HomeMy WebLinkAbout4.2 Purchase Agreement for 8991 West Point Douglas Road
TO: Economic Development Authority
FROM: Christine Costello, Economic Development Director
DATE: December 2, 2020
RE: Purchase Agreement for 8991 West Point Douglas Road
Background
The property located at 8991 West Point Douglas Road is located in the Langdon Village area
which is southeast of Highway 61/10 and Jamaica Avenue. The property is 45,302 square feet,
or 1.04 acres of land net of the existing right-of-way.
Location of 8991 West Point Douglas Road
A single-family home was built in 1965 and is comprised of a split-level home with three bedrooms,
one full bath with an unfinished basement and an attached two-car garage. The property has
remained a single-family home since that time.
Economic Development Authority
Purchase Agreement for 8991 West Point Douglas Road
December 2, 2020
Page 2 of 6
Front and Rear Façade of Property
The property is served by a private well and septic. The State has been providing a granular
activated carbon filter since March 2008. The City records should that the Health Index value of
5.1, and values over 1.0 requires treatment. The Conceptual Drinking Water Supply Plan that the
State has drafted is still in draft form and will not be finalized till the Summer of 2021. Though if
a water extension project was funded by the 3M Settlement and took place in the Langdon Village
area it would only pay for installation of the water, not the sanitary sewer or upgrading the roadway
to current standards.
The property is zoned B-2, Retail Business and the 2040 Comprehensive Plan guides the property
for mixed use land uses. The 2040 Comprehensive Plan guides the Langdon Village area for a
mixed-use development that calls 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. With a mix of commercial, residential, and mixed use. The plan
also depicts the future West Point Douglas and 100th Street realignment (Southwest Arterial
Study).
Economic Development Authority
Purchase Agreement for 8991 West Point Douglas Road
December 2, 2020
Page 3 of 6
Stantec Master Plan for Langdon Village Area
In the recent past (2018) developers such as MWF Properties expressed interest in the area and
had approached 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 the
developer remains interested in the community.
Washington County’s Southwest (SW) Arterial Study is looking at the feasibility and alignment
options for a County roadway connection from Highway 61/10 to Lower Grey Cloud Island. As
part of the SW Arterial Study, the County roadway connection is looking at connecting Innovation
Road to West Point Douglas. If this connection were to take place a large portion of this property
would be needed for right-of-way for the extension of West Point Douglas Road. The City has
been working closely with the County and 3M who own property to the east of 8991 West Point
Douglas Road to potentially make this a reality. Currently though the project is not in the County’s
Five-Year Capital Improvement Project timeline. The City has made a request that it be included
in the County’s CIP, but it has not been considered or approved by the County Board. When
promoting this area for redevelopment commercial real estate brokers have stated that their
clients most likely will not be interested in this area until this connection is made to Innovation
Road.
To facilitate redevelopment in the City and in an effort to remove blight throughout the community
the Economic Development Authority (EDA) explored purchasing both 8991 and 9165 West Point
Douglas Road (former Majestic Ballroom). Appraisals for both properties were conducted in
June/July 2020 and presented to the EDA at their August 11, 2020 meeting. The EDA approved
moving forward with the potential purchase of 8991 West Point Douglas Road, but decided to wait
on 9165 West Point Douglas Road due to a high appraisal value ($1,655,000 to $1,745,000). The
EDA felt it was more appropriate that the private market purchase and redevelop 9165 West Point
Douglas Road.
Economic Development Authority
Purchase Agreement for 8991 West Point Douglas Road
December 2, 2020
Page 4 of 6
Discussion
The appraisal for 8991 West Point Douglas Road was appraised for $306,000. The property
owner had the property on the market, and it was originally listed in February 2020 for $565,000.
At the time of the appraisal the property owner had reduced the price to $495,000. The EDA
made an offer to the property owner in August for $306,000 and the seller counter-offered for
$475,000. At the time the EDA told the seller they would pass but if the property owner changed
their mind the offer of $306,000 stood. In early November, the property owner stated they were
interested in the EDA’s offer of $306,000. A purchase agreement was presented to the property
owner for their review.
Comparable Sales
In doing an appraisal of a property the general industry standard is to use one of three
approaches.
1. Cost Approach - Considers the current cost of replacing the property, less the depreciation
from three sources: physical deterioration, functional obsolescence, and external
obsolescence.
2. Sales Comparison Approach - Produces an estimate of value by comparing the subject
property to sales of similar properties in the competing areas.
3. Income Approach - Based on an estimate of the subject property’s possible net income.
Since the property is either blighted or an obsolete legal-nonconforming use, the sales
comparison approach was used to appraise the property.
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. The table below features the properties’ city,
use, date sold, square feet of the land, acres of land, total price, and price per square foot. Added
to the table is 8991 West Point Douglas Road, if it was to be sold at its lowest appraised valuation
in relation to the comparable land sales in the appraisal.
Address City Use Date Square Acres Price Price/Sq.
Feet Ft.
8991 West Cottage Mixed TBD 45,302 1.04 $306,000 $6.75
Point Douglas Grove Use
Rd
15265 Rosemount Medical/Apr – 20 57,253 1.31 $414,512 $7.24
Carrousel Way Office
5715 Memorial Oak Park Medical/Mar – 20 239,632 5.5 $1,750,000 $7.30
Avenue N. Heights Office
SEC Osgood Oak Park Auto Jun – 19 113,692 2.61 $550,000 $4.84
Avenue & Heights Repair
Osman Avenue
XXXX Keokuk Lakeville Office Mar – 18 243,065 5.58 $1,884,000 $7.75
Avenue Building
1325 Corporate Eagan Hotel May – 17 97,690 2.24 $585,000 $5.99
Center Curve
Economic Development Authority
Purchase Agreement for 8991 West Point Douglas Road
December 2, 2020
Page 5 of 6
To provide an idea of similar properties sold in Cottage Grove the table below shows sale of land
for commercial and high-density residential properties. These uses would match the mix use
intended land use per the City’s 2040 Comprehensive Plan
Use Sale Acres Square Feet Price/Sq. Ft.
Commercial
Pizza Ranch Restaurant $600,000 1.67 72,745 $8.25
Junction 70 Restaurant $332,789 1.05 45,738 $7.28
Primrose Office $548910 1.68 73,180 $7.44
School
High Density Multi-Family Residential
Legends of Senior Housing* $949,500 4.85 211,265 $4.49
Cottage Grove
th
80 and Market-Rate $400,000 3.19 138,956 $2.88
Hemingway Apartments
LLC
*Section 42 Affordable Housing Tax Credit – Rented to individuals makes less than 60% AMI
If the City Council and EDA moved forward with purchasing of the property at 8991 West Point
Douglas Road, the home would be demolished to clear the land for future roadway and/or
development. The City Council and EDA could choose to leave the property in its current state
but one of the benefits of buying the property is removing the non-conforming use and blight.
Demolition and Environmental Costs
To understand the cost involved if the City Council and EDA chose to remove the home, quotes
for demolition and environmental work were obtained from contractors. The demolition quote
includes the demolition of the home following Minnesota Pollution Control Agency (MPCA)
guidelines, abandonment of the well and septic systems, and restoration of the disturbed area
with 4-inches of topsoil and seed. The environmental work for the property includes the cost of a
Phase I Environmental Site Assessment (ESA) and a pre-demolition hazardous building materials
inspection.
8991 West Point Douglas Rd. – Demolition and Environmental Cost Estimates
Demolition Quote Plus 15% Total Cost
Company Contingency plus
Indirect Cost
Veit $22,000 $3,300 $25,300
Frattalone $22,150 $3,323 $25,473
JM Hauling LLC $19,550 $2,933 $22,483
Environmental Quote Plus 15% Total Cost
Contingency plus
Indirect Cost
Braun Intertec $4,415 $662 $5,077
Wenck $5,110 $767 $5,877
The City Council considered the purchase of 8991 West Point Douglas Road at their December
2nd meeting and voted 5 to 0 to approve.
Economic Development Authority
Purchase Agreement for 8991 West Point Douglas Road
December 2, 2020
Page 6 of 6
Recommendation
Authorize the EDA Executive Director/City Administrator to execute a Purchase Agreement to
Jeffrey R. Meyers and Tamara A. Meyers for the purchase of 8991 West Point Douglas Road.
Attachments
Patchin Messner Valuation Counselors 8991 WPD Appraisal
Purchase Agreement
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (“Agreement”) is made as of __________________,
2020 (“Effective Date”), by and between Jeffrey R. Meyers and Tamara A. Meyers, husband and
wife, 8991 West Point Douglas Road, Cottage Grove, Minnesota 55016 (“Seller”), and the Cottage
Grove Economic Development Authority, a public body corporate and politic under the laws of
Minnesota, 12800 Ravine Parkway South, Cottage Grove, Minnesota 55016 ( “EDA” or “Buyer”),
its successors or assigns.
RECITALS
A. Seller is the fee owner of real property located at 8991 West Point Douglas Road in the
City of Cottage Grove, Minnesota, legally described on Exhibit A, attached hereto and
incorporated herein by reference (the “Property”).
B. EDA desires to purchase the Property from Seller, and Seller desires to sell the same to
EDA, all on the terms and conditions of this Agreement.
NOW THEREFORE, for mutual consideration, the Seller and the EDA agree as follows:
1. Sale.
A. Sale. Subject to the terms and provisions of this Agreement, Seller shall sell to EDA,
and EDA shall purchase from Seller, the Property on the date of Closing.
B. Purchase Price. The purchase price to be paid by EDA to Seller for the Property shall
be Three Hundred Six Thousand and No/100 Dollars ($306,000.00) (the “Purchase
Price”). Ten Thousand and No/100 Dollars ($10,000.00) shall be paid directly to Seller
by depositing same in escrow with DCA Title, 750 Main Street, Suite 208, Mendota
Heights, MN 55118 (“Title”) within five (5) business days after the full execution of
this Agreement, as earnest money (“Earnest Money”), which Earnest Money shall be
credited at Closing against the portion of the Purchase Price payable to Seller and the
balance of the Purchase Price shall be paid to Seller on the Closing Date (as defined in
Section 5) subject to those adjustments, prorations and credits described in this
Agreement, in cash or certified funds or by wire transfer pursuant to instructions from
Seller. The Closing will occur at Title, unless otherwise agreed to by the parties. If this
Agreement is terminated by EDA as a result of a default by Seller, then the Earnest
Money shall be returned to the EDA and neither Seller nor the EDA shall be liable to
the other for any further obligations under this Agreement (except for such obligations
as specifically survive termination of this Agreement).
2. Available Surveys, Tests, and Reports. Within five (5) days of the Effective Date, Seller
shall cause to be delivered to EDA to the extent same are in the possession and control of
Seller: (a) copies of any surveys, soil tests and environmental reports previously conducted on
the Property; (b) copies of leases associated with the Property: and (c) copies of existing title
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work for the Property (the “Due Diligence Materials”). Seller makes no representations or
warranties regarding the accuracy or completeness of the Due Diligence Materials. EDA
acknowledges that the sale of the Property is “AS-IS”, “WHERE IS,” and “WITH ALL
FAULTS”, and that it is the obligation of EDA to conduct and complete its due diligence and
investigations relating to the Property. As of the Effective Date, Seller shall make the Property
available to Buyer or its contractors to conduct interior or exterior inspections, following
reasonable notice by Buyer.
3. Insurance; Risk of Loss. Seller assumes all risk of destruction, loss or damage to the Property
prior to the Closing Date. If, prior to the Closing Date, all or any portion of the Property or
access thereto is condemned, taken by eminent domain, or damaged by cause of any nature,
Seller shall immediately give EDA notice of such condemnation, taking or damage. After
receipt of notice of such condemnation, taking or damage (from Seller or otherwise), EDA
shall have the option (to be exercised in writing within ten (10) days of receipt of such notice)
either (a) to require Seller to (i) convey the Property at Closing (as defined in Section 5) to
EDA in its damaged condition, upon and subject to all of the other terms and conditions of this
Agreement, without reduction of the Purchase Price, (ii) assign to EDA at Closing all of
Seller’s right, title and interest in and to any claims Seller may have to insurance proceeds,
condemnation awards and/or any causes of action with respect to such condemnation or taking
of or damage to the Property or access thereto, and (iii) pay to EDA at Closing by certified or
official bank check all payments made prior to the Closing Date under such insurance policies
or by such condemning authorities, or (b) to terminate this Agreement by giving notice of such
termination to Seller, whereupon this Agreement shall be terminated and thereafter neither
party shall have any further obligations to the other, except for such obligations and liabilities
that specifically survive termination of this Agreement. If the right to terminate this Agreement
is not exercised in writing within such ten (10) day period, such right shall be deemed to have
been waived.
4. Contingencies.
A. EDA’s Contingencies.
(1) Unless waived by EDA in writing or waived by the passage of time in the manner
set forth herein, EDA’s obligation to proceed to Closing shall be subject to (a)
performance by Seller of its obligations hereunder, (b) the continued accuracy of
Seller’s representations and warranties provided in Section 8, and (c) EDA’s
satisfaction, in EDA’s sole discretion, as to the contingencies described in this
Section 4A within the time periods set forth below:
a. On or before the Closing Date, EDA shall have received from Title an
irrevocable commitment to issue a title insurance policy for the Property in a
form and substance satisfactory to EDA in EDA’s sole discretion, not disclosing
any encumbrance not acceptable to EDA in EDA’s sole discretion (the
“Approved Commitment”).
b. On or before the Closing Date, Seller shall have obtained releases of the
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Property from any and all mortgages or other monetary liens affecting any of
the Property.
c. On or before the Closing Date, Seller shall have obtained all valid, necessary
and sufficient waivers, assignments, subordinations, non-disturbance,
attornments, approvals, authorizations, estoppel certificates and consents of
each and every party whose waiver, subordination, non-disturbance,
attornment, approval, authorization, estoppel certificate or consent shall be
required to transfer the Property and consummate the transactions contemplated
by this Agreement.
d. On or before the Closing Date, Seller shall execute an assignment and
assumption of surviving contracts, permits and licenses, warranties, and
intangible property conveying to EDA with warranties the surviving contracts,
permits and licenses, warranties and intangible property, free and clear of all
encumbrances, together with the consent of all parties having the right to
consent to such assignment, if necessary.
e. On or before the Closing Date, the termination or elimination of any and all
option to purchase rights, Rights of First Refusal, or Rights of First Offer related
to the Property to the satisfaction of the EDA.
f. On or before the Closing Date, Seller shall terminate all leases or other contracts
that entitle possession and control of the Property and the Property shall be
vacant.
(2) If EDA elects not to exercise any of the contingencies set out herein, such election
may not be construed as limiting any representations or obligations of Seller set out
in this Agreement.
The foregoing contingencies are for EDA’s sole and exclusive benefit and one (1) or more
may be waived in writing by EDA in its sole discretion, or by the passage of time as set
forth hereinabove. Seller shall reasonably cooperate with EDA’s efforts to satisfy such
contingencies, at no out of pocket cost to Seller or assumption of any obligation or liability
by EDA. EDA shall bear all cost and expense of satisfying EDA’s contingencies. If any of
the foregoing contingencies have not been satisfied on or before the applicable date, then
this Agreement may be terminated, at EDA’s option, by written notice from EDA to Seller.
If EDA terminates this Agreement as a result of a failure of an EDA contingency prior to
the applicable date, the Earnest Money shall be returned to the EDA and neither Seller nor
the EDA shall be liable to the other for any further obligations under this Agreement
(except for such obligations as survive termination of this Agreement). Such written notice
must be given on or before the applicable date set forth herein above for such contingency,
or EDA’s right to terminate this Agreement pursuant to such contingency shall be waived.
Upon termination, neither party shall have any further rights or obligations against the other
regarding this Agreement or the Property, except for such obligations that survive
termination of this Agreement.
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B. Seller’s Contingencies. Seller’s obligation to proceed to Closing shall be subject to
the satisfaction, on or prior to the Closing Date, of each of the following conditions:
(1) EDA shall have performed and satisfied all agreements, covenants and
conditions required pursuant to this Agreement to be performed and satisfied
by or prior to the Closing Date.
(2) All representations and warranties of EDA contained in this Agreement shall
be accurate as of the Closing Date.
Seller may in its sole discretion waive any of the conditions precedent set out in this
Section. If any of the foregoing contingencies have not been satisfied on or before the dates
set forth herein, then this Agreement may be terminated, at Seller’s sole option, by written
notice from Seller to EDA. Upon termination, neither party shall have any further rights
or obligations against the other regarding this Agreement or the Property, except for such
obligations that survive termination of this Agreement.
5. Closing. Unless modified by the agreement between the parties hereto, or extended as set forth
herein, the closing of the purchase and sale contemplated by this Agreement (the “Closing”)
shall occur no later than December 31, 2020 (the “Closing Date”). Seller agrees to deliver
legal and actual possession of the Property. Closing shall occur at Title.
A. Seller’s Closing Documents and Deliveries. On the Closing Date, Seller shall execute
and/or deliver, as applicable, to EDA the following:
(1) Warranty Deed. A warranty deed conveying title to the Property to EDA, free
and clear of all encumbrances, except the Permitted Encumbrances (the
“Deed”).
(2) Assignment and Assumption of Contracts, Permits and Licenses. Seller
shall execute an assignment and assumption of surviving contracts, permits and
licenses, warranties, and intangible property conveying to EDA with warranties
the surviving contracts, permits and licenses, warranties and intangible
property, free and clear of all encumbrances, together with the consent of all
parties having the right to consent to such assignment, if necessary.
(3) Seller’s Affidavit. A standard owner’s affidavit (ALTA form) from Seller
which may be reasonably required by Title to issue an owner’s policy of title
insurance with respect to the Property with the so-called “standard exceptions”
deleted (excluding the survey exception).
(4) Settlement Statement. A settlement statement with respect to this transaction.
(5) General Deliveries. All other documents reasonably determined by Title to be
necessary to transfer the Property to EDA and to evidence that Seller (a) has
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satisfied all monetary indebtedness with respect thereto, (b) has obtained such
termination statements or releases from such secured creditors as may be
necessary to ensure that the Property is subject to no monetary liens, (c) has
obtained all consents from third parties necessary to effect Seller’s performance
of the terms of this Agreement, including, without limitation, the consents of
all parties holding an interest in the Property, (d) has provided such other
documents as are reasonably determined by Title to be necessary to issue
policies of title insurance to EDA with respect to the Property with the so-called
“standard exceptions” deleted (excluding the survey exception), and (e) has
duly authorized the transactions contemplated hereby.
B. EDA Closing Documents and Deliveries. On the Closing Date, EDA shall execute
and/or deliver, as applicable, to Seller the following:
(1) Payment of Purchase Price. The Purchase Price, in accordance with the terms
of Section 1B.
(2) Settlement Statement. A settlement statement with respect to this transaction.
(3) General Deliveries. All other documents reasonably determined by Title to be
necessary to evidence that EDA has duly authorized the transactions
contemplated hereby and evidence the authority of EDA to enter into and
perform this Agreement and the documents and instruments required to be
executed and delivered by EDA pursuant to this Agreement, or may be required
of EDA under applicable law, including any purchaser’s affidavits or revenue
or tax certificates or statements.
6. Prorations. Seller and EDA agree to the following prorations and allocation of costs regarding
this Agreement:
A. Commitment and Closing Fee. Seller will pay all costs of the title search and
preparation of the Commitment with respect to the Property. EDA will pay the cost of
all premiums for any title insurance policy it desires with respect to the Property, and
the costs of all endorsements. EDA and Seller shall each pay one half (1/2) of any
reasonable closing fee or charge imposed by Title.
B. Transfer Taxes. Seller shall pay all state deed tax regarding the Deed.
C. Recording Costs. Seller will pay the cost of recording all documents necessary to
place record title to the Property in Seller. EDA will pay all recording costs with
respect to the recording of the Deed.
D. Real Estate Taxes and Special Assessments. General real estate taxes applicable to
any of the Property due and payable in the year of Closing shall be prorated between
Seller and EDA on a daily basis as of 12:00 a.m. CT on the Closing Date based upon a
calendar fiscal year, with Seller paying those allocable to the period prior to the Closing
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Date and EDA being responsible for those allocable to the Closing Date and subsequent
thereto. Except as set forth herein with regard to special assessments associated with
EDA’s development of the Property, Buyer shall pay in full all special assessments
(and charges in the nature of or in lieu of such assessments) levied, pending, postponed
or deferred with respect to any of the Property as of the Closing Date. EDA shall be
responsible for any special assessments that are levied or become pending against the
Property after the Closing Date. Notwithstanding anything to the contrary set forth
herein, in the event that there are special assessments levied against the Property after
the Effective Date, which special assessment relate to EDA’s development of the
Property, such special assessments shall be assumed by EDA at Closing.
E. Attorneys’ Fees. Seller and EDA shall each pay its own attorneys’ fees incurred in
connection with this transaction.
7. Title Examination.
A. EDA’s Objections. Within ten (10) days after EDA’s receipt of the Commitment,
EDA may make written objections (“Objections”) to the form or content of the
Commitment (“Title Objection Period”). The Objections may include without
limitation, any easements, restrictions or other matters. In the event the Commitment
discloses, or EDA becomes aware of, any lien on the Property created by Seller that
can be discharged or satisfied by the payment of money (“Monetary Title Matters”),
Seller shall discharge or satisfy such Monetary Title Matters on or prior to the Closing
Date. If Seller fails to discharge or satisfy any such Monetary Title Matters as
aforesaid, EDA, at its sole option, and in addition to any other rights and remedies it
may have under this Agreement, at law and/or in equity, shall have the right to
discharge and satisfy (or cause the Escrow Agent to discharge and satisfy) the same
from the proceeds of the Purchase Price to be paid to Seller at closing. Any matters
reflected on the Commitment which are not objected to by EDA within the Title
Objection Period or waived by EDA in accordance with Section 7B(2) shall be deemed
to be permitted encumbrances (“Permitted Encumbrances”). Notwithstanding the
foregoing, the following items shall be deemed Permitted Encumbrances: (a)
Covenants, conditions, restrictions (without effective forfeiture provisions) and
declarations of record, if any; (b) Reservation of minerals or mineral rights by the State
of Minnesota, if any; and (c) Applicable laws, ordinances, and regulations. EDA shall
have the renewed right to object to the Commitment as the same may be revised from
time to time, as to new items contained in any revised Commitment.
B. Seller’s Cure. Seller shall be allowed to cure the same but shall have no obligation to
do so. If such cure is not completed by Closing Date, or if Seller elects not to cure such
Objections, the sole recourse of EDA shall be to do one of the following:
(1) Terminate this Agreement by written notice to Seller; or
(2) Waive the Objections, in which event the Objections shall be deemed Permitted
Encumbrances.
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If EDA so terminates this Agreement under this Section 7B(1), the Earnest Money shall be
returned to the EDA and neither Seller nor the EDA shall be liable to the other for any
further obligations under this Agreement (except for such obligations as specifically
survive termination of this Agreement). If EDA fails to terminate this Agreement under
this Section 7B(1) on or before the Closing Date, EDA shall be deemed to have elected to
proceed under Section 7B(2) and waive such Objections, in which the Objections shall be
considered Permitted Encumbrances.
8. Warranties and Representations.
A. By Seller. Seller warrants and represents to the best of its knowledge and belief the
following to EDA to be true as of the Effective Date:
(1) This Agreement has been duly executed and delivered and constitutes the legal,
valid and binding obligation of Seller enforceable in accordance with its terms.
This Agreement and the documents and instruments required to be executed
and delivered by Seller pursuant hereto have each been duly authorized by the
Seller and such execution, delivery and performance does and will not conflict
with or result in a violation of any judgment or order.
(2) The execution, delivery and performance by Seller of this Agreement will not
(a) violate any provision of any law, statute, rule or regulation or any order,
writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
Seller, or (b) result in a breach of or constitute a default under any indenture,
loan or credit agreement or any other agreement, lease or instrument to which
Seller is a party or by which it or any of its properties may be bound.
(3) To Seller’s knowledge, except as contemplated herein, no order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any other entity, is required on the part of Seller to authorize, or is
required in connection with, the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, this Agreement.
(4) To Seller’s knowledge, there are no actions, suits or proceedings pending or
threatened against or affecting Seller or the Property, before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which in any of the foregoing (a) challenges the legality,
validity or enforceability of this Agreement, or (b) if determined adversely to
Seller, would have a material adverse effect on the ability of Seller to perform
its obligations under this Agreement.
(5) To Seller’s knowledge, there are wells and sewage treatment systems located
on any portion of the Property that have been disclosed in separate disclosures.
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To Seller’s knowledge, there has been no methamphetamine production on or
about any portion of the Property.
(6) To the best of Seller’s knowledge and belief, the Property is located in the
Perfluoroalkyl Substances (PFAS) East Metro Site by the 3M Cottage Grove
Manufacturing Facility and Large Waste Disposal Facilities where PFAS
bearing wastes were disposed. Sellers also disclose that the well samples show
contamination. See attached disclosures. Seller discloses that environmental
conditions exist due to being located by the 3M Cottage Grove Manufacturing
Facility and Large Waste Disposal Facility and because the property is located
in the PFAS East Metro Site and because the well water tested showed
contamination and Seller does not drink well water and water is being delivered
to the home. Seller advises Buyer that the Property may support a claim or
cause of action under any Environmental Law (as defined below) and there are
or may be Hazardous Substances (as defined below) on the Property.
“Environmental Law” shall mean (a) the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. § 9601-9657, as
amended, or any similar state law or local ordinance, (b) the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., (c) the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., (d) the Clean
Air Act, 42 U.S.C. § 7401, et seq., (e) the Toxic Substances Control Act, 15
U.S.C. § 2601 et seq., (f) the Safe Drinking Water Act, 42 U.S.C. § 300(f) et
seq., (g) any law or regulation governing aboveground or underground storage
tanks, (h) any other federal, state, county, municipal, local or other statute, law,
ordinance or regulation, including, without limitation, the Minnesota
Environmental Response and Liability Act, Minn. Stat. § 115B.01, et seq., (i)
all rules or regulations promulgated under any of the foregoing, and (j) any
amendments of the foregoing. “Hazardous Substances” shall mean
polychlorinated biphenyls, petroleum, including crude oil or any fraction
thereof, petroleum products, heating oil, natural gas, natural gas liquids,
liquefied natural gas or synthetic gas usable for fuel, and shall include, without
limitation, substances defined as “hazardous substances,” “toxic substances,”
“hazardous waste,” “pollutants or contaminants” or similar substances under
any Environmental Law. Seller makes no covenant or representation or
warranty as to the environmental condition of the Property.
(7) There are no unrecorded contracts of any nature or type relating to, affecting or
serving the Property, to which the Seller is a party.
(8) There will be no indebtedness attributable to the Property which will remain
unpaid after the Closing Date.
Seller shall have no liability with respect to a breach of the representations and warranties
set forth in this Agreement if EDA has actual knowledge of Seller’s breach thereof prior to
Closing and EDA consummates the acquisition of the Property as provided herein.
8
EDA acknowledges and agrees that, except as expressly specified in this Section of this
Agreement, Seller has not made, and Seller hereby specifically disclaims, any
representation, warranty or covenant of any kind, oral or written, expressed or implied, or
rising by operation of law, with respect to the Property, including but not limited to, any
warranties or representations as to the habitability, merchantability, fitness for a particular
purpose, title, zoning, and tax consequences, (as the same is defined by Section 10 of this
Agreement), utilities, valuation, governmental approvals, the compliance of the Property
with governmental laws, the truth, accuracy or completeness of any information provided
by or on behalf of Seller to EDA, or any other matter or item regarding the Property. ,
Buyer agrees to accept the Property and acknowledges that the sale of the Property as
provided for herein is made by Seller on an “AS IS,” “WHERE IS,” and “WITH ALL
FAULTS” basis including the disclosed known and unknown environmental issues and
including Environmental Investigation or Study and the Environmental Mitigation or
Remediation, as stated in Section 10 hereof, Buyer is an experienced purchaser of property
and as a governmental agency has actual knowledge of environmental issues with the
Property and Buyer has made or will make its own independent investigation of the
Property. The limitations set forth in this paragraph shall survive the Closing and shall not
merge in the Deed.
B. By EDA. EDA warrants and represents the following to Seller, and acknowledges that
Seller has relied on such representations and warranties in agreeing to enter into this
Agreement:
(1) EDA has all requisite authority to enter into this Agreement and to perform all
of its obligations under this Agreement.
(2) The execution, delivery and performance by EDA of this Agreement will not
(a) violate any provision of any law, statute, rule or regulation or any order,
writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
EDA, (b) violate or contravene any provision of the articles of incorporation or
bylaws of EDA, or (c) result in a breach of or constitute a default under any
indenture, loan or credit agreement or any other agreement, lease or instrument
to which EDA is a party or by which it or any of its properties may be bound.
(3) The EDA is a governmental agency that has actual knowledge that the Property
is located in the Perfluoroalkyl Substances (PFAS) East Metro Site by the 3M
Cottage Grove Manufacturing Facility and Large Waste Disposal Facilities
where PFAS bearing wastes were disposed. EDA also knows the well samples
have also found contamination and the Seller does not use the well for drinking
water and that Seller has drinking water that is delivered to the property. EDA
also knows that due to being located by the 3M Cottage Grove Manufacturing
Facility and Large Waste Disposal Facility and because the well water has tested
for contamination that this property may have additional environmental issues
that the Seller has no actual knowledge of. Seller has advised Buyer to conduct
its own Phase I or other environmental due diligence at its own cost. As a
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condition precedent to the sale of the Property, Buyer as an experienced Buyer
and a governmental agency also represents and warrants that Seller does not have
to provide the Hazardous Waste Disposal or Contamination Notice as provided
by Minn. Stat. § 115B.16 and hereby agrees to indemnify and hold Seller
harmless from all claims, damages, fines, costs, fees, attorney fees and
disbursements related to the Hazardous Waste Disposal or Contamination
Notice.
(4) Environmental Assessment Contingency. The EDA has the right to have access
to the property to enable it to do an environmental assessment, including a
Phase I, at EDA sole cost. EDA’s environmental consultant must be approved
by Seller, and Seller agrees it shall not unreasonably withhold approval. The
environmental assessment may be commenced at any date and shall be
completed prior to the closing date at the sole expense of the EDA. The EDA
may choose to waive an environmental Assessment. EDA may terminate this
agreement based on their environmental assessment up to the Closing Date. The
EDA must provide Seller copies of their environmental assessment. If the EDA
and Seller proceed to close the sale of the property then the EDA waives this
Environmental Assessment contingency.
EDA shall indemnify Seller against any loss, damage, claim, liability arising
out of or in connection with any act or omissions of the EDA, EDA’s
environmental consultant, or their representatives occurring to or upon the
property in connection with the environmental assessment. EDA shall keep the
property free from any mechanic lien claims arising out of the environmental
assessment or remediation by or through the EDA or its environmental
consultant.
(5) Release of Seller by EDA. Except for a material breach of any representation
or warranty by Seller contained in this Purchase Agreement, EDA waives,
releases, covenants not to sue and forever discharges Seller, agents, realtors,
attorney, agents and other persons acting on their behalf from any and all
claims, actions, causes of action, demands, rights, damages, costs, expenses, or
compensations whatsoever, direct or indirect, known or unknown, foreseen or
unforeseen, which EDA now has or which may arise in the future on account
of or growing out of or in connection with any physical characteristics or
existing conditions including without limitation, subsurface conditions,
contaminated water, contamination released through the sewage treatment
systems (Septic) that is in any way related to the contamination caused by the
PFAS East Metro Site, and contamination under, or related to the Property, or
contamination as defined by any applicable law or regulation. EDA
acknowledges that (i) Seller has afforded EDA the opportunity for a full and
complete investigation, examination and inspection of the Property and (ii) the
purchase price reflects the agreement of EDA not to pursue or assert any claims
against Seller arising out of environmental matters. EDA acknowledges that
this clause is a negotiated part of this Agreement and serves as an essential
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component of consideration for the Property. The release contained under this
clause includes, but is not limited to, the release of Seller from all claims
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, as well as all, federal, state, and local
environmental laws, including but not limited to the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), 42 USC
§ 9601 et. Seq., the Federal Brownfields Amendments Act, Pub. L. 107-118, §
115 Stat. 2356 (2002) as amended, and the Minnesota Environmental Response
and Liability Act (MERLA), 115B.01 et. seq. The covenants and agreements
of Buyer in this paragraph shall survive the Closing and consummation of the
transactions contemplated in this Agreement.
The representations, warranties and other provisions of this Section shall survive Closing;
provided, however, EDA shall have no liability with respect to any breach of a particular
representation or warranty if Seller shall fail to notify EDA in writing of such breach within
one (1) year after the Closing Date.
9. Additional Obligations of Seller.
A. Licenses and Permits. Seller shall transfer to EDA all transferable rights, if any, in
any permits or licenses held by Seller with respect to the Property. Seller shall execute
all applicable transfer forms and applications to facilitate and affect any such transfer
and to cooperate fully with EDA in its efforts to obtain all of the necessary licenses and
permits for the Proposed Use.
B. Further Assurances. From and after the Closing Date, Seller agrees to execute,
acknowledge and deliver to EDA such other documents or instruments of transfer or
conveyance as may be reasonably required to carry out its obligations pursuant to this
Agreement.
C. Non-Assumption of Contracts or Other Obligations. The parties understand and
agree that EDA is only acquiring certain of Seller’s real property assets and that this
Agreement and any related agreements shall not be construed to be in any manner
whatsoever an assumption by EDA of any agreements, indebtedness, obligations or
liabilities of Seller which are owing with respect to the Property prior to the Closing
Date.
D. Mortgages. On or before the Closing Date, Seller shall satisfy all mortgage and/or lien
indebtedness with respect to all or any portion of the Property and shall obtain
recordable releases of the Property from any and all such mortgages or other liens
affecting all or any portion of the Property. Notwithstanding the foregoing, Seller shall
not be obligated to satisfy any liens that result from the EDA’s Investigations.
E. Marketing. At all times prior to the Closing Date, Seller shall not negotiate in any
manner for the sale or transfer of the Property with any third party.
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10. Environmental Matters.
A. Definitions. For purposes of this Agreement,
(1) “Hazardous Substances” shall include, without limitation, polychlorinated
biphenyls, petroleum, including crude oil or any fraction thereof, petroleum
products, heating oil, natural gas, natural gas liquids, liquefied natural gas or
synthetic gas usable for fuel, and shall include, without limitation, substances
defined as “hazardous substances”, “toxic substances”, “hazardous waste”,
“pollutants or contaminants” or similar substances under any Environmental
Law, as hereinafter defined, PFAS, any and all substances related to the PFAS
East Metro Site by the 3M Cottage Grove Manufacturing Facility and Large
Waste Disposal Facilities where PFAS bearing wastes were disposed, including
the contaminated subsurface well water.
(2) “Environmental Law” shall mean (a) the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. § 9601-9657, as
amended, or any similar state law or local ordinance, (b) the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., (c) the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., (d) the Clean
Air Act, 42 U.S.C. § 7401, et seq., (e) the Toxic Substances Control Act, 15
U.S.C. § 2601 et seq., (f) the Safe Drinking Water Act, 42 U.S.C. § 300(f) et
seq., (g) any law or regulation governing aboveground or underground storage
tanks, (h) any other federal, state, county, municipal, local or other statute, law,
ordinance or regulation, including, without limitation, the Minnesota
Environmental Response and Liability Act, Minn. Stat. § 115B.01, et seq., (i)
all rules or regulations promulgated under any of the foregoing, and (j) any
amendments of the foregoing.
(3) “Seller-Caused Environmental Conditions” shall mean any release or
threatened release of any Hazardous Substances into the drainage systems,
soils, groundwater, waters or atmosphere, which release is the result of the
control, use, occupancy and/or operation of the Property by the Seller prior to
the Closing Date excluding any and all environmental claims related to PFAS
and any all environmental claims related to PFAS East Metro Site by the 3M
Cottage Grove Manufacturing Facility and Large Waste Disposal Facilities
where PFAS bearing wastes were disposed, including but not limited to those
claims related to the well water and any discharge from the septic tank related
to the PFAS East Metro Site by the 3M Cottage Grove Manufacturing Facility
and Large Waste Disposal Facilities
B. Reporting Requirements. Seller and Buyer agree to comply with all reporting
requirements set out in any Environmental Law.
11. Broker. It is acknowledged that there is not a broker for EDA. Seller has a broker who is
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related to the Seller and all fees to the broker will be paid by Seller.
12. Notice. Any notice to be given by one party hereto shall be personally delivered (including
messenger delivery) or be sent by registered or certified mail, or by a nationally recognized
overnight courier which issues a receipt, in each case postage prepaid, to the other party at the
addresses in this Section (or to such other address as may be designated by notice given
pursuant to this Section), and shall be deemed given upon personal delivery, three (3) days
after the date postmarked or one (1) business day after delivery to such overnight courier.
If to EDA: Cottage Grove Economic Development Authority
Attn: Jennifer Levitt, Executive Director
12800 Ravine Parkway South
Cottage Grove, MN 55016
with a copy to: Korine L. Land
LeVander, Gillen & Miller, P.A.
633 South Concord Street, Suite 400
South St. Paul, MN 55075
If to Seller: Jeffrey R. Meyers and Tamara A. Meyers
8991 West Point Douglas Road
Cottage Grove, MN 55016
13. Default; Remedies. If either Seller or EDA fails to perform any of its obligations under this
Agreement in accordance with its terms, and such failing party does not cure such failure within
thirty (30) days after written notice thereof from the other party (provided that no notice or
cure period shall be required for obligations to be performed at Closing), then the other party
shall have the right to terminate this Agreement by giving the failing party written notice of
such election. In the case of any default by EDA, Seller’s sole and exclusive remedy shall be
the termination of this Agreement as provided above and, upon any such termination, the
Earnest Money shall be forfeited to Seller as the full and final liquidated damages, with the
exception of any liens arising out of EDA’s Investigations, the obligations and liability for
which shall survive the termination of this Agreement and the release of the Earnest Money to
Seller. In the case of any default by Seller, EDA’s sole and exclusive remedy shall be to
terminate this Agreement, in which case the Earnest Money deposit shall be returned to EDA.
In no event shall EDA be entitled to record a notice of Lis Pendens against the Property.
14. Cumulative Rights. No right or remedy conferred or reserved to Seller or EDA is intended
to be exclusive of any other right or remedy herein or by law provided, but each shall be
cumulative in and in addition to every other right or remedy existing at law, in equity or by
statute, now or hereafter.
15. Entire Agreement; Modification. This written Agreement, its amendments, and the attached
disclosures constitutes the complete agreement between the parties with respect to this
transaction and supersedes any prior oral or written agreements between the parties regarding
this transaction. There are no verbal agreements that change this Agreement and no waiver of
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any of its terms will be effective unless in writing executed by the parties, except as specifically
set forth herein with regard to items waived as a result of passage of time. The Recitals are
hereby incorporated by reference into this agreement.
16. Binding Effect; Survival. This Agreement binds and benefits the parties and their respective
successors and assigns. All representations and warranties, and indemnification obligations of
the parties hereto shall survive the Closing. The EDA may not assign its rights under this
Purchase Agreement without the express written agreement of Seller.
17. Governing Law. The provisions of this Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, County of Washington.
18. Counterparts; Facsimiles. This Agreement may be executed in any number of counterparts,
and all of the signatures to this Agreement taken together shall constitute one and the same
agreement, and any of the parties hereto may execute such agreement by signing any such
counterpart. Facsimile or “PDF” signatures on this Agreement shall be treated as originals until
the actual original signatures are obtained.
19. Time of the Essence. Time is of the essence of this Agreement.
IN AGREEMENT, the parties hereto have hereunto set their hands as of the date
hereinbefore first written.
\[remainder of page intentionally left blank\]
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COTTAGE GROVE ECONOMIC
DEVELOPMENT AUTHORITY
By ________________________________
Myron Bailey
Its President
By ________________________________
Jennifer Levitt
Its Executive Director
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SELLER
JEFFREY R. MEYERS AND
TAMARA A. MEYERS
By: ___________________________
Jeffrey R. Meyers
By:
Tamara A. Meyers
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
All of Block (3), Village of Langdon, which lies Southwesterly of the right of way limits of State
Trunk Highway No. 61 as set forth in Final Certificate on Condemnation of Lands for Trunk
Highway purposes recorded at Document No. 210046.
\[Title Commitment legal description to govern\]
A-1
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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
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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
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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
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PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Front Façade of Subject Property
East and South Exterior Facades of Subject Property
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PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
Exterior Facade of Subject Property
West and South Exterior Facades of Subject Property
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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
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PHOTOGRAPHS OF SUBJECT
(Photographs taken on June 24, 2020)
th
Looking Northerly at Subject Property from 96 Street
Aerial View of Subject Property
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SUBJECT LOCATION MAP
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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.
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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.
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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
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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
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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.
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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
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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.
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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.
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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.
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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.
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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
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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.
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Construction Activity
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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,
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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.
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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.
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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
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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.
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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.
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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.
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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%).
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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.
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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.
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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
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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.
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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
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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.
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SANITARY SEWER MAP
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EXISTING AND FUTURE TRUNK WATER SYSTEM
.
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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
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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
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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:
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ZONING MAP
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FUTURE LAND USE MAP
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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
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FUTURE LAND USE AND AREAS OF CHANGE MAP
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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
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± 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
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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.
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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.
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PLAT MAP
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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.
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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.
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HIGHEST AND BEST USE
As Improved
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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.
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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.
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COMPARABLE LAND SALES LOCATION MAP
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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.
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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.
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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
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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.
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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
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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
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located in the southwest corner of Interstate 35 and 210 Street in
Lakeville. The property was purchased to build an owner/occupied
office.
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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.
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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.
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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
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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-
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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
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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%.
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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.
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ADDENDA
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EXHIBIT 1
(Pages 57-58)
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EXHIBIT 2
(Pages 60-61)
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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
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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
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CONTINGENT AND LIMITING CONDITIONS
(Pages 63-65)
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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.
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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.
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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.
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APPRAISER QUALIFICATIONS
(Page 67)
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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