Appraisal Report YMCA LotsITEN1114- �f�
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APPRAISAL REPORT
FOR
CITY OF BLAIR, NEBRASKA
In
YMCA LOTS
CITY OF BLAIR, NEBRASKA
RUSS NELSEN
NELSEN APPRAISAL SERVICE, INC
710 South 19th Street
Blair, NE 68008
CERTIFICATION OF APPRAISER
I, Russ Nelsen do hereby certify that, to the best of my knowledge and belief:
1. The statements of fact contained in this Complete Self -Contained Appraisal Report are
true and correct.
The reported analysis, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, where applicable, and are my personal, unbiased
professional analysis, 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 parties involved.
4. My compensation is not contingent upon the reporting of a predetermined value or
direction in value that favors 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 analysis, opinions and conclusions were developed, and this report has been
prepared in conformity with the Uniform Appraisal Standards for Federal Land
Acquisitions and Code of Professional Ethics and the Standards of Professional
Appraisal Practice of the Appraisal Institute.
6. No one provided significant professional assistance to the undersigned.
7. I have made a personal inspection of the land of the subject property and that the
property owner or his/her designated representative was given the opportunity to
accompany the appraiser on the property inspection. I observed the grounds and parking
area on the subject property.
8. Russ Nelsen currently holds a General Certified Appraisers Certificate in Nebraska and
Iowa.
Russ Nelsen Date
General Certified Appraiser
State of Nebraska CG 920 276
State of Iowa 506642249
Property - YMCA Lots
Size - 5.17 acres (225,205 SF)
Location - 10th and Wilbur Street, Blair, Nebraska
Client - City of Blair, Nebraska
Date of Appraisal - September 19, 2013
Property Rights - Fee Simple
Highest and Best Use- Office Development
Zoning - Office Park Development
Land Use - Row Crop
Improvements - None
Estimate of Value - $247,700
MARKETING TIME AND EXPOSURE TIME ESTIMATE
On September 16, 1992, the Appraisal Standards Board of the Appraisal Foundation
issued advisory opinions on Uniform Standards of Professional Appraisal Practice (USPAP)
for the referenced times.
Generally, Exposure Time relates to what has occurred and is currently occurring in
the market, while Marking Time is a projection of what is likely to occur in the market.
These references are consistent with the appraisal of any property where we as appraisers
look at what has, is and will most likely occur in issuing an opinion of value for a property.
Both time periods are a function of price, time, use, and the cost and availability of funds.
The primary difference between the two time periods is that for marketing time we also
consider anticipated changes in market condition (trends).
Assisting us in marketing estimates for the two time periods are verification of sales
data such as days on the market for properties, both listed and sold, along with interviews of
market participants. Understanding buyers' and sellers' motivations (financial assumptions)
is primary for reasonably priced property as well as considering who the most likely
purchaser will be, and how financing impacts their buying decision.
Properties like the subject in Bennington varying marketing time with an estimate of
marketing for the subject to be three to six months.
SCOPE OF APPRAISAL ASSIGNMENT
This appraisal involved extensive research of the real estate market in which the
subject property is located in order to arrive at an estimate of value for the property.
County records were researched and real estate brokers, appraisers, and procedures were
applied to provide a credible appraisal. The appraiser considered all pertinent market
information including physical, economic, and external factors that may affect the
appraisal. All three approaches to value were considered in estimating the value of the
subject property. The values indicated by the various approaches were reconciled to the
arrive at the final conclusion.
The effective date of this appraisal is September 23, 2013.
The date of inspection is September 23, 2013
The purpose of this appraisal is to establish an accurate and defensible market value.
This estimate will be of fee simple title of the subject property. This appraisal is of the real
property only.
The property rights appraised are the fee shnple title to the land and improvernents,
which comprise the subject property.
DEFINITION OF FEE SIMPLE
An absolute fee; a fee without limitations to any particular class of heirs or
restrictions, but subject to the limitations of eminent domain, escheat, police power, and
taxation. An inheritable estate.
Source: Byrl N. Boyce, Real Estate Appraisal Terminology - Revised Edition (Ballinger
Publishing Company, Cambridge, Massachusetts, First Printing 1981), p. 102.
OBJECT OF THE APPRAISAL
The objective of the appraisal is to estimate the market value of the subject property
land and improvements to the land as described in this report.
HIGHEST AND BEST USE
The definition of the highest and best use, as defined in the first edition of Real
Estate Appraisal Terminology, published in 1975, by the American Institute of Real Estate
Appraisers and the society of Real Estate Appraisers, on page 107 is stated as follows:
"That reasonable and probable use that will support the highest and
present value, as defined, as of the effective date of the appraisal.
Alternatively, that use from among reasonable, probable, and legal
alternative uses, found to be physically possible, appropriately supported,
financially feasible, and which results in highest land value."
The definition immediately above applies specifically to the highest and best use of
land. It is to be recognized that in cases where a site has existing improvements on it, the
highest and best use may very well be determined to be different from the existing use. The
existing use will continue, however, unless and until land value in its' highest and best use
exceeds the total value of the property in its' existing use.
An analysis of the highest and best use of the subject property requires application of
the principles inherent in the concept of highest and best use, employing a two-part
methodology. Initially, the site is analyzed as if vacant. Those probable uses are compared
as to their legal, physical, and economic viability in order to deduce that use which will
provide for the highest land value. Subsequent to the aforementioned analysis, the subject
property is then considered, taking into account existing improvements, and their impact to
determine the highest and best use of the subject property as improved.
The highest and best use for the subject property is office development.
ZONING AND UTILITIES
The subject property is zoned OPD. Office Park Development. All normally expected
utilities are available to the site.
Lot 2 Lot 3
Taxes (Total) $2,929.20 $1,577.96
Assessed Value (Total) $146,360 $78,845
The subject is an "L" shaped tract that has approximately 5.17 acres (225,205 sf). It is
bordered by Wilbur Street on the south and by 10th Street on the east. There is an office
building owned by the US government, this building is located at the corner of 10th and
Wilbur which results in the "L" shape of the subject (see attached map). The lot is nearly
street level a small creek border the subject on the west, and a line of trees border the subject
on the north. No adverse site conditions are apparent. Only a small area adjacent to this
creek is in a designated flood hazard area.
The subject is located near the southeast part of Blair 2-3 blocks off Hwy 75. The
area has shown some recent development of commercial property. It is in area of mixed use
property including industrial, residential, commercial use, and agriculture use properties. No
adverse influences are noted in the area.
OWNERSHIP
The owner of record is Blair Area Young Mens Christian Association.
LEGAL DESCRIPTI®N
Lots 2 and 3, YMCA Wilsons Addition, City of Blair, Nebraska.
Parcel #5 890083846, Lot 2
890087779, Lot 3
IMPROVEMENTS
There are no improvements on the subject tract. It is currently in row crop
production.
VALUATION PROCESS
An appraisal is an estimate of value; it is an opinion of value. Its accuracy depends
on the basic competence and integrity of the appraiser and on the soundness and skill by
which the appraiser processes the data. Its worth is' influenced by the availability of
pertinent data. The professional appraiser seeks current facts and the appraiser seeks to be
practical. The appraiser's opinion must be without bias. As with other types of "markets"
the real property appraiser does not make the market, but rather interprets the market.
The three traditional approaches to value, namely the Cost Approach, the Income
Capitalization Approach, and the Sales Comparison Approach, each discussed separately
below, are
all comparative approaches. Their basic data comes from direct and indirect comparisons
in the market, and the appraiser's judgement, which is based on market experience.
The Cost Approach, the cost to reproduce the property at the date of the appraisal,
less an appropriate allowance far• depreciation (physical deterioration, functional
obsolescence, and external obsolescence) is made by market comparisons of cost and
depreciation. The Cost Approach tends to set the upper limit of value.
In the Income Capitalization approach, the future operation experience is estimated
from comparable market data. Gross rental schedules, vacancy and collection losses, fixed
expenses, operating expenses, and reserves for replacements are estimated and result in an
estimate of value by a capitalization process.
The Capitalization Rate (interest rate and recapture rate) is based on demonstrated
rates found in the market. The method and technique of capitalization is determined by the
nature of the property in the market.
In the Sales Comparison Approach, the subject property is compared to sales of
similar properties. The sales are analyzed to bring out similar characteristics to common
denominators. Such common denominators may include number of units, number of rooms,
square feet, front feet, or a gross rent multiplier. Where necessary, adjustments are made to
allow for difference of date of sale, location, size of property, condition of property, and
other factors.
COST APPROACH
Under the "principle of substitution", a prudent buyer will not pay more for a
property than it would cost to build another property of equal utility assuming no
unreasonable delays. Various cost indexes applicable are studied and adjusted to local
construction costs. These building costs have been calculated on a square foot basis, and
include basic field costs (material and labor), site grading, excavation, contractor's profit,
architect's fees, insurance and interim financing. Included in the estimated cost of
reproduction of the improvements are the structural components plus all mechanical and
electrical systems, which are an integral part of the structure. Where applicable, this
includes heating, ventilating, cooling, sprinklers, and security equipment. Primary reference
used was the Marshall Swift Cost Handbook and local contractors were consulted to arrive
at a more precise square foot cost.
Depreciation is a loss from the upper limit of value. It is an effect caused by
deterioration and/or obsolescence. There are five general methods of estimating accrued
depreciation, they are: (1) the Capitalized Income Method, (2) the Market Method, (3) the
Straight -Line Method (also referred to as the Age -Life Method, (4) the Engineering Method,
and (5) the Breakdown Method. The first two are indirect methods while the last three are
direct methods.
The capitalized income method borrows from the Income Capitalization Approach
and the deprecation estimate of the Cost Approach is the by-product. The method implies
that the deterioration and obsolescence reduce the quality, quantity, and projected duration
of the net income and reduce the indication of value by the Income Capitalization Approach
and such indication becomes the basis for the estimate of depreciation in the Cost Approach.
This is appropriately handled by a capitalization process within the Cost Approach, or less
directly in the Reconciliation of Value Indications,
The Market Method is based on consideration of sales prices. Percentages of
depreciation as established in the market place may be applied to reproduction cost. Again
this borrowing from the Sales Comparison Approach may be appropriately handled in the
Cost Approach or in the Reconciliation.
The Straight -Line Method estimated the effective age of the improvements, the
remaining economic life, and takes the ratio between the number of years of effective age to
the total of the effective age and remaining economic life. The Engineering Method, in
effect, applies age -life
methods to the individual parts of the structure. The Breakdown Method separates the
various component parts of depreciation into (a) physical deterioration (physical
deterioration curable, physical deterioration curable but not yet cured, and physical
deterioration incurable), (b) functional obsolescence (curable and incurable), and (c)
external (environmental) obsolescence (usually considered incurable). The appraiser has
considered deprecation of the subject property's improvements by the breakdown method
borrowing from the capitalized income method to measure portions of obsolescence.
Land value of the subject property is estimated by comparison to other similar land
sales. In using the comparison approach, the appraiser estimates the price that the land will
bring in a sale based on similar market transactions. These sales are then analyzed to bring
out similar characteristics to common denominators. Adjustments are then made to allow
for differences in time of sale, size of property, location, topography, zoning, access, etc.
Because there are no improvements on the subject, the cost approach is not
applicable and will not be developed.
INCOME APPROACH
One approach considered in the valuation of properties is the income approach. This
approach involves the relationship of anticipated cash flow to value. As a result, this
approach is applicable to income producing properties such as farms and ranches. The
income approach is utilized routinely in the appraisal of these properties.
The income approach involves the conversion of anticipated future benefits into
value. The income approach measures the quality, quantity and durability of an income
stream. The most important economic principle is the principle of anticipation. The
principle of anticipation states that value is created by the anticipation of future benefits.
Other principles to be considered are:
CHANGE
SUBSTITUTION
INCREASING/DECREASING RETURNS
EXTERNALITIES
HIGHEST AND BEST USE
Logic indicates that an informed purchaser will not pay more for a property than the
cost of obtaining a return of the same amount on another property having the same risk and
amenities.
The method most commonly applied to rural properties is the direct capitalization
approach. This procedure is "straight forward" in that you divide the anticipated net income
by the appropriate capitalization rate to obtain an indication of value. The challenge to this
approach is developing a realistic anticipation of income based on market data and obtaining
a rate that is supported by the market. Direct capitalization assumes that the anticipated
income will continue in perpetuity. Because the highest and best use is not the present use,
the income approach is not applicable.
SALES COMPARISON APPROACH
The procedure of the Sales Comparison Approach arrives at an estimate of value by
comparing the subject property to sales of similar properties. Under the "principle of
substitution", a prudent person will not pay more to buy or rent a property than it will cost
them to buy or rent an equally desirable substitute with common denominators. Such
common denominators may include a site, square feet, front feet, and acres. The subject
property being appraised is compared and rated with other like properties for which market
data is available. The appraiser assembles the pertinent facts about the comparable property.
The major points of comparison are: (1) time, (2) location, (3) physical characteristics, and
(4) economic characteristics.
A sale of a property that is an exact duplicate of the subject property would be an
important indication of value. In actual practice, no two properties are exactly alike.
Therefore, potentially comparable sales must be assigned some common denominator for
comparison with the subject property. The sales with the greatest degree of comparability
are adjusted for the differences between the subject property. For example, if the
comparable property sold two years ago and prices had gone up 5%, then the sale price of
the comparable would be increased by 5% to give the indication of value for the subject. If
the comparable property was in a better location than the subject and this difference is
estimated at 5%, then the sale price of the comparable would be decrease by 5% to give the
indication of value for the subject. The adjustments for different physical and economic
characteristics are handled in the same manner. Adjustments may be by percentages or by
amounts or both.
Often, it is advisable to include additional sales that may not be ideal but do show
Lipper and lower limits of value and do demonstrate a thorough study of the market. For
some types of properties, sales many years old are of value and, in some instances, sales
many miles distant can be significant. Closely comparable properties are sought first, but
less comparable examples can build a pattern where the probable market price of the subject
property may fit. The appropriate common denominator is considered to be the value per
acre in applying the Sales Comparison Approach to the subject property in the appraisal.
The following sales are shown to achieve a factor used to estimate value for the
subj ect.
Location:
Adjacent to subject lot, 10th and Wilbur Street
Legal Description:
Lot 4, YMCA Wilson's Addition
Grantor:
Blair Area YMCA
Grantee:
Papio-Missouri River Natural Resource District
Dale of Sale:
02/09/09
Size of Site:
1.81 acres (78,884 SF)
Sale Price:
$100,000
Price per SF:
$1.27/SF
huprovements:
None
Utilies:
Full
Zoning:
OPD
Remarks:
This is the sale of an adjacent lot to the subject that sold to the NRD
for the purpose of building their new office building,
SALE TWO
Location:
320 Sheridan Street
Legal Description:
TL 239, 7-18-12
Grantor:
Wachter
Grantee:
A & S Services
Date of Sale:
09/24/12
Size of Site:
111,078 SF
Sale Price:
$210,000
Price Per Acre:
$1.89/SF
Improvement:
None
Utilities:
Full
Zoning:
A/ML
Remarks:
This is a small tract of nearby industrial land located near Cargill.
c120 1 NY i
Location:
1St and Grant Street
Legal Description:
Lot 2, Industrial Point
Grantor:
Mckinnis
Grantee:
RD Family Limited Partnership
Date of Sale:
03/08
Size of Site:
261,796 SF
Sale Price:
$350,000
Price per SF:
$1.34/SF
Improvements:
None
Utilities:
Full
Zoning:
A/MH
Remarks:
This is a slightly dated sale of an industrial site with similar
locational appeal.
SALE FOUR
Location:
5th and Grant Street
Legal Description:
TL 247, 12-18-11
Grantor:
Wright Investments
Grantee:
Barker
Date of Sale:
05/02
Size of Site:
356,756 SF
Sale Price:
$107,027
Price Per SF:
.30/SF
Improvements:
None
Utilities:
Full
Zoning:
A/MC
Remarks:
This is a dated sale of a large tract with similar locational appeal.
SUBJECT SIZE - 225,205 SF
Sale #
Size
SF
Sale Date
Price/SF
Time
Size
Location
Adjusted Price
1
78,998
2-09
1.27
=
-.25
=
$1.02
2
111,078
9-12
1.89
=
-.20
=
$1.69
3
261,796
3-08
1.34
=
_
_
$1.34
4
356,756
5-02
.30
+.10
+.25
=
$.65
Adjusted Price Low = $.65/SF
Adjusted Price High = $1.69/SF
Average Adjusted Price = $1.18/SF
After placing most weight on comparable sale #1 because of its location adjacent to
the subject, the per square foot value of the subject is called out $1.10/SF.
Subject 225,205 SF @ $1.10 = $247,725
Called $247,700
No ideal sales were available, but the foregoing comparable best represent the
subject. Comparable 2, 3, and 4 have similar market appeal with regards to location.
Bracketing of price per square foot and lot size was achieved.
SUMMARY AND RECONCILIATION OF VALUE INDICATORS
Replacement Cost Approach Not Developed
Income Approach Not Developed
Market Approach $247,700
The Cost and Income Approaches are not applicable for the subject because of the
reasons stated.
The Sales Comparison/Market Approach has the advantage of several sales but large
adjustments were necessary because of the fact that no sales were ideal. The Market
Approach does offer a degree of reliability and is given consideration in the final value
estimate for the subject lots. All weight is placed on the Market Approach with regards to
these lots.
FINAL ESTIMATE OF VALUE
With consideration to all three approaches but all weight being placed on the Market
Approach. I estimate the value of the subject property as of September 19, 2013 to be:
Two Hundred Forty Seven Thousand Seven Hundred Dollars
($247,700)
Russ Nelsen,
Certified Appraiser
Nelsen Appraisal Services, Inc.
The table following is the appraisal process we follow in developing opinion of a defined
standard of value of an interest iri real estate, It is presented here to assist the reader gain a better
understanding of the necessary steps undertaken in forming asupportdble opinion of value, as
deigned, .
Deflni 106 Of the Problem
Identification
of the Client
Intended
use of
appraisal
identifloation
of real
estate
Identlflcatlon of • Purpose of
property rights appraisal
Deflriltlon
-of value
Effective date of
Appralaal/report
Description
of scope of
appraisal
Assumptions
and limiting
conditions
Prelimino Analysis and Plan; Data Selection and Collection
Market AnW sis
Sub ect PropeLtj
Com etitive Pro ertles
General & Immediate Market Area;
aornand Components
Supply Components
Trends
i+orecasts
Property Analysis;
Sfte/lmprovements
Size
Age and Condition
Locailom
Legal (ittle, Use)
Comparison Analysls:
Sales
Rentals
Costs
Elements of Comparison
Units of Comparison
Highest and Best Use 0 inion
Land -as tf Vacant arid Available
Property es Improved (EAsting or Proposed)
Existing Usk of the Real Estate
Use of Real Estate Reflected in the Appraisal
Develo ment•of indlcators of Land Value As Defined
r
Sales Comparison
Approach
Subdtvlslon '
Development .
Ana is
Ground Rent ' Land Residual
Ca italization Technique
Extraction 7echni ue
Allocation
7ecrini' ue
17avelo m mt of Indicators of Improved Property 'Value As Defined
Cost roach Sales Com arlson Approach 11ncome A roach
Recr odillatlop of Value Indlon-Vons and Re?c ?Ino Nfined Value Opinion
Re• ort Opinion of Value As Deflned -
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