OHIO DEPARTMENT OF TRANSPORTATION OFFICE OF REAL ESTATE

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1 OHIO DEPARTMENT OF TRANSPORTATION OFFICE OF REAL ESTATE DATE: April 3, 2017 TO: FROM: RE: Users of the Real Estate Manual Jared Miller, Manager Appraisal Unit Changes and Updates to the Real Estate Manual The only current and accurate source of ODOT s Real Estate Manual is on the Office of Real Estate s website. This site is located at: Desired information can be accessed by scrolling down the left column and selecting Manuals and Booklets. Specific information can be selected by clicking on the desired section. The Real Estate Manual is a living document as procedures will evolve and change. Individuals or firms providing various services to the Office of Real Estate (e.g. negotiations, titles, appraisal, appraisal review, relocation, relocation review, closing, property management, railroad coordination and utility relocation) must perform these services in compliance with current published policies and procedures. Individuals utilizing a hard copy version of the manual, without accessing the website for updates, risk providing non-compliant services to the Office of Real Estate. Therefore, all users must be aware of the changes as various sections of the manual are updated. ODOT will provide notice of manual changes on the Design Reference Resource Center (DRRC) web page. Users of the manual can access this page and subscribe to be made aware of manual changes via notification. Then, when changes to the manual occur, ODOT will provide direct notice to the subscriber. This page can be accessed at Scroll down to Real Estate Policies and Procedures Manual and select the desired section for updates, or enter your address to subscribe for changes. It is the user s responsibility to maintain their most current address on the DRRC notification system. The DRRC web site is updated four times a year. The Office of Real Estate may also provide additional guidance to its procedures by Inter-Office Communications (IOC s). These communications will be made a part of the Real Estate Manual. If Individuals having questions pertaining specifically to this Section, contact me at (614)

2 TABLE OF CONTENTS 4500 NON EMINENT DOMAIN VALUATIONS General Appraisals for Disposal of Real Property Appraisals Needed for the Disposal of Excess Lands Appraisals Needed for Access Modifications Appraisals Needed for Purchase or Expansion of ODOT Facilities Estimating Fair Market Rent Appraisals Needed for Other Agencies Valuation Procedures For 6(F) Conversions And Replacements General Legal Authority Valuation of 6(f) Conversion Property or Replacement Property Appraisal Review Establishment of FMVE APRIL

3 4500 NON EMINENT DOMAIN VALUATIONS General A. This chapter provides procedures for appraisal and appraisal review assignments for valuations not subject to eminent domain. Due to the unique aspects of non-eminent domain valuations and reviews, the districts may request guidance from the Appraisal Unit at Central Office Real Estate to determine the appropriate valuation and valuation review format. B. Appraisals All valuations must comply with USPAP. The Jurisdictional Exception available to appraisers for assignments involving eminent domain is not applicable to non eminent domain valuations. The appraiser and review appraiser selected for these types of assignments must be prequalified to perform these services. The list of prequalified agency staff is available at the following website: The list of prequalified consultants is available at the following website: There are four general categories/reasons/needs for appraisals that are not subject to eminent domain: 1. State-owned properties or property rights that are being disposed (sold). This includes selling excess lands and permitting the property right of access to be modified [See ODOT Real Estate Manual Section 7300]; 2. Private properties that are being acquired for office facilities, maintenance facilities, salt storage, etc., without the threat of eminent domain [See ODOT Real Estate Manual Section 5309]; 3. State-owned properties that are being leased or rented to someone other than ODOT [See ODOT Real Estate Manual Section 7100]; and, 4. Appraisal for other agencies (not ODOT) or entities, which do not operate subject to the highway trust fund requirements (Division of Aviation, Ohio Rail Commission, etc.) [See ODOT Real Estate Manual Section 5300]. Non eminent domain valuations are often unique and ODOT s existing valuation formats used to acquire rights of way may not be appropriate as they were developed to estimate compensation under the Director s authority of appropriation. Due to the unique nature of non-eminent domain valuation assignments, districts may use limited scope appraisals so long as they are compliant to USPAP. The district must utilize employees who are knowledgeable of appraisal to determine the appropriate valuation format. The district may also utilize pre-approved fee consultants. APRIL

4 Appraisal reports, to the extent appropriate for non-eminent domain assignments, shall comply with this Real Estate Manual. Appraisals are to be prepared on 8½ x 11 paper and all pages must be numbered. A sketch of the entire property depicting approximate locations of structures is required. If structure details cannot be depicted in the property sketch, then a separate sketch depicting the structures is also required. Sketches must be legible. Photographs must show all sides of all structures. Photographs must be legible. It is critical the appraiser be familiar with and adheres to ODOT procedures on the development and reporting of comparable sales data which is outlined in Section 4200 of these procedures. The use of Parcel Impact Notes (PIN s) and Appraisal Problem Analysis forms (APA s) which are used in the valuation problem analysis process for eminent domain valuations are optional for non-eminent domain valuations. It is recommended that districts engage the reviewer before the appraiser as the reviewer can assist in scoping the appraiser and obtaining a USPAP compliant product that meets the needs of the department for each assignment. C. Review of Appraisal Reports All appraisal reports prepared for ODOT must be reviewed by an ODOT pre-qualified appraisal reviewer. The reviewer must be pre-qualified by ODOT for the category of appraisal being reviewed. Generally, the purpose of the review is to assure: 1. the appraisal report complies with USPAP, 2. that the appraisal report is credible, 3. that it complies with this Real Estate Manual, and 4. that it complies with the scope of work agreement between ODOT and the appraiser. It is mandatory that the reviewer create a written review report that documents the reviewer s findings and reports to ODOT if the appraisal report is recommended or not. All appraisal review reports are to comply with USPAP and therefore, must comply with Standard Rule 3. The general procedure to accept a USPAP compliant appraisal report prepared for any non-eminent domain purpose requires the reviewer to complete Form RE 25-12, USPAP Appraisal Review and, sign and date the Certification of Reviewer form (last page). Depending on the assignment conditions, there may be some unique circumstances that cause the reviewer to create the reviewer s own SR 3 compliant appraisal review report. The reviewer is to complete a field inspection of the subject property and if necessary, a field inspection of the comparable sales utilized within the report. The non-eminent domain appraisal review process does not require two reviews if the value estimate is $500,000 or more. The use of the RE 22 form is optional. Review Letters (discussed in the 4300 section of this manual) are to be issued for appraisal reports that are not recommended. APRIL

5 4501 Appraisals for Disposal of Real Property Appraisals Needed for the Disposal of Excess Lands A. Ohio Revised Code, Section governs the disposal of excess land no longer needed by ODOT. The Property Management section of the Real Estate Manual implements these disposal regulations into ODOT s procedural process. Under certain conditions, these regulations and procedures require ODOT to determine the fair market value of the land to be disposed. This section of the Real Estate Manual details procedures for the appraisal of these disposal properties. B. Appraisals for the purpose of disposal of excess land 1. The State s excess lands are diverse and may range from parcels that are located adjacent to a highway which are small, irregular tracts having little economic utility to parcels located in high demand areas which have tremendous economic utility and can be developed to an intense highest and best use. Appraisals needed for the disposal of excess lands must be considered on a case-by-case basis. As a result, there is no one appraisal process that would be appropriate in all situations. 2. The district must ensure that procedures published in the Property Management Section of the Real Estate Manual are considered prior to making the appraisal assignment. Many of the decisions that are required to comply with the Property Management sections of the Real Estate Manual will provide a background for a proper scope of work for the appraisal assignment. 3. Appraisals prepared for land disposals must be compliant to USPAP and must be prepared by an ODOT pre-qualified appraiser. If appropriate, a district may scope the appraiser to prepare a limited scope appraisal, but the limitations of the scope must be approved by the district and the appraiser must explicitly discuss those limitations in the body of the appraisal report. Additionally, the use of any extraordinary assumptions or hypothetical conditions by the appraiser must be pre-approved by the district. 4. If the excess land parcel was originally acquired with Federal funds, FHWA needs to approve the appraised value. Therefore, it is prudent for the district to consult with FHWA regarding the valuation format to be used prior to the actual assignment in order to avoid any delays that may occur due to FHWA disagreement regarding the appropriate valuation format. C. ODOT Appraisal Forms used for the disposal of excess land 1. Disposal valuation using the RE 27-L Land Appraisal Report form. a. This valuation format is used when the valuation problem is noted as simplistic and the property being disposed of is vacant land only. There is no dollar limit with this appraisal format. Districts should use the valuation format discussed in section (C)(2) whenever there are any structures on the property or the APRIL

6 valuation problem is noted as complex. Many appraisal software companies offer a Land Appraisal Report in their software packages. If an appraiser chooses to use a commercially available report, the appraiser should take care to ensure the reports are the same format. Not all software companies have the same forms or formats available. b. The disposal valuation using the RE 27-L Land Appraisal Report form consists of the following: Part 1 Cover Page/Letter of Transmittal Part 2 RE 27-L Land Appraisal Report form which is available on the ODOT Office of Real Estate web page. Part 3 Addenda: Since the one page RE 27-L Land Appraisal Report form does not offer sufficient room to answer every USPAP question adequately, it is the responsibility of the appraiser to add supplemental pages to the report that address each item that is necessary to bring the final report into compliance with USPAP and these procedures. At a minimum, the addenda should include a USPAP compliant discussion of the following items if they have not been adequately addressed on the one page form: Client and Any Intended Users: Intended Use of The Appraisal: Real Property Interest Being Appraised: Definition of Market Value: Dates of the Appraisal: The Valuation Problem: Extraordinary Assumptions: Hypothetical Conditions: General Assumptions and Limiting Conditions: Scope of Work Necessary to Solve the Valuation Problem: Exposure Time: Sale History of the Subject: (Must Go Back At Least 5 Years) Current Agreements of Sale or Lease: Legal and Political Constraints: Zoning: Highest and Best Use: Reconciliation of Value Indications and Conclusion of Value: Declaration of Reporting Option: Other Comments: Appraiser s Certification: Photographs of the Subject Taken At the Site And, Aerial Photograph of the Site (Google Maps, Bing Maps Or Other) And, Sketch of the Property: adequately depicting access, frontage, and North direction. Either the aerial photograph or the sketch must depict site dimensions and size, but at least one of the two must show site dimensions and site size. APRIL

7 Sales Location Map: Must adequately depict subject and sale locations and must adequately allow the reader to find these properties in the field. Sale Data Sheets: Must comply with the standards in section (B) of the Real Estate Manual and the sales data must include a sketch or aerial mapping of the sale property depicting road frontage, points of access and site dimensions. LEGAL DESCRIPTION of the subject property. The Addenda may include anything else considered relevant by the appraiser such as Parcel Impact Notes or a written scope of work. c. The districts may not use the ODOT Value Analysis or the ODOT RE 90 Summary Appraisal Report in a Value Finding Format when estimating the market value of disposal properties. These formats were developed for eminent domain valuation and are not appropriate for valuation of disposal properties. In particular, the Ohio Administrative Code exempts an appraiser from complying with Standards Rules 1 and 2 of USPAP when using the Value Analysis for partial take acquisitions under the waiver of appraisal provision. That exemption does not apply to appraisals performed for disposal of state assets. As disposal valuations must comply with USPAP, certified appraisers and reviewers will have a difficult time complying with USPAP if these formats are used for land disposals and the reports could easily be interpreted as misleading when used for purposes other than they were originally designed. d. A completed example of a disposal valuation report using the RE 27-L Land Appraisal Report form is available for the appraiser s review and use on the Office of Real Estate web page. e. The review format to be used by the appraisal reviewer is ODOT form RE USPAP Review for ODOT Non Eminent Domain Appraisal Reports. 2. RE 27 Summary Appraisal Report for an ODOT Real Property Disposal a. This valuation format is used whenever the valuation problem is complex or, when the property being disposed of includes structures or, whenever the more simplistic valuation format discussed in section 4501(C)(1) of these procedures does not apply. b. The RE 27 Summary Appraisal Report for an ODOT Real Property Disposal format is found on the Office of Real Estate web page. c. The appraiser must comply with Standards 1 and 2 of USPAP. The appraiser is to provide adequate information to produce a credible appraisal report. The appraiser must provide enough information to allow the reviewer and the agency users of this appraisal to adequately understand the appraiser s analyses s and conclusions. APRIL

8 d. The review format to be used by the reviewer is ODOT form RE USPAP Review for ODOT Non Eminent Domain Appraisal Reports Appraisals Needed for Access Modifications A. Valuations are needed when a district office disposes of its property right of access along a limited access highway see ORC The disposal of an access right is known as an access modification and it generally occurs when an owner requests a district to issue a permit allowing an owner to modify the drive access onto the state s highway. The modification can be a change in access location or an increase in the access width. The permit may require the owner to fulfill conditions such as installation of an acceleration lane and a deceleration lane, traffic studies, signalization and so on. The procedure for access modification is governed by the 7300 section of the Property Management Manual which is a component of the Real Estate Manual. This procedure requires an appraisal process to estimate enhancement, if any, caused by the conveyance of the right to modify the access. B. The Valuation Process for Access Modifications The valuation process requires the appraiser to prepare a before and after valuation of the property to determine the enhancement to the property caused by permit issued by the district to modify the access. Once enhancement is determined, costs to the owner that are mandated by the permit such as acceleration and deceleration lanes are deducted from the enhancement estimate creating a net enhancement estimate. This net enhancement is the appraised value for the disposal of this property right. An example the valuation analysis required for an access modification is shown: Value of the property As Is With Existing Access in Place 12 foot wide access drive 20 acres x $6,500/acre =$130,000 Value of the property As Modified Assume Permit has been Issued 12 foot wide drive can be widened to 36 feet 20 aces x $20,000/acres = $400,000 Enhancement Calculation Value As Modified $400,000 Value As Is (-) $130,000 Difference $270,000 Deductions for Costs Required by the Permit Create an acceleration and deceleration lane $60,000 Create a traffic impact study $ 5,000 Total $65,000 Net Enhancement Difference between Before and After $270,000 Costs Required by Permit (-) $ 65,000 Net Enhancement $205,000 APRIL

9 The Access Modification Appraisal template (RE 25-18) is to be used for access modification appraisals. This template is on the Office of Real Estate s web page. This appraisal is to be reviewed using the review template (RE 25-11) appropriate for this appraisal format. C. A charge to the property for enhancement due to the modification may be assessed in accordance with the 7300 section of the Real estate manual. If the property rights were originally acquired with any amount of Federal funds, FHWA will need to approve the estimated enhancement based on the appraisal. D. In some instances it may be apparent to a reasonable person there will be no change in the intensity of highest and best use by modifying the access of a property. An appraisal is not required in these situations. However, ODOT must secure a highest and best use analysis which documents there is no change in intensity of use. Such analysis must consider the four tests which include legally permissible, physically possible, financially feasible and maximally productive as well as an analysis of market conditions in the neighborhood of the subject. There must be a separate highest and best use analysis of the property As Is and another analysis of the property As Modified. E. The appraisal process for an access modification is as follows: 1. Qualified district staff are to look at the subject property and make a reasonable analysis to determine if the proposed access modification will clearly result in enhancement. If it is obvious the modified access does not result in enhancement, it is not necessary to order an appraisal and the access modification should be approved subject to any use restrictions deemed appropriate by the district. The reasons for not ordering an appraisal must be documented in the file and a highest and best use analysis is to be prepared and signed by staff or consultants making the analysis. If highway trust funds were used to acquire the property, it is strongly recommended that the district seek concurrence with FHWA before proceeding. 2. An appraisal is to be completed if it is questionable or if it is obvious the access modification benefits the property and causes a change in the intensity of the highest and best use of the property. 3. The Access Modification Appraisal Report must be USPAP compliant. ODOT acknowledges the market place is not perfect and that ideal comparable sales to reflect the property either As Is or as Modified may not exist. The appraiser is still obligated to logically explain the rationale for a conclusion of enhancement or no enhancement. The appraiser must follow the template or the report will be rejected. The italicized explanations in the template are not to be duplicated in the appraiser s report. ODOT expects adequate explanations and support for conclusions and adjustments. The appraiser is expected to verify factual data from all sources, and is not to base conclusion on conjecture, speculation or assumption. When considering the property As Modified, the appraiser is to analyze the property assuming ODOT has conveyed the property right to modify the access to the owner. The appraiser must discuss and verify the conditions of the access APRIL

10 modification with the District Real Estate Administrator. Often when a property right is granted to modify the access, the owner may also be required to add turn lanes, acceleration lanes, and deceleration lanes or to create a median cut in addition to creating a new/wider access. It is improper for the appraiser to value the property As Modified and assume these things as completed when in fact they are not. The costs of these features must be deducted from the enhancement value estimate to determine the net enhancement. The selection of comparable sales is to be based on similarity to the subject As Is and As Modified. The comparable sales are to have the same or very similar developmental potential of the subject property and should be located in a similar location and should be as recent as possible. The appraiser is required to detail information about each sale s access onto streets or highways. The sketch accompanying each sale should adequately show number of drives, width of drives and location of the drive in relationship to the overall property. NOTE: As the purpose of this appraisal is to determine the enhancement caused by the modification of the access, all comparable sales must have access locations and widths detailed on the sale data sheets making similarity or dissimilarity of access of the sales to the subject obvious to any reader. Appraisals that do not comply with this procedure are to be rejected. Access modifications do not guarantee the successful development of a property and the appraiser is to consider and analyze the developmental potential of the property and to avoid conjectural or speculative assumptions concerning the property. F. The appraisal review process for an access modification appraisal is as follows: 1. The reviewer is to ensure the appraiser used the current version of the Access Modification Appraisal Report which is: RE ODOT - Access Modification Appraisal. 2. The required forms the reviewer must fill out include: RE 25-11: The Access Modification Review Template. There is no need for the RE -22 to be filled out as the assignment was not for the purpose of establishing FMVE. Review Letter: This letter is to be created only if the appraisal has been rejected, or, if there are other items which are non-compliant with established ODOT procedures. 3. The Review Process a. The reviewer must ensure the appraiser has adequately researched, verified, developed, analyzed, supported and presented the highest and best use, the access descriptions/locations/widths and the comparable sales so the conclusions and values are well-understood by any reviewer reading the appraisal report. The APRIL

11 review appraiser must ensure the appraisal provides details on how access influenced the highest and best use of the subject property and that the comparable sale data sheets have adequately described the access of each sale and the sketch is sufficient allowing the reviewer to understand each comparable sale s access issues. b. Adjustments must be supported or adequately explained so the reviewer understands the rationale for the appraiser s conclusions and values. Appraisals that are recommended will note the reviewer s recommendation on the review template. Appraisals that are not recommended will also have the review template completed as well as a Review Letter issued by the reviewer. c. The reviewer is to inspect the subject property and if necessary, the prime comparable sales utilized in the analysis. G. The Acceptance of Appraisals of Access Modifications 1. The procedure to accept an Access Modification Appraisal Report requires the reviewer to complete the Access Modification Review Form RE and sign and date the Certification of Reviewer form which is the last page Appraisals Needed for Purchase or Expansion of ODOT Facilities 1. There are no pre-approved ODOT forms designed for appraisals for these assignments. The district is encouraged to engage the review appraiser first to assist the district in obtaining a report that meets the program needs of the district. 2. The appraisal report must comply with USPAP and with the guidance in ODOT Real Estate Manual Section The appraiser must also be provided all of the required documents in accordance with the ODOT Office of Facilities & Equipment Management website: 3. The appraiser may not use any extraordinary assumptions or hypothetical conditions as they relate to the property being considered for acquisition without the written consent of the district office. 4. A sketch detailing the property and improvements (if any) being appraised is required within the appraisal report. The appraiser is required to research the property in sufficient detail to determine where physical access (if any) to the property from the highway system will be provided and the width of that access. If more than one access is available, the appraiser is to describe all access points and detail them in the sketches as well. APRIL

12 4503 Estimating Fair Market Rent 1. A District has the responsibility to determine fair market rent for any property owned by ODOT that will be offered for lease. A District may use one of two approaches to estimate fair market rent. 2. Approach 1: A District may use an individual (or company) who is not a certified appraiser as issued by the Ohio Department of Commerce. The market rent estimate need not comply to USPAP standards, nor does the individual need to be listed as prequalified with any department within ODOT. 3. Approach 2: A District may use an individual who is a certified appraiser as issued by the Ohio Department of Commerce. The appraiser need not be listed as pre-qualified with any department in ODOT. Certified appraisers are required to comply with USPAP and an estimate of market rent is an appraisal see edition of USPAP, page 285. Any report of the estimated market is to comply with Standard Rules 1 and 2 of USPAP. 4. A review of the market rent estimate is not required. 5. If available, the individual estimating market rent is to be provided a copy of the existing rents (if any) and a copy of the proposed lease. As needed, the District is advised to seek guidance from Central Office of Real Estate. 6. There are no pre-approved ODOT forms used to estimate market rent. The District is encouraged to seek guidance from Central Office Real Estate to assure it is obtaining a market rent estimate report that meets its program needs. 7. As appropriate, the individual estimating market rent must comply with procedures in Section 7100 of the ODOT Real Estate Manual. 8 A sketch detailing the property and improvements (if any) is required within the report Appraisals Needed for Other Agencies 1. There are no pre-approved ODOT forms designed for appraisals prepared for other agencies. The district is encouraged to engage the review appraiser first to assist the district in obtaining a report that meets the needs of the agency. Appraisal review requirements will necessarily be worked out between agencies but will always meet the minimum standards in USPAP. Review requirements in addition to USPAP must be discussed and agreed to by each agency involved. 2. The appraisal report must comply with USPAP and with the guidance in ODOT Real Estate Manual Section 5303 as appropriate. The appraisal must also consider the appraisal requirements of the other agency and with The Uniform Appraisal Standards for Federal Land Acquisition (UASFLA), as appropriate. APRIL

13 3. The appraiser may not use any extraordinary assumptions or hypothetical conditions without the written consent of the district office or the other agency. 4. A sketch detailing the property, and improvements (if any), being appraised is required within the appraisal report. The appraiser is required to research the property in sufficient detail to determine where physical access (if any) to the property from the highway system will be provided and the width of that access. If more than one access is available, the appraiser is to describe all access points and detail them in the sketches as well Valuation Procedures For 6(F) Conversions And Replacements General 1. These valuation procedures are used when a highway project impacts property funded with Land and Water Conservation Funds (LWCF) State Assistance Program funds (commonly known as 6(f). 2. The Land and Water Conservation Fund Act was passed by Congress on September 3, The Act applies when LWCF funds have contributed to the acquisition or development of a state, local, or municipal recreational area. Section 6(f) of the Act applies when a highway project takes property from such a recreational area converting the property taken from recreational use to highway use. The land taken by the highway project must be replaced with land of equal or greater fair market value, location, and usefulness. These requirements are part of the National Environmental Protection Act (NEPA) and the mitigation plan occurs during the environmental phase of the highway project. a. Clarification regarding this law may be obtained from the Office of Environmental Services, Ohio Department of Transportation. 3. The Conversion Property a. The conversion property is the property needed for the highway project. The conversion property is taken from a larger parcel of property encumbered with LWCF funds. In some instances the conversion property may be the entire property (e.g. A small urban park). It is called the conversion property because the highway acquisition converts the area being acquired from recreational use to highway use. b. An appraisal of this conversion property is required to estimate its value so that an offer of compensation can be made to the owner. c. The Ohio Department of Transportation (ODOT) may have eminent domain authority unless the owner of the conversion property is another state agency. In the event the land acquired for highway purposes is encumbered by a preexisting easement in favor of another state agency, ODOT will work with the other agency to achieve results that are mutually respectful of each agency s program goals. APRIL

14 4. The Replacement Property a. Federal regulation requires any acquisition of LWCF land for a highway project to be mitigated with a replacement property. b. ODOT does not have the power of eminent domain to acquire the replacement property. (1.) Section of the Ohio Revised Code limits the Director of ODOT to purchase from a willing seller when a replacement of any environmental resource is required by state or federal law. c. If a replacement property is required, then it must be appraised so compensation can be established and then an offer can be made to acquire the property. 5. All valuations must comply with the Uniform Standards of Professional Appraisal Practice (USPAP). 6. All valuations must comply with the Uniform Act and 49 CFR Part Highest and Best Use: The appraiser s highest and best use must be an economic use. A non-economic highest and best use such as conservation, natural lands, preservation, or any use which requires the property to be withheld from economic production in perpetuity is not a valid use upon which to estimate market value. Therefore, any appraisal based on such non-economic highest and best use will not be approved for LCWF purposes. In the event that a use different than the economic use identified above is the desired outcome for ODNR, both ODOT and ODNR will jointly resolve any program differences. a. An appraiser s use of any definition of highest and best use which incorporates non-economic considerations will render the appraisal unacceptable for LWCF purposes. b. The use to which the grantee will put the property is generally an improper highest and best use. 8. Prequalification and competency of appraisers and review appraisers a. As required by 49 CFR (d) and OAC 5501:2-5-06(C)(4), anyone performing an appraisal, appraisal review, waiver valuation or review of the waiver valuation shall be competent and qualified to perform these functions. (1.) To implement the regulations, ODOT pre qualifies fee consultants and agency staff before they can perform any appraisal or appraisal-related function. ODOT maintains a list of those who are prequalified to do appraisal-related work. APRIL

15 b. 49 CFR (d)(2) requires ODOT to utilize a state-certified appraiser when an appraisal is prepared by a fee consultant. The list of ODOT prequalified consultants can be found at the following website: (1.) Certified appraisers must comply with the limitations of their certification. c. The list of agency staff (State) who are prequalified for valuations or review functions are listed on the following website: 9. Appraisal review: All valuations must be reviewed by an ODOT-prequalified review appraiser. If the reviewer is a consultant, he must be a state-certified general real estate appraiser as issued by the Ohio Department of Commerce, Division of Real Estate & Professional Licensing. Those approved for appraisal review are listed on the web sites noted in (8)(b) and (c) above. 10. All valuations and reviews of the valuations must comply, to the extent appropriate, with the procedures outlined in the 4000 series of the Real Estate Manual of the Ohio Department of Transportation. 11. Valuations and reviews of the valuations do not have to comply with the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA), commonly known as the Yellow Book Legal Authority A. Laws 1. Land and Water Conservation Fund Act of 1965 as amended, Public Law , 16 U.S.C The Uniform Act as codified in 42 USC, Chapter Laws and regulations in the State of Ohio including the Ohio Constitution, Article 1, Section 19; Chapters 163 and 55 of the Ohio Revised Code B. Regulations 1. Title 36: Parks, Forests, and Public Property, Part 59 Land and Water Conservation Fund Program of Assistance to States; Post Competition Compliance Responsibilities (36 CFR Part 59) 2. National Environmental Protection Act (NEPA) requirements in 23 CFR Part Mitigation of Impacts to Wetlands and Natural Habitat requirements in 23 CFR Part 777 APRIL

16 4. 49 CFR Part 24; Uniform Relocation Assistance And Real Property Acquisition For Federal And Federally Assisted Programs 5. Section 5501:2-5 of the Ohio Administrative Code: Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 C. Agreements 1. Programmatic Agreement between State of Ohio; Department of Transportation; Federal Highway Administration; State of Ohio; Department of Natural Resources; and, National Park Service for Interagency Coordination for Highway Projects Which Involve Section 6(f) Land and Water Conservation Fund Properties Valuation of 6(f) Conversion Property or Replacement Property A. Agency determination of the valuation problem 1. The Parcel Impact Notes: 49 CFR (a)(1) requires ODOT to contribute to the process of defining the appraisal problem and developing the scope of work necessary for the problem. ODOT implements this regulation by use of Parcel Impact Notes (PIN). 2. The procedures for creating a PIN requires input from someone knowledgeable of valuation issues associated with partial takings, such as the review appraiser, to analyze the impact of the taking for the conversion property. 3. The procedures for creating a PIN also requires someone to analyze the impact the acquisition of the replacement property will have on the residue property. 4. The completed PIN documents ODOT s perspective of the valuation problems and the scope of work necessary to solve the identified problems. a. Reference section of the ODOT Real Estate Manual for more information about proper procedures for developing the PIN. b. Reference the Office of Real Estate s web page to download and use the PIN form: B. The appraiser may be scoped to perform valuation services once the PIN is completed. The appraiser is made aware of the PIN and offered an opportunity to contribute to the final draft of the PIN. The appraiser is required to sign the PIN acknowledging he understands the assignment. C. Depending on the complexity of the valuation problem, the ODOT district office may select from the following approved valuation templates when appraising the conversion property or the replacement property: APRIL

17 1. The Value Analysis Report a. This report is developed under the waiver of appraisal provision regulated in 49 CFR Part 24 and OAC 5501:2-5-06(B)(3)(b). b. State-certified real estate appraisers must comply with the Jurisdictional Exception provision in USPAP and the enabling language in OAC 5501: (B)(3)(b)(ii)(a) that permits its use on ODOT projects. c. The ODOT procedure implementing these regulations is section (B) of the ODOT Real Estate Manual. d. The valuation problem must be simplistic and the estimated compensation may not exceed $10,000. e. The waiver valuation process is a part taken evaluation requiring the appraiser to: (1.) Determine the whole property. (2.) Determine the highest and best use of the whole property as vacant. (3.) Value the land component of the whole property to one buyer using the sales comparison approach. (4.) Apply the unit value of the land to the land area and/or property rights taken. (5.) Estimate the contributory value of any site improvements taken. (6.) Estimate any additional compensation for any temporary easement needed during construction. f. The Value Analysis form can be downloaded from the ODOT Office of Real Estate web page at the following link: 2. The Value Finding Report a. This valuation format is a form report, RE 90, and can be downloaded from the Office of Real Estate web page noted above in paragraph (C)(1)(f). b. The valuation format is a USPAP compliant appraisal report. c. As the Value Finding Report is an appraisal, the appraiser is required to extend an opportunity to the owner to accompany the appraiser during the inspection of the property. d. The ODOT procedure for this appraisal format is section (C) of the ODOT Real Estate Manual. e. The valuation problem must be simplistic and the estimated compensation may not exceed $65,000. APRIL

18 f. The valuation process is a part taken appraisal and the process is the same as (C)(1)(e) above. 3. The Right of Way Appraisal Report a. This report format is generally reserved for complex valuation problems. There are no compensation limits. The appraiser must offer owner accompaniment. This report requires the appraiser to estimate the value of the whole property before the taking and to estimate the value of the residue property (what remains of the whole property after the taking). b. The ODOT procedure for this appraisal report is section (D) of the ODOT Real Estate Manual. c. The valuation report is form RE and can be downloaded from the ODOT Office of Real Estate web page at the following link: D. Generally, conversion properties are owned by a government or quasi-governmental agency and the valuation problem is simplistic and a part taken valuation format is appropriate to use. Occasionally, a taking may present complex valuation issues requiring the use of the R/W Appraisal Report. Replacement properties may be owned by a private owner or a governmental owner. The valuation issues can range from simplistic to complex. ODOT district offices are encouraged to contact the ODOT Office of Real Estate for guidance on complex valuation issues on 6(f) conversion properties or replacement properties Appraisal Review A. ODOT requires a review of any valuation or appraisal associated with 6(f) conversion or replacement. 1. The review appraiser must comply with the review requirements in 49 CFR Part 24, OAC 5501:2-5-06(D), USPAP, and sections 4100 and 4300 of this Real Estate Manual. 2. The review appraiser uses these forms to document their review. a. Form RE is used for the review of the Value Analysis. b. Form RE is used for the review of the Value Finding Report. c. Form RE is used for the review of the Right of Way Appraisal Report. B. The purpose of appraisal review is to assure ODOT that the appraisal meets all requirements and supports a credible compensation estimate. ODOT cannot initiate negotiations with the property owner until the appraisal has been reviewed and APRIL

19 recommended by the review appraiser and an agency official has established the agency s Fair Market Value Estimate (FMVE). The FMVE represents the agency s opinion of compensation. 1. The ODOT prequalified review appraiser has the following options when the review is completed: a. Recommend the appraisal The appraisal meets federal, state, USPAP and ODOT requirements and is recommended as the basis for the ODOT offer. (1.) If the review was of an appraisal, the reviewer completes ODOT form RE 22 documenting the recommended FMVE and the reasoning for the recommendation. (2.) If the review was of the Value Analysis Report, the reviewer signs the review signature block on the Value Analysis Report signifying the reviewer s recommended FMVE. b. The signed RE 22 or Value Analysis Report is then sent to the District Real Estate Administrator (DREA) for the establishment of FMVE. 2. Accept the appraisal The appraisal meets federal, state, USPAP and ODOT requirements, but is not used as the basis for the ODOT offer. a. FMVE cannot be established. The ODOT district office must secure another valuation or the review appraiser may develop and support a recommended value. 3. Not accept the appraisal The appraisal does not meet requirements and cannot be used as the basis of the ODOT offer. a. FMVE cannot be established. The reviewer is to issue a Review Letter documenting the deficiencies so the appraiser can correct the appraisal and resubmit for another review. 4. If the appraisal cannot be brought into compliance and FMVE cannot be established, the district must secure another valuation or the review appraiser may develop and support a recommended value Establishment of FMVE A. FMVE is the amount of compensation that is initially offered to the owner. FMVE must be approved by an official from ODOT, it cannot be delegated to a consultant. There can be no initiation of negotiations until FMVE is established. 1. The DREA may establish FMVE up to $1,500,000. The ODOT Administrator, Office of Real Estate has authority to establish FMVE over $1,500,000. APRIL

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