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2004 Wisconsin Real Estate Peer Exchange Report

Appendix B

September 20 - 24, 2004

Hosted by the Wisconsin Department of Transportation
Bureau of Highway Real Estate

Funded by the Wisconsin Department of Transportation
Research, Development & Technology Transfer Program

Final Report

Table of Contents

Summary

Objectives

Participants

Preparing for the Exchange

Key Observations and Best Practices Discussed

Appendix A: Peer Exchange Agenda

Appendix B: WisDOT Background Information

Appendix C: Survey Results

WisDOT Bureau of Highway Real Estate
Peer Exchange
September 20 - 24, 2004

Appendix B

WisDOT Background Information

WisDOT Structure and Statistics

Basic Hierarchy:

Decentralized: Real Estate staffing consists of Central Office Real Estate (Bureau of Highway Real Estate) and Real Estate units in each of 8 District Offices. Central Office and Districts are housed in separate Divisions. Total statewide real estate staff = approximately 110.

Division of Transportation Infrastructure Development

Division of Transportation Districts

Size of State Real Estate Program in FY03

Surplus Land Inventory

Statewide meetings

Identified Issues in Wisconsin


Appraisal

Wisconsin Statutory Requirements

General appraisal practices

Off-Premise Signs

Access

Appraisal Review and the Offering Price

Issues Identified in Wisconsin


Waiver of Appraisal

a.k.a. "Nominals"
$5,000 Limit in Wisconsin

Waiver process

  1. Review Appraiser and appropriate district rep scope project to:
    • Identify nominals based on complexity
    • Identify type of fencing if any
    • Take additional notes and calculations of any additional items so they are available if needed to convert to an appraisal
    • Take at least one photo of the parcel and close-up photos of fencing or other items that might be affected by the acquisition
  2. Review Appraiser approves sales study
  3. An allocated summary of all nominal parcel damage amounts is listed on the Nominal Payment Parcel Report. This report establishes offering prices that District Real Estate management must approve before offers are made
  4. Agent completes the Nominal Payment Parcel-Waiver of Appraisal Form (the waiver valuation) allocating the offering prices that have been approved by District management
  5. Agent presents the completed valuation to the owner along with the owner's rights brochure
    • Owner is informed of his right to have property appraised
    • If the owner accepts the valuation, the agent can sign the approval
    • If the value is changed as a result of negotiations (still within the $5000 limit), the agent will make a pen and ink change on the form initialed by both owner and agent. Changes are subject to district real estate management approval.
  6. If owner is unwilling to sign on first negotiation call, the documents are left with owner to further review.
  7. If owner is unwilling or reluctant to sign on second negotiation call, the agent turns the visit into an appraisal call and asks the owner to accompany him on an inspection of the property
  8. Agent returns to office and prepares a Short Format appraisal and then follows the normal appraisal review and acquisition processes

Identified issues in Wisconsin's Appraisal Waiver process

Consultant & In-house Staffing Issues

Background on Consultant Use

What and How Much Gets Consulted Out
From Fiscal Year (FY) 2000 through FY 2003, the average of consultant work has been between 24 percent and 30.5 percent of all real estate work. FY 2003 was the highest percentage year at 30.5 percent and $2,359,213.00 of costs. The vast majority of the contracted work is appraisal work for parcels over $5,000. Contracting of appraisal work is 80-100% across the districts. Districts tend to keep the "Waiver of Appraisal" process, a/k/a "Nominal Value Parcels", in-house. This tendency is causing a gap in experience of staff completing other noncomplex and complex appraisal assignments.

Other work consulted out in increasing rates is acquisition and relocation assistance.

Methodologies for Consulting

Appraisal
The consultant appraisal need is filled by utilizing a special contracting/purchasing process allowed by State Statutes. Private sector appraisers who desire to perform appraisal for Department projects must submit their qualifications and samples of work. They are then rated as qualified/unqualified. If qualified, they are slotted in levels of complexity. Projects are then rated as far as complexity and solicitations go out to the matched, qualified appraisers for interest in bidding on the advertised appraisal assignment. A bidders packet is then sent to the interested bidders. All of the above is handled by use of e-mail, a requirement to be included in this process. Low bid is the established norm for receiving the work, unless there are other extenuating circumstances, such as concern about competing contract work, prior performance evaluations, etc. Penalties of ½ of 1% of fee are charged daily for late delivery of each appraisal. A DOT team is currently revamping the contract formats. The biggest items being changed are: more restrictive minimum qualifications (certified general appraiser license), mandatory courses including eminent domain appraisal theory, and the submission of actual appraisal products reflecting past work pertaining to eminent domain.

Title
Private title companies provide all title search work for WisDOT. The Department's Purchasing Unit solicits all title companies on a bi-annual basis for quotes of their fees to do various types of searches and updates. These fees are set up to be parcel specific and tied to the right of way plats provided. The fees are frozen for the term of the solicitation. Companies state which counties they will perform work in and what the prices are for each county. Work orders are then submitted to the title company in each county whose fees are the low fees and who have done satisfactory work in the past.

Other Real Estate Services
The contracting for acquisition, relocation assistance, property management, and project data entry services is different from above. There are no pre-qualified lists of vendors for these services. Solicitation on a project basis or master contract basis is the norm and handled by each district separately. Firms are rated by employee resumes and experience and training. The most qualified firm then enters into negotiations with the District for the specific acquisition work, etc. needed. If negotiations prove unsuccessful with the most qualified vendor, then negotiations are begun with the second qualified vendor. There are no percentage penalties incorporated into these style contracts. If the consultant does not perform work according to the project schedule and contract completion dates, the State is able to terminate the contract for noncompliance.

However, the district offices have found only 10 firms for these types of services, with a total of 23 "agents" staffing those firms actually available in the entire state. Most of these individuals are geographically restricted, and will not provide services to other districts or statewide. Almost all of the "agents" are recycled among the 10 firms. Almost all are former WisDOT employees, and the firms continue to actively recruit WisDOT employees. Plus these firms are in active competition for contracts by the Locals Units of Government and Utility Companies, which further erodes their ability to fulfill WisDOT contract commitments.

Consultant Qualifications and Training Programs
Other than the appraisal contracting process, consultant qualifications are not regimented.

New real estate agents in the consultant sector are usually hired as junior real estate agents and work along side senior agents. At the same time, they are attending many Appraisal Institute, Wisconsin Real Estate broker/sales licensing classes, International Right of Way Association, and any real estate courses offered through technical colleges.

The contract selection process contains an analysis of the qualifications of the consultants who are identified as working on a particular project. The district offices review and make decisions on use of consultants by matching qualifications, experience, and training to the assignments being contracted.

Real Estate consultants are not required to attend any Department of Transportation led courses. If space allows, they are invited to attend some in-house new agent training courses.

Background on In-House Staffing

WisDOT is organized into a Central Office Bureau of Highway Real Estate Office and eight district real estate units. These district units are located within a Technical Services Section (also containing specialized engineering areas, utility coordination, environmental coordination, right of way plat preparation, and control of outdoor advertising).

Within each real estate unit, the number of real estate staff is dependent upon the real estate program size for that district. The range in size is from two to 16 real estate specialists, plus program support and supervision.

There are currently 58 filled positions statewide in the Real Estate Specialist classification series, including specialist, senior, and advanced.

Standards and Measurements for Agent Productivity and Performance

The Department utilizes a "Real Estate Program Performance Measurement System". A copy of this system is being provided separately.

Four areas of the measurement system pertain to Agent productivity and performance. They are:

Education and Training of In-house Staff

Real Estate specialists, who are new to State civil service are trained in the following:

Applicants for real estate specialist positions provide information on skills, knowledge, education, and prior experience in their application for civil service employment. Job experts rate the applications on a periodic basis as qualified/not qualified. Benchmarks are established to help the job experts.

No licenses or certifications are required to be hired.

Pay coming into State civil service is broad banded. Broad banding allows for flexibility in establishing starting salary upon hire. for entry-level specialists, giving consideration for advanced training, knowledge, skills, and prior experience.

It takes 3-5 years to grow a real estate specialist to "senior" level. The Advanced level is achieved by promotion only and requires consistent responsibilities of a complex nature and coordination of one or more of 4 major real estate functions (Acquisition, Relocation, Property Management, Litigation) or as an Advanced appraiser or Central Office reviewer

Attracting Qualified Appraisers and Negotiators
The core of appraisal expertise in the Department resides with the review appraisers. Due to their workload, they are not available to perform appraisal work of any quantity. Most of the other specialists hired concentrate their efforts on specialized functional areas other than appraisal.

The Department's recent experience in trying to hire experienced appraisers into civil service is that they leave within a short period of time. Identified reasons are low pay and not being assigned to 100% appraisal duties. Other independent appraisers have been hired directly to the Real Estate Supervisor position and are presently staying within civil service.

There is no training ground outside of Government and the International Right of Way Association for the negotiations skill set.

Retaining Technical Expertise and Balancing with Consulting
There are currently 58 filled positions statewide in the Real Estate specialist classification series, including specialist, senior and advanced. That is the lowest staffing level in this class in 12 years. In these 58 positions, 52% (30 positions) of the incumbents are retirement eligible (over 55 years) within the next two years. 40% (23 positions) are eligible in 2004 alone. See chart below for further data. A poll of the Districts indicates that at least 10 of these people will actually retire and vacate a position in the next 12-18 months. This doesn't account for normal attrition otherwise. Several vacancies created by transfers or leaving WisDOT exist already. Governor James Doyle has placed a hiring freeze on all State positions for all State agencies. Currently vacancies, which can be justified to fill, are done so by internal transfer. Qualifications of present non-real estate civil service employees, who desire to transfer into a real estate specialist position, do not necessarily meet the minimum qualifications we have established to hire applicants from the private sector. Training would have to extensive and expensive.

Classification Total 55+ over in 2004 55 in 2005 55 in 2006 Total eligible
RE Specialist 12 4 0 1 5
RE Specialist Senior 33 16 1 2 19
RE Specialist Adv. 13 3 2 1 6
  58 23 3 4 30
    40% 5% 7% 52%
RE Mgmt with RE expertise 9 3 0 1 4

Contracted labor currently is used as an extension of DOT staff in the Real Estate functions for purposes of work involving appraisals, title, acquisition and relocation activities. Division resource modeling analysis continues to indicate a resource gap for real estate functions. In Wisconsin, as in other mid-western states, there is a shallow pool of "consultants" available for this specialized work. All Districts contract independently to meet their program needs. Frequently the Districts find themselves in direct competition with each other for the same external resources. Also, more often than not, the Districts experience over-commitment by this resource pool, not only in promising to deliver their work within unrealistic timelines in order to get contracts from WisDOT, but in their labor-personnel availability. Many of these firms will identify the same individuals as staff that may operate as subcontractors to them.

Identified Issues

Local Public Agency Coordination and Staffing in WisDOT

Staffing

District 3-yr avg ÷ 1313.84
conversion
StaffEquiv. + Consult. Effort + Support Staff Total Staff Input
1 152   .12 0.40 .01 .53
2 697   .53 1.20 .22 1.95
3 448   .34 -- 0 .34
4 686   .52 -- .02 .54
5 562   .43 -- .03 .46
6 122   .09 -- .01 .10
7 177   .13 -- .01 .14
8 315   .24 -- 0 .24
Total           4.30

Coordinator Activities

Training of LPAs

Identified Issues in Wisconsin's LPA Coordination Process

Property Management

Surplus Land Sales

REMNANT IDENTIFICATION/INVENTORY
Remnant parcels are identified, inventoried, and updated for status using our statewide Real Estate Automated Data System "READS". At the time of acquisition, or when otherwise identified, a Property Inventory Report is prepared detailing the size and acquisition value of the remnant. This information, along with other pertinent parcel data, is entered into our "READS" database for future tracking, updating, and reporting purposes.

DEPARTMENTAL APPROVAL FOR MARKETING
Prior to the marketing/sale of remnant parcels, approvals must be secured from the District Technical Services, Project Development, Planning, Maintenance, Environmental, and Archaeological units. After these approvals are secured, the sale process may proceed. If federal funds were used to acquire the surplus parcel, approval to dispose of the parcel or remnant must be obtained from FHWA.

VALUATION OF SURPLUS LANDS
Surplus lands are marketed at fair market value. This value will typically be determined through an appraisal. Depending on its complexity, a short format appraisal or market data report may suffice. An appraisal will be the basis of any sale or the recommended minimum acceptable bid for which the land would be sold at public bid.

Wisconsin Department of Transportation (WisDOT) requires a minimum sale price of $500 to at least cover the administrative cost of selling the parcel.

Appraisal Review

For parcels acquired with Federal Funding:
Parcels with an appraised value of $1,000 or more must be reviewed by a Central Office Review Appraiser.

For parcels acquired without Federal Funding:
Parcels with an appraised value of $10,000 or more must be reviewed by a Central Office Review Appraiser for approval prior to proceeding with the sale process.

Parcels with an appraised value of less than $10,000 may be reviewed by a District review appraiser.

METHODS OF DISPOSAL
Depending upon the characteristics of the surplus parcels, WisDOT typically uses one of the following methods of disposal. WisDOT has full discretion in evaluating a given parcel and choosing a marketing method.

CONVEYANCE

The Department of Transportation conveys its surplus lands by Quit Claim Deed. The Governor must approve the sale (if valued at $15,000 or greater) and the approval date is noted on the Quit Claim Deed. Sales of properties with a value of $3,000 to $15,000 require Secretary of Transportation approval, and properties valued under $3,000 may be approved for sale within the district.

Research and Processing
Prior to the mid 1960's, WisDOT had the counties acquire all lands needed for state and federal highways in the name of the county. These lands are being held in trust for WisDOT until such time as WisDOT requests transfer of title to WisDOT for the purpose of property conveyance.

Therefore, prior to any sale of highway lands, the original project, parcel, and type of ownership must be determined. If the property was acquired in the name of the county, conveyance of said lands must be obtained from the county via Order to Convey and Quit Claim Deed documents granting clear title to WisDOT.

The timeframe required for the approval, research, and sale process for any given property may be between two and six months.

Sales Preparation and Buyer's Responsibilities
The Department of Transportation requires that the entire purchase price be tendered before the deed to surplus property is recorded. It will be the buyer's responsibility to secure and/or pay for title insurance and a certified survey map of the surplus parcel, if required, and to perform due diligence typical for a purchaser of property.

Land is sold on an "as is" basis. Failure of a prospective buyer to be fully informed as to the condition and potential use of the surplus property being offered for sale will not constitute grounds for adjustment or withdrawal of a bid or offer to purchase.

The buyer also assumes the responsibility for the payment of any legal special assessments for public improvements such as sewer, water, sidewalks, etc., that may be levied against the property. It is recommended that a prospective purchaser check with the local municipality to secure up-to-date information regarding the parcel. The Department of Transportation will record the deed as soon as possible after closing. Buyer must secure firsthand information concerning the local real estate tax rate, utility service, zoning ordinances and building codes.

Deed Restrictions
Conveyance of surplus lands is often subject to certain restrictions included in the Quit Claim Deed. These restrictions may be included to ensure enforcement of statutes and regulations to protect the integrity of the adjacent highway, protect the health and safety of the public using the highway, preserve the visual appeal or natural beauty of the site, and protect the rights of existing utilities.

Examples of restrictions:

No vehicular ingress or egress allowed between the surplus parcel and the adjacent highway.

All public and private utilities located upon, over or under the surplus parcel shall have the continued right of occupancy and the continued right of ingress and egress for personnel and equipment for the purpose of maintaining or improving their facilities.

Application of a setback that extends 110 feet from the centerline of the highway or 50 feet from the nearer right-of-way line, whichever is furthest from the centerline.

No improvements or structures are allowed between the right-of-way line and the highway setback line. Improvements and structures include, but are not limited to, signs, parking areas, driveways, wells, septic systems, drainage facilities, buildings and retaining walls.

WisDOT may offer other State agencies or government units within the State the first right of acquisition of excess lands if the proposed use is for public purposes. In these cases, the land is sold without competitive bidding. However, WisDOT requires that a Reversionary Clause be added to the deed restrictions.

Reversionary Clauses
WisDOT uses two "Reversionary Clauses".

  1. "Reversionary Clause" which applies to property Sold at fair market value to a public agency.
    It is expressly intended and agreed by and between the parties hereto that these lands are conveyed to (Grantee) specifically for the public use and purpose of (Enter the Intended Use of property). If at any time, (Grantee) determines this land or any part thereof is no longer being used for public purposes, (Grantee) shall notify the WisDOT in writing and shall, at no cost to WisDOT, convey said property back to WisDOT. This restriction expires 25 years from (Enter effective date), after which time the (Grantee) is granted full ownership of the property.

  2. "Reversionary Clause" which applies to property Given to a public agency for a transportation use. (No expiration date)
    It is expressly intended and agreed by and between the parties hereto that these lands are conveyed to (Grantee) specifically for the public use and purpose of (Enter the Intended Use of property). If at any time, (Grantee) determines this land or any part thereof is no longer being used for public purposes, (Grantee) shall notify the WisDOT in writing and shall, at no cost to WisDOT, convey said property back to WisDOT.

PARCEL CLOSING PROCESS
Upon completion of the sale process, WisDOT submits the executed Quit Claim Deed to the County Register of Deeds Office to ensure recording. The recorded deed is returned to WisDOT, a copy is retained for WisDOT's file and the original is forwarded to the buyer.

Copies of the transaction are distributed to District Maintenance, Planning (for access purposes), and the Right of /Way Plat Unit (for the required plat updating).

Finally, our automated tracking system, "READS", is updated to reflect the sale data.

Encroachments/Rentals

District Project Development and Maintenance Departments identify encroachments (private improvements occupying highway right-of-way) and determine whether they may remain by entering into a Lease Agreement, through issuance of a revocable occupancy permit or if a sale of right-of-way is possible. If none of these options are feasible, then removal of the encroachment is required. Leases and Land Sales are referred to Real Estate for follow-up and processing. Maintenance executes removal procedures. Examples of types of leases include agricultural, commercial, airspace, and "Occupancy Agreements" (used for non-profit activities such as grass cutting, gardening, etc.)

WisDOT also leases acquired buildings. Relocation policy dictates that property owners be offered a 30-day free rental period beginning with the date of acquisition. Occupancy may be extended at WisDOT's discretion if requested by the property owner, provided site clearance is not immediately required for the highway improvement project. Typically, rent for the extended occupancy is calculated at one-half of one percent of the acquisition price and remitted on a monthly basis.

Site Clearance
It is important that provisions are in place for removal of all site improvements prior to the construction letting. This is accomplished through the following methods:

Identified Issues in Wisconsin's Property Management Process

Acquisition/Condemnation Processes

Authority to acquire lands

A "Relocation Order" providing for the laying out, relocation and improvement of a public highway must be approved before WisDOT can approve any offering prices or acquire any interests in land.

¼ Mile Rule
WisDOT may not acquire:

WisDOT Early Acquisition Process and FHWA Advanced Acquisition Process
Advanced (Hardships/Protective purchases)

Early acquisitions (can also be used for hardship and protective reasons)

*See Attachment for comparison chart of these two processes

Early or Advanced acquisitions can be acquired by use of Eminent Domain when property owner and Department cannot agree on purchase price.

No person can be coerced into agreeing to and signing the agency's offer by having the acquiring agency threaten to stop the acquisition process if property owner is not in agreement.

R/W Plat Process
Typically r/w plats must meet the certain standards laid out by the Department's Surveying and Mapping Bureau.

Exception: For early and advanced acquisitions, when an entire property is being acquired (total take), the district may opt to use a simple sketch or map in lieu of the more traditional r/w plat. The map must contain:

A county plat book map, certified survey map, tax map or subdivision plat may be used as the base vehicle when appropriate. In such cases, the district need only add those items such as the project ID and type of interest that are not already indicated on the map being used.

Donations

Temporary Limited Easements (TLE)

Construction Permits (CP)

Preparation of Appraisals:

Economic and Uneconomic Remnants

If owner is left with an uneconomic remnant, the Department must make a written offer to acquire the remnant (an Alternate Offer in addition to the Offering Price for the land needed for construction)

Not contrary to ¼ mile rule defined above. Department may purchase lands or interests in lands that are located on a single parcel that is completely or partially within ¼ mile of a highway or proposed highway.

Even if Department acquires needed r/w by condemnation, the owner has the right to ask that the uneconomic remnant be purchased. (Request must be in writing)

If parcel is contaminated, Department can require owner to remediate site before acquisition.

The Department will "consider" a request to purchase an economic remnant if it is in the best interests of the state.

Offering Prices

Providing Owner a copy of the State appraisal

Wisconsin law requires that WisDOT present the offering price and a copy of the state's appraisal to the owner(s) at the first negotiation call. The WisDOT Real Estate agent will walk through the report with the owner and explain the appraisers rationale and conclusion of value.

Owners right to obtain own independent appraisal/60 day time-period

Wisconsin law allows the owner to obtain his own appraisal by an appraiser of his choice. In order to be reimbursed for that appraisal, the report must follow specific appraisal guidelines provided to the owners, must be received by DOT no later than 60 days after the initial offer and State's appraisal was presented to the property owner and the cost must be reasonable.

Appraiser/Negotiator Roles

Negotiator/Relocation Agent Roles

Preparing for Negotiation
District parcel acquisition file:
Official files are kept in District office. Parcel file should include at a minimum:

Contact/Negotiation by Mail

Changes to the Original Offering Price
Two ways to accomplish this:

Closings

Condemnation

Temporary "Right of Entry" Easement

R/W Certification

Appeal Rights

Issues Identified in Wisconsin

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Updated: 04/02/2013
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