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HomeMy WebLinkAboutResolution 5472 Adopting the Update to the Fair Market Value of Land for Cash-In-Lieu of Parkland CalculationsVersion April 2020 RESOLUTION NO. 5472 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, 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, Section 38.420.030 of the Bozeman Municipal Code states that the city must periodically update the market value as deemed necessary to reflect changes in the price of land; and WHEREAS, an updated 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 now $2.60 per square foot (Exhibit A); NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, to wit: that the fair market value of residential property for the purposes of cash donation in lieu of park land dedication is $2.30 per square foot, subject to changes in market conditions that warrant an updated appraisal. PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 24th day of January, 2023. ___________________________________ CYNTHIA L. ANDRUS DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C Version April 2020 Mayor ATTEST: ___________________________________ MIKE MAAS City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C AN APPRAISAL REPORT OF: Standard Property Valuation for the City of Bozeman’s Cash in Lieu of Parkland Dedication Process FILE NO.: C113022457 PREPARED FOR: Mr. Mitchell Overton City of Bozeman - Department of Parks and Recreation 415 North Bozeman Avenue Bozeman, MT 59715 PREPARED ON: November 30, 2022 EFFECTIVE DATE OF VALUATION: November 1, 2022 PREPARED BY: Keith O'Reilly, MAI, MT-400 Bridger Appraisals, Inc. P.O. Box 11145 Bozeman, MT 59719 Resolution 5472 Exhibit ADocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 2 November 30, 2022 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 all zoning districts within the City of Bozeman. The zoning districts are as follows: Residential Suburban District (R-S), Residential Low Density District (R-1), Residential Moderate Density District (R-2), Residential Medium Density District (R-3), Residential High Density District (R-4), Residential Mixed-Use High Density District (R-5), Residential Office District (R-O), Residential Manufactured Home Community District (RMH), Neighborhood Business District (B-1), Community Business District (B-2), Community Business District-Mixed (B-2M), Downtown Business District (B-3), Urban Mixed-Use District (UMU), Light Manufacturing District (M-1), Manufacturing and Industrial District (M-2), Business Park District (B-P), Northeast Historical Mixed-Use District (NEHMU), Neighborhood Conservation Overlay District (NC), and Residential Emphasis Mixed-Use District (REMU). 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 3 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 description, as furnished, is correct; and that the title to the property is good and marketable. All existing liens and encumbrances, if any, have been disregarded. The property is 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. 7. Unless otherwise stated in this report, the appraiser did not observe the existence of hazardous DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 4 material, which may or may not be present on the property. I have no knowledge of the existence of such materials on or in the property. 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 appraised property 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 property. 5. Disclosure of the contents of this report is governed by the By-Laws and Regulations of the Appraisal DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 5 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 6 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: November 1, 2022 Date of Preparation: November 30, 2022 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 7 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 all zoning districts within the City of Bozeman as previously listed. 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 for all zoning 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 or description 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 8 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 the Residential Suburban District (R-S), Residential Low Density District (R-1), Residential Moderate Density District (R-2), Residential Medium Density District (R-3), Residential High Density District (R-4), Residential Mixed-Use High Density District (R-5), Residential Office District (R-O), Residential Manufactured Home Community District (RMH), Neighborhood Business District (B-1), Community Business District (B-2), Community Business District-Mixed (B-2M), Downtown Business District (B-3), Urban Mixed-Use District (UMU), Light Manufacturing District (M-1), Manufacturing and Industrial District (M-2), Business Park District (B-P), Northeast Historical Mixed-Use District (NEHMU), Neighborhood Conservation Overlay District (NC), and Residential Emphasis Mixed-Use District (REMU) 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. There are no other intended users. 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] DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 9 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 November 1, 2022. 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 10 MONTANA REGIONAL AND CITY MAPS Subject Area DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 11 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 12 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 DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 13 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. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 14 ID 1850 Sale Verification Source Broker Cory Vellinga Address SE Corner Gooch Hill Rd Price $4,000,000 City Bozeman Price per Acre $97,454.00 State MT Financing Cash to Seller Tax ID RGG10212 Property Rights Fee Simple County Gallatin Days on Market 0 Grantor Alan D. Fulton Recording Date 7/2/2021 Grantee Ryan Roller Book/Page or Reference 2739945 Legal Description Acres 41.05 Topography Level Land SF 1,787,920 Zoning Agricultural Suburban Road Frontage --Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Durston Rd and Gooch Hill Rd Price Per Land SF $2.23 Land Comparable 1 Site There are two approximatle 20 acre parcels totaling 41.045 acres that sold for $4,000,000 cash. The property was not actively listed for sale. The property is at the SE corner of the intersection of Gooch Hill Rd and Durston Rd. The property is not annexed into the City of Bozeman, but is adjacent to the City Limits. This is a prime piece of speculative residential land. The land to the east is already developed residentially. Transaction Tracts 1 and 2 of COS No. 158 located in the NW1/4 of Section 9 Township 2 South, Range 5 East, P.M.M. Gallatin County, MT Sale Comments DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 15 ID 1777 Sale Verification Source Buyer Address TBD West Graf Street Price $7,743,260 City Bozeman Price per Acre $95,000.00 State MT Financing Cash to Seller Tax ID RGG8316 & RGG8318 Property Rights Fee Simple County Gallatin Days on Market None Grantor Diane L. Brawner Revocable Trust Recording Date 9/24/2021 Grantee Bozeman Haus Two LLC Book/Page or Reference Doc 2751910 Legal Description Acres 81.51 Topography Level Land SF 3,550,488 Zoning AS, Agricultural Road Frontage W. Graf St. & S. 27th Ave.Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access W. Graf St. & S. 27th Ave.Price Per Land SF $2.18 Land Comparable 2 Sale Comments Site This is a closed sale of two adjacent 40+/- acre parcels of vacant land in the southern part of Bozeman from a single seller to a single buyer. The eastern parcel is bordered to the north, west, and south by the Bozeman city limits and it is expected that the buyer will pursue annexation and connection to the City of Bozeman water and sewer system. The buyer reportedly plans to develop the sites with multifamily residential improvements. This is considered to be a very attractive speculative development site given its location in the southern part of Bozeman and its adjacency to the Bozeman city limits. This property was not openly marketed and the transaction was privately negotiated between the buyer and the seller. Tract 1 of Certificate of Survey No. 2074 and Tract A of Certificate of Survey No. 1861, tracts of land being the NW 1/4 SW 1/4 and the NE 1/4 SW 1/4, Section 23, Township 2 South, Range 5 East, Gallatin County, Montana. Transaction DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 16 ID 1749 Sale Verification Source Buyer Address NWC S. 19th Ave & Stucky Rd. Price $10,250,000 City Bozeman Price per Acre $105,249.11 State MT Financing Cash to Seller Tax ID RGG40140 Property Rights Fee Simple County Gallatin Days on Market None Grantor Steven R. Aaker Recording Date 12/14/2021 Grantee West University, LLC Book/Page or Reference 2761479 Legal Description Acres 97.39 Topography Level Land SF 4,242,221 Zoning AS, Agricultural Road Frontage Stucky Rd., S. 19th Ave., W. Kagy Blvd. Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Stucky Rd., S. 19th Ave., W. Kagy Blvd. Price Per Land SF $2.42 Land Comparable 3 This is a prime speculative development site located at the intersections of Stucky Road and South 19th Avenue and West Kagy Boulevard and South 19th Avenue. The site is adjacent to the Bozeman city limits making it a likely candidate for annexation into the City of Bozeman and connection to the City of Bozeman water and sewer system. The properties to the north, east, and south of the site have already been annexed into the City of Bozeman. The site will likely be developed into a mixed-use project incorporating commercial development that takes advantage of South 19th Avenue with residential development to the west. The property was not openly marketed. Site Sale Comments Lot 2 of Minor Subdivsion Number 191, located in the SE 1/4 of Section 14, T2S, R5E, P.M.M. Gallatin County, MT. Transaction DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 17 ID 1751 Sale Verification Source Buyer Address TBD Davis Lane Price $8,100,000 City Bozeman Price per Acre $70,009.00 State MT Financing Cash to Seller Tax ID --Property Rights Fee Simple County Gallatin Days on Market -- Grantor The Peter Family Trust Recording Date 6/4/2021 Grantee Virga Venture II LLC Book/Page or Reference 2736653 Legal Description Acres 115.70 Topography Level Land SF 5,039,892 Zoning Ag Road Frontage --Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Davis Lane/Frontage Rd Price Per Land SF $1.61 Sale Comments This is the sale of a speculative development site located in the northwest quadrant of Bozeman. The sale price is $70,009 per acre for non-annexed land adjacent to City services. The purchaser plans on developing the site with high density residential improvements. The purchaser is a very seasoned developer in the Bozeman market. Site Transaction Land Comparable 4 Lengthy Retained in File DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 18 ID 1371 Sale Verification Source Buy-Sell Agreement Address TBD South 19th Avenue Price $10,000,000 City Bozeman Price per Acre $83,600.00 State MT Financing Conventional Tax ID RGG9600 Property Rights Fee Simple County Gallatin Days on Market None Grantor Bozeman Ranch Land, LLC Recording Date 10/30/2019 Grantee Blackwood Land Fund. LC Book/Page or Reference Doc 2662993 Legal Description Acres 119.62 Topography Level Land SF 5,210,522 Zoning See Comments Road Frontage South 19th Avenue Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access South 19th Avenue Price Per Land SF $1.92 Land Comparable 5 Site Transaction This is the sale of a large tract of speculative development land that is located along the eastern side of South 19th Avenue in the southern part of Bozeman. The property is not yet annexed into the City of Bozeman but is bordered on three sides by properties that are annexed. The City of Bozeman is very likely to grant annexation for the property shortly following the sale. The property is currently zoned by the Gallatin County Planning Department as AS, Agricultural Suburban District but the buyer is attempting to achieve an REMU, Residential Emphasis Mixed-Use zoning designation for a majority of the site from the City of Bozeman when it is annexed. Lower density zoning designations will be utilized for areas bordering existing communities. The buyer intends to develop the property into a multi-phase, large-scale mixed-use residential and commercial development. The property is already bisected by a water main for the City of Bozeman water system but the City's preferred sewer main connection is approximately 1,300 feet north of the property at the intersection of South 19th Avenue and Graf Street. However, it is expected that early phases of the development can be connected to smaller sewer lines stubbed at the adjacent Alder Creek Subdivision. There are estimated to be approximately $1,181,000 in off-site improvement costs for the widening of South 19th Avenue and the development of a traffic control light at 19th Avenue and Blackwood Road. The property is located in a Qualified Opportunity Zone which provides for additional potential tax benefits. The property was not openly marketed and the transaction was privately negotiated between the buyer and the seller. Sale Comments The South 1/2 of the Southwest 1/4 of Section 24 and the North 1/2 of the North 1/2 of the Northwest 1/4 of Section 25 in Township 2 South, Range 5 East, Gallatin County, Montana. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 19 ID 1230 Sale Verification Source Purchaser Address 5250 Baxter Lane Price $8,080,000 City Bozeman Price per Acre $50,374.00 State MT Financing Cash to Seller Tax ID RGG6855 Property Rights Fee Simple County Gallatin Days on Market None Grantor Fern Vesta Anderson Recording Date 6/7/2019 Grantee NWX, LLC Book/Page or Reference 2646897 Legal Description Acres 160.36 Topography Level Land SF 6,985,282 Zoning A-S, Agricultural Road Frontage Baxter Lane & Cottonwood Road Flood Zone None Dimensions Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Baxter Lane & Cottonwood Road Price Per Land SF $1.16 This property sold on 06/07/2019 for $8,080,000 or $50,374per acre for 160.360 acres. The property went under contract in the early fall of 2018. The property is in the county, but adjacent to the City of Bozeman. The property is bordered to the east by the new Bozeman Sport Complex and to the south by Laurel Glen, a residential subdivsion. This property is also in very close proximity to the new Bozeman High School. The purchaser has applied for annexation into the City of Bozeman and will pursue a high-density REMU and B- 2M zoning designation for the site following annexation. According to the buyer's proforma, off-site improvement costs are estimated to be approximately $4,300,000 or $26,815 per acre. Therefore, the effective acquisition cost for the property inclusive of estimated off-site improvement costs is $12,380,000 or $77,375per acre. This property was not openly marketed and the transaction was privately negotiated between the buyer and the seller. Site Land Comparable 6 Transaction Sale Comments Tract 5 of COS 2552, NE 1/4 of Section 4, Township 2 South, Range 5 East, Gallatin County, Montana. DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 20 DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 21 Address City State Date Price Land SF Land SF 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% Financing Cash to Seller 0.0%Cash to Seller 0.0%Cash to Seller 0.0%Cash to Seller 0.0%Conventional 0.0%Cash to Seller 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% Expend. After Sale Market Trends Through 11/1/2022 10.0% Location % Adjustment $ Adjustment Acres % Adjustment $ Adjustment Topography % Adjustment $ Adjustment Shape % Adjustment $ Adjustment Utilities % Adjustment $ Adjustment Zoning % Adjustment $ Adjustment Net Adjustments Gross Adjustments $0.00 Ag 0% $0.00 $0.00 115.70 Good $0.00 $0.00 AS, Agricultural Suburban $0.00 0% See Comments $0.00 0% NorthWestern Energy0% $0.00 5,210,522.00 0% $0.00 0% Land Analysis Grid Comp 1 -- 9/24/202111/1/2022 7/2/2021 $7,743,260$4,000,000 $10,250,000 3,550,488.00 $2.18 6,985,282.00 6/7/201910/30/2019 $10,000,000 TBD South 19th Avenue Bozeman 13.6% 0% $2.56 0% $1.84 Good $1.60 0% 14.4% $1.92$1.61 38.3% $1.16 33.2% 41.05 0% Adjusted Land SF Unit Price $2.54 $0.00 Good 0% Level $0.00 $0.00 NorthWestern Energy NorthWestern Energy 0% 97.39 NorthWestern Energy $0.00 $0.00 0% 81.51 $0.00 0% $0.00$0.00 $0.00 Level $0.00 33.2% Good 119.62 $0.00 Irregular $0.00 Level 0% 0% $0.00 NorthWestern Energy 0% $0.00 0% Level $0.00 NorthWestern Energy $0.00 Rectangular 33.2% $1.92 $0.00 MTMT $8,080,000 $0.00 $1.16 0% $0.00 0% $0.00 Rectangular 0% 160.36 0% Level $0.00 0% $8,100,000 $0.00 $0.00 $1.61 5,039,892.00 Level 0% $2.63 0% 0% 11.1% $2.42 $2.18 Good $0.00 0% $0.00 0% $0.00 Rectangular 0% 0% 0% $0.00 Irregular MT 6/4/2021 Comp 3 Bozeman 5250 Baxter Lane Comp 4 Comp 5 Comp 6 MT Bozeman NWC S. 19th Ave & Stucky Rd. TBD Davis LaneSE Corner Gooch Hill Rd and Durston Rd TBD West Graf Street Bozeman Comp 2 MT 0% $0.00 Rectangular 0% Agricultural Suburban $0.00 0%0% AS, Agricultural Suburban $0.00 0% A-S, Agricultural Suburban 8.8% Good $2.42 Bozeman MT $2.42 4,242,221.00 Transaction Adjustments 1,787,920.00 Bozeman $2.24 12/14/2021 $0.00 Adjusted Land SF Unit Price $2.24 38.3% 38.3% Adjusted Land SF Unit Price $2.63 13.6% $2.54 $1.60$1.84 14.4% $2.42 8.8%11.1% 11.1%8.8% 14.4%13.6% $2.56 $0.00 $0.00 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 all zoning districts within the City of Bozeman. Sales 1 through 4 are the most current, while Sales 5 and 6 are older. However, all fit the criteria and definition for the Cash in Lieu program. Sale 1 is located adjacent to the city limits. This property was not annexed and has not applied for annexation yet, but likely will be annexed before being developed. Sales 2, 3, and 4 were not annexed at the time of sale, but all have since applied for and are in the process of annexation. Sale 5 was annexed in after purchase and Sale 6 had approval to be annexed into the City at the time of sale. Sales 5 and 6 are currently being developed with a mix of commercial and residential development. Sale 2 is expected to be primarily residential, and Sales 3 and 4 will likely be a mix of commercial and residential. Sale 6 is the largest available sale at 160 acres, with Sales 2, 3, 4, and 5 between 80 acres and 120 acres. Sale 1 is the smallest at approximately 41 acres. Typically, the larger the site, the lower the value per acre/square foot, and the smaller the site, the higher the value per acre/square foot; however, DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 22 the adjusted values from Sales 1, 2, 3, and 5 are all very consistent between $2.42 per square foot and $2.63 per square foot. Sales 1, 2, and 3 are recent sales. There have been very limited sales of larger sales of development sites located within the city limits in recent years, but four recent sales of development sites located adjacent or near the edge of the city limits were included. Three of these are in the annexation process. In addition, I have confirmed two confidential sales, one of a moderately sized development piece annexed into the City of Bozeman, and one of a larger development piece annexed into the City of Belgrade. While the Belgrade piece would obviously not be a candidate for cash in lieu through the City of Bozeman, it fits the cash in lieu criteria and has been given consideration as additional support to the overall reconciled value. The pending sale from Bozeman is annexed into the City and zoned R-1 and R-2. The site contains approximately 35 acres and the buyer confirmed the purchase price is approximately $115,000 per acre or $2.64 per square foot. The confidential sale from Belgrade was approximately 239 acres of annexed land with a commercial zoning. The buyer reported this sale sold for approximately $117,000 per acre or $2.69 per square foot. At the time of this purchase, this was the highest price paid on a per acre basis for a larger speculative development site located in or near Belgrade or Bozeman. Market conditions are currently changing due to a significant increase in interest rates. The market peaked in the early spring of 2022, and market conditions began to change in the summer to early fall of 2022. Currently, days on the market have been extended and there is much less competition to purchase speculative development land. There are simply not enough sales of this type of property to graph or show the increase and then likely decline in values. Based upon the preceding sales and analysis of current market conditions, I would estimate the per square foot value for vacant land in the Residential Suburban District (R-S), Residential Low Density District (R-1), Residential Moderate Density District (R-2), Residential Medium Density District (R-3), Residential High Density District (R-4), Residential Mixed-Use High Density District (R-5), Residential Office District (RO), Residential Manufactured Home Community District (RMH), Neighborhood Business District (B-1), Community Business District (B-2), Community Business District-Mixed (B-2M), Downtown Business District (B-3), Urban Mixed- Use District (UMU), Light Manufacturing District (M-1), Manufacturing and Industrial District (M-2), Business Park District (B-P), Northeast Historical Mixed-Use District (NEHMU), Neighborhood Conservation Overlay District (NC), and Residential Emphasis Mixed-Use District (REMU) within the City of Bozeman to be $2.60psf or between $110,000 and $115,000 per acre as of November 1, 2022. While there is a broad range of zoning districts, there is not enough data available to support a different reconciled land value for a low density zoning versus DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 23 a high density or commercial zoning. The overall reconciled value per square foot is supportable across all larger speculative development parcels. 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 DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C 24 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 DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C Bridger Appraisals Inc. © Keith O’Reilly, MAI ADDENDUM DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C Bridger Appraisals Inc. © Keith O’Reilly, MAI DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C Bridger Appraisals Inc. © Keith O’Reilly, MAI DocuSign Envelope ID: 27C1C8FA-339A-406C-983B-457EF581F19C