"I was wondering if this was common for agencies to do and if it impacts the value of the gun."
Yes, KentuckyBlue, it is common and someone will usually come along and pay a small premium for that.
It's different if it's a limited edition "commemorative" - with the agency name and logo stamped on the sideplate - those usually come in presentation boxes (or did originally) and they will trade 75% or more above a similar condition plane-jane.
A duty gun is different - there are those who like them because they believe "carried a lot, shot little." Other fear they've had too much range time with big magnums. Frankly, you gotta look at each gun and see the wear and tear. If it's a 95% or better gun, it should fetch a small premium over a plane one. If it's a "beater" (or, "shooter" for those who like to be overly polite and follow the PC crowd), then it will likely price about the same as a similar "civilian" gun.
These are the general patterns I've seen with S&W wheel guns over the years; there are always exceptions since humans are involved.