Pipeline Arbitration: Is the taking of a right of way that is the best strip of your land worth more?

Where companies must compensate owners when taking rights of ways, one general approach is to value the acreage of the right of way based on the overall per acre value of the entire property.  However, it’s not uncommon that an entire property lacks uniform characteristics. It may have parcels, for example, not amenable to development, and also parcels well situated for development.  The question then is whether compensation should be higher for a right of way located in a desirable area, regardless of the value of the entire property.

A valuation based on a parcel that represents only a part of the landowner’s lands was illustrated in Double Alpha Holdings Corp. v. Pacific Coast Energy Corp (1998), 65 L.C.R. 99 (B.C.E.C.B.), a decision of the B.C. Expropriation Compensation Board. It involved an expropriation of a 1.6 acre strip of land along the boundary of a 1,600 acre property, but the Board accepted that the strip should be valued as being part of a 25.56 acre portion of the land that was suitable for single family residential development (Block 6A), rather than a 650 acre block contended by the respondent (Block A), or the entire 1,600 acre property:

“We conclude that it is neither necessary nor desirable to view the larger parcel here as being the whole of the Westwood Plateau or the whole of Block A. In our view, it would make more sense to define the larger parcel as Development Block 6A. This is because of the natural boundaries caused by the roads, the creek and the municipal border and the fact that it is a discrete parcel intended for development separate from the other areas of Block A and Westwood Plateau as a whole.” (emphasis added)

Such an approach will benefit an owner where the per-acre value of the smaller but more valuable parcel is greater than the per-acre value of the entire property, since less-valuable land drags the per-acre value of the entire property down.

If you are a property owner arbitrating or negotiating for compensation of a right of way, ask your appraiser whether the right of way should be appraised as part of a smaller more valuable parcel of the property.