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At a recent combined Appraisal Institute-- International Right of Way Association seminar on the Valuation of Transportation Corridors, the author was one of the three speakers on the topic of valuation of these corridors. While he advocated use of the across the fence (ATF) methodology, other speakers pronounced the ATF methodology unsuitable for corridor appraisals. With such diverse and contradictory positions on this Important appraisal theory, appraisers should familiarize themselves with the history, methodology, and potential applications of ATF.
History of the Methodology
Transportation corridors are special-purpose properties assembled from portions of adjacent properties. They have a wide variety of uses including public and private transportation, various types of utilities, and even recreational uses. Appraising these unique properties present a special challenge to appraisers.
To meet the appraisal needs required for these special purpose properties, a variation of the sales comparison approach has been adopted by the right of way industry. This variation is called "across the fence" or "ATF" valuation. It is based on the premise that the corridor land should be worth at least as much as the land through which it passes. Using this approach, the corridor is typically divided into segments or districts of similar utility based on the adjacent land use. Then the value of a typical parcel of adjacent land within the district is applied to that portion of the corridor to arrive at its market value. Finally, the values of each of the segments or districts of the corridor are added together to estimate the ATF value of the total corridor.
A common misconception about the across the fence (ATF) approach is that it is of recent origin and was developed by railroads for their own purposes. Actually, these appraisal procedures were not developed by the railroads but were imposed upon them by the Interstate Commerce Commission (ICC) to make the railroads accountable for their land holdings.
An early ICC manual states:
The act of March 1, 1913, providing for a valuation of the several classes of property of carriers, provides, among other things, that the Commission shall ascertain and report the present value of all lands owned or used by carriers for the purposes of a common carrier, and separately of all lands held...