Land uses and value: resources on corridors, land use regulation, and retail leases.
Appraising has many interesting specialties and subspecialties; one of these is corridor valuation. Definitions of corridors vary. The Dictionary of Real Estate Appraisal, sixth edition, defines a corridor as "a strip of land used for transportation or transmission purposes (e.g., rail, highway, power, information, slurries, liquids)." (2) Some other definitions may emphasize the function of a corridor as a connector, as illustrated in the following definitions.
A corridor is a long, narrow strip of land or property rights for which the highest and best use is to provide an economic or social benefit by making it possible to connect important end points, and sometimes serve intermediate points along the way, or providing a passage through an area congested by intense real estate development or obstructed by severe topography. (3) A corridor is a long, narrow strip of land or real property rights for which the highest and best use is to provide an economic or social benefit by connecting the end points, and sometimes serving intermediate points along the way. (4)
In practice, corridors are sometimes categorized by their use. A corridor may be used for one or more purpose, such as
* transportation (highways, railroads)
* power transmission lines
* telephone lines
* fiber optics
* infrastructure (water, storm, and sanitary sewer lines)
* gas or petroleum pipelines
* riparian open space or recreational use
* aqueducts and canals
* line of sight (information transmission)
* avigation or aircraft overflight and landing pattern
* recreational corridors (trails, linear parks)
Valuation of Corridors and Corridor Parcels
Often corridors are created through multiple property acquisitions by a public or quasi-public entity--usually piece by piece, property by property--by total or partial purchase, in fee or by easement. The acquiring entity normally needs appraisals; often the property owners obtain appraisals in the negotiation process, and in eminent domain actions. The initial valuation problem usually appears to be establishing the value of each of the component properties to create the corridor. But corridors, depending on highest and best use, may have a value higher than the sum of these parts. This relationship is called the corridor factor. (5)
At one time, the across-the-fence (ATF) method was about the only method used. The concept was that each square foot of land in the corridor had the same value as, or could best be estimated by considering, the value of the land adjacent, or "across the fence." Issues common to eminent domain appraising are often present in valuation of component parcels making up the corridor, such as defining the larger parcel, valuing of the part taken, and considering possible damages to the remainder parcel in cases of partial takings; all this keeps the valuation of component parcels from being routine.
Created, completed corridors may have value for one or more shared uses. The value of the corridor, once created, is not simply the sum of the values of the component parcels based on ATF valuation, or the cost to acquire parcels and create the corridor. As a created, useful entity, it has a separate highest and best use, productivity, and thus value. (6)
As with other types of real estate, the value of the corridor arises from its productivity. Corridor values depend on scarcity, demand, location, size, terminal points, connection with other corridors, and intermediate points. A corridor is usually valuable because of its utility: its functionality, usefulness, productivity in terms of money or even noneconomic benefits.
For its owner, the corridor may produce income or economic benefits as a part of a business enterprise (think of railroad, telecommunication, fiber optic, pipeline companies owning corridors). The corridor may be all or partially shared under various arrangements (leasing easement, for example) producing income for the corridor owner. Such provides the basis for an income capitalization approach.
A corridor is costly to create, beyond simply the amounts paid for the parcels of land acquired. Cost-to-create includes legal, engineering, and entitlement outlays; improvements in some cases; and a host of other costs. Further, the corridor may be subject to depreciation and obsolescence as technology changes; the optimum width of the corridor or the lease or easement terms may prove out-of-date, placing the owner of the corridor at a disadvantage, over time. Such provides the basis for the cost approach. (7)
With effective demand, a corridor may sell, i.e., transfer from one user to another, whether a corridor in fee or by easements. A buyer may be an owner-user, and, in many cases, may lease or otherwise share use with other users for additional income. A corridor may also sell to an investor considering income return on the investment by leasing rights to use the corridor to one or more users. This is much like a telecommunications tower owner leasing a right to use the tower for placement of various transmitters and/or receivers; or an apartment or office building owner renting time/space/use units to users. Corridors themselves may transfer and parties involved may need a value of all or part of the corridor. Such provides the basis for the sales comparison approach.
It is clear from all the factors mentioned that corridor valuation is interesting and challenging. Think of the additional increments in value possible that may arise from changes in highest and best use and factors of cost beyond the purchase price of the component parcels; think of the likelihood of assemblage value often resulting in plottage; i.e., the increment of value created when two or more sites are combined to produce greater utility. (8)
The total length of a corridor may transfer between seller and buyer as an entity. The underlying corridor may be entirely owned, in fee or by easement, or a combination of the two. In that corridor entity there may be linear parts, full length or partial, used by others under easement, lease, or other arrangement. There may be one or more corridors, with a different user for each, within a corridor. For example, a railroad right-of-way corridor may also be used or shared by a telecommunications company or electric power transmission company. (9) Moreover, a corridor running between terminus A and terminus Z, may have segments with different utility, productivity, and thus values within it.
Recommended Corridor Valuation Resources
The Appraisal Journal has published a number of articles that give an excellent overview of corridor valuation and its related issues. These articles are summarized below and can be accessed online through the Appraisal Institute's Lum Library.
The Appraisal Journal article "Transit Corridor Valuation: Issues and Methods," (10) by Wayne L. Hunsperger, Amy McGuire, and Ron Throupe, provides a comprehensive look at corridors. It addresses
* the history of development of the corridor concept largely arising from railroads in the 1800s,
* corridor valuation concepts,
* multiple uses in corridors,
* some of the underlying valuation issues and debates,
* defining the larger parcel in valuation of component properties,
* excess land challenges,
* the three approaches,
* liquidation value concept and application,
* going-concern value considerations,
* the alternative route theory, and
* the corridor factor.
"The Net Liquidation Valuation of Transportation Corridors," by Arthur G. Rahn, (11) looks at valuation of corridor as an entity, particularly as valued for net liquidation and particularly as applied to rail corridors. This article discusses the definition of liquidation, its application to valuation, and case studies.
For a perspective beyond transportation corridors, see "Fiber Optic Communication Corridor Right-Of-Way Valuation Methodology," (12) where authors Charles R Bucaria, Sr., and Robert G. Kuhs focus on fiber optics corridor uses. This article also includes a helpful overview discussion of valuation methods, highest and best use, and related issues.
The across-the-fence (ATF) method of corridor component valuation is a methodology that has seen considerable debate within The Appraisal Journal. A good overview of ATF is provided in "Across the Fence Methodology for Valuation of Corridors: What Is It and How Is It Used?" by Arthur G. Rahn. (13) This article includes a history of the ATF methodology, the three approaches used in ATF, case studies, and considerable ATF application information.
More recently, ATF was addressed in The Appraisal Journal article "Is Across the Fence Methodology Consistent with Professional Standards?" by John T. Schmick and Jeffrey K. Jones. (14) The authors examine the ATF tool in depth and address matters of corridor analysis, user (in this case, railroad) economics, primary and secondary uses, highest and best use relative to the Uniform Standards of Professional Appraisal Practice, current valuation practices, the assumed minimum valuation model, and the influence of the Surface Transportation Board as well as the basics of current valuation practices. The article includes numerous references to articles by various authors. This is one of the very important articles for appraisers involved in corridor valuations as it goes beyond ATF concerns.
ATF is not without controversy, as shown in the letters to the editor to the Schmick and Jones article, which include in-depth discussion of the pros and cons of the approach. (15) To see further discussion of the pros and cons of ATF, check out the Right of Way article by Wayne C. Lusvardi and Charles B. Warren, "The Cake Cutting Algorithm Problem in Corridor Valuations: Rebutting the ATF Corridor Valuation Methodology." (16) This article is must reading for an understanding of the ATF valuation methodology debate.
For a comprehensive list of corridor-related resources, see Appendix A at the end of this column.
New Resources in the Lum Library
Land Use Regulation, A Legal Analysis and Practical Application of Land Use Law, 3rd ed.
By Peter W. Salsich, Jr., and Timothy J. Tryniecki (Chicago: American Bar Association, 2015) 630 pages Available for purchase at www.ShopABA.org
Appraisers know that value stems from productivity in the supply and demand market, and productivity may be enhanced or limited by permitted uses. As the saying goes, "While land use regulation doesn't usually make value, it may limit it." Valuers commonly check zoning, and they may include some specifics about permitted uses in their reports. But there is a lot more to land use regulation than just zoning. A new acquisition to the Appraisal Institute's Lum Library, Land Use Regulation, A Legal Analysis and Practical Application of Land Use Law, third edition, offers an abundance of information in that regard.
This updated edition reflects changing laws and court rulings. The authors point out,
The United States Supreme Court has occupied much of the headlines, continuing to make constitutional law with respect to the perhaps intractable problem of regulatory takings and the property balance between land use regulation and property rights. State legislatures, in virtually all parts of the country, also continue to make new land use legal policy ... particularly in areas of regulatory takings, adult uses, nonconforming uses, telecommunications tower siting, vested rights, urban sprawl and growth management, environmental regulation, agricultural uses, intergovernmental conflicts, religious uses, and federal land use law and civil rights remedies. New contentious uses include medical and recreational marijuana, paycheck establishments, and environmentally impactful uses. (page xiii)
The authors begin with a brief review of the underpinnings of governmental regulation based on police power and then go on to discuss land use regulation by various levels of government and some of the more recent challenges to that power. This book is well documented throughout, and the first chapter alone has over 120 references and citations.
The ensuing chapters cover planning, and constitutional restrictions on land use regulation and takings, with specifics and citations. The authors discuss rights in the parcel as a whole and aggregate theory; segment theory; development moratoria; exactions; (17) due process; remedies for unconstitutional land use regulation; constitutional issues with respect to the fourth, fifth, and seventh amendments; the one person-one vote requirement; the commerce clause; and takings and due process under state constitutions.
Chapter 4, "Zoning," addresses definitions, vested rights, state statutory restrictions on local zoning powers and exemptions, cumulative and noncumulative zoning, specific types of regulations under zoning, overlay zones, design control and aesthetics, boards of architectural review, transferrable development rights, the zoning envelope, and amortization of nonconforming uses. The following two chapters address the local approval process, the dynamics of land use regulation, enforcement, special use permits, variances, and review of land use decisions by boards of adjustment and judicial review.
An entire chapter is devoted to regulating specific uses; included here are topics on uses such as mobile homes and manufactured housing, age-restrictive zoning, accessory uses, group homes, residential treatment centers, condominium conversions, intergovernmental conflicts, billboards and signs, commercial and industrial activities, telecommunications, marijuana-related uses, and payday loan and check-cashing businesses.
Another chapter covers subdivision regulations, how they are enacted and administered, differences from zoning, exactions and control, vested rights arising from plan approval, and judicial review of subdivision regulation decisions.
Overcoming barriers to affordable housing is the focus of Chapter 9, with discussion about exclusionary zoning, reinvestment displacement, density controls, inclusionary zoning, set-asides, density bonuses, zoning override ("anti-snob") regulation, and some specifics from Massachusetts, Connecticut, and California.
The final chapter examines environmental land use regulation, with coverage of the public trust doctrine, federal substantive prominence, and state environmental regulation. This chapter gets into coastal area protection regulations, environmental audits, regulation of contaminated property, and other environmental issues, including hazardous waste disposal, brownfields, and judicial review.
The book has a twenty-eight-page table of cases listed by litigant name; however, a mention of the topics addressed in the cases would have been helpful. The useful twenty-page index supplies information by subject or topic. Each of the individual chapters also has an extensive list of references and citations.
Recommendation: Land Use Regulation, A Legal Analysis and Practical Application of Land Use Law, third edition, is directed toward attorneys and others with interest in land use regulation, but appraisers need to know all they reasonably can about land use law since the statutes, court cases, and private land use regulations influence productivity and value. The content of this book helps satisfy that need. Take advantage of its availability in the Appraisal Institute's Lum Library, or visit the American Bar Association website to purchase a copy for your personal library.
For additional resources on land use regulation, see Appendix B at the end of this column.
Commercial Retail Leases and Outlot Purchases: A Practitioner's Guide to Forms and Provisions
By Mark Dali and Noble C. Hatfield (Chicago: American Bar Association, 2014) 298 pages Available for purchase at www.ShopABA.org
Another new acquisition in the Lum Library is Commercial Retail Leases and Outlot Purchases: A Practitioner's Guide to Forms and Provisions. This book is useful to appraisers because appraisers using the income capitalization approach must be intimately familiar with real estate leases, including the types of leases common for the appraised property type and locale, and leases' special provisions. When it comes to understanding and evaluating leases, confirming market leases, and comparing leased properties to the appraised property, appraiser due diligence logically involves considerably more than considering simply the appraised property's (and comparable properties') lease term or length, origination date, rental amount and provisions for rent change, options for renewal, and which property or occupancy expenses are paid by tenant and which are paid by the property owner. This book is an exceptionally valuable aid in that regard.
The basic purpose of the book is "to give the attorney who 'dabbles' in commercial real estate leases a practical guide to lease negotiations and language." (page xiii) But this book is of benefit to anyone dealing with and evaluating leases. The focus of the book is retail leases. Office, industrial, and other property type leases have some things in common with retail but are not within the specific scope of this work. The major topics covered in this book include the following chapters on aspects of retail leases.
Chapter 1 Pre-Opening Period. Chapter 1 covers rent and tenant rights during the period prior to the tenant opening for business, a period of architectural, legal, real, and personal property construction. Moreover, the lease must be clear on matters of completion of lessor's work, construction permit protection, pre-opening contingencies, business permits, environmental permits, licenses needed, title approval, restrictive easement agreements, subordination and nondisturbance agreements, franchisor approval, delays, buildout period, warranties, ADA warranty, code warranties, early or late delivery, landlord criteria for tenant build-outs and equipment. This chapter includes an appendix of "Sample Language for the Pre-Opening Period."
Chapter 2 Leasing and Use Restrictions. Chapter 2 covers a wide variety of lease restrictions, such as radius and exclusive clauses. (18) The discussion addresses scope and definition of restricted area, remedies for radius violation, entities covered, defining protected interests, exceptions, need for proof of harm, miscellaneous provisions, and remedies for violation of the exclusive clauses. This chapter includes an appendix of "Sample Language for Leasing and Use Restrictions."
Chapter 3 Securing Lease Obligations. Chapter 3 looks at the recent recession's impact on creditworthiness requirements for lessors and lessees. The chapter includes material on creditworthiness of the tenant, security deposits, lease guarantees, letters of credit and securing the landlord's obligations; on the other side of the table, the material includes good coverage about securing the landlord's obligations as well. This chapter offers an appendix of "Sample Language for Securing Lease Obligations."
Chapter 4 Property Lien Rights. Chapter 4 discusses what happens when a landlord defaults on a mortgage on the property, leaving the tenant(s) in a precarious position with the lender in charge, who may terminate leases. This section covers subordination of various types, attornment, non-disturbance, and other matters. This chapter also covers good points on ground leases and reciprocal easement agreements. There is an appendix for "Sample Language for Priority Lien Rights."
Chapter 5 Percentage Rent. Chapter 5 looks at percentage rent, which is usually on top of a base rent, or against a base rent, which is "a means by which the landlord can share in some of the upside potential" (page 101) of a retail tenant. How this rent is calculated is a major part of this chapter, along with sales threshold and timing of payment, defining gross sales, reporting requirements, audit rights, remedies, and termination rights due to insufficient gross sales. The chapter is followed by an appendix with "Sample Language for Percentage Rent." It includes some specifics on breakpoints, graduated rates, definitions of lease year or time period, stub periods, Internet exclusions, other commonly requested gross sales exclusions, returns, records retention clause, sales kickout clause, and tolling period.
Chapter 6 Taxes and Insurance. A discussion of two real estate operating expenses, taxes and insurance, makes up chapter 6. The authors discuss methods of calculation of tenants' share and alternatives ways of calculating real estate and other taxes to be considered and included. The types of insurance for which the tenant is responsible, and how the share and payment is calculated and timed, is well-covered. The appendix provides "Sample Language for Taxes and Insurance," which includes taxes over base, payment of taxes over time, verification of tax bills, exclusions, waiver of sales tax confidentiality and confidentiality of sales tax information, provision for insurance increases, waiver of claims, and mutual indemnification.
Chapter 7 Common Areas. The common area maintenance (CAM) charge and how it is shared and calculated between lessor and lessees is the focus of chapter 7. Topics include the various types of charges, fixed versus pro-rata CAM, hybrid CAM, and increase over base; further, the authors cover uses of common areas, specifying uses by tenant and by landlord. An appendix with "Sample Language for Common Areas" is provided and includes sample language for fixed CAM, duplicative costs, audit rights, hybrid CAM expenses, CAM floor, outdoor seating/ dining, kiosks, visibility and location, truck access, and, of course rules and regulations covering common areas.
Chapter 8 Lease Transfers. Sometimes things just do not work out for a landlord or tenant, so provision must be made in leases for transfer of the lease; chapter 8 discusses such lease transfers. Absent such provision, the tenant may transfer the lease to anyone, but the original tenant would still be primarily bound by all lease obligations. (page 161) This chapter covers a host of points which must be considered and covered in the lease concerning transfer of lease. It makes the distinctions between assignment of a lease and a sublease, standards of consent, transfers not requiring landlord consent, transfers by operation of law or voting control, release of transferring tenant, remedies for failure to consent, right of recapture, and collateral assignment of lease. The extensive 173-page appendix provides "Sample Language for Lease Transfers." Topics include intracorporate transfers and transfers in connection with merger, consolidation, or sale of assets, assignments to franchisees or licensees, changes in ownership, limits on tenant liability after lease transfer, and leasehold mortgage.
Chapter 9 Co-Tenancy. Co-tenancy is "a lease clause that triggers certain rights and remedies for the tenant in the event of a certain level of occupancy for the shopping center is not achieved at a particular point in time.... For the tenant, a co-tenancy clause is a mark of the landlord's unbending commitment to generate a steady stream of customers." (page 189) Co-tenancy clauses may be concerned with opening and operating situations. There are several provisions unique to operating co-tenancies discussed. The appendix provides "Sample Language for Co-tenancy." Sample language for startup situations covers situations such as where the tenant is not required to open or the tenant must open but at reduced rent; tenant rights to terminate; lease signing co-tenancy; and reimbursement of tenant expenses.
Chapter 10 Mixed-Use Projects. Chapter 10 covers mixed-use projects, which "run the gamut from large planned residential and commercial developments ... to urban office buildings to centers with nontraditional retail tenants. Each of these projects has unique concerns." (page 209) Topics in this chapter include leasing in vertical subdivisions, and mixed-use situations for a variety of primarily commercial property types. The appendix offers "Sample Language for Mixed-Use Projects." The emphasis is on tenants getting along, and the sample wording addresses sound levels, a "dirty dozen" of use prohibitions (twenty-three possible prohibited uses are actually listed), termination language, adjacent space prohibitions, and even some good examples of prohibition language that did not work.
Chapter 11 Outlots. Outlots, also known as out-parcels, are parcels that "can be purchased from a landlord or leased from a landlord." Restrictions and uses are usually the same as the in-line or non-outlot space, but sometime the leases are for just the ground with the tenant building its own improvements. The authors cover purchase of outlots and needed restrictions, and ground lease provisions for such a parcel. The forty-nine-page appendix has "Sample Language for Outlots," with suggestions for agreements related to purchase; access; covenants, conditions, and restrictions; surveys; environmental contingencies; temporary easements; insurance and proceeds; and split for outparcel real estate taxes.
Chapter 12 Maintenance. The final chapter addresses lease situations covering maintenance responsibilities for lessor and lessee, and what happens if either party does not live up to its side of the bargain. Unexpected maintenance costs can be a major problem and create financial hardship on either party. The chapter discusses maintenance obligations of the parties, restrictions on timing of maintenance, handling waste, use of scaffolding, business interruption, maintenance priorities, emergency maintenance, remedies for failure to maintain, right to offset rent, and arbitration.
The appendix, "Sample Language for Maintenance," offers wording suggestions for items such as notice, request for security, abatement of rent during landlord maintenance, black-out maintenance, scaffolding obstruction, business interruption minimization, self-help rights with and without offset, and arbitration.
At the end of this book, you will find a quite helpful five-page index.
Recommendation. When it comes to analyzing subject and comparable retail property leases, we appraisers often do not look much beyond lease term, origination date, rent amounts, provisions for adjustment and increases, who pays what property operating expenses, options, and names involved. Importantly, the other lease items, provisions, and clauses may vary from what is normal or common for a particular property type and market locale--and some of these can affect the rent amount, and relative positions of the parties. So probing into subject and comparable leases in some detail, and knowing important questions to ask about leases when reading or confirming them, is imperative and part of best practices and due diligence. This book is one of the resources available to help you do just that. Take advantage of its availability in the Appraisal Institute's Lum Library, or visit the American Bar Association website to purchase a copy for your personal library.
Also, you may want to check out the following Internet resources for a checklist of points, terms, items to look for in retail leases:
* "Negotiating Your Shopping Center Lease" http://bit.ly/NegotiateLease
* Sample lease agreement terms
About This Column
Resource Center is about all types of helpful information resources for appraisers and real estate market analysts--books, articles, presentations, data sources, and websites. (1) This edition of Resource Center discusses corridor valuation and reviews new Lum Library books about land use regulation and retail leases.
Appendix A Corridor-Related Valuation Information Resources
* Federal Highway Administration
* International Right of Way Association
* Rails to Trails Conservancy Toolbox
* Surface Transportation Board
Noteworthy Corridor Valuation-Related Articles, 1999-Present
* The Appraisal Journal and Valuation Magazine (Articles available online through Y. T. and Louise Lee Lum Library. Login required.)
1. Bucaria, Charles P., Sr., and Robert G. Kuhs. "Fiber Optic Communication Corridor Right-of-Way Valuation Methodology: A Summary Resulting From Telecommunications Corridor Right-of-Way Market Observations." The Appraisal Journal (April 2002): 136-147.
2. Bucaria, Charles P., Sr., and Robert G. Kuhs. "Fiber Optic Communication Corridor Right-of-Way Valuation Methodology." Valuation Insights and Perspectives (First Quarter, 2002): 16-20.
3. Jones, Jeffrey K. "Appraising Railroad Corridors for Recreational Trail Use." The Appraisal Journal (Summer 2014): 206-215.
4. Hunsperger, Wayne L., Amy McGuire, and Ron Throupe. "Transit Corridor Valuation: Issues and Methods." The Appraisal Journal (Summer 2012): 235-247.
5. Rahn, Arthur G. "Across the Fence Methodology for Valuation of Corridors: What Is It and How Is It Used?" The Appraisal Journal (July 2001): 270-276.
6. Rahn, Arthur G. "Net Liquidation Valuation of Transportation Corridors." The Appraisal Journal (Winter 2007): 56-61.
7. Schmick, John T., and Jeffrey K. Jones. "Is Across the Fence Methodology Consistent With Professional Standards?" The Appraisal Journal (Fall 2014): 318-329.
* Right of Way Magazine (Articles available online at http://bit.ly/ROWarchives)
1. Amspoker, Todd. "The Legality of the Across the Fence Appraisal Approach in Eminent Domain Proceedings." Right of Way (September/October 2000): 8-11.
2. Kent, James. "The Promise and Peril of Corridor Expansion." Right of Way (January/February 2012): 23-26. (This article has to do with the proposed Keystone Pipeline.)
3. Lathrop, Wendy. "Sharing the Railroad Corridors: A Question of Ownership." Right of Way (January/ February 2010): 32-34.
4. Lusvardi, Wayne C., and Charles B. Warren. "The Cake Cutting Algorithm Problem in Corridor Valuations: Rebutting the ATF Corridor Valuation Methodology." Right of Way (January/February 2007): 28-35.
5. Pomykacz, Mark. "Observations from the Rail Line: Can Railroad Corridors Be Considered the Highest and Best Use?" Right of 14/ay (September/October 2008): 14-17.
6. Rahn, Arthur G. "The Cost Approach in Corridor Valuation." Right of Way (January/February 2004): 39-41.
7. Rahn, Arthur G. "The Enhancement Factor: Exploring a Unique Aspect to Transportation Corridor Appraisals." Right of Way (May/June, 1999): 15-17.
8. Schmick, John. "Appraising Railroad Corridors: Misconceptions about Across-the-Fence Methodology." Right of Way (March/April 2013): 31-35.
9. Schmick, John. "Appraising Public Utility Easements in a Railroad Corridor." Right of Way (March/(April 2007): 28-30.
10. Schmick, John T., and Robert J. Strachota. "Railroad Right of Way: Appraising Public Utility Easements"
Right of Way (January/February 2006): 22-28.
11. Schmick, John T., and Robert J. Strachota. "Overhead Utility Crossings: Is the Impact Based on Perception or Reality?" Right of Way (July/August 2001): 28-33.
12. Allen, Albert N. "The Appraisal of Easements." Right of l/l/ay (November/December 2001): 40-46.
13. Seymour, Charles F. "The Continuing Evolution of Corridor Appraising (Back to the Basics)." Right of Way (May/June 2002): 12-20.
14. Zulaica, Richard J. "Valuing a Corridor within a Corridor." Right of Way (March/April 2000): 6-9. (Includes case study involving condemnation and trial insights, demand analysis, enhancement factor on ATF, plottage, and other considerations.)
* Miscellaneous Publications
1. Ad Hoc Task Force on Corridor Valuation. The Capitol Hill Declaration on Corridor Valuation: An Appeal for a Paradigm Shift from Monopolistic to Market Corridor Valuation Methods and Federal Rights-of-Way Rent Schedules. http://bit.ly/MarketCorridorValuation.
2. Ale, Eleasalo (Salo) V. Condemnation for Energy Corridors: Selected Legal Issues in Acquisitions for Pipeline, Transmission Line and Other Energy Corridors. Faegre & Benson, LLP, February 2009. http://bit.ly/EnergyCorridors.
3. Lusvardi, Wayne C., and Charles B. Warren. Unplanned Telecom Corridor Markets: The Marketization of Fiber Optic Easements by Deregulated Network Industries. University of Southern California, 1999-2000. http://bit.ly/TelecomCorridor.
4. Netusil, Noelwah R. "Economic Valuation of Riparian Corridors and Upland Wildlife Habitat in an Urban Watershed." Journal of Contemporary Water Research and Education 134 (July 2006): 39-45. http://bit.ly/RiparianCorridors.
5. Sklaroff, Michael. "The Valuation of Corridors in Eminent Domain: The Chester Valley Branch." Real Estate Issues 30, no. 2 (Winter 2005): 13-20, http://bit.ly/CorridorsEminentDomain.
Appendix B Land Use Regulation Resources
2. Historic Overlay Districts
* FindLaw, Land Use and Zoning Basics
* American Planning Association, Property Topics and Concepts
1. Fische, William A. Zoning Rules! The Economics of Land Use Regulation. Lincoln Institute of Land Policy, 2015. Available for purchase at http://bit.ly/ZoningRules. (A free download of chapter 1 is available on this website.)
2. Hirt, Sonia A. Zoned in the USA, The Origins and Implications of American Land-Use Regulation. Ithaca, NY: Cornell University Press, 2014. Available for purchase at http://bit.ly/CornellPress-Hirt.
3. Quigley, John M., and Larry A. Rosenthal. "The Effects of Land Use Regulation on the Price of Housing:
What Do We Know? What Can We Learn?" Cityscape 8, no. 1 (2005): 69-147. Available for download at http://bit.ly/PriceofHousing.
(1.) For easy direct access to the URL addresses noted throughout this article, read this column online; go to http://myappraisalinstitute.org/taj/default.aspx, and click on "View Current Issue." (Login required.)
(2.) Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), s.v. "corridor." Corridor may have real estate usages other than these; for example, you may encounter technology corridors, office corridors, scenic corridors, and transportation corridors.
(3.) Arthur G. Rahn, Corridor Valuation: An Appraiser's Overview (Fairfield, CA: October 2005), 7.
(4.) Charles F. Seymour, "The Continuing Evolution of Corridor Appraising (Back to the Basics)," Right of Way 49, no. 3 (May/June 2002): 14.
(5.) Corridor factor refers to "the ratio of the market value (or market price) of a corridor to the corridor's across- the-fence value. Corridor factors are applied to reflect the benefit or advantage, if any, of the corridor having already been assembled. Typically used in the valuation of existing corridors and not the assembly of a new corridor. Sometimes called an enhancement factor or continuity factor." The Dictionary of Real Estate Appraisal, 6th ed.
(6.) Corridor valuation is "the process of estimating value associated with rights to corridor real estate. Valuation approaches may include methods such as the across-the-fence method, sales comparison, the alternate route (cost avoidance) approach, and estimation of net liquidation value." Ibid.
(7.) Arthur G. Rahn's article, "The Cost Approach in Corridor Valuation," Right of Way (January/February, 2004): 39-41, is an informative article on corridor valuation, with a wealth of information beyond the cost approach.
(8.) The Dictionary of Real Estate Appraisal, 6th ed., s.v. "plottage value." A related concept is assemblage, which the Dictionary defines as, "1. The combining of two or more parcels, usually but not necessarily contiguous, into one ownership or use; the process that may create plottage value. 2. The combining of separate properties into units, sets, or groups, i.e., integration or combination under unified ownership." Further, the Dictionary defines assembled corridor as "a strip of land used for transportation or transmission purposes (e.g., rail, highway, power, information, slurries, liquids) under single control (not necessarily ownership) that was assembled from two or more separate and distinct land parcels not having a common owner."
(9.) This is addressed directly in Richard Zulaica, "Valuing a Corridor within a Corridor," Right of Way, (March/April 2000): 6-9. Other articles mentioned in this column address such joint use as well. Mixed use of a corridor is addressed in John Schmick, "Appraising Public Utility Easements in a Railroad Corridor" Right of Way (March/April 2007): 28-30. Also see, Wendy Lathrop, "Sharing the Railroad Corridors: A Question of Ownership" Right of Way (January/February, 2010): 32-34.
(10.) The Appraisal Journal (Summer 2012): 235-247.
(11.) The Appraisal Journal (Winter 2007): 56-61.
(12.) The Appraisal Journal (April 2002): 136-147.
(13.) The Appraisal Journal (July 2001): 270-276.
(14.) The Appraisal Journal (Fall 2014): 319-328.
(15.) Take a look at the related letters to the editor at The Appraisal Journal (January 2002): 108-110.
(16.) Right of Way (January/February 2007): 28-35, http://bit.ly/RightofWayATF.
(17.) During the 1980s, a variety of land use conditions called exactions came into use; exactions are conditions of development permission that require a public facility or improvement be provided at developer's expense, (page 415, authors citing Batch v. Town of Chapel Hill, 92 N.C. App. 601, 376 S.E.2d 20 (1989). The term is also used regarding requirements, in exchange for entitlements and/or zoning, to dedicate land for public purposes; construct public improvements and infrastructure; and linkage ordinances through which the right to develop is conditioned on receipt of a contribution of land or money to the applicable jurisdiction, (page 415, referring to New Jersey Builders Association v. Bernards Township, the Supreme Court of New Jersey in 1987)
(18.) "Under a radius clause, the landlord seeks to inhibit the ability of a tenant to expand its presence within a defined geographical area. Under an exclusive, the tenant seeks to restrict the ability of the landlord to lease space within the shopping center to uses or lines of business that would compete with the tenant." (page 27)
by Dan L. Swango, PhD, MAI, SRA
Dan L. Swango, PhD, MAI, SRA, is president of Swango Real Estate Counseling and Valuation International in Tucson, Arizona. He is experienced in valuation and consulting involving equity investment, debt security, risk reduction, profit optimization, estate planning and settlement, buy/sell opportunities, and eminent domain. Swango is an instructor and communicator with domestic and international experience. He is namesake of The Appraisal Journal's Swango Award, past Editorial Board chair and editor-in-chief of The Appraisal Journal, and a current member of the Journal's Review Panel. Contact: firstname.lastname@example.org
If you know of additional resources of interest to real estate analysts and valuers--or would like to suggest topics for this column--please contact the author.
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|Title Annotation:||Resource Center|
|Author:||Swango, Dan L.|
|Date:||Mar 22, 2016|
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