Evening star., 1927-03-19

Establishment of uniform and
standardized method of appraiSing
new building projects financed by first
mortgage real estate bonds is urged
by w. j. Moore, president of the
American Bond & Mortgage Co., who
has submitted a proposed standard
appraisal code to the committee of the
American Construction Council ap-
pointed to survey the real estate bond
industry. He declared that it is the
urgent responsibility" of all elements
either directly or indirectly identified
with this business to cooperate in Solv.
ing the appraisal problem.
Adoption of an honest, conserva.
tive and adequate appraisal policy,
worked out with the cooperation and
approval of the National Association
or Securities (Blue-Sky) Commission
ers," Mr.. Moore said, would un-
doubtedl go far toward eliminating
the criticism and present-day talk of
inadequate appraisals and inflated
valuations. Establishment of basic
principles of property valuation. ac-
cepted and universally recognized by
the commissioners, would also simpi-
fy the qualification of bond issues for
sale in the various States, and give in
Vestors additional assurance of the
quality and adequacy of the security
back of the bonds they buy"
The American Construction Council
committee now is considering Mr..
Moore's proposal, which was submit
ted in booklet form, citing at length de-
cisions of the Federal and State courts
and the rulings of the Interstate Com
merce Commission and the State pub
lie regulatory bodies on questions of
valuation that are similar and anal
ogous to those in the real estate bond
industry.
Study and analysis of these deci-
sions," Mr.. Moore said, "conclusively
show that there are certain recognized
and legaliZed standards of nractice al.
ready established. especially in the
public utility field. which 1 feel sure
must be recognized and accepted as a
basis of fair property valuation in the
real estate mortage bond field by the
officials of the various States who
are in charge of the execution of the
realty securities laws"
Basis for Code.
The following reasons were cited by
Mr. Moore in support of his contention
that there was ample precedent on
which to base a uniform appraisal
code for construction projects:
L. The highest courts by their de-
clsions on questions arising in the pub
lie utility field and in railroad rate
making cases have established COM
mon law with respect to the determi-
nation OF the value of lands, buildings
and improvements on property
z. These court decisions and the ac.
cepted rulings of the Interstate Com
merce Commission and the public util-
ity regulatory bodies have definitely
established principles for determining
fair actual cost. fair market value"
and certain other basic elements of
valuation subjected to much contro-
versy in new building appraisals.
3. Many so-called overhead charges"
which have been disputed or disal-
lowed as sound costs in real estate
appraisals. nave been defined and
legally established as sound elements |
of valuation. as well as practically |
every other item of cost that the |
owner actually incurs from the time |
a project Is started until ii is COM |
pleted and fully established as a GO |
ing business.
4. Intangible elements of cost, such |
as the value of putting a property
on profitable or going basis-often
referred to as going value"-also
have been defined and generally al
lowed a proper item Of valuation by
the courts and public utility commits
sions.
For Uniform Valuation.
Real estate bond houses operating
on national scale have been handi-
capped in qualifying their issues for