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8. Range of Value for Schreiner OfferingIt 0 CIS 2 Incorporated 1892 Planning, Economic & Community Development Department P.O. Box 1997 Kalispell, MT 59903-1997 TO: Bruce Williams, City Manager FROM: Lawrence Gallagher, PECDD, Director DATE: March 13, 1995 248 Third Avenue East (406) 758-7740 (406) 758-7739 (office fax) (406) 758-7758 (City Hall fax) SUBJECT: "Range -of -value" recommendation for Parcel C of Tract 5DL in Section 18, T28N, R21W - (Schreiner Request to Purchase). See Plat/preliminary survey attached You have asked me to inspect Parcel C of Tract 5DL in Section 18, T28N, R21W; and, to determine if there is (i) an existing public use or a need to retain it for public use and if not, (ii) to suggest the highest and best use, and finally, (iv) to suggest a range of value for the highest and best use so the land may be offered for sale. I understand that the City Council may use the information to determine if it should offer the land for sale to the adjacent property owner(s) or others who may wish to bid on it if it is publicly offered for sale. I also understand that this Memorandum is not to be considered an appraisal of the property but merely a discussion of land use and value considerations which may be considered by the City Council to aid it in making a policy decision. Glenn Neier, City Attorney, has advised the Council that it may exercise its legislative authority to establish a market value for the property without a formal appraisal should it decide to do so. Ownership - History and Description of the Property: Brian J. Wood, Zoning Administrator, provided a description of the property, the Schreiner's request, and his observations in a MEMORANDUM dated February, 22, 1995. It is attached. To summarize: The Schreiner's own Parcel 5DLB which is improved with a single family rental property and a large free standing garage. They desire to purchase the triangular shaped (Parcel C) piece of property, approximately 1,651 square feet, owned by the City of Kalispell so that they my build another (attached) single family dwelling on the site. Parcel C of Tract 5DL abuts the Schreiner's northerly property line and the existing garage. The garage is used by the Schreiner's for storage of business property. A Duplex is a permitted use in the R-4 District, however, there is a maximum lot coverage of 40 percent and the Schreiner's need more land. Parcel C of Tract 5DL Valuation Memorandum March 13, 1995 Parcel C, the subject property is shaped like a triangle with 4.95 feet on Meridian Road, its westerly boundary; its northerly boundary is formed by 113.26' abutting Parcel "B" which is a 20' wide undedicated public alley providing access to multiple private garages, car ports and residential dwelling units which front on Fourth Street East and also Tenth Avenue. Peterson School and the PeeWee baseball fields are adjacent to and north of the alley. The property's 24.01' easterly boundary abuts Tract SDM, owned by Francis Wall, 113 4th Street West, who has constructed a fence into the right-of-way forming a drive -way and access to a double car garage. The southerly property line is 116' abutting Parcel 5DLB, an L shaped parcel owned by Schreiner's. The Schreiner's garage is accessed from Meridian Road and the public alley. It appears that the Francis Wall's garage is also accessed via the public alley and Parcel C. There is another single family dwelling located on the Northeast corner of Meridian Road and 4th Street West. Highest and best use: Page 2 According to Public Works Director, Bob Babb, the 20' wide alley is adequate to serve the neighborhood; thus, Parcel C is not necessary to enable the alley to function. He did not know why the alley has never been dedicated as a public alley and suggested that the city should do so. Once the alley is dedicated there is no reason why the parcel should be held by the City. Because the alley separates Parcel C from Parcel A the Peterson School/PeeWee ball fields, it is not necessary to improve or enhance the function or utility of the park. Also, the Park is fenced so there is no direct or free access directly from the alley. The site is obviously not part of the schools park maintenance or landscaping management plan. Parcel C does provide a wide alley corridor enhancing both access and visibility for the Park, alley, the Francis Wall property and the Schreiner property (51)LB). However, the alley right-of-way is unimproved, unlighted, and unlandscaped and is not paved. If the City sold the property, it could restrict a building on the site and therefore visibility would be maintained the major benefit to the public. If the Schreiner's obtained ownership to the property they would be able to construct an additional single family dwelling on Parcel 5DLB. City policy has been to encourage both density and the construction residential units ---The highest and best use of all properly zoned residential within the City. The current zoning of the subject property is R-4 residential as is the adjacent property to the north. A duplex is a permitted use in the R-4 district provided the 40 % maximum lot coverage can be adhered to. If Parcel C were purchase by the adjacent property owner (Parcel 5DLB) with restrictions to prohibit construction of improvements which Parcel C of Tract 5DL Valuation Memorandum March 13, 1995 Page 3 would impede access or visibility and to require alley paving and/or landscaping of Parcel C, the Highest -and -best -use would be to sell the property to the Schreiners. The City does not have the ability to negotiate the sale of the land and must first publicly offer it for sale through legal publication of a Notice of Intent to Sell. The City must consider a bid from anyone interested in submitting a bid which meets minimum requirements. Value: There are three methods of determining the fair market value for the land. The comparable sales method may be considered the most valid unless one wants to get into a complex land residual valuation to determine how Parcel 5DLB would benefit if Parcel C's annexation enabled the construction of a duplex and thus, enhanced the income potential of the Parcel 5DLB when and if a second dwelling unit was constructed. On the other hand, If the City needed to acquire Parcel C for public right-of-way it would no doubt use the "partial takings --before and after" method of determining value. If Parcel C was being severed from Parcel 5DLB, limiting rather than enhancing value, visibility and access, it could easily be appraised at the highest square foot value for any R-4 residential comparable or the land impact on the present value of an income stream potential to be derived from a 2nd residential rental on the Parcel 5DLB. Another method would be to determine the value of the alley with and without Parcel C and thus establish the value of Parcel C. This would be difficult to do because the market data is a little scarce. The City hasn't purchased many alley's lately Having said all that, I recommend a simple market comparable approach to value utilizing a range of land values extrapolated from the sale of older residential properties and a few vacant land sales in similar residential neighborhoods. I did not have the time to investigate the market or independently verify market comparable sales. Instead, I reviewed recent acquisition appraisals, estimates of value offered by competent real estate appraisers, and I extrapolated a range of value for the land. This method of establishing value of a buildable lot could be supported by a reasonable vacant lot comparison of the Flathead Industries For The Handicapped acquisition of 21,120 square feet to be resubdivided into 3 multifamily lots at a purchase price of $2.37 per square foot. Other R-4 residential lots in new subdivisions range as high as $3.00 per square foot but not along a major arterial with a PeeWee Baseball field/school playground in the backyard. Both factors which limit rather than enhance a residential lot value. I was able to look at the data on Ten (10) residential properties used as market comps in recent appraisals done for the city. The average house had 1449 square feet of area and occupied an R-4 zoned lot of 7,941 square feet. If the average dwelling was valued at $30 - $35 Parcel C of Tract 5DL Valuation Memorandum March 13, 1995 Page 4 per square foot a value range of $44,070 to $51,415 for improvement value the land residual range of value for a 7,941 square foot lot would be from $13,325 to $20,670 or $1.68 to $2.60 per square foot. There are other comparable sales and other methods of arriving at value. If one was to explore them all I am confident the range of value would still bounce in the $2.00 to $2.50/SF. Therefore I would recommend that the City consider offering the property for the minimum range of value ($2.00) or approximately $3,302 (1,651 X $2.00 = $3,302). Or, the City could consider offering the property for a lesser amount, say $1.00 per square foot and require that the successful bidder pave the alley along the entire length of the parcel and landscape the lot so that it improves the neighborhood. In other words, provide some incentives to improve the neighborhood and increase the inventory of residential dwelling units in the area. The City of Kalispell Building Department Brian J. Wood Zoning Administrator TO: FROM: DATE: RE: Incorporated 1892 Telephone (406) 758-7730 248 3rd Avenue East PO Box 1997 Zip 59903 Fax (406) 758-7739 Larry Gallagher, PECDD Director Brian J. Wood, Zoning Administrator BY February 22, 1995 Schreiner Request - Appraisal At the February 13th city council workshop this department was directed to establish a range of values for Parcel C of Tract 5DL in Section 18, T28N, R21W (see attached drawing) in order to facilitate a possible sale of that property by the city. To assist you in establishing this range, the following information is provided: - The party interested in acquiring the subject property, the Schreiners, own Tract 5DLB. Existing improvements on 5DLB include a single-family dwelling and a large garage with an attached carport. It is their stated intent to add a second dwelling unit to the existing home on 5DLB. - The current zoning of the property is R-4 residential. A duplex is a permitted use in the R-4 district, and the Schreiners could add a second dwelling unit to the existing structure if all development standards of the R-4 district (attached) are met. - Maximum lot coverage in the R-4 district is 40%. This is a limiting factor for the Schreiners, given the existing improvements on the property. By acquiring Parcel "C" of Tract 5DL, the Schreiners would add approximately 1,650 square feet of land to their present.holdings and be allowed to construct a larger dwelling unit. - According to County records, Tract 5DL is owned by the City of Kalispell (Assessor's # E028550). Parcel "A" of this tract is parkland, Parcel "B" is an alley segment (though not an established alley of record), and the subject parcel, Parcel "C" is vacant and unused. Automobiles associated with the adjacent PeeWee baseball fields do occassionally park on Parcel "C" during the baseball season. - Documentation provided by the Schreiners indicate the size of Parcel "C" to be 1,651 square feet. If the City advertises and sells the property, it will be the responsibility of the purchaser to have the property surveyed and recorded. - Staff is unable to identify a "need" for the City to retain ownership of the property. The width and integrity of the existing alleyway will not be compromised by disposing Parcel Fr C " - It appears that the subject property would b.e of benefit to no party other than the Schreiners, the sole adjacent property owners. R-4 Residential - Page 13 R-4 RESIDENTIAL Sections: 27.07.010 Intent 27.07.020 Permitted uses 27.07.030 Uses Which May Be Permitted By Conditional Use Permit 27.07.040 Property Development Standards 27.07.010: Intent. A residential district with minimum lot areas. Development within the district will require all public utilities, and all community facilities. Two-family dwellings are permitted in this district. 27.07.020: Permitted uses. (1). Boarding house, incidental (see definition). (2). Day care (family or group day-care homes). (3). Dwelling, duplex. (4). Dwelling, single family. (5). Parks. 27.07.030: Uses which May Be Permitted By Conditional use Permit. (1). Bed and breakfast. (2). Church/worship/parish/sunday school buildings. (3). Community center/gym/swim pools -operated by public/quasi-public. (4). Community residential facility for eight (8) or fewer persons. (5). Day care center. (6). Dwellings, cluster development. (7). Electrical distribution Station. (8). Foster or group homes serving eight (8) or fewer persons. (9). Golf courses. (10). Law enforcement/fire stations. (11). Railroad rights -of -way. (12). Recreational area, non-commercial. (13). Schools, public/private, grades 1-12. (14). Temporary building/structure. (15). Water storage facilities. ,Page 14 - Kalispell Zoning Ordnance 27.07.040: Property Development Standards (1). Minimum Lot Area: 6000 square feet (2). 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