Scope and purpose of appraisal:
The goal of the appraisal is to provide an estimation about the current market value for the eminent domain to build a parking structure in the subject property in the assumption that the property is free and clear of any arrears and subject to any particular lease as of the appraisal date. The appraisal benchmarks the original appraisal carried out by Mark Massie in 1963. The appraisal contains a developed and well refined economic and legal parameters of the market value.
The data to form an opinion over the market value was mined from local realtors, in-house archives, and conveyance records as well as personally verified data. The domain was assessed to establish the conditions, current land use, trends as well as growth patterns.
To establish the current land use that would make it possible to maximize returns and plough back the highest potential value, physical potential, legal permissibility and economic viability were analyzed. The appraisal also considered the feasible approaches to value. Moreover, site and improvements were assessed, photographed and then described in detail. The data collected include utilities, access, terrain of the land and zoning with due diligence and competence. The appraiser is competent and is privy to the type of the subject property, well informed about the terrain, geographic location and conditions of land use.
The intended Use and User:
The intended use of this appraisal report is to facilitate Fresno City Council and the city government with the valuation. The purpose of the information to the city council will be to inform negotiations in the sale of the subject property with the objective of developing the landscape. The valuation of the property for its market value does not take into consideration the planned project.
Identification of the Subject Property:
The owner of the property is Fresno City Council. The type of ownership for the subject property is free simple. The subject property is situated in 1261 Van Ness Ave & 2030 Merced Street, Fresno. The parcel number is 40-0000000000.
Legal Description:
The brief legal is John and McKenzie 135-256.
Property Rights Appraised:
The property rights appraised for the subject property is a free simple estate.
Property History:
The owner of the subject property is the Fresno City Council. The local government has owned the parcel for made decades. There are no records indicating transfers of ownership for the last one decade.
Geographical Description:
The subject property is a squared parcel of land with 150′ of frontage at the junction between 1261 Van Ness Avenue and 2030 Merced Street. To the right and left are alleys. The subject property has an old surface parking lot with dilapidated parking spaces and leased spaces. There were no hazards observed in the region. To the far left side is an old theatre which is no longer in use. Further left is a zoo center for domesticated wild animals. The property is currently an open space set aside by the Fresno City Council for future developments. The parcel of land is restricted for access.
Zoning:
The property is zones as C-3. The appraisal body contains a list of uses which the Fresno City Council has allowed. In the zoning district, there were hardly any setbacks but there is need for an on-site parking. The zoning district also needs a loading bay. There is need for a 15 sq. feet structure per front in this domain.
Utilities:
The subject property has full access to utilities such as water, sewerage system and electricity.
Hazards or Public Nuisances:
The appraiser did not have access to any survey information indicating that easements or nuisances that would have a significant effect to the parking structure that will be built. At the time of inspection of the subject property, no environmental hazard or nuisance was witnessed that will devaluate the property. Moreover, the area is not categorized as a flood zone and hence no need for a flood insurance.
Market Conditions:
The quality control standards as stipulated in the requirements of the Uniform Standards of Professional Appraisal Practice were satisfied by the appraiser. The market conditions and trends for the domain can be regarded to be steadily average.
Market and Marketability Analysis:
The interest rates are appreciating and hence seem practicable for commercial lending. A reasonable interest rate for commercial lending represents an A level standpoint marketability analysis. From the indicators of marketability, the lending conditions are favorable and hence incentivize competition among local lenders. The city of Fresno has become an economic hub of the county and has a vibrant epicenter. The recent job growth is 2% which is higher compared to the 1.6% for the United States. The unemployment levels in the city are relatively lower as compared to the immediate area. The future job growth is projected to improve while unemployment levels are likely to decline further in future.
The location of the subject property is within the economic hub of Fresno, an economically vibrant area with vast open spaces for offices and businesses. The Kempinski Restaurant was opened along the 2030 Merced Street and has an open space for nature walking and meeting places. There are also a number of renovations going on to revamp the old theatre and Zoo sites into new model buildings. The massive renovations make this place highly potential for business within the district.
Highest and Best Use Analysis:
A total of six factors affecting use and value of land use were considered; financial feasibility, economic demands of the domain, council regulations on land use, amendments to the land use regulations, maximum productivity and physical adaptability.
Highest and Best Use as Though Vacant
Legally Permissible:
A legal perspective is an important factor to consider when estimating the most suitable use of a property. Establishing the legal permissibility will entail first ascertaining the existing land use regulations. A site which does not meet the legal permissibility standards is not potentially considered for utilization. The subject property’s zoning code is C-3 and allows establishments of commercial and retail businesses. Compared to other zoning codes, C-3 allows flexibility and a cocktail of uses.
Physical Possibility:
The subject property does not have any physical restrictions to retail or commercial development. The physical site of the subject property has the capacity to accommodate any utilization due to its functional configured. Moreover, the terrain of the site does not present any stumbling blocks to the development of the structures but provides an opportunity for intensive use of property.
Financial Feasibility:
A property that is financially feasible is a site whose cost exceeds or is equal to the prevailing market value. A property is therefore feasible if the structural improvements exceeds or are equal to its cost. The current zoning of the site allows multiple uses of the property. The financial feasibility takes into consideration economic viability of a proposed venture by assessing the cost and a forecast of a future performance. In property development, a site is financially feasible if it meets the standards of other commercial development types. There is a positive market area trend due to the present restructuring of the topography and new structures coming up. Therefore the highest and best use of this site is for future development.
Maximally Productive:
There are significant risks associated with the proposed domain to build a parking structure. However, the proposed use of the property is projected to generate a higher internal rate of return for the project as compared to other possible uses. The proposed use of property is maximally productive because of the high internal rate of return and high net present value.
Highest and Best Use as Improved
As long as a structure enhances the market value of a subject property, an existing improvement should be redesigned. The tests for highest and best use; financially feasible, physically possible, maximally productive and legally permissible apply to improved property. At the prevailing condition, the use of the property as a parking structure presents an improvement until such a time when the property will experience an intensive utilization.
Three Approaches to Value Then and Now
Valuation by Cost Approach:
In the cost approach appraisal, the estimation for the market value is equal to the cost of the land, site improvements less the cost of depreciation. Depreciation of the property may be external, physical or functional. The cost of depreciation is then included in the valuation of land. The subject property was not however appraised using this approach due to the nature of the property.
Valuation by Sales Comparison Approach:
Sales comparison approach was appropriate in estimating the market value of the property. The valuation took into consideration of the sale of land either as improved or vacant. After the sale, improvements were made to the structures that were dilapidated. The guarantees in the sales were contacted and verifications made regarding the transactions. The cost of meeting the site clearance expense was contributed by the owner to ensure that the site was clear for the construction of the parking structure.
Valuation by Income Approach
An income approach to subject property evaluation was established. The site if being utilized in the present as an open surface parking lot for all categories of vehicles. One portion of the site has a partial lease while the other portion is utilized as a public parking set aside by the Fresno City Council. The appraisal therefore took into consideration the parking leases.
Estimation of the market value using sales comparison approach:
The subject property will be evaluated using the sales comparison approach. A sales comparison approach entails quantitative and qualitative comparison of the market data available for the similar properties near the property being appraised. The approach uses identical units as indicators for comparing the unit prices based on the market parameters.
Some of the parameters include the transaction prices for the properties which are similar to the subject property. The price paid for a recent land near the subject property or similar in main aspects of land is compared. A clear understanding of the local real estate market conditions during the sale or purchase of a property is important in this approach. A realistic market value is estimated therefore through comparison and essential adjustments to the prevailing transaction costs. An improved property is evaluated on the premise of its location i.e. accessibility and visibility. This is important because it determines how economically feasible the improved property will be hence affecting the valuation of the property.
To derive the market value of the subject property, qualitative and quantitative analysis is done. Quantitatively, an appraisal is made to the elements of comparison. Adjustments to the prices of the properties are then carried out using a number of techniques such as data analysis, graphical analysis, income differences capitalization as well as cost-related adjustments. Qualitative analysis on the other hand entails use of trend, relative comparison and ranking analyses. In ranking analysis, comparable sales are analyzed based on their desirability to establish the position of each relative to the subject property.