Review of Land Purchase for the Replacement Hospital in Louisville, Kentucky

OIG reviewed VA’s appraisal process in support of land purchased in Louisville, KY. We determined VA’s Office of Acquisition, Logistics, and Construction (OALC) conducted two appraisals of the property in December 2010 and in February 2012. The first appraisal valued the property at $9,850,000. The second appraisal valued the property at $12,905,000. However, OALC did not obtain a required review appraisal, conducted by an independent third party, necessary for determining the appropriateness of the two appraisals prior to purchasing the land for $12,905,000. Instead, VA obtained the review appraisal at a cost of $2,477 nearly two years after the property was purchased. Spending $2,447 for the review appraisal was a waste of the taxpayers’ money since the sale was complete and no further action could be taken based on the review appraisal. As a result, VA may have overpaid more than $3 million for this property. Furthermore, OALC misrepresented information provided to the HVAC regarding the 31 percent increase in market value. OALC reported the analysis of highest and best use of the property was revised from residential to mixed-use development. This was contrary to our findings, as both appraisals state that the highest and best use of the property would be for mixed-use development.