A Guide to Real Estate and Right-of-Way Acquisition for Utility Companies
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The capacity of a utility to establish, maintain and manage relationships with stakeholders, including landowners, can be critical to a right-of-way land acquisition project's success. Easement considerations are a major source of concern for landowners during utility development projects.
Because landowners can have an impact on the planning, design and construction of a utility project, it is critical from the onset for landowners to understand the full scope and scalability of the utility project. The stakes can be high and the process arduous for everyone involved — from landowners to municipalities to the utility owners themselves — if easement acquisitions are not handled properly. Working with a firm to efficiently and effectively manage all aspects of a utility development project is important.
Roger Wright, a senior right-of-way specialist with Burns & McDonnell, offers insights into the land use right-of-way process. He works with utility, pipeline, transmission and distribution projects, capitalizing on more than 30 years of experience in real estate/right-of-way project management. Wright’s ability to manage land services projects on schedule and budget is an asset to his clients.
What matters most when handling utility right-of-way negotiations?
Trust on all sides is important. Utilities have to do their due diligence and conduct thorough background checks on the companies they hire for land acquisition support. As a utility owner, you want to make sure you trust your consultant and that they can really deliver what’s promised. Conversely, landowners need to feel they can trust you and your representatives. Remember, when partnering with a consultant, the consultant is a reflection of your company, and bad interactions with landowners or negative media attention can harm your reputation and complicate negotiations.
Whether you are negotiating with homeowners, business owners, attorneys for the government or large corporations, forging relationships built on trust will make the entire process less contentious. Without landowners’ trust, it will be difficult to get the easement rights you are trying to acquire.
What is the standard process for acquiring land for utility projects?
The first step is a survey of all the property that could possibly be impacted by easements. Then, base maps and property sketches are drafted. Next, tax cards are pulled and relevant personal information is extracted such as the landowner’s name and parcel ID number, deed information and details about other easements. From there, a line list is created to identify every affected property and some preliminary value assessments are made. During this process, easement documents for each property are prepared. Reviewing the chain of titles occurs next, which takes a look at a property’s history dating back at least 30 to 50 years. During this step, it is critical to check for encumbrances, liens and other property issues that could affect negotiations. Legal documents are drafted and appraisals then take place. There is usually a high-low range established. Factors to consider include the existing fair market value, the easement’s impact on resale, and landowner attorney fees — which in Florida, for example, are always covered by the utility company. Based on appraisals, acquisition offers are then made. This is usually the longest part of the process. Lastly, within 24 hours of an acquisition, the easement is recorded at the local courthouse.
What landowner questions should utilities be prepared to answer?
As one can expect, landowner anxiety is often high during real estate right-of-way land use negotiations. Questions a utility company should be prepared to answer to keep projects moving forward include:
- How will the utility evaluate properties?
- What are others getting paid?
- Will the easement affect property resale values?
- How much disruption will there be to daily life during construction?
- Is building or planting allowed on the easement?
- Who handles easement maintenance?
- Will the end use be safe (electric and magnetic fields, potential leaks, explosions and/or soil contamination, etc.)?
An experienced senior right-of-way project manager will answer these questions knowledgably, with credibility and transparency.
What should be considered when working with a real estate right-of-way acquisition company?
Utility companies need professionals adept at handling land use purchasing for right-of-way projects — which could include facility easements, supplemental easements, aerial easements, temporary construction easements or the purchase of full pieces of land to build substations or solar farms.
Look for a partner with depth of experience in land use and right-of-way management. A utility company’s representatives should really know the industry and be committed to seeing that landowners understand the process, whether it be for residential, commercial, governmental or public lands. Ideally, utility companies should work with a partner that can serve as a one-stop source of support, providing turnkey project delivery that involves all elements of a utility development project from design and engineering to real estate acquisition, procurement, public involvement, construction, startup and commissioning.
Efficient land acquisition is crucial to utility development projects. An integrated real estate team can provide a reliable, scalable process with a flexible, tailored plan designed to meet your needs.