DRAFT STRATEGIC PLAN Presented by The Strategic Plan Task Force of the Board of Trustees Comments due by October 1, 2012 Send comments to: paula@appraisalfoundation.org Important Note: All written comments will be posted for public viewing, exactly as submitted, on the website of The Appraisal Foundation. Names may be redacted upon request. reserves the right not to post written comments that contain offensive or inappropriate statements. Draft Strategic Plan Page 1
TABLE OF CONTENTS Background on the Strategic Plan Task Force... 3 Timeline and History of... 4 TAF Timeline 1987-1997... 4 TAF Timeline 1997-2007... 5 TAF Timeline 2007-2012... 6 Background Annual Federal Grant... 7 New TAF Vision and Mission Statement... 8 Outreach and Communications... 9 Interaction with State and Federal Regulators... 10 Future Educational Role of... 11 Future Funding Sources... 12 Role of Foundation Sponsors... 13 Proposed Foundation Structure... 14 Staying Abreast of Changing Valuation Products... 16 Reaching Out to Young and New Professionals... 17 TAF Relationship with Academia... 18 Branding of... 19 Conclusion... 20 Draft Strategic Plan Page 2
Board of Trustees Strategic Plan Task Force Draft Strategic Plan for Comments Comments Due October 1, 2012 BACKGROUND ON THE STRATEGIC PLAN TASK FORCE The Strategic Plan Task Force was established in 2011 by Past Chair Joseph Traynor. With the upcoming 25 th Anniversary of, then Chair Traynor and the Leadership Team agreed that the time was right to take a close look at where (TAF) is heading as it moves into its next 25 years. The Task Force was charged with reviewing the history of (where it started, where it is now and where it will go in the future). Over the years, has had several re-writes to its Strategic Plan including a Task Force devoted to the Structure of the organization in 2004. This effort has been the most comprehensive to-date, covering not only the Structure but also outlining several new initiatives. Since May of 2011, the Task Force met numerous times via conference call and held in person sessions in September 2011 and January 2012. The September 2011 session was a full-day brainstorming session that led to a finalized outline of key topics to address. The January 2012 meeting lasted for two days and included detailed discussion on key topic areas including the mission and structure of the Foundation. The January meetings culminated in a briefing with the Executive Committee. Since that meeting, the Task Force held several conference calls to refine its recommendations. These recommendations were presented in two private forums on May 17 and May 18 in conjunction with the Spring Board of Trustees meeting. Members of the Task Force include: Paul Welcome, Task Force Chair Anthony (Tony) Aaron, Business Plan Committee Member Larry Disney, Association of Appraiser Regulatory Officials (AARO) Representative Larry Foley, Sponsor Representative (National Association of Independent Fee Appraisers) Alan Hummel, Appraisal Practices Board (APB) Representative Richard Knitter, Appraisal Standards Board (ASB) Representative Warren K.K. Luke, Former Member of the Board of Trustees Kirk Manker, Business Plan Committee Member Wayne Miller, Appraiser Qualifications Board (AQB) Representative Lawrence Netterville, Business Plan Committee Chair Steve Spangle, Sponsor Representative (Massachusetts Board of Real Estate Appraisers) John Rasmus, Former member of the Board of Trustees James B. Nardie Vine, Former Board of Trustees Chair On the pages that follow, you will find the strategic initiatives outlined by the Task Force over the course of the last year and half. Included with the bullets is background/rationale for the recommendations. Send comments by October 1, 2012 to: Paula Douglas Seidel, Executive Administrator 1155 15 th Street NW, Suite 1111 Washington, DC 20005 paula@appraisalfoundaiton.org Draft Strategic Plan Page 3
TIMELINE AND HISTORY OF THE APPRAISAL FOUNDATION, over its 25 year history, has had many accomplishments. Many of these accomplishments are listed on a timeline over the next several pages. TAF TIMELINE 1987-1997 1990 The Uniform Standards of Professional Appraisal Practice (USPAP) first adopted in 1987 Original Real Property Appraiser Qualification Criteria (RPAQC) adopted in 1991 USPAP changed from loose-leaf binder format to annual bound edition Revenue Sources: Sponsorship Fees: 82% Publication Sales: 11% Federal Grant: 5% Miscellaneous: 2% Draft Strategic Plan Page 4
TAF TIMELINE 1997-2007 1998 The Appraiser Qualifications Board (AQB) implements the Course Approval Program (CAP) The RPAQC undergoes significant revisions AQB adopts voluntary Personal Property Appraiser Minimum Qualification Criteria 15-hour and 7-hour National USPAP Courses developed Instructor Certification Program implemented USPAP printing cycle changes to a two-year cycle, Frequently Asked Questions (FAQs) added First TAF sponsored symposium held on Mortgage Fraud Revenue Sources: Sponsorship Fees: 12% Publication Sales: 39% Federal Grant: 39% Miscellaneous: 10% Draft Strategic Plan Page 5
TAF TIMELINE 2007-2012 2012 The RPAQC continues to undergo significant revisions AQB establishes National Uniform Exam Voluntary Disciplinary Action Matrix developed State Investigator Training Program implemented Creation of elibrary of Videos on Website AQB establishes University Graduate/Undergraduate Review Program Release of first of a series of monographs on Valuations in Financial Reporting Appraisal Practices Board (APB) established Revenue Sources: Sponsorship Fees: 5% Publication Sales: 65% Federal Grant: 23% Programs: 6% Miscellaneous: 1% 2012 Budget: $4,256,000 Misc 1% Sponsorship Fees 5% Programs 6% Federal Grant 23% Publication Sales 65% Draft Strategic Plan Page 6
BACKGROUND ANNUAL FEDERAL GRANT OF THE APPRAISAL FOUNDATION $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 $1,248,353 $1,268,950 $1,965,857 $1,650,000 $1,100,000 $619,000* *Jan 1 Sept 30 Draft Strategic Plan Page 7
NEW TAF VISION AND MISSION STATEMENT During the course of the Strategic Planning discussions, the group revised the Foundation s Vision and Mission Statement. Since these changes were simply clarifying in nature, the Board of Trustees voted to adopt them on May 19, 2012. VISION STATEMENT To ensure public trust in the valuation profession. MISSION STATEMENT is dedicated to promoting professionalism and ensuring public trust in the valuation profession. This is accomplished through the promulgation of standards, appraiser qualifications, and guidance regarding valuation methods and techniques. Draft Strategic Plan Page 8
OUTREACH AND COMMUNICATIONS BACKGROUND Over the last decade has made some headway in its Public Relations and Communications efforts. Currently, the Foundation has implemented the following: An electronic media outreach service, Foundation enews, that sends targeted and topic-specific emails to over 50,000 individuals on the Foundation s database, An internal media list that includes both trade media and general media outlets, An elibrary of videos and training sessions that includes eight completed productions at this time, with five additions planned for 2012, A social media presence on Facebook as a way to increase communications on exposure drafts, meeting notices and guidance released by the APB, An effective means to handle all media calls and requests for interviews. That being said, with an increased focus and scrutiny on appraisers in light of the recent financial crisis, the time is right for the Foundation to increase its overall outreach efforts by seeking the guidance of a public relations firm or consultant. We feel that this consultant will provide the following assistance: outreach to many different constituencies (practicing appraisers in all disciplines, state and federal regulators, and the consumer public); pitching valuation-related articles to trade media outlets as well as major media outlets; and, providing a plan for crisis communications that can easily be put into place at a moment s notice. RECOMMENDATIONS Use Advisory Council (TAFAC) relationships and any other avenues as entree to federal government agencies Create effective means to better communicate with non-real property disciplines Create effective means to communicate with all appraisers utilizing webinars, videos and other multimedia (not require travel to meetings) Obtain and maintain a more comprehensive email list of appraisers (real property and non-real property) in order to maintain a consistent basis of communication Consider significant enhancements to the Foundation s online presence, including the web site, email communications, social media and other internet options Consider engaging a Communications Specialist or Public Relations Consultant to assist TAF in institutionalizing its communications and outreach Draft Strategic Plan Page 9
INTERACTION WITH STATE AND FEDERAL REGULATORS BACKGROUND In recent years the Foundation has increased its activities relating to working with state appraiser regulators. We have developed a Voluntary Disciplinary Action Matrix of suggested disciplinary actions related to USPAP; made several training videos directed at state regulators; participated in the program of every Association of Appraiser Regulatory Officials (AARO) conference; and, in cooperation with the Appraisal Subcommittee (ASC) and AARO, developed a state investigator training program. The Foundation has also had several meetings with the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB) on a variety of subjects. The Foundation continues to make itself available as an independent, objective source of valuation-related information. RECOMMENDATIONS The recommendations from this section are broken into two categories: State Regulators and Federal Regulators. State Regulators State regulator training, via classroom or video formats State legal staff training, via classroom or video formats State Board Member Training, via classroom or video formats Communicate timely updates and information to the above groups AARO and the Association of Real Estate Law License Officials (ARELLO) to forward topics to the Appraisal Practices Board (APB) Federal Regulators Increase interaction with users of appraisals and regulators of users. Examples include: the American Bankers Association (ABA), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and the Federal Reserve Board Discuss potential training of regulators regarding valuation standards, methods & techniques Ensure more proactive interaction with all regulators. Examples include: the Public Company Accounting Oversight Board (PCAOB), the U.S. Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) Identify other federal regulators whom TAF should proactively contact TAF to develop ongoing relationship with the ASC, the Federal Financial Institutions Examination Council (FFIEC) and others Draft Strategic Plan Page 10
FUTURE EDUCATIONAL ROLE OF THE APPRAISAL FOUNDATION BACKGROUND For the past fifteen years the Foundation has produced the National USPAP Courses. These courses serve as the benchmark for quality USPAP education. While the Foundation produces the course materials, it does not offer the courses to appraisers. The Foundation limits its instructional role to appraiser regulators and USPAP instructors. RECOMMENDATIONS Pursue partnership with Foundation Sponsors to develop Continuing Education (CE) course materials This collaborative effort would focus on promoting quality and consistency in valuation education This joint effort will reduce many developmental and administrative redundancies among the organizations Establish Education Committee separate oversight and management/staff The cooperative effort should result in more timely release of continuing education TAF would not offer courses to appraisers It would remain a wholesaler with Sponsors and other educational providers serving in the retail capacity The Sponsors would provide many of the course developers (SMEs) and, in exchange, would receive significant sponsor-only discounts The Board of Trustees will continue to evaluate the economic feasibility of making USPAP available on an electronic platform that all providers could utilize. Draft Strategic Plan Page 11
FUTURE FUNDING SOURCES BACKGROUND With the enactment of the Dodd-Frank Financial Reform Act, the Appraisal Subcommittee was given additional responsibilities which caused a subsequent increase in its budget and a reduction in the annual grant to the Foundation. Over the years, the grant to the Foundation has accounted for 20-40% of the Foundation s total revenue. While publication revenue is the largest single source of revenue for the Foundation, it is based primarily on one publication: USPAP. RECOMMENDATIONS Seek diversity beyond publications revenue and the federal grant, for instance: Study other Non-Governmental Organizations (NGOs) with governmental authority how are they funded? Examples include: the Financial Accounting Foundation (FAF), the Financial Institution Regulatory Authority (FINRA), and the PCAOB Approach other agencies and regulators (U.S. Housing and Urban Development, the Veteran s Administration, the IRS, Fannie Mae, etc.) about the Foundation educating their appraisers Seek possible outside grant authorities from other agencies (different funding relationships) Draft standards for users, such as Dodd-Frank requirements for Appraisal Management Companies (AMCs) and standards for Automated Valuation Models (AVMs) Draft Strategic Plan Page 12
ROLE OF FOUNDATION SPONSORS BACKGROUND The Sponsoring Organizations of have always had an important role within the organization. During the Foundation s formative years, the Founding Sponsors supported the organization via financial means with annual assessments. Over the years, as the Foundation became more fiscally sound, the organization has been able to lower the financial burden on the Sponsors by reducing the assessment fees. Even so, the role of Sponsoring Organizations today is one of intellectual support. It is through the Sponsoring Organizations and their respective memberships, that the Foundation is able to cultivate relationships with future board members and future leaders. RECOMMENDATIONS s Sponsors are extremely important to the ongoing work of the Foundation. Assuredly, the Task Force s desire is to encourage the Sponsors to maintain -- and grow their relation with TAF. In that spirit, the Task Force is recommending the creation of a Sponsor Council that would Identify emerging issues make recommendations to the Appraisal Standards Board (ASB), Appraiser Qualifications Board (AQB), Appraisal Practices Board (APB) and Board of Trustees (BOT) on major issues pending before the Boards Make recommendations regarding the agenda of projects, the selection of task forces, amendments to the Uniform Standards of Professional Appraisal Practice (USPAP), Statements or Advisory Opinions under development by the ASB and revisions to the AQB Appraiser Qualification Criteria and Interpretations/Clarifications The Task Force is also recommending that the Sponsor Council have a seat on the Board of Trustees Draft Strategic Plan Page 13
PROPOSED FOUNDATION STRUCTURE BACKGROUND The governing body of, its Board of Trustees, is currently composed of 25 individuals. At the present time 14 Trustees are elected At-Large and 11 are appointed by Sponsoring Organizations. The Foundation has three advisory councils which have historically provided future agenda items for our Boards as well as provided comment on exposure drafts. RECOMMENDATIONS Proposed changes to the structure of the Board of Trustees The rationale for changes is effectiveness of the Board based on the main responsibilities of the Board of Trustees: appointing members to the independent Boards providing oversight of the independent Boards funding the operations of the Boards Structure of the Board of Trustees Option 1 16 member BOT, includes 7 At-Large (consider including user, academia, consumer) 1 Sponsor Council Representative 8 associated with disciplines Commercial Real Property Residential Real Property Agricultural Real Property Mass Appraiser Right of Way Business Valuation Personal Property Machinery & Equipment Personal Property Fine Arts To be governed by 5 member Executive Committee (officers only no assistant officers) composed of individuals from the 16-member BOT Intermediate or Long Term Goal Structure of the Board of Trustees Option 2 14-17 Members, includes 5 member Executive Committee (officers only -- no assistant officers) 1 Sponsor Council Representative 1 Real Property Representative 1 Business Valuation Representative 1 Personal Property Representative Remainder would be at-large Draft Strategic Plan Page 14
Structure of the Board of Trustees Option 3 14-17 members, includes 5 officers the goal is to represent the disciplines contained in USPAP users of appraisal services (e.g. lenders) public representative Independent Boards (APB, AQB and ASB) Size to remain at 5-7 members Encourage multiple valuation disciplines on each Board Consider continued use of working groups for additional discipline-specific input Advisory Councils Global Valuer s Forum (formerly the International Valuation Council) The Foundation needs to continue to have an international presence. Will monitor the redevelopment of this council Industry Advisory Council A benefit to the Foundation Should continue as it is Advisory Council A benefit to the Foundation Should continue as it is Sponsor Council As discussed previously All Councils should encourage their members to apply for At-Large Trustee vacancies as they occur. Draft Strategic Plan Page 15
STAYING ABREAST OF CHANGING VALUATION PRODUCTS BACKGROUND In recent years many new valuation-related products are being used on an ever-increasing basis by the marketplace. In many instances, these alternative valuation products are being used in lieu of appraisals. Accordingly, the Foundation needs to keep abreast of ever-changing market needs. In addition, the role of Appraisal Management Companies in real estate appraisal has expanded exponentially in the past few years. RECOMMENDATIONS Broker Price Opinions (BPOs) Recommend a Task Force to examine the differences between BPOs and appraisals. Part of the charge of the Task Force is to determine if BPOs are working to the detriment of quality valuations and the overall recovery of the real estate market Consider public education piece comparing BPOs with appraisals/consumer protection (involve CFPB) Appraisal Management Companies (AMCs) The Appraisal Subcommittee (ASC) has been charged with enforcement of new regulations regarding AMCs. has reached out to the ASC on the issue of the AMCs to offer its assistance as needed. Letter issued October 2011. Overall, it is important for TAF to stay abreast of changing valuation products and services [such as standards for Automated Valuation Models (AVMs)] Draft Strategic Plan Page 16
REACHING OUT TO YOUNG AND NEW PROFESSIONALS BACKGROUND With a continuing focus on outreach, the Foundation recognizes an untapped source of innovation and ideas among professionals that are currently entering the valuation profession. We believe that this community is fertile ground for both education and outreach efforts as well as potential future leaders of the Foundation. A challenge in this area will be just how to effectively engage these young and new professionals, many of whom are growing new businesses and thus may have limited time for travel and outside extracurricular activities. RECOMMENDATIONS The Task Force recommends that the Board of Trustees find an appropriate forum for engaging young and new professionals. This outreach could include webinars, social networks and could be via the AQB Graduate/Undergraduate Review Program. Draft Strategic Plan Page 17
TAF RELATIONSHIP WITH ACADEMIA BACKGROUND The Appraiser Qualifications Board (AQB) recognizes the value a college degree adds to moving real property appraisal toward a true profession. As a result, effective January 1, 2015, all individuals seeking a Licensed Residential credential must have a minimum of 30 semester hours of college-level education, and all individuals seeking a State Certified Residential or State Certified General credential will be required to have a bachelor s degree. In the coming years, the AQB will work closely with interested colleges and universities to develop an alternative track to obtaining a real property appraiser credential. The AQB would like to examine ways a college/university student can obtain experience while enrolled in an educational program via internships and other creative practicum courses. The Foundation is also in the initial phase of establishing an Academic Resource Panel composed of individual academicians that will assist the AQB and the Appraisal Practices Board (APB). RECOMMENDATIONS Reach out to academic associations and encourage them to join TAFAC Attend and participate in conferences of academicians to raise TAF's profile Develop a mailing list of academicians Make full use of the academic Trustee as a liaison (currently Steve Thode) Work to ensure academic input in all future AQB qualification changes Encourage colleges & universities to add valuation to their curriculum Draft Strategic Plan Page 18
BRANDING OF THE APPRAISAL FOUNDATION BACKGROUND Over the years, has seen a growing change in the usage and meaning of the term appraisal. In many other countries and throughout the various disciplines it appears that the term valuation is preferable to appraisal. The term valuation is also preferred in the Financial and Accounting professions as well. RECOMMENDATIONS vs. The Valuation Foundation To recommend the consideration of changing the name of to The Valuation Foundation over a period of years. Intermediate Long Term Implementation Valuation is a term which more completely encompasses the entire range of property types: real, personal, and intangible Valuation describes a framework for the valuation of Assets (i.e., the complete range of property types) Valuation is a term recognized by the international community Valuation is a term recognized by the Financial and Accountancy Professions as well as the Governmental/Regulatory world Appraisal has become generic and is product-oriented, primarily used in the consumer real estate sector. As USPAP continues to be recognized and employed by a more diverse and expanding cadre of users no longer limited to real estate, a more encompassing term which describes the Foundation and the constituency for whom we provide standards is most appropriate. Valuation therefore is the more appropriate descriptor for the organization. Draft Strategic Plan Page 19
CONCLUSION Over the past twenty-five years has grown considerably and enjoyed much success. This is due in large part to the appraisal practitioners, educators, appraisal regulators and users of appraisal services who have taken the time to contribute to the work of the Foundation. As a stakeholder in the future of the Foundation, we hope you will take the time to share your observations about the course we plan to chart in the coming years. Comments regarding the recommendations contained in this Strategic Plan should be forwarded to the address below not later than October 1, 2012. Strategic Plan Comments Attention: Paula Douglas Seidel 1155 15 th Street, NW, Suite 1111 Washington, DC 20005 Phone: 202-624-3048 E-mail: paula@appraisalfoundation.org Fax: 202-347-7727 Important Note: All written comments will be posted for public viewing, exactly as submitted, on the website of The Appraisal Foundation. Names may be redacted upon request. reserves the right not to post written comments that contain offensive or inappropriate statements. Draft Strategic Plan Page 20