Right of Way Preservation for Future Development of Highways

Principal Investigator:

Gary Barnes, Former U of M Researcher, Humphrey School of Public Affairs

Project Summary:

The question of whether MnDOT should purchase right of way (ROW) in anticipation of growth in certain corridors is often raised, especially during periods of rapidly increasing land prices. Before a policy decision of this nature can be made, quantitative analysis must be undertaken in order to fully understand the opportunity costs of purchasing ROW in advance. For example, money used to purchase ROW could have been used to actually build or improve roads, providing immediate benefits to the public, and monetary benefits to MnDOT in the form of lower construction costs. This research project addressed the question of whether there are financial benefits to acquiring transportation right of way far in advance of when improvements will be made. 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.

Sponsor:

Project Details:

  • Start date: 01/2004
  • Project Status: Completed
  • Research Area: Planning and Economy
  • Topics: Economics, Planning