[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