Chapter 1: Introduction

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Section 1: Preface

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Purpose

The purpose of this manual is to provide a flexible guide to the understanding and effect of the existing state and federal laws and policies, as they apply to this field, for those appraisers or reviewers working for the Texas Department of Transportation (TxDOT) or local public agencies (LPAs) involved with TxDOT on transportation projects.

One does not usually encounter in other types of appraisals the appraisal policy subjects discussed here. They are unique to right of way appraising, particularly for partial acquisitions.

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Manual Organization

Chapter 2, Operating Procedures, covers the type & number of appraisals, appraiser qualifications, & evaluations, use of fee and staff appraisers, other services, assigning appraisals, independent appraisals, confidentiality of appraisals, working with property owners, reappraisals, property adjustment work & economic adjustments, and other matters pertaining to the appraisal assignment.

Chapter 3, Valuation – Legal Aspects and Policy, considers those items peculiar to right of way appraising and reviewing. Items discussed are the purposes of appraisals; the definition of market value; Legal instructions on Personalty and Realty, Noncompensable Items, Damages and Enhancements, Control of Access Rights; and, procedures on appraisals of specific types and situations such as Advertising Sign and Leasehold interests, Bisected Improvements, Convenience Stores, Fencing, Mobile Homes as Realty, Partial Acquisitions, Private Utility Lines, Project Influence, etc. The discussions of a legal nature do not attempt to give the full basis for the law. They set forth the accepted opinions concerning the handling of items in the appraisal process. The appraiser may or may not agree with these conclusions. However, these conclusions conform to the laws of Texas and the appraiser must follow them for an appraisal to be legally correct. In its role as a sovereign governmental agency, TxDOT determines policy on right of way appraisal procedures with these conclusions in mind.

Chapter 4, Appraisal Forms, discusses requirements and instructions in completing the Real Estate Appraisal Report (forms ROW-A-6 and ROW-A-5); Real Estate Value Finding Report (form A-7); and, the Memorandum of Value Determination (form A-8). Also discussed are miscellaneous forms such as forms A-9 (Property Classification Agreement); A-10D (Value Determination); A-11 (Declaration of Personal Property; A-13 (Declaration as to Method of Handling of Mobile Home); and, form A-PVD (Parcel Value Determination for LPA’s).

Chapter 5, Appraisal Review, discusses the review of appraisal reports plus special appraisal problems that do not appear in all reports. The sections within this chapter discuss reviewing personnel; reviewing for completeness, consistency, and variances in land and component values; reviewing the appraisal of the “Remainder After” and “uneconomic” remainders; and reviewing the appraisal of lessee interests and updated values.

Chapter 6, Establishing Right of Way Values, describes the completion of form ROW-A-10 (Tabulation of Values) to obtain approval of a recommended value, a revised value, a cancellation of a value, and/or an administrative settlement. Also discussed are “overlooked items of value” and the discussion of an “X-parcel.”

Chapter 7, Eminent Domain – State Acquisition, deals with the recommendations of appraisers and expert witnesses for eminent domain proceedings and/or jury trials; obtaining updated or new appraisal reports; Special Commissioners Award and Mediation Settlements analysis procedures; participation guidelines for the Pre-Mediation Conference and the actual Mediation; and, a discussion on using comparable sales subsequent to the “Date of Taking” in appraisal reports.

Chapter 8, LPA Acquisition, provides information on the state's program to acquire right of way in cooperation with LPAs (Local Public Agencies), with or without federal-aid, though most of the information in the manual applies to both the federal aid and LPA programs. The exceptions that apply to the LPA program are noted in this special chapter. Appraisal, appraisal review, and eminent domain guidelines are also included in this chapter.

Chapter 9, Special Site Appraisal Situations, contains information and procedures regarding appraisals and valuations of:

There are two appendices:

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Acronyms Used in This Manual

Commission

Texas Transportation Commission

CFR

Code of Federal Regulations

DBE

Disadvantaged Business Enterprise

FHWA

Federal Highway Administration

LPA

Local Public Agency, i.e., a municipality, county, city, etc.

LG

Local Government

OAG

Office of the Attorney General

OAS

Outdoor Advertising Signs (Billboards)

PREAS

Professional Real Estate Appraisal Services

ROW

Right of Way

R/W-PD

Right of Way Project Delivery

RFP

Request for Proposal

RMD

Real Estate Management and Development Division

ROWAPS

Right of Way Acquisition Professional Services

ROW Division HQ

Right of Way Division Headquarters in Austin, TX

ROWIS

Right of Way Information System, TxDOT's proprietary right of way acquisition data storage, tracking and retrieval software application

TALCB

Texas Appraiser Licensing and Certification Board

TxDOT

Texas Department of Transportation

USPAP

Uniform Standard of Professional Appraisal Practice


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Definitions Used in This Manual

Appraisal - The term appraisal means a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion of defined value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information. (source: 49 CFR 24.2(a)(3))

Appraisal Consulting - The act or process of developing an analysis, recommendation, or opinion to solve a problem, where an opinion of value is a component of the analysis leading to the assignment results. An appraisal consulting assignment involves an opinion of value but does not have an appraisal or an appraisal review as its primary purpose. (source: USPAP 2012-2013 edition) See also real property consulting.

Appraisal Practice - Valuation services performed by an individual acting as an appraiser, including but not limited to appraisal and appraisal review. Appraisal practice is provided only by appraisers, while valuation services are provided by a variety of professionals and others. (source: USPAP 2014-2015 edition)

Appraisal Review - The act or process of developing and communicating an opinion about the quality of another appraiser's work that was performed as part of an appraisal, appraisal review, [or appraisal consulting assignment]. (source: USPAP 2014-2015 edition)

Appraiser - One who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective. (source: USPAP 2014-2015 edition)

(2nd Option) "State-certified real estate appraiser" or "certified appraiser" means a person who is certified under this chapter. "State-licensed real estate appraiser" or "licensed appraiser" means a person who is licensed under this chapter. (source: Texas Occupation Code Chapter 1103.003(7)(8))

Department -Texas Department of Transportation (also see TxDOT as an acronym).

Department-Certified Appraiser - A real estate appraiser, either state-certified general or state-certified residential having received department-certification with TxDOT.

Eminent Domain - Authority to exercise the power to take private property for public use upon payment of just or adequate compensation, based on the theory that property is granted to the property owner upon condition that it may be taken to serve the necessities for the sovereign power. Agencies created by the state to serve the public may exercise the power of eminent domain where that power is conferred by statute.

Jurisdictional Exception - An assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP. (source: USPAP 2014-2015 edition)

Off-System - Off-system is off the TxDOT-designated highway system. (source: TxDOT Glossary October 2013)

On-System - On-system is on the TxDOT-designated highway system. (source: TxDOT Glossary October 2013)

Professional Services - Services directly related to professional practices as defined by United States Code, Chapter 2254, Subchapter A.

Provider - An appraiser operating with a written agreement to provide goods or services in accordance with the established price, terms and conditions. For the purposes of this manual, the term "provider" and "contractor" can be used interchangeably.

Real Estate Appraiser - An individual licensed and having either residential certification or general certification to provide real estate appraisal services in the State of Texas. For the purposes of this manual, the term "contract fee appraiser" is used when referencing a licensed certified residential appraiser or general real estate appraiser that is performing appraisal services for the department and is signing and certifying the appraisal document.

Real Property Consulting - The act or process of developing and reporting an analysis, recommendation, or opinion concerning real property, where an opinion of value is not a component of the analysis, recommendation, or opinion. (source: Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute)

Request for Proposal (RFP) - A request for submittal of a proposal that demonstrates competence and qualifications of the provider to perform the requested services and shows an understanding of the specific project.

Review Appraiser - An individual licensed and having residential certification or general certification to provide real estate appraisal services in the State of Texas. For purposes of this manual, the term "contract review appraiser" is used when referencing a licensed certified residential or certified general real estate appraiser that is performing appraisal review services for the department and is signing and certifying the appraisal/review document. The type of property reviewed must fall within the appraiser's permitted scope of practice under the Texas Appraiser Licensing and Certification Act.

Administrative Review - An administrative review process performed by a department staff member that is not a licensed appraiser.

Administrative Reviewer - A department staff member who signs the administrative review document only, but is not a licensed appraiser.

Right of Way Acquisition Professional Services (ROWAPS) - Work disciplines of right of way acquisition services, including appraisal services, but excluding surveying, engineering, or architectural services.

Uniform Act - The term Uniform Act means the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646, 84 Stat. 1894; 42 U.S.C. 4601 et seq.) and amendments thereto.

Work Authorization - A written authorization to begin work issued according to the entity and prime contract in place with the department. The work authorization includes a detailed scope of work as well as a contract period and maximum amount payable that does not exceed the time or money restrictions specified in the prime contract.

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The “Prompt Payment Law”

In 2001, the Texas Legislature enacted the “Prompt Payment Law,” now codified in Government Code §2251. The law prescribes that a payment by a state governmental agency under a contract executed on or after September 1, 1987, is overdue on the 31st day after the later of:

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  • the date the governmental entity receives the goods under the contract;
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  • the date the performance of the service under the contract is completed; or
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  • the date the governmental entity receives an invoice for the goods or service.

A payment begins to accrue interest on the date the payment becomes overdue.

Therefore, it is imperative that the ROW Division, RMD, and ROWAPs make every effort to process appraisal payments in a timely manner, and thereby avoid incursion of interest.

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