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5.b. Sunrise Builders Property - Appraisal Report
CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION CITY COUNCIL MEETING DATE: OCTOBER 15, 1991 AGENDA ITEM: SUNRISE BUILDERS PROPERTY - APPRAISAL REPORT AGENDA SECTION: OLD BUSINESS PREPARED BY: STEPHAN JILK, CITY ADMINISTRATOR AGENDA IffEtjl5 B ATTACHMENTS: APPRAISAL APP BY: This item is back on the agenda for presentation of the property appraisal. that appraisal is complete and a copy is attached for your consideration and review. The appraised value, as established by this formal appraisal process was set at $316,000. Please refer to the appraisal document to review the methodology utilized in establishing this value. The opener of the appraiser is the "highest and best use" of the property is commercial as currently allowed in the city's zoning ordinance (page 24). Though the City has shown interest in the property for possible addition to the city's recreational land use program and in fact is identified in.the preliminary plan for the "Town Green" as a future acquisition, it is based on the city's current budgetary constraints, in my opinion, that we are unable to consider acquisition currently. It is therefore my recommendation that the City advise Mr. McDonough that it is not presently interested in purchasing the property and that the City Council ask that the EDA work with Mr. McDonough in developing the site in a manner which is beneficial to mr. McDonough and compliments the proposed development of the Town Green and Armory Site. RECOMMENDED ACTION: Accept the appraisal and inform Mr. McDonough the City isnot interested in purchasing the Sunrise property at this time. COUNCIL ACTION: CITY OF ROSEMOUNT EXECUTIVE SPRY FOR ACTION CITY COUNCIL MEETING DATE: OCTOBER 15, 1991 AGENDA ITEM: SUNRISE BUILDERS PROPERTY - APPRAISAL REPORT AGENDA SECTION: OLD BUSINESS PREPARED BY: STEPHAN JILK, CITY ADMINISTRATOR AGENDA IffEIVI5 B ATTACHMENTS: APPRAISAL APP BY: This item is back on the agenda for presentation of the property appraisal. that appraisal is complete and a copy is attached for your consideration and review. The appraised value, as established by this formal appraisal process was set at $316,000. Please refer to the appraisal document to review the methodology utilized in establishing this value. The opener of the appraiser is the "highest and best use" of the property is commercial as currently allowed in the city's zoning ordinance (page 24) . Though the City has shown interest in the property for possible addition to the city's recreational land use program and in fact is identified in.the preliminary plan for the "Town Green" as a future acquisition, it is based on the city's current budgetary_ constraints, in my opinion, that we are unable to consider acquisition currently. It is therefore my recommendation that the City advise Mr. McDonough that it is not presently interested in purchasing the property and that the City Council ask that the EDA work with Mr. McDonough in developing the site in a manner which is beneficial to mr. McDonough and compliments the proposed development of the Town Green and Armory Site. RECOMMENDED ACTION: Accept the appraisal and inform Mr. McDonough the City is not interested in purchasing the Sunrise property at this time. COUNCIL ACTION: APPRAISALS BY PEN -FIELD, INC * REAL ESTATE APPRAISAL FOR: SUSAN L. VANDERHEYDEN CITY OF ROSEMOUNT ROSEMOUNT, MINNESOTA PROPERTY BEING APPRAISED: SUNRISE BUILDER SUPPLY 14000 SOUTH ROBERT TRAIL ROSEMOUNT MINNESOTA APPRAISED BY: WILLIAM A. SCHWAB, CA -S, C.R.A. APPRAISER'S LICENSE NO. 4000585 SEPTEMBER, 1991 FILE NO. 310-91 1 1 1 1 TABLE OF CONTENTS TRANSMITTALLETTER .................0............ ' SUMMARY OF SALIENT FACTS ..................0..... PAGE NO. Forward Forward 1 ' PART I - DESCRIPTIVE DATA 1 DATE AND PURPOSE OF APPRAISAL ................... MARKETVALUE DEFINED .......................0.... ' PROPERTY RIGHTS APPRAISED .......'..........0000. AREADATA ....................................... 5 LOCATIONOF PROPERTY .................0.......... 6 ADDRESS AND LEGAL DESCRIPTION ............0...... ZONING.......................0..........00.0.... ' TAX INFORMATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROPERTYINSPECTION ......0......0............0.. 'PRESENT USE ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 NEIGHBORHOODUSES ....0 .....................0.... LOCATIONMAPS ...........0.0..0....0............0 ' PARACEL PLAT MAP......o......................... 9 DESCRIPTIONOF THE SITE .......................0. DESCRIPTION OF THE IMPROVEMENTS .....0........... ' BUILDINGSKETCH ..............0.0.0..00.000..0000 PHOTOS 0000 ........ . . . . . . . . . . . . . . . . . . . . . . . . . 0 . 0 . . 9 HIGHESTAND BEST USE ........0 ................... 10 - 12 PAGE NO. Forward Forward 1 1 1 2 - 5 6 6 7 8 9 9 9 10 - 12 13 14 & 15 16 & 17 18 19 - 22 23 & 24 ' TABLE OF CONTENTS (CONTINUED) PAGE NO. PART II - VALUATION ANALYSIS APPROACHESTO VALUE .......................0..... 25 ' COST APPROACH .............................. 26 - 32 MARKETAPPROACH ............................ 33 ' INCOME APPROACH ......................0..... 34 - 42 ' SUMMARYAND ASSUMPTIONS CONCLUSION .......................... 43 AND LIMITING CONDITIONS ............. 44 APPRAISER'S CERTIFICATION ............0.......... 45 PART III - ADDENDUM ' COMMUNITY PROFILE APPRAISER'S QUALIFICATIONS t ' Professional Full Service Appraisers Minnesota Licensed IPEMREI IN-C. Serving AU Areas of Appraisal /Needs September 25, 1991 ' Ms. Susan L. VanderHeyden Assistant City Administrator City of Rosemount 2875 - 145th Street West ' Rosemount, MN. 55068 Re: Real Estate Appraisal Property Located at: 14000 South Robert Trail Rosemount, MN 55068 Dear Ms. VanderHeyden, 10010 - 60th Street No., Stillwater, MN 55082 (612) 777-9211 WILLIAM A. SCHWAB, CA -S, C.R.A. President JACK M. SWEDAHL, CRPA/S Senior Staff Appraiser SANDY 4 REBER, CA -R Senior Staff Appraiser Pursuant to your request, I have made an appraisal of the above -referenced property for the purpose of estimating the Fair Market Value, fee simple, of the subject property. Market Value is defined as the price the property will bring in a competitive market under all conditions requisite to a fair sale, which would result from negotiations between a buyer and seller, both acting prudently, with knowledge and ' without undue stimulus. As a result of my inspection and analysis, it is my opinion ' that the market value of the above-described property, as of September 23, 1991, is in the amount of: THREE HUNDRED SIXTEEN THOUSAND DOLLARS ($316,000.00) This total value may be allocated as follows: Land - $236,000.00 Improvements - $ 80,000.00 Members ot.• AMERICAN ASSOCIATION OF CERTIFIED APPRAISERS NATIONAL ASSOCIATION OF REVIEW APPRAISERS MINNESOTA GOVERNMENTAL APPRAISERS INTERNATIONAL RIGHT OF WAY ASSOCIATION AMERICAN PLANNING ASSOCIATION APPRAISAL INSTITUTE ST. PAUL BOARD OF REALTORS WESTERN WISCONSIN BOARD OF REALTORS Specialists in Appraising of Real Estate, Business Fixtures and Equipment i J 1 II Ll The description of the property being appraised, together with an explanation of the appraisal procedures used, the data and analysis supporting my conclusions, are set forth in the body of the report. The existence of potentially hazardous materials, and/or the existence of toxic waste which may or may not be present on the property, was not observed by me, nor do I have any know- ledge of the existence of such materials on/or in the subject property. The appraiser does not possess the necessary qual- ifications to be considered an expert in the detection of hazardous materials. Should you have a concern regarding the presence of such materials, I would suggest you retain an expert in this field. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, opinions and conclusions. Sincerely yours, •lam William A. Schwab, CA -S, C.R.A. Appraiser's License #4000585 PENFIELD, INC. WAS/lc SUMMARY OF SALIENT FACTS FEE OWNERS: Michael McDonough, D.B.A. Sunrise Builder Supply PROPERTY ADDRESS: 14000 South Robert Trail Rosemount, MN 55068 LEGAL DESCRIPTION: Auditor's Subdivision #1 Part of Lots 1 and 6. GROSS LAND AREA: 10.8 Acres ZONING: C-2, Community Commercial BUILDING IMPROVEMENTS: A. Main Retail Sales Building B. Shop Building C. 2 Open Storage Sheds ASSESSOR'S ESTIMATE OF MARKET VALUE: $104,600.00 INDICATED LAND VALUE: $236,000.00 INDICATED VALUE BY THE COST APPROACH: $321,000.00 INDICATED VALUE BY THE MARKET APPROACH: NOT APPLICABLE INDICATED VALUE BY THE INCOME APPROACH: $311,000.00 FINAL VALUE ESTIMATE: A. Indicated Land Value: $236,000.00 B. Indicated Value of Improvements: $ 80,000.00 Total Final Conclusion of Value: $316,000.00 PART I - DESCRIPTION DATA ' DATE AND PURPOSE OF APPRAISAL ' The purpose of this appraisal is to form an opion as to the estimated market value of the subject property, as of September 23, 1991. ' MARKET VALUE DEFINED ' Market Value is defined as 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, knowledgeably and assuming 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 seller to buyer under conditions whereby: (1) buyer ' and seller are typically motivated; ,(2) both parties are well informed or well advised, and each acting in what he considers his ' own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. ' dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the ' property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. IPROPERTY RIGHTS APPRAISED tThe subject property, land and improvements, together with the buildings, were appraised including the property rights ' of "fee simple". The subject property has been appraised as if it were free and clear of any liens, encumbrances, and any indebtedness against the property. Fee simple, as used in this appraisal, is defined as: ' "Fee Simple Interest": An absolute fee; a fee without limitations to any particular class of heirs or re- strictions, but subject to the limitations of eminent domain, escheat, police power and taxation. An in- ' heritable estate. ' AREA DATA The subject is located in the City of Rosemount, Dakota County, Minnesota, which is located approximately 20 miles south of the St. Paul/Minneapolis loop area. Rosemount is ' in the geographical center of Dakota County and consists of 36 square miles of area. The city has a steady population growth with the 1980 census ' of 5,083 people. It also has its own centrally located down - to ' wn own-town shopping center with a variety of excellent independently owned stores and businesses. This is a very desirable commun- ity to live in with a very stablepopulation base. There is a good mix of housing types available in most price ranges. Within the community and in close proximity to it, are a num- ber of industrial and manufacturing companies which provide a ' good employment base for the community. ' The city provides a full range of municipal services. Fire and police protection along with public utilities such as ' sanitary sewer and municipal water. Other available public utilities include natural gas, electric and telephone service. ' There are approximately 160 acres of community park land and numerous county recreational areas close by for the use and enjoyment of Rosemount residents. The city has a Mayor -Council form of government with appoint- ed administrative officers. The administrative functions are carried out by full time employees who also work with a num- ber of appointed citizen committees and commissioners. The City Council has adopted a comprehensive land use development ' plan which is providing excellent guidance for the overall orderly development of the community. Rosemount is also affect- ed by growth and development activities that take place in the Twin City Metropolitan Area. 2 J J 1] J i i The Metropolitan Area has a strong and well -diversified in- dustrial base; it also is the home of a world trade center. There are some 2,500 manufacturers based in the area includ- ing Minnesota Mining & Manufacturing, General Mills, Cargill, Control Data Corporation, Northwest Airlines, Land O'Lakes, Deluxe Check Printers, Honeywell, West Publishing, Munsingwear, Cray Research and St. Jude's. Other manufac- turers include; Andersen Windows, Ford Motors Truck Divi- sion, General Motors Parts Division, General Electric, DuPont, H.B. Fuller Company and a cross section of many other national firms. The industrial growth in Minnesota, and primarily in the Twin Cities, has been greater than the average growth rate for the United States. The latest available survey of manufacturers shows Minnesota surpassing the average growth rate in 12 of 15 categories, namely: (1) Textile Mill Products, (2) Apparel and Related Products, (3) Furniture and Fixtures, (4) Paper and Allied Products, (5) Printing and Publishing, (6) Stone, Clay and Glass; (7) Primary Metals, (8) Fabricated Metal Products, (9) Machinery (except electrical), (10) Transportation Equipment, (11) Instruments and Related Products and (12) Miscellaneous Manufacturing. The Twin Cities Metropolitan Area has traditionally enjoyed a low unemployment rate. The Twin Cities are, in addition, the financial center of the Upper Midwest. The largest commercial banks are the First National Bank of Minneapolis, the Norwest Bank of Minneapolis and the First National Bank of St. Paul. The Twin Cities are the headquarters for the Ninth Federal Reserve District. It is also the home of several billion - 3 dollar savings & loan associations, including First Minne- sota and Twin City Federal. Five large insurance companies; Northwestern National Life, Lutheran Brotherhood, Western Life, St. Paul Insurance companies and Minnesota Mutual Life, together with smaller companies, have their home offices in the Twin Cities. In addition, the Twin Cities include Prudential Insurance Company's Regional Office and numerous branch offices of other insurance companies. Investors Diversified Services (I.D.S.) anchors downtown Minneapolis in the I.D.S. Tower. The Twin Cities have an excellent educational system high- lighted by the University of Minnesota, now the third largest university in the United States, with an enrollment of over 50,000 full-time students students 'on its four campuses. The Medical College has gained attention through its Medical Center, Heart Hospital and close relationship with the Mayo Clinic. Ranking in quality, although not in size with the Univer- sity, are Macalester College, Augsburg College, College of St. Thomas, Hamline College and St. Catherine College. The diversification of the Twin Cities' economy is greatly enhanced by its being surrounded by, and in a primary posi- tion to serve, a vast and rich agricultural region of the United States. Culturally, the Twin Cities supports two area museums, a science museum, two zoos, the Minnesota Symphony Orchestra, several civic theatres, a host of libraries, the Tyrone Guthrie Repertory Theatre and the Ordway Theatre. The Twin Cities has become the sports capital of the Upper Midwest with the Minnesota Vikings of the National Football League, the Minnesota Twins of the American Baseball League, the Minnesota North Stars of the National Hockey League and the Timberwolves basketball team of the National Basketball Association. Additionally, year-round participant sports are easily available to all residents within the Metropolitan Area because of the many lakes, ski resorts, hunting and fishing areas within close proximity, and an extensive public park system. In conclusion, the economic climate in the Twin Cities is excellent. The area continues to experience a broad and healthy growth based upon a well -diversified economy, coupled with an enlightened public and governmental climate. j LOCATION OF PROPERTY ' The subject property is located on the east side of South Robert Trail, AKA State Highway #3 about 1/2 mile north of the downtown business district of the City of Rosemount. As ' growth continues north from downtown area the subject is the next area for development to take place. ADDRESS AND LEGAL DESCRIPTION ' The property is located at 14000 South Robert Trail, Rosemount, MN., and is legally described as: That part of Lot One (1), and Lot Six (6), of ' Auditor's Subdivision No. 1 to the Village of Rosemount, according to the plat thereof now on file and of record in the office of the Register of 1 Deeds within and for the County of Dakota and State of Minnesota, said part•of Lot One (1) being located in the Northeast Quarter (NE1/4) and said part of Lot Six (6), being located in the Northwest Quarter (NW1/4) of Section Twenty-nine (29), Township One Hundred Fifteen (115) North, Range Nineteen (19) West, and being described as follows: Beginning at a judicial landmark the East on line of the Northwest Quarter (NW1/4) of said Section Twenty-nine (29), a distance of 1997.40 feet North ' of the Southeast corner thereof, said East line assumed to be N 000 East thence S 88013127" East 495.00 feet to a judicial land mark at the Southeast corner of said Lot One (1); thence North ' 16046128" East along the Easterly line of said Lot One (1) a distance of 668.00 feet to a judicial ' land mark on the north line of said Northeast Quarter (NEI/4), thence South 88000100" West along the North line of said Northeast Quarter (NE1/4) and Lot One (1), a distance of 688.00 feet to a judicial land mark at the Northwest corner of said Northeast Quarter (NE1/4) and Lot One (1); thence South 89044142" West along the North line of said Northwest Quarter (NW1/4) and said Lot Six (6), ' distance of 80.68 feet to a judicial land mark on the Easterly right of way line of State Trunk Highway No. 3 as now established; thence South ' 17 29151" West along said right of way line 618.44 feet; to a judicial landmark; thence South 87051' East a distance of 266.81 feet to the East line of ' Lot Six (6), and of said Northwest Quarter (NW1/4) being the point of beginning, the land herein described. (Containing 10.78 acres, more or less.) ZONING The subject property is zoned by the City of Rosemount as Community Commercial. Permitted uses include most types of commercial uses. The land use around the subject is com- mercial. Within the neighborhood there is also a good mix of quality single family residences, both existing and proposed. With continued favorable market conditions, this area will continue to experience growth rate in both commercial and residential development. 7 TAX INFORMATION FEE OWNERS: Michael and Eileen McDonough PROPERTY ADDRESS - 14000 South Robert Trail Rosemount, MN 55068 SCHOOL DISTRICT —Rosemount - #196 COMMUNITY - City of Rosemount COUNTY - Dakota STATE - Minnesota The 1991 real estate taxes are reported to be $3,832.36. There were no special assessments reported. No search of pending assessments was made. The property is classified as non -homestead. The property is described on 2 separate tax statements. A. PARCEL IDENTIFICATION NUMBER: 34-03700-010-00 ASSESSOR'S ESTIMATED MARKET VALUE: Land - $64,200.00 Improvements - $18,900.00 Total: $83,100.00 B. PARCEL IDENTIFICATION NUMBER: 34-03700-030-06 ASSESSOR'S ESTIMATED MARKET VALUE: Land Only - $21,500.00 PROPERTY INSPECTION ARRANGEMENTS AND DATE On September 23, 1991, I met with Mr. Michael McDonough at the subject property and, with his permission, made a thorough inspection at that time. I inspected the interior of the subject property and photographed and measured the exterior of the structure. PRESENT USE The subject property is improved with a number of separate buildings. There is the main retail sales building, 4 shop and two open faced storage buildings. There is excess land beyond that which is needed to support the existing building improvements. That excess land is vacant. NEIGHBORHOOD USES The property is located on the east side of Highway 3, South Robert Trail. Land uses in the area are a mixture of commercial, residential and public. There is commercial and a mobile home park to the north. To the west is additional commercial, the high school and the site for the National Guard Armory. There is a park to the east and a cemetery to the south. 0 Rt.,.w+te T 49 r e tw IM �, �_ � I 4C1 I ...✓... tA.N� Man •7�ir..p.I Metro Area Location Map 4 I i b.a - Bill . a 65 A N i A �-- R�ww..� Una Lakes i r I tP`od • • I c t"w ( ; , •�` I �' �S.a.e.I. tri°t �- ,. . By .: 1D` r EeaAem 11 11j' T k q� Pi c SQUARE tdr cr.rh.a Lade:. EI' - f - ,. n c NI 7. • Lew C :4 !B18 1 49 an Li wNhnYw U k 'c.-e- SDatl ��•_ marc$er+w..wr ,c.$(.'A.rirY L o £ L• E t Lw PMp t L_Le B Dell L.J. Orth Oaks 1° _ 'i Pa 41 m. RD. xi � �--'= ' j P;wr�T+w t~ e}' t.e�`ar 95 • �.-"'„. •., r ',;� D;�rt 1v ... . +r✓H trA� Dkl ,kt ,• G1 var irr 0 ,_. herr o - I sr. 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W.._._ I - I - - - I 4 �. �� __ i 1s.a ' EMPIRE TWP_ aT t I V2 - - _ _ _ - - - Z 1 ml I s r f m Q ROSE OUNT I RESEARC . RD. 58 170TH ST. W. I a twr.... Al—'j '-411170TH-ST'.^W.'•.a•"' � I EMPIRE TWP. UNIVERSITY C _ �_— — 7 — — • — — '—. — — — 912— — — — — — — —O Parcel Plat Map j- a `i Ln y� Z T n ,y m A/,* Ib - a 1 � 1 a 1 13 J DESCRIPTION OF THE SITE The subject property is irregular in shape. The parcel has 618.44 feet of frontage on South Robert Trail, AKA State Highway #3. The average parcel depth is about 765 feet. ' Based on a survey by Sigma Surveying, Services Inc., the parcel size is 10.78 acres. The subject parcel has a sloping to slightly rolling topography. The parcel is lower than the elevation of South Robert Trail. It slopes down to the east for about 3/4 of the parcels depth, then it slopes up again toward the rear property line. over the years some filling has taken place to raise the site and provide a mdre level surface. There are areas of the site that had black dirt deposits which were mined and still have not been reclaimed. Drainage appears adequate with no evidence of surface water adversely affecting the improvements. The general drainage pattern is towards the center of the parcel and then northerly. There appear to be no adverse soil conditions that would adversely affect the marketability of the subject property. It should be noted that no soil tests were made by the appraiser, nor did he have any available to review. It would be advisable to have some compaction test performed on the areas that have been filled. There also appear to be no violations or encroachments noted that would affect the market value of the subject property. The property is served by an on-site private sewage disposal system and a private well. It is my understanding that the City of Rosemount is considering extending both municipal sanitary sewer and water to the subject in the near future. 14 Other utilities available to the site through local utility companies include natural gas, electric and telephone services. South Robert Trail is bituminous surfaced and is a state highway. That road provides primary access to the subject property. There are no sidewalks and the road has a rural ditch section. It would be most desirable if this parcel were fully developed as a single planned unit with one access road to State Highway #3. 15 I DESCRIPTION OF THE IMPROVEMENTS ' The subject improvement consist of a number of seperate pole type buildings. The principal building is the retail sales building. This structure is 64 feet wide and 84 feet deep. The west 26 feet of the building has been finished as an office and customer service area. The wall and ceiling are ' finished, there is a working fireplace, a rest room with two fixtures and a display area. The remainder of the building is unfinished storage space. There is no floor or other finish except for electric power. The exterior of the ' building is metal siding. There is a roof extension at the main entry door, forming a porch. The building has a 100 ' amp, 220 volt electric service, it is connected to natural gas and has a small electric water heater. The overall building size is 5,376 square feet. The front finished area ' is 1,664 square feet and the unfinished area is 3,712 square feet. The open-faced p d storage building that is northof and ' adjacent to the retail building is a pole building with metal siding. The floor is dirt and there is no interior r finish. The building is 30 feet wide by 40 feet deep for an overall size of 1,200 square feet. The second open-faced storage shed is of pole construction and is adjacent to the shop. The building has metal siding, a dirt floor, and no interior finish. The building is 36 feet long and 16 feet deep for an overall size of 576 square feet. There is a shop building which has finished walls and ' ceiling, is insulated and has a ceiling hung gas fired, forced air furnace. The floor is concrete and there is a 100 amp, 220 volt electric service. Extensive interior ' remodeling of this structure has taken place over the past 16 ' few years. This building is 26 feet wide by 60 feet long for a total overall size of 1,560 square feet. ' The driver andarkin p g areas are gravel. There is an outside storage area south of the main retail building. The buildings are functional for there present use. They do add value into an overall design concept for the property. 17 ' Open 40' Faced Storage MOW— Z 84' 64' BUILDING SKETCH Drive 26' SOUTH ROBERT TRAIL ' Michael McDonough ' 60' ' Rosemount, MN 55068 File #310-91 Shop 18 36 Open Faced Storag 16' ' 30' ' Open 40' Faced Storage MOW— Z 84' 64' ' Drive ' SOUTH ROBERT TRAIL ' Michael McDonough 1400 South Robert Trail ' Rosemount, MN 55068 File #310-91 18 PHOTOGRAPHS Property Owner: Michael McDonough Property Location: 1400 South Robert Trail - Rosemount MN 55068 DESCRIPTIONS 7 1 Photo No. View of ' building 1 subject retail looking easterly. Photo By: William Schwab Date Taken: September 23, 1991 _ PENFIELD, INC. 19 PHOTOGRAPHS Wroperty 0,.%ner: Michael McDonough Property Location: 1400 South Robert Trail - Rosemount_, MN 55068 DESCRIPTIONS Photo No. 3 View of open faced storage tuilding adjacent to and orth of the retail building. Coto No. 4 iew of open faced storage uilding adjacent to and west �f shop building. L� Photo By: William Schwab Date Taken: September 23, 1991 PENFIELD, INC. ' - 20 PHOTOGRAPHS y Owner: Michael McDonough y Location: 1400 South Robert Trail - Rosemount, MN 55068 DESCRIPTIONS Photo No. 5 View of shop building. Coto No. 6 iew of South Robert Trail n front of subject property, l r —a— Photo By: William Schwab Date Taken: September 23, 1991 _. PENFI EL D, INC. 7 21 PHOTOGRAPHS Property 0,-ner: Michael McDonough —Property Location: 1400 South Robert Trail - Rosemount, 19N 55068 DESCRIPTIONS F Photo No. 7 kiew of subject lot looking foutherly from driveway. i� -I 1hoto No. 8 iew of subject asterly, south improvements. 0 Photo By: William Schwab Date Taken: September 23, 1991 _ PENFIELD, INC. lot looking of r 22 ' HIGHEST AND BEST USE ' Highest and Best Use is defined as "the most profitable likely use to which a property can be put". The opinion of such use may be based on the highest and most profitable continuous use to which the property is adapted and needed, or likely to be in demand in the reasonably near future. However, elements ' affecting value which depend upon events or a combination of occurances which, while within the realm of possibility, are not fairly shown to be reasonably probable, should be excluded from consideration. Also, if the intended use is dependent on an uncertain act of another person, the intention cannot be ' considered. 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. ' In analyzing highest and best use of a site and the improve- ments, the appraiser must complete the Site Analysis before a ' conclusion of the highest and best use of the site is possible. This Site Analysis also indicates the present uses of the subject which must be considered in this highest and best use analysis. The appraiser must fully evaluate four pertinent areas that contribute to highest and best use. These four areas are as follows: 1. Physical Possible Uses: Uses that are physically possible on the subject site and/or in the subject improvements, ' given the physical characteristics of the site as revealed by the property analysis. 1 23 2. Legal Permissible Uses: Uses that are permitted under existing zoning and other land use regulations and controls, or that may be permitted by probable changes in those regu- lations or controls, and under deed restrictions, covenants, easements and lease restrictions. 3. Feasible Uses: Uses that are legally permissible and phy- sically possible for the subject property, that are appropriate given the characteristics of the marketplace and neighborhood, which will produce any net return to the owner of the subject property. 4. Highest and Best Use: The use among the feasible uses for the subject property that will produce the highest present value. After completing our analysis for the highest and best use, it is our opinion that the highest and best use of this subject site is for use as a commercial purposes as provided in the existing zoning ordinance. 24 PART II - VALUATION ANALYSIS APPROACHES TO VALUE There are three Approaches to Value utilized in most appraisals. The purpose of using three approaches is that each acts as a check against the other. These approaches are as follows: The Cost Approach The Cost Approach is a method whereby the estimated value of a property is obtained by adding to the land value the depreciated value of the improvements. Market Approach The Market Approach is a method for estimating the value of a property on the basis of selling prices of comparable properties. The rationale is that a purchaser will usually not pay more for a property than he would be required to pay for a comparable alternative property and a seller will not take less than he can obtain elsewhere in the market. Income Approach The Income Approach to Value is a method whereby the income or anticipated income of a property is used to estimate the value of the property. Normally these approaches will each generally indicate a different value. After all the factors have been carefully weighed, the indications of value derived from each of the approaches are correlated to arrive at a final estimate of value. 25 ' ESTIMATE OF MARKET VALUE COST APPROACH In the Cost Approach to Value, an indication of value is ' obtained by adding the estimated land value to the estimated replacement cost of the improvements less any depreciation ' occurring to the improvements. This analysis recognizes that the improvement replacement cost tends to represent the upper limit of its indicated value. Estimated Value of Land as if Vacant ' In order to estimate the value of the land, the subject property is normally considered in'the light of sale of other ' similar lands within the neighborhood or in other competitive locations. From knowledge of this type of market data, a ' judgment as to the value of the subject property can be made that is considered a valid support to the indicated conclu- sions. This is a process of analyzing sales of similar recently sold ' properties in order to derive an indication of the most probable sales price of the property being appraised. The reliability of this technique is dependent upon (a) the availability of comparable sales data, (b) the thoroughness of the sales data, (c) the degree of comparability or extent of ' adjustment necessary for time differences, and (d) the absence of non -typical conditions affecting the sale price. The following page shows recent market transactions of ' properties that are comparable; subject to adjustments for selling date, location, etc., with the subject property. 1 26 C G n 11 n �I J MARKET DATA - VACANT LAND A search of land sales within the City of _Rosemount for parcels similar to the subject produced no sales within the past year. The search was then expanded to include other communities in Dakota County. I came up with the same results. The differences were that all recent sales of commercial property with similar zoning had municipal utilities, both water and sanitary sewer. The typical sale prices started around $2.00 per square foot and went up. I did locate a few sales where municipal sanitary sewer and water were not to the parcel. These sales were over a year old and outside the City of Rosemount. These sales do, however, tend to give us an indication of market value for land without public utilities, that are in a service area and have a commercial land use planned or approved. We also know the land values in the business park, south of County Road #42, are in the range of $2.50 per square foot to $3.50 per square foot. Based on the sales of parcels without utilities and not in established business parks, we know that about $1.50 to $2.50 of that value relates to those items. Therefore we can state that a typical parcel of land with good exposure, no public utilities but in a service area, relatively level topography with no soil problems and ready for development, would have an indicated market value of about $1.00 per square foot. The following are some of the sales I looked at to guide me in arriving at the opinion first expressed. A. 751 Carrousel Way. Sold for $2.43 per square foot in 1990. B. Part of Lot 1, Block 1 South Rose Park Addition sold for $3.09 per square foot in 1985. That sale was to the Holiday Stores. 27 0 ' C. S.E. corner of Chippendale Ave and 151st Street, this parcel sold for $2.67 per square foot in 1984. ' D. 161st Street West east of Cedar Avenue, this parcel sold for $2.04 per square foot in 1989. E. Lot 3, Block 1, Century Addition in the City of ' Eagan, this property sold for $2.50 per square foot in 1988. ' F. 14690 Galaxie Avenue, sold for $1.20 per square foot in 1988. This parcel did not have utilities to it. They were planned for extension when development ' plans were approved. G. Northeast corner of 162nd Street at 35W. The parcel ' has frontage on the frontage road. This is a 13 acre parcel which sold for $0.68 square foot in per 1988. Utilities are planned for extension in 1993. H. Highway 5 south of Highway 36 in Baytown. This 7.5 acre parcel sold for $0..53 per square foot in 1990. Public utilities are planned for the area but are projected to be three to four years away. Part of ' the parcel has a storm water pond on it. ' In appraising the subject property, I took into consideration the factors that were a part of the value consideration of ' each of the sales listed and those others I evaluated. As stated earlier, a typical parcel without utilities, ready for development has a market value of $1.00 per square foot. Now we need to evaluate the subject property in light of a typical parcel having a value of $1.00 per square foot. The subject has a good location, however, being below the ' grade of South Robert Street tends to effect its exposure. With a sloping topography the parcel has less utility than a level lot. There is also a low area and steep slopes along the east portion of the parcel. About 25% or 3 acres of the subject is in my opinion about 25% inferior to a typical ' parcel. About 30% or 3.3 acres of the subject is about 45% inferior to a typical parcel. The remainder of the parcel or ' 4.5 acres has low land, a pond and steep slopes and in my opinion has a value of about 30% that of the typical parcel. 28 I ' The following are the calculations used to determine the - estimated market value of the subject based on the above listed opinions: ' Total subject parcel size 10.8 acres. 3 acres at $0.75 per square foot is = $ 98,010.00 ' 3.3 acres at $0.55 per square foot is = $ 79,061.00 4.5 acres at $0.30 per square foot is = $ 58.806.00 Total estimated value = $235,877.00 Say = $236,000.00 It is my opinion that the Estimated Value of land is: TWO HUNDRED THIRTY-SIX THOUSAND DOLLARS ($236, 000'. 00) Replacement Cost Estimate The Replacement Cost Estimate represents the appraiser's opinion of the cost of the replacing of the improvements at ' current prices. In this approach, all costs of producing the property are normally considered such as; architect's fee, financing cost, taxes and interest during construction, ' appraisal and legal fees, and other miscellaneous expenses. In calculating the cost of the improvements, Boeckh Building Valuation Manual, and the appraiser's experience with con- struction cost in the area are relied upon. F, L_ F1 7 ' 29 Depreciation ESTIMATE OF MARKET VALUE COST APPR9ACH (CONTINUED) ' All buildings except new ones suffer some physical depre- ciation. This appraiser feels that the amount of depreciation ' shown would be the amount that buyers and sellers would recognize in typical market transactions. 1 30 Depreciation generally results from one or more of three sources. These sources are known as physical deterioration, functional depreciation, and economic obsolescence. 1 Physical depreciation is a loss of value due to general wear and tear of the buildingdue to age, g , deferred maintenance or from other sources which cause the building to wear out. Functional depreciation is obsolescence in the building due to ' layout, changing tastes in design and use of materials, etc. Economic obsolescence is a reduction in value of the total real estate caused by factors outside the property itself, ' i.e. from proximity to other properties and usages which create depreciation in the subject property. ' All buildings except new ones suffer some physical depre- ciation. This appraiser feels that the amount of depreciation ' shown would be the amount that buyers and sellers would recognize in typical market transactions. 1 30 ESTIMATE OF DEPRECIATION Physical The age of the subject buildings was not available through Dakota County records. The appraiser viewed each building to determine a remaining economic life upon which to estimate physical depreciation. The appraiser can also by observation estimate the effective age of each building. Using the age/life method of depreciation provides a depreciation percentage. For each building this was done and that percentage was applied. Functional Obsolescence The improvements are adequate with respect to their present use. The building functions well as is currently utilized. It is our opinion there is no functional obsolescence. Economic Obsolescence The subject is well -located with respect to continued demand for land. There is no observable outside influence which would have an adverse affect upon the value of the subject property. It is our opinion there is no economic obsolescence. 31 S 11 tM 91 l 11 J r] ESTIMATED REPLACEMENT COSTS OF IMPROVEMENTS Subject Building A. Retail Sales Building: 1. Finished area: 1,664 square feet @ $30.00 = $ 49,920.00 2. Open storage area: 3,712 square feet @ $9.00 = $ 33,408.00 Total replacement cost new = $ 83,328.00 Less physical depreciation (-} S 20.832.00 Indicated depreciated value = $ 62,496.00 B. Open faced storage building 1,200 square feet @ $6.00 per square foot - $ 7,200.00 Less physical depreciation $ 1.440.00 Indicated depreciated value = $ 51760.00 C. Second open faced storage building 576 square feet @ $6.00 per square foot = $ 31456.00 Less physical depreciation (-) $ 2.592.00 Indicated depreciated value = $ 864.00 D. Shop building 1,560 square feet @ $20.00 per square foot = $ 31,200.00 Less physical depreciation (-) $ 17.160.00 Indicated depreciated value = $ 14,040.00 Total Present Indicated Depreciated Value of Subject Buildings. _ $ 83,160.00 Estimated Indicated Depreciated Value of Site Improvements Inplace: _ $ 2,000.00 Estimated Land Value _ $236,000.00 Total Indicated Value of Land and Improvements = $321,160.00 Rounded to Say: _ $321,000.00 It is our opinion the Estimated Value of the Subject by the Cost Approach is THREE HUNDRED TWENTY-ONE THOUSAND DOLLARS ($321,000.00) 32 MARKET DATA APPROACH TO VALUE Market Data is good evidence of value because it represents the actions of users and investors. In this approach to value, the appraiser compares the subject property with recent sales and offerings of similar properties. This approach to value is based on the principle of substitution, which states that "when a property is replaceable in the market, it's value tends to be set by the cost of acquiring an equally desirable substitution". Thus, sales in the open market of properties with generally similar characteristics and utility are good indicators of value. In the case of the subject property we have a commercial use taking place on a parcel without public utilities where there is excess land which is more than 50% the total parcel size. I researched the market place to find sales I would consider comparable to the subject. The sales I was able to find were far superior to the subejct in that they had full utilities in commercial area or were in rural areas. Major adjustments would be needed which would make the results meaningless. Therefore it is my opinion the use of the Market Data Approach is not applicable in determining the subjects market value. 33 INCOME APPROACH TO VALUE Basic Premises of the Income Approach to Value: Real estate which is purchased as a financial investment for the purpose of producing income is most often appraised by the Income Approach to Value. Such income-producing real estate usually includes apartments, stores, office buildings, shopping centers, industrial and other commercial properties. In appraising such real estate, the market value tends to be set by the quantity, quality and durability of the net income produced from the property. The first step is to estimate the'economic gross income which the property can generate considering that it is fully utilized, plus any miscellaneous or service income. The economic rent for the property is estimated from the market place by comparison to competitive, comparable property rentals. In practice, an income-producing property is not expected to be fully occupied throughout its entire useful life. A deduction is, therefore, made from the economic gross rent for anticipated vacancies and collection losses which result in an effective gross income. Other claims upon gross income are operating expenses which are forecasts of cash outlays based on a typical year's operation. These expenses are grouped into four basic categories: (a) fixed expenses such as property taxes and insurance, (b) variable expenses such as utilities, heat, management fees, (c) repair and maintenance, (d) new capital expenses and replacement reserve. 34 IBasic Premises of the Income Approach to Value (con't.) ' The income remaining after deducting operating expenses from the effective gross income is the net operating income. ' This net operating income is available to pay annual debt service, plus to provide a return on the equity investment. The net operating income is utilized in the capitalization ' process. ' capitalization is the process of converting into present value a series of anticipated future annual installments of income by discounting them into a present worth at a rate ' which is attracting purchase capital to investments with similar characteristics, such as risk and term. There are different methods to capitalize income; the ones most commonly used have variable built-in assumptions. The basic premise of the Income Approach is that a prudent investor will not invest a greater amount of money in a property than the ability of such property to produce a specific return on and return of his investment. ' The quantity, quality and durability and the net income gathered by an income-producing property tend to establish ' an estimated market value for the property. ' Gross Income is reduced by the expense paid by the property owner to produce net income before recapture and taxes. This net income is then capitalized by dividing it by the ' appropriate rate of capitalization. J Reducing this statement to a simple mathematical formula, we would express it as: Net Income = Value Overall Rate 35 0 0 k - I 7 J J Basic Premise of the Income Ar roach to Value (con't.) Within this specific formula there are two basic choices or methods used by appraisers today: The appraiser goes directly to the market ... that is, through the analysis of the sales of comparable properties and the relationship of the income produced in relationship to the sale, he is able to abstract the capitalization rate for this type of property. The differences between the properties, such as size, age, relationship of buildings to land, type of units within the building, location, etc., are taken into account. The Ellwood Capitalization Method is a composite rate which considers the income over a shorter period of time, usually a 10 year period. It also considers that in addition to the equity invested by the owner, there will normally be a mortgage to complete the financing. The property producing this income will either appreciate or depreciate during the period of con- sideration. All these items, including the build-up of equity by the investor, are considered in the Ellwood Method. Apartments, stores, offices, shopping centers, industrial and commercial buildings are generally considered to be income-producing properties. Single-family residential dwellings are usually not considered to be income-producing property and, therefore, this approach usually will not be included when appraising single-family residences. 1 36 fl � I u� MARKET RENT ESTIMATE The subject property being commercial is considered as income- producing property. In order to obtain a measure of the subject's income-producing capability, it is necessary to establish an economic rent for the subject property. The economic rent may be the current rent or the most probable rent as obtained by comparison to competitive, comparable property rentals. I have looked for rental information pertaining to small commercial/retail buildings. Most buildings of this type are owner occupied as is this building. I then looked for other commercial buildings primarily freestanding commercial/retail buildings. I looked at a number 6f commercial/retail building rental properties in the Rosemount and Twin City Metropolitan Areas. Most of the freestanding, single -tenant, commercial buildings are being rented on a triple -net type of lease. Based on the information I have been able to gather and my analysis of that information along with discussions I had with the property owner, it is my opinion the subject property has a fair and reasonable economic rent as follows: A. Main retail building and the two open ' storage buildings. $1,500.00 per month. ' B. The shop building. $500.00 per month. Total per year is: ' $2,000.00 per month x 12 = $24,000.00 9 37 ESTIMATED OPERATING EXPENSES I have considered the market rent to be based on a tripe -net basis; therefore, the tenant will pay in addition to the rent, all other expenses including insurance, taxes and maintenance. The owner's only expense would be a vacancy allowance, management cost and a small replacement reserve. I have estimated this expense item to be St. ANNUAL NET OPERATING INCOME Current estimated market rent is $24,000.00, less estimated operating expenses of 8%. Annual rent Less 8% Annual Net Operting Income 38 $24,000.00 (-) S 1,920.00 $22,080.00 n 0 MORTGAGE/EOUITY (ELLWOOD) METHOD OF CAPITALIZATION USING A "J" FACTOR The mortgage/equity method gives consideration to the amount and terms of existing or available financing that is typically utilized in the creation of investments in various types of income-producing real estate. A sale may produce all cash for the seller, but the buyer may still secure the purchase capital by borrowing as much mortgage money as possible at terms cur- rently available in the finance markets. The balance of the price over the obtainable mortgage will be the equity investment. The new income from such a mortgaged property will therefore be ' utilized first to pay debt service (interest and amortization) on the mortgage loan, and the remaining portion of such income will ' be cash flow or dividend to the equity investment. ' Benefits to an equity investment are two -fold. First, during the tenure of ownership, an investor will enjoy a series of cash flow ' dividends consisting of net income remaining after payment of debt service. Second, he will profit to the extent the equity position gains value during the period of ownership. Without ' regard to accrued depreciation, enhancement in the equity may result by reason of the amortization feature of the mortgage ' loan. When mortgage amortization exceeds depreciation, the value of the equity will increase. All capitalization methods discount ' anticipated future benefits to reflect present worth, and the compund interest principle is involved in this discount process. In the mortgage/equity method, the use of short income -projection periods is logical. Observations will demonstrate that many ownership tenures of investment property run a short term of ' 39 ' years with the investor selling when income tax deductions for depreciation of building improvements ceases to shelter the ' mortgage amortization payments, typically in about eight to ten years. In all investments, the element of recapture is import- ant. The investor deserves a return on his capital while in the investment, and looks equally for return of investment capital, or recapture. In the mortgage/equity method, recapture is ' accomplished through amortization of the mortgage during the investment term and then sale of the equity position at the end ' of the investment period. ' The foregoing rationale represents typical conditions, factors and reasoning found in the market for investment properties; and ' it is clear that a capitalization method should contain provision for all these important items. The mortgage/equity method accomplishes this objective by utilizing the proper overall rate ' in the following direct capitalization valuation process: Value = Net Income Overall Rate ' A formula has been developed for the overall rate containing provision for all the objectives and reasoning of the typical investor to income properties. Itis: RO = YE - MC - AO F.F.) 1 + LSI (J) ' In using the Mortgage/Equity Method of capitalization, the following assumptions are made in developing a proper overall capitalization rate for the subject based upon the indicated ' market assumptions. This method allows for equity build-up during the holding period. The following are the assumptions I ' used: 11 40 A. Mortgage Loan to Value Ratio: (M) 75% B. Mortgage Interest Rate: (I) 11.75$ C. Mortgage Amortization: 20 yrs. D. Income Projection Period: (N) 10 yrs. E. Equity Yeild Rate: YE 15% F. Change in Market Value o A Property During Holding Period: Leo 30% G. Change in Net Income fronA Property During Holding Period: L -II 30% H. Mortgage Coefficient from Ellwood Table "C": C .031624 I. Sinking Fund Factor at the Equity Yield Rate from Ellwood Table "C":S.F.F..049252 J. Factor for Changing Income in Relation to Changing Value from Ellwood Cy Tables: J .3258 Calculations: RO = .15 - (.75 x .031624) - (.30 x .049252) _ 1 + (.30 x .3258) RO = .11327 = .10158 Say: .10 1.0977 Overall Capitalization Rate = 10% We have also looked at the market place to find a capital- ization rate which is acceptable to investors who are pur- chasing this type of income-producing real estate. Based on our findings in the market place and in the Mortgage/Equity Method, it is my opinion that a capitalization rate of 10t is realistic considering the subject's age, condition, and the current financial climate. 41 Net Income of $22,080.00 at a capitalization rate of 10% is: $22,080.00 divided by .10 = $220,800.00 Say: $221,000.00 As discussed earlier in this report there is excess land. That is the part of the parcel not needed to support the building improvements. In the case of rental property we would not expect a renter to pay rent for property not needed to carry out the commercial activity. Based on the present use, which was considered in estimating the fair market rent, about 5 acres of land is needed to support the present building improvements. That means there is 5.8 acres of excess land. Looking back at the Cost Approach to determine the market value of the excess land we find that 4.5 acres has a value of $0.30 per square foot, leaving 1.3 acres at a value of $0.55 per square foot. 4.5 acres @ $0.30 per square foot is $58,806.00 1.3 acres @ $0.55 per square foot is = $31,145.00 Total value of excess land = $89,951.00 Say: - $90,000.00 The estimated value by the Income Approach is that value determined by estimated income plus the added value of the excess land. _.A. Income Value B. Excess Land Total $221,000.00 $ 90,000.00 $311,000.00 Estimated Market Value by the Income Approach THREE HUNDRED ELEVEN THOUSAND DOLLARS ($311,000.00) 42 J n F, 0 n F, u u SUMMARY AND CONCLUSIONS The estimate of market value based on the different approaches used for thesubject property have previously been explained in detail, and those valuation estimates are summarized as follows: Cost Approach to Value - $321,000.00 Market Data Approach to Value - Not Applicable Income Approach to Value - $311,000.00 The Cost Approach provides for an estimate of land value, to which is added the depreciated reproduction or replacement cost estimate of the improvements. Consequently, the im- provement replacement cost, plus land value, represents the market value. The Market Data Approach is normally considered an excellent method of estimating property values as it is an actual re- flection of the market and includes the thinking of the buyer and seller as an ingredient to "Market Value". The reliability of this technique is dependent upon (a) the degree of comparability of each property with the property being appraised, (b) the time of sale, (c) the absence of unusual conditions affecting the sale. The Income Approach to Value is a method whereby the income, or anticipated income, of a property is used to estimate the value of the property. Income which, when capitalized in a manner that is commensurate with the risk and the life ex- pectancy of the improvements, will indicate the present value of the income stream, or the estimated market value. Within my final conclusion, the Market Approach was given no consideration. I used 50% factor for the Cost Approach, and a 50% factor for the Income Approach. After consideration of all of the factors affecting the ' value of this property, it is our opinion that the Indicated Market Value of the subject, as of September 23, 1991, is in the sum of: THREEE HUNDRED SIXTEEN THOUSAND DOLLARS ($316,000.00) 1 43 ASSUMPTIONS AND LIMITING CONDITIONS Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media, without the written consent and approval of the author, particularly as to valuation conclusions, or the identity of the appraiser or firm with which he is connected. 44 The property has been considered as though it were free and clear of any indebtedness, liens, or encumbrances; and that said title is good and marketable, and competent management is assumed, unless otherwise stated herein. No responsibility is assumed by the appraiser for matters which are legal in nature. No survey has been made, and it ' is assumed that any improvements are located within the legally described property and that the buildings, if any, comply with all ordinances. ' Any sketches and pictures in this report are included mainly to assist the reader in visualizing the property, and are ' not guaranteed to be 100% accurate. The appraiser has no present or contemplated interest in the property appraised, nor is his employment in any manner con- tingent upon the value reported. Possession of the report, or any copy or part thereof, does not carry with it the right of publication. Further, all of the data contained herein must be used as whole. Any a page or portion taken out of context cannot stand alone, and in- validates the entire appraisal. The appraiser herein shall not be required to appear in court, or before any governmental body, by the reason of the completion of the assignment without predetermined arrange- ' ments and agreements. ' The data contained in this report is in no sense guaranteed; but has been gathered from reliable sources, and the appraiser certifies that to the best of his knowledge and belief, the statements, opinions, and materials contained in ' this appraisal subject to the above limiting conditions, are correct. Any cost data used herein is taken from charts and material maintained in our office and constantly kept up to date, based upon local labor and material costs in and around the area of the subject property. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media, without the written consent and approval of the author, particularly as to valuation conclusions, or the identity of the appraiser or firm with which he is connected. 44 APPRAISER'S CERTIFICATION ' PENFIELD, INC. The appraiser does hereby certify that, except for otherwise ' noted in this report: I have personally inspected the subject property. ' I have no present or contemplated future interest in the property that is the subject of this appraisal report. 1 I have no personal interest or bias with respect to the subject matter of the appraisal or the parties involved. ' My compensation is not contingent upon an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report. ' To the best of our knowledge and belief, the statements of fact contained in this appraisal report, upon which the analysis, opinions and conclusions expressed herein are based, are true and ' correct. This appraisal report sets forth all'of the assumptions and ' limiting conditions (imposed by the term of the assignment or by the undersigned) affecting the analysis, opinions and conclusions contained in this report. This appraisal report was made in accordance with the Code of Professional Ethics and Standards of the appraisal organizations with which I am affiliated. ' All conclusions and opinions concerning the real estate that are set forth in the appraisal report were prepared by the Appraiser whose signature appears on the appraisal report, unless indicated as "Review Appraiser". No change of any item in the appraisal report shall be made by anyone other than me, and I shall have no responsibility for any such unauthorized change. tThe opinion of the market value of the property as described herein and subject to the assumptions and limiting conditions of the report, is certified, as of July 11, 1991, to be: THREE HUNDRED SIXTEEN THOUSAND DOLLARS ' ($316,000.00) Appraised and Certified By: r William A. Schwab, CA -S, C.R.A. Appraiser's License #4000585 PENFIELD, INC. 45 0 HENT OF ENERV, PLANMNG AND DEVELOPMENT 480 CEDAR STREET. SAINT PAUL. MINNESOTA $5101 ROSEMOUNT COMMUNITY PROFILE 'TOWN Rosemount COUNTY Dakota REGION 11 Distance and Direction from Minneapolis/St. Paul 15 miles South Duluth 150 miles South L n City 1850 Census 1,375 1960 Census 2,012 1970 Census 4,034 1980 Census 5,083 Bureau of the Census I Major employers in area: Firm 'Independent School District 196 Dakota County 110 -Tech Institute Brockway Glass Company 'Koch Refining Greif Brothers 'N -Ren Corp. (St. Paul Ammonia) Spectro Alloys Reese Enterprises ICentennial Trucking, Inc. Carlson Tractor 'Genz & Ryan Plumbing & Heating C. F. Industries, Inc. POPULATION County 49,019 78,303 139,808 194,279 INDUSTRY Product/Service Education Education Glass Crude Oil Multiwall Bags Chemical Fertilizers Alum. Alloys Mfg. Weatherstripping Trucking Ind. & Farm Equip. Plumbing & Heating Dry Fertilizer 'EMPLOYMENT Labor survey date 1982 annual avg. nonagricultural wage and salary employment Number of Employees * SMSA 1,186,684 1,535,297 1,874,612 2,109,207 Union % No. (Give of Emp. employees Initials) In Union 1,390 449 410 600 160 110 85 50 35 28 27 25 Manufacturing 232,400 Unemployment rate 6.4% annual avg. 7 county Non -manufacturing 833,600 Niimher in lahnr force availahla 'Total labor force 1,066,000 Minneapolis -St. Paul SMSA Manufacturing Occupations In Area t (Production and Clerical) Occupation or Job Title Median Wage Auto Mechanic $ 9-40 /hr. 'Welder $ 9.00 /hr. Machine Operator $ 7.80 /hr. ' Licensed Practical Nurse $ 5.65 /hr, Bookkeeper $ 5.65 /hr. Typist $ 4.55 /hr. ' Cashier or Teller $ 4.30 /hr. TRANSPORTATION Rail Lines (companies) C.& N.W.; Soo Line; Milwaukee Road Frequency of Service unlimited 'Reciprocal Switching Yes Distance to Main Line Switching on main line Piggy -back Service Yes Passenger St. Paul *Truck Lines (companies) 27 headquartered In metro area (over 100 first class carriers) ' * No. of terminals 60 *Airport 12 Nearest Minneapolis—St. Paul International '*Commercial: (X ) Yes ( ) No Charter Service: ( X ) Yes ( ) No Jet Service: (X ) Yes ( } No *Airlines 11 national/international; 10 local/regional *Navigation Aids all FAA aids for international airport t*Runway length, surface' 10,000 feet concrete Distance to CBD 15 mi 1 es *Bus -Inter city . Greyhound, Jefferson, Zephyr Intra City MTC United Parcel Yes Highway route numbers, interstate/Distance 10 miles to 1-35W Federal #52 State #3, #55, #56 Load Limits 9 ton Navigable water Yes Depth 9 feet Specials 4.1241982 COMMERCIAL/INDUSTRIAL TAXES PAYABLE 1983 Municipal rate $ 16.186 /$1000/assessed valuation METHOD OF ASSESSMENT FDR COMMERCIAL/INDUSTRIAL PROPERTIES ' County $ /$1000/assessed valuation 19.594 Minnesota real estate taxes are based on market value. Market value is construed to be the price that a willing buyer would pay to a willing School rate $ 56.725 /$1000/assessed valuation seller in a free market. A two-step formula is used for determining property taxes for commercial/industrial properties. ' Total rate $ 96. /$1000/assessed valuation 629 1. The first $50,000 of market value times 40% plus the remaining market value times 43% equals assessed valuation. 2. Assessed valuation times the total mill rate equals property taxes payable. GOVERNMENT Organization: ( X) mayor council ( ) limited mayor ( ) manager council ( ) commission ( ► other ' Refuse service: ( ) public ( X ) private ( ) none Police Force, regular 7 part time 0 Fire dept., regular 0 volunteer 32 Annual budget S 1.3 mi 11 i nn Master Plan: ( X) yes ( ) no Industrial plans must be approved by Planning Commission & City Council Insurance rating in community: class 1 2 3 4 5© 7 8 9 10 (circle) -1 UTILITIES WATER Municipal water source: ( )stream ( ) lake ( X ) wells Storage capacity 500,000 gals. Pumping capacity 2,355 gal./min. Avg. demand_ 331, 000 G/D Peak demand 736,000 GID Industrial water rate 95� per 1, 000 gal l ons water ' Total hardness tapwater 280 ppm ' SEXIER Metropolitan Waste Control Commission EDUCATION Capacity sewage treatment plant GID; Peak demand G/D; Avg. demand G,D total enrollment 6,000 grades included K-5 Sewer use charge $1.05 per 1,000 gallons of water No. junior high schools 3 total enrollment 3,400 grades included 6-8 ELECTRICITY No. high schools 2 total enrollment_ 3,700 Electric service: By Northern States Power Company Dakota Electric Assn. Cost per pupil unit $1, 744.00 For rate data, contact _ 612/463-8621 612/463-7134 'No. GAS total enrollment 509 grades included K-12 Gas service: By Peoples Natural Gas Company Northern Natural Gas Co. total enrollment For rate data, contact 612/454-6080 612/927-9981 Nearest area vocational -training school TELEPHONE ' Telephone company serving area Central Telephone Company & United Tel ephone System Distance Distance 10 miles COMMUNITY SERVICES 19 in metro area * Number of hotels 50 total rms. 9,343 Number of motels 142 total units 10,453 ' Hospital beds *10, 520 Nursing Home Beds *17,391 Doctors 3 (*3,850) Dentists 5 (*1,614) ' Nearest hospital, if not in town 34 hospitals in metro area (Farmington - 7 miles) 'Number churches: Protestant 5 Catholic 1 Jewish 0 Other 0 * Main cultural attraction, festivals Leprechaun Das - Rosemount Annual Festival 1 MN Zoo, MN Orchestra, Guthrie, Aquatennial, Winter Carnival, Mpls. Institute of Art, Science ' Museum & attractions normally associated with a metro area of 2 million population Parks & Playgrounds: municipal 9 State 0 - private County 'Golf * courses: municipal 1 private 1 Tennis courts 6 _ Swimming pools 1 Sports: college ( X) yes ( ) no professional Baseball. Football , Hockey * News Media: papers: daily 3 kl 3 'wee y radio stations: AM 20 FM 15 Cable TV: ( X ) yes Meeting facilities: no. of____L Capacity of largest three 300 150 50 Retail sales (county) $ _ 835,143,16CL 98J(1) Per capita income (county) $ 10,781 (1980 ) 'Names of hanks/S&L/deposits for each First State Bank $30 million, Rosemount National Bank $2 million First Federal S&L $25 million * 156 banks and 130 saving and loan branch offices ' Public libraries: a res: ( ) local (X) county ( ) regional (X) bookmobile Post office: first- class Chamber of Commerce, Jaycees, Lions, Lioness, VFW,_ Service organizations American Legion & Auxiliary 1 200 total membership_ , EDUCATION ' No, elementary schools 10 total enrollment 6,000 grades included K-5 No. junior high schools 3 total enrollment 3,400 grades included 6-8 No. high schools 2 total enrollment_ 3,700 grades included 9-12 Cost per pupil unit $1, 744.00 Pupil to teacher ratio: elementary 25/1 high school 22/1 'No. parochial schools 2 No, private schools total enrollment 509 grades included K-12 total enrollment grades included Nearest area vocational -training school In City Nearest community college _ Inver Grove Heights Distance Distance 10 miles Nearest college or university_ 4 -yr: 19 in metro area Distance *Liberal Arts Programs: 15 Co11PQPs ' *Engineering — University and uniwPrcitiPS of Mi nnesnta (.ijegrPP) n�� 1 Pam_ Distance *Business Administration_ 7 rnllPgPc, - anrf uniwarcitjPS Distance 1 *Graduate Schools_ in callpgES and universities Distance Distance I= Ci J 11 Coldest Month jan. Mean Daily Max. 22.4 OF Hottest Month Jul Y Mean Daily Max. 83- Q_°F Average annual precipitation 24. 78 inches CLIMATE Mean Daily Min. 2_3 F No. days over 90 degrees j - Mean Daily Min. Fin_ 7 JF No. days between killing frosts 167 Snow 42.2 inches INDUSTRIAL SITES Name or number of site: Une Bend Name or number of site: Total available acreage in site: 2,000 acres Total available acreage in site: acres Owner of site is: Pine BenOwner of site is: Option hel by local industrial development group: No Option held by local industrial development group: paartfai Si is zoned: (X ) yes ( ) no In city limts: (x) yes ( ) no Site is zoned: O yes O no In city limits: ( ) yes {) no If not in city, miles from city limits: If not in city, miles from city limits: Services available at site: (x ) rail ( A electricity (X ) gas Services available at site: ( ) rail ( ) electricity { ) gas ( ) treated water ( ) sanitary sewer ( ) storm sewer ( ) treated water ( ) sanitary sewer ( ) storm sewer ( ) curb and gutter ( X) paved roads ( ) curb andutter g ( )paved roads LOCATION SERVICES ' Name of local development corporation None Full time chamber of commerce manager ( ) yes (X ) no Community contacts: Don Darling, City Clerk Pine Bend Development Dean Johnson, City Planner c/o M. G. Astleford City of Rosemount 1200 West Highway 13 P. 0. Box 455 Burnsville, MN 55337 Rosemount, MN 55068 612/890-6300 612/423-4411 ' Chamber of Commerce P. 0. Box 82 ' Rosemount, MN 55068 1 REMARKS *Seven County Metropolitan Statistics 1 Program of Business Services 'Department of Energy, Planning and Development 480 Cedar Street St. Paul, Minnesota 55101 612/296-5021 County -City Code No. 19.15 Prepared/Revised 3/1983 Senate District 37 House District 37B Form: 1/69, Revised 1982 u APPRAISER'S QUALIFICATIONS WILLIAM A. SCHWAB CA -S, C.R.A. Auuraiser's License No. 4000585 EDUCATION BACKGROUND: Harding High School University of Minnesota - Public Administration University of Minnesota - Graduate courses in Land Use and Land Planning Guest Lecturer at the University of Minnesota School of Landscape Architecture. ' PROFESSIONAL APPRAISAL COURSES SPONSORED BY: Society of Real Estate Appraisers ' Minnesota School of Real Estate University of Minnesota International Right -of -Way Association Lakewood Community College Appraisal Institute Minnesota Trial Lawyer's Association Currently attends two to three appraisal seminars per year, one to three days duration each. ' Currently satisfying all continuing educational requirements for recertification by the professional appraisal associa- tions of which I am a designated member. Guest Speaker at numerous conferences and instructor in training courses relating to my professional activities. ' EMPLOYMENT BACKGROUND: Assistant to the Public Work Director of the City of Roseville, MN. Directed staff activities relating to City engineering services including land planning, utility, installations, property and easement acquisitions (1964-1967). Administrator for the City of Shoreview, MN. Directed all staff activities relating to the operations of all City functions (1967-1970). 1 PENFIELD, INC. ' APPRAISER'S QUALIFICATIONS (Continued) WILLIAM A. SCHWAB, CA -S. C.R.A. ' Appraiser's License No. 4000585 ' EMPLOYMENT BACKGROUND (Continued) Department Head of the Planning Department for Washington County. Directed all staff activities relating to the operation of the Planning Department including park and administrative land acquisitions, land planning and develop- ' ment, building inspection and building management (1970-1980). Real Estate sales person with Grant Realtors and President of ' Grant Construction Company. Primary area of activity was land sales and building construction of a residential and commer- cial nature in Washington County (1980-1983). ' Founder and President of Penfield, Inc. Responsible for all operational activities of the company including the prepara- tion of appraisal reports and the review of appraisal reports ' prepared by our staff appraisers (1983 to present). APPRAISAL EXPERIENCE Responsible since 1964 for determining real estate values and functioning as acquisition agent for various governmental agencies. ' Appraisal services performed includepre arias ' estimates of residential, commercial industrial, agricul- market tural, institutional, and special purpose properties, and of business fixtures and equipment. The market value estimates have been used for fee and easement acquisitions, sales, mortgages, partial and total takings in condemnation, probate ,court, district court, urban renewal re -use appraisals and benefit appraisals. ' ' Primary clients served are governmental agencies including counties, cities, townships, housing and redevelopment authorities, airport commissions, the Metropolitan Waste ' Control Commission, park boards, United States governmental agencies and watershed districts. In the private sector I have served relocation companies, banks, mortgage companies, attorneys, corporations, developers, architects, and indivi- dual property owners. 2 PENFIELD, INC. 3 PENFIELD, INC. ' APPRAISER'S QUALIFICATIONS (Continued) _WILLIAM A. SCHWAB CA -S, C.R.A. Appraiser's License No 4000585 ' I am qualified and have testified as an expert witness in many Minnesota district courts. I an on the State of Minnesota Approved List of Professional -Appraisers and have ' been approved to do appraisals for the United States Government. I have also served as a district court appointed commissioner. My primary area of activity has been concentra- ted in the Twin City Metropolitan Area, however, I am active throughout the State of Minnesota, Western Wisconsin and a number of other States throughout the country. ' PROFESSIONAL AFFILIATIONS: American Association of Certified Appraisers, Designated Certified Appraiser - Senior, CA -S National Association of Review Appraisers, Designated - Senior Member, C.R.A. ' Appraisal Institute International Right of Way Association Minnesota Governmental Appraisers Minneapolis, St. Paul & Western Wisconsin Boards of Realtors ' American Planning Association Minnesota Council of Airports LICENSING: Licensed as a Certified Federal General appraisar. License #4000585. 3 PENFIELD, INC. .. <d �z�, ,-.�. �F :.�. �. ,xk. ,� �� � � �_ _�� �..��r� �,.