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<br />Nagell Appraisal Incorporated | 952.544.8966 Page 39
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<br />HIGHEST AND BEST USE
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<br />Highest and best use as defined in The Appraisal of Real Estate, Thirteenth Edition, by the Appraisal Institute, is:
<br />"The reasonably probable and legal use of vacant land or an improved property, that is physically possible, legally
<br />permissible, appropriately supported, financially feasible, and that results in the highest value.” Highest and best use
<br />is analyzed in two ways, site as vacant and site as improved.
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<br />Typically, there are four criteria in highest and best use analysis
<br />Legally permissible uses What uses are allowed by zoning?
<br />Physically possible uses What uses are physically possible on the site?
<br />Financially feasible use Which possible and permissible uses will produce a positive return?
<br />Maximally productive use Of the financially feasible uses, which use produces the highest return warranted by the market
<br />(the ideal improvements)?
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<br />Site as Vacant: Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are
<br />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
<br />made vacant by demolishing any improvements. The Dictionary of Real Estate Appraisal, Fifth Edition, by the Appraisal Institute.
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<br />Legally Permissible Uses: The current B-3, Highway Business zoning allows for a variety of office and
<br />commercial related uses. The site appears to be guided for a Mixed-Use PUD, which allows for
<br />commercial and residential.
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<br />The city is considering multiple scenarios for the subject, including 100% multi-family, potentially 100%
<br />commercial, as well as a mixture of both uses.
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<br />The below analysis assumes the following. The information is based on documents provided by the city.
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<br />100% Apartments: Total of 135 units, density of 35.5 units per acre
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<br />Apartment/Commercial Mixture: Total of 63 units, density of 27.4 units per acre
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<br />Likely Commercial Pad Area: 1.5 acres or 65,340 SF
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<br />The above could change as the city determines final density and commercial areas. This could result in
<br />varying values; for example, more apartment units would likely increase the value while fewer units would
<br />likely decrease the value.
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<br />Physically Possible Uses: The physical characteristics of the site appear suitable for development ; the
<br />site has average appeal and average visibility. The site is mostly level and the site shape would allow for
<br />typical building placement. Public utilities are available (gas, electricity, water, sanitary sewer).
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<br />Per Brian Beeman, a developer would have to remove the existing Greenfield Avenue on the site and
<br />then reconstruct a connector street from Edgewood Drive to Greenfield Avenue (see prior maps). A
<br />developer would consider this cost when purchasing the subject.
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<br />The existing road has an area of about 10,000 SF. Assuming razing costs of $2 per SF (per Marshall &
<br />Swift), the total cost to remove the road is about $20,000.
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<br />To construct a new road, concrete curb and gutter, storm sewer, asphalt base, 30’ wide, etc. would be,
<br />per Marshall & Swift, about $300 per linear foot. The distance from Edgewood Drive to Greenfield Avenue
<br />is about 290’, which implies a road cost of $87,000.
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<br />The total cost to reconfigure the roads is therefore $87,000 + $20,000 = $110,000 rounded
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<br />Note: It is assumed the subject does not have any major soil corrections, if found to be otherwise any
<br />value conclusions could differ.
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