National Park Concessions Impact Appraised Value: The Appraisal Journal
October 19, 2021 08:30 AM
CHICAGO (Oct. 19, 2021) – The National Park Service’s concession program and its various attempts to compensate concessioners for the value of physical improvements put in place during the tenure of a concession contract can impact valuation, according to an article published this week in The Appraisal Journal.
The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. The materials presented in the publication represent the opinions and views of the authors and not necessarily those of the Appraisal Institute.
“National Park Concessions: Valuation Concepts, Issues, and Controversies,” by Richard J. Roddewig, JD, MAI, examines the latest compensation concept, “leasehold surrender interest value,” highlighting its elements and challenges as the Park Service tries to balance the interests of outgoing and incoming concessioners and the interests of park users.
“Reasonably Probable? Possibly,” by David C. Lennhoff, MAI, SRA, AI-GRS, and Richard L. Parli, MAI, examines the role that the “reasonably probable” test plays in reaching a conclusion of highest and best use and how that ultimately affects the opinion of value. The article cautions appraisers not to substitute extraordinary assumptions or hypothetical conditions for a careful interpretation of the market. It advises the appraiser to first determine if the market recognizes a reasonable probability of a particular use and then quantify the premium the market is willing to pay for that reasonable probability.
“A Sales Comparison Approach Adjustment Technique: Converting Qualitative Analysis to a Quantitative Basis,” by Stephen M. Rothweiler, MAI, introduces and describes an adjustment technique that can be employed in the appraisal of real property. The technique applies a qualitative adjustment based on an incremental scale, and then converts the qualitative adjustments to a quantitative basis. This process encourages the appraiser to consider the magnitude of incremental differences associated with the qualitative adjustment process and adds another tool for providing more reliable and credible appraisal assignment results.
“Valuation of Undivided Interests—The Elephant in the Room: How Much Emphasis on Partition Analysis?” by Donald Sonneman examines key issues in valuing undivided interests in real estate. The reasons for placing less emphasis on partition analysis, which is favored by the Internal Revenue Service, are explained, and partition analysis is compared to alternative valuation techniques that take into account risk, control, and marketability discounts.
The Appraisal Institute is a global professional association of real estate appraisers, with nearly 17,000 professionals in almost 50 countries throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Individuals of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA, SRA, AI-GRS and AI-RRS designations. Learn more at www.appraisalinstitute.org.