Idaho Transportation Department (ITD)
Right-of-Way Section
Greg Graybadger
Appraisal Methodology on Land for Wetland Mitigation
This award recognizes Greg Graybadger of the ITD Right-of-Way Section for his use of an innovative appraisal method for valuing wetland mitigation properties to provide a solution for interagency stakeholders.
The majority of right-of-way appraisals consist of applying time-tested methodology based on comparable market sales. However, sales motivated by a need for wetland mitigation credit are relatively rare because there is insufficient market activity to demonstrate a value premium attributable to properties for wetlands mitigation.
Greg applied the discounted cash flow analysis, typically used for valuing land proposed for subdivision, which had not previously been applied to this type of appraisal problem. Also known as "the development approach" to value, the methodology analyzes the property from the viewpoint of a private sector investor who would expect to make a profit by undertaking the project. It is a way of answering the question, "How much can I pay for this property and still make a profit through developing it?" Although public agencies are not profit-making, the economic theory is still applicable.
This valuation method demonstrated the maximum price which could be paid for the prospective property, when supported by market activity, and also established the financial feasibility of the mitigation project. Interviews with subject-matter experts and formal appraisal reviews validated the methodology used by Greg, and were found to produce a credible and well-supported valuation. Because of Greg's use of this valuation methodology, ITD was able to purchase properties and develop of wetland mitigation credits required of the department under the Clean Water Act.
