Fort Walton Beach Council agenda — 02-27-2007 workshop agenda — reading text

The Okaloosa County Property Appraiser states a total area of about 97, 989 square feet for the building improvements. The parcel also contains asphalt drives, poled lighting, and chain- link fencing. As we were asked to appraise the land value only, our appraisal does not include any valuation of the existing improvements.  13 FUTURE LAND USE/ ZONING: County/ Not Zoned. HIGHEST AND BEST USE: Residential Development. FINAL LAND VALUE: 2, 760, 000 ' ESTIMATED ANNUAL LEASE: 234, 600  14 SCOPE OF APPRAISAL The subject properties consist of three distinct parcels. We have been asked to provide answers to two questions regarding each parcel. First, we, have been asked to appraise the current market value of the land only of each of the subject parcels as stand~alone parcels. Secondly, we have been asked to. determine a reasonable annual lease rate for each of the three parcels, based on market land lease trends, as well as our opinions of market value for each parcel. In answering these two questions for each of the three parcels" we first examine the characteristics of the subject parcels through inspection, prImary public record source material, and interviews with some city employees familiar with the properties. We then conduct research on a regional and neighborhood basis to identify trends and factors that have an effect on property values within the subject neighborhood. Once these trends and factors are identified, we conduct a highest and best use analysis for each of the three subject properties. Upon determination of the land' s highest and best use, we research recent sales of similar, use land for direct comparison to the subject parcels, and/or their component parts. Based on our conclusion from the comparative sales analyses, we render an opinion of market value for the land only of each of the three subject parcels. Lastly, to answer the question of a reasonable annual market rent for each of the subject properties, we research land lease agreements within the region, arriving through comparative analysis at a market- supported rate of return for each of the subject properties. The expected fate of return is then applied to the estimated market value of each parcel of land to arrive at an opinion of annual rent for each of the subject properties.  15 PURPOSE OF APPRAISAL The purpose of this appraisal is to estimate the market value of the subject properties, as well as the annual rent 'of each of the three properties. The objective of this report is, to present the data and reasoning that the appraiser used to form the opinions of value. PROPERTY RIGHTS APPRAISED The property rights appraised are those of a fee simple estate. " Fee simple estate" has been defined as: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." 1 MARKET VALUE DEFINITION AND IMPLICATIONS The definition, and qualifications of this term as currently accepted by the, Lending Institutions to include such organizations as the Federal Home Loan Bank Board, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, and Federal Deposit Insurance Corporation are as follows: . The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: A. buyer and seller are typically motivated; B. both parties are well informed or well advised, and acting in what they consider their own best interests; C. a reasonable time is allowed for exposure in the open' market; D. payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and 1 Appraisal Institute, The Appraisal of Real Estate, 111h ed. ( Chicago: Appraisal Institute, 1996) 137.  16 E. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." 2 EXPOSURE TIME A brief definition of the term "exposure time" would be: The estimatedlength of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market." 3 Based on the sales found within this' report and .conversations with ,local market participants, the subject' s exposure time is estimated to be from six to twelve months. This exposure time assumes the sale to have been handled by a knowledgeable real estate broker familiar with the subject real estate market. MARKETING TIME A brief definition of the term " marketing time" would be: The time it takes an interest in real property to sell on the market subsequent to the date of an appraisaL" 4 Based on the sales found within this report, current listings and conversations with local market participants, the subject's marketing time is estimated to be from six to twelve months. This marketing time assumes the sale to be handled by a knowledgeable real estate broker familiar with the subject real estate market. It also assumes aggressive real estate sales tactics and readily available contacts active in the subject real estate market. The subject's marketing time is considered to be reflective of the exposure' time as little change is expected in the market. 2 Appraisal Institute, The Appraisal of Real Estate, 11th ed. ( Chicago: Appraisal Institute, 1996) 23. 3 Appraisal Institute, The Dictionary of Real Estate Appraisal, 3rd ed. ( Chicago: Appraisal Institute, 1993) 126. 4 Appraisal Institute, The Dictionary of Real Estate Appraisal, 3rd ed. ( Chicago: Appraisal Institute, 1993) 220.  17 IDENTIFI CATION INTENDED USER: City of Fort Walton Beach OWNER OF RECORD: City of Fort Walton Beach DATE OF APPRAISAL: January 11, 2007 DATE OF REP,ORT: February 9, 2007 PARCEL IDS: Parcel # 1- Portion of# 26- 18- 24- 0000- 0001- 0040; Parcel # 2 - All of# 26- 18- 24-0000- 0001- 0030 & portion of #26- 18- 24-0000- 0001- 0040. Parcel # 3 - Portion of #26- 18- 24-0000- 0001- 0040. LOCATION: North 8ide of Lewis Turner Boulevard between Roberts Boulevard and Willwall 8treet across from the Municipal Golf Course in Fort Walton Beach. ' ASSESSMENTS: The total assessed value of the two tax parcels that make up the three subject parcels is 6, 704, 314. This is allocated as $ 3, 975; 579 to. the' land and $ 2, 728, 735 to the improvements. Being owned by the City of Fort Walton Beach, none of ' the subject property is burdened with real estate tax., LEGAL R:EFERENCE: The deed is recorded in the Okaloosa County Registry of Deeds in O. R.Book 2663, Page 4937. HISTORY: The two parent parcels from which the three subject properties are derived were transferred to the City of Fort Walton Beach from the United 8tates of America on October 26, 2005, as recorded in O. R.Book 2663, Page 4937. In that document, a copy of which is found in the Addendum, the parent parcels are described as Tract A-943 and Tract A-944. The deed contains a building height restriction of 50 feet Above Ground Level (AGL), as well as the requirement  18 that all electromagnetic radiation devices be coordinated with the Eglin Spectrum Management Office. Although the Quit Claim Deed states a sales price of only $ 1, the Northwest Florida Daily News reported on . January 24, 2007, that $4, 000, 000 was paid. .' Parcel # 3 is under lease to the Northwest Florida- Fair Association, Inc. The lease agreement also allows limited use of parking areas located on Parcel # 1 during scheduled events. This lease, a copy of which is found in the Addendum, was initiated on December 29, 2005, to extend until December 31, 2008. The annual rent is $ 20, 00.0 paid in quarterly increments, as well as an additional 5% of gross recei-pts, to be paid at the end of each year. The Fair Association is acknowledged as the owner of all building improvements on the site and is also responsible for all expenses to the land for the term of the lease.  19 APPROACHES TO VALUE There are three ( 3) commonly accepted approaches to value: The Cost Approach, which is the estimation of the reproduction of a' property, less depreciation from deterioration and functional and economic obsolescence; the Sales Comparison Approach, which is estimating the value of a property by comparison with recent sales of si.milar or competitive properties in the market; the Income Approach, which is the estimation of value which the property's net earning power will support, based upon a capitalization of this net income. Contrary to that implied trom the terminology, all three are '~market" approaches. These approaches do not make value. They are merely tools in the hands of the appraiser, who must carefully apply each of the three approaches, and then make an analysis as to which is adapted to the purpose of the appraisal. The final estimate of each approach is then