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Transportation Corridors

A transportation corridor is a long, narrow strip of property that includes surface, subsurface, and air rights. It often connects two or more areas restricted to surface, subsurface, and air rights, for the deportation of goods and passengers.

Some examples of transportation corridors are: railroad and mass transit lines, public and private roads, pipelines, including oil, gas, water, and sewer lines, fiber optics, pedestrians pathways, aqueducts and canals, television cables, and electrical transmission lines.

How to Appraise a Transportation Corridor

There are different methods that can be used when appraising a transportation corridor, including Replacement Cost New Less Depreciation (RCNLD), Corridor Value (CV), Sales Comparison Approach, Across the Fence Value (ATF), Net Liquidation Value (NLV), and Going Concern Value (GCV). [1]

Replacement Cost New Less Depreciation (RCNLD) is based on the principle of substitution and is more commonly referred to as the “cost of assemblage.” It includes the cost of the part taken, appraisal costs, negations costs, title costs, grading costs, project management costs, and the acquisition and demolition of buildings. According to Dolman and Seymour, this cost can range from two to six times the Across the Fence (ATF) value. The Court of Appeals in People v. Southern Pacific Transportation Company (1978) held that “the cost of reproduction is an acceptable approach to a determination of just compensation.”

When several similar commensurate commodities, goods or services are available, the one with the lowest price attracts the greatest demand and the widest distribution. Corridor Value (CV) is determined by multiplying the ATF value and the enhancement factor. The enhancement factor is arrived at by dividing the sales price of a corridor by its ATF value.

Sales Comparison Approach is applicable when there are several sales or comparables that have sold in the subject’s market area. This approach is seldom used since there are relatively few transactions of transportation corridors that sell in the same market area.

The underlying assumption in the Across the Fence (ATF) method is that land in the transportation corridor is equal to the value of adjoining lands. When using this method, the property is divided down the centerline and each half is joined to the adjacent parcel along with the adjacent property’s highest and best use and unit value. The ATF is the sales comparison approach modified to the degree that shape, size, topography, and access are disregarded. The State Board of Equalization, railroad companies, utility companies and public agencies use this method more than others when assessing value of operating and non-operating property, ground rent, and public and private streets.

The Net Liquidation Value (NLV) is the present value of the net amount the owner will realize if the corridor is sold piecemeal over a reasonable time period. Net proceeds are determined after administrative, marketing, real estate taxes, and cleanup costs are deducted from the gross revenues.

The Going Concern Value (GCV) is the expected future profits discounted to today’s value at a rate reflecting the quantity, quality, and durability of the income.

Appraising transportation corridors is a challenging endeavor, but can be accomplished by using one or more of the methods outlined above.

Valentine Appraisal and Associates Has Successfully Completed Several Transportation Corridor assignments:

Lower Franklin Reservoir Property in City of Los Angeles, CA

An Existing Pipeline Traverse Crossing at the BNSF Transportation Corridor in Hesperia, CA

1.9 Mile 50-foot wide Right of Way Corridor in Riverside County, CA

80.48 Mile Transportation Corridor in Siskiyou and Shasta Counties, CA

Palmdale Commercial Building Appraisals

Avigation Easements

Pipeline Easements

Visit Valentine Appraisal and Associates

[1] Valentine, Gary S. “Appraising a Transportation Corridor.” Right of Way Nov-Dec. 1998: 6-10.

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Fiber Optics

Fiber optics are lines of thin glass that can send digital information by transmitting light signals. Thousands optic fibers are arranged in bundles and optical cables, protected by an outer covering, called a jacket. Optical fibers can be single-mode fibers that transmit infrared laser light, or multi-mode fibers that transmit infrared light from light emitting diodes (LEDs). Optical fibers have the diameter of a single human hair.

Fiber optics were discovered in 1970 and the discovery has revolutionized the telecommunications industry. Today, more than 80% of the world’s long-distance traffic is secured over optical fiber cables and because of the increase of computer use, the current recession has had very little effect on the market for fiber.

Optical fibers can be buried underground or hung from poles above ground like electrical wires. When they are buried, the rule of thumb is that they be placed three to four feet deep and the cables typically encumber an area non-exclusively between three to ten feet wide. Protective cables are designed for approximately a 40-year lifetime, and the glass fiber inside the cable is good for a millennia as long as the coatings and plastics used in the cable remain intact. The biggest failure is damage from backhoes and/or digging up cables. The downside to placing cables underground, according to experts, is that the installation cost to place fiber optic conduits underground is twice as much as the cost to hang fiber optic cable from poles. However, more conduits can be placed underground for little additional cost per conduit, and several times more fiber can be installed simultaneously underground than on poles.

Because the industry has failed to make comparable sales and rental data available for fiber optic lines, appraisers are left to use alternative approaches of value. Methodologies that are used are similar to appraising a transportation corridor.

The Survey Method, where information from right of way owners who have allowed leases or easements for fiber optic lines on their corridors is one method where values can be obtained. Further information from users who have fiber optic lines throughout various corridors can help as well. Discussions may include those in private and public sectors.

Across the Fence method where the value of the corridor is similar to the value of adjacent properties may also be used. Across the Board or Region is another method that was developed in the early days of the industry’s growth, when fiber optics had a window of opportunity to beat out the competition and secure laying thousands of miles of fiber optics in agreements that needed to close in a very short period of time. An example of this is when negotiators for Southern Pacific Transportation Company needed an idea of the value of real estate fiber optic lines which encumbered their corridors, so a rough Across the Fence (ATF) value was arrived at and eventually, Across the Board value for fiber optic lines which equaled $10,000 an acre for rural areas and $25,000 an acre for urban areas was agreed upon. These numbers were used for nearly two decades (1980’s-1990’s). Another acceptable unit of comparison for Across the Board approach is price per mile.

The final approach that is used is the Market Approach, which is recognized as the most reliable method for appraising real property for fiber optic lines. This approach requires obtaining comparable leases and easements of fiber optic lines. These are adjusted for necessary market adjustments, including terms and conditions of agreement, changing market conditions, location differences, and differences of physical characteristics between the comparable and subject property.

Because the telecommunications industry continues to grow at a rapid pace and there is a blockage of free flowing information due to confidential agreements, the appraisal of fiber optic lines continues to vary. Until there is some level of uniformity in the units and elements of comparison in appraising real property for fiber optic lines, the marketplace will continue to accept a host of methodologies and approaches of value.

Valentine, G.S. & Hodges, T. (2011, July/August). Fiber Optic Valuation: The need for conformity. Right of Way, 28-32.

(https://dictionary.reference.com/browse/fiber+optics)

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Pipeline Easements

Pipelines transport products from one point to another. Pipeline title is usually

acquired through an easement. According to Websters, an easement “is the right a property owner grants to another for the use of their property”.

Therefore, a pipeline easement is the right to construct, operate, and maintain a pipeline over the land of others within prescribed geographical limits.

How to Appraise a Pipeline

There are two different ways to appraise a pipeline depending on if it is part of a transportation corridor or within a conforming parcel.

Reviewing published articles and books, interviewing buyers and sellers of property that is encumbered by pipelines, and sending out letters to property owners are all methods that can help when appraising pipeline.

No Acceptable Standard Width for a Pipeline Easement

There is no acceptable standard width for a pipeline easement. It is usually determined through negotiations. Initially, railroads arrived at the easement width by rounding up the diameter of the pipe to the nearest foot, then adding two feet on both sides as a buffer to ensure the pipeline’s integrity and security. But, railroads soon realized that pipeline users were getting free access onto their corridors to service and maintain pipelines, so they reasoned that since automobile lanes on public roads are typically 11 to 12-feet wide, and the width of a standard truck is 8 feet 2 ½ inches, a 10 to 12-foot width requirement to access pipelines seemed reasonable.

Pipeline Easements and Severance Damage

Once the width of the pipeline has been negotiated, and the value has been determined through research and determining the value of surrounding land, severance damages can be analyzed. Severance damages are those damages to the remainder property that are compensable. Severance damages are seldom found for new pipelines in transportation corridors because owners of corridors do not let pipeline companies install their pipeline if it could diminish the value of the remaining portion of the corridor and/or pipeline easements.

Through advance research and preparation, conducting an in-depth search for best comparable data available, and conducting a thorough analysis, your appraisal of pipeline will be supportive and reliable. You can count on us to have your assignment done on time, too.

Sample Pipeline Appraisal assignments completed by Valentine Appraisal and Associates:

• Two Existing Pipelines at the Dominguez Channel in Carson, California

• An Existing Pipeline Traverse Crossing at the BNSF Transportation Corridor in Hesperia, CA

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