Atch1_DRAFT_AMHT_AppraisalScopeInstructions_7.19.17.pdf

Alaska Mental Health Trust Legislated Land Exchange – ver. 07/19/2017 page 1 of 14

APPRAISAL INSTRUCTIONS and STATEMENT OF WORK

FOR THE

ALASKA MENTAL HEALTH TRUST

LEGISLATED LAND EXCHANGE

On May 5, 2017, Federal legislation was passed directing the USDA Forest Service to exchange certain lands with the State of Alaska’s Mental Health Trust Authority. The lands proposed for exchange include a total of 20,580 acres of Federal lands and a total of 18,247 acres of non-Federal lands. The legislation is the Alaska Mental Health Trust Land Exchange Act of 2017, (“the Act”).

The exchange is to be conducted in 2 phases. Phase 1 consists of 2,400 acres of Federal land to be exchanged for 2,585 acres of non-Federal land. Appraisals are needed for each of these two ownerships for Phase 1. In Phase 2, another exchange will occur, with approximately 18,180 acres of Federal land and approximately 15,662 acres of non-Federal land. Additional appraisals are needed for each of these two land holdings, so a total of 4 appraisal reports will be produced for the project.

Official maps of the lands proposed for exchange are included in the exhibits for these appraisal instructions, and those maps are referenced in the legislation. All of the lands identified for this exchange are within Southeast Alaska. The various locations are identified in the image below:

AG-0120-S-17-0028, Attachment 01 AMHT Appraisal Instructions & Statement of Work

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The parcels to be appraised in Phase 1 are listed in the table below. The specific conditions of title and property rights for the estates to be appraised are discussed in detail later in these instructions. The lands identified to be appraised in Phase 1 will not be changed in order to produce equal values between the Federal and non-Federal ownerships. Any difference in values will be addressed in Phase 2 of the exchange.

The parcels to be appraised in Phase 2 are listed in the table below. The specific conditions of title and property rights for the estates to be appraised are discussed in detail later in these instructions.

The official maps depict these parcels, and are included in the exhibits for these appraisal instructions.

ID Parcel Name Acres Citation within the Act Map #

Federal Land Naukati Phase 1 Naukati Phase 1 2,400 Sec. 3. (2) (A) 8

Non-Federal Land K-1 Signal Mtn. 1,878 Sec. 3. (4) (A) 1 K-2 Minerva Mtn. 707 Sec. 3. (4) (B) 1

Alaska Mental Health Trust Land Exchange Act of 2017, Phase 1 Parcels

ID Parcel Name Acres Citation within the Act Map #

Federal Land West Naukati West Naukati 4,182 Sec. 3. (2) (B) 8 North Naukati North Naukati 1,311 Sec. 3. (2) (C) 8

East Naukati/2016 Naukati addition East Naukati/2016 Naukati addition 1,067 Sec. 3. (2) (D) 8 Central Naukati Central Naukati 1,858 Sec. 3. (2) (E) 8

Hollis Hollis 1,538 Sec. 3. (2) (F) 9 Shelter Cove Area Shelter Cove 8,224 Sec. 3. (2) (G) 7

Non-Federal Land K-3 Deer Mtn. 889 Sec. 3. (4) (C) 1

(K-3 conservation easement) K-3 conservation easement 12 Sec. 4. (e) (1) and Sec. 4. (e) ( 2) 1 K-4A Gravina Mid 3,180 Sec. 3. (4) (D) 1 P-1A Twin Creek 3,174 Sec. 3. (4) (E) 2 P-1B Twin Creek 144 Sec. 3. (4) (F) 2 P-2B S Fall Creek 181 Sec. 3. (4) (G) 2 P-3B Blind Pt. E 92 Sec. 3. (4) (H) 2 P-4 Kupreanof N 280 Sec. 3. (4) (I) 2 W-1 Wrangell Area 204 Sec. 3. (4) (J) 3 W-2 Wrangell Area 104 Sec. 3. (4) (K) 3 W-3 Wrangell Area 63 Sec. 3. (4) (L) 3 W-4 Wrangell Area 700 Sec. 3. (4) (M) 3 S-2 Indian Creek E 284 Sec. 3. (4) (N) 4 S-3 Indian Creek W 109 Sec. 3. (4) (O) 4 S-4 Cascade Creek 26 Sec. 3. (4) (P) 4

MC-1 Meyers Chuck 169 Sec. 3. (4) (Q) 5 J-1B Douglas S 2,261 Sec. 3. (4) (R) 6 J-1A Mt Bradley Trail 428 Sec. 3. (4) (S) 6 NB-1 No Name Bay 3,374 Sec. 3. (4) (T) 10

Alaska Mental Health Trust Land Exchange Act of 2017, Phase 2 Parcels

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For the land exchange project overall, the lands exchanged must be of equal value, so parcels will be eliminated from the higher-valued ownership until equalization of value is reached. Details of this process are described later in these instructions. However, this process requires that the appraiser identifies the contributory value of each parcel individually, in addition to the total value for each ownership.

The subject parcels for both phases are likely to have values influenced by the presence of timber resources. The USDA Forest Service intends to separately engage a contractor to provide timber cruise data and analysis. Because the appraiser must rely upon the accuracy and credibility of the timber cruiser’s work product, the appraiser will be consulted in regards to the timber cruise. The areas to be cruised will depend on the appraiser’s determination of the highest and best use of each parcel. This is discussed in greater detail later in these appraisal instructions.

Applicable Standards:

The appraisals must comply with the provisions of the Alaska Mental Health Trust Land Exchange Act of 2017. The appraisals must also comply with the Uniform Appraisal Standards for Federal Land Acquisitions (2016 edition), and the Uniform Standards of Professional Appraisal Practice current as of the date of the appraisal report, and any relevant provisions of a Memorandum of Understanding (MOU) between the State and the USDA Forest Service regarding these appraisals.

If clarification of these instructions is needed, and/or to arrange for site inspections and the pre-work meeting, the contract appraiser shall contact the Forest Service review appraiser assigned to this case:

Greg Graybadger, MAI, RPRA, Senior Review Appraiser USDA Forest Service, Pacific Northwest Region 208-863-5969 / ggraybadger@fs.fed.us

Details of the property, including legal descriptions and the estates to appraise, are contained in various documents listed at the end of these instructions. These documents will be provided to the contract appraiser.

APPRAISAL ASSIGNMENT INSTRUCTIONS

Purpose – The purpose of each of the appraisals must be to conclude an opinion of Market Value as defined at 36 CFR 254, Subpart A, 254.2.

Intended Use – The intended use of each of the appraisals is to provide a credible, reliable, accurate, and properly supported opinion of the market value of the subject properties as a basis for conducting the land exchanges directed in the Alaska Mental Health Trust Land Exchange Act of 2017.

Client and Intended Users – The contract appraiser shall identify the USDA Forest Service as the client and address the transmittal letter of the reports to the assigned agency review appraiser accordingly. The intended users shall be the USDA Forest Service and the Alaska Mental Health Trust Authority and their authorized representatives.

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Definition of Value – The appropriate definition of Market Value is:

“Market value means the most probable price in terms of cash, or terms equivalent to cash, which land or interests in lands should bring in a competitive and open market under all conditions requisite to a fair sale, where the buyer and seller each acts prudently and knowledgeably, and the price is not affected by undue influence.” Source: 36 CFR 254, Subpart A, 254.2.

This definition makes no linkage between the opinion of market value and exposure time. USPAP only requires development of an opinion of reasonable exposure time when exposure time is a component of the definition. A specific exposure time shall not be cited in an appraisal report prepared under UASFLA standards.

Scope of Work – The assignment consists of the development and reporting of well-supported opinions of the market values of the subject properties, which are credible, reliable, and accurate. The contract appraiser shall make a detailed field inspection of the subject property and conduct as many investigations and studies as are necessary to derive sound conclusions. The field inspection must include on-the-ground visits to each subject parcel. Any additional information requested from USDA Forest Service shall be requested through the assigned review appraiser, including any request for legal instructions or determinations. The appraisal reports must contain all supporting information necessary to the reader’s understanding of the basis for the market value opinions. Each of the two Phases are valued as though they are separate land exchanges. The properties are valued as a separate bulk transaction to one purchaser.

Identification of the property and estate to be appraised The subject properties to be appraised are listed in the tables at the beginning of these instructions. The official maps of the subject properties are referenced in the Act, and are provided in the exhibits for these appraisal instructions.

The Act provides that, “If there is a conflict between a map, acreage estimate, or description of land in this Act, the map shall be given effect unless the Secretary and the Alaska Mental Health Trust mutually agree otherwise.”

(SEC. 7 MISCELLANEOUS PROVISIONS. (b) MAPS, ESTIMATES, DESCRIPTIONS. (b) (2) CONFLICT.)

More detailed descriptions will be provided as available. In some cases, some survey work is ongoing, and title investigations and environmental reporting may be ongoing. The most recent data will be provided to the appraiser as it becomes available. If the appraiser believes that any easements or other conditions of title necessitate the use of an Extraordinary Assumption, a request must be submitted to the assigned Review Appraiser for instructions. No Hypothetical Conditions or Extraordinary Assumptions may be used without specific instructions.

The estate to be appraised is the “as-is” fee interest as encumbered by existing easements, encroachments and restrictions and the impacts on value due to the easements contained in the Act. Existing Special Use Permits on Federal lands will be terminated prior to conveyance. A hypothetical condition may state that the properties are appraised as though any Special Use Permits are terminated.

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The properties are to be valued as if in private ownership and available for sale in the open market. This is an assignment condition and it creates a hypothetical condition (as it is contrary to known fact).

Because the land is appraised as if in private ownership, to its highest and best use, any other surrounding Federal or State land cannot be a part of a larger parcel because (due to the hypothetical condition) it is under different ownership.

First deliverable: Opinions of Highest and Best Use.

Conduct sufficient depth of market analysis to provide a credible, reliable, accurate, and properly supported opinion of market value. Develop the opinion of the Highest and Best Use of the property in conjunction with analysis of the “larger parcel” and describe the analysis of the four tests for determining Highest and Best Use.

In some cases, the identification of the legally permissible uses may require an unusually thorough investigation. There is some potential for public reaction to influence land use policies, and such influences should be investigated, where they may be applicable. These concerns are particularly evident where the properties are highly-visible lands adjacent to communities. If there may be legal or other challenges to timber harvest, discounting may be appropriate. UASFLA requires that the valuation is based on an economic highest and best use. While benefits to the public or to ecosystems may exist, the highest and best use, and the value opinion, must be based on an economic use.

Utilize and report the definition of Highest and Best Use defined at 36 CFR 254, Subpart A, 254.2 as follows:

“Highest and best use means an appraiser's supported opinion of the most probable and legal use of a property, based on market evidence, as of the date of valuation.”

This deliverable must include a specific analysis of the Southeast Alaska timber market, and all factors which may affect values. All three of the deliverables under this engagement must have a thorough and well-documented Highest and Best Use analysis; it cannot be weak or cursory.

For each Phase, the appraiser must determine the Highest and Best Use of the entire property in each ownership, as though each ownership is sold in a bulk transaction. If there are multiple highest and best uses, these must be identified as a preliminary finding. This information will be used to identify which properties will require a timber cruise. The USDA Forest Service will separately contract for a professional timber cruise which will only encompass the lands which have timber production as a component of their values. Obtaining the timber cruise results will be a potential source of delays for the appraisal process. The Forest Service seeks to facilitate timeliness by cruising only the timber which provides a significant value component. The Forest Service will coordinate with the appraiser, as the appraiser must rely upon the timber cruise data, and the appraiser must identify at least 3 potential providers of timber cruise services, whose work is generally deemed reliable and acceptable to the appraiser. If the appraiser needs the timber cruise results in order to determine the highest and best use of a particular parcel, this circumstance must be identified to the assigned review appraiser.

The appraiser shall provide a preliminary report identifying the Highest and Best Use of each parcel, and identifying the parcels for which a timber cruise is needed to determine the Highest and Best Use, within 6 weeks of the date of the Notice to Proceed under this contract.

Second deliverables: Appraisal reports for Phase 1.

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The appraisal assignment will produce 2 appraisal reports for the Phase 1 land exchange. Phase 1 will require an appraisal of the specified 2,400 acres of Federal property and an appraisal of the specified 2,585 acres of non-Federal property, together with all associated rights. These two appraisal reports are likely to present opinions of values which are different from each other, but Phase 1 will not include any action to equalize values. The same appraiser will develop and report the value opinions, and the effective dates will be the same, for each ownership. The properties to be appraised will include the effects of existing rights, reservations, rights-of-way, or other encumbrances and restrictions of record as well as property rights associated with certain easements described in the legislation, detailed below.

The Federal parcel identified as “Naukati Phase 1” includes two easements specified in the Act:

The POW Yakut Study Plot research easement shown on official map #8, prohibits roads and timber harvest on the study plots for a period of 10 years from enactment of the Act. This “research easement” is described in the Act at SEC. 4 LAND EXCHANGE (f) RESEARCH EASEMENTS (1) (C).

A conservation easement reserved to the United States prohibits new roads and timber harvest within 100 feet of anadromous water bodies, and prohibits commercial mineral extraction in an area labelled “Conservation easement 100 feet either side of anadromous water bodies including those underground” on official map #8. This conservation easement is described in the Act at SEC. 4 LAND EXCHANGE (g)

AREA OF KARST CONCERN.

These two easements are located on the parcel identified in the Act at SEC. 3 DEFINITIONS (2) FEDERAL

LAND (A) which is the parcel called “Naukati Phase 1” shown on official map #8. If more detail is required for valuation purposes, request guidance through the assigned review appraiser. The effects on values due to these easements must be considered in both appraisals for Phase 1.

Third deliverables: Appraisal reports for Phase 2.

One appraisal report will provide an opinion of the market value of the Federal land and rights identified for Phase 2, and a separate appraisal report will provide an opinion of the market value of the non-Federal land and rights identified for Phase 2. The same appraiser will develop and report the value opinions, and the effective dates will be the same, for each ownership. Value opinions will also be developed and reported for the contributory value of each parcel. The properties to be appraised will include the effects of existing rights, reservations, rights-of-way, or other encumbrances and restrictions of record as well as property rights associated with certain easements described in the legislation and detailed below.

Easements:

Non-Federal parcel K-3, named Deer Mountain, consists of 889 acres of fee acquisition plus a conservation easement over 12 acres as described in the Act: “…the Alaska Mental Health Trust shall grant to the United States a 300-foot conservation easement abutting that parcel along the interface of the parcel and the City of Ketchikan landfill…” and this easement “…shall provide that the land covered by the easement remains undeveloped and in the ownership of the Alaska Mental Health Trust.” The value of this easement is to be included in the value of parcel K-3. These provisions are shown in the Act at SEC. 4 LAND EXCHANGE (e) K-3 PARCEL LANDFILL BUFFER, and the acreage is identified on the official map #1. (The Act describes parcel K-3 as “…901 acres, including the 12-acre conservation easement…” but the 12-acre ownership remains with AMHT, so it is excluded from the calculation of acreage conveyed. Even though the easement is not part of the acreage conveyed, it is part of the rights conveyed, and the value of the easement is included as part of parcel K-3.)

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The Sakar research easement on study plot for 10 years (no roads and no timber harvest on study plots).

This “research easement” is described in the Act at SEC. 4 LAND EXCHANGE (f) RESEARCH EASEMENTS (1)(A). It is located on the parcel identified in the Act at SEC. 3 DEFINITIONS (2) FEDERAL LAND (B) which is the parcel called “West Naukati” shown on official map #8.

The Naukati commercial thinning study plot for 15 years (no roads and no timber harvest on study plots).

This “research easement” is described in the Act at SEC. 4 LAND EXCHANGE (f) RESEARCH EASEMENTS (1)(B). It is located on the parcel identified in the Act at SEC. 3 DEFINITIONS (2) FEDERAL LAND (B) which is the parcel called “West Naukati” shown on official map #8.

The POW Naukati study plot research easement for 10 years (no roads and no timber harvest on study plots). This “research easement” is described in the Act at SEC. 4 LAND EXCHANGE (f) RESEARCH

EASEMENTS (1)(D). It is located on the parcel identified in the Act at SEC. 3 DEFINITIONS (2) FEDERAL

LAND (D) which is the parcel called “East Naukati/2016 Naukati addition” shown on official map #8.

The Revilla George study plot research easement for 10 years (no roads and no timber harvest on study plots). This “research easement” is described in the Act at SEC. 4 LAND EXCHANGE (f) RESEARCH

EASEMENTS (1)(D). It is located on the parcel identified in the Act at SEC. 3 DEFINITIONS (2) FEDERAL

LAND (G) which is the parcel called “Shelter Cove” shown on official map #7. (The Act incorrectly cites this as being depicted on map #8).

On the parcel called “East Naukati/2016 Naukati addition” there is a conservation easement reserved to the United States which prohibits new roads and timber harvest within 100 feet of anadromous water bodies, and prohibits commercial mineral extraction in an area labelled “Conservation easement 100 feet either side of anadromous water bodies including those underground” on official map #8. This conservation easement is the same as previously described for Phase 1, as it also affects the parcel named “Naukati Phase 1.” It is described in the Act at SEC. 4 LAND EXCHANGE (g) AREA OF KARST CONCERN.

Official map #8 identifies the total area as 65 acres. More detailed mapping and/or descriptions will be provided to identify the affected area.

If more detail is required for valuation purposes, request guidance through the assigned review appraiser.

The effects on values due to these easements must be considered in both appraisals for Phase 2. If the appraiser develops the values of these easements by using before-and-after analysis, it may necessitate use of hypothetical conditions for these analyses. Uses of hypothetical conditions in such analyses are hereby authorized.

Equalization:

For the combined land exchange project overall, the lands exchanged must be of equal value, so parcels will be eliminated from the higher-valued ownership until this equalization of value is reached. This equalization, or “balancing” will only occur as part of Phase 2. The differences in values from Phase 1 will be carried forward and the total difference will control the parcels to be excluded in Phase 2. The equalization process will be described by the appraiser in the appraisal reports for Phase 2.

In Phase 2 the appraiser will begin by developing and reporting an opinion of the market value for all of the lands and rights identified for Phase 2 of the exchange, with one report for the Federal lands and one report for the non-Federal lands. After reporting those conclusions, the appraiser will report the sum of the market values for both Phase 1 and Phase 2 for each ownership. Then, the total values for both phases will be compared to identify which ownership has a higher overall total value, and the amount of the difference.

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The appraiser will then “drop” or exclude lands from the side of the exchange which indicated a higher overall total value. A schedule of priorities for exactly which parcels should be dropped, is presented in the next paragraph. The result of Phase 2 will be two appraisal reports which present values different from each other. But the total value of each ownership will be equal for both phases combined. The overall result, for both Phases combined, will be an exchange of lands between the U.S. Forest Service and the Alaska Mental Health Trust, in which each party has exchanged land of equal value.

As a practical matter, it is very difficult to arrive at exactly equal values. A detailed process will be used for achieving the least possible variation between the values of each ownership. That process is described as follows: Once the more-valuable ownership is identified, remove from that ownership the parcel which is shown lowest on the ID table. If the Federal ownership is more valuable, this would mean that the Shelter Cove parcel would be eliminated from the exchange. If the non-Federal ownership is more valuable, this would mean that the No Name Bay parcel NB-1 would be eliminated. This process will be repeated, ascending the list of parcels, until the values are approximately equal. If this process using whole parcels does not produce equal values, the last parcel to be eliminated shall be pro-rated to identify the number of acres necessary to produce equal values between the two ownerships. The appraiser will then identify the property which remains to be exchanged and state an opinion of the value of that property. The final result will be that the value of the Federal property in both phases combined will be equal to the value of the non-Federal property in both phases combined.

Unless otherwise noted herein, it is not anticipated that any extraordinary assumptions will be necessary to achieve credible results. Some hypothetical conditions have been identified and authorized within these instructions, to aid in analysis and compliance with standards. Extraordinary Assumptions and Hypothetical Conditions may only be used if specifically authorized. If any issue arises during the development of the appraisal that would necessitate their use, the Forest Service review appraiser must be consulted and supplemental instructions issued prior to completion of the assignment.

If highest and best use is for assemblage, describe and explain the relationship of the appraised property to the property to which it would be joined. If speculation or investment is the highest and best use of the property, describe and explain both the interim and the most probable ultimate use.

Within the Sales Comparison Approach to value, include a sales adjustment chart summarizing the adjustments and showing the final adjusted sale prices and how the sales compare with the subject property.

The development approach (a.k.a. the subdivision approach and discounted cash flow analysis) should not be relied upon as the primary indicator of value when comparable sales are available with which to accurately conclude the property’s market value. The contract appraiser shall adhere to UASFLA direction pertaining to this highly sensitive and complex method of valuation.

If the Development Approach is employed, it may be necessary for the contract appraiser to obtain the services of an independent engineering firm with regard to infrastructure costs as part of the assignment. The USDA Forest Service will not be responsible for the cost of any independent studies.

Date of Value – The date of the value of each opinion shall coincide with the last date the appraiser inspected the appraised properties in each Phase. If inspections of the parcels are not possible on the same day, the contract appraiser shall use the last date any of the Federal parcels was inspected. The 2 appraisals in each Phase must be made as of the same effective date of value. The appraisal reports for Phase 1 are not required to have the same effective date of value as the appraisal reports for Phase 2.

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Legal Descriptions and Property Rights and Interests:

For all appraisals, the estate to be appraised consists of “all rights, title, and interests, subject to any outstanding rights and reservations.” Legal descriptions, outstanding rights, and proposed reservations are identified in the supporting documents included as exhibits to these appraisal instructions.

Assignment Conditions – The appraisal must comply with 36 CFR 254 (Subpart A), the Uniform Appraisal Standards for Federal Land Acquisitions (2016 edition), the Uniform Standards of Professional Appraisal Practice (current edition), and the Appraisal Instructions contained herein.

The use of an uninstructed assumption or hypothetical condition that results in other than “as is” market value will invalidate the appraisal. Include only factors relating to the appraisal problem. Assumptions and limiting conditions that are speculative in nature are inappropriate. Do not include limiting conditions that significantly restrict the application of the appraisal.

No extraordinary assumptions are necessary in order to achieve credible results. The hypothetical condition that must be made is:

1) In analyzing the value of the Federal parcel, the appraiser has assumed that the lands and interests are in private ownership, zoned consistent with similar non-Federal properties in the area, and are available for sale on the open market. As this is contrary to what exists as of the effective date of appraisal, it is noted as a hypothetical condition.

Pre-Work Conferences – The appraiser signing the report will attend a pre-work conference for discussion and understanding of these instructions. Invited attendees shall include at least one representative of the State of Alaska’s Mental Health Trust Authority, and at least one representative of the Tongass National Forest, in addition to the contract appraiser and the assigned Forest Service review appraiser.

After acceptance of the final appraisal reports for Phase 1, a second conference will be conducted with the same invited attendees, to clarify the specific provisions applicable to Phase 2.

Larger Parcel – UASFLA requires the appraiser to make a larger parcel determination in all appraisals.

A Memorandum of Understanding (MOU) between the Alaska Mental Health Trust and the USDA Forest Service is expected to identify the larger parcels for each of the Phases under the Act as they are described in the table at the beginning of these instructions. Alternatively, legal instructions to that effect may be provided. This is not an “assembled land exchange” as that term is used in UASFLA. The larger parcel would be all of the identified lands for each phase in each ownership, as if transferred from one buyer to one seller in one bulk transaction. There may be other lands under the same ownerships and the same highest and best use which are contiguous or proximate, but such lands are not identified as eligible for transfer under the Act.

The properties are to be valued as if in private ownership and available for sale in the open market. This is an assignment condition and it creates a hypothetical condition (as it is contrary to known fact).

Because the land is appraised as if in private ownership, to its highest and best use, any other surrounding Federal or State land cannot be a part of a larger parcel because (due to the hypothetical condition) it is under different ownership.

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For Phase 1, Naukati Phase 1 constitutes the larger parcel for the Federal lands, and K-1 Signal Mtn. and K-2 Minerva Mtn. together constitute the larger parcel for the non-Federal lands. Similarly, for Phase 2 the listed group of parcels together constitute the larger parcel for each ownership.

Appraisal Report Format and Delivery – The contract appraiser shall submit to the assigned Forest Service review appraiser final appraisal reports. “Draft” copies will not be accepted. Delivery of the Phase 1 appraisal reports will be within 90 days of the contracting officer’s Notice to Proceed. The review appraiser will then review the appraisal reports for acceptance or recommended revisions. The appraiser shall respond to review comments and requests for corrections and submit a revised final report within 30 days of receipt of the reviewer’s request. Appraisal reports may only be provided from the appraiser to the assigned Review Appraiser or the Regional Appraiser. The Regional Appraiser will control any subsequent distribution of appraisal reports, summaries, or review reports after technical review is completed.

The face of the report shall be labeled to identify the appraised property and to show the contract appraiser's name and address and the date of the appraisal. All pages of the report, including the exhibits, shall be numbered. An initial submission of an electronic copy of each report is preferred, but not required. If a hard-copy is submitted, it shall be printed on bond paper sized 8 1/2 by 11 inches, with all parts of the report legible, and bound with a durable cover. If corrections are required, the appraiser will be notified and allowed 30 days to resubmit the corrected report. Once the reports are found acceptable, 4 hard copies of each report, and one electronic copy in PDF format, are to be submitted with original signatures.

GENERAL APPRAISAL SPECIFICATIONS

The following specifications required by the USDA Forest Service are in addition to those set forth in Uniform Standards of Professional Appraisal Practice (USPAP) and the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA).

Performance – Unless otherwise stated, the contract appraiser shall furnish all materials, supplies, tools, equipment, personnel, travel, and shall complete all requirements including performance of the professional services listed herein. The USDA Forest Service will separately contract for a professional timber cruise, with costs paid by AMHT, so the cost of providing such services will NOT be part of the appraiser’s bid. The USDA Forest Service will coordinate with the appraiser regarding the acceptable timber cruise standards, as the appraiser must rely upon the timber cruise data.

If the appraiser elects to subcontract any elements of the appraisal, the appraiser shall assume responsibility for all work, including the selection and work product of appraisal subcontractors. The appraiser shall notify the Forest Service review appraiser of the selection of all subcontract appraisers or specialists before they start work. The appraiser shall present specialist and consulting reports in the addenda to the appraisal report or make them available for inspection by the Forest Service review appraiser.

Confidentiality – The appraiser may provide information about the assignment, appraisal results, or portions thereof only to the Forest Service review appraiser or Regional Appraiser. Subsequent to the pre-work meeting, all communications will be in accordance with the AMHT Appraisal Communication Protocol document attached as an exhibit to these appraisal instructions. Appraisal reports may only be provided from the appraiser to the assigned Review Appraiser or the Regional Appraiser. The Regional Appraiser will control any subsequent distribution of appraisal reports, summaries, or review reports after technical review is completed.

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Federal Law Controls – Federal law may differ from the law of some states and supersedes State law when they conflict. Accordingly, the appraiser must understand Federal law as it affects the appraisal process in the opining of market value.

UASFLA and USPAP Conflicts – In the uncommon instance where UASFLA and USPAP conflict, UASFLA takes precedence. If it is necessary to invoke the Jurisdictional Exception Rule to USPAP to meet certain provisions of the UASFLA, such action must include a citation of the over-riding federal policy, rule, or regulation that requires it. Any jurisdictional exceptions not specifically cited in the UASFLA must be discussed with the assigned Forest Service review appraiser.

Definition of Terms – Unless specifically defined herein or in current editions of either the USPAP or UASFLA, definitions of all terms are those found in The Dictionary of Real Estate Appraisal (Appraisal Institute, Chicago). UASFLA takes precedence in any differences among definitions. The following specific definitions and sources shall be utilized:

“Market value means the most probable price in terms of cash, or terms equivalent to cash, which land or interests in lands should bring in a competitive and open market under all conditions requisite to a fair sale, where the buyer and seller each acts prudently and knowledgeably, and the price is not affected by undue influence.” Source: 36 CFR 254, Subpart A, 254.2.

“Highest and best use means an appraiser's supported opinion of the most probable and legal use of a property, based on market evidence, as of the date of valuation.” 36 CFR 254, Subpart A, 254.2

Comprehensive Review – A value opinion is acceptable for agency use only after the assigned Forest Service review appraiser has approved the appraisal report (Forest Service Manual 5411). As an alternative to disapproval, the Forest Service review appraiser may discus findings of deficiency and request corrections.

Freedom of Information Act – Freedom of Information Act (FOIA) provisions may result in the release of all or part of the appraisal report. If providers of information gathered by the appraiser request it be kept confidential, that information is not to be included in the report. The appraiser shall make confidential information available to the Forest Service review appraiser upon request, but such information will not be incorporated in a Forest Service system of records. A statement signed by the appraiser requesting confidentiality and citing reasons for seeking confidentiality must accompany any confidential information.

Updating of Report – The Alaska Mental Health Trust Land Exchange Act of 2017 contains specific provisions regarding the timeliness of the appraisal reports, as follows.

“(i) IN GENERAL. – During the 3-year period beginning on the date on which the final appraised values of the Federal land and the non-Federal land for each phase of the exchange described in subsection (n) are approved by the Secretary, the Secretary shall not be required to reappraise or update the final appraised values of the Federal land and the non-Federal land.

(ii) Exchange agreement – After the date on which an agreement to exchange the Federal land and the non-Federal land is entered into under this Act, no re-appraisal or updates to the final appraised value of the Federal land and the non-Federal land approved by the Secretary shall be required.”

(SEC. 4 LAND EXCHANGE. (i) APPRAISALS. (2) REQUIREMENTS. (B)FINAL APPRAISED VALUE.)

Because of these provisions of the Act, no updates will be subsequently required under these appraisal instructions.

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Testimony – Upon the request of the United States Attorney or the Department of Justice, the contract appraiser shall testify regarding the appraisal. A supplemental contract will be negotiated as necessary.

Report Format – Unless otherwise specified in the following Assignment Instructions, the appraisal report should contain all applicable components listed in UASFLA Appendix B. Any question as to their applicability shall be determined by the assigned Forest Service review appraiser.

Appraiser’s Certification – Each appraisal report shall contain a signed and dated certification consistent with the requirements of USPAP and UASFLA, and which states the appraiser’s opinion of market value of the subject property, stating the effective date of appraisal, and stating that the value opinion is in terms of cash. Additional verbiage required by professional associations for their members is allowed.

Per Forest Service Handbook, include the following:

"I have made a personal inspection of the appraised property which is the subject of this report and all comparable sales used in developing the opinion of value. The date(s) of inspection was __________, and the method of inspection was ___________________.” (If more than one person signs the report, this certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property. The contract appraiser must inspect the appraised property.)

"In my opinion, the market value (or other value as required) is $ as of (date).

By (Appraiser’s signature) Printed Name and Professional Accreditation State General Certification No. .

Inspection Notice – The appraiser shall provide the intended users 10 days advance notice of the site inspection date and shall give the intended users, or their designated representative(s), an opportunity to accompany the appraiser during the inspection of the property. These notices shall be documented in the transmittal letter accompanying the appraisal reports.

The appraiser is not responsible for providing transportation or travel arrangements for anyone other than themselves.

Statement of Assumptions and Limiting Conditions – Since all appraisal reports submitted to the Forest Service become the property of the United States and may be used for any legal and proper purpose, do not include any conditions that may limit distribution of the report or in any way limit or obligate the government. Use of uninstructed extraordinary assumptions or hypothetical conditions are not acceptable. Avoid use of “boilerplate” assumptions and limiting conditions which are not relevant or appropriate to the current assignment.

Maps – Include detailed topographic and aerial imagery of the appraised property with the property boundaries delineated. Significant encumbrances and both legal and physical access routes must be shown.

Zoning – Determine “consistent” zoning (and other land use restrictions) of Federal land by research and analysis, not by assumption. If zoning changes are anticipated or likely, provide analysis and the supporting basis for any opinions regarding such issues.

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Comparable Sales – Inspect all sales directly compared with appraised property sufficiently for credible analysis and comparison. Discuss unusual circumstances that precluded on-the-ground inspection with the Forest Service review appraiser prior to completion of appraisal reports. Comparable sale inspection cannot be waived unless the Forest Service review appraiser provides such a waiver in writing. The minimum required inspection consists of a personal visual inspection by a fly-over of all comparables relied upon in the analysis. For timber properties, report the type of access and analyze and report the likely method of logging.

At a minimum, document all direct comparable sales with:

Parties to the transaction Date of transaction Recordation data Verification of the price, terms, and conditions of sale with buyer, seller, broker, or other knowledgeable person. Include the verifying party’s telephone number.

Person who verified the transaction and verification date Buyer motivation Location Legal and physical access Size Legal description Property rights conveyed Consideration Financing terms Sale conditions, such as arm’s length or distressed Improvements Physical description (topography, vegetative cover, water influence, and other characteristics.)

Non-realty items Economic characteristics Zoning Current use Topographic map Photographs

Include a list of the sales considered, but not actually used, in the addenda. Cite pertinent facts such as date, size, buyer and seller, price, terms, location, and explain why each sale was not used. Alternatively, this information could be presented in the market analysis section of the report.

Addenda/Other Pertinent Exhibits – Present in the addenda additional data such as documents and charts pertinent to the valuation and referred to in the body of the report. Include a copy of this document (appraisal instructions prepared specifically for the assignment), specialist reports, and supporting documents that describe the property rights appraised in the addendum of the appraisal report.

Qualifications – Include the qualifications of all appraisers or technicians who made significant professional contributions. The appraiser(s) signing the certification must provide evidence of compliance with the certification requirements of the state where the property is located, the date their current license expires, as well as evidence of successful completion of specific training in the application of the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA).

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ADDITIONAL INFORMATION

Exhibits containing the following information will be provided to the contract appraiser separately, at the pre-work meeting:

Alaska Mental Health Trust Land Exchange Act of 2017 (“the Act”) Official Maps referenced within the Act Additional maps and descriptive data.

Land Description Verification forms, title insurance policies, Encumbrance Evaluation Reports, and other evidence of encumbrances and restrictions on the subject properties.

AMHT Appraisal Communication Protocol After award of the contract, a list of Contacts will be provided to the appraiser, however, all communication must be in accordance with the provisions of the AMHT Appraisal Communication Protocol document.

Additional relevant information will be conveyed to the appraiser as it becomes available. This will include a timber cruise report identifying the volume, size and species present on the subject properties, and a valuation of the timber resource. Additional information is expected to include mineral potential reports, surveys, and other documents.

First Deliverable

Attend pre-work meeting conference and receive Notice to Proceed

Preliminary Highest & Best Uses: prior to 6 weeks from Notice to Proceed

Identification of at least 3 potential Foresters: prior to 6 weeks from Notice to Proceed

Second Deliverable Phase 1

Perform property inspection for Phase 1: prior to 60 days after Notice to Proceed Deliver initial appraisal reports: prior to 5 months after Notice to Proceed Respond to reviewer comments with requested corrections: within 15 days of receipt Deliver final Phase 1 appraisal reports: prior to 6 months from Notice to Proceed

Third Deliverable Phase 2 Attend pre-work meeting conference: after Phase 1 appraisal reports are approved Perform property inspection for Phase 2: prior to 60 days after second pre-work meeting Deliver initial appraisal reports: prior to 5 months after after second pre-work meeting Respond to reviewer comments with requested corrections: within 15 days of receipt Deliver final Phase 1 appraisal reports: prior to 6 months after second pre-work meeting

TIMELINE FOR DELIVERABLES UNDER THIS CONTRACT