Proposed Appraisal Selection Process

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Proposed Appraisal Selection Process

• General Services Public Works and Engineering
  Real Estate Divisions

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Charter, Art. VII, Section 9

• The City Council shall enact by a vote of
  two-thirds of the Council, such ordinances
  governing the sale, lease or disposal of said
  real estate or interest therein as it deems to be
  in the best interest of the City which shall
  establish the minimum monetary value of the real
  estate or interest therein at which the Council
  must appoint two qualified appraisers for the
  purpose of determining fair market value prior
  to completion of the transaction which may
  define and identify authorized transactions
  involving the sale, lease or disposal of said
  real estate of interests therein and which may
  outline the procedures for and the manner in
  which such transactions shall be administered.

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City Ordinance (Code 2-240)

• Under the current City Ordinance we are required
  to obtain two independent appraisals for property
  sales and leases where the value of the City
  property is expected to exceed 25,000.

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Who Orders Appraisals

• General Services Department
• Acquisitions
• Dispositions
• Leasing

• Public Works Engineering
• CIP/ Acquisitions
• JRC Abandonment/ Dispositions
• Dangerous Buildings

Appraisers receive assignments on a revolving
basis depending on which council district the
property is located.
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Concerns We Seek to Address
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Concerns We Seek to Address

• Appraiser appointment process
• The current appointment process for appraisers
  is a next-on-list selection from appraisers
  designated by district Council Members

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Concerns We Seek to Address

• Relevant Appraisal Experience in Type of Property
  
• The current process does not include a
  sufficiently wide variety of appraisers from
  which to choose. Under the current process,
  appraisers with expertise in residential property
  may be appointed to appraise commercial or
  industrial property. The City often has unique
  properties that require a certain level of skill
  to arrive at a reliable value

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Concerns We Seek to Address

• Missed Delivery Dates
• Some appraisal firms routinely fail to provide
  their appraisal reports by the agreed delivery
  date. This delays the disposition process and
  development of non-City projects

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Threshold Value Requires Two Appraisals
Concerns We Seek to Address

• The threshold (currently 25,000) requirement to
  obtain two appraisals often adds additional
  expense to the City with little or no benefit. It
  is the Departments opinion that if an appraisal
  is done correctly, only one appraisal is needed
  to determine an accurate value

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Use of Improper Appraisal Methodologies
Concerns We Seek to Address

• Failure to comply with USPAP Guidelines
• Failure to verify comparables and
• Grammatical and Mathematical errors.

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Recommendations

• 1) Set the minimum value at a more realistic
  level whereby the City must obtain two outside
  appraisals
• 2) Provide for an appointment process that
  assures that appraisals are done by duly
  qualified and experienced appraisers who produce
  reliable, competent and timely appraisal reports
  at a competitive cost to the City

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Recommendations

• 3) Develop a new list of appraisers without
  regard to Council District through an open
  solicitation process based upon standards
  established by the City
• 4) Continue to insure MWBE participation and

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Recommendations

• 5) Implement penalties for failure to comply with
  established City standards, i.e. removal from
  appraisal list.

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Recommendations
We Propose an Amendment to the Code of Ordinance
to

• Increase the threshold value for requiring two
  appraisals for sales or leases of City property
  from 25,000 to 1,000,000.
• (NOTE The City may elect to obtain two
  appraisals for properties less than 1,000,000 if
  the unique nature of the property warrants a
  second appraisal).

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Benefits

• Quality Improved work product
• Timely Delivery of appraisals by commitment
  date
• Savings Reduced cost in appraisal assignments
• Productivity Enhance City resources and reduce
  expenses and
• Responsive - The City will be more responsive to
  taxpayer needs.