Functional Replacement of Real Property

When publicly-owned real property, including land and/or facilities, is to be acquired for a project receiving federal participation, in lieu of paying the fair market value for the real property, TxDOT may provide compensation by functionally replacing the publicly-owned real property with another facility that will provide equivalent utility.
A functional replacement arrangement will only be considered on a case-by-case basis and requires approval from the ROW Program Office and ROW Legal.
Federal-aid funds may participate in functional replacement costs only if the following conditions are met:
  1. TxDOT elects to provide functional replacement.
  2. The property in question is in public ownership and use;
  3. The replacement facility will be in public ownership and will continue the public use function of the acquired facility;
  4. TxDOT has informed, in writing, the entity owning the property of its right to an estimate of just compensation based on an appraisal of fair market value and of the option to choose either just compensation or functional replacement;
  5. The FHWA concurs in TxDOT's determination that functional replacement is in the public interest; and
  6. The real property is not owned by a utility or railroad.