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Home My WebLink About15.D.2. Public Works Building Master Plan Contract IS .0. J. CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Public Works Building Master Plan Contract DATE: October 2, 2003 INTRODUCTION: The Council is asked to continue consideration of the award of a contract to Oertel Architects for master planning the Public Works site. BACKGROUND: At a workshop held September 30th, the Council heard Public Works Director Loney and Architect Jeff Oertel discuss the need for a master plan for the Public Works building and exterior storage. One key element of this discussion was whether the approximately four acres comprising the current SPUC headquarters building would be available. Council was advised that an appraisal had been performed, and I indicated that I would talk to Lou VanHout, SPUC Director, to see if that was ready to be shared. Copies of the two appraisals were provided Thursday-one is for a parcel located on former railroad right-of-way to the south ofthe Public Works fenced storage yard, and the other is for the 3.905 acre portion containing the SPUC building. Both ofthese are part of a larger 12.75 acre parcel owned by the City, which also includes the Public Services building. In the interests of conserving paper, the Council has been provided with the portions of the documents which contain information relating to the value and rationale for reaching the value. Should a complete copy of the appraisals be desired, please contact the City Administrator's office. VALUE DETERMINATION: As shown, the value as established by Patchin Messner Appraisers for the "remnant" parcel south of the storage yard is $50,000. The value of the 3.905 acre parcel containing the Headquarters Building is established at $800,000. However, it is important to note the discussion of "highest and best use", which begins on page 20 of the appraisal document. In that, the $800,000 assumes that the building will be able to be used "as is" for B-1 zoning. It could only be utilized "as is" by another similar public utility user (i.e.; Time Warner Cable, Reliant Energy). Given the very narrow scope of possible buyers, the appraisal states that the building could be on the market for up to 36 months before a buyer is found. That will reduce the net present value of the $800,000. Other uses allowed under the B-1 zone include retail, office, or a similar use. However, to change uses would mean that structural changes would need to be made. (An earlier review of the building's condition during a space needs analysis indicated that no modifications could be made without reinforcing modifications and other structural changes to bring it up to code.) Those would be expensive, and would reduce the net proceeds of the sale to SPUC significantly below the appraised $800,000 amount. Finally, the appraisal indicates that no consideration has been given to the possible diminution of value that might result from the costs needed to cleanup potential contaminants. While no survey of which I am aware has taken place, the building is of such an age that asbestos was possibly used during construction, and there have also been concerns raised as to the possible presence of PCB's. OWNERSHIP: In answer to a question raised by the City Council at the September 30th meeting, ownership ofthe SPUC headquarters property technically remains with the City of Shakopee. Most other SPUC parcels (substations, well fields, etc.) were quitclaim deeded from the City to SPUC in 1998. However, the current headquarters building was specifically omitted from that action. ACTION REQUIRED: The purpose of this memo is to advise Council of the appraisal and ownership status. Action relating to the master plan study is recommended under separate cover by Public Works Director Loney. Mr. Van Hout is providing the SPU Commission with copies of these appraisals, and it is likely that this will be on the October 6th SPUC agenda. Actions or recommendations resulting from that meeting will be provided to the City Council. Mark McNeill City Administrator MM:th ":l lOt 0;2- I CITY OF SHAKOPEE Memorandum TO: Mayor & City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Consider Proposal for Architectural Services for the City of Shakopee Public Works Department Building Expansion DATE: October 7, 2003 INTRODUCTION: Attached to this memorandum is a proposal from Oertel Architects to perform architectural services for a master plan for the Public Works Department building expansIOn. BACKGROUND: At the September 30, 2003 City Council work shop, the City Council did discuss a proposal for architectural services from Oertel Architects on the Public Works Department expansion project. At this meeting staff did present two alternatives for the expansion for the Public Works building, one being to expand the existing public service building, as recommended by JEA Architects, on the space needs study or to include the Shakopee Public Utility Commission (SPUC) building site for possible demolition and reconstruction of a new public works building. In order to properly estimate costs and conclusion of the study, Oertel Architects was requested by staff to prepare a proposal for City Council to consider and prepare a master plan for the Public Works building project. In this proposal, the study has three components as follows: . Master planning of the site for Public Works $5,500.00 . Master planning ofthe site for Public Works and Engineering $ 800.00 (Additional) . Tlrree D color model of the final master plan $1,200.00 In reviewing the proposal from Oertel Architects, City Council did wish to hear ft.'om SPUC on the appraisal that has been prepared on their site. SPUC is meeting on Monday, October 6th , and information brought back from this meeting will be presented to the City Council on Tuesday, October ih, for further consideration on moving forward on the master planning proposal for the Public Works Department. ALTERNATIVES: 1. Authorize the appropriate City officials to execute an agreement with Oertel Architects for the master planning of the Public Works Department expansion. 2. Do not authorize the agreement at this time. 3. Table for additional information. RECOMMENDATION: Staff would recommend Alternative No.1, as preparing a master plan will assist the City Council in determining which option they wish to proceed and at what cost to have included for a future public hearing on this project for future bonding. Council should indicate what components ofthe study they desire to approve. ACTION REQUESTED: Authorize the appropriate City officials to execute an agreement with Oertel Architects for architectural services associated with the City of Shakopee Public Works Department building expansion. ~~ Bruce Loney Public Works BUpmp ARCHSERVICES ,i:',:........... ....\,<:" ',">.., .:. i.'.:.... ...'., . ..:.... >. ......;\.', ..,' ...._: .,. '., .,..........'. ...... ~.. .....', ........,':'~,.::. '<'.) :... ...... ..' ...' .},.. i'- :....'.......'... . '.,':,.,:'. ,>.','. ,,' '.:':OERT'ELARCHITEC~TS ,'.." ',', " .,.". '...: . ,'. 1795 SAIwi.CLAlRAYENUE; ~AiNT.PAoL; MNS~10S," . ".....,: ; . 'TEL:'6S1i696~SI8'6.' ',..~..". ,." .'. ," ,<: .... ' :'. ..'.. . fAX:6Slf696~5i88 ':. , ,,:,' :.; . . ",." , , . . .... '" . .. ' M '. . Septe~ber 2~, ?003' '. '. . .. ~ ~ ' . . .', Mr. B~ce Loney, Public Wo*s riit~ct6r '.' '. " " . ,City of Shako pee: Pu~lic, W~rks l>epartPlent .. )29 South Holme~ S1;reet' : .... . ' . . . . ,,"Shako~e~;:~.~'5~79.., ..,." . . .' " " .. . . '. " ',' R~{ :,'.,. . Propo~at f~r Mcl;itectufal Servic~s '.' " ..:........, ..,'" . . .' . , . ". . :'.,. . CitY Of Sh~ope,e PubUc :Works .Department ~ansion . '. . . -, '. . . . . . . ~:. " '., ..' . . . . . . . ..: ,', . Dear'Mr. Loney,' '. ' :. ' . '. ' . :: ", " .' . .... . l .". . '..:.:', . .. " ' :. .': .' '.:' ...: '. "", , :., . . '. " '. .' .. .' '. . '. : , . '.'''-: '-.: :p'er'your,~equestto'pro~~e~xpan.!ied pJaDhingand design'sefVices,:~:iS a ptoPo'sai for 'seri1~es':' . . ' . .:, 'and assocmted .cqsts' hi prepari1jg the . expan(Jecl' master plan.for the"combined 'public works and: ., .... ,;,' .. '.: '''. 'S.P;U.C. building sites. 1~acceptable, ~ a~cuineni wol.j.I4's'erv~'as a'namendtnent to'our existing",> " . :.. . cOritti!ct fOJ: the ,renovation of the builciU1i and sait storfige ,building' work.' ':': . ,:, .. . :.:. .". ',..:..' :, " ... .. . .' ..0000~'SC~1"'o~~rkfo;~publil: wor~.~xPailsio;;,n,;~ inc~~~~o~r;;~~Ofj1JSt ....... ,.... . . . ,..'. the:public work~ site to e~e.tha(the expailSion would'workv0tb:;tl1e lqngtenn uSe of the. :, " , , :' existing public works 'site.', The current request for sernces incorporates'the publi~.utilides site. . . .,', .' ~TbiS site'and. bl.1i1d~g, com~ined .i1th the 'exiStirigpublic .works site, proVides fo'rsome very' ..,. :'. ':mteresting' and worthwhile 'opp6rtunities~:short teni1'~d'kmg terra ,In'~diticin,there. was a' ." . requestto prov~de' an option :16' move the engineeringdepartnientto the'. site andcoIi1b~e.With .. . public works op~ratiol1B.:.' '.' .' ' '.. . '.' . , . In all, 'we il?ticipate-th~tthere will be approximately fourme~tings with'staff~d tWo ,council meetings. dUl;mg th~.process. Further; we woUld prepare several planning options showing' posslbleusesofihe site and the'means of providing the' iJublicworks department with a hew or . expanded facility: Once tIie preferred pIan is selecte,d, we wouldprepare amast,er plan.o.fthe'site which wouldinc1ude a short term and a .long term plan. '.' . ."... . .... , .' . 'A report would also'.be'provided that would outline the s~ope, estun~ted costs and conclusions ~f . " our stl.1dy.Wewould include copies of the reduced ma5terplans~ shoWing the short term and , . l~)]lg terin building and site la:youts~ and ,include this within this report. We Will also provide you with larger format plans as well. ' . '. Note that there are two optional tasks that you can consider. :One is the inclusion ofthe plarining department within the expansion plans. We anticipate two additional meetings for this task, along with the associated planning. Second, we could provi4e a 3D colored model ofthe site with' capabilities of providing images from any distance or vantage point.' An example is attached. 1 ,..'. .) "',-. ,',.:. ..'....... .... ....'..... .. .... ....:}..C::: ...,.;; .:....:,. ..i( .;,. '... .,' ./':.' .:': .:...' ..... .:...!., ..... .......'.:... .....), .... .';.:.., .....:: . . . '.' ", Not included.in: c;>uI scope would be surveying the"sites,' soil borlngs',and any detai1~d bUiId~g' " , :: . ,', .':' . :. .' 'desIgns: and the i;lssqdated Jayouts.' :We wou1d~ provide enough building' desigilto ensUre. that :tlie ". : ..:,'.' ',: ~plaDswOrk; sho~ l!I141o!1!lterm:' . ... , . .....' . , .:. ..' .,' .. ", . .. .., ,.. .. : . .. . . . . :The cost~.a~soGiated.Vvit~this,stu~y are."as ~?ll~'Ys; '.: . , '..' . '.... .". . ; ..Mast~r..p~g~fth~sitefrirpt1b1i~:wQrks:':. ':"". .':,>'$S;500;'Oq , : . " ;.... ...,: "'.. " .:.,-:-, .:Mastet.'pIaniiing onhesite'forpu1;>lic'works I engmeenng: '$, 800.00 (add~tiorni1) ,...','., . "<' . . : ,~:D~olore4mod~~of~h~.fina1.~ter:?~:', .' .' .. ': $1~200~00. "..' ".,' . . ' .: '. "....,.. . .' " , .' . - ; . :" ' .; ..., ' . ',' .' , ' ,.... ... . ., ...'. ''.In additlon,'.weaskto be reiinbui~ed for expensesatoUrdiiectcost~ w.e.e~iinate the allowance,' ,'. . 'J:'.' his be $15'0 0'0 "," ", . . " .,.. . '., , .".. ". .,". . , , . .lor t JO' . ..' . . .' ' : ': :. ' ,:: . . '..., '" , . ,.' .' '.'.:. . ... .-co~ ;~ule.lfwe~art ~tbe next\',.;ek;-veWouidnet~ abo~t ~ight ~~'g~ ...' through the 'process .and co~plete our cost' estimates, plans' and reports. . Tl:l;us,:we wilLbe able'to" .' . . ': cqniplete'o~ ,.wotk by the :firstweek ofDec~~ber. " . . '- .' , , . " ',' , .' . . .' '.., . . . " . ': : "'Ple'as~~d~e'~:ri'~i' ~ther fuf~~ti~~:'y~ti may.'need.'... There .~' 'so~efle;abilityni.ihe,scope. ,and: ' :',: ::. ~- '" .' , COstsout~ab9W: .. ... ........... .... ., . .....:. ..... ., ..., , .... > .... .' ...., ..' ........., ..:i . : W,e wouldriee,d toki;1ow.wh~~er or not *e~ri~eeririg~otl1Pdl1ellt is mCluded.jn the scoP~, 'sin~e." ':, . '.': " '. that WOlildneed to' be petfo~ea :siniw.taneotls mththepublic workspIatrillng.' ',The 3D.m04el ':' ,.' '..' . >' ' . 'cotild:bepreparedatari.y.Hni~....:. ',' '<. :'. ".".. , ': .',.: ,...::...>. ....'i:1iankyorifurtlliso~riupiiy~_ p' ... . . .... . ....'... " '.' . " . ' . ',Sincerely, . , . . . . .' . '. ':'M"'" ARC ,':BC . ..$ , .' ..:. ..t:... ... .. ..... ... .. ApproVed cOntact ameu<hnl:nt amount . . '" city Admiriistrator ". . ',,' City Clerk. Date 2 '. . ~ COMPLETE APPRAISAL, SUMMARY REPORT SPUC UTILITIES FACILITY 1030 EAST FOURTH AVENUE SHAKOPEE, MINNESOTA DATE OF REPORT: September 29, 2003 PREPARED FOR: Shakopee Public Utilities Commission 1030 East Fourth Avenue Shakopee, MN 55379 PREPARED BY: Patchin Messner & Dodd Skyline Square Building 12940 Harriet Avenue South, Suite 220 Burnsvil!e, MN 55337 PATCHIN MESSNER & DODD , , PATCHIN MESSNER & DODD VALUATION COUNSELORS September 29, 2003 Shakopee Public Utility Commission (SPUC) 1030 East Fourth Avenue Shakopee, MN 55379-1699 ATTN: Mr. Joseph D. Adams , RE: Complete Appraisal, Summary Report SPUC Utility Facility 1030 East Fourth Avenue Shakopee, Minnesota Dear Mr. Adams: At your request, we have made a complete appraisal of the above captioned property for the purpose of estimating its market value. The function of this appraisal is to provide valuation guidance for an internal transfer of the property between the Shakopee Public Utility Commission (SPUC) and the City of Shakopee. , The subject property includes a 30,000 SF building, located on a 3.905 acre site at the southwest corner of East Fourth Avenue and Gorman Street. It is noted that the subject property is a part of a larger parcel. In this case, the subject propeliy itself includes the northern 3.905 acres of a larger 12.75 acre parcel. Title to the larger parcel, including the northern 3.905 acres, is held by the City of Shakopee. For purposes of this appraisal, it is assumed that the subject property is a separate and independent parcel. This complete appraisal is intended to comply with the Uniform Standards of Professional Appraisal Practice, (USPAP), of the Appraisal Foundation. This appraisal is presented in a summary reporting format, as described in USPAP Standard Rule 2-2(b). The attached report summarizes the findings, analysis and conclusions of the appraisal and fully identifies the property. ' Based upon my inspection of the property' and careful consideration of the many factors influencing market value, I conclude the subject's market value, as of August 28, 2003 is $800,000. EIGHT HUNDRED THOUSAND DOLLARS Skyline Square Building, Suite 220 · 12940 Harriet Avenue South · Burnsville, MN 55337 Phone; (952) 895-1205 Fax: (952) 895-1521 II The above estimate of value reflects the fact that the subject is an industrial type of building located on a commercially zoned (B-1) site. With the exception of utility service facilities, industrial uses are not allowed in the B-1 zone. As such, I have concluded that the subject's highest and best use, as improved, is to continue using the subject as a utilities service facility, or convert the building to some type of retail establishment. However, the report by JEA Architects indicates that the subject is maximally loaded. Thus, the $800,000 value estimate assumes that structural re-enforcement would be needed to convert the building to another use. These combined issues have a negative impact on value, as is demonstrated in each of the three approaches to value, summarized herein. The "Contingent and Limiting Conditions" section of this report should be thoroughly read and understood before relying on any information or analysis presented herein. If you have any questions or comments after reading the appraisal, please contact the firm. It should be noted that this letter does not qualify as an appraisal, and that the reader is directed to the following report for the supporting data, analysis and conclusions which support this value estimate. The appraisal report is contingent upon the assumptions and limiting conditions submitted within the report. Thank you for allowing our firm to be of service to you in this matter. If have any questions feel free to contact me at your convenience. Respectfully submitted, PATCHIN MESSNER & DODD c(b~,~ Minnesota Certified General Real Property Appraiser License 20019812 PATCHIN MESSNER & DODD 20374 iv SUMMARY OF SALIENT FACTS AND CONCLUSIONS Fee Owner: City of Shakopee Location: 1030 East Fourth Avenue Shakopee, Minnesota Date of Appraisal: August 28,2003 Date of Inspection: August 28, 2003 Property Appraised: Real Property Rights & Interests Appraised: Fee Simple Market Value Zoning: B-1 (Highway Business District) Highest And Best Use: As Vacant: Commercial Development As Improved: Continued Use as Utility Services Facility or Conversion to Retail Site Area: 3.905 Acres, or170,086:t SF Building Description: Single-story, slab-on-grade building with metal and masonry exterior. The building has a typical office/industrial type design, with about 24% finished office area and 76% unfinished industrial area. Building Age: 1968 Gross Building Area: 30,000 SF (150' x 200') Conclusions of Value: Cost Approach: $830,000 Sales Comparison $810,000 Approach: Income Approach: $750,000 Final Estimate of Value: $800,000 Allocated As Follows: Land: $527,000 Improvements: $273,000 Total Value: $800,000 PATCHIN MESSNER & DODD Valuation Counselors , 20374 v TABLE OF CONTENTS ITEM PAGE NO. LETTER OF TRANSMITTAL ..... ..... ................................. ........................................... ... i-ii CERTI FICA TION .... ...... ...... ...... ..... ................. ....... ...... ......... ............... ........................ i i i SUMMARY OF SALIENT FACTS AND CONCLUSIONS .............................................. iv TAB LE OF CO NTENTS ............ .......... ........... ......... ................................ ......... ............. v S U BJ ECT PHOTOG RAPHS ...................... .... ........... ................... ................................ vi i SUBJECT LOCATION MAP .................................................. ............... ............... ......... xi PLAT MAP OF LARGER PARCEL............................................... ...................... ...... ..... xii SURVEY DEPICTI NG SU BJECT PROPERTY ......................... ............................ .......... xiii PROPERTY APPRAISED. ........ ............ .......... ........................................... ..................... 1 SCOPE OF THE APPRAISAL ..................... ................................................................... 1 DATE OF APPRAISAL. ........................ .................................. .................... ...................2 PURPOSE AND FUNCTION OF APPRAISAL ...............................................................2 I NTEN DED USER.. ..... ..... ............. ......... ....... ........... ............................................ ........ 2 PROPERTY RIG HTS APPRAISED:....... ............................ .............................................. 3 ENVIRONMENTAL CONSI DERA TIONS .......................................................... ............3 MARKET VALUE DEFI NED ............................................................ ..... ... .... .... ..............4 LOCATION AND LEGAL DESCRIPTION ..................................................................... 5 TAX AN D ASSESSMENT DATA.................................................. ..................... ........ ..... 5 S U BJ ECT SALES HISTORy....................... .............................................. ...................... 5 AREA AN D NEIG H BORHOOD DATA.................................. ..... ................ .................. 6 ZON I NG . II II' .... II ... II .... 11.,1 II' .... ......... II ... .... ... .... .... ...'. ..... ..... II ...... II... ....... ... .......... ...... 1 0 SITE DATA .................. ............ ............................................. ..... ..... ............. .............. 12 DESCRIPTION OF IMPROVEMENTS ................................. ........ ............ ...... ........ ......13 H.IG H EST AN D BEST USE.......... ..................... ...... ........ .................. ...................... ..... 16 EXPOSURE AN D MARKETI NG TIME ... ................................... ............ ......... .............. 21 APPRAISAL PROCEDU RE AND TECH NIQ UES .................................... ............ .......... 22 COST APPROACH TO VALUE ............................ ....................... .......... ........... ..... ..... 23 SALES COMPARISON APPROACH TO VALUE .........................................................52 I NCOME APPROACH TO VALUE ..... ............. .............. ..................... .............. ..........71 RECONCILlA TION AND FINAL ESTIMATE OF VALUE ..............................................77 PATCHIN MESSNER & DODD Valuation Counselors , 20374 vii PHOTOGRAPHS OF SUBJECT Viewing South From Fourth Avenue .... ".. ... Viewing Southeast From Fourth Avenue PATCHIN MEsSNER & DODD Valuation Counselors 20374 viii PHOTOGRAPHS OF SUBJECT Viewing West to Northwest From Gorman Street Viewing Northeast From Southwest Corner of Site PATCHIN MEsSNER & DoDD Valuation Counselors 20374 ix PHOTOGRAPHS OF SUBJECT City Fueling Area at Southwest Corner of Site Interior View - Office Area PATCHIN MEsSNER & DODD Valuation Counselors 20374 x PHOTOGRAPHS OF SUBJECT Interior View - Shop Area Interior View - Unheated Warehouse P ATCBlN MEsSNER & DODD Valuation Counselors I'-..) 0 Lake EDEN UJ ti1/~. "055347 ~ 6 :<; .j:::. EDEN 0 0 .. .Rice !Ji~e . ~ <> o. t- o o. ~ \!? ~ PRrdBIE 55347 ___ ..." ~_ _._~ _~. __M .....___. , ..!;~ '-' ,: ..~?~!k-fi;-~...:~~t.+' 0 .-..*"!O.;~ S ~ . 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'.. ; I ......... ~..4IL. -- BOOl< /OJ ~ ..... . I TI". *_,. _ _ _.., oncI ~ . , ""'odor. D. K_ : , ~~~ do, of ./ " , UN LIc..... No. 1700II PACE: . l l' , Dol.: Q4jh-L-L 2003 , (104-11) by t! ~ . ~~~~ .t '/ , , i, R~S "" I CLIENT ..,.. Ei DAtE ..... SCHOELL c!c MADSON. INC. r; '-2~a.J LPI fa _11....... t......htiMt....... -e- ..,.. ;; CDfftIW ... 11M ,lilt.... , . .... . oc'D !M*UIlt. __. ~ SHAKOPEE PUBLIC UTILITIES MINNESOTA" I-JO-O.s UJS 1.- tllwitlon 11M ... ..... flY ~ TElllfI\I . lIMIlOIlIlI:IlT~ IEI\'4ICII SHAKOPEE, 10-1..0J as -..- -.cr.I.... '!l5I!O "VATA ICIIUYMD. "'tE , COMMISSION __A. III ~ ~ , I"') ~7101 rAIl: ("') ~_.. ~ S.M.!. PROJECT NO. 10007-148 ~ 20374 1 PROPERTY APPRAISED The subject of this report is known as the SPUC property, located at 1030 East Fourth Avenue. The subject property is comprised of the northern 3.905 acres of a larger 12.75 acre tax parcel owned by the City of Shakopee. The property appraised includes the real estate only (land and buildings). This appraisal excludes personal property, including any immovable fixtures and equipment. SCOPE OF THE APPRAISAL I have performed a complete appraisal in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). The appraisal is presented in a Summary reporting format. As such, only summaries of the data, analyses and conclusions are included herein. As part of the appraisal process, I have examined the following data and concepts pertaining to the subject property: . Physical characteristics of the subject site and improvements. . Characteristics of the subject's neighborhood. .. Zoning data. . Tax and Assessment data. . Property rights appraised. . General dynamics of the local real estate market, and the subject's specific sub-market. . Engineering/Architectural reports prepared by JEA Architects and M&E Engineering, Inc. . Comparable land sales. . Cost data (Marshall Valuation Service). PATCHIN MESSNER & DODD - Valuation Counselors 20374 2 SCOPE OF THE APPRAISAL . Comparable improved property sales. . Comparable rental data. A physical inspection of the subject has been made. A highest and best use analysis has been performed as part of the appraisal process. All three of the traditional approaches to value have been performed. Comparable sales and rental data have been obtained from a search of our extensive internal files, as well as the public record. Comparable sales have been confirmed with a party to the transaction, unless otherwise noted. DATE OF APPRAISAL The effective date of this appraisal is August 28, 2003. An on-site inspection of the subject property was made on August 28, 2003. PURPOSE AND FUNCTION OF APPRAISAL The purpose of this appraisal is to estimate the market value of the fee simple interest of the subject property. The function or use of this appraisal is to provide valuation guidance for an internal transfer of the property between the Shakopee Public Utility Commission (SPUC) and the City of Shakopee. I NTEN DED USER The intended user of this appraisal report is the Shakopee Public Utility Commission. PATCHIN MESSNER & DODD Valuation Counselors 20374 3 PROPERTY RIGHTS APPRAISED The subject property will be appraised by estimating the market value of the fee simple interest of the real estate. For use in this appraisal, the market value of the fee simple interest in the real estate is subject to the following definition obtained on Page 113 of The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute. Absolute ownership unencumbered l:Jy any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. ENVI RONMENT Al CONSIDERATIONS For purposes of this appraisal, I have assumed that no environmental concerns such as asbestos, PCBs, toxic and hazardous soil or groundwater contamination exist upon the subject as of the date of this appraisal report. If any envi ronmental contaminants do exist within the subject property, I reserve the right to adjust the estimated market value contained in this report accordingly. PATCHIN MESSNER & DODD Valuation Counselors 20374 4 MARKET VALUE DEFINED Market value as utilized in this appraisal report conforms to the following definition obtained from Pages 177-178 of The Dictionary of Real Estate Appraisal, Fourth Edition. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and asswning the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from selZer to buyer under conditions whereby: ], Buyer and seller are typically motivated,' 2. Both parties are well informed or well advised, and acting-in what they consider their own best interest,' 3. A reasonable time is allowed for exposure in the open market,' 4. Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and 5. The price represents a normal consideration for the property sold unaffected by special or creative financing or sales concession granted by anyone associated with the sale. Unless otherwise noted in the appraisal report, market value shall represent cash equivalent terms where the seller receives all cash for their interest. The property may be financed at typical market terms under this definition. The above definition describes market value as an exchange concept. According to The Dictionary of Real Estate Appraisal, Fourth Edition, at Page 104, exchange value is defined as follows: "In economics, the attribution of value to goods or services based on how much can be obtained for them in exchange for other goods and services." The definition goes on to say, "Market value as an appraisal concept is a type of exchange value." PATCHIN MESSNER & DODD Valuation Counselors 20374 5 lOCATION AND LEGAL DESCRIPTION The subject is located along at the southwest corner of East Fourth Avenue and Gorman Street in Shakopee, Minnesota. As stated previously, the subject property is comprised of the northern 3.905 acres of a larger tax parcel owned by the City of Shakopee. Address: 1030 East Fourth Avenue Shakopee, Minnesota Note: According to Scott County the street aaafess for the larger tax parcel is 476 Gorman Street. However, the SPUC building has historically been identified as 1030 East Fourth Avenue. Identification Numbers: 27-906-035-0 (larger tax parcel) Legal Description: The legal description is found on the Survey, included on Page xiii of this report. TAX AND ASSESSMENT DATA The following assessed value pertains to the larger 12.75 acre tax parcel. The assessed building value includes both the SPUC building and the public works building located to the south. The subject is tax exempt. Assessor's Market Value 2002 land Value: $ 939,000 Building Value: $1 ,228,500 Total Value: $2,167,500 SUBJECT SALES HISTORY The Uniform Standards of Professional Appraisal Practice requires that all sales of the subject property, during the previous three years, be reported and analyzed. The current owner has owned the subject for many years. As such, no sales of the subject property have occurred during the three years immediately prior to the date of appraisal. PATCHIN MESSNER & DODD Valuation Counselors 20374 8 AREA AND NEIGHBORHOOD DATA City Data A significant amount of vacant industrial land is available in Shakopee. Several parcels are available within the Valley Green Park, including parcels along U.S. Highway 169. In addition, United Properties has 112 acres of industrial land along the south side of Highway 101 listed for sale. It is also noted that there is a substantial amount of improved industrial space available for lease. According to the 2003 Towle Report, the combined vacancy rate for office/showroom, business center, office/warehouse and bulk warehouse in Scott County was 40.6%, as of the 4th Quarter, 2002. Much of the vacant industrial space in Scott County is attributed to the city of Shakopee. Neighborhood Data The subject property is located at the southwest corner of 4th Avenue and Gorman Street. This intersection is one block west of Marschall Road, a main traffic artery that extends from State Highway 101 to the north, to U.S. 169 and beyond to the south. The subject's neighborhood is defined as follows: North Boundary: State Highway 101 South Boundary: Eagle Creek Boulevard East Boundary: Those properties along the east side of Marschall Rd. West Boundary: West side of Gorman Street, extending north to 101. .... The neighborhood is primarily zoned B-1 (Highway Commercia/). As such, the majority of the land uses in the neighborhood tend to be commercial. Marschall Road is heavily developed with commercial uses. In addition, commercial developments extend along Fourth Avenue to the Gorman Street intersection. Immediately to the west of the neighborhood, and the subject property itself, the land use changes to residential. The subject's neighborhood has good access to the surrounding area. Again, Marschall Road forms the neighborhood's eastern boundary. From Marschall Road, Highway 101 can be accessed about three blocks to the north, and Highway 169 can be accessed about 1 ~ miles to the south. PATCHIN MESSNER & DODD Valuation Counselors 20374 9 AREA AND NEIGHBORHOOD DATA Neighborhood Data The neighborhood is served by all modern utilities including municipal water and sanitary sewer. Street improvements throughout the neighborhood include bituminous streets with concrete curb and gutter, concrete sidewalks and street lights. An in-ground storm sewer system is present. Overall, the street improvements appear to be well maintained. On average, the building improvements in the area appear to be about 10 to 30 years old. Properties appear reasonably well maintained. Little evidence of deferred maintenance was noted during the inspection of the neighborhood. The neighborhood is considered to be in the growth to stability stage of the life cycle. I estimate the neighborhood is about 75% developed. A new police station is being developed along the east side Gorman Street. I am also aware that a new commercial development along the west side of Marschall Road is planned. This development will include a Voyager Bank branch. Once these developments are finished, the neighborhood will be about 85% to 90% developed, with a few vacant sites remaining. A future change in land use from predominately commercial appears highly unlikely. It should also be noted that a significant amount of commercial development has occurred further to the south, around the Marschall Road/Highway 169 interchange, in recent years. Thus, to some extent, the development focus has shifted away from the older subject neighborhood to the newer commercial district to the south. Nevertheless, the subject neighborhood remains strong and should continue to have a positive impact on values in the coming years. Overall, I consider the subject's neighborhood to be healthy and stable. My research reveals that land values are increasing in the neighborhood. As noted above, both public and private sector developments are currently planned or underway. PATCHIN MESSNER & DODD Valuatlon Counselors 20374 10 ZONING Zoning is administered by the city of Shakopee. The subject is zoned B-1, (Highway Business). According to the zoning ordinance, liThe purpose of the highway business zone is to provide an area for business uses fronting on or with immediate access to . arterial and collector streets." Permitted uses within the B-1 District revolve around a variety of commercial uses, including the following. . Hotels and motels . Restaurants, class 1 · Uti Jity Services . Medical and dental clinics . Retail establ ishments . Offices . Public Buildings In addition to the permitted uses, a number of conditional uses are listed as well. The majority of the conditional uses are also commercial type uses. Examples of conditional uses in the B-1 District include taverns, gas stations, car washes, theaters and vehicle sales. Lot requirements within the 8-1 District are as follows: Minimum Lot Size: 1.0 Acres Minimum Lot Width: 100 Feet Max. Impervious Surface Area: 75% Set Backs Front-yara: 30 Feet Side-yard: 20 Feet (75' from residential zone) Rear-yard: 30 Feet (75' from residential zone) As both a utility services facility and a public building, the subject is considered a permitted use, under the B-1 zoning ordinance, Based on my review of the survey, it appears the subject meets all set-back and design standard requirements as well. As such, the subject is considered a legally conforming use. Further zoning details are included in Exhibit 2 of the Addenda. PATCHIN MESSNER & DODD Valuation Counselors 20374 11 · F F "~~ (' -- -~~ B ~L~ ~~ ~ ~ I n ~I,\~~ '/ - -- ~ 1 · " 1. ~ --Till'. I\" i. . ~' ~,Q\~~ I J6~ \ I- ~ ~ .~~. nttJ .. w' I' I l.----' ~ ) ~' ~'\ .. ....' 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I 'R ~ ~ I I ~ I r-- e' SC04C iC1Qn'! . I, 3 ...;\l ~cr. ~ " ~~'T ,- 'fiTll~~ "LE~ i ~--~..... 'J:c~ rc"..y,;jYi("j , ~R 11"1 1 mmX'\~,\'\""l ~ ". IISTLOT. R3 '"-: ~~~ffif I I ... .". - . . ~ '2 I · . ~ ~ I" 15/ 'l'-'l"'f'IA'fEl I II : a I ~,. a 9 , fliJ I> ~ 2 ~.,.. ,~\oW.L/":::;;; 1-11131 . I"' . ....1..M111 t.;i;~' I 'lB, '/~i~ ~ J '.,. ~ ( =:J .'in;L.... r:TTl2Il"T-'\ r;T;T"'71 r:rr.r0"~ .... :'-... r:--t>. \ / Jr./ n I ..... _-",- _ .' r- -.t-l /!--CJ I::-;- 1'1: ~ \-Y:!I ~ A ~ . p .. SUBJECT ZONING MAP PATCHIN MEsSNER & DODD Valuation Counselors 20374 12 SITE DATA Size: 170,086 SF, or 3.905 Acres Shape: Irregular (four sided) Frontage: 417.5:t LF along Fourth Avenue 412.0:t LF along Gorman Street Access: Vehicular access is gained via two curb-cuts on Fourth Avenue and one curb-cut on Gorman Street. Terrain: Generally level and at street grade. Soils: The soils appear stable and suitable for typical construction practices. We have not been provided with soils tests or engineering data. Utilities: All present, including municipal water and san itary sewer. Street Improvements: Fourth Avenue and Gorman Street are both paved streets with concrete curb and gutter and an in- ground storm sewer system. Other street improvements include sidewalks and street lights. Flood Hazard: The subject is located in a Zone C (area of minimal flooding). Community-Panel 270434 0001 C Effective Date: September 29, 1978 Easements/ Encumbrances: A telephone utility easement runs northwest to southeast through the eastern half of the site. Based on my examination of the survey, this easement is located about 42.5' to 110' west of the subject's eastern boundary. In addition, the City of Shakopee maintains underground fuel tanks and fuel dispensers at the southwest corner of the site. Since the City of Shakopee holds title to the entire parcel, there is no easement associated with this fueling area. However, if the subject were sold as an independent parcel to a third party, then some type of access and maintenance easement would be needed. For purposes of this appraisal, I have assumed an easement area of about 75' x 75'. PATCHIN MESSNER & DODD Valuation Counselors 20374 13 DESCRIPTION OF IMPROVEMENTS The subject is as a single occupant, stand alone building. The building was designed and constructed as a public utility building in about '1968. Since the time of construction, the building has been continually occupied by SPuc. The design characteristics of the building are very typical of a light industrial type facility. Functional areas include office and storage/warehouse space. I n terms of appearance and utility, the subject resembles a typical office/industrial building. The building could be utilized for either a warehousing or light manufacturing use. However, the building does not have any dock-height doors, which diminishes it's utility as a warehouse. As part of the appraisal process I have made an on-site inspection of the improvements. I have also reviewed architectural and engineering reports prepared for the City of Shakopee by JEA Architects and M&E Engineering, Inc. In addition, I have reviewed site and building plans supplied by the client. Based on those items, the subject improvements are summarized as follows: Gross Building Area: 30,000 SF (150' x 200') Age: 1968 (Per SPUC representative) Functional Areas: Office Area: 7,125 SF (23.75%) Shop Area: 7,250 SF (24.1 7%) Storage Area: 15,625 SF (52.08%) Total G BA: 30,000 SF Construction: Single-story slab-on-grade building with steel framing. The south and west exterior walls are pre-cut metal panels. The eastern exterior wall has face brick over concrete block. The northern elevation includes stone finish. Interior walls include concrete block and sheetrock over metal studs. The building .includes a sloped standing-seam metal roof. According to the client, a new roof was installed about five years ago. The roof and exterior walls are insulated. PATCHIN MESSNER & DODD Valuation Counselors 20374 14 DESCRIPTION OF IMPROVEMENTS Ceiling Heights: Ceiling heights in the shop/warehouse areas are approximately 16.0 feet at the exterior wall, and 21.5 feet at the peak. HVAC: Office Area: Forced-air, gas-fired furnace. Central air conditioning. ceiling mounted, gas-fi red Shop Area: Five space heaters. Warehouse: None (unheated). Electrical: According to the M&E Engineering report, there is an indoor d~ type transformer in the building: 225KVA, 3- phase wit 120/208 secondary. 1,000 amp. Plumbing: Four bathrooms total (two sets of men's and women's). Sprinklered: No Interior finish: Office Area Floors: Carpet or Vinyl floor tile. Walls: Wall covering over drywall or painted concrete block Ceiling: Suspended grid. Shop/Warehouse Area Floors: Exposed concrete Walls: Unfinished Ceiling: Unfinished Lighting: Office Area: Fluorescent (2' x 4' fixtures). Shop Area: Fluorescent Warehouse: Incandescent RLM domes. Note: The office and shop areas are well lit. The warehouse area is dimly lit. More lighting would likely be required to accommodate another use or user. Overhead doors: 8 - drive through doors. Note: There are no dock-height loading doors. L-T-B Ratio: 5.67:1 PATCHIN MESSNER & DODD Valuation Counselors 20374 15 . DESCRIPTION OF IMPROVEMENTS Site Improvements: The site improvements include internal paved driveways, along with paved parking and maneuvering areas. These driveways and parking areas have concrete curb and gutter surrounding them. My on-site inspection revealed 39 striped parking spaces. This equates to one space per 769 SF of building area. Other site improvements include an average to above average level of landscaping. The landscaping includes grass lawns, mature trees, a decorative rock bed and shrubbery. Based on analysis of the site survey, the following quantities are estimated. Asphalt Paving: 59,400 SF Curb & Gutter: 890 LF Landscap i ng: 85,000 SF Comment: As noted previously, the design characteristics of the subject improvements are typical of an office/industrial type building. Overall, the subject functions well as a public utilities facility. The JEA Architects report notes a couple of items of concern. First, significant signs of efflorescence was noted on the interior block on the east perimeter wall. JEA recommends the face brick on the exterior of this wall be repaired or replaced, as needed. Second, the walk-thru door on the east elevation needs replacement. Third, concrete along the trench in the shop is spalling, and needs to be repaired and sealed. If the building were put to another use, a number of modifications would likely be needed. These would include a) additional lighting in warehouse area, b) heating in warehouse area, and c) installation of a sprinkler system. The M&E Engineering report indicates that additional electrical service would likely be needed to accommodate additional lighting and HVAC. The JEA rehort also states that the structure is presently loaded to t e maximum. This matter is further discussed in subsequent sections of this report. PATCHIN MESSNER & DODD Valuation Counselors 20374 16 HIGHEST AND BEST USE Highest and best use is defined in The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, at Page 135, as follows: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability. This publication goes on to distinguish the highest and best use as vacant and as improved, as follows: Highest and best use of land or site as though vacant. Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. Highest and best use of property as improved. The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the returnfrom a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. As If Vacant In order to determine highest and best use of the subject property, as if vacant, the following factors must be considered when addressing possible uses. They are: 1. Legally Permissible 2. Physically Possible 3. Financially Feasible 4. Maximally Productive PATCHIN MESSNER & DODD Valuation Counselors . 20374 17 HIGHEST AND BEST USE As If Vacant The first test of highest and best use involves identifying those uses which are legally permissible. Legal restrictions can include public restrictions such as zoning and building codes, and private restrictions such as deed restrictions and protective covenants. The subject is zoned B-1, (Highway Business). Permitted uses in the B-1 district include a number of commercial uses, including restaurants, offices and retail establishments. Conditional uses in the B-1 district are also commercial in nature. Based on the first test of highest and best use it appears some type of commercial use would be most likely. The subject site has sufficient size and shape to accommodate a wide variety of commercial uses. In addition, the subject's topography and soils appear suitable for commercial development. The site has good access, via three curb-cuts, and is served by all modern utilities and street improvements. I do note the telephone easement, which runs northwest to southeast in the eastern half of the site. This easement could have some impact on development, especially in light of the fact that a 75 foot set-back is required on the western side. Nevertheless, the telephone easement is located far enough to the east to allow for the placement of a sizable building, while meeting all applicable set-back requirements. Based on the above, a wide variety of commercial uses would be physically possible on the subject site. Thus, the first two tests of highest and best use suggest some type of commercial development would be most likely. The national, state and local economies are considered mixed as of the date of appraisal. However, recent economic data suggest the national economy is recovering and growing. Interest rates and other financing terms are considered favorable and funds are generally available to qualified buyers. The city of Shakopee continues to realize strong growth in population, and a significant amount of commercial development has occurred in the City in recent years. I conclude that various commercial dev'elopments on the subject site would be financially feasible. PATCHIN MESSNER & DODD Valuation Counselors . 20374 18 HIGHEST AND BEST USE As If Vacant It is beyond the scope of this appraisal to determine precisely what commercial use would be most productive. The subject has good access and frontage along two streets. However, the site is located about one block west of the Marschall Road, which is the main commercial corridor. Traffic volumes along Fourth Avenue and Gorman Street are relatively light. Thus, the site is not well suited to those commercial uses that require a high degree of visibility. Rather, the site is better suited for destination type commercial uses. I conclude the highest and best use of the subject site, as if vacant, is for commercial development, in accordance with the B-1 zoning ordinance. Again, the subject's locational attributes lend themselves best to a destination type of commercial use. As Improved . The subject is improved with a single-story building of 30,000 SF. The building was originally designed and constructed as a public utility building, and continues to be occupied as such by the Shakopee Public Utility Commission. The building has a chronological age of about 35 years. The current use of the building is permitted under the B-1 zoning ordinance. In this case, the B-1 ordinance lists Utility Services and Public Buildings as permitted uses. As discussed previously, the design characteristics of the building are that of an office/industrial facility. The building is very similar in appearance and functionality to an office/warehouse or a light manufacturing building. Thus, from a physical standpoint the building could easily be converted to some type of industrial use. However, with one exception, the B-1 zoning ordinance does not allow for industrial type uses. The one exception is a utilities services facility, which could be considered an industrial type use. Thus, from a legal stand-point, the subject could not be converted to another industrial type use. PATCHIN MESSNER & DODD Valuation Counselors . 20374 19 HIGHEST AND BEST USE As Improved As stated previously, the subject building was designed and constructed as a utility services building. As such, the subject would not have to be converted or modified in order to continue using it as a utilities service facility. However, the primary short- coming with this use is that the market is very limited, In total, there are about five or six potential utility providers that could use the subject in it's "as is" condition. An alternative would be to convert the subject to another use that is permitted under the B-1 zoning ordinance, and that has. a broader market appeal. A review of both the zoning ordinance and the subject's physical characteristics suggests the most likely use would be some type of retail establishment. Given the subject's size and lack of high visibility, some type of a large ticket/destination type retail use would be most likely. Examples might include a furniture store, recreational vehicle sales, lawn and garden sales, etc. In order to convert the subject to a retail establishment, a number of modifications would be needed. First, any change in use would require that a sprinkler system be added. Second, additional lighting and HVAC systems would be needed in the existing industrial areas, particularly the unheated storage portion of the building. Finally, depending on the specific retail use, additional interior finishes may be needed. Normally, the above listed modifications could be accomplished without undue compl ications. However, as referenced previously, the lEA Architects report states that the subject building is maximally loaded from a structural stand-point. Evidently, th is situation resulted from the recent re-roofing of the building. The JEA report states that no additional loads should be placed on the building. I have interviewed Mr. Jack Anderson of JEA Architects with regards to this issue. Mr. Anderson indicated that even the installation of a sprinkler pipe or HV AC duct would constitute an additional load. If this is true, then the building would have to be structurally reinforced to accommodate any type of a conversion to an alternative use. It should be noted that I am not qualified to ascertain the veracity of the JEA report. Thus, PATCHIN MESSNER & DODl) Valuation Counselors 20374 20 HIGHEST AND BEST USE As Improved without additional studies by a qualified engineer, one is left to take the JEA report at face value. Based on my research and analysis of all the issues involved, I have concluded that there are three potential options for the subject. First, the subject building could be razed to make way for redevelopment of the site. Second, the subject can be left in it's current condition and used as a utility services facility. Third, the building might be structurally reinforced and converted to some type of retail establishment. The first alternative is to raze the building and redevelop the site. The subsequent valuation analysis indicates that the existing improvements continue to contribute to overall value. As such, it would not be maximally productive to raze the building improvements at this time. The second alternative is to leave the building as it currently exists and use it as a utility services facility. This use is legally permissible and requires no physical modification. The one short-coming is that the market for such as use is considered very narrow. Again, only about five or six potential users would be available for such a use. The third alternative would be to convert the subject to a retail establishment. Retail establishments are a permitted use under the B-1 zoning ordinance, and the subject's physical characteristics would lend themselves to certain big ticket/destination type retail uses. The main question with this alternative is whether or not it would be feasible to structurally reinforce the building to accommodate such conversion. Again, additional structural studies would be needed to determine this matter precisely. However, the loads in question seem relatively light (heating duct, sprinkler pipe, additional light fixtures). For purposes of this analysis, it appears reasonable that the building could feasibly be reinforced to accommodate a conversion. Conclusion: I conclude that the highest and best use of the subject, as improved, is to leave the building in place and utilize it in one of two ways. Either leave the building in it's current condition and utilize it as a utility services building, while recognizing that PATCHIN MESSNER & DODD Valuation Counselors 20374 21 HIGHEST AND BEST USE As Improved this is a limited market. Or make the building available for conversion to a retail use, while recognizing the costs and risks associated with the structural reinforcements that are ostensibly needed. EXPOSURE AND MARKETING TIME The following definitions are taken from The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute: Exposure Time: The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. Exposure time is always presumed to occur prior to the effective date of the appraisal, The overall concept of reasonable exposure encompasses not only adequate, sufficient and reasonable time but also adequate, sufficient and reasonable effort. Exposure time is different for various types of real estate and value ranges and under various market conditions. Marketim~ Time: The time it takes an interest in real property to sell on the market subsequent to the date of appraisal, Reasonable market time is an estimate of the amount of time it might take to sell an interest in real property at its estimated market value during the period immediately after the effective date of appraisal,' the anticipated time required to expose the property to a pool of prospective purchasers and to allow appropriate time for negotiation, the exercise of due diligence, and the consummation of a sale at a price supportable by concurrent market conditions. Marketing time differs from exposure time, which is always presumed to precede the effective date of the appraisal, Given the zoning and structural issues surrounding the subject, I have concluded that the highest and best use of subject is to leave the existing building in place, under one of two I ikely scenarios. First, the subject can be used as a utility services facility. Under this scenario, the building would require no modification, but the potential market is limited, or narrow. I estimate there would be no more than five or six potential buyers under this use. The exposure and marketing time for typical industrial type properties is generally esti mated at about 12 months. However, under such limited market PATCHIN MESSNER & DODD Valuation Counselors 20374 22 EXPOSURE AND MARKETING TIME conditions, the exposure and marketing time as a utility services building could be up to 36 months. Second, the subject might be converted to a retail establishment. The market for retail establishments is much broader, and a typical 12 month exposure and marketing time would apply. APPRAISAL PROCEDURE AND TECHNIQUES Three traditional approaches to value are widely accepted in the appraisal of real property. These three approaches are briefly described below. The Cost Approach - which considers the current cost of reproducing a property less the depreciation from three sources: physical deterioration, functional obsolescence and external obsolescence. A summation of the market value of the land, assumed vacant, and the defreciated reproduction cost of the improvements provides an indication 0 the total value of the property. The Sales Comparison Approach - which produces an estimate of value by comparing the subject property to sales and/or listings of similar properties in the same or competing areas. This technique is used to indicate the value established by informed buyers and sellers in the market. The Income Approach - which is based on an estimate of the subject property's possible net income. The net income is capitalized to arrive at an indication of value from the standpoint of an investment. This method measures the present worth of anticipated future benefits (net income) derived from a property. The various approaches will be described in further detail in the following sections. In this case, I have considered and performed all three approaches to value in this appraisal. PATCHIN MESSNER & DODD Valuation Counselors . 20374 23 COST APPROACH TO VALUE The cost approach is that approach in appraisal analysis which is based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. It is particularly applicable when the property being appraised involves relatively new improvements which represent the highest and best use of land, or when relatively unique or specialized improvements are located on the site and for which there exists no comparable properties on the market. This approach is also useful when land value constitutes a relatively high proportion of the overall property value. In the cost approach to value, an indication of market value is obtained by adding: 1. The estimated land value to, 2. The estimated replacement cost of the improvements, less any depreciation accruing to the improvements. Land Valuation The comparison method is the most common way of developing a market value estimate for land. Sales of vacant parcels of land, which are comparable to the subject property, are gathered and analyzed. The sales prices are adjusted for time, location, physical characteristics and other relevant variations. The adjusted prices are reduced to some common unit of comparison, such as price per acre or per SF. The appraiser analyzes this information and derives a unit value applicable to the subject property. When applied to the appropriate unit measure, this value results in an estimate of the market value of the land as if vacant. I have made a search for comparable commercial land sales. My search primarily focused on sales which occurred in the city of Shakopee, preferably within the subject's neighborhood. I have found several sales which are useful to this analysis. These sales are summarized on the following pages. PATCHIN MESSNER & DODD Valuation Counselors 20374 24 COST APPROACH TO VALUE Land Valuation Comparable land Sale 1 Location: 1211 Fourth Avenue East Shakopee, Minnesota Legal Description: PID 27-087-007-0 Size: 47,655 SF or 1.094 Acres Buyer: Randolph Kubes Seller: David Yarusso Date of Sale: January, 2003 Intended Use: Investment Zoning: B-1, Highway Business PATCHIN MESSNER & DODD Valuation Counselors 20374 25 COST APPROACH TO VALUE Land Valuation Comparable Land Sale 1 Utilities: All Present Topography & Soil: Generally level with soils assumed stable. Sale Price: $200,000 Special Assessments: $ -0- Other $ -0- (Preparation Costs) Total Price: $200,000 Price Per SF: $4.20 Per SF Remarks: This property is located at the northeast corner 4th Avenue and Gorman Street. As such, it is located at the same intersection as the subject. The sale was confirmed with Mr. Kubes, the bd'er. According to Mr. Kubes, the property had been liste on the market for about two years. Mr. Kubes owns the adjacent property to the east. Mr. Kubes indicates that he may have paid slightly above market value. PATCHIN MESSNER & DODD Valuation Counselors 20374 26 COST APPROACH TO VALUE Land Valuation : f5' CErfhJRY ......,.: :..: . , ,~ PlAZA ,c~t\'t ~. "'.:I~C!:' 3 ;..;;} SaUAR,i;: I ; 4lJi p~ .&# , . Ace:N, 1 1; . c:.i ,~ , o. C' I ~ # $<i\l~ .;;. . ;: ::. 00,' ._ . ~ :,.. t ~.: .: l .. . ,..::: ::- ;,! ~ ,:':' ',,:~ . Clldu,", '- ~.' ...:-, ..... .' . " , .2'lillBtitll ' ' . ~iOOsri2IJ:1.' '''11~ oj .#j" . tt . ......... " . ~!I"WJG!lSl 219000210 I.'. " " .t.......... f'..., .i~~. 2-n;oo.bSQG Comparable land Sale 2 Location: North Side of Gorman Street Shakopee, Minnesot~ Legal Description: PIO 27-118-001-0 Size: 45,346 SF, or 1.041 Acres Buyer: City of Shakopee Seller: Shakopee '84 Partnership, LLC Date of Sale: December, 2001 Intended Use: Part of Police Station Development Zoning: B-1, Highway Business PATCHIN MESSNER & DODD Valuation Counselors . 20374 27 COST APPROACH TO VALUE Land Valuation Comparable Land Sale 2 Utilities: All present. Topography & Soil: Generally level and at street grade. Soils assumed stable. Sale Price: $142,500 Sped al Assessments: $ 12,856 (Estimated) Other: . $ -0- Total Price: $155,356 Price Per SF: $3.43 Per SF Remarks: This was an arms-length transaction between the sellers and the City of Shakopee. This property is located along the north side of Gorman Street and one lot west of Marschall Road. . P A TCHIr'1 MESSNER & DODD Valuation Counselors 20374 28 COST APPROACH TO VALUE Land Valuation -- . . n .". _ _ ____ ...... . . :.......~~ . .. .~~. I 279060180 Ie. @ ... f'-< cel'fujRY .ff fWti~~ ~. '. . c . . O'..-:torA ~ saUAR~ I J ~7Kl!!O~. ,,'i:I 4TH .' ':" p~ 279060350 1 ;/' ~ ADO:N .#.: ':~ 'z". # so.\l~ .' " g , . . .'r.'ClnM;'" ""d . . Comparable land Sale 3 Location: West Side of Marschall Road Shakopee, Minnesota legal Description: PI D 27-178-002-1 Size: 98,707 SF, or 2.266 Acres Buyer: Voyager Bank Seller: Dakota Bank Date of Sale: October, 2001 Intended Use: Bank Branch Zoning: B-1, Highway Business PATCHIN MESSNER & DODD Valuation Counselors . 20374 29 COST APPROACH TO VALUE Land Valuation Comparable land Sale 3 Utilities: All present. Topography & Soil: Generally level and at street grade. Soils assumed stable. Sale Price: $476,367 Special Assessments: $ -0- Total Price: $476,367 Price Per SF: $4.83 Per SF Remarks: This is an interior site located along the west side of Marschall Road, a short distance south of Fourth Avenue. This sale was confirmed with Mr. Weaver, a representative of the buher. The property was purchased by one bank from anot er bank, on a contract-for-deed. According to Mr. Weaver, the negotiated sales price was based on a price of $5.00 per SF. The finalcfurice was "backed into" based on some financial a justments related to the contract financing. Thus, a 3.5% upward adjustment should be made to this sale for financing ($5.00 + $4.83). Mr. Weaver also stated that they have recently sold the property to a developer for $5.50 per SF. The sale has not yet closed. Voyager Bank will be a tenant in the new commercial development. However, Mr. Weaver said the new price of $5.50 per SF was carefully negotiated at market value. I have not included this new sale as a comparable, since it has not yet closed. However, this new sale does provide good information with regards to growth rates in value. This new sale at $5.50 per SF occurred about 23 months after the original sale at $5.00 per SF, suggesting an annual compounded growth rate of about 5%. P A TCHrN MESSNER & DODD Valuation Counselors . 20374 30 COST APPROACH TO VALUE Land Valuation tW~" , " ..... , " ,~.J. . 27906018(1 R u<i) ... ,... ceNttJRY ,ff PLAZA .~t)'< q, ., ' . O'.;t~CT .. SOUAR,!: ,,?i- j r :m<l!!"~. 4T,H' ~7906a356 p~ .it- ,ADm-. 1 #~ ., .,', ' #~ sa.\J~ " " s Comparable land Sale 4 Location: 460 Marschall Road Shakopee, Minnesota Legal Description: 27-178-002-0 Size: 53,400 SF or 1.226 Acres Buyer: Atlantic financial Group, Ltd. Seller: Cletus & Helen link Date of Sale: March, 1999 Intended Use: Retail Auto Parts (Napa) Zoning: B-1, Highway Business P A TCHrN MESSNER & DODD Valuation Counselors . . . 20374 31 - COST APPROACH TO VALUE Land Valuation Comparable Land Sale 4 Utilities: All present Topography & Soil: Generally level and at street grade. Soils assumed stable. Sale Price: $240,000 Special Assessments; $ -0- Total Price: $240,000 Price Per SF: $4.49 Per SF Remarks: Property is an. interior site, located immediately north of Comparable Land Sale 4. This sale was previously confirmed by our firm with the buyer. PATCHIN MESSNER & DODD Valuation Counselors . . 20374 32 . COST APPROACH TO VALUE land Valuation .~. Pl.AZA .~~~ q. '. . . O'.;I~O! A SQUAR~ ~ ) , 27ill:l":r.i!. ~ 4lJ.i p~ ..{$- .ADO:n 1 .&~. #~ ,; .., .IS so.U~ , '.- ,.:r1SlOli:l~ . ~j90s02.9:1.. '......N AoP . '" .......... i~1A~ f . '. . .. '.,. I~ ~SQO '. ...", ~" ' . ", . '. ....;:..~ ..: '~:'" Comparable land Sale 5 Location: East Side of Marschall Road Shakopee, Minnesota Legal Description: 27-120-003-0 Size: 50,093 SF or 1.15 Acres Buyer: Randolph Kubes Seller: MinnPeg, LLC Date of Sale: january, 2003 Intended Use: Investment - Commercial Development Zoning: B-1, Highway Business Utilities: All Present PATCHIN MESSNER & DODD Valuation Counselors . . . 20374 33 . COST APPROACH TO VALUE Land Valuation Comparable Land Sale 5 Topography & Soil: Level with soils assumed stable. Sale Price: $178,000 Special Assessments: $ -0- Total Price: $178,000 Price Per SF: $3.55 Per SF Remarks: Interior site along the east side of Marschall Road, one lot north of Gorman Street/County Road 16. This transaction represents a good arms-length sale according to the buyer. PATCHIN MESSNER &DODD Valuation Counselors . . . 20374 34 . COST APPROACH TO VALUE Land Valuation CJ/~ . .; PlAZA <a. '. . .C . U'..:r~UT It .sQUAR~ lIFTOt~ ~ i ; :>,~~ "c;, 4TH V9D60~~ 1 ;T:.>t , .;t- ADD:,.., .&~ . ~r- . 1 . '=' ~~ # j . . . l' I .:.... ;. ..3na'J:Jico . ... ~_. ..-:..:.;;~-": .. ~i.. Comparable land Sale 6 Location: East Side of Gorman Street Shakopee, Minnesota Legal Description: 27-090-002-0 Size: 236,827 SF or 5.437 Acres Buyer: City of Shakopee Seller: Century Plaza Partnership Date of Sale: April, 2002 Intended Use: Police Station Development Zoning: B-1, Highway Business Uti Iiti es: All Present PATCHIN MESSNER & DODD Valuation Counselors . . . 20374 35 " COST APPROACH TO VALUE Land Valuation Comparable Land Sale 6 Topography & Soil: Level with soils assumed stable. Sale Price: $675,000 Special Assessments: $106,890 Total Price: $781,890 Price Per SF: $3.30 Per SF Remarks: This property is located c.cross Gorman Street from the subject property. This site does not have frontage along Fourth Avenue PATCHIN MESSNER & DODD Valuation Counselors . . 20374 36 ----- ~) " -- " -- . ._-_._--_._--_.-::=--=~~----------~ -----.... - ZTIt':lfjtt6 "{!)6C!.l)t vi' ' ,"" 27'JOtj~90 Z19O...""'O :Z~R1 curl ON ~'1fJ!lGO:;!O ,.~ I 2f'ftlJijn~01 27OO7C111I COMPARABLE lAND SALES. lOCATION MAP P ATCBlNMEsSNER & DoDD Valuation Counselors ~ . .. , 20374 37 ~: 0) 10 (') co (') ~ co ~:: .,..... co 10 C\I .... 0 B: c<i ~ c<i rJ N c<i c<i >:l(' ~ ~ ~ ~ ~ J \l) Cl 0: CO (') (') (') 0 10 e! ::g "": CO "'" "'" CO 0 ~: 0 0 0 0 0 .,...: \l) ::/ ~ :;:;:: lil : 10 10 10 10 10 10 is: 0) 0) 0) 0) 0) 0) .,': 0 0 0 0 0 0 :;::' ::::: en: C\I .... .... (') C\I (') ., CO CO 0) CO CO C! ;) 0 0 ci 0 ci .... iii: : 0 0 10 10 10 0 ': 0 C! 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'_ ::t!. ....~ o ell ell o ell (f)ell (f)ell '.c: co.c: , .s:::. , .s:::. ~(J) z55 sen ~en wen wen .... C\I (') 'V It) CO PATCHIN MESSNER & DODD Valuation Counselors " " COMPLETE APPRAISAL, SUMMARY REPORT SPUC - FORMER RAI L ROW PROPERTY PART OF 476 GORMAN STREET SHAKOPEE, MINNESOTA DATE OF REPORT: September 29, 2003 PREPARED FOR: Shakopee Public Utilities Commission . 1030 East Fourth Avenue Shakopee, MN 55379 PREPARED BY: Patchin Messner & Dodd Skyline Square Building 12940 Harriet Avenue South, Suite #220 Burnsville, MN 55337 n" ..,.."y"n.,"" KT""i'f"'I"'fT"'n o~ T"'\___ ./ PATCHIN MESSNER & DODD VALUATION COUNSELORS September 29,2003 Shakopee Public Utility Commission (SPUC) 1030 East Fourth Avenue Shakopee, MN 55379-1699 ATTN: Mr. Joseph D. Adams RE: Complete Appraisal, Summary Report SPUC - Former Rail ROW Property Part of 476 Gorman Street Shakopee, Minnesota Dear Mr. Adams: At your request, we have made a complete appraisal of the above captioned property for the purpose of estimating its market value. The function of this appraisal is to provide valuation guidance for an internal transfer of the property between the Shakopee Public Utility Commission (SPUC) and the City of Shakopee. The subject property includes approximately 41,698 SF of vacant land located at the south end of a larger 12.75 acre parcel, which runs along the west side of Gorman Street. The subject property can also be identified as the former rail right-of-way that was transferred to the City of Shakopee in August of 1981. Title to the larger parcel, including the subject property, is held by the City of Shakopee. For purposes of this appraisal, it is assumed that the subject property is a separate and independent parcel. This complete appraisal is intended to comply with the Uniform Standards of Professional Appraisal Practice, (USPAP), of the Appraisal Foundation. This appraisal is presented in a summary reporting format, as described in USPAP Standard Rule 2-2(b). The attached report summarizes the findings, analysis and conclusions of the appraisal and fully identifies the property. Based upon my inspection of the property and careful consideration of the many factors influencing market value, I conclude the subject's market value, as of August 28, 2003 is $50,000. FIFTY THOUSAND DOllARS Skyline Square Building, Suite 220 · 12940 Harriet Avenue South · Burnsville, MN 55337 Phone: (952) 895-1205 Fax: (952) 895-1521 ~ ~ ij The "Contingent and Limiting Conditions" section of this report should be thoroughly read and understood before relying on any information or analysis presented herein. If you have any questions or comments after reading the appraisal, please contact the firm. It should be noted that this letter does not qualify as an appraisal, and that the reader is directed to the following report for the supporting data, analysis and conclusions which support this value estimate. The apr,raisal report is contingent upon the assumptions and limiting condition,s submitted within tle report. Thank you for allowing our firm to be of.service to you in this matter. If have any questions feel free to contact me at your convenience. Respectfully submitted, PATCHIN MESSNER & DODD ~ Mi/:UJJ Clay . Dodd, MAl Minnesota Certified General Real Property Appraiser license #20019812 PATrJ-lIN MpC:C:1\n:;~ J& T"lnnn " iii , CERll FICA liON (Real tstate) I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, un- biased professional analyses, opinions, and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. 4. Mt compensation is not continfcent upon the reporting of a predetermined va ue or direction in value that avors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. - 5. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. 6. I have made a personal inspection of the property that is the subject of this report. 7. The reported analyses, 1inions, and conclusions were developed, and this report has been prepare, in conformity with the requirements of the Code of Professional Ethics and the Standards of ProfessIonal Appraisal Practice of the Appraisal I nstitute. 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 9. No one provided significant professional assistance to the persons signing this report, except as noted herein. 10. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. 11. This appraisal cannot be completely understood without reading the "Contingent and Limiting Conditions" section of this report, which should be thoroughly read and understood before relying on any information or analysis presented herein. 12. As of the date of this report, Clay M. Dodd has completed the requirements under the continuing education program of the Appraisal Institute. ~a{f/!o6lJ:rffl r / .1f<J3 / 0 te PATCHIN MESSNER & DODD Valuation Counselors i.". 20374-A iv SUMMARY OF SALIENT fACTS AND CONCLUSIONS Fee Owner: City of Shakopee Location: Southern portion of 476 Gorman Street Shakopee, Minnesota Date of Appraisal: August 28, 2003 Date of Inspection: August 28, 2003 Property Appraised: Real Property Rights & Interests Appraised: Fee Simple Market Value - Zoning: B-1 (Highway Business District) Highest And Best Use: As Vacant: Assemblage Site Area: 41,698:t SF, or 0.957 Acres Building Description: N/A Conclusions of Value: Sales Comparison $50,000 Approach: Final Estimate of Value: $50,000 PATCHIN MESSNER & DODD Valuation Counselors 20374-A vii ~ PHOTOGRAPHS OF SUBJECT Viewing Southeast From Mid-Point of Site Viewing West From East End of Site P ATCHINMEsSNER & DoDD Valuation Counselors 20374-A IX .. IT,\~ ,\ · \ \:j\-~ ' ' · ' \' \ \it\jJ · ~_'_L- l__.~ 'rU.;::;:, t ,. . \ j \' \" " .. 1..J r"'~ .....1:- . - , \ \' . \ tJ--' '.- _-----l - ' -.-.-- ~~' . \ \ _...8- --.< I ,,~ '\ \.-....,.... ~ 2_~ A . ,,' ~_.~-~: <:> ~ 81 $" :27906 . cd!> ~>~UJt ~f C ~{~ 1}"( It) ~ g CJ 0 '<,(j'>. 0 ~ \ ~ ~ ,'g '8 '" I Cig IE .... ~ \~l ~ \ ;lJ ,y~ to OJ Q ,.....-- I ,.,_..,,'. -. .- t ,,~-""'" .-..... ~ ' -- ~ CENtuRY 2 . ",,, jl PLAzA E:~fl , 1 \ ' . C \ i SQUARE ' CLIFTON I <f}. ' " 4TH ,.: 27fJ06035Cl I'. ., 'I ~ r'Lf\ZJ ..U) '5. T {& AODN . .~ --~- 1 r r,J:i-'~ -, ' \ ,~ \ ,,<:J:J ~)O\ji' .GTIIJEi~~''"''''''c. ! ~ , SOU RE k-:-,,=~ ~ ~1:lLWAUKEE J } ,~ 2 0 r.' ..MAN~_~ 7 '" I ~ 'I '. ,Z{S1)(lO= "- ADD';"l '>.. fL. ^ 'I ^ , ........... I , , ~ ~ ~ .1 :. j' ........... . ~. '"3"2' .'"t:E' J 1 1 ;;i . <l " . seCOND ADD'N ! ~.- '. . Lf -------.' ,r:.. ... I f'1R.9T ADD N . I" ~'"'r. rlTrl "l'n, 1 ]7Tl r--l~! 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'''_''T>_'''~'_>^.'_'.'''''''''~ _ ,_~~_" A.....""._".__.~.__.J ..__~.,.."",-.,.~~,~~.._,.^'_<' _~-,.....,,.,.,'.v.., :',o-.,"_.'==~-...... ~ _"'~~_"""'~""'~'..,__"'''r._._~~___."...-=,--<._............~~," .--.."-~,~.-_"___..-~~.~ \/alUi:'i:h}f} c;..ounS(;'-!;)fS 20374-A x ~ ). .: .... . . ..: ',""::'" ,". ';) .~:~~':~~~:j. .;"~ " ..27.90..603.5....0. .... : "'r.. .' .. ... . '. .. :'!f .'::"'<, '~':: . ..; ."," ,;.:. . ~. . . :', . : ' . . '.:,'.. .' ~. :.. ".: '. ,.' '. ..:. . . .:. " ... . ,.,;:;L';. ':. ..:~~.~ .. . .. <;.:~y ,.:....:.~,~;. ., .'. ,,~... ,-, . :'~ . ';": . ',:" . . . .. . . :1;. :. ., '. ':.i,"S.:.:. ........: ....O'::,~:. .: ....~:.:: ..~. ~ ~~~ '. ,,:.. ," .:'~~: .... 'l~:' .' : . ~: . '.. . . :'~ ::'i ~~;;:.,A.: ''"'' PLAT MAP SHOWING SUBJECT PROPERTY P ATCHINMEsSNER. & DODD Valuation Counselors 20374-A 1 . PROPERTY APPRAISED The subject of this report is the former rail right-of-way, located at the south end of the larger 12.75 acre parcel identified as 476 Gorman Street. Title to the larger parcel, including the subject property itself, is held by the City of Shakopee. The property appraised includes the real estate, in this case land only. SCOPE OF THE APPRAISAL I have performed a complete appraisal in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). The appraisal is presented in a Summary reporting format. As such, only summaries of the data, analyses and conclusions are included herein. As part of the appraisal process, I have examined the following data and concepts pertaining to the subject property: · Physical characteristics of the subject site and improvements. · Characteristics of the subject's neighborhood. · Zoning data. . Tax and Assessment data. · Property rights appraised. · General dynamics of the local real estate market, and the subject's specific sub-market. . Comparable land sales. A physical inspection of the subject has been made. A highest and best use analysis has been performed as part of the appraisal process. All three of the traditional approaches to value have been performed. PATCHIN MESSNER & DODD Valuation Counselors 20374-A 2 . SCOPE OF THE APPRAISAL Comparable sales and rental data have been obtained from a search of our extensive internal files, as well as the public record. Comparable sales have been confirmed with a party to the transaction, unless otherwise noted. DATE OF APPRAISAL The effective date of this appraisal is August 28, 2003. An on-site inspection of the subject property was made on August 28, 2003. - PURPOSE AND FUNCTION OF APPRAISAL The purpose of this appraisal is to estimate the market value of the fee simple interest of the subject property. The function or use of this appraisal is to provide valuation guidance for an internal transfer of the property between the Shakopee Public Utility Commission (SPUC) and the City of Shakopee. INTENDED USER The intended user of this appraisal report is the Shakopee Public Utility Commission. PATCHIN MESSNER & DODD Valuation Counselors , 20374-A 3 PROPERTY RIGHTS APPRAISED The subject property will be appraised by estimating the market value of the fee simple interest of the real estate. For use in this appraisal, the market value of the fee simple interest in the real estate is subject to the following definition obtained on Page 113 of The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute. Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. - ENVIRONMENTAL CONSI DERA liONS For purposes of this appraisal, I have assumed that no environmental concerns such as asbestos, PCBs, toxic and hazardous soil or groundwater contamination exist upon the subject as of the date of this appraisal report. If any environmental contaminants do exist within the subject property, I reserve the right to adjust the estimated market value contained in this report accordingly. PATCHIN MESSNER & DODD Valuation Counselors 20374-A 5 , lOCATION AND LEGAL DESCRIPTION The subject comprises the south 0.957 acres of a larger 12.75 acre parcel owned by the cityof Shakopee. The subject itself does not have street frontage, but lies roughly 500 feet southwest of Gorman Street. Address: 476 Gorman Street Shakopee, Minnesota Note: The above street address pertains to the larger 12.75 acre parcel. Identification Numbers: 27-906-035-0 (larger tax parcel) Legal Description: The legal description is taken from the Quit Claim Deed which transferred the subject from James and Mary Ann Hauer to the City of Shakopee, in August of 1981. A copy of this Quit Claim Deed is included in Exhibit 3 of the Addenda. TAX AND ASSESSMENT DATA The following assessed value pertains to the larger 12.75 acre tax parcel. The assessed building value includes both the SPUC building and the public works building located to the south. The subject is tax exempt. Assessor's Market Value 2002 Land Value: $ 939,000 Building Value: $1 ,228,500 Total Val ue: $2,167,500 SUBJECT SALES HISTORY The Uniform Standards of Professional Appraisal Practice requires that all sales of the subject property, during the previous three years, be reported and analyzed. As noted above, the current owners purchased the property in 1981. Thus, no sales of the subject property have occurred during the three years immediately prior to the date of appraisal. PATCHIN MESSNER & DODD Valuatlon Counselors , 20374-A 10 ZONING Zoning is administered by the city of Shakopee. The subject is zoned B-1, (Highway Business). According to the zoning ordinance, "The purpose of the highway business zone is to provide an area for business uses fronting on or with immediate access to arterial and collector streets." Permitted uses within the B-1 District revolve around a variety of commercial uses, including the following. . Hotels and motels . Restaurants, class 1 · Util ity Services - . Medical and dental clinics . Retail establishments . Offj ces . Public Buildings In addition to the permitted uses, a number of conditional uses are listed as well. The majority of the conditional uses are also commercial type uses. Examples of conditional uses in the B-1 District include taverns, gas stations, car washes, theaters and vehicle sales. Lot requirements within the B-1 District are as follows: Minimum Lot Size: 1.0 Acres Minimum Lot Width: 100 Feet Max. Impervious Surface Area: 75% Set Backs Front-yare: 30 Feet Side-yard: 20 Feet (75' from residential zone) Rear-yard: 30 Feet (75' from residential zone) The subject parcel is part of a larger parcel, owned by the City of Shakopee. As such, it is considered a permitted use under the B-1 ordinance. Further zoning details are included in Exhibit #2 of the Addenda. PATCHIN MESSNER & DODD Valuation Counselors 20374-A 11 20 F ~ /~~. I ~..- - ~ .... ~- - I-. -r:;:....\\ \-1l, ~ ~ ~. ~I,\"~~ \~~ ~" ", . ~ ,..-.----L. ~ . 6\' (i\~~1 -- O~L- ~ ~ ~~~ co ~.,. I I----' ~ ~. .W~~\" . /1 · L~~111 I1l ~ I I. "" l.~': , ' : ~. i ~ . ~ nnru :;lfl' I. I f~ \. l ^." .81 rnli,,~1 81 ... ,'t""\ ~. 1 .. I 7' . 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J'I IsllfL'!l"lYlA'fEf II .. ,) \.l.E ill , III '..I\~/....,....I'1113 '1'1l\l..1..J.l.l111~. '.~E!J"~ 3 '. 1-', · ... v ~~ I · I · I ~N 2,,1Ie.. ' t ....~,. -..__ _ .r~~,,~wmE\~~~..'": Pi SUBJECT ZONING MAP PATCHIN MEsSNER & DoDD Valuation Counselors . t 20374-A 12 . SITE DATA Size: 41,698:t SF, or 0.957 acres Note: The site size is based on my measurements OftIie subject boundaries on the Scott County plat map. Shape: Irregular (four sided) Frontage: None Access: The subject itself is only accessed through the larger parcel. Terrain: Generally level and at street grade. Soils: The soils appear stable and suitable for typical construction practices. I have not been provided with soils tests or engineering data. Utilities: All utilities are present in the area. However, it is likely that the utility lines do not extend to the subject property itself. Rather the uti Iity lines extend to the larger parcel, north of the subject. Street Improvements: N/A Flood Hazard: The subject is located in a Zone C (area of minimal flooding). Community-Panel 2704340001 C Effective Date: September 29, 1978 Easements/ Encumbrances: I am not aware of any easements or encumbrances on the subject parcel. However, it should be noted that I have not conducted a title as part of this appraisal assignment. Comment: The subject property is former railroad right-of- way. In 1981 it was purchased by the City, and assembled with the 11.75:t acres to the north. By itself, the subject has no frontage or access to a public roadway. In order to gain access and frontage, the subject would have to be assembled with an adjoining property. This is often the case with abandoned railroad right-of-way parcels. PATCHIN MESSNER & DODD Valuation Counselors . 20374-A 13 f HIGHEST AND BEST USE Highest and best use is defined in The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, at Page 135, as follows: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value, The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability, This publication goes on to distinguish the highest and best use as vacant and as improved, as follows: Highest and best use of land or site as though vacant. Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination, The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements, Highest and best use of property as improved. The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. As If Vacant In order to determine highest and best use of the subject property, as if vacant, the following factors must be considered when addressing possible uses. They are: 1. Legally Permissible 2. Physically Possible 3. Financially Feasible 4. Maximally Productive PATCHIN MESSNER & DODD Valuation Counselors t ,\ 20374-A 14 HIGHEST AND BEST USE As If Vacant The first test of highest and best use involves identifying those uses which are legally permissible. Legal restrictions can include public restrictions such as zoning and building codes, and private restrictions such as deed restrictions and protective covenants. The subject is zoned B-1, (Highway Business). Permitted uses in the B-1 District include a number of commercial uses, including restaurants, offices and retail establishments. Conditional uses in the B-1 District are also commercial in nature. Based on the first test of highest and best use it appears some type of commercial use would be most likely. As discussed previously, the subject is a former railroad right-of-way parcel. The subject parcel can be described as a strip of land that is roughly four times as long as it is wide. By itself, the subject has no frontage or access to a public street. In fact, the subject parcel lies roughly 500 feet southwest of Gorman Street. Given the above, the subject is not independently developable. Given the subject's configuration and lack of street access, the subject would have little utility by itself. In such cases, the highest and best use is to assemble the parcel with an adjoining parcel. Conclusion: I conclude that the highest and best use of the subject parcel, as vacant, is for assemblage with an adjoining parcel. P A TCHrN MESSNER & DODD Valuation Counselors ~ 20374-A 15 !~ EXPOSURE AND MARKETING TIME The following definitions are taken from The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute: Exposure Time: The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal,' a retrospective estimate based upon an analysis of past events assuming a competitive and open market. Exposure time is always presumed . to occur prior to the effective date of the appraisal. The overall concept of reasonable exposure encompasses not only adequate, sujJicient and reasonable time but also adequate, sufficient and reasonable effort. Exposure time is different for various types of real estate and value ranges and under various market conditions, Marketin/{ Time: The time it takes an interest in real property to sell on the market subsequent to the date of appraisal, Reasonable market time is an estimate of the amount of time it might take to sell an interest in real property at its estimated market value during the period immediately after the effective date of appraisal,' the anticipated time required to expose the property to a pool of prospective purchasers and to allow appropriate time for negotiation, the exercise of due diligence, and the consummation of a sale at a price supportable by concurrent market conditions, Marketing time differs from exposure time, which is always presumed to precede the effective date of the appraisal. Again, the subject is a former railroad right-of-way parcel. By itself the subject is not developable, and I have concluded that the highest and best use would be to assemble it with an adjoining property. In this case, the most likely scenario would be to assemble the subject with the property to the north. In fact, this is essentially what happened when the subject was purchased in 1981. However, there would also be some potential to assemble the subject with the residential properties to the south. There would likely be some demand for this scenario, as home owners often desire larger lots. Examples can be found of homeowners purchasing adjoining right-of-way for just such purposes. There is generally a market for former right-of-way parcels such as the subject. I have estimated the exposure and marketing time at about 12 to 18 months. PATCHIN MESSNER & DODD Valuation Counselors