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Wednesday, November 14, 2007

For what it's worth

We've gotten ourselves on quite a few e-mail lists in connection with writing this blog. One such list brings us electronic announcements of most of the City of Portland's solicitations for bids on contracts. It's amazing how, despite the city's large bureaucracy, it still has to farm out tons of work to private firms. We seem to get one or more bid notices from the city every business day.

Yesterday we got one that seems fairly run-of-the-mill, until you take a look at the fine print. It's from the city's Water Bureau. They say they're looking to hire a real estate appraisal firm to be on call for various valuation tasks that might arise. The idea is that the outside firm will be standing by to whip out an appraisal within 10 calendar days whenever somebody from the Water Bureau calls.

Doesn't the city already have in-house people who do this sort of thing? Shouldn't it? But even if one concedes that there's a need for third-party appraisals, nonetheless a few aspects of this request for proposals seem unusual.

First, the call for bids seems awfully rushed. Dated yesterday, the proposal also gives yesterday as the deadline for submitting any questions that a prospective bidder might have. I got my copy of the notice just before 10 a.m. Is it really good practice for the city to leave just six working hours for questions?

Then there's the description of the work itself. Here are the situations in which the city says appraisals might be necessary:

The PWB from time to time, receives offers to purchase lands or may receive gifts of land. PWB will need appraisal services for the purpose of purchasing land or to determine the value for the purpose of estate taxes of those lands that are donated to the PWB.
I can see that the Water Bureau might need an appraisal before deciding to sell real estate... but hey, wait a minute, exactly what real estate does it having lying around that it thinks is suitable for being sold off? Is this another one of those Parks Bureau situations, where people are skulking around plotting to sell city land without adequate public consultation?

And as for appraising donated land, why should that the be the city's responsibility? Why are we taxpayers paying to appraise property for purposes of some wealthy donor's estate tax return? If someone is being all that magnanimous, he or she (or the estate, if the donor's dead) ought to foot the bill for the appraisal.

And if purchases and gifts are the two contexts in which the valuation work needs to be done, the description of the work that's supposed to be performed doesn't make a whole lot of sense. It includes the following:

Economic research and analysis: evaluate the accuracy of claims for compensation for the loss of the real market value of real property due solely to the imposition of specific regulations; conduct independent economic evaluations and general estimates of the relative values of real property under specific regulatory conditions, isolating to the fullest extent practical the specific impacts of specific regulations; provide licensed or certified property appraisals of real property with and without the imposition of specific regulations....

In addition to those items required within the self-contained appraisal report, the following items shall be included within the report:


This statement shall include the property parcel number, name of property owner of each interest being evaluated, estimate of damages for each property owner, the total amount of damages appraised if any, date of the appraisal, and the signature of appraiser preparing the report, (not a facsimile or reproduction). This statement shall precede the letter of transmittal.

Sounds like there's more going on here than straight-ahead sales and gifts. It sounds like condemnation (or so-called inverse condemnation) work. The conflicting descriptions of the scope of the work are troubling.

Whatever the task really is, proposals are due next Tuesday afternoon. There are many appraisers in town who might be qualified and interested, but given the odd features of the announcement, one might infer that a contractor has already been selected, and that the bid process is mere window dressing. Ladies and gentlemen of the Water Bureau, say it ain't so.

UPDATE, 12:54 p.m.: Somebody noticed this post.

Comments (8)

They are paid $75,000 to be 'on call' ??

How many transactions will take place in a 52 week period to warrant being paid $1442 a week?

Based on the history, it would probably be better if they had an "independent" appraiser to look at properties. However, in reality, the appraiser knows for repeat business, he shoudl tell the Water Bureau what they want to hear.

The convoluted nature of the work description seems, to me, to be designed to have only one "qualified" firm / individual bid.

It looks to me like the typical perversion of Portland's purported "openness". Somebody with close ties to the Water Bureau is, IMHO, getting a "Christmas present."

It will be interesting to see who bids, and who is selected, and who had what prior dealings with the H2O folks. Public records request time. =:]

Also, Jack, I don't see it as appropriate for either the H2O folks or the ity as a whole to have staff appraisers who are full time employees. First, for he City of Portland (CoP), as opposeed to Mult. Co. (or an other County) there just isn't that much appraisal work.
Second, appraisals almost always wind up in contested hearings either in Tax Court or elsewhere, and having a true independent third party appraiser lends credibility to an appraisal that CoP wouldn't get from an employee / staff appraiser.

And no I am not now nor have I ever been in the appraisal business, nor am I related to an appraiser, s I am not trying to make work for appraisers.

I read this as being about now only condemnation (or maybe Mt. Tabor?), but also Measure 37/49 claims. That could partly explain the short turnaround.

My suspicion is that the reason to have a somewhat devoted or captive appraiser is so that (a) the City wouldn't have to do a bid process every time it needed an appraiser, and (b) if the market turns hot again, the City could force itself to the front of the appraiser's line (which in a hot market, can be a long line). I agree that the short timeframe is disconcerting, and I would hope that interested appraisers would bring that up, and ask for an extension of time to bid.

Who would donate land to the Portland Water Bureau?

I wonder if Washington Mutual's problems with an approved list of appraisers would have been solved if only they had put out a bid to let the appraisers restrict their numbers via a similar kind of contract?

Next thing you know, our designated professional appraiser can become an elected position just like the auditor, so as to assure "independence." As the home owner equity position continues it's strategic slide from 1980 onward there will be no market other than for debt, and increasingly funny appraisals . . . based solely on capacity to repay such debt, like any asset in a bank. (Glorified renters is all we are. But only a critical economist would examine it in such a way. Wage deflation continues at a rapid rate, by design.)

I still think an argument could be made that a higher quality -- supportable by an economist -- "intrinsic" valuation could be obtained from taking a 1995 market value appraisal and then adjusting only for the delta in private sector wages of the owners/"debtors" over time. This is of course applicable only to residential housing, but that is what is substantially relevant to deriving the limit in public indebtedness.

I'd like to query the bidder on their knowledge of the money supply. This is an open ended question that can be answered by way of a twenty page essay to be reviewed by economics professors at each of three separate higher education institutions.

If you, the bidder, are concerned with credibility then post here for appropriate grilling by the local masses.

I'm sure there's a perfectly rational explanation for this bid solicitation - after all, it's from the government.

Maybe if Commissioner Leonard can take time out from his spray paint stings he'll grace us with an explanation.

****They are paid $75,000 to be 'on call' ??

How many transactions will take place in a 52 week period to warrant being paid $1442 a week?*****

Probably the $75,000 is the maximum that can be spent under the contract. In other words they get paid ony if they do appraisals to a maximum of $75k. Also it would be not uncommon for more than one bidder to win a contract like this. That way the City can always have some one on call to do the work.

As to the rest of Jack's questions maybe Water Dave can answer them.

Greg C

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