Klamath dams: Real estate repercussions?

Siskiyou County Assessor Mike Mallory recently got his first look at the U.S. Department of the Interior’s (DOI) “Iron Gate and Copco Dams Removal Real Estate Evaluation Report.”

Mallory presented the findings to the Siskiyou County Board of Supervisors at its meeting on Tuesday.

Bender Rosenthal, Inc., a Sacramento-based real estate appraisal firm contracted by the DOI to produce the report, has estimated loss of real estate value at $2.7 million resulting in a tax roll impact of $2.2 million, according to the report.

Mallory said that those value losses would translate to a $22,000 loss of annual tax revenue. Mallory feels that these numbers are gross underestimates and the “entire appraisal process was geared toward a pre-determined outcome.”

“This was a very deceptive process,” Mallory told the Board of Supervisors on Tuesday.

“I met with representatives of Bender Rosenthal, Inc. and the DOI for several hours in June of 2010,” Mallory told the Daily News on Wednesday. “I told them, ‘the office is open to you,’ and we waived the normal fees.”

At the supervisors’ meeting County Council Thomas Guarino said, “It appears that they ignored the volumes of materials given by the county regarding devaluation.”

Both Mallory and Guarino said they felt the scope of the appraisal was intentionally structured to reach a predetermined outcome of minimal economic impact.

According to Mallory, one of the most glaring flaws of the appraisal was the “failure to include the loss of value to structures and improvements to properties.”

The report’s transmittal letter from Bender Rosenthal to the DOI states that water frontage and reservoir views were the “primary value influences.”

“Since these value influences or enhancements are directly attributable to the land component of the real property interest and not to the improvements component, it was determined that it would be unnecessary to evaluate the combined house/lot interest,” the letter stated.

The letter also states that the Statement of Work (the document that the DOI used to establish the scope of the appraisal process) requires a “before” and “after” valuation analysis. The “after” scenario includes the hypothetical condition “that the land which is under the lakes has been restored to its native condition,” the letter stated.

“This assumption of a fully restored condition completely overlooks the interim time period when there are vast mud-flats where the lakes used to be,” Mallory said. “That is going to have a negative affect on property values in the area until the long-term goal of restoration is achieved.”

“The Iron Gate and Copco Dams Removal Real Estate Valuation Report” is part of Secretary of Interior Ken Salazar’s Secretarial Determination process. Another part of that process is the DOI’s Draft Environmental Impact Statement and Report, which was made publicly available on Sept. 21 at http://klamathrestoration.gov. A press conference regarding the report’s findings will be held Thursday. Look for coverage of that conference in the Daily News.