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Section 3: Establishing Values

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Establishing 90-10 Right of Way Values

Establishment of an approved value for each right of way parcel is essential, since it ultimately may serve as a basis for the limit of state participation in the LPA’s negotiated parcel cost. The counties or cities also need current values in negotiations and for use in condemnation proceedings.

It is expected that an LPA usually will prefer to have the process of determining a property value completed and be in receipt of the state’s approval on a parcel before proceeding with the purchase, but this is not mandatory. However, if the LPA will seek reimbursement from the state, it must conform to all policies and procedures contained in this manual, especially those in the previous Section 2 of this chapter. Special attention is directed to the fact that, regardless of the method of determining values, there is a definite need for TxDOT to keep its process of determining values abreast with the LPA’s action in acquisition. Where improvements are involved, an intelligent analysis of value cannot be made unless such improvements can be evaluated in their existing condition and original position on the property. The appraisals and analyses must be made before any improvement is removed either through sale by the General Services Commission or through retention by the owner.

If a LPA retains the right to recommend values but is slow in submitting this recommendation, R/W-PD should exercise TxDOT’s option of making an independent determination of value before any improvement is removed or before an award is made in condemnation.

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Values for Improvements

For negotiated parcels, the state participation in the cost of improvements will be based on values approved by the state. Whether the LPA anticipates acquiring the improvement or letting the owner retain the improvement, or plans on relocating the improvements for the owner, it is necessary that the state be furnished with the values of each item of improvement. This requirement is predicated on the fact that the state’s upper limit of participation will be the approved value reduced by the retention value for the improvement if the improvement is not acquired. Market values are therefore essential for the state to set these upper limits of cost participation. See Advertising Sign Interests Chapter 3, for treatment of advertising sign interests.

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Exceptions to Requirement for Establishing Values

Values will not be established for property interests held by railroads or utilities, or for irrigation and drainage canals not privately owned when these interests are handled by agreement and by payment for adjustment of the facilities. If an owner offers to donate his property or accept a reduced consideration, he must be fully informed of all the facts, including his right to just compensation under the law.

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Retention Values for Improvements

Under the terms of the contractual agreement, an owner may retain all or part of the improvements located on the property being acquired for right of way purposes, and the upper limit of state cost participation will be reduced by an appropriate amount. Where the property owner retains an improvement within the acquisition, the state’s upper limit of participation in the compensation paid will be based on the state’s approved value less the retention value of the improvement.

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LPA to Recommend Values

In determining values, a flexible procedure has been adopted in order to use existing organizations and efficient processes in counties and cities. The assistance of local officials is also proposed for projects traversing areas where uniform property values prevail and the knowledge of such values by the LPA will assist the state in making its determination of values on which to base its cost participation. Therefore, the contractual agreement provides that the LPA may recommend right of way values for each parcel to be acquired for the project. These values can be determined by any method acceptable to the LPA, but must be fully supported by information to document such recommendations. Attention is directed to the manner in which right of way fencing is to be handled. If the approved value is to include fencing costs, the recommended value is to include the value for the fence in the part to be acquired and the net damages, if any, accruing to the remainder, including damage due to an unfenced condition, if any. If the LPA is to perform the right of way fencing on a lump sum or actual cost basis, neither a value for existing fences whose use will be restored by the new fence nor damages for an unfenced condition are to be included in the recommended value. These values are to be recommended on the prescribed forms to R/W-PD for the state’s consideration and action.

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