Kerry suggests 10/27 that function is related to Highest & Best Use. The 8th edition mentions HBU on p.86 but does not explain, merely citing CTLA 1986 which only says (p.49) that HBU of land is "a factor that may be considered." So let's start another thread. What is Highest & Best Use?

Reply to post by Scott Cullen, on October 30, 1998 at 07:57:42:

Highest and best use is what lawyers argue about. :^)


Lots of things are plausible and possible on a site. Future plans run rampant when it appears that big bucks are on the line. In my opinion the plant appraiser should take guidance from the land itself, it's condition and extent of current development. Consideration can be given to what the neighbors are doing, but in order to get an accurate "snapshot in time" for the purpose of an appraisal, I think we need to look at the land as it exists during the appraisal.

If the land is growing wild trees in undeveloped territory, I'm hard pressed to regard them as ornamentals. If a property is in ragged condition, I am hard pressed to imagine the potential it may have if it were "cleaned up". Courts may take a little more latitude with the future of the property, but when I form my opinions, I feel it is important to view the property as it exists the day I do the appraisal.

Further, I think it is important to insulate an objective appraiser from the opinions and plans of the client. The land and trees tell a story of their own. Personally, I enjoy that story much more than those of the people involved, so I go out of my way to get in touch with the story that the land and trees have to tell prior to being exposed to the stories of people (and the attached adgendas).

My two cents,
KWK

Reply to post by Kerry, on October 30, 1998 at 07:57:42:

Kerry, your two postings seem at odds. Your earlier message suggests that value is associated with human appreciated function, closely tied to HBU.

Here you seem to suggest that human opinions only cloud objective facts and that Existing Use is more important than HBU.

Can you clarify?

Reply to post by Scott Cullen, on October 31, 1998 at 00:00:39:

I have to agree with Kerry. In fact, I believe we are compelled to appraise trees in relation to the site as it existed at the time of appraisal OR immediately prior to damage.

Developing a hypothetical future value is the duty of an attorney and/or jury or judge... or maybe a real estate appraiser.

Example: On a rural site to be developed... we cannot anticipate the impacts of future construction.... while possible for a given tree to be of greater individual value after development, it may also be so impacted by construction as to be worth very little or nothing at all!

Just my two cents (or would that be two dollars as a result of HBU?)

Torrey

Reply to post by Torrey Young, on October 31, 1998 at 06:24:44:

I guess you're agreeing with Kerry's 2nd posting that HBU does not apply to tree appraisals. Kerry has not clarified his position yet.

If a qualified real estate appraiser might offer an opinion about future hypothetical values, why might a tree appraiser not offer an opinion about future hypothetical tree values? Any hypothetical assumptions would, of course, need to be clearly specified (ASCA SPP 4.2(E)).

Ignore for the moment the distinction between Existing and HBU. Assume the current state of the site is wooded but the development has been approved so the higher use is not hypothetical. The assignment is to place a value on the trees to remain, considering their roles in the developed landscapes. You have specced the tree preservation and protection plan and selected to remain only trees which can be well isolated from impacts. The planning agency wants to assign values to serve as penalties if the developer or sub-contractors violate the specs and cause (in the opinion of 3 experts, 1 for each side and 1 neutral) loss of the trees. Is the assignment within a tree appraiser's competence and ethical/professional standards?

Real estate appraisers, by the way, have a duty to consider HBU whenever "necessary and appropriate" (typically market value appraisals). Uniform Standards of Professional Appraisal Practice, Standrads Rule 2-2(i).

I'd like to hear more opinions on whether or when HBU applies to tree appraisals. (And the initial thread question: What is HBU?)

Reply to post by Scott Cullen, on October 31, 1998 at 00:00:39:

My point is that one must deal with REALITY. In order to accurately express value, one must be able to measure the subject and it's current use.

Reality as it exists on the day of appraisal is credible, solid evidence. I'll leave it to others to hypothesize based on future values of the land, because frankly, those projected objectives or intended values are not credible. That's what the gamble of investment is all about. It could be worth a gold mine, it could give you the shaft. Only the passage of time reveals the reality.

Sure, there will be some person who confidently strides onto the scene and offers an opinion as to future value of the trees based on projected changes in the land value, but there's a good (50%) chance that person will be wrong too. I think the credibility of tree appraisal suffers greatly in those (wrong) cases. It suffers more than a real estate appraisal would, since in the arguements that follow a failure, an exaggerated valuation of the trees serves as the icing on the cake for parties who are pointing out the extent of the failed projections.

In short, the crediblility of an appraiser's opinion of highest and best use should be closely tied to current use, since that use is shown to be serving well. I won't argue against projections based on a finished landscape remodel, but I would inject a lot of caution against getting carried away with radical changes in the values of the trees. Time will tell.

Best regards,
KWK

Reply to post by Scott Cullen, on November 01, 1998 at 20:40:11:

Correction: proper cite of 1998 USPAP re: HBU is Standards Rule 2-2, a(ix), b(ix) and c(ix).

Reply to post by Scott Cullen, on November 01, 1998 at 20:40:11:

If future HBU values are not appraised by arborists, than who?

A statement with existing values, could show projected HBU values by illustrating existing like species with similar characteristics.
Since we deal with a growing investment, future values are intricate factors in arriving at current values. Note: non-growth results in
negative values.

Unless pathogenic, biotic influences, or known abiotic influences are present to begin depreciation of these values. Than certainly, growth
value is considered as part of existing value. Furthermore, HBU value(s) can be reflected in any proposed usage.

In order to promote the professional credibility of our field. I for one do not desire to have real estate appraisers,(or any other discipline)
describe to the legal profession these values.

Sincerly, Steve

Reply to post by Stephen Wiley, on November 01, 1998 at 21:28:01:

More food for thought in your post.

We're leaning towards another thread: value when? How do or should our opinions of value relate to the future? For now I'd just like to distinguish the issues but stay on HBU.

Still looking for a definition: What is HBU?

Reply to post by Scott Cullen, on November 05, 1998 at 00:33:19:

Scott,

Much of the talk of HBU for definition, including my earlier comments have not addressed one specific issue.
That is HBU is a real estate term, legally used for the purpose of arguements to RE-ZONE the usefulness of property.

So, is the incorporation of this term used for rezoning a valid term for preservation of trees, or rather the misuse
For instance the argument to rezone from EFU to Light Industrial in order to preserve a tree may be drastically flawed.

Any comments?

Sincerely, Steve

Reply to post by Stephen Wiley, on November 05, 1998 at 05:01:28:

HBU is a real estate term. As I understand it it's use is not limited to re-zoning. In fact, one of the qualifying characteristics of HBU (in an appraisal context at least) is that the use is legally permissable, so it really presumes current zoning. (I just gave away part of the answer).

I think the issue of rezoning, for tree preservation or otherwise, is not the issue at hand.

Does HBU have a place in tree appraisal? Why is it mentioned but not explained in the CTLA literature? Let's start with the definition and then we can discuss how, why when.

Scott

Reply to post by Scott Cullen, on October 30, 1998 at 07:57:42:

The topic question has been answered 11/18/98 at "Highest & Best Use Is" #(292). I appreciate the discussion.

Scott