Rails to Trails

from RECGA Member C. David Matthews MAI CRE SRA

Over the past 30 years I have appraised hundreds of Rails to Trails acquisitions in eleven states. These all involved the conversion of an abandoned rail corridor to a hiking and biking trail. Beginning in the 1960’s, as a way to preserve railroad rights-of-way for future generations, the federal government agreed to acquire these corridors, usually 50 ft to 100 ft wide, and have a “Trail Operator” agree to build and maintain a public trail. Congress wanted to “Railbank” these corridors because acquiring a new corridor after owners had built upon the prior easement would be far more difficult and expensive. Very few of these abandoned rail corridors had building improvements of value at time of abandonment.

There are hundreds of these trails throughout the US. Some were acquired many years ago without compensation being paid to the underlying land owner. Later a series of state and federal court decisions found that the adjacent land owners who had granted an easement for rail use to the railroad, usually in the 1800’s or early 1900’s, must be compensated for the loss of their land rights to the corridors when converted from a rail corridor to a trail. The question then is how much should the land owner be compensated?

An appraiser may be hired as a joint appraiser for both the land owner and the Department of Justice (condemnor) or by either party if a joint appraiser is not used. Often, a review appraiser is hired by one or both sides. There are a number of special rules that the appraiser must follow in the appraisal process for Rails to Trails valuations. The appraisals must be done as true Before and After Valuations with the difference being paid out as compensation to the land owner. The Before valuation scenario reflects the market value of the property as of the date of take which can be a decade or more earlier and assumes that the land owner owns the land in fee simple title to the middle of the rail corridor. The After value scenario assumes the property is encumbered by a trail easement that exactly overlays the original railroad easement and that the corridor may one day be converted back to railroad use. If the land was originally acquired by the railroad in fee title then no compensation is owed the adjacent land owner since they have no legal rights to the rail corridor.  The appraiser must follow fairly specific rules set down by the courts in completing the valuations as well as following the Uniform Appraisal Standards for Federal Land Acquisitions, known as the “Yellow Book”.

My work as a joint appraiser and individual party appraiser as well as reviewer has taken me to the east coast, the west coast, the Gulf coast and many points in between. Land types appraised include farmland and woodland in the Midwest, industrial property in New England, fish processing plant in Florida, marshland in South Carolina, ranch land in Texas, retail property and residential lakefront land in the Northwest which was some of the most expensive residential land in the U.S.

Some of these cases involve hundreds of properties requiring the appraiser to be consistent, thorough and convincing. I have successfully testified as an expert valuation witness in federal courts and before federal judges mediating the cases resulting in awards in the hundreds of millions of dollars.