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I know this topic has been discussed previously, but I wanted to get some professional opinions.

I am working on my second overhead transmission line right of way. There are multiple parcels along a rural highway.

It looks like the right of way will extend close to several single family residences. I realize this not a highway acquisition, but a utility easement, but I'm wondering if proximity to a home would necessitate a larger percentage of the fee, but I don't really see how this will affect the property owner negatively -- perhaps an eye sore I suppose. If the overhead easement extends into a building (say a church) how would that negatively affect the property. Would the church need to be moved back, or would the utility company simply agree not to interfere with its operation. Does this sound like a Form A appraisal to those who work with easements.

Mathew,

First of all, using a percentage of fee to measure the value of the easement footprint is generally referred to as "Value of the Part Taken". The percentage to apply is dependent on the extent of rights taken. For instance, an underground sewer pipe easement is generally low impact (after construction) while an open drain over the surface is high impact. Thus, the type of easement and its affect on the real estate help determine what percentage of fee is applicable. But this method generally always assumes no diminution of value occurs to the unemcumbered remainder of the larger parcel. One quick reference I can suggest is an article written by Donald Sherwood, SR/WA, in the May/June 2006 Right of Way magazine which provides a matrix listing different percentage rangese for various types of easements. However, you should ground yourself with local knowledge. Another important factor may be local norms. If many agencies are paying within a relatively standard range, then you should consider that. I don't believe you should use a sliding scale based on proximity.

Regarding proximity, if proximity results in an "eyesore" to the property, you need to perform a "Before and After" appraisal which values the larger parent parcel before the easement and after the easement. This is done in one report. It is generally the recommended method in easement valuation even when no damage results to the remainder. (Because, how do you know unless you measure it?) To measure the impact to larger parcel, you should perform an impact study or reference studies already performed which address this type of easement. Be mindful when valuing a parcel in the before state, it may be subject to existing easements. If so, consider whether they impact the before value. Also, your comparable sales may also be likewise affected by easements. Study them carefully.

It appears you have limited experience in right of valuation. If possible, seek a mentor in your area who can you can bounce ideas off. (Perhaps, over lunch on you). Also, IRWA Course 401 The Appraisal of Partial Acquisitions is an excellent course which I highly recommend. In the meantime, research past articles on this topic in Right of Way Magazine.

Good luck,

Michael Oakes

Michael, thank you for your comments. I have taken 401 and have 5 years of IRWA experience hours and am in the process of acquiring my SR/WA, so my experience is far from limited. I've worked on massive highway projects, historical bridge projects, numerous eminent domain cases and now I have become quite versed in utility easements. Thanks again for your input.

Mathew,

No offense. You mentioned it was only your second project and you questioned whether a "sliding scale" in terms of percentage of fee value was advisable when valuing easements having greater proximity than others. I agree you have sufficient experience for R/W valuation. However, the idea of applying a sliding scale may appear to, say, an opposing attorney as a means to avoid addressing damages. All property is unique, therefore there is no universal rule regarding measuring an easement's value as a percentage of fee. My point was that such a valuation implies that no damages occur to the parent parcel. There may be times when the "going rate" for some easements is XX% of value, but a particular property may warrant yy%. If you have a small parcel, an additional easement may render it non-compliant with zoning; and there is always the "straw that breaks the camel's back". On the other hand, some properties already have so many easements (and restrictions) on them that the Before value is nominal and another easement won't have much impact. In those cases, a value of the part taken would seem the most appropriate.

Rather than adopt a rule of thumb for valuing an easement as a percentage of fee, I tend to favor a "Before and After" appraisal which at least considers damages. Even then, you may still value the footprint of an easement in the After State as some percentage less than its fee value in the Before. Some easements may be valued at 100% of fee value even though you conclude no damages to the unencumbered remainder exists.

Good luck in pursuit of your SR/WA. In retrospect, the answer to your original question is the proverbial appraiser's answer: "It depends".

Michael Oakes