Research Reports

The Financial Benefits of Early Acquisition of Transportation Right of Way

Principal Investigator:

Gary Barnes, Sarah Watters

September 2005

Report no. MnDOT 2005-35

Projects: Right of Way Preservation for Future Development of Highways

Topics: Economics, Planning

This report addresses the question of whether there are financial benefits to acquiring transportation right of way far in advance of when the improvement will be done. The first part of the analysis is very general, comparing rates of price increase for different types of properties to the opportunity costs of holding land, over a long historical period. The second part of the analysis focuses on Minnesota and examines property price increases by county over shorter, more recent, time periods. While it is almost certainly worthwhile to acquire land that is in danger of becoming developed, this analysis did not find much apparent financial value in early purchase of land that is already developed, or is not likely to become developed. While there could be localized exceptions, prices of these types of land do not in general rise fast enough to offset the opportunity cost of the money that is used to purchase them. However, there could be other, non-financial benefits associated with early purchase that could compensate for some of the costs involved.

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