Transportation Corridors

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  • July 12, 2017

A transportation corridor is a long, narrow strip of property that includes surface, subsurface, and air rights. It often connects two or more areas restricted to surface, subsurface, and air rights, for the deportation of goods and passengers. 

Some examples of transportation corridors are: railroad and mass transit lines, public and private roads, pipelines, including oil, gas, water, and sewer lines, fiber optics, pedestrians pathways, aqueducts and canals, television cables, and electrical transmission lines. 

How to Appraise a Transportation Corridor

There are different methods that can be used when appraising a transportation corridor, including Replacement Cost New Less Depreciation (RCNLD), Corridor Value (CV), Sales Comparison Approach, Across the Fence Value (ATF), Net Liquidation Value (NLV), and Going Concern Value (GCV). [1]

Replacement Cost New Less Depreciation (RCNLD) is based on the principle of substitution and is more commonly referred to as the “cost of assemblage.”  It includes the cost of the part taken, appraisal costs, negations costs, title costs, grading costs, project management costs, and the acquisition and demolition of buildings.  According to Dolman and Seymour, this cost can range from two to six times the Across the Fence (ATF) value.  The Court of Appeals in People v. Southern Pacific Transportation Company (1978) held that “the cost of reproduction is an acceptable approach to a determination of just compensation.”

When several similar commensurate commodities, goods or services are available, the one with the lowest price attracts the greatest demand and the widest distribution.   Corridor Value (CV) is determined by multiplying the ATF value and the enhancement factor.  The enhancement factor is arrived at by dividing the sales price of a corridor by its ATF value.

Sales Comparison Approach is applicable when there are several sales or comparables that have sold in the subject’s market area.  This approach is seldom used since there are relatively few transactions of transportation corridors that sell in the same market area.

The underlying assumption in the Across the Fence (ATF) method is that land in the transportation corridor is equal to the value of adjoining lands.  When using this method, the property is divided down the centerline and each half is joined to the adjacent parcel along with the adjacent property’s highest and best use and unit value.  The ATF is the sales comparison approach modified to the degree that shape, size, topography, and access are disregarded.  The State Board of Equalization, railroad companies, utility companies and public agencies use this method more than others when assessing value of operating and non-operating property, ground rent, and public and private streets.

The Net Liquidation Value (NLV) is the present value of the net amount the owner will realize if the corridor is sold piecemeal over a reasonable time period.  Net proceeds are determined after administrative, marketing, real estate taxes, and cleanup costs are deducted from the gross revenues. 

The Going Concern Value (GCV) is the expected future profits discounted to today’s value at a rate reflecting the quantity, quality, and durability of the income.

Appraising transportation corridors is a challenging endeavor, but can be accomplished by using one or more of the methods outlined above.

Valentine Appraisal and Associates Has Successfully Completed Several Transportation Corridor assignments:

  • Lower Franklin Reservoir Property in City of Los Angeles, CA
  • An Existing Pipeline Traverse Crossing at the BNSF Transportation Corridor in Hesperia, CA
  • 1.9 Mile 50-foot wide Right of Way Corridor in Riverside County, CA
  • 80.48 Mile Transportation Corridor in Siskiyou and Shasta Counties, CA

Palmdale Commercial Building Appraisals

Avigation Easements

Pipeline Easements

Visit Valentine Appraisal and Associates

 [1] Valentine, Gary S. “Appraising a Transportation Corridor.”  Right of Way Nov-Dec. 1998: 6-10.

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