2004 Wisconsin Real Estate Peer Exchange Report

September 20 - 24, 2004

Hosted by the Wisconsin Department of Transportation
Bureau of Highway Real Estate

Funded by the Wisconsin Department of Transportation
Research, Development & Technology Transfer Program

PDF version (555KB). To view PDF files, you need the Acrobat® Reader®.

Final Report

Table of Contents

Summary

Objectives

Participants

Preparing for the Exchange

Key Observations and Best Practices Discussed

Appendix A: Peer Exchange Agenda

Appendix B: WisDOT Background Information

Appendix C: Survey Results

WisDOT Bureau of Highway Real Estate
Peer Exchange
September 20 - 24, 2004

Summary

The Wisconsin Department of Transportation (WisDOT) Bureau of Highway Real Estate (BHRE) is working to streamline and optimize many of its program areas in the face of budget cuts, restructuring, and inefficiencies. In an effort to be as successful as possible in these efforts, WisDOT hosted a peer exchange from September 20-24, 2004. The goal of the meeting was to provide an opportunity for Wisconsin and all other participating states to learn from the successes and experiences of others.

Representatives from six state DOTs, along with FHWA representatives from Illinois and Washington D.C., gathered in Madison, Wisconsin to share procedural best practices in the areas of valuation methodologies; consulting and in-house staffing; local public agency and staffing alternatives; and property management. WisDOT real estate representatives from all eight districts participated in the event. The meetings consisted of both presentations and active discussions as the group worked to share key information on participants' respective programs.

Funded by WisDOT's Research, Development and Technology Transfer (RD&T) Program, the exchange proved to be a very effective use of State Planning and Research (SP&R) dollars. Although WisDOT initiated and funded the event, the out-of-state participants also left the exchange full of new ideas for improving their states' real estate and right-of-way programs.

This report summarizes the best practices that came out of the peer exchange discussions throughout the week. It is the result of a collaborative effort between WisDOT, FHWA, and CTC & Associates (for the RD&T Program). WisDOT's Bureau of Highway Real Estate will generate a separate report containing planned actions and recommendations for Wisconsin's real estate program.

Objectives

The main theme of this exchange was Procedural Best Practices. Discussions focused on the following topics with the aim of establishing best practices and sharing lessons learned. See Appendix B for a full description of WisDOT's current program operations and specific areas of concern that were addressed during the exchange.

Valuation Methodologies

• Tools, including short format appraisals.
• Alternatives to appraisals, including nominal valuation methods.
• Training and retention of current staff.

Consultants & In-house Staffing Issues

• What and how much gets consulted out.
• Methodologies for consulting.
• Consultant qualifications and training programs.
• Standards and measurements for agent productivity and performance.
• Education and training of in-house staff.
• Attracting qualified appraisers and negotiators.
• Retaining technical expertise and balancing with consulting.

LPA & Staffing Alternatives

• Administering and resourcing Local Public Agency programs.
• Degree of program oversight.
• Using grant programs.

Property Management

• Surplus land sales.
• Air space leases.
• Encroachments.
• Selling lands held in Highway Easement.

In addition, several discussions under a "Lucky Strikes Extra" title gave participants an opportunity to follow up on related topics and to briefly address common concerns in other real estate areas. See Appendix A for the complete peer exchange agenda.

Participants

The following representatives from state Departments of Transportation participated in the exchange:

• Linda Anderson, Washington DOT
• Bernard Banker, Iowa DOT
• Eric Smith, Michigan DOT
• Douglas Maitland, Ohio DOT
• Kenneth Towcimak, Florida DOT
• Gary Fawver, Pennsylvania DOT

In addition, the following FHWA representatives participated:

• Reginald Bessmer, FHWA-Washington, D.C.
• Kathleen Kendrick, FHWA-Washington, D.C.
• Don Keith, FHWA-Illinois
• Justin Luther, FHWA-Illinois
• Roger Szudera, FHWA-Wisconsin

WisDOT had outstanding participation from the following real estate managers and staff around the state:

Craig Andersen Anna Anton Joel Batha Marvin Braund Jay Buchite Rebecca Burkel Fran Coenen Earl Cramer Richard Dickson Michaeleen Erickson Joseph Farmer Dennis Fonger Connie Griesbach Richard Happel

Allen Holmstrom Margaret Hutnik Patricia Jackson-Ward Shau-Nong Jea G. Joe Johnson Abe Kaalele David Kircher Larry Knutson Rebecca Krugman Jeri Krugman James Kuehn Joe Lacenski Robert Leggate Cynthia Magray

Cynthia Michalski Olabunmi Olapo Norman Pawelczyk Kip Pelegrin Ronald Polacek Russell Prusak Tonia Rice Debra Sinkula Larry Stein Roger Szudera Carrol Waldenberger Kenneth Wickham Margaret Zastrow

The individuals below represented WisDOT's RD&T Program at the exchange:

Nina McLawhorn, WisDOT Research Administrator
K im Linsenmayer, CTC & Associates
Maryellen Charbonneau, CTC & Associates

In addition, Claudia Orvis from WisDOT's Office of Organizational Development Services facilitated the week's discussions.

Preparing for the Exchange

A planning team consisting of representatives from RD&T, BHRE and FHWA spent six months planning the exchange, determining which topics to pursue, which states to invite, what format the meetings should take, and what logistically should take place to ensure a successful meeting. Below are the members of the planning team:

Rebecca Krugman, WisDOT Bureau of Highway Real Estate
Patricia Jackson-Ward, WisDOT Bureau of Highway Real Estate
Richard Happel, WisDOT Transportation District 3 Real Estate
Michaeleen Erickson, WisDOT Transportation District 4 Real Estate
Joseph Farmer, WisDOT Transportation District 5 Real Estate
David Kircher, WisDOT Transportation District 7 Real Estate
Roger Szudera, FHWA-Wisconsin
Kim Linsenmayer, CTC & Associates on behalf of RD&T

With the help of the RD&T Program, the planning team conducted an informal survey of state DOTs in an effort to identify which states shared the same concerns as WisDOT, were similarly structured, and had embraced best practices that participants in the exchange could gain from. See the full survey results in Appendix C.

To help the out-of-state participants prepare for the exchange, the planning team sent participants extensive background information about WisDOT's real estate program in the exchange topical areas, along with a list of concerns to be addressed during the exchange. State DOT and FHWA representatives were asked to prepare short presentations on their respective programs for each topic of the exchange.

Key Observations and Best Practices Discussed

Valuation Methodologies

• Consider raising waiver limits. Some states use $10,000, others $25,000.
• Increased appraisal review limits at District or Regional levels.
• Use of fee reviewers for peak times.
• Administrative Revision approval up to $500 to experienced real estate specialists in the field.
• Difficult to attract staff appraisers because of salary constraints.
• Accelerate training program.
  • Increase appraisal knowledge of all staff.
  • Consider pooled funding for offering classes that are too expensive for one state to coordinate alone.
  • Make training part of the work plan for program directors.
  • If possible, have staff appraisal reviewers do occasional appraisals to keep them sharp.
  • Require the passing of a test at the end of training sessions.
  • Reward employees with a degree or license.
• Better define and explain the tie between Uniform Standards of Professional Appraisal Practice and the Uniform Act Regulations under 49 CFR Part 24.
• Develop and use electronic appraisal formats and databases.
• Improve contracting process for right-of-way services.
  • Consider Pennsylvania's process that incorporates both low bid and best value. Low bid is essentially WisDOT's Chapter 16 process. Best value contracts have criteria to evaluate best value quotes and are used on complex specialty appraisals. If appraisal price is $3,000 or under, state can pick the appraiser.
  • More requirements for appraisal bid acceptance (i.e. Experience, past history, current work load, etc.) and not just look entirely at the low bid.
  • Trend toward qualification-based negotiated price contracts and fewer low bid contracts.
  • Trend toward more flexible and longer term "various-various" types of contracts. These provide state DOTs flexibility in their use of consultants. For example, the state could use a consultant on a variety of projects in various counties in a given state up to a maximum dollar ceiling and up to a maximum period of time. The goal is to get the best quality contractor for a reasonable negotiated rate that allows maximum flexibility for the state.
• Michigan's evaluation process for appraisers. If appraiser receives three bad ratings they are taken off list (probation period of some sort) or can be suspended until they get more training.
• Simpler appraisal formats for low value, non-complex acquisitions.

Consultants & In-house Staffing

• More formalized, continuous real estate training programs for all levels of state staff and consultant staff. Establishment of training manuals and a qualified real estate DOT trainer position. (Look at examples of training manuals such as Pennsylvania's.)
• Focus on the most critical real estate services the state should perform and put resources toward those; consult out the rest. (Example: Contract out more negotiations and retain more appraisal work.)
• Attendance at DOT real estate training should be mandated for consultants to be approved for work on state projects.
• Illinois' price range charts are broken down by district in their state to negotiate prices on consultant contracts. This makes it more competitive and also a cost saver for the state.
• Maintain good procedure manuals for consultants.
• Think of consultants as partners, not adversaries. Train in-house staff to understand that consultants are needed and are on the same team. Along with this, need to better train consultants on program standards so that they produce better work, get more results, and give more of an effort. We want their work to be just as good as if we were doing it ourselves. Teaching them a thorough process will alleviate in-house staff from having to correct consultant work.
• Very important to communicate expectations to consultants.
  • Ohio employs a communication program called "scoping" to let consultants know what ODOT's needs are and to identify those consultants who perform high quality work.
  • Michigan holds an "Orientation for Fee Appraisers". Tells consultants what it takes to get on list, stay on list and what DOT will pay, etc. Not an appraisal instruction training.
• Consultants need to be managed, and it's time intensive. This was one of the most important observations regarding the use of consultants. Plan on one hour of management time for every four hours of consultant work.
• In Ohio, Office of Consulting Services and the district get together at end of projects to rate the consultants, cite examples, show deficiencies.
• Pre-qualify consultants via an on-line application.
• WisDOT best practice - contracting out the title work.
• FHWA is in process of developing a division office resource guide for managing consultants. They also offer several courses around the country on the consultant process. Classes will be offered online in the spring.
• Allow new or existing employees to shadow senior agents and learn from them.
• Develop real estate awareness/overview training course for engineers and other non-real estate staff.
• Obtain real estate studies done by other State DOTs (i.e., Before and After study by Virginia DOT, proximity study by Maryland, consultant vs. in-house cost study by Ohio).
• Establish effective communication in decentralized structures. Frequent monthly or quarterly meetings between central office and district management.

LPA & Staffing Alternatives

• Functional User Group meets twice a year in Wisconsin.
• In Washington, headquarters handles most LPA work. Each region also has a LPA coordinator. Do after-the-fact file reviews. Locals invited to all training courses. Workshops and specific training courses given regularly.
• PennDOT does after-the-fact reviews, requires locals to sign a certificate stating that all requirements were followed.
• Michigan conducts after-the-fact LPA project reviews but finds them less valuable than early project involvement.
• Early involvement in the planning stage is important for streamlining the process.
• Make sure LPAs performing well by completing evaluation reports.

Property Management

• Michigan uses a "Relinquishment of Easement" process to release easements and charges a flat rate administrative processing fee of $500.
• Pennsylvania and Oregon have tried selling property on E-Bay.
• General rule is to sell remnants at no less than market value but most states have exceptions to that rule.
• Most states use reversionary clauses when selling to public entities.
• Illinois hired a consultant to inventory what land was held in State name.
• Many DOTs can fine for highway encroachments. WisDOT can only charge a dollar a day once it's identified.
• Wisconsin's use of rent formula is effective.
• Ohio does things in advance of project, gives surplus parcels value before acquisition in case they want to use it during negotiations.
• Use realtors to develop their sales data book.
• Early buyouts can be used as an on-site project field office.

Other topics

• Right of way acquisition on Design/Build projects has proven to be disastrous in Ohio and Florida. Keep r/w in-house if you must include in Design/Build.
• Although Minnesota Design/Build project was considered a success overall, real estate processes were compromised and significant monies were paid for r/w acquisitions. It was done in-house using work sharing among districts. Developed a footprint upfront and any design changes after that were the responsibility of the consultant.
• Outdoor advertising
  • Using consultants to acquire signs.
  • Measuring inspection for signs is consulted out by some states.
  • Michigan developed a small sign compensation schedule for on-site signs.
  • Everyone has problems with signs/billboards that need to be acquired/removed for right-of-way projects. Are they real estate or personal property? Some states, like Illinois, can use Transportation Enhancement funds or other funds to acquire and remove non-conforming billboards as a highway beautification project, saving themselves the headache of having to deal with the billboards when acquiring the new project right-of-way.
  • Get out in advance of project to get rid of off premise signs. Buy them out ahead of time. Same idea with driveways, get out early and attempt to limit size of driveways.
• WisDOT's performance measures.
• Incentive bonus payments.
  • Michigan: $500 for small takings if closed within 30 days, $1000 for residences if closed within 30 days and $2000 for businesses if closed within 30 days. Additional move incentive if they move within 60/90 days.
  • Florida adds an incremental bonus to their initial offer up front for performance within a specified period of time. All owners are offered that incentive.
• WisDOT's User Groups meetings, annual workshops, and managers meetings.
• Once a year, IDOT and FHWA-IL have a high level meeting to reach a consensus on where they are with respect to risk. This allows them to figure out where they need to perform joint reviews.
• Knowledge sharing among states.
• Most Decentralized organizations give maximum delegation of authority to the lowest (qualified) level.
• Wisconsin's title insurance method may be useful in Ohio.
• May make sense to combine surveys of property owners. Have federal and state offices both go together to make property owners feel valued and important.

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To provide Feedback, Suggestions or Comments for this page contact Kathleen Facer, kathleen.facer@fhwa.dot.gov