Agenda - Council - 04/09/2019 - Laserfiche WebLink

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HIGHEST AND BEST USE Highest and best use as defined in The Appraisal of Real Estate, Thirteenth Edition, by the Appraisal Institute, is: "The reasonably probable and legal use of vacant land or an improved property, that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value." Highest and best use is analyzed in two ways, site as vacant and site as improved. Typically, there are four criteria in highest and best use analysis Legally permissible uses What uses are allowed by zoning? Physically possible uses What uses are physically possible on the site? Financially feasible use Which possible and permissible uses will produce a positive return? Maximally productive use Of the financially feasible uses, which use produces the highest return warranted by the market (the ideal improvements)? Site as Vacant: Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. The Dictionary of Real Estate Appraisal, Fifth Edition, by the Appraisal Institute. Legally Permissible Uses: The current B-2, Business District zoning allows for a variety of office and commercial related uses, along with multiple conditional commercial uses. The site appears to be guided for a commercial related use. Physically Possible Uses: The physical characteristics of the site appear suitable for development; the site has average appeal and average to good visibility from Highway 10. The site is mostly level and the site shape would allow for typical building placement. Public utilities are available (electricity, water, sanitary sewer), public gas is not available at this time. Financially Feasible Uses: Typically, surrounding uses, market demand, and availability of financing drive financially feasible uses. Surrounding Uses: Uses in the immediate area are a mixture of open land, commercial, and residential. To the west of the subject, as well as in the greater area, are additional commercial uses (RV sales). Given the access and visibility, a destination commercial use would be supported in the market by the surrounding uses. Financing: Over the past 3+ years, financing has loosened up since the "Great Recession". However, borrowers typically must be well qualified with 20% to 30% down. For new projects, lenders commonly require significant pre -leasing activity for multi -tenant properties. Financing for owner occupied projects is rated to be average. Market Demand: Market demand for commercial land in the subject area is average. There is available land in the area for development, however, land prices have been increasing. The subject, with highway visibility and public utilities, does have appeal in the market. Financially Feasible Uses: A destination commercial use would be logical for development in the next 1 to 3 years +. Maximally Productive Use: The subject is surrounded by vacant land, highway commercial, and residential. The site has average to good visibility and access to surrounding roads. Given the subject's zoning, frontage, and access, the highest and best use for the subject site as vacant would be for a destination commercial development. The site would likely be improved with a single -occupant building. Typical construction in the market results in average to good quality and land -to -building ratios of 3 to 8 to 1.0. This would imply a total building area of 4,000 SF to 10,000 SF.