acquired. Similarly, an owner cannot
be penalized for any diminution in
value due to that government project.
Once a property is within the scope of
the project, all project influence on the
property’s before market value must be
disregarded.
Anticipated Public
Improvements
The third jurisdictional exception
relates to anticipated public
improvements, located on or off
the site. USPAP [S.R. 1-4(f)] states,
“When analyzing anticipated public or
private improvements, located on or
off the site, an appraiser must analyze
the effect on value, if any, of such
anticipated improvements to the extent
they are reflected in market actions.”
Contrary to this statement, the Yellow
Book posits that "an increase or
decrease in the market value of real
property prior to the date of valuation
caused by the government project
must be disregarded in developing
the appraisal." Under federal law,
valuations for just compensation
purposes must disregard any
government project influence on a
property’s market value once it is
within the scope of the government’s
project. The rationale for this
determination is very much the same
as the rationale for the probability of a
rezoning; the application of this scope
of the project rule ensures fair results
for both landowners and the public.
Specific Legislation and
Regulations
The fourth and final jurisdictional
exception category is specific
legislation and regulations. Each land
acquisition agency has its own rules
and regulations based on the Uniform
Act and its implementing regulations.
Specific agency program activities
sometimes make it necessary to adopt
rules and regulations that are contrary
to USPAP. Also, it is not uncommon
for Congress to enact specific
legislation relating to the acquisition
of a specific property or properties
to be acquired for a specific
public project. In some instances,
adherence to the provisions of that
specific legislation may require
the appraiser to invoke USPAP’s
Jurisdictional Exception Rule.
According to USPAP, if an appraiser
invokes a jurisdictional exception,
the appraiser must:
1. Identify the law or regulation
that precludes compliance with
USPAP.
2. Comply with that law or
regulation.
3. Clearly and conspicuously
disclose in the report the part of
USPAP that is voided by that law
or regulation.
4. Cite in the report the law
or regulation requiring this
exception to USPAP compliance.
Ultimately,
USPAP and the
Yellow Book
have the same
objective...
Summary
The Uniform Standards of
Professional Appraisal Practice and
the Uniform Appraisal Standards
for Federal Land Acquisitions are
broadly consistent with each other,
with USPAP representing the
generally accepted and recognized
standards of appraisal practice
in the United States, while the
Yellow Book stands as the foremost
authority on real estate valuation
in federal eminent domain, and
an indispensable resource for the
appraisal of property for all types
of federal acquisitions.
However, there are occasions when
appraisals prepared to Yellow Book
standards require the invocation of
USPAP’s Jurisdictional Exception
Rule. The Rule is a saving or
severability clause, which is
intended to preserve the balance
of USPAP if compliance with a
part is jurisdictionally precluded
by law or regulation. A statement
by a client, attorney, or appraiser
does not constitute a jurisdictional
exception. J
David Layne, SR/WA, ASA, is owner of Layne
Consulting Services. Dave is a New York State
Certified General Real Estate Appraiser and an
AQB Certified USPAP instructor. He is a recipient
of the IRWA’s Frank C. Balfour Professional
of the Year Award and Past Chair of The
Appraisal Foundation. Dave was a member of
The Appraisal Foundation’s Yellow Book course
development team and the author of TAF’s online
version, delivered by McKissock Learning.
