Friday, June 14, 2013

Finding The Value of a Right of Way

This is a good article from the Maryville Gazette in Kansas.  In an effort to give both sides of the story, the paper interviewed a pitchman for the company.  Mr. Mark Lawlor of “Clean” Line Energy gave some interesting talking points and quotes.

The company is offering payments of 100 percent of a “fair market value” for a one-time easement payment. They’ll also make structure payments to landowners, who can choose an annual or upfront lump sum. The company, which will have the right of eminent domain as a public utility in Kansas, will pay 20 percent of the value of that easement now.

“When construction time comes, we’d pay the remaining value on that,” Lawlor said. “If it doesn’t go, they keep the money. If it does, they’ll get a portion of it up front. …We decided to start that much earlier than anticipated.”

Wow that’s hardly fair.  What about the loss in value for the remainder of the property?

We want your land for perpetuity.  Give it to us.  We’ll pay “fair market value” with 20% down and 80% if the project is successful. 

So what’s “fair market value”  for a 500 mile long contiguous right of way?  More than “fair market value” 

Why is “Clean” Line willing to pay more in Illinois than in Arkansas?

Why is “Clean” Line will to pay much much less than Northern Pass in New Hampshire?

A Right of Way is a Right of Way for transmission.  So why the discrepancy?

So what is “Fair Market Value”?

What if a 500 mile long contiguous piece of land contained oil or natural gas?

Is it worth the same as if it were only farm land?

What if it contained coal or even frac sand or any other commodity?

“Fair Market Value” is the value of a 500 mile long by 200 foot wide right of way for a transmission line.  The current fair market value for the dirt as farmland has nothing to do with the fair market value of a transmission line right of way.

Suppose “Clean” Line Energy is successful to secure a 500 mile long right of way and no powerline is built but the right of way is purchased.  What is the fair market value if “Clean” were to sell the right of way to … say Goldman Sachs?

Can “Clean” Line sell the right of way for $25,000 an acre?  $50,000 an acre?  $100,000 an acre?

Seriously, what is the fair market value for a 500 mile long 200 foot wide right of way?  Heck, you can fit 2 almost 3 pipeline right of ways in there.

20% down?  Pullezze! 

 A 500 mile long by 200 foot wide right of way is worth far more than the value of the farmland. 
A 500 mile long by 200 foot wide right of way is worth far more than the value of the farmland.  It’s 12,000 acres of contiguous land. It’s rights to 12,000 acres of contiguous land for perpetuity. There is a value here beyond the present value of the land. 


  1. What a joke. Per the contracts ALREADY HANDED OUT in Illinois, they are no where close to market value even for the acreage IN the easement. They're at about 55-60% of what the land is actually selling for. And that doesn't account for the damaged land, land devaluation, and loss of productivity forever.

  2. I think the most recent comparable near the current proposed RICL ROW recently sold for for $13,400 per acre at a public auction a couple of weeks ago in LaSalle County.

    1. Nope. Recent land sales have gone for significantly more.

  3. Mr. Skelly will have to do his own research to find where. Send Hans to the courthouse, or perhaps he might be able to find a banker to confide in him with the information.

  4. 20% down now to lock "a bunch of farmers" into legal contracts to sell ROW at today's prices, when it could be years before the company exercises the option to purchase. How long does the option to purchase last? Is it renewable at Clean Line's option? Is it assignable at Clean Line's option? Not such a good deal. Always consult an attorney before signing any documents from Clean Line.

  5. It appears that one of "Clean" Line's new talking points is that landowners would be getting annual payments- of course, intending that you jump to the conclusion that it's like wind turbines and annual payments. This is NOT the case. The "annual payments" would just be for a couple of years- in other words, the lump payment basically divided up.