Category: Eminent Domain

Eminent Domain

eminet-domain-2-copyThe right of government to take private property for public use upon the payment of just compensation.  The 5th Amendment of the United States Constitution, also known as the “takings clause”, guarantees payment of just compensation upon appropriation of private property.

(Dictionary of Real Estate Appraisal, 4th edition.)

Florida Fiber Optic Right of Way Appraisals

fiber-optics-1-copyFiber optics are lines of thin glass that can send digital information by transmitting light signals. Thousands optic fibers are arranged in bundles and optical cables, protected by an outer covering, called a jacket. Optical fibers can be single-mode fibers that transmit infrared laser light, or multi-mode fibers that transmit infrared light from light emitting diodes (LEDs). Optical fibers have the diameter of a single human hair.

Fiber optics were discovered in 1970 and the discovery has revolutionized the Orlando, Florida telecommunications industry. Today, more than 80% of the world’s long-distance traffic is secured over optical fiber cables, and because of the increase of computer use demand remains strong.

Florida Fiber Optic Right of Way Appraisals

Optical fibers can be buried underground or hung from poles above ground like electrical wires. When they are buried, the rule of thumb is that they be placed three to four feet deep and the cables typically encumber an area non-exclusively between three to ten feet wide. Protective cables are designed for approximately a 40-year lifetime, and the glass fiber inside the cable is good for a millennia as long as the coatings and plastics used in the cable remain intact. The biggest failure is damage from backhoes and/or digging up cables. The downside to placing cables underground, according to experts, is that the installation cost to place fiber optic conduits underground is twice as much as the cost to hang fiber optic cable from poles. However, more conduits can be placed underground for little additional cost per conduit, and several times more fiber can be installed simultaneously underground than on poles.


Florida Fiber Optic Right of Way Appraisal Methods

Because the Florida real estate industry has failed to make comparable sales and rental data available for fiber optic lines, appraisers are left to use three alternative approaches of value: The Market Approach, Across the Fence and Survey Methods of appraisal.

Florida real estate appraisal

The Survey Method for Fiber-Optic Appraisals

The Survey Method, where information from right of way owners who have allowed leases or easements for fiber optic lines on their corridors is one method where values can be obtained. Further information from users who have fiber optic lines throughout various corridors can help as well. Discussions may include those in private and public sectors.

The Across the Fence Method for Fiber-Optic Appraisals

Across the Fence method where the value of the corridor is similar to the value of adjacent properties may also be used. Across the Board or Region is another method that was developed in the early days of the industry’s growth, when fiber optics had a window of opportunity to beat out the competition and secure laying thousands of miles of fiber optics in agreements that needed to close in a very short period of time. An example of this is when negotiators for Southern Pacific Transportation Company needed an idea of the value of real estate fiber optic lines which encumbered their corridors, so a rough Across the Fence (ATF) value was arrived at and eventually, Across the Board value for fiber optic lines which equaled $10,000 an acre for rural areas and $25,000 an acre for urban areas was agreed upon. These numbers were used for nearly two decades (1980’s-1990’s). Another acceptable unit of comparison for Across the Board approach is price per mile.

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The Market Approach for Fiber-Optic Appraisals

The final approach that is used is the Market Approach, which is recognized as the most reliable method for appraising real property for fiber optic lines. This approach requires obtaining comparable leases and easements of fiber optic lines. These are adjusted for necessary market adjustments, including terms and conditions of agreement, changing market conditions, location differences, and differences of physical characteristics between the comparable and subject property.

Final Thoughts on Florida Fiber Optic Right of Way Appraisals

Because the telecommunications industry continues to grow at a rapid pace and there is a blockage of free flowing information due to confidential agreements, the appraisal of fiber optic lines continues to vary. Until there is some level of uniformity in the units and elements of comparison in appraising real property for fiber optic lines, the marketplace will continue to accept a host of methodologies and approaches of value.

Looking for a Florida Certified General Appraiser? Please contact Gary Valentine, Lic# RZ4132. Ph 407-721-5373


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