Utilities as a Real Estate Acquisition

When a utility owns or occupies right of way, or has plant facilities located on land owned by the utility and existing facilities are no longer needed or are not part of the utility’s system requirements for delivering service to the public, payment for the land or utility facilities needed to accommodate construction should be handled as a right of way acquisition matter. The land and facilities must therefore be appraised for acquisition.
For example, when a utility has several facilities on a crossing and parallel location that must be removed but not replaced, one of the following procedures should be used.
  • The crossing and parallel segment may be considered jointly as a utility adjustment project, as allowed under Federal and State law. TxDOT will participate in the costs to remove all of the existing facilities, but will require salvage credit for all of the recovered materials because the facilities are considered as one unit and are being functionally replaced. This procedure may be followed regardless of whether the utility facilities are located on public or private right of way.
  • If this work is considered as two separate work units, the crossing is to be processed as a utility adjustment project and the parallel segment is to be considered as a right of way acquisition item. Under this procedure, it is necessary to determine whether the utility has a compensable interest along the parallel segment. When the parallel utility facilities are located on public property by statutory right and must be removed, removal costs are ineligible for TxDOT participation. TxDOT will not participate in the costs of salvage, nor require salvage credit for those facilities. It will be necessary at the agreement stage to make a determination regarding the method to be used in prorating the costs of removal, salvage, and salvage credits between the eligible and ineligible costs at the billing stage. This may be accomplished using a ratio, based on the number of poles or length of line for pipelines, or on a cost factor.
Other items that may need to be examined to determine if they are eligible for right of way acquisition are as follows:
  • Control of access rights to property owned for utility facilities, if the facilities can be accessed from another location.
  • Substations, water treatment plants, lift stations, and power plants that are no longer needed to maintain utility capabilities, or may be made obsolete by other methods that are the result of adjustments to their facilities in other locations.
  • Water wells or cathodic protection wells that do not need to be replaced.
  • Excess property located around utility facilities, if the acquisition will not hinder the function of the facilities.
Property owned by the utility housing personnel, equipment, or materials should always be acquired by the right of way acquisition process.