Louisiana Administrative Code › Title 70 - TRANSPORTATION AND DEVELOPMENT › Part XVII - Real Estate › Chapter 5 - Appraisal Handbook for Fee Appraisers › Section XVII-525 - Highest and Best Use

Current through Register Vol. 50, No. 6, June 20, 2024
A. In an
				assignment, it is required that the appraiser fully analyze the highest and
				best use of a parcel and include that analysis within the appraisal report as a
				detailed and concise narrative. There are locations where the highest and best
				use is obvious. At other locations, evaluation for highest and best use renders
				limited possibilities. If that is the case and a detailed analysis is not
				warranted, a less detailed written analysis is acceptable.
B. In cases where it is necessary to estimate
				the highest and best use of an improved parcel, the focus is on the existing
				use as well as all potential alternate uses. To correctly accomplish the goal,
				the appraiser must analyze the highest and best use as improved and as
				vacant.
C. Often, the existing use
				will be the highest and best use and that conclusion may be clearly obvious to
				the appraiser. The discussion within the report need not be as detailed as with
				a different or changing highest and best use.
D. The support of the appraiser's opinion is
				most critical in the not so obvious situations when the appraiser may need to
				respond to inquiries by the reviewer appraiser or an attorney. Because the
				highest and best use determinations affect the value conclusion, an unsupported
				estimate of the highest and best use may lead to unnecessary and costly
				litigation for both the LDOTD and the property owners.
E. When the highest and best use is estimated
				to be different from the existing use, the appraiser is essentially concluding
				that the present improvements no longer provide an acceptable return of the
				investment for that purpose. This generally occurs when the value of land in an
				area, due to changing conditions, increases to such a degree that it approaches
				or exceeds the value as improved. In cases such as this, a detailed analysis
				and discussion will be required utilizing accepted appraisal
				techniques.
F. The appraiser must
				substantiate the existence of demand for the proposed use; that the physical
				features of the property would accommodate that use; that the use is compatible
				with zoning requirements or a reasonable probability exists for re-zoning and
				there are no restrictions that would preclude that use.
G. Another item for consideration within the
				highest and best use evaluation is the recognition and adherence to the
				"Consistent Use Theory". Basically, a property in transition to another use
				cannot be valued on the basis of one use for the land and another for the
				improvements. This may introduce the possibility of an interim use. Sometimes
				an improvement is not the proper improvement to maximize the value of the whole
				property. There may be some type of interim use of that improvement which may
				be utilized until such time as the land can be put to its highest and best use.
				This improvement may be valued by ascertaining the amount of temporary income
				derived during the interim period or a value based upon the use of the interim
				improvement for another highest and best use until a proper improvement can be
				justified.
AUTHORITY NOTE:
				  Promulgated in accordance with
				  R.S.
				  48:443.