Appraisers should understand local planning and government.

An appraiser's opinion of value captures a "moment in time." It's based on the property and its circumstances on the date of the appraisal.

But property values at any given moment depend as much on the future as on the present. If an appraiser does all the necessary due diligence, he or she can develop a pretty reliable assessment of what the immediate future may hold.

A truly comprehensive appraisal looks beyond the here and now and considers plans for future development in the property's town or community. It makes a lot of sense. If an appraisal's discounted cash flow analysis considers a five- or 10-year holding period, it's just as important that the qualitative analysis consider the impact of the town's or district's five- or 10-year development plan.

For example, how will zoning changes allowing for outlying retail development affect traffic in a suburban town's central business district?

What impact will the development have on current tenants' businesses and on future market rents?

The answers to these questions about the future help determine present valuations.

If a planning board is rezoning land parcels to allow for multifamily residential development, what will be the effect on the absorption of current residential vacancies?

How will the plan affect the rate of house and condo sales?

Will the impact be temporary? If so, how long and how deeply will valuations be affected?

The best way for an appraiser to gain insight into the planning boards' vision is to get on the board. Short of that, clients should ask their appraisers three questions:

One, how well does the appraiser know the town and its long-term plans? Part of appraisers' professional responsibility is performing due diligence--analyzing a retail property's lease terms, tenant quality and competitors, for example, as well as market rents, cap rates and comps.

But due diligence also should include a thorough analysis of local planning initiatives.

If plans call for commercial development elsewhere in town tomorrow, that should influence values today. Tax abatements may also be offered as part of a plan to redevelop a specific area.

Two, is the appraiser intimately familiar with how local government works? Experienced appraisers know both the formal structure of their town government and the relationships that underlie that structure. Because town and village governments can operate very differently from one another, appraisers need to be involved with the informal network.

Serving on the planning board (or heading it) certainly helps, although it's not critical.

What is critical is knowing who's most likely to give you the straight scoop about local plans. It could be the planning board or the building inspector. Sometimes it's the board of trustees or a few key members.

It's essential to know who in town or village government has the most influence over (and the most reliable information about) local planning.

Three, how well do appraisers understand local codes, especially non-conforming use statutes?

Laws often restrict certain types of development. If a developer has a plan that's not in keeping with local codes, he and the appraiser need to know how likely it is that he will gain approval--in the form of a zoning variance or code revision--to develop the property for its intended use.

This issue should be part of the appraiser's analysis of highest and best use. The more familiar the appraiser is with local codes, the more meaningful that analysis will be.

This is especially true when an appraiser acts as a consultant for a developer and is involved in negotiations with a municipality to develop a property.

This is also true when appraising a property that no longer complies with local zoning and building codes.

A rebuilding of a partially destroyed property may not be permitted when it's declared prior-existing, non-conforming.

An educated view of the planning board's tendencies also enables the appraiser to assign a hypothetical value to the property.

Including this in the appraisal's Assumptions and Limiting Conditions, or an addendum to the opinion of value, is necessary in keeping with Uniform Standards of Professional Appraisal Practice.

It adds depth and integrity to the appraisal.

* Steven Corte is President of Ford Valuation Services.