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Editor’s Note:
The goal is to help appraisers stay in
business, broaden their client base and expand their expertise.
And, says author and appraiser Sue Hoell, to help meet the current
and anticipated demand for competent appraisers for public projects
in rural areas, small towns and urban areas.
Appraising
Outside the Banks: Public Projects
By Sue Hoell
Strong demand exists for appraisals
associated with federal, state, and local public projects. A
“project” might include a new regulation or a change in use of
public property, as well as new physical structures and
infrastructure and disposal of property no longer needed by a
government agency. Public agencies need rigorous, factual,
competent appraisals to support their offers to private property
owners. Private property owners may want to contract for their own
appraisals when part, or all, of their property is required for a
public purpose. Frequently, government agencies sell or exchange
real property with each other. Both of these situations may require
appraisals.
Public projects in urban areas can
include the acquisition or disposition of property supporting
schools, public buildings, streets, open space and hiking and biking
trails. Projects in suburban areas are apt to include the expansion
of sewer, water and gas pipelines, power lines, public roads, a new
or re-aligned interstate off-ramp, airport expansion, or waste
processing locations. Rural areas can include acquisition of all or
parts of farm land, recreational land or timbered land for highway
projects, public campgrounds, wildlife preservation, wetlands
projects and many other types of environmental protection projects.
Development of new public
infrastructure is among the top priorities of the federal government
as it works to solve the current jobs crisis. You can be at the
head of the pack in providing the appraisals needed to move these
projects forward.
(story continues below)
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Appraisals associated with public
projects differ in several ways from appraisals required by
lenders. Guidelines are provided in the Uniform Appraisal Standards
for Federal Land Acquisitions, in state statutes, by case law, and
by regulations specific to a particular project funding agency.
While investigation of these authorities for each set of appraisal
conditions may sound daunting, or at least time-consuming, with
practice it can also become a new area of appraisal specialization.
Too often, non-lender clients assume that a licensed appraiser is
competent to provide appraisals for any purpose. They don’t
understand the difference in Scope of Work between lending
conditions and public project conditions. Sometimes appraisal
practitioners are unaware of their own lack of competence when
offered an engagement associated with a public project. The client
may need a quick turn-around, leaving little time for the appraiser
to study unfamiliar regulations and guidelines. Courses on eminent
domain and “partial interests” may not be immediately available.
Mentors may or may not be immediately available. Projects tend to
have strict time constraints on each step of the process.
Appraisals cannot be accepted if they fail to comply with applicable
regulations and guidelines.
Public Projects often impact only part of a property
or property interest. This adds a new twist to
traditional appraisal steps, requiring the appraiser
to learn about the project and exactly how it will
impact the property or property interest. Before
and after methodology may be applicable.
Federal agency appraisal standards, state statutes,
case law, and regulations specific to a particular
project funding agency may require compliance.
The
appraiser may need to understand engineering plans.
Meetings with engineers and agency officials may be
necessary.
Engagements often address existing easements and new
easements. The appraiser must understand accepted
methodology for appraising different types of
easement conditions.
Typically narrative
appraisal reports are used rather than form reports.
David
Brauner Insurance Services/ OREP/Working RE Magazine
David
Brauner Calif. Insurance License: 0C89873
(story continues)
Stepping Up
These types of
appraisals are interesting for a variety of reasons:
Learning about proposed public projects and how projects
impact the community; working with engineers and staff
to solve problems created by a project and gaining an
understanding of how community conditions are addressed
and the steps required to bring projects to fruition.
Fees are generally
consistent with the time and expertise required.
Qualified appraisers are asked to bid on projects.
Time frames range from a week
to six months. A contract could be anywhere from $400,
for the simplest, most straight-forward appraisal to
$90,000 or more for an appraisal contract involving
multiple properties. Because property conditions and
project conditions vary so much, there is no standard
fee or timeframe.
In most cases the
appraiser needs a General Certification, however,
residential appraisals are also needed for some public
projects. For the appraiser interested in pursuing
public project appraisal engagements, the following
steps are recommended: Take a course in “The Yellow
Book” i.e. Uniform Appraisal Standards for Federal Land
Acquisitions. The Yellow Book doesn’t apply to
all public project appraisals but it applies to many of
them: know where it does and does not apply. Carefully
read, highlight, dog-ear, and understand the Yellow
Book. Reread and comply with each part that is
applicable to each particular appraisal engagement,
before completing the engagement. Read the most current
edition of Real Estate Valuation in Litigation,
by Jim Eaton and refer back to applicable parts when
completing appraisals for public projects. The book
instructs on a wide array of public project appraisal
conditions. Know where to find federal, state, and local
regulations, as well as case law relevant to appraisals
for each type of public project. Expand your skills in
writing narrative appraisals. Forms developed for the
banking industry are not applicable to non-lender
appraisal engagements. Keep your eye on news articles on
proposed or anticipated federal, state, and local
projects likely to require appraisals. Identify, and
take time to meet, the folks who hire appraisers for
these projects. When you are ready, sign up on the
Federal Central Contractor Registration website
https://www.bpn.gov/ccr/default.aspx.
A
good place to start might be the online course offered
by The University of Montana-Helena. Thecourse
is called Introduction to Appraising for Public
Projects. Find more information on the course at
WorkingRE.com; Sidebar: Introduction to Appraising
for Public Projects.
About the Author
Sue Hoell is a
Certified Distance Education Instructor. She has
provided appraisals, reviews, and policy development for
federal, state and local government agencies for the
past 22 years. She has authored several articles and
book reviews for various appraisal publications, and
currently serves on The Appraisal Journal Editorial
Board.
