1. NAU sponsored Lands Conference OST/OAS-Land Buy Back Program Valuations
U.S. Department of the Interior
Office of the Special Trustee for American Indians
Office of Appraisal Services
November 29, 2016

2. Land Valuation
Outreach
Land Research
Land Valuation
Land Acquisition
Land Valuation is the process that determines the fair market value of tracts where the Department of the Interior (DOI) will offer to buy fractional interests.
The Land Buy Back Program’s Land Consolidation process is comprised of four phases – outreach, land research, land valuation, and land acquisition. Under the Program, OAS, OVS/DME and BIA/Forestry are responsible for meeting the Land Valuation requirements.

3. Land Valuation
LBBP’s need for a high volume of appraisals, within an accelerated timeframe and across various geographical regions of the country, required OAS make a strategic decision to incorporate the Mass Appraisal methodology and other streamlined valuation methods into its appraisal process.
The OAS completes an appraisal of a fractionated tract by appraising the tract as if it were a single-owner fee status tract, and compares it to similar tracts that have recently sold in the area. Adjustments, based upon market conditions and physical characteristics, are made to account for differences between the tract being appraised and recent land sales
This strategic direction was one of the recommendations made by The Appraisal Foundation when invited to review OAS’s appraisal methodology for the Program. OAS has appraised nearly 24,400 tracts consisting of more than 4 million acres. Of this land, 96 percent of the acres appraised are agricultural acres. The remaining 4 percent of acres are comprised of variety of property types, including recreational, timberland, residential, commercial, and wildlife habitat.

4. Land Valuation Planning
Sample: Reservations with 1000s of tracts
Agency Name
Parcel Count
Land Use
% of Total Acreage
TOTAL Parcel Acres
ROCKY MOUNTAIN
Blackfeet (201)
Native Range
0.8600
752,869.03
S Parcels:
8,478
Dry Crop
0.0986
86,317.31
B Parcels:
1,639
Irrigated
0.0414
36,242.77
Total Parcel Count:
10,117
100%
875,429.11
Crow (202)
0.7600
695,655.63
8,804
0.2134
195,332.78
3,122
Irrigated Crop
0.0266
24,347.95
11,926
915,336.36
GREAT PLAINS
Standing Rock (302)
0.9223
651,547.55
1,528
Crop
0.0777
54,890.21
3,456
4,984
706,437.76
Pine Ridge (344)
1,530
0.9766
1,053,542.34
6,365
0.0234
25,243.59
7,895
1,078,785.93
Research sample from OAS Regional Operations to determine types of land use, ownership type and best appraisal methodology to use to support an opinion of market value. Reservations with high volume of purchasable tracts, non-complex, and mostly homogeneous ag lands were earmarked for mass appraising
All tract information (TSR, plat maps, etc,) must be on hand to complete appraisal. 2) Timber valuations (if applicable) must be on hand to complete appraisal. 3) No Improvements are made part to the assignment. 4) Based upon past experience in Great Plains, 95% of "S" only tracts and 85% of "S" & "B" tracts will conform to mass methodology, the remaining 5% and 15% will be valued using typical appraisal valuations methods. 5) Numbers of tracts with "S", "B“ and “M” resource codes is given by OVS/DME. Note: parcel count left out

5. Land Valuation Planning – Scope of Work
Real Estate Appraisal Methodologies
August 5, 2013
Mass Appraisal- similar and non-complex property type and a sufficient volume of land sales
Project Appraisal- similar highest and best use of tracts and a similar sale data set can be analyzed
Individual, Site Specific Appraisal- tract is complex, has unique physical characteristics and there is limited comparable sales data
Purpose is to identify methodologies to use with BBP. Mass- Homogeneous land use types/HBU/similar market areas, Project- eliminate repetitive reporting. Site Specific-commercial, special use.
More detail in later slides.

6. Land Valuation Planning
Additional Considerations
Developing and Implementing Information Systems
Personnel – hiring qualified real estate appraisers and appraisal support staff
Training
Contracting
Tribes and Federal Partners whose decisions and support affect the valuation process, i.e., BLM Cadastral Surveys, OVS-DME and BIA Forestry
OASIS is place but needed to develop a mass model process within OASIS, AgWare for sales, ArcGIS- mapping did not have, SPSS- did not have, TAAAMS (title plant)

7. Land Valuation Planning
RESERVATIONS
Region
Fractionated Tracts w/ Purchasable Interests
Purchase Estimate
OAS Report Type
OAS/Contract Tribe Completion Date
Mapping Completion Date
DME Completion Date
Offer Dates
Lummi Tribe of the Lummi Reservation, Washington (107)
Northwest
343
$ ,360,586
Individual
9/1/2015
8/10/15
11/9 to12/28/15
Umatilla, Confederated Tribes of Reservation, Oregon (143)
1,015
$ ,113,252
10/23/2015
9/18/15
11/23 to 1/7/16
Cabazon Band of Mission Indians, California (568)
Pacific 9
$ ,742
12/15/2015
8/19/15
12/28/15 to 2/15/16
Makah Indian Tribe of the Makah Indian Reservation, Washington (108)
257
$ ,524,111
1/30/2016
12/17/15
2/22 to 4/71/16
Fond du Lac Band - Minnesota Chippewa
Midwest
351
$ ,837,753
Project
2/15/2016
12/21/15
3/7 to 4/25/16
Round Valley Indian Tribes of the Round Valley Reservation, California (540)
185
$ ,456,371
Project or Individual
3/5/2016
1/30/16
3/28 to 5/23
Quinault Tribe of the Quinault Reservation, Washington (117)
1,422
$ ,263,655 MA
3/14/2016
6/27 to 8/15/16
Considering type of appraisals- not only land use, but also complexity, number of tracts that are purchasable and volume of available comparable land sales.

8. Valuation Phase Types of Appraisals
1. Mass Appraisal
Definition:
The process of valuing a universe of
properties as of a given date using standard methodology,
employing common data, and allowing for statistical testing.
Advantages:
Speed
Low Unit Cost
Testable results
USPAP Standard 6

9. Critical Components of Mass Appraisals
GIS – Geographic Information System
Robust Database Management Capabilities
Effective Valuation Models meeting national standards
OASIS – Appraisal request generation and Information System for OAS
USPAP Standard 6

10. Steps in Mass Appraisal Modeling
Data Assembly
Exploratory Data Analysis
Base Mass Appraisal Model Development
Full Model is completed
Sales Ratio Testing
Model Refinement
Final Mass Appraisal Model
OAS LBBPV modeling team has been working with local OAS regional appraisers in the model development process to gain expert information on local real estate markets and subject tracts.

11. GIS for Mass Appraisal- Osage and Ponca
Subject properties only- 11

12. GIS for Mass Appraisal- Blackfeet
Red = Appraised Tracts
Yellow = Comparable Sales

13. Valuation Phase Types of Appraisals
2. Project Appraisal
A multi-parcel appraisal that include the appraisal analysis of more than one tract that is documented in a single report.
The most relevant Approach to Value (Cost, Income or Sales Comparison) is applied to all parcels and the report format follows the requirements under the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA), Section 17-D.
Appraisals developed under USPAP Standards 1and 2. More land uses, limited sales and less tracts, but still in the 100s.

14. GIS for Project Report- Bad River
Bad River – 500 plus tracts, HBU- recreation plus (wetlands- wild rice fields). 14

15. GIS for Project Report- Prairie Band Potawatomi Nation
Red- tracts, yellow sales. Approximately 130 tracts HBU- agriculture and rural residential 15

16. Valuation Phase Types of Appraisals
3. Individual, Site Specific Appraisals
Individual Appraisals are for a single tract
Individual or site-specific appraisals may be used on tracts that are difficult to value simultaneously with tracts amenable to mass appraisal without diminishing the efficiency and cost-effectiveness of the appraisal process.
Benefits:
Tracts with potential economic value in minerals or timber can be left out of the mass appraisal and appraised individually
Certain tracts may not be amenable to mass appraisal valuation techniques, such as those located in commercial areas or urbanized zones where greater variation and value may exist
Appraisals developed under USPAP Standards 1and 2. For single tract – may be commercial, industrial, etc.

17. GIS –Individual Site Specific- Squaxin Island
13 tracts, recreation and timber- HBU. Contracted for timber valuations. 17

18. Individual Site Specific- Cabazon
Only 2 tracts appraised- the above is a vacant industrial site. 18

19. Appraisal Types and Cost Efficiency
Mass appraisal Individual appraisal
Many Properties One property
Analyze 3-5 years of sales Analyze 3-5 years of sales; however, the analysis may be limited to most current sales (3-6 months)
Virtual inspection- thousands On-site inspection of the one property
5 to 7 months to be complete a model 2-3 days turnaround*
Statistical testing of Typically qualitative analysis. May use statistical
results required testing
Low cost per appraisal Higher cost per appraisal report
report (unique and/or complex)
(non-complex/homogeneous)
Mass appraising has always been used for ad valorem taxation within counties. The counties usually take up to 2 -3 years to develop and implement mass appraisal models, then a continued updating of the model periodically. With OAS/LBBPV a new model is developed and implemented from the beginning, as each reservation is unique in property type and real estate markets. *This timeframe for completion is when appraiser does not need to inspect the subject tract, comparable land sales are available in the office and the subject tract is vacant and non-complex.

20. Different Appraisal Approaches Used to
Determine Value?
The SALES COMPARISON APPROACH is based on similar properties in the vicinity that have sold recently.
The COST APPROACH is based on the cost to replace or reproduce an existing improvement(s) on the property (i.e. rebuild) after deducting for accrued depreciation and adding land value.
The INCOME APPROACH is based on the net income the property generates, which converted to market value by a market derived capitalization rate or the Net Present Value estimate of the income stream.
All of the methods are considered but for most BBP assignments the Sales comparison Approach is the primary method.

21. How Property is Appraised
The COST APPROACH is based on the cost to replace or reproduce the existing improvement (i.e., rebuild) after deducting for accrued depreciation and adding land value.
Cost approach, in many cases, is used to value structures. As the BBP is not requesting the valuation of structures (improvements), this approach is seldom used.

22. How Property is Appraised
The INCOME APPROACH is based on the income the property generates, capitalized or NPV estimate to determine its market value.
OAS uses the income approach for trust lands that have a HBU of commercial, industrial, special use. 22

23. How Property is Appraised
The SALES COMPARISON APPROACH is based on a direct comparison of similar properties in the vicinity that have sold recently.

24. Use of Appraisals Purpose of the Appraisal-
For land purchase transaction by USDOI
Only valuing surface rights
Not applicable for other types of transactions
Trespass Damage Estimates
Rights of Way
Leasing
Partitions
Loans/mortgages
Tribes seeking Agreements to determine fair market values must demonstrate the ability to perform reservation-wide valuations in a manner that is efficient and cost-effective. Tribes that currently perform appraisal work under a P.L Program may be better positioned to provide opinions of market value for the Program through an Agreement. The OAS reviews and decides whether to approve appraisals provided by a Tribe.

25. Deputy Director, OAS/LBBPV
Thank You.
Mr. Eldred Lesansee
Director, OAS
Ms. Iris F. Crisman
Deputy Director, OAS/LBBPV
Mr. Thomas Young
Project Manager