Any delays in the right-of-way (ROW) acquisition process can lead to major delays in the construction phase. This paper examines the factors that have contributed to higher numbers of condemnation cases and, by extension, to delays in the ROW acquisition process in Mississippi. Addressing some of the delay factors will allow targeted improvements to reduce condemnation cases and speed the acquisition process. By using a survey of practitioners and previous analyses, condemnation cases, transparency, and Mississippi’s lack of price disclosure in the public record were identified as significant factors that contributed to delays in the ROW acquisition process. The identified factors that contributed to acquisition delays at the Mississippi Department of Transportation and the survey results were used to develop a new recommended process, changing the state law to reduce the number of condemnations, increase the number of parcels acquired through negotiation, and enhance the overall efficiency of the ROW acquisition process. The recommended new process was tested and validated on an active project that contained 32 parcels in which 10 (31%) parcels were considered for condemnation. Using this new process, only one parcel (3%) was condemned and the other nine parcels (28%) were prevented from condemnation. This new process significantly reduced the duration of ROW acquisition by reducing potential condemnation cases and enhanced the negotiation and the overall acquisition process. The new process is simple and readily applicable for the acquisition policies and procedures of any transportation agency.
The right-of-way (ROW) acquisition process is not only an economic issue that needs to be executed in a timely manner, but also a socially sensitive issue. It concerns matters of public need and property owner rights (Aleithawe 2010). The ability to acquire the ROW for highway construction projects in a timely manner is the primary key to allowing a highway construction project to begin construction on an approved schedule. Properties needed for transportation construction or improvement projects come in all sizes, shapes, and locations, and each comes with specific challenges. A single project usually has many parcels of land that are needed from different owners; each parcel must be acquired to ensure completion of the project. Project delays often occur because of common difficulties with ROW acquisition that cause schedule slippage and cost increases. Condemnation, the process of taking private property for public use through the power of eminent domain, is an example of this (Aleithawe 2010). Methods are needed to reduce those delays.
Transparency in the acquisition process is a critical component for any effort at increasing operational efficiency and reducing the time required for ROW acquisition. The term “transparency” is a broad reference to multiple concerns within the overall acquisition process, highlighted by price disclosure, which has substantial implications for the appraisers performing market value appraisals in addition to property owners.
Federal regulation requires that the offer of just compensation to the property owners not be less than the approved appraisal. Under regulations of the Federal Real Property Acquisition Polices Act of 1970 [Uniform Act; Federal Highway Administration (FHWA) 1971], the appraiser is required to personally confirm details of real estate transactions (comparable sales) with a party to the transaction (seller, buyer, attorney, broker, or financier). Therefore, any appraiser seeking information on a sale, especially in a rural area of the state, must persuade a transaction participant to provide him or her with specific information about the transaction, primarily the sales price. Mississippi’s status as a nondisclosure state (one of the remaining nondisclosure states) means that the sales price is not required to be disclosed in the transaction deed or any other part of the public record. Historically, the standard process at the Mississippi Department of Transportation (MDOT) was for the appraiser to collect recent sale deeds at local courthouses and to contact buyers or sellers and request information on the transaction, such as sales price, condition of the property, and time it took to sell. This has always been a time-consuming process that has delayed the acquisition process.
This paper proposes a process to reduce condemnation cases of new ROW acquisition projects under circumstances similar to those faced by MDOT.
A study was conducted to identify the factors that contributed to the delay in the ROW acquisition process at MDOT. Among a set of completed highway construction projects (1,478 parcels included in 35 projects), statistical analysis identified the number of parcels, the parcels that were acquired by condemnation, and the number of revisions in the completed project to be significantly associated with increasing the duration of the ROW acquisition process. Condemnation is the process of taking private property for public use or purpose through the power of eminent domain (Aleithawe 2012).
Other studies sought innovative practices to accelerate the acquisition delivery for ROW in project development. For example, 36 agencies responded to a detailed survey of ROW administrators and managers in all 50 states (Waters 2000). Several contributing factors were identified in the survey. Thirty-six percent listed coordination issues between organizational elements as a primary factor in acquisition delay. More than half of the 36 survey respondents (58%) indicated that issues outside of the control of the state transportation agency management, such as legislation and public policy, contribute to ROW acquisition delays. Some states have found alternative settlement methods, such as mediation, to be useful in reaching amicable settlements and avoiding condemnation and its delays. Mediation is used internally before condemnation procedures are initiated. The survey results showed that 33% of the respondents identified eminent domain laws (condemnation) as a barrier to improving ROW delivery. The time allowed for the property owner to consider the acquiring agency’s offer impacts condemnation rates: longer time spans result in higher condemnation rates (Waters 2000). The FHWA recommends that administrative settlements and other techniques be considered before initiation of legal procedures or condemnation (FHWA 2002). Late design and revisions to design plans was a factor that all 36 states survey respondents identified as major concern in the duration of ROW acquisition. Active coordination with ROW staff among design teams in the project development phase resulted in significant quality improvements to the ROW acquisition process, according to the survey.
Hakimi (2005) examined key ROW laws in all states, with emphasis on real estate acquisition rules. This study identified matters impacting the acquisition process, such as: (1) state laws that address ROW governmental acquisition of private property and those amendments that significantly influence the ROW acquisition process; (2) federal laws and regulations applicable to the acquisition of properties for federally funded projects; and (3) best practices and strategies during the acquisition process. Hakimi noted that, to improve the US ROW acquisition process, the environmental, social, economic, and political characteristics of each state should be considered. Although different project corridors are acquired every year, state and federal laws constraining acquisition practices tend to evolve slowly. He also noted the need for law changes to promote transparency to build trust between property owners and the government. Hakimi concluded that appropriate changes would minimize cost by expediting the acquisition process.
A lack of transparency occurs when critical information is not readily available to the parties involved in the process. This lack of public information can affect both sides of the acquisition process. When an appraisal report is not available to a landowner, or there is a lack of real estate price disclosure, it injects uncertainty into the mix. Uncertainty typically creates time delays and additional costs, inconveniencing state agencies and property owners alike. Therefore, when sales information is not publicly accessible, the entire acquisition process is delayed. Such is the case in nondisclosure states (Aleithawe 2009). In those states that do have transaction price disclosure, there is state law requiring the transaction price to be declared at the time the deed is recorded. Mississippi is a nondisclosure status state, one of a few (Mississippi, Texas, Montana, North Dakota, Indiana, Utah, and Wyoming) remaining in the US (Setzer 2007). Additionally, in Mississippi, real estate transaction price data are substantially controlled by the local boards of realtors across the state through the Multiple Listing Service (MLS) database system.