OHIO DEPARTMENT OF TRANSPORTATION OFFICE OF REAL …...4500 NON EMINENT DOMAIN VALUATIONS 4500.01 General A. This chapter provides procedures for appraisal and appraisal review assignments

OHIO DEPARTMENT OF TRANSPORTATION

OFFICE OF REAL ESTATE

DATE: April 3, 2017

TO: Users of the Real Estate Manual

FROM: Jared Miller, Manager Appraisal Unit

RE: 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: http://www.dot.state.oh.us/real. 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 e-mail notification. Then, when changes to the manual

occur, ODOT will provide direct notice to the subscriber. This page can be accessed at

http://www.dot.state.oh.us/DRRC. Scroll down to “Real Estate Policies and Procedures

Manual” and select the desired section for updates, or enter your e-mail address to

subscribe for changes. It is the user’s responsibility to maintain their most current e-mail

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) 752-6151.

http://www.dot.state.oh.us/real

http://www.dot.state.oh.us/DRRC

NON EMINENT DOMAIN VALUATIONS

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TABLE OF CONTENTS

4500 NON EMINENT DOMAIN VALUATIONS ............................................................................ 2

4500.01 General ............................................................................................................................. 2

4501 Appraisals for Disposal of Real Property ..................................................................................... 4

4501.01 Appraisals Needed for the Disposal of Excess Lands ...................................................... 4

4501.02 Appraisals Needed for Access Modifications .................................................................. 7

4502 Appraisals Needed for Purchase or Expansion of ODOT Facilities ........................................... 10

4503 Estimating Fair Market Rent ..................................................................................................... 11

4504 Appraisals Needed for Other Agencies ...................................................................................... 11

4505 Valuation Procedures For 6(F) Conversions And Replacements .............................................. 12

4505.01 General ................................................................................................................................... 12

4505.02 Legal Authority ....................................................................................................................... 14

4505.03 Valuation of 6(f) Conversion Property or Replacement Property ........................................ 15

4505.04 Appraisal Review .................................................................................................................... 17

4505.05 Establishment of FMVE .......................................................................................................... 18


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4500 NON EMINENT DOMAIN VALUATIONS

4500.01 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:

http://www.dot.state.oh.us/Divisions/Engineering/RealEstate/Pages/LPA.aspx

The list of prequalified consultants is available at the following website:

http://www.dot.state.oh.us/divisions/Engineering/consultant/Pages/default.aspx

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.


http://www.dot.state.oh.us/divisions/Engineering/consultant/Pages/default.aspx


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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.


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4501 Appraisals for Disposal of Real Property

4501.01 Appraisals Needed for the Disposal of Excess Lands

A. Ohio Revised Code, Section 5501.34 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 4501.01(C)(2) whenever there are any structures on the property or the


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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.


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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 4000.15(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 25-12

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.


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d. The review format to be used by the reviewer is ODOT form RE 25-12 USPAP

Review for ODOT Non Eminent Domain Appraisal Reports.

4501.02 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 5501.34. 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


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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


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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 25-18 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


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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 25-11 and sign and

date the Certification of Reviewer form which is the last page.

4502 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 5309. The appraiser must also be provided all of the required

documents in accordance with the ODOT Office of Facilities & Equipment

Management website:

http://portal.dot.state.oh.us/Divisions/Facilities

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.

http://portal.dot.state.oh.us/Divisions/Facilities


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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 pre-

qualified 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 2016-2017 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.

4504 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.


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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.

4505 Valuation Procedures For 6(F) Conversions And Replacements

4505.01 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, 1964. 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.


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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 5501.31 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 24.

7. 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 24.103(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.


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b. 49 CFR 24.103(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:

http://www.dot.state.oh.us/Divisions/Engineering/Consultant/Consultant/prequal-row.pdf

(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”.

4505.02 Legal Authority

A. Laws

1. Land and Water Conservation Fund Act of 1965 as amended, Public Law 88-578, 16

U.S.C.4601-4

2. The Uniform Act as codified in 42 USC, Chapter 61

3. 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 771

3. Mitigation of Impacts to Wetlands and Natural Habitat requirements in 23 CFR Part

777

http://www.dot.state.oh.us/Divisions/Engineering/Consultant/Consultant/prequal-row.pdf



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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

4505.03 Valuation of 6(f) Conversion Property or Replacement Property

A. Agency determination of the valuation problem

1. The Parcel Impact Notes: 49 CFR 24.103(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 4100.02 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:

http://www.dot.state.oh.us/Divisions/Engineering/RealEstate/Pages/Forms.aspx

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:



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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 5501:2-5-

06(B)(3)(b)(ii)(a) that permits its use on ODOT projects.

c. The ODOT procedure implementing these regulations is section 4200.02(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 4200.02(C) of the

ODOT Real Estate Manual.

e. The valuation problem must be simplistic and the estimated compensation may

not exceed $65,000.



APRIL 3 3017 4500-17

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 4200.02(D) of the ODOT

Real Estate Manual.

c. The valuation report is form RE 25-17 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.

4505.04 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 25-13 is used for the review of the Value Analysis.

b. Form RE 25-14 is used for the review of the Value Finding Report.

c. Form RE 25-16 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



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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.

4505.05 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.


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B. FMVE is established by the DREA signing the FMVE signature block on the RE 22 for

appraisals or the signature block on the Value Analysis Report when the waiver of

appraisal provision was used.

C. The district shall comply with section 4100.02(I) of the Real Estate Manual when

establishing FMVE.

D. Negotiations may be initiated once:

1. FMVE is established and,

2. The National Park Service (NPS) has approved the conversion of the 6(f) property.

Documents

OHIO DEPARTMENT OF TRANSPORTATION OFFICE OF REAL …...4500 NON EMINENT DOMAIN VALUATIONS 4500.01 General A. This chapter provides procedures for appraisal and appraisal review assignments