HomeMy WebLinkAbout4.2 9165 and 8991 West Point Douglas Road Appraisals
TO: Economic Development Authority
FROM: Matt Wolf, Economic Development Coordinator
DATE: August 4, 2020
RE: 9165 and 8991 W. Point Douglas Property Appraisal Reports
Introduction
Based on Minnesota State Statute 469.101 an economic development authority in the State of
Minnesota may acquire by lease, purchase, gift, or devise the needed right, title, and interest in
property to create economic development districts. The Economic Development Authority (EDA)
currently purchases property to facilitate development in the Cottage Grove Business Park such
as Airgas, Renewal by Andersen expansion, and Gardenworld project. Further the EDA looks to
develop blighted parcels or parcels that are not consistent with future land use or development
plans within the community. This was the case in June of 2019 when the EDA approved
purchasing the former transmission shop at 7470 East Point Douglas. In all cases the EDA and
the City of Cottage Grove work to leverage these parcels for investment in the form of property
tax and jobs in the community.
Discussion
9165 and 8991 West Point Douglas Property – Langdon Village
The properties located at 9165 West Point Douglas Road South (9.27 acres) and 8991 West Point
Douglas Road South (1.8 acres) are both currently for sale. Both properties are part of the
Langdon Village area, which is located southeast of Highway 61/10 and Jamaica Avenue.
Currently the area is made up of 65 acres including 12 residential properties, two commercial
properties, and the City of Cottage Grove Public Works facility. Of the 65 acres the Cottage Grove
th
Economic Development Authority currently owns eight acres of the land south of 96 Street, which
is currently leased for farming. Langdon Village is guided per the City’s 2040 Comprehensive
Plan as mixed-use development, with the plan calling for:
“a walkable mix of commercial and community businesses and activities, serving a new higher
density neighborhood as well as the broader city. It could expand Cottage Grove’s retail, both in
terms of land area, and in terms of offering a different character of retail development” (page 26
City of Cottage Grove Comprehensive Plan).
A master plan was created for the area in 2018 by Stantec that demonstrates how the area
could potentially develop in the future; a mix of commercial, residential, and mixed use. The
th
plan also depicts the future West Point Douglas and 100 Street realignment (Southwest
Arterial Study). Recently developers have shown interest in the area with MWF Properties in
2018 approaching the City for the development of a 174-unit workforce housing project. The
project did not receive the necessary funding through the Department of Minnesota Housing but
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 2 of 10
the developer remains interested in the community. To facilitate this area for development it is
in the City’s best interest if the Economic Development Authority explore purchasing these
properties for future development that is in line with the Comprehensive Plan and remove blight
in the area.
Figure 1 Concept plan of Langdon Village completed by Stantec in 2018.
Appraisal Reports
The EDA approved the appraisals of
9165 and 8991 West Point Douglas by
Patch Messner Valuation Counselors
th
at their June 9, 2020 EDA meeting by
a vote of 7-to-0. The City Council
approved the appraisals at their June
17, 2020 meeting by a vote 5-to-0.
Patch Messner Valuation Counselors
completed their appraisals of both
properties on July 16, 2020.
The property at 9165 West Point
Douglas is the former Majestic
Figure 2 Aerial of 9165 and 8991 West Point Douglas
Ballroom site and sits on 9.27 acres of
2
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 3 of 10
land. The building is currently in disrepair and not habitable. Based on the appraisal the
property has a market value range of $1,655,000 to $1,745,000. With the report reading:
“The site is improved with a commercial property that was built in 1973 and comprises 18,000
SF of gross building area (GBA). Reportedly, the subject building improvements are in poor
condition and contribute a nominal value to the overall property. As such, based on the June 24,
2020 inspection of the subject property, and after consideration of the many factors influencing
market value, it is the appraiser’s opinion the fee simple market value range for the subject
property is $1,655,000 to $1,745,000.”
Figure 3 Interior photo of 9165 West Point Douglas Road.
The property at 8991 West Point Douglas is currently a single-family residential home that sits
on 1.8 acres. Based on the appraisal the property has a market value of $306,000. With the
report reading:
“The site is improved with a single-family home that was built in 1965 and comprises 976 SF of
finished living area. However, the highest and best use of the subject property is for
redevelopment to a destination-oriented commercial use with the existing single-family home as
an interim use. As such, based on the June 24, 2020 inspection of the subject property, and
after consideration of the many factors influencing market value, it is the appraiser’s opinion the
subject’s fee simple market value is $306,000.”
Currently both properties have a future land use designation of mixed use in both the 2030 and
2040 comprehensive plans allowing for commercial, high density residential, or a mix of both.
The properties are currently zoned B2, Retail Business District per the City’s zoning code.
3
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 4 of 10
Comparable Sales
In doing an appraisal of a property the general industry standard is to use one of three
approaches. The first is the cost approach which considers the current cost of replacing the
property, less the depreciation from three sources: physical deterioration, functional
obsolescence, and external obsolescence. The second approach is the sales comparison
approach which produces an estimate of value by comparing the subject property to sales of
similar properties in the competing areas. The final approach is the income approach, which is
based on an estimate of the subject property’s possible net income. Since both properties are
either blighted or an obsolete legal-nonconforming use, the sales comparison approach was
used to appraise the properties.
The appraiser used the sale of comparable land in the surrounding area from 2017 to present.
These sales are similar in highest and best use with the appraiser focusing on commercial uses,
location, zoning/future land use, size and appeal. Table 1 features each of these properties’
city, use, date sold, square feet of the land, acres of land, total price, and price per square foot.
Added to the table are also the properties of 8991 and 9165 West Point Douglas if they were to
be sold at their lowest appraised valuation.
Table 1 Comparable land sales used by the appraiser to determine market value of 8991 and 9165 West Point Douglas Road.
Address City Use Date Square Acres Price Price/SF
Feet
8991 West Point Douglas Cottage Mixed TBD 45,302 1.04 $306,000 $6.75
Road S. Grove Use
9165 West Point Douglas Cottage Mixed TBD 303,398 6.97 $1,655,000 $5.45
Road S. Grove Use
15265 Carrousel Way Rosemount Medical Apr-57,253 1.31 $414,512 $7.24
Office 20
5715 Memorial Avenue N. Oak Park Medical Mar-239,632 5.5 $1,750,000 $7.30
Heights Office 20
SEC Osgood Avenue & Oak Park Auto Jun-113,692 2.61 $550,000 $4.84
Osman Avenue Heights Repair 19
XXXX Keokuk Avenue Lakeville Office Mar-243,065 5.58 $1,884,000 $7.75
Building 18
1325 Corporate Center Eagan Hotel May-97,690 2.24 $585,000 $5.99
Curve 17
To give the EDA an idea of similar properties sold in the City of Cottage Grove Table 2 below
shows the sale of land for commercial and high-density residential properties. These uses
would match the mixed use intended land use per the City’s Comprehensive plan for the area.
Table 2 Commercial and High-Density Multi-Family Residential land sales in the City of Cottage Grove.
Commercial Sale Price Acres Square Feet Price/SF
(SF)
Pizza Ranch (Restaurant) $600,000 1.67 72,745 $8.25
Junction 70 Grill (Restaurant) $332,789 1.05 45,738 $7.28
Primrose School (Office) $548,910 1.68 73,180 $7.44
4
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 5 of 10
High Density Multi-Family Residential
Legends of Cottage Grove $199,500 1.63 71,002 $2.81
Legends of Cottage Grove $750,000 3.22 140,263 $5.35
80th and Hemingway LLC $400,000 3.19 138,956 $2.88
Potential Investment: Return and Challenges
Before any funds are spent on acquisition it is important that all potential strengths and
weaknesses are known about the sites to make the best decision moving forward on any potential
purchase. The below table layouts out a SWOT analysis for the sites.
Table 3 Strengths, Weaknesses, Opportunities and Threats for the potential purchase or sale of the properties.
Strengths Weaknesses Opportunities Threats
Great site lines, Currently traffic Long term Retail and
visibility, and counts are not high investment in the restaurants want to
access from enough to attract community that can be on or as close
th
Highway 61/10. commercial allow for the City to as possible to 80
development until help develop its Street and East
Langdon develops vision for the area. Point Douglas
further. Intersection
Remove obsolete Infrastructure is not The parcel can be Both properties
legal-currently available competitively priced have remained on
nonconforming at site, no to allow for the market during a
uses and blighted secondary access development before strong economic
buildings from Innovation more costly sites at period without
th
Road and any both 80 Street and being sold.
project will need Jamaica
assistance commercial
extending the corridors.
infrastructure to the
site.
Gain controlling No current or future Potential in future Langdon Village
interest of parcels plans for to purchase may be looked over
to leverage transportation, additional parcels for the Shoppes at
maximum which helps create surrounding the site Cottage View or
investment for the and attract high-to create Langdon deter development
community. density residential. Master Plan. at the Shoppes at
Cottage View if it
develops first.
5
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 6 of 10
Demolition and Environmental Costs
If the EDA moves forward with purchasing either of the properties, the buildings and parking lot
at 9165 West Point Douglas will have to be demolished to clear the land for future development.
The EDA can choose to leave both properties in their current state but one of the benefits of
buying the properties is removing the obsolete non-conforming uses and blighted buildings. For
the EDA to get an estimate of the possible costs for removing the buildings staff gathered
demolition and environmental quotes from contractors to remove the buildings. The demolition
quotes include demolition of the building following Minnesota Pollution Control Agency
guidelines, abandonment of the well and septic systems, and restoration of the disturbed area
with 4” of topsoil and seed. The environmental work for each property contains costs of a phase
1 site assessment study and a pre-demolition hazardous building materials inspection.
Table 4 Demolition and Environmental Estimates for 8991 West Point Douglas Road.
8991 West Point Douglas Road
Plus 15%
Demolition Quotes Contingency plus Total Cost
Indirect Costs
Veit $22,000 $3,300 $25,300
Frattalone $22,150 $3,323 $25,473
JM Hauling LLC $19,550 $2,933 $22,483
Plus 15%
Environmental Quotes Contingency plus Total Cost
Indirect Costs
Braun Intertec $4,415 $662 $5,077
Wenck $5,110 $767 $5,877
Table 5 Demolition and Environmental Estimates for 9165 West Point Douglas Road.
9165 West Point Douglas Road
Plus 15%
Contingency
Demolition Quotes Total Cost
plus Indirect
Costs
Veit $142,000 $21,300 $163,300
Frattalone $132,316 $19,847 $152,163
JM Hauling LLC $64,710 $9,707 $74,417
Plus 15%
Contingency
Environmental Quotes Total Cost
plus Indirect
Costs
Braun Intertec $5,595 $839 $6,434
Wenck $5,110 $767 $5,877
6
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 7 of 10
Based on the lowest quotes received it is estimated that it would cost a total of $27,560 to
conduct the environmental and demolish the building at 8991 West Point Douglas Road. To
remove the building at 9165 it would cost $80,851 for both demolition and environmental studies
on the property. However, the demolition costs may increase based on what is found during the
Phase 1 Environmental Study and the Hazmat Inspection that need to occur on the sites.
Infrastructure Costs
One of the challenges that needs to be addressed as part of the development of Langdon
Village is the current lack of infrastructure in place to attract development. When MWF
Properties was interested in developing an affordable housing development at Langdon Village
in 2018 the staff worked with our engineering consultant to develop potential costs for the
infrastructure. These cost estimates included running sanitary sewer, watermain, storm sewer,
streets and lights for the main parcels that are part of Langdon Village. In total those items were
estimated to cost $3,762,000 for the areas highlighted in Figure 3 on page 7.
If the City wanted to take a more aggressive approach to development in the Langdon Village
area the EDA and City Council could consider using a redevelopment TIF (tax increment
financing) district for the properties.
Figure 4 Map of West Point Douglas Utility and Street Improvements in Langdon Village
Redevelopment TIF District
7
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 8 of 10
The properties located at 8991 and 9165 West Point Douglas are both obsolete non-conforming
uses and blighted buildings. As a result, they do potentially qualify for a redevelopment TIF
district per Minnesota State Statute 469.174. Redevelopment TIF districts run for a period of 26
years. Using the Langdon Village Concept Plan shown in Figure 4, it is estimated that the
parcels at 8991 and 9165 West Point Douglas would be developed into one commercial building
around 7,000 square feet and two mixed-use buildings each at 30,500 square feet with
commercial on the ground floor and multi-family on floors 2 through 4. Using these estimates
there would be 112 apartments units and 68,000 square feet of retail.
Figure 5 Langdon Village Concept Plan with 8991 and 9165 West Point Douglas highlighted in yellow.
Based on the concept plan and the development scenario listed on page 7 the City’s financial
consultant Ehlers estimated the parcels would generate $3.44 million in tax increment financing
over the 26-year life of the TIF district. Further, if the EDA and City Council were to consider a
redevelopment TIF district as an option for these parcels as part of the Minnesota State Statute
there is an option to pass a demolition resolution that could delay the start of the TIF for up to
three years. This would allow the buildings to be removed immediately and give the City three
years to find a developer before starting the TIF District. In this scenario then the demolition
resolution would be passed in the beginning of 2021 and the buildings removed. The City would
actively look for a developer and have until the end of 2024 to find an interested party. The
Redevelopment TIF District would then start in 2025 with development needing to be completed
by the end of 2026, the full potential schedule is listed in Table 6 below.
8
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 9 of 10
Table 6 Proposed schedule if a redevelopment TIF district was used to help finance infrastructure improvements in Langdon
Village.
Proposed Redevelopment TIF District used to pay for Infrastructure Costs
Timeline
2020 Purchase of Properties at 9165 and 8991 West Point Douglas Road
2021 Resolution of Demolition is Passed by EDA and City Council and
buildings demolished.
2022-Market sites to developer
2024
2025 Start Redevelopment TIF District
2026 Development of parcels is complete by developer and infrastructure is
installed by the City of Cottage Grove
2051 Redevelopment TIF District Ends*
*Based on the Langdon Village master plan, the TIF District would generate $3.44 million in TIF if fully
developed by the end of 2026.
If no developer could be found by the end of 2024, the demolition resolution would end and there
would be no future opportunity to use a Redevelopment TIF District for the sites.
The other option for the properties would be to leave the buildings until a developer is found who
wished to develop the parcels. This would delay the properties demolition but would allow for the
use of a redevelopment TIF district indefinitely with no time limit for implementation. However, this
scenario would not remove the blighted conditions that currently exist on the parcels.
Conclusion
The property at 8991 West Point Douglas Road is a legal nonconforming use and has the potential
to be sold and remain a single family for the significant future. If the EDA and City of Cottage
Grove would like to fulfill the potential vision for the Langdon Village area staff believes it is in the
best interest for the City to purchase the property now for redevelopment in the future. This would
allow the site to be redeveloped for commercial and/or mixed-use in the future and prevent the
City from having to pay significantly more in the future for potential relocation expenses if
continued to be used as a single-family home. However, if the site is purchased it should be
looked at as a long-term investment in Langdon Village especially if the property at 9165 West
Point Douglas is not purchased.
The property at 9165 West Point Douglas Road is a tougher question to address and staff is
asking for discussion to be had on the long-term planning for the area. The market has left
9165 West Point Douglas for sale for an extended period. Some of the issues that make the
property unappealing to a developer could be addressed by the City such as potentially
financing the infrastructure through a Redevelopment TIF District or working with the County to
develop a secondary access to the area from the Innovation Road Exit off Highway 61/10.
However, the site may come with high environmental clean-up costs that needs to be
addressed, which is something the City and EDA will not know until due diligence is completed
before purchase of the property. In order to determine those potential clean-up costs the City
will need to spend $5,877 to conduct a Phase I Site Assessment and a Pre-Demolition
9
Economic Development Authority
8991 W. Point Douglas Appraisal
August 4, 2020
Page 10 of 10
Hazardous Materials Inspection. There are also long-term items that the City cannot address
and will remain long term challenges to developing the site such as low traffic counts for
commercial development. The site also does not have any public transportation now or planned
in the future, which would greatly help market the site to high density multi-family apartment
developers and in turn attract commercial development.
Given these issues staff would recommend the EDA discuss the following three items as they
relate to 9165 West Point Douglas:
1. Leave the property for the private market to address.
2. Due to potential environmental remediation issues begin the process of negotiating
purchase of the site between $850,000 and $950,000. With a Phase I Site
Assessment and Pre-Demolition Hazardous Materials Inspection needed before a
final purchase agreement is brought to the EDA.
3. Consider working with the building division to have the building condemned.
Recommendation
1. Discuss the long-term plans for addressing 9165 West Point Douglas Road and
determine what the best option is for the site moving forward.
By Motion:
1. Authorize staff to begin negotiations and environmental work for the purchase of 8991
West Point Douglas Road.
Attachments
Langdon Village Concept – Stantec Memo
Patchin Messner Valuation Counselors 8991 West Point Douglas Appraisal
Patchin Messner Valuation Counselors 9165 West Point Douglas Appraisal
Ehlers TIF Run Estimate
Ehlers Redevelopment Tax Increment Financing District Handout
10
2335 Highway 36 West, St. Paul MN 55113
Memorandum
DATE: April 30, 2018
TO: Jennifer Levitt, Cottage Grove Community Development Director and City Engineer
FROM: Phil Carlson, AICP, Senior Planner
RE: Langdon Village Concept Plan
Introduction
You have asked Stantec to update the concept plan for the redevelopment of the Langdon
Village area of Cottage Grove, in the southeast quadrant of Highway 61 and Jamaica Avenue.
The impetus for this revised concept is a proposed housing project on one of the City-owned EDA
parcels in the area. Previous plans for Langdon Village prepared by Hay Dobbs in 2011 (see
attached) related to planning for the Red Rock transit corridor anticipated a future commuter rail
station on the west side of Langdon Village. That is no longer a likely option in the near term, so
that element can be removed from the plan. The previous concept also assumed a full-block City
Park and a three-block-long Public Greenway, both of which are attractive elements for a
redeveloped Langdon Village, but not in the right location to take advantage of the anticipated
new housing project.
Developing a revised concept plan is not a substitute for a thorough analysis and planning
process for the area. There are a number of questions and variables to be considered, including:
th
The alignment of the extension of 100 Street and Innovation Road in a reconfigured
Innovation Road interchange is important to the redevelopment of Langdon Village.
Different alignment options would have very different impacts on properties in the area
and on the potential land use that might be developed.
There are existing public streets in the area with commercial and residential uses abutting
them. Redevelopment may vacate some of those streets (and add new ones) but we
need to know the status of underground utilities in the various rights-of-way in order to
prepare feasible plans.
Significant public park and greenway uses are proposed and should be planned to serve
the immediate area and to connect to the larger City and regional park and trail system.
The design and planning of the area should consider the market for various uses and
respond to those needs.
Property owners and other stakeholders should be consulted before plans get too far
along.
April 30, 2018
Jennifer Levitt, City of Cottage Grove City
Page 2 of 10
Langdon Village Concept Plan
Concept Plan
The Langdon Village Concept Plan is attached on the following page and illustrates our
preliminary thoughts on the redevelopment of the area. Other issues are called out on the
features of the plan are:
The type and location of land uses is similar to the Hay Dobbs station area plan.
The Park and Public Greenway are essentially the same as the Hay Dobbs plan, but moved
south one block to front the proposed housing project on the southern City EDA parcel.
Commercial development is shown in the NE triangular parcel on the east side of West
Point Douglas Rd, bounded by Hwy 61 and the 100th Street extension.
The proposed affordable housing project is turned 90° from a previous version, so that its
two long facades face the Park and the Greenway.
A residential building is placed at the west end of the Greenway to provide a visual
terminus to that view, since there is no transit station and plaza.
Residential uses are shown along the west edge (railroad) of the Village because these
areas are likely too far from West Point Douglas Road to be attractive for commercial uses.
A residential building is shown on the far western parcel overlooking Jamaica Ave and the
roundabout, which is currently the vacant end of the mini-storage property. Because
access up the grade from West Point Douglas Road is difficult and not ideal for
commercial uses, this would be a good site for higher density residential near the other
mixed uses in the redeveloped Langdon Village. This parcel currently has a holding pond
on it, so we need to determine if development is feasible, but ponding might be placed
under the parking to replace that function, making better use of the parcel possible.
A West Point Douglas Road and the 100th
Street extension. Land Use Plan we suggested this distance
in the mixed use land use discussion, requiring commercial uses at street level within that
area. Some of the residential uses in this Langdon Village Concept go against this idea, but
for good reasons:
o The residential uses shown on the far eastern and far western ends of the concept
do have close access to the arterial roadways on the west end due to grades; on
the east end due to the 100th St extension rising to clear the RR tracks.
o The affordable housing project is a key component of the area and occupies a
est Point Douglas Road.
April 30, 2018
Jennifer Levitt, City of Cottage Grove City
Page 3 of 10
Langdon Village Concept Plan
th
100 Street Alignment Options
The 2008 Southwest Cottage Grove Transportation Study looked at alignment options for a
reconfigured Innovation Road Interchange with Highway 61, to the southeast of Langdon Village.
There was a preferred alignment that came out of that study, but it would cross through the
southeast corner of Langdon Village, impacting the development of several parcels. Various
th
of the issues.
3M is a major property owner adjacent to Langdon Village and we understand that the preferred
, whereas the other alignments would separate
more 3M property on the north side of the realigned roadway. Assuming this is a key issue, the
Hybrid Alignment option cuts through the various properties in such a way as to allow swapping of
more or less equal parcels to create an end result that may be satisfactory and allow reasonable
development by all parties. This series of assumptions is illustrated on the attached three pages of
Hybrid Alignment maps. They show:
The existing condition shows the roadway cutting through the Sievert and Florin properties
at the south end of Langdon Village.
Sievert and Florin could swap roughly equal corners of their properties, so there would not
be remnants orphaned on either side of the new roadway.
roadway.
The new Florin parcel and the remnant 3M parcel are about equal in size and might also
be swapped.
As a result, Florin would get a developable parcel adjacent to Langdon Village (as they
had previously).
3M would be made whole by having about the same amount of property, but contiguous
and not separated by the new roadway.
We look forward to reviewing these concepts and ideas with you and to a more thorough process
of understanding Langdon Village and planning for its successful future.
E
V
A
A
C
I
A
M
A
J
M
E
N
A
R
D
S
H
W
Y
N
6
E
1
W
S
T
R
E
E
T
I
R
A
W
PARK & RIDE
I
N
RAMP
A
W
V
P
E
O
I
N
E
T
X
D
O
T
U
EG
PARK
L
N
A
S
& RIDE
S
R
D
I
RAMP
O
S
N
NEW STREET B
H
GREENWAY
PUBLIC
W
TRANSIT
Y
PLAZA
95TH ST S 6
1
I
S
L
A
Y
A
V
E
W
S
P
NEW
O
PARKI
N
T
96TH STREET S
D
I
N
O
N
S
L
E
EU
E
W
W
G
T
OL
S
S
A
NT
T
S
R
R
A
R
E
E
VD
E
E
ET
T
S
D
E
NEW STREET C
M
I
L
L
E
R
R
D
S
D
A
0’ 100’ 200’ 400’
O
R
N
LANGDON VILLAGE KEYLANGDON VILLAGE KEY
O
I
T
A
STATION / PLATFORMSTATION / PLATFORM
V
O
N
PARK & RIDEPARK & RIDE
N
I
/
MIXED USEMIXED USE
T
S
H
RESIDENTIALRESIDENTIAL
T
0
0
1
CIVIC / INSTITUTIONAL / OFFICECIVIC / INSTITUTIONAL / OFFICE
COMMERCIALCOMMERCIAL
LANGDON VILLAGE LONG TERM STATION AREA CONCEPT PLAN (YEAR 2040+)
LANGDON VILLAGE STATION AREA
Red Rock Corridor Station Area Planning and Site Master Planning
www.RedRockRail.org
3M Property
Gas
North
Hwy 61
West Point Douglas Rd
High Density
Commercial/Residential Above
Residential CommercialMixed Use Park/GreenwayStorm PondStorm Pond under ParkingCity EDA Parcels
2018
-
27
-
Langdon Village Concept Plan Cottage Grove, MN 4
th
W Pt
Alignment of 100Street connection impacts development of several properties
Potential commercial development on remnant parcel north side ofDouglas Rd
3M Property
Gas
-
Not all of EDA parcel needed for housing project, allows street to cross for access to W Pt Douglas Rd
spacing of access points on W Pt Douglas Rd
Street
th
100connection needs to rise to clearance
North
Hwy 61
Entry monument at end of Greenway for visual terminus
Street
th
Need 98connection around EDA parcel to W Pt Douglas Rd
Gas line easement no buildings
Plan park & trail connections both internally and externally
Key Issues
Maintain building edge at street around Park and Greenway
Plan
may need exceptions
Building at end of Greenway for visual terminus
uses for west parcel due to access and east parcel for EDA housing project West Point Douglas Rd
Replace/augment storm pond with underground storage
2018
-
27
-
Langdon Village Concept Cottage Grove, MN 4
Residential (site access not OK for commercial)
Future interchange realignment
Stantec Option:Hybrid Alternate
Street/CR 19 Alignment Options
th
100
Village
Grove
Langdon
1
Cottage
Alignments fromSWTransportation Study:Preferred AlternateAlternate 1aAlternate
Street
th
2018
-
Jamaica Ave
27
-
100
Langdon Village Cottage Grove, MN 4
Title
Future interchange realignment
Existing Condition
Stantec Option:Hybrid Alternate
3M
Hybrid Alignment
Florin
Sievert
Village
corners that
by roadway
Swap roughly
are separated
equal property
Langdon
Street
th
2018
-
Jamaica Ave
27
-
100
Langdon Village Cottage Grove, MN 4
Title
Future interchange realignment
Property Swap 1
Stantec Option:Hybrid Alternate
3M
3M property separated by roadway
Hybrid Alignment
Florin
Sievert
Village
Resulting parcels
Langdon
Street
th
2018
-
Jamaica Ave
27
-
100
Langdon Village Cottage Grove, MN 4
Title
Future interchange realignment
Property Swap 2
Stantec Option:Hybrid Alternate
3M
Swap roughly equal parcels; 3M property is contiguous
Florin
Hybrid Alignment
3M
Sievert
Village
Langdon
Street
th
2018
-
Jamaica Ave
27
-
100
Langdon Village Cottage Grove, MN 4
Title
22029-1
iv
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Fee Owner: Jeffrey and Tamara Meyers
Location: 8991 West Point Douglas Road South
Cottage Grove, Minnesota
Date of Valuation: June 24, 2020
Dates of Inspection: June 24, 2020
Property Appraised: Real Property
Rights & Interests Appraised: Fee Simple Market Value
Zoning: B2, Retail Business District
Guided Future Land Use: Mixed Use (2030 and 2040)
Site Description: The subject site comprises 45,302 SF, or 1.04 acres
of land, net of existing right-of-way. The site is
triangular in shape and is generally level and open.
The property fronts along West Point Douglas
Road in Cottage Grove.
Description of Improvements: The subject is improved with a single-family home
that was built in 1965 and comprises 976 SF of
finished living area including three bedrooms and
one full bathroom. Additionally, there is
unfinished basement space and an attached two-
car garage.
Highest and Best Use:
As Vacant A destination-oriented commercial use
As Improved Redevelop the site with a destination-oriented
commercial use, and on an interim basis the
current single-family home
Market Value Conclusion: $306,000
P ATCHIN M ESSNER
Valuation Counselors
22029-1
v
TABLE OF CONTENTS
ITEM PAGE NO.
LETTER OF TRANSMITTAL ....................................................................................... i-ii
CERTIFICATION ........................................................................................................ iii
SUMMARY OF SALIENT FACTS AND CONCLUSIONS .............................................. iv
TABLE OF CONTENTS ................................................................................................ v
PHOTOGRAPHS OF SUBJECT .................................................................................. vii
AERIAL VIEW OF SUBJECT ......................................................................................... x
SUBJECT LOCATION MAP ........................................................................................ xi
PROPERTY APPRAISED ............................................................................................... 1
DATE OF APPRAISAL .................................................................................................. 1
INSPECTION OF THE PROPERTY ............................................................................... 1
PROPERTY OWNERSHIP ............................................................................................ 1
SALES HISTORY .......................................................................................................... 2
CLIENT AND INTENDED USER ................................................................................. 2
INTENDED USE .......................................................................................................... 2
PROPERTY RIGHTS APPRAISED ................................................................................. 2
PURPOSE OF APPRAISAL ........................................................................................... 3
MARKET VALUE DEFINED .......................................................................................... 3
COMPETENCY OF APPRAISER ................................................................................... 4
SCOPE OF WORK ...................................................................................................... 4
ENVIRONMENTAL CONSIDERATIONS ...................................................................... 6
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS .................. 6
REGIONAL AND CITY DATA ..................................................................................... 7
NEIGHBORHOOD DATA ......................................................................................... 26
LOCATION AND LEGAL DESCRIPTION ................................................................... 30
TAX AND ASSESSMENT DATA ................................................................................. 30
ZONING DATA ........................................................................................................ 31
ZONING MAP .......................................................................................................... 33
FUTURE LAND USE MAP ......................................................................................... 34
FUTURE LAND USE AND AREAS OF CHANGE MAP ............................................... 36
PROPERTY DESCRIPTION ........................................................................................ 37
PLAT MAP ................................................................................................................ 39
HIGHEST AND BEST USE ......................................................................................... 40
P ATCHIN M ESSNER
Valuation Counselors
22029-1
vi
TABLE OF CONTENTS
(CONTINUED)
ITEM PAGE NO.
EXPOSURE AND MARKETING TIME ......................................................................... 43
APPRAISAL PROCEDURES AND TECHNIQUES ........................................................ 43
SALES COMPARISON APPROACH ........................................................................... 44
ADDENDA
EXHIBIT 1 - SUBJECT'S SALE LISTING ................................................................. 55
EXHIBIT 2 - SUBJECT'S INTERIOR PHOTOGRAPHS ............................................ 59
CONTINGENT AND LIMITING CONDITIONS .................................................... 62
APPRAISING QUALIFICATIONS OF CHRISTINE L. MACKAMAN ........................ 67
P ATCHIN M ESSNER
Valuation Counselors
22029-1
vii
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Front Façade of Subject Property
East and South Exterior Facades of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-1
viii
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Exterior Facade of Subject Property
West and South Exterior Facades of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-1
ix
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Looking Southeasterly at Subject Property from West Point Douglas Road
Looking Southwesterly at Subject Property from West Point Douglas Road
P ATCHIN M ESSNER
Valuation Counselors
22029-1
x
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
th
Looking Northerly at Subject Property from 96 Street
Aerial View of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-1
xi
SUBJECT LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
1
22029-1
PROPERTY APPRAISED
The subject of this report is a single-family dwelling located at 8991 West Point Douglas
Road South in Cottage Grove, Minnesota. The site is approximately 45,302 SF, or 1.04
acres, net of existing right-of-way, and is improved with a split-level, single-family home
that was built in 1965. The subject-family home comprises approximately 976 SF
of finished space with a full unfinished basement. Additionally, there is a two-car attached
garage.
The appraiser observed a musty odor in the basement and noted open windows and
running fans at the time of inspection. As such, there may be a possibility of water
intrusion. However, given the lack of visible impairment, we assume the basement space
is unimpaired. Moreover, based on the highest and best use analysis provided herein, the
highest and best use of the subject property is to redevelop the site for a destination-
oriented commercial use with the existing home as an interim use.
DATE OF APPRAISAL
The effective date of this appraisal is June 24, 2020.
INSPECTION OF THE PROPERTY
Christine Mackaman inspected the subject on June 24, 2020. The property owner was
provided the opportunity to accompany the appraiser on an inspection, but was not
present.
PROPERTY OWNERSHIP
The property is owned by Jeffrey and Tamara Meyers.
P ATCHIN M ESSNER
Valuation Counselors
2
22029-1
SALES HISTORY
The Uniform Standards of Professional Appraisal Practice requires that all sales of the
subject during the previous three years be reported and analyzed. According to
Washington County records, there have been no sales of the subject property within the
previous three years. The property is currently listed for sale on the Northstar Multiple
Listing Service with an asking price of $495,000. The subject was originally listed for sale
on February 7, 2020 for $565,000. Based on our analysis provided herein, the listing price
is considered above market value. We have provided improved single-family home
comparables and commercial land comparable sales to support our estimated market
value.
CLIENT AND INTENDED USER
The client and intended user of this appraisal assignment is the City of Cottage Grove.
INTENDED USE
The intended use of this appraisal is to provide valuation guidance to the City of Cottage
Grove regarding the potential acquisition of the subject property. There is no other
intended use for this appraisal report.
PROPERTY RIGHTS APPRAISED
The subject property will be appraised by estimating the market value of the fee simple
interest of the real estate, subject to existing easements. For use in this appraisal, the fee
simple interest in the real estate is subject to the following definition obtained on Page 90
of , Sixth Edition, Appraisal Institute.
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations
imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
P ATCHIN M ESSNER
Valuation Counselors
3
22029-1
PURPOSE OF THE APPRAISAL
The purpose of the appraisal is to develop an opinion of market value for the subject
property .
MARKET VALUE DEFINED
Market value as utilized in this appraisal report conforms to the following definition
obtained from Page 142 of , Sixth Edition.
The most probable price that a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably,
and assuming the price is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title from seller to buyer under
conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what
they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
The price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.
Unless otherwise noted in the appraisal report, market value shall represent cash
equivalent terms where the seller receives all cash for their interest. The property may be
financed at typical market terms under this definition.
The above definition describes market value as an exchange concept. According to
, Sixth Edition, at Page 245, value in exchange is defined
as unt that can be obtained from an asset if exchanged
P ATCHIN M ESSNER
Valuation Counselors
4
22029-1
COMPETENCY OF APPRAISER
Christine L. Mackaman has the knowledge and experience to complete this appraisal
assignment competently and in compliance with USPAP. Refer to the Appraiser
Qualifications in the Addenda of this report for further details.
SCOPE OF WORK
This document is intended to provide a market value appraisal of the property. This
appraisal report is intended to comply with the Uniform Standards of Professional
Appraisal Practice of the Appraisal Foundation. It has also been performed in compliance
with the Code of Professional Ethics and Standards of Professional Appraisal Practice of
the Appraisal Institute.
The appraisal task is to estimate the fee simple market value of the real property.
Summary of Appraisal Methodology
In this analysis, the following data and concepts pertaining to the subject property have
been examined.
1. Physical Characteristics of Real Property, including:
Inspection of the Subject Property on June 24, 2020 This inspection was
conducted in order to gather information about characteristics of the
subject that are relevant to the valuation problem.
Review of available Aerial Maps
Observation of the Local Market and the Subject's Place within this
Market
2. Non-Physical Characteristics of Real Property, including:
Property Rights We have examined property rights of the subject.
Legal Description The legal description was obtained from Washington
County public information and is assumed to be accurate.
Existing Road, Drainage and Utility Easements, if any
P ATCHIN M ESSNER
Valuation Counselors
5
22029-1
SCOPE OF WORK
Summary of Appraisal Methodology
2. Non-Physical Characteristics of Real Property (continued):
Tax and Assessment Data
Zoning and Land Use Data We have examined the City of Cottage Grove
Zoning Ordinance and Comprehensive Plan.
3. Observations and Data Concerning the Subject Property's Market and
Transactions within this Market:
Sales of Land and Improved Properties In order to gather comparable
land and improved sales, we searched the Northstar Multiple Listing
Service (MLS), RediComps, Electronic Certificate of Real Estate Value
(eCRV) database, and our internal files.
After selecting the comparable sales, a comparative analysis of relevant
factors that influence value was undertaken to adjust the sales to the
subject property based upon the actions and preferences demonstrated
by participants in the marketplace.
Supply and Demand Generators of the Market
Financing available within the Market
Perception of the Market as to the Future
From the above data and concepts, we have made the following analyses:
Highest and Best Use Analysis of the Subject Property
Application of Appropriate Approaches to Value for the Property The
sales comparison approach is utilized to value the subject. The cost
approach and income approach are not considered applicable in this
case, given the highest and best use is for redevelopment to a destination-
oriented commercial use.
Correlation and a final estimate of value are reconciled as the final step.
P ATCHIN M ESSNER
Valuation Counselors
6
22029-1
ENVIRONMENTAL CONSIDERATIONS
Many homes built before 1980 contain asbestos in old floor tiles and ceiling tiles, as well
as in other construction materials. However, the reader is advised that the appraiser is not
qualified to perform inspections concerning the existence or absence of environmental
concerns. Therefore, for purposes of this appraisal, it is assumed that the construction
materials were not manufactured with asbestos. Additionally, the City has reported the
high levels of perfluoroalkyl substances (PFAs). However, the state
provides granular activated carbon filters to help reduce the concentration levels.
Furthermore, it is assumed that no other environmental concerns such as PCBs, toxic and
hazardous soil or ground water contamination exist upon the subject as of the date of this
appraisal report. If any environmental contaminants do exist within the subject property,
the assignment results would likely be different.
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS
The definitions of extraordinary assumption and hypothetical condition, as taken from
, Sixth Edition (Appraisal Institute, 2015), are as
follows. Following these definitions is a description of any extraordinary assumptions
and/or hypothetical conditions pertinent to this appraisal.
Extraordinary Assumption --
Hypothetical Condition
P ATCHIN M ESSNER
Valuation Counselors
7
22029-1
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS
We have not assumed any hypothetical conditions or extraordinary assumptions in this
appraisal.
REGIONAL AND CITY DATA
Location
The subject property is located in Cottage Grove, Washington County, Minnesota. Cottage
Grove is an outer-ring suburb of the Twin Cities Metropolitan Area. The Minneapolis-St.
Paul Metropolitan Statistical Area (MSA) is situated in the north central portion of the
United States, approximately 275 miles south of the U.S./Canadian Border and 400 miles
northwest of Chicago, Illinois.
-St. Paul MSA is located in the
southeastern region of the State of Minnesota at the confluence of the Mississippi and
Minnesota Rivers, or at the crossroads of Interstate 94 (east/west) and Interstate 35
(north/south). The Twin Cities serves as a regional economic center for the upper Midwest.
According to the U.S. Census Bureau, the Minneapolis-St. Paul MSA includes sixteen
Counties: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Le Sueur, Mille Lacs,
Ramsey, Scott, Sherburne, Sibley, Washington and Wright Counties in Minnesota and
Pierce and St. Croix Counties in Wisconsin.
Government
Cottage Grove has a City Council/Mayor form of government. On the regional level, the
core seven counties of the Minneapolis-St. Paul MSA, which include Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott and Washington Counties are under the jurisdiction of
the Metropolitan Council. The Metropolitan Council is the regional policy-making body,
planning agency and provider of essential services. The Metropolitan Council is led by a
17-member policy-making board, which guides the strategic growth of the seven-county
metropolitan area.
P ATCHIN M ESSNER
Valuation Counselors
8
22029-1
REGIONAL AND CITY DATA
Population
According to the 2010 census, the seven-county metropolitan area had a total population
of 2,849,567. Based upon data compiled by the U.S. Census Bureau, the Metropolitan
Council reports the following population trends for Cottage Grove, Washington County,
and the seven-county metropolitan area.
POPULATION
Seven-County
Cottage Washington
Metropolitan
Year
GroveCountyArea
2000 Census30,582201,1302,642,062
2010 Census34,589238,1362,849,567
2018 Estimate*37,341261,5123,113,338
2020 Estimate*38,400269,2703,160,000
2030 Estimate*42,200304,7103,459,000
2040 Estimate*47,000335,7903,738,000
*As projected by the Metropolitan Council
The population data shows that Cottage Grove realized moderate growth between 2000
and 2010, increasing at a compounded annual growth rate of 1.24%. Washington County
as a whole also experienced similar growth, with a compounded annual growth rate of
1.70% over the same time period. In comparison, the Seven-County metropolitan area
grew at a 0.76% compounded annual rate. As estimated by the Metropolitan Council,
moderate growth is expected to continue for Cottage Grove, as well as for Washington
County and the larger metropolitan area.
Households
Based upon data compiled by the U.S. Census Bureau, the Metropolitan Council reports
the following household trends for Cottage Grove, Washington County and the Seven-
County metropolitan area on the following page.
P ATCHIN M ESSNER
Valuation Counselors
9
22029-1
REGIONAL AND CITY DATA
Households
HOUSEHOLDS
Seven-County
Cottage Washington
Metropolitan
Year
GroveCountyArea
2000 Census9,93271,4621,021,456
2010 Census11,71987,8591,117,749
2018 Estimate*12,55396,4241,213,980
2020 Estimate*13,300102,4901,264,000
2030 Estimate*15,200118,5201,402,000
2040 Estimate*17,300132,4001,537,000
*As projected by the Metropolitan Council
The household data indicates that Cottage Grove and Washington County realized
moderate household growth between 2000 and 2010. Cottage Grove realized a
compounded annual growth rate of 1.67%. Washington County experienced a 2.09%
compounded annual growth rate in households over the same time period, which is higher
than the Seven-County metropolitan a0.90%. Growth has moderated
across all markets in recent years with the decline of residential permit activity since the
most recent recession.
Employment
employment sector. The area tends to have lower rates of unemployment than the nation,
even in challenging economic cycles. The following table illustrates local to national
unemployment trends. The figure on the following page shows average annual
unemployment rates for Cottage Grove, Washington County, and the metro area.
P ATCHIN M ESSNER
Valuation Counselors
10
22029-1
REGIONAL AND CITY DATA
Employment
As can be observed from the data above, local and regional unemployment rates generally
trend lower than the national and state average. Furthermore, rates have improved
significantly from 2009 levels.
Household Income Trends
Household income trends are a good indication of the overall economic health of a city,
and are related to the previous employment and labor force discussion. Cottage Grove
and Washington County have similar median household incomes, as indicated by the
median household income levels illustrated in the following chart. In addition, the median
household income for Cottage Grove has trended above that of the Seven-County Twin
Cities Area since at least 1990.
P ATCHIN M ESSNER
Valuation Counselors
11
22029-1
REGIONAL AND CITY DATA
Household Income Trends
Single-Family Housing Values
As provided by the Minneapolis Area Association of Realtors, historic median home price
data for Cottage Grove, nearby communities, Washington County, and the 13-county
metropolitan area is shown in the following table.
MEDIAN HOME SALE PRICES
20092010201120122013201420152016201720182019
Afton$307,000$330,000$430,000$275,000$409,500$412,375$435,000$452,500$450,000$492,000$508,500
Woodbury$239,000$243,750$219,700$240,000$267,500$284,000$288,600$294,500$312,400$325,000$352,500
Cottage Grove$180,000$174,450$160,000$174,900$194,000$209,900$222,000$240,000$250,000$262,500$290,000
Washington County$189,000$195,000$179,000$200,000$220,000$236,000$242,300$260,000$278,900$300,000$325,000
Twin Cities (13-County)$165,000$169,900$150,000$167,900$192,000$205,600$220,000$232,000$247,500$265,000$282,000
Source: Minneapolis Area Association of Realtors
As indicated, median home prices in Cottage Grove have been lower than in the
surrounding communities of Afton and Woodbury, as well as for Washington County as a
P ATCHIN M ESSNER
Valuation Counselors
12
22029-1
REGIONAL AND CITY DATA
Single-Family Housing Values
whole. However, the median sale prices have trended above the 13-County Twin Cities
area. Home prices declined during the Great Recession starting in 2008, but have been
increasing steadily since 2012.
Construction Activity
Residential developers remained hesitant to take risks on growth in outer-ring suburbs
during the market recovery and, instead, focused on in-fill sites in strong, core
communities. As of recently, much of the in-fill sites have been developed, and investors
have been expanding into outer-ring suburbs, primarily acquiring land within and along
the edge of the Metropolitan Urban Service Area, particularly in suburban cities that have
well-regarded public schools. Subdivisions are evolving to include a mix of housing types,
price ranges and lot widths. Mid-density residential products such as single level and villa-
style homes, along with for-sale townhomes, have also been on the rise.
Since recovering from the Great Recession, the commercial and industrial real estate
markets in the Twin Cities metropolitan area have been performing well in the inner-
portion of the metro area at prime locations, which has extended further in the metro area.
The following charts summarize construction activity in Cottage Grove, Washington
County, and the Twin Cities metropolitan area, with data obtained from the Metropolitan
Council.
P ATCHIN M ESSNER
Valuation Counselors
13
22029-1
REGIONAL AND CITY DATA
Construction Activity
P ATCHIN M ESSNER
Valuation Counselors
14
22029-1
REGIONAL AND CITY DATA
Construction Activity
Industry and Economic Climates
As previously discussed, Minnesota is home to 17 companies listed on the 2019 Fortune
500 list, as well as privately held firms listed on the Forbes 500 list. Large insurance
companies based in the Twin Cities include UnitedHealth Group, Thrivent Financial,
Minnesota Mutual and the St. Paul Travelers Companies. The Twin Cities is home to the
corporate headquarters of US Bank and the regional headquarters of Wells Fargo, two of
the largest commercial bank holding companies. One of the largest thrift institutions, TCF
Reserve Bank is located in Minneapolis.
Enhanced by the vast and rich agricultural region surrounding the Twin Cities, long-term
analysis of economic and demographic data reveals a trend of general growth and stability
-
isolated from the national and global economic events that occurred in 2008 and 2009,
P ATCHIN M ESSNER
Valuation Counselors
15
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
which sent the nation into a deep recession. The national and regional economies,
however, have experienced significant improvements since 2013, with real economic
growth driven by improved employment.
As part of the valuation process, an analysis of the market affecting the subject property is
conducted. This analysis helps lead to conclusions concerning the marketability and/or
income potential of the subject property. In this context, a review of the general
metropolitan area market is presented. The information in this market analysis was
January 2020
Minneapolis/St. Paul, as well as the Metropolitan Council and other commercial brokerage
publications.
Land
Demand for industrial sites continued to remain active in the second half of
2019. The strong demand is partly because suburban cities have become
more amenable to new projects like bulk distribution centers as
communities realize the likelihood of attracting office development is
minimal. Industrial users are seeking larger sites to accommodate the
rapidly increasing space requirements of e-commerce and fulfillment
businesses. Also, they are looking for sites that feature convenient access
to transportation corridors, as it is one way to attract employees in a very
tight labor market.
In the past, well-known developers often built speculative bulk warehouse
or office/warehouse projects. This still remains true; however, companies
are now opting for built-to-suit projects, through owner-occupied or single-
tenant arrangements.
New infrastructure projects, including sewer and water extensions and new
freeway interchanges have driven up land prices in certain new industrial
zoned/guided areas.
Multi-family construction saw a shift from urban submarkets to underserved
suburban areas where cities are increasingly allowing the repurposing and
reguiding of land. Luxury market-rate apartments are starting to be
developed in affluent suburbs, where rents have exceeded expectations.
Still, demand is strong for sites that are within walking distance of popular
amenities such as grocery stores or proximate to transit routes.
P ATCHIN M ESSNER
Valuation Counselors
16
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Land (continued)
Single-family demand remained strong in 2019. Developers have shifted to
smaller and affordable housing types. These housing types are suited for
retiring baby boomers and first-time homebuyers, which include young
compact homes as possible on their land positions, seeking to profit on
volume.
Homebuilders continue to seek large sites located in suburban cities that
have well-regarded public schools. Subdivisions are evolving to include a
mix of housing types, price ranges and lot widths. Developers are also to
focusing on constructing townhome products that cater to first-time
homebuyers.
Self-storage facilities are expanding their footprint in the Twin Cities market,
thanks in part to cities allowing them in areas that were reserved for other
uses. They are able to pay top dollar for the best sites.
Demand for agricultural land was limited during 2019, as pressure on
agricultural land prices remained intense, mostly due to low commodity
prices, global and U.S. policy changes.
Agricultural land prices were relatively stable during the second half of
2019 even with poor weather and the trade dispute with China ongoing.
In certain cases, farmers have felt pressure to sell their land for residential
or industrial development.
Retail demand is primarily coming from individual users that are immune
from online shopping. Starbucks, Dunkin and Chick-fil-A were acquiring
sites in the second half of 2019. The effect of Amazon.com continues to be
felt by larger retailers.
Retail land-
micro-demographic data of surrounding areas.
Demand for office and hospitality land is negligible.
The outlook for 2020 continues to look well for the industrial, multi-family,
and single-family residential sectors.
Political uncertainties related to the 2020 presidential election could put a
damper on the markets in the second half of the year.
P ATCHIN M ESSNER
Valuation Counselors
17
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Retail
The retail market has entered a transitional period where retailers, landlords,
and developers are dealing with changing consumer behaviors, e-
commerce competition, store closings/downsizing, and fewer new concepts
entering the market.
In the first half of 2019, the Twin Cities market experienced positive
absorption of 22,157 SF. Sears at the Mall of America was the only
significant big-box vacancy that occurred in the community centers
submarket in the first half of 2019. In the second half of 2019, the Twin
Cities market experienced positive absorption of 428,626 SF. As such, the
total absorption for 2019 was 450,783 SF.
The Twin Cities retail vacancy rate reached 9.7% in the first half of 2019,
the highest it had been since 2010 and up from 9.4% at the end of 2018.
By the end of 2019, the retail vacancy rate dipped slightly to 9.2%. Many
of the challenges the Twin Cities market faces are shared across the nation.
The majority of activity in the Twin Cities market is being driven by value-
add retailers, fast-casual restaurants, active lifestyle concepts, coffee shops,
service retailers, and medical users. Value retailers that are expanding in
the market include .
Expanding fitness concepts include F-45 Training, Orangetheory, Planet
Fitness, Yoga Fit, Barre3, Xperience Fitness, Life Time Fitness, and karate
concepts.
Fast-casual restaurants are also in expansion mode. These include Crisp &
Green, Chick-fil--
Robbins, and Caribou Coffee.
Service retail categories such as nail/hair salons, cell phone retailers, banks,
financial services firms, and day care centers have been more protected
from the e-commerce emergence. In 2019, JPMorgan Chase opened its first
three bank branches in the Twin Cities. One is located in Minneapolis on
the University of Minnesota campus, one is located along Grand Avenue in
Medical users are also beginning to fill vacant retail space. Examples of this
include Associated Eye opening at CityPlace, a mixed-use development in
Woodbury, and Park Nicollet converting the Mann Theater in St. Louis Park
into a specialty medical center. Also, Allina Health is set to open a clinic
in Calhoun Squa
P ATCHIN M ESSNER
Valuation Counselors
18
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Retail (continued)
Life Time Fitness redeveloped the former J.C. Penney at Southdale Center
in Edina. Grocers have also started exploring going into malls.
Mall owners are also beginning to develop or split off underutilized parking
areas. Some examples of these types of development include iFLY, Zupas,
Steakhouse at Rosedale Center in Roseville, and Shake Shack and
Restoration Hardware at Southdale in Edina.
No approved, large-scale projects are in the pipeline. Retail development
has mostly been one-off or small mixed-use projects in urban areas and first-
ring suburbs.
For grocers, activity is slowing. The market is becoming saturated and good
sites have become more difficult to find and expensive. Active grocers
include Hy-
and Fresh Thyme Farmers Market.
Cub Foods is continuing to remodel stores. However, SuperValu, Cub
As such, many shopping center investors are waiting for clarification about
their future operation before purchasing Cub Foods anchored centers.
The Twin Cities market has felt and will continue to feel the impact of
numerous national retailers closing. Big box vacancies are largely attributed
Us, and Shopko. Bankruptcies and store closings have
caused uncertainty in the retail market. Even so, as more vacancies are
backfilled, the retail sector could absorb approximately 150,000 SF in the
first half of 2020.
Most of the big-box vacant space will be divided to accommodate smaller
users. Spaces in less attractive centers will be harder to lease, and landlords
may need to shorten the length of leases or add termination clauses.
Mall owners have been filling vacancies with restaurants, entertainment,
example, Scheels is redeveloping the former Sears at Eden Prairie Center.
P ATCHIN M ESSNER
Valuation Counselors
19
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Office
Approximately 557,601 SF of absorption took place in the first half of 2019
and 202,384 SF of absorption took place in the second half of 2019,
bringing the positive office absorption in the last year to 759,985 SF. The
market has remained active despite tenants downsizing and big users
trading multi-tenant spaces in for build-to-suits and corporate campuses.
Additionally, many submarkets are battling a surplus of Class B office space.
While there is positive leasing activity, this momentum is somewhat offset
from space returning to the market from companies that are downsizing.
The overall vacancy rate for the Twin Cities office sector modestly increased
from 16.4% in the first half of 2019 to 17.0% in the second half of 2019.
Landlords have been investing in their properties by renovating,
repositioning, and/or improving the amenities offered.
highly amenitized. Other tenants are considering a broader geography and
different property types including single-story flex buildings or renovated
warehouse space.
One trend in the local market has been third-party co-working space. The
Twin Cities is now home to 30 co-working companies that lease or own
facilities. In the North Loop, WeWork leased 60,000 SF of The Nordic
mixed-use building and in Uptown, WeWork leased 102,000 SF of the
MoZaic East office building. The new Life Time at Southdale in Edina also
features co-working space.
The Twin Cities medical office market reports a 10.40% vacancy rate,
relatively flat absorption, and stable rental rates. Market activity took a step
backwards with 1,799 SF of negative absorption in the first half of 2019;
however, there was 45,098 SF of positive absorption in the second half of
2019.
The medical office market is beginning to shift from on-campus to off-
campus properties. For example, Park Nicollet is converting the Mann
Theater in St. Louis Park into medical office space.
The outlook remains positive for the medical office market, with new
buildings in the works, that will give absorption a bump.
P ATCHIN M ESSNER
Valuation Counselors
20
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Industrial
Strong fundamentals continued for the Twin Cities industrial market in the
second half of 2019, with 1,524,411 SF of positive absorption, bringing the
yearly total to 2,943,613 SF. All Twin Cities submarkets saw strong levels
of positive absorption in the second half of 2019, led by the Northeast and
Northwest submarkets which experienced 631,074 SF and 598,465 SF of
positive absorption respectively.
The overall direct vacancy rate fell from 7.8% at the first half of 2019 to
7.5% at the second half of 2019.
The lowest 2019 vacancy rates were found in the Southeast and Southwest
submarkets, which reported vacancy rates of 6.8% and 4.5% respectively.
The highest rate was in the Northeast submarket, which reported a vacancy
rate of 8.3%.
In recent years, the Southwest submarket has seen the largest amount of
activity. However, as available land is becoming scarce, interest is
spreading to the long-overbuilt Northwest submarket and also the Northeast
submarket.
The industrial absorption levels experienced in 2019 were the second best
since 2009, behind only the 3.7 million SF of absorption in 2015. Lease
rates for bulk warehouse and office-warehouse products have increased.
Rents are projected to remain steady due to tight market conditions and
longer lease terms.
Industrial construction continued its pace from 2018 into 2019. Nearly 2
million SF of industrial space was under construction in 2019.
The low unemployment rate in the Twin Cities market has caused some
problems for companies that are looking to build or fill space too far from
the urban core.
Going forward, approximately 1.3 million SF of absorption is predicted for
the first half of 2020.
Multi-Family
The Twin Cities market posted one of the lowest apartment vacancy rates
in the country in 2019. Twin Cities vacancies dropped to 2.5% in the
second half of 2019. The low vacancy rate can be attributed to low
unemployment, healthy job growth, and barriers to homeownership.
P ATCHIN M ESSNER
Valuation Counselors
21
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Multi-Family (continued)
Approximately 3,500 apartment units were built in 2017, 5,500 units were
built in 2018, and another 6,000 units were delivered in 2019.
Absorption has slowed in 2019, and certain pockets have begun to offer
concessions such as a month of free rent.
In Downtown Minneapolis, approximately 2,400 units were constructed in
the past two years. As such, downtown vacancies could continue to rise as
more product comes to market.
Job growth in the Twin Cities has been a major factor for the continued
demand for rental housing.
Millennials have been the focus of the multi-family market; however, Gen
Gen Z group is similar in size
to the Millennials and they are now graduating college and entering the job
market.
Construction of the light rail line in the southwest metro area has sparked
new development/re-development in that area and several multi-family
projects have begun.
Some developers have expanded into the micro-unit market in order to
provide affordable options for rents while generating higher per SF rents in
areas where larger parcels have already been snapped up.
With approximately 11,000-unit openings in 2018 and 2019 combined,
Class A lease up is expected to slow down, but concessions may be used to
speed up leasing. However, many of the new properties are located in
suburban markets where there is strong demand for rental options.
The outlook for the multi-family sector remains strong, as millennials
continue to choose renting rather than moving out to the suburbs for
affordable starter homes.
Developers expect to deliver another 6,000 units in 2020.
Hotel
Previous predictions about the Twin Cities hotel market indicated the
beginning of a cooling period. It now has, with supply growth (3.2%)
outpacing demand (1.9%).
P ATCHIN M ESSNER
Valuation Counselors
22
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Hotel (continued)
In the Minneapolis-St. Paul MSA, average occupancy decreased from 67.5%
in December 2018 to 66.6% in December 2019, ADRs decreased from
$122.74 in December 2018 to $121.46 in December 2019, and REVPAR
decreased from $82.89 in December 2018 to $80.93 in December 2019.
Approximately, 6,500 new rooms have been delivered to the market during
this current up-cycle and another 6,700 rooms are in various stages of
development.
Downtown Minneapolis remains in demand for hotel development with
2,000 rooms proposed or under construction. This growth has been fueled
by major events such as the 2018 Super Bowl, 2018 and 2019 X-Games,
Wrestling
United Properties has plans for a 222-room Four Seasons Hotel in the
Gateway Tower development at the north end of Nicollet Mall, which will
be the first five-star hotel in the Twin Cities.
Other markets that are also active include downtown St. Paul (1,000 rooms
planned or underway) and Bloomington/Mall of America/Airport (1,100
rooms planned or underway). Additional building activity is taking place
in Woodbury, Maple Grove, Eagan, and Shakopee.
The hotel market is experiencing major competition from Airbnb. While it
is difficult to quantify its impact on hotel performance, some segment of
Airbnb users are substituting hotels for cheaper rates. Due to this
substitution, the average rates in some markets are negatively impacted.
However, more cities are attempting to regulate Airbnb and similar
platforms.
Overall, the outlook is that the hotel market will flatten out. Hotel operators
have trouble with the availability of labor, rising wages, and increasing
supplies and materials costs. As such, development is expected to cool due
to overbuilding concerns and rising construction costs.
P ATCHIN M ESSNER
Valuation Counselors
23
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Investment and Capital Markets
The Twin Cities investment marketplace has experienced a steady flow of
new capital entering the market. The Twin
following the broader national trend, with a rolling 12-month total in 2019
of $5.864 billion, slightly down from $6.341 billion in the previous year.
In 2019 (rolling 12 month total), office market sales led all property types,
totaling $1.700 billion. The multi-family market followed closely, with
sales totaling $1.694 billion.
The multi-family market will surpass $1 billion in sales for the sixth
consecutive year. Class B and Class C apartment sales continue to be
performing well thanks to buyers looking for value-add properties. Several
Class A properties have stabilized and hit the market. However, prices for
luxury Class A properties are now flattening.
The difference between Class A, Class B, and Class C cap rates is narrowing.
Industrial sales activity totaled $1.378 billion in the past year, a slight
increase from the prior year. There has been continued demand for large
distribution and fulfillment centers and smaller in-fill locations for last-mile
delivery.
Investors are still targeting single-tenant net lease deals. These investors
include high net worth individuals, REITs and private equity funds. They
enjoy good cash flow and the stability of long-term leases with low turnover
costs.
Sales volume for the retail market dropped from $992.17 million in 2018 to
$597.76 million in 2019. However, the average price per SF increased from
$188 in 2018 to $202 in 2019.
Multi-tenant retail sales were down in 2019 due to a lack of available
product with owners reluctant to bring assets to market.
Single-tenant NNN sales were up in 2019 compared to 2018.
Investors are benefiting from low interest rates and are taking their time with
sales. The low cost of debt has encouraged owners to consider refinancing
or recapitalization strategies as attractive alternatives to an outright sale.
P ATCHIN M ESSNER
Valuation Counselors
24
22029-1
REGIONAL AND CITY DATA
Transportation
The Minneapolis/St. Paul metropolitan area is served by the following major highways:
Interstate 35 - A major north/south highway which connects with
Duluth, Minnesota to the north and Kansas City,
Missouri to the south. In the metro area, I-35 splits
with I-35W passing through Minneapolis, while
I-35E passes through St. Paul.
Interstate 94 - A major east/west highway that connects with
Milwaukee, Wisconsin/Chicago, Illinois to the east,
and Fargo, North Dakota to the west.
Interstate 494/694 - A major freeway which loops around the periphery
of the Twin Cities.
U.S. Highway 169 - A north/south route serving the western suburbs.
U.S. Highway 212 - An east/west route serving the southwestern
suburbs.
U.S. Highway 12/
Interstate 394 - An east/west route which connects downtown
Minneapolis with the western suburbs.
U.S. Highway 61 - A north/south route serving the eastern suburbs.
U.S. Highway 10 - A diagonal route extending from Wisconsin to
Fargo, North Dakota; it passes through St. Paul and
Anoka County.
Other major highways serving the Twin Cities area include State Highway 100, State
Highway 77 (Cedar Avenue), Crosstown Highway 62, Lafayette Freeway and U.S.
Highway 52/55.
The Twin Cities is served by the Minneapolis St. Paul International Airport (MSP) and six
general aviation airports throughout
relieve congestion at MSP. These airports provide private and corporate aviation services
for more than 400,000 aircraft each year, according to the Metropolitan Airports
P ATCHIN M ESSNER
Valuation Counselors
25
22029-1
REGIONAL AND CITY DATA
Transportation
Commission. MSP International is among the largest airports in the world, with high
volumes of passenger and cargo traffic to and from destinations around the globe. MSP is
a primary hub for Delta Airlines, and is served by eleven other domestic and international
passenger carriers.
The major means of mass transit in the Twin Cities includes the metropolitan bus system
and Light Rail Transit (LRT) operated by Metro Transit, a division of the Metropolitan
Council. Metro Transit offers 128 bus routes, including 63 express bus routes throughout
the Twin Cities. Light rail service includes two LRT lines, the Blue Line and Green Line,
which have a combined 37 stations. The Blue Line began service in 2004, and extends
from downtown Minneapolis to the southern suburb of Bloomington, with stops at the
Mall of America and the Minneapolis-St. Paul International Airport. The Green Line LRT
began service in June 2014, and connects Paul, as
well as the State Capital and the University of Minnesota. Metro Transit also operates the
Northstar Commuter Rail line, which provides service with seven stations between
downtown Minneapolis and the northwest suburbs of the Twin Cities. Additionally, the
line connects with Northstar Link bus line for service to and from St. Cloud, Minnesota.
Major freight train railroads serving the Twin Cities include Burlington Northern Santa Fe,
Union Pacific, and Canadian Pacific/Soo Line Railway Company. Amtrak provides
passenger rail service from the Twin Cities to Illinois (Chicago), Oregon (Portland) and
Washington (Seattle).
Trucking service is also a vital part of the freight transportation to and from the Twin Cities,
and is a key component of the regional freight transportation system. River port barge
service runs from St. Paul to points south along the Mississippi. Major commodities
transported by river barge to and from the Twin Cities include grain, aggregate, fertilizer
and cement.
Utilities
The Minneapolis/St. Paul area, as well as the majority of Cottage Grove, is served by
municipal water and sewer systems, electricity, telephone service and natural gas.
P ATCHIN M ESSNER
Valuation Counselors
26
22029-1
REGIONAL AND CITY DATA
Summary
In summary, prior to the COVID-19 pandemic, most markets were expected to experience
continued demand and increase pricing. The Twin Cities had gained favor with
international and national investors who are interested in bulk industrial, multi-family, core
Class A office, and well positioned grocery-anchored retail centers. Sellers of top-quality,
assets in prime locations with predictable income streams, a strong tenant base and good
credit were expected to see the most demand.
However, the COVID-19 pandemic has affected the nation and created significant
uncertainty for the U.S. economy. For the U.S. stock market, the first quarter of 2020 is
the worst first quarter in U.S history. The first confirmed COVID-19 case in Minnesota
was reported March 6, 2020. In the Twin Cities metropolitan area, CoStar tracked
commercial property sales for a three-week period beginning February 21, 2020 and sales
were roughly half of the previous period in 2019. However, prior to the COVID-19
pandemic, commercial real estate in the Twin Cities metropolitan area was expected to
record strong first quarter sales metrics (Finance and Commerce, March 26, 2020). The
Twin Cities metropolitan real estate markets appear to be on hold while this pandemic
unfolds on a global economic scale. As such, an increase in capitalization rates or decrease
in sale prices has not yet occurred within this market. Therefore, at this point in time,
other than a slowing of transaction volume, it is too soon to determine the potential impacts
to the Twin Cities real estate market.
NEIGHBORHOOD DATA
The subject is located on the south side of U.S. Highway 61, a principal arterial roadway,
in the central portion of Cottage Grove. The neighborhood may be described as those
th
properties along the U.S. Highway 61 corridor between 80 Street, northwest of the
subject, and Keats Avenue, southeast of the subject. This area is primarily commercial,
retail, and residential on the north side of U.S. Highway 61, including retailers such as
Target, Menards, Hy-Vee, Dollar Tree, Cub Foods, and Aldi. Additionally, restaurants and
P ATCHIN M ESSNER
Valuation Counselors
27
22029-1
NEIGHBORHOOD DATA
various other retail uses are along the north side of the U.S. Highway 61 corridor. Aside
from retail and commercial uses, residential uses such as Grove Ridge Apartments and
single-family homes, are also part of the northerly neighborhood.
Conversely, the south side of U.S. Highway 61 is primarily agricultural, commercial, and
industrial uses. South of the subject there are large tracts of undeveloped land used for
farming along with rural residential single-family homes. Northwest of the subject property
is the Cottage Grove Public Work facility, several storage units along with various industrial
and commercial buildings are located along the U.S. Highway 61 corridor.
The subject is located approximately ½-mile southeast of the U.S. Highway 61 and Jamaica
Avenue interchange. The average daily traffic counts in 2019 of nearby roadways in the
neighborhood are as follows.
Neighborhood Traffic Volumes (AADT)
Roadway2019
Jamaica Avenue
North of W Point Douglass Rd21,900
South of W Point Douglass Rd13,200
U.S. Highway 10/61
Northbound40,000
Southbound25,500
Off Ramps (Jamaica Ave)21,250
On Ramps (Jamaica Ave)21,250
The location of municipal utilities in Cottage Grove are depicted on the maps on following
pages. As illustrated, a sanitary sewer main runs along U.S. Highway 61 within the
Municipal water is currently located within the subject
neighborhood. Referring to the Utility Staging Areas Map following, the subject property
is part of Development Stage 2 and within the 2040 MUSA boundary.
In conclusion, the neighborhood is expected to grow and develop to the east and south of
the subject. The city has planned and guided development in the southern portion of the
neighborhood for industrial, retail, and some residential uses; while in the northern portion
of the neighborhood, residential and retail and commercial development is planned. The
characteristics and influences of the neighborhood should continue to have a positive
effect on real estate and property values.
P ATCHIN M ESSNER
Valuation Counselors
28
22029-1
SANITARY SEWER MAP
P ATCHIN M ESSNER
Valuation Counselors
29
22029-1
EXISTING AND FUTURE TRUNK WATER SYSTEM
.
P ATCHIN M ESSNER
Valuation Counselors
30
22029-1
LOCATION AND LEGAL DESCRIPTION
Location: 8991 West Point Douglas Road South
Cottage Grove, Minnesota
Property Identification
Number: 21.027.21.41.0005
Legal Description: That part of Block 3 lying southwesterly of right-of-way of
Highway 61 and vacated Dodge Street adjacent, Langdon
Addition, Washington County, Minnesota
TAX AND ASSESSMENT DATA
All Minnesota counties follow the property tax process that was created by the Minnesota
State Legislature. The property values used to establish 2020 property taxes are based on
estimate of market value as of January 2019. operty tax and
assessment data are provided below.
TAX AND ASSESSMENT DATA
Washington County PID No. 21.027.21.41.0005
2019 Assessor's Market Value2020 Assessor's Market Value
Land$97,100Land$97,100
Improvements$112,400Improvements$115,500
Total$209,500Total$212,600
Real Estate Taxes Payable 2020Real Estate Taxes Payable 2021
General Taxes$2,727.00General TaxesN/A
Special Assessments$57.00Special AssessmentsN/A
Total$2,784.00TotalN/A
Effective Tax Rate1.30%Effective Tax RateN/A
Analysis of 2019 Assessor's Market ValueAnalysis of 2020 Assessor's Market Value
Land Area (Square Foot)45,302Land Area (Square Foot)45,302
Land Value per Square Foot$2.14Land Value per Square Foot$2.14
P ATCHIN M ESSNER
Valuation Counselors
31
22029-1
ZONING DATA
Zoning is administered by the City of Cottage Grove. As depicted on the Zoning Map on
the following page, the subject is zoned B-2, Retail Business District. As depicted by the
2040 Future Land Use Map, the subject is guided Mixed Use. Additionally, in the 2030
Comprehensive Plan the subject is part of the Business Park Alternative Urban Areawide
Review (AUAR), and is part of the Langdon Area in the 2040 Comprehensive Plan.
The Cottage Grove Zoning Ordinance describes the Retail Business District as follows:
The retail business district (B-2) is to encourage retail sales and services by grouping
businesses in patterns of workable relationships to minimize the influence on surrounding
residential neighborhoods by limitation and control of permitted uses. (Ord. 904, 5-16-
2012)
Permitted uses within the B-2 District include, but are not limited to: single-family detached
dwellings, commercial agriculture and horticulture, farm buildings and pole barns, farm
drainage and irrigation systems, feedlots and poultry facilities and forestry.
Additional uses allowed with a conditional use permit include religious institutions and
columbariums; commercial horse stables, boarding stables and dog kennels; density
transfers, which will subsequently be explained in greater detail; detached domesticated
farm animal building on parcels between five and ten acres; detached rural storage
buildings on parcels less than ten acres; electromagnetic communication facilities; limited
commercial ventures; and public utility and public service structures.
The following design standards apply to properties within the B-2 District:
Lot Area: Minimum of 10,000 SF, unless the land is adjacent
to an existing commercial area
Minimum Lot Width: 100 ft.
Maximum Building Height: 35 ft., except buildings over 35 ft. shall be subject
to receiving a conditional use permit
P ATCHIN M ESSNER
Valuation Counselors
32
22029-1
ZONING DATA
Minimum Setbacks:
Front Yard 30 ft.
Side Yard 10 ft.
Rear Yard 35 ft.
-family home, is considered a legally non-
conforming use.
Additionally,
Comprehensive Plan. The highest and best use of the subject is for a destination-oriented
commercial use, which conforms with the Mixed Use guiding. As such, the Mixed Use
designation is described as follow:
P ATCHIN M ESSNER
Valuation Counselors
33
22029-1
ZONING MAP
P ATCHIN M ESSNER
Valuation Counselors
34
22029-1
FUTURE LAND USE MAP
P ATCHIN M ESSNER
Valuation Counselors
35
22029-1
ZONING DATA
The subject property lies within the Highway 61 and Jamaica Avenue South Mixed Use
Area. Furthermore, the subject is located in Area 5 of future land use change also known
as the Langdon Area, and can be seen in the following page.
The Langdon Area is described in the 2040 Comprehensive Plan as follow:
Langdon Area
P ATCHIN M ESSNER
Valuation Counselors
36
22029-1
FUTURE LAND USE AND AREAS OF CHANGE MAP
P ATCHIN M ESSNER
Valuation Counselors
37
22029-1
PROPERTY DESCRIPTION
Size: The gross land area is reportedly 78,269 SF, or 1.80 acres.
However, the northern portion of the site is encumbered
by existing right-of-way.
considered approximately 45,302 SF, or 1.04 acres, net of
existing right-of-way, according to the Washington County
.
Shape: The subject is triangular in shape.
Street Frontage: The subject has ±322 LF of frontage on West Point
Douglas Road along the northerly property boundary and
th
± 264 LF of frontage on 96 Street, which is the southerly
property boundary.
Street Access: The subject has one driveway along West Point Douglas
Road, which is a bituminous paved roadway with one lane
th
of traffic in each direction. Additionally, 96 Street is a
minimally maintained roadway, improved with gravel.
Traffic Count: The average annual average daily traffic counts for nearby
roadways is as follows:
25,500 Highway 61 (2019)
13,200 Jamaica Avenue (south of Hwy 61; 2019)
Terrain:
surrounding roadways. The subject is open with a modest
level of landscaping and trees.
Utilities: Municipal water and sewer are available to the subject
property. However, the home is served by private well and
septic. According to the City of Cottage Grove, the
well water has a higher level of PFAs. However,
the State has been providing granular activated carbon filter
to help lower concentration levels.
Flood Hazard: The subject is located in Zone X, areas with minimal flood
risk. No flood hazard analysis has been conducted.
Map No.: 27163C0416E
Effective Date: February 3, 2010
Soil Conditions: The soils appear stable and suitable for typical construction
practices. However, neither soils tests nor engineering data
have been provided in conjunction with this appraisal.
P ATCHIN M ESSNER
Valuation Counselors
38
22029-1
PROPERTY DESCRIPTION
Easements: We were not provided with a title report. However, based
on the plat map the subject is encumbered with Minnesota
Department of Transportation (MnDOT) right-of-way along
the northern portion o
Additionally, as reported by the listing agent, there is also
a power line easement along the eastern property
boundary. To our knowledge, there are no other recorded
easements or encumbrances that would have a significant
effect
Building Description: The subject is improved with a split-level, single-family
home that was built in 1965. The single-family home
comprises approximately 976 SF of finished space
including three bedrooms and a full bathroom along with
a full unfinished basement. Additionally, there is a two-car
attached garage.
The appraiser observed a musty odor in the basement and
noted open windows and running fans at the time of
inspection. As such, there may be a possibility of water
intrusion. However, given the lack of visible impairment,
we assume the basement space is unimpaired. Moreover,
based on the highest and best use analysis provided herein,
the highest and best use of the subject property is to
redevelop the site for a destination-oriented commercial
use, with the current single-family home as an interim use.
P ATCHIN M ESSNER
Valuation Counselors
39
22029-1
PLAT MAP
P ATCHIN M ESSNER
Valuation Counselors
40
22029-1
HIGHEST AND BEST USE
Highest and best use is defined in , Fifth Edition,
Appraisal Institute as follows:
The reasonably probable and legal use of vacant land or an improved property that is physically
possible, appropriately supported, financially feasible, and that results in the highest value. The
four criteria the highest and best use must meet are legal permissibility, physical possibility,
financial feasibility, and maximum productivity.
This publication goes on to distinguish the highest and best use as vacant and as improved,
as follows:
Highest and best use of land or site as though 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.
Highest and best use of property as improved - The use that should be made of a property as it
exists. An existing improvement should be renovated or retained as is so long as it continues to
contribute to the total market value of the property, or until the return from a new improvement
would more than offset the cost of demolishing the existing building and constructing a new one.
In order to determine highest and best use of the subject property, the following factors
must be considered when addressing possible uses. They are:
1. Legally Permissible
2. Physically Possible
3. Financially Feasible
4. Maximally Productive
Legally Permissible
The first test of highest and best use involves identifying those uses that are legally
permissible. Legal restrictions can include public restrictions such as zoning and building
codes, and private restrictions such as deed restrictions and protective covenants. The
subject is located in the city of Cottage Grove with a zoning of B-2, Retail Business District
and guided Mixed Use. Based on permitted uses, a commercial use is considered for this
analysis.
P ATCHIN M ESSNER
Valuation Counselors
41
22029-1
HIGHEST AND BEST USE
Physically Possible
The subject site comprises approximately 45,305 SF, or 1.04 acres of land area, net of
existing right-of-way and is triangular in shape. Municipal water and sewer are available
to the site, including other utilities, such as natural gas, electricity and telephone. Access
to the site is from West Point Douglas Road, which fronts along Highway 61. Access to
Highway 61 is located from the northwest at Jamaica Avenue, which is a full interchange.
Nearby uses along the south side of Highway 61 include: agricultural, single-family homes,
a vacant commercial building, the City of Cottage Grove Public Works Facility, and Acorn
Mini Storage. North of Highway 61 near the subject property include Menards, Target,
and Walmart along with smaller strip retail and stand-alone retail uses.
Financially Feasible
As outlined in the Market Analysis section of this report, before the COVID-19 Pandemic,
sections of the commercial market were strong, both in terms of demand and pricing.
Additionally, as of this appraisal date, the Twin Cities real estate market appears to be on
hold while this pandemic unfolds on a global economic scale. Other than a slowing of
transaction volume, it is too soon to determine the potential impacts to the market.
However, considering the surrounding land uses on the south side of Highway 61. The
subject property is more suitable as a destination-oriented commercial use.
Maximally Productive
that the highest and best use, as vacant, is to develop the subject property with a
destination-oriented commercial use that maximizes the site and is consistent with zoning
and guiding.
As Improved
The subject is improved as a single-family home that was built in 1965 and comprises 976
SF of finished living area with three bedrooms and one full bath. A search for sales of
comparable single-family homes similar to the subject property was completed, and a table
is provided on the following page.
P ATCHIN M ESSNER
Valuation Counselors
42
22029-1
HIGHEST AND BEST USE
As Improved
P ATCHIN M ESSNER
Valuation Counselors
43
22029-1
HIGHEST AND BEST USE
As Improved
The comparables sold between August 2019 and May 2020 with a range of $197,000 to
$254,984 and an average of $229,793. All of the comparables are split-level homes built
between 1963 and 1980 with three bedrooms and one full bath along with a two-car
garage. Additionally, all of the homes range in finished area between 1,170 SF and 1,500
SF. Moreover, the lot size of the comparables are between 0.24 acres and 0.37 acres with
municipal services. Overall the comparables are considered similar with the subject
property. However, there are some differences between the comparables and the subject
property. The subject is not served by municipal water and sewer, but available to the site.
Additionally, the subject property is a larger site, while all of the comparables have smaller
lots that are located in more residential subdivisions in Cottage Grove. Considering these
factors regarding the comparable sales
and best use, as improved, is for redevelopment with a destination-oriented commercial
use. However, the single-family home is considered an interim use for the site.
EXPOSURE AND MARKETING TIME
Exposure time of 12 to 18 months would be required to sell the subject property, based on
the value stated herein. Marketing time, including due diligence and closing, is also
estimated at 12 to 18 months.
APPRAISAL PROCEDURES AND TECHNIQUES
In order to develop an opinion of market value of the subject, the following appraisal
techniques are considered.
Cost Approach - considers the current cost of replacing a property, less the
depreciation from three sources: physical deterioration, functional
obsolescence and external obsolescence. A summation of the market value
of the land, assumed vacant, and the depreciated replacement cost of the
improvements provides an indication of the total value of the property.
P ATCHIN M ESSNER
Valuation Counselors
44
22029-1
APPRAISAL PROCEDURES AND TECHNIQUES
Sales Comparison Approach - produces an estimate of value by comparing the
subject property to sales and/or listings of similar properties in the same or
competing areas. This technique is used to indicate the value established by
informed buyers and sellers in the market.
Income Approach -
income. The net income is capitalized to arrive at an indication of value
from the standpoint of an investment. This method measures the present
worth of anticipated future benefits (net income) derived from a property.
The Sales Comparison Approach to value the land has been utilized in this appraisal. This
approach is more fully described below. The Cost and Income approaches are not
considered to yield credible assignment results and are not applied in the valuation
assignment.
SALES COMPARISON APPROACH
The sales comparison approach to value examines the sale prices of other properties
similar to the subject in utility, size and type that have sold in the marketplace. This
approach is good evidence of value because it represents activities and reactions of sellers,
users and investors as they respond to the marketplace.
property than it will cost to buy or rent a comparable substitute property. The validity of
this approach is based on the assumption that continuity exists between similar properties
of like adequacy and their market values. The reliability of this technique is dependent
upon the availability of sales data and the degree of comparability of the sales studied.
To apply this approach to the subject property, information has been sought on sales of
land from 2017 to the present, which are similar in terms of highest and best use with
particular focus on commercial uses, location, zoning/guiding, size and appeal. These
sales used are identified on a location map, followed by individual write-ups, an
adjustment grid and narrative analysis, to arrive at a land value estimate.
P ATCHIN M ESSNER
Valuation Counselors
45
22029-1
COMPARABLE LAND SALES LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
46
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 1
Location: 15265 Carrousel Way
Rosemount, Minnesota
PID: 34-71176-01-011
Buyer: Rosemount MOB Partners, LLC
Seller: Rosemount Properties, LLC
Date of Sale: April 2020
Zoning/Guiding: C4, General Commercial / CC, Community Commercial
Intended Use: Medical Office
Traffic Count: 5,300 AADT (2018), Chippendale Avenue; and 910 AADT (2018),
Carrousel Way
Size: 57,253 SF, or 1.31 Acres
Sale Price: $414,512
Price per SF: $7.24
Remarks: -length transaction of a property
located at the northeast corner of Chippendale Avenue and Carrousel
Way in Rosemount. The sale price was openly negotiated and was
reported to be at or near market. The buyer purchased the property
to develop a 12,000 SF medical office building. The finished
building will be leased to Lorenz Clinic, a mental health practice,
which also has offices in Victoria, Chaska and Prior Lake.
P ATCHIN M ESSNER
Valuation Counselors
47
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 2
Location: 5715 Memorial Avenue North
Oak Park Heights, Minnesota
PID: 06.029.20.13.0013
Buyer: TCO Real Estate-Fund 2, LLC
Seller: Gregory and Lorene Clark
Date of Sale: March 2020
Zoning/Guiding: B-3, Highway Business & Warehouse / Highway Business & Warehouse
Intended Use: Medical Office
Traffic Count: 23,100 AADT (2019), Stillwater Boulevard
Size: 239,632 SF, or 5.50 Acres
Sale Price: $1,750,000
Price per SF: $7.30
Remarks: -length transaction of a property
located in the southwest quadrant of Highway 36 and Stillwater
Boulevard in Oak Park
Stillwater Area High School, Kwik Trip, and Public Storage. The
comparable was purchased by Twin Cities Orthopedics.
P ATCHIN M ESSNER
Valuation Counselors
48
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 3
Location: SEC Osgood Avenue and Osman Avenue
Oak Park Heights, Minnesota
PID: 04.029.20.11.0160
Date of Sale: June 2019
Buyer: Dave Trimert JR
Seller: McCullough & Sons Incorporated
Zoning/Guiding: B-2, General Business / Commercial
Intended Use: Auto Repair Store
th
Traffic Count: 11,200 AADT (2019), Osgood Avenue; and 890 AADT (2019), 60
Street
Size: 113,692 SF, or 2.61 Acres
Sale Price: $550,000
Price per SF: $4.84
Remarks: This is an openly-marketed, arm's-length transaction of a property
located in the southeast quadrant of Highway 36 and Osgood Avenue.
The property was purchased for an auto repair store. Nearby uses
include Andersen Corporation to the west and residential uses to the east
and south of the comparable.
P ATCHIN M ESSNER
Valuation Counselors
49
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 4
Location: XXXX Keokuk Avenue
Lakeville, Minnesota
PID(s): 22.035.000.1012
Date of Sale: March 2018
Buyer: Compeer Financial, FLCA
Seller: Lakeville Land, Ltd. Limited Partnership
Zoning/Guiding: C-3, General Commercial / Commercial
Intended Use: Office
th
Traffic Count: 8,000 AADT (2019), 210 Street; and 225 AADT (2018), Keokuk Avenue
Size: 243,065 SF, or 5.58 Acres
Sale Price: $1,884,000
Price per SF: $7.75
Remarks: This is an openly-marketed, arm's-length transaction of a property
th
located in the southwest corner of Interstate 35 and 210 Street in
Lakeville. The property was purchased to build an owner/occupied
office.
P ATCHIN M ESSNER
Valuation Counselors
50
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 5
Location: 1325 Corporate Center Curve
Eagan, Minnesota
PID(s): 10-22535-00-010
Buyer: Advantage Equities 10544 LLC
Seller: Eagandale Properties, LLC
Date of Sale: May 2017
Zoning/Guiding: PD, Planned Development / Major Office
Intended Use: Hotel
Traffic Count: 5,600 ADT (2019), Corporate Center Drive
Size: 97,690 SF, or 2.24 Acres
Sale Price: $585,000
Price per SF: $5.99
Remarks: -length transaction. According
development. The site is currently listed for sale with an asking
price of $1,149,000, or $11.76 per SF. The listing brochure
indicates the site is fully entitled for an 87-room Comfort Suites
hotel.
P ATCHIN M ESSNER
Valuation Counselors
52
22029-1
SALES COMPARISON APPROACH
Explanation of Adjustments
Property Rights: All of the sales represent the transfer of the fee simple
interest. Therefore, no adjustments are necessary.
Financing: No unusual financing was discovered that would have
an impact on the sale price. Therefore, no adjustments
are necessary.
Conditions of Sale: All of the comparable sales are considered -length
transactions by unrelated parties and require no
adjustment for conditions of sale.
Special Assessments: None
Other Expenditures: No additional expenditures were required for the
comparables.
Market Conditions: This adjustment reflects differences in market
conditions between the date of appraisal and the date
the comparables sold. The comparable sales occurred
between May 2017 and April 2020. The commercial
market has been stable with development occurring
throughout the market over the past few years. The
outbreak of COVID-19 was declared a global
pandemic on March 11, 2020. Since the pandemic
declaration, the affects of the pandemic on the real
estate market have yet to be determined. Therefore, the
market conditions adjustment is based on 5% annual
appreciation from 2017 through March 2020. No
further adjustment is applied from March 2020 to April
2020 since the impact is not known.
Location: This adjustment is based upon observations of both the
subject and the comparables. Factors such as access,
lot orientation, type of road frontage, neighborhood
amenities, and surrounding land use were considered
when making this adjustment. Comparables 1, 2, 4,
and 5 are considered superior to the subject regarding
location and downward adjustments are made.
Comparable 3 is located south of Highway 36 in Oak
Park Heights with no visibility to the highway, and an
upward adjustment is applied.
P ATCHIN M ESSNER
Valuation Counselors
53
22029-1
SALES COMPARISON APPROACH
Explanation of Adjustments
Size: The subject property has a land area of 45,302 SF, or
1.04 acres, net of existing right-of-way. The
comparables range in size from 57,253 SF to 243,065
SF. Properties of this size are generally sold on a per SF
basis. Typically, a smaller property will demand a
higher price per SF than a larger property. This inverse
relationship is present among the comparable sales.
Size adjustments are based on a curve.
Shape: The subject is triangular in shape, which can limit the
utility of the site. Comparables 1, 2, and 4 are
rectangular sites and a 5% downward adjustment is
applied. Comparables 3 and 5 are irregular and
triangular in shape and considered to have similar
development utility. As such, no adjustment is made
to these two comparables.
Terrain: The subject property is generally level and open.
Nearly all of the comparables are considered similar in
terrain and no adjustments are made. However,
Comparable 3 has a sloping terrain and wooded
topography, and an upward adjustment is applied to
this sale.
Zoning - Guiding: All of the comparable sales have similar zoning and
guiding, and no adjustments are necessary.
Other: None
Analysis
The five comparable land sales range in unadjusted unit price from $4.84 per SF to $7.75
per SF, with an average of $6.62 per SF of land. After the adjustment process, the five
comparable land sales range in unit price from $6.24 per SF to $7.76 per SF, with an
average of $6.82 per SF of land. The adjustment process has tightened the range of the
comparable sales, indicating the appropriateness of the adjustments utilized.
Generally speaking, all of the comparables are commercial properties that were purchased
for office, medical office, auto repair and hotel use. Comparable 1 is located south of
th
150 Street (Co Rd 42) along the east side of Chippendale Avenue in Rosemount,
Minnesota. The immediate area is nearly developed with a mix of impulse and destination-
P ATCHIN M ESSNER
Valuation Counselors
54
22029-1
SALES COMPARISON APPROACH
Analysis
oriented retail and office uses. This comparable is considered superior in location and
shape to the subject property. Comparable 2 is also located in a more developed
commercial area that was purchased for a medical office building. This comparable is
considered superior to the subject as well. Comparable 3 located in Oak Park Heights in
the vicinity of Andersen Corporation to the west and commercial uses to the north. The
site has sloping topography with wooded terrain. Comparable 4 is located at the southwest
th
corner of Interstate 35 and 210 Street in Lakeville. This comparable is least similar to the
subject site since the comparable is located at a highway interchange. Comparable 5 is
located south of Interstate 494 and east of Pilot Knob Road in Eagan. The location of this
comparable is in a commercial and office area.
All of the comparables are considered useful in this analysis, and the overall gross
12% to 33%.
th
Comparable 4 is located at the southwest corner of Interstate 35 and 210 Street in
Lakeville, which is a more impulse-oriented commercial location at a highway
interchange. Therefore, this comparable is given less weight in this analysis. The remaining
comparables are given similar weight in this analysis. Considering the above, the market
value of the subject, as of June 24, 2020, is estimated to be $6.75 per SF. Therefore, the
market value of the subject is estimated as follows:
45,302 SF x $6.75 per SF = $305,789, rounded $306,000
Since the subject is improved with a single-family residential home that is approximately
1,516 SF of gross building area, demolition costs, based on Marshall and Swift cost
estimator, for the single-family home are estimated at approximately $5.00 per SF of
building area. However, since on an interim basis the home improvements are considered
to contribute a nominal value, this nominal improvement value generally off-sets the
demolition costs.
P ATCHIN M ESSNER
Valuation Counselors
55
22029-1
ADDENDA
P ATCHIN M ESSNER
Valuation Counselors
56
22029-1
EXHIBIT 1
(Pages 57-58)
P ATCHIN M ESSNER
Valuation Counselors
57
22029-1
P ATCHIN M ESSNER
Valuation Counselors
58
22029-1
P ATCHIN M ESSNER
Valuation Counselors
59
22029-1
EXHIBIT 2
(Pages 60-61)
P ATCHIN M ESSNER
Valuation Counselors
60
22029-1
INTERIOR PHOTOGRAPHS OF SUBJECT
View of Living Room View of Kitchen
View of Living Room View of Kitchen and Dining Area
View of Bedroom One View of Bedroom Two
P ATCHIN M ESSNER
Valuation Counselors
61
22029-1
INTERIOR PHOTOGRAPHS OF SUBJECT
View of Bedroom Three View of Bathroom
View of Lower Level View of Lower Level
View of Lower Level View of Garage
P ATCHIN M ESSNER
Valuation Counselors
62
22029-1
CONTINGENT AND LIMITING CONDITIONS
(Pages 63-65)
P ATCHIN M ESSNER
Valuation Counselors
22029-1 63
CONTINGENT AND LIMITING CONDITIONS
The value estimates and conclusions in the appraisal are made subject to these assumptions
and conditions:
1. No title search has been made and the reader should consult an appropriate
attorney or title insurance company for accurate ownership data. Title to the
property is assumed to be good and marketable unless otherwise stated.
2. The legal description, furnished or otherwise, is assumed to be correct. No
responsibility is assumed for the legal description or for matters including
legal or title considerations.
3. The information contained in this report is not guaranteed, but it has been
gathered from reliable sources. The appraiser(s) certify that, to the best of
their knowledge and belief, the statements, information and materials
contained in the appraisal are correct.
4. All value estimates in this report assume stable soil and any necessary soil
corrections are to be made at the seller's expense, unless otherwise noted.
5. The site plan, if any, in this report is included to assist the reader in visualizing
the property, but we assume no responsibility for its accuracy.
6. The market value herein assigned is based on conditions which were
applicable as of the effective date of appraisal, unless otherwise noted.
7. The appraiser(s) that signed this report shall not be required to prepare for,
or appear in court, or before any board or governmental body by the reason
of the completion of this assignment without predetermined arrangements
and agreements.
8. Surveys, plans and sketches may have been provided in this report. They
may not be complete or be drawn exactly to scale.
9. Possession of this report, or a copy thereof, does not carry with it the right of
publication. It may not be used for any purpose by any person, other than
the party to whom it is addressed, without the written consent of the
appraiser, and in any event only with properly written qualification and only
in its entirety.
10. Information in the appraisal relating to comparable market data is more fully
documented in the confidential file in the office of the appraiser.
P ATCHIN M ESSNER
Valuation Counselors
22029-1 64
CONTINGENT AND LIMITING CONDITIONS
(CONTINUED)
11. All studies and field notes will be secured in our files for future reference.
12. It is assumed that all applicable zoning and use regulations and restrictions
have been complied with, unless a non-conformity has been stated, defined
and considered in the appraisal report. And, it is assumed that the utilization
of the land and any improvements is within the boundaries or property lines
of the property described and that there is no encroachment or trespass unless
noted within the report.
13. The distribution of the total valuation in this report between land and any
improvements, if stated, applies only under the reported highest and best use
of the property. The allocations of value for land and improvements must
not be used in conjunction with any other appraisal and are invalid if so used.
14. It is assumed that there is full compliance with all applicable federal, state
and local environmental regulations and laws unless non-compliance is
stated, defined and considered in the appraisal report.
15. The appraiser was not aware of the presence of soil contamination on the
subject property, unless otherwise noted in this appraisal report. The effect
upon market value, due to contamination was not considered in this
appraisal, unless otherwise stated.
16. The appraiser was not aware of the presence of asbestos or other toxic
contaminants in any building(s) located on the site, unless otherwise noted
in this report. The effect upon market value, due to contamination was not
considered in this appraisal, unless otherwise stated.
17. Unless otherwise stated in this report, the existence of hazardous material,
which may or may not be present on the property, was not observed by the
appraiser. The appraiser has no knowledge of the existence of such materials
on or in the property. The appraiser, however, is not qualified to detect such
substances. The value estimate is predicated on the assumption that there is
no such material on or in the property that would cause a loss in value. No
responsibility is assumed for any such conditions, or for any expertise or
engineering knowledge required to discover them. The client is urged to
retain an expert in this field, if desired.
18. The value stated in this report is fee simple, assuming responsible owner-ship
and management, unless otherwise indicated. This appraisal recognizes that
available financing is a major consideration by typical purchasers of real
estate in the market, and the appraisal assumes that financing is or was made
available to purchasers of property described herein.
P ATCHIN M ESSNER
Valuation Counselors
22029-1 65
CONTINGENT AND LIMITING CONDITIONS
(CONTINUED)
19. The appraiser has neither present nor contemplated interest in the property
appraised and employment is not contingent upon the value reported.
20. Unless otherwise stated in this report, the appraisers have not made a survey
or analysis to determine whether any buildings on the property are in
compliance with "The Americans with Disabilities Act" (ADA). If the
property is not in compliance with the ADA, it could have a negative effect
on the value of the property.
21. The property is appraised free and clear of any or all liens or encumbrances
unless otherwise stated.
P ATCHIN M ESSNER
Valuation Counselors
22029-1 66
APPRAISER QUALIFICATIONS
(Page 67)
P ATCHIN M ESSNER
Valuation Counselors
22029-1 67
QUALIFICATIONS OF
CHRISTINE L. MACKAMAN
PROFESSIONAL
AFFILIATIONS MAI, AI-GRS, Appraisal Institute
Certified General Real Property Appraiser, Minnesota License No. 20517275
BUSINESS
EXPERIENCE Patchin Messner Valuation Counselors, Principal, 2015 to Present
CM Valuation, Principal, 2011 to Present
Cassidy Turley, 2004-2010
Metropolitan Council, 2001-2004
EDUCATIONAL
BACKGROUND Master of Urban and Regional Planning, University of Minnesota
Bachelor of Arts Degree, Albion College
SPECIALIZED
REAL ESTATE Appraisal Institute/American Institute of Real Estate Appraisers Course Work:
TRAINING Real Estate Appraisal Principles
Basic Valuation Procedures
Residential Case Study
Standards of Professional Appraisal Practice
Basic Income Capitalization
Advanced Income Capitalization
Highest & Best Use and Market Analysis
Advanced Sales Comparison and Cost Approaches
Report Writing and Valuation Analysis
Advanced Applications
Business Practice and Ethics
Litigation Appraising: Specialized Topics and Applications
SEMINARS ATTENDED:
Appraisal Institute
Annual Real Estate Trends
Annual Forecast/Industry Forecast
Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book)
APPRAISAL
EXPERIENCE Preparation of appraisals for eminent domain, tax appeal, estate planning, acquisition/disposal, and
financing. Properties appraised include: hospitals, apartment complexes, office and industrial buildings,
shopping centers, single family residences and development land.
RELATED
EXPERIENCE North Star Chapter of the Appraisal Institute: Sectary, present
North Star Chapter of the Appraisal Institute: Government Relations Committee, present
North Star Chapter of the Appraisal Institute: Region III Representative, past
North Star Chapter of the Appraisal Institute: Candidate Guidance Committee Chair, past
North Star Chapter of the Appraisal Institute: Board of Directors, past
P ATCHIN M ESSNER
Valuation Counselors
22029-1
iv
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Fee Owner: Jeffrey and Tamara Meyers
Location: 8991 West Point Douglas Road South
Cottage Grove, Minnesota
Date of Valuation: June 24, 2020
Dates of Inspection: June 24, 2020
Property Appraised: Real Property
Rights & Interests Appraised: Fee Simple Market Value
Zoning: B2, Retail Business District
Guided Future Land Use: Mixed Use (2030 and 2040)
Site Description: The subject site comprises 45,302 SF, or 1.04 acres
of land, net of existing right-of-way. The site is
triangular in shape and is generally level and open.
The property fronts along West Point Douglas
Road in Cottage Grove.
Description of Improvements: The subject is improved with a single-family home
that was built in 1965 and comprises 976 SF of
finished living area including three bedrooms and
one full bathroom. Additionally, there is
unfinished basement space and an attached two-
car garage.
Highest and Best Use:
As Vacant A destination-oriented commercial use
As Improved Redevelop the site with a destination-oriented
commercial use, and on an interim basis the
current single-family home
Market Value Conclusion: $306,000
P ATCHIN M ESSNER
Valuation Counselors
22029-1
v
TABLE OF CONTENTS
ITEM PAGE NO.
LETTER OF TRANSMITTAL ....................................................................................... i-ii
CERTIFICATION ........................................................................................................ iii
SUMMARY OF SALIENT FACTS AND CONCLUSIONS .............................................. iv
TABLE OF CONTENTS ................................................................................................ v
PHOTOGRAPHS OF SUBJECT .................................................................................. vii
AERIAL VIEW OF SUBJECT ......................................................................................... x
SUBJECT LOCATION MAP ........................................................................................ xi
PROPERTY APPRAISED ............................................................................................... 1
DATE OF APPRAISAL .................................................................................................. 1
INSPECTION OF THE PROPERTY ............................................................................... 1
PROPERTY OWNERSHIP ............................................................................................ 1
SALES HISTORY .......................................................................................................... 2
CLIENT AND INTENDED USER ................................................................................. 2
INTENDED USE .......................................................................................................... 2
PROPERTY RIGHTS APPRAISED ................................................................................. 2
PURPOSE OF APPRAISAL ........................................................................................... 3
MARKET VALUE DEFINED .......................................................................................... 3
COMPETENCY OF APPRAISER ................................................................................... 4
SCOPE OF WORK ...................................................................................................... 4
ENVIRONMENTAL CONSIDERATIONS ...................................................................... 6
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS .................. 6
REGIONAL AND CITY DATA ..................................................................................... 7
NEIGHBORHOOD DATA ......................................................................................... 26
LOCATION AND LEGAL DESCRIPTION ................................................................... 30
TAX AND ASSESSMENT DATA ................................................................................. 30
ZONING DATA ........................................................................................................ 31
ZONING MAP .......................................................................................................... 33
FUTURE LAND USE MAP ......................................................................................... 34
FUTURE LAND USE AND AREAS OF CHANGE MAP ............................................... 36
PROPERTY DESCRIPTION ........................................................................................ 37
PLAT MAP ................................................................................................................ 39
HIGHEST AND BEST USE ......................................................................................... 40
P ATCHIN M ESSNER
Valuation Counselors
22029-1
vi
TABLE OF CONTENTS
(CONTINUED)
ITEM PAGE NO.
EXPOSURE AND MARKETING TIME ......................................................................... 43
APPRAISAL PROCEDURES AND TECHNIQUES ........................................................ 43
SALES COMPARISON APPROACH ........................................................................... 44
ADDENDA
EXHIBIT 1 - SUBJECT'S SALE LISTING ................................................................. 55
EXHIBIT 2 - SUBJECT'S INTERIOR PHOTOGRAPHS ............................................ 59
CONTINGENT AND LIMITING CONDITIONS .................................................... 62
APPRAISING QUALIFICATIONS OF CHRISTINE L. MACKAMAN ........................ 67
P ATCHIN M ESSNER
Valuation Counselors
22029-1
vii
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Front Façade of Subject Property
East and South Exterior Facades of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-1
viii
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Exterior Facade of Subject Property
West and South Exterior Facades of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-1
ix
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Looking Southeasterly at Subject Property from West Point Douglas Road
Looking Southwesterly at Subject Property from West Point Douglas Road
P ATCHIN M ESSNER
Valuation Counselors
22029-1
x
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
th
Looking Northerly at Subject Property from 96 Street
Aerial View of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-1
xi
SUBJECT LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
1
22029-1
PROPERTY APPRAISED
The subject of this report is a single-family dwelling located at 8991 West Point Douglas
Road South in Cottage Grove, Minnesota. The site is approximately 45,302 SF, or 1.04
acres, net of existing right-of-way, and is improved with a split-level, single-family home
that was built in 1965. The subject-family home comprises approximately 976 SF
of finished space with a full unfinished basement. Additionally, there is a two-car attached
garage.
The appraiser observed a musty odor in the basement and noted open windows and
running fans at the time of inspection. As such, there may be a possibility of water
intrusion. However, given the lack of visible impairment, we assume the basement space
is unimpaired. Moreover, based on the highest and best use analysis provided herein, the
highest and best use of the subject property is to redevelop the site for a destination-
oriented commercial use with the existing home as an interim use.
DATE OF APPRAISAL
The effective date of this appraisal is June 24, 2020.
INSPECTION OF THE PROPERTY
Christine Mackaman inspected the subject on June 24, 2020. The property owner was
provided the opportunity to accompany the appraiser on an inspection, but was not
present.
PROPERTY OWNERSHIP
The property is owned by Jeffrey and Tamara Meyers.
P ATCHIN M ESSNER
Valuation Counselors
2
22029-1
SALES HISTORY
The Uniform Standards of Professional Appraisal Practice requires that all sales of the
subject during the previous three years be reported and analyzed. According to
Washington County records, there have been no sales of the subject property within the
previous three years. The property is currently listed for sale on the Northstar Multiple
Listing Service with an asking price of $495,000. The subject was originally listed for sale
on February 7, 2020 for $565,000. Based on our analysis provided herein, the listing price
is considered above market value. We have provided improved single-family home
comparables and commercial land comparable sales to support our estimated market
value.
CLIENT AND INTENDED USER
The client and intended user of this appraisal assignment is the City of Cottage Grove.
INTENDED USE
The intended use of this appraisal is to provide valuation guidance to the City of Cottage
Grove regarding the potential acquisition of the subject property. There is no other
intended use for this appraisal report.
PROPERTY RIGHTS APPRAISED
The subject property will be appraised by estimating the market value of the fee simple
interest of the real estate, subject to existing easements. For use in this appraisal, the fee
simple interest in the real estate is subject to the following definition obtained on Page 90
of , Sixth Edition, Appraisal Institute.
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations
imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
P ATCHIN M ESSNER
Valuation Counselors
3
22029-1
PURPOSE OF THE APPRAISAL
The purpose of the appraisal is to develop an opinion of market value for the subject
property .
MARKET VALUE DEFINED
Market value as utilized in this appraisal report conforms to the following definition
obtained from Page 142 of , Sixth Edition.
The most probable price that a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably,
and assuming the price is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title from seller to buyer under
conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what
they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
The price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.
Unless otherwise noted in the appraisal report, market value shall represent cash
equivalent terms where the seller receives all cash for their interest. The property may be
financed at typical market terms under this definition.
The above definition describes market value as an exchange concept. According to
, Sixth Edition, at Page 245, value in exchange is defined
as unt that can be obtained from an asset if exchanged
P ATCHIN M ESSNER
Valuation Counselors
4
22029-1
COMPETENCY OF APPRAISER
Christine L. Mackaman has the knowledge and experience to complete this appraisal
assignment competently and in compliance with USPAP. Refer to the Appraiser
Qualifications in the Addenda of this report for further details.
SCOPE OF WORK
This document is intended to provide a market value appraisal of the property. This
appraisal report is intended to comply with the Uniform Standards of Professional
Appraisal Practice of the Appraisal Foundation. It has also been performed in compliance
with the Code of Professional Ethics and Standards of Professional Appraisal Practice of
the Appraisal Institute.
The appraisal task is to estimate the fee simple market value of the real property.
Summary of Appraisal Methodology
In this analysis, the following data and concepts pertaining to the subject property have
been examined.
1. Physical Characteristics of Real Property, including:
Inspection of the Subject Property on June 24, 2020 This inspection was
conducted in order to gather information about characteristics of the
subject that are relevant to the valuation problem.
Review of available Aerial Maps
Observation of the Local Market and the Subject's Place within this
Market
2. Non-Physical Characteristics of Real Property, including:
Property Rights We have examined property rights of the subject.
Legal Description The legal description was obtained from Washington
County public information and is assumed to be accurate.
Existing Road, Drainage and Utility Easements, if any
P ATCHIN M ESSNER
Valuation Counselors
5
22029-1
SCOPE OF WORK
Summary of Appraisal Methodology
2. Non-Physical Characteristics of Real Property (continued):
Tax and Assessment Data
Zoning and Land Use Data We have examined the City of Cottage Grove
Zoning Ordinance and Comprehensive Plan.
3. Observations and Data Concerning the Subject Property's Market and
Transactions within this Market:
Sales of Land and Improved Properties In order to gather comparable
land and improved sales, we searched the Northstar Multiple Listing
Service (MLS), RediComps, Electronic Certificate of Real Estate Value
(eCRV) database, and our internal files.
After selecting the comparable sales, a comparative analysis of relevant
factors that influence value was undertaken to adjust the sales to the
subject property based upon the actions and preferences demonstrated
by participants in the marketplace.
Supply and Demand Generators of the Market
Financing available within the Market
Perception of the Market as to the Future
From the above data and concepts, we have made the following analyses:
Highest and Best Use Analysis of the Subject Property
Application of Appropriate Approaches to Value for the Property The
sales comparison approach is utilized to value the subject. The cost
approach and income approach are not considered applicable in this
case, given the highest and best use is for redevelopment to a destination-
oriented commercial use.
Correlation and a final estimate of value are reconciled as the final step.
P ATCHIN M ESSNER
Valuation Counselors
6
22029-1
ENVIRONMENTAL CONSIDERATIONS
Many homes built before 1980 contain asbestos in old floor tiles and ceiling tiles, as well
as in other construction materials. However, the reader is advised that the appraiser is not
qualified to perform inspections concerning the existence or absence of environmental
concerns. Therefore, for purposes of this appraisal, it is assumed that the construction
materials were not manufactured with asbestos. Additionally, the City has reported the
high levels of perfluoroalkyl substances (PFAs). However, the state
provides granular activated carbon filters to help reduce the concentration levels.
Furthermore, it is assumed that no other environmental concerns such as PCBs, toxic and
hazardous soil or ground water contamination exist upon the subject as of the date of this
appraisal report. If any environmental contaminants do exist within the subject property,
the assignment results would likely be different.
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS
The definitions of extraordinary assumption and hypothetical condition, as taken from
, Sixth Edition (Appraisal Institute, 2015), are as
follows. Following these definitions is a description of any extraordinary assumptions
and/or hypothetical conditions pertinent to this appraisal.
Extraordinary Assumption --
Hypothetical Condition
P ATCHIN M ESSNER
Valuation Counselors
7
22029-1
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS
We have not assumed any hypothetical conditions or extraordinary assumptions in this
appraisal.
REGIONAL AND CITY DATA
Location
The subject property is located in Cottage Grove, Washington County, Minnesota. Cottage
Grove is an outer-ring suburb of the Twin Cities Metropolitan Area. The Minneapolis-St.
Paul Metropolitan Statistical Area (MSA) is situated in the north central portion of the
United States, approximately 275 miles south of the U.S./Canadian Border and 400 miles
northwest of Chicago, Illinois.
-St. Paul MSA is located in the
southeastern region of the State of Minnesota at the confluence of the Mississippi and
Minnesota Rivers, or at the crossroads of Interstate 94 (east/west) and Interstate 35
(north/south). The Twin Cities serves as a regional economic center for the upper Midwest.
According to the U.S. Census Bureau, the Minneapolis-St. Paul MSA includes sixteen
Counties: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Le Sueur, Mille Lacs,
Ramsey, Scott, Sherburne, Sibley, Washington and Wright Counties in Minnesota and
Pierce and St. Croix Counties in Wisconsin.
Government
Cottage Grove has a City Council/Mayor form of government. On the regional level, the
core seven counties of the Minneapolis-St. Paul MSA, which include Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott and Washington Counties are under the jurisdiction of
the Metropolitan Council. The Metropolitan Council is the regional policy-making body,
planning agency and provider of essential services. The Metropolitan Council is led by a
17-member policy-making board, which guides the strategic growth of the seven-county
metropolitan area.
P ATCHIN M ESSNER
Valuation Counselors
8
22029-1
REGIONAL AND CITY DATA
Population
According to the 2010 census, the seven-county metropolitan area had a total population
of 2,849,567. Based upon data compiled by the U.S. Census Bureau, the Metropolitan
Council reports the following population trends for Cottage Grove, Washington County,
and the seven-county metropolitan area.
POPULATION
Seven-County
Cottage Washington
Metropolitan
Year
GroveCountyArea
2000 Census30,582201,1302,642,062
2010 Census34,589238,1362,849,567
2018 Estimate*37,341261,5123,113,338
2020 Estimate*38,400269,2703,160,000
2030 Estimate*42,200304,7103,459,000
2040 Estimate*47,000335,7903,738,000
*As projected by the Metropolitan Council
The population data shows that Cottage Grove realized moderate growth between 2000
and 2010, increasing at a compounded annual growth rate of 1.24%. Washington County
as a whole also experienced similar growth, with a compounded annual growth rate of
1.70% over the same time period. In comparison, the Seven-County metropolitan area
grew at a 0.76% compounded annual rate. As estimated by the Metropolitan Council,
moderate growth is expected to continue for Cottage Grove, as well as for Washington
County and the larger metropolitan area.
Households
Based upon data compiled by the U.S. Census Bureau, the Metropolitan Council reports
the following household trends for Cottage Grove, Washington County and the Seven-
County metropolitan area on the following page.
P ATCHIN M ESSNER
Valuation Counselors
9
22029-1
REGIONAL AND CITY DATA
Households
HOUSEHOLDS
Seven-County
Cottage Washington
Metropolitan
Year
GroveCountyArea
2000 Census9,93271,4621,021,456
2010 Census11,71987,8591,117,749
2018 Estimate*12,55396,4241,213,980
2020 Estimate*13,300102,4901,264,000
2030 Estimate*15,200118,5201,402,000
2040 Estimate*17,300132,4001,537,000
*As projected by the Metropolitan Council
The household data indicates that Cottage Grove and Washington County realized
moderate household growth between 2000 and 2010. Cottage Grove realized a
compounded annual growth rate of 1.67%. Washington County experienced a 2.09%
compounded annual growth rate in households over the same time period, which is higher
than the Seven-County metropolitan a0.90%. Growth has moderated
across all markets in recent years with the decline of residential permit activity since the
most recent recession.
Employment
employment sector. The area tends to have lower rates of unemployment than the nation,
even in challenging economic cycles. The following table illustrates local to national
unemployment trends. The figure on the following page shows average annual
unemployment rates for Cottage Grove, Washington County, and the metro area.
P ATCHIN M ESSNER
Valuation Counselors
10
22029-1
REGIONAL AND CITY DATA
Employment
As can be observed from the data above, local and regional unemployment rates generally
trend lower than the national and state average. Furthermore, rates have improved
significantly from 2009 levels.
Household Income Trends
Household income trends are a good indication of the overall economic health of a city,
and are related to the previous employment and labor force discussion. Cottage Grove
and Washington County have similar median household incomes, as indicated by the
median household income levels illustrated in the following chart. In addition, the median
household income for Cottage Grove has trended above that of the Seven-County Twin
Cities Area since at least 1990.
P ATCHIN M ESSNER
Valuation Counselors
11
22029-1
REGIONAL AND CITY DATA
Household Income Trends
Single-Family Housing Values
As provided by the Minneapolis Area Association of Realtors, historic median home price
data for Cottage Grove, nearby communities, Washington County, and the 13-county
metropolitan area is shown in the following table.
MEDIAN HOME SALE PRICES
20092010201120122013201420152016201720182019
Afton$307,000$330,000$430,000$275,000$409,500$412,375$435,000$452,500$450,000$492,000$508,500
Woodbury$239,000$243,750$219,700$240,000$267,500$284,000$288,600$294,500$312,400$325,000$352,500
Cottage Grove$180,000$174,450$160,000$174,900$194,000$209,900$222,000$240,000$250,000$262,500$290,000
Washington County$189,000$195,000$179,000$200,000$220,000$236,000$242,300$260,000$278,900$300,000$325,000
Twin Cities (13-County)$165,000$169,900$150,000$167,900$192,000$205,600$220,000$232,000$247,500$265,000$282,000
Source: Minneapolis Area Association of Realtors
As indicated, median home prices in Cottage Grove have been lower than in the
surrounding communities of Afton and Woodbury, as well as for Washington County as a
P ATCHIN M ESSNER
Valuation Counselors
12
22029-1
REGIONAL AND CITY DATA
Single-Family Housing Values
whole. However, the median sale prices have trended above the 13-County Twin Cities
area. Home prices declined during the Great Recession starting in 2008, but have been
increasing steadily since 2012.
Construction Activity
Residential developers remained hesitant to take risks on growth in outer-ring suburbs
during the market recovery and, instead, focused on in-fill sites in strong, core
communities. As of recently, much of the in-fill sites have been developed, and investors
have been expanding into outer-ring suburbs, primarily acquiring land within and along
the edge of the Metropolitan Urban Service Area, particularly in suburban cities that have
well-regarded public schools. Subdivisions are evolving to include a mix of housing types,
price ranges and lot widths. Mid-density residential products such as single level and villa-
style homes, along with for-sale townhomes, have also been on the rise.
Since recovering from the Great Recession, the commercial and industrial real estate
markets in the Twin Cities metropolitan area have been performing well in the inner-
portion of the metro area at prime locations, which has extended further in the metro area.
The following charts summarize construction activity in Cottage Grove, Washington
County, and the Twin Cities metropolitan area, with data obtained from the Metropolitan
Council.
P ATCHIN M ESSNER
Valuation Counselors
13
22029-1
REGIONAL AND CITY DATA
Construction Activity
P ATCHIN M ESSNER
Valuation Counselors
14
22029-1
REGIONAL AND CITY DATA
Construction Activity
Industry and Economic Climates
As previously discussed, Minnesota is home to 17 companies listed on the 2019 Fortune
500 list, as well as privately held firms listed on the Forbes 500 list. Large insurance
companies based in the Twin Cities include UnitedHealth Group, Thrivent Financial,
Minnesota Mutual and the St. Paul Travelers Companies. The Twin Cities is home to the
corporate headquarters of US Bank and the regional headquarters of Wells Fargo, two of
the largest commercial bank holding companies. One of the largest thrift institutions, TCF
Reserve Bank is located in Minneapolis.
Enhanced by the vast and rich agricultural region surrounding the Twin Cities, long-term
analysis of economic and demographic data reveals a trend of general growth and stability
-
isolated from the national and global economic events that occurred in 2008 and 2009,
P ATCHIN M ESSNER
Valuation Counselors
15
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
which sent the nation into a deep recession. The national and regional economies,
however, have experienced significant improvements since 2013, with real economic
growth driven by improved employment.
As part of the valuation process, an analysis of the market affecting the subject property is
conducted. This analysis helps lead to conclusions concerning the marketability and/or
income potential of the subject property. In this context, a review of the general
metropolitan area market is presented. The information in this market analysis was
January 2020
Minneapolis/St. Paul, as well as the Metropolitan Council and other commercial brokerage
publications.
Land
Demand for industrial sites continued to remain active in the second half of
2019. The strong demand is partly because suburban cities have become
more amenable to new projects like bulk distribution centers as
communities realize the likelihood of attracting office development is
minimal. Industrial users are seeking larger sites to accommodate the
rapidly increasing space requirements of e-commerce and fulfillment
businesses. Also, they are looking for sites that feature convenient access
to transportation corridors, as it is one way to attract employees in a very
tight labor market.
In the past, well-known developers often built speculative bulk warehouse
or office/warehouse projects. This still remains true; however, companies
are now opting for built-to-suit projects, through owner-occupied or single-
tenant arrangements.
New infrastructure projects, including sewer and water extensions and new
freeway interchanges have driven up land prices in certain new industrial
zoned/guided areas.
Multi-family construction saw a shift from urban submarkets to underserved
suburban areas where cities are increasingly allowing the repurposing and
reguiding of land. Luxury market-rate apartments are starting to be
developed in affluent suburbs, where rents have exceeded expectations.
Still, demand is strong for sites that are within walking distance of popular
amenities such as grocery stores or proximate to transit routes.
P ATCHIN M ESSNER
Valuation Counselors
16
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Land (continued)
Single-family demand remained strong in 2019. Developers have shifted to
smaller and affordable housing types. These housing types are suited for
retiring baby boomers and first-time homebuyers, which include young
compact homes as possible on their land positions, seeking to profit on
volume.
Homebuilders continue to seek large sites located in suburban cities that
have well-regarded public schools. Subdivisions are evolving to include a
mix of housing types, price ranges and lot widths. Developers are also to
focusing on constructing townhome products that cater to first-time
homebuyers.
Self-storage facilities are expanding their footprint in the Twin Cities market,
thanks in part to cities allowing them in areas that were reserved for other
uses. They are able to pay top dollar for the best sites.
Demand for agricultural land was limited during 2019, as pressure on
agricultural land prices remained intense, mostly due to low commodity
prices, global and U.S. policy changes.
Agricultural land prices were relatively stable during the second half of
2019 even with poor weather and the trade dispute with China ongoing.
In certain cases, farmers have felt pressure to sell their land for residential
or industrial development.
Retail demand is primarily coming from individual users that are immune
from online shopping. Starbucks, Dunkin and Chick-fil-A were acquiring
sites in the second half of 2019. The effect of Amazon.com continues to be
felt by larger retailers.
Retail land-
micro-demographic data of surrounding areas.
Demand for office and hospitality land is negligible.
The outlook for 2020 continues to look well for the industrial, multi-family,
and single-family residential sectors.
Political uncertainties related to the 2020 presidential election could put a
damper on the markets in the second half of the year.
P ATCHIN M ESSNER
Valuation Counselors
17
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Retail
The retail market has entered a transitional period where retailers, landlords,
and developers are dealing with changing consumer behaviors, e-
commerce competition, store closings/downsizing, and fewer new concepts
entering the market.
In the first half of 2019, the Twin Cities market experienced positive
absorption of 22,157 SF. Sears at the Mall of America was the only
significant big-box vacancy that occurred in the community centers
submarket in the first half of 2019. In the second half of 2019, the Twin
Cities market experienced positive absorption of 428,626 SF. As such, the
total absorption for 2019 was 450,783 SF.
The Twin Cities retail vacancy rate reached 9.7% in the first half of 2019,
the highest it had been since 2010 and up from 9.4% at the end of 2018.
By the end of 2019, the retail vacancy rate dipped slightly to 9.2%. Many
of the challenges the Twin Cities market faces are shared across the nation.
The majority of activity in the Twin Cities market is being driven by value-
add retailers, fast-casual restaurants, active lifestyle concepts, coffee shops,
service retailers, and medical users. Value retailers that are expanding in
the market include .
Expanding fitness concepts include F-45 Training, Orangetheory, Planet
Fitness, Yoga Fit, Barre3, Xperience Fitness, Life Time Fitness, and karate
concepts.
Fast-casual restaurants are also in expansion mode. These include Crisp &
Green, Chick-fil--
Robbins, and Caribou Coffee.
Service retail categories such as nail/hair salons, cell phone retailers, banks,
financial services firms, and day care centers have been more protected
from the e-commerce emergence. In 2019, JPMorgan Chase opened its first
three bank branches in the Twin Cities. One is located in Minneapolis on
the University of Minnesota campus, one is located along Grand Avenue in
Medical users are also beginning to fill vacant retail space. Examples of this
include Associated Eye opening at CityPlace, a mixed-use development in
Woodbury, and Park Nicollet converting the Mann Theater in St. Louis Park
into a specialty medical center. Also, Allina Health is set to open a clinic
in Calhoun Squa
P ATCHIN M ESSNER
Valuation Counselors
18
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Retail (continued)
Life Time Fitness redeveloped the former J.C. Penney at Southdale Center
in Edina. Grocers have also started exploring going into malls.
Mall owners are also beginning to develop or split off underutilized parking
areas. Some examples of these types of development include iFLY, Zupas,
Steakhouse at Rosedale Center in Roseville, and Shake Shack and
Restoration Hardware at Southdale in Edina.
No approved, large-scale projects are in the pipeline. Retail development
has mostly been one-off or small mixed-use projects in urban areas and first-
ring suburbs.
For grocers, activity is slowing. The market is becoming saturated and good
sites have become more difficult to find and expensive. Active grocers
include Hy-
and Fresh Thyme Farmers Market.
Cub Foods is continuing to remodel stores. However, SuperValu, Cub
As such, many shopping center investors are waiting for clarification about
their future operation before purchasing Cub Foods anchored centers.
The Twin Cities market has felt and will continue to feel the impact of
numerous national retailers closing. Big box vacancies are largely attributed
Us, and Shopko. Bankruptcies and store closings have
caused uncertainty in the retail market. Even so, as more vacancies are
backfilled, the retail sector could absorb approximately 150,000 SF in the
first half of 2020.
Most of the big-box vacant space will be divided to accommodate smaller
users. Spaces in less attractive centers will be harder to lease, and landlords
may need to shorten the length of leases or add termination clauses.
Mall owners have been filling vacancies with restaurants, entertainment,
example, Scheels is redeveloping the former Sears at Eden Prairie Center.
P ATCHIN M ESSNER
Valuation Counselors
19
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Office
Approximately 557,601 SF of absorption took place in the first half of 2019
and 202,384 SF of absorption took place in the second half of 2019,
bringing the positive office absorption in the last year to 759,985 SF. The
market has remained active despite tenants downsizing and big users
trading multi-tenant spaces in for build-to-suits and corporate campuses.
Additionally, many submarkets are battling a surplus of Class B office space.
While there is positive leasing activity, this momentum is somewhat offset
from space returning to the market from companies that are downsizing.
The overall vacancy rate for the Twin Cities office sector modestly increased
from 16.4% in the first half of 2019 to 17.0% in the second half of 2019.
Landlords have been investing in their properties by renovating,
repositioning, and/or improving the amenities offered.
highly amenitized. Other tenants are considering a broader geography and
different property types including single-story flex buildings or renovated
warehouse space.
One trend in the local market has been third-party co-working space. The
Twin Cities is now home to 30 co-working companies that lease or own
facilities. In the North Loop, WeWork leased 60,000 SF of The Nordic
mixed-use building and in Uptown, WeWork leased 102,000 SF of the
MoZaic East office building. The new Life Time at Southdale in Edina also
features co-working space.
The Twin Cities medical office market reports a 10.40% vacancy rate,
relatively flat absorption, and stable rental rates. Market activity took a step
backwards with 1,799 SF of negative absorption in the first half of 2019;
however, there was 45,098 SF of positive absorption in the second half of
2019.
The medical office market is beginning to shift from on-campus to off-
campus properties. For example, Park Nicollet is converting the Mann
Theater in St. Louis Park into medical office space.
The outlook remains positive for the medical office market, with new
buildings in the works, that will give absorption a bump.
P ATCHIN M ESSNER
Valuation Counselors
20
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Industrial
Strong fundamentals continued for the Twin Cities industrial market in the
second half of 2019, with 1,524,411 SF of positive absorption, bringing the
yearly total to 2,943,613 SF. All Twin Cities submarkets saw strong levels
of positive absorption in the second half of 2019, led by the Northeast and
Northwest submarkets which experienced 631,074 SF and 598,465 SF of
positive absorption respectively.
The overall direct vacancy rate fell from 7.8% at the first half of 2019 to
7.5% at the second half of 2019.
The lowest 2019 vacancy rates were found in the Southeast and Southwest
submarkets, which reported vacancy rates of 6.8% and 4.5% respectively.
The highest rate was in the Northeast submarket, which reported a vacancy
rate of 8.3%.
In recent years, the Southwest submarket has seen the largest amount of
activity. However, as available land is becoming scarce, interest is
spreading to the long-overbuilt Northwest submarket and also the Northeast
submarket.
The industrial absorption levels experienced in 2019 were the second best
since 2009, behind only the 3.7 million SF of absorption in 2015. Lease
rates for bulk warehouse and office-warehouse products have increased.
Rents are projected to remain steady due to tight market conditions and
longer lease terms.
Industrial construction continued its pace from 2018 into 2019. Nearly 2
million SF of industrial space was under construction in 2019.
The low unemployment rate in the Twin Cities market has caused some
problems for companies that are looking to build or fill space too far from
the urban core.
Going forward, approximately 1.3 million SF of absorption is predicted for
the first half of 2020.
Multi-Family
The Twin Cities market posted one of the lowest apartment vacancy rates
in the country in 2019. Twin Cities vacancies dropped to 2.5% in the
second half of 2019. The low vacancy rate can be attributed to low
unemployment, healthy job growth, and barriers to homeownership.
P ATCHIN M ESSNER
Valuation Counselors
21
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Multi-Family (continued)
Approximately 3,500 apartment units were built in 2017, 5,500 units were
built in 2018, and another 6,000 units were delivered in 2019.
Absorption has slowed in 2019, and certain pockets have begun to offer
concessions such as a month of free rent.
In Downtown Minneapolis, approximately 2,400 units were constructed in
the past two years. As such, downtown vacancies could continue to rise as
more product comes to market.
Job growth in the Twin Cities has been a major factor for the continued
demand for rental housing.
Millennials have been the focus of the multi-family market; however, Gen
Gen Z group is similar in size
to the Millennials and they are now graduating college and entering the job
market.
Construction of the light rail line in the southwest metro area has sparked
new development/re-development in that area and several multi-family
projects have begun.
Some developers have expanded into the micro-unit market in order to
provide affordable options for rents while generating higher per SF rents in
areas where larger parcels have already been snapped up.
With approximately 11,000-unit openings in 2018 and 2019 combined,
Class A lease up is expected to slow down, but concessions may be used to
speed up leasing. However, many of the new properties are located in
suburban markets where there is strong demand for rental options.
The outlook for the multi-family sector remains strong, as millennials
continue to choose renting rather than moving out to the suburbs for
affordable starter homes.
Developers expect to deliver another 6,000 units in 2020.
Hotel
Previous predictions about the Twin Cities hotel market indicated the
beginning of a cooling period. It now has, with supply growth (3.2%)
outpacing demand (1.9%).
P ATCHIN M ESSNER
Valuation Counselors
22
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Hotel (continued)
In the Minneapolis-St. Paul MSA, average occupancy decreased from 67.5%
in December 2018 to 66.6% in December 2019, ADRs decreased from
$122.74 in December 2018 to $121.46 in December 2019, and REVPAR
decreased from $82.89 in December 2018 to $80.93 in December 2019.
Approximately, 6,500 new rooms have been delivered to the market during
this current up-cycle and another 6,700 rooms are in various stages of
development.
Downtown Minneapolis remains in demand for hotel development with
2,000 rooms proposed or under construction. This growth has been fueled
by major events such as the 2018 Super Bowl, 2018 and 2019 X-Games,
Wrestling
United Properties has plans for a 222-room Four Seasons Hotel in the
Gateway Tower development at the north end of Nicollet Mall, which will
be the first five-star hotel in the Twin Cities.
Other markets that are also active include downtown St. Paul (1,000 rooms
planned or underway) and Bloomington/Mall of America/Airport (1,100
rooms planned or underway). Additional building activity is taking place
in Woodbury, Maple Grove, Eagan, and Shakopee.
The hotel market is experiencing major competition from Airbnb. While it
is difficult to quantify its impact on hotel performance, some segment of
Airbnb users are substituting hotels for cheaper rates. Due to this
substitution, the average rates in some markets are negatively impacted.
However, more cities are attempting to regulate Airbnb and similar
platforms.
Overall, the outlook is that the hotel market will flatten out. Hotel operators
have trouble with the availability of labor, rising wages, and increasing
supplies and materials costs. As such, development is expected to cool due
to overbuilding concerns and rising construction costs.
P ATCHIN M ESSNER
Valuation Counselors
23
22029-1
REGIONAL AND CITY DATA
Industry and Economic Climates
Investment and Capital Markets
The Twin Cities investment marketplace has experienced a steady flow of
new capital entering the market. The Twin
following the broader national trend, with a rolling 12-month total in 2019
of $5.864 billion, slightly down from $6.341 billion in the previous year.
In 2019 (rolling 12 month total), office market sales led all property types,
totaling $1.700 billion. The multi-family market followed closely, with
sales totaling $1.694 billion.
The multi-family market will surpass $1 billion in sales for the sixth
consecutive year. Class B and Class C apartment sales continue to be
performing well thanks to buyers looking for value-add properties. Several
Class A properties have stabilized and hit the market. However, prices for
luxury Class A properties are now flattening.
The difference between Class A, Class B, and Class C cap rates is narrowing.
Industrial sales activity totaled $1.378 billion in the past year, a slight
increase from the prior year. There has been continued demand for large
distribution and fulfillment centers and smaller in-fill locations for last-mile
delivery.
Investors are still targeting single-tenant net lease deals. These investors
include high net worth individuals, REITs and private equity funds. They
enjoy good cash flow and the stability of long-term leases with low turnover
costs.
Sales volume for the retail market dropped from $992.17 million in 2018 to
$597.76 million in 2019. However, the average price per SF increased from
$188 in 2018 to $202 in 2019.
Multi-tenant retail sales were down in 2019 due to a lack of available
product with owners reluctant to bring assets to market.
Single-tenant NNN sales were up in 2019 compared to 2018.
Investors are benefiting from low interest rates and are taking their time with
sales. The low cost of debt has encouraged owners to consider refinancing
or recapitalization strategies as attractive alternatives to an outright sale.
P ATCHIN M ESSNER
Valuation Counselors
24
22029-1
REGIONAL AND CITY DATA
Transportation
The Minneapolis/St. Paul metropolitan area is served by the following major highways:
Interstate 35 - A major north/south highway which connects with
Duluth, Minnesota to the north and Kansas City,
Missouri to the south. In the metro area, I-35 splits
with I-35W passing through Minneapolis, while
I-35E passes through St. Paul.
Interstate 94 - A major east/west highway that connects with
Milwaukee, Wisconsin/Chicago, Illinois to the east,
and Fargo, North Dakota to the west.
Interstate 494/694 - A major freeway which loops around the periphery
of the Twin Cities.
U.S. Highway 169 - A north/south route serving the western suburbs.
U.S. Highway 212 - An east/west route serving the southwestern
suburbs.
U.S. Highway 12/
Interstate 394 - An east/west route which connects downtown
Minneapolis with the western suburbs.
U.S. Highway 61 - A north/south route serving the eastern suburbs.
U.S. Highway 10 - A diagonal route extending from Wisconsin to
Fargo, North Dakota; it passes through St. Paul and
Anoka County.
Other major highways serving the Twin Cities area include State Highway 100, State
Highway 77 (Cedar Avenue), Crosstown Highway 62, Lafayette Freeway and U.S.
Highway 52/55.
The Twin Cities is served by the Minneapolis St. Paul International Airport (MSP) and six
general aviation airports throughout
relieve congestion at MSP. These airports provide private and corporate aviation services
for more than 400,000 aircraft each year, according to the Metropolitan Airports
P ATCHIN M ESSNER
Valuation Counselors
25
22029-1
REGIONAL AND CITY DATA
Transportation
Commission. MSP International is among the largest airports in the world, with high
volumes of passenger and cargo traffic to and from destinations around the globe. MSP is
a primary hub for Delta Airlines, and is served by eleven other domestic and international
passenger carriers.
The major means of mass transit in the Twin Cities includes the metropolitan bus system
and Light Rail Transit (LRT) operated by Metro Transit, a division of the Metropolitan
Council. Metro Transit offers 128 bus routes, including 63 express bus routes throughout
the Twin Cities. Light rail service includes two LRT lines, the Blue Line and Green Line,
which have a combined 37 stations. The Blue Line began service in 2004, and extends
from downtown Minneapolis to the southern suburb of Bloomington, with stops at the
Mall of America and the Minneapolis-St. Paul International Airport. The Green Line LRT
began service in June 2014, and connects Paul, as
well as the State Capital and the University of Minnesota. Metro Transit also operates the
Northstar Commuter Rail line, which provides service with seven stations between
downtown Minneapolis and the northwest suburbs of the Twin Cities. Additionally, the
line connects with Northstar Link bus line for service to and from St. Cloud, Minnesota.
Major freight train railroads serving the Twin Cities include Burlington Northern Santa Fe,
Union Pacific, and Canadian Pacific/Soo Line Railway Company. Amtrak provides
passenger rail service from the Twin Cities to Illinois (Chicago), Oregon (Portland) and
Washington (Seattle).
Trucking service is also a vital part of the freight transportation to and from the Twin Cities,
and is a key component of the regional freight transportation system. River port barge
service runs from St. Paul to points south along the Mississippi. Major commodities
transported by river barge to and from the Twin Cities include grain, aggregate, fertilizer
and cement.
Utilities
The Minneapolis/St. Paul area, as well as the majority of Cottage Grove, is served by
municipal water and sewer systems, electricity, telephone service and natural gas.
P ATCHIN M ESSNER
Valuation Counselors
26
22029-1
REGIONAL AND CITY DATA
Summary
In summary, prior to the COVID-19 pandemic, most markets were expected to experience
continued demand and increase pricing. The Twin Cities had gained favor with
international and national investors who are interested in bulk industrial, multi-family, core
Class A office, and well positioned grocery-anchored retail centers. Sellers of top-quality,
assets in prime locations with predictable income streams, a strong tenant base and good
credit were expected to see the most demand.
However, the COVID-19 pandemic has affected the nation and created significant
uncertainty for the U.S. economy. For the U.S. stock market, the first quarter of 2020 is
the worst first quarter in U.S history. The first confirmed COVID-19 case in Minnesota
was reported March 6, 2020. In the Twin Cities metropolitan area, CoStar tracked
commercial property sales for a three-week period beginning February 21, 2020 and sales
were roughly half of the previous period in 2019. However, prior to the COVID-19
pandemic, commercial real estate in the Twin Cities metropolitan area was expected to
record strong first quarter sales metrics (Finance and Commerce, March 26, 2020). The
Twin Cities metropolitan real estate markets appear to be on hold while this pandemic
unfolds on a global economic scale. As such, an increase in capitalization rates or decrease
in sale prices has not yet occurred within this market. Therefore, at this point in time,
other than a slowing of transaction volume, it is too soon to determine the potential impacts
to the Twin Cities real estate market.
NEIGHBORHOOD DATA
The subject is located on the south side of U.S. Highway 61, a principal arterial roadway,
in the central portion of Cottage Grove. The neighborhood may be described as those
th
properties along the U.S. Highway 61 corridor between 80 Street, northwest of the
subject, and Keats Avenue, southeast of the subject. This area is primarily commercial,
retail, and residential on the north side of U.S. Highway 61, including retailers such as
Target, Menards, Hy-Vee, Dollar Tree, Cub Foods, and Aldi. Additionally, restaurants and
P ATCHIN M ESSNER
Valuation Counselors
27
22029-1
NEIGHBORHOOD DATA
various other retail uses are along the north side of the U.S. Highway 61 corridor. Aside
from retail and commercial uses, residential uses such as Grove Ridge Apartments and
single-family homes, are also part of the northerly neighborhood.
Conversely, the south side of U.S. Highway 61 is primarily agricultural, commercial, and
industrial uses. South of the subject there are large tracts of undeveloped land used for
farming along with rural residential single-family homes. Northwest of the subject property
is the Cottage Grove Public Work facility, several storage units along with various industrial
and commercial buildings are located along the U.S. Highway 61 corridor.
The subject is located approximately ½-mile southeast of the U.S. Highway 61 and Jamaica
Avenue interchange. The average daily traffic counts in 2019 of nearby roadways in the
neighborhood are as follows.
Neighborhood Traffic Volumes (AADT)
Roadway2019
Jamaica Avenue
North of W Point Douglass Rd21,900
South of W Point Douglass Rd13,200
U.S. Highway 10/61
Northbound40,000
Southbound25,500
Off Ramps (Jamaica Ave)21,250
On Ramps (Jamaica Ave)21,250
The location of municipal utilities in Cottage Grove are depicted on the maps on following
pages. As illustrated, a sanitary sewer main runs along U.S. Highway 61 within the
Municipal water is currently located within the subject
neighborhood. Referring to the Utility Staging Areas Map following, the subject property
is part of Development Stage 2 and within the 2040 MUSA boundary.
In conclusion, the neighborhood is expected to grow and develop to the east and south of
the subject. The city has planned and guided development in the southern portion of the
neighborhood for industrial, retail, and some residential uses; while in the northern portion
of the neighborhood, residential and retail and commercial development is planned. The
characteristics and influences of the neighborhood should continue to have a positive
effect on real estate and property values.
P ATCHIN M ESSNER
Valuation Counselors
28
22029-1
SANITARY SEWER MAP
P ATCHIN M ESSNER
Valuation Counselors
29
22029-1
EXISTING AND FUTURE TRUNK WATER SYSTEM
.
P ATCHIN M ESSNER
Valuation Counselors
30
22029-1
LOCATION AND LEGAL DESCRIPTION
Location: 8991 West Point Douglas Road South
Cottage Grove, Minnesota
Property Identification
Number: 21.027.21.41.0005
Legal Description: That part of Block 3 lying southwesterly of right-of-way of
Highway 61 and vacated Dodge Street adjacent, Langdon
Addition, Washington County, Minnesota
TAX AND ASSESSMENT DATA
All Minnesota counties follow the property tax process that was created by the Minnesota
State Legislature. The property values used to establish 2020 property taxes are based on
estimate of market value as of January 2019. operty tax and
assessment data are provided below.
TAX AND ASSESSMENT DATA
Washington County PID No. 21.027.21.41.0005
2019 Assessor's Market Value2020 Assessor's Market Value
Land$97,100Land$97,100
Improvements$112,400Improvements$115,500
Total$209,500Total$212,600
Real Estate Taxes Payable 2020Real Estate Taxes Payable 2021
General Taxes$2,727.00General TaxesN/A
Special Assessments$57.00Special AssessmentsN/A
Total$2,784.00TotalN/A
Effective Tax Rate1.30%Effective Tax RateN/A
Analysis of 2019 Assessor's Market ValueAnalysis of 2020 Assessor's Market Value
Land Area (Square Foot)45,302Land Area (Square Foot)45,302
Land Value per Square Foot$2.14Land Value per Square Foot$2.14
P ATCHIN M ESSNER
Valuation Counselors
31
22029-1
ZONING DATA
Zoning is administered by the City of Cottage Grove. As depicted on the Zoning Map on
the following page, the subject is zoned B-2, Retail Business District. As depicted by the
2040 Future Land Use Map, the subject is guided Mixed Use. Additionally, in the 2030
Comprehensive Plan the subject is part of the Business Park Alternative Urban Areawide
Review (AUAR), and is part of the Langdon Area in the 2040 Comprehensive Plan.
The Cottage Grove Zoning Ordinance describes the Retail Business District as follows:
The retail business district (B-2) is to encourage retail sales and services by grouping
businesses in patterns of workable relationships to minimize the influence on surrounding
residential neighborhoods by limitation and control of permitted uses. (Ord. 904, 5-16-
2012)
Permitted uses within the B-2 District include, but are not limited to: single-family detached
dwellings, commercial agriculture and horticulture, farm buildings and pole barns, farm
drainage and irrigation systems, feedlots and poultry facilities and forestry.
Additional uses allowed with a conditional use permit include religious institutions and
columbariums; commercial horse stables, boarding stables and dog kennels; density
transfers, which will subsequently be explained in greater detail; detached domesticated
farm animal building on parcels between five and ten acres; detached rural storage
buildings on parcels less than ten acres; electromagnetic communication facilities; limited
commercial ventures; and public utility and public service structures.
The following design standards apply to properties within the B-2 District:
Lot Area: Minimum of 10,000 SF, unless the land is adjacent
to an existing commercial area
Minimum Lot Width: 100 ft.
Maximum Building Height: 35 ft., except buildings over 35 ft. shall be subject
to receiving a conditional use permit
P ATCHIN M ESSNER
Valuation Counselors
32
22029-1
ZONING DATA
Minimum Setbacks:
Front Yard 30 ft.
Side Yard 10 ft.
Rear Yard 35 ft.
-family home, is considered a legally non-
conforming use.
Additionally,
Comprehensive Plan. The highest and best use of the subject is for a destination-oriented
commercial use, which conforms with the Mixed Use guiding. As such, the Mixed Use
designation is described as follow:
P ATCHIN M ESSNER
Valuation Counselors
33
22029-1
ZONING MAP
P ATCHIN M ESSNER
Valuation Counselors
34
22029-1
FUTURE LAND USE MAP
P ATCHIN M ESSNER
Valuation Counselors
35
22029-1
ZONING DATA
The subject property lies within the Highway 61 and Jamaica Avenue South Mixed Use
Area. Furthermore, the subject is located in Area 5 of future land use change also known
as the Langdon Area, and can be seen in the following page.
The Langdon Area is described in the 2040 Comprehensive Plan as follow:
Langdon Area
P ATCHIN M ESSNER
Valuation Counselors
36
22029-1
FUTURE LAND USE AND AREAS OF CHANGE MAP
P ATCHIN M ESSNER
Valuation Counselors
37
22029-1
PROPERTY DESCRIPTION
Size: The gross land area is reportedly 78,269 SF, or 1.80 acres.
However, the northern portion of the site is encumbered
by existing right-of-way.
considered approximately 45,302 SF, or 1.04 acres, net of
existing right-of-way, according to the Washington County
.
Shape: The subject is triangular in shape.
Street Frontage: The subject has ±322 LF of frontage on West Point
Douglas Road along the northerly property boundary and
th
± 264 LF of frontage on 96 Street, which is the southerly
property boundary.
Street Access: The subject has one driveway along West Point Douglas
Road, which is a bituminous paved roadway with one lane
th
of traffic in each direction. Additionally, 96 Street is a
minimally maintained roadway, improved with gravel.
Traffic Count: The average annual average daily traffic counts for nearby
roadways is as follows:
25,500 Highway 61 (2019)
13,200 Jamaica Avenue (south of Hwy 61; 2019)
Terrain:
surrounding roadways. The subject is open with a modest
level of landscaping and trees.
Utilities: Municipal water and sewer are available to the subject
property. However, the home is served by private well and
septic. According to the City of Cottage Grove, the
well water has a higher level of PFAs. However,
the State has been providing granular activated carbon filter
to help lower concentration levels.
Flood Hazard: The subject is located in Zone X, areas with minimal flood
risk. No flood hazard analysis has been conducted.
Map No.: 27163C0416E
Effective Date: February 3, 2010
Soil Conditions: The soils appear stable and suitable for typical construction
practices. However, neither soils tests nor engineering data
have been provided in conjunction with this appraisal.
P ATCHIN M ESSNER
Valuation Counselors
38
22029-1
PROPERTY DESCRIPTION
Easements: We were not provided with a title report. However, based
on the plat map the subject is encumbered with Minnesota
Department of Transportation (MnDOT) right-of-way along
the northern portion o
Additionally, as reported by the listing agent, there is also
a power line easement along the eastern property
boundary. To our knowledge, there are no other recorded
easements or encumbrances that would have a significant
effect
Building Description: The subject is improved with a split-level, single-family
home that was built in 1965. The single-family home
comprises approximately 976 SF of finished space
including three bedrooms and a full bathroom along with
a full unfinished basement. Additionally, there is a two-car
attached garage.
The appraiser observed a musty odor in the basement and
noted open windows and running fans at the time of
inspection. As such, there may be a possibility of water
intrusion. However, given the lack of visible impairment,
we assume the basement space is unimpaired. Moreover,
based on the highest and best use analysis provided herein,
the highest and best use of the subject property is to
redevelop the site for a destination-oriented commercial
use, with the current single-family home as an interim use.
P ATCHIN M ESSNER
Valuation Counselors
39
22029-1
PLAT MAP
P ATCHIN M ESSNER
Valuation Counselors
40
22029-1
HIGHEST AND BEST USE
Highest and best use is defined in , Fifth Edition,
Appraisal Institute as follows:
The reasonably probable and legal use of vacant land or an improved property that is physically
possible, appropriately supported, financially feasible, and that results in the highest value. The
four criteria the highest and best use must meet are legal permissibility, physical possibility,
financial feasibility, and maximum productivity.
This publication goes on to distinguish the highest and best use as vacant and as improved,
as follows:
Highest and best use of land or site as though 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.
Highest and best use of property as improved - The use that should be made of a property as it
exists. An existing improvement should be renovated or retained as is so long as it continues to
contribute to the total market value of the property, or until the return from a new improvement
would more than offset the cost of demolishing the existing building and constructing a new one.
In order to determine highest and best use of the subject property, the following factors
must be considered when addressing possible uses. They are:
1. Legally Permissible
2. Physically Possible
3. Financially Feasible
4. Maximally Productive
Legally Permissible
The first test of highest and best use involves identifying those uses that are legally
permissible. Legal restrictions can include public restrictions such as zoning and building
codes, and private restrictions such as deed restrictions and protective covenants. The
subject is located in the city of Cottage Grove with a zoning of B-2, Retail Business District
and guided Mixed Use. Based on permitted uses, a commercial use is considered for this
analysis.
P ATCHIN M ESSNER
Valuation Counselors
41
22029-1
HIGHEST AND BEST USE
Physically Possible
The subject site comprises approximately 45,305 SF, or 1.04 acres of land area, net of
existing right-of-way and is triangular in shape. Municipal water and sewer are available
to the site, including other utilities, such as natural gas, electricity and telephone. Access
to the site is from West Point Douglas Road, which fronts along Highway 61. Access to
Highway 61 is located from the northwest at Jamaica Avenue, which is a full interchange.
Nearby uses along the south side of Highway 61 include: agricultural, single-family homes,
a vacant commercial building, the City of Cottage Grove Public Works Facility, and Acorn
Mini Storage. North of Highway 61 near the subject property include Menards, Target,
and Walmart along with smaller strip retail and stand-alone retail uses.
Financially Feasible
As outlined in the Market Analysis section of this report, before the COVID-19 Pandemic,
sections of the commercial market were strong, both in terms of demand and pricing.
Additionally, as of this appraisal date, the Twin Cities real estate market appears to be on
hold while this pandemic unfolds on a global economic scale. Other than a slowing of
transaction volume, it is too soon to determine the potential impacts to the market.
However, considering the surrounding land uses on the south side of Highway 61. The
subject property is more suitable as a destination-oriented commercial use.
Maximally Productive
that the highest and best use, as vacant, is to develop the subject property with a
destination-oriented commercial use that maximizes the site and is consistent with zoning
and guiding.
As Improved
The subject is improved as a single-family home that was built in 1965 and comprises 976
SF of finished living area with three bedrooms and one full bath. A search for sales of
comparable single-family homes similar to the subject property was completed, and a table
is provided on the following page.
P ATCHIN M ESSNER
Valuation Counselors
42
22029-1
HIGHEST AND BEST USE
As Improved
P ATCHIN M ESSNER
Valuation Counselors
43
22029-1
HIGHEST AND BEST USE
As Improved
The comparables sold between August 2019 and May 2020 with a range of $197,000 to
$254,984 and an average of $229,793. All of the comparables are split-level homes built
between 1963 and 1980 with three bedrooms and one full bath along with a two-car
garage. Additionally, all of the homes range in finished area between 1,170 SF and 1,500
SF. Moreover, the lot size of the comparables are between 0.24 acres and 0.37 acres with
municipal services. Overall the comparables are considered similar with the subject
property. However, there are some differences between the comparables and the subject
property. The subject is not served by municipal water and sewer, but available to the site.
Additionally, the subject property is a larger site, while all of the comparables have smaller
lots that are located in more residential subdivisions in Cottage Grove. Considering these
factors regarding the comparable sales
and best use, as improved, is for redevelopment with a destination-oriented commercial
use. However, the single-family home is considered an interim use for the site.
EXPOSURE AND MARKETING TIME
Exposure time of 12 to 18 months would be required to sell the subject property, based on
the value stated herein. Marketing time, including due diligence and closing, is also
estimated at 12 to 18 months.
APPRAISAL PROCEDURES AND TECHNIQUES
In order to develop an opinion of market value of the subject, the following appraisal
techniques are considered.
Cost Approach - considers the current cost of replacing a property, less the
depreciation from three sources: physical deterioration, functional
obsolescence and external obsolescence. A summation of the market value
of the land, assumed vacant, and the depreciated replacement cost of the
improvements provides an indication of the total value of the property.
P ATCHIN M ESSNER
Valuation Counselors
44
22029-1
APPRAISAL PROCEDURES AND TECHNIQUES
Sales Comparison Approach - produces an estimate of value by comparing the
subject property to sales and/or listings of similar properties in the same or
competing areas. This technique is used to indicate the value established by
informed buyers and sellers in the market.
Income Approach -
income. The net income is capitalized to arrive at an indication of value
from the standpoint of an investment. This method measures the present
worth of anticipated future benefits (net income) derived from a property.
The Sales Comparison Approach to value the land has been utilized in this appraisal. This
approach is more fully described below. The Cost and Income approaches are not
considered to yield credible assignment results and are not applied in the valuation
assignment.
SALES COMPARISON APPROACH
The sales comparison approach to value examines the sale prices of other properties
similar to the subject in utility, size and type that have sold in the marketplace. This
approach is good evidence of value because it represents activities and reactions of sellers,
users and investors as they respond to the marketplace.
property than it will cost to buy or rent a comparable substitute property. The validity of
this approach is based on the assumption that continuity exists between similar properties
of like adequacy and their market values. The reliability of this technique is dependent
upon the availability of sales data and the degree of comparability of the sales studied.
To apply this approach to the subject property, information has been sought on sales of
land from 2017 to the present, which are similar in terms of highest and best use with
particular focus on commercial uses, location, zoning/guiding, size and appeal. These
sales used are identified on a location map, followed by individual write-ups, an
adjustment grid and narrative analysis, to arrive at a land value estimate.
P ATCHIN M ESSNER
Valuation Counselors
45
22029-1
COMPARABLE LAND SALES LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
46
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 1
Location: 15265 Carrousel Way
Rosemount, Minnesota
PID: 34-71176-01-011
Buyer: Rosemount MOB Partners, LLC
Seller: Rosemount Properties, LLC
Date of Sale: April 2020
Zoning/Guiding: C4, General Commercial / CC, Community Commercial
Intended Use: Medical Office
Traffic Count: 5,300 AADT (2018), Chippendale Avenue; and 910 AADT (2018),
Carrousel Way
Size: 57,253 SF, or 1.31 Acres
Sale Price: $414,512
Price per SF: $7.24
Remarks: -length transaction of a property
located at the northeast corner of Chippendale Avenue and Carrousel
Way in Rosemount. The sale price was openly negotiated and was
reported to be at or near market. The buyer purchased the property
to develop a 12,000 SF medical office building. The finished
building will be leased to Lorenz Clinic, a mental health practice,
which also has offices in Victoria, Chaska and Prior Lake.
P ATCHIN M ESSNER
Valuation Counselors
47
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 2
Location: 5715 Memorial Avenue North
Oak Park Heights, Minnesota
PID: 06.029.20.13.0013
Buyer: TCO Real Estate-Fund 2, LLC
Seller: Gregory and Lorene Clark
Date of Sale: March 2020
Zoning/Guiding: B-3, Highway Business & Warehouse / Highway Business & Warehouse
Intended Use: Medical Office
Traffic Count: 23,100 AADT (2019), Stillwater Boulevard
Size: 239,632 SF, or 5.50 Acres
Sale Price: $1,750,000
Price per SF: $7.30
Remarks: -length transaction of a property
located in the southwest quadrant of Highway 36 and Stillwater
Boulevard in Oak Park
Stillwater Area High School, Kwik Trip, and Public Storage. The
comparable was purchased by Twin Cities Orthopedics.
P ATCHIN M ESSNER
Valuation Counselors
48
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 3
Location: SEC Osgood Avenue and Osman Avenue
Oak Park Heights, Minnesota
PID: 04.029.20.11.0160
Date of Sale: June 2019
Buyer: Dave Trimert JR
Seller: McCullough & Sons Incorporated
Zoning/Guiding: B-2, General Business / Commercial
Intended Use: Auto Repair Store
th
Traffic Count: 11,200 AADT (2019), Osgood Avenue; and 890 AADT (2019), 60
Street
Size: 113,692 SF, or 2.61 Acres
Sale Price: $550,000
Price per SF: $4.84
Remarks: This is an openly-marketed, arm's-length transaction of a property
located in the southeast quadrant of Highway 36 and Osgood Avenue.
The property was purchased for an auto repair store. Nearby uses
include Andersen Corporation to the west and residential uses to the east
and south of the comparable.
P ATCHIN M ESSNER
Valuation Counselors
49
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 4
Location: XXXX Keokuk Avenue
Lakeville, Minnesota
PID(s): 22.035.000.1012
Date of Sale: March 2018
Buyer: Compeer Financial, FLCA
Seller: Lakeville Land, Ltd. Limited Partnership
Zoning/Guiding: C-3, General Commercial / Commercial
Intended Use: Office
th
Traffic Count: 8,000 AADT (2019), 210 Street; and 225 AADT (2018), Keokuk Avenue
Size: 243,065 SF, or 5.58 Acres
Sale Price: $1,884,000
Price per SF: $7.75
Remarks: This is an openly-marketed, arm's-length transaction of a property
th
located in the southwest corner of Interstate 35 and 210 Street in
Lakeville. The property was purchased to build an owner/occupied
office.
P ATCHIN M ESSNER
Valuation Counselors
50
22029-1
SALES COMPARISON APPROACH
Comparable Land Sale 5
Location: 1325 Corporate Center Curve
Eagan, Minnesota
PID(s): 10-22535-00-010
Buyer: Advantage Equities 10544 LLC
Seller: Eagandale Properties, LLC
Date of Sale: May 2017
Zoning/Guiding: PD, Planned Development / Major Office
Intended Use: Hotel
Traffic Count: 5,600 ADT (2019), Corporate Center Drive
Size: 97,690 SF, or 2.24 Acres
Sale Price: $585,000
Price per SF: $5.99
Remarks: -length transaction. According
development. The site is currently listed for sale with an asking
price of $1,149,000, or $11.76 per SF. The listing brochure
indicates the site is fully entitled for an 87-room Comfort Suites
hotel.
P ATCHIN M ESSNER
Valuation Counselors
52
22029-1
SALES COMPARISON APPROACH
Explanation of Adjustments
Property Rights: All of the sales represent the transfer of the fee simple
interest. Therefore, no adjustments are necessary.
Financing: No unusual financing was discovered that would have
an impact on the sale price. Therefore, no adjustments
are necessary.
Conditions of Sale: All of the comparable sales are considered -length
transactions by unrelated parties and require no
adjustment for conditions of sale.
Special Assessments: None
Other Expenditures: No additional expenditures were required for the
comparables.
Market Conditions: This adjustment reflects differences in market
conditions between the date of appraisal and the date
the comparables sold. The comparable sales occurred
between May 2017 and April 2020. The commercial
market has been stable with development occurring
throughout the market over the past few years. The
outbreak of COVID-19 was declared a global
pandemic on March 11, 2020. Since the pandemic
declaration, the affects of the pandemic on the real
estate market have yet to be determined. Therefore, the
market conditions adjustment is based on 5% annual
appreciation from 2017 through March 2020. No
further adjustment is applied from March 2020 to April
2020 since the impact is not known.
Location: This adjustment is based upon observations of both the
subject and the comparables. Factors such as access,
lot orientation, type of road frontage, neighborhood
amenities, and surrounding land use were considered
when making this adjustment. Comparables 1, 2, 4,
and 5 are considered superior to the subject regarding
location and downward adjustments are made.
Comparable 3 is located south of Highway 36 in Oak
Park Heights with no visibility to the highway, and an
upward adjustment is applied.
P ATCHIN M ESSNER
Valuation Counselors
53
22029-1
SALES COMPARISON APPROACH
Explanation of Adjustments
Size: The subject property has a land area of 45,302 SF, or
1.04 acres, net of existing right-of-way. The
comparables range in size from 57,253 SF to 243,065
SF. Properties of this size are generally sold on a per SF
basis. Typically, a smaller property will demand a
higher price per SF than a larger property. This inverse
relationship is present among the comparable sales.
Size adjustments are based on a curve.
Shape: The subject is triangular in shape, which can limit the
utility of the site. Comparables 1, 2, and 4 are
rectangular sites and a 5% downward adjustment is
applied. Comparables 3 and 5 are irregular and
triangular in shape and considered to have similar
development utility. As such, no adjustment is made
to these two comparables.
Terrain: The subject property is generally level and open.
Nearly all of the comparables are considered similar in
terrain and no adjustments are made. However,
Comparable 3 has a sloping terrain and wooded
topography, and an upward adjustment is applied to
this sale.
Zoning - Guiding: All of the comparable sales have similar zoning and
guiding, and no adjustments are necessary.
Other: None
Analysis
The five comparable land sales range in unadjusted unit price from $4.84 per SF to $7.75
per SF, with an average of $6.62 per SF of land. After the adjustment process, the five
comparable land sales range in unit price from $6.24 per SF to $7.76 per SF, with an
average of $6.82 per SF of land. The adjustment process has tightened the range of the
comparable sales, indicating the appropriateness of the adjustments utilized.
Generally speaking, all of the comparables are commercial properties that were purchased
for office, medical office, auto repair and hotel use. Comparable 1 is located south of
th
150 Street (Co Rd 42) along the east side of Chippendale Avenue in Rosemount,
Minnesota. The immediate area is nearly developed with a mix of impulse and destination-
P ATCHIN M ESSNER
Valuation Counselors
54
22029-1
SALES COMPARISON APPROACH
Analysis
oriented retail and office uses. This comparable is considered superior in location and
shape to the subject property. Comparable 2 is also located in a more developed
commercial area that was purchased for a medical office building. This comparable is
considered superior to the subject as well. Comparable 3 located in Oak Park Heights in
the vicinity of Andersen Corporation to the west and commercial uses to the north. The
site has sloping topography with wooded terrain. Comparable 4 is located at the southwest
th
corner of Interstate 35 and 210 Street in Lakeville. This comparable is least similar to the
subject site since the comparable is located at a highway interchange. Comparable 5 is
located south of Interstate 494 and east of Pilot Knob Road in Eagan. The location of this
comparable is in a commercial and office area.
All of the comparables are considered useful in this analysis, and the overall gross
12% to 33%.
th
Comparable 4 is located at the southwest corner of Interstate 35 and 210 Street in
Lakeville, which is a more impulse-oriented commercial location at a highway
interchange. Therefore, this comparable is given less weight in this analysis. The remaining
comparables are given similar weight in this analysis. Considering the above, the market
value of the subject, as of June 24, 2020, is estimated to be $6.75 per SF. Therefore, the
market value of the subject is estimated as follows:
45,302 SF x $6.75 per SF = $305,789, rounded $306,000
Since the subject is improved with a single-family residential home that is approximately
1,516 SF of gross building area, demolition costs, based on Marshall and Swift cost
estimator, for the single-family home are estimated at approximately $5.00 per SF of
building area. However, since on an interim basis the home improvements are considered
to contribute a nominal value, this nominal improvement value generally off-sets the
demolition costs.
P ATCHIN M ESSNER
Valuation Counselors
55
22029-1
ADDENDA
P ATCHIN M ESSNER
Valuation Counselors
56
22029-1
EXHIBIT 1
(Pages 57-58)
P ATCHIN M ESSNER
Valuation Counselors
57
22029-1
P ATCHIN M ESSNER
Valuation Counselors
58
22029-1
P ATCHIN M ESSNER
Valuation Counselors
59
22029-1
EXHIBIT 2
(Pages 60-61)
P ATCHIN M ESSNER
Valuation Counselors
60
22029-1
INTERIOR PHOTOGRAPHS OF SUBJECT
View of Living Room View of Kitchen
View of Living Room View of Kitchen and Dining Area
View of Bedroom One View of Bedroom Two
P ATCHIN M ESSNER
Valuation Counselors
61
22029-1
INTERIOR PHOTOGRAPHS OF SUBJECT
View of Bedroom Three View of Bathroom
View of Lower Level View of Lower Level
View of Lower Level View of Garage
P ATCHIN M ESSNER
Valuation Counselors
62
22029-1
CONTINGENT AND LIMITING CONDITIONS
(Pages 63-65)
P ATCHIN M ESSNER
Valuation Counselors
22029-1 63
CONTINGENT AND LIMITING CONDITIONS
The value estimates and conclusions in the appraisal are made subject to these assumptions
and conditions:
1. No title search has been made and the reader should consult an appropriate
attorney or title insurance company for accurate ownership data. Title to the
property is assumed to be good and marketable unless otherwise stated.
2. The legal description, furnished or otherwise, is assumed to be correct. No
responsibility is assumed for the legal description or for matters including
legal or title considerations.
3. The information contained in this report is not guaranteed, but it has been
gathered from reliable sources. The appraiser(s) certify that, to the best of
their knowledge and belief, the statements, information and materials
contained in the appraisal are correct.
4. All value estimates in this report assume stable soil and any necessary soil
corrections are to be made at the seller's expense, unless otherwise noted.
5. The site plan, if any, in this report is included to assist the reader in visualizing
the property, but we assume no responsibility for its accuracy.
6. The market value herein assigned is based on conditions which were
applicable as of the effective date of appraisal, unless otherwise noted.
7. The appraiser(s) that signed this report shall not be required to prepare for,
or appear in court, or before any board or governmental body by the reason
of the completion of this assignment without predetermined arrangements
and agreements.
8. Surveys, plans and sketches may have been provided in this report. They
may not be complete or be drawn exactly to scale.
9. Possession of this report, or a copy thereof, does not carry with it the right of
publication. It may not be used for any purpose by any person, other than
the party to whom it is addressed, without the written consent of the
appraiser, and in any event only with properly written qualification and only
in its entirety.
10. Information in the appraisal relating to comparable market data is more fully
documented in the confidential file in the office of the appraiser.
P ATCHIN M ESSNER
Valuation Counselors
22029-1 64
CONTINGENT AND LIMITING CONDITIONS
(CONTINUED)
11. All studies and field notes will be secured in our files for future reference.
12. It is assumed that all applicable zoning and use regulations and restrictions
have been complied with, unless a non-conformity has been stated, defined
and considered in the appraisal report. And, it is assumed that the utilization
of the land and any improvements is within the boundaries or property lines
of the property described and that there is no encroachment or trespass unless
noted within the report.
13. The distribution of the total valuation in this report between land and any
improvements, if stated, applies only under the reported highest and best use
of the property. The allocations of value for land and improvements must
not be used in conjunction with any other appraisal and are invalid if so used.
14. It is assumed that there is full compliance with all applicable federal, state
and local environmental regulations and laws unless non-compliance is
stated, defined and considered in the appraisal report.
15. The appraiser was not aware of the presence of soil contamination on the
subject property, unless otherwise noted in this appraisal report. The effect
upon market value, due to contamination was not considered in this
appraisal, unless otherwise stated.
16. The appraiser was not aware of the presence of asbestos or other toxic
contaminants in any building(s) located on the site, unless otherwise noted
in this report. The effect upon market value, due to contamination was not
considered in this appraisal, unless otherwise stated.
17. Unless otherwise stated in this report, the existence of hazardous material,
which may or may not be present on the property, was not observed by the
appraiser. The appraiser has no knowledge of the existence of such materials
on or in the property. The appraiser, however, is not qualified to detect such
substances. The value estimate is predicated on the assumption that there is
no such material on or in the property that would cause a loss in value. No
responsibility is assumed for any such conditions, or for any expertise or
engineering knowledge required to discover them. The client is urged to
retain an expert in this field, if desired.
18. The value stated in this report is fee simple, assuming responsible owner-ship
and management, unless otherwise indicated. This appraisal recognizes that
available financing is a major consideration by typical purchasers of real
estate in the market, and the appraisal assumes that financing is or was made
available to purchasers of property described herein.
P ATCHIN M ESSNER
Valuation Counselors
22029-1 65
CONTINGENT AND LIMITING CONDITIONS
(CONTINUED)
19. The appraiser has neither present nor contemplated interest in the property
appraised and employment is not contingent upon the value reported.
20. Unless otherwise stated in this report, the appraisers have not made a survey
or analysis to determine whether any buildings on the property are in
compliance with "The Americans with Disabilities Act" (ADA). If the
property is not in compliance with the ADA, it could have a negative effect
on the value of the property.
21. The property is appraised free and clear of any or all liens or encumbrances
unless otherwise stated.
P ATCHIN M ESSNER
Valuation Counselors
22029-1 66
APPRAISER QUALIFICATIONS
(Page 67)
P ATCHIN M ESSNER
Valuation Counselors
22029-1 67
QUALIFICATIONS OF
CHRISTINE L. MACKAMAN
PROFESSIONAL
AFFILIATIONS MAI, AI-GRS, Appraisal Institute
Certified General Real Property Appraiser, Minnesota License No. 20517275
BUSINESS
EXPERIENCE Patchin Messner Valuation Counselors, Principal, 2015 to Present
CM Valuation, Principal, 2011 to Present
Cassidy Turley, 2004-2010
Metropolitan Council, 2001-2004
EDUCATIONAL
BACKGROUND Master of Urban and Regional Planning, University of Minnesota
Bachelor of Arts Degree, Albion College
SPECIALIZED
REAL ESTATE Appraisal Institute/American Institute of Real Estate Appraisers Course Work:
TRAINING Real Estate Appraisal Principles
Basic Valuation Procedures
Residential Case Study
Standards of Professional Appraisal Practice
Basic Income Capitalization
Advanced Income Capitalization
Highest & Best Use and Market Analysis
Advanced Sales Comparison and Cost Approaches
Report Writing and Valuation Analysis
Advanced Applications
Business Practice and Ethics
Litigation Appraising: Specialized Topics and Applications
SEMINARS ATTENDED:
Appraisal Institute
Annual Real Estate Trends
Annual Forecast/Industry Forecast
Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book)
APPRAISAL
EXPERIENCE Preparation of appraisals for eminent domain, tax appeal, estate planning, acquisition/disposal, and
financing. Properties appraised include: hospitals, apartment complexes, office and industrial buildings,
shopping centers, single family residences and development land.
RELATED
EXPERIENCE North Star Chapter of the Appraisal Institute: Sectary, present
North Star Chapter of the Appraisal Institute: Government Relations Committee, present
North Star Chapter of the Appraisal Institute: Region III Representative, past
North Star Chapter of the Appraisal Institute: Candidate Guidance Committee Chair, past
North Star Chapter of the Appraisal Institute: Board of Directors, past
P ATCHIN M ESSNER
Valuation Counselors
22029-2
iv
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Fee Owner: 9165 Point Douglas LLC
Location: 9165 West Point Douglas Road South
Cottage Grove, Minnesota
Date of Valuation: June 24, 2020
Dates of Inspection: June 24, 2020
Property Appraised: Real Property
Rights & Interests Appraised: Fee Simple Market Value
Zoning: B2, Retail Business District
Guided Future Land Use: Mixed Use (2030 and 2040)
Site Description: The subject site comprises 303,398 SF, or 6.97
acres of land, net of existing right-of-way. The site
is trapezoidal in shape and is generally level and
open. The property fronts along West Point
Douglas Road in Cottage Grove.
Description of Improvements: The subject is improved with a commercial
building that was built in 1973 and comprises
18,000 SF of GBA. The building is currently vacant
and reportedly in poor condition and contributes a
nominal value to the overall property.
Highest and Best Use:
As Vacant A destination-oriented commercial use
As Improved To redevelop the site with a destination-oriented
commercial use
Value Range Conclusion: $1,655,000 to $1,745,000
P ATCHIN M ESSNER
Valuation Counselors
22029-2
v
TABLE OF CONTENTS
ITEM PAGE NO.
LETTER OF TRANSMITTAL ....................................................................................... i-ii
CERTIFICATION ........................................................................................................ iii
SUMMARY OF SALIENT FACTS AND CONCLUSIONS .............................................. iv
TABLE OF CONTENTS ................................................................................................ v
PHOTOGRAPHS OF SUBJECT .................................................................................. vii
AERIAL VIEW OF SUBJECT ......................................................................................... x
SUBJECT LOCATION MAP ........................................................................................ xi
PROPERTY APPRAISED ............................................................................................... 1
DATE OF APPRAISAL .................................................................................................. 1
INSPECTION OF THE PROPERTY ............................................................................... 1
PROPERTY OWNERSHIP ............................................................................................ 1
SALES HISTORY .......................................................................................................... 1
CLIENT AND INTENDED USER .................................................................................. 2
INTENDED USE .......................................................................................................... 2
PROPERTY RIGHTS APPRAISED ................................................................................. 2
PURPOSE OF THE APPRAISAL.................................................................................... 2
MARKET VALUE DEFINED .......................................................................................... 2
COMPETENCY OF APPRAISER ................................................................................... 3
SCOPE OF WORK ...................................................................................................... 4
ENVIRONMENTAL CONSIDERATIONS ...................................................................... 5
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS .................. 6
REGIONAL AND CITY DATA ..................................................................................... 6
NEIGHBORHOOD DATA ......................................................................................... 25
LOCATION AND LEGAL DESCRIPTION ................................................................... 29
TAX AND ASSESSMENT DATA ................................................................................. 29
ZONING DATA ........................................................................................................ 31
ZONING MAP .......................................................................................................... 33
2040 FUTURE LAND USE MAP ................................................................................ 34
FUTURE LAND USE AND AREAS OF CHANGE MAP ............................................... 36
P ATCHIN M ESSNER
Valuation Counselors
22029-2
vi
TABLE OF CONTENTS
(CONTINUED)
ITEM PAGE NO.
PROPERTY DESCRIPTION ........................................................................................ 37
SUBJECT PLAT MAP.................................................................................................. 39
HIGHEST AND BEST USE ......................................................................................... 40
EXPOSURE AND MARKETING TIME ......................................................................... 42
APPRAISAL PROCEDURES AND TECHNIQUES ........................................................ 42
SALES COMPARISON APPROACH ........................................................................... 42
ADDENDA
EXHIBIT 1 - SUBJECT'S LISTING BROCHURE ...................................................... 55
CONTINGENT AND LIMITING CONDITIONS .................................................... 60
APPRAISING QUALIFICATIONS OFCHRISTINE L. MACKAMAN ......................... 65
P ATCHIN M ESSNER
Valuation Counselors
22029-2
vii
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Looking Southeasterly along West Point Douglas Road Subject on Right
Looking Northwesterly along West Point Douglas Road Subject on Left
P ATCHIN M ESSNER
Valuation Counselors
22029-2
viii
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Looking Southwesterly at Front Exterior Facade of Subject Property
Looking Southeasterly at Front and West Exterior Facades of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-2
ix
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Looking Southeasterly at Subject Property from West Point Douglas Road
Looking Easterly at Eastern Portion of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-2
x
PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Looking Southwesterly at Southwest Portion of Subject Property
Aerial View of Subject Property
P ATCHIN M ESSNER
Valuation Counselors
22029-2
xi
REGIONAL LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
22029-2
xii
9165 West Point Douglas Road, Cottage Grove
SUBJECT LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
1
22029-2
PROPERTY APPRAISED
The subject site comprises 303,398 SF, or 6.97 acres of land, net of existing right-of-way.
The site is trapezoidal in shape and is generally level and open. The property fronts along
West Point Douglas Road in Cottage Grove, and is improved with a commercial building
that was built in 1973 and comprises 18,000 SF of GBA. The building is currently vacant
and reportedly in poor condition and contribute a nominal value to the overall property.
DATE OF APPRAISAL
The effective date of this appraisal is June 24, 2020.
INSPECTION OF THE PROPERTY
Christine Mackaman inspected the subject on June 24, 2020. A representative of the
property owner was contacted to discuss the property, but did not accompany the
appraiser on the exterior-only inspection.
PROPERTY OWNERSHIP
The property is owned by 9165 Point Douglas LLC.
SALES HISTORY
The Uniform Standards of Professional Appraisal Practice requires that all sales of the
subject during the previous three years be reported and analyzed. According to
Washington County records, there have been no sales of the subject property within the
previous three years. The property is currently listed for sale by Cushman & Wakefield
with an undisclosed asking price.
P ATCHIN M ESSNER
Valuation Counselors
2
22029-2
CLIENT AND INTENDED USER
The client and intended user of this appraisal assignment is the City of Cottage Grove. No
other intended users are considered for the purposes of this appraisal.
INTENDED USE
The intended use of this appraisal is to provide valuation guidance to the City of Cottage
Grove regarding the potential acquisition of the subject property. There is no other
intended use for this appraisal report.
PROPERTY RIGHTS APPRAISED
The subject property will be appraised by estimating the market value of the fee simple
interest of the real estate, subject to existing easements. For use in this appraisal, the fee
simple interest in the real estate is subject to the following definition obtained on Page 90
of , Sixth Edition, Appraisal Institute.
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations
imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
PURPOSE OF THE APPRAISAL
The purpose of the appraisal is to develop an opinion of market value for the subject
property .
MARKET VALUE DEFINED
Market value as utilized in this appraisal report conforms to the following definition
obtained from Page 142 of , Sixth Edition.
P ATCHIN M ESSNER
Valuation Counselors
3
22029-2
MARKET VALUE DEFINED
The most probable price that a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably,
and assuming the price is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title from seller to buyer under
conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what
they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
The price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.
Unless otherwise noted in the appraisal report, market value shall represent cash
equivalent terms where the seller receives all cash for their interest. The property may be
financed at typical market terms under this definition.
The above definition describes market value as an exchange concept. According to
, Sixth Edition, at Page 245, value in exchange is defined
as
COMPETENCY OF APPRAISER
Christine L. Mackaman has the knowledge and experience to complete this appraisal
assignment competently and in compliance with USPAP. Refer to the Appraiser
Qualifications in the Addenda of this report for further details.
P ATCHIN M ESSNER
Valuation Counselors
4
22029-2
SCOPE OF WORK
This document is intended to provide a market value appraisal of the property. This
appraisal report is intended to comply with the Uniform Standards of Professional
Appraisal Practice of the Appraisal Foundation. It has also been performed in compliance
with the Code of Professional Ethics and Standards of Professional Appraisal Practice of
the Appraisal Institute.
The appraisal task is to estimate the fee simple market value of the real property.
Summary of Appraisal Methodology
In this analysis, the following data and concepts pertaining to the subject property have
been examined.
1. Physical Characteristics of Real Property, including:
Inspection of the Subject Property on June 24, 2020 This inspection was
conducted in order to gather information about characteristics of the
subject that are relevant to the valuation problem.
Review of available Aerial Maps
Observation of the Local Market and the Subject's Place within this
Market
2. Non-Physical Characteristics of Real Property, including:
Property Rights We have examined property rights of the subject.
Legal Description The legal description was obtained from Washington
County public information and is assumed to be accurate.
Existing Road, Drainage and Utility Easements, if any
Tax and Assessment Data
Zoning and Land Use Data We have examined the City of Cottage Grove
Zoning Ordinance and Comprehensive Plan.
3. Observations and Data Concerning the Subject Property's Market and
Transactions within this Market:
P ATCHIN M ESSNER
Valuation Counselors
5
22029-2
SCOPE OF WORK
Summary of Appraisal Methodology
Sales of Land In order to gather the comparable sales, we searched the
Northstar Multiple Listing Service (MLS), REDIComps, the Electronic
Certificate of Real Estate Value (eCRV) database, and our internal files.
After selecting the sales, a comparative analysis of relevant factors that
influence value was undertaken to adjust the sales to the subject property
based upon the actions and preferences demonstrated by participants in
the marketplace.
Supply and Demand Generators of the Market
Financing available within the Market
Perception of the Market as to the Future
From the above data and concepts, we have made the following analyses:
Highest and Best Use Analysis of the Subject Property
Application of Appropriate Approaches to Value for the Property The
sales comparison approach is utilized to value the subject. The cost
approach and income approach are not considered applicable in this
case, given the highest and best use is for redevelopment to a destination-
oriented commercial use.
Correlation and a final estimate of value are reconciled as the final step.
ENVIRONMENTAL CONSIDERATIONS
According to the city, the water in this area may contain high levels of perfluoroalkyl
substances (PFAs). However, the state provides granular activated carbon filters to help
reduce the concentration levels for private wells. Based upon inspection of the subject
property, it is assumed that no other environmental concerns such as PCBs, toxic and
hazardous soil or ground water contamination exist upon the subject as of the date of this
appraisal report. However, the reader is advised that the appraiser is not qualified to
perform inspections concerning the existence or absence of environmental concerns. If
any environmental contaminants do exist within the subject property, the appraisers
reserve the right to adjust the estimated market value contained in this report accordingly.
P ATCHIN M ESSNER
Valuation Counselors
6
22029-2
HYPOTHETICAL CONDITIONS AND EXTRAORDINARY ASSUMPTIONS
The definitions of extraordinary assumption and hypothetical condition, as taken from
, Sixth Edition (Appraisal Institute, 2015), are as
follows. Following these definitions is a description of any extraordinary assumptions
and/or hypothetical conditions pertinent to this appraisal.
Extraordinary Assumption --
Hypothetical Condition
We have not assumed any hypothetical conditions or extraordinary assumptions in this
appraisal.
REGIONAL AND CITY DATA
Location
The subject property is located in Cottage Grove, Washington County, Minnesota. Cottage
Grove is an outer-ring suburb of the Twin Cities Metropolitan Area. The Minneapolis-St.
Paul Metropolitan Statistical Area (MSA) is situated in the north central portion of the
United States, approximately 275 miles south of the U.S./Canadian Border and 400 miles
northwest of Chicago, Illinois.
-St. Paul MSA is located in the
southeastern region of the State of Minnesota at the confluence of the Mississippi and
Minnesota Rivers, or at the crossroads of Interstate 94 (east/west) and Interstate 35 (north/
P ATCHIN M ESSNER
Valuation Counselors
7
22029-2
REGIONAL AND CITY DATA
Location
south). The Twin Cities serves as a regional economic center for the upper Midwest.
According to the U.S. Census Bureau, the Minneapolis-St. Paul MSA includes sixteen
Counties: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Le Sueur, Mille Lacs,
Ramsey, Scott, Sherburne, Sibley, Washington and Wright Counties in Minnesota and
Pierce and St. Croix Counties in Wisconsin.
Government
Cottage Grove has a City Council/Mayor form of government. On the regional level, the
core seven counties of the Minneapolis-St. Paul MSA, which include Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott and Washington Counties are under the jurisdiction of
the Metropolitan Council. The Metropolitan Council is the regional policy-making body,
planning agency and provider of essential services. The Metropolitan Council is led by a
17-member policy-making board, which guides the strategic growth of the seven-county
metropolitan area.
Population
According to the 2010 census, the seven-county metropolitan area had a total population
of 2,849,567. Based upon data compiled by the U.S. Census Bureau, the Metropolitan
Council reports the following population trends for Cottage Grove, Washington County,
and the seven-county metropolitan area.
POPULATION
Seven-County
Cottage Washington
Metropolitan
Year
GroveCountyArea
2000 Census30,582201,1302,642,062
2010 Census34,589238,1362,849,567
2018 Estimate*37,341261,5123,113,338
2020 Estimate*38,400269,2703,160,000
2030 Estimate*42,200304,7103,459,000
2040 Estimate*47,000335,7903,738,000
*As projected by the Metropolitan Council
P ATCHIN M ESSNER
Valuation Counselors
8
22029-2
REGIONAL AND CITY DATA
Population
The population data shows that Cottage Grove realized moderate growth between 2000
and 2010, increasing at a compounded annual growth rate of 1.24%. Washington County
as a whole also experienced similar growth, with a compounded annual growth rate of
1.70% over the same time period. In comparison, the Seven-County metropolitan area
grew at a 0.76% compounded annual rate. As estimated by the Metropolitan Council,
moderate growth is expected to continue for Cottage Grove, as well as for Washington
County and the larger metropolitan area.
Households
Based upon data compiled by the U.S. Census Bureau, the Metropolitan Council reports
the following household trends for Cottage Grove, Washington County and the Seven-
County metropolitan area on the following page.
HOUSEHOLDS
Seven-County
Cottage Washington
Metropolitan
Year
GroveCountyArea
2000 Census9,93271,4621,021,456
2010 Census11,71987,8591,117,749
2018 Estimate*12,55396,4241,213,980
2020 Estimate*13,300102,4901,264,000
2030 Estimate*15,200118,5201,402,000
2040 Estimate*17,300132,4001,537,000
*As projected by the Metropolitan Council
The household data indicates that Cottage Grove and Washington County realized
moderate household growth between 2000 and 2010. Cottage Grove realized a
compounded annual growth rate of 1.67%. Washington County experienced a 2.09%
compounded annual growth rate in households over the same time period, which is higher
than the Seven-
across all markets in recent years with the decline of residential permit activity since the
most recent recession.
P ATCHIN M ESSNER
Valuation Counselors
9
22029-2
REGIONAL AND CITY DATA
Employment
employment sector. The area tends to have lower rates of unemployment than the nation,
even in challenging economic cycles. The following table illustrates local to national
unemployment trends. The figure on the following page shows average annual
unemployment rates for Cottage Grove, Washington County, and the metro area.
As can be observed from the data above, local and regional unemployment rates generally
trend lower than the national and state average. Furthermore, rates have improved
significantly from 2009 levels.
Household Income Trends
Household income trends are a good indication of the overall economic health of a city,
and are related to the previous employment and labor force discussion. Cottage Grove
and Washington County have similar median household incomes, as indicated by the
median household income levels illustrated in the following chart. In addition, the median
household income for Cottage Grove has trended above that of the Seven-County Twin
Cities Area since at least 1990.
P ATCHIN M ESSNER
Valuation Counselors
10
22029-2
REGIONAL AND CITY DATA
Household Income Trends
Single-Family Housing Values
As provided by the Minneapolis Area Association of Realtors, historic median home price
data for Cottage Grove, nearby communities, Washington County, and the 13-county
metropolitan area is shown in the following table.
MEDIAN HOME SALE PRICES
20092010201120122013201420152016201720182019
Afton$307,000$330,000$430,000$275,000$409,500$412,375$435,000$452,500$450,000$492,000$508,500
Woodbury$239,000$243,750$219,700$240,000$267,500$284,000$288,600$294,500$312,400$325,000$352,500
Cottage Grove$180,000$174,450$160,000$174,900$194,000$209,900$222,000$240,000$250,000$262,500$290,000
Washington County$189,000$195,000$179,000$200,000$220,000$236,000$242,300$260,000$278,900$300,000$325,000
Twin Cities (13-County)$165,000$169,900$150,000$167,900$192,000$205,600$220,000$232,000$247,500$265,000$282,000
Source: Minneapolis Area Association of Realtors
As indicated, median home prices in Cottage Grove have been lower than in the
surrounding communities of Afton and Woodbury, as well as for Washington County as a
P ATCHIN M ESSNER
Valuation Counselors
11
22029-2
REGIONAL AND CITY DATA
Single-Family Housing Values
whole. However, the median sale prices have trended above the 13-County Twin Cities
area. Home prices declined during the Great Recession starting in 2008, but have been
increasing steadily since 2012.
Construction Activity
Residential developers remained hesitant to take risks on growth in outer-ring suburbs
during the market recovery and, instead, focused on in-fill sites in strong, core
communities. As of recently, much of the in-fill sites have been developed, and investors
have been expanding into outer-ring suburbs, primarily acquiring land within and along
the edge of the Metropolitan Urban Service Area, particularly in suburban cities that have
well-regarded public schools. Subdivisions are evolving to include a mix of housing types,
price ranges and lot widths. Mid-density residential products such as single level and villa-
style homes, along with for-sale townhomes, have also been on the rise.
Since recovering from the Great Recession, the commercial and industrial real estate
markets in the Twin Cities metropolitan area have been performing well in the inner-
portion of the metro area at prime locations, which has extended further in the metro area.
The following charts summarize construction activity in Cottage Grove, Washington
County, and the Twin Cities metropolitan area, with data obtained from the Metropolitan
Council.
P ATCHIN M ESSNER
Valuation Counselors
12
22029-2
REGIONAL AND CITY DATA
Construction Activity
P ATCHIN M ESSNER
Valuation Counselors
13
22029-2
REGIONAL AND CITY DATA
Construction Activity
Industry and Economic Climates
As previously discussed, Minnesota is home to 17 companies listed on the 2019 Fortune
500 list, as well as privately held firms listed on the Forbes 500 list. Large insurance
companies based in the Twin Cities include UnitedHealth Group, Thrivent Financial,
Minnesota Mutual and the St. Paul Travelers Companies. The Twin Cities is home to the
corporate headquarters of US Bank and the regional headquarters of Wells Fargo, two of
the largest commercial bank holding companies. One of the largest thrift institutions, TCF
Reserve Bank is located in Minneapolis.
Enhanced by the vast and rich agricultural region surrounding the Twin Cities, long-term
analysis of economic and demographic data reveals a trend of general growth and stability
-
isolated from the national and global economic events that occurred in 2008 and 2009,
P ATCHIN M ESSNER
Valuation Counselors
14
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
which sent the nation into a deep recession. The national and regional economies,
however, have experienced significant improvements since 2013, with real economic
growth driven by improved employment.
As part of the valuation process, an analysis of the market affecting the subject property is
conducted. This analysis helps lead to conclusions concerning the marketability and/or
income potential of the subject property. In this context, a review of the general
metropolitan area market is presented. The information in this market analysis was
January 2020
Minneapolis/St. Paul, as well as the Metropolitan Council and other commercial brokerage
publications.
Land
Demand for industrial sites continued to remain active in the second half of
2019. The strong demand is partly because suburban cities have become
more amenable to new projects like bulk distribution centers as
communities realize the likelihood of attracting office development is
minimal. Industrial users are seeking larger sites to accommodate the
rapidly increasing space requirements of e-commerce and fulfillment
businesses. Also, they are looking for sites that feature convenient access
to transportation corridors, as it is one way to attract employees in a very
tight labor market.
In the past, well-known developers often built speculative bulk warehouse
or office/warehouse projects. This still remains true; however, companies
are now opting for built-to-suit projects, through owner-occupied or single-
tenant arrangements.
New infrastructure projects, including sewer and water extensions and new
freeway interchanges have driven up land prices in certain new industrial
zoned/guided areas.
Multi-family construction saw a shift from urban submarkets to underserved
suburban areas where cities are increasingly allowing the repurposing and
reguiding of land. Luxury market-rate apartments are starting to be
developed in affluent suburbs, where rents have exceeded expectations.
Still, demand is strong for sites that are within walking distance of popular
amenities such as grocery stores or proximate to transit routes.
P ATCHIN M ESSNER
Valuation Counselors
15
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Land (continued)
Single-family demand remained strong in 2019. Developers have shifted to
smaller and affordable housing types. These housing types are suited for
retiring baby boomers and first-time homebuyers, which include young
. Builders have responded by building as many
compact homes as possible on their land positions, seeking to profit on
volume.
Homebuilders continue to seek large sites located in suburban cities that
have well-regarded public schools. Subdivisions are evolving to include a
mix of housing types, price ranges and lot widths. Developers are also to
focusing on constructing townhome products that cater to first-time
homebuyers.
Self-storage facilities are expanding their footprint in the Twin Cities market,
thanks in part to cities allowing them in areas that were reserved for other
uses. They are able to pay top dollar for the best sites.
Demand for agricultural land was limited during 2019, as pressure on
agricultural land prices remained intense, mostly due to low commodity
prices, global and U.S. policy changes.
Agricultural land prices were relatively stable during the second half of
2019 even with poor weather and the trade dispute with China ongoing.
In certain cases, farmers have felt pressure to sell their land for residential
or industrial development.
Retail demand is primarily coming from individual users that are immune
from online shopping. Starbucks, Dunkin and Chick-fil-A were acquiring
sites in the second half of 2019. The effect of Amazon.com continues to be
felt by larger retailers.
Retail land-
micro-demographic data of surrounding areas.
Demand for office and hospitality land is negligible.
The outlook for 2020 continues to look well for the industrial, multi-family,
and single-family residential sectors.
Political uncertainties related to the 2020 presidential election could put a
damper on the markets in the second half of the year.
P ATCHIN M ESSNER
Valuation Counselors
16
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Retail
The retail market has entered a transitional period where retailers, landlords,
and developers are dealing with changing consumer behaviors, e-
commerce competition, store closings/downsizing, and fewer new concepts
entering the market.
In the first half of 2019, the Twin Cities market experienced positive
absorption of 22,157 SF. Sears at the Mall of America was the only
significant big-box vacancy that occurred in the community centers
submarket in the first half of 2019. In the second half of 2019, the Twin
Cities market experienced positive absorption of 428,626 SF. As such, the
total absorption for 2019 was 450,783 SF.
The Twin Cities retail vacancy rate reached 9.7% in the first half of 2019,
the highest it had been since 2010 and up from 9.4% at the end of 2018.
By the end of 2019, the retail vacancy rate dipped slightly to 9.2%. Many
of the challenges the Twin Cities market faces are shared across the nation.
The majority of activity in the Twin Cities market is being driven by value-
add retailers, fast-casual restaurants, active lifestyle concepts, coffee shops,
service retailers, and medical users. Value retailers that are expanding in
the market include Ult.
Expanding fitness concepts include F-45 Training, Orangetheory, Planet
Fitness, Yoga Fit, Barre3, Xperience Fitness, Life Time Fitness, and karate
concepts.
Fast-casual restaurants are also in expansion mode. These include Crisp &
Green, Chick-fil--
Robbins, and Caribou Coffee.
Service retail categories such as nail/hair salons, cell phone retailers, banks,
financial services firms, and day care centers have been more protected
from the e-commerce emergence. In 2019, JPMorgan Chase opened its first
three bank branches in the Twin Cities. One is located in Minneapolis on
the University of Minnesota campus, one is located along Grand Avenue in
St. Paul,
Medical users are also beginning to fill vacant retail space. Examples of this
include Associated Eye opening at CityPlace, a mixed-use development in
Woodbury, and Park Nicollet converting the Mann Theater in St. Louis Park
into a specialty medical center. Also, Allina Health is set to open a clinic
P ATCHIN M ESSNER
Valuation Counselors
17
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Retail (continued)
Life Time Fitness redeveloped the former J.C. Penney at Southdale Center
in Edina. Grocers have also started exploring going into malls.
Mall owners are also beginning to develop or split off underutilized parking
areas. Some examples of these types of development include iFLY, Zupas,
Steakhouse at Rosedale Center in Roseville, and Shake Shack and
Restoration Hardware at Southdale in Edina.
No approved, large-scale projects are in the pipeline. Retail development
has mostly been one-off or small mixed-use projects in urban areas and first-
ring suburbs.
For grocers, activity is slowing. The market is becoming saturated and good
sites have become more difficult to find and expensive. Active grocers
include Hy-
and Fresh Thyme Farmers Market.
Cub Foods is continuing to remodel stores. However, SuperValu, Cub
.
As such, many shopping center investors are waiting for clarification about
their future operation before purchasing Cub Foods anchored centers.
The Twin Cities market has felt and will continue to feel the impact of
numerous national retailers closing. Big box vacancies are largely attributed
caused uncertainty in the retail market. Even so, as more vacancies are
backfilled, the retail sector could absorb approximately 150,000 SF in the
first half of 2020.
Most of the big-box vacant space will be divided to accommodate smaller
users. Spaces in less attractive centers will be harder to lease, and landlords
may need to shorten the length of leases or add termination clauses.
Mall owners have been filling vacancies with restaurants, entertainment,
example, Scheels is redeveloping the former Sears at Eden Prairie Center.
P ATCHIN M ESSNER
Valuation Counselors
18
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Office
Approximately 557,601 SF of absorption took place in the first half of 2019
and 202,384 SF of absorption took place in the second half of 2019,
bringing the positive office absorption in the last year to 759,985 SF. The
market has remained active despite tenants downsizing and big users
trading multi-tenant spaces in for build-to-suits and corporate campuses.
Additionally, many submarkets are battling a surplus of Class B office space.
While there is positive leasing activity, this momentum is somewhat offset
from space returning to the market from companies that are downsizing.
The overall vacancy rate for the Twin Cities office sector modestly increased
from 16.4% in the first half of 2019 to 17.0% in the second half of 2019.
Landlords have been investing in their properties by renovating,
repositioning, and/or improving the amenities offered.
highly amenitized. Other tenants are considering a broader geography and
different property types including single-story flex buildings or renovated
warehouse space.
One trend in the local market has been third-party co-working space. The
Twin Cities is now home to 30 co-working companies that lease or own
facilities. In the North Loop, WeWork leased 60,000 SF of The Nordic
mixed-use building and in Uptown, WeWork leased 102,000 SF of the
MoZaic East office building. The new Life Time at Southdale in Edina also
features co-working space.
The Twin Cities medical office market reports a 10.40% vacancy rate,
relatively flat absorption, and stable rental rates. Market activity took a step
backwards with 1,799 SF of negative absorption in the first half of 2019;
however, there was 45,098 SF of positive absorption in the second half of
2019.
The medical office market is beginning to shift from on-campus to off-
campus properties. For example, Park Nicollet is converting the Mann
Theater in St. Louis Park into medical office space.
The outlook remains positive for the medical office market, with new
buildings in the works, that will give absorption a bump.
P ATCHIN M ESSNER
Valuation Counselors
19
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Industrial
Strong fundamentals continued for the Twin Cities industrial market in the
second half of 2019, with 1,524,411 SF of positive absorption, bringing the
yearly total to 2,943,613 SF. All Twin Cities submarkets saw strong levels
of positive absorption in the second half of 2019, led by the Northeast and
Northwest submarkets which experienced 631,074 SF and 598,465 SF of
positive absorption respectively.
The overall direct vacancy rate fell from 7.8% at the first half of 2019 to
7.5% at the second half of 2019.
The lowest 2019 vacancy rates were found in the Southeast and Southwest
submarkets, which reported vacancy rates of 6.8% and 4.5% respectively.
The highest rate was in the Northeast submarket, which reported a vacancy
rate of 8.3%.
In recent years, the Southwest submarket has seen the largest amount of
activity. However, as available land is becoming scarce, interest is
spreading to the long-overbuilt Northwest submarket and also the Northeast
submarket.
The industrial absorption levels experienced in 2019 were the second best
since 2009, behind only the 3.7 million SF of absorption in 2015. Lease
rates for bulk warehouse and office-warehouse products have increased.
Rents are projected to remain steady due to tight market conditions and
longer lease terms.
Industrial construction continued its pace from 2018 into 2019. Nearly 2
million SF of industrial space was under construction in 2019.
The low unemployment rate in the Twin Cities market has caused some
problems for companies that are looking to build or fill space too far from
the urban core.
Going forward, approximately 1.3 million SF of absorption is predicted for
the first half of 2020.
Multi-Family
The Twin Cities market posted one of the lowest apartment vacancy rates
in the country in 2019. Twin Cities vacancies dropped to 2.5% in the
second half of 2019. The low vacancy rate can be attributed to low
unemployment, healthy job growth, and barriers to homeownership.
P ATCHIN M ESSNER
Valuation Counselors
20
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Multi-Family (continued)
Approximately 3,500 apartment units were built in 2017, 5,500 units were
built in 2018, and another 6,000 units were delivered in 2019.
Absorption has slowed in 2019, and certain pockets have begun to offer
concessions such as a month of free rent.
In Downtown Minneapolis, approximately 2,400 units were constructed in
the past two years. As such, downtown vacancies could continue to rise as
more product comes to market.
Job growth in the Twin Cities has been a major factor for the continued
demand for rental housing.
Millennials have been the focus of the multi-family market; however, Gen
Gen Z group is similar in size
to the Millennials and they are now graduating college and entering the job
market.
Construction of the light rail line in the southwest metro area has sparked
new development/re-development in that area and several multi-family
projects have begun.
Some developers have expanded into the micro-unit market in order to
provide affordable options for rents while generating higher per SF rents in
areas where larger parcels have already been snapped up.
With approximately 11,000-unit openings in 2018 and 2019 combined,
Class A lease up is expected to slow down, but concessions may be used to
speed up leasing. However, many of the new properties are located in
suburban markets where there is strong demand for rental options.
The outlook for the multi-family sector remains strong, as millennials
continue to choose renting rather than moving out to the suburbs for
affordable starter homes.
Developers expect to deliver another 6,000 units in 2020.
Hotel
Previous predictions about the Twin Cities hotel market indicated the
beginning of a cooling period. It now has, with supply growth (3.2%)
outpacing demand (1.9%).
P ATCHIN M ESSNER
Valuation Counselors
21
22029-2
REGIONAL AND CITY DATA
Industry and Economic Climates
Hotel (continued)
In the Minneapolis-St. Paul MSA, average occupancy decreased from 67.5%
in December 2018 to 66.6% in December 2019, ADRs decreased from
$122.74 in December 2018 to $121.46 in December 2019, and REVPAR
decreased from $82.89 in December 2018 to $80.93 in December 2019.
Approximately, 6,500 new rooms have been delivered to the market during
this current up-cycle and another 6,700 rooms are in various stages of
development.
Downtown Minneapolis remains in demand for hotel development with
2,000 rooms proposed or under construction. This growth has been fueled
by major events such as the 2018 Super Bowl, 2018 and 2019 X-Games,
the 2018 National Baptist Convention, and
Four. Upcoming major events include the 2020 NCAA M
United Properties has plans for a 222-room Four Seasons Hotel in the
Gateway Tower development at the north end of Nicollet Mall, which will
be the first five-star hotel in the Twin Cities.
Other markets that are also active include downtown St. Paul (1,000 rooms
planned or underway) and Bloomington/Mall of America/Airport (1,100
rooms planned or underway). Additional building activity is taking place
in Woodbury, Maple Grove, Eagan, and Shakopee.
The hotel market is experiencing major competition from Airbnb. While it
is difficult to quantify its impact on hotel performance, some segment of
Airbnb users are substituting hotels for cheaper rates. Due to this
substitution, the average rates in some markets are negatively impacted.
However, more cities are attempting to regulate Airbnb and similar
platforms.
Overall, the outlook is that the hotel market will flatten out. Hotel operators
have trouble with the availability of labor, rising wages, and increasing
supplies and materials costs. As such, development is expected to cool due
to overbuilding concerns and rising construction costs.
P ATCHIN M ESSNER
Valuation Counselors
22
22029-2
REGIONAL AND CITY DATA
Investment and Capital Markets
The Twin Cities investment marketplace has experienced a steady flow of
following the broader national trend, with a rolling 12-month total in 2019
of $5.864 billion, slightly down from $6.341 billion in the previous year.
In 2019 (rolling 12 month total), office market sales led all property types,
totaling $1.700 billion. The multi-family market followed closely, with
sales totaling $1.694 billion.
The multi-family market will surpass $1 billion in sales for the sixth
consecutive year. Class B and Class C apartment sales continue to be
performing well thanks to buyers looking for value-add properties. Several
Class A properties have stabilized and hit the market. However, prices for
luxury Class A properties are now flattening.
The difference between Class A, Class B, and Class C cap rates is narrowing.
Industrial sales activity totaled $1.378 billion in the past year, a slight
increase from the prior year. There has been continued demand for large
distribution and fulfillment centers and smaller in-fill locations for last-mile
delivery.
Investors are still targeting single-tenant net lease deals. These investors
include high net worth individuals, REITs and private equity funds. They
enjoy good cash flow and the stability of long-term leases with low turnover
costs.
Sales volume for the retail market dropped from $992.17 million in 2018 to
$597.76 million in 2019. However, the average price per SF increased from
$188 in 2018 to $202 in 2019.
Multi-tenant retail sales were down in 2019 due to a lack of available
product with owners reluctant to bring assets to market.
Single-tenant NNN sales were up in 2019 compared to 2018.
Investors are benefiting from low interest rates and are taking their time with
sales. The low cost of debt has encouraged owners to consider refinancing
or recapitalization strategies as attractive alternatives to an outright sale.
P ATCHIN M ESSNER
Valuation Counselors
23
22029-2
REGIONAL AND CITY DATA
Transportation
The Minneapolis/St. Paul metropolitan area is served by the following major highways:
Interstate 35 - A major north/south highway which connects with
Duluth, Minnesota to the north and Kansas City,
Missouri to the south. In the metro area, I-35 splits
with I-35W passing through Minneapolis, while
I-35E passes through St. Paul.
Interstate 94 - A major east/west highway that connects with
Milwaukee, Wisconsin/Chicago, Illinois to the east,
and Fargo, North Dakota to the west.
Interstate 494/694 - A major freeway which loops around the periphery
of the Twin Cities.
U.S. Highway 169 - A north/south route serving the western suburbs.
U.S. Highway 212 - An east/west route serving the southwestern
suburbs.
U.S. Highway 12/
Interstate 394 - An east/west route which connects downtown
Minneapolis with the western suburbs.
U.S. Highway 61 - A north/south route serving the eastern suburbs.
U.S. Highway 10 - A diagonal route extending from Wisconsin to
Fargo, North Dakota; it passes through St. Paul and
Anoka County.
Other major highways serving the Twin Cities area include State Highway 100, State
Highway 77 (Cedar Avenue), Crosstown Highway 62, Lafayette Freeway and U.S.
Highway 52/55.
The Twin Cities is served by the Minneapolis St. Paul International Airport (MSP) and six
relieve congestion at MSP. These airports provide private and corporate aviation services
for more than 400,000 aircraft each year, according to the Metropolitan Airports
P ATCHIN M ESSNER
Valuation Counselors
24
22029-2
REGIONAL AND CITY DATA
Transportation
Commission. MSP International is among the largest airports in the world, with high
volumes of passenger and cargo traffic to and from destinations around the globe. MSP is
a primary hub for Delta Airlines, and is served by eleven other domestic and international
passenger carriers.
The major means of mass transit in the Twin Cities includes the metropolitan bus system
and Light Rail Transit (LRT) operated by Metro Transit, a division of the Metropolitan
Council. Metro Transit offers 128 bus routes, including 63 express bus routes throughout
the Twin Cities. Light rail service includes two LRT lines, the Blue Line and Green Line,
which have a combined 37 stations. The Blue Line began service in 2004, and extends
from downtown Minneapolis to the southern suburb of Bloomington, with stops at the
Mall of America and the Minneapolis-St. Paul International Airport. The Green Line LRT
well as the State Capital and the University of Minnesota. Metro Transit also operates the
Northstar Commuter Rail line, which provides service with seven stations between
downtown Minneapolis and the northwest suburbs of the Twin Cities. Additionally, the
line connects with Northstar Link bus line for service to and from St. Cloud, Minnesota.
Major freight train railroads serving the Twin Cities include Burlington Northern Santa Fe,
Union Pacific, and Canadian Pacific/Soo Line Railway Company. Amtrak provides
passenger rail service from the Twin Cities to Illinois (Chicago), Oregon (Portland) and
Washington (Seattle).
Trucking service is also a vital part of the freight transportation to and from the Twin Cities,
and is a key component of the regional freight transportation system. River port barge
service runs from St. Paul to points south along the Mississippi. Major commodities
transported by river barge to and from the Twin Cities include grain, aggregate, fertilizer
and cement.
Utilities
The Minneapolis/St. Paul area, as well as the majority of Cottage Grove, is served by
municipal water and sewer systems, electricity, telephone service and natural gas.
P ATCHIN M ESSNER
Valuation Counselors
25
22029-2
REGIONAL AND CITY DATA
Summary
In summary, prior to the COVID-19 pandemic, most markets were expected to experience
continued demand and increase pricing. The Twin Cities had gained favor with
international and national investors who are interested in bulk industrial, multi-family, core
Class A office, and well positioned grocery-anchored retail centers. Sellers of top-quality,
assets in prime locations with predictable income streams, a strong tenant base and good
credit were expected to see the most demand.
However, the COVID-19 pandemic has affected the nation and created significant
uncertainty for the U.S. economy. For the U.S. stock market, the first quarter of 2020 is
the worst first quarter in U.S history. The first confirmed COVID-19 case in Minnesota
was reported March 6, 2020. In the Twin Cities metropolitan area, CoStar tracked
commercial property sales for a three-week period beginning February 21, 2020 and sales
were roughly half of the previous period in 2019. However, prior to the COVID-19
pandemic, commercial real estate in the Twin Cities metropolitan area was expected to
record strong first quarter sales metrics (Finance and Commerce, March 26, 2020). The
Twin Cities metropolitan real estate markets appear to be on hold while this pandemic
unfolds on a global economic scale. As such, an increase in capitalization rates or decrease
in sale prices has not yet occurred within this market. Therefore, at this point in time,
other than a slowing of transaction volume, it is too soon to determine the potential impacts
to the Twin Cities real estate market.
NEIGHBORHOOD DATA
The subject is located on the south side of U.S. Highway 61, a principal arterial roadway,
in the central portion of Cottage Grove. The neighborhood may be described as those
th
properties along the U.S. Highway 61 corridor between 80 Street, northwest of the
subject, and Keats Avenue, southeast of the subject. This area is primarily commercial,
retail, and residential on the north side of U.S. Highway 61, including retailers such as
Target, Menards, Hy-Vee, Dollar Tree, Cub Foods, and Aldi. Additionally, restaurants and
ry Inn & Suites,
P ATCHIN M ESSNER
Valuation Counselors
26
22029-2
NEIGHBORHOOD DATA
various other retail uses are along the north side of the U.S. Highway 61 corridor. Aside
from retail and commercial uses, residential uses such as Grove Ridge Apartments and
single-family homes, are also part of the northerly neighborhood.
Conversely the south side of U.S. Highway 61 is primarily agricultural, commercial, and
industrial uses. South of the subject there are large tracts of undeveloped land used for
farming along with rural residential single-family homes. Northwest of the subject property
is the Cottage Grove Public Work facility, several storage units along with various industrial
and commercial buildings are located along the U.S. Highway 61 corridor.
The subject is located approximately ½-mile southeast of the U.S. Highway 61 and Jamaica
Avenue interchange. The average daily traffic counts in 2019 of nearby roadways in the
neighborhood are as follows.
Neighborhood Traffic Volumes (AADT)
Roadway2019
Jamaica Avenue
North of W Point Douglass Rd21,900
South of W Point Douglass Rd13,200
U.S. Highway 10/61
Northbound40,000
Southbound25,500
Off Ramps (Jamaica Ave)21,250
On Ramps (Jamaica Ave)21,250
The location of municipal utilities in Cottage Grove are depicted on the maps on following
pages. As illustrated, a sanitary sewer main runs along U.S. Highway 61 within the
Municipal water is currently located within the subject
neighborhood. Referring to the Utility Staging Areas Map following, the subject property
is part of Development Stage 2 and within the 2040 MUSA boundary.
In conclusion, the neighborhood is expected to grow and develop to the east and south of
the subject. The city has planned and guided development in the southern portion of the
neighborhood for industrial, retail, and some residential uses; while in the northern portion
of the neighborhood, residential and retail and commercial development is planned. The
characteristics and influences of the neighborhood should continue to have a positive
effect on real estate and property values.
P ATCHIN M ESSNER
Valuation Counselors
27
22029-2
SANITARY SEWER MAP
P ATCHIN M ESSNER
Valuation Counselors
28
22029-2
EXISTING AND FUTURE TRUNK WATER SYSTEM
.
P ATCHIN M ESSNER
Valuation Counselors
29
22029-2
LOCATION AND LEGAL DESCRIPTION
Location: 9165 West Point Douglas Road South
Cottage Grove, Minnesota
Property Identification
Numbers: 21.027.21.41.0012, -0013, -0015, and -0016
Legal Descriptions: -0012 Lots 1 8, Block 15 Langdon Addition, Washington
County, MN
-0013 Lots 1 -6, including except to State for Highway, Langdon
Addition, Washington County, MN
-0015 Lots 1 11, Block 18, Rice Street Except for Highway
Langdon Addition, Washington County, MN
-0016 Lots 1 -8, Block 19 Rice Street adjacent Langdon Addition,
Washington County, MN
TAX AND ASSESSMENT DATA
All Minnesota counties follow the property tax process that was created by the Minnesota
State Legislature. The property values used to establish 2020 property taxes are based on
as of January 2019.
assessment data are on the following page.
P ATCHIN M ESSNER
Valuation Counselors
30
22029-2
TAX AND ASSESSMENT DATA
P ATCHIN M ESSNER
Valuation Counselors
31
22029-2
ZONING DATA
Zoning is administered by the City of Cottage Grove. As depicted on the Zoning Map on
the following page, the subject is zoned B-2, Retail Business District. As depicted by the
2040 Future Land Use Map, the subject is guided Mixed Use. Additionally, in the 2030
Comprehensive Plan the subject is part of the Business Park Alternative Urban Areawide
Review (AUAR), and is part of the Langdon Area in the 2040 Comprehensive Plan.
The Cottage Grove Zoning Ordinance describes the Retail Business District as follows:
The retail business district (B-2) is to encourage retail sales and services by grouping
businesses in patterns of workable relationships to minimize the influence on surrounding
residential neighborhoods by limitation and control of permitted uses. (Ord. 904, 5-16-
2012)
Permitted uses within the B-2 District include, but are not limited to: single-family detached
dwellings, commercial agriculture and horticulture, farm buildings and pole barns, farm
drainage and irrigation systems, feedlots and poultry facilities and forestry.
Additional uses allowed with a conditional use permit include religious institutions and
columbariums; commercial horse stables, boarding stables and dog kennels; density
transfers, which will subsequently be explained in greater detail; detached domesticated
farm animal building on parcels between five and ten acres; detached rural storage
buildings on parcels less than ten acres; electromagnetic communication facilities; limited
commercial ventures; and public utility and public service structures.
The following design standards apply to properties within the B-2 District:
Lot Area: Minimum of 10,000 SF, unless the land is adjacent
to an existing commercial area
Minimum Lot Width: 100 ft.
Maximum Building Height: 35 ft., except buildings over 35 ft. shall be subject
to receiving a conditional use permit
P ATCHIN M ESSNER
Valuation Counselors
32
22029-2
ZONING DATA
Minimum Setbacks:
Front Yard 30 ft.
Side Yard 10 ft.
Rear Yard 35 ft.
Additionally,
Comprehensive Plan. The highest and best use of the subject is for a destination-oriented
commercial use, which conforms with the Mixed Use guiding. As such, the Mixed Use
designation is described as follow:
P ATCHIN M ESSNER
Valuation Counselors
33
22029-2
ZONING MAP
P ATCHIN M ESSNER
Valuation Counselors
34
22029-2
FUTURE LAND USE MAP
P ATCHIN M ESSNER
Valuation Counselors
35
22029-2
ZONING DATA
The subject property lies within the Highway 61 and Jamaica Avenue South Mixed Use
Area. Furthermore, the subject is located in Area 5 of future land use change also known
as the Langdon Area, and can be seen in the following page.
The Langdon Area is described in the 2040 Comprehensive Plan as follow:
Langdon Area
P ATCHIN M ESSNER
Valuation Counselors
36
22029-2
FUTURE LAND USE AND AREAS OF CHANGE MAP
P ATCHIN M ESSNER
Valuation Counselors
37
22029-2
PROPERTY DESCRIPTION
Size: The gross land area is reportedly 360,697 SF, or 8.28 acres.
However, the northern portion of the site is encumbered
by existing right-of-way.
considered approximately 303,398 SF, or 6.97 acres, net of
existing right-of-way, according to the Washington County
.
Shape: The subject is trapezoidal in shape.
Street Frontage: The subject has ±780 LF of frontage on West Point
Douglas Road along the northerly property boundary and
th
± 663 LF of frontage on 96 Street, which is the southerly
property boundary.
Street Access: The subject has two driveways along West Point Douglas
Road, which is a bituminous paved roadway with one lane
th
of traffic in each direction. Additionally, 96 Street is a
minimally maintained roadway, improved with gravel.
Traffic Count: The average annual average daily traffic counts for nearby
roadways is as follows:
25,500 Highway 61 (2019)
13,200 Jamaica Avenue (south of Hwy 61; 2019)
Terrain:
surrounding roadways. The subject is open with a modest
level of landscaping and trees along West Point Douglas
Road and the southern boundary of the site.
Utilities: Municipal water and sewer are available to the subject
property.
Flood Hazard: The subject is located in Zone X, areas with minimal flood
risk. No flood hazard analysis has been conducted.
Map No.: 27163C0416E
Effective Date: February 3, 2010
Soil Conditions: The soils appear stable and suitable for typical construction
practices. However, neither soils tests nor engineering data
have been provided in conjunction with this appraisal.
Easements: We were not provided with a title report. However, based
on the plat map the subject is encumbered with Minnesota
Department of Transportation (MnDOT) right-of-way along
the northern portion o
P ATCHIN M ESSNER
Valuation Counselors
38
22029-2
PROPERTY DESCRIPTION
Easements
(continued): knowledge, there are no other recorded easements or
encumbrances that would have a significant effect upon the
Building Description: The subject is improved with a one-story commercial
building that was built in 1973 and comprises 18,000 SF of
GBA. The building is currently vacant and reportedly in
poor condition and contributes a nominal value to the
overall property.
P ATCHIN M ESSNER
Valuation Counselors
39
22029-2
PLAT MAP
P ATCHIN M ESSNER
Valuation Counselors
40
22029-2
HIGHEST AND BEST USE
Highest and best use is defined in , Fifth Edition,
Appraisal Institute as follows:
The reasonably probable and legal use of vacant land or an improved property that is physically
possible, appropriately supported, financially feasible, and that results in the highest value. The
four criteria the highest and best use must meet are legal permissibility, physical possibility,
financial feasibility, and maximum productivity.
This publication goes on to distinguish the highest and best use as vacant and as improved,
as follows:
Highest and best use of land or site as though 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.
Highest and best use of property as improved - The use that should be made of a property as it
exists. An existing improvement should be renovated or retained as is so long as it continues to
contribute to the total market value of the property, or until the return from a new improvement
would more than offset the cost of demolishing the existing building and constructing a new one.
In order to determine highest and best use of the subject property, the following factors
must be considered when addressing possible uses. They are:
1. Legally Permissible
2. Physically Possible
3. Financially Feasible
4. Maximally Productive
Legally Permissible
The first test of highest and best use involves identifying those uses that are legally
permissible. Legal restrictions can include public restrictions such as zoning and building
codes, and private restrictions such as deed restrictions and protective covenants. The
subject is located in the city of Cottage Grove with a zoning of B-2, Retail Business District
and guided Mixed Use. Based on permitted uses, a commercial use is considered for this
analysis.
P ATCHIN M ESSNER
Valuation Counselors
41
22029-2
HIGHEST AND BEST USE
Physically Possible
The subject site comprises approximately 303,398 SF, or 6.97 acres of land area, net of
existing right-of-way and is trapezoidal in shape. Municipal water and sewer are available
to the site, including other utilities, such as natural gas, electricity and telephone. Access
to the site is from West Point Douglas Road, which fronts along Highway 61. Access to
Highway 61 is located from the northwest at Jamaica Avenue, which is a full interchange.
Nearby uses along the south side of Highway 61 include: agricultural, single-family homes,
the City of Cottage Grove Public Works Facility, and Acorn Mini Storage. North of
Highway 61 near the subject property include Menards, Target, and Walmart along with
smaller strip retail and stand-alone retail uses.
Financially Feasible
As outlined in the Market Analysis section of this report, before the COVID-19 Pandemic,
sections of the commercial market were strong, both in terms of demand and pricing.
Additionally, as of this appraisal date, the Twin Cities real estate market appears to be on
hold while this pandemic unfolds on a global economic scale. Other than a slowing of
transaction volume, it is too soon to determine the potential impacts to the market.
However, considering the surrounding land uses on the south side of Highway 61. The
subject property is more suitable as a destination-oriented commercial use.
Maximally Productive
that the highest and best use, as vacant, is to develop the subject property with a
destination-oriented commercial use that maximizes the site and is consistent with zoning
and guiding.
As Improved
The subject is improved as improved with a one-story commercial building that was built
in 1973 and comprises 18,000 SF of GBA. The building is vacant and reportedly in poor
condition and contributes a nominal value to the overall property. Therefore, the highest
and best use, as improved, is to redevelop the site with a destination-oriented commercial
use.
P ATCHIN M ESSNER
Valuation Counselors
42
22029-2
EXPOSURE AND MARKETING TIME
Exposure time of 12 to 18 months would be required to sell the subject property, based
on the value stated herein. Marketing time, including due diligence and closing, is also
estimated at 12 to 18 months.
APPRAISAL PROCEDURES AND TECHNIQUES
In order to develop an opinion of market value of the subject, the following appraisal
techniques are considered.
Cost Approach - considers the current cost of replacing a property, less the
depreciation from three sources: physical deterioration, functional
obsolescence and external obsolescence. A summation of the market value
of the land, assumed vacant, and the depreciated replacement cost of the
improvements provides an indication of the total value of the property.
Sales Comparison Approach - produces an estimate of value by comparing the
subject property to sales and/or listings of similar properties in the same or
competing areas. This technique is used to indicate the value established by
informed buyers and sellers in the market.
Income Approach -
income. The net income is capitalized to arrive at an indication of value
from the standpoint of an investment. This method measures the present
worth of anticipated future benefits (net income) derived from a property.
Since only the underlying land is valued herein, the Sales Comparison Approach to value
the land has been utilized in this appraisal. This approach is more fully described below.
The Cost and Income approaches are not considered to yield credible assignment results
and are not applied in the valuation assignment.
SALES COMPARISON APPROACH
The sales comparison approach to value examines the sale prices of other properties
similar to the subject in utility, size and type that have sold in the marketplace. This
approach is good evidence of value because it represents activities and reactions of sellers,
users and investors as they respond to the marketplace.
P ATCHIN M ESSNER
Valuation Counselors
43
22029-2
SALES COMPARISON APPROACH
property than it will cost to buy or rent a comparable substitute property. The validity of
this approach is based on the assumption that continuity exists between similar properties
of like adequacy and their market values. The reliability of this technique is dependent
upon the availability of sales data and the degree of comparability of the sales studied.
To apply this approach to the subject property, information has been sought on sales of
land from 2017 to the present, which are similar in terms of highest and best use with
particular focus on commercial uses, location, zoning/guiding, size and appeal. These
sales used are identified on a location map, followed by individual write-ups, an
adjustment grid and narrative analysis, to arrive at a land value estimate.
P ATCHIN M ESSNER
Valuation Counselors
44
22029-2
COMPARABLE LAND SALES LOCATION MAP
P ATCHIN M ESSNER
Valuation Counselors
45
22029-2
SALES COMPARISON APPROACH
Comparable Land Sale 1
Location: 15265 Carrousel Way
Rosemount, Minnesota
PID: 34-71176-01-011
Buyer: Rosemount MOB Partners, LLC
Seller: Rosemount Properties, LLC
Date of Sale: April 2020
Zoning/Guiding: C4, General Commercial / CC, Community Commercial
Intended Use: Medical Office
Traffic Count: 5,300 AADT (2018), Chippendale Avenue; and 910 AADT (2018),
Carrousel Way
Size: 57,253 SF, or 1.31 Acres
Sale Price: $414,512
Price per SF: $7.24
Remarks: This is a publicly marketed, -length transaction of a property
located at the northeast corner of Chippendale Avenue and Carrousel
Way in Rosemount. The sale price was openly negotiated and was
reported to be at or near market. The buyer purchased the property
to develop a 12,000 SF medical office building. The finished
building will be leased to Lorenz Clinic, a mental health practice,
which also has offices in Victoria, Chaska and Prior Lake.
P ATCHIN M ESSNER
Valuation Counselors
46
22029-2
SALES COMPARISON APPROACH
Comparable Land Sale 2
Location: 5715 Memorial Avenue North
Oak Park Heights, Minnesota
PID: 06.029.20.13.0013
Buyer: TCO Real Estate-Fund 2, LLC
Seller: Gregory and Lorene Clark
Date of Sale: March 2020
Zoning/Guiding: B-3, Highway Business & Warehouse / Highway Business & Warehouse
Intended Use: Medical Office
Traffic Count: 23,100 AADT (2019), Stillwater Boulevard
Size: 239,632 SF, or 5.50 Acres
Sale Price: $1,750,000
Price per SF: $7.30
Remarks: -length transaction of a property
located in the southwest quadrant of Highway 36 and Stillwater
Boul
Stillwater Area High School, Kwik Trip, and Public Storage. The
comparable was purchased by Twin Cities Orthopedics.
P ATCHIN M ESSNER
Valuation Counselors
47
22029-2
SALES COMPARISON APPROACH
Comparable Land Sale 3
Location: SEC Osgood Avenue and Osman Avenue
Oak Park Heights, Minnesota
PID: 04.029.20.11.0160
Date of Sale: June 2019
Buyer: Dave Trimert JR
Seller: McCullough & Sons Incorporated
Zoning/Guiding: B-2, General Business / Commercial
Intended Use: Auto Repair Store
th
Traffic Count: 11,200 AADT (2019), Osgood Avenue; and 890 AADT (2019), 60
Street
Size: 113,692 SF, or 2.61 Acres
Sale Price: $550,000
Price per SF: $4.84
Remarks: This is an openly-marketed, arm's-length transaction of a property
located in the southeast quadrant of Highway 36 and Osgood Avenue.
The property was purchased for an auto repair store. Nearby uses
include Andersen Corporation to the west and residential uses to the east
and south of the comparable.
P ATCHIN M ESSNER
Valuation Counselors
48
22029-2
SALES COMPARISON APPROACH
Comparable Land Sale 4
Location: XXXX Keokuk Avenue
Lakeville, Minnesota
PID(s): 22.035.000.1012
Date of Sale: March 2018
Buyer: Compeer Financial, FLCA
Seller: Lakeville Land, Ltd. Limited Partnership
Zoning/Guiding: C-3, General Commercial / Commercial
Intended Use: Office
th
Traffic Count: 8,000 AADT (2019), 210 Street; and 225 AADT (2018), Keokuk Avenue
Size: 243,065 SF, or 5.58 Acres
Sale Price: $1,884,000
Price per SF: $7.75
Remarks: This is an openly-marketed, arm's-length transaction of a property
th
located in the southwest corner of Interstate 35 and 210 Street in
Lakeville. The property was purchased to build an owner/occupied
office.
P ATCHIN M ESSNER
Valuation Counselors
49
22029-2
SALES COMPARISON APPROACH
Comparable Land Sale 5
Location: 1325 Corporate Center Curve
Eagan, Minnesota
PID(s): 10-22535-00-010
Buyer: Advantage Equities 10544 LLC
Seller: Eagandale Properties, LLC
Date of Sale: May 2017
Zoning/Guiding: PD, Planned Development / Major Office
Intended Use: Hotel
Traffic Count: 5,600 AADT (2019), Corporate Center Drive
Size: 97,690 SF, or 2.24 Acres
Sale Price: $585,000
Price per SF: $5.99
Remarks: -length transaction. According
, no soil corrections are needed for
development. The site is currently listed for sale with an asking
price of $1,149,000, or $11.76 per SF. The listing brochure
indicates the site is fully entitled for an 87-room Comfort Suites
hotel.
P ATCHIN M ESSNER
Valuation Counselors
51
22029-2
SALES COMPARISON APPROACH
Explanation of Adjustments
Property Rights: All of the sales represent the transfer of the fee simple
interest. Therefore, no adjustments are necessary.
Financing: No unusual financing was discovered that would have
an impact on the sale price. Therefore, no adjustments
are necessary.
Conditions of Sale: All of the comparable sales are considered -length
transactions by unrelated parties and require no
adjustment for conditions of sale.
Special Assessments: None
Other Expenditures: No additional expenditures were required for the
comparables.
Market Conditions: This adjustment reflects differences in market
conditions between the date of appraisal and the date
the comparables sold. The comparable sales occurred
between May 2017 and April 2020. The commercial
market has been stable with development occurring
throughout the market over the past few years. The
outbreak of COVID-19 was declared a global
pandemic on March 11, 2020. Since the pandemic
declaration, the effects of the pandemic on the real
estate market have yet to be determined. Therefore, the
market conditions adjustment is based on 5% annual
appreciation from 2017 through March 2020. No
further adjustment is applied from March 2020 to April
2020 since the impact is not known.
Location: This adjustment is based upon observations of both the
subject and the comparables. Factors such as access,
lot orientation, type of road frontage, neighborhood
amenities, and surrounding land use were considered
when making this adjustment. Comparables 1, 2, 4,
and 5 are considered superior to the subject regarding
location and downward adjustments are made.
Comparable 3 is located south of Highway 36 in Oak
Park Heights with no visibility to the highway, and an
upward adjustment is applied.
P ATCHIN M ESSNER
Valuation Counselors
52
22029-2
SALES COMPARISON APPROACH
Explanation of Adjustments
Size: The subject property has a land area of 303,398 SF, or
6.97 acres, net of existing right-of-way. The
comparables range in size from 57,253 SF to 243,065
SF. Properties of this size are generally sold on a per SF
basis. Typically, a smaller property will demand a
higher price per SF than a larger property. This inverse
relationship is present among the comparable sales.
Size adjustments are based on a curve.
Shape: The subject is trapezoidal in shape, which can limit the
utility of the site. Comparables 1, 2, and 4 are
rectangular sites and a 5% downward adjustment is
applied. Comparables 3 and 5 are irregular and
triangular in shape and a 5% upward adjustment is
made. As such, no adjustment is made to these two
comparables.
Terrain: The subject property is generally level and open.
Nearly all of the comparables are considered similar in
terrain and no adjustments are made. However,
Comparable 3 has a sloping terrain and wooded
topography, and an upward adjustment is applied to
this sale.
Zoning - Guiding: All of the comparable sales have similar zoning and
guiding, and no adjustments are necessary.
Other: None
Analysis
The five comparable land sales range in unadjusted unit price from $4.84 per SF to $7.75
per SF, with an average of $6.62 per SF of land. After the adjustment process, the five
comparable land sales range in unit price from $5.68 per SF to $6.74 per SF, with an
average of $6.05 per SF of land. The adjustment process has tightened the range of the
comparable sales, indicating the appropriateness of the adjustments utilized.
Generally speaking, all of the comparables are commercial properties that were purchased
th
for office, medical office, auto repair and hotel use. Comparable 1 is located south of 150
P ATCHIN M ESSNER
Valuation Counselors
53
22029-2
SALES COMPARISON APPROACH
Analysis
Street (Co Rd 42) along the east side of Chippendale Avenue in Rosemount, Minnesota.
The immediate area is nearly fully developed with a mix of impulse and destination-
oriented retail and office uses. This comparable is considered superior in location and
shape to the subject property. Comparable 2 is also located in a more developed
commercial area that was purchased for a medical office building. This comparable is
considered superior to the subject as well. Comparable 3 located in Oak Park Heights in
the vicinity of Andersen Corporation to the west and commercial uses to the north. The
site has sloping topography with wooded terrain. Comparable 4 is located at the southwest
th
corner of Interstate 35 and 210 Street in Lakeville. This comparable is least similar to the
subject site since the comparable is located at a highway interchange. Comparable 5 is
located south of Interstate 494 and east of Pilot Knob Road in Eagan. The location of this
comparable is in a commercial and office area.
While all of the comparables are considered useful in this analysis, the overall gross
17% to 27%. All of
the comparables are considered in this analysis. However, Comparable 4, is located at
th
the southwest corner of Interstate 35 and 210 Street in Lakeville, which is a more impulse-
oriented commercial location. Therefore, this comparable is given less weight in this
analysis. The remaining comparables are given similar weight in this analysis. Considering
the above, the market value of the subject land is estimated to be $5.75 per SF. Therefore,
the land value of the subject is estimated as follows:
303,398 SF x $5.75 per SF = $1,744,539, rounded $1,745,000
Since the subject is improved with an 18,000 SF one-story commercial building,
demolition costs, based on Marshall and Swift cost estimator, are estimated at
approximately $5.00 per SF of building area, and are typically deducted. However, it may
be possible to reuse or salvage portions/parts of the building improvements. As such, a
market value range is esimtated for the subject proprety as of June 24, 2020:
Market Value Range $1,655,000 to $1,745,000
P ATCHIN M ESSNER
Valuation Counselors
54
22029-2
ADDENDA
P ATCHIN M ESSNER
Valuation Counselors
55
22029-2
EXHIBIT 1
(Pages 56-59)
P ATCHIN M ESSNER
Valuation Counselors
56
22029-2
P ATCHIN M ESSNER
Valuation Counselors
57
22029-2
P ATCHIN M ESSNER
Valuation Counselors
58
22029-2
P ATCHIN M ESSNER
Valuation Counselors
59
22029-2
P ATCHIN M ESSNER
Valuation Counselors
60
22029-2
CONTINGENT AND LIMITING CONDITIONS
(Pages 61-63)
P ATCHIN M ESSNER
Valuation Counselors
22029-2 61
CONTINGENT AND LIMITING CONDITIONS
The value estimates and conclusions in the appraisal are made subject to these assumptions
and conditions:
1. No title search has been made and the reader should consult an appropriate
attorney or title insurance company for accurate ownership data. Title to the
property is assumed to be good and marketable unless otherwise stated.
2. The legal description, furnished or otherwise, is assumed to be correct. No
responsibility is assumed for the legal description or for matters including
legal or title considerations.
3. The information contained in this report is not guaranteed, but it has been
gathered from reliable sources. The appraiser(s) certify that, to the best of
their knowledge and belief, the statements, information and materials
contained in the appraisal are correct.
4. All value estimates in this report assume stable soil and any necessary soil
corrections are to be made at the seller's expense, unless otherwise noted.
5. The site plan, if any, in this report is included to assist the reader in visualizing
the property, but we assume no responsibility for its accuracy.
6. The market value herein assigned is based on conditions which were
applicable as of the effective date of appraisal, unless otherwise noted.
7. The appraiser(s) that signed this report shall not be required to prepare for,
or appear in court, or before any board or governmental body by the reason
of the completion of this assignment without predetermined arrangements
and agreements.
8. Surveys, plans and sketches may have been provided in this report. They
may not be complete or be drawn exactly to scale.
9. Possession of this report, or a copy thereof, does not carry with it the right of
publication. It may not be used for any purpose by any person, other than
the party to whom it is addressed, without the written consent of the
appraiser, and in any event only with properly written qualification and only
in its entirety.
10. Information in the appraisal relating to comparable market data is more fully
documented in the confidential file in the office of the appraiser.
P ATCHIN M ESSNER
Valuation Counselors
22029-2 62
CONTINGENT AND LIMITING CONDITIONS
(CONTINUED)
11. All studies and field notes will be secured in our files for future reference.
12. It is assumed that all applicable zoning and use regulations and restrictions
have been complied with, unless a non-conformity has been stated, defined
and considered in the appraisal report. And, it is assumed that the utilization
of the land and any improvements is within the boundaries or property lines
of the property described and that there is no encroachment or trespass unless
noted within the report.
13. The distribution of the total valuation in this report between land and any
improvements, if stated, applies only under the reported highest and best use
of the property. The allocations of value for land and improvements must
not be used in conjunction with any other appraisal and are invalid if so used.
14. It is assumed that there is full compliance with all applicable federal, state
and local environmental regulations and laws unless non-compliance is
stated, defined and considered in the appraisal report.
15. The appraiser was not aware of the presence of soil contamination on the
subject property, unless otherwise noted in this appraisal report. The effect
upon market value, due to contamination was not considered in this
appraisal, unless otherwise stated.
16. The appraiser was not aware of the presence of asbestos or other toxic
contaminants in any building(s) located on the site, unless otherwise noted
in this report. The effect upon market value, due to contamination was not
considered in this appraisal, unless otherwise stated.
17. Unless otherwise stated in this report, the existence of hazardous material,
which may or may not be present on the property, was not observed by the
appraiser. The appraiser has no knowledge of the existence of such materials
on or in the property. The appraiser, however, is not qualified to detect such
substances. The value estimate is predicated on the assumption that there is
no such material on or in the property that would cause a loss in value. No
responsibility is assumed for any such conditions, or for any expertise or
engineering knowledge required to discover them. The client is urged to
retain an expert in this field, if desired.
18. The value stated in this report is fee simple, assuming responsible ownership
and management, unless otherwise indicated. This appraisal recognizes that
available financing is a major consideration by typical purchasers of real
estate in the market, and the appraisal assumes that financing is or was made
available to purchasers of property described herein.
P ATCHIN M ESSNER
Valuation Counselors
22029-2 63
CONTINGENT AND LIMITING CONDITIONS
(CONTINUED)
19. The appraiser has neither present nor contemplated interest in the property
appraised and employment is not contingent upon the value reported.
20. Unless otherwise stated in this report, the appraisers have not made a survey
or analysis to determine whether any buildings on the property are in
compliance with "The Americans with Disabilities Act" (ADA). If the
property is not in compliance with the ADA, it could have a negative effect
on the value of the property.
21. The property is appraised free and clear of any or all liens or encumbrances
unless otherwise stated.
P ATCHIN M ESSNER
Valuation Counselors
22029-2 64
APPRAISER QUALIFICATIONS
(Page 65)
P ATCHIN M ESSNER
Valuation Counselors
22029-2 65
QUALIFICATIONS OF
CHRISTINE L. MACKAMAN
PROFESSIONAL
AFFILIATIONS MAI, AI-GRS, Appraisal Institute
Certified General Real Property Appraiser, Minnesota License No. 20517275
BUSINESS
EXPERIENCE Patchin Messner Valuation Counselors, Principal, 2015 to Present
CM Valuation, Principal, 2011 to Present
Cassidy Turley, 2004-2010
Metropolitan Council, 2001-2004
EDUCATIONAL
BACKGROUND Master of Urban and Regional Planning, University of Minnesota
Bachelor of Arts Degree, Albion College
SPECIALIZED
REAL ESTATE Appraisal Institute Course Work:
TRAINING Real Estate Appraisal Principles
Basic Valuation Procedures
Residential Case Study
Standards of Professional Appraisal Practice
Basic Income Capitalization
Advanced Income Capitalization
Highest & Best Use and Market Analysis
Advanced Sales Comparison and Cost Approaches
Report Writing and Valuation Analysis
Advanced Applications
Business Practice and Ethics
Litigation Appraising: Specialized Topics and Applications
The Appraiser as an Expert Witness
Review Theory
SEMINARS ATTENDED:
Appraisal Institute
Annual Real Estate Trends
Annual Forecast/Industry Forecast
Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book)
APPRAISAL
EXPERIENCE Preparation of appraisals for eminent domain, estate planning, tax appeal, financing, and
acquisition/disposal. Properties appraised include: hospitals, apartment complexes, office and
industrial buildings, shopping centers, single family residences and development land.
RELATED
EXPERIENCE North Star Chapter of the Appraisal Institute: Secretary, present
North Star Chapter of the Appraisal Institute: Government Relations Committee, present
North Star Chapter of the Appraisal Institute: Region III Representative, past
North Star Chapter of the Appraisal Institute: Candidate Guidance Committee Chair, past
North Star Chapter of the Appraisal Institute: Board of Directors, past
P ATCHIN M ESSNER
Valuation Counselors
11232
Area/
Phase
599
2,6582,7643,6582,764
12,442
After
Conversion
Orig. Tax Cap.
0.00%1.50%2.00%2.00%1.25%0.75%0.25%1.00%1.25%1.00%1.25%1.00%
C:\\Users\\KDahl\\Desktop\\TIF Run 8-3-20
After
Base Value Assumptions - Page 1Class
RentalRentalRentalRental
C/I Pref.
Conversion
958
2,1264,4223,6584,422
15,586
Current
Original
Tax Capacity
C/IC/IC/I
Tax
Class
C/I Pref.
Tax Rates
Property
Hmstd. Res.
Pay 2021Pay 2021Pay 2021Pay 2021Pay 2021
Original
$150,000$150,000$162,000$162,000$500,000$500,000$500,000$500,000
Tax Year
Market Value
FirstFirstFirstFirst
OverOverOverOver
47,900
212,600221,100220,400221,100
923,100
Original
Market Value
Exempt Class Rate (Exempt)Commercial Industrial Preferred Class Rate (C/I Pref.)Commercial Industrial Class Rate (C/I)Rental Housing Class Rate (Rental)Affordable Rental Housing Class
Rate (Aff. Rental)Non-Homestead Residential (Non-H Res. 1 Unit)Homestead Residential Class Rate (Hmstd. Res.)Agricultural Non-Homestead
100%100%100%100%100%
for District
Percentage
Of Value Used
47,900
City of Cottage Grove, MN
ASSUMPTIONS AND RATES
212,600221,100220,400221,100
923,100
Total
Value
Market
Pay 2020Pay 2020Pay 2020Pay 2020Pay 2020Pay 2020
112 Apartment Units and 68,000 Sq. Ft. of Commerical
000
Langdon Village Concept - No Inflation
26
BASE VALUE INFORMATION (Original Tax Capacity)
202120232048
0.00%4.50%
26,000
115,500
141,500
1-Feb-23
1-Aug-22Inside(B)
Pay 2021Value
35.6373%106.535%106.535%38.8460%0.32961%
Market
Building
142.4540%
Incremental
Redevelopment
97,10047,900
221,100194,400221,100
781,600
Land
Market Value
Address
Not AssignedNot AssignedNot Assigned
8991 West Point Douglas Rd S9165 West Point Douglas Rd S
Owner
Meyers Jeffrey R
9163 Point Douglas LLC9164 Point Douglas LLC9165 Point Douglas LLC9166 Point Douglas LLC
DistrictType:District Name/Number:County District #:First Year Construction or Inflation on ValueExisting District - Specify No. Years RemainingInflation Rate - Every Year:Interest
Rate:Present Value Date:First Period EndingTax Year District was Certified:Cashflow Assumes First Tax Increment For Development:Years of Tax IncrementAssumes Last Year of Tax IncrementFiscal
Disparities Election \[Outside (A), Inside (B), or NA\]Incremental or Total Fiscal DisparitiesFiscal Disparities Contribution RatioFiscal Disparities Metro-Wide Tax RateMaximum/Frozen
Local Tax Rate: Current Local Tax Rate: (Use lesser of Current or Max.)State-wide Tax Rate (Comm./Ind. only used for total taxes)Market Value Tax Rate (Used for total taxes)
PID
8/3/2020 Prepared by Ehlers & Associates, Inc. - Estimates Only
Note:
21.027.21.41.000521.027.21.41.001221.027.21.41.001321.027.21.41.001521.027.21.41.00161. Base values are for pay 2021 based upon review of County website on 8-3-2020.2. Located in SD
# 833 and South Washington Watershed
12345
Map ID
20242024202420242024
Payable
First Year
Full Taxes
2024
100%100%100%100%100%
Completed
Percentage
C:\\Users\\KDahl\\Desktop\\TIF Run 8-3-20
2023
100%100%100%100%100%
Base Value Assumptions - Page 2
Completed
Percentage
2022
100%100%100%100%100%
Completed
Percentage
3.443.443.24
50%50%50%50%50%
2021
2,076.622,076.62
Taxes Per
Completed
Sq. Ft./Unit
Percentage
2 2 2
1,563 1,563
Total
Taxes
22,684
116,291104,775116,291104,775464,815
Project Tax
Capacity/Unit
2,307
Value
Taxes
23,07310,05323,07310,05368,559
Market
Project87,50060,25087,50060,25013,250
308,750175,000133,750
Tax Capacity
00
Tax
4,564
Class
RentalRentalTaxes
22,82222,82250,208
C/I Pref.C/I Pref.C/I Pref.
PropertyProperty
State-wide
City of Cottage Grove, MN
00
6,727
Value
Taxes
30,58730,58767,901
Fiscal
Market
700,000
7,000,0003,050,0007,000,0003,050,0006,800,000
Disparities
20,800,00014,000,000
Total Taxable
PROJECT INFORMATION (Project Tax Capacity)
112 Apartment Units and 68,000 Sq. Ft. of Commerical
Langdon Village Concept - No Inflation
5656
112
Total
9,085
Local
7,000Taxes
93,21841,31393,21841,313
30,50030,50068,000
278,146
Property
Sq. Ft./Units
TAX CALCULATIONS
100100100
125,000125,000
Tax
8,528
Local
87,50038,77987,50038,779
261,085
Taxable(50,208)(67,901)(68,559)(11,866)
464,815266,280
Capacity
Market Value
Per Sq. Ft./Unit
00
100100100
4,722
21,47121,47147,665
Fiscal
125,000125,000
Estimated
Disparities
Market ValueTax Capacity
Per Sq. Ft./Unit
Tax
Total
RetailRetailRetail
87,50060,25087,50060,25013,250
308,750
New UseCapacity
ApartmentsApartments
WHAT IS EXCLUDED FROM TIF?
e
s
U
11223
w
RetailRetailRetail
e
TOTALTOTAL
N
8/3/2020 Prepared by Ehlers & Associates, Inc. - Estimates Only
Area/Phase
ApartmentsApartments
Note:
Subtotal ResidentialSubtotal Commercial/Ind.1. Market values are based upon estimates.Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values,
rates, state law, fiscal disparities and other factors which cannot be predicted.Total Property Taxesless State-wide Taxesless Fiscal Disp. Adj.less Market Value Taxesless Base
Value TaxesAnnual Gross TIF
Date
02/01/2308/01/2302/01/2408/01/2402/01/2508/01/2502/01/2608/01/2602/01/2708/01/2702/01/2808/01/2802/01/2908/01/2902/01/3008/01/3002/01/3108/01/3102/01/3208/01/3202/01/3308/01/3302/01/3408/01/3402/01/3
508/01/3502/01/3608/01/3602/01/3708/01/3702/01/3808/01/3802/01/3908/01/3902/01/4008/01/4002/01/4108/01/4102/01/4208/01/4202/01/4308/01/4302/01/4408/01/4402/01/4508/01/4502/01/4608/01/4602/01/4708/01/
4702/01/4808/01/4802/01/49
Payment
2023202320242024202520252026202620272027202820282029202920302030203120312032203220332033203420342035203520362036203720372038203820392039204020402041204120422042204320432044204420452045204620462047204
720482048
Year
Tax
123456789
1011121314151617181920212223242526
0.51.52.53.54.55.56.57.58.59.5
10.511.512.513.514.515.516.517.518.519.520.521.522.523.524.525.5
Yrs.C:\\Users\\KDahl\\Desktop\\TIF Run 8-3-20
Tax Increment Cashflow - Page 3
PERIOD
ENDING
54,555
107,909217,136323,960428,433530,608630,534728,261823,838917,311
1,008,7281,098,1331,185,5711,271,0851,354,7171,436,5081,516,5001,594,7321,671,2421,746,0681,819,2481,890,8181,960,8132,029,2672,096,2162,161,6912,225,7252,288,3502,349,5972,409,4972,468,0782,525,3702
,581,4022,636,2002,689,7932,742,2062,793,4662,843,5992,892,6282,940,5782,987,4733,033,3363,078,1893,122,0563,164,9583,206,9153,247,9493,288,0813,327,3293,365,7133,403,2533,439,967
Value
Present
Semi-Annual
-
57,03757,037
119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119
,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395119,395
6,083,8133,439,967
Net Tax
Increment
Semi-Annual
-
(6,337)(6,337)
(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266
)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,266)(13,26
6)
at
(675,979)(382,219)
10%
Admin.
-
(229)(229)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479
)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)(479)
(24,423)(13,810)
State
0.36%
Auditor
-
63,60463,604
133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133
,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140133,140
6,784,2153,835,995
Increment
Gross Tax
Semi-Annual
City of Cottage Grove, MN
127,207127,207266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266
,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280266,280
Annual
Increment
Gross Tax
TAX INCREMENT CASH FLOW
112 Apartment Units and 68,000 Sq. Ft. of Commerical
Langdon Village Concept - No Inflation
4.50%
Tax
Rate
Local
106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535
%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.535%106.53
5%106.535%106.535%
119,404119,404249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249
,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947249,947
Tax
Capacity
Captured
Present Value Rate
(22,529)(22,529)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361
)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,361)(46,36
1)(46,361)(46,361)
Fiscal
Disparities
Incremental
(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442
)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,442)(12,44
2)(12,442)(12,442)
Tax
Original
Capacity
Present Value From 08/01/2022
154,375154,375308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308
,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750308,750
Tax
Project
Capacity
Total
100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100
%100%100%
% ofOTC
8/3/2020 Prepared by Ehlers & Associates, Inc. - Estimates Only
Redevelopment Tax Increment Financing Districts
Minnesota Statute 469.174 subdivision 10 allows an authority to establish a redevelopment tax
increment financing (TIF) district to assist with redeveloping sites that contain substandard
buildings. A redevelopment TIF district has a maximum term of 26 years of increment. In order
to qualify the redevelopment property as a redevelopment TIF district, one must ensure the
parcels meet three criteria related to coverage, blighted buildings, and reasonable distribution.
What is needed to meet the coverage test?
Land parcels consisting of 70% of the TIF district must be occupied by buildings, streets,
utilities, paved or gravel parking lots.
To meet the coverage requirement, one must evaluate the proposed district parcel by parcel to
determine how many of th
requirement, 15% of its area must contain improvements such as buildings, sidewalks, and
parcel can be used for the coverage test. For example, let us assume there are four properties of
What is needed to meet the blight test?
More than 50% of the buildings, not including outbuildings, must be structurally substandard to
a degree requiring substantial renovation or clearance and reasonably distributed throughout the
geographic area.
Determining if a building is structurally substandard requires a two-part analysis.
1.
defects in structural elements or a combination of deficiencies in essential utilities and
facilities, light and ventilation, fire protection including adequate egress, layout and
condition of interior partitions, or similar factors, which defects or deficiencies area of
2. Needed repairs determined by the above definition must meet a cost requirement. A
building is not structurally substandard if it could be brought up to the building codes
applicable to new buildings at a cost of less than 15% of the cost of constructing a new
building of the same size and type on the site.
An interior inspection is required unless the city has been unable to obtain permission to enter a
building despite its best efforts. It is recommended that a building inspector or other qualified
person perform an outside inspection of all buildings in the district and render a written opinion
as to each building status with respect to this test. Ultimately the governing body of a
municipality must make the determination that buildings are substandard.
What is reasonable distribution?
The structurally substandard buildings must be reasonably distributed throughout the proposed
TIF District. In the following example, both areas have 80 percent coverage; however, Area B
has reasonable distribution of the substandard buildings, and therefore only Area B qualifies as
a redevelopment TIF district.
Area A: 80% substandard buildings Area B: 60% substandard buildings
What other conditions may qualify a district for redevelopment?
In addition
if either of the following conditions is present:
Vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail
storage facilities, or excessive or vacated railroad rights-of-way.
Tank facilities or property whose immediately previous use was for tank facilities, if
the tank facilities have or had a capacity or more than 1,000,000 gallons; are located
adjacent to rail facilities; and have been removed or are unused, underused,
inappropriately used.
Use of TIF
A minimum of 90% of the increment must be used to correct the conditions causing the need for
redevelopment. Specifically, increment can be used for site acquisition, environmental
remediation, site preparation, public improvements, and public parking facilities.
Where can I get more information?
Contact your Ehlers Financial Advisor at 651-697-8500. A list of Minnesota Financial
Advisors and their direct dial numbers can be found under the Contact Us tab at the top of our
website at www.ehlers-inc.com.