United States Government Accountability Office

Washington, DC 20548 

September 26, 2006 

The Honorable Greg Walden 

Chairman 

Subcommittee on Forests and Forest Health 

Committee on Resources 

House of Representatives 

The Honorable Earl Blumenauer 

House of Representatives 

Subject: Federal Land Exchange: Assessment of Mount Hood Land Appraisal Reports 

In response to your request, we briefed you and your staff on September 21, 2006, on the results 

of our review of two appraisal reports prepared for a proposed land exchange contained within 

the pending bill H.R. 5025, the Mount Hood Stewardship Legacy Act. This bill would authorize 

the exchange of private land and business interests at Cooper Spur for Forest Service land at 

Government Camp in Oregon. Specifically, you asked that we determine whether the appraisal 

reports supporting this land exchange were prepared in compliance with recognized appraisal 

standards, namely, appraisal industry standards as defined in the Uniform Standards of

Professional Appraisal Practices (USPAP) and federal standards as defined in the Uniform 

Appraisal Standards for Federal Land Acquisitions (UASFLA). 

To conduct this work, we contracted with two certified appraisers to conduct separate and 

independent formal reviews of the Cooper Spur and Government Camp appraisal reports and to 

provide their professional opinions on whether these reports conform to the recognized industry 

and federal appraisal standards. We asked the review appraisers to conduct a desk review in 

accordance with appraisal standards, which consists of reviewing the information and analyses 

contained within the reports, as well as examining the internal logic and consistency. The 

appraisers did not independently verify the data presented within the reports, visually inspect the 

properties, or establish separate valuations of the properties. 

Both appraisers concluded that the Cooper Spur appraisal report did not comply with the 

recognized standards, although they differed on whether the Government Camp appraisal report 

complied with the standards. On the basis of the review appraisers’ reports and conclusions, we 

concluded that the federal government has limited assurance that the Cooper Spur and 

Government Camp appraisal reports reflect market value for the land and business interests 

proposed for this exchange. We discussed our results with the certified appraiser who prepared 

the appraisal reports and considered his comments in preparing our final report. Enclosure I 

provides the slides that we used in our briefing to you and your staff members. We conducted 

this work from August 2006 through September 2006 in accordance with generally accepted 

government auditing standards.

GAO-06-1135R Mount Hood Land Appraisal Reports 
We are sending copies of this report to interested congressional committees and members, the 

Secretary of Agriculture, the Chief of the Forest Service, and other interested parties. We will 

also make copies available to others on request. In addition, this report will be available at no

charge on the GAO Web site at http://www.gao.gov. Should you or your staff have any questions, 

please contact me at (202) 512-3841 or by e-mail at nazzaror@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the last page of this 

report. Key contributors to this briefing include David P. Bixler, Assistant Director; Nathan 

Anderson; Ellen W. Chu; Richard Johnson; and Arvin Wu. 

Robin M. Nazzaro 

Director, Natural Resources 

 and Environment 

Enclosure

Page 2 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

Federal Land Exchange: Assessment of Mount Hood Land Appraisals Reports

Federal Land Exchange: Assessment of Mount Hood 

Land Appraisal Reports 

A Briefing for Congressional Requesters

September 21, 2006

Page 3 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

1

Introduction

• To resolve a 30-year dispute over potential development on 

Oregon’s Mount Hood, a pending bill, H.R. 5025, would

implement an agreement proposing to exchange private 

land and business interests at Cooper Spur for two parcels 

of Forest Service land at Government Camp

• In July 2005, the parties to the agreement contracted with a

private land appraiser to estimate the market value of the 

land parcels to be exchanged 

Page 4 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

2

Introduction (cont.)

Location of Mount Hood Land Exchange Properties

Page 5 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

3

Objective

To determine whether the appraisal reports supporting the 

land exchange were prepared in compliance with recognized

appraisal standards:

• Uniform Standards of Professional Appraisal Practice 

(USPAP, herein called “industry standards”)

• Uniform Appraisal Standards for Federal Land 

Acquisitions (UASFLA, herein called “federal standards”)

Page 6 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

4

Scope and Methodology

• We contracted with two certified appraisers having the highest 

appraisal industry designation (MAI) to independently review the

appraisal reports and provide their professional opinions on 

whether the reports conformed to recognized appraisal standards

• Because of time constraints, the review appraisers performed a

desk review, which “involves, in addition to confirmation that the 

report was prepared in accordance with these Standards, a

thorough review and analysis of the information and analysis 

contained in the appraisal report under review and a careful 

examination of the internal logic and consistency”1

• Review appraisers did not visually inspect the properties or

establish a separate valuation

1

Interagency Land Acquisition Conference, Uniform Appraisal Standards for Federal Land Acquisitions, UASFLA Section C-2 (Chicago: Appraisal Institute, 2000)

Page 7 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

5

Background

Cooper Spur properties consist of three components:

• Cooper Spur Inn (privately owned)

• 3 acres zoned for commercial use, containing the Inn at Cooper Spur

resort, including lodge with six guest rooms, three two-bedroom suites, 

five cabins, and hot tubs

• 152 acres zoned as undeveloped forestland

• Cooper Spur Ski Area (privately owned business interest on 

Forest Service land)

• 1,400 acres under a Forest Service special-use permit allowing permit

holder to build, operate, and maintain a winter sports resort, including a 

50-acre ski area with facilities such as 10 ski runs, ski lifts, and day 

lodge; designated for wilderness recreation use

• Hood River County Exchange Property (privately owned)

• 614 acres zoned as undeveloped forestland

Page 8 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

6

Background (cont.)

Government Camp properties consist of two parcels owned by 

the Forest Service:

• 40-acre undeveloped parcel, zoned for low-density 

residential development if transferred to private 

ownership

• 80-acre undeveloped parcel, zoned for low-density 

residential development if transferred to private 

ownership

Page 9 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

7

Background (cont.)

• Objective land appraisals lie at the heart of establishing the 

market value of a property or property interest to help guard 

against vested interests of buyer and seller

• In general, two sets of standards—appraisal industry (USPAP)

and federal (UASFLA)—apply to appraisals for federal land 

transactions:

• Federal standards conform to industry standards but add 

requirements and restrictions to conform with federal law 

about valuation of real estate for government acquisition

• Both standards require an appraiser to identify, verify, 

analyze, and reconcile all pertinent information to produce an 

objective and credible appraisal value

Page 10 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

8

Background (cont.)

Industry and federal standards require appraisers to identify a 

land parcel’s “highest and best use.” Highest and best use

includes what is: 

• Legally permissible: zoning, building codes, historic

district controls, and environmental regulations

• Physically possible: size, shape, and terrain

• Financially feasible: potential uses likely to produce 

income equal to or greater than expenses

• Maximally productive: the legally permissible, physically

possible, and financially feasible use that produces the

highest value

Page 11 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

9

Background (cont.)

Industry standards clearly state:

“Each written or oral real property appraisal report must:

“(a) clearly and accurately set forth the appraisal in a 

manner that will not be misleading;

“(b) contain sufficient information to enable the intended

users of the appraisal to understand the report 

properly; and

“(c) clearly and accurately disclose all assumptions,

extraordinary assumptions, hypothetical conditions, 

and limiting conditions used in the assignment.”

Source: Appraisal Foundation, 2005 Uniform Standards of Professional Appraisal Practice, USPAP Standards Rule 2-1 (Washington, D.C.: 2005)

Page 12 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

10

Review Appraisers’ Findings

• Both review appraisers concluded that the Cooper Spur 

appraisal report did not comply with recognized standards

• The two review appraisers differed on whether the 

Government Camp appraisal report complied with 

recognized standards

Page 13 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

11

Cooper Spur Appraisal Report

Both review appraisers concluded that the Cooper Spur appraisal 

report did not comply with recognized standards.

• Cooper Spur Inn: Both reviewers found lack of support for

zoning assumptions:

• Evidence was insufficient to support assumption of zoning 

change, which formed the basis of a “highest and best use”

designation as resort development for about 80 acres of 

forestland

• Appraiser did not mention local opposition to rezoning from 

forestland to resort development, potentially violating 

federal appraisal standards2

2UASFLA Section D-6

Page 14 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

12

Cooper Spur Appraisal Report (cont.)

• Cooper Spur Inn (cont.): Both reviewers found lack of 

support for land value appreciation assumptions.

• Evidence was insufficient to support use of an

18 percent annual land value appreciation rate

• An 18 percent annual land value appreciation rate 

was inappropriately applied to entire parcel (existing 

commercial, potential resort, and undeveloped forest

lands)

Page 15 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

13

Cooper Spur Appraisal Report (cont.)

• Cooper Spur Ski Area: Both reviewers found lack of

support for income assumptions for the ski area.

• Estimate of income was based on data from a single 

ski season (2004–05), a good snow year

• Estimate of income appeared high because the 

Cooper Spur ski operator shared expenses with 

another nearby ski facility

Page 16 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

14

Cooper Spur Appraisal Report (cont.)

• Cooper Spur Ski Area (cont.): Both reviewers found 

lack of support for the conversion of income to value.

• Appraisal report justified use of a high conversion 

factor on the basis of the potential for future ski area 

expansion but offered no evidence for this assumption

• Range of multipliers used in the conversion was 

based on much larger resorts at higher elevations—

such as Heavenly Mountain Resort near Lake Tahoe 

in California and Nevada and Grand Targhee in

Wyoming—which may not be comparable to the 

Cooper Spur resort

Page 17 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

15

Cooper Spur Appraisal Report (cont.)

• Hood River County Exchange Property

• One reviewer concluded that this component of the

Cooper Spur appraisal report complied with 

recognized standards.

• The other reviewer concluded that this component did 

not comply with recognized standards. The valuation 

of this component was based primarily on the work of 

a forestry consultant, and the review appraiser found 

insufficient evidence of the consultant’s findings in the 

appraisal report to justify that valuation.

Page 18 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

16

Cooper Spur Appraisal Report (cont.)

• Other Concerns

• One review appraiser also noted that, contrary to

industry standards,3 the three Cooper Spur properties 

were valued separately and a single aggregate value 

was not given, even though the Government Camp 

and Cooper Spur properties were to be exchanged in 

aggregate.

• The other review appraiser noted that the Forest 

Service was not listed as an intended user in the 

Cooper Spur appraisal report. According to federal 

standards, federal land agencies and private

landowners are both “intended users” of appraisals for 

federal land exchanges and must be named in such 

appraisals.4

3

USPAP Standards Rule 1-4(e) 4

UASFLA Section D-7

Page 19 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

17

Government Camp Appraisal Report

The review appraisers differed in their conclusions on 

whether the Government Camp appraisal report complied 

with recognized standards but shared a similar concern 

about the annual land value appreciation rates used in the 

appraisal reports

Page 20 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

18

Government Camp Appraisal Report (cont.)

One reviewer concluded that the Government Camp appraisal

report complied with recognized standards but noted two 

problems:

• Use of a 10 percent annual land value appreciation rate

for Government Camp appeared inconsistent with the

18 percent used for Cooper Spur

• The two Government Camp parcels were valued 

separately and a single aggregate value was not given,

even though the Government Camp and Cooper Spur

properties were to be exchanged in aggregate

Page 21 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

19

Government Camp Appraisal Report (cont.)

The other reviewer concluded that the Government Camp

appraisal report did not comply with recognized standards

when compared with the Cooper Spur appraisal report:

• Using a 10 percent annual land appreciation rate for 

Government Camp may understate its value, given the 

land appreciation rate of 18 percent used for Cooper

Spur

• Government Camp has a more active residential

market

• Government Camp is closer to Portland

• Government Camp has more commercial amenities

Page 22 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

20

Government Camp Appraisal Report (cont.)

• Like the appraisal report for Cooper Spur, the appraisal

report for Government Camp did not list the Forest 

Service as an “intended user,” although federal

standards state that federal land agencies and private

landowners are both intended users of appraisals for 

federal land exchanges and must be named in such

appraisal reports

Page 23 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

21

Comparison of Appraisal Reports

One reviewer found it difficult to reconcile the appraised values 

of Cooper Spur and Government Camp with the potential for 

development at each site. For example, the reviewer noted that 

future development at Cooper Spur would require: 

• Approval for rezoning, while Government Camp already 

has zoning in place

• Construction of infrastructure, while such infrastructure

already exists adjacent to Government Camp

• Approval to expand the ski area, without which potential 

development may not be feasible, whereas ski resorts

already exist near Government Camp

• Addressing public opposition and environmental concerns 

that Government Camp has not faced

Page 24 GAO-06-1135R Mount Hood Land Appraisal Reports 
Enclosure I 

22

Conclusion

On the basis of the review appraisers’ reports and 

conclusions, the federal government has limited assurance 

that the Cooper Spur and Government Camp appraisal 

reports reflect market value 

(360753)

Page 25 GAO-06-1135R Mount Hood Land Appraisal Reports 
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