementation is to inform the public of the potential impacts of each alignment, gauge opinion and/or support for a project, and allow the public to comment on the project and each alignment. ; The scope of public involvement is dependent on the type of environmental documents which must be prepared for the project.

Selection of Alignment.

After thorough consideration of the advantages and disadvantages of potential alignments, your agency will decide which alternative best serves the needs of the public and will select the preferred alignment to advance to project design.

Project design

In project design the construction plans, specification, and estimates (PS&E) are developed for use in advertising for and constructing the transportation project. ; There are many factors that are considered in developing final design plans. ; The following two components are essential to the real property interests that are affected by the proposed project.


Utility relocation is a critical part of the construction of a project. ; Early and continuing coordination with all of the affected utilities is critical to keeping your project on schedule. ; Utilities often need extensive lead time in order to reasonably schedule their work and obtain materials necessary for relocation of their facilities. ; Any affected utility company should be notified as soon as a project is identified that may require utility relocation. ; Once the utility is made aware (or notified) of the future need for a utility relocation, the utility company may be able to provide information concerning the location of existing utilities and any proposed new utilities for a project corridor. ; If a utility occupies land outside the right-of-way of a public highway, you will have to pay the utility to relocate its affected facilities in the same manner that you would compensate any other occupant. ; If a utility occupies land within the right-of-way corridor of a highway, your local and State laws governing the utility's right of occupancy in the right-of-way will govern whether you have to pay for all or part of the cost of relocating its facilities.

Right-of-Way Plans.

As part of project design, a right-of-way plan indicating the property required to build and maintain the transportation project is required. ; The right-of-way plan should contain essential data needed for appraisal and negotiation activities. ; Depending on your agency's requirements, these plans will illustrate the existing and proposed right-of-way lines, the property lines and owner's names for each property adjacent to the highway, the highway center line, design features, width of the new highway, grade changes, and other details of the construction. ; The plan should provide sufficient information for preparation of legal descriptions of the properties and types of property interests to be acquired.

A right-of-way plan is a valuable visual-aid tool for negotiators, appraisers, and attorneys involved in acquisition transactions. ; It also helps property owners understand why and how their properties are being acquired.


Once the above steps have been completed, including the environmental analysis and development of the right-of-way plans, the project is ready to enter the acquisition phase.

Note: ; ; At this time, if Federal-aid funding is planned for your project, you will need to work with your SDOT to secure authorization to proceed.

Once your agency has received authorization to proceed, the property owners and tenants affected by the project must be notified of the agencies intent to acquire their property. ; An appraisal or waiver valuation of the real property to be acquired for the project is the initial step in the acquisition process. ; This step uses either a formal appraisal and review or an administrative procedure to estimate the fair market value of the property acquisition. ; Chapter V, Valuation, provides further explanation of the property valuation and appraisal process used to support the agencies determination of just compensation using estimates of fair market value.

After just compensation is established, the next step in the acquisition process is to present a written offer to the property owner. ; The agency, acting principally through an acquisition agent or negotiator, should make every reasonable effort to reach an agreement expeditiously with the property owner. ; If agreement is not reached, the agency may have to initiate condemnation proceedings. ; Chapter VI, Acquisition, provides further explanation of this process.

If there are occupants (including the property owner) or personal property on the parcel, relocation assistance is available. ; Chapter VII, Relocation Assistance, further explains the relocation process, benefits and services.

Right-of-Way Certification

Prior to advertising for construction bids for the project, the acquiring agency must prepare a right-of-way certification. ; A right-of-way certification states that the properties needed for construction of the project have been obtained, they are clear of any utilities and structures which must be moved plus persons or businesses displaced by the project have been relocated. ; Essentially, the certification must include a statement that the agency has complied with Uniform Act requirements and that the project is ready for construction. ; Your agency then can advertise for bids to construct the project. ; In some limited circumstances, the agency may proceed with advertising for construction bids prior to the elements of certification being completed if it will not adversely affect any owners or occupants nor impede the construction contractors' activities.

This chapter has provided an overview of the project development process. ; In the next chapter, we focus on several specific administrative issues which may provide flexibility in the management of your agency's real estate acquisition program.

Updated: 1/31/2017
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