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From Highest and Best Use To The Edge of Chaos Presenter: Steven Thair.

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Presentation on theme: "From Highest and Best Use To The Edge of Chaos Presenter: Steven Thair."— Presentation transcript:

1 From Highest and Best Use To The Edge of Chaos Presenter: Steven Thair

2 Appraisers' Model Appraisers are objective & independent Appraisal is a Science (and an Art) Our Method is: Study things in an objective and independent way Determine Highest and Best Use Estimate a fixed point value...At a fixed point in time Attributes of a property are inherent in the property, like market price and market value The Universe and land use are made up of well-fitted cogs. That is...

3 Appraisers' Model continued... If only we can get enough information we will get the right answers AND We will agree on our estimates. A parcel of land has properties inherent in it, like size, shape, building age, desirability -- like a nice view, and market value. Some properties are extrinsic to the land like air contamination, noise, or a recession.

4 Highest and Best Use Ancient HBU (1980): Most profitable use Classical HBU: An opinion of the appraiser as to which use is: Physically possible Financially feasible Legally permissible Maximally productive Neo Classical HBU AND considers political, environmental, governmental and social constituents

5 Problems with highest & best use1. The cogs fit poorly It's neither highest or best. None of the factors are ever optimalized Land use emerges from the interbeing of many constituents in ways that are competitive – even destructive – and cooperative, depending on what factors have your attention... But ALWAYS both competitive and cooperative

6 Problems with highest & best use 2. There's no intrinsic or extrinsic properties Where to look for a new model that more closely reflects reality? Look at the land more deeply. Land, like everything else, has not properties inherent in it. Like everything else, it is empty. Properties we attribute to land EMERGE and MANIFEST from a complex interaction or inter- being of many factors and forces, and none of them are in the land. e.g. zoning, frontage

7 Problems with highest & best use 3. Subjectivity Related to the fact that HBU does not function like cogs. Because people have different intererests, different points of view there is conflict The appraiser picks a point of view as well. To the extent the appraiser is not aware of what point of view she is picking, it is picked for her. e.g. Billiards, relativity, three appraisers e.g/ Sandy McNair presentationnot lowering rents

8 Most Probable Use obliges the appraiser to also consider: Uncertainty and Relationships between the constituents, including: Short term budgetary constraints, Short term labour & expertise constraints Habits and idiosyncrasies of the players Examples: the developer, the heritage society, and the banker There is Uncertainty in unclear zoning bylaws, uncertain urban plans, uncertain engineering design criteria

9 Problems with Most Probable Use While MPU recognizes the importance of the uncertain, it then sets that stuff aside The concept still relies on the notion of the universe is a clock MPU is still premised on objectivity

10 Other Problems with HBU & MPU Loss of credibility by tying to Science Failure to acknowledge Values Self interests – credibility, to get paid, to enhance my reputation, develop business, to provide a helpful service... to whom? Developers, bankders, consumers, my comunity, the market place, consumerism, capitalism

11 Summary of Problems We're not objective but we say we are We're not unbiased or value free but we say we are At best we have the same values as our clients The Universe is not a clock Highest and Best Use is not a clock Most Probable Use does not accommodate uncertainty, emergent behaviours or discontinuous change (in short, irrationality) Loss of credibility Failure to make values explicit

12 Post Modern Economic Model This model takes into account: environmental contribution Inspirational contribution Government intervention (an imperfection) Smith and Keynes didn't take any of these into account Contributors: Michel Baranger, Professor of Physics, MIT Andri Stahel, Professor of Political Science, Denmark Judith Innes, Professor of City Planning, Berkeley

13 Complex Adaptive Systems An outgrowth of chaos theory, fractals. Chaos theory is a branch of physics and mathematics that allows us to deal with uncertainty, subjectivity, and the interbeing of things. The biological world and the social organization of animals are exhibiting many similar characteristics when viewed from this perspective, giving rise to a model called Complex Adaptive Systems.

14 Complex Adaptive Systems cont... As the name implies, such systems can adapt to their environment and change their environment to suit themselves.

15 Complex Adaptive System Characteristics 1. Many constituents, some interacting in unexpected ways 2.These many constituents are interdependent 3.Interplay between Competition and Co-operation 4.Interplay of chaos and non-chaos 5.Discontinuous Change 6.The system exists or displays on many scales 7. Giving rise to emerging behaviour

16 Chaotic State: Proposition 13 In 1978, California voters supported a freeze on property taxes. The schools received the property tax. The state budget was funded by income tax. Local governments were given the sales tax. The freeze created more retail and less housing: local governments cannot afford to service new housing of any type, but they get sales tax revenue from retail.

17 Chaotic State: Proposition 13 continued... Freeze created legal and legislative gridlock. With local budgets inadequate, voters allocated 150% of the budget in a series of budget votes for parks, fire dept, police, etc. Freeze contributed to a regulatory gridlock where frequently new projects take four years to get literally dozens of needed approvals. Regulation has resulted in no development rather than better development –the exact opposite really, of what was wanted.

18 System exists on many scales System has many layers: Cells Tissues – muscle, bone, blood, nerves Physiological system – skeletal, nervous, endocrine Individuals – Tom, Dick, Harriet Family Units Businesses, Schools, Hospitals Community Eco-systems Planet

19 Many Scales – Land Use The portion of a shelf holding a pound of coffee The shelf in a grocery store aisle The store The whole mall The community AND The perspectives of consumer, grocer, mall owner, assessor, coffee grower.

20 Land Use is a Complex Adaptive System All the factors of Highest and Best Use can be accommodated in this new model All the factors of Most Probable Use can be accommodated The model recognizes the role of uncertainty The model recognizes the inter-connectedness of factors The model recognizes the importance of the relationships The mode recognizes both the cooperative and competitive interfaces between constituents

21 Land Use is a Complex Adaptive System continued.. The model accommodates the unpredictable and the surprising The model provides an opportunity to make effective interventions

22 The Edge of Chaos That zone, between chaos and equilibrium states where interventions will have an effect in the intended direction.

23 Implications of land use as a complex adaptive system Indicators of well being and performance Consensus Building Dialogue New Leadership -- collaboration New Follower-ship --our expectations of leaders Letting things go if they are in the chaotic or the equilibrium states Trying to see situations as in the Edge of Chaos – like a rummy hand.

24 Indicators of Well-being & Performance 2-3 broad Indicators that reflect the central values of concern to metropolitan players Economic performance with a green measure Performance measures on particular aspects A street system, water resources, social services Sandy McNair supply and demand analysis of office space Jeannette Hanna : Speed is essential. There is a huge potential beyond point in time valuation Rapid feedback indicators Traffic flow as on the QEW How much does it cost to water your lawn?

25 Consensus Building Dialogue Multi-stakeholder consensus-building processes They are complex adaptive systems themselves Self-organizing, decentralized, inventive Continuing dialogues of those who are in a position to change the system When to intervene, how to intervene Measure results and respond appropriately

26 New Leadership Leaders in a world of complex uncertainty have vision and focus. They translate this into menaing and communicate meaning Systems thinking – seeing things as wholes Personal growth Sharing models, Building shared visions, Instead of identifying answers and pushing through agendas with a few advisors

27 New Leadership......leaders assist participants in developing a comon sense of values and purpose Instill a sense of empowerment Encourage self-organizing

28 What's it all mean for appraisal?

29 Emerging Use Emerging Use or Manifesting Use are terms that remind us that we are commenting on a never- ending process. The terms also inform us that land use is not inherent in the property, nor is it extrinsic Rather, whatever use has arisen (and will arise) is the consequence of the causes and conditions that exist at that moment The appraiser has the insight to make a prediction about whether in broad terms, the use will be the same or different in the near future.

30 In the end... We each come back to our own model of HBU or MPU We come back with a greater sense of uncertainty about what will happen at a parcel of land BUT with a comfort about that uncertainty We come back with a fresher view of the world around us

31 In the end... We come back with a sense of re-cognition of our role in the land's use – that we affect land use in many ways – affecting decisions that developers and bankers make, buying or not buying the coffee of the grocery shelf, choosing to shop at a large grocery store or a specialty shop

32 A Puzzle... What's the connection (if any) between Complex adaptive systems, and better communities through indicators of well-being, consensus building and new leadership ON THE ONE HAND And- Land use, our notions of HBU and MPU and land use being a complex adaptive system ON THE OTHER HAND?

33 A link:Value in Use One thing appraisers have always done right and done well (and contrary to classical economic theory ) was look at value in use. Or, as we call it, highest and best use.

34 A link Our traditional inquiries in to value in use is a connection to the values that the community believes in and lives by.

35 Quiz: Who said it? Use value is the utility of a particular object. Use values constitute the substance of all wealth, whatever may be the social form of that wealth. Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life. We value Canada (the double entendre)



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