GRPappraisal review-specs.doc

TECHNICAL APPRAISAL REVIEW SPECIFICATIONS FOR APPRAISALS OF REAL PROPERTY FOR THE GRASSLANDS RESERVE PROGRAM (GRP)

A. BACKGROUND INFORMATION

The United States of America, acting through the United State Department of Agriculture, Natural Resources Conservation Service (NRCS) is considering purchasing an easement to assist the landowner with preserving, restoring, and conserving grassland, rangeland, pastureland, and shrub land that may be placed under a conservation easement through the Grassland Reserve Program (GRP) of NRCS. These lands may ultimately be placed under a conservation easement through the Grassland Reserve Program (GRP) of NRCS.

All appraisal reviews completed for this program will comply with Uniform Standards of Professional Appraisal Practice (USPAP) and appraisal instructions as issued by NRCS. The appraisal review reports will be completed consistent with USPAP and these instructions.

B. REVIEW APPRAISER QUALIFICATIONS

All real property appraisers performing technical appraisal reviews shall be a qualified State Certified General Real Property Appraiser in conformance with Title XI of the Financial Institution’s Reform, Recovery and Enforcement Act of 1989 and be in good standing with the licensing authority where the credential was issued. Appraisal reviewers must have demonstrated competency in compliance with USPAP in conducting appraisals of agricultural properties with of the requested type. Documentation of appraisal education courses attended to include at least 40 hours of training in conducting technical reviews and either eminent domain or conservation easement courses shall be provided by the review appraiser to the contracting officer. A copy of the appraiser’s state license or practice permit shall be provided to the CO at the time of bid submission. Work will not be granted until such time as the CO has reviewed and approved the licensing credentials, and the experience and education requirements of the contractor and any subcontractors. If the contractor elects to sub-contract the appraisal work, the sub-contractor must also be a State Certified General Real Property Appraiser and be in good standing with the licensing authority where the credential was issued. Proof of the sub-contractor’s qualifications must be supplied within 10 days of contract award. Appraiser and any subcontractor must have demonstrated competency in compliance with USPAP in conducting appraisals of agricultural properties with and without conservation easements of the requested type. In the event the contractor wishes to change personnel or subcontractors, the contractor shall submit the same proof of qualifications and licensing, approval shall be obtained from the Contracting Officer prior to the assignment of appraisal work to such individuals. Failure to obtain such approval may invalidate the award and cause termination of the contract in accordance with Federal Acquisition Regulation 52.249-8.

C. PURPOSE OF THE APPRAISAL REVIEW REPORTS

The purpose of the technical appraisal reviews are to provide an opinion of the acceptability of the appraisals that provide a market value of the subject property before acquisition of an easement (unencumbered value) and an opinion of market value of the subject property after the proposed easement has been placed (encumbered value) as of a current date of value minus any adjustments for excess irrigation water to arrive at the effect on value of the easement. The appraisals and technical review must be completed in compliance with Uniform Standards of Professional Appraisal Practice and appraisal review instructions issued by NRCS.

The purpose of two opinions of value is to establish the effect on value resulting from imposition of a conservation easement.

A separate technical review will be conducted if two or more appraisals have been requested.

The market value definition that will be stated and used in developing and reporting this assignment is as follows;

“Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;

2. both parties are well informed or well advised and acting in what they consider their own best interests;

3. a reasonable time is allowed for exposure to the open market;

4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. the price represents the normal considerations for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

No other definition of market value is acceptable

D. SCOPE OF WORK

The scope of work is a desk technical review to assure each appraisal meets the definition of appraisal as required, examine the appraisals to assure that they meet applicable appraisal requirements which include Uniform Standards of Professional Appraisal Practice (USPAP) and appraisal instructions issued by NRCS. The technical appraisal review reports will be in compliance with USPAP Standard 3, NRCS appraisal instructions and will be type written, dated and signed by the reviewer. All items contained in Standard 3 of USPAP must be documented by the review appraiser in the technical appraisal review reports. The appraisal reviewer will be required to make a determination as to the acceptability of the appraisal in accordance with instruction provided to the appraiser and these instructions.

The review appraiser may be instructed to express their own opinion of value. This determination will be made on a case by case basis by the authorized official and will be included in any work order.

The review appraiser will determine if the appraisal is approved, or not approved.

Approved – If the review appraiser determines the appraisal report is approved, the review appraiser will set forth in the review report the approved value and document the technical appraisal reviewer’s opinion; the value estimate is strongly supported and complies with all contract specifications. Any corrections or revisions by the appraiser are deemed insignificant in the technical appraisal reviewer’s opinion and will not affect the values identified in the appraisal report. Fees will be paid upon receipt of accurate invoices. A copy of the appraisal and the technical appraisal review will be submitted to the NHQ staff appraiser upon completion.

Not Approved - Any appraisal report revisions required either by the Technical or the Administrative Reviewer shall be completed and returned to the Government not later than the 14th calendar day after receipt of notification of the appraisal not being acceptable by the appraiser. Revised appraisal reports will be submitted by NRCS to the technical reviewer no more than three (3) times. If, after the third submission, the report is still found to be unacceptable, the report will be rejected and/or disapproved. The review appraiser will clearly show why the appraisal report is inadequate. A copy of the appraisal and the technical appraisal review will be submitted to the NHQ staff appraiser upon completion.

In the technical appraisal reviewer’s opinion, the value estimate is unsupported or not supported strongly enough the report will be disapproved. NRCS reserves the right to order a second appraisal to confirm, support or replace the original appraisal report. In the event the second report supports a significantly different value estimate - and the second report is ultimately approved - this determination effectively rejects the original appraisal report and payment will be withheld by NRCS.

Ultimate disapproval of a contract appraisal report, in the review appraiser’s opinion, because the value estimate is unsupported or not supported strongly enough, does not constitute "rejection" for contract payment purposes if the contractor has complied with the contract specifications.

If the review appraiser determines the appraisal report is not approved, the contracting officer will provide NHQ staff appraiser with a copy of the appraisal report and a copy of the technical appraisal report. NHQ staff appraiser will make a determination if the appraiser and or the technical reviewer should be contacted, by whom and determine if the appraisal report should be returned for corrections or if a new appraisal should be ordered. The review appraiser may be instructed to work with the appraiser to obtain an acceptable appraisal in an advisory role. If the review appraiser does not approve the appraisal, the Option Agreement to Purchase will not be signed until an approved appraisal report is obtained for the offered property.

Rejection – When appraisal report is in violation of appraisal principles and standards, Agency or Departmental Regulations or directives, is inconsistent with facts, or asserts unsupported conclusions the report will be rejected. The Technical Review Appraiser finds the appraisal report to be illogical, unreasonable, not supported by data cited, or is inconsistent with other data. Rejection indicates particular problems of integrity. Minor technical non-conformance with USPAP should not be the cause of rejection of an appraisal report unless the deficiencies affect the reliability of the value estimate. Fees will be withheld if the report clearly and flagrantly does not comply with the contract specifications. A copy of the appraisal and the technical appraisal review will be submitted to the NHQ staff appraiser upon completion.

The review appraiser must obtain a copy of the listed standards at their own expense and have them available during any technical review for reference.

Limitations

1. The review appraiser may not change an appraisal report, except for minor mathematical or typographical errors, and must call those minor changes to the appraiser's attention. No one, except the original appraiser, is permitted to edit or otherwise revise the original appraisal report.

2. The review appraiser may not substitute personal judgment for that of the appraiser, nor dismiss careful appraisal judgment solely because it cannot be supported by conclusive market data. However, the review appraiser may question the appraiser's judgment when it is illogical, unreasonable, not supported by data cited, or is inconsistent with other data.

3. The review appraiser shall not allow agency goals or adversarial pressure to influence the reviewer’s opinion of an appraisal report’s value estimate. Nor can the staff review appraiser’s personal opinion regarding the proposed action influence the review process.

4. The review appraiser must not attempt to influence the appraiser's judgment or direct the appraiser toward a value estimate. The only effort should be to obtain a properly supported value estimate based on factual evidence and valid analysis of all facts available through use of approved appraisal approaches and techniques. Minor technical non-conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) should not be the cause of rejection of an appraisal report unless the deficiencies affect the reliability of the value estimate.

E. BACKGROUND FOR THE APPRAISAL REVIEW REPORT

1. Client is NRCS and/or Farm Service Agency (FSA).

2. Intended User is NRCS and/or FSA only, unless otherwise directed by the Client.

3. Intended Use will be for USDA determination of acceptability of the appraisals for use in consideration in determining the effect on value of the easement for lands entering into the Grassland Reserve Program.

4. Property rights to be appraised will be surface rights, improvements such as houses, barns and fencing, timber, orchards or other permanent plantings and any irrigation water rights. The irrigation water rights include owned wells, ditches, reservoirs, ponds and lakes that provide irrigation on the subject property. The value of any standing timber will be determine by a timber cruise and included in any valuations. Other permanent plantings that are located on the subject property will be appraised and included in any valuations.

5. Irrigation water rights that are owned and used on the subject property will be valued in the unencumbered appraisal. The appraiser will document if these irrigation water rights can be removed from the subject property or not. If the irrigation water rights can be removed from the property, the appraiser will provide a value opinion of the value of each irrigation right. The appraiser will consider only the irrigation water rights required by the conservation plan on the subject property in the encumbered appraisal.

Irrigated units may have excess irrigation water rights in the after condition due to change in use of the land. The value of these excess irrigation water rights, if they can be sold or leased, will be deducted from the difference between the unencumbered and encumbered values. This is necessary to determine compensation for rights obtained by the government and rights retained by the property owner.

6. NRCS will provide a copy of the work order to the appraiser and attachments, appraiser instructions, Copy of GRP Manual relating to the Appraisal of GRP lands will be provided to the review appraiser.

7. All technical appraisal reviews are subject to a review for compliance with the applicable instructions by NRCS/NHQ.

8. The review appraiser shall prominently state any crop base acres and allotment history that are located in the easement area and if crop base is to be acquired by NRCS or moved to another parcel as identified in the appraisal and if it was included in the appraisal.

9. All technical appraisal review reports shall clearly identify the timeframe, not to exceed 12 months, within which the appraisal report is useable for the intended purpose. The expiration date of all approved appraisals shall be based upon the market trends as reflected in the appraisal report. No appraisal report shall be used as the basis of any transaction if it does not represent current market conditions and values as of the date of the decision.

10. The effective date of the technical review will be the effective date of the appraisal.

11. Only technical review reports completed and submitted on 8½ by 11 inch papers will be accepted.

12. Technical review reports must contain a Table of Contents and sequentially numbered pages including addenda.

13. The technical appraisal(s) reports shall be in typewritten or automated or computerized forms.

14. The review appraiser will document whether the analysis and documentation contained in the appraisals supports the opinion of value arrived at by the appraiser and complies with NRCS appraisal instructions.

15. The technical review format will be as shown in Exhibit 1.

Exhibit 1

Technical Appraisal Review Report

Appraisal Review of

(property)

Prepared by

(name, title, unit)

The italic words need to be changed for the circumstances and reviewer.

This technical appraisal review report is presented in four sections: (1) Appraisal Report Summary, (2) Appraisal Review Purpose, Scope, and Intended Use, (3) Reviewer’s Analysis, Comments, and Conclusions, and (4) Reviewer’s Certification.

As a result of my review, I (approve), (disapprove), the appraisal report that concludes opinion of values as of ___(date)______, the market value of the unencumbered parcel is $____________, and the market value of the encumbered parcel is $___________.

By:

(signature)

Print Name

Printed Name and Professional Accreditation

State Certification #

Identify type of value such as market, investment or other value, and identify and give estimated contributory value(s) for major components such as land, timber, improvements, damages, and benefits.

Any extraordinary assumption and/or hypothetical condition of the appraisal report or the appraisal review report shall be recited here.

Section 1: Appraisal Report Summary

Each shall be completed from information in the appraisal report. If the assignment required no extraordinary assumptions, jurisdictional exceptions, or hypothetical conditions, so state.

a. Owner of Record.

b. Estate Appraised.

State the ownership interest as Fee, Leased Fee, or Partial Interest and reference the specific title document or land status report. If the estate appraised is subject to any reservations, outstanding rights, or other encumbrances, state them briefly here and fully in Section 3.a.

- Exhibit 1--Continued

c. Legal Description.

Identify the survey and land description verification.

d. Property Characteristics.

Provide a brief overview of the significant physical, legal, and location characteristics of the property.

e. Extraordinary Assumption and/or Hypothetical Conditions.

Identify the source of the written instructions.

f. Highest and Best Use or Permitted Use.

g. Date of the Appraisal Report.

h. Date of Appraisal.

i. Appraiser.

j. Value (valid through ) (Reviewer determination) Section 2: Appraisal Review Process

a. Client and Intended Users.

b. Intended Use.

c. Purpose of the Review Assignment.

For example: To judge the appraisal report’s compliance with the Uniform Standards of Professional Appraisal Practice (USPAP), NRCS appraisal instructions and to develop a credible opinion of the adequacy of the data and appropriateness of the analysis of the data relative to the final conclusions.

d. Scope of Work.

Describe work the reviewer did with the property before the appraisal, knowledge of any other appraisals that you returned or reviewed, property and comparable property inspection, sale verification, additional data and information procured, analytical methods applied, and what standards were followed. If the appraiser revised the appraisal during this review, at your request, describe the extent of the revision process. Any analytical work or support documents shall be retained in the reviewer’s work file.

Section 3: Reviewer’s Analysis, Comments, and Conclusions

The purpose of this section is to report the reasons and provide support for the reviewer’s conclusions and explain discrepancies and disagreements. This section should be written in a detailed narrative format that clearly achieves the standards found in USPAP SR 3-2(d). What follows is an outline of substance to be considered for the narrative.

- Exhibit 1--Continued

a. Present your opinion of the adequacy to which the appraiser followed appraisal instructions, including value definition, sales verification, extraordinary assumptions and hypothetical conditions, hazardous material conditions, estate appraised, legal description used, and general specifications followed.

b. Analyze and describe adequacy and appropriateness of appraiser’s highest and best use determination. Comment whether an economic analysis was appropriate and carried out correctly. Compare subject and sales for consistency of highest and best use; compare subject zoning and land use regulations with appraiser’s analysis of legal property uses; explain reasons of agreement or disagreement with highest and best use conclusion.

c. Analyze and describe adequacy of appraiser’s analysis of previous sale of subject property.

d. Review and describe adequacy and appropriateness of valuation approaches selected.

e. Review and describe adequacy of treatment of contributory values of minerals, water, timber, improvements, personal property, and intangibles.

f. Review and describe appropriateness of sale data stratification, review methods and accurateness of sales analysis, adjustments to sales, and value indications obtained from sales.

g. Review for reasonableness and accuracy all assumptions and data in the cash flow analysis of the income approach and analyze for appropriateness the market extracted rate applied to the subject cash flow. Ensure the appropriateness of computer software used in sales, income, and statistical analysis.

h. Explain and conclude as to the reasonableness and appropriateness of the overall appraisal methods used and support presented. State whether the appraisal report is approved, disapproved, or rejected. If other than approved, summarize the principal reasons for your action.

Section 4: Reviewer Certification

I certify that, to the best of my knowledge and belief:

· The facts and data reported by the reviewer and used in the review process are true and correct.

· The analysis, opinions, and conclusions in this review report are limited only by the assumptions and limited conditions stated in this review report and are my own personal, impartial, and unbiased professional analysis, opinions, and conclusions.

- Exhibit 1--Continued

· I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.

· I have no bias with respect to the property that is the subject of this report or to the parties involved in this assignment.

· My engagement on this assignment was not contingent upon developing or reporting predetermined results.

· My compensation is not contingent on an action or event resulting from the analyses, opinions, and conclusions in this review or from its use.

· My analysis, opinions, and conclusions were developed and this review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice and NRCS requirements.

· My report preparation and presentation conforms to the requirements of the Code of Professional Ethics and Standards of (applicable professional organizations).

· I am a member of the (applicable professional organizations) and am current on all continuing education requirements through (date).

· I have(have not) made a personal inspection of the subject property under review.

· (Name of professional or no one) provided significant appraisal and appraisal review assistance to the person signing this certification.

Reviewer Date of Review

General Certification Number and State and expiration date when required by State.

Title

Attach Qualification Statement for the reviewer.

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