Right-of-Way Cost EstimatingOhio DOT Perspective

R/W & Utilities Subcommittee ConferenceFlorida 2007

April 2007 2

Project Development ProcessAll projects must go through a PDP Process to:

● Encourage communication among all disciplines

● Increase plan quality

● Foster better management of the agency’s resources

● Document reasoning behind project-related decisions Documentation includes Right-of-Way cost

estimating which is: Required at the initiation of a project Updated throughout PDP process, and Becomes part of the decision making process

April 2007 3

Project TypesProjects are divided into 3 types

StepsTypical

CharacteristicsAcquisition of R/W

Number of R/W Cost EstimatesRequired

Minimal 5 Paving and maintenance projects None NoneMinor 10 Projects generally located along

existing alignment

Bridge replacements; intersection upgrades; turn lanes

Yes 6

Major 14 Projects that impact capacity; High degree of public controversy;

New alignments; bypasses; significant alterations to existing alignments

Substantial

Amounts 9

April 2007 4

STEPS 1-10 OF THE OF THE PDP PROCESS

On Major Projects (Steps 1- 6) No real plans at this point; many assumptions must be made. Market Survey and Tax Roll data are used to estimate costs.

Conversations with Realtors, Auctioneers Pulling base comparables from local MLS Talk to County Auditor to find comparables they use for various property types Pull Tax Roll data on random sampling of properties within project area

On Major Projects (Steps 7-10) Once preferred alignment selected, overlay alignment over tax maps and aerials. Determine:

the take the impact to the residue relocation issues valuation formats complexity of the project time necessary for the acquisition, and capacity of in house staff versus using consultants

Gather verified market data for more accurate costs Data books having verified sales that are reflective of the property types being impacted People along the project site physically inspecting the take area and the residue and determining

the impact of the take on the residue Start assessing complexities of acquisition-appraisal-relocation processes on preferred alignment Estimate of damages to residue becoming more apparent Serious R/W project management starts, and R/W Costs become market driven at this point

April 2007 5

General Formula

Estimate value today (Compensation paid)(at Step 1)

+ Relocation Costs (Est. Payment to owner) (at Step 5)

+ Consultant Labor Costs (at Step 6)

Subtotal A+ Adj. for Time (Current to R/W Authorization date) (at Step 1)

Subtotal B+ Adj. for Administrative Settlements (at Step 1)

+ Adj. for Appropriations (at Step 1)

+ Adj. for Incidental Expenses (at Step 1)

TOTAL COST TOTAL COST ROUNDED

April 2007 6

Information on Relocation Costs

Relocation Costs (Est. Payment to Owner):

●Residential Owner $ 40,000●Residential Tenant $ 11,750●Commercial/Farm $ 25,000●Personal Property $ 1,000

April 2007 7

Information on Labor Costs

Consultant Labor Costs:Titles . . . . . . . . . . . . . . . $ 400/pclAppraisal

Simple . . . . . . . $ 750/pclDetailed . . . . . . $ 4,000/pcl

Appraisal ReviewSimple. . . . . . . . $ 500/pclDetailed . . . . . . $ 2,000/pcl

Negotiation . . . . . . . . . . $ 1,100/pclRelocation

PP Move . . . . . . $ 1,500/displaceeResidential Move $ 5,200/displaceeCommercial Move$ 5,600/displacee

Closings . . . . . . . . . . . . . $ 400/ownershipProject Management . . . $ 550/pclAsbestos Testing . . . . . . $ (determined by

project)

April 2007 8

Information on Adjustments

Adjustment for Time:● Based on market support or average % of change in CPI over last

5 yrs.

Adjustment for Administrative Settlement:● Assume 15% of parcels settle by Adm. Settlement at average of

20% over offer●[Subtotal B x 0.15] x 1.20

Adjustment for Appropriation● Assume 10% of parcels will be appropriated● Appropriated parcels will settle at amount 50% over offer● Formula is [Subtotal B x 0.10] x 1.50

Adjustment for Incidental Expenses● Assume ODOT will have some incidental expense● 90% of parcels will settle and close● Amount is estimated to be 2.5% of settlement amount● Formula is [Subtotal B x 0.90] x 0.025

April 2007 9

STEP 1 OF THE PDP PROCESS

Working with stakeholders to understand problems and needs

No plans Defining the Study Area Developing an initial cost estimate_________________________________

This is what you have………..

A 500 square mile study area

April 2007 10

STEP 1 OF THE PDP PROCESS Defining the Study Area - 500 Sq. Mile Study Area

April 2007 11

Developing an Initial Cost Estimate

Given the study area, I’m assumingassuming that the highway will be:

● a single corridor (located somewhere in the study area):

● a 4 lane divided facility

● 300 feet wide

● the length of the study area_________________________________

Visualizing the assumptionsassumptions……..a defined area

April 2007 12

STEP 1 OF THE PDP PROCESSGreen Line is Defined Area

April 2007 13

Determining “Value Today” for the Formula

Working with a corridor that is 300 ft. wide x 36 miles long:

1. Determine Land Usage Within this Corridor: By using a combination of aerial photographs and County Profiles, one can assume:

●70% agricultural ●24% residential●5% commercial ●1% industrial

2. Determine values appropriate for land usages within corridor: Ignore structures within the corridor Focus only on the land Ask local Realtors and Auctioneers what land is going for (now too difficult to use

tax roll data)

3. Break the 36 mile long corridor into land-use segments; verify per-acre price for each segment:

Agricultural Land $3,500/acre Residential Land $5,000/acre Commercial Land $7.00/SF or $304,920/A Industrial Land $2.50/SF or $108,800/A

April 2007 14

Determining “Value Today” for the Formula (cont’d)

Using 5,280 LF = 1 mile/43,560 SF = 1 Acre:

1. Calculate the total acreage within corridor.

a. Determine how many lineal feet are in the 36 mile corridor:

36/Miles x 5,280/LF = 190,080/LF

b. Determine how many square feet are in the corridor:

300/ft. wide x 190,080/ft. long = 57,024,000 SF

c. Determine how many acres are in the corridor:

57,024,000 SF ÷ 43,560 = 1,309 Acres in the corridor

2. Calculate the number of acres in each land use segment using the land-use ratios.

3. Calculate the value of the acres in each land use segment.

4. Calculate the value of all the land in the corridor as of today.

Calculate number of acres in each land use segment

Calculating acreage cost of each land use segment

Agriculture 70% x 1,309A = 916.3/A X $3,500/A = $ 3,207,050

Residential 24% x 1,309/A = 314.2/A X $5,000/A = $ 1,571,000

Commercial 5% x 1,309/A = 65.5/A x $304,920/A = $19,972,260

Industrial 1% x 1,309/A = 13,0/A X $108,800/A = $ 1,414,400

ESTIMATED VALUE OF LAND WITH CORRIDOR AS OF TODAY $26,164,710

Goes into the formula

April 2007 15

Adjust current value forward in time to anticipated Sale Date or R/W Authorization Date This information provided by District Office Assume 4 years from now

Time is based on market evidence or CPI and tempered with reason Reflects history and not necessarily indicative of the future Assume 2.5% per year increase over the next 4 years

Using an HP-12C calculator, the time adjustment is:

Determining Adjustment for Time for the Formula

4N2.5i1CHS PVSolve for FV = 1.1038$26,164,710 x 1.1038 = $28,880,607

Goes into the formula

April 2007 16

Developing the Cost EstimateDetermining Other Adjustments for the Formula

Adjustment for Administrative Settlements

[ $28,880,607 x 0.15] x 1.20 = $5,198,509

Adjustment for Appropriations

[$28,880,607 x 0.10] x 1.50 = $4,332,091

Adjustment for Incidentals

[$28,880,607 x 0.90] x 0.025 = $649,813

April 2007 17

STEP 1 Entering Other Adjustments into the Formula

Estimate value today (Slide 16) $26,164,710 Relocation Cost (at Step 5) -0-Consultant Labor Cost (at Step 6) -0-

Subtotal A $26,164,710

Adj. for Time (Slide 20) x 1.1038

Subtotal B$28,880,607

Adj. for Administrative Settlements (Slide 22) + 5,198,509Adj. for Appropriations (Slide 22) + 4,332,091Adj. for Incidentals (Slide 22) + 649,813

Total Estimated Cost $39,061,020Rounded to: $39,060,000

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STEP 7 - An Overview

1. Preferred alignment identified 2. Approximate centerline known

● Topographical ground survey features collected● Utilities and their depths shown● Railroad acquisitions identified● Preliminary Plan and Profile sheets shown● Preliminary construction limits shown ● Cross section being developed● Individual auditor parcels now known

3. Create a Sales Data Book● All Sales in Sales Data Book to be of vacant land● Utilize local Realtors, appraisers, staff or consultants● Verify market data to reflect property types in the corridor● Use ODOT standard data sheet

4. Update Costs Estimate for:● Improved properties● Damages to residue properties● Relocation Costs● Consultant Labor costs for R/W Acquisition

3. Create a Sales Data Book● All Sales in Sales Data Book to be

of vacant land● Utilize local Realtors, appraisers,

staff or consultants● Verify market data to reflect

property types in the corridor● Use ODOT standard data sheet

April 2007 23

STEP 9 - An Overview

Overview● Stage 1 review completed; comments incorporated into the Stage 2 design● Preliminary R/W Plans available● Summarize environmental commitments; prepare environmental plan notes● Stage 2 Detailed design is created at the end of this step

Address Serious Project Management Decisions• Time needed for relocation process

Use staff or consultants for relocation• Time needed for acquisition parcels

Use staff or consultants

Determine the complexity of the appraisal process• Engage the appraisal reviewer• Create parcel impact notes• Define the valuation issues• Determine the scope of appraisal needed• Determine the type of appraisal needed• Use staff or consultants

April 2007 24

STEP 9 - An OverviewOther Determinations• Consultant utilization• Money needed to pay the consultant• Process to encumber money, and• Contracting process to engage consultants

Update Cost Estimate● Preliminary R/W Plans basis for cost estimate

Workplan used to estimate costs● Pre-Acquisition Surveys initiated for Relocation parcels

Skilled relocation people estimating relocation cost● Tax roll data no longer used for improvements

Skilled eminent domain people estimating value to improvements taken and damages (if any) to residue

● Update labor cost

Example of a Step 9 Cost Estimate● Focus will be on 1 Parcel● Based on Preliminary Plans● Use: Summary Sheet (Slide 37)

Property Map SheetDetail Sheet

April 2007 25

Parcel 283 WLBefore – 5.371 Net Acres

Take – 1.783 AcresRemainder – 3.588 Acres

April 2007 26

New 4 lane medianDivided road, limited access

Located to the rear of the property

House located along existingroad at front of property

At grade crossing atIntersection of US 24 and Whetstone Road

April 2007 27

LA R/W 1,570 LF of 4Strand barb wire

Fence on wood polestaken

CL ofProject

Small horse barn103 ft. from R/W

April 2007 28

From the Cross Section and the Data Book

Using Information from the Cross Sections● Grade change is minimal – about 4 feet● EOP is about 100 feet from the rear property line

Using Information from the Data BookZoning for Parcel 123: AG Residential

● Defined as Agricultural Residential ● Min site size is 1.5 acres● Setbacks are:

50 feet from CL of any road30 feet from the rear property line

15 feet side property line● Min. frontage of 200 feet

Land value● For 5 to 10 acre Residential Use Properties● Ranges from $3,000 to $5,000 per acre

April 2007 29

STEP 9 - Determining Estimate Value Today

From Data BookRange is $3,000 to $5,000/AEstimate $4,000/AcreTake Area is 1.783 AcresLand Value Estimate:

● $4,500/A x 1.783 A = $8,023Improvements Taken:Fence taken – 1570 LFCost New is $7.00/LFFence taken is older – Est. 50% depreciated

● $7.00 x 50% = $3.50Estimate of Fence:

● 1,570 LF x $3.50/LF = $5,495Damages:No fence along R/W to keep livestock out of roadwayNeed CTC to create a fenceCost to Cure

● 214 feet x $7.00/LF = $1,498

Land Value Estimate: $ 8,023Estimate of Fence: $ 5,495Cost to Cure: $ 1,498Est. Value Today: $15,016

Put It Together

April 2007 30

STEP 9 - Determine Consultant Labor Costs

Consultant Labor Cost:● Amounts from Slide 9_______________________________________

Titles $ 400/parcel

Appraisal – Simple $ 750/pcl

Appraisal Review – Simple $ 500/pcl

Negotiation $1,100/pcl

Closings $ 400/ownership

Project Management $ 550/pcl

Total $3,700/Parcel 123

April 2007 31

STEP 9 - Determining Adjustment for Time

Adjustment for Time:● Time is to based on market evidence or CPI and is

also to be tempered with reason.● Reflects history and not necessarily indicative of

the future● Assume 2.5% per

year increase● Assume from current

date until R/W clear date of 2.5 years

Using an HP-12C calculator, the time adjustment is:

2.5N2.5i1CHS PVSolve for FV = 1.0638$18,716 x 1.0638 = $19,910

Calculate It

April 2007 32

STEP 9 - Determining Other Adjustments

Adjustment for Settlements

[ $19,910 x 0.15] x 1.20 = $3,584

Adjustment for Appropriations

[$19,910 x 0.10] x 1.50 = $2,986

Adjustment for Incidentals

[$19,910 x 0.90] x 0.025 = $ 448

April 2007 33

STEP 9 - Updating the Formula

Estimate value today: (slide 58) $15,016 + Relocation Cost: -0-+ Consultant Labor Cost $ 3,700

Subtotal A $18,716+ Adj. for Time x 1.0638

Subtotal B $19,910+ Adj. for Adm. Settlements (slide 53) $ 3,584+ Adj. for Appropriations (slide 53) $ 2,986+ Adj. for Incidental Expenses (slide 53) $ 448

Total Cost $26,928

April 2007 34

Questions?

Douglas S. Maitland Ohio DOT (614) 466-6802 dmaitland@dot.state.oh.us