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Definition of Public vs Private Utility

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Tejus

Member
Joined
Nov 1, 2002
Professional Status
Certified Residential Appraiser
State
Texas
I previously considered the definition of a public vs private utility (i.e. elec, gas, water and septic) straight forward. Since then, I’ve been waffling back and forth on this. Refer to the 1004, p. 1, Site section for the context.

My original definition of public vs private utility was whether the utility provider was a public entity (such as a city) or a private entity (such as a community water well for a subdevelopment). This led to many interesting and lengthy discussions on whether a utility was public or private based on the utility providers classification. This turns into a gray area very quickly for many utility providers.

Since then, I’ve come to the conclusion this discussion is irrelevant in the 1004 context. My latest interpretation is the 1004 is really asking if the utilities are private to the Subject. The primary information being asked for is whether the Subject’s utilities are contained on site (i.e. private, such as a septic system or water well) or obtained from another source (i.e. public, any outside source is considered public in this context). This is much simpler than my earlier definition and more accurately describes the private vs public definition in the 1004 context.

This simplified definition is not consistent with Harrison’s old URAR book, p. 42:

“Public means governmentally supplied and regulated. It does not, therefore, include community systems sponsored, owned or operated by the developer or a private company not subject to government regulation or financial assistance. If such systems are found, a description thereof should be given in the Site-Comments section or in the addendum to the report.”

I like my simplified definition and think it more accurately describes the private vs public utility definition in the 1004 context. The simplified definition also avoids a lot of unnecessary confusion when trying to classify utility providers.

Any comments or other interpretations of private vs public utility? Flame away . . .

Muchas gracias.
 
Alan,
I don't think it matters much as long as the water is safe and the HO can flush. Reminding you of what you already know, that confounded form isn't the whole appraisal. Any time a feature exhibits unusual or abnormal qualities, you gotta 'splain it. Fully.
 
This has become an issue because a client is comparing reports from different parties (i.e. inspectors, appraisers, etc.). When something is inconsistent between the reports, it has be to be explained. This has led to the simplified definition "if the utility source is offsite, then it's public".

As a related example, I just spent several hours writing up an explanation why an inspector's FEMA map was incorrect, providing the supporting documents showing it was incorrect, explaining why many auto generated maps are inaccurate and explaining how the FEMA web site and historical maps work. This was necessary due to an Inspector submitting an incorrect FEMA map that didn't even cover the Subject's area.

Many people in this industry have no idea how things work. They push a button, obtain an answer and have no idea how to confirm if the answer is accurate.
 
Public/Private; never gave it much thought, other than if it was Well & Septic, it's private.

Because most Utilities are "stock" companies they are held in part by private; corporate and even in some cases gobmnt. enterprises. Probably why I never gave it much thought.

Flood Maps: one thing that should no longer be on any form; these need to be Certified - and those who certify do not take very much time researching anything. Don't waste to much of your time on the issue.

good luck
 
As a related example, I just spent several hours writing up an explanation why an inspector's FEMA map was incorrect, providing the supporting documents showing it was incorrect, explaining why many auto generated maps are inaccurate and explaining how the FEMA web site and historical maps work. This was necessary due to an Inspector submitting an incorrect FEMA map that didn't even cover the Subject's area.


I beg to differ with you but it is not part of the assignment to explain anything about other data written by someone else. If you are comfortable with your data, then let it stand and speak for itself.

As far as auto-generated maps go, if you blindly trust them to accurately place the comps, then you deserve to spend hours explaining them. Nobody should ever just accept the locations of the comp flags on an auto-generated maps. I typically find that the locations I get from WinTotal maps are off anywhere from 200 yards to 1/3 of a mile. You have to know the location of each sale and reposition the flag to the proper location.
 
I agree with Mike C about auto generated maps. It seems like it happens at least once a week that the spot indicated on the map is wrong. Once a week and I'm only doing 2-3 reports a week.

Utilities: Privately owned utility companies are regulated by The State or Feds are considered PUBLIC utilities. On site facilities such as wells, septic systems, shared wells, individual generators of electricity, bottled gas/propane, cisterns, solar or windmill generated electricity are all examples
of private systems. Even mutual water systems are considered private as some are regulated and others are not. You should name the system and the type in the report.
 
XI, 404.03: Utilities (06/30/02)

For a mortgage to be eligible for purchase or securitization, the utilities of the property must meet community standards and be adequate, in service, and accepted generally by area residents. If public sewer and/or water facilities—those that are supplied and regulated by the local government—are not available, then community or private well and septic facilities must be available and utilized by the subject property. If community facilities are used, the owners of the subject property must have the right to access those facilities, which must be viable on an ongoing basis. Generally, private well or septic facilities must be located on the subject site. However, off-site private facilities are acceptable if the inhabitants of the subject property have the right to access them and if there is an adequate, legally binding agreement for their access and maintenance.

If there is market resistance to an area because of environmental hazards or any other conditions that affect well, septic, or public water facilities, the appraiser must comment on the effect of the hazards on the marketability and value of the subject property (as discussed in Section 307).

This is what Fannie has to say about it.
 
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