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HomeMy Public PortalAbout1991.05.29 Market Value Appraisal - Parcel #2PARCEL SITE DESCRIPTION CONFIGURATION AND SIZE As may be noted on the facing plat map, subject Parcel # 2 is a rectangular parcel of irregular shape. According to the legal description provided by the client, the parcel contains about 0.488± acres (21,257 ± sf). It is noted that the parcel's legal description includes the right-of-way of Eagle Drive. At the request of the client, this analysis is based on the parcel's size and condition prior to the development of Timberlost VI Subdivision. However, from a practical standpoint, the parcel's size is realistically less than the described area; by the right- of-way of Eagle Drive. The parcel's southern boundary is approximately 335 feet in length along Wooley Way and is widest at its western end (74.73 feet) where it fronts the tee box of the 1 lth hole. The parcel averages this width (74.73 feet) for most of its length, but narrows at the eastern end of the parcel to about 34 feet in width at its narrowest point. As indicated, the land area within the Parcel # 2 contains approximately 0.488 acres, or 21,257 square feet. Removing the area of Eagle Drive reduces the parcel's area to approximately .444 acres, or 19,359 square feet. TOPOGRAPHICAL CHARACTERISTICS Based upon a physical inspection, the subject parcel is level near grade with the 1 lth tee box, but slopes gently up to the base of the 10th green of the golf course at the parcel's eastern end. As developed, the parcel is substantially below Wooley Way and would require a sloped drive from the parcel to Wooley Way for access, similar to the way in which Eagle Drive was developed. The parcel has a light to medium tree cover, and offers a limited golf course view due to its low lying topography below the 10th green, and its overall site orientation to the golf course fronting the 11th tee box. Soils conditions appear to be typical of the immediate area, comprised of a sandy/gravelly soil, with several large rocks noted on the parcel, or in the general vicinity. While no developmental restrictions due to soils conditions are known to exist, no soils tests have been provided to Real Estate Consulting Group, Inc. regarding the subject, or any other property(s) in the area. REAL ESTATE CONSULTING GROUP, INC. • 62 GOLF COURSE EXCHANGE PARCELS UTILITIES AND EASEMENTS From my investigations, today the subject parcel has public electricity, sewer, water and telephone service available to it along Wooley Way and Eagle Drive. While a Preliminary Title Report on the subject parcel has not been provided to Real Estate Consulting Group, Inc., known easements of record include a cart path access in favor of the city. The cart path traverses almost the entire parcel from one end to the other, providing golfers access between the 10th and the 11th holes of the golf course. Additionally, it is typically the desire of utility companies to allow for the greatest possible flexibility when initiating feeder distribution lines so that no developmental restrictions result. This possible limitation is noted, and should be verified if of further concern. At the request of the client, no consideration is given to the location of the existing cart path easement, as it can theoretically be re-routed over the parcel to allow for development of the parcel to its Highest and Best Use. However, from a practical standpoint, a cart path easement through, or fronting a parcel, is less than desirable as compared with those parcels which do not have such an easement. ACCESS AND VIEW The subject parcel has developed road access via Eagle Drive off of Wooley Way, which connects to Davis Avenue providing year around access to downtown McCall and the Interstate Highway System. Stated road access is publicly maintained by the City of McCall. As indicated, the subject parcel borders the golf course along its east and west boundaries offering frontage on the tee box of the 1 lth hole, and adjoins the green of the 10th hole (albeit substantially below the elevation of the green) of the McCall Municipal Golf Course. However, while the parcel does offer golf course frontage, said frontage is not as desirable as other golf course lots which have superior orientation and topography in relationship to the golf course. Therefore, the subject parcel would not be expected to achieve the price levels of the majority golf course lots analyzed in this analysis. REAL ESTATE CONSULTING GROUP, INC. • 63 GOLF COURSE EXCHANGE PARCELS DESCRIPTION OF IMPROVEMENTS The parcel is unimproved, with the exception of utility extensions and Eagle Drive which bisects the parcel. At the request of the client, the existence of Eagle Drive has not been considered within the scope of this assignment. Therefore, the parcel is being valued as though vacant, prior to the removal of any trees and natural habitat which were removed to allow for the development of the above noted roadway. REAL ESTATE CONSULTING GROUP, INC. • 64 GOLF COURSE EXCHANGE PARCELS TAKEN BY: TK SUBJECT PHOTOGRAPH; PARCEL #2 MAY 29, 1991 View of subject Parcel # 2 from the tee box of the 11th hole looking east along Wooley Way. TAKEN BY: TK SUBJECT PHOTOGRAPH; PARCEL # 2 MAY 29, 1991 View looking west of the east end of subject parcel # 2 from Wooley Way. Note: Eagle Drive bisecting Parcel # 2 and connecting with Wooley Way. REAL ESTATE CONSULTING GROUP, INC. • 65 GOLF COURSE EXCHANGE PARCELS TAKEN BY: TK SUBJECT PHOTOGRAPH; PARCEL # 2 MAY 29, 1991 View looking south toward Eagle Drive over Parcel # 2 from Lot 14. TAKEN BY: TK SUBJECT PHOTOGRAPH; PARCEL # 2 MAY 29, 1991 View from Lot 14 over Eagle Drive toward the east end of the subject parcel. Note: Sloping topography up to the 10th green on the left side of photograph. REAL ESTATE CONSULTING GROUP, INC. • 66 GOLF COURSE EXCHANGE PARCELS TAKEN BY: TK SUBJECT PHOTOGRAPH; PARCEL # 2 MAY 29,1991 View of cart path over Parcel # 2 through the approximate center of the parcel. View taken looking west from Eagle Drive; Wooley Way on left side of photograph. TAKEN BY: TK SUBJECT PHOTOGRAPH; PARCEL # 2 MAY 29,1991 View of Parcel # 2 looking southwest toward the tee box of the 1lth hole. REAL ESTATE CONSULTING GROUP, INC. • 67 GOLF COURSE EXCHANGE PARCELS HIGHEST AND BEST USE In common appraisal practice, the concept of highest and best use represents the premise upon which a value estimate is based: The highest and best use of a specific parcel of land does not depend on subjective analysis by the property owner, the developer, or the appraiser; rather, highest and best use is shaped by the competitive forces within the market where the property is located. Therefore, the analysis and interpretation of highest and best use is an economic study of market forces focused on the subject property. Market forces also shape market value. The general data that are collected and analyzed to estimate property value are also used by the appraiser to formulate an opinion of the property's highest and best use as of the appraisal date. In all valuation assignments, value estimates are based on use. The highest and best use of property to be appraised provides the foundation for a thorough investigation of the _ competitive positions of market participants. Consequently, highest and best use can be described as the foundation on which market value rests.8 The determination of highest and best use is the result of the appraiser's judgment and analytical skill. The reader is cautioned, however, that highest and best use of a property is not necessarily its most likely use. Furthermore, the use determined from analysis represents an opinion, not always a "fact" to be found. Highest and best use can be defined as: That reasonable and probable use that will support the highest present value as of the effective date of the appraisal. Alternatively, that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in the highest present land value.9 The definition immediately above applies specifically to the highest and best use of undeveloped land. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. 8The Appraisal of Real Estate, Eighth Edition, American Institute of Real Estate Appraisers, 1983, p. 270. 9The Appraisal of Real Estag, p. 214. REAL ESTATE CONSULTING GROUP, INC. • 68 GOLF COURSE EXCHANGE PARCELS In practical application, the determination of highest and best use of a property is analyzed, both as vacant, and as currently improved, subject to the following four criteria: "The highest and best use must be 1) physically possible, 2) legally permissible, 3) financially feasible, and 4) maximally productive."10 1. Physically Possible,: Considers what uses are possible or are prohibited for physical reasons. Elements such as size, shape, assemblage, soil, topography, grading, and availability of utility hook-ups are considerations in this realm. 2. Lally Permissible: Considers what uses are possible in terms of such considerations as laws, codes, environmental regulations, long term leases, deed restrictions, and the possibility of changes in zoning. - 3. Financially Feasible: Considers, among uses that meet the first two criteria, which uses are likely to produce an income or return greater than the amount needed to satisfy operating expenses, financial obligations, and capital amortization. All uses that are expected to provide a positive return are regarded as financially feasible. 4. Maximally Productive: Considers which use, among the feasible uses, will produce the highest net return or the highest present worth.11 The number of property uses are usually limited by the market to a few logical choices. Each of those choices is then analyzed according to the above criteria, considered in sequence. Only when a possible use meets a lower level criterion should consideration progress to the next level. Following is my opinion of the Highest and Best Use of Parcel #2. HIGHEST AND BEST USE, AS VACANT The subject parcel is approximately one half acre in size and has an elongated, rectangular shape, with some narrowing of the parcel at the parcel's east end. As such, the parcel's physical characteristics are considered to be somewhat limiting to the potential use of the parcel, of those uses which might be considered as of appraisal date. The subject parcel is located within the Medium Density Residential Zoning District B, within the City Limits of McCall. As discussed in the Zoning Section of the report, the 10I'he Aporaisal of Real Estate, p. 274. 11The ADnraisal of Real Estate, pp. 274-276. REAL ESTATE CONSULTING GROUP, INC. • 69 GOLF COURSE EXCHANGE PARCELS average minimum lot size in this zoning classification is the same as District A, or 10,000 square feet. Considering such, it would appear that the subject parcel could theoretically only be developed with two single family residential lots within this zoning classification, or four multifamily units, if a higher density use proves to be more feasible. However, as discussed above, the configuration of the parcel is somewhat limiting and may necessarily restrict the improvements orientation on the site, which would be more restrictive to a higher density use. Reasonably considering the parcel's size and narrow configuration, high density residential use of the site is not one of the uses of the parcel which might reasonably be considered as of appraisal date. Additionally, the feasibility of such a use of the site is questionable at this time. While demand for this type property has recently been increasing from the obvious over -supply of just a few years ago, available supply is still believed to exceed existing demand levels as of appraisal date. This is especially so of the more marginal, less desirable sites which are available. Single family residential development of the parcel would allow for further subdivision of the parcel into two (2) single family residential building sites of around 10,000 square feet each. Considering the narrowness of the parcel and available access off of Wooley Drive along the southern border of the parcel, improvement siting would appear to be much more conducive to single family residential development. While a multi -family project could be oriented toward Wooley Way, the desirability of being located on the golf course would be substantially diminished. Therefore, considering the above factors and conditions, it is my opinion that the Highest and Best Use of the parcel as of appraisal date, is for subdivision of the parcel into two single family residential building sites. REAL ESTATE CONSULTING GROUP, INC. • 70 GOLF COURSE EXCHANGE PARCELS PARCEL VALUATION Not all of the comparable sales presented have been directly compared to the subject parcel in developing an opinion of this parcel's market value. However, where applicable, all have contributed in the development of reasonable adjustments and estimates, which in turn have been factored into the analysis presented. Comparable Sale #'s 1, 4, 5, 10, and 13 were considered to be the best direct comparison to the subject parcel, of all the sales considered in the analysis, in developing retail lot values for the two lots which are possible for development within the parcel. These sales develop the following time adjusted square foot value indications, before making any additional adjustments which may be required for various differences in property features between the subject and the comparables. Sale # 1 $3.02/SF Sale # 4 $3.43/SF Sale # 5 $3.96/SF Sale # 10 $3.92/SF Sale # 13 $2.61/SF The above time-adiusted golf course lot sales range in value from a low of $2.61 per square foot to a high of $3.96, with a general trending between $3.50 and $4.00 per square foot. All of the five sales presented sold in 1990, except one which sold at the beginning of 1991, indicating an active market for golf course fronting recreational sites to this point in time. The upper end of the square foot value range is represented by Sale #'s 5 and 10 which are wooded golf course lots of 10,000 + square feet in size. Sale # 5 has reasonably level topography and frontage on the fairway of the 1 lth hole, which is considered to be superior to that offered by either of the two subject lots. Comparable Sale # 10 is a sloping parcel, but also has generally superior golf course frontage as compared to the subject. These lots are believed to set the upper end square foot value limit for the subject parcel, as divided into two individual lots. The lower end of the square foot value range is depicted by a larger than normal golf course lot (Sale # 13), which has an irregular shape and low level to sloping topography. This lot also has frontage on the golf green of the 10th hole, similar to the subject parcel, but the sale parcel is considered to have a superior view amenity of the green. Comparable Sale # 13 is a larger lot with low level topography in portions of the site area. As such, this sale is believed to set the lower limit of square foot value for the subject parcel. REAL ESTATE CONSULTING GROUP, INC. • 71 GOLF COURSE EXCHANGE PARCELS The upper middle end of the range is represented by Sale # 4, which is located just north of the subject parcel and offers a slightly superior golf course view amenity as that available to the west end of the parcel. This sale included the purchase of two golf course lots to a single purchaser, and therefore should be a fair representation of the anticipated discount which might be expected for the subject parcel. However, the subject parcel actually has an inferior shape as compared with this comparable, and the east end of the subject parcel is an inferior lot as compared with the two fronting lots within the sale property. Comparable Sale # 1 is physically located across from the west end of the subject parcel and is slightly larger than the average lot anticipated from the subdivision of the subject parcel. Additionally, like the subject parcel, this lot is substantially below grade with surrounding roadways. Therefore, Comparable Sale #1 is considered a fair indication for the square foot value anticipated for the subject parcel. Based on the foregoing discussion and analysis, it's my opinion that the subject parcel would likely be developed with two single family residential golf course lots which would require a simplified subdivision of the parcel. It is possible that a single user would purchase the lot for the purpose of having an oversized lot, similar to the planned use of Comparable Sale # 4, but such use is less likely to occur because of the subject parcel's elongated shape. As such, most consideration in developing an opinion of value for the subject parcel is given to the indication of value represented by Comparable Sale #'s 1 and 4, with additional support from the other sales presented. This develops the following estimate of market value in Fee Simple Title for subject Parcel # 2, under the conditions set forth above, as of May 29, 1991: 21,257 Square Feet x $3.25/SF = $69,085 Considering the practical reality that the parcel is encumbered with a cart path easement which affects its market appeal, and that Eagle Drive divides the parcel effectively reducing its area by approximately 1,898 square feet, a square foot value at the low end of the range of the comparables presented is believed most applicable under these circumstances. This develops the following estimate of market value in Fee Simple Title for subject Parcel # 2, under the conditions set forth above, as of May 29, 1991: 19,359 Square Feet x $2.65/SF = $51,301 Because of the unique circumstances surrounding this appraisal assignment relative to the contemplated land trade, as has been discussed herein, the value for subject Parcel # 2 is REAL ESTATE CONSULTING GROUP, INC. • 72 GOLF COURSE EXCHANGE PARCELS