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ACEP -ALE Appraisal Specifications and Scope C. Purpose Of The Appraisal Report The applicable purpose of the appraisal report must be stated in the report. The purpose depends upon which of the approved appraisal methods the eligible entity selected. 1. FOR USPAP APPRAISALS: The purpose of the appraisal is to provide an opinion of market value of the proposed easement area before placement of the easement and an opinion of market value of the proposed easement area as if the easement is in place. The difference between these two values will be the effect of the easement on the subject property. An appraisal report, as discussed in USPAP Standards Rule 2 -2(a), must be provided; restricted appraisal reports are not acceptable. The appraisal report must contain the level of detail, discussion and support necessary for the client and intended users to comprehensively understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches used in the appraisal. This format was formerly known as the self - contained reporting option, prior to the release of the 2014 -2015 USPAP. a. The market value definition that will be stated and used in developing and reporting this assignment is as follows: 1. "Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby a. Buyer and seller are typically motivated. b. Both parties are well informed or well advised and acting in what they consider their own best interests. c. A reasonable time is allowed for exposure to the open market. d. Payment is made in terns of cash in U.S. dollars or in terms of financial arrangements comparable thereto. e. The price represents the normal considerations for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." b. ° No other definition of market value is acceptable for USPAP appraisals. 2. FOR UASFLA/YELLOW BOOK APPRAISALS: The purpose of the appraisal is to provide an opinion of market value of the subject property (larger parcel) before acquisition of an easement (before value) and an opinion of market value of the subject property remaining after the proposed easement has been placed (after value). The or, appraiser must recognize that in a before and after appraisal, the partial interest being acquired is not actually being appraised. The subject property appraised is the larger parcel before and after the conveyance of the partial interest. The larger parcel concept involves not only the land proposed for the easement area but all surrounding land that meets the defmition of larger parcel found in UASFLA. a. The purpose of two opinions of value is to establish the effect on value resulting from imposition of a conservation easement. The compensation for the easement is the before value of the larger parcel minus the after value of the property as encumbered by the ALE warranty easement deed, provided there are not adjustments such as excess irrigation water rights explained below, which would equal the price of the easement. A key concept in this appraisal process is defining the larger parcel which is required to begin the appraisal process. The appraisal must be completed in compliance with USPAP, UASFLA and appraisal instructions issued by NRCS. b. For the purpose of these appraisals, the Federal rules for acquisition will be used. 2 Attachment number 1 F -7 Page 183