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Appraisal System in Department of the Interior Gets Scrutinized

By AppraiserLoft Team | January 6, 2023

An evaluation report on the appraisal operations in the Department of the Interior (Department) has found that the existing system is not working properly and has heavy criticism for the current status of the Appraisal Services Directorate (ASD), the office set up to handle the appraisal needs for the Department.

The report, from the Office of the Inspector General, claims that appraisal operations are “impeded by a combination of factors,” including a lack of support from the National Business Center (NBC), persistent undermining by other bureaus and the “nonexistence of leadership.”

The ASD was originally created in 2003 as part of the effort to remedy longstanding problems with the appraisal process in the Department. The ASD’s mission is to satisfy the appraisal needs for property bought and sold by the Department and its bureaus, including the Bureau of Land Management, Fish and Wildlife Service, National Park Service and Bureau of Reclamation. Over the last four years, the ASD has appraised almost 8 million acres of land, with an appraised value of almost $10 billion. The ASD has over fifty full-time appraisers who report back to a chief appraiser based in Washington, D.C.

The report says that the ASD does not have “full control over and responsibility for the appraisal process,” with the NBC failing to provide timely support and services. In addition, the other bureaus have consistently undermined the ASD by “repeatedly acting to regain control of the appraisal function.” The Department, meanwhile, did nothing to intervene and address these issues.

In damning criticism of the current structure, the memo that accompanied the report, said, “This lack of support is compounded by the fact that ASD has essentially become dependent upon others to address policy and enforcement issues as the agency has been without consistently strong leadership for the past three years.”

At the heart of the system should be appraiser independence, according to the findings in the report. “The quality of an appraiser’s services in ascertaining market value is negated when appraiser independence is compromised by excessive pressure to meet management and political objectives.”

The appraisers employed by ASD were frequently in conflict with realty managers’ “drive to expedite land transactions and ‘make the deal.’” The ASD was placed within the NBC, making it dependent on the Assistant Secretary – Policy, Management and Budget to address any problems.

Making matters worse was that the ASD lacked a proper chief appraiser for the last three years. Since the first chief appraiser left the post in 2006, the ASD was led by a “series of well-intentioned acting chiefs and, for one year, by a chief appraiser who was not technically qualified to hold the position.”

Summing up the attitude of the NBC towards the objectivity of appraisers, the report said, “We found that the NBC selected the unqualified chief appraiser as a result of its focus on customer service and business experience, with a de-emphasis on technical appraisal skills and qualifications.”

The audit makes three recommendations to fix the problems with the Department’s appraisal system. The first is to delegate responsibility to ASD for complete control of the contracting process. The system currently sees the NBC as responsible for contracting. The second recommendation is to ensure that a “strong and competent” chief appraiser is hired to lead ASD. The final recommendation is to revisit the organizational placement of the ASD. Rather than its current status within NBC, the report recommends it becomes an independent office within the Office of Policy, Management and Budget, in order to “reinforce ASD’s ability to successfully and independently perform appraisal-related activities.”

 

Source: Valuation Review

Topics: Bank Appraisal Conflicts | No Comments »

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