The Diversion Board of Authority has approved a study that will help gather data for establishing flowage easement calculations. Flowage easements will be needed in areas that are impacted by flood water when the FM Area Diversion Project would operate.
“We are working on establishing a really in-depth process for figuring out how to fairly compensate people if they are impacted by the Project when it operates,” Finance Committee and Board Member Tony Grindberg said. “This is an important process that ultimately affects property owners, tax payers and the long-term financial management of this flood-control project. We have been steadfast in our commitment to this since state legislation was passed in 2013.”
Calculating a flowage easement requires many pieces of complex data.
The first piece of data needed is provided by the hydraulic models of the project. These models show how much water would impact acres during a flood event.
“The hydraulic models are the first step in figuring some of the most basic and important questions like who will be impacted, for how long and at what depth,” Board Member Rodger Olson explained. “These models are fundamental to the rest of the process.”
The second piece of information is taken from research conducted by North Dakota State University’s Agronomics program. The studies evaluate how operation of the Project will impact and risk farming income on properties. For example, if the project operates and impacts a parcel for four days, how much impact does that have on the planting dates, crop selection, and revenue.
The Diversion Board of Authority approved Phase 1 of the process to create the final piece of data at their regular meeting on Thursday, Dec. 21. A kick-off meeting for Phase 1 of the Flowage Easement Valuation study was held on February 22. The study will include gathering market data locally and from across the country about comparable parcel values and possible parcels that could show similarities with those in the mitigation area. Using tools like “matched pairs” where parcels with similarities with and without certain encumbrances are matched, the study will be a critical part of the equation that will be used to calculate how the project impacts and flowage easement restrictions will impact the value of the parcels in the mitigation area.
In addition, the appraisal study authorized by the Diversion Authority includes a regression analysis. The analysis is a complex package of statistics that will explore the relationship between the impacts and many other variables that exist in defining a value loss to the property.
All of three components, the hydraulic data, the agronomic data, and appraisal study data are also impacted by the market value of the parcels.
“This is going to take us some time to evaluate and get this equation for fair mitigation hammered out,” Olson said. “We want to treat everyone fairly and need to have as much data as possible to do that.”
Phase 1 of the study that was authorized by the Diversion Authority is scheduled to conclude with a complete appraisal model by the end of August 2018. The appraisal model will then be able to be flanged up with data from an updated hydraulic model and agronomic impacts model after the final location of the southern embankment and mitigation area are defined. A subsequent phase of the appraisal effort will include producing specific valuation reports for each of the parcels in the mitigation area. Commencing with Phase 1 now allows for parallel tracking these efforts with the goal of being able to answer the long-asked questions as soon as possible.