[Audit Report on Land Acquisition Activities, National Park Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 99-i-518

Title: Audit Report on Land Acquisition Activities, National Park
       Service



Date:  May 28, 1999




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of Acquisition and Management Operations at (202) 208-4599.

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U.S. Department of the Interior
Office of Inspector General



AUDIT REPORT
LAND ACQUISITION ACTIVITIES,
NATIONAL PARK SERVICE



REPORT NO. 99-I-518

MAY 1999



MEMORANDUM

             TO:  The Secretary

           FROM:  Robert J. Williams
                  Acting Inspector General 

SUBJECT SUMMARY:  Final Audit Report  - "Land Acquisition
Activities, National Park Service" (No. 99-i-518)

Attached for your information is a copy of the subject final
audit report. The objective of the audit was to determine whether
the National Park Service conducted land acquisition activities
in accordance with applicable laws and regulations and whether it
paid a fair price for the land acquired. 

The Park Service's processes and procedures for acquiring land
were usually efficient and conducted in accordance with
applicable laws and regulations.  However, for certain land
acquisitions costing more than $100,000, the Park Service did not
ensure that just compensation was properly established before it
purchased land and conservation easements at the regions
reviewed.  This occurred because the Park Service did not fully
comply with Federal standards or implement the procedures for
preparing and reviewing appraisals of real property.  Also, the
Park Service acquired one property without obtaining an appraisal
and acquired another property based on an appraisal that had
insufficient documentation to support the estimated fair market
value.  As a result, the Park Service did not have adequate
assurance  that  it  paid fair market value for some land,
including nine acquisitions that totaled $7.2 million.

In addition, the Park Service's Southeast Region did not
negotiate a sales price at an amount less than fair market value
when it acquired land from nonprofit organizations, even though
such an option was authorized by Department of the Interior
guidance.  As a result, the Park Service did not take advantage
of the opportunity to save about $3 million, which represented
the differences between the nonprofit organizations' purchase and
selling prices of lands conveyed to the Park Service. 

Also, the Park Service did not properly establish the amount of
compensation paid for conservation easements at two parks because
it obtained  updated appraisals that did not appear to be
warranted at one park and did not obtain a valid  appraisal at
another park.  As a result, the Park Service may have paid $2.6
million more than fair market value for an easement at one park
and did not have assurance that the payment of $588,000 for an
easement at another park was appropriate.

The Park Service's Southeast Region paid relocation claims that
were not supported by adequate documentation, which resulted in
the Park Service not having adequate assurance that payments for
relocation costs totaling $53,400 were reasonable or justified.
Further, the Park Service's land acquisition management
information system contained data that were inaccurate and
incomplete, which resulted in  the Park Service not having
reliable information for tracking and managing land acquisition
activities.

In the report section "Other Matters," we discussed the Park
Service's use of appraisals obtained by nonprofit organizations.
At the Southeast Region, the Park Service generally used
appraisals obtained by nonprofit organizations to establish
compensation amounts.  Based on a review of appraisals obtained
by landowners and those obtained independently by the Park
Service, we found that the Park Service's independent appraisals
in at least three cases established lower fair market values.  As
such, we believe that the Park Service might acquire land at
lower prices if it obtains independent appraisals.

Based on the Park Service's response to the draft report, we
considered 7 of the report's 11 recommendations resolved but not
implemented and 4 recommendations unresolved. The Park Service
was requested to reconsider its response to the unresolved
recommendations, which pertained to obtaining two appraisals for
certain acquisitions, complying with nonprofit guidelines,
providing justification for reappraisals, and reconciling
information in the Federal Financial System with information in
the management information system.

If you have any questions concerning this matter, please contact
me at (202) 208-5745. 



Attachment

cc:  Assistant Secretary for Fish and Wildlife and Parks
Chief of Staff
Director, National Park Service
Office of Communications




                                                  E-IN-NPS-010-97

Memorandum

     To:  Assistant Secretary for Fish and Wildlife and Parks

   From:  Robert J. Williams
          Assistant Inspector General for Audits

Subject:  Audit Report on Land Acquisition Activities,
          National Park Service (No. 99-i-518)

This report presents the results of our audit of land acquisition
activities conducted by the National Park Service.  The objective
of the audit was to determine whether the Park Service conducted
land acquisition activities in accordance with applicable laws
and regulations and whether it paid a fair price for the land
acquired.

We found that the Park Service's processes and procedures for
acquiring land were efficient and conducted in accordance with
applicable laws and regulations in the areas of land acquisition
planning; acquisitions through condemnation, donation, and
transfer of properties; payments of relocation claims for closing
costs, residential moving expenses, and replacement housing; and
purchases of land costing less than $100,000.  However, for
certain land acquisitions, the Park Service did not ensure that
just compensation was properly established before it purchased
lands and conservation easements at the regions reviewed.  This
occurred because the Park Service did not fully comply with
Federal standards or implement the procedures for preparing and
reviewing appraisals of real property.  We found that 32 of the
42 appraisals reviewed did not meet Federal appraisal standards
in at least one area, including 6 appraisals that were not
adequately supported.  We also found that 40 of the 42 appraisal
review reports did not contain one or more of the required
elements needed to substantiate that the reviews were performed
properly and in compliance with regulations.  In addition, the
Park Service acquired one property without obtaining an appraisal
and acquired another property based on an appraisal that had
insufficient documentation to support the estimated fair market
value.  Officials at the Park Service's Washington Office
attributed the noncompliance with Federal appraisal standards to
insufficient program oversight.  Because of the noncompliance,
the Park Service did not have adequate assurance that it paid
fair market value for land, including nine acquisitions that
totaled $7.3 million.

We also found that the Park Service did not take sufficient
action to protect the Government's interests when it acquired
land from nonprofit organizations.  Specifically, the Park
Service did not make concerted efforts to negotiate a sales price
at an amount less than fair market value when it acquired land
from nonprofit organizations, even though such an option was
authorized by Department of the Interior guidance.  As a result,
the Park Service did not take advantage of the opportunity to
save about $3 million, which represented the differences between
the nonprofit organizations' purchase prices and selling prices
of lands conveyed to the Park Service. 

In addition, we found that the Park Service did not properly
establish the amount of compensation paid for conservation
easements at two parks.  To facilitate the acquisition of
conservation easements, the Park Service obtained inappropriate
appraisal updates at one park and did not obtain a valid
appraisal at another park.     As a result,  the  Park  Service
may have paid $2.6 million more than fair market value to obtain
a conservation easement at one park and did not have assurance
that the payment of $588,000 for a conservation easement at
another park was properly supported.

We also found that the Park Service's Southeast Regional Office,
to expedite business property owner and tenant relocations for
the 1996 Summer Olympics, paid relocation claims which were not
supported by adequate documentation.  As a result, the Park
Service did not have adequate assurance that payments totaling
$53,400 for relocation costs were reasonable or justified.  

Further, we found that the Park Service's land acquisition
management information system contained data that were inaccurate
and incomplete.  Specifically, the system did not contain
information on seven land purchases, totaling $1.1 million, and
11.4 percent of the system's required data fields on land
purchases made during fiscal years 1995 through 1997 were
incomplete.  Park Service officials said that system data were
not complete and accurate because the Park Service had not
implemented quality control procedures to validate system data or
to ensure that erroneous data from a previous management
information system were not entered into the new system.  Because
the data were inaccurate and incomplete, the Park Service did not
have reliable information for tracking and managing land
acquisition activities.

In the report section "Other Matters," we discussed the Park
Service's use of appraisals obtained by nonprofit organizations.
At the Southeast Region, the Park Service generally used
appraisals obtained by nonprofit organizations to establish
compensation amounts.  Park Service officials said that they used
nonprofit organizations' appraisals to expedite the acquisition
process.  Based on a review of appraisals obtained by landowners
and those obtained independently by the Park Service, we found
that the Park Service's independent appraisals in at least three
cases established lower fair market values.  As such, we believe
that the Park Service might acquire land at lower prices if it
obtains independent appraisals.

In the April 30, 1999, response (Appendix 2) to the draft report
from the Director, National Park Service, the Park Service
concurred with Recommendations A.1, A.2, C.2, D.1, D.2, D.3, and
E.1, which we considered resolved but not implemented.
Accordingly, the unimplemented recommendations will be referred
to the Assistant Secretary for Policy, Management and Budget for
tracking of implementation.  The Park Service did not concur with
Recommendations A.3, B.1, and E.2 and did not express specific
concurrence or nonconcurrence with Recommendation C.1.  Based on
the response, we request that the Park Service reconsider its
responses to Recommendations A.3, B.1, and E.2, which are
unresolved, and provide additional information for Recommendation
C.1 (see Appendix 3). 

In accordance with the Departmental Manual (360 DM 5.3), we are
requesting a written response to this report by July 16, 1999.
The response should provide the information requested in 
Appendix 3.

The legislation, as amended, creating the Office of Inspector
General, requires semiannual reporting to the Congress on all
audit reports issued, the monetary impact of audit findings
(Appendix 1), actions taken to implement audit recommendations,
and identification of each significant recommendation on which
corrective action has not been taken. 

We appreciate the assistance of Park Service personnel in the
conduct of our audit.

CONTENTS
                                                       Page

INTRODUCTION............................................1

BACKGROUND..............................................1
OBJECTIVE AND SCOPE.....................................2
PRIOR AUDIT COVERAGE....................................3

FINDINGS AND RECOMMENDATIONS............................4

A.  APPRAISALS..........................................4
B.  NONPROFIT ORGANIZATIONS............................16
C.  CONSERVATION EASEMENTS.............................20
D.  BUSINESS RELOCATION PAYMENTS.......................25
E.  MANAGEMENT INFORMATION SYSTEM......................28
OTHER MATTERS..........................................31

APPENDICES

1.  CLASSIFICATION OF MONETARY AMOUNTS.................33
2.  NATIONAL PARK SERVICE RESPONSE.....................34
3.  STATUS OF AUDIT REPORT RECOMMENDATIONS.............44


INTRODUCTION

BACKGROUND

The National Park System consists of 375 units designated as
national parks, preserves, historic sites, monuments, seashores,
recreation areas, battlefields, trails, and other areas.  These
units encompass more than 83 million acres of land, of which
about 4.68 million acres  (including 3.8 million acres in Alaska)
were privately owned as of September 30, 1997.  Park System lands
are acquired to preserve nationally important natural and
historic resources, to establish new parks, to provide additional
lands in existing parks, and to add buffers around parks for
natural resource protection. For parks within Park System
boundaries that contain private land, the National Park Service
has developed land protection plans, which identify the minimum
land acquisitions needed to prevent incompatible uses of these
lands.

Funding for land acquisitions is provided through annual
appropriations from the Land and Water Conservation Fund.  As
provided in the Land and Water Conservation Fund Act of 1965, the
Park Service can use this funding, which remains available until
expended, to buy land only at Congressionally authorized parks.
Also, Part 4.1 of the National Park Service's Land Acquisition
Procedures Manual states that the written approval of the House
and Senate Committees on Appropriations is required for purchases
that cost more than the approved appraised value.  The Fund also
finances the administration of the land acquisition program,
including the assessments of new units that are proposed for
inclusion in the Park System.  During fiscal years 1995 through
1997, the Park Service used appropriated funds totaling $169
million to acquire 69,000 acres[1] of land,  of which $22 million
was used for program administration; $8 million for appraisal,
closing, relocation, and title costs; and $139 million for direct
payments to landowners.

The Park Service may acquire land through purchase, donation,
condemnation, transfer from other Federal agencies, and exchange
for other public and private lands.  Also, the Park Service may
obtain conservation easements to protect scenic, ecological,
historic, archeological, or cultural resources within existing
parks or in authorized areas outside park boundaries.  When
expedient action is needed to prevent the sale of property to
other parties or to eliminate the threat of adverse development,
the Park Service may acquire land with the assistance of
nonprofit organizations.  These organizations either purchase or
obtain a purchase option on land with the intention of selling
the land to the Park Service when funds are available.

The Park Service's land acquisition activities are administered
by its Land Resources Division, located in Washington, D.C.; nine
regional offices; and three project offices.  As of September 30,
1997, the Park Service had 141 full-time-equivalent employees
engaged in land acquisition activities.  

OBJECTIVE AND SCOPE

The objective of the audit was to determine whether the National
Park Service conducted land acquisition activities in accordance
with applicable laws and regulations and whether it paid a fair
price for the land acquired.  The audit covered land acquisition
activities that occurred during fiscal years 1995 through 1997. 

We conducted the survey phase of our review at the Appalachian
Trail Project Office in Martinsburg, West Virginia; the Northeast
Regional Office in Philadelphia, Pennsylvania; the National
Capital Regional Office in Washington, D.C.; and, the Southeast
Regional Office in Atlanta, Georgia.  Based on the results of our
survey, we concluded that the Park Service's processes and
procedures for acquiring land were conducted efficiently and in
accordance with applicable laws and regulations in the areas of
land acquisition planning; acquisitions through condemnation,
donation, and transfer of properties; payments of relocation
claims for closing costs, residential moving expenses, and
replacement housing; and purchases of land costing less than
$100,000.  Also, because we found no significant deficiencies in
land acquisition practices at the Appalachian Trail Project
Office during the survey phase, we limited our audit verification
phase to determining whether fair prices were paid for land
acquired by the Northeast, Southeast, and National Capitol
Regional Offices.  

We focused our audit on acquisitions of more than $100,000 made
through purchase or exchange (138 acquisitions, which totaled $74
million), transactions with nonprofit organizations, and business
relocation payments of more than $5,000 because we considered
these transactions to be the areas with the highest risk for
deficiencies.  At the three regional offices reviewed during the
verification phase of our audit, these acquisitions involved
costs of about $41 million  (including program funds for fiscal
years 1995, 1996, and 1997 and the value of Federal lands used in
exchanges). Of the acquisition costs of $41 million, we audited
costs of $37 million, including costs of $10.8 million
attributable to land that the Park Service acquired by purchase
or exchange from nonprofit organizations.  (We reviewed 21 of  40
acquisitions at the Northeast and Southeast Regional Offices that
were transacted with nonprofit organizations.)  We also reviewed
the Park Service's management information system, which is used
to track and report land acquisition activities.

Our review was made, as applicable, in accordance with the
"Government Auditing Standards," issued by the Comptroller
General of the United States.  Accordingly, we included such
tests of records and other auditing procedures that were
considered necessary under the circumstances.  As part of our
audit, we evaluated the system of internal controls over the land
acquisition process to the extent we considered necessary to
accomplish the objective.  We found internal control weaknesses
in the Park Service's preparation and review of appraisals,
transactions with nonprofit organizations, purchase of
conservation easements, payment of business-related relocation
claims, and maintenance of management information system data.
Our recommendations, if implemented, should improve the internal
controls in these areas.

In addition, we reviewed the Secretary's Annual Statement and
Report to the President and the Congress, which is required by
the Federal Managers' Financial Integrity Act, for fiscal year
1995 and the Departmental Reports on Accountability for fiscal
years 1996 and  1997, which include information required by the
Act, and determined that no reported weaknesses were within the
objective and scope of our audit.

PRIOR AUDIT COVERAGE

During the past 7 years, the General Accounting Office has not
issued any audit reports on the Park Service's land acquisition
activities.  However, the Office of Inspector General issued the
audit report "Department of the Interior Land Acquisitions
Conducted With the Assistance of Nonprofit Organizations" (No.
92-I-833) in May 1992, which covered the National Park Service,
the U.S. Fish and Wildlife Service, and the Bureau of Land
Management.  The report concluded that nonprofit organizations
helped acquire needed land but that certain transactions were not
adequately controlled to ensure that nonprofit organizations did
not benefit unduly and that the Government's interests were
adequately protected.  The report stated that none of the three
bureaus fully complied with established appraisal standards which
required that estimates of property values be timely,
independent, and adequately supported by market data.  As a
result, according to the report, the Department had little
assurance that the fair market value estimates used to establish
land acquisition prices were timely, complete, and accurate.  The
report contained seven recommendations, all of which were
considered resolved and implemented.  However, our current audit
found that the Park Service was not adequately protecting the
Government's interests in transactions with nonprofit
organizations and that appraisals did not fully meet established
standards.

**FOOTNOTES**

[1]:This amount does not include a land exchange that added
85,000 acres to the Park Service's Big Cypress National Preserve
because the transaction was conducted by the Office of the
Secretary.

FINDINGS AND RECOMMENDATIONS

A.APPRAISALS

The National Park Service did not fully comply with the
established standards or implement the required procedures for
preparing and reviewing appraisals of real property.
Specifically, we found that 32 of the 42 appraisals audited did
not meet Federal standards in at least one area, including 6
appraisals that were not adequately supported.  We also found
that 40 of the 42 appraisal review reports did not contain one or
more of the required elements needed to substantiate that the
appraisal reviews were performed properly and in compliance with
Federal standards and appraisal principles.  In addition, the
Park Service acquired one property without obtaining an appraisal
and acquired another property based on an appraisal that had
insufficient documentation to support the estimated fair market
value. The guidelines for preparing and reviewing appraisals are
contained in the "Uniform Appraisal Standards for Federal Land
Acquisitions," issued by the Interagency Land Acquisition
Conference in 1992, and in the Park Service's Land Acquisition
Procedures Manual, both of which require that appraisals include
specific information to support analyses, opinions, and
conclusions and be reviewed and approved by appraisal reviewers.
However, Park Service officials said that full compliance was not
achieved because the Washington Office did not provide sufficient
program oversight.  As a result, the Park Service did not have
adequate assurance that it paid fair market value for seven
acquisitions, totaling $7.0 million, for which adequately
supported appraisals were not prepared; for one acquisition for
$70,000 that was not supported with an appraisal; and for one
acquisition for $280,000 for which the original appraisal was not
available.

Appraisal Standards

We found that the Park Service did not fully comply with one or
more of the Federal standards for preparing appraisals for 32 of
42 appraisals we reviewed, including 6 appraisals that were not
adequately supported, 30 appraisals that did not contain the
required appraiser certifications on conformity with Federal
standards, and 6 appraisals that did not contain the required
10-year sales history of the subject property or information on
the date of the last sale. 

Adequately Supported Appraisals.  The "Uniform Appraisal
Standards for Federal Land Acquisitions" (the "Standards")
requires Federal agencies to appraise land at its "highest and
best use" and to document the basis used to estimate land values.
Moreover, Section A-9 of the "Standards" states, "`Elements
affecting value that depend upon events or combinations of
occurrences which, while within the realm of possibility, are not
fairly shown to be reasonably probable, should be excluded from
consideration, for that would allow mere speculation and
conjecture to become a guide for the ascertainment of value.'"

We identified six appraisals that, in our opinion, were not
adequately supported as follows:

-  An appraisal valued a currently inaccessible tract of land at
$3.1 million based on the  land's potential use for residential
development.  In the appraisal report, the appraiser stated that
the access needed to develop the property (and thereby enable the
property to have a higher value) could be purchased from an
adjacent landowner for $1 million, but the appraiser provided no
documentation to support this assumption.  However, we found
documentation in the Park Service's files showing that the
landowner of the adjacent property was unwilling to sell the land
needed for access to (and future development of) the potential
Park Service property. As such, we concluded that the appraised
value was overstated because there was no documentation to show
that the land had an existing or potential "highest and best use"
for residential development.

- We considered one appraisal to be inadequately supported
because the appraiser used the recent sale of the same property
to a related party to estimate the property's market value.  In
this transaction, several parties, including a nonprofit
organization, two companies, a lawyer, and an appraiser, were
involved in negotiations to exchange private land for Park
Service land.  In a preliminary agreement, one of the companies
involved in the negotiations agreed to exchange a portion of its
land for Park Service land.  Before the exchange was finalized,
this company sold the total tract of land, including the parcel
subject to the exchange, to the other company that was involved
in the initial discussions on the land exchange.  The nonprofit
organization obtained or coordinated the appraisals of  both
tracts of land (the Park Service property and the property owned
by the company).  Also, the appraiser used the sales price of the
land in estimating the land's fair market value ($430,000), even
though this land sale was transacted between two parties that
were involved in the land exchange with the Park Service.  We
believe that there was not an "arm's-length" relationship between
the parties involved in this land exchange because the appraisals
for both properties were obtained by the nonprofit organization,
which had negotiated the exchange, and because the appraised fair
market value of the acquired land was based, in part, on the
sales price of the land in a transaction between two parties
which were involved in the land exchange negotiations.

-  An appraisal provided by the landowner estimated that a
property's fair market value was 15 percent more than comparable
properties, thereby increasing the value of the property from
$49,300 to $57,000.  The adjustment was made on the basis of
changed conditions in another area where crime had decreased and
property maintenance had improved, resulting in higher property
values in that area.  The appraiser, however, provided no
documentation to support the assumption that the neighborhood in
which the Park Service sought to acquire property would
experience a similar decrease in crime or improvement in property
maintenance. 

- The Park Service obtained an updated appraisal that was made
without a physical reinspection of  the volume and quality of
timber on the property.  The appraiser estimated the property's
fair market value at $1.4 million, or $300,000 more than the $1.1
million estimated fair market value in a prior appraisal that was
performed 2 years earlier.  Park Service procedures in Section
3.3.5 of the Land Acquisition Manual, Part XI, state that
"updated appraisals shall be complete appraisal reports in every
respect," including reinspection of the subject property.
Although Park Service officials stated that the appraiser's
timber estimator  had visited the property and measured several
sample plots to calculate the increase in timber volume, the
appraisal report stated, "The update was done without revisiting
the property, and I assume that no timber harvests have been
made, nor have there been any losses due to insects, wind, ice,
or other factors that would substantially affect the value of the
property." 

- Two properties were appraised at $250,000 and $1.5 million,
respectively, based on the properties being free of contaminants,
even though the Park Service was aware that contaminants existed
on these properties.  Section C-9 of the "Standards" states that
"it is improper to estimate the market value of a property
assuming it is free of contamination when there is evidence, by
the past use of the property or the appraiser's inspection
thereof, that contamination may exist."  Park Service officials
stated that the appraisal for both properties was performed in
this manner to expedite the purchase in time for the 1996 Olympic
Games. 

-  An appraiser increased the value of a property by $10,000, to
$255,000, based on information provided by the property owner
that a second source of water on the property could be used to
develop an additional residence.  Because the appraiser did not
verify the owner's assertion, we considered the $10,000
adjustment to be unsupported.

Appraiser Certifications.  Section B-1.4 of the "Standards"
requires that appraisals used by the Government contain appraiser
certifications that the appraisals were prepared in conformity
with nine provisions in the "Standards."  We found, however, that
30 of 42 appraisals audited did not contain the required
certifications that the appraisals were prepared in conformity
with the "Standards."  Instead, less stringent commercial
standards were cited.  As a result, the Park Service did not have
full assurance that the appraisers properly considered the
"Standards" when the appraisals were prepared and that the
appraisals they prepared were valid and complete.

Prior Sales History.  Section A-5 of the "Standards" requires the
appraisals to contain a history of the appraised property,
including all sales of the property within the past 10 years.
Section A-5 states, "prior sales of the same property, reasonably
recent and not forced, are extremely probative evidence of market
value."  We found, however, that 6 of the 42 appraisals reviewed
did not contain the required 10-year history of the subject
property or the date of the sale.  As a result, the Park Service
did not have full assurance that the appraisals were based on
complete information on which to establish the estimated value of
the land.

Appraisal Reviews 

Section C-8 of the "Standards" states that the Appraisal
Foundation's "Uniform Standards of Professional Appraisal
Practice" should be considered a minimum requirement for
appraisal review.  Standard 3 of the "Uniform Standards" requires
that appraisers review and express an opinion in appraisal review
reports  on (1) the appraisal's completeness; (2) the adequacy
and relevance of the data used and the propriety of any
adjustments to the data; (3) the appropriateness of the appraisal
methods and the techniques used; and (4) whether the analyses,
opinions, and conclusions in the appraisals are appropriate and
reasonable.  This standard also requires that review appraisers
include signed certifications in their reports stating the
following:  (1) facts and data used in the review and reporting
process are true and correct; (2) reported analyses, opinions,
and conclusions are objective and based on the assumptions and
conditions stated in the report; (3) the review appraiser has or
does not have a present or prospective interest in the subject
property and has or does not have a personal interest or bias
with respect to the parties involved; (4) the review appraiser's
compensation is not contingent on an action or event resulting
from the analyses, opinions, or conclusions in or in the use of
the report; (5) analyses, opinions, and conclusions were
developed and reported in conformity with the "Uniform Standards
of Professional Appraisal Practice"; (6) the review appraiser did
or did not personally inspect the subject property under review;
and (7) no one provided significant assistance to the review
appraiser in the review and reporting process.

We found that 40 of the 42 appraisal reviews did not contain one
or more of the four opinions and seven certifications required
for each appraisal, as discussed in the previous paragraph.  Park
Service employees at the offices we visited could not explain why
their review appraisers did not include the required opinions and
certifications.  As such, we believe that the Park Service did
not take the required actions to ensure that the appraisals were
adequately supported and that the review process was conducted in
compliance with the "Uniform Standards of Professional Appraisal
Practice."

Required Appraisals

Both the Park Service's Land Acquisition Procedures Manual and
the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (Public Law 91-646) require that real
property be appraised before negotiations with property owners
are initiated.  However, we found two transactions in which the
Park Service either did not obtain the required appraisal or did
not maintain a copy of the required appraisal as follows:

-  At one regional office, Park Service officials said that the
Chief Appraiser (now retired) approved the use of a
market/feasibility study instead of a formal appraisal to
establish a property's value as $70,000.  According to a Park
Service official, the study was performed to confirm the
estimated market value of an unapproved appraisal that was
conducted 4 years earlier.  Because this land acquisition was
made without a formal appraisal, we consider the amount of this
transaction to be unsupported.

-  In January 1996, the Park Service offered to purchase property
based on an approved appraisal that valued the property at
$200,000.  The landowner rejected the offer.  In February 1996,
the Park Service approved another appraisal of the same property
for $280,000 and offered this amount to the landowner, who
accepted the offer.  According to a Park Service official, the
landowner refused to accept the original offer of $200,000
because the appraiser did not use the correct square footage or
consider improvements made to a building on the property.  The
official further stated that the appraiser was "embarrassed"
about his errors, collected all copies of the original appraisal,
and submitted the new appraisal.  Because no documentation was
maintained, we could not determine whether the original appraisal
was erroneous or the $80,000 increase in value between the two
appraisals was warranted.

Washington Office land acquisition officials said that they had
not conducted routine reviews of regional or project offices'
land acquisition files or practices to ensure that the offices
complied with acquisition regulations because of insufficient
funding.  Regarding the completeness of the appraisals,
Washington Office officials said that regional officials may have
approved appraisals based on valid assumptions or considerations
but that the regional officials did not prepare documentation to
show the factors considered in establishing and approving fair
market values.  

Two Appraisals

The U.S. Fish and Wildlife Service's Appraisal Handbook requires
that a second appraisal be prepared by a qualified contract
appraiser or an appraiser from a different region for property
that is "unique," "controversial," or "complex" or that has an
estimated value exceeding $750,000.[2]  In a recent audit of the
Service's land acquisition activities ("Land Acquisition
Activities, U.S. Fish and Wildlife Service," Report No. 99-I-162,
issued in December 1998), we found that of 17 land acquisitions
for which the Service obtained two appraisals, it acquired the
land at the lower of the two appraised values in 11 cases.  The
Park Service, however, does not require the preparation and
approval of two appraisals for land acquisitions.  Based on the
benefits of using two appraisals, as demonstrated by the Fish and
Wildlife Service's acquisition of land at a lower cost, we
believe that the Park Service  should also require the
preparation and approval of two appraisals for unique,
controversial, or complex land acquisitions and for high-dollar
value land acquisitions.  Of the land acquisitions that were
transacted in fiscal years 1995 through 1997, we identified 20
acquisitions that involved acquisition costs of  $750,000 or
more, of which 14 involved  acquisition costs of $1 million or
more.

Recommendations

We recommend that the Director, National Park Service:

1. Provide Washington Office oversight of regional offices' land
acquisition activities to ensure that requirements for the
preparation and review of appraisals are followed, including
compliance with the "Uniform Appraisal Standards for Federal Land
Acquisitions."

2. Ensure that adequately documented appraisals are prepared and
approved before offers are made to purchase  land.

3. Establish a requirement for obtaining two appraisals for
acquisitions that are unique, controversial, or complex or that
exceed a designated high-dollar-value threshold.

National Park Service Response and Office of Inspector General
Reply

In the April 30, 1999, response (Appendix 2) to the draft report,
from the Director, National Park Service, the Park Service
concurred with Recommendations 1 and 2 but did not concur with
Recommendation 3.  Based on the response, we consider
Recommendations 1 and 2 resolved but not implemented, and request
that the Park Service reconsider its response to Recommendation
3, which is unresolved (Appendix 3).

Regarding Recommendation 3, the Park Service stated that it did
not believe a two-appraisal requirement was necessary because its
appraisers already had the authority, which was not limited by
the type or value  of the property, to obtain "as many appraisals
as necessary to assure conformance with UASFLA ["Uniform
Appraisal Standards for Federal Land Acquisitions"]."  The Park
Service also stated that it "view[ed] this requirement as being
potentially costly . . . not an efficient use of Federal funds .
. . [and] may not even be necessary."  In addition, the Park
Service stated that "having two divergent appraisals on high
value properties could put the government at a decided
disadvantage if eminent domain is ultimately used to acquire the
property."

Although we recognize that the Park Service has the authority to
obtain more than one appraisal if deemed necessary, we believe
that a requirement to obtain two appraisals for acquisitions
which are unique, controversial, or complex or which exceed a
designated high-dollar-value threshold would protect the
Government's interests by ensuring that adequate support is
obtained.  Regarding the cost of a second appraisal, we believe
that the potential for reducing land acquisition costs justifies
the additional appraisal cost, as documented in our audit report
"Land Acquisition Activities, U.S. Fish and Wildlife Service"
(No. 99-I-162), dated December 1998.  According to that report,
in 11 of 17 cases in which second appraisals were obtained, the
Service realized savings by paying the lower of the appraised
values.  Moreover, since only 14 land acquisitions, costing $1
million or more, were transacted during the 3-year period
reviewed (fiscal years 1995 through 1997), the number of second
appraisals, in our opinion, is relatively limited and therefore
should not result in an undue burden to the Park Service.  

The Park Service also stated that the Government could be at a
"disadvantage" in eminent domain proceedings if there are two
different appraisals for the property.  We do not believe that
disparate appraisals would adversely impact contested land
acquisitions because, during eminent domain proceedings, the
determination of cost is based not only on the appraisal or
appraisals obtained by the Park Service but also on appraisals
obtained by the Department of Justice and by the property owners.
As such, the second appraisal would be just additional evidence
of value available to the court.

Additional Comments on Audit Finding

The Park Service also provided additional comments on the
finding.  The Park Service's comments and our replies are as
follows:

Appraisals

National Park Service Comments.  The Park Service "strongly
disagreed" with our statement that it "did not fully comply with
the established standards or implement the required procedures
for preparing and reviewing appraisals of real property."  The
Park Service stated that "except for a few isolated cases, all
appraisals and reviews have met the intent of all established
standards."

Office of Inspector General Reply.  We consider the 32 of 42
appraisals that did not meet all Federal appraisal standards and
the 40 of 42 appraisal reviews that did not contain all required
elements to be indicative of a significant number of deficiencies
in the appraisal preparation and review process. Moreover, in
stating that it would hire staff and establish oversight teams,
we believe that the Park Service has recognized that existing
controls are inadequate and that additional controls are  needed
to ensure compliance with Federal appraisal and appraisal review
standards.

Adequately Supported Appraisals

National Park Service Comments.  The Park Service stated that in
our discussion of the inaccessible tract of land located at the
Chattahoochee River National Recreation Area (page 5 of this
report), we concluded that "the appraised value [$3.1 million]
was overstated because there was no documentation to show that
the land had an existing or potential highest and best use for
residential development."  The Park Service further stated that
it agreed with  the appraiser's valuation that the property had
"a highest and best use for residential development . . .  based
on the assumption that access could be purchased from the
adjacent landowner."  Also, the Park Service stated that the
appraiser interviewed the landowner, "who stated that he would
sell an access easement to his neighbor if requested."

Office of Inspector General Reply.  We found no documentation to
show that access to the land had been negotiated or agreed to, a
requisite condition for this property to have an appraised market
value based on its highest and best use for residential
development.  Rather, we found documentation in the Park
Service's acquisition files which showed that the owner of the
adjoining property did not intend to sell access rights.  

National Park Service Comments.  Regarding the exchange of
Federal land for private land located at the Chattahoochee River
National Recreation Area (page 5 of this report), the Park
Service said that we "considered one appraisal to be inadequately
supported because the appraiser used the recent sale of the same
property to a related party to estimate the property's market
value."  The Park Service also stated that it believed the
appraiser "appropriately considered this sale of the subject
property and properly concluded it was an arms-length
transaction."  It quoted Section A-5 of the "Standards" as
follows: "Since compensation is measured by market value (supra,
p.3), prior sales of the same property, reasonably recent, and
not forced, are extremely probative evidence of market value.
Accordingly, the appraiser has an obligation to determine what
the owner paid for the property."  Also, the Park Service stated
that the appraiser "presented additional sales to support his
conclusion that this transaction was within the adjusted value
range of the other sales."

Office of Inspector General Reply.  The Park Service based its
position on a Federal appraisal standard that, in our opinion,
does not apply to this transaction.  Although the cited standard
(Section A-5) allows appraisers to use prior sales of the same
property to establish market value, the prior sale in this
example was between parties mutually involved in the Park Service
land acquisition.  As such, we believe that Section A-4 of the
"Standards"applies: "Sales between . . .  closely related
business entities are not arms-length transactions, and since
they may involve other considerations than a fair market value
consideration, such sales should not be used for comparative
purposes."  Also, regarding the additional "comparable sales," we
found that two of the five comparable sales included in the
appraisal were offers for sale and not sales, three comparable
sales were for properties which had significantly less acreage
than the subject property, and only one sale involved a property
of comparable size.

National  Park  Service  Comments.   The  Park Service  stated
that  it believed a 15 percent upward adjustment made to a
property at the Martin Luther King, Jr. National Historic Site
was "supported by a paired-sale analysis in the appraisal and
warranted consideration of the urban renewal efforts currently
taking place in the area of the subject property."  The Park
Service further stated that according to the Appraisal Institute,
"When market evidence clearly supports differences between sales
attributable to specific elements of comparison, paired data
analysis can be a very effective technique."

Office of Inspector General Reply.  The "paired-sale analysis" to
which the Park Service referred pertains to a technique for
adjusting the fair market value of properties.  Specifically,
"The Appraisal of Real Estate," published by the Appraisal
Institute, states, "Paired data analysis is a process in which
two or more market sales are compared to derive an indication of
the size of the adjustment for a single characteristic."
Although we do not question the use of price adjustments for
documented or reasonably assumed factors, we believe that the
price adjustment made to the valuation of this Park Service
property was unwarranted.  In this case, the appraiser found that
improved conditions in another neighborhood had resulted in
higher property values.  The appraiser applied an adjustment
factor to increase the value of the Park Service property based
on the increased value from improved conditions in the other
neighborhood.  However, we found no documentation to show that
improvements were imminent or could reasonably be assumed in the
neighborhood in which the Park Service sought to acquire
property.  Therefore, we believe that  the appraiser had no basis
for making the 15 percent upward adjustment to the value of the
Park Service property.

National Park Service Comments.  The Park Service stated that an
appraiser prepared an updated appraisal of timber property
without physically reinspecting the property and that the
appraiser was "remiss" in not performing the inspection.  The
Park Service also said that the property had been reinspected by
a forester who provided technical assistance to the appraiser and
that the appraiser's failure to reinspect "had no impact on the
final value conclusion reached in the report."

Office of Inspector General Reply.  We found no documentation in
the file to indicate that a forester physically inspected the
entire property and fully evaluated timber conditions.  As such,
we believe that there was insufficient support for the updated
appraisal's valuation, which, in part, was based on the value of
the timber on the property.

National Park Service Comments.  Regarding the two properties
that had known contaminants, the Park Service said that the
properties "were appraised as being free of  contaminants in
order to expedite the acquisition process in time for the 1996
Olympic Games" and that it considered the appraisals to be "valid
for the condition of the property when it was conveyed" because
title to the properties was not taken until after the
contaminants were removed. 

Office of Inspector General Reply.  We believe that the
Government is taking an unacceptable risk when it relies on
appraisals of contaminated properties which do not factor in
professional estimates of the cleanup costs.  Moreover, an
appraisal that is based on future, improved conditions of a
property is not in compliance with the "Standards," which states
that it is "improper to estimate the market value of a property
assuming it is free of contamination when there is evidence, by
the past use of the property or the appraiser's inspection
thereof, that contamination may exist." 

Appraiser Certifications

National Park Service Comments.  The Park Service agreed with our
statement that 30 of 42 appraisals did not contain the
appraisers' certifications that they were prepared in accordance
with the "Standards."  However, the Park Service "strongly
disagree[d]" with our statement that it did not have full
assurance that the appraisal standards were properly considered
in the preparation of appraisals and that the appraisals were
valid and complete.  The Park Service further said that all
appraisals used "to establish just compensation are reviewed to
assure conformance with [the "Standards"], regardless of what is
certified by the appraiser."

Office of Inspector General Reply.  In our opinion, the Park
Service does not have "full assurance" that appraisals are
prepared in accordance with professional appraisal standards
unless the appraisers make such certifications.

National Park Service Comments.  Although the Park Service agreed
that 6 of the 42 appraisals reviewed did not contain the 10-year
history of the subject property, it "strongly disagree[d]" that
it "did not have full assurance that the appraisals were based on
complete information on which to establish the estimated value of
the land."  The Park Service further stated that its review
appraisers had access to title information which would have
informed them of any transactions impacting the valuation of
subject properties and that its review appraisers would have
required these transactions to be discussed in the appraisal
reports.

Office of Inspector General Reply.  We believe that the Park
Service cannot have "full assurance" that its appraisals are
based on complete information without evidence that it reviewed
all required documentation (in this case, the required 10-year
histories of the subject properties).  Although Park Service
review appraisers have access to title information, we could not
determine whether such information was reviewed and considered in
establishing market value because no documentation was available
to show that historical sales information had been evaluated.

Appraisal Reviews

National Park Service Comments.  The Park Service agreed with our
statement that 40 of 42 appraisal reviews did not contain one or
more of the four opinions and seven certifications required by
the "Uniform Standards of Professional Appraisal Practice," but
it "strongly disagree[d]" that it did not take required actions
to ensure that the appraisals were adequately supported and that
the review process was conducted in compliance with appraisal
standards.  The Park Service stated that all appraisals were
reviewed "to assure conformance with . . . [the professional
appraisal standards], regardless of missing opinion verbiage or
certifications" and that "[n]either of these items affects the
competency or technical accuracy of the review."  However, the
Park Service stated that "in the future" it would "ensure that
[appraisal] standards are followed."

Office of Inspector General Reply.  We believe that our
conclusions are substantiated by the deficiencies found in 40 of
42 appraisal reviews.  Moreover, the opinions and certifications
required by professional appraisal standards are considered to be
minimum requirements for "competent" appraisal reviews.  As such,
we believe that the "competency or technical accuracy" of the
reviews is not supported without the required opinions and
certifications.

Required Appraisals

National Park Service Comments.  Regarding the use of a market
feasibility study rather than an appraisal to establish the value
of a property at the Women's Rights National Historic Park, the
Park Service stated that it had not approved the nonprofit
organization's appraisal because of "serious deficiencies" and
that its reviewer "performed his own market analysis and became
the appraiser for this parcel," as permitted under Rule 3-1(g) of
the professional appraisal standards.  The Park Service further
stated that it believed the "reviewer's final value conclusion .
. . was fully supported."

Office of Inspector General Reply.  We discussed the market
feasibility study used by the Park Service with the Associate
Appraiser, who assisted in its preparation.  The Associate
Appraiser stated that the analysis was called a market
feasibility study instead of an appraisal because all of the
applicable professional standards were not followed.  The Park
Service's procedures for acquiring land require that all
appraisals be prepared in accordance with the professional
appraisal standards and that all appraisals be reviewed by
qualified review appraisers.  Because this market feasibility
study was not prepared in accordance with applicable professional
standards, we consider the $70,000 amount of the purchase, which
was based on the study, to be unsupported.  

In its response, the Park Service stated that it considered our
inclusion of the $70,000  as a "Questioned Cost" in Appendix 1 to
be  "unwarranted" because a "supplemental market analysis" had
been prepared after the nonprofit organization's appraisal had
been "disapproved." We consider the classification to be
appropriate because the market feasibility study, according to
the "Standards," was not an acceptable and properly reviewed
appraisal.

National Park Service Comments.  Regarding a property that had an
unsupported $80,000 increase in value after the original
appraisal was updated, the Park Service  disagreed with our
"accusation" that the increase in value "may not have been
warranted."  The Park Service further stated that incorrect
square footage was used to estimate the value in the first
appraisal and that when this factor was corrected in the updated
appraisal, the value of the property increased by $80,000.  The
Park Service also said that the second appraisal was "reviewed in
conformance with [the professional appraisal standards] and found
to be fully supported."

Office of Inspector General Reply.   Our report did not imply
that the Park Service had no basis for the increased property
value.  Instead, the report stated that because the original
appraisal was not available, we could not determine whether it
contained incorrect information.  Also, our comments regarding
the property owner who had refused the Park Service's first offer
and who subsequently informed the Park Service that the original,
approved appraisal contained incorrect square footage was based
on an interview with a Park Service official.  The absence of the
original, approved appraisal (which the Park Service was required
to retain) and the 40 percent increase in the appraised value of
the property over the original appraised value (which was
attributable to information provided by the property owner) led
to our conclusion that the updated appraised value was not
warranted.  Also, we found that the second appraisal was not
reviewed "in conformance" with the professional appraisal
standards and was not "fully supported."  In its review of the
updated appraisal, the Park Service did not include any of the
appraisal review standards' required four opinions and included
only one of the required seven certifications.  

In its response, the Park Service stated that it considered our
inclusion of the $80,000 amount as a "Questioned Cost" in
Appendix 1 to be "unwarranted" because the property value was
based on an approved appraisal.  We consider the classification
to be appropriate because the Park Service had no support for the
$80,000 increase in property value (the difference between the
undocumented $200,000 original, approved appraisal and the
$280,000 updated appraisal that was not reviewed in conformance
with the professional appraisal standards).     

**FOOTNOTES**

[2]:In response to our draft report on Fish and Wildlife Service
land acquisitions, Service officials said that they recently
increased the acquisition threshold for requiring two appraisals
to $1 million.

B.NONPROFIT ORGANIZATIONS

The National Park Service did not take sufficient action to
protect the Government's interests when it acquired land from
nonprofit organizations.  Specifically, the Park Service did not
take the opportunity to negotiate a lower purchase price.
Guidance on acquiring land from nonprofit organizations is
contained in the Department's "Clarification to August 10, 1983
Guidelines for Transactions Between Nonprofit Organizations and
Agencies of the Department of the Interior," issued in August
1995; the Park Service's Procedures Manual; and Park Service
policy memoranda.  The Park Service, however, did not choose the
option in the "Guidelines" that would have enabled it to attempt
to negotiate land acquisitions at less than fair market values.
As a result, the Park Service did not take full advantage of the
opportunity to achieve savings of as much as $3.2 million, which
represented the differences between the nonprofit organizations'
purchase prices and the selling prices of certain lands conveyed
to the Park Service. 

Guidelines

The Department's "Guidelines" established the policy that bureaus
could pay either "the fair market value of the property, based
upon the bureau-approved appraisal" or "the purchase price paid
by the nonprofit organization to acquire the property from a
third party, not to exceed the appraised fair market value
approved by the acquiring bureau, plus related and associated
expenses from a list approved by the Assistant Secretary for
Policy, Management and Budget."  To exercise this option, bureaus
needed to enter into agreements with nonprofit organizations.
These agreements, called letters of intent,[3] established terms
under which nonprofit organizations buy land for possible
conveyance to the Park Service.

Although the "Guidelines" enables bureaus to negotiate the
purchase price of land obtained from nonprofit organizations at
amounts less than the appraised value, the Southeast Region did
not take advantage of this option.  According to Southeast
Regional Office officials, the option was not chosen because the
Director of the Park Service issued a transmittal memorandum with
the August 1995 "Guidelines" stating that the Park Service would
not implement this option.  Officials responsible for the
Northeast and the National Capital Regional Offices stated that
they did attempt to negotiate with nonprofit organizations to
obtain a better price for the Government, although there was no
documentation in the files showing that such negotiations had
taken place.

We found that in 10 of the 21 transactions reviewed, the
nonprofit organizations' purchase prices were equal to or more
than the prices at which the property was sold to the Park
Service.  In these cases, nonprofit organizations paid $4 million
for properties that they sold to the Government for $3.8 million.
For example, a nonprofit organization provided $130,000 of
financial assistance, which enabled the Park Service to pay the
appraised value of $1.52 million for land that was purchased from
a private landowner for $1.65 million.

However, for the 11 other transactions, nonprofit organizations
paid $3.7 million for properties that they sold to the Government
for $6.9 million, or a difference of $3.2 million.  Two of the 11
transactions were at the Northeast Region, where properties
costing nonprofit organizations $575,000 were sold to the
Government for $658,000, or a difference of $83,000. The other
nine transactions involved the Southeast Region, where nonprofit
organizations  paid  $3.1   million  for  properties  that  were
sold  to  the  Government  for $6.2 million, or a difference of
$3.1 million. For example:

- The Park Service paid $3.1 million on October 3, 1997, for
property that a  nonprofit organization had purchased on July 1,
1996, for $1.25 million without attempting to negotiate a better
price for the Government.  Park Service officials stated that the
payment of the appraised value for the land was in accordance
with Park Service policy.

- The Park Service paid $468,000 on October 1, 1996, to acquire
property that a nonprofit organization had purchased on July 16,
1996, for $259,500.  Park Service officials told us that the
payment was made in accordance with Park Service policy and that
no attempt had been made to negotiate a lower price to the
Government.

In our opinion, by not negotiating the purchase price when buying
land from nonprofit organizations, the Park Service did not take
full advantage of the opportunity to achieve savings of as much
as $3.2 million, the differences between the nonprofit
organizations' purchase prices and the selling prices of lands
conveyed to the Park Service.

Recommendation

We recommend that the Director, National Park Service, ensure
that land acquisition officials comply with the Department of the
Interior's "Clarification to August 10, 1983 Guidelines for
Transactions Between Nonprofit Organizations and Agencies of the
Department of the Interior" and rescind the directive that does
not allow the use of the option to negotiate the purchase price
under the "Guidelines."

National Park Service Response and Office of Inspector General
Reply

In the April 30, 1999, response (Appendix 2) to the draft report
from the Director, National Park Service, the Park Service did
not specifically address the recommendation.  Therefore, the Park
Service is requested to reconsider the recommendation, which is
unresolved  (Appendix 3). 

Regarding the recommendation, the Park Service stated that it
believed it was "in complete compliance with the Department's
Nonprofit `Guidelines'" and that the "Guidelines" already allows
it to negotiate for property by paying either fair market value
or "such lessor figure at which the nonprofit offers to sell the
property."  The Park Service also said  that if the "[Office of
Inspector General] feels that it is necessary to rescind, change
or modify any portion of the `Guidelines' to allow us [the Park
Service] to negotiate, we recommend that this be taken up with
the Department [of the Interior]."

Because the "Guidelines" allows Department of the Interior
bureaus to negotiate the purchase price of land purchased from
nonprofits, we do not believe that changes to the "Guidelines"
are needed.  However, we found that Park Service personnel in the
Southeast Region had interpreted the Park Service Director's
guidance, which limited the options available under the
"Guidelines," as  precluding the Park Service from negotiating
land acquisitions at less than fair market value.  Thus, if the
Director's guidance authorizes Park Service personnel to
negotiate with nonprofit organizations for land acquisitions at
less than fair market value,  we believe that this guidance has
been misinterpreted.  Accordingly, we believe that the Park
Service should rescind or clarify the Director's guidance so that
Park Service personnel are  authorized to obtain less than fair
market prices in negotiating land acquisitions with nonprofit
organizations, in accordance with the Departmental "Guidelines."

Additional Comments on Audit Finding

In its response, the Park Service disagreed with our statement
that it "did not take advantage of the opportunity to achieve
savings of about $3 million, which represented the differences
between the nonprofit organizations' purchase prices and the
selling prices of lands conveyed to the Park Service." The Park
Service said that "because in most cases where the purchase price
paid by the non-profit was lower than the Service's approved
appraised value, we [the Park Service] have at least verbally
attempted to negotiate a sale price at the lower amount."  The
Park Service further stated that it had no documentation to show
that these negotiations occurred but that it would document the
negotiations in the future.  In addition, the Park Service stated
that none of the 11 properties cited in the report could have
been purchased for less because "[u]sually, we know up front if
the nonprofit will sell for less than the appraisal or donate."
Referring to the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (Public Law 91-646), the Park
Service stated, "As long as [this law] requires us, to offer the
approved appraised value, regardless of purchase price, our
opportunity for potential savings will be limited."

Although the Park Service, in its response, stated that it
attempted to negotiate with nonprofit organizations "in most
cases" to obtain properties at the price paid by the
organizations and that none of the report's 11 purchases could
have been purchased for less than the appraised market value, we
found these statements to be inconsistent with statements made by
Park Service Southeast Region officials during our audit.
Although officials at the Northeast and National Capital Regional
Offices said that they attempted to negotiate a favorable price
for the Government, officials at the Southeast Regional Office,
where 9 of the 11 transactions took place, said  that they did
not attempt to negotiate the purchase price.  Southeast Region
officials said that the Park Service Director's guidance
authorized them to offer a nonprofit organization only the amount
of the property's fair market value but that they could accept a
lower price offered by the organization.  Based on the officials'
comments, we concluded that the Southeast Region did not
negotiate with nonprofit organizations to obtain land at less
than fair market value because of the Director's guidance.


**FOOTNOTES**

[3]: According to Departmental and Park Service guidelines, a
letter of intent should be used whenever a nonprofit organization
seeks prior assurance from the Park Service or the Park Service
requests the assistance of a nonprofit organization in a proposed
acquisition.  The purpose of the letter of intent is to provide
the nonprofit organization with prior assurance of the Park
Service's interest in and intent to take conveyance of land
acquired by the nonprofit organization.  At a minimum, the letter
of intent is required to identify the land desired by the agency;
state the estimated value of the land subject to future
appraisal; state the projected time frame for when the agency
intends to acquire the property; and contain a statement that if
the agency is unable or declines to purchase the land, the
Federal Government is not liable to the nonprofit organization
for the disposition of the land.  Letters of intent compel both
the Government and the nonprofit organizations to abide by
guidelines that, for example, provide  the Government with the
right to inspect the nonprofit organization's records and
financial information.  

C. CONSERVATION EASEMENTS

The National Park Service did not properly establish the amount
of compensation paid for the two conservation easements reviewed.
Section 1.1 of the Park Service's Acquisition Procedures Manual
requires the Park Service to obtain only the minimum interest in
acquired lands necessary to protect park resources, and the
"Uniform Appraisal Standards for Federal Land Acquisitions" and
the Park Service's Land Acquisition Procedures Manual contain
guidelines on preparing and updating appraisals. The Park
Service, however, in an attempt to facilitate the acquisition of
conservation easements that it considered to be vital to the
protection of the scenic environment at two parks, (1) obtained
reappraisals at one  park, which may have resulted in its paying
$2.6 million more than fair market value to obtain a conservation
easement and in insufficient funds to acquire other higher
priority property, and (2) did not obtain a valid appraisal at
another park and therefore had insufficient support for a
$588,000 conservation easement. 

The Park Service purchases conservation or scenic easements to
maintain the aesthetic value of park environments.  Such
easements place restrictions on the landowners' use of their
land.  According to Section A-20 of the "Standards," agencies are
required to compensate landowners for the financial losses caused
by the placement of restrictions on their properties.  To
determine the fair market value of easements, appraisers should
estimate the difference in the value of properties before and
after restrictions are imposed.  Regarding the purchase of
conservation easements, Section 1.1 of the Manual requires the
Park Service to "[use] to the maximum extent practical
cost-effective alternatives to direct purchase of privately owned
lands and, when acquisition is necessary, acquire or retain only
the minimum interests necessary to meet management objectives."

During fiscal years 1995 through 1997, the Park Service purchased
23 easements, costing $9.0 million, including 2 easements,
costing $7.2 million, at the sites visited.  We reviewed the two
easements at the sites visited and identified the deficiencies
described in the paragraphs that follow.

Acadia National Park.  In 1991, owners of an island outside
Acadia National Park but within the Park's general planning area
contacted the Park Service to discuss the Park Service's interest
in obtaining an easement on the property.  At that time, the
island was not one of the Park's land acquisition priorities;
thus, Park officials suggested that the owners contact local,
state, and national conservancy organizations which might be
interested in acquiring the island. However, according to Park
Service files, none of these organizations had adequate funding,
so action was not taken to purchase the property.  Subsequently,
the Park Service conducted a study which determined that purchase
of a conservation easement on the island would be appropriate.
In August 1993, the Park Superintendent and landowners agreed to
the placement of a conservation easement on about 4,300 of the
island's 4,560 acres to protect existing natural, ecological,
scenic, and cultural resources; preserve the traditional
shorefront view; and limit residential and commercial
development. An appraisal completed in July 1994 estimated the
value of the entire tract at $5.9 million and the value of the
conservation easement at $4.1 million.  Although this appraisal
was reviewed and approved, there was no record in the Park
Service's files that an offer was made to the landowners based on
the appraisal.  A Park Service official stated that the
landowners did not agree with the appraised value.

About 5 months later, in December 1994, the Park Service obtained
a reappraisal of the easement.  The appraiser was directed by the
Park Service to use a "different scope of work," which entailed
segmenting the property into five separate tracts and assigning a
value to each tract.  Using this method, the appraiser estimated
the value of the land at $7.9 million and the value of the
easement at $4.7 million. The Park Service offered $4.7 million
to the landowners, who rejected the offer.

In March 1995, the Park Service obtained a second reappraisal of
the conservation easement. The appraiser was directed to use
another method to revalue the economic loss that would result
from the placement of the easement. This method involved
segmenting the property into five separate tracts, as well as
excluding from consideration two parcels totaling 250 acres upon
which the development of 18 dwellings was allowed.  Using this
method, the value of the entire tract remained at $7.9 million,
but the value of the easement increased to $6.7 million.  In
March 1995, the Park Service offered to buy the easement for $6.7
million, and the landowners accepted the offer.

In regard to the acquisition of this easement, there was no
documentation provided to justify the reappraisals after the
initial appraisal had been reviewed and approved by the Park
Service, and there was no information in the file indicating that
the real estate market or the highest and best use of the land
had changed sufficiently to require reappraisals.  In addition,
there was no evidence that greater restrictions were imposed or
needed to be imposed on the property after the initial appraisal.
As such, we believe that there was no basis for the increased
valuation of the easement from the initial appraisal of $4.1
million to the acquisition cost of $6.7 million, or a $2.6
million difference. Moreover, at the time the easement was
acquired, there was a $24.5 million backlog of land within Park
boundaries that had been identified for acquisition, although the
easement was outside Park boundaries (but within the Park's
general planning area).  Also, the Park had a backlog of donated
land  awaiting  the  processing of  title  transfers.   Because
the Park Service purchased the easement (which cost $6.7 million
of the $7 million available to the Park in fiscal year 1995 for
land acquisitions), it did not have sufficient money to buy
available property within the Park, appraised at $1.4 million,
and to obtain title and ownership of donated property, which
would cost another $200,000 to process.

Park Service officials said that multiple reappraisals had been
performed and action had been taken  to  obtain this easement
because the easement  became the  highest priority  in that it
presented a "unique opportunity" to protect almost an entire
island.  The officials further stated that the landowners were
willing sellers but that they wanted additional compensation.  

Assateague Island National Seashore.

In 1996, to protect the scenic view from the Assateague Island
National Seashore's visitor center, the Park Service purchased a
conservation easement on 84 acres of nearby shoreline.  The
easement prohibited residential development on this property but
allowed the construction of an 18-hole golf course.  This
easement was purchased from a nonprofit organization, which had
bought the easement at the Park Service's request.  Although the
nonprofit organization purchased the easement  for $525,000, the
Park Service paid $588,000 for the property based on the easement
valuation in an appraisal obtained by the nonprofit.

In our opinion, the Park Service purchased this easement without
having obtained a valid appraisal because the appraisal obtained
by the nonprofit organization, which was reviewed and accepted by
the Park Service, did not comply with Park Service regulations
and the "Standards."  Specifically, the appraisal submitted by
the nonprofit organization provided an estimate of the value of
other larger and adjacent properties rather than the value of the
easement.  Moreover, Section C-3 of the "Standards" states,
"Although the appraiser is an advocate of his opinion, there must
be nothing in his testimony or demeanor that suggests advocacy
for his client's interest." Because the appraisal was based on
client instructions and  prepared for the "internal use" of the
client, we consider the appraisal not to be impartial and thus
not in compliance with Section C-3 of the "Standards."

The Park Service's Chief Appraiser at the Washington Office
stated that the Washington Office would not have approved the
nonprofit appraisal and that the field office which reviewed the
appraisal should have obtained another appraisal.  However, we
found that the Washington Office had not reviewed the appraisal
prior to our review and that there was no requirement for the
field office to send the appraisal to the Washington Office for
review and approval.  Park Service field office officials said
that they accepted the appraisal because they wanted to expedite
the purchase of the property to prevent planned development which
would have compromised the scenic views at the nearby park
visitor center.

Recommendations

We recommend that the Director, National Park Service:

1.  Require that documentation be prepared for reappraisals
obtained less than 1 year after the original appraisal was
approved to show that the updates were warranted based on changes
in market conditions,  highest and best use, and/or the need to
impose additional restrictions on land use.

2.  Establish controls to ensure that appraisals are prepared
properly and are based on objective and independent estimates of
land values.

National Park Service Response and Office of Inspector General
Reply

In the April 30, 1999, response (Appendix 2) to the draft report
from the Director, National Park Service, the Park Service
concurred with Recommendations 1 and 2.  Based on the response,
we consider Recommendation 2 resolved but not implemented and
request that the Park Service reconsider its response to
Recommendation 1, which is unresolved (see Appendix 3).

In its response, the Park Service stated that it "fully
concurred" with Recommendation 1 and that as part of its
"contracting process, for appraisal updates, [it] should be
documenting any changes that could potentially effect the
original value estimate."  The Park Service further stated that
it would "take steps to immediately confirm that our current
policies are being followed."

We do not believe that the Park Service's concurrence was fully
responsive to the recommendation.  Specifically, the Park Service
stated that by ensuring compliance with its current policies, it
would implement corrective action.  However, during our audit, we
found no Park Service policy that required written justification
(based on factors such as changes in market conditions, highest
and best use, and/or the need to impose additional restrictions
on land use) for reappraisals which were obtained less than 1
year after the original appraisal was approved.  Therefore, the
Park Service is requested to reconsider its response to the
recommendation and, if such a policy has been issued, to provide
information and/or a copy of the policy.

Additional Comments on Audit Finding

In its response, the Park Service provided additional comments on
the finding.  The Park Service's comments and our replies are as
follows:

National Park Service Comments.  Regarding the first acquisition
discussed in this finding, the purchase of a 4,000-acre easement
at Acadia National Park for $6,657,000, the Park Service said
that it did not agree that it paid more than $2.6 million over
the fair market value or that other higher priority properties
should have been acquired.  The Park Service said that the
purchase decision was based on "a resource management decision
made at the park level" and that this decision "is a dynamic one,
depending on the situation at that particular time, taking into
account such items as the mission of the park, threat to the
resource, willing or unwilling seller, available funding, etc."
The Park Service further said that the property was "a high
priority," that the easement restrictions "were needed to protect
the resource," and that it "firmly believe[d]" it paid "fair
market value for the easement acquired."

Office  of  Inspector  General  Reply.  We concluded that the
Park Service paid $2.6 million more than the fair market value
for the subject easement based on the facts that the Park Service
had no documentation to show that (1) the original, approved
appraisal was inaccurate or improperly prepared and reviewed and
(2) a reappraisal was needed (based on changes in the market
value or the highest and best use of the property or on the need
for additional restrictions on land use).  We believe that the
easement acquired was no more restrictive than the easement
described in the initial appraisal. Thus, we found no
justification for Park Service obtaining two additional
appraisals, which increased the value of the easement from $4.1
million to $6.7 million (a $2.6 million difference).  

In its response, the Park Service took exception to our including
$2.6 million as "Funds To Be Put To Better Use" in Appendix 1,
stating that these funds "were put to proper use in protecting
park resources."  However, we found no justification for the
additional amount paid for the easement and no benefit to the
public from the reappraisals.

Regarding the statement that the purchase of the easement did not
result in "insufficient funds [being available] to acquire other
higher priority property," we found that before the owners of the
easement property offered to sell the property to the Park
Service, the Park Service had not identified this property (which
is outside park boundaries) as a priority land acquisition.
However, at that time, the Park Service had identified other
parcels of land within park boundaries as acquisition priorities.
After the purchase of the easement, the Park Service did not have
sufficient funds to acquire the lands within park boundaries that
previously had been considered priority purchases. 

National Park Service Comments and Office of Inspector General
Reply.  Regarding the purchase of the 84-acre easement at
Assateague Island National Seashore for $588,000, the Park
Service stated that "the appraisal used to establish just
compensation did not meet [the "Standards"] and a second
appraisal should have been procured."  However, in its response,
the Park Service "disagree[d] with the amount in question" and
estimated "that approximately only $168,000 of the purchase price
should be considered questionable."  Because the Park Service
agreed that the appraisal did not meet standards and provided no
justification for its statement that only $168,000 of the
$588,000 of "Questioned Costs" should be "considered
questionable," we made no adjustments to the amount reported in
Appendix 1.

D. BUSINESS RELOCATION PAYMENTS

The National Park Service's Southeast Regional Office did not
maintain sufficient documentation to support relocation payments
made to businesses that were moved as a result of land
acquisitions.  The Code of Federal Regulations (49 CFR 24.207)
requires that requests for relocation payments be supported by
documentation supporting the expenses claimed.  However, the Park
Service's Southeast Region paid business owners for claims that
were not supported by adequate documentation to expedite the
relocation of displaced property owners and tenants prior to the
1996 Summer Olympics.  As a result, the Park Service did not have
adequate assurance that payments for relocation costs totaling
$51,700 were reasonable or justified, and it made a duplicate
relocation payment of $1,700.

Of the three regional offices visited, only the Southeast Region
had reported business relocation payments exceeding $5,000 during
fiscal years 1995 though 1997.  We reviewed all 13 payments at
this region, totaling $181,747, and found that 3 payments,
totaling $51,700, were not supported by sufficient documentation
and that 1 payment, for $1,700, was a duplicate payment for
expenses compensated previously.  The four payments are discussed
as follows:

-  The Code of Federal Regulations (49 CFR 24.303) authorizes
payment for actual moving and related expenses that agencies deem
necessary for services such as packing, transporting, unpacking,
and storing business personal property.  The Code of Federal
Regulations (49 CFR 24.304) also authorizes payments not to
exceed $10,000 for actual expenses incurred in relocating and
reestablishing small businesses, such as repairs or improvements
to replacement property required by law, redecoration or
replacement of soiled or worn surfaces at the replacement site,
and professional services related to the purchase or lease of a
replacement site.  We found, however, that one business owner who
received two payments totaling $72,750 for moving expenses
($62,750) and business reestablishment expenses ($10,000),
received moving expense payments of $36,700 and reestablishment
expenses of $10,000, which were not supported by receipts to
document that these expenses were incurred.  Although the
claimant provided the Park Service with an estimate of $36,700
for moving expenses, Park Service files contained no vendor
invoices or other documentation showing that these costs were
incurred by the claimant.  Similarly, Park Service files
contained only two handwritten proposals as support for the
reestablishment expenses claim of $12,850 (for which payment of
$10,000 was made), with no vendor invoices or other documentation
to show that these costs were incurred by the claimant.

- The Code of Federal Regulations (49 CFR  24.303) states that if
a displaced person elects to take full responsibility for a move,
the agency may pay the  person's self-moving expenses in an
amount not to exceed (1) the lower of two acceptable bids or (2)
estimates obtained by the agency or prepared by qualified staff.
The Code allows the agency discretion to approve a bid or
estimate for a low cost or uncomplicated move based on a single
bid or estimate.  We found that four business owners were each
paid  $5,000 to personally move their businesses, one of whom was
paid an additional $1,700 for reestablishment expenses. According
to a Park Service official, the Park Service called a local
moving company and described the nature of the businesses and the
items to be moved to facilitate the moves of these four
businesses.  The official stated that the moving company provided
verbal estimates of moving expenses for the businesses and that,
on that basis, the Park Service prepared written estimates of the
costs of three of the moves.  According to the official, the Park
Service "forgot" to prepare the written estimate for the fourth
move.  As a result, the Park Service did not have documentation
to support the self-move payment of $5,000 made to one of four
claimants.  

- One of the business owners received a self-move payment of
$5,000 and  another payment of $1,700 for business
reestablishment expenses.  The invoice supporting the $1,700
payment showed that the funds were used to pay for a storage
building to shelter business property at the owner's residence.
However, the $5,000 self-move payment was based on a Park Service
estimate of $5,475, which included $2,100 for storage costs.  As
such, we consider the additional payment of $1,700 to be
compensation for storage expenses that were reimbursed
previously.  

Officials at the Southeast Region said that they had not obtained
the required documentation so that they could expedite the
relocations of business owners whose vacated sites were needed
for  the 1996 Summer Olympics.

Recommendations

We recommend that the Director, National Park Service:

1.  Ensure that the payments of relocation claims are made in
accordance with Park Service procedures.

2.  Obtain documentary support for payments of $51,700 ($36,700
of moving expenses, $10,000 of reestablishment expenses, and
$5,000 of unsupported self-move costs) or seek recovery of such
reimbursements.

3.  Recover the $1,700 overpayment of storage costs.

National Park Service Response and Office of Inspector General
Reply

In the April 30, 1999, response (Appendix 2) to the draft report
from the Director, National Park Service, the Park Service
concurred with all three recommendations.  Based on the response,
we consider Recommendations 1, 2, and 3 resolved but not
implemented (see Appendix 3).

Additional Comments on Finding 

In its response (page 8), the Park Service said that it agreed
that "there was a lack of formal supporting documentation" for
payment of relocation expenses.  However, in a different part
(page 1) of its response, the Park Service stated that it
believed "the questionable $51,700 payment for business
relocation to be reasonable and justified once all the necessary
documentation is obtained."  

Since the Park Service did not provide documentation to support
its statement that the business relocation payments of $51,700
were "reasonable and justified," we have not deleted the $51,700
as a "Questioned Cost" in Appendix 1.

E. MANAGEMENT INFORMATION SYSTEM

The management information system of the National Park Service's
Land Acquisition Division contained data that were inaccurate and
incomplete.  Specifically, the system did not contain information
on seven land purchases, totaling $1.1 million, and 11.4 percent
of the system's required data fields on land purchases made
during fiscal years 1995 through 1997 were not completed.  Office
of Management and Budget Circular A-130, "Management of Federal
Information Resources," requires that Federal agencies "record,
preserve, and make accessible sufficient information to ensure
the management and accountability of agency programs."  Also,
Office of Management and Budget Circular A-123 (revised),
"Management Accountability and Control," requires Federal
agencies to ensure that "reliable and timely information is
obtained, maintained, reported and used for decision making."
According to Park Service officials, system data were not
complete and accurate because the Park Service had not
implemented quality control procedures to validate system data or
to ensure that erroneous data from a previous management
information system were not entered into a newly installed
system.  As a result, the Park Service did not have reliable
information for tracking and managing land acquisition
activities.

To evaluate the accuracy and completeness of the management
information system's data at the Division's Northeast, National
Capital, and Southeast Regions, we compared selected land
acquisition information  recorded in the system with information
recorded in the Park Service's official accounting system, the
Federal Financial System.  We found that the Northeast Regional
office did not enter six land transactions, costing $492,000,
into the management information system and that the National
Capital Region did not enter one transaction, costing $650,000.
Regional officials said that seven transactions were not entered
because the regions did not always have sufficient staff to
properly enter all data and that there were no procedures to
perform accuracy checks or to reconcile financial system data
with management information system data.

We also reviewed the required information recorded in the
management information system for 25 land acquisition
transactions to determine whether all required information, such
as appraisal dates, offer dates, purchase amounts, acres
purchased, and closing dates, was included.  We found that 70 of
the 550 required data fields for the 11 selected transactions at
the Northeast Region, 18 of the 100 required data fields for the
2 selected acquisitions at the North Capital Region, and 55 of
the 600 required data fields for the 12 selected acquisitions at
the Southeast Region were not completed.  In total, the system
did not include information on 143 of the required 1,250 data
fields selected for testing, or 11.4 percent of the data fields.

According to Park Service officials, all of the required
information may not have been included or entered into the
current management information system, established in November
1997, because (1) data from the previous system may not have been
properly integrated into the new system (for example, some new
data fields in the new system did not exist in the old system);
(2) the land acquisition staff had not received sufficient
training on correcting system errors; and (3) no quality control
system had been implemented to monitor, identify, and ensure that
the system contained and maintained complete and accurate data.

Because information in the management information system was
incomplete and inaccurate,  Park Service managers did not have
reliable information for tracking and managing land acquisition
activities.

Recommendations

We recommend that the Director, National Park Service, ensure
that:

1. Quality control procedures are established and training is
provided at the field- office level so that management
information system data are current, complete, and accurate.

2. Information in the management information system is
reconciled, to the extent feasible, to the official accounting
information in the Federal Financial System on at least an annual
basis.

National Park Service Response and Office of Inspector General
Reply

In the April 30, 1999, response (Appendix 2) to the draft report
from the Director, National Park Service, the Park Service
concurred with Recommendation 1 and nonconcurred with
Recommendation 2.  Based on the response, we consider
Recommendation 1 resolved but not implemented and request that
the Park Service reconsider its response to Recommendation 2,
which is unresolved (see Appendix 3).

Regarding Recommendation 2, the Park Service stated that it did
"not believe the data in the MIS [Management Information System]
can be reconciled with the FFS [Federal Financial System] with
any degree of accuracy.  The data is input differently in the two
systems and at different times.  Any reconciliation would be
extremely difficult and produce dubious results."  The Park
Service also said that the management information system was not
part of the National Park Service's financial system and thus
should not be subject to Office of Management and Budget
regulations.  In addition, the Park Service said that its
management information system "is an internal database used to
track workload and project status only."

We recognize that the Park Service's management information
system, which contains land acquisition data, and its financial
accounting system differ in purpose, data entry, and data
content.  However, both systems contain information on land
acquisitions, and, to the extent that the same information is or
should be recorded in both systems, we believe that this
information should be reconciled to ensure the completeness and
accuracy of land acquisition data. 

The Park Service also stated that its management information
system is an "internal database used to track workload and
project status only" and therefore was not subject to Office of
Management and Budget Circulars A-123, "Management Accountability
and Control," and A-130, "Management of Federal Information
Resources." We consider both of these regulations to be
applicable to the Park Service's management information system,
which is used to record and track land acquisition information.
Circular A-123 pertains to a requirement that Federal agencies
ensure that "reliable and timely information is obtained,
reported and used for decision making," and Circular A-130
requires Federal agencies to ensure that "records management
programs provide adequate and proper documentation of agency
activities."  

Additional Comments on Finding

In its response, the Park Service said that it disagreed that it
did not have reliable information to manage its acquisition
program because "once the transition and testing phase was
completed the information was available to properly manage our
program."  However, the Park Service did not provide any
documentation during our review to show that corrective actions
on the noted  deficiencies in the management information system
had been taken.  

OTHER MATTERS

We found that the Southeast Regional Office did not obtain
independent appraisals when it acquired land from nonprofit
organizations.  Although Departmental and Park Service guidance
allows landowner appraisals to be used for acquisitions, subject
to Park Service review and approval, we found that at two (the
Northeast and National Capital Regional Offices) of the three
offices visited, the Park Service generally obtained its own
independent contract appraisals for acquisitions involving both
private parties and nonprofit organizations.  However, the
Southeast Regional Office's practice was to obtain independent
contract appraisals when it acquired land from private landowners
and to accept appraisals obtained by nonprofit organizations,
subject to the review and approval of the Park Service, when it
purchased land from these organizations.  For example, of the 21
nonprofit organization transactions reviewed, the National
Capital and the Northeast Regions obtained independent appraisals
in 9 of 11 transactions, whereas the Southeast Region obtained
independent appraisals for only 1 of 10 transactions (examples
are provided in the paragraphs that follow).  Southeast Regional
officials said that they used appraisals provided by nonprofit
organizations because these organizations usually initiated the
acquisitions and had obtained the appraisals before the Park
Service was involved in the transaction.  The officials also said
that they did not obtain additional independent appraisals
because they wanted to avoid lengthening the acquisition process.

Land acquisition officials at the offices visited and at the
headquarters agreed that obtaining independent appraisals would
be beneficial because it would enable the Park Service to provide
some level of control over the appraisers.  We believe that
independent appraisals may result in market values that are lower
than the estimated values in appraisals obtained by the property
owners, as illustrated in the following examples:

-   The owner of an 8,580-acre tract obtained two appraisals that
valued the property at $16 million and $19 million, respectively.
The Park Service's Southeast Region obtained an independent
appraisal that valued the property at $6.6 million.  The
landowner offered to sell the property for $7.6 million, which
the Park Service accepted after obtaining Congressional approval
(which is required for payments that exceed the appraised value).
In this case, by obtaining an independent appraisal, the Park
Service obtained land at  $8.4 million less than the landowner's
appraised value.

-  A nonprofit organization that owned a 78.2-acre tract obtained
an appraisal that  valued the property at $5.1 million. The
organization asked the Park Service's Southeast Region to use the
appraisal to establish the purchase price. The Region determined
that the appraisal did not meet Federal standards and prepared an
in-house appraisal which valued the property at $3.1 million.
The organization accepted the $3.1 million offer, which was $2
million less than the value of the land as estimated in the
organization's appraisal.

- The owner of an improved .45-acre tract obtained an appraisal
that valued the property at $320,000. The Park Service's
Southeast Region obtained an independent appraisal which valued
the property at $280,000.  The landowner accepted the Park
Service's $280,000 offer, which was $40,000 less than the
property's value as estimated in the appraisal obtained by the
property owner.

Based on the previous examples, we believe that the Park Service
has an opportunity to reduce land acquisition costs by obtaining
independent appraisals.  Accordingly, we suggest that the Park
Service issue guidance requiring the preparation of in-house or
independent contract appraisals for all land acquisitions. 

National Park Service Comments and Office of Inspector General
Reply

In the April 30, 1999, response (Appendix 1) to the draft report
from the Director, National Park Service, the Park Service stated
that it believed the three examples in the report illustrating
the opportunity to reduce acquisition costs by obtaining
independent appraisals were "erroneous and misleading."  The Park
Service further said that "the report falsely assumes that the
independent appraisals, used in each of the examples, would have
been approved for just compensation purposes" and that none of
the appraisals met appraisal standards.  In addition, the Park
Service said that "any comparison to the differences between
these appraisals and our appraisals produces only illusory cost
savings."

The three examples in our report describe the lower market values
in appraisals that were provided by independent appraisers as
compared with higher market values for the same property in
appraisals that were provided by appraisers hired by the property
owner.  We also stated that one of the appraisals obtained by the
property owners did not meet appraisal standards and made no
representations that reportable savings (Appendix 1) were
identified.  We believe that the Government's interests would be
better protected if the Park Service obtained independent
appraisals, a belief that was expressed by all Park Service land
acquisition field personnel whom we interviewed during our audit.
Also, in the report section "Appraisal Standards," we provided
examples of appraisals that we considered to be based on
inadequate support.  In several of these examples, the
appraisals, which had been obtained by the property owners and
approved by the Park Service, established what we believe were
higher than warranted market values.


APPENDIX 1

CLASSIFICATION OF MONETARY AMOUNTS

-----------------------------------------------------------
Funds To Be Put       Questioned Finding   
To Better Use         Costs                   Area         
-----------------------------------------------------------
Appraisals             $150,000
-----------------------------------------------------------
Conservation                              |               |
Easements              $2,600,000         |588,000        |
-----------------------------------------------------------
Business Relocation    |            1,700 |       51,700  |
Payment                |                  |               |
-----------------------------------------------------------
Total                   $2,601,700                 $789,700
-----------------------------------------------------------

APPENDIX 3

STATUS OF AUDIT REPORT RECOMMENDATIONS


Finding/Recommendation

Reference                  Status              Action Required       

A.1, A.2, C.2, D.1, Resolved; not   No further response to
D.2, D.3, and E.1implemented.the Office of Inspector General is
required.  The recommendations will be referred to the Assistant
Secretary for Policy, Management and Budget for tracking of
implementation. 

C.1  Management   An action plan,concurs; additional including
the targetinformation needed. date and the title of the official
responsible  for implementation, is needed..

A.3, B1, and E.2 Unresolved     Reconsider the recommendations,
and provide action plans that include target dates and titles of
the officials responsible for implementation.



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