The States or their political subdivisions had, of course, for many years been acquiring right-of-way for highway projects without Federal participation. Although procedures, and particularly documentation, in many States were inadequate, considerable knowledge had been acquired about how to take private property for public use, and how to appraise “just compensation” for it. In addition, the courts were conversant with eminent domain procedures because such processes had been used in cases of railroad and utility right-of-way condemnations which established precedents and opinions. Thus, it was prior to Federal participation that the “market value” concept came into use as a means of determining “just compensation.” Likewise, the “before and after” approach in appraising damages came into use and the term “a willing buyer and a willing seller” was discussed in many court opinions.
The acquisition of right-of-way has been, and continues to be, a process of evolution brought about by the experiences of men and the wisdom of trial judges in acquiring private property for public use. When the Federal Government became involved in reimbursing the States for right-of-way costs, the BPR adopted, as the foundation of its right-of-way program, standards established by courts in eminent domain cases and procedures evolved in acquisition programs of other agencies. One of the first procedures, still in use today, involved sound prenegotiation appraisal requirements where the fair market value of land to be acquired was established and the damages to the remaining property were determined prior to negotiations or institution of condemnation proceedings. These appraisals had to conform to established appraisal principles and techniques; be independent judgments as to the value of the property; and be prepared without collaboration between the various appraisers.
To assure that the States’ appraisals are properly prepared and documented, FHWA requires that a responsible reviewing appraiser in the State right-of-way division review each appraisal. Basically, it is the duty of the reviewing appraiser to assemble, review, analyze, and correlate all appraisal data into a final estimate of value and damages that will fairly compensate a landowner for his real property being acquired. The reviewing appraiser’s estimate of value is offered in writing to the property owner on the first negotiating visit where price is discussed.
Prior to the establishment of prenegotiation appraisals, it was noted that in one State the acquisition cost was always in the exact amount of the appraisal. Upon investigation, it was found that the State was working out an agreement with the property owner and then sending an appraiser out to make an appraisal supporting the settlement. An educational program prevented a continuation of this procedure and resulted in the property owners receiving the full appraised fair market value of their property.
The property owner has no role in the selection of the appraisers for the acquiring agency. He is free, however, to secure his own appraisals to guide him in making his decision in subsequent negotiations. The property owner is not always aware that sentiment or long family tenure is of no use in determining the value of his property. He will not receive more for his property just because it, has been in the family for generations. Comparing the price offered with the price someone else received also is hazardous since no two situations are exactly the same.
At the outset, the appraisers of land needed for highways were often without training and experience. The situation is entirely different today. The acquiring agencies employ appraisers who have been well trained in their field through college courses and training courses conducted by appraisal organizations or the acquiring agencies themselves.
Negotiations
During the formative years (1941–1956) of right-of-way acquisition procedures, negotiations for rights-of-way often were conducted by the person who appraised the property. Usually, this person would make a fair appraisal of the property being purchased. He would then call on the property owner and after some discussion make a verbal offer of some amount less than his appraisal. In these years many property owners were not knowledgeable about real estate transactions. If the owner accepted the offer, the acquiring agency “saved” the difference between the appraisal and the offer, but the owner was actually deprived of money that really belonged to him. If the owner objected to the low offer, the appraiser/negotiator would “horse trade” up to, or perhaps exceed, the amount of his appraisal. Under this system, the knowledgeable person may have received more than that to which he was entitled.
To help correct this inequity, BPR late in 1956 required that appraisal and negotiation functions be separated. The appraiser would appraise the fair market value, the reviewing appraiser would review all appraisals and approve the amount to be offered the property owner, a trained and qualified negotiator would visit the property owner, explain the highway improvement and the need for the property, and present in writing the amount approved by the reviewing appraiser as the full fair market value of the property to be purchased. The negotiator would not have authority to increase the amount of the written offer. Under certain prescribed conditions, the chief administrative officer, or other officials of the highway department having final authority over right-of-way matters, may make an administrative determination whether a settlement should be attempted at an amount above that previously offered the property owner. When a settlement is made on the basis of an administrative determination and such a settlement varies from the State review appraiser’s determination of value, the file must contain a statement setting forth the reason for the settlement.
In a few instances, a property owner refusing to settle by negotiation has taken a case into court and received a verdict less than the amount offered by the acquiring agency. He then wanted to go back to the amount offered. However, the acquiring agency was bound by the court decision and could not pay more than the court award.
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