Podcast: The Rising Cost of Highway Right-of-Way

Logan Finney, Idaho Reports: As this journalist wrote to start her story, rising land values affect more than just housing prices in Idaho. Joining us this week is senior reporter Margaret Carmel from BoiseDev.com to talk about how rising land values affect specifically the right-of-way for highway projects at the Idaho Transportation Department. Margaret, thanks for joining us.

Margaret Carmel, BoiseDev: Yeah, thanks for having me.

IR: So, as I’ve referenced, you wrote about how land prices in the Treasure Valley are increasing, and you kind of dug into the numbers of how this affects highway projects at the Idaho Transportation Department. Can you tell me, what was your inspiration for this reporting project?

Carmel: Well, like a lot of stories at BoiseDev, I got the idea to do this from one of our readers. We source a lot of our ideas from people who read our content, who say, “Well, what about this?” And I thought it was a really good question of how much land prices that you have to buy for highways is increasing, because they have to pay fair market value. And as fair market value has gone up, particularly in the Treasure Valley, that’s got to be hitting our government as well. And when we say right-of-way, that can be kind of a confusing term. But really what we’re talking about is the land on the sides of the roads that needs to be used, that can be used to widen a road or add sidewalk or streetlights or any of those sorts of things, because whenever you widen a road, you need that land. And that’s the land we’re talking about here.

IR: Right. For listeners and even myself – I’m not a construction worker – it took me a second to kind of wrap my head around what specifically the state was having to buy these parcels of land for if a highway is already in place.

Carmel: Right. Those, depending on the project, especially if you’re widening a highway which tend to have a lot of infrastructure, they might have interchanges or they might have to take some land like chunks of a parking lot from an existing business if you’re in an urban area or something like that. It can get expensive to buy the land, to blow out a road two or three extra lanes. That’s quite a lot of land acquisition. And it’s not just that little chunk on the side of the road, right? It’s all the way up and down Chinden. It’s all the way up and down Eagle Road if they were to widen Eagle Road. So that’s where it comes in, is it’s buying like maybe narrow chunks, but miles-long stretches of these parcels.

IR: And so, as you got your hands on some of the numbers from ITD, what were some of your findings in this story?

Carmel: Yeah, we’ve definitely seen a pretty big increase in how much this land is going for. And just to put this in perspective, the agency spent $20 million over the past year to buy property to widen Chinden. I mean, so this is not an insignificant expense for the state to obtain this land, which is another reason why we get into the debate about if widening roads is always the right option, because it is so expensive.

So, if we look at the numbers. On average, if you look at the Chinden widening corridor and the new Highway 16 corridor in western Meridian and Ada County, the average in September 2019 to buy an acre was $88,000. It is now, in 2023, $189,000 on average for an acre. So that appreciated $100,000 in that time period.

IR: And were you able to find out what sort of effect this has on ITD’s planning process and on its larger budget? What sort of information did you get from them that was qualitative rather than quantitative?

Carmel: Right. I talked to them, and they said that it’s actually really not causing that much of an impact because they plan on a seven-year cycle. So, if something ends up being wildly expensive, they can push things back in that seventh year of the plan. And also, it really just depends on where the land is. I mean, we’re seeing these hikes in the Treasure Valley, but, you know, not everywhere is going to be this expensive. So, they said pretty much it depends on the location, and it’s the cost of doing business. So, they’re moving on ahead.

IR: Sure. In theory, all of this land that they’re acquiring along the sides of the highways is private land that they have to buy from somebody. How are the prices determined? I assume it’s a little bit different than a regular real estate transaction because it’s the state government making the purchase.

Carmel: Right. So the landowner can’t say, “I want $1 million for this property,” and get away with it, right? They have to go through what’s called a fair market assessment process. They get an appraiser, they get a second appraiser, and go out and make sure, “Okay, this land. This is what this land is worth, and this is what we’re paying for it.” Depending on where you’re widening the road, these are often like we said a narrow little strip. So, it’s not always developable property, but it’s right on a frontage of a parcel. So, people who own it, you know, they’re only going to be selling a small section, even if it’s a long-running strip of land. So, that’s why we sort of tabulate it by average per acre, because it’s not like they’re buying huge, huge parcels.

IR: If there are individual landowners – let’s say along Chinden or along State Street or one of these other highways in the state – are they in the position where they can just flat out turn down ITD? Or is this more of an eminent domain situation where the state can take it as long as they compensate you fairly?

Carmel: I did not dig super deep into that. But yes, this is a case where one single landowner cannot stop a development project, a road widening from going through. If they don’t want to negotiate, if they don’t want to take the fair market price, then they’re going to have to- Then ITD can engage eminent domain and go through and get that property. That’s my understanding anyway, but I didn’t talk to anybody about that during this process. That’s just what I understand from writing about other highway issues.

IR: I appreciate that, thank you. As these land prices generally are increasing, we talked about how it hasn’t had much of an effect on ITD’s planning process. But what about the bill at the end of the day for the taxpayers? Did you have any discussion about that with them?

Carmel: Yeah. So ITD is facing cost hikes on everything. We talked about this a little bit where they’re saying, “Okay, we see increases in fuel prices. We’re seeing material prices.” I mean, general inflation is really hitting everybody right now. And the sense that I got from ITD is this is one of many other areas where they’re seeing price increases.

IR: All right. Well, thanks for coming on the podcast to talk about your story, Margaret. If our listeners are interested in finding out more, they can find it at BoiseDev.com.

Carmel: Thank you so much.