HomeMy WebLinkAboutC4. MSU MOU Easement
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Craig Woolard, Director of Public Works
SUBJECT: Montana State University Utility Easement Memorandum of Understanding.
MEETING DATE: June 6, 2016
AGENDA ITEM TYPE: Consent Item
RECOMMENDATION: Authorize the City Manager to sign the memorandum of
understanding between Montana State University (MSU) and the City of Bozeman (the City) that grants the City easements for the construction of sewer mains to serve the south university district in exchange for constructing a water line to serve MSU farm complex.
BACKGROUND: The City of Bozeman wastewater master plan call for the construction of
additional sewer lines to serve the south university district area. These plans call for extending a
trunk sewer line from North 19th Avenue to West Garfield Street. Construction of the sewer line require easements from Montana State University as the proposed sewer line follows access roads on MSU’s College of Agriculture facility.
The attached Memorandum of Understanding grants the City easements to construct the sewer in
exchange for the City constructing a water line extending from West Garfield Street to the
College of Agriculture facility on West Lincoln Street. As shown in the attached documents, the MSU easements appraised at a total value of $112,750. The engineers estimate for construction of the water line was $120,900. Staff considers this transfer (i.e., easement for water line
construction) a fair exchange and recommends approval.
UNRESOLVED ISSUES: NONE
ALTERNATIVES: As recommended by the Commission.
FISCAL EFFECTS: The City will construct the water and sewer lines referenced in this agreement with budgeted impact fees.
Attachments:
1. Dowl cover letter dated May 23, 2016 2. Memorandum of Understanding 3. Appendix 1 – Easement Documents 4. Appendix 2 – Engineers Opinion of Probable Cost
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5. Appendix 3 - Appraisals
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Page 1 of 2
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Alaska Ŷ Arizona Ŷ Colorado Ŷ Montana Ŷ North Dakota Ŷ Oregon Ŷ Washington ŷWyoming
May 23, 2016 DOWL Project #: 4524.11402.04
The State of Montana
c/o Montana State University Dr. Waded Cruzado, President
P.O. Box 172420 Bozeman, MT 59717-2420
Subject: MSU Farm Utility Easements for Parcels 1 and 2
Dear Dr. Cruzado:
The City of Bozeman will be installing new water main and sewer mains in the near future. In order to allow the improvements to be constructed, the City needs to obtain new utility easements across two of Montana State University’s (MSU) properties. The properties are described as Tract A of COS 2729 in the NW¼ of Section 14, T2S, R5E and Tract D of COS 1243A in the NE¼ of Section 14, T2S, R5E, property MSU utilizes for the Marsh Laboratory and College of Agriculture. This letter is intended to present the Memorandum of Understanding (MOU) to obtain water main and sewer main easements on Parcels 1 and 2, as well as briefly explain the process.
DOWL is under contract with the City of Bozeman to assist with obtaining the additional Right-of-Way for this project. Our job is to answer your questions and ensure that you understand the MOU for the necessary interests, the acquisition process and the rights of a property owner. The following is a summary of the agreement, additional required information and the paperwork required to complete this process.
The Agreement between MSU and the City of Bozeman
The City of Bozeman and MSU have agreed to exchange utility improvements for new utility easements. The attached MOU details the agreement made between both parties and details the costs associated with the exchange for mutual benefit.
All documents required to execute the transaction are enclosed. A brief description of the documents and additional steps necessary to complete the transaction are as follows:
•Memorandum of Understanding: The MOU expresses the terms of the water main installation and utility easement exchange in writing. Please sign and date the document where indicated.
•Public Utility Easement (PUE): The PUE’s for Parcel 1 and Parcel 2 are the documents that will allow the City of Bozeman to utilize the property rights defined therein. The PUE documents are included in Appendix 1 of the MOU. Please sign and date the documents where indicated with a notary present. These documents will be recorded. As the documents will be signed on behalf of MSU, we will need a copy of the official document that authorizes signers on its behalf.
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Page 2 of 2
•Appraisals: The Appraisal Report for Parcels 1 and 2 is included for your records. The appraisals are included in Appendix 3 of the MOU. Below is a brief summary of how the value of each easement was calculated:
Area (acres) Price / acre Total Value
Market Value of Parcel 1, Current 1: 41.17 $45,000 $1,852,650
Value of the new PUE (Rounded) 2: 0.89 $45,000 * 95% $38,050
Market Value of Parcel 2, Current 3: 76.00 $45,000 $3,420,000
Cost to Cure for gates and fencing:$720
Value of the new PUE: 1.73 $45,000 * 95% $73,958
Subtotal (Rounded) 4:$74,700
Combined value of new PUE’s (Rounded): $112,750
1 Parcel 1 Appraisal Report, page 45
2 Parcel 1 Appraisal Report, page 67
3 Parcel 2 Appraisal Report, page 45
4 Parcel 2 Appraisal Report, page 70
Please return all original signed documents as soon as possible and retain a copy for your files. We appreciate your attention to this matter.
If you have any questions, require additional information, or would like to discuss these documents in more detail, please feel free to contact me via email (agaddo@dowl.com) or phone (406-551-1445).
Sincerely, DOWL
Tony Gaddo, P.E. Real Estate Services Transportation Engineer
Attachment(s): As stated
57
MOU between Montana State University and The City of Bozeman
CITY OF BOZEMAN PROJECT NAME: MSU FARM SANITARY SEWER EASEMENT Parcel 1 and 2
PROJECT#: 4524.11402.04 / 0417.072.02 Page 1 of 4
CITY OF BOZEMAN
Engineering Division
Public Works Department
MEMORANDUM OF UNDERSTANDING
PROJECT NAME: MSU FARM
SANITARY SEWER EASEMENT
PROJECT #: 4524.11402.04 /
0417.072.02
PARCEL #: 1 AND 2
MEMORANDUM OF UNDERSTANDING
Between and Among
MONTANA STATE UNIVERSITY, OWNER OF PARCELS 1 AND 2,
AND THE CITY OF BOZEMAN
This Memorandum of Understanding (MOU) is hereby made and entered into by, between, and
among Montana State University (hereinafter MSU), and the City of Bozeman (hereinafter the
City).
A. PROJECT PURPOSE AND BACKGROUND
The City of Bozeman completed a wastewater facility plan in 2015 that recommended
constructing a new sanitary main in this vicinity. The property in the vicinity is owned by the
State of Montana, but is for the benefit of MSU. The location of the main through MSU’s
property was found to be preferred since it allowed a gravity draining sewer main to be installed,
negating the need for an expensive sewer lift station. Since the facility plan was completed,
MSU also indicated the necessity for a new water main to be installed south of W. Garfield St.
In discussions between the City and MSU in the attempt to purchase the necessary property
interests from MSU for the project, MSU has offered to grant the necessary project property
interests at no cost in exchange for the City constructing a new water main in addition to the
project’s sewer main. Both parties have explored this opportunity, including identification of
property values and construction costs. Given that each party’s respective costs are relatively
equal, this exchange of interests is considered to be in the best interests of both parties.
The purpose of this MOU is to document the project roles and responsibilities of each of the
aforementioned parties. This document will formally outline which party will be responsible of
various aspects of the project including construction efforts, oversight, maintenance, funding,
and impacts to private property features.
B. PROJECT
The Project area is generally defined as incorporating a portion of land bounded by North 19th
Ave., W. Lincoln St., and W. Garfield St., with a total new sanitary sewer length of approximately
58
MOU between Montana State University and The City of Bozeman
CITY OF BOZEMAN PROJECT NAME: MSU FARM SANITARY SEWER EASEMENT Parcel 1 and 2
PROJECT#: 4524.11402.04 / 0417.072.02 Page 2 of 4
0.80 miles and water main length of approximately 0.25 miles within new utility easements. The
goal of the project is to install a new sanitary sewer main that will serve the South University
Area, including future development in the surrounding area, and a new water main to serve the
South University Area. Both parties to this agreement have showed necessity for these utility
mains. This project will not include the installation of new streets or public rights-of-ways (R/W),
but will include a maintenance access road within the confines of the new utility easements.
C. DETAILED PROJECT INFORMATION
Improvements
The City will install a new sanitary sewer main from W. Garfield St. to North 19th Ave. and a new
water main from W. Garfield St. to the future W. Lincoln St. R/W. Included with the
improvement project are utility manholes, valves, a waterline stub for future MSU use, other
related utility features, and a maintenance access road.
Public Utility Easements
To allow access to the new water main and sewer main through Parcels 1 and 2, new public
utility easements are required for MSU’s property. Generally, Parcel 1 requires a 32-ft wide
water main and sewer main easement and Parcel 2 requires a 30-ft wide sewer main easement,
as shown in Appendix 1.
Costs
This project to install a new water main and sewer main is being funded by the City of Bozeman.
The project costs include compensation for the utility easements required to install the public
utility lines on MSU’s property. Based on MSU’s need for a water main and the City’s need for a
utility easement, the City of Bozeman and MSU have agreed to assist each other for mutual
benefit by the City building the water main at its cost and MSU granting the utility easement
without compensation. To accurately justify the cost comparisons between constructing the
mains and the easement compensation, the parties have performed the following evaluations:
The City has prepared an engineer’s opinion of probable cost to design and install a new water
main for the benefit of MSU and has determined the cost to be $120,900.00 The engineer’s
opinion is included in Appendix 2.
Two appraisal reports were completed and paid for by the City, one report for each parcel
owned by MSU. The appraised value for a sewer main easement on Parcel 1 was determined
to be $38,050.00; the appraised value for a sewer main easement on Parcel 2, including
impacts to gates and fencing, was determined to be $74,700.00; the combined easement value
is $112,750.00. The appraisals are included in Appendix 3.
59
MOU between Montana State University and The City of Bozeman
CITY OF BOZEMAN PROJECT NAME: MSU FARM SANITARY SEWER EASEMENT Parcel 1 and 2
PROJECT#: 4524.11402.04 / 0417.072.02 Page 3 of 4
D. WORK ASSIGNMENTS
PART A – THE CITY OF BOZEMAN
WORK TO BE PERFORMED BY THE CITY OR ITS CONTRACTOR AT THE CITY’S
EXPENSE:
1. Except as otherwise provided herein, furnish all plans, engineering, supervision, labor,
material, supplies and equipment necessary for construction of the project, complete in
all details.
2. The City of Bozeman agrees to complete the project improvements as detailed in this
agreement, the construction plans, including but not limited to water main installation,
installing a water main stub for future MSU service connection, sewer main installation,
and project administration.
3. The City of Bozeman agrees to install a new water main, as described in the project
plans, at its own cost in exchange for receiving new public utility easements without
compensation.
4. The City of Bozeman agrees to maintain the new water main and sewer main
improvements at its expense.
5. Upon completion of the project, the City of Bozeman agrees to restore the property as
nearly as possible to its original condition.
PART B – MONTANA STATE UNIVERSITY
ASSIGNMENTS TO BE PERFORMED BY MSU AT MSU’S EXPENSE:
1. Montana State University agrees to execute the public utility easements for the parcels
as shown in Appendix 1 for Parcel 1 and Parcel 2, without compensation in exchange for
the new water main being installed.
2. Montana State University acknowledges and agrees they will be responsible for future
impact fees when connecting to the public water main.
E. TERM
This MOU is effective _____________________, 2016, and will expire when the City
has completed all construction of the Water and Sewer Utility Project as noted above.
F. PRINCIPAL CONTACTS
The principal contacts for this instrument are:
City of Bozeman
c/o Dr. Craig Woolard,
Public Works Director
P.O. Box 1230
Bozeman, MT 59771-1230
Phone: (406) 582-2321
Montana State University
c/o Dr. Waded Cruzado,
MSU President
P.O. Box 172420
Bozeman, MT 59717-2420
Phone: (406) 994-2341
60
MOU between Montana State University and The City of Bozeman
CITY OF BOZEMAN PROJECT NAME: MSU FARM SANITARY SEWER EASEMENT Parcel 1 and 2
PROJECT#: 4524.11402.04 / 0417.072.02 Page 4 of 4
G. AUTHORIZED REPRESENTATIVES
By signature below, each party certifies that the individuals listed in this document as
representatives of their respective party are authorized to act in their respective areas for
matters related to this agreement.
THE PARTIES HERETO have executed this instrument.
CITY OF BOZEMAN
____________________________ Date: __________________________
Name:
Title:
ATTEST:
____________________________ Date: __________________________
Name:
Title:
MONTANA STATE UNIVERSITY
____________________________ Date: __________________________
Name:
Title:
ATTEST:
____________________________ Date: __________________________
Name:
Title:
61
CITY OF BOZEMAN
Engineering Division
Public Works Department
MEMORANDUM OF UNDERSTANDING
PROJECT NAME: MSU FARM
SANITARY SEWER EASEMENT
PROJECT #: 4524.11402.04 /
0417.072.02
PARCEL #: 1 AND 2
APPENDIX 1
Easement Documents
62
Return to:
DOWL
2090 Stadium Drive
Bozeman, MT 59715
CITY OF BOZEMAN PROJECT NAME: MSU FARM PROPERTY UTILITY EASEMENT Parcel 1
PROJECT#: 4524.11402.04 Page 1 of 3
CITY OF BOZEMAN
Engineering Division
Public Works Department
WATER MAIN AND SEWER
MAIN EASEMENT
PROJECT NAME: MSU FARM
PROPERTY UTILITY EASEMENT
PROJECT #: 4524.11402.04
PARCEL #: 1
WATER MAIN AND SEWER MAIN EASEMENT
THE GRANTOR(S), THE STATE OF MONTANA, for the use and benefit of Montana State University,
for and in consideration of Ten and No/100 - Dollars, and other valuable consideration, in hand paid,
conveys and warrants to the CITY OF BOZEMAN, a Municipal Corporation of the State of Montana,
with offices at 121 North Rouse Avenue, Bozeman Montana 59715, its successors or assignees, a
perpetual, full and unrestricted water main and sewer main easement, over, under, along, through, and
across the following-described tract of land located in Gallatin County, Montana:
A water main and sewer main easement to the City of Bozeman, on a tract of land located in Tract A
of Certificate of Survey No. 2729, situated in the NW1/4 of Section 14, Township 2 South, Range 5
East, P.M.M., Gallatin County, Montana, according to the official survey thereof on file and of record
in the office of the County Clerk and Recorder, Gallatin County, Montana, more particularly described
as shown on Exhibit A and Exhibit B;
All improvements are the property of the CITY OF BOZEMAN, removable at its option. The failure of the
GRANTEE to exercise any of its rights granted herein shall not be construed as a waiver or abandonment
of the right.
The above-named Grantor hereby covenants with the CITY OF BOZEMAN that said Grantor has good
title to the above-described tract of land and covenants that the CITY OF BOZEMAN shall have quiet and
peaceable possession thereof; and shall have a free and unrestricted right to maintain said facilities as
long as the right-of-way of which this easement area is a part, remains a public water main and sewer
main easement.
63
CITY OF BOZEMAN PROJECT NAME: MSU FARM PROPERTY UTILITY EASEMENT Parcel 1
PROJECT#: 4524.11402.04 Page 2 of 3
Dated this ____ day of _____________, 20__.
THE STATE OF MONTANA, for the use and benefit of Montana State University
________________________________________
By: Dr. Waded Cruzado
Montana State University President
ACKNOWLEDGMENT OF GRANTORS
STATE OF __________ )
) ss
County of ___________ )
On this ____ day of ______________, 20__, before me, the undersigned, a Notary Public in and for
the said State, personally appeared the Grantor, The Montana State University President, authorized
signatory for MONTANA STATE UNIVERSITY, known to me to be the identical individual who executed
the foregoing instrument, who acknowledged to me that said individual executed the same as the free
and voluntary act of said company, with full authority to do so and with full knowledge of its contents, for
the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this day and year
above written.
Notary Public in and for the State of __________
My Commission Expires: ___________________
64
CITY OF BOZEMAN PROJECT NAME: MSU FARM PROPERTY UTILITY EASEMENT Parcel 1
PROJECT#: 4524.11402.04 Page 3 of 3
CERTIFICATE OF ACCEPTANCE
THIS IS TO CERTIFY that the CITY OF BOZEMAN, a Municipal Corporation of the State of Montana,
Grantee herein, acting by and through its City Manager and City Clerk for the City of Bozeman, hereby
accepts for public purposes, the real property, or interest therein, described in this instrument and
consents to the recordation thereof:
CITY OF BOZEMAN
____________________________ Date: __________________________
By: Chris Kukulski
City Manager
ATTEST:
____________________________
By: Robin Crough
City Clerk
STATE OF MONTANA )
)ss.
County of Gallatin )
The foregoing instrument was acknowledged before me this _____ day of _______________,
20__ by Chris Kukulski and Robin Crough, known to me to be the City Manager and City Clerk for
the City of Bozeman and the persons whose names are subscribed to this instrument, and
acknowledged to me that they executed the same for and on behalf of the City of Bozeman.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this day and year
above written.
____________________________________
Notary Public in and for the State of Montana
My Commission Expires: ______________
65
67
Return to:
DOWL
2090 Stadium Drive
Bozeman, MT 59715
CITY OF BOZEMAN PROJECT NAME: MSU FARM PROPERTY UTILITY EASEMENT Parcel 2
PROJECT#: 4524.11402.04 Page 1 of 3
CITY OF BOZEMAN
Engineering Division
Public Works Department
SEWER MAIN EASEMENT
PROJECT NAME: MSU FARM
PROPERTY UTILITY EASEMENT
PROJECT #: 4524.11402.04
PARCEL #: 2
SEWER MAIN EASEMENT
THE GRANTOR(S), THE STATE OF MONTANA, for the use and benefit of Montana State University,
for and in consideration of Ten and No/100 - Dollars, and other valuable consideration, in hand paid,
conveys and warrants to the CITY OF BOZEMAN, a Municipal Corporation of the State of Montana,
with offices at 121 North Rouse Avenue, Bozeman Montana 59715, its successors or assignees, a
perpetual, full and unrestricted sewer main easement, over, under, along, through, and across the
following-described tract of land located in Gallatin County, Montana:
A sewer main easement to the City of Bozeman, on a tract of land located in Tract D of Certificate of
Survey No. 1243A, located in the NE1/4 of Section 14, Township 2 South, Range 5 East, P.M.M.,
Gallatin County, Montana, according to the official survey thereof on file and of record in the office of
the County Clerk and Recorder, Gallatin County, Montana, more particularly described as shown on
Exhibit A and Exhibit B;
All improvements are the property of the CITY OF BOZEMAN, removable at its option. The failure of the
GRANTEE to exercise any of its rights granted herein shall not be construed as a waiver or abandonment
of the right.
The above-named Grantor hereby covenants with the CITY OF BOZEMAN that said Grantor has good
title to the above-described tract of land and covenants that the CITY OF BOZEMAN shall have quiet and
peaceable possession thereof; and shall have a free and unrestricted right to maintain said facilities as
long as the right-of-way of which this easement area is a part, remains a public sewer main easement.
68
CITY OF BOZEMAN PROJECT NAME: MSU FARM PROPERTY UTILITY EASEMENT Parcel 2
PROJECT#: 4524.11402.04 Page 2 of 3
Dated this ____ day of _____________, 20__.
THE STATE OF MONTANA, for the use and benefit of Montana State University
________________________________________
By: Dr. Waded Cruzado
Montana State University President
ACKNOWLEDGMENT OF GRANTORS
STATE OF __________ )
) ss
County of ___________ )
On this ____ day of ______________, 20__, before me, the undersigned, a Notary Public in and for
the said State, personally appeared the Grantor, The Montana State University President, authorized
signatory for MONTANA STATE UNIVERSITY, known to me to be the identical individual who executed
the foregoing instrument, who acknowledged to me that said individual executed the same as the free
and voluntary act of said company, with full authority to do so and with full knowledge of its contents, for
the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this day and year
above written.
Notary Public in and for the State of __________
My Commission Expires: ___________________
69
CITY OF BOZEMAN PROJECT NAME: MSU FARM PROPERTY UTILITY EASEMENT Parcel 2
PROJECT#: 4524.11402.04 Page 3 of 3
CERTIFICATE OF ACCEPTANCE
THIS IS TO CERTIFY that the CITY OF BOZEMAN, a Municipal Corporation of the State of Montana,
Grantee herein, acting by and through its City Manager and City Clerk for the City of Bozeman, hereby
accepts for public purposes, the real property, or interest therein, described in this instrument and
consents to the recordation thereof:
CITY OF BOZEMAN
____________________________ Date: __________________________
By: Chris Kukulski
City Manager
ATTEST:
____________________________
By: Robin Crough
City Clerk
STATE OF MONTANA )
)ss.
County of Gallatin )
The foregoing instrument was acknowledged before me this _____ day of _______________,
20__ by Chris Kukulski and Robin Crough, known to me to be the City Manager and City Clerk for
the City of Bozeman and the persons whose names are subscribed to this instrument, and
acknowledged to me that they executed the same for and on behalf of the City of Bozeman.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this day and year
above written.
____________________________________
Notary Public in and for the State of Montana
My Commission Expires: ______________
70
72
CITY OF BOZEMAN
Engineering Division
Public Works Department
MEMORANDUM OF UNDERSTANDING
PROJECT NAME: MSU FARM
SANITARY SEWER EASEMENT
PROJECT #: 4524.11402.04 /
0417.072.02
PARCEL #: 1 AND 2
APPENDIX 2
Engineer’s Opinion of Probable Cost
73
Date:
Project #:
Project Name:
Engineer:
Item No. Unit Unit Price Total Cost
101 LS $2,900.00 $2,900
102 LS $1,900.00 $1,900
103 LS $4,800.00 $4,800
105 LF $50.00 $64,500
106 LF $6,000.00 $12,000
107 EA $1,500.00 $4,500
108 EA $500.00 $2,000
109 EA $2,500.00 $2,500
110 LS $10,000.00 $10,000
$105,100
15% $15,800
15% $15,800
$120,900TOTAL PROJECT COST
CONSTRUCTION SUB-TOTAL
CONTINGENCY
ENGINEERING
1,290
Restoration 1
8" Fitting 4
Fire Hydrant 2
Connect to Existing System 1
8" Ductile Iron
8" Gate Valve 3
General Requirements 1
Taxes, Bonds , and Insurance 1
ENGINEER'S OPINION
OF PROBABLE COST*
3/28/2016
0417.072
South University Area - Water Line
J Nickelson
Water Line
Description
Estimated
Quantity
Mob/Demob 1
74
CITY OF BOZEMAN
Engineering Division
Public Works Department
MEMORANDUM OF UNDERSTANDING
PROJECT NAME: MSU FARM
SANITARY SEWER EASEMENT
PROJECT #: 4524.11402.04 /
0417.072.02
PARCEL #: 1 AND 2
APPENDIX 3
Appraisals
75
AN APPRAISAL OF PARCEL 1
LOCATED ON THE
SOUTH SIDE OF
GARFIELD STREET
IN BOZEMAN, MONTANA
DATE OF VALUATION
MARCH 3, 2016
FOR
TONY BECKEN-GADDO
DOWL HKM
BY
J. MICHAEL JOKI, MAI, SRA
HELENA, MONTANA
76
J. MICHAEL JOKI, MAI, SRA
P.O. BOX 281
HELENA, MONTANA 59624
Phone (406) 442-2159
March 24, 2016 FAX (406) 442-6196
Tony Becken-Gaddo, P.E.
Dowl HKM
2090 Stadium Drive
Bozeman, Montana 59715
RE: An appraisal of the property owned by Montana State University (Parcel 1) on the south side of
Garfield Street in Bozeman, Montana.
Dear Mr. Becken-Gaddo:
Per our Agreement for Professional Services dated December 8, 2015 I have examined and
investigated the above referenced property for the purpose of estimating its current fair market value before
imposition of the sanitary sewer easement, its current fair market value after imposition of the sanitary sewer
easement, and for my estimate of compensation due to the property owner. The attached report provides
the essential data and detailed reasoning employed in estimating my final value estimates. The report
contains 67 pages.
The site being valued in this appraisal report is 41.17 acres (see larger parcel discussion on page 25),
and supports various out buildings associated with Montana State University. The City of Bozeman intends
to impose a 30' sanitary sewer easement along the east property boundary that will total .89 acres. An aerial
view of this proposed easement is included in the addenda of this appraisal report.
The values reported are qualified by certain definitions, assumptions and limiting conditions, and
certification which are set forth within the attached report. This appraisal report is intended to conform with
the Uniform Standards of Professional Appraisal Practice.
Based on my analysis, the market value of the subject site before imposition of the sanitary sewer
easement, as set forth, documented and qualified in the attached report under conditions prevailing on
March 3, 2016 was:
ONE MILLION EIGHT HUNDRED FIFTY-TWO THOUSAND
SIX HUNDRED FIFTY DOLLARS
$1,852,650
MEMBER APPRAISAL INSTITUTE
77
Based on my analysis, the market value of the subject site after imposition of the sanitary sewer
easement, as set forth, documented and qualified in the attached report under conditions prevailing on
March 3, 2016 was:
ONE MILLION EIGHT HUNDRED FOURTEEN SIX HUNDRED TWO
DOLLARS
$1,814,602 *
Value of the Remainder, Before:$1,814,602
Value of the Remainder, After:$1,814,602
Depreciation to Current Fair Market Value:$0
Special Benefits:$0
Value of the New Easement Area:$38,048
My total estimation of compensation is:$38,050(R)*
I direct your attention to the data, discussions and conclusions which follow.
Respectfully submitted,
J. Michael Joki, MAI, SRA
Montana State Certified
General Real Estate Appraiser #152
* Subject to the Hypothetical and Extraordinary Conditions listed on page 8.
MEMBER APPRAISAL INSTITUTE
78
TABLE OF CONTENTS
INTRODUCTION Page
Letter of Transmittal
Certification
Assumptions and Limiting Conditions 6
Hypothetical Condition 8
Summary of Important Facts and Conclusions 9
Subject Property Photograph 10
DESCRIPTION, ANALYSIS AND CONCLUSION:
Definition of Market Value 11
Purpose of Appraisal 11
Intended Use of the Appraisal and Intended Client 12
Scope of Appraisal 12
Summary of the Appraisal Problem 13
Property Rights Appraised 14
Identification of Property and Legal Description 14
History of the Property 15
Regional Map 16
Regional and City Analysis 17
Neighborhood Analysis 22
Plot Plan 24
Property Description Before the Imposition of the Easement 25
Subject Property Photographs 28
Zoning 31
Highest and Best Use Before 32
The Valuation Process 37
Site Valuation 37
Land Sale Location Map 40
Land Sale Adjustment Grid 41
Bracketing the Subject Property 44
Map Depicting the Easement Area 46
Scope of the Project and Its Affect on the Subject Site 47
Subject Property Photographs 49
Identification of the Site, After 52
Highest and Best Use After 53
The Valuation Process 57
J. Michael Joki, MAI, SRA
HELENA, MONTANA
79
Site Valuation 59
Land Sale Location Map 60
Land Sale Adjustment Grid 61
Bracketing the Subject Property 64
Depreciation to Current Fair Market Value 66
Recapulation of Compensation 67
ADDENDA:
Property Record Card
PLI Zoning
Zoning Map
Exhibit B
Email Explaining Sewer Easement Size
Project Aerial Map
Sample Public Utility Easement
Comparable Land Sale Sheets with Photographs
Qualifications of the Appraiser
State License
J. Michael Joki, MAI, SRA
HELENA, MONTANA
80
I CERTIFY THAT...
1. The statements of fact contained in this report are true and correct.
2. 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.
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 the parties involved.
4. I have performed no services, as an appraiser or in any other capacity, regarding the property that
is the subject of this report within the three year period immediately proceeding acceptance of this
assignment.
5. 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. This appraisal assignment was not based
on a requested minimum valuation, or a specific valuation.
6. My analysis, opinions and conclusions were developed, and this report has been prepared, in
conformity with The Uniform Standards of Professional Appraisal Practice, and with the
requirements of the Code of Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
7. The use of this report is subject to the requirements of the Appraisal Institute relating to the review
by its duly authorized representatives.
8. As of the date of this report, I, J. Michael Joki, have completed the requirements of the continuing
education program of the Appraisal Institute.
9. I have made a personal inspection of the property that is the subject of this report and have
afforded the owner, or their representative, the opportunity to accompany me on the inspection.
10. I have personally inspected and verified the comparable sales relied upon in making this appraisal.
11. No one provides significant real property appraisal assistance to the person signing this certification.
12. I have the necessary level of knowledge and experience to credibly estimate the value of the subject
property, or have taken reasonable steps to achieve such competency and to provide a professional
appraisal of the subject property, in accordance with the Uniform Standards of Professional
Appraisal Practice.
MEMBER APPRAISAL INSTITUTE
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13. I am currently licensed in the State of Montana (Certificate #152) as a Certified General Real Estate
Appraiser, and hold the MAI and SRA designations conferred by the Appraisal Institute.
DATE: March 24, 2016 SIGNATURE:
Appraised By: J. Michael Joki, MAI, SRA
Certified General #152
MEMBER APPRAISAL INSTITUTE
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ASSUMPTIONS AND LIMITING CONDITIONS
This is to certify that the appraiser in submitting this statement and opinion of value of subject property
acted in accordance with and was bound by the following principles, limiting conditions and assumptions.
Unauthorized use of this report is set forth below.
1. No responsibility is assumed for matters that are legal in nature nor is any opinion rendered on title
of property appraised.
2. Unless otherwise noted, the property has been appraised as though free and clear of all
encumbrances.
3. All maps, areas, plans, specifications, and other data furnished your appraiser were assumed to be
correct. No survey of the property was made by this firm. Furthermore, all numerical references
to linear measurements, area, volume or angular measurements should be assumed to be "more or
less" (+/-) and are accurate to a degree consistent with their use for valuation purposes.
4. This appraisal considers only surface rights to the property with consideration of current zoning and
land use controls. The estimate of highest and best use will form the basis for the value estimate.
This appraisal does not consider mineral, gas, oil or other natural resource rights that may be
inherent in the ownership of the property.
5. In this appraisal assignment any potentially hazardous material found on the land which may or may
not be present on the property, has not been considered. The appraiser is not qualified to detect
such substances. Any interested party is urged to retain an expert in this field if there is any question
regarding such potentially hazardous material. If such material or substance is present it could
adversely affect the value reported.
6. The appraiser is not a seismologist. This appraisal should not be relied upon as to whether a seismic
problem exists, or does not actually exist on the property. The property which is the subject of this
appraisal is within a geographic area where earthquakes and other seismic disturbances have
previously occurred and where they may occur again. Except as specifically indicated in the report,
no seismic or geologic studies have been provided to the appraiser concerning the geologic and/or
seismic condition of the property. The appraiser assumes no responsibility for the possible effect
on the subject property on seismic activity and/or earthquakes. I have not made a specific
compliance survey and analysis of this property to determine whether or not it is in conformity with
any seismic requirements by the City or County. It is possible that a survey of the property could
reveal that the property does not meet the required seismic requirements. If so, this fact could have
a negative effect upon the value of the property. Since I have no direct evidence relating to this
issue, I did not consider possible noncompliance requirements in estimating the value of the
property.
7. All data contained in this report and in the appraiser's files, as obtained from other sources, upon
which to any degree the opinions and conclusions were based, are considered reliable and believed
to be true and correct. However, the appraiser does not assume responsibility for the accuracy of
such items that were obtained from other parties.
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8. There shall be no obligation to give testimony or attendance in court by reason of this appraisal with
reference to the property in question unless arrangements have been previously made and at an
additional fee.
9. Disclosure of the contents of this appraisal 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 the conclusions as to value, the
identity of the appraiser, or the firm with which he is connected, or to the MAI and SRA
designations, shall be disseminated to the public through advertising media, news media, public
relations media, sales media, or any other public means of communication without the prior written
consent of the appraiser.
10. J. Michael Joki, MAI, SRA, specifically does not authorize the out-of-context quoting from or partial
reprinting of this appraisal report.
11. The liability of J. Michael Joki, MAI, SRA and employees is limited to the client and to the fee
collected. Further, there is no accountability, obligations or liability to any third party. If this report
is placed in the hands of anyone other than client, the client shall make such party aware of all
limiting conditions and assumptions of the assignment and related discussions. The appraiser
assumes no responsibility for any costs incurred to discover or correct any deficiencies of any type
present in the property; physically, financially, or of a legal nature.
12. The fee for this appraisal report is for the service rendered and not for time spent on the physical
report or for the physical report itself.
13. This appraisal report is prepared for the appraisers’ client Dowl HKM. It is my understanding Dowl
HKM is working in conjunction with the City of Bozeman on this sanitary sewer easement project.
No third parties are authorized to rely upon this report without the express written consent of the
appraiser.
14. This Appraisal Report is intended to comply with the reporting requirements set forth under
Standard Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for an Appraisal
Report. As such, it presents discussions of the data, reasoning, and analysis that were used in the
appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning
the data, reasoning and analysis is contained in the appraiser’s file.
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HYPOTHETICAL CONDITION
A hypothetical condition is a condition that is contrary to what exists but is supposed for the purpose
of the analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal,
or economic characteristics of the subject property; or about conditions external to the subject property,
such as conditions or trends; or about the integrity of data used in an analysis.
1. As of the effective date of this appraisal report the sanitary sewer easement has not been imposed
on the subject property and if all parties are in agreement the easement will be imposed at a future
date. The value of the subject site after the imposition of the easement is subject to this easement
being recorded and imposed on the subject site as explained in this appraisal report. The analysis
after the imposition of the easement would not be reasonable nor would the value conclusion be
creditable if this project is not completed.
EXTRAORDINARY ASSUMPTION AND LIMITING CONDITION
An extraordinary assumption is an assumption is that is directly related to a specif assignment, which,
if found to false, could alter the appraisers opinions or conclusions. Extraordinary assumptions assume as
fact otherwise uncertain information about the physical, legal or economic characteristics of the subject
property, or about conditions external to the property, such as market conditions or trends or about the
integrity of data used in the analysis.
1. The current zoning for the subject property is PLI ( Public Lands and Institutions). I spoke with
Tom Rogers at the City of Bozeman Planning Department concerning the current zoning and the
potential of a zoning change if the subject property were in private ownership. I have been asked
to estimate the market value of the subject property which is based on the highest and best use of
this site, and as explained in the highest and best use analysis the highest and best use of this site is
for conversion to a zoning ordinance that would accommodate a commercial or multi family use,
but more likely a multi family use. In order to be consistent with the highest and best use analysis
sales with the same or a similar use are analyzed in this appraisal report. If the information provided
by Tom Rogers is found to be false it could change my conclusion to value in this appraisal report.
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SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS
PURPORTED OWNER:Montana State University
LOCATION OF PROPERTY:This site is located on the south side of Garfield Street and just
west of 19th Avenue in Bozeman, Montana.
LAND SIZE:As shown on the Montana Cadastral Property Record Card
contained in the addenda this site is 41.17 acres.
PROPOSED SANITARY
SEWER EASEMENT AREA:.89 Acres.
IMPROVEMENTS:The site is improved with several out buildings including the Bob
Miller Pavilion associated with Montana State University.
PROPERTY RIGHTS APPRAISED:Fee Simple
ZONING:PLI (Public Lands and Institutions)
PRESENT USE:Supports various out buildings associated with Montana State
University.
HIGHEST AND BEST USE:Multi family
DATE OF VALUATION:March 3, 2016
CONCLUDED ESTIMATE OF
MARKET VALUE BEFORE
IMPOSITION OF THE EASEMENT:$1,852,650
CONCLUDED ESTIMATE OF
MARKET VALUE AFTER
IMPOSITION OF THE EASEMENT:$1,814,602*
DEPRECIATION OF CURRENT
FAIR MARKET VALUE:$0*
TOTAL ESTIMATE OF COMPENSATION: $38,050*
*Subject to the Hypothetical and Extraordinary Conditions Listed on page 8.
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SUBJECT PROPERTY PHOTOGRAPH
Aerial view of the subject property. Approximate location
of the property boundaries are outlined in red.
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DEFINITION OF MARKET VALUE
The current fair market value has been developed and refined by the State of Montana and
found in state statute MCA70-30-313 and is as follows:
"Current fair market value is the price that would be agreed to by a willing and informed seller and buyer,
taking into consideration, but not limited to the following factors
1. The highest and best reasonably available use and its value for such use, provided current use may
not be presumed to be the highest and best use;
2. The machinery, equipment, and fixtures for the part of the real estate taken;
3. Any other relevant factors as to which evidence is offered."
PURPOSE OF THE APPRAISAL
The purpose of this appraisal report is to arrive at a supportable estimation of the market value.
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INTENDED USE OF THE APPRAISAL AND INTENDED CLIENT
It is understood that the intended use of this appraisal report is to assist Dowl HKM/City of
Bozeman in appropriately compensating the property owner for the imposition of a sanitary sewer easement.
The client is Dowl HKM, and the intended users of the appraisal report are Dowl HKM and the City of
Bozeman, Montana.
SCOPE OF THE APPRAISAL
The scope of this assignment includes a personal inspection of the subject site, reviewing public
record information concerning the site and other properties in the immediate neighborhood.
Initially I spoke with Tony Becken-Gaddo from Dowl HKM and he explained the City of Bozeman
is making improvements to their utilities and would like to extend a sanitary sewer easement along the east
boundary of the subject site. This site needs to be valued so the City of Bozeman can appropriately
compensate Montana State University for the imposition of this sanitary sewer easement.
I inspected the subject site on March 3, 2016 unaccompanied. Prior to my inspection I spoke with
Tony Becken-Gaddo and he explained Dan Stevenson is the on site facilities manager who may or may not
meet me for the inspection. March 3, 2016 is the day I took all photographs of the subject property and I
completed my inspection unaccompanied.
To the best of my knowledge and as explained by Tony Becken-Gaddo Montana State University has
no issues or concerns with this easement project. Montana State University will be compensated for the
portion of their site that is being imposed with the sanitary sewer easement and will also be compensated
for any site improvements being impacted.
Real estate agents, local MLS Service, developers and appraisers in Bozeman were interviewed in
an attempt to find relevant market data. Market data has been confirmed with the buyer, seller or broker
involved in the transaction. All of the comparable sales utilized in this appraisal report are described in the
body of the report and in more detail on the sale sheets included in the addenda. All known, available,
relevant market data considered to have an impact on the market value of the subject site has been
considered.
The Scope of Work defines an appraiser's conclusions as to what is deemed necessary to provide
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a creditable appraisal report. The client is defined as Dowl HKM/City of Bozeman. The intended user is
the client, and the intended use will be to assist the client in appropriately compensating the property owner
for the imposition of a sanitary sewer easement. The following sources provided me data that was used in
this appraisal report.
• Gallatin County Clerk and Recorder's Office
• City of Bozeman Planning Department
• Tony Becken-Gaddo, Dowl HKM
• Todd Olson, Appraiser
• Keith O’Reilly, MAI, Appraiser
• Ed Jackson, Appraiser
• Jason Leap, Realtor
• Jack Catron, Realtor
• Donnie Olson, Realtor
• Sunny Odegard, Appraiser
• Lloyd Mandeville, Realtor
• Tom Starner, Realtor
• Dennis Erickson, Realtor
• Brian Cline, Developer
SUMMARY OF APPRAISAL PROBLEM
Tony Becken-Gaddo provided me the maps and aerial photographs of the sanitary sewer
easement project which depicts the subject property, Parcel 1, and Parcel 2 directly to the east which is
also being impacted by this same project. The sanitary sewer easement is 30' in width and will be imposed
along the entire east property boundary and will total .89 acres. Montana State University will be
compensated for the loss of their property rights in this permanent easement area. It is Dowl HKM and the
City of Bozeman intent to make the property owner whole after this project is completed and the new
sanitary sewer service easement is in place.
The "before" condition is based on the "as is" condition of the subject property reflecting its current
highest and best, market trends and market data available from which to extract an indication of current
market value. In the "after" condition the appraisal is based on the hypothetical condition that the proposed
sanitary sewer easement is an encumbrance to the real property. In the "after" condition the impact to the
property rights and market value are fully identified and incorporated into the analysis.
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PROPERTY RIGHTS APPRAISED
This appraisal is made with the understanding and assumption that present ownership of the subject
property includes all rights that may be lawfully owned, and is therefore title in fee simple as of March 3,
2016. A fee simple estate is subject only to the limitations imposed by the governmental powers of taxation,
eminent domain, police power and escheat.
IDENTIFICATION OF PROPERTY AND LEGAL DESCRIPTION
The site that is the subject matter of this appraisal report consists of 41.17 acres and is located on
the south side of Garfield Street and across from 29th Avenue. The subject site is located approximately 2
blocks west of 19th Avenue in Bozeman, Montana. The legal description of the land involved is as follows:
"The eastern portion of Tract A of Certificate of Survey No. 2729 situated in the NW 1/4 of Section 14,
Township 2 South, Range 5 East, PMM, City of Bozeman, Gallatin County, Montana ".
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HISTORY OF THE PROPERTY
To best of my knowledge Montana State University has owned this land for 40+ years and this land
has since supported buildings associated with the University. As I understand this property is not currently listed for
sale.
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REGIONAL MAP
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REGIONAL AND CITY ANALYSIS
Bozeman is the county seat of Gallatin County and is one of 56 counties in the State of Montana. Gallatin
County is located in a mountainous area of Montana north of the Montana/Wyoming border and Yellowstone
National Park. Bozeman primarily lies on the south side of Interstate 90 and is located approximately 140 miles
west of Billings, Montana and 80 miles east of Butte, Montana.
Gallatin County has grown faster than any other county in the State of Montana over the past decade
according to the Census Bureau. Gallatin County includes almost 2,500 square miles of mountainous lands that
offer a variety of topography and climate. Nearly half of Gallatin County is under public ownership by the
Gallatin National Forest, State of Montana, Bureau of Land Management or the National Park Service.
Fo rc e s Influe nc ing Pro pe rty Value s
The value of real estate is influenced by the interaction of four major forces. Social considerations, economic
considerations, government and environmental considerations. The four forces are discussed as follows:
So c ial Co nside ratio ns
Social forces are exerted largely by population characteristics, including population growth, density, and age
distribution. According to the U. S. Census Bureau the population of the City of Bozeman increased from
27,509 in 2000 to 37,280 as of April, 2010 and increase of nearly 9,800 people. This represents an increase in
population of approximately 35.5% over this 10 year period, or an average rate of growth of about 3.55%/year.
From April, 2010 to April, 2012 the population increased from 37,280 to 38,695, an increase of nearly 1,415
people which equated to a growth of 3.8% over this time frame.
Gallatin County’s population increased from 67,831 in 2000 to 89,513 in 2010 or approximately 21,700
people. This represents an increase in population of approximately 32% over a 10 year period or an average
growth rate of 3.2%/year. Between April, 2010 and April, 2012 the population increased from 89,513 to 92,614
people or 3,101people which equates to a growth rate of about 3.5% over this time period. Comparatively, the
State of Montana grew from 989,417 people in April 2010 to 1,005,140 people in 2012 or 15,724 people which
equates to a growth rate of 1.6% over that time frame.
In addition to population growth the City of Bozeman continues to see growth in its geographic size. In 1990
the City of Bozeman was approximately 6,420 acres (± 10 square miles) and by the end of 2009 it had expanded
to 12,300 acres (±19.25 square miles) resulting in an increase of ±92% over this 19 year period. This growth
was to accommodate the increasing population which required new land for residential, commercial and
industrial development. This growth significantly slowed in 2009 and 2010 which was being seen all throughout
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this region as the national economic recession took effect.
Bozeman has a significantly lower home ownership rate than most other communities in the county primarily
due to the student body of Montana State University. Bozeman also has a smaller average household size and
a smaller portion of families than other areas of Gallatin County. Bozeman has an average household size of
2.27 people while the average household size for Gallatin County is 2.49 people. Just over half of the Bozeman
households are families compared to ±63% countywide. The population of Bozeman is considerably younger
than Gallatin County as a whole, and even more so, in comparison to the State of Montana. Again this
emphasizes the significance of Montana State University being located in Bozeman. Bozeman and Gallatin
County has transformed over the past decade from a primarily agricultural based community to a tourism related
community. Bozeman and Gallatin County offers a high quality of life due to its low crime rate, offering of
many cultural experiences, the presence of Montana State University and its education offerings. An abundance
of outdoor activities that include excellent downhill snow skiing, world class fly fishing rivers, streams and
access to numerous state and federally owned lands are all nearby.
Ec o no m ic Co nside ratio ns
Bozeman, like many communities in Montana experienced significant growth in population and economy for
a number of years. This area was affected by the national recession just like many other areas in the country
however new growth and development has begun again and the outlook for Bozeman and the vicinity is quit
positive based on a number of factors.
C County seat of Gallatin County.
C Wide range of skills in the labor force.
C Home of Montana State University.
• Well located in southwestern Montana.
• Numerous recreational opportunities
Bozeman is somewhat unique when compared to other communities in Montana because there are few
employers who employ a large amount of the population. Missoula, Montana, as an example was very
dependent on the lumber and timber industry and Butte, Montana had always relied heavily on the mining
industry. When those industries slowed those communities were very heavily impacted. The primary employer
in Bozeman is Montana State University. Other major sectors of the economy that provide employment are
construction, local and state government, manufacturing, technology, agricultural and retail service. Montana
State University currently employs about 3,500 people as permanent faculty/staff and they also employ over
2,000 students in part time work. In the fall of 2,013 the student enrollment at MSU was slightly over 15,000
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people which certainly has a significant affect on the local economy. Other major employers in Gallatin
County include the State of Montana, Gallatin County, the City of Bozeman, Bozeman Deaconess Hospital,
Right Now Technologies. With such a diverse employment base the local economy tends to be sheltered from
a downturn in any of the Country’s key employment industries.
In 2010 Bozeman was declared as the most expensive place to live in Montana based upon a report
by Propera Business Network. This report stated that Bozeman’s 2009 cost of living was 4.4% above the
national average. The other Montana cities that showed an overall cost of living above the national average
were Missoula at 1.8% and Kalispell at 1.5%. Residential rent levels in Gallatin County have remained stable
primarily due to the presence of Montana State University. Rents in this community will periodically show a
slight decline however they tend to stabilize or even increase rather quickly due to the continued growth of
Montana State University.
Overall the economic growth has been much stronger in Bozeman and Gallatin County than what
is being seen statewide. Historically the sectors in Bozeman and Gallatin County that show the most
substantial growth are agricultural services, construction, manufacturing, finance, insurance, real estate and
lodging. Currently the unemployment rate in Montana is 6.4% and Gallatin County recorded a slightly lower
unemployment rate at 5.8%. Gallatin County’s labor force is currently estimated at 52,070 employees, the third
largest labor force in Montana’s 56 counties.
Over the past ±10 years residential building permit activity in the City of Bozeman was on the rise and
reached its peak in 2005 and then began to decline over the next 5 years, and most significantly in 2008 and
2009. Residential building permits began to increase again in 2010 and have been on a steady incline. Bozeman
has been experiencing new growth in several areas of town but no area has provided as much commercial real
estate development at the 19th Avenue corridor. Recent stores and restaurants developed along 19th Avenue
include Sportsman’s Warehouse, Lowes, IHOP, Bed Bath and Beyond, Staples, World Market and REI. Most
recently a new Safeway grocery store (±58,000 SF) was completed in December, 2011 and a Kohls department
store (±55,300 SF) was completed in October, 2011.
The City of Bozeman facilities over the past 5 years have seen significant development and/or renovation
which includes the fire stations, police station, waste water treatment facilities, the completion of a downtown
parking garage, City of Bozeman Library, construction of the Gallatin County Detention Center, an expansion
of the landfill building etc. Montana State University has also seen significant expansion and renovation which
include a significant remodel of the football stadium, addition of the Molecular Biology Center, renovations
to the Health and Physical Education Center, addition of the Black Box Theater, renovation of Gaines Hall etc.
Tourism brings a significant number of visitors to the Bozeman area. Yellowstone National Park, the first
national park in the United States, is located approximately 65 miles south of Bozeman. Big Sky Ski Resort is
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located approximately 45 miles south of Bozeman and has recently been listed as the seventh best ski resort
in the United States. This ski area averages over 300" of annual snowfall with skiing available November
through April. The Yellowstone Club lies adjacent to Big Sky Ski Resort and is an exclusive vacation/residential
development that includes both private skiing and golfing. This exclusive, private development had filed for
bankruptcy in 2008 and in 2010 was purchased by Cross Harbor Capital and for several years saw significant
decline in sales and values. However the private development has begun to rebound again as sales are starting
to climb again. Other ski resorts in Gallatin County include Moonlight Basin which is also adjacent to Big Sky
and Bridger Bowl which lies approximately 15 miles to the north of Bozeman.
Enviro nm e ntal Co nside ratio ns
Environmental and physical forces, both natural and man made, can influence property values. These forces
include climatic conditions, topography and natural barriers, and transportation systems.
Bozeman’s climate clearly reflects its mountain valley location. Bozeman truly has four seasons with
its short summers being pleasant which are typically characterized by warm to hot days and cool nights. The
average high temperature in the summer is in the upper 80°’s and the average low in the winter is the mid to
lower 30°’s. Spring tends to come late in the Gallatin Valley as a of its annual precipitation ±19" falls during
May and June. The average annual snowfall in Bozeman is ±72" and the average length of the growing season
is about 107 days. The climate of the county varies according to elevation but is generally characterized by
relatively cold winters and warm summers. Snow removal is a common operating cost that will affect real
estate in the winter months. In contrast air conditioning costs are less during the fairly temperate summer
months however heating bills can be quite high during the cold winter months.
Bozeman is located on the south side of Interstate 90. Access to the south towards Yellowstone Park
is via U.S. Highway 91. There are numerous other state highways and Gallatin County maintained roads that
provide access throughout this region. Commercial air service, truck and rail transportation are considered
to be adequate. Gallatin Field which is located in the adjacent community of Belgrade is the second busiest
airport in the state and provides air service for this area.
Go ve rnm e ntal Co nside ratio ns
The City of Bozeman is a City Commission/City Manager form of government with an elected municipal
judge. There are five commissioners elected with no party affiliation and are elected to a four year term which
are overlapping. The City Commissioner elections are held every two years and the terms of the
commissioners are staggered and the candidate who receives the most votes in an election becomes the mayor
the last two years of their term.
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The City of Bozeman has approximately 40 police officers and the fire department has approximately 18
firefighters plus the Fire Chief, Deputy Chief/Marshall, and seven captains. There are three fire stations in
the City of Bozeman and overall the fire and police protection services are considered to be good.
The Department of Planning and Community Development processes applications for new development
in the city limits. This department enforces the zoning regulations within the city limits of Bozeman. Gallatin
County administers all zoning for properties outside the city limits and within the “zoning donut”. The
Gallatin County Comprehensive Plan encourages development near the existing city limits and/or services
and discourages development in more remote locations. In general the planning and zoning regulations in
this area are considered stringent.
Co nc lusio n
Bozeman and Gallatin County has population and overall growth trends that are continuing upward. This
area offers a wide variety of outdoor recreational opportunities, cultural resources, tourism, and coupled with
the presence of Montana State University this area is poised for continued growth. Bozeman has a young and
very well educated work force and coupled with its diverse economy the general outlook for Bozeman,
Belgrade and the surrounding small communities is good.
Overall the real estate market in Bozeman is strong. 2013 was the first year of strong market
conditions after 5+ recession years. Residential and commercial activity has increased significantly.
Residential apartment occupancy is more or less at 100% , and commercial lease rates and commercial
property values have been increasing as well.
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NEIGHBORHOOD DATA & ANALYSIS
The subject property is located near the Southern edge of the Bozeman city limits and more particularly
just southwest of the College Street and 19th Avenue intersection. 19th Avenue is a significant north/south
arterial street and College Street is a significant east/west arterial street and their intersection forms the northwest
corner of the Montana State University campus.
North of College Street is primarily developed with residential properties. Historically this has been a
highly sought after neighborhood because of its proximity to the Montana State University Campus. Because of
its proximity to campus many of the residential properties in this neighborhood are used as rentals by the
university students.
South of Campus and particularly along 19th Avenue there has been new residential and commercial
development. The Bozeman city limits are continually expanding to the South and around the University campus.
Some of Bozeman's newer residential subdivisions, with some having homes in the upper end of the single
family residential price range for this community, are in this area.
This neighborhood has good access to Main Street (downtown district) via 19th Avenue. Interstate 90
can easily be accessed off of Main Street from several roads. Main Street transitions into Huffine Lane as it leads
west out of Bozeman and gives direct access to the Four Corners/Belgrade area.
As Bozeman continues to expand new residential development, including multi family development, is
expected to continue in this area and particularly on land that is in direct proximity to Montana State University.
The demand for housing of college students is currently high which is expected to continue in this neighborhood
until more housing is developed.
Elementary schools, middle school and Bozeman High School are all located nearby. The Gallatin
Valley Mall is located on the north side of Huffine Lane and approximately 2 miles to the northwest. City
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water and sewer service is readily available throughout this neighborhood, and natural gas and electrical
service are provided throughout the area by Northwestern Energy.
I expect this neighborhood will continue to see new development because of the shortage of rental
housing. Historically rental properties, either single family or multi family properties, have been in high
demand in this neighborhood because of its proximity to the Montana State University Campus. Currently
this shortage of housing is being compounded by the growth in student population at the University and
overall growth in Bozeman. In my opinion market conditions are expected to remain strong in this
neighborhood and most likely market values will appreciate accordingly. This trend is consistent with the
trend other neighborhoods are experiencing in the Bozeman city limits.
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PLOT PLAN
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PROPERTY DESCRIPTION BEFORE THE
IMPOSITION OF THE EASEMENT
Site
Size:The subject property is highlighted in red on the facing page and is 41.17
acres. However, Montana State University owns six contigious parcels of land
that total 230.10 acres. To meet the test of the larger parcel theory the
property must have unity of ownership, contiguity and unity of use to
establish the larger parcel area. All six parcels of land are currently owned by
Montana State University and more or less all have the same use which is for
educational purposes associated with MSU. So at first blush the larger parcel
area could be determined as 230.10 acres.
However, only two of these parcels border Garfield Street which is the East
½ of Tract A (subject property) and the West ½ of Tract A . As shown on
the Montana Cadastral web site all six parcels are individual parcels of land
that could be sold as such. It is likely the (2) +/- 41 acre parcels that comprise
Tract A have a higher and better use than the remaining parcels in MSU
ownership because of their frontage on Garfield Street and proximity to city
services. Therefore all six parcels do not have the same highest and best use.
I'm of the opinion it is likely the East ½ and West ½ of Tract A would sell
separately and be developed separately if this land were available on the open
market. Knowing, the eastern portion of Tract A is the only parcel being
impacted by the sanitary sewer easement project I have determined the larger
parcel area to be the 41.17 AC that comprises the eastern portion of Tract A.
Shape:Square.
Topography:Most of the land is level at street grade.
Soil Conditions:Soil conditions are unknown and no soils test was provided to your appraiser.
Easements:No title policy was provided to your appraiser. A title policy should be used
for final determination of easements and encroachments.
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Access:This site is accessed from Garfield Street at its NEC. From there a dirt/gravel
road parallels the east boundary which leads to the building improvements
near the SEC. It appears this road over laps the boundary of Parcel 1 and
Parcel 2. Currently all of the roads on the subject site are privately maintained.
Utilities:All utilities are readily available as the majority of the land surrounding the
subject property is annexed into the Bozeman city limits and utilities have
been extended throughout most of this neighborhood.
Functional Adequacy:This site has been utilized by Montana State University for many years. Over
time the Montana State University Campus has expanded, and land to the north,
west and south has become developed and annexed into the Bozeman city limits.
As discussed in the following highest and best use analysis the current use of this
land is not the highest and best use of this land even though it is very likely this
land will stay in State of Montana/Montana State University ownership.
Flood Plain:The subject property is located in Flood Zone X which is an area of minimal
flooding. This information was extracted from FEMA's National Flood Hazard
Layer Website. The Community Panel No. is 30031 C 0816 D. This map is
dated September 2, 2011.
Nuisances or Hazards:Land directly to the east is also owned by Montana State University/ State of
Montana. Directly to the north is a relatively new commercial development
between Garfield and College Streets, and north of College Street there is a mix
of older residential and commercial uses. Land east of 19th Avenue is the
Montana State University Campus. Land to the south on either side of 19th
Avenue is a mix of campus, multi family, single family and commercial uses.
These surrounding uses are typical to this neighborhood as this is one of the
areas in Bozeman that is rapidly expanding. None of the surrounding uses
adversely affect the market value of the subject property.
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Site and Building Im pro vem ents
Nearly all of the building improvements are concentrated near the SEC of the
subject site. The primary building is the Bob Miller Pavilion and there are
various other out buildings and a series of corrals that is all associated with
Montana State University. The subject site was not staked at the time of my site
visit but it does not appear any of the building or site improvements will be
impacted by the proposed sanitary sewer easement project.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken from the NEC and
looking SW at the subject property.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Looking west on Garfield Street. Subject property is to the left.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken from Garfield Street and looking south at the gravel road
that parallels the east property boundary. Subject property is on the right
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Photograph taken near the NWC at looking south over the subject property.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken from the SWC and looking
north over the subject property.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Photograph shows the Bob Miller Pavilion and the other
buildings/site improvements near the SEC.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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ZONING
I spoke with Tom Rogers at the City of Bozeman Planning Department and he confirmed that the
subject site is currently zoned PLI (Public Lands and Institutions). This district is intended to provide for and
apply to public and quasi public institutional uses and lands, and recreational and public service activities for
the general benefits of the citizens of the city.
The typical uses in a PLI zoning district are open areas, parks, museums, historic or cultural exhibits, water
conservation, flood control, drainage area, natural conservation and preservation area. Institutions including
schools, colleges and universities, hospitals, rehabilitation centers, etc. are permitted. Public buildings, cemeteries,
memorial stadia are permitted as well. Recreational uses including golf courses, tennis courses, softball fields,
swimming pools etc. are also a common use.
Currently the subject property in all respects is compatible with the existing zoning. Tom Rogers and I
discussed if the subject property transferred to private ownership ( non public agencies) and it was not going to
be utilized for the general benefit of the public then a zone change would be required. The existing zoning districts
in the immediate vicinity of the subject property are BP (Business Park), B2 (Community Business), R4
(Residential High Density) and RO ( Residential Office). Most likely a zoning change would be based on one of
these existing uses in the immediate vicinity. It will be discussed in the following highest and best use analysis that
the historical use of this site which supports the Bob Miller Pavilion and various other outbuildings associated with
Montana State University is not necessarily the highest and best use of this property.
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HIGHEST AND BEST USE BEFORE
"The reasonably probable and legal use of vacant land or an improved property that is
physically possible, appropriately supported, financially feasible and that results in the highest
value. The four criteria the highest and best use must meet are legal permissibility, physical
possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of
land or improved property - specific with respect to user and timing of the use - that is
adequately supported and results in the highest present value."1
The definition above applies to the highest and best use of vacant land or improved property. 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.
Quite often in estimating the highest and best use of land, the appraiser is controlled by governmental
regulations. These controls are generally zoning ordinance, parking requirements and building codes. Also, in
the estimate of highest and best use, one must recognize the attitude of typical investors in the marketplace.
Real estate will usually fall into certain definite development patterns, and their uses can be classified
as: residential, agricultural, recreational, industrial, commercial and public use. In valuing the highest and best
use of the land both as if vacant and improved, the following criteria must be met. 1) legally permissible, 2)
physically possible, 3) financially feasible, and 4) maximally productive.
HIGHEST AND BEST USE OF THE PROPERTY AS VACANT
Le g ally Pe rm issible
The subject property is currently zoned PLI ( Public Lands and Institution District) which allows for
a wide range of uses. A number of the allowed uses were previously described in the zoning section and a copy
of the zoning ordnance is included in the addenda. The aforementioned uses are allowed as long as the property
is being used for the benefit of the public. Because I have been asked to estimate the current market value of
the subject property, which is based on its highest and best use, I will not value this property as public land and
institutions ground. Not only is the PLI not the highest and best use of this property but PLI zoned land sales
are not available as PLI land does not typically sell on the open market.
I have been asked to estimate the current market value of the subject property and it will be shown in
the following sales analysis that the historical use of this site associated with Montana State University with PLI
The Dictionary of Real Estate Appraisal, 5th ed., s.v. "highest and best use".1
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zoning is no longer the highest and best use of this property. I spoke at length with Tom Rogers from the City
of Bozeman Planning Department about the subjects location and surrounding uses and because of these
characteristics several of the development classifications can reasonably be eliminated from consideration. The
first check when requesting a zoning change is to consider the 20 Year Land Use plan for a property and
determine if these are any zoning overlays. In the 20 Year Land Use Plan for the City of Bozeman this site is
still ear marked to have PLI zoning and they do not expect a change in use because this site is being used by
Montana State University. Also, there are no zoning overlays on this land. However the planning department
has to entertain amendments to their growth policy on a regular basis.
I first considered the reasonableness of this property being developed with single family residential
home sites with the R1 or R2 zoning ordinance. These zoning ordinance certainly exist within in this
neighborhood however it is more likely a multi family, office or other commercial use is more probable at this
location which is generally at the intersection of 19th Avenue and College Street at the northwestern edge of
the Montana State University Campus. There are other areas in and around this neighborhood that are much
better suited for a residential use and therefore I have eliminated residential use from consideration.
Agricultural use can also reasonably be eliminated from consideration merely based upon the size and
location of this site. Even though this site is currently utilized by Montana State University this is for
educational purposes.
The City of Bozeman has public tennis courts, softball fields, swimming pools and other recreational
facilities dispersed though out the city limits and reasonably this use can also be eliminated from consideration.
This location is not suited for industrial use (light or heavy) as land values in this neighborhood are to
high to justify an industrial use at this location. Therefore industrial uses can also be eliminated from
consideration.
This leaves commercial use and multi family use as the most reasonable and legally permissible uses of
this land as if it were vacant. Both commercial and multi family uses are prevalent throughout this
neighborhood and in the immediate vicinity of the subject property. I found through my research it is likely
a commercial use (i.e. office or retail) would have a relatively long absorption period at this location and at the
outset it appears a multi family use with an R-3 or R-4 zoning district would be better suited for this location.
It is no secret that Montana State University is continually expanding, as well as its student body, and finding
housing in direct proximity to the campus has been a challenge for many years. A multi family use at this
location would certainly help this seemingly never ending need.
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Physic ally Po ssible
Properties in this neighborhood are improved with a mix of residential and commercial uses. Most sites
are improved to the maximum density permitted by zoning while considering parking regulations and other
restrictions.
The subject property is 41.17 acres ( larger parcel area) and has significant frontage on Garfield Street.
This site has generally level topography and is square in its shape which eliminates higher development cost
often associated with sloping, irregular shaped sites. This property can be accessed from Garfield Street, and
all public utilities are readily available. Soil conditions in this neighborhood have proven adequate for
development of all property types. Based upon the physical characteristics of the subject property and the
existing properties in this neighborhood, the most reasonable and legally permissible uses of the subject
property (commercial or multi family use) would be physically possible.
Financ ially Fe asible
Bozeman is experiencing growth again, particularly in the past 4 or 5 years, and much of the new growth is
residential development. In terms of residential development this site is very well located near the intersection of
19th Avenue and College Street and at the northwestern edge of the Montana State University Campus. From this
location there is good access to Bozeman's downtown district and the significant retail development along North
19th Avenue. Many nearby streets are significant traffic streets that provide good access throughout Bozeman.
Properties in this neighborhood historically are very marketable and well received in this community.
To develop the subject site into numerous commercial lots for either a retail or office use may prove to be
financially difficult. I have spoken with a number of real estate professionals in this community and they were
generally of the opinion that a commercial use at this location wether it be retail or office use would most likely have
a longer absorption period than a multi family use. There are a number of established retail and office uses
surrounding the Montana State University Campus that have existed for many years. There is newer retail and office
use directly north and northwest of the subject property however this land has been slower to develop because the
demand for these uses is not as strong at this location as compared to other areas of Bozeman. Because there is such
high demand for high density residential development, i.e. apartments, in Bozeman, let alone the subjects location
in direct proximity to campus, most likely a residential development could absorb the development costs and impact
fees more quickly and prove to be a feasible use of this site.
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Maxim ally Produc tive
The use that conforms with the requirements of the first three tests and will provide maximum
productivity of the subject site, as if vacant, is most likely for development with a high density residential use.
In concluding to the highest and best use of a property the physical use, the timing of the use and the
user’s/most probable buyers needs to be defined. It is my opinion the maximally productive use of this site
is for development with a high density residential use that would be consistent with the nearby uses in this
neighborhood. In terms of the most likely buyer and user of this site there are two options. An end-user sale
is a sale to a buyer who intends to immediately utilize the property to its highest and best use. A speculative-
investor sale is the sale to a buyer who purchases the property with no intention of immediately utilizing the
property to its highest and best use. It is my opinion the subject site would be purchased as an end user sale
and would be immediately utilized to its highest and best use as a high density residential development
assuming the appropriate changes could be made to its current zoning.
HIGHEST AND BEST USE OF THE PROPERTY AS IMPROVED
Le g ally Pe rm issible
The subject property appears to meet all PLI zoning ordinance requirements. It was confirmed with
Tom Rogers that the current use, associated with Montana State University, is a legally permitted use in the
PLI zoning ordinance. Therefore the current use of the subject property is a legally permissible use as it
conforms to the current zoning ordinance.
Physic ally Possible
The current use of the subject property which is associated with Montana State University is
obviously physically possible. This site serves an educational purpose for the University and as I understand
has served well with this use for many years.
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Financ ially Feasible
The subject site currently supports the Bob Miller Pavilion and various other outbuildings that are
primarily located along the south boundary. For the most part the northern 75% of this site is unimproved
but is utilized by Montana State University. Even though this land is being utilized for educational purposes
it is obviously under utilized and not being used to its highest and best use. I have spoken with several
realtors, real estate appraisers and developers who are very familiar with this neighborhood and undeniably
if a zoning change could be made a high density residential development at this location would be well
received. To correctly test the financial feasibility of this property "as improved" the market rent, operating
expenses and an appropriate capitalization rate should be determined for the existing buildings so an
indication of value via the Income Approach can be compared to the vacant land value. However, as
previously explained there are few building improvements on this property and the only building that would
command a significant rent is the Bob Miller Pavilion. As shown in the following land sales analysis this
property "as if" vacant is worth far more than it could ever be as currently improved with its few building
improvements.
Maxim ally Produc tive
Ultimately the highest and best use of this property is no longer for use by Montana State University.
A higher and better use would be to raze the existing building improvements and make way for new
development that would most likely be a high density residential use.
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PROPERTY VALUATION, BEFORE
In the Sales Comparison Approach an indication of value is derived by comparing the relative utility
and desirability of the subject site with comparable properties that have recently sold or are currently listed
for sale. Basic to this approach is the principle of substitution which states that "when a property is
replaceable in the market, its value tends to be set by the price required to acquire an equally desirable
substitute property."
In this appraisal report the land is valued however the improvements are not included therefore the
Cost and Income Approaches to value are not applicable.
SITE VALUATION
The method employed to value the site as if vacant and available for sale is the Sales Comparison
Approach. An investigation of the market revealed several sales and listings indicative of what a well-
informed buyer or seller would consider in forming an opinion of value. Four sales were chosen as being
most appropriate to compare against the subject site. Descriptive data and photographs of these comparables
are contained in the addenda.
Adjustm e nts
All comparables differ somewhat from each other, and from the subject in various ways. The usual
differences are for cash equivalency, market conditions, location, and a number of physical characteristics.
Many of these factors, in varying degrees, are applicable in the appraisal of the subject property. When
dissimilarities are found in comparable properties, they are adjusted for by adding to the comparable price
when the dissimilar factor is inferior to the same factor found in the subject property. Likewise, a minus
adjustment should be made when the comparable sale has a factor which is superior to that found in the
subject property. The sale properties, then, are adjusted to the subject property.
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However, in the market it is often difficult and sometimes impossible to accurately isolate a given
factor. In short, one very seldom finds sales which are identical in all respects but one, and thus is able to
prove conclusively the value, or lack of it, for any one factor due to a difference in sale price. Often, there
are plus and minus factors which offset each other. Thus, the use of subjective judgment, to some degree,
may be exercised.
Nevertheless, the differences in values are real and adjustments based on as much fact as can be
found, will be made. Then, the appraiser may call upon his experience to make subjective judgments.
Pro pe rty Rig hts
Each of the sales involve fee simple property rights. As a result, no property rights adjustments were
warranted.
Financ ing :
All Sales were cash to the seller or on terms considered cash equivalent, and no adjustments were
required.
Co nditio ns o f Sale :
No non-market conditions motivating the buyer or seller involved in the transactions are known,
therefore no adjustments are required.
Expe nditure s Im m e diate ly Afte r Sale :
None of the sales required expenditures immediately after sale, and therefore no adjustments are
required. If expenditures were verified they were typically associated with annexation into the city limits.
Marke t Co nditio ns:
A market conditions (time adjustment) is required to bring all comparable sale properties up to the
effective date of the appraisal report which is March 3, 2016. Bozeman was experiencing significant decline
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in real estate values when the local and national recession was in affect. Since 2011 real estate values have
rebounded in this market, and have become particularly strong since 2013, with new projects being
developed again. Demand for unimproved land is now out weighing its supply.
I will utilize four comparables in the following analysis with two sales closing in 2012, one sale
closing in 2015, and one sale closing in 2016. Each of the developers, real estate agents and real estate
appraisers I interviewed in this market were of the opinion market conditions are improving and they are
currently strong in Bozeman with more demand than supply of vacant land. The persons I interviewed were
consistently of the opinion that value of unimproved sites, particularly those with a highest and best use of
multi family, have conservatively appreciated 20% since 2013 and at least 30% since 2012.
To provide some support for the information given to me in the aforementioned interviews I have
completed a paired sales analysis of two sales I have in file that are best suited for multi family development.
The first property sold on February 11, 2011 at $1.15/SF and the other sale sold on June 16, 2014 at
$1.95/SF. Both of these sales are very similar in terms of there location and physical aspects, and making the
assumption there would be no adjustment necessary for the difference in size, this paired sales analysis
indicates values have increased 69.57% over the 40 months between these sales which equates to an
appreciation rate of 1.74% per month or 20.87% per year. This at least provides some market data support
for the information provided to me during my market interviews. I have considered the information given
to me during my interviews and the paired sales analysis and will adjust sale No. 1 and No. 2 upward by 30%
for market conditions. Comparable No. 3 and No 4 sold within 6 months of the effective date of this
appraisal report and in my opinion are indicative of current market value and will not be adjusted for market
conditions.
Re m aining Adjustm e nts:
The remaining adjustments will be explained in a qualitative analysis which is an effective technique
that recognizes the inefficiencies of a real estate market and the difficulty in expressing the adjustments with
mathematical precision. The adjustments included in the qualitative analysis are location, size, access,
topography, utilities, shape and use. The land sales adjustment grid can be seen on the following page.
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LAND SALE LOCATION MAP
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LAND SALE ADJUSTMENT GRID
SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Sale Price $2,900,000 $648,233 $3,564,000 $3,866,137
Size (acre)41.17 78.00 20.00 37.05 53.77
Price/AC $37,179 $32,412 $96,194 $71,901
Date of Sale 8/10/12 6/27/12 9/10/15 1/6/16
Market Adjustment Plus 30%Plus 30%-0--0-
Adjusted Price $3,770,000 $842,703 $3,564,000 $3,866,137
Adjusted Price/AC $48,333 $42,135 $96,194 $71,901
Location
South of Garfield
Street and just West
of 19th Avenue
19th Ave and Graf
Street
19th Ave and
Southbridge Dr.
11th Ave and
Baxter Lane, just
south of I-90
Valley Center and
West lake Rd, just
south of I-90
Comparability Similar Similar Superior Superior
Size (acre) 41.17 78.00 20.00 37.05 53.77
Comparability Slightly Inferior Similar Similar Similar
Access Garfield Street 19th Avenue 19th Avenue Baxter Lane & 11th
Avenue
Valley Center &
North 27th Ave.
Comparability Similar Similar Similar Similar
Topography Level Level Level Level Level
Comparability Similar Similar Similar Similar
Shape Square Rectangular Rectangular Slightly Irregular Slightly Irregular
Comparability Similar Similar Similar Similar
Utilities Adjacent to site North of site Adjacent to site On site On site
Comparability Slightly Inferior Similar Superior Superior
Highest & Best Use Multi Family
Residential
Subdivision or Multi
Family
Residential
Subdivision Commercial Commercial or
Residential
Comparability Similar Similar Superior Superior
Overall Comparability Similar Similar Superior Superior
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Sales Analysis:
The subject site is a square shaped site that is located on the south side of Garfield Street and just west
of 19th Avenue. This 41.17 acre site supports the Bob Miller Pavilion and other outbuildings associated with
Montana State University. This site has level topography and is accessed from Garfield Street near its northeast
corner. City services are adjacent to this site as much of the surrounding land is already developed. The subject
site is currently zoned PLI however as previously discussed in the highest and best use analysis this site is best
suited for a multi family development.
Sale No. 1 is a 78.00 acre site that sold on August 10, 2012 for $2,900,000 or $37,179/AC. After
adjusting for market conditions this comparable indicates a price of $48,333/AC. Comparable No. 1 is located
south of the subject property on the east side of 19th Avenue. Comparable No.1 has similar access, topography,
shape and use and its only inferior aspects are city utilities were located north of this site at the time of sale, and
this is a slightly larger site. Otherwise, Comparable No. 1 is considered to be quite similar when compared to
the subject property.
Comparable No. 2 is a 20.00 acre site that sold on June 27, 2012 at $648,233 or $ 32,412/AC. After
adjusting for market conditions this comparable indicates a price of $42,135/AC. Comparable No. 2 is also
located just south of the subject property and on the west side of 19th Avenue. Comparable No. 2 is considered
to be similar in all of its physical aspects when compared to the subject property.
Comparable No. 3 is a 37.05 acre site that sold on September 10, 2015 at $3,564,000 or $96,194/AC.
Comparable No. 3 is located at the intersection of Baxter Lane and 11th Avenue and just south of Interstate
90 which is clearly a superior location. Comparable No. 3 is similar in size, access, topography and shape.
Comparable No 3 has superior utilities and is best suited for a commercial use, an coupled with its superior
location, is considered to be superior when compares to the subject property.
Comparable No. 4 is a 53.77 acre site that sold on January 6, 2016 at $3,866,137 or $71,901/AC.
Comparable No. 4 is located at the intersection of Valley Center Road and North 27th Avenue and just south
of Interstate 90 which is clearly a superior location. Comparable No. 4 is similar in size, access, topography and
shape. However, Comparable No. 4 has superior utilities and is best suited for a mixed use development with
commercial and residential. These fearures coupled with this sales superior location makes Comparable No.
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4 superior to the subject property.
The value indications derived from the comparables are reconciled into a single value indication by
arranging the four comparables in an array relative to the subject.
BRACKETING THE SUBJECT PROPERTY
Comparable Adjusted Price
Per AC
Overall
Comparability
2 $42,135 Similar
1 $48,333 Similar
Subject Property
4 $71,901 Superior
3 $96,194 Superior
A shown in the chart above clearly the most similar comparables are Sale No. 1 and Sale No. 2. Both
of these sales are considered to be very similar when compared to the subject property with the only discerning
difference being the size of Comparable No. 1 at 78 acres. After analyzing the size and the other physical
characteristics it appears that site size does not affect market value as much as location and zoning which
ultimately dictate the highest and best use of the sites. Therefore, little emphasis is being given to the difference
in size of the sales when compared to the subject property. Not only do Comparable No.1 and No. 2 have the
same use but they are both located just south of the subject property. These sales show a value range of $42,135
to $48,333/AC.
Comparable No. 3 and No. 4 are both very recent sales of land that is best suited for commercial
development. Sale No. 3 and No. 4 are similar to the subject property in many of their physical aspects however
their superior location in proximity to Interstate 90 and their commercial zoning/use makes these sales superior
to the subject property.
Considering this information and giving most emphasis to Comparable No. 1 and No. 2 it is my
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opinion the subject site has a current market value of $45,000/AC.
41.17 Acres x $45,000/AC = $1,852,650
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MAP DEPICTING THE EASEMENT AREA
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SCOPE OF THE PROJECT AND ITS AFFECT
ON THE SUBJECT SITE
The intent of this project is to impose a utility easement (sewer main easement) along the east boundary
of the subject property. As shown on the facing page the easement area is calculated at 1.003 acres however
as explained in the copy of the email in the addenda the proposed sewer main easement is only 38,938 SF or
.89 acres. This easement will essentially extend from the NEC to the SEC. In the addenda is a description of
the land that will be imposed with the sewer main easement. Also aerial photographs provided by DOWL HKM
that depict the sewer main easement as it crosses through the subject property and Parcel 2, which is also part
of this same project, are included in the addenda as well.
This appraisal assignment address a partial acquisition of the subject property which I assume is
regulated by the State Rule. The following calculations and conclusions are made under the assumption that the
State Rule is applicable to this appraisal assignment.
Reportedly the current owner of this property, Montana State University, has no issues or concerns with
this project. Tony Becken-Gaddo informed the facilities manager, Dan Stevenson, that I would be on site on
March 3, 2016 to complete my property inspection and take my photographs. Mr. Stevenson did not meet me
for my inspection.
At the time of my site inspection the subject property was not staked so the exact boundary of the
proposed easement was not located. Prior to my site inspection I spoke with Tony Becken-Gaddo and he
explained any fencing that may be impacted by this project would be repaired as part of the project. It does not
appear any of the building improvements near the SEC or any other site improvements are impacted by the
project.
Value o f the Ease m e nt
Tony Becken-Gaddo provided me a copy of a sample public utility easement that is similar to the one
that will be imposed on the subject site. Since this new easement will be for a sewer main it is my opinion the
property owner will loose most of their property rights or 95% of their rights in the easement area once it is in
place. The proposed sewer main easement will be .89 acres. Land value was estimated earlier in this appraisal
report at $45,000/AC. Therefore, the value of the easement area is as follows:
$45,000/AC x .89 AC x 95% = $38,048
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Value o f the Re m ainde r, Be fo re
The value of the remainder before is the value of the larger parcel before less the value of the easement
as part of the whole before, which calculates as follows:
Total Value Before:$1,852,650
Total Value of the Easement: $ 38,048
Value of the Remainder, Before: $1,814,602
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken near the NEC and
looking south along the easement area.
March 3, 2016 by J. Michael Joki, MAI, SRA.
Photograph taken near the SEC
and looking north along the easement area.
March 3, 2016 by J. Michael Joki, MAI, SRA.
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IDENTIFICATION OF THE SITE, AFTER
The use of the subject site is essentially the same in the after situation, best suited for multi family
development, except a sewer main easement will be imposed along the entire east boundary that is .89 acres in size.
SITE DESCRIPTION AFTER IMPOSITION OF THE EASEMENT
After this project is completed the larger parcel area remains at 41.17 acres. A new easement for a sewer
main of .89 acres will be imposed along the east property boundary. The property owner will lose most of their
property rights within this new easement area and will have very little or 5% of their rights remaining once the
sewer main easement is in place. After the project is completed the size, access, topography, shape and use will
all remain the same.
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HIGHEST AND BEST USE AFTER
"The reasonably probable and legal use of vacant land or an improved property that is physically
possible, appropriately supported, financially feasible and that results in the highest value. The
four criteria the highest and best use must meet are legal permissibility, physical possibility,
financial feasibility, and maximum productivity. Alternatively, the probable use of land or
improved property - specific with respect to user and timing of the use - that is adequately
supported and results in the highest present value."2
The definition above applies to the highest and best use of vacant land or improved property. 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.
Quite often in estimating the highest and best use of land, the appraiser is controlled by governmental
regulations. These controls are generally zoning ordinance, parking requirements and building codes. Also, in the
estimate of highest and best use, one must recognize the attitude of typical investors in the marketplace.
Real estate will usually fall into certain definite development patterns, and their uses can be classified as:
residential, agricultural, recreational, industrial, commercial and public use. In valuing the highest and best use of
the land both as if vacant and improved, the following criteria must be met. 1) legally permissible, 2) physically
possible, 3) financially feasible, and 4) maximally productive.
The Dictionary of Real Estate Appraisal, 5th ed., s.v. "highest and best use".2
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HIGHEST AND BEST USE OF THE PROPERTY AS VACANT
Le g ally Pe rm issible
The subject property is currently zoned PLI ( Public Lands and Institution District) which allows for a
wide range of uses. A number of the allowed uses were previously described in the zoning section and a copy
of the zoning ordnance is included in the addenda. The aforementioned uses are allowed as long as the property
is being used for the benefit of the public. Because I have been asked to estimate the current market value of the
subject property, which is based on its highest and best use, I will not value this property as public land and
institutions ground. Not only is the PLI not the highest and best use of this property but PLI zoned land sales
are not available as PLI land does not typically sell on the open market.
I have been asked to estimate the current market value of the subject property and it will be shown in the
following sales analysis that the historical use of this site associated with Montana State University with PLI
zoning is no longer the highest and best use of this property. I spoke at length with Tom Rogers from the City
of Bozeman Planning Department about the subjects location and surrounding uses and because of these
characteristics several of the development classifications can reasonably be eliminated from consideration. The
first check when requesting a zoning change is to consider the 20 Year Land Use plan for a property and
determine if these are any zoning overlays. In the 20 Year Land Use Plan for the City of Bozeman this site is still
ear marked to have PLI zoning and they do not expect a change in use because this site is being used by Montana
State University. Also, there are no zoning overlays on this land. However the planning department has to
entertain amendments to their growth policy on a regular basis.
I first considered the reasonableness of this property being developed with single family residential home
sites with the R1 or R2 zoning ordinance. These zoning ordinance certainly exist within in this neighborhood
however it is more likely a multi family, office or other commercial use is more probable at this location which
is generally at the intersection of 19th Avenue and College Street at the northwestern edge of the Montana State
University Campus. There are other areas in and around this neighborhood that are much better suited for a
residential use and therefore I have eliminated residential use from consideration.
Agricultural use can also reasonably be eliminated from consideration merely based upon the size and
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location of this site. Even though this site is currently utilized by Montana State University this is for educational
purposes.
The City of Bozeman has public tennis courts, softball fields, swimming pools and other recreational
facilities dispersed though out the city limits and reasonably this use can also be eliminated from consideration.
This location is not suited for industrial use (light or heavy) as land values in this neighborhood are to high
to justify an industrial use at this location. Therefore industrial uses can also be eliminated from consideration.
This leaves commercial use and multi family use as the most reasonable and legally permissible uses of
this land as if it were vacant. Both commercial and multi family uses are prevalent throughout this neighborhood
and in the immediate vicinity of the subject property. I found through my research it is likely a commercial use
(i.e. office or retail) would have a relatively long absorption period at this location and at the outset it appears a
multi family use with an R-3 or R-4 zoning district would be better suited for this location. It is no secret that
Montana State University is continually expanding, as well as its student body, and finding housing in direct
proximity to the campus has been a challenge for many years. A multi family use at this location would certainly
help this seemingly never ending need.
Physic ally Po ssible
Properties in this neighborhood are improved with a mix of residential and commercial uses. Most sites
are improved to the maximum density permitted by zoning while considering parking regulations and other
restrictions.
The subject property is 41.17 acres ( larger parcel area) and has significant frontage on Garfield Street.
This site has generally level topography and is square in its shape which eliminates higher development cost
often associated with sloping, irregular shaped sites. This property can be accessed from Garfield Street, and
all public utilities are readily available. Soil conditions in this neighborhood have proven adequate for
development of all property types. Based upon the physical characteristics of the subject property and the
existing properties in this neighborhood, the most reasonable and legally permissible uses of the subject property
(commercial or multi family use) would be physically possible.
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Financ ially Fe asible
Bozeman is experiencing growth again, particularly in the past 4 or 5 years, and much of the new growth is
residential development. In terms of residential development this site is very well located near the intersection of 19th
Avenue and College Street and at the northwestern edge of the Montana State University Campus. From this location
there is good access to Bozeman's downtown district and the significant retail development along North 19th Avenue.
Many nearby streets are significant traffic streets that provide good access throughout Bozeman. Properties in this
neighborhood historically are very marketable and well received in this community.
To develop the subject site into numerous commercial lots for either a retail or office use may prove to be
financially difficult. I have spoken with a number of real estate professionals in this community and they were generally
of the opinion that a commercial use at this location wether it be retail or office use would most likely have a longer
absorption period than a multi family use. There are a number of established retail and office uses surrounding the
Montana State University Campus that have existed for many years. There is newer retail and office use directly north and
northwest of the subject property however this land has been slower to develop because the demand for these uses is
not as strong at this location as compared to other areas of Bozeman. Because there is such high demand for high
density residential development, i.e. apartments, in Bozeman, let alone the subjects location in direct proximity to
campus, most likely a residential development could absorb the development costs and impact fees more quickly and
prove to be a feasible use of this site.
Maxim ally Produc tive
The use that conforms with the requirements of the first three tests and will provide maximum
productivity of the subject site, as if vacant, is most likely for development with a high density residential use.
In concluding to the highest and best use of a property the physical use, the timing of the use and the
user’s/most probable buyers needs to be defined. It is my opinion the maximally productive use of this site is
for development with a high density residential use that would be consistent with the nearby uses in this
neighborhood. In terms of the most likely buyer and user of this site there are two options. An end-user sale
is a sale to a buyer who intends to immediately utilize the property to its highest and best use. A speculative-
investor sale is the sale to a buyer who purchases the property with no intention of immediately utilizing the
property to its highest and best use. It is my opinion the subject site would be purchased as an end user sale
and would be immediately utilized to its highest and best use as a high density residential development assuming
the appropriate changes could be made to its current zoning.
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HIGHEST AND BEST USE OF THE PROPERTY AS IMPROVED
Le g ally Pe rm issible
The subject property appears to meet all PLI zoning ordinance requirements. It was confirmed with
Tom Rogers that the current use, associated with Montana State University, is a legally permitted use in the PLI
zoning ordinance. Therefore the current use of the subject property is a legally permissible use as it conforms
to the current zoning ordinance.
Physic ally Possible
The current use of the subject property which is associated with Montana State University is obviously
physically possible. This site serves an educational purpose for the University and as I understand has served
well with this use for many years.
Financ ially Feasible
The subject site currently supports the Bob Miller Pavilion and various other outbuildings that are
primarily located along the south boundary. For the most part the northern 75% of this site is unimproved but
is utilized by Montana State University. Even though this land is being utilized for educational purposes it is
obviously under utilized and not being used to its highest and best use. I have spoken with several realtors, real
estate appraisers and developers who are very familiar with this neighborhood and undeniably if a zoning change
could be made a high density residential development at this location would be well received. To correctly test
the financial feasibility of this property "as improved" the market rent, operating expenses and an appropriate
capitalization rate should be determined for the existing buildings so an indication of value via the Income
Approach can be compared to the vacant land value. However, as previously explained there are few building
improvements on this property and the only building that would command a significant rent is the Bob Miller
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Pavilion. As shown in the following land sales analysis this property "as if" vacant is worth far more than it
could ever be as currently improved with its few building improvements.
Maxim ally Produc tive
Ultimately the highest and best use of this property is no longer for use by Montana State University.
A higher and better use would be to raze the existing building improvements and make way for new
development that would most likely be a high density residential use.
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PROPERTY VALUATION, AFTER
In the Sales Comparison Approach an indication of value is derived by comparing the relative utility and
desirability of the subject site with comparable properties that have recently sold or are currently listed for sale.
Basic to this approach is the principle of substitution which states that "when a property is replaceable in the
market, its value tends to be set by the price required to acquire an equally desirable substitute property."
In this appraisal report the land is valued however the improvements are not included therefore the Cost
and Income Approaches to value are not applicable.
SITE VALUATION
The method employed to value the site as if vacant and available for sale is the Sales Comparison
Approach. An investigation of the market revealed several sales and listings indicative of what a well-informed
buyer or seller would consider in forming an opinion of value. Four sales were chosen as being most appropriate
to compare against the subject site. Descriptive data and photographs of these comparables are contained in
the addenda.
Adjustm e nts
All comparables differ somewhat from each other, and from the subject in various ways. The usual
differences are for cash equivalency, market conditions, location, and a number of physical characteristics.
Many of these factors, in varying degrees, are applicable in the appraisal of the subject property. When
dissimilarities are found in comparable properties, they are adjusted for by adding to the comparable price when
the dissimilar factor is inferior to the same factor found in the subject property. Likewise, a minus adjustment
should be made when the comparable sale has a factor which is superior to that found in the subject property.
The sale properties, then, are adjusted to the subject property.
However, in the market it is often difficult and sometimes impossible to accurately isolate a given factor.
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In short, one very seldom finds sales which are identical in all respects but one, and thus is able to prove
conclusively the value, or lack of it, for any one factor due to a difference in sale price. Often, there are plus
and minus factors which offset each other. Thus, the use of subjective judgment, to some degree, may be
exercised.
Nevertheless, the differences in values are real and adjustments based on as much fact as can be found,
will be made. Then, the appraiser may call upon his experience to make subjective judgments.
Pro pe rty Rig hts
Each of the sales involve fee simple property rights. As a result, no property rights adjustments were
warranted.
Financ ing :
All Sales were cash to the seller or on terms considered cash equivalent, and no adjustments were
required.
Co nditio ns o f Sale :
No non-market conditions motivating the buyer or seller involved in the transactions are known,
therefore no adjustments are required.
Expe nditure s Im m e diate ly Afte r Sale :
None of the sales required expenditures immediately after sale, and therefore no adjustments are
required. If expenditures were verified they were typically associated with annexation into the city limits.
Marke t Co nditio ns:
A market conditions (time adjustment) is required to bring all comparable sale properties up to the
effective date of the appraisal report which is March 3, 2016. Bozeman was experiencing significant decline in
real estate values when the local and national recession was in affect. Since 2011 real estate values have
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rebounded in this market, and have become particularly strong since 2013, with new projects being developed
again. Demand for unimproved land is now out weighing its supply.
I will utilize four comparables in the following analysis with two sales closing in 2012, one sale closing
in 2015, and one sale closing in 2016. Each of the developers, real estate agents and real estate appraisers I
interviewed in this market were of the opinion market conditions are improving and they are currently strong
in Bozeman with more demand than supply of vacant land. The persons I interviewed were consistently of the
opinion that value of unimproved sites, particularly those with a highest and best use of multi family, have
conservatively appreciated 20% since 2013 and at least 30% since 2012.
To provide some support for the information given to me in the aforementioned interviews I have
completed a paired sales analysis of two sales I have in file that are best suited for multi family development.
The first property sold on February 11, 2011 at $1.15/SF and the other sale sold on June 16, 2014 at $1.95/SF.
Both of these sales are very similar in terms of there location and physical aspects, and making the assumption
there would be no adjustment necessary for the difference in size, this paired sales analysis indicates values have
increased 69.57% over the 40 months between these sales which equates to an appreciation rate of 1.74% per
month or 20.87% per year. This at least provides some market data support for the information provided to me
during my market interviews. I have considered the information given to me during my interviews and the
paired sales analysis and will adjust sale No. 1 and No. 2 upward by 30% for market conditions. Comparable
No. 3 and No 4 sold within 6 months of the effective date of this appraisal report and in my opinion are
indicative of current market value and will not be adjusted for market conditions.
Re m aining Adjustm e nts:
The remaining adjustments will be explained in a qualitative analysis which is an effective technique that
recognizes the inefficiencies of a real estate market and the difficulty in expressing the adjustments with
mathematical precision. The adjustments included in the qualitative analysis are location, size, access,
topography, utilities, shape and use. The land sales adjustment grid can be seen on the following page.
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LAND SALE LOCATION MAP
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LAND SALE ADJUSTMENT GRID
SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Sale Price $2,900,000 $648,233 $3,564,000 $3,866,137
Size (acre)41.17 78.00 20.00 37.05 53.77
Price/AC $37,179 $32,412 $96,194 $71,901
Date of Sale 8/10/12 6/27/12 9/10/15 1/6/16
Market Adjustment Plus 30%Plus 30%-0--0-
Adjusted Price $3,770,000 $842,703 $3,564,000 $3,866,137
Adjusted Price/AC $48,333 $42,135 $96,194 $71,901
Location
South of Garfield
Street and just West
of 19th Avenue
19th Ave and Graf
Street
19th Ave and
Southbridge Dr.
11th Ave and
Baxter Lane, just
south of I-90
Valley Center and
West lake Rd, just
south of I-90
Comparability Similar Similar Superior Superior
Size (acre) 41.17 78.00 20.00 37.05 53.77
Comparability Slightly Inferior Similar Similar Similar
Access Garfield Street 19th Avenue 19th Avenue Baxter Lane & 11th
Avenue
Valley Center &
North 27th Ave.
Comparability Similar Similar Similar Similar
Topography Level Level Level Level Level
Comparability Similar Similar Similar Similar
Shape Square Rectangular Rectangular Slightly Irregular Slightly Irregular
Comparability Similar Similar Similar Similar
Utilities Adjacent to site North of site Adjacent to site On site On site
Comparability Slightly Inferior Similar Superior Superior
Highest & Best Use Multi Family
Residential
Subdivision or Multi
Family
Residential
Subdivision Commercial Commercial or
Residential
Comparability Similar Similar Superior Superior
Overall Comparability Similar Similar Superior Superior
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Sales Analysis:
The subject site is a square shaped site that is located on the south side of Garfield Street and just west
of 19th Avenue. This 41.14 acre site supports the Bob Miller Pavilion and other outbuildings associated with
Montana State University. This site has level topography and can is accessed from Garfield Street near its
northeast corner. City services are adjacent to this site as much of the surrounding land is already developed.
The subject site is currently zoned PLI however as previously discussed in the highest and best use analysis this
site is best suited for a multi family development.
Sale No. 1 is a 78.00 acre site that sold on August 10, 2012 for $2,900,000 or $37,179/AC. After
adjusting for market conditions this comparable indicates a price of $48,333/AC. Comparable No. 1 is located
south of the subject property on the east side of 19th Avenue. Comparable No.1 has similar access, topography,
shape and use and its only inferior aspects are the city utilities were located north of this site at the time of sale,
and this is a slightly larger site. Otherwise, Comparable No. 1 is considered to be quite similar when compared
to the subject property.
Comparable No. 2 is a 20.00 acre site that sold on June 27, 2012 at $648,233 or $ 32,412/AC. After
adjusting for market conditions this comparable indicates a price of $42,135/AC. Comparable No. 2 is also
located just south of the subject property and on the west side of 19th Avenue. Comparable No. 2 is considered
to be similar in all of its physical aspects when compared to the subject property.
Comparable No. 3 is a 37.05 acre site that sold on September 10, 2015 at $3,564,000 or $96,194/AC.
Comparable No. 3 is located at the intersection of Baxter Lane and 11th Avenue and just south of Interstate
90 which is clearly a superior location. Comparable No. 3 is similar in size, access, topography and shape.
Comparable No 3 has superior utilities and is best suited for a commercial use, an coupled with its superior
location, is considered to be superior when compares to the subject property.
Comparable No. 4 is a 53.77 acre site that sold on January 6, 2016 at $3,866,137 or $71,901/AC.
Comparable No. 4 is located at the intersection of Valley Center Road and North 27th Avenue and just south
of Interstate 90 which is clearly a superior location. Comparable No. 4 is similar in size, access, topography and
shape. However, Comparable No. 4 has superior utilities and is best suited for a mixed use development with
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commercial and residential. These fearures coupled with this sales superior location makes Comparable No.
4 superior to the subject property.
The value indications derived from the comparables are reconciled into a single value indication by
arranging the four comparables in an array relative to the subject.
BRACKETING THE SUBJECT PROPERTY
Comparable Adjusted Price
Per AC
Overall
Comparability
2 $42,135 Similar
1 $48,333 Similar
Subject Property
4 $71,901 Superior
3 $96,194 Superior
A shown in the chart above clearly the most similar comparables are Sale No. 1 and Sale No. 2. Both
of these sales are considered to be very similar when compared to the subject property with the only discerning
difference being the size of Comparable No. 1 at 78 acres. After analyzing the size and the other physical
characteristics it appears that site size does not affect market value as much as location and zoning which
ultimately dictate the highest and best use of the sites. Therefore, little emphasis is being given to the difference
in size of the sales when compared to the subject property. Not only do Comparable No.1 and No. 2 have the
same use but they are both located just south of the subject property. These sales show a value range of $42,135
to $48,333/AC.
Comparable No. 3 and No. 4 are both very recent sales of land that is best suited for commercial
development. Sale No. 3 and No. 4 are similar to the subject property in many of their physical aspects however
their superior location in proximity to Interstate 90 and their commercial zoning/use makes these sales superior
to the subject property.
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Considering this information and giving most emphasis to Comparable No. 1 and No. 2 it is my
opinion the subject site has a current market value of $45,000/AC.
After this project is completed .89 acres will be encumbered with a sewer main easement. It is my
opinion the property owner will have little or 5% of their property rights remaining in the easement area.
Therefore, land value after the project is as follows:
40.28 AC x $45,000/AC = $1,812,600
New Easement Area .89 AC x $45,000/AC x 5% = $2,002
Total = $1,814,602
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DEPRECIATION TO CURRENT FAIR MARKET VALUE
Depreciation to current fair market value is calculated by subtracting the estimated market value of the
subject property after the imposition of the easement from the value of the remainder, before. This calculates
as follows:
$1,814,602 - $1,814,602 = $0
The above calculation shows there is no depreciation to the current fair market value of this site.
Co st to Cure :
None
Value o f the Re m ainde r as Cure d:
None
Re m aining De pre c iatio n o f the Fair Marke t Value :
None
Spe c ial Be ne fits:
None
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RECAPULATION OF COMPENSATION
Value of the acquisition:$ 0
Site Improvements:$ 0
Temporary Construction Easement: $ 0
Sewer Main Easement: .89 acres x $45,000/AC x 95% $ 38,048
Depreciation of Fair Market Value: None $ 0
Cost to Cure:$ 0
Total Compensation as of March 3, 2016 $38,048
Compensation, rounded:$38,050
Total Compensation: $38,050
Le sse e Inte re st:
Not applicable
Le sso r Inte re st:
Not applicable
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ADDENDA
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AN APPRAISAL OF PARCEL 2
LOCATED AT THE
SWC OF 19TH AVENUE AND
GARFIELD STREET
IN BOZEMAN, MONTANA
DATE OF VALUATION
MARCH 3, 2016
FOR
TONY BECKEN-GADDO
DOWL HKM
BY
J. MICHAEL JOKI, MAI, SRA
HELENA, MONTANA
187
J. MICHAEL JOKI, MAI, SRA
P.O. BOX 281
HELENA, MONTANA 59624
Phone (406) 442-2159
March 24, 2016 FAX (406) 442-6196
Tony Becken-Gaddo, P.E.
Dowl HKM
2090 Stadium Drive
Bozeman, Montana 59715
RE: An appraisal of the property owned by the State of Montana (Parcel 2) at the SWC of 19th Avenue
and Garfield Street in Bozeman, Montana.
Dear Mr. Becken-Gaddo:
Per our Agreement for Professional Services dated December 8, 2015 I have examined and
investigated the above referenced property for the purpose of estimating its current fair market value before
imposition of the sanitary sewer easement, its current fair market value after imposition of the sanitary sewer
easement, and for my estimate of compensation due to the property owner. The attached report provides
the essential data and detailed reasoning employed in estimating my final value estimates. The report
contains 70 pages.
The site being valued in this appraisal report is 76.00 acres (see larger parcel discussion on page 24)
and supports the Marsh Laboratory and various other buildings/out buildings associated with Montana
State University. A sign at the entrance to this property shows this site as the Montana State University-
Montana Agricultural Experiment Station. The City of Bozeman intends to impose a 30' sanitary sewer
easement along the south property boundary that will total 1.733 acres. An arial view of this proposed
easement is included in the addenda of this appraisal report.
The values reported are qualified by certain definitions, assumptions and limiting conditions, and
certification which are set forth within the attached report. This appraisal report is intended to conform with
the Uniform Standards of Professional Appraisal Practice.
Based on my analysis, the market value of the subject site before imposition of the sanitary sewer
easement, as set forth, documented and qualified in the attached report under conditions prevailing on
March 3, 2016 was:
THREE MILLION FOUR HUNDRED TWENTY THOUSAND DOLLARS
$3,420,000
MEMBER APPRAISAL INSTITUTE
188
Based on my analysis, the market value of the subject site after imposition of the sanitary sewer
easement, as set forth, documented and qualified in the attached report under conditions prevailing on
March 3, 2016 was:
THREE MILLION THREE HUNDRED FORTY-SIX THOUSAND FORTY TWO
DOLLARS
$3,346,042 *
Value of the Remainder, Before:$3,346,042
Value of the Remainder, After:$3,346,042
Depreciation to Current Fair Market Value:$0
Special Benefits:$0
Value of the New Easement Area:$73,958
My total estimation of compensation is:$74,700(R)*
I direct your attention to the data, discussions and conclusions which follow.
Respectfully submitted,
J. Michael Joki, MAI, SRA
Montana State Certified
General Real Estate Appraiser #152
* Subject to the Hypothetical and Extraordinary Conditions listed on page 8.
MEMBER APPRAISAL INSTITUTE
189
TABLE OF CONTENTS
INTRODUCTION Page
Letter of Transmittal
Certification
Assumptions and Limiting Conditions 6
Hypothetical Condition 8
Summary of Important Facts and Conclusions 9
Subject Property Photograph 10
DESCRIPTION, ANALYSIS AND CONCLUSION:
Definition of Market Value 11
Purpose of Appraisal 11
Intended Use of the Appraisal and Intended Client 12
Scope of Appraisal 12
Summary of the Appraisal Problem 13
Property Rights Appraised 14
Identification of Property and Legal Description 14
History of the Property 15
Regional Map 16
Regional and City Analysis 17
Neighborhood Analysis 22
Plot Plan 24
Property Description Before the Imposition of the Easement 25
Subject Property Photographs 28
Zoning 31
Highest and Best Use Before 32
The Valuation Process 37
Site Valuation 37
Land Sale Location Map 40
Land Sale Adjustment Grid 41
Bracketing the Subject Property 44
Map Depicting the Easement Area 46
Scope of the Project and Its Affect on the Subject Site 47
Subject Property Photographs 49
Identification of the Site, After 52
Highest and Best Use After 53
The Valuation Process 57
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Site Valuation 59
Land Sale Location Map 62
Land Sale Adjustment Grid 63
Bracketing the Subject Property 65
Depreciation to Current Fair Market Value 67
Recapulation of Compensation 69
ADDENDA:
Property Record Card
PLI Zoning
Zoning Map
Exhibit B
Project Aerial Map
Sample Public Utility Easement
Comparable Land Sale Sheets with Photographs
Qualifications of the Appraiser
State License
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I CERTIFY THAT...
1. The statements of fact contained in this report are true and correct.
2. 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.
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 the parties involved.
4. I have performed no services, as an appraiser or in any other capacity, regarding the property that
is the subject of this report within the three year period immediately proceeding acceptance of this
assignment.
5. 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. This appraisal assignment was not based
on a requested minimum valuation, or a specific valuation.
6. My analysis, opinions and conclusions were developed, and this report has been prepared, in
conformity with The Uniform Standards of Professional Appraisal Practice, and with the
requirements of the Code of Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
7. The use of this report is subject to the requirements of the Appraisal Institute relating to the review
by its duly authorized representatives.
8. As of the date of this report, I, J. Michael Joki, have completed the requirements of the continuing
education program of the Appraisal Institute.
9. I have made a personal inspection of the property that is the subject of this report and have
afforded the owner, or their representative, the opportunity to accompany me on the inspection.
10. I have personally inspected and verified the comparable sales relied upon in making this appraisal.
11. No one provides significant real property appraisal assistance to the person signing this certification.
12. I have the necessary level of knowledge and experience to credibly estimate the value of the subject
property, or have taken reasonable steps to achieve such competency and to provide a professional
appraisal of the subject property, in accordance with the Uniform Standards of Professional
Appraisal Practice.
MEMBER APPRAISAL INSTITUTE
192
13. I am currently licensed in the State of Montana (Certificate #152) as a Certified General Real Estate
Appraiser, and hold the MAI and SRA designations conferred by the Appraisal Institute.
DATE: March 24, 2016 SIGNATURE:
Appraised By: J. Michael Joki, MAI, SRA
Certified General #152
MEMBER APPRAISAL INSTITUTE
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ASSUMPTIONS AND LIMITING CONDITIONS
This is to certify that the appraiser in submitting this statement and opinion of value of subject property
acted in accordance with and was bound by the following principles, limiting conditions and assumptions.
Unauthorized use of this report is set forth below.
1. No responsibility is assumed for matters that are legal in nature nor is any opinion rendered on title
of property appraised.
2. Unless otherwise noted, the property has been appraised as though free and clear of all
encumbrances.
3. All maps, areas, plans, specifications, and other data furnished your appraiser were assumed to be
correct. No survey of the property was made by this firm. Furthermore, all numerical references
to linear measurements, area, volume or angular measurements should be assumed to be "more or
less" (+/-) and are accurate to a degree consistent with their use for valuation purposes.
4. This appraisal considers only surface rights to the property with consideration of current zoning and
land use controls. The estimate of highest and best use will form the basis for the value estimate.
This appraisal does not consider mineral, gas, oil or other natural resource rights that may be
inherent in the ownership of the property.
5. In this appraisal assignment any potentially hazardous material found on the land which may or may
not be present on the property, has not been considered. The appraiser is not qualified to detect
such substances. Any interested party is urged to retain an expert in this field if there is any question
regarding such potentially hazardous material. If such material or substance is present it could
adversely affect the value reported.
6. The appraiser is not a seismologist. This appraisal should not be relied upon as to whether a seismic
problem exists, or does not actually exist on the property. The property which is the subject of this
appraisal is within a geographic area where earthquakes and other seismic disturbances have
previously occurred and where they may occur again. Except as specifically indicated in the report,
no seismic or geologic studies have been provided to the appraiser concerning the geologic and/or
seismic condition of the property. The appraiser assumes no responsibility for the possible effect
on the subject property on seismic activity and/or earthquakes. I have not made a specific
compliance survey and analysis of this property to determine whether or not it is in conformity with
any seismic requirements by the City or County. It is possible that a survey of the property could
reveal that the property does not meet the required seismic requirements. If so, this fact could have
a negative effect upon the value of the property. Since I have no direct evidence relating to this
issue, I did not consider possible noncompliance requirements in estimating the value of the
property.
7. All data contained in this report and in the appraiser's files, as obtained from other sources, upon
which to any degree the opinions and conclusions were based, are considered reliable and believed
to be true and correct. However, the appraiser does not assume responsibility for the accuracy of
such items that were obtained from other parties.
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8. There shall be no obligation to give testimony or attendance in court by reason of this appraisal with
reference to the property in question unless arrangements have been previously made and at an
additional fee.
9. Disclosure of the contents of this appraisal 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 the conclusions as to value, the
identity of the appraiser, or the firm with which he is connected, or to the MAI and SRA
designations, shall be disseminated to the public through advertising media, news media, public
relations media, sales media, or any other public means of communication without the prior written
consent of the appraiser.
10. J. Michael Joki, MAI, SRA, specifically does not authorize the out-of-context quoting from or partial
reprinting of this appraisal report.
11. The liability of J. Michael Joki, MAI, SRA and employees is limited to the client and to the fee
collected. Further, there is no accountability, obligations or liability to any third party. If this report
is placed in the hands of anyone other than client, the client shall make such party aware of all
limiting conditions and assumptions of the assignment and related discussions. The appraiser
assumes no responsibility for any costs incurred to discover or correct any deficiencies of any type
present in the property; physically, financially, or of a legal nature.
12. The fee for this appraisal report is for the service rendered and not for time spent on the physical
report or for the physical report itself.
13. This appraisal report is prepared for the appraisers’ client Dowl HKM. It is my understanding Dowl
HKM is working in conjunction with the City of Bozeman on this sanitary sewer easement project.
No third parties are authorized to rely upon this report without the express written consent of the
appraiser.
14. This Appraisal Report is intended to comply with the reporting requirements set forth under
Standard Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for an Appraisal
Report. As such, it presents discussions of the data, reasoning, and analysis that were used in the
appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning
the data, reasoning and analysis is contained in the appraiser’s file.
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HYPOTHETICAL CONDITION
A hypothetical condition is a condition that is contrary to what exists but is supposed for the purpose
of the analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal,
or economic characteristics of the subject property; or about conditions external to the subject property,
such as conditions or trends; or about the integrity of data used in an analysis.
1. As of the effective date of this appraisal report the sanitary sewer easement has not been imposed
on the subject property and if all parties are in agreement the easement will be imposed at a future
date. The value of the subject site after the imposition of the easement is subject to this easement
being recorded and imposed on the subject site as explained in this appraisal report. The analysis
after the imposition of the easement would not be reasonable nor would the value conclusion be
creditable if this project is not completed.
EXTRAORDINARY ASSUMPTION AND LIMITING CONDITION
An extraordinary assumption is an assumption is that is directly related to a specif assignment, which,
if found to false, could alter the appraisers opinions or conclusions. Extraordinary assumptions assume as
fact otherwise uncertain information about the physical, legal or economic characteristics of the subject
property, or about conditions external to the property, such as market conditions or trends or about the
integrity of data used in the analysis.
1. The current zoning for the subject property is PLI ( Public Lands and Institutions). I spoke with
Tom Rogers at the City of Bozeman Planning Department concerning the current zoning and the
potential of a zoning change if the subject property were in private ownership. I have been asked
to estimate the market value of the subject property which is based on the highest and best use of
this site, and as explained in the highest and best use analysis the highest and best use of this site is
for conversion to a zoning ordinance that would accommodate a commercial or multi family use,
but more likely a multi family use. In order to be consistent with the highest and best use analysis
sales with the same or a similar use are analyzed in this appraisal report. If the information provided
by Tom Rogers is found to be false it could change my conclusion to value in this appraisal report.
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SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS
PURPORTED OWNER:State of Montana
LOCATION OF PROPERTY:This site is located at the SWC of 19th Avenue and Garfield Street
in Bozeman, Montana. This site is known as the Montana State
University-Montana Agricultural Experiment Station Site.
LAND SIZE:As shown on the Montana Cadastral Property Record Card
contained in the addenda this site is 88.58 acres. However as
discussed on page 25 the larger parcel area is 76.00 acres.
PROPOSED SANITARY
SEWER EASEMENT AREA:1.733 Acres.
IMPROVEMENTS:The site is improved with the Marsh Laboratory and various other
buildings/out buildings associated with Montana State University.
PROPERTY RIGHTS APPRAISED:Fee Simple
ZONING:PLI (Public Lands and Institutions)
PRESENT USE:Supports various buildings associated with Montana State
University- Montana Agricultural Experiment Station.
HIGHEST AND BEST USE:Multi- family
DATE OF VALUATION:March 3, 2016
CONCLUDED ESTIMATE OF
MARKET VALUE BEFORE
IMPOSITION OF THE EASEMENT:$3,420,000
CONCLUDED ESTIMATE OF
MARKET VALUE AFTER
IMPOSITION OF THE EASEMENT:$3,346,042*
DEPRECIATION OF CURRENT
FAIR MARKET VALUE:$0*
TOTAL ESTIMATE OF COMPENSATION: $74,700*
*Subject to the Hypothetical and Extraordinary Conditions Listed on page 8.
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SUBJECT PROPERTY PHOTOGRAPH
Aerial view of the subject property. The larger parcel area
is outlined in green.
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DEFINITION OF MARKET VALUE
The current fair market value has been developed and refined by the State of Montana and
found in state statute MCA70-30-313 and is as follows:
"Current fair market value is the price that would be agreed to by a willing and informed seller and buyer,
taking into consideration, but not limited to the following factors
1. The highest and best reasonably available use and its value for such use, provided current use may
not be presumed to be the highest and best use;
2. The machinery, equipment, and fixtures for the part of the real estate taken;
3. Any other relevant factors as to which evidence is offered."
PURPOSE OF THE APPRAISAL
The purpose of this appraisal report is to arrive at a supportable estimation of the market value.
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INTENDED USE OF THE APPRAISAL AND INTENDED CLIENT
It is understood that the intended use of this appraisal report is to assist Dowl HKM/City of
Bozeman in appropriately compensating the property owner for the imposition of a sanitary sewer easement.
The client is Dowl HKM, and the intended users of the appraisal report are Dowl HKM and the City of
Bozeman, Montana.
SCOPE OF THE APPRAISAL
The scope of this assignment includes a personal inspection of the subject site, reviewing public
record information concerning the site and other properties in the immediate neighborhood.
Initially I spoke with Tony Becken-Gaddo from Dowl HKM and he explained the City of Bozeman
is making improvements to their utilities and would like to extend a sanitary sewer easement along the south
boundary of the subject site. This site needs to be valued so the City of Bozeman can appropriately
compensate the State of Montana for the imposition of this sanitary sewer easement.
I inspected the subject site on March 3, 2016 unaccompanied. Prior to my inspection I spoke with
Tony Becken-Gaddo and he explained Dan Stevenson is the on site facilities manager who may or may not
meet me for the inspection. March 3, 2016 is the day I took all photographs of the subject property and I
completed my inspection unaccompanied.
To the best of my knowledge and as explained by Tony Becken-Gaddo the State of Montana has no
issues or concerns with this easement project. The State of Montana will be compensated for the portion
of their site that is being imposed with the sanitary sewer easement and will also be compensated for any
site improvements being impacted.
Real estate agents, local MLS Service, developers and appraisers in Bozeman were interviewed in
an attempt to find relevant market data. Market data has been confirmed with the buyer, seller or broker
involved in the transaction. All of the comparable sales utilized in this appraisal report are described in the
body of the report and in more detail on the sale sheets included in the addenda. All known, available,
relevant market data considered to have an impact on the market value of the subject site has been
considered.
The Scope of Work defines an appraiser's conclusions as to what is deemed necessary to provide
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a creditable appraisal report. The client is defined as Dowl HKM/City of Bozeman. The intended user is
the client, and the intended use will be to assist the client in appropriately compensating the property owner
for the imposition of a sanitary sewer easement. The following sources provided me data that was used in
this appraisal report.
• Gallatin County Clerk and Recorder's Office
• City of Bozeman Planning Department
• Tony Becken-Gaddo, Dowl HKM
• Todd Olson, Appraiser
• Keith O’Reilly, MAI, Appraiser
• Ed Jackson, Appraiser
• Jason Leap, Realtor
• Jack Catron, Realtor
• Donnie Olson, Realtor
• Sunny Odegard, Appraiser
• Lloyd Mandeville, Realtor
• Tom Starner, Realtor
• Dennis Erickson, Realtor
• Brian Cline, Developer
SUMMARY OF APPRAISAL PROBLEM
Tony Becken-Gaddo provided me the maps and aerial photographs of the sanitary sewer
easement project which depicts the subject property, Parcel 2, and Parcel 1 directly to the west which is also
being impacted by this same project. The sanitary sewer easement is 30' in width and will be imposed along
the entire south property boundary and will total 1.733 acres. The State of Montana will be compensated
for the loss of their property rights in this permanent easement area. It is Dowl HKM and the City of
Bozeman intent to make the property owner whole after this project is completed and the new sanitary
sewer service easement is in place.
The "before" condition is based on the "as is" condition of the subject property reflecting its current
highest and best, market trends and market data available from which to extract an indication of current
market value. In the "after" condition the appraisal is based on the hypothetical condition that the proposed
sanitary sewer easement is an encumbrance to the real property. In the "after" condition the impact to the
property rights and market value are fully identified and incorporated into the analysis.
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PROPERTY RIGHTS APPRAISED
This appraisal is made with the understanding and assumption that present ownership of the subject
property includes all rights that may be lawfully owned, and is therefore title in fee simple as of March 3,
2016. A fee simple estate is subject only to the limitations imposed by the governmental powers of taxation,
eminent domain, police power and escheat.
IDENTIFICATION OF PROPERTY AND LEGAL DESCRIPTION
The site that is the subject matter of this appraisal report consists of 76.00 acres and is located at the
SWC of 19th Avenue and Garfield Street in Bozeman, Montana. The legal description of the land involved
is as follows:
"Tract D of COS #1243A, situated in the NE 1/4 of Section 14, Township 2 South, Range 5 East, PMM,
City of Bozeman, Gallatin County, Montana".
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HISTORY OF THE PROPERTY
To best of my knowledge the State of Montana has owned this land for 40+ years and this land has
supported the Montana State University - Montana Agricultural Experiment Station for most of that time. As I
understand this property is not currently listed for sale.
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REGIONAL MAP
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REGIONAL AND CITY ANALYSIS
Bozeman is the county seat of Gallatin County and is one of 56 counties in the State of Montana. Gallatin
County is located in a mountainous area of Montana north of the Montana/Wyoming border and Yellowstone
National Park. Bozeman primarily lies on the south side of Interstate 90 and is located approximately 140 miles
west of Billings, Montana and 80 miles east of Butte, Montana.
Gallatin County has grown faster than any other county in the State of Montana over the past decade
according to the Census Bureau. Gallatin County includes almost 2,500 square miles of mountainous lands that
offer a variety of topography and climate. Nearly half of Gallatin County is under public ownership by the
Gallatin National Forest, State of Montana, Bureau of Land Management or the National Park Service.
Fo rc e s Influe nc ing Pro pe rty Value s
The value of real estate is influenced by the interaction of four major forces. Social considerations, economic
considerations, government and environmental considerations. The four forces are discussed as follows:
So c ial Co nside ratio ns
Social forces are exerted largely by population characteristics, including population growth, density, and age
distribution. According to the U. S. Census Bureau the population of the City of Bozeman increased from
27,509 in 2000 to 37,280 as of April, 2010 and increase of nearly 9,800 people. This represents an increase in
population of approximately 35.5% over this 10 year period, or an average rate of growth of about 3.55%/year.
From April, 2010 to April, 2012 the population increased from 37,280 to 38,695, an increase of nearly 1,415
people which equated to a growth of 3.8% over this time frame.
Gallatin County’s population increased from 67,831 in 2000 to 89,513 in 2010 or approximately 21,700
people. This represents an increase in population of approximately 32% over a 10 year period or an average
growth rate of 3.2%/year. Between April, 2010 and April, 2012 the population increased from 89,513 to 92,614
people or 3,101people which equates to a growth rate of about 3.5% over this time period. Comparatively, the
State of Montana grew from 989,417 people in April 2010 to 1,005,140 people in 2012 or 15,724 people which
equates to a growth rate of 1.6% over that time frame.
In addition to population growth the City of Bozeman continues to see growth in its geographic size. In 1990
the City of Bozeman was approximately 6,420 acres (± 10 square miles) and by the end of 2009 it had expanded
to 12,300 acres (±19.25 square miles) resulting in an increase of ±92% over this 19 year period. This growth
was to accommodate the increasing population which required new land for residential, commercial and
industrial development. This growth significantly slowed in 2009 and 2010 which was being seen all throughout
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this region as the national economic recession took effect.
Bozeman has a significantly lower home ownership rate than most other communities in the county primarily
due to the student body of Montana State University. Bozeman also has a smaller average household size and
a smaller portion of families than other areas of Gallatin County. Bozeman has an average household size of
2.27 people while the average household size for Gallatin County is 2.49 people. Just over half of the Bozeman
households are families compared to ±63% countywide. The population of Bozeman is considerably younger
than Gallatin County as a whole, and even more so, in comparison to the State of Montana. Again this
emphasizes the significance of Montana State University being located in Bozeman. Bozeman and Gallatin
County has transformed over the past decade from a primarily agricultural based community to a tourism related
community. Bozeman and Gallatin County offers a high quality of life due to its low crime rate, offering of
many cultural experiences, the presence of Montana State University and its education offerings. An abundance
of outdoor activities that include excellent downhill snow skiing, world class fly fishing rivers, streams and
access to numerous state and federally owned lands are all nearby.
Ec o no m ic Co nside ratio ns
Bozeman, like many communities in Montana experienced significant growth in population and economy for
a number of years. This area was affected by the national recession just like many other areas in the country
however new growth and development has begun again and the outlook for Bozeman and the vicinity is quit
positive based on a number of factors.
C County seat of Gallatin County.
C Wide range of skills in the labor force.
C Home of Montana State University.
• Well located in southwestern Montana.
• Numerous recreational opportunities
Bozeman is somewhat unique when compared to other communities in Montana because there are few
employers who employ a large amount of the population. Missoula, Montana, as an example was very
dependent on the lumber and timber industry and Butte, Montana had always relied heavily on the mining
industry. When those industries slowed those communities were very heavily impacted. The primary employer
in Bozeman is Montana State University. Other major sectors of the economy that provide employment are
construction, local and state government, manufacturing, technology, agricultural and retail service. Montana
State University currently employs about 3,500 people as permanent faculty/staff and they also employ over
2,000 students in part time work. In the fall of 2,013 the student enrollment at MSU was slightly over 15,000
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people which certainly has a significant affect on the local economy. Other major employers in Gallatin
County include the State of Montana, Gallatin County, the City of Bozeman, Bozeman Deaconess Hospital,
Right Now Technologies. With such a diverse employment base the local economy tends to be sheltered from
a downturn in any of the Country’s key employment industries.
In 2010 Bozeman was declared as the most expensive place to live in Montana based upon a report
by Propera Business Network. This report stated that Bozeman’s 2009 cost of living was 4.4% above the
national average. The other Montana cities that showed an overall cost of living above the national average
were Missoula at 1.8% and Kalispell at 1.5%. Residential rent levels in Gallatin County have remained stable
primarily due to the presence of Montana State University. Rents in this community will periodically show a
slight decline however they tend to stabilize or even increase rather quickly due to the continued growth of
Montana State University.
Overall the economic growth has been much stronger in Bozeman and Gallatin County than what
is being seen statewide. Historically the sectors in Bozeman and Gallatin County that show the most
substantial growth are agricultural services, construction, manufacturing, finance, insurance, real estate and
lodging. Currently the unemployment rate in Montana is 6.4% and Gallatin County recorded a slightly lower
unemployment rate at 5.8%. Gallatin County’s labor force is currently estimated at 52,070 employees, the third
largest labor force in Montana’s 56 counties.
Over the past ±10 years residential building permit activity in the City of Bozeman was on the rise and
reached its peak in 2005 and then began to decline over the next 5 years, and most significantly in 2008 and
2009. Residential building permits began to increase again in 2010 and have been on a steady incline. Bozeman
has been experiencing new growth in several areas of town but no area has provided as much commercial real
estate development at the 19th Avenue corridor. Recent stores and restaurants developed along 19th Avenue
include Sportsman’s Warehouse, Lowes, IHOP, Bed Bath and Beyond, Staples, World Market and REI. Most
recently a new Safeway grocery store (±58,000 SF) was completed in December, 2011 and a Kohls department
store (±55,300 SF) was completed in October, 2011.
The City of Bozeman facilities over the past 5 years have seen significant development and/or renovation
which includes the fire stations, police station, waste water treatment facilities, the completion of a downtown
parking garage, City of Bozeman Library, construction of the Gallatin County Detention Center, an expansion
of the landfill building etc. Montana State University has also seen significant expansion and renovation which
include a significant remodel of the football stadium, addition of the Molecular Biology Center, renovations
to the Health and Physical Education Center, addition of the Black Box Theater, renovation of Gaines Hall etc.
Tourism brings a significant number of visitors to the Bozeman area. Yellowstone National Park, the first
national park in the United States, is located approximately 65 miles south of Bozeman. Big Sky Ski Resort is
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located approximately 45 miles south of Bozeman and has recently been listed as the seventh best ski resort
in the United States. This ski area averages over 300" of annual snowfall with skiing available November
through April. The Yellowstone Club lies adjacent to Big Sky Ski Resort and is an exclusive vacation/residential
development that includes both private skiing and golfing. This exclusive, private development had filed for
bankruptcy in 2008 and in 2010 was purchased by Cross Harbor Capital and for several years saw significant
decline in sales and values. However the private development has begun to rebound again as sales are starting
to climb again. Other ski resorts in Gallatin County include Moonlight Basin which is also adjacent to Big Sky
and Bridger Bowl which lies approximately 15 miles to the north of Bozeman.
Enviro nm e ntal Co nside ratio ns
Environmental and physical forces, both natural and man made, can influence property values. These forces
include climatic conditions, topography and natural barriers, and transportation systems.
Bozeman’s climate clearly reflects its mountain valley location. Bozeman truly has four seasons with
its short summers being pleasant which are typically characterized by warm to hot days and cool nights. The
average high temperature in the summer is in the upper 80°’s and the average low in the winter is the mid to
lower 30°’s. Spring tends to come late in the Gallatin Valley as a of its annual precipitation ±19" falls during
May and June. The average annual snowfall in Bozeman is ±72" and the average length of the growing season
is about 107 days. The climate of the county varies according to elevation but is generally characterized by
relatively cold winters and warm summers. Snow removal is a common operating cost that will affect real
estate in the winter months. In contrast air conditioning costs are less during the fairly temperate summer
months however heating bills can be quite high during the cold winter months.
Bozeman is located on the south side of Interstate 90. Access to the south towards Yellowstone Park
is via U.S. Highway 91. There are numerous other state highways and Gallatin County maintained roads that
provide access throughout this region. Commercial air service, truck and rail transportation are considered
to be adequate. Gallatin Field which is located in the adjacent community of Belgrade is the second busiest
airport in the state and provides air service for this area.
Go ve rnm e ntal Co nside ratio ns
The City of Bozeman is a City Commission/City Manager form of government with an elected municipal
judge. There are five commissioners elected with no party affiliation and are elected to a four year term which
are overlapping. The City Commissioner elections are held every two years and the terms of the
commissioners are staggered and the candidate who receives the most votes in an election becomes the mayor
the last two years of their term.
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The City of Bozeman has approximately 40 police officers and the fire department has approximately 18
firefighters plus the Fire Chief, Deputy Chief/Marshall, and seven captains. There are three fire stations in
the City of Bozeman and overall the fire and police protection services are considered to be good.
The Department of Planning and Community Development processes applications for new development
in the city limits. This department enforces the zoning regulations within the city limits of Bozeman. Gallatin
County administers all zoning for properties outside the city limits and within the “zoning donut”. The
Gallatin County Comprehensive Plan encourages development near the existing city limits and/or services
and discourages development in more remote locations. In general the planning and zoning regulations in
this area are considered stringent.
Co nc lusio n
Bozeman and Gallatin County has population and overall growth trends that are continuing upward. This
area offers a wide variety of outdoor recreational opportunities, cultural resources, tourism, and coupled with
the presence of Montana State University this area is poised for continued growth. Bozeman has a young and
very well educated work force and coupled with its diverse economy the general outlook for Bozeman,
Belgrade and the surrounding small communities is good.
Overall the real estate market in Bozeman is strong. 2013 was the first year of strong market
conditions after 5+ recession years. Residential and commercial activity has increased significantly.
Residential apartment occupancy is more or less at 100% , and commercial lease rates and commercial
property values have been increasing as well.
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NEIGHBORHOOD DATA & ANALYSIS
The subject property is located near the Southern edge of the Bozeman city limits and more particularly
just south of the College Street and 19th Avenue intersection. 19th Avenue is a significant north/south arterial
street and College Street is a significant east/west arterial street and their intersection forms the northwest corner
of the Montana State University campus.
North of College Street is primarily developed with residential properties. Historically this has been a
highly sought after neighborhood because of its proximity to the Montana State University Campus. Because of
its proximity to campus many of the residential properties in this neighborhood are used as rentals by the
university students.
South of Campus and particularly along 19th Avenue there has been new residential and commercial
development. The Bozeman city limits are continually expanding to the South and around the University campus.
Some of Bozeman's newer residential subdivisions, with some having homes in the upper end of the single
family residential price range for this community, are in this area.
This neighborhood has good access to Main Street (downtown district) via 19th Avenue. Interstate 90
can easily be accessed off of Main Street from several roads. Main Street transitions into Huffine Lane as it leads
west out of Bozeman and gives direct access to the Four Corners/Belgrade area.
As Bozeman continues to expand new residential development, including multi family development, is
expected to continue in this area and particularly on land that is in direct proximity to Montana State University.
The demand for housing of college students is currently high which is expected to continue in this neighborhood
until more housing is developed.
Elementary schools, middle school and Bozeman High School are all located nearby. The Gallatin
Valley Mall is located on the north side of Huffine Lane and approximately 2 miles to the northwest. City
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water and sewer service is readily available throughout this neighborhood, and natural gas and electrical
service are provided throughout the area by Northwestern Energy.
I expect this neighborhood will continue to see new development because of the shortage of rental
housing. Historically rental properties, either single family or multi family properties, have been in high
demand in this neighborhood because of its proximity to the Montana State University Campus. Currently
this shortage of housing is being compounded by the growth in student population at the University and
overall growth in Bozeman. In my opinion market conditions are expected to remain strong in this
neighborhood and most likely market values will appreciate accordingly. This trend is consistent with the
trend other neighborhoods are experiencing in the Bozeman city limits.
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PLOT PLAN
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PROPERTY DESCRIPTION BEFORE THE
IMPOSITION OF THE EASEMENT
Site
Size:As shown on the map on the facing page the subject site is comprised of
land on the south side of Garfield Street as well as the land on the north side
of Garfield Street which is outlined in blue. All together this totals 88.58
acres. However, to meet the test of the larger parcel theory a property must
have unity of ownership, contiguity and unity of use to establish the larger
parcel area. All of this land is currently owned by the State of Montana and
it all supports the Montana State University- Agricultural Experiment Station.
However this land no longer has contiguity as Garfield Street is now an
improved street which physically separates this land. So by definition the
larger parcel area would not include the land that is north of Garfield Street.
Also, the land north of Garfield Street is a relatively long and narrow parcel
of land and with its location at the intersection of 19th Avenue and College
Street it may very well have a different use, potentially a higher and better use,
than the land south of Garfield Street. Therefore, I have determined the larger
parcel area to be the +/- 76.00 acres that is south of Garfield Street as
outlined in yellow. Also, as shown on the aerial photograph in the addenda,
this is the only portion of the subject site being impacted by the sanitary sewer
easement project.
Shape:Rectangular.
Topography:Most of the land is level at street grade. Two irrigation canals or seasonal
creeks pass through this land in a general north/south direction and there
appears to be areas of high water table.
Soil Conditions:Soil conditions are unknown and no soils test was provided to your appraiser.
Easements:No title policy was provided to your appraiser. A title policy should be used
for final determination of easements and encroachments.
Access:This site can be accessed from Garfield Street near its NWC or 19th Avenue
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near its SWC. Across 19th Avenue from the SEC is Lincoln Street which is
a city street. Lincoln Street appears to extend west off of 19th Avenue onto
the subject site. However, Lincoln Street is not a city street where it passes
through the subject site, and the pavement only extends to the Marsh
Laboratory. West of the Marsh Laboratory this road is a dirt/gravel road that
parallels the south boundary. From the southwest corner to the northwest
corner there is a gravel road that overlaps the boundary of Parcel 2 and Parcel
1 that provides access to Garfield Street. Currently all of the roads on the
subject site are privately maintained roads.
Utilities:All utilities are readily available as the majority of the land surrounding the
subject property is annexed into the Bozeman city limits and utilities have
been extended throughout most of this neighborhood.
Functional Adequacy:This site has served as the Montana State University-Montana Agricultural
Experiment Station site for many years. Over time the Montana State University
Campus has expanded, and land to the north, west and south has become
developed and annexed into the Bozeman city limits. As discussed in the
following highest and best use analysis the current use of this land is not the
highest and best use of this land even though it is very likely this land will stay
in State of Montana/Montana State University ownership.
Flood Plain:The subject property is located in Flood Zone X which is an area of minimal
flooding. This information was extracted from FEMA's National Flood Hazard
Layer Website. The Community Panel No. is 30031 C 0816 D. This map is
dated September 2, 2011.
Nuisances or Hazards:Land directly to the west is also owned by Montana State University/State of
Montana. Directly to the north is a relatively new commercial development
between Garfield and College Streets, and north of College Street there is a mix
of older residential and commercial uses. Land directly across and east of 19th
Avenue is the Montana State University Campus. Land to the south on either
side of 19th Avenue is a mix of campus, multi family, single family and
commercial uses. These surrounding uses are typical to this neighborhood as this
is one of the areas in Bozeman that is rapidly expanding. None of the
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surrounding uses adversely affect the market value of the subject property.
Site and Building Im pro vem ents
The primary building on the subject site is the Marsh Laboratory which is
located near the SEC and close to the intersection of 19th Avenue and Lincoln
Street. There are various other buildings (shops, garages, outbuildings) that are
associated with Montana State University. The subject site was not staked at the
time of my site visit but it does not appear any of the building improvements
will be impacted by the proposed sanitary sewer easement project.
Any site improvements that are impacted by the sanitary sewer easement
project are further discussed on page 47 in the Scope of the Project section of
this appraisal report.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken from the southwest corner and
looking north on the gravel road towards Garfield Street.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Photograph taken from the northwest corner at Garfield Street and
looking southeast at the subject property.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph shows some of the high ground water
near the center of the site.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Looking east on Garfield Street towards 19th Ave/MSU
and the lighted intersection. Subject property is on the right.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken from the southeast corner of the subject site and looking north.
19th Avenue is shown on the right.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Photograph taken from Garfield Street and looking south at the subject property.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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ZONING
I spoke with Tom Rogers at the City of Bozeman Planning Department and he confirmed that the
subject site is currently zoned PLI (Public Lands and Institutions). This district is intended to provide for and
apply to public and quasi public institutional uses and lands, and recreational and public service activities for the
general benefits of the citizens of the city.
The typical uses in a PLI zoning district are open areas, parks, museums, historic or cultural exhibits, water
conservation, flood control, drainage area, natural conservation and preservation area. Institutions including schools,
colleges and universities, hospitals, rehabilitation centers, etc. are permitted. Public buildings, cemeteries, memorial
stadia are permitted as well. Recreational uses including golf courses, tennis courses, softball fields, swimming pools
etc. are also a common use.
Currently the subject property in all respects is compatible with the existing zoning. Tom Rogers and I
discussed if the subject property transferred to private ownership ( non public agencies) and it was not going to be
utilized for the general benefit of the public then a zone change would be required. The existing zoning districts in the
immediate vicinity of the subject property are BP (Business Park), B2 (Community Business), R4 (Residential High
Density) and RO ( Residential Office). Most likely a zoning change would be based on one of these existing uses in
the immediate vicinity. It will be discussed in the following highest and best use analysis that the historical use of this
site which supports the Marsh Laboratory and is known as the Montana State University-Montana Agricultural
Experiment Station is not necessarily the highest and best use of this property.
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HIGHEST AND BEST USE BEFORE
"The reasonably probable and legal use of vacant land or an improved property that is
physically possible, appropriately supported, financially feasible and that results in the highest
value. The four criteria the highest and best use must meet are legal permissibility, physical
possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of
land or improved property - specific with respect to user and timing of the use - that is
adequately supported and results in the highest present value."1
The definition above applies to the highest and best use of vacant land or improved property. 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.
Quite often in estimating the highest and best use of land, the appraiser is controlled by governmental
regulations. These controls are generally zoning ordinance, parking requirements and building codes. Also, in
the estimate of highest and best use, one must recognize the attitude of typical investors in the marketplace.
Real estate will usually fall into certain definite development patterns, and their uses can be classified
as: residential, agricultural, recreational, industrial, commercial and public use. In valuing the highest and best
use of the land both as if vacant and improved, the following criteria must be met. 1) legally permissible, 2)
physically possible, 3) financially feasible, and 4) maximally productive.
HIGHEST AND BEST USE OF THE PROPERTY AS VACANT
Le g ally Pe rm issible
The subject property is currently zoned PLI ( Public Lands and Institution District) which allows for
a wide range of uses. A number of the allowed uses were previously described in the zoning section and a copy
of the zoning ordnance is included in the addenda. The aforementioned uses are allowed as long as the property
is being used for the benefit of the public. Because I have been asked to estimate the current market value of
the subject property, which is based on its highest and best use, I will not value this property as public land and
institutions ground. Not only is the PLI not the highest and best use of this property but PLI zoned land sales
are not available as PLI land does not typically sell on the open market.
I have been asked to estimate the current market value of the subject property and it will be shown in
the following sales analysis that the historical use of this site as the Montana State University-Montana
The Dictionary of Real Estate Appraisal, 5th ed., s.v. "highest and best use".1
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Agricultural Experiment Station site with PLI zoning is no longer the highest and best use of this property. I
spoke at length with Tom Rogers from the City of Bozeman Planning Department about the subjects location
and surrounding uses and because of these characteristics several of the development classifications can
reasonably be eliminated from consideration. The first check when requesting a zoning change is to consider
the 20 Year Land Use plan for a property and determine if these are any zoning overlays. In the 20 Year Land
Use Plan for the City of Bozeman this site is still ear marked to have PLI zoning and they do not expect a
change in use because this site is being used by Montana State University. Also, there are no zoning overlays
on this land. However the planning department has to entertain amendments to their growth policy on a regular
basis.
I first considered the reasonableness of this property being developed with single family residential
home sites with the R1 or R2 zoning ordinance. These zoning ordinance certainly exist within in this
neighborhood however it is more likely a multi family, office or other commercial use is more probable at this
location which is generally at the intersection of 19th Avenue and College Street at the northwestern edge of
the Montana State University Campus. There are other areas in and around this neighborhood that are much
better suited for a residential use and therefore I have eliminated residential use from consideration.
Agricultural use can also reasonably be eliminated from consideration merely based upon the size and
location of this site. Even though this site currently supports the Montana State University-Montana
Agricultural Experiment Station this is for educational purposes associated with the University.
The City of Bozeman has public tennis courts, softball fields, swimming pools and other recreational
facilities dispersed thoughout the city limits and reasonably this use can also be eliminated from consideration.
This location is not suited for industrial use (light or heavy) as land values in this neighborhood are to
high to justify an industrial use at this location. Therefore industrial uses can also be eliminated from
consideration.
This leaves commercial use and multi family use as the most reasonable and legally permissible uses of
this land as if it were vacant. Both commercial and multi family uses are prevalent throughout this
neighborhood and in the immediate vicinity of the subject property. I found through my research it is likely
a commercial use (i.e. office or retail) would have a relatively long absorption period at this location and at the
outset it appears a multi family use with an R-3 or R-4 zoning district would be better suited for this location.
It is no secret that Montana State University is continually expanding, as well as its student body, and finding
housing in direct proximity to the campus has been a challenge for many years. A multi family use at this
location would certainly help this seemingly never ending need.
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Physic ally Po ssible
Properties in this neighborhood are improved with a mix of residential and commercial uses. Most sites
are improved to the maximum density permitted by zoning while considering parking regulations and other
restrictions.
The subject property is 76.00 acres ( larger parcel area) and has significant frontage on 19th Avenue
and Garfield Street. This site has generally level topography and is rectangular in its shape which eliminates
higher development cost often associated with sloping, irregular shaped sites. This property can be accessed
from its SEC off of 19th Avenue or its NWC from Garfield Street. All public utilities are readily available.
Soil conditions in this neighborhood have proven adequate for development of all property types. Based upon
the physical characteristics of the subject property and the existing properties in this neighborhood, the most
reasonable and legally permissible uses of the subject property (commercial or multi family use) would be
physically possible.
Financ ially Fe asible
Bozeman is experiencing growth again, particularly in the past 4 or 5 years, and much of the new growth is
residential development. In terms of residential development this site is very well located near the intersection of
19th Avenue and College Street and at the northwestern edge of the Montana State University Campus. From this
location there is good access to Bozeman's downtown district and the significant retail development along North
19th Avenue. Many nearby streets are significant traffic streets that provide good access throughout Bozeman.
Properties in this neighborhood historically are very marketable and well received in this community.
To develop the subject site into numerous commercial lots for either a retail or office use may prove to be
financially difficult. I have spoken with a number of real estate professionals in this community and they were
generally of the opinion that a commercial use at this location wether it be retail or office use would most likely have
a longer absorption period than a multi family use. There are a number of established retail and office uses
surrounding the Montana State University Campus that have existed for many years. There is newer retail and office
use directly north and northwest of the subject property however this land has been slower to develop because the
demand for these uses is not as strong at this location as compared to other areas of Bozeman. Because there is such
high demand for high density residential development, i.e. apartments, in Bozeman, let alone the subjects location
in direct proximity to campus, most likely a residential development could absorb the development costs and impact
fees more quickly and prove to be a feasible use of this site.
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Maxim ally Produc tive
The use that conforms with the requirements of the first three tests and will provide maximum
productivity of the subject site, as if vacant, is most likely for development with a high density residential use.
In concluding to the highest and best use of a property the physical use, the timing of the use and the
user’s/most probable buyers needs to be defined. It is my opinion the maximally productive use of this site
is for development with a high density residential use that would be consistent with the nearby uses in this
neighborhood. In terms of the most likely buyer and user of this site there are two options. An end-user sale
is a sale to a buyer who intends to immediately utilize the property to its highest and best use. A speculative-
investor sale is the sale to a buyer who purchases the property with no intention of immediately utilizing the
property to its highest and best use. It is my opinion the subject site would be purchased as an end user sale
and would be immediately utilized to its highest and best use as a high density residential development
assuming the appropriate changes could be made to its current zoning.
HIGHEST AND BEST USE OF THE PROPERTY AS IMPROVED
Le g ally Pe rm issible
The subject property appears to meet all PLI zoning ordinance requirements. It was confirmed with
Tom Rogers that the current use, Montana State University-Montana Agricultural Experiment Station, is a
legally permitted use in the PLI zoning ordinance. Therefore the current use of the subject property is a
legally permissible use as it conforms to the current zoning ordinance.
Physic ally Possible
The current use of the subject property which is associated with Montana State University is
obviously physically possible. This site serves an educational purpose for the University and as I understand
has served well with this use for many years.
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Financ ially Feasible
The subject site currently supports the Marsh Laboratory and various other buildings that are
primarily located along the south boundary. For the most part the northern 75% of this site is unimproved
but serves as the Montana Agricultural Experiment Station site for Montana State University. Even though
this land is being utilized for educational purposes it is obviously under utilized and not being used to its
highest and best use. I have spoken with several realtors, real estate appraisers and developers who are very
familiar with this neighborhood and undeniably if a zoning change could be made a high density residential
development at this location would be well received. To correctly test the financial feasibility of this property
"as improved" the market rent, operating expenses and an appropriate capitalization rate should be
determined for the existing buildings so an indication of value via the Income Approach can be compared
to the vacant land value. However, as previously explained there are few building improvements on this
property and the only building that would command a significant rent is the Marsh Laboratory. As shown
in the following land sales analysis this property "as if" vacant is worth far more than it could ever be as
currently improved with its few building improvements.
Maxim ally Produc tive
Ultimately the highest and best use of this property is no longer in support of the Montana
Agricultural Experiment Station as associated with Montana State University. A higher and better use would
be to raze the existing building improvements and make way for new development that would most likely
be a high density residential use.
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PROPERTY VALUATION, BEFORE
In the Sales Comparison Approach an indication of value is derived by comparing the relative utility
and desirability of the subject site with comparable properties that have recently sold or are currently listed
for sale. Basic to this approach is the principle of substitution which states that "when a property is
replaceable in the market, its value tends to be set by the price required to acquire an equally desirable
substitute property."
In this appraisal report the land is valued however the improvements are not included therefore the
Cost and Income Approaches to value are not applicable.
SITE VALUATION
The method employed to value the site as if vacant and available for sale is the Sales Comparison
Approach. An investigation of the market revealed several sales and listings indicative of what a well-
informed buyer or seller would consider in forming an opinion of value. Four sales were chosen as being
most appropriate to compare against the subject site. Descriptive data and photographs of these comparables
are contained in the addenda.
Adjustm e nts
All comparables differ somewhat from each other, and from the subject in various ways. The usual
differences are for cash equivalency, market conditions, location, and a number of physical characteristics.
Many of these factors, in varying degrees, are applicable in the appraisal of the subject property. When
dissimilarities are found in comparable properties, they are adjusted for by adding to the comparable price
when the dissimilar factor is inferior to the same factor found in the subject property. Likewise, a minus
adjustment should be made when the comparable sale has a factor which is superior to that found in the
subject property. The sale properties, then, are adjusted to the subject property.
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However, in the market it is often difficult and sometimes impossible to accurately isolate a given
factor. In short, one very seldom finds sales which are identical in all respects but one, and thus is able to
prove conclusively the value, or lack of it, for any one factor due to a difference in sale price. Often, there
are plus and minus factors which offset each other. Thus, the use of subjective judgment, to some degree,
may be exercised.
Nevertheless, the differences in values are real and adjustments based on as much fact as can be
found, will be made. Then, the appraiser may call upon his experience to make subjective judgments.
Pro pe rty Rig hts
Each of the sales involve fee simple property rights. As a result, no property rights adjustments were
warranted.
Financ ing :
All Sales were cash to the seller or on terms considered cash equivalent, and no adjustments were
required.
Co nditio ns o f Sale :
No non-market conditions motivating the buyer or seller involved in the transactions are known,
therefore no adjustments are required.
Expe nditure s Im m e diate ly Afte r Sale :
None of the sales required expenditures immediately after sale, and therefore no adjustments are
required. If expenditures were verified they were typically associated with annexation into the city limits.
Marke t Co nditio ns:
A market conditions (time adjustment) is required to bring all comparable sale properties up to the
effective date of the appraisal report which is March 3, 2016. Bozeman was experiencing significant decline
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in real estate values when the local and national recession was in affect. Since 2011 real estate values have
rebounded in this market, and have become particularly strong since 2013, with new projects being
developed again. Demand for unimproved land is now out weighing its supply.
I will utilize four comparables in the following analysis with two sales closing in 2012, one sale
closing in 2015, and one sale closing in 2016. Each of the developers, real estate agents and real estate
appraisers I interviewed in this market were of the opinion market conditions are improving and they are
currently strong in Bozeman with more demand than supply of vacant land. The persons I interviewed were
consistently of the opinion that value of unimproved sites, particularly those with a highest and best use of
multi family, have conservatively appreciated 20% since 2013 and at least 30% since 2012.
To provide some support for the information given to me in the aforementioned interviews I have
completed a paired sales analysis of two sales I have in file that are best suited for multi family development.
The first property sold on February 11, 2011 at $1.15/SF and the other sale sold on June 16, 2014 at
$1.95/SF. Both of these sales are very similar in terms of there location and physical aspects, and making the
assumption there would be no adjustment necessary for the difference in size, this paired sales analysis
indicates values have increased 69.57% over the 40 months between these sales which equates to an
appreciation rate of 1.74% per month or 20.87% per year. This at least provides some market data support
for the information provided to me during my market interviews. I have considered the information given
to me during my interviews and the paired sales analysis and will adjust sale No. 1 and No. 2 upward by 30%
for market conditions. Comparable No. 3 and No 4 sold within 6 months of the effective date of this
appraisal report and in my opinion are indicative of current market value and will not be adjusted for market
conditions.
Re m aining Adjustm e nts:
The remaining adjustments will be explained in a qualitative analysis which is an effective technique
that recognizes the inefficiencies of a real estate market and the difficulty in expressing the adjustments with
mathematical precision. The adjustments included in the qualitative analysis are location, size, access,
topography, utilities, shape and use. The land sales adjustment grid can be seen on the following page.
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LAND SALE LOCATION MAP
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LAND SALE ADJUSTMENT GRID
SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Sale Price $2,900,000 $648,233 $3,564,000 $3,866,137
Size (acre)76.00 78.00 20.00 37.05 53.77
Price/AC $37,179 $32,412 $96,194 $71,901
Date of Sale 8/10/12 6/27/12 9/10/15 1/6/16
Market Adjustment Plus 30%Plus 30%-0--0-
Adjusted Price $3,770,000 $842,703 $3,564,000 $3,866,137
Adjusted Price/AC $48,333 $42,135 $96,194 $71,901
Location SWC of 19th Ave
and Garfield Street
19th Ave and Graf
Street
19th Ave and
Southbridge Dr.
11th Ave and
Baxter Lane, just
south of I-90
Valley Center and
West lake Rd, just
south of I-90
Comparability Similar Similar Superior Superior
Size (acre) 76.00 78.00 20.00 37.05 53.77
Comparability Similar Superior Similar Similar
Access 19th Avenue &
Garfield Street 19th Avenue 19th Avenue Baxter Lane & 11th
Avenue
Valley Center &
North 27th Ave.
Comparability Similar Similar Similar Similar
Topography Level Level Level Level Level
Comparability Similar Similar Similar Similar
Shape Rectangular Rectangular Rectangular Slightly Irregular Slightly Irregular
Comparability Similar Similar Similar Similar
Utilities Adjacent to site North of site Adjacent to site On site On site
Comparability Slightly Inferior Similar Superior Superior
Highest & Best Use Multi Family
Residential
Subdivision or Multi
Family
Residential
Subdivision Commercial Commercial or
Residential
Comparability Similar Similar Superior Superior
Overall Comparability Similar Similar Superior Superior
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Sales Analysis:
The subject site is a rectangular shape site that is located at the southwest corner of 19th Avenue and
Garfield Street. This 76 acre site supports the Marsh Laboratory and is commonly known as the Montana State
University-Montana Agricultural Experiment Station site. This site has level topography and can be accessed
from 19th Avenue near its southeast corner or Garfield Street near its northwest corner. City services are
adjacent to this site as much of the surrounding land is already developed. The subject site is currently zoned
PLI however as previously discussed in the highest and best use analysis this site is best suited for a multi family
development.
Sale No. 1 is a 78.00 acre site that sold on August 10, 2012 for $2,900,000 or $37,179/AC. After
adjusting for market conditions this comparable indicates a price of $48,333/AC. Comparable No. 1 is located
directly south of the subject property on the east side of 19th Avenue. Comparable No.1 has similar access,
topography, shape and use and its only inferior aspect is the city utilities were located north of this site at the
time of sale. Otherwise, Comparable No. 1 is considered to be quite similar when compared to the subject
property.
Comparable No. 2 is a 20.00 acre site that sold on June 27, 2012 at $648,233 or $ 32,412/AC. After
adjusting for market conditions this comparable indicates a price of $42,135/AC. Comparable No. 2 is also
located just south of the subject property and on the west side of 19th Avenue. Comparable No. 2 has similar
access, topography, shape, utilities and use. The only superior aspect of comparable No. 2 is its smaller size
otherwise this sale is also considered to be quite similar when compared to the subject property.
Comparable No. 3 is a 37.05 acre site that sold on September 10, 2015 at $3,564,000 or $96,194/AC.
Comparable No. 3 is located at the intersection of Baxter Lane and 11th Avenue and just south of Interstate
90 which is clearly a superior location. Comparable No. 3 is similar in size, access, topography and shape.
Comparable No 3 has superior utilities and is best suited for a commercial use, an coupled with its superior
location, is considered to be superior when compares to the subject property.
Comparable No. 4 is a 53.77 acre site that sold on January 6, 2016 at $3,866,137 or $71,901/AC.
Comparable No. 4 is located at the intersection of Valley Center Road and North 27th Avenue and just south
of Interstate 90 which is clearly a superior location. Comparable No. 4 is similar in size, access, topography and
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shape. However, Comparable No. 4 has superior utilities and is best suited for a mixed use development with
commercial and residential. These fearures coupled with this sales superior location makes Comparable No.
4 superior to the subject property.
The value indications derived from the comparables are reconciled into a single value indication by
arranging the four comparables in an array relative to the subject.
BRACKETING THE SUBJECT PROPERTY
Comparable Adjusted Price
Per AC
Overall
Comparability
2 $42,135 Similar
1 $48,333 Similar
Subject Property
4 $71,901 Superior
3 $96,194 Superior
A shown in the chart above clearly the most similar comparables are Sale No. 1 and Sale No. 2. Both
of these sales are considered to be very similar when compared to the subject property with the only discerning
difference being the size of Comparable No.2 at 20 acres. After analyzing the size and the other physical
characteristics it appears that site size does not affect market value as much as location and zoning which
ultimately dictate the highest and best use of the sites. Therefore, little emphasis is being given to the difference
in size of the sales when compared to the subject property. Not only do Comparable No.1 and No. 2 have the
same use but they are both located just south of the subject property. These sales show a value range of $42,135
to $48,333/AC.
Comparable No. 3 and No. 4 are both very recent sales of land that is best suited for commercial
development. Sale No. 3 and No. 4 are similar to the subject property in many of their physical aspects however
their superior location in proximity to Interstate 90 and their commercial zoning/use makes these sales superior
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to the subject property.
Considering this information and giving most emphasis to Comparable No. 1 and No. 2 it is my
opinion the subject site has a current market value of $45,000/AC.
76.00 Acres x $45,000/AC = $3,420,000
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236
MAP DEPICTING THE EASEMENT AREA
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SCOPE OF THE PROJECT AND ITS AFFECT
ON THE SUBJECT SITE
The intent of this project is to impose a utility easement (sewer main easement) along the south
boundary of the subject property. As shown on the facing page the proposed sewer easement is 1.733 acres and
crosses the entire south boundary beginning at 19th Avenue and extends to the southwest corner. In the
addenda is a description of the land that will be imposed with the sewer main easement. Also aerial photographs
provided by DOWL HKM that depict the sewer main easement as it crosses through the subject property and
Parcel 1, which is also part of this same project, are included in the addenda as well.
This appraisal assignment address a partial acquisition of the subject property which I assume is
regulated by the State Rule. The following calculations and conclusions are made under the assumption that the
State Rule is applicable to this appraisal assignment.
Reportedly the current owner of this property, State of Montana, has no issues or concerns with this
project. Tony Becken-Gaddo informed the facilities manager, Dan Stevenson, that I would be on site on March
3, 2016 to complete my property inspection and take my photographs. Mr. Stevenson did not meet me for my
inspection.
At the time of my site inspection the subject property was not staked so the exact boundary of the
proposed easement was not located. Prior to my site inspection I spoke with Tony Becken-Gaddo and he
explained any fencing that may be impacted by this project would be repaired as part of the project. The only
asphalt and concrete that might be impacted by the project is near the southeast corner at the access from 19th
Avenue. It does not appear the concrete or asphalt will be impacted, however, as Tony Becken-Gaddo and I
discussed, if there is any impact qto these items they will also be repaired or replaced as part of the project. It
does not appear any trees on this site will be impacted by the project. The one item that will most likely be
impacted by the project are the metal gates which I have addressed as a Cost to Cure item later in this report.
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Value o f the Ease m e nt
Tony Becken-Gaddo provided me a copy of a sample public utility easement that is similar to the one
that will be imposed on the subject site. Since this new easement will be for a sewer main it is my opinion the
property owner will loose most of their property rights or 95% of their rights in the easement area once it is in
place. The proposed sewer main easement will be 1.733 acres. Land value was estimated earlier in this appraisal
report at $45,000/AC. Therefore, the value of the easement area is as follows:
$45,000/AC x 1.73 AC x 95% = $73,958
Value o f the Re m ainde r, Be fo re
The value of the remainder before is the value of the larger parcel before less the value of the easement
as part of the whole before, which calculates as follows:
Total Value Before:$3,420,000
Total Value of the Easement: $ 73,958
Value of the Remainder, Before: $3,346,042
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken near the southwest corner and
looking east along the easement area.
March 3, 2016 by J. Michael Joki, MAI, SRA.
Photograph taken near the center of the site and
looking east along the easement area and towards 19th Ave.
March 3, 2016 by J. Michael Joki, MAI, SRA.
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SUBJECT PROPERTY PHOTOGRAPHS
Metal gate near the southwest corner that will be
impacted by the project.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
Metal gate near the southeast corner
that will be impacted by the project.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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SUBJECT PROPERTY PHOTOGRAPHS
Photograph taken near Marsh Laboratory and
looking east towards 19th Avenue.
Photograph taken March 3, 2016 by J. Michael Joki, MAI, SRA.
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IDENTIFICATION OF THE SITE, AFTER
The use of the subject site is essentially the same in the after situation, best suited for multi family
development, except a sewer main easement will be imposed along the entire south boundary that is 1.73 acres in size.
SITE DESCRIPTION AFTER IMPOSITION OF THE EASEMENT
After this project is completed the larger parcel area remains at 76.00 acres. A new easement for a sewer
main of 1.73 acres will be imposed along the south property boundary. The property owner will lose most of
their property rights within this new easement area and will have very little or 5% of their rights remaining once
the sewer main easement is in place. After the project is completed the size, access, topography, shape and use
will all remain the same.
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HIGHEST AND BEST USE AFTER
"The reasonably probable and legal use of vacant land or an improved property that is physically
possible, appropriately supported, financially feasible and that results in the highest value. The
four criteria the highest and best use must meet are legal permissibility, physical possibility,
financial feasibility, and maximum productivity. Alternatively, the probable use of land or
improved property - specific with respect to user and timing of the use - that is adequately
supported and results in the highest present value."2
The definition above applies to the highest and best use of vacant land or improved property. 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.
Quite often in estimating the highest and best use of land, the appraiser is controlled by governmental
regulations. These controls are generally zoning ordinance, parking requirements and building codes. Also, in the
estimate of highest and best use, one must recognize the attitude of typical investors in the marketplace.
Real estate will usually fall into certain definite development patterns, and their uses can be classified as:
residential, agricultural, recreational, industrial, commercial and public use. In valuing the highest and best use of
the land both as if vacant and improved, the following criteria must be met. 1) legally permissible, 2) physically
possible, 3) financially feasible, and 4) maximally productive.
The Dictionary of Real Estate Appraisal, 5th ed., s.v. "highest and best use".2
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HIGHEST AND BEST USE OF THE PROPERTY AS VACANT
Le g ally Pe rm issible
The subject property is currently zoned PLI ( Public Lands and Institution District) which allows for a
wide range of uses. A number of the allowed uses were previously described in the zoning section and a copy
of the zoning ordnance is included in the addenda. The aforementioned uses are allowed as long as the property
is being used for the benefit of the public. Because I have been asked to estimate the current market value of the
subject property, which is based on its highest and best use, I will not value this property as public land and
institutions ground. Not only is the PLI not the highest and best use of this property but PLI zoned land sales
are not available as PLI land does not typically sell on the open market.
I have been asked to estimate the current market value of the subject property and it will be shown in the
following sales analysis that the historical use of this site as the Montana State University-Montana Agricultural
Experiment Station site with PLI zoning is no longer the highest and best use of this property. I spoke at length
with Tom Rogers from the City of Bozeman Planning Department about the subjects location and surrounding
uses and because of these characteristics several of the development classifications can reasonably be eliminated
from consideration. The first check when requesting a zoning change is to consider the 20 Year Land Use plan
for a property and determine if these are any zoning overlays. In the 20 Year Land Use Plan for the City of
Bozeman this site is still ear marked to have PLI zoning and they do not expect a change in use because this site
is being used by Montana State University. Also, there are no zoning overlays on this land. However the planning
department has to entertain amendments to their growth policy on a regular basis.
I first considered the reasonable uses of this property being developed with single family residential
home sites with the R1 or R2 zoning ordinance. These zoning ordinance certainly exist within in this
neighborhood however it is more likely a multi family, office or other commercial use is more probable at this
location which is generally at the intersection of 19th Avenue and College Street at the northwestern edge of the
Montana State University Campus. There are other areas in and around this neighborhood that are much better
suited for a residential use and therefore I have eliminated residential use from consideration.
Agricultural use can also reasonably be eliminated from consideration merely based upon the size and
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location of this site. Even though this site currently supports the Montana State University-Montana Agricultural
Experiment Station this is for educational purposes associated with the University.
The City of Bozeman has public tennis courts, softball fields, swimming pools and other recreational
facilities dispersed thoughout the city limits and reasonably this use can also be eliminated from consideration.
This location is not suited for industrial use (light or heavy) as land values in this neighborhood are to high
to justify an industrial use at this location. Therefore industrial uses can also be eliminated from consideration.
This leaves commercial use and multi family use as the most reasonable and legally permissible uses of
this land as if it were vacant. Both commercial and multi family uses are prevalent throughout this neighborhood
and in the immediate vicinity of the subject property. I found through my research it is likely a commercial use
(i.e. office or retail) would have a relatively long absorption period at this location and at the outset it appears a
multi family use with an R-3 or R-4 zoning district would be better suited for this location. It is no secret that
Montana State University is continually expanding, as well as its student body, and finding housing in direct
proximity to the campus has been a challenge for many years. A multi family use at this location would certainly
help this seemingly never ending need.
Physic ally Po ssible
Properties in this neighborhood are improved with a mix of residential and commercial uses. Most sites
are improved to the maximum density permitted by zoning while considering parking regulations and other
restrictions.
The subject property is 76.00 acres ( larger parcel area) and has significant frontage on 19th Avenue and
Garfield Street. This site has generally level topography and is rectangular in its shape which eliminates higher
development cost often associated with sloping, irregular shaped sites. This property can be accessed from its
SEC off of 19th Avenue or its NWC from Garfield Street. All public utilities are readily available. Soil
conditions in this neighborhood have proven adequate for development of all property types. Based upon the
physical characteristics of the subject property and the existing properties in this neighborhood, the most
reasonable and legally permissible uses of the subject property (commercial or multi family use) would be
physically possible.
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Financ ially Fe asible
Bozeman is experiencing growth again, particularly in the past 4 or 5 years, and much of the new growth is
residential development. In terms of residential development this site is very well located near the intersection of 19th
Avenue and College Street and at the northwestern edge of the Montana State University Campus. From this location
there is good access to Bozeman's downtown district and the significant retail development along North 19th
Avenue. Many nearby streets are significant traffic streets that provide good access throughout Bozeman. Properties
in this neighborhood historically are very marketable and well received in this community.
To develop the subject site into numerous commercial lots for either a retail or office use may prove to be
financially difficult. I have spoken with a number of real estate professionals in this community and they were generally
of the opinion that a commercial use at this location wether it be retail or office use would most likely have a longer
absorption period than a multi family use. There are a number of established retail and office uses surrounding the
Montana State University Campus that have existed for many years. There is newer retail and office use directly north
and northwest of the subject property however this land has been slower to develop because the demand for these
uses is not as strong at this location as compared to other areas of Bozeman. Because there is such high demand for
high density residential development, i.e. apartments, in Bozeman, let alone the subjects location in direct proximity
to campus, most likely a residential development could absorb the development costs and impact fees more quickly
and prove to be a feasible use of this site.
Maxim ally Produc tive
The use that conforms with the requirements of the first three tests and will provide maximum
productivity of the subject site, as if vacant, is most likely for development with a high density residential use.
In concluding to the highest and best use of a property the physical use, the timing of the use and the
user’s/most probable buyers needs to be defined. It is my opinion the maximally productive use of this site is
for development with a high density residential use that would be consistent with the nearby uses in this
neighborhood. In terms of the most likely buyer and user of this site there are two options. An end-user sale
is a sale to a buyer who intends to immediately utilize the property to its highest and best use. A speculative-
investor sale is the sale to a buyer who purchases the property with no intention of immediately utilizing the
property to its highest and best use. It is my opinion the subject site would be purchased as an end user sale
and would be immediately utilized to its highest and best use as a high density residential development assuming
the appropriate changes could be made to its current zoning.
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HIGHEST AND BEST USE OF THE PROPERTY AS IMPROVED
Le g ally Pe rm issible
The subject property appears to meet all PLI zoning ordinance requirements. It was confirmed with
Tom Rogers that the current use, Montana State University-Montana Agricultural Experiment Station, is a
legally permitted use in the PLI zoning ordinance. Therefore the current use of the subject property is a legally
permissible use as it conforms to the current zoning ordinance.
Physic ally Possible
The current use of the subject property which is associated with Montana State University is obviously
physically possible. This site serves an educational purpose for the University and as I understand has served
well with this use for many years.
Financ ially Feasible
The subject site currently supports the Marsh Laboratory and various other buildings that are primarily
located along the south boundary. For the most part the northern 75% of this site is unimproved but serves
as the Montana Agricultural Experiment Station site for Montana State University. Even though this land is
being utilized for educational purposes it is obviously under utilized and not being used to its highest and best
use. I have spoken with several realtors, real estate appraisers and developers who are very familiar with this
neighborhood and undeniably if a zoning change could be made a high density residential development at this
location would be well received. To correctly test the financial feasibility of this property "as improved" the
market rent, operating expenses and an appropriate capitalization rate should be determined for the existing
buildings so an indication of value via the Income Approach can be compared to the vacant land value.
However, as previously explained there are few building improvements on this property and the only building
that would command a significant rent is the Marsh Laboratory. As shown in the following land sales analysis
this property "as if" vacant is worth far more than it could ever be as currently improved with its few building
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improvements.
Maxim ally Produc tive
Ultimately the highest and best use of this property is no longer in support of the Montana Agricultural
Experiment Station as associated with Montana State University. A higher and better use would be to raze the
existing building improvements and make way for new development that would most likely be a high density
residential use.
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PROPERTY VALUATION, AFTER
In the Sales Comparison Approach an indication of value is derived by comparing the relative utility and
desirability of the subject site with comparable properties that have recently sold or are currently listed for sale.
Basic to this approach is the principle of substitution which states that "when a property is replaceable in the
market, its value tends to be set by the price required to acquire an equally desirable substitute property."
In this appraisal report the land is valued however the improvements are not included therefore the Cost
and Income Approaches to value are not applicable.
SITE VALUATION
The method employed to value the site as if vacant and available for sale is the Sales Comparison
Approach. An investigation of the market revealed several sales and listings indicative of what a well-informed
buyer or seller would consider in forming an opinion of value. Four sales were chosen as being most appropriate
to compare against the subject site. Descriptive data and photographs of these comparables are contained in
the addenda.
Adjustm e nts
All comparables differ somewhat from each other, and from the subject in various ways. The usual
differences are for cash equivalency, market conditions, location, and a number of physical characteristics.
Many of these factors, in varying degrees, are applicable in the appraisal of the subject property. When
dissimilarities are found in comparable properties, they are adjusted for by adding to the comparable price when
the dissimilar factor is inferior to the same factor found in the subject property. Likewise, a minus adjustment
should be made when the comparable sale has a factor which is superior to that found in the subject property.
The sale properties, then, are adjusted to the subject property.
However, in the market it is often difficult and sometimes impossible to accurately isolate a given factor.
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In short, one very seldom finds sales which are identical in all respects but one, and thus is able to prove
conclusively the value, or lack of it, for any one factor due to a difference in sale price. Often, there are plus
and minus factors which offset each other. Thus, the use of subjective judgment, to some degree, may be
exercised.
Nevertheless, the differences in values are real and adjustments based on as much fact as can be found,
will be made. Then, the appraiser may call upon his experience to make subjective judgments.
Pro pe rty Rig hts
Each of the sales involve fee simple property rights. As a result, no property rights adjustments were
warranted.
Financ ing :
All Sales were cash to the seller or on terms considered cash equivalent, and no adjustments were
required.
Co nditio ns o f Sale :
No non-market conditions motivating the buyer or seller involved in the transactions are known,
therefore no adjustments are required.
Expe nditure s Im m e diate ly Afte r Sale :
None of the sales required expenditures immediately after sale, and therefore no adjustments are
required. If expenditures were verified they were typically associated with annexation into the city limits.
Marke t Co nditio ns:
A market conditions (time adjustment) is required to bring all comparable sale properties up to the
effective date of the appraisal report which is March 3, 2016. Bozeman was experiencing significant decline in
real estate values when the local and national recession was in affect. Since 2011 real estate values have
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rebounded in this market, and have become particularly strong since 2013, with new projects being developed
again. Demand for unimproved land is now out weighing its supply.
I will utilize four comparables in the following analysis with two sales closing in 2012, one sale closing
in 2015, and one sale closing in 2016. Each of the developers, real estate agents and real estate appraisers I
interviewed in this market were of the opinion market conditions are improving and they are currently strong
in Bozeman with more demand than supply of vacant land. The persons I interviewed were consistently of the
opinion that value of unimproved sites, particularly those with a highest and best use of multi family, have
conservatively appreciated 20% since 2013 and at least 30% since 2012.
To provide some support for the information given to me in the aforementioned interviews I have
completed a paired sales analysis of two sales I have in file that are best suited for multi family development.
The first property sold on February 11, 2011 at $1.15/SF and the other sale sold on June 16, 2014 at $1.95/SF.
Both of these sales are very similar in terms of there location and physical aspects, and making the assumption
there would be no adjustment necessary for the difference in size, this paired sales analysis indicates values have
increased 69.57% over the 40 months between these sales which equates to an appreciation rate of 1.74% per
month or 20.87% per year. This at least provides some market data support for the information provided to me
during my market interviews. I have considered the information given to me during my interviews and the
paired sales analysis and will adjust sale No. 1 and No. 2 upward by 30% for market conditions. Comparable
No. 3 and No 4 sold within 6 months of the effective date of this appraisal report and in my opinion are
indicative of current market value and will not be adjusted for market conditions.
Re m aining Adjustm e nts:
The remaining adjustments will be explained in a qualitative analysis which is an effective technique that
recognizes the inefficiencies of a real estate market and the difficulty in expressing the adjustments with
mathematical precision. The adjustments included in the qualitative analysis are location, size, access,
topography, utilities, shape and use. The land sales adjustment grid can be seen on the following page.
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LAND SALE LOCATION MAP
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LAND SALE ADJUSTMENT GRID
SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Sale Price $2,900,000 $648,233 $3,564,000 $3,866,137
Size (acre)76.00 78.00 20.00 37.05 53.77
Price/AC $37,179 $32,412 $96,194 $71,901
Date of Sale 8/10/12 6/27/12 9/10/15 1/6/16
Market Adjustment Plus 30%Plus 30%-0--0-
Adjusted Price $3,770,000 $842,703 $3,564,000 $3,866,137
Adjusted Price/AC $48,333 $42,135 $96,194 $71,901
Location SWC of 19th Ave
and Garfield Street
19th Ave and Graf
Street
19th Ave and
Southbridge Dr.
11th Ave and
Baxter Lane, just
south of I-90
Valley Center and
West lake Rd, just
south of I-90
Comparability Similar Similar Superior Superior
Size (acre) 76.00 78.00 20.00 37.05 53.77
Comparability Similar Superior Similar Similar
Access 19th Avenue &
Garfield Street 19th Avenue 19th Avenue Baxter Lane & 11th
Avenue
Valley Center &
North 27th Ave.
Comparability Similar Similar Similar Similar
Topography Level Level Level Level Level
Comparability Similar Similar Similar Similar
Shape Rectangular Rectangular Rectangular Slightly Irregular Slightly Irregular
Comparability Similar Similar Similar Similar
Utilities Adjacent to site North of site Adjacent to site On site On site
Comparability Slightly Inferior Similar Superior Superior
Highest & Best Use Multi Family
Residential
Subdivision or Multi
Family
Residential
Subdivision Commercial Commercial or
Residential
Comparability Similar Similar Superior Superior
Overall Comparability Similar Similar Superior Superior
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Sales Analysis:
The subject site is a rectangular shape site that is located at the southwest corner of 19th Avenue and
Garfield Street. This 76 acre site supports the Marsh Laboratory and is commonly known as the Montana State
University-Montana Agricultural Experiment Station site. This site has level topography and can be accessed
from 19th Avenue near its southeast corner or Garfield Street near its northwest corner. City services are
adjacent to this site as much of the surrounding land is already developed. The subject site is currently zoned
PLI however as previously discussed in the highest and best use analysis this site is best suited for a multi family
development.
Sale No. 1 is a 78.00 acre site that sold on August 10, 2012 for $2,900,000 or $37,179/AC. After
adjusting for market conditions this comparable indicates a price of $48,333/AC. Comparable No. 1 is located
directly south of the subject property on the east side of 19th Avenue. Comparable No.1 has similar access,
topography, shape and use and its only inferior aspect is the city utilities were located north of this site at the
time of sale. Otherwise, Comparable No. 1 is considered to be quite similar when compared to the subject
property.
Comparable No. 2 is a 20.00 acre site that sold on June 27, 2012 at $648,233 or $ 32,412/AC. After
adjusting for market conditions this comparable indicates a price of $42,135/AC. Comparable No. 2 is also
located just south of the subject property and on the west side of 19th Avenue. Comparable No. 2 has similar
access, topography, shape, utilities and use. The only superior aspect of comparable No. 2 is its smaller size
otherwise this sale is also considered to be quite similar when compared to the subject property.
Comparable No. 3 is a 37.05 acre site that sold on September 10, 2015 at $3,564,000 or $96,194/AC.
Comparable No. 3 is located at the intersection of Baxter Lane and 11th Avenue and just south of Interstate
90 which is clearly a superior location. Comparable No. 3 is similar in size, access, topography and shape.
Comparable No 3 has superior utilities and is best suited for a commercial use, an coupled with its superior
location, is considered to be superior when compares to the subject property.
Comparable No. 4 is a 53.77 acre site that sold on January 6, 2016 at $3,866,137 or $71,901/AC.
Comparable No. 4 is located at the intersection of Valley Center Road and North 27th Avenue and just south
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of Interstate 90 which is clearly a superior location. Comparable No. 4 is similar in size, access, topography and
shape. However, Comparable No. 4 has superior utilities and is best suited for a mixed use development with
commercial and residential. These features coupled with this sales superior location makes Comparable No. 4
superior to the subject property.
The value indications derived from the comparables are reconciled into a single value indication by
arranging the four comparables in an array relative to the subject.
BRACKETING THE SUBJECT PROPERTY
Comparable Adjusted Price
Per AC
Overall
Comparability
2 $42,135 Similar
1 $48,333 Similar
Subject Property
4 $71,901 Superior
3 $96,194 Superior
A shown in the chart above clearly the most similar comparables are Sale No. 1 and Sale No. 2. Both
of these sales are considered to be very similar when compared to the subject property with the only discerning
difference being the size of Comparable No.2 at 20 acres. After analyzing the size and the other physical
characteristics it appears that site size does not affect market value as much as location and zoning which
ultimately dictate the highest and best use of the sites. Therefore, little emphasis is being given to the difference
in size of the sales when compared to the subject property. Not only do Comparable No.1 and No. 2 have the
same use but they are both located just south of the subject property. These sales show a value range of $42,135
to $48,333/AC.
Comparable No. 3 and No. 4 are both very recent sales of land that is best suited for commercial
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development. Sale No. 3 and No. 4 are similar to the subject property in many of their physical aspects however
their superior location in proximity to Interstate 90 and their commercial zoning/use makes these sales superior
to the subject property. Considering this information and giving most emphasis to Comparable No. 1 and No.
2 it is my opinion the subject site has a current market value of $45,000/AC.
After this project is complete 1.73 acres will be encumbered with the sewer main easement. It is my
opinion the property owner will have little or 5% of their property rights remaining in the easement area.
Therefore, land value after the project is as follows.
74.27/AC x $45,000/AC = $3,342,150
New Easement Area 1.73 AC x $45,000/AC x 5% =$3,892
Total = $3,346,042
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DEPRECIATION TO CURRENT FAIR MARKET VALUE
Depreciation to current fair market value is calculated by subtracting the estimated market value of the
subject property after the imposition of the easement from the value of the remainder, before. This calculates
as follows:
$3,346,042 - $3,346,042,= $0
The above calculation shows there is no depreciation to the current fair market value of this site.
Co st to Cure :
As previously explained there are two metal gates that will be impacted by this easement project. The gate
closest to the SWC is comprised of a 6 rail 12' gate, and another 6 rail 6' gate. There is approximately 10 lineal
feet of 3 panel, wood slat fencing on either side of the gates that may also be impacted. I have extracted costs for
these items from the Marshall and Swift Valuation Service Manual. The cost of the 12' metal gate is shown at
$145, the cost of the 6' gate is shown at $95, and the cost of the 10 LFof wood fencing is $15/ LF or $150. The
gate closest to the SEC is a 6 rail gate that is approximately 16' long. I have estimated there will be another 10
LF of 3 panel wood slat fencing impacted at this location as well. The cost of the 16' gate is shown at $180 and
again the cost of the wood fencing is $150. In total the cost of the metal gates and wood fencing is $720.
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Value o f the Re m ainde r as Cure d:
None
Re m aining De pre c iatio n o f the Fair Marke t Value :
None
Spe c ial Be ne fits:
None
J. Michael Joki, MAI, SRA
HELENA, MONTANA
69
261
RECAPULATION OF COMPENSATION
Value of the acquisition:$ 0
Site Improvements:$ 0
Temporary Construction Easement: $ 0
Sewer Main Easement: 1.73 acres x $45,000/AC x 95% $ 73,958
Depreciation of Fair Market Value: None $ 0
Cost to Cure: Metal Gates and Wood Fencing $ 720
Total Compensation as of March 3, 2016 $74,678
Compensation, rounded:$74,700
Total Compensation: $74,700
Le sse e Inte re st:
Not applicable
Le sso r Inte re st:
Not applicable
J. Michael Joki, MAI, SRA
HELENA, MONTANA
70
262
ADDENDA
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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