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NRCS amends rules to require certified appraisers, Yellow Book compliance.

In a July 27 Interim Final Rule, the Natural Resources Conservation Service proposed amendments to the Farm and Ranch Lands Protection Program (FRPP) to clarify certain program policies and legal requirements regarding easement issues. Among the issues addressed include the definition of fair market value, appraiser qualifications and required adherence to the Uniform Appraisal Standards for Federal Land Acquisitions and the before-and-after method. The rule is open for comments through September 25, 2006, and the Appraisal Institute and its partner organizations are preparing a comment letter.

NRCS proposes changing the definition of fair market value to the value of the landowner's whole property before the easement, and the value of the landowner's whole property after the easement. The current definition does not consider the difference in value between the property being protected by the easement and the remainder of the land, owned by the same individual, that is not protected. Although the easement may lower the value of the land being protected by preventing development for certain uses, the easement may increase the value of adjacent land, according to the NRCS. Consequently, they said, comparing the value of the whole property before and after the easement is recorded is the only way to assess its fair market value.

Also in keeping with federal and congressional efforts to improve the validity of conservation easement appraisals, the NRCS proposes that only state-certified appraisers be allowed to appraise the value of the conservation easement as opposed to the current wording, which allows appraisals to be conducted by a state-certified or licensed general appraiser, according to the NRCS. This rule amends that language to provide that NRCS requires that appraisals must be completed and signed by a state-certified general appraiser and must contain a disclosure statement by the appraiser. "This change is made to clarify the requisite experience needed to appraise FRPP-funded easements," the NRCS said. The Real Property Appraiser Qualification Criteria, published by The Appraisal Foundation, states that certified general appraisers have the training and experience enabling them to complete a variety of complex property type appraisals.

"It is in the public interest to require the use of certified general appraisers in the valuation of FRPP easements because utilizing the services of licensed appraisers dramatically increases the risk of overpayment for acquisitions due to inaccurate appraisals," the NRCS said.

In addition, the proposed rule would provide that the appraisal conform to both the Uniform Standards of Professional Appraisal Practice and the Uniform Appraisal Standards for Federal Land Acquisitions ("Yellow Book") and any Supplemental Standards issued by NRCS. Requiring the use of both USPAP and the UASFLA is simply stating the professional standards for federal appraisals, the NCRS reasoned.

The changes to the appraisal requirements of the Farm and Ranch Land Protection program are consistent with those occurring throughout the NRCS, including its Grassland Reserve, Wetlands Reserve and Healthy Forests Protection programs.

Comments on the Farm and Ranch Land Protection Interim Final Rule can be mailed to the Easement Program Division, NRCS, 1400 Independence Avenue, S.W., Room 6819-S, Washington, DC 20250-1400, or faxed to 202-720-9689. For more information on the Interim Final Rule, visit
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Publication:Valuation Insights & Perspectives
Date:Jun 22, 2006
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