SOW_Mineral_Materials.pdf

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APPRAISAL STATEMENT OF WORK

QUARTZ & AGGREGATE MINERAL MATERIALS

OUACHITA and OZARK-ST FRANCIS NATIONAL FORESTS

One real estate appraisal report is needed with opinions of market value for Quartz and Aggregate (sand & gravel) mineral materials located on the Ouachita and Ozark-St Francis National Forests. The unit values will be used within several counties in Arkansas and Oklahoma where these Forests are located (see mapping). The Quartz requires two steps in the appraisal process. First, a consultation of highest and best use and market study of typical lease rates and terms needs communicated to the review appraiser.

This shall include researching all similar sales, leases and/or royalties, identifying a market recognized unit of value, then communicating the results to the review appraiser. Second, an appraisal of the quartz minerals using an agreed value unit is the appraisal assignment. Each individual quartz producing location does not require a physical inspection. Best representative pits shall be inspected. There is no lump sum value or specific quantity required as part of this contract. The aggregate market value opinion shall be of the most typical material being produced and based on a short ton and a market recognized cubic yard conversion and valued “in place” for material processed and removed. Each aggregate location does not require a physical on-site inspection. Best representative examples (two-three pits) shall be inspected.

Legal Description State Owner None -see attached Arkansas & Oklahoma USDA Forest Service

The purpose of the appraisal(s) is to conclude market value opinions for each mineral commodity in accordance with Forest Service Manual (FSM) 2850, Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA), and most recent edition of Uniform Standards of Professional Appraisal Practice (USPAP).

The intended use of the appraisals shall be the basis of market value charged by the USA for the mineral commodities. The only intended users of the appraisals are authorized representatives of the USDA Forest Service. The only client for this appraisal assignment is the USDA Forest Service.

If questions or clarification of these instructions is needed, please contact the assigned the Forest Service review appraiser assigned to this case, by email at:

Mark Sonderby, ARA, MBA, Senior Review Appraiser USDA Forest Service, Southern Region mark.sonderby@usda.gov mailto:mark.sonderby@usda.gov

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APPRAISAL REPORT SPECIFICATIONS

Performance – The contract appraiser shall furnish all materials, supplies, tools, equipment, personnel, travel, and complete all requirements including performance of the appraisal services contract herein. The appraiser shall assume responsibility for all work, including any selection and work product of subcontractors. The appraiser must notify Forest Service review appraiser before selection of any subcontract appraisers, trainees or specialists. The appraiser shall present outside specialist and/or consulting reports to the Forest Service review appraiser prior to any submission of final appraisal report.

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 USPAP or UASFLA, definitions of all terms are the same as found in The Dictionary of Real Estate Appraisal.1 UASFLA takes precedence in any differences among definitions.

Freedom of Information Act – Freedom of Information Act (FOIA) provisions may result in the release of all or part of the appraisal report. A statement signed by the appraiser requesting confidentiality of any information and the reasons must accompany any identified confidential information.

Updating of Report – At the Government’s request, the appraiser may be requested to update the value opinion as of a specified date. A supplemental contract will be negotiated as necessary.

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.

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

Report Format – Unless otherwise specified in these instructions, the appraisal reports shall contain all applicable format components listed in the UASFLA. The integration of format from Bureau of Land Management’s (BLM) Mineral Material Handbook H-3630-1 and International Mineral Valuation Standards Template shall be considered in the appraisal report. A UASFLA report review requirement checklist, UASLFA Appendix B format shall be provided and applicability, integration of report format, and any questions discussed at length during pre-work meeting before the appraiser begins the work.

1 Appraisal Institute, The Appraisal of Real Estate Appraisal (Appraisal Institute, Chicago). Edition current as of date of report.

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Appraiser’s Certification – Include the following above a dated signature in the appraisal report:

“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 principal appraiser must inspect the appraised property.)

“In my opinion, the market value is $______ as of __(date)__.

Appraisers not meeting Forest Service qualifications shall not sign a certification.

Examination Notice – The appraiser shall contact the Forest Service and the assigned review appraiser advance notice of the examination date and shall give them an opportunity to accompany the appraiser during the inspection of the property. These notices shall be documented in the transmittal letter and certification accompanying the respective appraisal report.

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 limit distribution of the report to the public. Uses of uninstructed extraordinary assumptions or hypothetical conditions may invalidate the appraisals.

Maps – These are contained herein and the mineral materials are generally located within these general property boundaries and dimensions delineated. Additional mapping may be provided on request.

Zoning – Determine “consistent” zoning from the private market (or other land use and permitting restrictions) on the mining and extraction of the Federal mineral estates by research and analysis, not by assumption.

Highest and Best Use – Conduct sufficient depth of market analysis and support (using the four tests) for the highest and best use conclusion developed in the appraisal. It is the mineral material market value that is to be estimated, on a market based value unit, not the property’s value to the government.

Comparable Sales – Sufficiently inspect all sales, leases or royalties compared with appraised property for credible analysis and comparison. Discuss unusual circumstances that precluded or limit an on-the-ground inspection of sales with the assigned Forest Service review appraiser. Include a location map showing the subject, comparable sales and their relationship/distance. Discuss, illustrate and summarize any sales that were considered but not used for comparison with the subject(s) and explain reasons why.

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Document all comparable sales or leases in accordance with established Federal standards similar to;

Mineral Material Sale # 1

Location: N' of Piedmont, SD Geology: Limestone/Minnelusa

Seller: Confidential County: Meade

Buyer: Roger's Construction Market: Sturgis, Whitewood

Date: Sept. 2018 Owner: Private

Type of Material: Aggregate Source: Alluvial Bench Uplift

Price/short ton: $0.80 Terms: 1 yr lease 20K tons (or per acre/year) (or bonus/royalty/cost/ton)

Process:

Drill - Blast - Crush Access: Good gravel/paved road

Confirmed with: Lincoln Shuck Date: 9/8/2018 by MSS Meade County

Comments: This is a newly negotiated 10-acre lease a county road manager knew about and plans to sub-lease pit for future road re-graveling project. Did not want me to disclose land owner but shared exact location so I could inspect. It is light colored limestone with good fines and good quality that meets SDOT specs for asphalt and concrete. Its location is good being only 3-4 miles north of I-90.

Lincoln will pay up to $1.00 per ton for very good material, and if within 3-4 miles. They have not yet bought at $1.00, but knew of a project that they are currently hauling material to that involved

50,000 tons of product sold at this price. The location for this was very good being less than 2 miles from the project and was very short hauls on outskirts of Whitewood. This sale is good location and although there were No Trespassing signs I was able to see and inspect from a road and verified quality as good. There were no water or utilities available. It has typical or normal reclaiming requirements, and appears to have had minimal overburden.

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Addenda/Other Pertinent Exhibits – Present in the addenda of report additional data such as studies, documents and charts pertinent to the valuation opinion or that are referenced in the body of the report.

Include a copy of this statement of work prepared specifically for the assignment at the beginning of the addenda, then any supporting relevant documents.

Qualifications – Include the qualifications of all appraisers or technicians (resume) that made significant professional contributions. The appraiser(s) signing the certification must include with a resume a copy of the appraisal license or certification in the state where the property is located, and it must include the date of expiration. Include evidence of successful completion of specific training in the application of the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA).

ASSIGNMENT INSTRUCTIONS

The assignment is named the Ouachita and Ozark-St. Francis National Forests Mineral Material Appraisals. The appraisal shall be made of each of the mineral materials owned by the USA. These include only quartz and aggregates (sand and gravels). Rip-rap, build stone, or boulders are not included.

Problem Identification – Both the USPAP and the UASFLA identify seven critical assignment elements necessary to ensure appraisals are credible, reliable, and accurate. The purpose of these instructions (called the statement of work) is to clearly identify these seven elements; however, the appraiser must still conduct any other due diligence deemed necessary to fully understand the:

• client

• intended users

• intended use

• type and definition of value

• effective date

• relevant characteristics about mineral being appraised (including geological properties)

• assignment conditions

Client – The appraiser shall recognize the USDA Forest Service as the client.

Intended Users – The intended users shall, in addition to the client, include the Senior Review Appraiser, Regional Appraiser, Lands/Geology personnel attached to the Ouachita and Ozark-St. Francis National Forests, Lands/Minerals personnel attached to the Southern Regional Office, and our Office of General Counsel. Dissemination of appraisal report to the intended users – other than Senior Review Appraiser or the Regional Appraiser – will only be after a desk or field appraisal review report is completed.

Intended Use – The intended use of the appraisal is to provide a basis of market value for the respective mineral material being extracted from lands administered by the US Forest Service, owned by the USA.

Type and Definition of Value – Per USPAP, the type of value opinion to be developed is market value.

The definition of market value identified by the UASFLA [Section 1.2.4] shall be used and is:

Market Value is the amount in cash, or terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 10 of 46 seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property.

This definition makes no linkage between the estimated market value and exposure time. A specific exposure time shall not be cited in an appraisal report prepared under UASFLA standards. Invoke the Jurisdictional Exception Rule to avoid a violation of USPAP standards, which requires the development of a specific exposure time. To comply with the Jurisdictional Exception Rule follow the assignment conditions provided for on the next page.

Effective Date – The effective date of value shall be the last date the appraiser(s) inspect the property and must be within 90 days from completing the appraisal report and it’s submittal for review.

Relevant Characteristics about the Subject Property:

Property Interest Appraised –All the rights and interest in quartz and aggregate mineral materials, on a unit basis, owned by the USA, and located within the Ouachita and Ozark-St. Francis National Forests.

Legal Description – None. There is also no quantity specified. Includes the described mineral materials (on a unit basis) removed from any area contained within the two Forest boundaries as depicted below;

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Pre-Work, Property Inspection and Contacting Landowners – The appraiser signing the report will attend a pre-work conference with the Senior Review Appraiser for discussing and understanding these instructions. For this specific assignment, that conference can be face-to-face, MS Live Meeting or by telephone conference. The appraiser shall complete a physical on-site inspection and examination of the minerals being mined. Not every existing mine /pit requires and inspection. Best representative samples of the minerals produced shall be selected for the contractor. The contract appraiser may elect to inspect additional locations if requested. Invited attendees for these should include one representative from the Ouachita and Ozark-St. Francis National Forest. If an attendee declines the offer to inspect the property with the appraiser, this shall be documented in the transmittal letter and the certification section of the appraisal report.

Information – the following information is being provided within this statement of work;

• BLM Mineral Material Appraisal Handbook H-3630-1

• Geology - Mineral Assessment Report

Assignment Conditions – The report must conform to FSM 2850, the most recent editions of the Uniform Appraisal Standards for Federal Land Acquisitions and the Uniform Standards of Professional Appraisal Practice, as well as the specifications and assignment conditions as follows;

Utilize the following hypothetical condition in the appraisal:

These mineral materials are appraised as if in private ownership, to a highest and best use, and as if available for sale in the open market. Since the mineral materials are currently owned by the United States, and is contrary to a known fact, it is a legally instructed hypothetical condition that is required for purposes of credible analysis.

Note: Per USPAP [2-2(a)(xiii)] state if use of the hypothetical condition may affect the assignment results.

Utilize the following jurisdictional exception in the appraisal:

The appraiser invokes the Jurisdictional Exception Rule, as allowed under the Uniform Standards of Professional Appraisal Practice to comply with the Uniform Appraisal Standards for Federal Land Acquisitions; Section 1.2.4 states that “the appraiser[s] shall not link an opinion of market value for federal acquisition purposes to a specific exposure time.” Since this is contrary to Standards Rule 1-2(c) of the Uniform Standards of Professional Appraisal Practice, and market value opinions under federal rules [UASFLA Section 4.2.1.2] presumes that the Federal interest was exposed on the open market for a reasonable length of time, given the character of the property interest and its market.

The use of any unistructed assumption or hypothetical condition that results in other than “as is” market value will invalidate the appraisal. If an issue arises during the development of the appraisal process that would necessitate their use, the review appraiser must be consulted and supplemental or amended instructions shall be issued prior to continuing the work. Include only factors relating to the appraisal problem. Assumptions and limiting conditions that are speculative in nature are not acceptable. Do not include limiting conditions that significantly restrict the application and/or use of the appraisal.

Scope of Work – The appraiser shall conduct all investigations necessary to provide credible results. The three approaches to value shall be considered, if deemed reliable, regardless of the appraisers’ opinion of added strength to the overall value conclusion. Explain why one or more approaches were not applicable.

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For appraisals, the UASFLA defines highest and best use as “The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future.” The appraiser may, in addition to the UASFLA definition, refer to the definition found in The Dictionary of Real Estate Appraisal.

The highest and best use conclusion must be clearly supported by market evidence. Sale to the United States or other public entity is not an acceptable highest and best use. A non-economic highest and best use, or any use requiring property to be withheld from economic production in perpetuity, is not a valid use to base opinions of market value.

If speculation or investment is the highest and best use, describe and explain its interim and most probable use. When there is a claim the highest and best use of a property is something other than the property’s existing use, the burden of proof is on the appraiser to provide sufficient rationale to support the conclusion. Market value cannot be predicated upon potential uses speculative and conjectural.

Nearby arm’s length transactions, comparable to the commodity under appraisement, reasonably current, are the best evidence of market value. The Federal courts recognize a properly documented sales comparison approach as being the best evidence of market value.

Document and discuss within the last 10-years of sale and use history of the subject minerals. There are a number of competitively bidded past sale transactions by these Forest’s that shall be provided to the appraiser, and shall be considered in the sales comparison approach. In summary, there are around 200 past sales over the past 30 years. The best market demand was back in the 1990’s, before a 17-year gap occurred from 2000 up to 2017 when there were no sales. The appraiser shall use great care in explaining differences in terms when comparing these past subject sales with the private market, and adjust or dis-qualify in accordance with UASFLA. The same applies to historical rent or lease history for the subject minerals, within the past three years from the effective date of value [see the UASFLA pages 62-63].

When supportable by market evidence, use of only quantified adjustments is preferred. If used these must be supported by paired sales from the same or or equal market. Percentage or dollar adjustments may, and often should, be combined. Resort to qualitative adjustments only when there is inadequate market data (lack of multiple pairings) to support quantitative adjustments. Factors that cannot be quantified are dealt with in qualitative analysis. When quantitative and qualitative adjustments are both used in the adjustment process, all quantitative adjustments shall be made first.

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

Include a discussion on which of the best market sales were weighted and why. If more than one sale is weighted please clearly explain to the reader what factor, rounding or percentage and why.

Within the Cost Approach to value (if applicable), consider obtaining the services of a local/regional contractor or professional cost estimator to assist in developing a reproduction or replacement cost estimate. Estimating cost new by national cost services or depreciation by the use of published tables or age-life computations other than market supported data shall be avoided.

Within an Income Approach to value (if applicable), all items – including capitalization rates and market rental data – must be supported from the market with similar documented transactions.

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Additional Federal Data –There have been many prior competitively bid sales of both aggregates and quartz materials on the Forests since the nineties. While the terms may not be market, a complete report of all historic sales shall be provided upon request. Permission to access and inspect the most recent past competitively bid transactions still in operation (there have only been three since 2017) shall be provided.

In summary, the following information shall be provided to the contractor prior to starting work;

• Past competitively bid aggregate and quartz sales

Performance – The assignment consists of the preparation of an appraisal report with two or more opinions of value on a unit basis. Though the USPAP allows for two written reporting options, the restricted appraisal report option is not permitted since it cannot be reviewed to the level of detail required for federal appraisals under UASLFA and because the intended user is restricted to only one client.

The appraiser shall submit to the Review Appraiser a final appraisal report within 90 days or earlier from the data of a physical inspection of the mineral property. “Draft” copies will not be accepted. This Statement of Work (SOW) must appear in the addenda of the appraisal report.

The face of the report shall be labeled to identify the appraised property, contract number, contract appraiser's name and address and the effective date of the appraisal. All pages of the report, including the exhibits, shall be numbered. One final, hard-copy original report signed in blue ink must be submitted, along with one electronic pdf copy. Hard copy shall be typewritten on bond paper sized 8 1/2 by 11 inches, with all parts of the report legible, and bound with a durable cover.

Deliverable/Task Schedule

a) Project Kickoff Meet and Teleconference – DATE;

b) Site visits (if needed) – DATE;

c) Submission of mineral appraisal report – DATE;

d) Forest Service Review of mineral appraisal report – DATE RANGE;

e) Report review initial comments back to aprpaiser –DATE;

f) Submission of Final Mineral Report – DATE;

g) Forest Service review of Final Mineral Report - DATE RANGE;

h) Forest Service acceptance and approval, or return to contractor for final revisions – DATE;

i) Due Date of Final Mineral Report – DATE.

REQUIRED DELIVERABLES DELIVERY DATE

Cost and Delivery of Proposals for Consideration by CO and COR

14 Days after RFP-SOW and the evaluation criteria is received by the Bidder

Pre-Work Meeting TBD (Coordinate with Review Appraiser) Subject Property Inspection TBD (Coordinate with Forest contacts) Initial Appraisal Report(s) 90 Days from contract award date Review Period Comments to Appraiser 15 Days after Appraisal received Final Appraisal Report (1 original paper report and one electronic copy to Review Appraiser)

15 Days after Review completed & appraisal approved.

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Evaluation Criteria This appraisal solicitation is based on “Best Value.” The Government (USDA Forest Service) will evaluate offers and proposals (Bid Packages) based on Proposal Evaluation Criteria developed by the US Forest Service Reviewer and the Contraacting Officer (CO). The proposed bidder should provide a list of similar past projects completed for a Federal agency or State government. List the mineral appraised, quantity, challenges with assignment, and when completed. List contact info of the review appraiser and/or contract representative assigned to project. The amount of detail and the number of similar past projects completed is the largest consideration in the final Evaluation Criteria for a successful award.

Contractors must be able to provide the appraisal services within the performance period specified in this solicitation. Otherwise state their proposed delivery schedule.

The contractor is to indicate in the proposal what specific roles, any associates or subcontractors will play in the assignment. This does not include office support staff. If any associates or subcontractors are contemplated, then their qualifications must be included with the proposal. If the contractor is awarded the assignment, no other associates or subcontractors may work on the project without prior written authorization from the Forest Service Review Appraiser. The specific contribution(s) to the appraisal of any and all individuals, other than the signer(s), must be detailed in the appraisal report. If the contractor does not list anyone else as providing assistance, then the proposal will reflect that the contracted appraiser will be doing 100 percent of the research, analysis and writing of report.

Submission of Offers Submissions of offers to perform these appraisal service shall be submitted via email to the Contracting Officer listed below. The emailed bid offer and proposal shall reference the name of this project and state the price is for performing the work in accordance to this Statement of Work.

Jay Tobin via email jay.g.tobin@usda.gov

Payment The "Submit Invoice-to" address for USDA orders is the Department of Treasury's Invoice Processing Platform (IPP). The contractor must follow the instructions on how to register and submit invoices via IPP as prescribed by the U.S. Department of Treasury. All invoices are to be submitted via the electronic Invoice Processing Platform at this website https://www.ipp.gov.

The invoice shall be processed, once the contractor is notified that the appraisal work is reviewed and acceptable. The invoice shall indicate the total appraisal fee for the assignment, the total amount previously invoiced, and any amount currently due. All invoices come only from the appraisal company awarded contract, but if subcontractor costs are included, then copies of invoices from the subcontractor must be included with the appraisal company’s invoice.

mailto:jay.g.tobin@usda.gov https://www.ipp.gov/

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H-3630-1 - MINERAL MATERIAL APPRAISAL HANDBOOK

Chapter V. Narrative Appraisal Report

A. Part I. Introduction V-l

1. Title Page ..." V-l

2. Table of. Contents. .v-l

3 Limiting Conditions and Assumptions V-l

B. Part II. Factual Data. .V-l

1. Purpose. V-l

2. Mineral Material Site Description and Inspection V-l

3 Area Data V-2 »

4. Site Data .V-2

C. Part III. Analysis and Conclusion V-2

1. Highest and Best Use V-2

2 General Valuation Analysis V-3

3. Market Data Approach V-3

4. Income Approach V-3

5. Reconciliation and Conclusion V-3

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D. Part IV. Exhibits or Addenda V-4

1 General Location Map v-4

2 Comparable Data and Material Site Map V-4

3. Subject Photographs V-5

4. Geological Map V-5

5 Comparable Data V-5

6. Other Pertinent Data or Exhibits V-5

E. Appraisal Report Distribution V-6

Chapter VII. References (reserved) .VII-1

Illustrations

1. Comparable Sales Data Sheet

2. Comparison Summary Charts

3. Bracketing Method

4. Derivation of Purchase Price as a Percentage of the Sales Price Method

5. Appraisal Report Title Page

6. Mineral Report Title Page

7. Short-Form Mineral Material Appraisal Report

Appendices

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1. Checklist for Appraisal Data Acquisition

2. Discounted Cash Flow Analysis and Simple Discounted Cash Flow Model

BLM MANUAL Rel. 3-135 8/26/86

Chapter I. Introduction .

A. Purpose of the Handbook .

The purpose of this Handbook is to provide guidelines and a checklist for mineral material appraisers (see BLM Manual 3630 Glossary of Terms) who have received formal training in the preparation of a mineral material appraisal and the writing of an appraisal report for disposals of mineral material under 43 CFR 3600. This Handbook does not take the place of training, but rather provides the mineral material appraiser with the format for the report and the information necessary to conduct an appraisal according to current Bureau standards and policy.

B. Duties of the Mineral Material Appraiser.

A mineral material appraiser's role requires a thorough knowledge of accepted appraisal methods and techniques as used by the Bureau. A working knowledge of the mineral material industry is essential.

The mineral material appraiser's professional reputation as well as that of the agency is "on the line" on every appraisal performed. It is incumbent upon the mineral material appraiser to prepare a thorough professional appraisal to ensure that fair market value is being received by the Government for all mineral material sold.

The mineral material appraiser's function is to apply the technical standards outlined in this Handbook to render an opinion as to the fair market value of the mineral material appraised. In the case of mineral

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C. Appraisal Type Determination.

The first thing a mineral material appraiser must do is to determine which type of appraisal is necessary. There are two types of appraisals, the narrative appraisal and the short form appraisal.

The narrative appraisal is done for trespass cases and complicated or controversial mineral material sales. An area wide appraisal or preparation of a rate schedule would require a narrative appraisal. An area wide appraisal is prepared in the same manner as a single sale appraisal except that the market area analyzed is larger. Preparation of a rate schedule is less reliable than an individual appraisal, but may be necessary because of personnel or budgetary constraints. The preparation, field examination data, analysis, and format for narrative appraisals are given in Chapters II-V, respectively.

A short form appraisal can be prepared for uncomplicated^ noncontroversial appraisals. A short form appraisal uses very basic information and does not go into the detail of a narrative appraisal.

The format for the short form appraisal is given in Chapter VI. Since the information needed for a short form appraisal is also contained in a narrative appraisal, the minimum requirements are referenced to where the material is covered in the narrative report chapters.

Chapter II. Preparation for the Appraisal.

A. Office Preparation.

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The disposal case file should be carefully examined, making certain that it contains all available pertinent case history. If not in the case file, the Master Title Plat should be reviewed to ascertain the land status or any classification actions which could affect the value of the material. The mining claim recordation index should be checked for any mining claims which would prevent the disposal of mineral materials.

If the land is private surface with minerals reserved to the Government, it will be necessary to ascertain the name and address of the landowner.

This can be done by going to the county courthouse and checking the land records. A topographic map, preferably a 7.5 minute series (scale 1 inch to 2000 feet), should be used to plot the necessary data for the field examination. All access routes to and from the mineral material site and the land status of the lands they cross should be noted prior to the field examination. If access to the mineral material site crosses private land, the name and address of the landowner must be ascertained and permission to cross his property obtained. Bureau records should be checked to determine if any rights-of-way or easements were reserved to the United States.

The current land use plan (RMP or MFP) must be checked to see if any conflicts would affect the value (i.e., zoning, resource conflicts, stipulations, etc.).

Photographs of all significant features of the appraisal site should be taken. Best results can be obtained by using a 35mm camera. Prints should be taken as opposed to slides. These pictures will become a part of the appraisal report.

B. Market Data.

All available literature concerning the geology and economics of the mineral commodities being appraised should be reviewed. The best available sources of information are State Highway Departments, the U.S.

Geological Survey, State Geological Surveys, private testing laboratories, local colleges and universities, and the Bureau of Mines.

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Determine whether the market for the mineral material being appraised is a local market or a regional market. Dependent upon availability, sand and gravel would probably have a local market; whereas building stone may be shipped throughout a wide area, therefore having a regional market.

II-2

C. Comparable Sales Data.

Review Bureau records for sales of the same or similar material in the general area of the proposed mineral material site. Sales from the same location such as competitive sales are preferred. All sales used as comparables should be reasonably recent. Generally, reasonably recent would be sales not over two years old.

Private operators and State and local governments should be checked for sales of similar material in the appraisal area. Caution must be exercised when using comparable sales of government agencies and State or county highway departments to ensure that these are "arms length transactions" of unrelated, knowledgeable individuals. BLM negotiated sales should not be used, but the basis for the value of these sales could be. Good sources of information on the market price for mineral material can be found in the following manner:

o Call or visit the State Highway Department.

o Call or visit the County Highway Department.

o Call or visit companies listed in the phone book under such headings as construction, sand and gravel, stone, building supply, landscaping, etc.

D. Checklist for Appraisal Data Acquisition.

Notes taken in the field should be recorded in sequence as the

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 21 of 46 appraisal progresses. The use of a checklist before and during the field examination helps to minimize the possibility of overlooking pertinent data that should be recorded while in the field. See Appendix 1 for the checklist. Not all of the information listed will be needed for each appraisal. Use of the data from this checklist should be commensurate with the complexity of mineral material appraisal.

III-l

Chapter III. Field Examination of the Proposed Mineral Material Site .

A. Access Routes.

1. Road Type. Describe the type of road (i.e., paved, gravel, dirt, etc.) and the ownership (public or private).

2. Restrictions . Discuss any legal or physical barriers such as current litigation, mining claims, hostile land owners, feuds, etc.

3. Comparability. Compare the access to areas with similar types of material.

B. Mineral Material Site.

Verify the physical boundaries of the mineral material site.

Describe the following aspects of the mineral material site:

1. Location. Give the general location of the site in reference to the nearest town or community.

2. Topography and Geology. Describe physical characteristics such as size and shape of the mineral material, soil type, topography and drainage, vegetative cover, and geology of the site.

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 22 of 46

3. Climate . Describe the climate and how weather conditions affect the market for and the mining of the mineral material.

4. Present Land Use. Describe the past and present uses of the mineral material site and identify any conflicts which may occur due to the proposed use.

5. Material Data. Describe the material being appraised and the effects of the following factors on its marketability:

a. Describe the quality of the material being appraised and what uses it can be suitable for.

b. Give the quantity of material being appraised and the range of units anticipated If different sizes will be sold from the same location.

III-2

c. Describe the thickness and composition of all overburden to be stripped and the placement of the stripped material. Give the stripping ratio.

d. Describe the process by which the material will be removed and the equipment necessary to carry out the operation.

e. Describe how the material will be processed and/or stockpiled. Cite any special problems which may exist.

f. Give distances to market for the materials being appraised and the type of transportation used.

g. Give details of what kind of reclamation measures will be required and who will require them (I.e., State, Federal Government, Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 23 of 46 private landowner, etc.).

6 * Photographs, Maps, and Sketches. Take photographs of the mineral material being appraised, the site, and any buildings or equipment being used to mine or process the material. Make appropriate maps and sketches to assist in the evaluation of the material.

7. Sampling. Sampling, drilling, or testing of the mineral material, if required, should be done by the BLM mineral specialist or by a qualified testing facility.

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Chapter IV. Analysis of Appraisal Data.

A. Limitations on Analysis.

Describe any factors which may set limitations on the appraisal such as current land use plan restrictions or stipulations, zoning (if applicable), and the amount of market data available or amount of market data used.

B. Critical Assumptions.

Critical assumptions are made prior to the analysis of the market data. These assumptions put the reader on notice of the parameters which constrain the analysis.

1. Examples. Examples of critical assumptions are as follows:

a. Data, opinions, estimates, statistics, etc., obtained from outside sources during the course of gathering information are assumed to be reliable and accurate.

b. The appraiser renders no opinions of a legal nature, such as

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 24 of 46 ownership of the property or conditions of title.

c. The appraisal report should not be used for purposes other than that for which it is written.

d. The estimated value given in the appraisal report is for the date indicated and is subject to change and modification.

e. The mineral material will be disposed of under current BLM procedures.

C. Comparable Sales Method.

The comparable sales method is an appraisal method that relies on direct comparison of transactions between knowledgeable buyers and sellers in the open market. It is the simplest and ordinarily the most direct and reliable approach. Consequently, its use alone may be adequate where sufficient transaction data exists upon which to draw firm conclusions of value. It is particularly applicable to small volume sales. The comparable sales method is the preferred method and should be used unless no comparable sales are available.

1. Data Selection . Describe comparable sales data selection for analysis. Include an explanatory statement concerning the objectivity of comparable sales data which are selected for further analysis and ultimately used involving family members, Government or administrative agencies, and interrelated corporations.

2. Data Verification , Verification of data used for direct comparison is mandatory.

a. Outline the steps followed and any unusual circumstances encountered In verifying data.

b. Personally contact persons knowledgeable about the

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 25 of 46 transaction. Telephone verification Is acceptable if the party contacted provides detailed information.

c. Ensure that the individual providing transaction data has been directly involved or is personally familiar with the parties, their motivation, and the intensity of negotiations. He might be the buyer or seller or their agent. Identify the individual on the data sheet by name and title such as buyer, seller, or agent. Also, include the date and name of the person who obtained the information.

d. Thoroughly inspect by field examination the data of each comparable sale so that an accurate comparison may be made with the mineral material being appraised.

e. Complete all items shown on the Comparable Sales Data Sheet during verification so that information concerning the comparable is fully descriptive and accurate, facilitating subsequent analysis (see

Illustration 1).

f. Specifically identify the actual transaction date. This is the date the consideration and terms were agreed upon, and may differ from the document date.

g. Specifically explain the details concerning any data involving a government agency. If used, this data must be thoroughly verified with the private party. It must be shown that he was a willing, but not obligated, buyer or seller and consideration was not influenced by the fact that the other party was a government agency.

3. Data Presentation. Present the data documentation so that the reader will know exactly where to search the records and which person to contact who has direct knowledge of the data. Documentation of the data used for direct comparison must be Included in the narrative comparison and the comparison summary chart.

IV-3

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 26 of 46

a. Identify the data and essential facts of the comparable sales that document quantitative or qualitative differences between it and the mineral material being appraised in the narrative comparison and the comparison summary chart. Take the data directly from the complete documentation of the data contained on the Comparable Sales Data Sheet

(see Illustration 1). These may include:

(1) Date of sale.

(2) Distance to market.

(3) Type of deposit.

(4) Type of products sold or that can be sold.

(5) Production rates.

(6) Sale price.

(7) Operating costs (mining, processing fees, and other costs).

(8) Contingencies/conditions of sale, i.e., mining, reclamation, and bonding requirements.

(9) Ownership (private sector, governmental agency, split estate).

4. Data Analysis . Analyze the data in sufficient detail to provide an overall picture and to support specific comparison factors used in the market data approach. In general, more complex valuation tasks require more detailed analysis. If differences or adjustments between the sale and the mineral material being appraised are supportable, the appraiser must present data in sufficient detail, with an appropriate analysis, to

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 27 of 46 reasonably demonstrate the extent of the particular differences or adjustments. If adjustments cannot be fully supported by sales/market data, the appraiser must demonstrate and explain the reasonableness of any adjustments based on this judgment.

a. Describe the overall analysis, proceeding from general to specific comments concerning the data and provide:

(1) An indication of the price level trends affecting the material.

(2) The number of sales selected.

(3) A statement that the data concerning these transactions are included in the addenda and are given on a map showing each comparable sale.

b. Identify, discuss, and analyze significant comparison factors to develop support for adjustments. Some of the factors that may be significant are:

(1) Time as It relates to changes in price as a response to changes in the economy of the market.

(2) The physical properties of the material in relation to its marketability and suitability for various uses (i.e., color, uniformity, density, etc.).

Give uses for which the material is marketable.

(3) The cost of access and the stability of the access contract.

(4) The amount of mineral material generally removed by the operator annually.

(5) The ease of removing the vegetation, soil material, and weathered rock.

(6) The physical properties of the deposit and its material in relation to the ease of extraction.

(7) Differences of the material or site (i.e., utilities) that may decrease or increase the cost expended to process the material.

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 28 of 46

(8) Average cost to haul the material to the consumer.

(9) Relative availability of railroad access.

(10) The cost for the operator to meet reclamation standards as required by the landowner or regulatory authority.

(11) The portion of the price paid which relates to compensation for surface damages. Caution must be exercised to ascertain the real value from any disguise In royalty and damages which seek to give seller a tax advantage.

5 * Data Comparison. The comparison process follows the data analysis.

By directly comparing similar sales, using the factors above, adjustment factors can be calculated.

a. Take into account the following general considerations when comparing similar sales and making adjustments:

(1) Only reasonably comparable sales are included.

(2) Sales must be identified clearly and consistently to permit cross-referencing in the report and to permit detailed documentation in the addenda.

(3) Adjustments should proceed from the known to the unknown. Each sale is compared to the subject disposed material. Where the subject material is superior to the sale in a particular factor, a plus is used on the summary chart with the corresponding narrative explaining the reasons. Therefore, a minus is assigned if the subject material is inferior to the sale for a particular factor and a zero is used where the two are considered to be equal or similar.

(4) Comparisons are made on a sale basis rather than a factor basis. Discuss each sale fully and consider all differences before proceeding to the next sale.

Do not use an adjustment factor as the heading. Complete the discussion of each sale by considering each factor or difference and conclude with an overall comparison with the mineral material being appraised, as if there were only

Statement of Work for Mineral Materials - Ouachita and Ozark-St. Francis National Forests page 29 of 46 this one sale to indicate the mineral material value.

b. Use the comparison summary chart and narrative comparison methods which are dependent and complimentary to each other, in each report.

(1) The comparison summary chart includes essential identifying facts such as the sale number, date, size, and price per cubic yard or ton (see Illustration 2).

Headings for each of the significant value factors for which adjustments were made in the narrative comparison are shown. The adjustment described in the narrative is displayed for each factor for each sale.

Inclusion of an appropriate summary chart is required,…