ohio department of transportation...may 06, 2019 · ohio department of transportation office of...

OHIO DEPARTMENT OF TRANSPORTATION

OFFICE OF REAL ESTATE

DATE: May 06, 2019

TO: Users of the Real Estate Manual

FROM: Jared Miller, Manager Appraisal Unit

RE: Changes and Updates to the Real Estate Manual

The only current and accurate source of ODOT’s Real Estate Manual is on the Office of

Real Estate’s website. This site is located at: http://www.dot.state.oh.us/real. Desired

information can be accessed by scrolling down the left column and selecting “Manuals

and Booklets.” Specific information can be selected by clicking on the desired section.

The Real Estate Manual is a “living document” as procedures will evolve and change.

Individuals or firms providing various services to the Office of Real Estate (e.g.

negotiations, titles, appraisal, appraisal review, relocation, relocation review, closing,

property management, railroad coordination and utility relocation) must perform these

services in compliance with current published policies and procedures. Individuals

utilizing a hard copy version of the manual, without accessing the website for updates,

risk providing non-compliant services to the Office of Real Estate. Therefore, all users

must be aware of the changes as various sections of the manual are updated.

ODOT will provide notice of manual changes on the Design Reference Resource Center

(DRRC) web page. Users of the manual can access this page and subscribe to be made

aware of manual changes via e-mail notification. Then, when changes to the manual

occur, ODOT will provide direct notice to the subscriber. This page can be accessed at

http://www.dot.state.oh.us/DRRC. Scroll down to “Real Estate Policies and Procedures

Manual” and select the desired section for updates, or enter your e-mail address to

subscribe for changes. It is the user’s responsibility to maintain their most current e-mail

address on the DRRC notification system. The DRRC web site is updated four times a

year.

The Office of Real Estate may also provide additional guidance to its procedures by

Inter-Office Communications (IOC’s). These communications will be made a part of the

Real Estate Manual. If Individuals having questions pertaining specifically to this

Section, contact me at (614) 752-6151.

http://www.dot.state.oh.us/real

http://www.dot.state.oh.us/DRRC

REVIEW OF EMINENT DOMAIN APPRAISALS

June 4, 2019 4300- 1

Table of Contents

4300 APPRAISAL REVIEW ........................................................................................................ 2

4300.01 Legal Requirements for Appraisal Review ........................................................... 2

A. Appraisal review Requirements: ................................................................................ 2

B. Review appraisers must be qualified: ........................................................................ 2

C. Valuation complexity determines review level: ........................................................ 3

D. Appraisals requiring clarification or correction: ........................................................ 3

E. Requirement to identify the appraisal report into one of three categories: ................ 3

F. The Review Appraiser may become the Appraiser of Record: ................................. 3

G. The review appraiser is required to create a written report: ...................................... 4

H. The review appraiser is required to create a signed certification: ............................. 4

4300.02 Requirements for Appraisal Review ..................................................................... 4

4300.03 Purpose of Appraisal Review ................................................................................ 5

4300.04 The Process for Appraisal Review ........................................................................ 5

4300.05 Review Formats..................................................................................................... 7

A. Review of the Value Analysis Report (VA) .............................................................. 7

Value Analysis Report and Plan Revisions (Plan Changes) ...................................... 9

Value Analysis Report and "Pen & Ink" changes by the reviewer: ........................... 9

B. Review of RE 90 Value Finding Report (VF) ........................................................ 10

C. Review of the RE 25-17 Right-of-Way Appraisal Report ....................................... 11

4300.06 The Procedures For Seeking Corrections To Appraisal Reports ........................ 12

A. The Review Letter.................................................................................................... 12

B. Automatic “Not Accepted” conditions: ................................................................... 13

C. It is reasonable to “Not Accept” reports for the following errors: ........................... 14

4300.07 The RE 22 (Acquiring Agency’s Fair Market Value Estimate) ......................... 14

4300.08 The RE 22-1 (Apportionment of Right of Way Costs) ....................................... 25

4300.09 Corrections, Updates, and Revisions .................................................................. 29

4300.10 Uneconomic Remnants ....................................................................................... 29

4300.11 Unique Issues and Appraisal Review .................................................................. 30


June 4, 2019 4300- 2

4300 APPRAISAL REVIEW

4300.01 Legal Requirements for Appraisal Review

A. Any program or project receiving federal financial assistance or subject to oversight by

ODOT shall have an appraisal review process (OAC 5501:2-5-06(A) and (D). These

procedures establish the appraisal review process ODOT utilizes to establish FMVE.

1. To implement this regulation, the procedure at ODOT requires a review of all

appraisals that are created for the purpose of making an offer to the owner in

compliance with ORC 163.04.

2. Appraisal review is mandatory for Value Finding and RE 25-17 Right-of-Way

Appraisal Report:

3. Waiver of appraisals (Value Analysis Reports) do not require review. However,

review is optional for these assignments. Additionally, review is recommended for

project consistency, new valuation agent, unique property type, or when acquiring

agency deems necessary.

B. Review appraisers must be qualified:

Only qualified review appraisers can review and examine appraisals [(OAC 5501:2-5-

06(D)(1) and (C)(4)].

1. Review appraisers are pre-qualified by ODOT [OAC 5501:2-5-06(C)(4)(a)].

2. The list of ODOT-staff pre-qualified to review appraisals is maintained by the

Appraisal Unit Manager, Office of Real Estate, ODOT.

http://www.dot.state.oh.us/Divisions/Engineering/RealEstate/Pages/LPA.aspx

a. The Appraisal Unit Manager makes the determination if an ODOT staff person is

qualified to perform appraisal review functions. The level and limitations of

review authority is documented in a letter maintained by the Unit Manager. The

staff person and the DREA are provided copies of this letter.

3. Consultants and LPA staff pre-qualified to review appraisals are posted on the ODOT

web page under the Office of Consultant Services.

http://www.dot.state.oh.us/divisions/Engineering/consultant/Pages/default.aspx

a. Consultants must be certified or licensed in accordance with OAC 5501:2-5-

06(C)(4)(b). To be considered for the ODOT pre-qualification list, a fee

contractor must be a state-certified general real estate appraiser approved to

perform appraisals in Ohio by the Ohio Department of Commerce, Division of

Real Estate and Professional Licensing.


June 4, 2019 4300- 3

C. Valuation complexity determines review level:

The level of review is dependent on the complexity of the appraisal problem [OAC

5501:2-5-06(D)(1)].

1. To implement this regulation into its procedure, ODOT has created specific appraisal

review templates to be used for each of its valuation formats. See section 4300.05 of

these procedures for more detail regarding appraisal review templates.

D. Appraisals requiring clarification or correction are to be resolved before a review

appraiser recommends a report:

As needed, the review appraiser shall seek necessary corrections or revisions [OAC

5501:2-5-06(D)(1)]. See section 4300.06 of these procedures for more detail about

ODOT’s procedure to implement this regulation.

E. Requirement to identify the appraisal report into one of three categories:

The review appraiser shall identify each appraisal report as: 1) recommended; 2)

accepted; or, 3) not accepted [OAC 5501:2-5-06(D)(1)].

Recommended = This means the report meets Federal and State

requirements (including USPAP), ODOT procedures and is recommended as the

basis for the acquiring agency's offer.

Accepted = This means the report meets Federal and State

requirements (including USPAP), and ODOT procedures, but is not being used as the

basis for the acquiring agency's offer.

Not Accepted = This means the report does not meet Federal and State

requirements (including USPAP), ODOT procedures and will not be used as the basis

for the acquiring agency's offer.

1. See section 4300.07 of these procedures for more detail about ODOT’s procedure to

implement this regulation.

F. The Review Appraiser may become the Appraiser of Record:

If the review appraiser is unable to recommend an appraisal because of insufficient

support within the report or; because the highway plans or circumstances of the

acquisition have changed since the time of the original valuation and, the District

determines it is not practical to obtain another appraisal, the review appraiser may offer

additional support to the appraiser’s analysis for a recommended value [OAC 5501:2-5-

06(D)(2)] so long as the support conforms with the appraisal requirements of Ohio

Administrative Code Section 5501:2-5-06(C).

1. To implement this regulation, the review appraiser must create additional

documentation that meets the standard for appraisal requirements under OAC 5501:2-


June 4, 2019 4300- 4

5-06(C) and using this written documentation, the review appraiser may recommend

FMVE that is different from what is presented in the appraisal report.

2. This occurs most frequently when the initial analysis offered by the appraiser is

acceptable, but the circumstances of the acquisition changed due to events which

have occurred after the date of valuation. Most often the review appraiser merely

needs to document the differences between what was originally analyzed and the

impact of changes to the acquisition. For example, plan changes modify the take area

and the review appraiser merely needs to recalculate the compensation estimate based

upon the new plans.

a. The aggregate of the written appraisal report plus the additional documentation

created by the review appraiser is the basis of FMVE and it is this information

that is to be provided to the property owner during the initial offer of

compensation (ORC 163.04).

3. Another appraisal review is not required when the review appraiser becomes the

appraiser of record.

G. The review appraiser is required to create a written report:

The review appraiser shall prepare a written report identifying the appraisal reports

reviewed and documenting the findings and conclusions arrived at during the review of

the appraisals. Damages or benefits to any remaining property shall be identified in the

review appraiser’s report [OAC 5501:2-5-06(D)(3)].

1. ODOT implements this regulation into its procedure by having the review appraiser

fill out form RE 22. See section 4300.07 for more detail regarding this procedure.

2. If there are tenant-owned improvements classified as real property, the review

appraiser must also fill out form RE 22-1. See section 4300.08 for more detail

regarding this procedure.

H. The review appraiser is required to create a signed certification:

The review appraiser shall prepare a signed certification stating the parameters of the

review. The certification shall state the review appraiser’s recommend compensation.

See section 4100.02 (I) of these procedures regarding people having authority to establish

FMVE [OAC 5501:2-5-06(D)(3)].

4300.02 Requirements for Appraisal Review

A. The review appraiser cannot establish FMVE for the District.

B. A review appraiser cannot review and concur their own appraisal work. However, a

review appraiser may supplement the work of another appraiser and base their

recommendation of compensation on the initial analysis subject to the modifications or


June 4, 2019 4300- 5

changes offered by the review appraiser. The review appraiser must still comply with the

requirement to support a recommended FMVE in compliance with OAC 5501:2-5-06(D).

C. A review appraiser cannot be under any employment agreement to a consultant or an

LPA as an appraiser for a project and also be a review appraiser of appraisals on that

project.

D. A review appraiser cannot be in a position which would compromise the integrity of the

review process and must avoid any appearance of impropriety.

E. The review appraiser must be able to perform the review in a competent, unbiased

manner in compliance with these procedures

4300.03 Purpose of Appraisal Review

A. The purposes of appraisal review are:

1. To ensure owner(s) of real property acquired receive fair and reasonable

compensation for the part taken and damages, if any, for the part not taken.

2. To ensure appraisals and valuations comply with law, regulation, these procedures

and that the valuation issues identified by the District in the Appraisal Scoping

Checklist are addressed in the appraisal report.

3. To assist the District in expediting the appraisal and appraisal review processes so

offers of compensation can be made to property owners, the rights of way needed for

transportation projects can be cleared and the projects can enter into their construction

phase.

4300.04 The Process for Appraisal Review

A. The appraisal is delivered to ODOT.

B. The appraisal is provided to the review appraiser who performs the review function.

C. Field review:

The review appraiser is required to physically drive by and view the appraised property,

drive by and view the relevant comparable sales, drive through and view the

neighborhood/area and compare what is physically observed to the right-of-way plans

that are in hand to the information in the appraisal report. The review appraiser need not

physically view the interior of the structure as this is the responsibility of the appraiser.

However, the review appraiser, at his/her discretion, may view the interior of the

structure if warranted for any reason.

The review appraiser is required to:


June 4, 2019 4300- 6

1. Determine that the appraiser is pre-approved by ODOT to perform the appraisal

function.

2. For certified or licensed appraisers, determine the category of property appraised is

within their certification or license.

3. Read the entirety of the appraisal report.

4. Check mathematical calculations for accuracy.

5. Determine if the appraisal answered the issues identified in the Appraisal Scoping

Checklist. Verify the Checklist is a part of the appraisal report and is signed by all

parties. See section 4100.02 (A) of this Manual for more detail about Checklist.

6. Determine the appraiser adequately considered the right-of-way plans, the takings,

and the impact of the takings to the residue.

7. Determine the appropriate approaches to value have been utilized by the appraiser.

8. Determine the appraisal report complies with USPAP.

9. Determine the appraisal report complies to the extent appropriate, with the Uniform

Appraisal Standards for Federal Land Acquisitions (commonly referred to as the

“Yellow Book”)

10. Determine that the approaches to value used in the report comply with accepted

appraisal standards, techniques and methodologies.

11. Determine the appraisal is compliant with the procedures for ODOT and this Manual.

12. Determine the appraisal meets laws and regulations such as the Uniform Act, 49

CFR, Ohio Revised Code and Ohio Administrative Code.

13. Determine that you, as the review appraiser, understand the reasoning, analysis and

conclusions in the appraisal report.

14. Determine the value(s) estimated and the compensation reported in the appraisal

report is/are credible.

15. The review appraiser is encouraged to call and talk to the appraiser to gain a better

understanding of information regarding the property, analysis, values or conclusions

reported in the appraisal. However, the review appraiser may never pressure, force or

steer an appraiser to a conclusion that is not the appraiser’s. Everything in the body

of the appraisal belongs to the appraiser and not the review appraiser.


June 4, 2019 4300- 7

16. The review appraiser is required to seek corrections or clarification if it is determined

that corrections or clarification are necessary. If corrections or clarification are

necessary, the review appraiser is required to create a Review Letter. See section

4300.06 of these procedures for more information regarding Review Letters.

17. Appraisals should not be rejected, Review Letters should not be created, and the

appraisal process should not be delayed for small, inconsequential issues. Obviously,

this does not apply to issues of consequence affecting values or compensation. This

requires review appraisers to have good skill, knowledge and common sense. For

more information regarding the qualities of a review appraiser, see Appendix A of 49

CFR Part 24, Subpart B Section 24.104.

D. After the review is completed, the review appraiser fills out the appropriate review

template for the type of appraisal or valuation received and then, the review appraiser has

the following options:

1. If the appraisal meets standards, needs no corrections and in the review appraiser’s

opinion, should be the basis of ODOT’s offer of compensation; then, the review

appraiser rates the appraisal as recommended and proceeds to fill out the RE 22 form.

2. If the appraisal meets standards, needs no corrections, but in the review appraiser’s

opinion, should not be the basis of ODOT’s offer of compensation; then, the review

appraiser rates the appraisal as accepted. ODOT may now obtain another appraisal

report or the review appraiser may create the additional documentation necessary to

support a value that may become the basis of compensation.

3. If the appraisal does not meet standards and needs corrections, the review appraiser

shall rate the report as not accepted and shall seek corrections from the appraiser.

The review appraiser shall create a Review Letter [see section 4300.06 (A) for more

information about this letter] and issue this letter to the appraiser. The appraiser is

given an opportunity to correct the identified problems. The corrected appraisal is

again submitted to the review appraiser who again reviews the appraisal report. The

review appraiser shall rate the corrected appraisal as recommended, accepted or not

accepted. Review Letters shall always accompany appraisal reports rated as not

accepted.

E. The review appraiser shall complete the form RE 22 (Review Appraisers Fair Market

Value Estimate) when the appraisal is recommended as the basis of FMVE. See 4300.07

of these procedures for more information about the RE 22 form and recommendation

process.

4300.05 Review Formats

A. Review of the Value Analysis Report (VA)


June 4, 2019 4300- 8

1. The reviewer of the VA needs to be aware of the procedures for the creation of the

VA. See 4200.02(B) of these procedures for more information about the Value

Analysis Report.

2. The Acquiring Agency has the option of review for the VA templates. All reviews

shall be reviewed by a review appraiser who has been pre-qualified by ODOT to

perform appraisal reviews. The person who prepares the VA cannot review the same

report. The Manager of the Appraisal Unit shall determine and document by letter

which agency staff have authority to review a VA. The review appraiser shall

complete the review using form RE 25-13.

3. Once the VA is complete, the District shall establish FMVE based on the approved

VA report.

4. FMVE is established by the authorized manager of the District - see section

4100.02(I) of the Real Estate Manual. The authorized manager will review the form

and establish FMVE by signing their name and title in the appropriate space. The

manager is cautioned at this point to not sign the form blindly as this function is a

commitment of public funds and should be accorded the respect such responsibility

demands. If the manager is concerned about the execution of the procedures or the

recommendation of the estimated compensation, the manager may seek further

assurances or may seek a second opinion of value.

5. The forms for the optional review of the Value Analysis Report are:

RE 25-13: The Review Checklist for the Value Analysis Report: This form is a

checklist for the VA. This form also includes a review appraiser’s

certification statement and signature line. If the VA is accepted, the

review appraiser signs the RE 25-13 form. The review appraiser is also

to sign the appropriate place on the VA form itself. If there are

typographical mistakes which can be corrected, the review appraiser is

expected to make the necessary “Pen & Ink” changes on the front of the

VA and initial and date the corrections in compliance with the guidance

provided in section 4300.05(A)(7) of the Real Estate Manual.

NOTE: Generally, there is no RE 22 form filled out by the person reviewing

and recommending the Value Analysis Report as the basis of

compensation. The review appraiser’s signature on the VA form itself

signifies that the review appraiser is recommending the VA as the basis

for FMVE. The VA form is all inclusive having the preparer’s name,

the review appraiser’s name, the name of the person from the agency

establishing FMVE and the FMVE amount.

RE 22-1: This form is to be completed if FMVE needs to be allocated between

ownership interests.


June 4, 2019 4300- 9

Review Letter: This letter must be created if the VA is not accepted.

6. Value Analysis Report and Plan Revisions (Plan Changes)

a. VA Completed:

For those instances when the VA has been completed and the project designers

determine a plan change is necessary, the correct procedure is:

i. If the agency or review appraiser determines there is no impact to the

valuation, the normal process of reviewing the VA and determining if it

should be the basis of compensation is followed.

A. The agency or reviewer may make "Pen & Ink" changes to the Value

Analysis Report to reflect the plan revision and document as noted in the

"Pen & Ink" guidance below under item 7 (see below).

ii. If the agency or reviewer determines a new or revised valuation is necessary,

then one is to be secured as soon as possible. This would necessitate revised

Appraisal Scoping Checklist and a new scope meeting.

b. VA Completed and FMVE Established:

For those instances when FMVE was based on a Value Analysis Report and the

take has been amended by a plan change, the procedure to reflect the plan revision

is:

i. Ensure that the reviewer (if applicable) agrees that the scope of the valuation

problem has not changed and that a new valuation is not necessary.

A. If a new valuation is necessary, then one is to be secured as soon as

possible and the District is to be notified of the potential impact on the

right-of-way clear date.

ii. If a new valuation was not necessary, but the revised plan changes the

estimated compensation, the agency or review appraiser must create an RE 22

to document the original FMVE as shown on the VA and the revised FMVE

as shown on the RE-22. Comments are made on the back of the RE-22 about

the nature of the plan revisions and the review appraiser’s opinion that the

valuation problem has not changed significantly. The revised FMVE reflects

the review appraiser’s new recommended compensation estimate

7. Value Analysis Report and "Pen & Ink" changes by the reviewer:

Corrections for typographical mistakes may be made by the reviewer or agency for

minor math errors, minor omissions, or plan revisions, wherein the cost in time and


June 4, 2019 4300- 10

inconvenience to the District outweighs the nature of the error/issue. The reviewer or

agency is to follow these guidelines.

a. For instances when the initial FMVE is based on a Value Analysis Report

wherein the reviewer or agency has modified the VA with “Pen & Ink” changes,

the justification for those changes must be noted on the Appraisal Scoping

Checklist for the VA.

b. The reviewer or agency must also pen a justification under the comments section

of the VA to aid the reader in understanding the “Pen & Ink” changes and their

necessity.

c. A "new report or a revised report" generated solely for the purpose of providing

explanation of the reasons for the reviewer or agency to make the "Pen & Ink"

changes is not required or desired as it defeats the original purpose of the Pen &

Ink changes which is to perform simplistic corrections quickly with little or no

additional paperwork.

d. VA's are still required to be reasonably compliant with procedure and VA's that

are not reasonably compliant should be corrected by the person who prepared the

VA. “Pen & Ink" procedure is intended to deal with those instances where the

necessary corrections were either minor or their necessity was disputed between

the person performing the value analysis and the reviewer. The "Pen & Ink"

procedure gives the reviewer or the agency the ability to expedite the approval

process for VA's where the issues are truly minor or timeliness is a concern.

Since the Value Analysis Report is shared with the property owner, the reviewer

or agency is cautioned to be reasonable in their application of the "Pen & Ink"

procedure. The choice of when to use the "Pen & Ink" procedure is left to the

discretion of the reviewer or agency.

B. Review of the RE 90 Value Finding Report (VF)

1. The review appraiser of the Value Finding (VF) needs to be aware of the procedures

for the creation of the VF. See 4200.02 (C) of these procedures for more information

about the VF.

2. All VF reports shall be reviewed by a review appraiser approved by ODOT. The

review appraiser shall complete the appropriate review form (RE 25-14).

3. Once the VF Report is reviewed and recommended, the District shall establish FMVE

based on the VF report.

4. FMVE is recommended by the review appraiser completing form RE 22. The review

appraiser then sends the form to the District where an authorized manager establishes

FMVE - see 4100.02(I) of the Real Estate Manual. The authorized manager will

review the form and establish FMVE by signing their name and title in the


June 4, 2019 4300- 11

appropriate space. The manager is cautioned at this point to not sign the form blindly

as this function is a commitment of public funds and should be accorded the respect

such responsibility demands. If the manager is concerned about the execution of the

procedures or the recommendation of the award, the manager may seek further

assurances or may seek a second opinion of value.

5. The review appraiser is required to fill out the following forms:

RE 25-14: The Review Checklist for the Value Finding Report. This form is a

checklist for the review appraiser and ensures the Value Finding is the

appropriate format for the appraisal problem. This form also includes a

review appraiser’s certification statement and signature line.

RE 22: This form is to be used when the VF has been recommended as FMVE.

RE 22-1: This form shall be used if FMVE needs to be allocated between


Review Letter: This letter is to be created if the appraisal is not accepted or, there are

issues which must be resolved prior to the RE 22 being prepared or, if

there are other items which are noncompliant with established ODOT

procedures.

C. Review of the RE 25-17 Right-of-Way Appraisal Report

1. In reviewing this narrative appraisal format, the review appraiser must be aware of

the procedural requirements to create the Right-of-Way Appraisal Report. See

section 4200.02 (D) of these procedures for more information about the R/W

Appraisal Report (RE 25-17).

2. All R/W Appraisal Report templates shall be reviewed by a review appraiser pre-

approved by ODOT.

3. Once the report is reviewed and recommended, the District may then establish FMVE

based on the R/W Appraisal Report recommended by the review appraiser.

4. The review appraiser completes form RE 25-16 documenting the reviewer’s findings,

completes form RE 22 with the reviewer’s recommendation and forwards the form to

the District. The authorized manager will review the form and establish FMVE by

signing their name and title in the appropriate space. The manager is cautioned at this

point to not sign the form blindly as this function is a commitment of public funds

and should be accorded the respect such responsibility demands. If the manager is

concerned about the execution of the procedures or the recommendation of the award,

the manager may seek further assurances or may seek a second opinion of value.


June 4, 2019 4300- 12

5. The review appraiser is required to complete the following forms:

RE 25-16 Appraisal Review Template for ODOT’s Right-of-Way Appraisal

Report.

RE 22: This form is to be completed when the ODOT - R/W Appraisal has

been recommended as FMVE.

RE 22-1: This form is to be completed if FMVE needs to be allocated between


Review Letter: This letter is to be created if the appraisal is not accepted or, there are

issues which must be resolved prior to the RE 22 being prepared or, if

there are other items which are noncompliant with established ODOT

procedures.

4300.06 The Procedures For Seeking Corrections To Appraisal Reports

A. The Review Letter

1. After reviewing the appraisal, if the review appraiser determines the appraisal does

not meet standards or, does not comply with laws or regulations or, determines there

are significant math issues, or, determines anything else that is relevant to the

credibility of the appraisal report, the review appraiser is required to seek corrections

or clarifications of those issues [OAC 5501:2-5-06(D)].

a. The review appraiser shall document these relevant issues in a Review Letter.

b. A Review Letter is not required for non-relevant issues. Appraisal reports may

contain minor issues, but may still be credible reports. In these instances, the

review appraiser should note any minor issues in the review template, but is not

required to seek corrections of the appraisal report.

2. The purpose of a Review Letter is to identify those parts of an analysis that need

correction or clarification, cite the authoritative source which the analysis is not in

compliance with, and give the appraiser guidance to bring the appraisal report into

compliance so that the appraisal can be recommended as a basis for FMVE.

3. All Review Letters are prepared using the following format:

a. Identify the deficiency that needs clarification or correction.

b. Reference the pertinent sections of the law(s), regulation(s), case law, USPAP,

ODOT manual(s), or other published well-known appraisal source which have

been violated.


June 4, 2019 4300- 13

c. Give the appraiser guidance and direction to correct the deficiency.

d. The Review Letter is signed by the review appraiser.

e. Prior to issuing the letter, the review appraiser shall notify the project manager.

f. Example illustrating the proper way to identify a relevant issue and to comply

with these procedures:

Item No.1

A. The Deficiency: The larger parcel contains 15 acres of contiguous land

owned by the same owner and this area is not subdivided. The appraiser

divided this larger parcel into 10 lots, then valued each of these lots, then

reported the value of the larger parcel as the sum of the 10 lots.

B. The Regulation / Practice / or Procedure Not Followed: This practice

violates the Unit Rule (see Uniform Appraisal Standards for Federal Land

Acquisitions, page 53-54) and also violates USPAP (see USPAP 2010-

2011 Edition, SR 1-4(e).

C. Guidance to Correct or Clarify: To correct the deficiency, the appraiser

must value the 15-acre tract based upon what a buyer (single purchaser)

would pay for the entire tract.

Note there is usually more than one item or issue raised in a Review Letter. A, B,

and C must be addressed in the same fashion for each item the review appraiser is

seeking clarification or correction about.

4. The Review Letter shall identify the issue or issues causing the need for clarification

or correction. The letter may also address minor issues that under normal

circumstances would not be reason for rejection of the report. It is improper to send

multiple letters with each letter identifying different deficiencies. The first letter is to

address all relevant issues.

a. It is possible that additional issues may be created when the appraiser corrects the

valuation report. It is imperative that adequate communication occurs between

the review appraiser and the appraiser so this situation does not occur.

5. The review appraiser is required to review the corrected report to ensure issues

identified in the Review Letter have been addressed by the appraiser prior to

recommending FMVE.

B. Automatic “Not Accepted” conditions:


June 4, 2019 4300- 14

The review appraiser is required to reject reports for the following deficiencies:

1. When an improper report format is utilized. (Example: A VA over $10,000)

2. When an offer for accompaniment to the owner is not made for an appraisal.

3. Anytime a law or regulation is violated.

4. Any report that is unsigned.

5. Any appraisal report lacking an Appraiser’s Certification Statement.

6. When the appraiser is not found on the ODOT pre-qualified consultant list.

C. It is reasonable to “Not Accept” reports for the following errors:

1. Anytime that there is an obvious violation of USPAP.

2. Any report having numerous errors creating a misleading conclusion and affecting the

compensation estimate.

3. If a before and after appraisal is required and the appraiser fails to properly analyze

the residue.

4. A report that relies on a preponderance of unverified data or lacks sufficient support

and analysis that does not allow the reader to reach the same conclusions as the

appraiser.

5. For R/W Appraisal Reports, when the appraiser values the residue assuming a cure as

completed and, the appraiser has not first valued the residue as uncured and stated his

conclusion of damages based on the residue as uncured.

4300.07 The RE 22 (Acquiring Agency’s Fair Market Value Estimate)

A. The RE 22 (also known as the White Sheet) documents compliance with the requirements

in OAC 5501:2-5-06(D). The RE 22 is the review appraiser’s written report in

compliance with section 4300.01 (G) of these procedures. The RE 22 provides the

following information:

1. Review appraiser’s recommendation of compensation.

2. Allocation of compensation (FMVE) into the part taken and damages, if any, to the

residue. Allocates FMVE into various property rights being acquired and also into

land, building and site components.


June 4, 2019 4300- 15

3. Documents who recommends the appraisal report and who establishes FMVE.

4. Identification of the appraiser whose appraisal report was reviewed.

5. Identification of the review appraiser.

6. Documentation of the review appraiser’s reasoning for recommending the

compensation amount.

7. Documents the appraisal and appraisal review history of the parcel.

8. Documents the administrative settlement amount, provides justification for settlement

and documents who approved settlement.

9. Documents revised FMVE amounts for the Value Analysis.

10. Documents appropriation case settlements.

B. The form is used by many people:

1. The negotiation agent uses the form to create the NIAGFO (offer to purchase). The

negotiation agent also reads the review appraiser’s reasoning for recommending the

appraisal as the basis for FMVE to better understand the appraisal and may use this

information to explain the appraisal report to the property owner.

2. The relocation agent may use the form to base the relocation assistance offer to a

displacee.

3. The form is reviewed in the QAR (Quality Assurance Review) processes.

C. General information about the RE 22 form:

1. The RE 22 is not to be completed until the review appraiser is ready to recommend

the appraisal as the basis for the agency to establish FMVE. When the review

appraiser has reviewed an appraisal and agrees the appraiser’s findings, conclusions,

analyses and the compensation amounts are well supported and comply with laws,

regulations, and ODOT procedures, the review appraiser completes the RE 22 and

recommends the compensation estimate as reported in the appraisal.

2. The review appraiser may need to review two or more appraisals on the same

property and make a recommendation on the RE 22 based on one report or the other.

The review appraiser may accept one report as the basis of the value estimate and add

items which may have been over looked.


June 4, 2019 4300- 16

a. The review appraiser may not take pieces or parts of two reports and combine the

two creating a completely different valuation. For example, the review appraiser

cannot take the “Before Value” of one report and combine it with the “After

Value” from another report to estimate a compensation amount without

complying with the legal requirements in OAC 5501:2-5-06(D).

3. If the review appraiser concludes the appraisal is well supported, compliant with

laws, regulations, ODOT procedures, and should be the basis of FMVE, he must

adequately explain the basis for the recommendation. The RE 22's are used by many

people in the acquisition process, therefore, any explanation must be adequately

composed so that one does not have to re-read a 200 page appraisal report to

understand what the review appraiser stated in the RE 22.

D. Procedure to fill out the Front of the RE 22

On the top of the form, the review appraiser identifies current ownership; County; Route;

Section; Parcel Number, and Project I.D. Number (PID).

The review appraiser next allocates compensation to the part taken and damages. Each

item listed is allocated to a single parcel number with corresponding compensation, the

sum of which must equal the total FMVE. Compensation is shown in whole dollar

amounts. The body of this form is completed as follows:

1. Land

The quantity and type of land taken are to be entered in the appropriate spaces. The

size of the area taken must conform to the right of way plans. The type of land taken

(residential, commercial, etc.), is listed based upon its highest and best use as

described in the appraisal. In some instances, land is acquired from a parcel having

multiple highest and best uses requiring the review appraiser to break the acquisition

into the highest and best use component parts.

Example - typical entry onto the RE 22:


June 4, 2019 4300- 17

Example – PRO conversion: PRO (present road occupied) property is encumbered

by a highway easement and the fee owner still retains the underlying fee ownership

position.

When an existing PRO is being acquired (meaning the District is acquiring the

underlying fee ownership position), the PRO acquisition must be assigned a value on

the RE 22. Under most circumstances, the existing PRO is assigned only a value of

$1. See Section 4400 (14) for explanation of the $1 allocation.

2. Fence

The lineal feet and type of fence taken are to be entered in the appropriate spaces.

Common types of fencing are chain link, woven wire, barbed wire, picket and

vertical board. So called fencing of uncommon materials such as masonry should be

categorized as “Wall” and included in “Other.”

3. Trees and Shrubs

The review appraiser is to include all significant vegetation in the take area. Trees

and shrubs, when part of a landscape plan, are the typical items included and are to

be itemized as to kind, quality, size, etc. The allocation of value to these items is

based on their contributory value to the larger parcel before the taking.

4. Other


June 4, 2019 4300- 18

Includes all items not listed in the other categories. Such items may include, but are

not limited to:

1. Sidewalks 7. Tennis Courts

2. Pavement 8. Underground Tanks

3. Water Wells 9. Private Utilities

4. Advertising Devices 10. Special Equipment

5. Lighting Systems 11. Parking Bumpers

6 Swimming Pools

A brief description of quantity and type of each improvement is to accompany each

item.

5. Buildings

Includes all structures of a shelter type such as residences, garages, barns, silos,

sheds, stores, warehouses, plants, schools, churches, etc. A brief description of the

structure depicting its use, levels, stories and basic construction materials is

necessary. Base square footage or total square footage may be shown depending

upon the type of structure involved.

6. Damage to Residue

It is in this area of the RE 22 that the review appraiser is to reflect any decrease in

value of the remaining land, structures or other improvements as a result of the

acquisition. The reasons for damage must be identified and can include land

locking, proximity, triangulation, change of intensity of the highest and best use, etc.


June 4, 2019 4300- 19

In cases where there are several types of takings such as WL, WD, etc., and there are

damages due to these takings, the review appraiser is to allocate the total damage to

the primary taking unless he/she can support a breakout of damages attributable to

the other parcels involved.

Costs to cure are damages and shall be entered in the category of “Damage to

Residue” with a brief description of the item(s) being cured.

“T” Parcels are temporary easements needed for the construction phase of projects.

Compensation paid for the acquisition of “T” parcels is also entered in this section.

The review appraiser is to enter the purpose of the “T”, the area involved and the

anticipated duration for which compensation is estimated.

7. EL Area

It is within this area of the form that the review appraiser is to report the

recommended FMVE as well as the uneconomic remnant, if there is one. The

information needed on the following lines are:

a. TOTAL FAIR MARKET VALUE FOR REQUIRED RIGHT-OF-WAY

Having completed items 1 through 7 which comprise the various elements of

compensation, the review appraiser shall show the total of the allocated value as

FMVE. If compensation is rounded up to $300 to comply with the minimum

offer procedure [see section 4000.07 (D) of these procedures], the review

appraiser shall show the $300 amount and state the rounding is in compliance

with ODOT procedure.

b. OFFER FOR REQUIRED RIGHT-OF-WAY AND EXCESS LAND

The review appraiser may need to make a recommendation that a residue is an

uneconomic remnant meaning the remaining property, or a portion of the

remaining property has no value or utility to the property owner. This is a

requirement of law [Ohio Revised Code, Sec. 163.59 (K)]. This is the review

appraiser’s obligation and not the appraiser. For additional information on


June 4, 2019 4300- 20

uneconomic remnants, see sections 4000.17 (A) and 4300.11 of these

procedures.

The total FMVE plus the uneconomic remnant (E) parcel cannot exceed the

total value of the property before the take. Both of these compensation

estimates are also entered in the Review Appraiser’s Record on the reverse side

of the form RE 22. Obviously, if there is no uneconomic remnant, this line does

not have to be filled out.

Additionally, this line is to be filled out if the District desires to purchase land

outside the take area and which is not an uneconomic remnant. These types of

purchases are not needed for the project, are negotiated and cannot be acquired

by eminent domain action. The procedure is the same as previously noted for

the uneconomic remnant.

c. ADDED COST TO ACQUIRE EXCESS LAND

The value attributed to the uneconomic remnant or the land to be negotiated

outside the take area is to be reported on this line. This number is the value of

the residue less the value of any temporary easements (T takes). If there are no

T takes, this amount is equal to the value of the residue which is declared as

uneconomic (the E parcel) or the value of land to be negotiated outside the take

area that is not uneconomic (the EL parcel). The example below illustrates this

procedure.

d. VALUE

This is the value of the remnant(s). It may be the same number reported on the

previous line, “Added Cost to Acquire Excess Land” or it may not, depending

upon the Temporary Easements on the residue.

e. AREA

The land area which is the uneconomic remnant or the area to be negotiated

outside the take area is to be reported on this line.

Example: Assume the total FMVE for the required right of way is $119,500, that

the taking created two residues and damaged one residue by land-locking it. The


June 4, 2019 4300- 21

appraiser estimated the value of the landlocked residue at $750 and the area of the

landlocked residue was 1.5 acres. The landlocked residue was encumbered by a

temporary easement which was estimated at $250. Based on this information, the

EL portion of the RE 22 is filled out as follows:

Note the difference between the added cost to acquire the Excess Land and the Value

of the Excess Land is the same as the amount of compensation for the Temporary

Easement on the landlocked residue. This is because the Temporary Easement is

designed to run for a period of time after the acquisition. If the property owner sells

the District the landlocked residue, the Temporary Easement is no longer needed.

8. Signature Boxes

a. Left Side Signature Box Labeled Trainee’s Recommendation

This box is reserved for agency personnel that are in training to become an

approved staff review appraiser. These District employees have no review

authority and may only recommend acceptance of an appraisal to an approved

review appraiser. This category is only open to ODOT staff or LPA staff review

appraisers who are apprenticing with pre-qualified staff review appraisers.

Consultants do not have this option available to them. All signatures must also

have the name typed together with the date the RE 22 was recommended.

b. Right Side Signature Box Labeled Recommended:

This box is reserved for review appraisers who are pre-approved by ODOT. The

review appraiser is to sign in this box if the appraisal is reviewed and

recommended as the basis for ODOT to establish FMVE. The date of


June 4, 2019 4300- 22

recommendation and the typed name and signature of the review appraiser are to

be inserted into the boxes

c. Signature Box Labeled Recommended/ 2nd Review Appraiser:

This box is reserved for a secondary review appraiser. Secondary review

appraisers only fill this box in after they complete a review of appraisal(s) where

the FMVE is equal to or greater than $500,000. The process for secondary

reviews is outlined in the Real Estate Manual Section 4100.02 (I)(5). The

secondary review appraiser’s signature, typed name and date of the secondary

review are to be reported in this box.

d. Signature Box Labeled Recommended/Appraisal Unit Manager:

This box is reserved for only Central Office Appraisal Unit Manager. The

manager only fills this box in after they complete a review of appraisal(s). In

those instances where the initial review appraiser and the secondary review

appraiser cannot agree on a recommendation, the Appraisal Unit Manager may

take the place of one of the review appraisers. The manager’s signature, typed

name and date of the review are to be reported in this box.

e. Signature Box Labeled Agency Signature Establishing FMVE:

Per Federal regulation [49 CFR 24.102(d)] and Ohio Law [163.59(D)], the review

appraiser does not establish FMVE and a fee consultant cannot establish FMVE.

The acquiring agency (ODOT or LPA) must establish FMVE. Only people of

authority within the agency may establish FMVE. See section 4100.02(I) of these

procedures for more information about people having authority to establish

FMVE.

f. Signature Box Labeled Administrative Settlement/Case Settlement:

Only those people having Administrative Settlement authority or Case Settlement

authority are to sign within this box.


June 4, 2019 4300- 23

E. The Back Page of the RE 22

On the back of the RE 22, the review appraiser is to report the Appraisal and Appraisal

Review Record and the Review Appraiser’s reasoning for recommending the appraisal

report as the basis for the compensation estimate.

1. Appraisal and Review Record

a. The Appraisal Record must show the name(s) of all performing appraiser(s) and

whether it is a fee, staff or property owner’s report. The appraiser’s estimate of

value must appear in the “Value of Taking” column, followed by the submitted

date of the appraisal as shown on the Summary Sheet (form RE 25-1).

The review appraiser is to indicate whether it is a Right of Way Appraisal

Report, Value Finding Report (VF), or Specialty Appraisal (Special) and state

the type of specialist report if applicable.

b. The Review Record must show the name of every review appraiser in addition

to the respective approved FMVE amount and date for the original and each

revision.

b. In the examples above and immediately following, the reasons for a revised

FMVE must be adequately explained in the “Review Appraiser’s Reasoning


June 4, 2019 4300- 24

for the Value Estimate” which follows immediately below the review

appraisers record on the RE-22 form.

Example - Illustrating an Uneconomic Remnant

2. Review appraiser’s reasoning for recommending the appraisal report as the basis for

the compensation estimate.

a. The review appraiser shall adequately explain the basis for his recommendation

of the appraisal(s) as compensation for the part taken and damages, if any, to the

part not taken. The review appraiser must give logical reasons. The main

source of information must be cited and evaluated. Contrary data must also be

explained for its omission as supporting evidence. If the review appraiser does

not use the assigned appraisals as support for FMVE, other acceptable data

sufficient to support the recommended FMVE must be provided including sale

data and analysis.

b. The review appraiser is cautioned not to make use of “canned statements”

which do not adequately explain, or, present so little explanation that the reader

does not understand the stated explanation. The review appraiser’s

recommendation of the appraisal(s), together with the explanation for

recommendation is the basis for the District to establish FMVE.


June 4, 2019 4300- 25

c. An RE 22 prepared for a simplistic valuation format does not have the depth of

presentation as one based on a more detailed appraisal report. The explanation

supporting the recommendation is to include:

i. Succinct description of the larger parcel before the take with a statement as

to its highest and best use.

ii. The value of the property before the take.

iii. Succinct description of the taking and the impact of the taking to the

residue.

iv. Succinct description of the residue(s) with a statement of its (their) highest

and best use.

v. The value of the residue(s).

vi. The review appraiser’s analysis of why the appraisal is appropriate to

recommend as a basis for compensation to the property owner.

vii. The review appraiser is to elaborate when two or more appraisals have

been considered.

viii. The review appraiser may have to go into greater detail if the review

appraiser must develop the documentation necessary to support an

approved or recommended value - see OAC Section 5501:2-5-06(D)(3).

d. The official from the District may reject the RE 22 if the official does not agree

with the RE 22, or, if the official does not understand the RE 22, or, if the

official is of the opinion the RE 22 is not adequately written to support the

recommendation.

4300.08 The RE 22-1 (Apportionment of Right of Way Costs)

A. The RE 22-1 is also known as the Blue Sheet. This form is printed on blue paper so that

it gets the attention of everyone who must handle the acquisition file. The purpose of the

RE 22-1 is to:

1. Apportion FMVE into the amount due the fee owner and an amount due a tenant

when improvements classified as real property are owned by the tenant and, both fee

owner and tenant agree that the improvements are tenant-owned.

2. Apportion the settlement amount between two or more types of funding participation

in the right of way taking. This can occur when the Federal government does not

participate with funding for a portion of the FMVE.


June 4, 2019 4300- 26

B. Realty Owned By Others (Tenant-Owned):

The review appraiser is to prepare the RE 22-1 apportioning the original FMVE of the

property as established in the RE 22 between the fee owner’s interest and any third party

(tenant) interests. The third party shall be offered contributory value or salvage value,

whichever is greater. The fee owner is to receive the remaining FMVE (FMVE –

contributory value of tenant-owned improvement).

The review appraiser shall be furnished a list of improvements to be acquired from the

third party (tenant-owned real estate). The suffix “BS” is applied to the third-party

interest and is put in the FMVE Apportionment column on the RE 22-1. If there are two

or more tenant interests, the “BS” parcels shall be labeled BS, BS-1, BS-2, BS-3 and so

on.

To establish appropriate compensation for tenant- owned real estate, the review appraiser

must show on the RE 22-1:

1. The compensation apportioned to those improvements owned by the tenant, and;

2. The compensation apportioned to the fee owner of the land and remaining

improvements to be acquired.


June 4, 2019 4300- 27

When salvage value is greater than contributory value of an improvement, the tenant is

awarded the salvage value and the sum total of the “Fee” column and the “BS” columns

is greater than the total FMVE.


June 4, 2019 4300- 28


June 4, 2019 4300- 29

C. Apportionment Needed For Non-Participating Federal Funding

There are instances when the review appraiser is required to apportion FMVE between

different funding sources. These instances are very rare. If such an occasion arises then

contact the Office of Real Estate for further guidance and direction.

4300.09 Corrections, Updates, and Revisions

A. Corrections

A “correction” is requested from the appraiser when the appraisal report does not meet

ODOT standards as set forth in this procedures manual. The correction of observed

deficiencies, errors or omissions in appraisal reports, either before or after acceptance, is

the responsibility of the appraiser without additional fee. When a report requires

corrections, all copies are returned to the appraiser and the responsibility of inserting

corrected pages and removing the deficient pages is the appraiser’s. The Department

may make an exception to this rule when necessary to expedite the delivery of FMVE

and if the number of corrected pages is nominal.

B. Updates

An “update” is requested from the appraiser when sufficient time has elapsed since the

date of the last FMVE to warrant a review of the market to determine if any increase or

decrease in market value has occurred. The need for an update may be determined by a

member of the review staff, the District Real Estate Administrator or by the Assistant

Attorney General in cases of litigation.

C. Revisions

The appraiser may be requested to “revise” his/her appraisal report to reflect changes that

have occurred in the appraisal problem since the date it was originally assigned.

Revisions usually occur due to a change in the appraisal problem which was unforeseen

at the time of the original assignment. These changes are usually the result of an ODOT

action or decisions and may include such items as a change in the area to be acquired, a

change in the determination of realty versus personalty or change in the appraisal premise

based upon a legal opinion. The above terms which are often erroneously used

interchangeably, must be understood and used correctly by the review appraiser

throughout the appraisal review process and in the preparation of the form RE 22.

4300.10 Uneconomic Remnants

A. Uneconomic remnants are regulated by law. See:

42USC Chapter 61, Subchapter III, Section 4651 (9)


June 4, 2019 4300- 30

49 CFR Part 24 Subpart A, 24.2 (27) Definition of an uneconomic remnant

49 CFR Part 24 Subpart B, 24.102 (k) Uneconomic remnant

Ohio Revised Code, Section 163.59(K) Acquisition of an uneconomic remnant

Ohio Administrative Code, 5501:2-5-06(B)(11) Uneconomic remnant

These laws and regulations mandate the District shall offer to acquire from the owner any

residue property determined by the District as having little or no value or utility to the

owner. The decision to acquire is made by the District.

B. The review appraiser makes the recommendation that a residue is uneconomic on the RE

22. The review appraiser must support his conclusion by presenting analysis detailing

why the residue has little or no value or utility to the owner.

C. A remnant is declared uneconomic by the person of authority within the District signing

the RE 22.

D. The procedure to acquire an uneconomic remnant is in section 5305 of the Real Estate

Manual. Additional information about uneconomic remnants is in section 4300.07 of

these procedures.

4300.11 Unique Issues and Appraisal Review

A. Cost-to-Cure

1. A Right-of-Way Appraisal Report is not to be recommended as the basis to establish

FMVE if the appraiser has valued the residue property as cured and has not done the

following:

a. The appraiser must have estimated the value of the residue as severed and

uncured;

b. The appraiser must have stated damages assuming no cure;

c. The appraiser must have analyzed the cure and determined the cost of the cure;

d. The appraiser must have analyzed and determined the feasibility of the cure.

Under no circumstance can the cost to cure measure of damage be applied if the

cost to cure exceeds the diminution in value that would result if such a cure were

not taken. However, if the cost to cure is less than the diminution in value of the

residue, the cost to cure measure of damage must be used.

i. See section 4400.45 of this Manual for detailed information regarding cost to

cure analysis.


June 4, 2019 4300- 31

e. As a result of this feasibility analysis, the appraiser determines whether

compensation should be based on valuing the residue with no cure or based on

valuing the residue assuming a cure has been completed.

When the appraiser determines the cost to cure is nominal, he may request the District

to allow the appraiser complete a limited scope appraisal. If the District makes the

decision to allow the appraiser to utilize a limited scope appraisal, the District shall

document this instruction in a letter to the appraiser and the appraiser is required to

insert this letter in the appraisal report. If the determination of a limited scope report

is done prior to the appraisal, the instruction may be stated in the Parcel Impact Notes

instead of a separate letter.

The appraiser is required to disclose the limited scope appraisal in the Extraordinary

Assumptions of the R/W Appraisal Report to comply with USPAP requirements. See

section 4000.10 of the Real Estate Manual for more information about limited scope

appraisals.

A limited scope appraisal prepared for acquisition may not be appropriate for a parcel

that has been appropriated and, the appraiser may need to prepare another appraisal

that demonstrates the value of the residue uncured, no matter the cost to cure

estimate.

2. Value estimates using the Value Analysis format and the Value Finding format may

be recommended without having the appraiser comply with A(1) above.

3. See section 4400.44 and 4400.45 of these procedures for more information about

damages and costs-to-cure.