LPA’s Right-of-Way Practice Leader Explains How Texas’ Growing Population and Thriving Economy Are Creating Opportunities Even as They Place a Strain the State’s Infrastructure

LPA’s Right-of-Way Practice Leader Explains How Texas’ Growing Population and Thriving Economy Are Creating Opportunities Even as They Place a Strain the State’s Infrastructure

Mark Lowery

02/24/2020

Right-of-way (ROW) valuation is not just about protecting the financial interests of our client (the state or county, and ultimately the taxpayers). It’s about using all of the information at our disposal and the expertise we’ve acquired to present appraisals that are beyond reproach. It’s also not uncommon for our appraisers to be called as expert witnesses when legal disputes crop up in right-of-way proceedings. So not only do our appraisals have to be accurate by any objective standard, but our valuation experts must also be able to convey appraisal methodology and techniques to laypersons in a thoughtful and convincing manner. Accuracy is the best way to answer the question, “Are we accounting for action in our market while being impartial to both parties?” — Mario Caro, MAI, AI-GRS, SR/WA, Managing Director, LPA (San Antonio)

LPA’s right-of-way (ROW) practice leader, Mario Caro, MAI, AI-GRS, and Managing Director at LPA’s San Antonio offices

It’s no secret that Texas continues to pace the nation in just about every significant measure of economic health. But the latest numbers provide an even more impressive than usual reminder of just how much opportunity is spreading from one end of the Lone Star State to the other.

According to the U.S Census Bureau, more than 367,000 people relocated to Texas between July 2018 and July 2019; staggeringly, that’s more than 1,000 people per day. Meanwhile, the state’s major metropolitan areas — specifically, Dallas and Houston — are expected to trail only the Bay Area/Silicon Valley in GDP growth over the next three years.

In the decade to come, Texas’ relative affordability and steady employment figures will likely continue to attract even more newcomers. These trends are naturally exciting for public and private developers as well. They have a vested interest in making sure the state’s roads, utilities, and communities can accommodate additional residents and new businesses.

We recently sat down to talk with LPA’s right-of-way (ROW) practice leader, Mario Caro, MAI, AI-GRS, SR/WA, and Managing Director at LPA’s San Antonio offices, to learn more about Texas’ thriving economy, its growing infrastructure needs, and the role commercial real estate (CRE) valuation services play in supporting the state’s investment in itself.

The following conversation has been condensed and lightly edited for clarity.

With growth sometimes comes growing pains. By virtue of the work you do, are you seeing evidence of that in Texas? If so, how so?

Absolutely. As more and more rural areas, unincorporated communities, and exurbs get absorbed by Texas’ big cities, transportation and utility departments have a definite need for right-of-way valuation services to keep up with that growth. And it’s not only municipalities that are experiencing these growing pains. Texas’ individual landowners and taxpayers are feeling them, too.

For example, we’re currently working on a proposed 36-inch wastewater line that will pass through rural land bordering a creek in a suburb of San Antonio. This line will ultimately serve newer subdivisions that are popping up in droves. While not everyone may be thrilled about the exercise of right-of-way acquisition, flushing toilets, kitchen faucets, and washing machine hook-ups are all conveniences we’d rather not do without.

So, how do we honor our Texas traditions and preserve our wide-open spaces while continuing to provide the infrastructure necessary for record population growth? It’s a delicate balance that requires a great deal of careful planning. Moreover, we all have to work together to ensure everyone’s concerns are heard and needs are considered. As right-of-way appraisers, we’re very accustomed to talking with different stakeholders (condemnors, real property holders, TxDOT, municipalities, private developers, you name it), seeing things from their perspectives, then coming to an amicable solution. We appreciate that relentless research into market conditions, coupled with insight, experience, and empathy for the landowner’s position, are all key to helping ensure a fair outcome.

How are communities across Texas successfully adjusting to the state’s exploding population?

A good example is what’s been happening down in the Rio Grande Valley. There, several communities [Hidalgo County, Brownsville, and Harlingen-San Benito] recently merged to form their own MPO, or Metropolitan Planning Organization. In doing so, they’ve positioned themselves to reserve a better seat at the same table where Houston, Dallas/Fort Worth, San Antonio, and Austin vie for the allocation of state transportation funds. Representation equals bargaining power, and these local governments are doing what they can to make sure their citizens benefit from that power.

It also helps to understand just how much transportation money is at stake here. Over the next 10 years, Texas expects to spend $77 billion on transportation infrastructure. The bulk of that spending will be dedicated to new and expanded highways. Another way to look at this is that, in 2019, the acquisition budget for TxDOT’s Right-of-Way Division was $800 million. In 2020, that budget is expected to surpass the $1 billion threshold.

We expect that right-of-way acquisition volume will be high, too. An estimated 2,000 to 2,100 parcels will be acquired for right-of-way purposes this year. So, it’s not just that we’re talking about changing funding priorities — how tax dollars are spent. We’re also talking about the road map of Texas itself being redrawn.

What does all this economic growth mean for the state’s big industries?

That's definitely an emerging aspect to right-of-way, and it’s going to be an even more significant factor moving forward. Take the Port of Corpus Christi. Already a major economic generator, it’s beginning to rival the largest ports in the country. Corpus Christi now ranks third in the nation in terms of tonnage coming in and out. They’ve also risen to the number-one spot among exporters of crude oil. Currently, the Port Authority is dredging and widening its channel to accommodate even bigger shipping vessels and replacing the Harbor Bridge with a taller, more modern structure. The goal is to make Corpus Christi the first stop for freight coming through the Panama Canal.

There’s an oil and gas dimension here, too. With all the oil shale production happening across Texas, that industry is realizing that pipelines are the most efficient midstream solution out there. Pipelines get oil to port and get it ready for final delivery both more quickly and cost-effectively than other methods. So we’re seeing more pipeline right-of-way projects linking the Permian Basin and the Gulf Coast.

How does the right-of-way valuation process help make all this possible?

By being impartial, timely, and accurate — which means being research-driven.

Because our biggest clients, so to speak, are condemning authorities like TxDOT, we have a responsibility to taxpayers to be good stewards of federal and state dollars. But, as a property owner myself, just compensation matters to me, too. So I constantly strive to put myself in the shoes of the person who’s having their land acquired for public use (and, sometimes, condemned) and treat them as I would want to be treated.

Every Texan has something at stake in seeing these projects reach completion in a reasonable amount of time. But these infrastructure projects can be as complex as they are massive. Sometimes, our appraisers find themselves in a time crunch, or they aren’t able to work under optimal conditions. Maybe the project has already experienced delays related to surveying or environmental clearance. In fact, I've been working on a project in South Texas, near the border, that’s been on hold for two and a half years. Whatever the case, as appraisers, we never want to be a bottleneck, and we want to make sure our clients are able to stay both within budget and on schedule.

Finally, right-of-way valuation is not just about protecting the financial interests of our client (the state or county, and ultimately the taxpayers). It’s about using all of the information at our disposal and the expertise we’ve acquired to present appraisals that are beyond reproach. It’s also not uncommon for our appraisers to be called as expert witnesses when legal disputes crop up in right-of-way proceedings. So not only do our appraisals have to be accurate by any objective standard, but our valuation experts must also be able to convey appraisal methodology and techniques to laypersons in a thoughtful and convincing manner. To bring this conversation full circle: accuracy is the best way to answer the question, “Are we accounting for action in our market while being impartial to both parties?”

Transportation, public works, electric transmission lines, telecommunications infrastructure, oil and gas pipelines — LPA’s principle-driven CRE valuation experts have the right-of-way and easement expertise you need.

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