Land Acquisition Costs

Michigan highway construction costs have long been inflated by overly generous condemnation laws. Current law has allowed developers to buy up land after road alignments are known, and to receive the appreciated value of the land years later when state purchases are actually made. This has been a major problem on routes such as M-59. Landowners should be compensated at land values prior to increases related to the highway development. In addition, when partial packages are being acquired, the compensation for the acquired package should be reduced by any increase in value on remaining land that is due to the new highway project. Attorneys should also be prevented from receiving excessive compensation related to highway condemnation cases. Currently, attorney fees are based on the difference between the MDOT appraised value and the actual settlement value even though MDOT may initially offer more than the appraised value. Changing this provision to the difference between the initial offer and the settlement value would be a step in the right direction.

Currently, MDOT has a bill in the final stages of drafting for introduction in the Legislature. While there are no MDOT estimates available on the potential savings from this bill, it would seem reasonable to assume a 10% savings on annual land acquisition costs of $57.5 million, or $5.8 million.