I. Introduction

The value of the rights-of-way held in trust by state and local government is the sum of the value of the real estate plus the value of the capital improvements, which make rights-of-way useful and usable. There are numerous appraisal methods to identify this value: Book Value; Replacement Value; Willing Buyer/Willing Seller Value; Income-Based Method and a Comparable Transactions Valuation (1). This paper employs the book value and comparable transaction valuation methods. These and the other valuation methods substantiate that state and local governments hold, and are responsible for, one of the most important and valuable assets in the United States economy. Managing this asset in trust on behalf of the nation’s taxpayers is a central responsibility of state and local elected officials.

II Establishing the Size of the National Rights-of-Way Inventory
(625,517,587,200 square feet)

The Federal Highway Administration of the U.S. Department of Transportation estimates there are 3,917,232 linear miles of roads in the United States (2). State and local governments are responsible for the acquisition, construction and maintenance 78% of this total inventory (3). This paper uses an average width estimate of 40 feet (4).

5,280 feet/centerline mile x 2,961,731 centerline miles x 40 feet width = 625,517,587,200 square feet of rights-of-way that are the sole responsibility of state and local government.

III. Establishing the Value of the Rights-of-Way Inventory

1. Net Book Value: ($4,676,039,947,040)

A. Value of Improvements: ($1,110,589,700,000)
The Bureau of Economic Analysis (BEA) states that the present value of the total capital expenditures on streets and highways is $1,423,833,000,000 (5). This is the depreciated capital cost borne by taxpayers to improve streets and highways. State and local taxpayers paid 78% or $1,110,589,700,000 (6).

B. Value of the Land (7). ($3,565,450,247,040.00)
There are several methods to establish an average value for each square foot of land in the rights-of-way. Land in the right of way has widely varying value. The “Across or At the Fence” value (ATF) is less than a penny per square foot for some western rural counties (8). The ATF value exceeds $2,500 per square (in 1989 dollars) for downtown New York (9). Between these extremes lies a national average.

The Minnesota Department of Transportation estimated in 1994 that the average ATF value of the land abutting the rights of way for the City of Minneapolis at $5.70/square foot (10).

This paper uses the Minnesota 1994 valuation of a mid-size, mid-western urban area as a conservative approximation of the nation-wide average (11).

Multiplying the length x width x average value equals $3,565,450,247,040.00 (12).

C. Total Book Value ($4,676,039,947,040)
The total book value of the rights-of-way is the sum of the value of the land plus the value of the improvements, which equals $4,676,039,947,040 (13).

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