[Federal Register Volume 63, Number 31 (Tuesday, February 17, 1998)]
[Notices]
[Pages 7825-7826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3801]


-----------------------------------------------------------------------

DEPARTMENT OF THE INTERIOR

National Park Service


Public Notice and Request for Comments

AGENCY: National Park Service, Interior.

SUMMARY: The National Park Service (NPS) administers a number of 
concession contracts under which private parties are authorized to 
provide specified visitor service and facilities in areas of the 
national park system. Many such contracts contain provisions which 
grant the concessioner a ``possessory interest'' in authorized capital 
improvements that they make to park lands in furtherance of their 
authorized operations. Possessory interest in effect provides the 
concessioner with a compensable interest in such improvements in the 
event it ceases to be authorized to utilize the improvements pursuant 
to the terms of a concession contract. In such circumstances, 
concession contracts provide that specified compensation will be paid 
to the concessioner. Concession contracts vary with respect to the 
measure of this compensation. This notice describes an NPS proposal as 
to how it interprets ``sound value'' possessory interest, one such 
measure of possessory interest compensation.
    In addition, this notice proposes an NPS method for implementation 
of this interpretation. Public comment is sought on these matters.

DATES: Comments on this notice must be received no later than thirty 
(30) days after the date of publication of this notice to be assured of 
consideration.

ADDRESSES: Comments should be sent to: Robert K. Yearout, Program 
Manager, Concessions Program, National Park Service, 1849 ``C'' Street, 
NW., Washington, D.C. 20240.

SUPPLEMENTARY INFORMATION: Public Law 89-249, 16 U.S.C. Sec. 20 et seq. 
(the Act), prescribes policies under which NPS concession contracts are 
to be administered. Among other matters, the Act discusses possessory 
interest (16 U.S.C. Sec. 20e) and states as follows in pertinent part 
as to compensation for possessory interest:

    Unless otherwise provided by agreement of the parties, just 
compensation [for possessory interest] shall be an amount equal to 
the sound value of such structure, fixture, or improvement 
[consessioner improvements] at the time of taking by the United 
States determined upon the basis of reconstruction cost less 
depreciation evidenced by its condition and prospective 
serviceability in comparison of a new unit of like kind, but not to 
exceed fair market value.

    The statute does not define the term ``reconstruction cost'' as 
used in this section. However, the legislative history of the Act 
states as follows in pertinent part in this regard:

    The Department [of the Interior and the NPS] and the 
concessioners are agreed that the term reconstruction cost and 
reproduction cost are synonymous and that the terms have the meaning 
given on p. 188 of The Appraisal of Real Estate [Third Edition, 
1960] prepared by the American Institute of Real Estate Appraisers; 
namely, reproduction cost is the present cost of replacing [the 
improvements] with as nearly an exact replica as modern materials 
and equipment will permit.

    Many NPS concession contracts provide for ``sound value'' 
possessory interest compensation which is generally described as 
follows in such contracts:


[[Page 7826]]


    The sound value of any structure, fixture or improvement shall 
be determined upon the basis of reconstruction cost less 
depreciation evidenced by its condition and prospective 
serviceability in comparison with a new unit of like kind, but not 
to exceed fair market value.

    The terms ``reconstruction cost'' and ``fair market value'' are not 
defined in such concession contracts.
    In consideration of these matters, NPS proposes to interpret these 
terms and implement such interpretation in the following manner.

Proposed Interpretation and Implementation

    NPS will construe the term ``reconstruction cost'' as used in NPS 
concession contracts to be synonymous with the term ``reproduction 
cost'' which is defined as follows consistent with the legislative 
history of the Act:

    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 Sound Value appraisals are prepared for determination of 
Possessory Interest, appraisers must chose from one or more of the 
following three methods:

(1) Quantity Survey
(2) Unit-in-place (Segregated)
(3) Comparative Unit

    A description of each method may be found in The Appraisal of Real 
Estate [11th Edition] from the Appraisal Institute.
    NPS will construe the term ``fair market value'' as follows and as 
based on The Appraisal of Real Estate [Third Edition, 1960] prepared by 
the American Institute of Real Estate Appraisers, as previously 
identified and cited from the legislative history of the Act:

    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 formal appraisals of improvements in which an NPS 
concessioner has a sound value possessory interest. In making such 
appraisals, it will utilize or cause its appraiser to utilize these 
preceding definitions in arriving at the appraised value of such 
possessory interest. NPS standard possessory interest appraisal 
instructions shall incorporate these definitions.
    The NPS may choose to consider, based on professional and 
knowledgeable analysis, 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.

    Dated: January 29, 1998.
Robert K. Yearout,
Concession Program Manager.
[FR Doc. 98-3801 Filed 2-13-98; 8:45 am]
BILLING CODE 4310-70-M