Right-of-Way and Utilities Pilot Projects

In March 2000, FHWA, AASHTO, and TRB sponsored an international tour (scan) to observe right-of-way and utility coordination practices in four European countries. The tour delegation identified practices they concluded could help ensure timely procurement and clearance of highway right-of-way and adjustment of utilities. The European Right-of-Way and Utilities report and recommendations can be found at http://international.fhwa.dot.gov/eurorightofway/

An implementation team was formed to encourage state DOTs to pilot procedures evaluated during the European trip (scan). Several state DOTs initiated pilots in 2001 and have analyzed the results. The Right-of-Way and Utilities Pilot Project Summary and Evaluation, May 2004, contains information for each pilot that includes evaluations and lessons learned. Pilots covered the following initiatives: waiver of appraisals, modified appraisal reviews, acquisition and relocation incentive payments, conflict of interest, land consolidation, and preliminary engineering cost reimbursement for utilities.

Right-of-Way and Utilities Pilot Project Summary and Evaluation - May 2004

Pilot Name: California Conflict of Interest

State Contact: Vern Rhinehart (916) 654-4456
FHWA Contact: Bill Todd (916) 498-5011

Pilot Purpose:

Identify benefits and risks in changing Caltrans conflict of interest policy to allow the same right-of-way agent to both appraise and acquire parcels valued up to $25,000 (now limited to $10,000) as a potential means of accelerating project delivery. Existing Caltrans policy requires a full appraisal report for parcels valued at $10,000 and above. The pilot program provided for continuing that policy.

When Approved: March 2001
When Started: March 2001
End Date: Currently operating

Summary of Pilot Approach, Implementation, and Current Status:

Initially the pilot program was to have included as many as 13 projects spread over 6 district offices. However, only 4 of those projects were found to have followed special charge coding designations required to quantify delivery efficiencies to the individual parcel level, and only 18 of those parcel values actually fell within the pilot $10,000 to $25,000 range. Interview discussions, however, broadly included lessons learned from the non-coded projects, and an additional 5 pilot project parcels marginally below the $10,000 threshold or marginally above the $25,000 limit were also useful in drawing general pilot conclusions.

Staff time charged to pilot project parcels using special coding statistics were run, appraisal and acquisition files were reviewed, and assigned agents, their supervisors and managers were interviewed for observations and recommendations.

Pilot projects typically involved multi-parcel strip type acquisitions for relatively minor widening and freeway sound wall installation projects from agricultural, residential and commercial properties. At this time the pilot is complete and a report is currently being prepared.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

Observation: Only four projects were reviewed and 23 parcels evaluated. The size of the parcel sample is quite small; the evaluation will continue.

Time savings: Project delivery rates were not recognizably improved.

Cost savings: Support costs remain generally the same for similar parcels not in the pilot program.

Public reaction: Closure of acquisitions appeared to be facilitated. Agents gained knowledge of the market and of the specific parcels during the appraisal function, which benefited the acquisition activities. The relationship between owner and agent was enhanced.

Project schedules: These were met.

Standards of appraisal and acquisition products: Although there were instances of erroneously applying the appraisal waiver process occurred, standards were generally maintained.

Equitable treatment of all property owners: All standards were maintained.

Concerns:

Potential agent conflict of interest between valuation and acquisition settlement: None noted in the pilot.

Inexperienced agents assigned work: Requires additional management and supervision.

On one project offers were made before written appraisals were formally prepared: This is counter to Caltrans policy and Federal regulations.

Lessons Learned: Pressure to accelerate project delivery must not be allowed to diminish adherence to sound, accepted right-of-way principles that assure fair and equitable treatment and just compensation. Management must assure that staff are qualified in both appraisal and acquisition functions or be prepared to supervise staff more closely.

Appraisal reports should contain a body of basic information common to the general property type so that short supplements for the various participating parcels can be attached. Acquisition managers should evaluate the capabilities of agents and form well-experienced teams. Otherwise supervisory control must be intensified.

The single agent process can be an additional tool for managers to consider when delivering right-of-way products. However, it was not demonstrated to be a silver bullet for low-cost, quick, right-of-way project delivery. From pilot results traditional appraisals, containing multiple parcel valuations, and separate acquisition activities appear to be equally effective.

Would you recommend this technique to others? Statistical project efficiencies were not demonstrated from the limited pilot project study. Participants and managers indicated opinions both for and against the single agent process, and the $25,000 limit. However, few thought a higher limit would be advisable or beneficial. The process could be an additional tool for managers to selectively consider for application when appropriate, based on the type of project, parcels and available staff experience levels, especially if staffing constraints limit available qualified staff and a single agent could deliver a project.

Please describe any issues that might affect use of the technique in other states. The nature and scope of projects must support use of the pilot program as a project delivery tool. Acquisition managers should evaluate the capabilities of agents and form well-experienced teams. Otherwise supervisory control must be intensified. Selected projects typically involved existing highways where large numbers of small properties were acquired along the frontage. Proportionally very few of the parcels fell into the target value range of $10,001 to $25,000. Most parcels were below this range.

Pilot Name: Florida Appraisal Review Modification

State Contact: Tom Shields (850) 414-4609
FHWA Contact: Brian Telfair (850) 942-9650 x 3060

Pilot Purpose:

To test the effectiveness and efficiency in the use of high-tech software in the appraisal review process to flag areas of critical data elements where additional supporting information and analysis may be required in appraisal reports.

When Approved: October 11, 2001
When Started: October 11, 2001
End Date: In-progress

Summary of Pilot Approach, Implementation, and Current Status:

The reporting period is from October 2001 to December 2003. Two right-of-way projects have been identified: one in Tallahassee which is located in the District Three region and the other in Inverness, a rural town in the District Seven region of central Florida. The requirement of a standard technical appraisal review is being waived and an alternative review process, a computer generated Statistical Process Control (SPC) program, is being implemented and under study. The intent of the SPC is to provide the Department with a method of measuring core processes by identifying and measuring key appraisal information and comparing that information with statistical standards and thresholds. The desired result is a comprehensive evaluation of the appraisal product, a high level of quality control, and optimization of personnel resources.

Each of the two districts has also identified a control project from which statistical comparisons can be drawn from the timelines in critical areas relative to the appraisal function in the production process. Collaborative efforts by Central Office, the Districts, and FHWA will provide on-going analyses and in-process measures throughout the duration of the program. A comprehensive technical review and comparisons with historical data at the conclusion of the pilot will produce the outcome measures. Historical data will be statistically outlined to establish base-line measurements and comparisons between the pilot projects and the control projects where possible.

Monitoring includes such comparisons as the number of days elapsed between the appraisal being received by the Department from the consultant and the date the appraisal is approved for negotiation and forwarded to acquisition staff. Other measurements include the number of days from initial receipt of the appraisal by acquisition to the initial negotiation, number of agreements at first offer, increase above appraised value, and the fees and costs associated with appraisal and review. In comparing the pilot projects to historical data, statistical information such as standard deviations, percentage differences, median and modal percentage increases or decreases will be utilized. Both projects are well under way; however, a full performance evaluation would not be available until all right-of-way issues are resolved.

The initial implementation of the pilot was very difficult and time consuming in training both the district employees involved and the consultants actually doing the appraisals. The SPC, at this stage in its development, is very technical and data entry is tedious. There was a considerable amount of time used in technical assistance and follow-up to insure consistency in the two districts. A Desk Manual for the pilot project was developed between the Central Office and involved Districts, which aided in laying out the scope and responsibilities of the respective participants.

Results to Date:

The following is a breakdown by district of the current status and performance report of the pilot projects in Districts Three and Seven.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

Both projects have had all parcels acquired either through negotiation or condemnation. The next step in the evaluation of the effectiveness of employing the SPC will be the technical review of a significant sample of the projects' parcels to assess the level of quality, or lack thereof, of the appraisals themselves. This step will take place over the coming months.

Time Savings:

The waiver of the technical appraisal review has shown a substantial reduction in the time normally required for this function; an anticipated outcome. Interviews with primary users of the appraisal to evaluate the effects of not having appraisal summaries normally provided by the technical review indicate generally there to be no significant impact in this area. The obvious advantage here is an extended time for negotiation opportunities.

Cost Savings:

This estimate is based on what would be anticipated to be the usual and customary fees for the fee review of the parcels.

Lessons Learned:

The most significant challenge has been the implementation of the SPC. In an interim stage of development at the beginning of the project, a large degree of time for familiarization and training was required for the pilot districts. It continues to be very difficult to achieve a reasonable level of comfort with participants. Another challenge is drawing meaningful comparisons for measurements between identified test projects and control projects. Even the most similar projects can have subtle differences that can affect the validity and reliability of cross comparisons. The lesson here is to do as much proactive work as possible to insure all participants are in full understanding of what their individual responsibilities are and exactly what the desired outcome is for the pilot.

The SPC, in its relatively early stages of development, has restrictions on its effectiveness, especially in the analyses of complex appraisals involving severance damages and substantial cost-to-cure situations. The preference here would be to have had the SPC further along in its development.

The development of the Desk Manual for the pilot project was very effective in providing guidance to the participants.

Would you recommend this technique to others?

Yes, if the agency had a relatively complete software program having the capability of effectively assessing the quality an appraisal.

Please describe any issues that might affect use of the technique in other states.

Technical resources.

Pilot Name: Florida Incentive Offer

State Contact: Kenneth Grimes (850) 414-4607
FHWA Contact: Brian Telfair (850) 942-9650 x 3060

Pilot Purpose:

To assess potential for incentive offers to reduce overall project costs and project delivery time.

When Approved: October 2001
When Started: October 2001
End Date: Estimated completion 2006

Summary of Pilot Approach, Implementation, and Current Status:

At initiation of negotiations, each landowner is made an offer, consisting of just compensation plus an additional incentive amount. The amount of the incentive is determined as a percentage of the appraised value, using a sliding scale. Incentive amounts were developed from historical amounts paid in comparison to the initial approved appraisal. The minimum incentive is $1,000 and the maximum is $100,000. The offer remains open for the landowner to accept until it is determined that an agreement cannot be reached or the project schedule dictates that condemnation must be initiated. Condemnation is based on the appraised value without the incentive included.

A pilot and a control project have been identified in each of 3 districts. Control projects are similar in type and complexity to pilot projects and will be used for comparison purposes. The projects selected were rural, suburban and urban in character to allow a broad test of the concept.

Acquisition is nearing completion on all pilot and control projects. Condemnation is in progress on those parcels that could not be negotiated.

Results to Date:

A. Rate of Negotiation

Rate of negotiation is defined as the percentage of the total parcels on the project that were acquired by negotiation and real estate closing rather than through eminent domain. The three pilot projects have shown very different rates of negotiation versus the control projects:

Note that these percentages are subject to change as the remaining parcels are acquired.

B. Time to Acquire

The greatest difference has been noted in the time required to acquire. The pilot projects show an average time from initiation of negotiations to signed agreement of 104 days compared to 168 for the control project or a 38% improvement. When looking at the time between initiation of negotiations and suit filing, the pilot projects show an average of 168 days compared to 346 for the control projects (a 51% improvement).

C. Property Owner Survey

A telephone survey was conducted of the property owners for both the pilot and control projects. Seven (7) questions were evaluated on a 1 to 5 scale with 5 representing the most favorable response. The pilot projects averaged 4.66 compared to an average score of 4.57 for the control projects.

D. Cost

Expenditures are not sufficiently complete to allow for an effective comparison of cost factors.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

The rate of negotiation is markedly better on the pilot projects with both the rural project and the urban project exceeding both the control pilots and all other projects in that district to date in this fiscal year.

But, the negotiation rate results for the suburban project are difficult to analyze because seventeen (17) parcels on that project were negotiated by the acquisition agents, but, because of the project schedule, were acquired by stipulated eminent domain judgment. Technically, under Florida DOT nomenclature, any parcel acquired through the eminent domain process is ordinarily classified as a condemned parcel, regardless of who achieved the agreement. But, if these parcels are considered closed by negotiation by acquisition agents (who actually reached the agreement) in this case, a total of 83% of the parcels were actually negotiated compared to 77% on the control and 67% on all projects in the district this fiscal year, indicating a favorable impact from the incentive offers.

Another factor contributing to difficulty in obtaining negotiated settlements on this suburban project was the large number of business damage claims filed. Because of the statutorily mandated timeframes and the contentiousness of the business damage claim process, condemnation is generally required on parcels on which there is a claim for business damages.

As noted above, the most favorable result has been in the area of decreased project time. All projects have not yet been certified for construction letting, so the final impact on project delivery cannot yet be determined.

The urban project corridor was found to have a rapidly increasing market which somewhat negated the impact of the incentive offer. By simply delaying negotiations, the owner could achieve a better increase than was being offered through the incentive.

Of interest was the customer survey, which showed indications that the property owners on the pilot projects felt they were better informed than on the control projects. This may be due, at least in part, to agents taking extra time to explain the operation of the incentive offer.

Major factors which cannot yet be evaluated are project delivery time and total cost per parcel. When this data is available, a final analysis of the effectiveness of the incentive offers can be undertaken.

Lessons Learned:

It is a bit early to develop the final lessons on this technique. One early indication is that the technique may not be very effective in areas with a rapidly increasing real estate market or where ancillary damage issues, such as business damages, lost income, or goodwill must be considered.

Would you recommend this technique to others?

Although we believe the final results of this pilot will be positive, it is too early to determine whether the concepts can be recommended for expansion to other states.

Please describe any issues that might affect use of the technique in other states.

Florida's attorney fee statutes make the incentive offer workable in this state. In states where fees are not paid or the payment scale is structured differently, the technique may not have as much effect on overall project costs. The potential for reducing project time remains however.

Pilot Name: Florida Appraisal Waiver

State Contact: Tom Shields (850) 414-4609
FHWA Contact: Brian Telfair (850) 942-9650 x 3060

Pilot Purpose:

To test the effectiveness and efficiency in foregoing the standard technical appraisal process in estimating market value by establishing and implementing alternative processes to develop a good-faith offer to be made to the property owner.

When Approved: District 3 (Chipley, FL) 4/6/2000; District 5 (DeLand, FL) 12/3/2001
When Started: Same
End Date: On-going

Summary of Pilot Approach, Implementation, and Current Status:

The reporting period of this update is from July 2001 through December 2003; however, District Five received authorization to begin the Pilot on 12/3/01. District Three has been working under this pilot for approximately three and one-half years.

This appraisal waiver pilot has been granted by the Federal Highway Administration on a district wide, on-going basis, for both Districts Three and Five. FDOT has implemented the provision of the waiver by use of an Agent's Price Estimate (APE), a format used to construct a good faith offer. This pilot was initially put into place to test the results of increasing the ceiling of an APE from $10,000 to $20,000 by evaluating its effect on costs, production, and customer satisfaction. Since the initiation of this pilot project, FHWA has authorized the FDOT to increase its APE ceiling to $25,000 statewide; however, FDOT has continued to monitor the results of the $20,000 waiver pilot in the two districts for National study purposes.

Administrative settlement criteria for this pilot when an APE is used, is as follows: For parcels valued by an Agent's Price Estimate up to $2,500, administrative settlements may be made up to $5,000, exclusive of fees and costs. On parcels between $2,500 and $20,000, the amount of the increase, exclusive of fees and costs, may not exceed the lesser of 100% of the Agent's Price Estimate or $10,000.

Results to Date:

The following is a breakdown by district of the current status and performance report from districts Three and Five.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

The relatively high settlement rate where APEs are used is a clear indication of customer satisfaction relative to property owners. The districts report that most parcels done on APEs that subsequently required appraisals and eventual litigation, came as a result of title problems and not necessarily from a failure in negotiations. The districts also report that use of the APE has been very well received by the negotiation agents, due primarily to them being able to negotiate on a good-faith offer estimate they themselves produced. Pride of ownership has been a noted motivator.

Time Savings:

Cost Benefits:

Downsides:

There were some growing pains and steep learning curves early on in the initial development and implementation of the appraisal waiver program. Specifically, some parcels were targeted as candidates for APEs that eventually turned out to be more complex than originally anticipated. When negotiations failed and an appraisal was ordered, the result was sometimes a significant increase over the initial (APE) offer to the owner, which placed the department in a very awkward position. Also, the department encountered a very limited negotiation success rate on a project in the very early stages of the appraisal waiver adoption when the APE was used on a high density, commercialized, and litigious corridor in Orlando. More stringent processes for screening viable APE candidates have been put into place to minimize these occurrences. We have noted no long-range downsides in the implementation of the Appraisal Waiver and highly endorse its use in the acquisition process.

Lessons Learned:

The Agent's Price Estimate appraisal waiver program continues to prove to be an effective, timesaving negotiation tool. It is critical that an initial offer to a property owner based on an APE, not only be nothing less than just and full compensation, but should be as realistically generous as practicable. Based on our experience, we have three strong points of advice we pass on to our districts when using the Agent's Price Estimate:

1. Be Conservative when identifying parcels as potential candidates for APEs. It is critical that the person or people evaluating a taking must have the experience to foresee ANY possible cause of severance damages that could elevate the level of complexity of the appraisal problem beyond the intent for an appraisal waiver. To overlook severance damage issues due to a partial taking can not only lead to production impacts by having to backtrack in the acquisition process, but can be a disservice to the property owner and result in an underpayment in just compensation, should the Department be dealing with an unknowledgeable seller/property owner.

2. Be Liberal when deriving the good faith offer. The offer should be recognizable as a generous (but reasonable) offer to the owner. If negotiations should fail and a subsequent appraisal prepared, what the agent definitely doesn't want is for the resulting appraised estimate of market value to be higher that the APE offer made to the owner. If the appraised amount exceeds the APE, it places the Department in a very poor posture and creates the appearance that the DOT has attempted to buy the property for something less that what it was worth.

3. Be timely in communicating to the appraisal section in your district when it is determined that the parcel cannot be purchased through the APE and that an appraisal needs to be prepared. A big deterrent in using the APE we faced from our districts was the risk they faced in not having an appraisal prepared, reviewed, and approved on time in order to file a law suit for condemnation to meet the production schedule. Close coordination needs to exist between appraisal and acquisition when the appraisal waiver provision is used.

Would you recommend this technique to others?

Yes

Please describe any issues that might affect use of the technique in other states:

None noted other that those discussed above.

Pilot Name: Michigan Appraisal Review Modification

State Contact: Eric Smith (517) 373-4143
FHWA Contact: Charlie O'Neill (517) 702-1839

Pilot Purpose: Waiver of appraisal review on appraisals of non-complex parcels.

When Approved: June 2001
When Started: June 2001
End Date: Ongoing

Summary of Pilot Approach, Implementation, and Current Status:

The pilot was originally used on four projects: M-45 in the Grand region, M-84 Phase 2 and Phase 3, in the Saginaw region, and the Ontonagon bridge in the Superior region. The control project was M-84 Phase 1 in the Saginaw region. For the control project, the average time for a good faith offer (GFO) to be presented to the owner after the appraisal was received was 80 days. There were 14 parcels on this project.

M-84, Phases 2 & 3: The average time for a GFO to be presented after the appraisal was received was 23 days. There were 50 parcels on these two phases. M-45: The average time to present a GFO to the owner, using the waiver of appraisal review on non-complex parcels, was 25 days. There were 69 non-complex parcels on this project. The average compensation was between $10,000 and $75,000. Ontonagon Bridge: The average time to present a GFO using the waiver of appraisal review was 14 days. There were 22 non-complex parcels on this project. Compensation ranged from $1,500 to $59,000.

The acquisition agent performed a cursory staff review of appraisal content. The Form 633E, Appraisal Check List, was completed by the acquisition agent. It states there are no apparent issues that would alter the appraisal conclusion.

Evaluation of Results to Date:

Considerable time was saved on the pilot projects. The pilot program was well received by staff and seemed to work well on the non-complicated parcels. Time from receipt of appraisal to GFO decreased. The condemnation rate remained unchanged at 8%.

Time Savings: There is an average savings of 60 days when using the waiver review.

Cost Savings: $3000 is saved per parcel.

Lessons Learned:

While treating the property owner in a fair manner, on non-complex parcels, a formal written review adds little value. It is costly and takes considerably longer. Little or no change in the condemnation rate or administrative settlements, compared to the control or other typical projects, was observed. The appraisal review modification has proven itself to be a beneficial tool to hold down right-of-way costs and certifying the right-of-way on time.

Pilot Name: Mississippi Land Consolidation

State Contact: Jim Majure (601) 359-7457
FHWA Contact: Cecil Vick (601) 965-4217

Pilot Purpose: To broker voluntary land acquisitions to assist affected rural property owners to re-establish economic units.

When Approved: 2003
When Started:
End Date:

Summary of Pilot Approach, Implementation, and Current Status:

In 2003 the Mississippi DOT made public its willingness to use the land consolidation technique in the I-69 corridor. Numerous public meetings were held. These were well attended by the affected farmers in the I-69 corridor. The DOT offered to broker voluntary land acquisitions and will continue to investigate what role the DOT should play as this project evolves.

Results: No one in Mississippi has used this technique to date.

Pilot Name: North Carolina Appraisal Waiver

State Contact: John Williamson (919) 733-7932
FHWA Contact: Mike Dawson (919) 856-4336 x 127

Pilot Purpose: Evaluate the use of appraisal waiver threshold amount of $20,000.

When Approved: October 10, 2001; modified February 26, 2003
When Started: Initial pilot October 10, 2001; expanded pilot February 27, 2003
End Date: October 10, 2003

Summary of Pilot Approach, Implementation, and Current Status:

In order to determine whether the increased waiver threshold can yield improved delivery of right-of-way a pilot was approved using the Federal agency waiver of regulations. 90 parcels were targeted on the original pilot. In 2003, this was expanded to include an additional state division. This addition was made to evaluate an area of the state that is predominately rural. A review by the FHWA office confirmed the efficiency of the increased waiver limit as well as the continued high standards used in property valuation and review by the state. NCDOT demonstrated a clear understanding of the use of the increased appraisal waiver protocol. Upon completion of the pilot program, the state requested FHWA to make the waiver limit permanent and increased to $25,000 to match other states waiver limits. That request was approved on December 18, 2003.

Evaluation of Results to Date (savings, costs, benefits, downsides):

NCDOT saw significant time and cost savings in the acquisition process by using the increased waiver limit under the pilot program for acquisitions in both the rural Division 3 office and the more urban setting of the Division 5 office. The requirement in 49 CFR 24.102 (c)(2) that the valuation problem be uncomplicated remains in place. A review of the program confirmed that NCDOT Division 3 and 5 offices are using the waiver provision correctly and effectively with no diminishment to the level of service or protection of the rights of impacted property owners.

Time Savings:

25% of claims settled on initial contact; 50% of claims settled within 1 month;

25% of claims settled with 6 months.

Cost Savings:

It is difficult to quantify the cost savings to NCDOT in real dollars. The use of the increased appraisal waiver threshold has allowed for considerable time savings to the department, which in turn impacted the project timeline in a positive manner.

Lessons Learned:

The pilot was determined to be highly successful. The appraisal waiver was most useful in rural environments where undeveloped farmland and acreage parcels were more common. In urbanized areas the waiver provision was found to allow for more expeditious acquisition in small strip takes although the opportunity to use the waiver was hampered by acquisitions that tended to be more complex in nature due to their urbanized setting.

Pilot Name: South Florida Water Management Acquisition/Relocation Incentive

Contact: Dick Moeller (561) 478-7210

Pilot: In an effort to maintain the schedule prescribed for this project, the South Florida Water Management District approved incentive payments to reach early agreement and relocation from the project area. These amounts are in addition to amounts previously discussed for the payment of just compensation and relocation assistance.

Summary of Pilot Approach, Implementation, and Current Status: The Kissimmee Chain of Lake-Acquisition of Rocks and Shady Oaks Fish Camps project involves the acquisition of tenant owned improvements from 350 owners, 120 of which are primary residents at this location. This project is underway and the incentive program is believed to be working well and resulting in earlier and a greater number of settlements than otherwise would be expected. The prescribed performance dates in the following schedule must be strictly adhered to in order to qualify for the incentives.

Tenant Owners*

Level I

• Accept the Districts written offer within 30 calendar days of receipt, either by certified mail or personal meeting with ORC agent. The 90/30 day notice to vacate will be issued on the date of the receipt of the written offer.

• Vacate no later than 30 calendar days from date of payment availability/closing date. The 30 day notice to vacate will be issued at this time to the displacee specifying a date certain by which the move must be accomplished.

• ncentive payment is the lesser of 25% of appraised value or $5,000, if all specified schedule dates are met.

Level II

• Accept offer within 60 calendar days of receipt, either by certified mail or a personal meeting with an ORC agent. The 90/30 day notice to vacate will be issued on the date of the receipt of the written offer.

• Vacate no later than 30 calendar days from date of payment availability/closing date. The 30 day notice to vacate will be issued at this time to the displacee specifying a date certain by which move must be accomplished.

• Incentive payment is the lesser of 12.5% of appraised value or $2,500, if all specified schedule dates are met.

Tenants (no ownership of improvements)*

• Accept replacement housing payment (RHP) determination within 30 days of offer date. The 90 day notice to vacate will be issued on the same date as the offer.

• Vacate no later than 90 days from the RHP date.

• Incentive is the lesser of 25% of the gross annual cash rental amount or $1,200.

Results as of May 1, 2004: Offers were made to 188 owners. 185 signed agreements at the Level I highest rate incentive. This is a 98.5% success rate.

*Business owners and tenants would receive a similar incentive entitlement if improvements are acquired or rent is paid in the name of the business.

Pilot Name: South Carolina Appraisal Waiver

State Contact: Oscar K. Rucker (803) 737-1400
FHWA Contact: Melvin Cooper (803) 253-3877

Pilot Purpose: Monitor whether, or not, the use of Cost Estimate offers under $20,000 is an effective tool in streamlining the valuation process, and a factor in time and condemnation reduction on SCDOT projects.

When Approved: May 2002
When Started: July 1, 2002
End Date: July 1, 2003

Summary of Pilot Approach, Implementation, and Current Status:

Time frame established for pilot implementation and procedure for data collection. Field acquisition personnel informed of pilot project and instructed to proceed with approved cost estimate offers of $20,000.00 and under. Data is currently being collected and analyzed for report to FHWA.

Results to Date:

Preliminary results are inconclusive to date.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

Preliminary data indicates that 65% of offers on federally funded tracts were below the $20,000.00 threshold during 2003. We are currently analyzing cost and time savings along with any other benefits of the pilot project.

Lessons Learned:

Factors such as proximity damages, severance damages, highest and best use, etc should be monitored closely to insure that a fair offer is made.

Would you recommend this technique to others?

I don't feel that I can make any recommendation at this time until final analysis of pilot project is complete.

Please describe any issues that might affect use of the technique in other states.

Where statute requires DOT to pay all litigation expenses and an appraisal is required for condemnation purposes it may justify all offers from appraisals in lieu of cost estimates.

Just compensation must be set by DOT for all cost estimate offers.

Pilot Name: Virginia Preliminary Engineering Cost Reimbursement

State Contact: Gregory Wroniewicz (804) 786-2931
FHWA Contact: Barbara Middleton (804) 775-3341

Pilot Purpose: Reimburse utility companies for 100% of the preliminary engineering cost incurred on a Virginia DOT roadway improvement project.

When Approved: September 1, 2000
When Started: September 1, 2000
End Date: To be determined

Summary of Pilot Approach, Implementation, and Current Status:

Each District has tried this on at least 1 or 2 projects. The Richmond District tried over 50 projects. Right now, in several Districts, the plans and estimates are coming in at approximately the same time as always. In a couple Districts, the estimates are arriving sooner. Some Districts think it is an improvement, some think there is no difference. To date, we have noticed a small but steady increase in the timely response and receipt of the plan and estimates from the utilities and their consultants.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

The VDOT roadway project workload has been reduced in the last few years so a good response is not available at this time. However, the utilities view this as a very important step by VDOT in helping them meet the engineering demands for their relocations. The utilities have down sized their engineering staffs in the last few years so, when our workload does return, we should see great benefits from this program.

Lessons Learned:

The process can speed up the plan and estimate submittal from the utilities. The utilities are very supportive of this pilot and believe it will benefit VDOT in the future in getting the plan and estimates sooner when the construction resumes.

Would you recommend this technique to others?

Yes.

Pilot Name: Virginia Relocation Incentive

State Contact: Stuart Waymack (804) 786-2923
FHWA Contact: Barbara Middleton (804) 775-3341

Pilot Purpose: Early move incentive program on the Woodrow Wilson Bridge.

When Approved: March 30, 2001
When Started: April 7, 2001 (1^st incentive claim processed April 30, 2001)
End Date: April 22, 2002 (last incentive claim processed April 22, 2002; last tenant moved December 2001)

Summary of Pilot Approach, Implementation, and Current Status:

Incentives were offered to tenants in addition to the full relocation payment. Incentive payments were based on the early move date. VDOT successfully relocated 403 tenants in 8 months. This was significantly less time than originally scheduled. The relocation incentive program was a major factor in getting the project back on schedule and minimizing additional delays.

Results to Date:

The incentive program cost the project approximately $1.2 million. This was offset by construction schedule-related savings of approximately $6 million. If relocations had been delayed and the opening of the new bridge delayed, the VDOT could have been assessed a $50,000/day penalty by the Maryland State Highway Administration. There was reduced property management overhead cost for the condemned properties during the relocation period.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

The tenants moved quickly and took advantage of the incentive payment.

Lessons Learned:

The program developed goodwill between the tenants and VDOT and has gone a long way to improve the image of VDOT and FHWA in the eyes of those impacted by the project. It serves as a model for future residential relocation programs. Virginians and all users of the Capital Beltway will enjoy reduced commuting expenses and travel times through earlier project completion. The southern span is scheduled to open for traffic in 2006. Final completion of the bridge is expected in 2008.

Would you recommend this technique to others? Yes.

Pilot Name: Washington State Appraisal Review Modification

State Contact: Gerry Gallinger (360) 705-7305
FHWA Contact: Dave Leighow (360) 753-9486

Pilot Purpose: Evaluate a streamlined appraisal review process

When Approved: September 28, 2001
When Started: See summary
End Date: Originally 2003, based on two-year pilot approval

Summary of Pilot Approach and Implementation:

The state of Washington had extreme trouble funding projects for the period 2001 through 2003, during the pilot phase. The result was there were few projects with the criteria outlined in the pilot program. The projects identified originally were not funded or were materially revised. Late in 2002 a test project with approximately 15 parcels was identified. Some of those parcels were deleted or modified to such an extent that an appraisal waiver was used. Two parcels of the 15 were to be appraised. In 2003, the state reported that they would move forward with appraisals and apply the modified review criteria to them. It may not be possible to get meaningful results but there may be helpful feedback on the negotiation side of the process.

These figures were for the period from approximately June 1, 2001 to September 1, 2002:

277 appraisals were submitted for review
20% (56) were reviews within one week
42% (117) were reviewed within two weeks
54% (150) were reviewed within three weeks
67% (185) were reviewed within four weeks
33% (92) took longer than four weeks
301 appraisal waivers were processed
52% of all offers were made using the waiver
100% approvals of Administrative Offer Summary completed in less than one week
62% of offers were made within one week of completion of an appraisal/waiver

Evaluation of Results as of March 2003:

We hope to know more regarding appraisal review modification at a later date.

Pilot Name: Wisconsin Appraisal Review Modification

State Contact: Rebecca Krugman (608) 266-2362
FHWA Contact: Roger Szudera (608) 829-7508

Pilot Purpose: Appraisal review by Central Office review appraisers eliminated.

When Approved: March 2003
When Started: March 2003
End Date: Ongoing

Summary of Pilot Approach, Implementation, and Current Status:

The second project is getting under way in the spring of 2004. It will be Highway 32 in Racine and Kenosha Counties. The Racine County portion will be the control section, and will have Central Office review. The Kenosha County portion will not have Central Office review. The state will then look at the difference in time to get approved offers out to owners once District 2 receives the appraisal. This should cut down on workload for Central Office review appraisers. Right now plats are being processed.

Evaluation of Results to Date (including savings, costs, benefits, downsides):

One project is complete, Highway 11 in Racine County, project ID # 1320-06-20. It had 50 parcels that were a mix of agricultural, commercial, and residential use. This was a resurfacing and realignment project with mainly strip takings.

Overall, the process was improved from a production standpoint. We cut 2 to 3 month off the acquisition time on this project. We feel there were no ill effects on property owners or taxpayers by not running the appraisals through a Central Office reviewer. The same conclusions on value were reached by using in house staff and in house senior agents when questions arose.

Lessons Learned:

On simple straightforward projects, Central Office review of appraisals is not necessary. It is advantageous to have the option of running trouble parcels through the Central Office reviewers when needed, however, on simple projects District 2 staff is capable of handling the work in house.

Would you recommend this technique to others?

Yes. This frees up the Central Office appraisal reviewer to review the more complex parcels in the state.