[Federal Register Volume 63, Number 113 (Friday, June 12, 1998)]
[Notices]
[Pages 32245-32246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15693]
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DEPARTMENT OF THE INTERIOR
National Park Service
Adoption of NPS Policy on Valuing Sound Value Possessory Interest
Under NPS Concession Contracts
SUMMARY: On February 17, 1998, NPS published for comment a proposed
policy concerning the ``Interpretation and Implementation of Sound
Value Possessory Interest.'' This notice discuses comments received in
response to this proposal and adopts a final NPS policy in this regard.
EFFECTIVE DATE: June 12, 1998.
FOR FURTHER INFORMATION CONTACT:
Robert K. Yearout, Program Manager, Concession Program, National Park
Service, 1849 ``C'' Street, NW, Washington, D.C. 20240.
[[Page 32246]]
SUPPLEMENTARY INFORMATION: The National Park Service (NPS) administers
a number of concession contracts which grant the concessioner a
``possessory interest'' in authorized capital improvements made to park
lands by the concessoner in furtherance of their authorized operations.
Possessory interest grants the concessioner a compensable interest in
such improvements should it cease to be authorized to utilize them
under the term of a concession contract. Concession contracts vary with
respect to the measure of this compensation. The February 17, 1998,
notice concerns the NPS interpretation of ``sound value'' possessory
interest, one measure of possessory interest compensation.
Several comments were received in response to that notice. One
comment was submitted by an organization representing concessioners,
and the remainder were received from licensed real estate appraisers.
Several of the comments received concerned matters which were not
within the scope of the request for comments. Particularly, a number of
questions were raised about how NPS intends to address more specific
issues regarding possessory interest appraisals and how a
concessioner's possessory interest relates to a concessioner's right of
preference in contract renewal. These questions have been noted by NPS
but are not responded to here as they are beyond the scope of the
proposed policy. The proposed policy, correspondingly, has been renamed
``Interpretation of Sound Value Possessory Interest.'' In addition, its
description of specific appraisal methods has been deleted as it is
more appropriate to address such methodology in NPS appraisal
instructions rather than in a policy statement. Finally, several
clarifying editorial changes have been made.
One commenter asked how the proposed policy relates to previous NPS
internal guidance. The final policy supersedes all previous NPS
guidance inconsistent with its terms.
Most of the relevant comments received raised questions about the
meaning of the last paragraph of the proposed policy, which read as
follows:
The NPS may choose to consider, based on professional and
knowledgeable analysis, therefore, that in some circumstances a less
than formal appraisal value may be needed for internal purposes. In
those instances, NPS appraisers may provide estimates of value which
will clearly disclose that said estimates do not conform to
appraisal standards and are subject to change based on execution of
a formal appraisal.
This paragraph was included in the proposed policy to cover
instances where, for internal purposes, an estimate of value might be
made by an NPS appraiser with less than a complete Summary Appraisal
report. As such an estimate would be for internal purposes only, NPS
has removed this paragraph from its final policy.
NPS points out, however, that on occasion it may make and publicly
release estimates of the value of a concessioner's possessory interest
for contract administration and/or other purposes. Such estimates,
unless they are developed in conformance with appraisal practices and
standards, will make clear that they have not been made by a licensed
appraiser nor under usual appraisal practices and standards. Two
sentences to this effect have been added to the final policy.
One commenter questioned the use of the Third Edition of The
Appraisal of Real Estate in defining the term ``fair market value,''
stating that the definition NPS used is from the 11th edition. The
final policy deletes reference to a particular source for the
definition and notes that the definition is subordinate if inconsistent
with law in particular circumstances. However, in light of the express
legislative history of Public Law 89-249, the definition of
reproduction cost to be used by NPS is the definition used in such
legislative history which cites the first paragraph of page 188 of the
Third Edition of The Appraisal of Real Estate.
In consideration of comments received, the final NPS policy is as
follows:
Interpretation of Sound Value Possessory Interest
NPS will construe the term ``reconstruction cost'' as used in NPS
concession contracts to be synonymous with the term ``reproduction
cost'' defined as follows consistent with the legislative history of
Public Law 89-245:
Reproduction cost of improvements in which an NPS concessioner
has a possessory interest is the present cost of replacing the
improvements with as nearly an exact replica as modern materials and
equipment will permit.
When an NPS concession contract utilizes the term ``fair market
value'' with respect to possessory interest, NPS will construe the term
as follows unless otherwise inconsistent with law in particular
circumstances:
The most probable price, as of a specific date, in cash, or in
terms equivalent to cash, or in other precisely revealed terms, for
which the property rights should sell after reasonable exposure in a
competitive market under all conditions requisite to a fair sale,
with the buyer and seller each acting prudently, knowledgeably, and
for self-interest, and assuming that neither is under undue duress.
In circumstances where NPS considers it necessary, it will
undertake appraisals of improvements in which an NPS concessioner has a
possessory interest. In making such appraisals, it will utilize or
cause its appraiser to utilize, where applicable, the preceding
definitions in arriving at the appraised value of possessory interest.
In addition, when appropriate, NPS may make estimates of the value of a
concessioner's possessory interest for contract administration and/or
other purposes. Such estimates will make clear that they have not been
made by an appraiser nor under usual appraisal practices and standards.
Dated: June 3, 1998.
Wendelin M. Mann,
Acting Concession Program Manager.
[FR Doc. 98-15693 Filed 6-11-98; 8:45 am]
BILLING CODE 4310-70-M
