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Section 7: “Uneconomic Remainders”

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Policy

There will be no acquisition of property that is not needed for state right of way since TxDOT has no authority under state statues to acquire excess property. However, there is one exception to this policy in the case of “uneconomic remainders.”

TxDOT may acquire uneconomic remainders even though the remainder property is not needed for a particular project.

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Procedure

For partial acquisitions of parcels needed for transportation purposes, including acquisitions performed by local participating agencies and consultants, R/W-PD will make an assessment of whether the remainder is a potential uneconomic remainder based on a review of the right of way map, an inspection of the property as necessary, and the appraisal of the property considering the guidelines set forth below. R/W-PD must make an assessment to determine whether a partial acquisition will or will not result in an uneconomic remainder, considering the guidelines set forth below and other relevant information concerning the property in question.

R/W-PD guidelines in determination of potential uneconomic remainder are:

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  • Partial acquisition of improved properties where the “Remainder’s After” highest and best use will be changed from its “Remainder’s Before” use due to the acquisition, and such acquisition causes a substantial loss of parking, change in shape, use, etc. Other impacts should be carefully analyzed to determine the existence of an uneconomic remainder.
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  • Landlocked remainder, where it has been determined that it is NOT economically feasible to provide access, will generally be classified as an uneconomic remainder.
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  • If a partial acquisition changes the present use of the remainder, but also creates another use of value to the owner, the remainder should not be classified as an uneconomic remainder.
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  • Factors such as property owner maintenance and liability of ownership (i.e. nuisance properties) should be considered.

R/W-PD will make a determination on whether there is an indication and/or presence of hazardous material or substance(s) on the potential uneconomic remainder. TxDOT is not required to make an offer on a remainder if an appraisal or environmental investigation indicates the presence of hazardous materials or substances. Pursuant to Transportation Code 203.0521(e), TxDOT may enter a remainder to conduct an appraisal, survey, or environmental investigation to determine whether TxDOT should offer to acquire the remainder. R/W-PD should determine what, if any, environmental investigations, etc., may be necessary to ascertain the existence of hazardous materials or substances. R/W-PD staff should also make inquiries about the former uses of the remainder property and surrounding property uses. If the R/W-PD staff determines from its investigation and inquiry that there is a presence of hazardous materials or substances, then it should document the file, and no further action to purchase the remainder will be required. R/W-PD staff may recommend purchasing the remainder as an uneconomic remainder even though the potential uneconomic remainder may contain hazardous materials or substances. The state is not obligated to buy the contaminated remainder.

If R/W-PD staff determines that there is no uneconomic remainder, then the file must be so documented by R/W-PD as to the basis for the determination.

If a remainder has been identified as uneconomic, and there is no presence of hazardous materials or substances, R/W-PD will recommend to ROW Division HQ that the tract be purchased as an uneconomic remainder. R/W-PD will submit its recommendation to purchase the potential uneconomic remainder tract, together with the parcel information on the property to be acquired for transportation purposes, to ROW Division HQ for review and concurrence according to customary practice and policies. Upon approval, ROW Division HQ will notify R/W-PD of the decision.

If the tract is approved as an uneconomic remainder, R/W-PD will transmit an offer letter to the owner either for the purchase of the part acquired plus damages to the remainder or for the purchase of the whole property as reflected in the appraisal report.

If the owner accepts the offer for the whole property, thereby including the uneconomic remainder, R/W-PD will arrange to obtain a separate field note description and parcel plat of what was the “remainder tract”, and will identify this uneconomic remainder tract as “Tract UR”, using the same parcel number as that of the parcel tract. For example, if the original parcel was designated as “Parcel 4,” the separately described remainder tract would be “Tract 4UR.” In addition, R/W-PD will provide a revised right of way map to ROW Division HQ, which will indicate the right of way parcel as originally shown and the additional uneconomic remainder tract as a separate and distinct “UR” tract. R/W-PD will then prepare and submit one executed deed with the two separate legal descriptions (one describing the right of way parcel and one describing the uneconomic remainder tract) in accordance with normal acquisition procedures. It is noted that there will be no bisected improvements described in the acquisition documents since the original right of way parcel and uneconomic remainder tract are now considered as a “whole property acquisition.”

ROW Division HQ may consider requests from R/W-PD staff for a potential uneconomic remainder that was not previously acquired with its parent tract on or after May 23, 1997 (per Transportation Code §203.0521) by following the above-noted procedures. The value of the uneconomic remainder will be the remainder after value noted in the original appraisal report for the acquired parcel.

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