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A residential subdivision has a storm water retention basin that does not have the volume needed for large storm events. An adjacent subdivision has excess storm water capacity and is considering receiving the excess storm water from the adjacent subdivision through an easement. Any ideas as to how we would value this easement? The storm water retention basin with excess capacity is approximately 2 acres, and the piping to convey the storm water between the two subdivisions is in place.

I'm a little confused as to what you are valuing, if the pipes are in place. Are you looking for the value of the subdivision with excess capacity taking the overflow? Or are you looking for the value of the easement to get the water to the retention basin?

I am valuing the subdivision property with excess capacity - actually, the value of an easement to use the subdivision property for excess stormwater, say from a 100-year storm event.

It also depends on whether you are in an eminent domain situation or a negotiated purchase situation. Also, this is a general overview and might not be appropriate depending on the specifics of your situation.

In eminent domain I'd probably be looking at the cost of building the extra capacity and/or the loss to that subdivision for having the extra capacity, plus any additional maintenance costs that may exist. Did they lose developable land for the retention pond, or did they have to make lots smaller, therefore getting less of a premium? What incremental costs were involved in building the excess capacity? You could make an argument that they are losing the opportunity to sell the excess capacity, but that may be a stretch, depending on the laws in your area.

If you are not in emeinent domain, looking at the value to the subdivision that needs the capacity might be part of the analysis. The value to the subdivision that needs the capacity might be higher, if they can't develop as many lots or need to make the lots smaller to accomodate the required capacity. They would also have incremental costs as well. But, as I'm sure you know, one buyer does not make a market, so using that as the sole source of market value may not be appropriate.

I hope this helps.