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HomeMy WebLinkAbout08-06-18 City Commission Packet Materials - C13. Res. 4938, Fair Market Value for Cash-in-Lieu of Parkland Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Carolyn Poissant – Trails, Open Space, and Parks Development Manager Mitch Overton – Director of Parks and Recreation SUBJECT: Resolution 4938 – Determination of Fair Market Value for Cash-in-Lieu of Parkland Dedication MEETING DATE: August 6, 2018 AGENDA ITEM TYPE: Consent RECOMMENDATION: Adopt Resolution 4938 setting the fair market value of land per square foot for calculating cash-in-lieu of parkland dedication amounts. BACKGROUND: Section 38.420.030 of the Bozeman Municipal Code, (“Cash Donation in lieu of Land Dedication”) includes the following provisions: 164 The process for determining valuation includes the following steps: 1. Obtain proposal from appraiser to provide initial appraisal report on fair market value for residentially zoned, undeveloped land. 2. Set initial value for cash in lieu of parkland dedication per square foot based on appraiser’s report. 3. Update appraisal a minimum of once per year, or as market conditions change significantly. A report has been prepared by O’Reilly Appraisal, a local appraiser who has been providing appraisals for cash in lieu of parkland dedication valuation for development proposals for the past several years (Attachment A). The reports recommends setting the valuation at $1.50 per square foot for all residential zoning districts, based on the availability of appropriate comparisons that meet the requirements of state law and the Bozeman municipal code. UNRESOLVED ISSUES: None. ALTERNATIVES: Per Commission. FISCAL EFFECTS: The Parks Department will need to pay for the initial appraisal report (at a cost of approximately $2500) and updates a minimum of once per year (at a cost of approximately $800 per update). ATTACHMENT: Resolution 4938 Attachment A – Appraisal Report Report compiled: July 26, 2017 165 COMMISSION RESOLUTION NO. 4938 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, SETTING THE FAIR MARKET VALUE OF LAND PER SQUARE FOOT FOR CALCULATING CASH-IN-LIEU OF PARKLAND DEDICATION WHEREAS, Section 38.420.030 of the Bozeman Municipal Code, (“Cash Donation in lieu of Land Dedication”) states that the city commission may adopt procedures to be used by the director of parks and recreation to determine the fair market value for cash in lieu of parkland dedication donations; and WHEREAS, an appraisal report has been obtained from a qualified, licensed appraiser to determine the fair market value of unsubdivided, unimproved land after it has been annexed and given a municipal zoning designation in accordance with Montana Code Annotated Section 76- 3-621; and WHEREAS, the appraisal report indicates the fair market value of residential property for the purposes of cash donation in lieu of park land dedication is $1.30 per square foot (Exhibit A); NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, that the fair market value of residential property for the purposes of cash donation in lieu of park land dedication is $1.30 per square foot and this value shall remain in effect for up to one calendar year, subject to changes in market conditions that warrant an updated appraisal. 166 PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 6th day of August, 2018. ___________________________________ CYNTHIA L. ANDRUS Mayor ATTEST: ____________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney 167 AN APPRAISAL REPORT OF: Standard Property Valuation for the City of Bozeman's Cash in Lieu of Parkland Dedication Process FILE NO.: C071718278 PREPARED FOR: Mr. Mitchell Overton City of Bozeman - Department of Parks and Recreation 415 North Bozeman Avenue Bozeman, MT 59715 PREPARED ON: July 18, 2018 EFFECTIVE DATE OF VALUATION: July 1, 2018 PREPARED BY: Keith O'Reilly, MAI, MT-400 Bridger Appraisals, Inc. P.O. Box 11145 Bozeman, MT 59719 168 July 18, 2018 City of Bozeman - Department of Parks and Recreation 415 North Bozeman Avenue Bozeman, MT 59715 Re: Standard Property Valuation for the City of Bozeman’s Cash in Lieu of Parkland Dedication Process Dear Mr. Mitchell Overton, Per your request, I have gathered information and completed the following report to establish a standard property valuation on a per square foot basis for Residential Single- Household Low Density (R1), Residential Two-Household Medium Density (R2), Residential Medium Density (R3), Residential High Density (R4), and Residential Office (RO) districts within the City of Bozeman. This report is to be used for the City of Bozeman’s Cash in Lieu of Parkland dedication process. This appraisal is not of one subject property but is rather a compilation of sales of large tracts of land within the City as well as Gallatin County purchased for development purposes. Per city code and state law: Cash donation in-lieu of land dedication shall be equal to the fair market value of the amount of land that would have been dedicated. For the purpose of these regulations, the fair market value is the value of the unsubdivided, unimproved land after it has been annexed and given an urban zoning designation. The city intends to obtain the highest value for cash-in-lieu of park land that is allowable under state law. 169 Bridger Appraisals Inc. © Keith O’Reilly, MAI ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report, the letter of transmittal, and certification are subject to the following assumptions and limiting conditions; and also, any special qualifying conditions that may be contained elsewhere in the report are incorporated by reference. Assumptions 1. That the legal descriptions, as furnished, are correct; and that the titles to the properties are good and marketable. All existing liens and encumbrances, if any, have been disregarded. The properties are appraised as though free and clear of other burdens, under responsible ownership and competent management. 2. That the land dimensions taken from available maps, plats, and/or surveys are correct. It has been assumed that those boundaries that are apparent are correct. 3. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 4. That no adverse water table or soil conditions exist, and no representation regarding such conditions is made in this report unless specifically stated; and, that the value estimated is predicated on the absence of any such conditions occurring. 5. Those opinions, estimates, data and statistics supplied by others in the course of this study, are correct; the assumption has been made that the sources are reliable, but no responsibility has been inferred for their accuracy. 6. This report does not contemplate any court action, nor does it obligate the appraiser to give any testimony or make any appearance in court, before commission, arbitrator or any other individual, body or agency. If court action or appearance later becomes necessary in the interest of the client, the terms of the additional service shall be negotiated at that time. 170 7. Unless otherwise stated in this report, the appraiser has no knowledge of the existence of hazardous material, which may or may not be present on the properties. I am not qualified to detect such substances. The presence of potentially hazardous materials may affect the value of the property. This extends to any leaks from underground fuel storage tanks, and identification of Asbestos containing materials. The value estimate is predicated on the assumption that there is no such material on or in the property. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. Any such environmental risk discovered at a later date may require a revised estimate of value that may or may not be simply a reduction of the value by the estimated cost to cure the environmental condition. Properties known to have environmental risk may also carry a stigma in the market place that may or may not affect the value. If future soil tests should reveal the existence of any such soil conditions or hazardous waste, I reserve the right to review and adjust this appraisal accordingly. Limiting Conditions: 1. The appraiser is not responsible for any matter legal in character, nor is any opinion rendered as to title, which is assumed to be marketable. 2. The value reflected in the analysis applies only to the program of utilization considered in this report. The use of the value in conjunction with any other appraisal or under other influences invalidates the conclusions developed. 3. This analysis and estimate of value is made for the exclusive use and benefit of the clients to whom it is addressed; and, possession of this report or a copy, does not carry with it the right of publication, nor may it be used for any purpose other than that intended without the previous consent of the appraisers. In any event, only the entire report may be used and no part shall be taken or used out of context. 4. Included as an integral part of this report are maps and photographs of the comparable properties and sales. The maps and photographs were prepared and taken by the appraisers, and although they do not purport to represent survey accuracy, they are substantially correct and adequately serve as visual reference to the properties. 171 Bridger Appraisals Inc. © Keith O’Reilly, MAI 5. Disclosure of the contents of this report is governed by the By-Laws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions of value, the identity of the appraisers or the firm with which they are connected) shall be disseminated to the public through advertising media, public relations, news media, sales media, or any other public means of communication without the prior written consent and approval of the authors. 6. The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions. 172 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Client: Mitchell Overton, City of Bozeman - Department of Parks and Recreation Intended User: City of Bozeman - Department of Parks and Recreation Date of Valuation: July 1, 2018 Date of Preparation: July 18, 2018 Rights Appraised: Fee Simple Highest and Best Use: The highest and best use is not applicable to this appraisal report as the valuation is not of a subject property, but rather a compilation of sales to establish a standard property valuation. SCOPE OF THE APPRAISAL The scope of work consists of the amount and type of information researched and analyzed in an assignment. In preparing the appraisal, I have considered pertinent characteristics of the comparable sales in comparison to current market standards. I have gathered information and completed the following report to establish a standard property valuation on a per square foot basis for Residential Single-Household Low Density (R1), Residential Two- Household Medium Density (R2), Residential Medium Density (R3), Residential High Density (R4), and Residential Office (RO) districts within the City of Bozeman. General and specific data was obtained through personal and telephone interviews with government officials, property managers, developers, and other market participants. I have not considered the highest and best use as it is not applicable to the standard property valuation on a per square foot basis of R1, R2, R3, R4, and RO districts within the City of Bozeman. I have applied the sales comparison approach valuation method to determine a standard property valuation method on a per square foot basis. This is the only applicable approach to valuing vacant land. The results indicated by this method have been reviewed and reconciled based on the reliability, relevance and reasonableness of the data, and the purpose and intended user of the appraisal. This is an Appraisal Report as defined by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2. This format provides a summary of the appraisal process, subject and market data and valuation analyses. The information contained in this report is specific to the needs of the client and for the intended use as stated in this report. 173 Bridger Appraisals Inc. © Keith O’Reilly, MAI PURPOSE AND INTENDED USE AND USER OF THE APPRAISAL The purpose of this appraisal is to estimate a credible opinion of the Current Market Value on a per square foot basis of the Fee Simple Interest for Residential Single- Household Low Density (R1), Residential Two-Household Medium Density (R2), Residential Medium Density (R3), Residential High Density (R4), and Residential Office (RO) districts within the City of Bozeman, in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and supplemented by the Appraisal Institute. The intended use of the appraisal is to assist the Client and Intended User, City of Bozeman - Department of Parks and Recreation, in establishing a standard property valuation for vacant land on a square foot basis to be used for the City of Bozeman’s Cash in Lieu of Parkland dedication process. DEFINITION OF MARKET VALUE 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 and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is consummation of a sale as of a specified date and 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 they consider their own best interest; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; 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. 1 1[Source: Section 323.2 amended at 57 Fed. Reg. 9049, March 16, 1992; 59 Fed. Reg. 29501, June 7, 1994] 174 PROPERTY RIGHTS APPRAISED Property rights are ownership interests in real estate and have value. It is important to know what property right(s) or estate(s) are involved in the appraisal, because the estate identifies the rights being valued. The subject property rights being appraised is the Fee Simple Interest. Fee Simple: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.2 Leased Fee: A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e. a lease). 3 VALUATION DATE The effective date of the appraisal is July 1, 2018. This is the date of valuation. The comparable sales reflected in this report are the most current identifiable sales as of the effective date. 2 The Dictionary of Real Estate Appraisal, 5th ed. (Chicago; Appraisal Institute, 2010), p. 78. 3 The Dictionary of Real Estate Appraisal, 5th ed. (Chicago; Appraisal Institute, 2010), p. 111. 175 Bridger Appraisals Inc. © Keith O’Reilly, MAI MONTANA REGIONAL AND CITY MAPS Subject Area 176 REGIONAL, CITY, AND NEIGHBORHOOD ANALYSIS Bozeman, Montana is located in Gallatin County, in an area more commonly referred to as the Gallatin Valley. This report is for the Client and Intended User, the City of Bozeman – Department of Parks and Recreation. Information regarding the City of Bozeman has not been included as this information is provided from the City of Bozeman and the client and intended user has access to this information. 177 Bridger Appraisals Inc. © Keith O’Reilly, MAI THE APPRAISAL PROCESS Typically, real estate can be valued by applying three approaches. All of these approaches to value, (particularly when the purpose of the appraisal is to establish market value) are market data approaches since the data inputs are presumably market derived. Cost Approach: One of the approaches to value commonly applied in Market Value estimates and many other valuation situations. A comparative approach to the value of property or another asset that considers, as a substitute for the purchase of a given property, the possibility of constructing another property that is an equivalent to the original or one that could furnish equal utility with no undue cost resulting from delay. The Valuer's estimate is based on the reproduction or replacement cost of the subject property or asset, less total (accrued) depreciation. The cost approach establishes the value of a real property by estimating the cost of acquiring land and building a new property with equal utility or adapting an old property to the same use with no undue cost due to delay. An estimate of entrepreneurial incentive or developer's profit/loss is commonly added to land and construction costs. For older properties, the cost approach develops an estimate of depreciation including items of physical deterioration and functional obsolescence.4 Sales Comparison Approach: A comparative approach to value that considers the sales of similar or substitute properties and related market data and establishes a value estimate by processes involving comparison. In general, a property being valued (a subject property) is compared with sales of similar properties that have been transacted in the open market. Listings and offerings may also be considered. A general way of estimating a value indication for personal property or an ownership interest in personal property, using one or more methods that compare the subject to similar properties or to ownership interests in similar properties. This approach to the valuation of personal property is dependent upon the Valuer's market knowledge and experience as well as recorded data on comparable items. 5 Income Approach: A comparative approach to value that considers income and expense data relating to the property being valued and estimates value through a capitalization process. Capitalization relates income (usually net income) and a defined value type by converting an income amount into a value estimate. This process may consider direct relationships (whereby an overall capitalization rate or all risks yield is applied to a single year's income), yield or discount rates (reflecting measures or return on investment) applied to a series of incomes over a projected period, or both. The income approach reflects the principles of substitution and anticipation. 6 5 The Dictionary of Real Estate Appraisal, 5th ed. (Chicago; Appraisal Institute, 2010), p. 250. 5 The Dictionary of Real Estate Appraisal, 5th ed. (Chicago; Appraisal Institute, 2010), p. 244. 7 The Dictionary of Real Estate Appraisal, 5th ed. (Chicago; Appraisal Institute, 2010), p. 256 178 Comparable Sales The following sales have been used to estimate a value on a per square footage basis. The compiled data represents the most recent known sales of speculative development land within the City of Bozeman and Gallatin County. 179 Bridger Appraisals Inc. © Keith O’Reilly, MAI ID 1014 Verification Source Confidential Address 5528 Stucky Rd Price $2,900,000 City Bozeman Price Per Acre $59,434.00 State MT Financing Cash to Seller Tax ID RGG6891 Property Rights Fee Simple County Gallatin Days on Market -- Grantor Big Sky Western Bank, a Division of Glacier Bank Recording Date 07/18/17 Grantee R Haus, LLC Recording Number 2585905 Legal Description Acres 48.8 Topography Mostly Level Land SF 2,125,467 Zoning Residential High Density (R4), Residential Medium Density (R3) Road Frontage --Flood Zone No Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Stucky Rd, Graf St Price Per Land SF $1.36 Tracts 1, 3 and 4 of C.O.S. No. 2725, being a relocation of common boundaries between Tracts 1 & 2 of C.O.S. No. 2122 and Tract 1A-1 of C.O.S. No. 2029 and Parcel II, loc. in N1/2 of Sec. 23, T2S, R5E, P.M.M., City of Bozeman, Gallatin Co., MT. Comments The subject is located in southwest Bozeman, near Montana State University. The site is annexed into the city. The surrounding area has seen recent growth with a mix of commercial and residential development. This sale was a bank owned property that went to auction. Site Land Comparable 1 Transaction 180 ID 893 Verification Source Contract- Dick Steffani Address Oak Street and Davis Lane Price $764,600 City Bozeman Price Per Acre $76,231.00 State MT Financing Cash to Seller Tax ID RGG9336 Property Rights Fee Simple County Gallatin Days on Market -- Grantor William and Betty Anne Sipple Trust Recording Date 01/18/17 Grantee City of Bozeman Recording Number 2569512 Legal Description Acres 10.0 Topography Level Land SF 436,906 Zoning SRR, Semi-Rural Residential Zone Road Frontage --Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Oak Street Price Per Land SF $1.75 A Tract of land containing 10.03 acres in the West Half of the West Half of the Southwest Quarter of Section 2, Township 2 South, Range 5 East, Gallatin County, MT This is a vacant 10 acre tract of land located south of Oak Street where Davis Lane will intersect. All public utilities including water, sewer, electricty and natural gas are to the site. However, the site has not been annexed into the City of Bozeman. The site has good access off of Oak Street. The City of Bozeman is the purchaser and bought the land to extend Davis Lane from Oak Street to Durston Rd. Comments Site Transaction Land Comparable 2 181 Bridger Appraisals Inc. © Keith O’Reilly, MAI ID 726 Verification Source Jerry Pape - Broker Address 5200 Durston Road Price $715,700 City Bozeman Price Per Acre $82,711.00 State MT Financing Conventional Tax ID RGG7243 & RGG9606 Property Rights Fee Simple County Gallatin Days on Market 571 Grantor Paul Christenot Recording Date 06/09/14 Grantee JBE, LLC Recording Number 2482934 & 2482935 Legal Description Acres 8.7 Topography Level Land SF 376,925 Zoning R-3 & R-4 Road Frontage Durston Road Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Durston Road Price Per Land SF $1.90 Lengthy; retained in file Transaction Comments Site Land Comparable 3 This was the sale of a speculative piece of residential land. It is more or less an infill type property. There are residential subdivisions bordering it on all sides. The site was located in the county at the time it sold but was approved for annexation into the city which has since occurred. There was an older house located on one of the property that has since been demolished. The property was listed for sale with an asking price of $735,700 at the time it went under contract. 182 ID 445 Verification Source Buyer Address 1067 Thomas Drive Price $536,000 City Bozeman Price Per Acre $53,600.00 State MT Financing Cash to Seller Tax ID RFG9580 Property Rights Fee Simple County Gallatin Days on Market 563 Grantor Kenneth and Jill Davenport Recording Date 09/30/16 Grantee O'Reilly Partnership LLC Recording Number 2559333 Legal Description Acres 10.0 Topography Level Land SF 435,600 Zoning Residential High Density (R4) Road Frontage --Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Thomas Drive Price Per Land SF $1.23 N1/2 S1/2 NE1/4 SW1/4 Section 25, Township 1 South, Range 5 East, P.M.M. Gallatin County, MT (Deed Reference: Film 29, Page 277) Comments This is a 10 acre tract of speculative development land. The site fronts what is now Thomas Drive, but will become North 27th Avenue. North 27th Avenue currently end at Cattail Street and Baxter Lane. The site has been annexed into the City of of Bozeman and is zoned R-4. Water and sewer has been installed along Thomas Drive. There are minimal wetlands of less than .5 acres associated with this site. Site Transaction Land Comparable 4 183 Bridger Appraisals Inc. © Keith O’Reilly, MAI ID 1055 Verification Source Donnie Olsson - Broker Address SW Corner of Love Ln. & Baxter Ln. Price $2,550,000 City Bozeman Price Per Acre $43,031.00 State MT Transaction Type Closed Tax ID RGG11911 Financing Cash to Seller County Gallatin Days on Market 1 Grantor Vina Del Mar Holdings, LLC Recording Date 07/28/17 Grantee Bozeman Development Fund, LLC Recording Number 2587075 Legal Description Acres 59.3 Topography Level Land SF 2,581,366 Zoning RR/A, Rural Residential & Agricultural Road Frontage Love Ln. & Baxter Ln.Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Love Ln. & Baxter Ln.Price Per Land SF $0.99 Tracts 1 and 2 of C.O.S. No. 2939, located in the NE 1/4 of Section 6, Township 2 South, Range 5 East, Gallatin County, Montana. Land Comparable 5 Transaction Site Comments This is a 59.260-acre tract of speculative development land on the southwest corner of Love Lane and Baxter Lane that the buyer intends to develop with 104 single-family residential lots. As of the date of purchase, the property was not in the Four Corners Water & Sewer District; however, the adjacent property to the west is in the district and the buyer hopes to tie into the water and sewer system and purchase water and sewer entitlements for development of the proposed subdivision. The property has an attractive location for a subdivision given its good views of the surrounding mountain ranges. The property was listed for sale with an asking price of $2,900,000 at the time it went under contract. 184 ID 1057 Verification Source Jennifer Trainer - Broker Address NW Corner of Gooch Hill Rd. & Huffine Ln. Price $4,000,000 City Bozeman Price Per Acre $51,593.00 State MT Financing Cash to Seller Tax ID RGG60568 Property Rights Fee Simple County Gallatin Days on Market 28 Grantor Mudhead, LLC Recording Date 08/10/17 Grantee Gooch Hill Opportunities, LLC Recording Number 2589101 Legal Description Acres 77.5 Topography Level Land SF 3,377,207 Zoning M-I & N-S Road Frontage Huffine Ln. & Gooch Hill Rd.Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Huffine Ln. & Gooch Hill Rd.Price Per Land SF $1.18 Tract 2A of C.O.S. No. 2682A, a tract of land located in the East 1/2 of Section 8, Township 2 South, Range 5 East, Gallatin County, Montana. Transaction This is a 77.530-acre tract of speculative development land that is located on the northwest corner of Gooch Hill Road and Huffine Lane, in-between the Bozeman city limits and Four Corners. Approximately 75% of the property is zoned M-I, Manufacturing and Industrial District while the remaining approximate 25% is zoned N-S, Neighborhood Service District. There are no water and sewer services available to the site. The buyer was Town Pump and the property was purchased for potential future development. There are some wetland areas on the site. The property was listed for sale with an asking price of $4,300,000 at the time it went under contract. Site Comments Land Comparable 6 185 Bridger Appraisals Inc. © Keith O’Reilly, MAI ID 1056 Verification Source Buyer Address TBD Huffine Lane Price $1,800,000 City Bozeman Price Per Acre $43,552.00 State MT Financing Cash to Seller Tax ID RGG61787 Property Rights Fee Simple County Gallatin Days on Market None Grantor Winchester Holdings, LLC Recording Date 10/10/17 Grantee Skeeter, Cayman, Quantum, & 3B Recording Number 2595275 Legal Description Acres 41.3 Topography Level Land SF 1,800,335 Zoning MU, Mixed-Use District Road Frontage Huffine Lane Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Huffine Lane Price Per Land SF $1.00 Lot 2 of Minor Subdivision No. 418, located in the SW 1/4 of Section 8, Township 2 South, Range 5 East, Gallatin County, Montana. Site This is a 41.330-acre tract of speculative development land located near the northeast corner of Love Lane and Huffine Lane in the Four Corners area of Bozeman. The buyer purchased the property for future development. There are no water or sewer services available to the site. The property was not openly marketed and the transaction was privately negotiated between the buyer and the seller. Comments Land Comparable 7 Transaction 186 ID 1060 Verification Source Copy of Buy-Sell Address TBD Cottonwood Road Price $3,169,210 City Bozeman Price Per Acre $112,835 State MT Financing Conventional Tax ID RGG65187 Property Rights Fee Simple County Gallatin Days on Market Unknown Grantor Crescent Cross, LLP Recording Date -- Grantee Reservoir Real Estate, LLC Recording Number Pending Legal Description Acres 28.1 Topography Level Land SF 1,223,470 Zoning R-5, Residential Mixed Use High Density Road Frontage Cottonwood Road Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Cottonwood Road Price Per Land SF $2.59 Lot 3A-1 of Minor Subdivision 454C, a relocation of common boundaries between Lot 3A of Minor Subdivision No. 454A and Lot 4 of Minor Subdivision No. 454, located in the West 1/2 of Section 15, Township 2 South, Range 5 East, Gallatin County, Montana. Comments Land Comparable 8 Transaction Site This is a large tract of multi-family residential development land along Cottonwood Road that was previously located adjacent to the western Bozeman city limit border; however, it was annexed into the city of Bozeman in October of 2017 and will be zoned R-5, Residential Mixed Use High Density District. The $3,169,210 purchase price is reflective of a $3,100,000 base price in addition to a $69,210 annexation related fee that will be paid for by the buyer. The buyer intends to develop the site with 157 rental townhomes and 166 rental apartments over two phases. Based on the 323 total units and the $3,169,210 purchase price, the price per proposed unit is equal to approximately $9,812. The buyer will tie into the existing City of Bozeman water and sewer infrastructre at an additional cost to the buyer. 187 Bridger Appraisals Inc. © Keith O’Reilly, MAI Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Sale 6 Sale 7 Sale 8 188 Comparable Sale 5, 6, and 7 are sales of large tracts of land that have not been annexed into the City but were purchased for speculative development purposes. The per square foot range of values for these sales was $0.99 to $1.18. These comparables help to establish to the lower limit of value on a per square foot basis. The per square foot value of these comparables is lower than those sites annexed into the City, which is expected, as the purchasers of these sites would have additional costs for annexation and accessing utilities. Comparable 5 is planned to be developed residentially, while Comparables 6 and 7 will most likely be developed with commercial and residential improvements. There is not a large difference in per square foot value on the residential sale versus the commercial/residential. Comparable 8 is a failed sale but was included to bracket the very upper limit of value. At the time of contract, this site was not annexed into the City. However, the contract price was inclusive of the annexation fee to be paid by the buyer. This parcel of land was zoned R-5, Residential Mixed-Use High-Density District. This sale failed due to the costs for off-site improvements. For this reason, it is indicated the per square foot value for a Cash in Lieu valuation must be lower than the per square foot value of this contract. Address City State Date Price Acres Acre Unit Price Property Rights Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0%Fee Simple 0.0% Financing Cash to Seller 0.0%Cash to Seller 0.0%Conventional 0.0%Cash to Seller 0.0%Cash to Seller 0.0%Cash to Seller 0.0%Cash to Seller 0.0%Conventional 0.0% Conditions of Sale Arm's length 0.0%Arm's Length 0.0%Arm's Length 0.0%Arm's Length 0.0%Arm's Length 0.0%Arm's Length 0.0%Arm's Length 0.0%Arm's Length 0.0% Expenditures After Sale Market Trends Through 7/1/18 10.0% Location % Adjustment $ Adjustment Acres % Adjustment $ Adjustment Topography % Adjustment $ Adjustment Shape % Adjustment $ Adjustment Utilities % Adjustment $ Adjustment Zoning % Adjustment Net Adjustments Gross Adjustments 0.0%0.0%0.0%0.0%0.0% 0.0% 0.0%0.0%0.0% 0.0%0.0% $43,031 59.26 $0 $0 $51,593$43,031 7/18/2017 $764,600 77.53 $2,900,000 10/10/20179/30/2016 $53,600 1/18/20177/1/2018 $51,593 $56,163 GoodGood $63,333 $0 Level 59.26 0%0% 18.2% 0% 8.9% Good $47,001 9.2% $0 NorthWestern Energy 0% $536,000 0% $0 Level $46,660 $0 7.1% 0% $43,552 $0 28.09 $3,169,210$1,800,000 TBD Huffine Lane $43,552 Bozeman Comp 7 41.33 MT Residential High Density (R4) 0% $0 0% $0 0% RR/A, Rural Residential & Agricultural 0%0% NorthWestern Energy $0 0% $0 Level 10.00 0% $0 $0 NorthWestern Energy Northwestern Residential High Density (R4), Residential Medium Density (R3) R-3 & R-4 0% SRR, Semi-Rural Residential Zone $0 Level $0 Rectangular $0 6/9/2014 $87,523 10.00 NW Corner of Gooch Hill Rd. & Huffine Ln. 1067 Thomas Drive Good $121,827 $53,600 $0 $4,000,000 Bozeman $2,550,000 MT Bozeman 8/10/20177/28/2017 MT Comp 6Comp 3 Comp 5 SW Corner of Love Ln. & Baxter Ln. Comp 4 MT Bozeman Land Analysis Grid Comp 1 Comp 2 MT MTMT 5528 Stucky Rd Oak Street and Davis Lane 5200 Durston Road Bozeman BozemanBozeman $715,700 8.65 $82,711$76,231 10.03 14.8% Adjusted Acre Unit Price $59,434 Cash 9.5% $0 48.79 Conventional Fee Simple Transaction Adjustments 0.00 $59,434 $82,711$76,231 $0 GoodGood 0% Adjusted Acre Unit Price $65,087 0.00 Good $0 48.79 0% $0 0% $0 10.03 0% 8.65 $0 0% $0$0 $0 0%0%0% $0 $0$0 0%0%0% RectangularIrregular Electricity, Water, Sewer, Gas Site shape Level NorthWestern Energy NorthWestern Energy 0% Mostly Level $0 $0 Irregular 0% Level 0% 0% $0 0% $87,523$65,087Adjusted Acre Unit Price $63,333$121,827 0% NorthWestern Energy 0% $0 $0 $0 Rectangular $0 0% Rectangular 0% $0 M-I & N-S 0% NorthWestern Energy MU, Mixed-Use District $0 0%0% $0 0% $0 $0 0% Irregular $0 77.53 0%0% 41.33 Level R-5, Residential Mixed Use High Density 0% $0 $0 $112,835 28.09 NorthWestern Energy $0 Level $0 $0 0% 0% Irregular $112,835 0% $112,835 0% 0.0% Good Comp 8 TBD Cottonwood Road Bozeman MT $0 7/1/2018 47.3% 0%0% Good 0.0%0.0%0.0% $56,163 $46,660 $112,835 0.0%0.0% $47,001 189 Bridger Appraisals Inc. © Keith O’Reilly, MAI The provided sales give a good indication of the per square foot valuation for vacant land in the City of Bozeman. This valuation is for Residential Single-Household Low Density (R1), Residential Two-Household Medium Density (R2), Residential Medium Density (R3), Residential High Density (R4), and Residential Office (RO) districts. Sale 1 is current and actually fits the criteria and definition for the Cash in Lieu program. This property will likely be developed mixed-use residential. This sale is also of a more moderately sized site of 49 acres; thus, there are sales that are smaller and larger. Typically, the larger the site, the lower the value per acre, and the smaller the site, the higher the value per acre. Sale 1 is a typical site where the developer will literally have to give up the physical land for park. After a market condition adjustment, the indicated value is $65,000 per acre or $1.50psf. Based upon these sales, I would estimate the per square foot value for vacant land in the Residential Single-Household Low Density (R1), Residential Two-Household Medium Density (R2), Residential Medium Density (R3), Residential High Density (R4), and Residential Office (RO) districts within the City of Bozeman at $1.50psf as of July 1, 2018. If I can be of further assistance, please do not hesitate to contact me. Sincerely, Keith O’Reilly, MAI General Certified Appraiser State of Montana #400 190 CERTIFICATION As a result of a request for an appraisal assignment of the property, identified as: Standard Property Valuation for the City of Bozeman's Cash in Lieu of Parkland Dedication Process I certify: To the best of my knowledge and belief the statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and the requirements of the Code of Professional Ethics and Standard of the Professional Appraisal Practice of the Appraisal Institute. The use of this report is subject to the requirements of the Appraisal Institute relating to its duly authorized representatives. As of the date of this report, I, Keith O’Reilly, MAI, have completed the continuing education program of the Appraisal Institute. Heidi Switzer provided significant real property appraisal assistance to the person signing this certification, including market research and input as to the final reconciled value. Respectfully Submitted, Keith O’Reilly, MAI General Certified Appraiser #400 State of Montana 191 Bridger Appraisals Inc. © Keith O’Reilly, MAI 192 193 Bridger Appraisals Inc. © Keith O’Reilly, MAI 194