What is meant by “appraisal waiver valuation”?
The term appraisal waiver valuation means the valuation process used and the product produced when the acquiring agency determines that an appraisal is not required, pursuant to §24.102(c)(2).
Is the use of appraisal waiver valuation mandatory for the acquiring agency?
The use of an appraisal waiver valuation is an option for the acquiring agency. It is not mandatory.
What factors should be considered in determining if the appraisal waiver option is appropriate?
Those interested in using the appraisal waiver option should consider whether the option is permitted under state law. The acquisition(s) in question should be simple and uncomplicated. The estimated amount of just compensation should also be below the dollar threshold set forth in the State Department of Transportation’s right-of-way (ROW) manual.
What are the dollar thresholds for waiver valuations set forth in 49 CFR?
As set forth in §24.102(c)(2)(C), “the Federal Agency funding the project may approve exceeding the $10,000 threshold, up to a maximum of $25,000, if the Agency acquiring the real property offers the property owner the option of having the Agency appraise the property.”
Is an appraisal waiver valuation subject to appraisal review?
No. The waiver valuation is not an appraisal and is not subject to an appraisal review; moreover, the waiver valuation is not subject to The Uniform Standards of Professional Appraisal Practice.
Should appraisers prepare waiver valuations?
No. One of the benefits of the appraisal waiver option is that it allows appraisers to focus on addressing more complicated valuation assignments. The person performing the appraisal waiver valuation must have sufficient understanding of the local real estate market to be qualified to make the waiver valuation.
Is there an obligation to have the property owner accompany the waiver valuation preparer during the property inspection?
No. The waiver valuation is not an appraisal as defined by the Uniform Act, and therefore there is no owner accompaniment requirement.
Conditional ROW Certification Q&A
What is “conditional” right-of-way certification?
Conditional right-of-way (ROW) certification identifies the acquisition status of ROW that is required to advance a highway project to construction when such property has not yet been acquired, the acquiring agency has not yet obtained right-of-occupancy, or future displacees are still residing on such property. Conditional ROW certification, which is provided for in 23 CFR 635.309(c)(3), is sometimes called a “cert 3” or a “work around.”
Under what circumstances can a conditional ROW certification be used?
A conditional ROW certification be used when the state (or local public agency) ensures that any occupants who have not yet moved “...are protected against unnecessary inconvenience and disproportionate injury or any action coercive in nature.” The State (or local public agency) must also provide “...a realistic date when physical occupancy and use is anticipated as well as substantiation that such date is realistic.”
The regulation says the State may request authorization for a conditional right-of-way certification “...only in very unusual circumstances.” The regulation further states: “This exception must never become the rule.” Do these two sentences restrict the ability to use the conditional ROW certification?
The authorization of construction prior to the completion of acquisition and relocation presents some risks. One risk is that any delay in obtaining access to the properties in question may result in contractor claims. Another risk is that the proximity of construction activities coerce the property owners and/or displaced persons to make decisions that are not in their best interest. As the regulation states, these persons must be protected from unnecessary inconvenience, disproportionate injury, and actions coercive in nature.
Should we begin using conditional ROW certifications on a regular basis?
The conditional ROW certification is one of a number of tools available to States and local public agencies for advancing projects to construction in a timelier manner. As with any tool, the conditional ROW certification does come with certain risks. Before choosing to use this tool, the State or local public agency must carefully evaluate those risks and properly document its decisions. In some cases approval from the FHWA Division Office may be required.
Federal Land Transfer Q&A
What is “right-of-entry”?
A right-of-entry is a right to enter and begin construction on property that is needed and will be acquired for a highway project.
What is a Federal land transfer?
A Federal land transfer is the conveyance of property, usually by highway easement deed, to a State or local public agency either directly by a Federal land management agency (such as the U.S. Forest Service or Bureau of Land Management) or by the FHWA on behalf of the land management agency. These transfers are made to allow the construction or improvement of a highway facility on Federal land.
Are Federal land transfers subject to federal statues or regulations?
Yes. Two statutes, 23 United States Code (U.S.C.) 317 and 23 U.S.C. 107(d), authorize the Secretary of Transportation and, by delegation, the FHWA to transfer lands under the jurisdiction of another Federal agency to a State or local public agency. The regulations implementing this statutory authority can be found at 23 Code of Federal Regulations 710.601.
What do the regulations say about the use of a right-of-entry for a Federal land transfer?
The regulation in 23 CFR 710.601(e) states that if FHWA concurs in the need for the land to be transferred to the State or local agency “...the land-owning agency will be notified and a right-of-entry requested.”
If the State or local agency works through the FHWA, pursuant to 23 U.S.C. 317 or 107(d), is the Federal land management agency required to grant a right-of-entry?
No. However, in the past FHWA has been very successful in receiving grants of right-of-entry from Federal land management agencies.
Can a right-of-entry still be obtained if the State obtains the property by direct transfer from the Federal land management agency rather than proceeding via the FHWA under 23 U.S.C 317 or 107(d)?
A State or local agency can request a right-of-entry if it obtains the property by direct transfer from a Federal land management agency. However, the transferring agency will make the determination whether to grant such a request.
Functional Replacement Q&A
What is “functional replacement”?
Functional replacement allows for payment of the cost to erect a structure of similar function on a replacement site. When publicly owned and used land and facilities, such as fire stations or police departments, are needed for a highway project, the acquiring agency may functionally replace the property in lieu of providing compensation. The intent is that the replacement property will provide equivalent utility as the acquired property.
Is the use of functional replacement mandatory for the acquiring agency?
It is an option for the acquiring agency.
Is functional replacement used solely at the discretion of the acquiring agency?
Functional replacement is an option for the public agency. The public agency may opt to receive just compensation and relocation assistance.
Are there limits on the costs that may be eligible under functional replacement?
Yes. The acquiring agency may participate in costs necessary to replace the functions of the acquired property, but the costs must have been actually incurred and not include betterments or increases in capacity.
Does the option of functional replacement apply to any publicly owned property?
No. The property must be in public ownership and use at the time of acquisition, and the public ownership and use must continue with the replacement property. Functional replacement is not allowable when a railroad or a utility owns the property.
Is it necessary for FHWA to concur with a proposed functional replacement?
Yes. FHWA concurrence is required per 23 CFR 710.509(b)(5).
How can the use of functional replacement expedite the time required to get a project to the construction phase?
Since functional replacement allows for payment of the costs to erect a structure of similar function on a replacement site, the affected agency will likely have more replacement site options, thus expediting their decision on a replacement site. Also, the acquiring agency may request a right-of-entry to allow construction to proceed as soon as the publicly-owned agency starts its move to the replacement site.
Incentive Payments Q&A
What is the purpose of an incentive payment?
Incentive payments were originally designed to reduce overall project costs and delivery time in the right-of-way (ROW) phase of project delivery by encouraging early settlement and minimizing potential litigation as well as other associated project costs. FHWA first used incentive payments after an international scan in 2000.
What is the authority for incentive payments?
The authority for the FHWA to participate in incentive payments is found in 23 CFR 710.203(b)(2)(ii). The regulation allows Federal participation in relocation assistance and payments provided under the law of the State that may exceed the requirements of 49 CFR Part 24.
How is the incentive payment implemented?
The incentive payment is implemented on a program or project specific basis and approved for use of Federal aid through request transmittal to the FHWA Division Office. Safeguards are to be used to ensure coercion is not employed [49 CFR 24.102(h)] and consistency shall be maintained in project selection and payment.
Must property owners accept an incentive payment?
No. Property owners and those being relocated may opt out of the incentive program and choose to precede with otherwise normal acquisition procedures.
How can offering an additional payment help reduce total project costs?
The early acquisition of ROW can reduce future costs related to acquisition, construction, and unforeseen project delays. Bypassing delays and delivering a project sooner could result in a reduction in safety risks and improvement in public opinion.
Since an incentive payment program is only an option, the acquiring agency is charged with designing a program that is both attractive and cost effective with respect to overall project delivery. A PIF or (Public Interest Finding) will be developed as part of the request transmittal to the Division Office. The PIF helps ensure that cost effectiveness is reached and proper stewardship of the public investment is maintained.
Conflict of Interest Waiver Q&A
Is it a conflict of interest for the same person to both appraise and negotiate on the same property?
The Federal regulations implementing the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, allow the same person who appraised, conducted the appraisal review for, or made an appraisal waiver determination on to also negotiate the acquisition of the property. The regulation specifically limits this opportunity to situations where the value of the property is $10,000 or less.
What safeguards are in place to ensure this opportunity does not rise to the level of a conflict of interest?
The regulation at 49 CFR 24.102(n) preclude the use of anyone from making the appraisal, a waiver valuation, or doing an appraisal review if they have any interest, direct or indirect, in the real property being valued. The regulation provides for a separation of functions to keep a supervisor who might otherwise be a negotiator on the same property from unduly influencing or coercing the appraiser, waiver valuation preparer, or review appraiser.
What is the purpose of allowing the same person to appraise and negotiate a property?
Appendix A of 49 CFR 24.102(n) points out that the overall objective is to minimize the risk of fraud while allowing agencies to operate as efficiently as possible. One example could be an agency that has a simple property valuation and acquisition located in a remote part of the state. Rather than sending two persons to the property, one to appraise and one to negotiate, the regulation provides efficiency by allowing one person to handle both functions.