Bee Branch Creek_Purchase of 540 E. 16th StreetMasterpiece on the Mississippi
Dubuque
All America City
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Bee Branch Creek Restoration Project, Purchase of 540 E. 16th Street
DATE: October 31, 2011
City Engineer Gus Psihoyos recommends the City Council establish the fair market
value of 540 E. 16th Street, owned by WP Investments, at the appraised value of
$68,000, and authorize the City Manager to commence negotiations to acquire the
property for the Bee Branch Creek Restoration Project. It is further recommended that
the City Council authorize the City Manager to acquire the property through eminent
domain if negotiations fail.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michel C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Gus Psihoyos, City Engineer
Masterpiece on the Mississippi
Dubuque
AII•America City
'
le!
2007
TO: Michael C. Van Milligen, City Manager
FROM: Gus Psihoyos, City Engineer
SUBJECT: Bee Branch Creek Restoration Project, Purchase of 540 E. 16th Street
DATE: October 24, 2011
INTRODUCTION
The purpose of this memo is to establish the fair market value of 540 E. 16th Street and
seek authorization for the City Manager to begin negotiations to acquire the property
required for the Bee Branch Creek Restoration Project. Further authorization is sought
to acquire the property through eminent domain proceedings should negotiations fail.
BACKGROUND
In December of 2010, the City Council authorized the City manager to begin the
process of acquiring 540 E. 16th Street for the Lower Bee Branch Creek Restoration
Project.
DISCUSSION
The City commissioned an appraisal of the property at 540 E. 16th Street legally
described as the East 1/2 of Lot 252 in East Dubuque No. 2 in Dubuque, Iowa. The
property owned by WP Investments was appraised at $68,000.00.
RECOMMENDATION
I recommend that the City establish the fair market value of 540 E. 16th Street at the
appraised value and that the City Manager begin negotiations with the property owner.
And should negotiations fail, I recommend that the City acquire the property through
eminent domain proceedings.
ACTION TO BE TAKEN
I respectfully request that the City Council adopt the attached resolution:
(1) Establishing the fair market value of the East 1/2 of Lot 252 in East Dubuque No.
2 and authorizing the City Manager to commence negotiations to acquire the
property; and
(2) Authorizing the City Manager to acquire the property through eminent domain if
negotiations fail.
Prepared by Deron Muehring, Civil Engineer 11
cc: Barry Lindahl, City Attorney
Jenny Larson, Budget Director
Deron Muehring, Civil Engineer
Attach.
2
RESOLUTION NO. 358 -11
ESTABLISHING THE FAIR MARKET VALUE AND AUTHORIZING THE
ACQUISITION BY EMINENT DOMAIN OF CERTAIN REAL PROPERTY OWNED BY
WP INVESTMENTS, LLC IN THE CITY OF DUBUQUE, IOWA
Whereas, the City of Dubuque (City) intends to acquire certain real property
owned by WP Investments, LLC (Owner), at 540 E. 16th Street legally described as
follows (the Property):
East 1/2 of Lot 252 in East Dubuque No. 2, all in the City of Dubuque, Dubuque
County, Iowa
as shown on Exhibit A attached hereto for the purpose of constructing, operating, and
maintaining the Bee Branch Creek Restoration, a stormwater management project; and
Whereas, Iowa law requires that City must make a good faith effort to negotiate
with the Owner to purchase the Property before proceeding with condemnation; and
Whereas, City has caused an appraisal of the property to be made and the
appraised value of the property is $68,000.00; and
Whereas, the City Council now desires to establish the fair market value of the
property.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
1. The fair market value of the Property is hereby established to be $68,000.00.
2. The City Manager is hereby authbrized to commence negotiations with the
Owner of the Property and any other interested parties for the purchase of the
Property for a purchase price which is not Tess than the fair market value
established by this resolution.
3. The City Manager is hereby authorized to commence proceedings for the
acquisition of the Property by eminent domain should negotiations fail.
Passed, approved and adopted this 7 t h
Attest:
Kevi . Firnstahl, City Clerk
day of Nove be O11 //.rr
Roy D. Buol, Mayor
Exhibit A
Bee Branch Creek Restoration Project Property Acquisition
Address:
Legal Description:
540 E. 16th Street
East 1/2 of Lot 252 in East Dubuque No. 2 in the City of Dubuque,
Iowa, according to the recorded Plat thereof, County of Dubuque,
State of Iowa
Form 633101
EMINENT DOMAIN DETAILED APPRAISAL
FEE ACQUISITION
Parcel Number: WP Auto
Record Owner: WP Investments, LLC
Project: Bee Branch Creek Restoration County: Dubuque
Owner's Mailing Address: Perry Picket, 875 Boyer Street, Dubuque, IA 52001
Address of Property being Appraised: 508 East 16'x' Street -- Parcel 1024284002
This property is described as: South 33.5' of Lot 254, North 18' of Lot 254, Lot 253 and the West 'A of Lot 252 in
East Dubuque No.2, an addition to the City of Dubuque, Iowa.
This property consists of 12,875 taxable SF before the acquisition.
for highway purposes and / net SF will remain after the acquisition.
Present zoning is H -I, Heavy Industrial Present use is commercial
Appraised on the basis of highest and best use for commercial
before the acquisition and the same after the acquisition.
MARKET VALUE UNDER EMINENT DOMAIN LAW OF THE STATE OF IOWA
Value of the entire property before the acquisition is: $ 300,000
Value of the remaining property after the acquisition is:
The estimate of just compensation is :
$ 300,000
Date of Valuation February 14, 2011
Signed:
7/9 glas J. Ii ery, Appr is
Foam 633204
CERTIFICATION OF APPRAISER
Project: Bee Branch Creek Restoration
Parcel Number: WP Auto
1 hereby certify:
That 1 personally made a field inspection of the property herein appraised and that I have afforded the property owner or his authorized
representative the opportunity to accompany me at the time of inspection. 1 have also personally made a field inspection of the
comparable sales relied upon in making said appraisal. The subject and the comparable sales relied upon in making said appraisal
were as represented by the photographs appropriately supplied.
That to the best of my knowledge and belief the statements contained in the appraisal herein set forth are true, and the information
upon which the opinions expressed therein are based is correct; subject to the limiting conditions therein set forth.
That 1 understand this appraisal is to be used in connection with the acquisition of property by the City of Dubuque.
That this appraisal has been made in conformity with Iowa law, regulation, and the Iowa Department of Transportation Appraisal
Manual as is applicable to the appraisal of this type of property for the stated purpose; and that to the best of my knowledge no portion
of the value assigned to this property consists of items which are noncompensable under the established law of the State of Iowa.
That neither my employment nor my compensation for making this appraisal and report are in any way contingent upon the values
reported herein.
That I have no direct or indirect present or contemplated future personal interest in such property or in any benefit from the acquisition
of such property appraised.
That I have not revealed the findings and results of such appraisal to anyone other than the proper officials of the City of Dubuque and
1 will not do so until so authorized, or until I am required to do so by due process of law or until 1 ani released from this obligation by
having publicly testified as to such findings.
That the conclusion set forth in this appraisal is my independent opinion of the difference between the fair market value of this
property before and after the proposed acquisition.
As of February 14, 2011 the estimate of just compensation is $ 300,000
Signcd:
Date of Signature: February 25, 2011
Fonn 633205
Project: Bee Branch Creek Restoration
Parcel Number: WP Auto
PURPOSE OF THIS APPRAISAL:
To estimate the market value of the ownership interest, and the leasehold interest if any, in this property before the proposed
acquisition by the City of Dubuque and the market value of the same interest in the remainder property immediately after the proposed
acquisition. In case the proposed acquisition causes only limited damage, the purpose is to estimate just compensation resulting from
the acquisition, without repotting before and after values. This appraisal considers the Toss in value, if any, of owner's rights in
advertising signs being acquired and is made without consideration of any enhancement that might accrue from the proposed
improvement.
DEFINITION OF MARKET VALUE:
The cash price which would be arrived at as between a voluntary seller willing but not compelled to sell and a voluntary purchaser
willing but not compelled to buy, both of whom are acting freely, intelligently and at arm's length, bargaining in the open market for
the sale and purchase of the real estate in question. (State of Iowa Uniform July hisiruction No. 14.4)
DEFINITION OF HIGHEST AND BEST USE:
The utilization of a property to its best and most profitable use. It is that use, chosen from among the reasonably probable and
financially feasible alternative uses which is found to be physically practical, legally acceptable and which results in the highest present
value, as defined, as of the effective date of the appraisal.
HAZARDOUS SUBSTANCE CONTAMINATION:
The appraiser observed the following signs of possible contamination: Not As Bribed
FIVE YEAR DELINEATION OF TITLE: (If none, so state)
Grantor Grantee Inst Type Inst Date Book & Page Sale Price
None
LEASES: (Lessee's Name, Address and Lease Terms)
None
DATE OF INSPECTION AND INVITATION:
The property owner (Perry Pickel) was offered an opportunity to accompany me on my inspection of this property. The inspection was
attended by the owner.
Telephone number of owner: 563 -590 -6140. I personally inspected the subject property on February 14, 2011.
NARRATIVE APPRAISAL OF MARKET VALUE
OF THE FEE - SIMPLE INTEREST OF
508 EAST 16TH STREET
ASSESSOR PARCEL 1024284015
DUBUQUE, IA
DATE OF APPRAISAL - FEBRUARY 14, 2011
DATE OF REPORT - FEBRUARY 25, 2011
PREPARED BY
DOUGLAS J. HATTERY
HATTERY REAL ESTATE APPRAISALS, LLC
2717 COLLEGE AVENUE
DAVENPORT, IOWA 52803
PREPARED FOR
DERON MUEHRING, CIVIL ENGINEER
CITY OF DUBUQUE
50 WEST 13TH STREET
DUBUQUE, IA 52001
HATTERY REAL ESTATE APPRAISALS, LLC
REAL ESTATE APPRAISAL AND CONSULTING
DOUGLAS J. HATTERY
2717 COLLEGE AVENUE
DAVENPORT, IOWA 52803
(563) 386-6606
February 25, 2011
Deron Muehring, Civil Engineer
City of Dubuque
50 West 13th Street
Dubuque, IA 52001
RE: Narrative Appraisal of Market Value of the Fee-Simple Interest of 508 East 16m Street in
Dubuque, IA, for the Bee Branch Creek Restoration Project.
Mr. Muehring:
This appraisal report, plus exhibits, explains and supports my opinion of value of the subject
property. The report was prepared after an inspection of the property, neiQhborhood, recent
comparable sales, and other factors which | consider to be pertinent to the value of the subject
property.
The subject property consists of a 12,875 SF site which is improved with a one-level
structure. The property 15 Iocated in the southeast corner of 16th Street and
Pine Street. The property is currently utilized as an auto sales and contractors office (d/b/a16'
St. Auto) and is owner-occupied. The proposed acquisition by the City of Dubuque is a total
acciuisition in Fee Title.
The appraisal date is February 14, 2011, which is the date of inspection of the subject
property. The date of the report is February 25, 2011. This report is a Detailed Narrative
Appraisal as defined within the Appraisal Policy & Procedures Manual, August 2003 edition,
provided by the Iowa Department of Transportation, Office of Right of Way.
The purpose of this appraisal is to estimate the Market Value of the subject property, as of the
appraisal date, relative to the Bee Branch Creek Restoration Project, which requires the
acquisition of the subject property in Fee Title. The intended use of the appraisal is to
estimate just compensation for eminent domain purposes as of the appraisal date for
acquisition by the (}|1y of Dubuque. The intended users of the appraisal are the City of
Dubuque, and other parties with an interest in the acquisition process regarding the subject
property.
508 East 16th Street
-2- February 25, 2011
This appraisal was prepared according to the contract/assignment from the City of Dubuque.
The intended use of the appraisal is for eminent domain related acquisition. The appraisal is
prepared under the Jurisdictional Exception provision contained in the Uniform Standards of
Professional Appraisal Practice (USPAP). In preparing the appraisal, the appraiser has
conformed with all parts of USPAP except those that are contrary to State and Federal
requirements. The appraisal was prepared in conformance with the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, Public Law 91 -646, as amended
and Chapters 68 and 316, Code of Iowa. The report was not prepared under USPAP reporting
requirements but does conform to the requirements of State and Federal law as implemented in
the Iowa Department of Transportation Appraisal Manual reporting requirements.
No Phase I environmental audit has been provided regarding the subject property. No
hazardous conditions were obvious upon the inspection, and the property is appraised as if
clean of all contamination, above and below ground.
As a result of my investigation, based upon my analysis of the included data, it is my opinion
that as of February 14, 2011 the Market Value of the Fee - Simple Interest of the subject
property is at, or near $300,000.
THREE HUNDRED THOUSAND DOLLARS
Respectfully Submitted,
APPRAISALS, LLC
BY: D6i glas J. Clattery, Appraiser
TABLE OF CONTENTS
Letter of Transmitta
Property Photographs 1
Purpose and Scope of the Appraisal 2.
Summary of Salient Facts and Conclusions 3.
Legal Description and Address of Subject Property 4.
Neighborhood and Area Analysis 5.
Site and Improvement Analysis 6.
Statement of Highest and Best Use 7.
Valuation of the Subject Property
Land Value Estimate 8.
Sales Comparison Approach to Value S.
lncome Approach to Value 10.
Reconciliation and Final Value Estimate 11.
Assumptions and Limiting Conditions 12.
Appraiser Qualifications
Addenda
1.
PROPERTY PHOTOGRAPHS
The photo above is a front view of the subject property. The photo below is a view of the front
office /display area.
1 -A.
PROPERTY PHOTOGRAPHS
The photos on this page are views of the shop areas in the subject building.
2.
PURPOSE AND SCOPE OF THE APPRAISAL
PURPOSE OF THE APPRAISAL:
The purpose of this appraisal is to estimate the Marke Value of the subject property, as of the
appraisal dote, relative to the Bee Branch Creek Restoration Project, which requires the
acquisition of the subject property. Eminent domain law in the State of Iowa has established
the following definition of Market Value:
The term fair and reasonable market value means the cash price which would be arrived at as
between a voluntary seller willing but not compelled to sell and a voluntary purchaser willing but
not compelled to buy, both of whom are acting freely, intelligently and at arm's length,
bargaining in the open market for the sale and purchase of the real estate in question. Such
term does not mean the value under peculiar circumstances where greater than its fair price
could be obtained, nor does it mean the price which the property would bring at a forced sale. It
does not mean what the property is worth to the plaintiff nor what the defendant can afford to
poy, but what it is fairly worth in cash on the open markeg, as above stated. (Uniform Jury
Instruction No. 14.4).
In short, the fair and reasonable market value of a property is to be considered in the same
manner that a knowledgeable, voluntary buyer determines the fair and reasonable market value
of a property--what are its cepabU|Ueo, what are its detriments, what is it fairly and reasonably
worth in the market place? The jury and/or Compensation Commission is entitled to be
informed of all factors which (1) the willing seller would impress upon the willing buyer that tend
to show value, and (2) the willing buyer would impress upon the willing seller that tend to show
lack of value--including sales of comparable properties and evidence of its highest and best
use. (Uniform Jury Instruction No. 14.6 and annotated authorities). See also Bellew v. |8H[|'
171 N.W.2d 284, 288, 289 (Iowa 1969) and In Re Primary Road No. 141, 124 N.W.2d 141, 147
(Iowa 1963).
The determination of "Market Value" may not consider or reflect any enhancement or diminution
in value of the eubimct, caused by the building of the project which has prompted the taking.
(No sales exhibiting these effects may be used as a comparable in arriving at the value of the
subject property, eithor before or after the date of condemnation.) Uniform Jury instruction 14.3
and 8oconyVmouum Oil Co. v. State of Iowa, 170 N.W.2d 378. (Iowa 1969).
SUMMARY OF SUBJECT PROPERTY:
The subject property consists of a 12,075 SF site which is improved with a one-level
commercial/service structure. The property is located in the southeast corner of 16th
Street and
Pine Street. The property is currently utilized as an auto sales and contractors office (d/b/a 16th
St. Auto) and iamwnmpoocupied. The proposed acquisition by the City of Dubuque is a total
acquisition in Fee Title.
continued'
2-A.
PURPOSE AND SCOPE OF THE APPRAISAL (CONTINUED)
INTENDED USE AND INTENDED USERS OF THE APPRAISAL:
The intended use of the appraisal is to estimate just compensation for eminent domain
purposes as of the appraisal date for acquisition by the City of Dubuque. The intended users
of the appraisal are the City of Dubuqua, and other parties with an interest in the acquisition
process regarding the subject property.
DATE OF THE APPRAISAL:
The appraisal date is February 14, 2011, which is the date of inspection of the subject
property. The date of the report is February 25, 2011. This report is a Detailed Narrative
Appraisal as defined within the Appraisal Policy & Procedures Manual, August 2003 edibmn,
provided by the Iowa Department of Transportation, Office of Right of Way.
DELINEATION OF TITLE:
According to the available records, the subject property has not transferred in the last five
years. The property is not currently listed for sale.
[Although the above information is believed to be true and correct, no reliance should be
assumed in that the appraiser 15 not responsible for items of a tegal nature.]
APPRAISAL PROCESS:
The appraisal process is a systematic method of gathering data regarding sociological,
physical, economic, and governmental forces in order to analyze and interpret their influence, in
terms of value, on a specific real property. In this process three basic approaches are typically
used, the Cost, Sales Comparison and Income Capitalization Approaches. Each is based upon
the principle of substitution which states that an informed purchased would pay no more for the
rights in a particular real property than the cost of acquiring without undue delay an equally
desirable one.
Cost Approach, according to the definition as stated on page 81 in The Dictionary of Rea
Estate Appraisal, copyright 18S3.bvUheAnorainel|noUb/te.UleCoetAooroachiadefinadas:
"A set of procedures through which a value indication is derived for the fee simple
interests in a property by estimating the current cost to construct a reproduction of, or
replacement hxr, the existing structure; deducting accrued depreciation from the
reproduction or replacement cost; and adding the estimated land value plus an
entrepreneurial profit. Adjustments may then be made to the indicated fee simple value
of the subject property to reflect the value of the property interest being appraised."
2 -B.
PURPOSE AND SCOPE OF THE APPRAISAL (CONTINUED)
Sales Comparison Approach, according to the definition as stated on page 318 in The
Dictionary of Real Estate Appraisal, copyright 1993, by the Appraisal Institute, the Sales
Comparison Approach is defined as:
"A set of procedures in which a value indication is derived by comparing the property
being appraised to similar properties that have been sold recently, applying appropriate
units of comparison, and making adjustments to the sale prices of the comparables
based on the elements of comparison. The Sales Comparison Approach may be used
to value improved properties, vacant land, or land being considered as though vacant; it
is the most common and preferred method of land valuation when comparable sales
data are available."
Income Capitalization Approach, according to the definition as stated on page 178 in The
Dictionary of Real Estate Appraisal, copyright 1993, by the Appraisal Institute, the Income
Capitalization Approach is defined as:
"A set of procedures through which an appraiser derives a value indication for an income -
producing property by converting its anticipated benefits (cash flows and reversion) into
property value. This conversion can be accomplished in two ways. One year's income
expectancy can be capitalized at a market - derived capitalization rate or at a capitalization rate
that reflects a specified income pattern, return on investment, and change in the value of the
investment. Alternatively, the annual cash flows for the holding period and the reversion can be
discounted at a specified yield rate."
The last step in the appraisal process is the Correlation and Reconciliation of the value
estimates derived by each approach used into a final estimate of value. Through the interaction
of analyzing costs and depreciation, rental rates, expense estimates and capitalization rates,
and direct -sale comparables, the results of each approach to value should be similar.
SCOPE OF THE APPRAISAL:
The appraisal report is prepared under a Jurisdictional Exception, based upon Article 1, Section
18 of the Iowa Constitution, which prohibits consideration of increases or decreases in a
property's value caused by the project. It specifically states "shall not take into consideration
any advantages that may result to said owner on account of the improvement for which it is
taken ".
In this appraisal, I have relied upon the Sales Comparison Approach and the Income
Approach. The property is improved with a commercial structure, but in my opinion the Cost
Approach is not particularly applicable because of the age and condition of the improvements
and the difficulty in estimating total depreciation. The Highest and Best Use has been
determined to be continued commercial usage. In the Sales Comparison Approach, I have
researched and analyzed sales of similar properties located in the subject market area and
estimated the value of the subject by weighing various differences. All of the sales data have
been confirmed by a principal involved (buyer, seller, or broker). In the Income Approach, I
have estimated the market rental rate, expenses and capitalized the net operating income (N01)
at rnarket rates.
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
DATE OF APPRAISAL: February 14, 2011
DATE OF REPORT: February 25, 2011
PROPERTY TYPE: Commercial/Service
SIZE OF PROPERTY: 12,875 SF
OWNERSHIP: WP Investments, LLC
ASSESSED VALUE: $162,900
ZONING: H-1, Heavy Industrial
IMPROVEMENTS: Commercial structure
RIGHTS APPRAISED: Market Value of the Fee-Simple Interest to the subject
property.
4.
LEGAL DESCRIPTION AND ADDRESS OF SUBJECT PROPERT"(
ADDRESS: 508 Eas l6th Street, Dubuque, IA
LEGAL DESCRIPTION:
The South 33.5' of Lot 254, North 18' of Lot 254, Lot 253 and the West 1/2 of Lot 252 in East
Dubuque Addition No. 2, in the Cty of Dubuque, Iowa.
Source: Available records.
AREA AND NEIGHBORHOOD ANALYSIS
Dubuque, Iowa is the largest community and the county seat of Dubuque County, and is
located in northeast Iowa. Dubuque is located 70 miles north of the IA -IL Quad Cities, 160
miles northwest of Chicago, IL, and 70 miles northeast of Cedar Rapids, Iowa. Population
figures for Dubuque and Dubuque County over the last three census periods are as follows:
As can be seen from the above population figures, the loss in population through the 1980's is
consistent with many Midwestern agricultural areas which experienced decline in the decade of
the 1980's. The decade of the 1990's was generally positive, and many communities like
Dubuque have rebounded and stabilized over the past 5 -7 years. The recent economic
downturn has been characterized by sluggish growth. The City of Dubuque appears to be
generally stable.
TRANSPORTATION:
The area is served by two U.S. Highways 151, 20, 52, 61 and State Highways 3 and 84. There
continues to be upgrades in Highway 61, providing expressway type traffic north and south.
The area is also served by railroad and Mississippi River barge carriers. The Dubuque
Municipal Airport is located south of Dubuque along Highway 61 and provides some
commercial airline service through American Airlines, as well as charter service.
INDUSTRY, GROWTH TRENDS AND MAJOR EMPLOYERS:
Dubuque has a typical mixture of major employers. Aside from John Deere, the manufacturing
companies are relatively small. Although there are fluctuations in the John Deere workforce,
the employment situation appears to be relatively stable. The Dubuque area has experienced
the same economic downturns that many communities experienced in the decades of the
1970's and 1980's. A list of some of the major employers is shown below.
FIRM
PRODUCT /SERVICE
APPROXIMATE
EMPLOYEES
JOHN DEERE
HEAVY EQUIPMENT
1,800
MERCY HEALTH CENTER
HEALTH CARE
1,325
DUBUQUE SCHOOLS
EDUCATION
1,600
FLEXSTEEL INDUSTRIES
SEATING PRODUCTS
450
MEDICAL ASSOC CLINIC
HEALTH CARE
743
HEARTLAND FINANCIAL
FINANCIAL SERVICES
760
FINLEY HOSPITAL
HEALTH CARE
920
HOLY FAMILY SCHOOLS
SCHOOLS
500
EAGLE WINDOW AND DOOR
WINDOWS AND DOORS
750
- continued-
1980
1990
% change
2000
% change
Dubuque County
93,745
86,403
-7.8%
89,143
3.2%
Dubuque
62,321
57,538
-7.6%
57,686
0.3%
As can be seen from the above population figures, the loss in population through the 1980's is
consistent with many Midwestern agricultural areas which experienced decline in the decade of
the 1980's. The decade of the 1990's was generally positive, and many communities like
Dubuque have rebounded and stabilized over the past 5 -7 years. The recent economic
downturn has been characterized by sluggish growth. The City of Dubuque appears to be
generally stable.
TRANSPORTATION:
The area is served by two U.S. Highways 151, 20, 52, 61 and State Highways 3 and 84. There
continues to be upgrades in Highway 61, providing expressway type traffic north and south.
The area is also served by railroad and Mississippi River barge carriers. The Dubuque
Municipal Airport is located south of Dubuque along Highway 61 and provides some
commercial airline service through American Airlines, as well as charter service.
INDUSTRY, GROWTH TRENDS AND MAJOR EMPLOYERS:
Dubuque has a typical mixture of major employers. Aside from John Deere, the manufacturing
companies are relatively small. Although there are fluctuations in the John Deere workforce,
the employment situation appears to be relatively stable. The Dubuque area has experienced
the same economic downturns that many communities experienced in the decades of the
1970's and 1980's. A list of some of the major employers is shown below.
FIRM
PRODUCT /SERVICE
APPROXIMATE
EMPLOYEES
JOHN DEERE
HEAVY EQUIPMENT
1,800
MERCY HEALTH CENTER
HEALTH CARE
1,325
DUBUQUE SCHOOLS
EDUCATION
1,600
FLEXSTEEL INDUSTRIES
SEATING PRODUCTS
450
MEDICAL ASSOC CLINIC
HEALTH CARE
743
HEARTLAND FINANCIAL
FINANCIAL SERVICES
760
FINLEY HOSPITAL
HEALTH CARE
920
HOLY FAMILY SCHOOLS
SCHOOLS
500
EAGLE WINDOW AND DOOR
WINDOWS AND DOORS
750
- continued-
5 -A.
AREA AND NEIGHBORHOOD ANALYSIS (CONTINUED)
CONCLUSIONS:
The trends with respect to population, employment, construction and tourism are fairly typical of
midwestern river frontage communities. The economy, in general appears to be rebounding
somewhat. The residential sector appears to be ahead of the commercial sector in this
recovery. The Dubuque area unemployment rate has risen over the past few years, and was at
7.8% in March of 2010. This is higher than the past few years, but there are many areas that
have experienced more job losses than Dubuque.
NEIGHBORHOOD DATA:
Identification and Delineation: The subject neighborhood is just northeast of the "downtown"
area, and is located in the eastern portion of Dubuque, Iowa. The subject neighborhood is
roughly bounded by Highway 61 on the east, 20th Street on the north, 14th Street on the south,
and the railroad ROW to the west.
Property Types: The area has a variety of uses, with a balance of vacant sites, residential,
light industrial, and commercial uses interspersed. There are several vacant sites in the area,
and the homes and commercial buildings are generally older.
Neighborhood Trends and Changes: The subject neighborhood is about 50% built -up with
various improvements. The major influence on the area is the development of the former FDL
foods "pack site ". The large site has been purchased and has had the buildings cleared from
the site and the rough grading mostly completed. The property was rezoned to a PUD
classification, which would allow for large retail, or other commercial uses. The developers of
the "pack" site have also been purchasing properties (like the subject) in the immediate subject
neighborhood in order to provide sufficient land area for development. The development of the
pack site has been slow, partially because of the general economic situation of the past few
years. Nevertheless, it appears that this portion of the community (the pack site and the area
south of 16'h Street) is poised to see development in the relatively near future.
Competition: The subject neighborhood competes with other developing intensive commercial
areas within Dubuque, but the area is somewhat distinct, as an older, fringe downtown
neighborhood. The area is generally stable, but will likely see some redevelopment in the
future, and the general outlook is basically positive.
Adverse Influences: There appears to be no obvious adverse influences on the subject
neighborhood.
6.
SITE AND !MPROVEMENT ANALYSIS
Location: The subject property is located in the southeast corner of 16th Street and Pine
Street.
Size and Shape: The subject lot is and consists of12.875 SF, as shown on the plat
on the opposite page. There is5O'of frontage along East 16th 154.5' of frontage okono
Pine Street and the site is also bordered by the alley on the east side.
Access and Traffic Flow: The entire northerly portion of the property is paved with concrete
and is currently utilized for the auto sales business. The property appears to have access from
16' Street, Pine Street and the alley on the east. The bordering streets are typical two-lane,
two-way residential streets.
Topography: The subject property is basically leve and is at grade with the surrounding
streets. According to the City of Dubuque, the property is located in Zone X, which is not a
100-yearor500'yearfloodp|min.
Zoning and Utilities: The subject is located within the city limits of Dubuque and is
currently zoned H-I, Heavy Industrial District. This zoning classification aflows for a wide variety
of uses and the current use is a legal, conforming use. The site is served by all municipal
utilities.
Improvements: The subject property is improved with a one-level commercial/service
structure with 4,160 SF of total building area. The building was built in 2003 and has a concrete
foundation with 2" x 6" wood frame walls and wood rafters. The exterior walls and roof are
metal and the bullding is insutated. The Interior consists of three areas, two shop areas on the
ends and a display/office area in the middle. The shop areas are each 42' x 40' /1,680 SF)
and have a concrete floor with floor drains, drywall walls, fluorescent |i0h1inQ, and a hanging
gas heating unit. The ceiling height iri the shop areas is 12'. The easterly shop area has two
overhead doors and the westerty shop area has one overhead door. The middle section has a
display area in the front, one private office, a break anoo, a restroom and a mechanical closet.
The center section has a gas furnace and central air conditioning. The finishes in the middle
section include tile flooring and painted drywall walls and ceilings. The finished office/display
area consists uf8O0GF(19Y6nf building eneu). The overall buliding condition is good and the
depreciation appears to be typical physical obsolescence with no extreme deferred
maintenance noted. A building sketch is in the addenda of the report.
7.
STATEMENT OF HIGHEST AND BEST USE
The subject property consists of a 12,875 SF site which is improved with a one-level
cm
comnnen�oKae[Y|ueminu(ture. The p[opedxin�omtmdin the southeast corner of1" Street a
Pine Street. The property is currently utilized as an auto sales and contractors office kd/b/m 16"'
St. Auto) and is owner-occupied.
Highest and Best Use as if vacant: The subject site is of sufficient size for many uses, coutd
also be assembled with surrounding land and has the zoning (current or likely potential change)
to allow industrial or intensive commercial usage. These are the physical and legal uses that
appear to be most likely. The financially feasible uses would also include industrial or
commercial. Commercial development is the use that the neighborhood appears to be
transitioning to, although residential and light industrial usages have been prevalent for many
years. Based on the size, location and area trends, it is my opinion that commercial usage is
the Highest and Best Use of the subject property, as if vacant.
Highest and Best Use as lmproved: The immediate neighborhood is partially u .
and has been stable for many years. However, there is the distinct possibility of intensive
commercial development of the area, considering the activity associated with the "pack site" to
the north of the subject. According to the City of Dubuque Zoning Oapartnngnt, the current
zoning would allow primarily industrial or commercial ueee, and the current subject use is a
|ega|, conforming use. The most recent activity in the neighborhood involving the "pack site"
indicates that the subject site would have potential for some type of intensive commercial
development, if it was assembled with surrounding land. While the City of Dubuque would not
guarantee that rezoning would be allowed, | have presumed that there is a reasonable
likelihood that the property could be rezoned and utilized as part of a larger commercial
development. However, the property would not require rezoning for continued light industrial or
medium-intensity commercial uae, as it is currently utilized. It appears that the subject
improvements contribute significant value to the land and it is my opinion that the maximally
productive use of the property is the current uoe, which represents the Highest and Bost Use
of the subject property.
8.
LAND VALUE ESTIMATE
The subject property is improved with a commercial /service structure, but there is significant
depreciation which is difficult to accurately measure or estimate. In my opinion, the Cost
Approach is not particularly meaningful or applicable in this situation. Therefore, I have relied
primarily upon the Sales Comparison Approach with support from the Income Approach in
estimating the value of the subject property. However, I have estimated the value of the land
(as if vacant) based on sale activity in the market area.
The subject site is located northeast of the downtown area. The immediate neighborhood is
characterized by a variety of vacant lots, residential, commercial, and Tight industrial uses. The
area has more vacant land than the nearby downtown area, and the land values do not appear
to be as high as in the downtown area, primarily because downtown sales often involve older,
improved buildings which are demolished to create a vacant site. The cost of the improved
property plus the cost of the demolition tends to make the vacant land very costly, relative to
other vacant commercial sites in other neighborhoods. It is not unusual to have a per square
foot land cost that is higher in the downtown area than in the most popular intensive commercial
development areas in a community. The range of sale prices per SF in the other commercial
development areas is generally from $10.00 /SF to $15.00/SF. There are sales in the
$16.00/SF to $20.00 /SF range (including the recent Walgreens sale at 20th and Elm Streets),
but in my opinion these are atypical of the market, in general.
The subject neighborhood does have some current influence from the demand for land by the
developers of the "pack site ". I have researched land sales in the subject neighborhood, and
the trends appear to be consistent, with the older sales (2004 -2007) having a per SF price in
the $6.00 to $7.00 range, and the most recent sale discovered involving the developers of the
pack site having a per SF price of $10.68/SF. It is not unusual for the general market
conditions to improve over time, but economic conditions do not always improve, and
corresponding land values do not necessarily rise, particularly if there is limited new building
activity. The economic difficulties of the past two years are well known, and there is limited new
development in the commercial sector at this time. Therefore, I have not adjusted the
comparable sales from 2007 for time, as the value of commercial development land does not
appear to have appreciated demonstrably since that time. The sales analyzed below are good
comparables which illustrate a reasonable value range for the subject site. The comparable
sales most heavily relied upon are summarized below, with detailed writeups in the Addenda.
Sale 1 is a 2,560 SF paved parking lot located on the east side of the 1400 block of Central
Avenue. This property was purchased in March of 2005 for $45,000 ($17.58/SF). The site is
utilized as a rental parking lot. The.site has 9 spaces which have rented for $25.00 /month. The
property was sold to the owner of a commercial building located across Central Avenue. In my
opinion, this sale would require downward adjustments for the size, paving, and for the slightly
superior location. The net adjustment to the sale price /SF is downward, relative to the subject
property.
- continued-
8 -A.
LAND VALUE ESTIMATE (CONTINUED)
Sale 2 is a 2,500 SF site located in the northwest corner of 15th Street and Maple Street, just
south of the subject. This vacant parcel was sold by G & S Real Estate to the owner of the
adjacent parcel in May of 2004 for $15,000 ($6.00/SF). This site is a good direct comparable
with respect to size and location, but would require an adjustment for time (market conditions
for vacant land have strengthened since 2004). Therefore, it is my opinion that an upward
adjustment for time (market conditions) is appropriate. In my opinion, the net adjustment to the
sale price /SF of this sale is significantly upward.
Sale 3 is located along the east side of the alley between Maple and Cedar Street, just south of
161h Street. The property was sold by William Blum to the current owners (SB Development) in
August of 2006 for $24,000 ($6.85 /SF). The site does not front Cedar Street or Maple Street.
In my opinion, the subject is more desirable because it fronts a street, although the sale
property, like the subject, would likely be used for assemblage with neighboring property for a
more intensive development. Nevertheless, this factor would indicate an upward adjustment, as
well as a minimal upward adjustment for time. The overall (net) adjustment is significantly
upward, in my opinion.
Sale 4 is the city block bordered by 15th and 16th Streets and by Cedar and Sycamore Streets.
This property was purchased by SB Development (the pack site developers) from Alvin Blum in
August of 2007. The property was primarily vacant land, and there were small, older buildings
which the seller indicated had minimal contributory value. The property consists of 10 Tots (all
51.5' x 100') which are separated by the public alley. This 51,500 SF property was purchased
in August of 2007 for $550,000 ($10.68/SF). In my opinion, this sale is the most meaningful
sale for a current indication of land value trends in the immediate area. This sale would require
minimal overall adjustment, although a minimal upward adjustment for property size would be
appropriate. The overall adjustments for the sales discussed above, relative to the subject
property are summarized below.
Sale Size (SF) Sale Price Sale Price /SF Net Adjustment
Sale 1 2,560 $45,000 $17.58 Downward
Sale 2 2,500 $15,000 $6.00 Large Upward
Sale 3 3,502 $24,000 $6.85 Large Upward
Sale 4 51,500 $550,000 $10.68 Minimal Upward
have also considered a pending sale of a portion of the "pack site ", which the owners have
indicated would involve approximately 2 acres in the northeast portion of the site. The
ownership indicated that there is a signed purchase agreement, and the sale is expected to
close in the Spring of this year. The anticipated sale price is $10.00 /SF. This would be a very
positive event for the future development of the immediate area and could spur additional
development in the near future. This is not a closed sale, but it does lend some support for the
value estimated for the subject land.
- continued-
8-B.
LAND VALUE ESTIMATE (CONTINUED)
CONCLUSIONS: The sales primarily required adjustments for size and time. Smaller sites
typically sell for more per SF than larger sites, and this is a factor when comparing the subject
site to the sales analyzed. However, when assemblage is the goal, the size is not always a
major consideration. The sales are somewhat older, but three of the sales are in the immediate
neighborhood, and were unaffected by the project. It is my opinion that these sales represent
the most meaningful tnannactiono, and the adjustment for time is a minimal factor. As
previously mnenUmned, the current neighborhood trend has been affected by the pack site
development, and the demand for neighborhood parcels for that development. The sale prices
in the subject neighborhood are comparable to other parcels in arguably more desirable
commercial locations in the community. The pack site development has been slow to
noo1erio|ize, but there is a pending sale, and this may spur other development in the immediate
area. Based upon my analysis of the sales, adjusted for differences, it is my opinion that the
market value of the 12,875 SF subject site (as if vacant) io at, or near $15O,000/$11.05/SF\.
LAND VALUE ESTIMATE (AS IF $150,000
It is relevant to note that the subject site is not vacant, and there would be a cost to demolish
and remove the improvements. The cos would likely be in the range of $2,000 to $5,000. This
cost would be deducted from the estimated value in order to reflect a true estimate of the value
of the site for more intensive development purposes, considering the current improvements.
Therefore, the current value of the property for use as development land would be in the range
of $145,000 to $148,000.
9.
SALES COMPARISON APPROACH TO VALUE
The Sales Comparison Approach to Value presumes a buyer will pay no more for any property
than an amount for which he can secure a substitute property with similar utility to him as the
subject, assuming no undue delay. Thus, recent market transactions (actual property sales)
are most important to an appraisal of a property, in most cases. In this approach to value, the
appraiser must select properties which are similar to the subject, which have also sold recently.
From these comparable sales he can generally extract meaningful units of comparison to help
in analyzing the value of the subject property. Units of comparison such as sale price per SF
of building area, sale price /gross annual income (GIM), or sale price on an overall basis.
I have researched the local market for comparable sales and listings, and have discussed five
comparable sales below. Detailed writeups of the sales are in the addenda of the report. The
subject has a total building area of 4,160 SF, with 19% finished office /display area. The unit of
comparison in this analysis is the sale price per SF. I have adjusted the sale price per SF of the
sales upward or downward for various factors and arrived at an overall adjustment (net
adjustment). The comparable sales and adjustments are summarized below with an
adjustment grid following.
Sale 1 is the July of 2009 sale of a 3,214 SF light industrial building located at 598 Central
Avenue in Dubuque. The property is improved with a one -story concrete block and tile building
utilized as an auto service garage and sales facility. The property was in fair condition at the
time of the sale and the buyer intended to make significant improvements after the sale. The
property is zoned C -4, Downtown Commercial and previously sold in 2006 for $50,000. This
property sold for $85,000 or $26.45/SF of building area. The downward adjustments would be
for the smaller building, and a minimal adjustment for location. The upward adjustments would
be for the building age /condition. In my opinion, the upward adjustments would far outweigh
the downward adjustments and the overall adjustment would be significantly upward, relative to
the subject.
Sale 2 is the March of 2009 sale of a 12,273 SF light industrial building located at 1146 Elm
Street in Dubuque. The building is a one -story steel frame, metal clad structure built in 1955
with 12' sidewalis. There are 4 overhead doors. The property is zoned HI (industrial) and the
building was in average condition. This property sold for $410,000 or $33.41/SF of building
area. This is a much larger building and the building was in inferior condition to the subject.
There would be large upward adjustments required for building size, and building age /condition.
The overall adjustment would be significantly upward, relative to the subject.
Sale 3 is the December of 2007 sale of a 5,151 SF auto service building located at 1006
Central Avenue in Dubuque. The building is a one -story brick -faced shop /service structure built
in 1977 with 15' ceiling height. There are 3 overhead doors and the interior was mostly open
shop area with a small office (8% of building area). The interior was heated and only the office
was air conditioned. The building was in good condition. The property is zoned C -4, Downtown
Commercial. This property sold for $307,000 or $59.60/SF of building area. This sale would
require minimal upward adjustments for the building size, the age of the building and the
amount of office buildout in the subject. These adjustments would be minimal, because the
differences are relatively minimal. The sale would require a downward adjustment for the
location. The overall adjustment would be upward, relative to the subject.
9-A.
SALES COMPARISON APPROACH TO VALUE (CONTINUED)
Sale 4 is the March of 2009 sale of a 3,750 SF light industrial building located at 165 Westside
Court in Dubuque. This property consisted of a steel frame, metal sided building /built in 1983\
with 16' ceilings in the shop area. The interior of the building had three offices with a mezzanine
over the offices. The interior was about 1/3 finished, according to the seller. The sale was a
private me|m, but was armslength. The interior and offices were heated only and the building
was in good condition at the time of the sale. The buyer added 3'200 SF building to the site
after the purchase. The property has a large site 133,293 SF and the main portion containing
the buildings is zoned CS, Commercial Service and the remainder is zoned PC, Planned
Commercial. This property sold for $300,000 or $80.00/SF of building area. This sale would
require downward adjustments for site size and location. The main upward adjustment would
be for the age of the building. The west side of Dubuque is a higher traffic area and is
considered to be superior to the subject neighborhood for commercial uses, both intensive retail
and service uses. The building age adjustment and the location adjustment largely offset, but it
is my opinion that the overall adjustment would be downward, relative to the subject.
Sale 5 is the December of 2007 sale of a cmmnmnencimKmen/ioe building with a total size of 5,424
SF located at 210 Cedar Cross Road in Dubuque. This property consisted of a steel fnanna,
brick exterior building (built in 1993) with approximately 80% radiant heated shop area with five
overhead doors and the remainder is finished office area with heating and air conditioning. The
property was in good condition at the time of the sale. The property was utilized as a muffler
shop prior to the sale and is now owned by a sign company. The property is zoned C8.
Commercial Service. This property sold for $450,000 or $82.96/SF. This sale would require a
downward adjustment for location and a minimal upward adjustment for the building age. In my
opin|on, this sale would also have a downward overall adiuotmnant, relative to the subject.
SALE SIZE (SF) SALE PRICE/SF NET ADJUSTMENT
1 3,214 $26.45 LARGE UPWARD
2 12,273 $33.41 LARGE UPWARD
3 5,151 $58.60 UPWARD
4 3.750 $80.00 DOWNWARD
5 5,424 $82.96 DOWNWARD
CONCLUSIONS: The sales range in sale price per SF from $26.45/8F to $82.98/8F' prior to
adjustments. The sales required a variety of adjustments, primarily for building size, location
and age/condition. In my opinion, a time adjustment is not warranted as there has not been a
significant change in the current market relative to the late 2007 through 2009 sales. Based on
these oa|ea, adjusted for differences relative to the eub|ect, it is my opinion that the market
value of the subject property is at, or near $300,000 ($72.12/SF of Total Building Area).
VALUE BY THE SALES COMPARISON APPROACH
10.
INCOME CAPITALIZATION APPROACH TO VALUE
| have developed the Income Approach within this appraisal by estimating a market rental rate
for the subjec property based upon the comparable rentals analyzed, with consideration of the
rental arrangements with respect to the division of expenses. Most commercial leases in the
area market are almost completely net to the owner ('triple ne[\, which means that the tenant
pays most of the expenses, and a high percentage of the rental income is netted by the owner.
The estimates of the subject income and division of expenses have been analyzed similarly.
In estimating the "market rental rate" for the property, 1 have researched a variety of properties
in the area market. | have discussed the local rental situation with several real estate
professionals. According to my neomanch, the general light industrial/service/office market is
generally in balance at this time, although there are limited properties for sale. There are more
properties available for lease, and the available properties are very supportive of the indications
from my discussions with local realtors and developers. The general range of rental rates is
$2.O0/8F to $3.00/GF for "cold storage" or basic warehouse space. The properties with a
mixture of warehouse and office or service space rent in the range of $4.00/SF to $6.00/SF (on
a triple net basis). The comparables summarized below are located in various areas of
Dubuque, but are generally similar to the subject property. It is important to note that the
properties summarized below are offered for lease, although many of them have been recently
rented at rates similar to the current offering rates. Specific rentals are difficult to obtain, mainly
for confidentiality reasons. Nevertheless, it is my opinion that the information obtained does
adequately represent the area mnarket, as indicated by the market participants | received
information from. The rental comparables are summarized below.
Address Total SF % Office Rent/SF
367 Cedar Cross 3,600 72 $7.50
3131 Cedar Cross CX. 2l00 5 $540
3135 Cedar Crest Rdg. 12'000 10 $4.00
1044 Iowa 5.500 29 $6.50
1084 Iowa 10,000 20 $5.49
3188 Hughes Court 2,880 28 $5.95
3192 Hughes Court 1.470 0 $3.75
These leases are all good comparables for the subject and illustrate the range in rates for
properties with varying levels of office/retail finished area. In my opinion, the subject rental rate
would be most similar to the spaces with similar finished area. | have estimated a rental rate at
the upper end of the reasonable range, because of the age of the subject building, the size of
the building and the percentage of finished space. Based on the rental comparables analyzed,
adjusted for differences, it is my opinion that the subject would have a rental rate of
$2.500/month ($7.21/SF). Therefore, the Potential Gross Income is estimated at $30,000yYR,
net to the ownership, with the exception of management, repairs/maintenance and a structural
reserve.
-continued-
10-A.
INCOME CAPITALIZATION APPROACH TO VALUE (CONTINUED)
Vacancy and Collection has been estimated at 7% for the building overall. Although there is
no current vacancy because the property is owner occupied, a prudent owner would allow for
the possibility of future vacancy or collection loss. There is vacancy in the area service/office
market, but it is not excessive and the subject is well located and is good quality space. The
percentage estimated would involve a vacancy of about 25 total "vacant days" per year, or
about four months following the departure of a five-year tenant to remodel and fill the space.
The Potential Gross Income less the vacancy estimated results in an Effective Gross Income
(EGI) estimate of $27,900.
PROPERTY EXPENSE ESTIMATES: Real Estate Taxes, Insurance, Utilities, and Repairs
and Maintenance are paid by the tenant. Management, Miscellaneous Expense and
Replacement for Reserve are to be paid by the ownership and are based upon typical market
parameters. Management Expense is estimated at 5% of EGI, which is $1,395 per year. The
Miscellaneous Expense is estimated at 1% of EGI. Replacement Reserve and Repairs
have been estimated at $0.15 per SF, which should be adequate to maintain the property. This
amount is to be reserved as an annuity to replace and repair items such as the roof, parking lot,
etc. From the Effective Gross Income (EGI) estimate, the expenses discussed above are
subtracted, resulting in a Net Operating Income (N01) of $25,602, as shown on the Income
and Expense Proforma below.
INCOME / EXPENSE PROFORMA
Building Size (Total Usable/Rentable SF) 4,160
Gross Income Estimate: Bldg Size Monthly Annually Per/SF % EGI
Shop/Office 4,160 $ 2,500 30 000 $ 7.21 107.5%
$ 30,000
-7% 2 100 0.50
Potential Gross Income
Less Vacanc & Collection Allowance:
Effective Gross Income:
Operating Expenses:
Real Estate Taxes
Insurance
Management @
Utilities
Repairs/Miscellaneous
Replacement for Reserve @ (per SF)
Subtotal
-7.5%
$ 6.71 100.0%
5.00%
1.00%
$ 0.15
Net Operating Income (N01)
Tenant
Tenant
$ 1,395
Tenant
$ 279
$ 624
0.34
$ -
$ 0.07
$ 0.15
2 298 0.55 8.21
25,602 6.15 91.8%
10'B.
INCOME CAPITALIZATION APPROACH TO VALUE (CONTINUED)
CAPITALIZING INTO VALUE: Of the com sales analyzed in the Sales Com
Approach, none had sufficient information with whch to derive an Overall Capitalization Rate
(OAR). | have also consulted Realty Rates for capitalization rates. The Realty Rates Investor
survey for industrial properties indicated that the ''K8ethod'VVeightod" average rate for 2008 was
9.38%, for 2009 was 9.48% and the second quarter of 2010 was 9.59%.
In addition to the information from Realty Rates, | have also considered a band-of-investment
analysis in this appraisal in estimating the OAR. Because most properties are purchased with
debt and equity capiba|, the overall capitalization rate must satisfy the market return
requirements of both investment positions. An appraiser can analyze a particular investment if
the mortgage constant is known, along with a reasonable rate of equity return by typical
investors. The derived overall capitalization rate by this method is known as the band-of-
investment technique. The equity rate varies greatly among property types and the
Realty Rates information shows a range of approximately 6% to in excess of 13%, and | have
utilized 10Y6' based on the relative safety of the subject situation, with long-term tenants and a
quality location. The information is summarized below with the overall capitalization rate
calculation by the band-of-investment.
Available Loan:
75% LTV, 6.5% interest, r amortization which yields
a mortgage constant of 0.0895
Equity Capitalization Rate 1O%, based upon alternative investments
=
Overall Rate
(0.75 x + (1-0.75) (0.1000)
=
0.0671 + 0.0250
�
0.0921
The Real indications tend to center around 9.50%, and the band-of-investment analysis
appears to be similar, but slightly lower. Therefore, Capitalization Rates have been estimated
in the range of 8.00% to 9.5096' centering at 9.25%. It is my opinion that this range would
reasonably represent market capitalization rates. The capitalization into value is shown below.
Capltalizing Into Value:
Estimated
Value/
Net Income from Above
�25GO2
Market Value
SF Bide
Capitalization Rate
0.O0Y6
$ 284,467
$ 68.38
Capitalization Rate =
9.25%
$ 276,778
$ 66.53
Capitalization Rate =
9.50Y6
$ 269,495
$ 64.78
VALUE BY THE INCOME CAPITALIZATION APPROACH $270,000 to $285,000
11.
RECONCILIATION AND FINAL VALUE ESTIMATE
COST APPROACH TO VALUE N/A
SALES COMPARISON APPROACH TO VALUE $300,000
INCOME APPROACH TO VALUE $275,000
The subject o���a12.8�8F��i��im��������
commercial/service ''' 'ruotVre. The property is Iocated in the southeast t corner of 161h Street and
Pine Street. The property is currently utilized as an auto sales and contractors office (d/b/a 16th
St. Auto) and is owner-occupied. The proposed acquisition by the City of Dubuque is a total
acquisition in Fee Title.
The appraisal date is February 14, 2011, which is the date of inspection of the subject
property. The date of the report is February 25, 2011. This report is a Detailed Narrative
Appraisal as defined within the Appraisal Policy & Procedures Manual, August 2003 edition.
provided by the Iowa Department of Transportation, Office of Right of Way.
The purpose of this appraisal is to estimate the Market Value of the subject property, as of the
appraisal data, relative to the Bee Branch Creek Restoration Project, which requires the
acquisition of the subject property in Fee Title. The intended use of the appraisal is to
estimate just compensation for eminent domain purposes as of the appraisal date for
acquisition by the City of Dubuque. The intended users of the appraisal are the City of
Dubuque, and other parties with an interest in the acquisition process regarding the subject
property.
This appraisal was prepared according to the nment from the City of Dubuque.
The intended use of the appraisal is for eminent domain related acquisition. The appraisal is
prepared under the Jurisdictional Exception provision contained in the Uniform Standards of
Professional Appraisal Practice (USPAP). In preparing the appraisal, the appraiser has
conformed with all parts of USPAP except those that are contrary to State and Federal
requirements. The appraisal was prepared in conformance with the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, Public Law 91-646, as amended
and Chapters 6B and 316, Code of |owe, and in concurrence with the FAA Advisory Circular
150V5100-17, Chapter 2. The report was not prepared under USPAP reporting requirements
but does conform to the requirements of State and Federal law as implemented in the Iowa
Department of Transportation Appraisal Manual reporting requirements.
11 -A.
RECONCILIATION AND FINAL VALUE ESTIMATE (CONTINUED)
Exposure and Marketing time: The improved properties researched indicated a wide variety of
exposure times. Longer marketing times are generally caused by changes in Highest and Best
Use, declining desirability of locations and other factors. Considering the subject's location and
the current market conditions, I would estimate Exposure Time (i.e. the length of time the
subject property would have been exposed for sale in the market had it sold at the market value
estimated in this analysis as of the date of the valuation) to be six to 12 months. I have
estimated a similar marketing time for the subject property (the length of time it would probably
take to sell the property if exposed in the market beginning on the date of this valuation).
In addition to the contingencies and limitations stated elsewhere within this report, no survey
was available of the property to show boundaries, improvements, lot size, easements or any
encroachments, although the accompanying exhibits and descriptions herein fairly depict the
property under appraisement. No Phase 1 environmental audit has been provided regarding the
subject property. No hazardous conditions were obvious upon the inspection. The property is
appraised as if clean of all contamination, above and below ground.
CONCLUSIONS:
Based on the relative strengths and shortcomings of the various approaches to value
developed in this appraisal I have relied primarily upon the Sales Comparison Approach with
support from the Income Approach in arriving at an opinion value for the subject property. In
the Income Approach, I have utilized what appear to be a rental rate at the upper end of the
reasonable range, and a relatively low capitalization rate. The estimated value by this approach
is still below the value estimated by the Sales Comparison Approach. Because the rental
information was less plentiful, I have reconciled at the higher amount indicated by the Sales
Comparison Approach. As a result of my investigation, based upon my analysis of the included
data, it is my opinion that as of February 14, 2011 the Market Value of the Fee - Simple Interest
of the subject property is at, or near $300,000.
THREE HUNDRED THOUSAND DOLLARS
HATTERY REAL ESTATE APPRAISALS, LLC
BY: Doifglas J. ttery, Appraiser
12.
ASSUMPTIONS AND LIMITING CONDITIONS
1. The photographs contained in the individual appraisal reports were taken by the appraiser
on the date the property was inspected. Any photo taken on a different date or by another
person will be appropriately labeled.
2. The title to the property is good and merchantable, free and clear of all Iiens and, there are
no encumbrances other than those mentioned in the appraisal report.
3. The planm, mknhs, legal descriptions and other data furnished by others are assumed to be
correct and reliable but the appraiser assumes no responsibility for their accuracy.
4. The individual appraisals are made in accord with the Code of Iowa and do not reflect any
benefit from the proposed improvement or non-compensable items of damage.
5. Any temporary easement area acquired will be retained by the acquiring authority until
completion of p 'aotoonetrucUonandm/iUben*turnmdintheoondiUonindica0odbythehighxvay
plans.
O. The existing drainage will not be adversely affected by highway construction unless
otherwise specified in the data furnished and the tile lines on the remaining property will
function properly after highway construction is completed.
7. The property is appraised as though under responsible ownership and typical management.
8. The property owner will be paid separately for the cost of fencing the new right of way line, if
such fencing is neaded, in those cases where the acquiring authority does not erect a right of
way fence. The property owner has a right to pasture livestock adjacent to any state erected
fence but must assume all responsibility for restraint of such livestock. Any effect on fencing
other than right of way fence or temporary fence will be considered in the individual appraisal
reports.
9. The property owner or lessee will be paid separately for kzaa, if any of growing crops or
completed field work.
10. The acquiring authority may use any or all of the contents of the appraisal reports only for
its normal business functions.
APPRAISER QUALIFICATIONS - DOUGLAS J. HATTERY
EDUCATION:
Graduate of Galesburg Senior High School, Galesburg, Illinois, 1981
Graduate of University of Colorado, Boulder, Colorado, 1985
Bachelor of Science in Business with majors in Marketing and Small Business
Management
APPRAISAL INSTITUTE COURSES:
Course 1A -1, Real Estate Appraisal Principles, June 1992, Tom Bennett, MAI, sponsored by
the University of Colorado and the Appraisal Institute, Boulder, Colorado
Course SPP Parts A & B, Standards of Professional Practice, March 1993, Guy Romito, MAI
and Jim Schroeder, MAI, sponsored by Chicago Chapter -of the Appraisal Institute, Chicago,
Illinois
Course 120, Real Estate Appraisal Procedures, February 1994, Joseph Magdziarz, SRPA,
SRA, sponsored by Chicago Chapter of the Appraisal Institute, Chicago, Illinois
Course 210, Residential Case Study, March 2001, Maggie Hambleton, SRA, sponsored by
Chicago Chapter of the Appraisal Institute, Chicago, Illinois
Course 310, Income Capitalization, October 1999, Joseph Magdziarz, SRPA, SRA, sponsored
by Chicago Chapter of the Appraisal Institute, Chicago, Illinois
Course ILVII, Nonresidential Report Writing, April 2001, Susan Rex, sponsored by Chicago
Chapter of the Appraisal Institute, Chicago, Illinois
EXPERIENCE:
Present Hattery Real Estate Appraisals, LLC, Davenport, Iowa
August 1995 — September 2006 Stahl - Hattery Valuation Services, LLC, Davenport, Iowa
January 1992 - August 1995 American Real Estate Ltd. Davenport, Iowa
CERTIFICATION:
Certified General Real Property Appraiser by the State of Iowa, Certificate #CG01824
Certified General Real Estate Appraiser by the State of Illinois, License #553.001382
ADDENDA
i 40
SALE #: 1
ADDRESS: 1400 Central Avenue
ZONING: C-4, Commercial
LAND SIZE (SF): 2,560 SF
SALE DATE: 3-30-2005
SALE PRICE: $45,000
SALE PRICE/SF: $17.58
TERMS: Cash to Seller
GRANTOR: K & L Properties
GRANTEE: Zapf Family Trust
CONFIRMED BY: Grantor (Kehrli)
RECORDING: 4622-05
REMARKS: This parcel was sold to the owner of a commercial building located across the
street. The site is paved and is utilized as a rental parking lot, with 9 spaces. The rent is
somewhat below market, according to the seller, at $25 per month.
SALE #: 2
ADDRESS: NWC 151h & Maple
ZONING: M'[ Heavy Industrial
LAND SIZE (SF): 2,500 SF
SALE DATE: 5-14-2004
SALE PRICE: $15'000
SALE PRICE/SF: $0.00
REMARKS: This unimproved parcel is
neighboring property.
TERMS: Cash to Selier
GRANTOR: G & S Real Estate
GRANTEE: Tony Zenner
CONFIRMED BY: Grantor (Schwartz)
RECORDING: 8376-04
a 1/2 lot (25' x 100') which was sold to the owner of the
SAL #: 3
ADDRESS: SWQ 16th & Cedar
ZONING: H-I, Heavy Industrial
LAND SIZE (SF): 3,502 SF
SALE DATE: 8-4-2006
SALE PRICE: $24.000
SALE PRICE/SF: $6.85
TERMS: Cash to Se!Ier
GRANTOR: Wililam Blum
GRANTEE: SB Development
CONFIRMED BY: BIum
RECORDING: 12072-06
REMARKS: This unimproved parcel does not front Cedar Street, but fronts the alley between
Cedar and Maple Street. The lot is 51.5'x88' and was formerly improved with a single-family
home. The property was purchased by the developer of the "pack site".
SALE #: 4
ADDRESS: Cedar St Block /1�mto1�m) TER��S:Cash hoSeller
` '
ZONING: HA, Heavy Industria GRANTOR: B|unn Properties
LAND SIZE (SF): 51,500 SF GRANTEE: SB Development
SALE DATE: 8-21-2007 CONFIRMED BY: Alvin Bum
SALE PR/CE: $550.000 RECORDING: 12834-07
SALE PRICE/SF: $10.88
REMARKS: This property is the city block bounded by 15th and 16* Stneets, and by Cedar and
Sycamore Streets. The property consists of 10 lots, each 51.5' x 100'. separated by the city
alley. The parcel is mostly unimproved |end, with small bui/dings, which had no significant
contributory value according to the seer. The property was purchased by the developer of the
"pack site".
SALE #: 1
ADDRESS: 598 Central Avenue
CITY: Dubuque, IA
SITE SIZE: 5,170 SF
BUILDING SIZE (SF): 3,214
LJB RATIO: 1.60:1
SALE PRICE: $85,000
SALE PRICE /SF: $26.45
TERMS: Cash for Deed
GRANTOR: Richard Haberkorn
GRANTEE: Kenneth Jaeger
SALE DATE: 7- 142009
CONFIRMED BY: Grantee
IMPROVEMENTS: Auto Repair /Sales bldg.
RECORDING: 2009 -14231
REMARKS: One -story concrete block and the building utilized as an auto service garage and
sales facility. The property was in fair condition at the time of the sale and the buyer intended
to make significant improvements after the sale. The property is zoned C-4, Downtown
Commercial and previously sold in 2006 for $50,000.
SALE #: 2
ADDRESS: 1146 Elm Street
CITY: Dubuque, IA
SITE SIZE: 17,720 SF
BUILDING SIZE (Sr): 12,273
UB RATIO: 1.44:1
SALT PRICE: $410,000
SALE PRICE /SF: $33.41
TERMS: Cash for Deed
GRANTOR: Awesome Rental, Inc.
GRANTEE: Stackis, LLC
SALE DATE: 3 -26 -2009
CONFIRMED BY: Grantee
IMPROVEMENTS: Shop!Warehouse bldg.
RECORDING: 2009-5886
REMARKS: Located in the southwest corner of Elm Street and East 12'" Street. The building is
a one -story steel frame, metal clad structure built in 1955 with 12' sidewalls, There are 4
overhead doors. The property Is zonod HI (industrial) and the building was in average
condition.
SALE #: 3
ADDRESS: 1006 Central Avcmuo
CITY: Dubuque, IA
SITE SIZE: 12,800 SF
BUILDING SIZE (SF): 5,151
L/B RATIO: 2.49:1
SALE PRICE: $307,000
SALE PRICE /SF: $59.60
TERMS: Cash for Deed
GRANTOR: James Riedl
GRANTEE: DLTV, LLC
SALE DATE' 12-28-2007
CONFIRMED BY: Grantor
IMPROVEMENTS: Shop /Service bldg.
RECORDING: 2007 -19265
REMARKS: Located in the northeast corner of Central Avenue and East 10th Street. The
building is a one -story brick -faced shop /service structure built in 1977 with 15' ceiling height.
There are 3 overhead doors and the interior was mostly open shop area with a small office (8%
of building area). The interior was heated and only the office was air conditioned. The building
was in good condition. The property is zoned C -4, Downtown Cornmercial.
SALE *I: 4
ADDRESS: 165 Wostside Court
CITY: Dubuque, IA
SITE SIZE: 933,293 SF
BUILDING SIZE (SF): 3,750
LIB RATIO: 35.54 :1
SALE PRICE: $300,000
SALE PRICE/SF: $80.00
TERMS: Cash for Deed
GRANTOR: Roger Bruggeman
GRANTEE: Arthofer Properties, LLC
SALE DATE: 3 -31 -2009
CONFIRMED BY: Grantor
IMPROVEMENTS: Shop /Service bldg.
RECORDING: 2009 -6934
REMARKS: This property consisted of a steel frame. metal sided building (built In 1983) with
16' ceilings in the shop area, The interior of the building had three offices with a mezzanine
over the offices. The interior was about 1/3 finished, according to the seller. The sale was a
private sale, but was arrrnslength. The interior and offices were heated only and the building
was in good condition at the time of the sale. The buyer added 3,200 SF building to the site
after the purchase. The property has a large site and the main portion containing the buildings
is zoned CS, Commercial Service and the remainder is zoned PC, Planned Commercial.
SALE #: 5
ADDRESS: 210 Cedar Cross Road
CITY: Dubuque, IA
SITE SIZE: 48,787 SF
BUILDING SIZE (SF): 5.424
L/B RATIO. 8.99:1
SALE PRICE: $450,000
SALE PRICE /SF: $82.96
TERMS: Cash for Deed
GRANTOR: Jeffrey Meyer
GRANTEE: Keith and Tina Wolff
SALE DATE; 12 -27 -2007
CONFIRMED BY: Grantee
IMPROVEMENTS: Shop/Service bldg.
RECORDING: 2007 -1 9186
REMARKS: This property consisted of a steel frame, brick exterior building (built in 1993) with
approximately 80% radiant heated shop area with five overhead doors and the remainder is
finished office area with heating and air conditioning. The property was in good condition at the
time of the sale. The property was utilized as a muffler shop prior to the sale and is now owned
by a sign company. The property is zoned CS, Commercial Service.
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