II. Comparable Transaction Valuation ( $7.1 trillion to $10.9 trillion)

Comparable transaction valuation looks in the marketplace and uses sales and transfers of similar assets to establish a value for the property in question. As explained by NOAA, “Prices paid in actual market transactions provide direct data of fair market value." (14) NOAA cautions that “a wide variety of conditions and prices can create difficulties in finding the right comparison. A verifiable set of comparable sales must be viewed as a tool for identifying market trends and a basis for establishing a range of possible appraisal values.” (15)

Employing this traditional method for assessing real estate values faces specific difficulties that must be accommodated when used to assess rights-of-way value:

• Proprietary Information: As the U.S. Department of Transportation learned in its study Shared Resources: Sharing Right-Of-Way for Telecommunications (FHWA-JPO-96-0015, April 1996): “Although access to rights-of-way is leased and prices are recorded in various contracts, these values may not be generally available because they are considered proprietary.”
  
  

• Dramatic Increases in Value: The explosive growth of telecommunications sector has resulted in an exponential growth in rights-of-way value. In its report, NOAA stated, “For…rights of way greater than 5 miles in length, price levels rose from $8,026 per mile in 1987 to $11,880 per mile in 1993 to $100,042 in 1997.” See NOAA report at p. 18.
  
  NOAA’s research identified two valuation trends for market rates for fiber optic rights-of-way fees:
  
  

• Linear trend, which places the value of right-of-way in October 1995 at a value approaching $120,000 per mile per year; and
  
  

• Exponential trend, which for the same time period established the rates at $100,000 per mile per year.(16)

Employing either of these base numbers as capturing the entire value of the nation’s rights of way for a single year produces an annual rental value range between $ 366,153,720,000 and $305,128,100,000.

Normal sales prices for real estate are based on 30 times annual lease payments, according to NOAA. Doing the math, comparable rates for the rights-of-way ranges between $10,984,611,600,000 and $9,153,843,000,000.(17)

A second comparable transaction valuation may be reached by multiplying the “ATF” average value by a corridor enhancement factor. The International Right of Way Association suggests that current prices paid by governments and private utilities to condemn and construct right of way is related the “across the fence value” of the abutting land, plus a multiplier factor to account for the “connectivity nature of right of way”. This multiplier accounts for the transactional cost savings realized by the right of way user not having to negotiate rights of passage with each abutting landowner and the value added by the nature of the two points the right of way connects. According to NOAA, the connectivity factor ranges between 2 and 6.(18)

The following formula projects the value:

Value of right of way = Value of ATF square footage x Value of Connectivity

= $3,565,450,247,040 x 2
= $7,130,900,494,080

CONCLUSION
The total value of the land and improvements held in trust by state and local governments for the taxpayer is enormous. Using conservative assumptions, the value ranges from $1.1 Trillion for the improvements alone to $4.7 Trillion for the improvements and the ATF land value. However the cost of acquiring a right-of-way corridor necessarily is more expensive than simply the ATF value of the abutting land. Applying the lowest corridor enhancement factor now employed by appraisers suggests the value is $7.1 Trillion. These results are consistent and conservative when measured against comparable transactions reported by federal government agencies.

END

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