Update on second day
Pretty much more of the same.
Donald Johnson MAI finished his testimony. He basically disagreed with everything I did, based on his extensive knowledge and his thorough reading of my report. I think he indicated I violated every possible element of Standard 1 and 2 except one. He opined that the project was Fed Ex, not airport expansion, and that my report therefore violated state law because I improperly considered Fed Ex to be the project. Under cross examination, his thorough review of my report did not look so thorough since my report only mentions Fed Ex in one location, in the area description.
He apparently never read the Memorandom of Action included in my report. (This document submitted by the airport as the basis for the acquisition states that the project was airport expansion and does not mention Fed Ex.) In short, he inserted his opinion (the project being Fed Ex) into the very premise of the report and then said I was wrong in the remainder of my report because my work does not match his premise of the report. This is absolutely the worst possible mistake (and injustice to a peer) that a reviewer can make.
As an example, assume the following scenario. You are appraising a house that sits on two lots, and you conclude that the it is not economical or permissable (or whatever) for the lots not to be subdivided and that the highest and best use is therefore for the house to be viewed as a house on one oversized lot. You then gather data based on that premise and make reasonable and appropriate judgements in your analysis of that data and form a value conclusion. The reviewer then disagrees with your opinion that the lots can not be subdivided. He/she then goes on to say that your comparable selection was incorrect, your adjustments were therefore wrong and your value conclusion not credible and your report was misleading.
This is a bad review. The reviewer can of course disagree with the highest and best use conclusion, after all we can disagree on such issues. The reviewer must of course set forth the basis for the disagreement on the highest and best use issue; the client can then decide whose work is more credible. What is wrong with such a review is the reviewers conclusions that your selection of comparables was wrong, and that the findings were incorrect.
What the professional appraiser should report is that given the appraisers original premise that the house was on an over size lot, that the subsequent analysis was appropriate and reasonable. You need to point out to your client that you disagree with the highest and best use conclusion, and that that would lead to a different value conclusion. If your scope of work requires a new value, you would then provide the data and analysis that supports your new opinion.
Of course this bad review work is exactly what my case is about. The board investigators, and the MAI's inserted their own opinions into the appraisal problem prior to the highest and best use, and then just set out to show all the errors based on this (as it turns out) incorrect identification of the project. The complaintant and other reviewers never considered the possibility that any other opinions, other than their own, could possibly have merit. The state investigators, even though they were provided with documentation saying the project was not Fed Ex, chose to ignore it and believed the complaintant and his cronies.
The only possible protection for such abusive reviews is to have competent written Standard Three reviews prepared by the staff of the regulatory boards. That way, bad reviews (including lack of thorough investigation and improper use of techniques and methods, errors of omission and commission,) can be identified and action taken internally within the board. In short, the merit of the accusation should be what is important, and not the credentials of the person making the accusation.
Well, back to the hearing.
The Deputy Director also testified yesterday. Before I tell you why I think his work product in this case was weak, let me tell you the good news. Mr. Humphries truly seems to be attempting to be impartial. He acknowledged that most of my work product was solid, with the exception of the scope of project issue and my "interpretation of state law". He even said that my discussion of the property history was exactly what it should be. He seemed to be judicious in addressing the appropriateness of adjustments and only took exception to several, and recognized that he had no real basis for disagreement with the most controversial adjustment except that he thought the underlying premise of the adjustment was inappropriate. I have high hopes for this gentleman to become a good solid member of the board staff.
The problem with his work product was that the scope of work was far too narrow. In my opinion, in a contested case when the charges include almost every possible standard violation, limiting your review to only a reading of the report (and site visit to subject and comps) is insufficient for the reviewer to appropriately address the development issues of the appraisal. In such a case, the review must be as comprehensive as possible, not the minimum possible level, otherwise his report, be it written or oral, just simply will not be credible. Hopefully, Mr. Humphries has come to this conclusion on his own after this hearing.
The other two problems with Mr Humphries work product is that Mr. Humphries was given this assignment in October 2001, but did not complete the written review until one week before the hearing. This is far too late for meaningful discovery by deposition to occur. This would not be a problem if the review report had sufficient data for a unintended user (or an intended user only through discovery) to even begin to grasp the basis for his conclusions, but Mr. Humphries report merely stated in an very abbreviated bullet fashion the items he felt were of concern, but the report was completely devoid of any explanation of the reasoning or basis for his conclusions. This is a due process issue, no chance for discovery and insufficient information in the report to allow for a rebuttal in advance.
Boards, such as the NCAB, who do not want to have appraisers prepare substantive written appraisal reviews setting forth the basis of their opinions, are attempting to have their appraisers act as advocates. They are also hoping that they can just have these experts state opinions as if they are fact rather than have to prove the accusations.
The testimony continued first with my client explaining the assignment, in the context of the litigation and stating that, as a attorney who specialized in condemnation work, he found my work product to be more than adequate and not misleading.
The next expert was a civil engineer who clarified for the court that my treatment of the flood plains, flood way, stream buffers, wetlands and developmental ordinances was appropriate.
The next witness was David Johnson, who presented his appraisal review. In stark contrast to the witnesses for the state, Mr. Johnsons review was extensive and exhaustive. I personally can state he questioned every single aspect of the development of my work product and the related reports, including depositions and trial testimony. He would not accept any of my responses to go unchallenged and sought actual documentation to support all issues, including a basis for the adjustment. Where I suggested that an adjustment was based on my professional judgement, he explored the basis for this adjustment. Even when I presented text book answers to some of the litigation appraisal issues, such as found in Eatons text, he made the effort to call Eaton and confirm that my interpretation was correct.
I have never been subjected to such an exhaustive scrutiny and verification in 12 years of litigation work and I applaud Davids diligence in this matter. Well done, David.
Davids testimony went off resonably well after he spilled about half the pitcher of ice water on himself just after he was qualified as a witness. A moment of levity in an otherwise rather somber proceeding! I do not recommend this as a tactic for those who are testifying in court, but it seemed to work for David in breaking the nervousness and getting down to the matter of testifying!
The written review report is available for reading I believe, linked in a prior post, so I will not go into detail.
The interesting thing is that the state attorney could not really find an area of weakness in his review, not surprising given the extensive scope of his review, so she resorted to attempting to discredit him because he has been, well to phrase it mildly, critical of the NCAB in his web site (boardwatch) and in this forum. One of the comments I found particularly amusing was that she asked him if he had made the comment that the NCAB staff and some of the board members should be exiled from the NC, preferably to a federal prison. David agreed that he had said that. I sensed that the staff attorney did not find Davids comments to be as humorous I did. My attorney pointed out on redirect that Mr. Johnson was well within his rights as an American citizen under the First Ammendment to express his opinions. David very adroitely interposed his opinion that not only was it the right of an individual to speak against governmental injustice, it was an obligation.
That ends the second day. All in all, about as much fun as I thought it would be. The hearing had to be continued to next Thursday, seems the NCAB attorney needed today off for some scheduled medical work.
The news reporter who wrote the article also showed up to hear the testimony on the afternoon yesterday. Perhaps there will be another article.
Also present at portions of the hearing on Wednesday and Thursday was an appraiser, Allan Beatty, from Gastonia. My thanks to Allen for showing interest in this matter; I only wish that those appraisers who think our board does a pretty good job in their investigations had taken the time to come and see this hearing. But I will accept their explanation that they were too busy.
The decision to file charges with the NCAB and possibly the AI on the work product of the MAI's in this case has not yet been made. Early on in this matter, I submitted charges against Mr.Clapp for doing a review outside of standard three for his attorney client to the NCAB. Of course, Mr. Clapp freely admits he did this in front of the staff legal counsel, and the NCAB has used him as an expert in this case. They even introduced into evidence that he subsequently wrote a note taking bak his previously sworn testimony that he did a review and saying that he did not do an appraisal review. I would surmise from this that it is unlikely that the NCAB will take any action against this highly ethical individual. But this kind of you scratch my back, I'll scratch yours, is typical practice of the NCAB. Perhaps someone from the ASC or the AF or ASB or AQB might like to take the matter up with the NCAB.
One thing I wish to have is the actual transcripts of this hearing before I make any further allegations. Unlike others in this profession, I do not wish to make unsupported or documented allegations.
Regards to all who have posted and the sizeable number who are just lurking.
Tom Hildebrandt GAA
