New Mexico Administrative Code › Title 19 - NATURAL RESOURCES AND WILDLIFE › Chapter 2 - STATE TRUST LANDS PART 24 CULTURAL PROPERTIES PROTECTION › Part 22 - PLANNING AND DEVELOPMENT LEASES › Section 19.2.22.17 - IMPROVEMENT VALUE; IMPROVEMENT VALUE CREDIT

Current through Register Vol. 35, No. 13, July 16, 2024
A. IV, when calculated. Improvement value
				(IV) must be calculated when a planning and development lease terminates, upon
				a disposition or partial disposition, or at lessor's discretion including but
				not limited to at the time of a sublease or assignment. IV is generally
				determined through appraisal by comparing the subsequent value of the leased
				premises to the base value of the leased premises with an adjustment for
				natural appreciation pursuant to the following and as described in Paragraph
				(1) of Subsection C of 19.2.22.17 NMAC below:
(1) Base appraisal. Prior to the effective
				date of the planning and development lease, the applicant, at the applicant's
				expense, shall cause an appraisal of the trust land to be performed by a
				qualified appraiser conforming to the uniform standards of professional
				appraisal practice (USPAP) to establish the base value (BV). The commissioner
				may require specific appraisal instructions and require that the appraiser be
				approved in advance. The state land office staff appraiser shall review the
				base appraisal pursuant to the USPAP Standard 3, and make a recommendation to
				the commissioner that the base appraisal be accepted, rejected, or accepted
				with adjustments. The commissioner may approve a BV consistent with the staff
				appraiser's recommendation or make deviations therefrom if appropriate based on
				the commissioner's exercise of reasonable judgment, documented in writing. The
				commissioner reserves the right to reject any base appraisal.
(2) Subsequent appraisal. A subsequent
				appraisal is required in order to update the current value of the leased
				premises for purposes of identifying IV, if any. At least 60 but not more than
				90 days prior to the expiration of a lease, disposition or partial disposition,
				or at lessor's discretion including but not limited to at the time of a
				sublease or assignment, lessee at lessee's expense shall cause an appraisal of
				the trust land to be performed by a qualified appraiser and conforming to USPAP
				to establish the subsequent value of the leased premises (SV). The commissioner
				may require specific appraisal instructions, including but not limited to those
				described in Subparagraph (a) of Paragraph (3) below, and require that the
				appraiser be approved in advance. The state land office staff appraiser shall
				review the subsequent appraisal pursuant to USPAP Standard 3, and make a
				recommendation to the commissioner that the subsequent appraisal be accepted,
				rejected, or accepted with adjustments. The commissioner may set the SV
				consistent with the staff appraiser's recommendation or make deviations
				therefrom if appropriate based on the commissioner's exercise of reasonable
				judgment, documented in writing. The commissioner reserves the right to reject
				any subsequent appraisal.
(3)
				Adjustment for NA. Only the beneficiaries of the land trust are entitled to
				increased value resulting from NA. Accordingly, every planning and development
				lease must provide for one of the following methodologies designed to adjust
				for NA when determining IV:
(a) Appraisal
				instructions method. In addition to any other specific appraisal instructions
				required by the commissioner, each subsequent appraisal must be performed
				pursuant to the following specific instructions requiring two iterations of the
				appraisal:
(i) first iteration - the
				appraiser shall first appraise the disposition parcel for its present value
				considering only those improvements, if any, that were in place at the time
				that the base appraisal was performed; if the value that results from this
				first iteration exceeds BV as established by the base appraisal, this first
				iteration value becomes the BV of the disposition parcel for purposes of
				calculating IV; and
(ii) second
				iteration - the appraiser shall next appraise the disposition parcel at its
				full present value considering all present improvements; the value that results
				from this second iteration becomes the SV of the disposition parcel for
				purposes of calculating IV.
(b) Predetermined adjustment factor or other
				alternative method. Any methodology determined by the commissioner to protect
				the trust's interest in the value created by NA as opposed to the value created
				by lessee's improvements may be used, including but not limited to a
				pre-negotiated periodic adjustment factor included in the lease to be applied
				to the BV to account for the anticipated NA at the time of
				disposition.