Hartig / Finley Land Purchase
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MEMORANDUM
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September 1, 2005
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TO:
The Honorable Mayor and City Council Members
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FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Hartig/Finley Land Purchase
I received an August 25, 2005 letter from Finley Hospital Chief Executive Officer John
Knox requesting that the City sell land to the Dick Hartig/Finley Hospital partnership for
development of a Hartig Drug Store and a Finley Diabetes Center at $2.15 per square
foot for 32,685 square feet, for a total price of $70,500.
The City of Dubuque has an appraisal from Felderman Appraisals for this three-quarters
of an acre parcel of land for $25.00 per square foot, based on how much Hartig/Finley
paid for surrounding parcels.
You will recall that this item was on a previous City Council agenda to sell the land for
$4.56 per square foot. At 32,685 square feet, this would be $149,043.
In the letter, Mr. Knox referenced the $4.56 per square foot cost to purchase the land
from the City and said, "This is consistent with the figure you quoted Dick Hartig and me
during our first couple of meetings." I wanted to clarify this point. In the very first
discussion I had with Dick Hartig about this project, he advised me that the Finley/Hartig
project budgets included the same amount per square foot that HyVee paid the City for
land on Railroad Avenue. Based on this, the City did not get an appraisal and
continued discussions based on that value of $4.56 per square foot. Appraisals were
only commissioned when they later objected to the value they had first quoted.
In Mr. Knox's letter, he advises that the value of the homes they purchased adjoining
the City property should be deducted in the Felderman Appraisals from the purchase
prices to determine the value of the City land. The results of that exercise arrive at a
value of $4.98 per square foot, or $162,771.
In the letter Mr. Knox also makes a case that the value of the HyVee property is greater
than this property. I agree. However, HyVee had an estimated $269,000 in utility
relocation costs. Considering HyVee purchased 21,954 square feet of land for $4.56
a
THE FINLEY
HOSPITAL
IOWA HEALTH SYSTEM
350 N. GRANDVIEW AVENUE
DUBUQUE, IOWA 52001
563-582-1881 or 1-800-582-1891
www. finleyhospital.org
August 25, 2005
Michael C. Van Milligen
City Manager
City of Dubuque
50 West 13th Street
Dubuque, Iowa 52001-4864
Dear Mike:
Since our meeting of August 15, I have carefully reviewed the information you provided
me with Richard Hartig and Tom Kane, our appraiser. Since the Kehl Diabetes Center is
being built with dollars contributed by the community and an approved HRSA grant
fund, I feel obligated to ensure that the price we pay is reasonable.
After discussing R.J. Felderman's Appraisal of the parcels we are interested in with Tom
Kane and others, I am convinced Mr. Felderman's appraisal would not be supported by
most other licensed appraisers. To our knowtedge, the City of Dubuque has never sold
property for a price even close to $25 per square foot. The properties that Mr. Felderman
cites as comparables ignores the value of the houses on the property and treats the
purchases as if they were land only. It is irrelevant whether or not the houses are later
tom down. The houses have value and, in our case, are either being moved and given to
those who can't afford a home or salvaged for parts. If one does the math and separates
the house value from the land, the appraised value would be more in accordance with
T om Kane's appraisal.
During our meeting with Barry Lindahl and Gus Psihoyos, you acknowledged that the
$25 per square foot figure may be high and indicated a willingness to settle at the $4.56
per square foot figure used for the property purchased by HY - VEE. This is consistent
with the figure you quoted Dick Hartig and me during our first couple meetings. The
problem we have with this is that the property purchased by HY - VEE is zoned Industrial,
consisted of a large parcel that would accommodate a major building project with great
access to major roadways, and also is in a different area (Railroad A venue from Locust
Street to Harrison-Lot lA of Eagles Place). The property we are interested in consists
mostly of alleyways and has very limited usefulness. The October 2004 purchase by the
University of Dubuque of a city parcel at Lombard and Collins Street for $2.70 per
square foot or the alleyway The Finley Hospital purchased in September 2003 west of
Fifth Street for $1.27 per square foot seems to be far more reasonable comparisons.
The Finley Hospital and Grandview University LLC will be absorbing considerable
improvement costs to this area including relocated utilities, new side walks, curb and
gutter, pavement and landscaping estimated to total $180,992. Particularly in light of
these costs being absorbed by The Finley Hospital and Grandview University LLC, we
feel strongly that the $70,500 appraised value by Kane Appraisal and Real Estate
Services, Incorporated is reasonable. We would once again offer and ask you and the
City Council to consider our offer of $70,500 for the 32,685 square feet included in
Parcels A-I, A-2, B, C, and D.
Thanks for your consideration, and we look forward to hearing from you.
Sincerely,
~Z~
U~~. Knox
President and CEO
c: Richard Hartig
Mayor Terry Duggan
Council Member Dan Nicholson
Council Member Ann Michalski
Council Member John Markham
Council Member Roy Buol
Council Member Joyce Connors
Council Member Pat Cline
DU~~JE
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MEMORANDUM
August 31,2005
FROM:
Michael C. Van Milligen, City Manager
Gus Psihoyos, City Engineer.90
TO:
SUBJECT: Collins and Lombard Streets - Vacate & Sale to University of
Dubuque
BACKGROUND
The University of Dubuque requested the vacating of an unused portion of right-
of-way at the west side of the intersection of Collins and Lombard Streets. This
area was excess right-of-way since Lombard Street would not be extended west.
The University of Dubuque grading and landscape plan required a portion of the
excess right-of-way to accommodate the new roadway constructed from Dodge
Street (US Highway 20) to the campus.
DISCUSSION
The value of the land was determined by using the average of the assessed land
value of three (3) adjacent parcels. Two of the parcels had values of $3.30 per
square foot and one had a value of $1.51. The area of the parcel to be vacated
was 626 feet and irregular in shape. Adequate right-of-way was retained for the
installation of sidewalk and utilities behind the curb.
The normal procedure for non-controversial vacates of small pieces of excess
right-of-way is to prorate the average accessed land value over the area to be
vacated. The proposed Stewart Street vacate differed from the Collins/Lombard
Streets area in the following ways:
1. The area to be vacated is not excess right-of-way, but right-at-way
currently being used tor public roads and utilities.
Page 2
August 31, 2005
2. The right-at-way is not a small non-controversial area, based on the
following:
a) 32,235 square feet versus 626 square feet.
b) Existing public roads connecting homes and businesses.
c) Public utilities that need to be relocated.
d) Removal of residential housing.
e) Close proximity to highly-traveled streets.
cc: Ronald J. Turner, PLS
Attachs.
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PREPARED BY: LAWRENCE A. BOYER L.S. 9761 WHKS &: CO. 470 CENTRAL AVE. DUBUQUE IOWA 52001 563 582 5461
PLAT OF SURVEY
LOT A OF LOT 2 OF 2 OF MINERAL LOT 156 IN THE
CITY OF DUBUQUE, DUBUQUE COUNTY, IOWA
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LOCATED IN SECTION 26. TB9H. R2E
OF FIFTH PRINCIPAL MERIDIAN.
DUBUQUE COUNTY. IOWA
SURVEY REQUESTED BY:
University Of Dubuque.
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I hereby certify that this land survey!ng document W05 prepared
and the raatcG survey wert wa:s performed by me or under my
direct personal ~perilisKm and that I om 0 duly licensed Lana
Surve nder the 10". of the Slole of Iowa.
license Number 9761
Wy Itc:ense rene_OIl dote.. O-=-nber 31. 2004.
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PROJECT: 5319.02
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FINLEY/PROPERTY RATIO
715 Stewart Street
Lot Square Footage
Courthouse Value of Land
Courthouse Square Footage Value
Recent Sale Price to Finley
Courthouse Value
Finley Sale/Courthouse Ratio
Adjusted Square Footage Value
$ 12,100 + 3,800
$114,590 + $ 74,000
$ 3.18 x $ 1.53
655 Stewart Street
Lot Square Footage
Courthouse Value of Land
Courthouse Square Footage Value
Recent Sale Price to Finley
Courthouse Value
Finley Sale/Courthouse Ratio
Adjusted Square Footage Value
$ 12,000 + 3,939
$130,000 + $ 66,000
$ 3.05 x $ 1.97
1610 University Avenue
Lot Square Footage
Courthouse Value of Land
Courthouse Square Footage Value
Recent Sale Price to Finley
Courthouse Value
Finley Sale/Courthouse Ratio
Adjusted Square Footage Value
$ 14,000 + 4,836
$119,000 + $ 85,400
$ 2.89 x $ 1.40
Average Value of Properties Based on Calculation Method
(715 Stewart Street, 655 Stewart Street, 1610 University
Avenue) )
08:30:05
G. Psihoyos
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3,800
$ 12,100
$ 3.18
$114,590
$ 74,800
$ 1.53
$ 4.87
3,939
$ 12,000
$ 3.05
$130,000
$ 66,000
$ 1.97
$ 6.01
4,836
$ 14,000
$ 2.89
$119,000
$ 85,400
$ 1.39
$ 4.05
$
4.98
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Jack Felderman
From: Bob Felderman [robertfelderman@yahoo.com]
Sent: Saturday, August 13, 20054:48 PM
To: jackfelderman@feldermans.com
Subject: Finley Hospitals Appraisals by Kane
The key to what he did is his statement of highest and best use, plus the comparables he used.
It is obvious that he did not read his best use, which specifically states ... well suited for development and access and
visibility are good.
Regarding the comparables, he used those that are not acceptable in the real estate market - sales from DOT and from
CITY.
#1 is a sale of excess highway land from DOT. It was blocked access and no one else could have used it. Development
potential listed as fair.
#2 is sale from City of Dubuque, with potential listed as fair/average.
#3 is sale of alley vacated by city (we did appraisal). Property was poor access and he lists as fair/average potential for
development.
#4 appears to be arms length sale but was in 2003. Says good potential, but it was before any of the current sales.
#5 was zoned industrial, located along highway (we did appraisal for sale) and was sold by the City for commercial
use. So it is not applicable.
My main fault with the appraisal is it did not use any sales from the immediate area, in the past 6 months (though the
report says they looked), and purchased for the same use.
It is my opinion that none of his comparables are applicable to the CURRENT value of the subject property.
As I stated in our report, the costs for removal of utilities impacted the value (and I made adjustments for that figure).
Fee, plus cost of mailing, would be $200.
Do they want a formal report? If so, it would take quite a bit more time.
PS in the future, talk to me about the reports before you spend the money to mail four of the same report to me. I only
needed to have a few pages scanned and sent to me.
Bob Felderman
(719) 492-7758 Cell
robertfelderman@yahoo. com - nights
robertfelderman@us.army.mil- days
8/15/2005