1j. Sale of property, Redmond products 1 CITY O e
i
y ,
i CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147• CHANHASSEN, MINNESOTA 55317
(612) 937-1900 • FAX(612) 937-5739
IMEMORANDUM
TO: Mayor and City Council
IFROM: Don Ashworth, City Manager - f's III-
.
IIDATE: November 1, 1990
SUBJ: Land Sale, Redmond Products
IIApproximately one month ago the City Council approved an expansion
for Redmond Products subject to :a number of conditions. One of
II those conditions was to employ professional appraisers to make a
fair determination as to the value of a wetland adjacent to the
Redmond property. By the city selling the wetland to Redmond, they
II would meet the overall green space requirements under the ordinance
while simultaneously preserving the area as a wetland. At issue
was what would be a reasonable value for this property.
II The decision to employ professional appraisers in making this
determination was a good decision. }', As can be seen from the
attached report, the appraisers both agreed that the property
II should be looked at from the standpoint of a "market value to a
captive buyer" versus the "market value to the City of Chanhassen".
As both appraisers agreed that this would be the best approach in
II determining a net value, there was no necessity to hire a third
appraiser. moth appraisers worked independently with their
resulting reports as to values being' extremely close, i.e. $85,000
(our appraiser) versus:A 88•'000 00R on4's -appraiser) . These
1 numbers were arrived at by first establishing the "market value to
captive buyer" 0125,000 and $131,000, respectively) minus the
value to the city ($40,000 and $43,000, respectively) .
As stated above, I am extremely ,pleased with the process used in
determining the value. I think it will be very difficult for
anyone to claim that the city,:=was overly harsh on an existing
IIbusiness or, by contrast, gave away the farm. Authorizing the
Manager and Mayor to enter into a sales agreement with Redmond
Products is recommended.
II
II
II
11: .. -141...-4cv4
II HARVEY G. SWENSON,MAI REAL ESTATE APPRAISER•CONSULTANT
6100 GREEN VALLEY DRIVE
MINNEAPOLIS,MINNESOTA 55438
1 (612)830-9003
1 .
1 p' .3 /...C•
1 r pt. W( ../ f,,c i.•�.
IN -
Fu.1/ 2vd. wV'"/
1 APPRAISAL OF e e,, AV
I 1.6 ACRE LAND PARCEL
1 SI LOTUS TO THE REAR OP
S LAWN AND GARDEN CENTER
iCHANHASSEN, MINNESOTA
1
II
IA2EPARED FOR
'? . DON ASHWOF i, CITY MANAGER
CITY OF CHANHASSEN
690 OM= DRIVE
CHANHASSEN, )5O'I A 55317
In
II
DATE OF APPRAISAL
OCTOBER 19, 1990
1 `
II
Ii . CUR E NUMBER 90502
In FE
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HARVEY G. SWENSON, MAI REAL ESTATE APPRAISER•CONSULTANT
6100 GREEN VALLEY DRIVE
MINNEAPOLIS,MINNESOTA 55438
(612)830-9003
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October 23, 1990
Mr. Don Ashworth, City Manager
City of Chanhassen
690 Coulter Drive
Chanhassen, Minnesota 55317
RE: 1.6 Acre Laid Parcel
Situated to the Rear of
Lotus Zahn and Garden Center
Chanhassen, Minnesota
Dear Mr. Ashworth:
At the request of Mr. To Gerhardt, an appraisal of this real estate has
been completed after a personal viewing of the property and the Highway 5
commercial/industrial neighborhood in which it is located.
The subject site is currently aned by the City of Chanhassen and is 1
utilized mainly as a storm water drainage pondirlg area/open space site.
There is also interest from the adjacent light industrial property owner 1
located immediately to the east, Redmond Products, Inc., to acquire fee title
to this site - subject to retaining the existing storm water pooling use - in
order to obtain a large enough overall site that would meet the 70% maxiiamm lot
coverage requirement of the zoning ordinance in an Industrial Office Park (IOP)
District relative to their proposed expansion plans.
' There appears then, to be at least two levels of utilization or usefulness
attributable to the subject site: 1
1 1. Utility, or usefulness, to the City of its present use, and
2. Utility, or usefulness, to the adjacent property owner to help 1
implement a planned expansion.
The basis of value for any property, largely relates to its "usefulness" or
"utility".
1
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i Page 2
Mr. Ashworth
IIII When a city acquires lower elevation wetland type properties, they are
normally able to do so at prices at the lower end of the range of values for
land within the immediate area - because of the 'general lack of "utility" or
"usefulness" and practical alternative economic uses of that type of lard.
On the other hand, if an industrial property owner wishes or needs to
IF expand, and does not own or otherwise control enough additional land necessary
to accommodate that expansion, any available expansion land normally takes on
even greater "utility" or "usefulness" - at least to that one buyer, and
especially if there is only one such site effectively available for that
purpose. These conditions then generally lead to the "captive buyer" paying a
premium for the needed or potentially usable adjacent property.
In the situation under consideration here, the subject property is not the
only possible abutting expansion land potentially available, but it may be the
more readily and affordable available land. The other potential expansion land
is the 2.1+/- acres located immediately south of the subject property owned by
Jay Kronick and currently used for his Lotus Lawn and Garden Center. This
"front" portion has better visibility, accessibility, soils, and much better
overall "utility" or usefulness" as compared to the subject property, however
II! it may not be "effectively" available due to pricing and/or timing aspects.
Also it should be recognized that the "utility" or usefulness" of the
subject property is much more restrictive or limited. It may not be used for
III any actual physical and utilitarian building or parking lot expansion - but
only for purposes of meeting a maximum lot coverage requirement. This feature
alone, however, may be itself have considerable value if it allows one to
accomplish this expansion whereas that expansion might not otherwise be
IIIaccomplished without delay or additional expense.
Approach Used to Estimate the Value of the Subiect Property
The market value of the subject property has been appraised using the normal
arms-length willing buyer/willing seller definition and standards found on page
3 in the attached appraisal report, entitled "Definition of Market Value".
I
Page 3
Mr. Ashworth I
Under this scenario, the transaction is deemed to be canted between two
I
fully informed, knaaledgeable, prudent parties - both equally motivated - and
both acting without undue stimulus or pressure.
I
Applying this, in my opinion, first requires both fully informed
knowledgeable parties to view the relative respective values that the property
has to: I
1. Themselves, and
2. The other party to the transaction I
I Once these steps are carpleted, both parties - neither under undue stimulus,
or pressure to act - would then on sane reasoned and equitable basis arrive at
I
I a price or "market value" reflective of the relative benefits obtained and/or
retained by them in the transaction.
I
IRespective Estimated Values
1
1 1. Estimated market value based on Utilization Program 1
For use by the City for storm water drainage and I
Isimilar uses.
Forty Thousand Ibliars $ 40,000
I
' 2 . Estimated market value based on Utilization Program 2
To help implement expansion for the industrial
J I
property, and reflecting a 20% to 25% premium price
I
over and above the indicated market value of similar
Iindustrial land having sold recently within the
immediate area. I
IOne Hundred Testy--five Thousand Dollars $125,000
IEstimated Arms-Lenath Market Value Considering the
Estimate Respective Relative Values Above - I
In my opinion, once the parties were to arrive at the relative values of
the subject property to both themselves and also the other party, the following
I or similar reasoned and equitable market value determination process would take
place, resulting in an arms-length negotiated price or "market value" for the
subject property.
1
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1 Page 4
Mr. Ashworth
ystimated Arms-Length Market Value Considering the
IEstimate Respective Relative Values Above cont'd
li 1. Value to the abutting owner under Utilization $125,000
Program 2
li 2. Less, relative value to the City urder Utilization Program 1,
recognizing that this actual use and benefit to the City
III will be continued (40.000)
3. Estimated market value or price to be paid by the abutting
miner to the City, reflecting the relative benefits
IIIobtained and also retained by the parties $ 85,000
II Conclusion of Market Value of the subject property as of October 19, 1990 for
the purposes and between the parties described herein:
Eighty-Five Thcusand Dollars $85,000
This estimate of market value is further conditioned on the "Key Assumptions"
set forth on pages.6 and 7 in this report.
Reasonable care has been exercised in verifying the factual data set forth in
the report and is judged and assumed to be reliable. This appraisal is made
subject to certain assumptions and limiting conditions which are submitted in
the follmwirg report. The attached report identifies and describes the real
estate and presents same of the data considered as well as the valuation
analysis and conclusions.
•
mi
Sincerely,
1
SWENSON & ASSOCIATES
1 �
;
I 44/ / 1
7 Harvey G. - •, , mu,1115/jkg
1
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II TABLE OF CONTENTS Page No.
I
PHOTOGRAPHIC VIEWS OF SUBJECT 1-2
PROPERTY RIGHTS APPRAISED 3
I
I PURPOSE OF APPRAISAL 3
DEFINITION OF MARKET VALUE 3
I
PROPOSED SITE PLAN, REEMOND PROCUCTS, INC 4
SITE MTh DESCRIPTION, REDMOND PRODUCTS, INC. 5
KEY ASSUMPTIONS 6-7 I
rHISTORY OF ITIE SUBJECT FRDk' M 8
SCOPE OF 'THE APPRAISAL 8 I
IIMETROPOLITAN AREA 9-10
CITY MAP 11 I
I THE CITY AND NEIGHBORHOOD 12-15
TRUNK HIGHWAY REALIGNMENT MAP 16
II
ISITE DESCRIPTION 17-18
IOP INDUSTRIAL OFFICE PARK DISTRICT ZONING REQUIREMENTS . . . 19 II SURVEY MAP 20
IISITE PLAN MAP 21
LEGAL DESCRIPTION 22 II
11 REAL ESTATE TAXES 23
OPTIMAL, OR HIGHEST AND BEST USE OF THE SUBJECT SITE 24 I
II VALUATION METHOD TO BE USED 24
LAND VALUE ESTIMATES 25-26
II
il LAND SALE 27-30
LAND SALES MAP 31
SUMMARY OF MARKET VALUE CONCI<USIC*S 32-33 II
11 APPRAISER'S CERTIFICATION 34
CONTINGENT AND LIMITING CONDITIONS 35 II
II APPRAISING/CONSULTING QUALIFICATIONS OF HARVEY G. SWENSON 36
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View looking southwesterly from rear of Redmond site toward
subject 1.6 acre City of Chanhassen site.
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Close up view of subject property from northeast corner showing the easterly
water ponding area and the venter street and utility easement ridge.
( Photograph IL__
Views
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Redmond Products, Inc. at 18930 West 78th Street, the north
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11111 frontage road to State Highway 5
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IIIII Rear portion of Redmond site adjacent to the railroad right-of-way
to the left side in photograph.
II
III ( Photograph Views )
--ArvnRaAmnmmmfflip•-Arrrorarqprm --- -,.-..........._....._____III
Mark A. Oehrlein Appraisals, Inc.
Real Estate Appraisers . Consultants
7101 YORK AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55435 • (61 2) 921-3309
MARK A OEHRLEIN, MAI
/2C1
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firr.7 S
October 26, 1990
Mr. Eugene J. Stroebl, PE A•s, @ e.><, /4/1
Redmond Products Inc.
' 18930 West 78th Street
Chanhassen, Minnesota 55317
Re: Appraisal of a Parcel of Vacant Wetland in Chanhassen, MN
' Dear Mr. Stroebl:
' In accordance with your request, an inspection and appraisal has
been made of the above referenced property for the purpose of
estimating the market value of the fee simple interest. The
purpose of this appraisal is to estimate a suggested purchase price
for Redmond Products Inc. which is regarded as a captive buyer.
Our value estimate is based upon the premise that the highest and
best use of this vacant tract of wetland would be for Redmond
Products Inc. to acquire the site from the City of Chanhassen in
order to increase its total land area. The acquisition would allow
' Redmond Products Inc. to then meet the city's zoning regulations
pertaining to site coverage ratios in order to expand the parking
area on its existing site. At the same time, however, the subject
property would not be used in any physical or tangible manner by
Redmond Products Inc. , therefore, the City of Chanhassen will be
able to continue its use of the site as a ponding area.
Based upon our opinion of the highest and best use of the site, as
of October 10, 1990, our estimated market value is:
EIGHTY EIGHT THOUSAND DOLLARS ($88,000)
Market Value to a Captive Buyer $131,000
Less: Market Value to the City of Chanhassen $ 43 ,000
Market Value to Redmond Products Inc $ 88,000
The appraisal report is attached. It contains a description of the
' property, a summary of significant factors affecting its market
value, and a portion of the computations employed in arriving at
the value estimates. The appraiser's definition of market value,
the appraiser's qualifications, a summary of general assumptions
and general limiting conditions are also included.
IF
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October 26, 1990 1
This appraisal has been completed in conformance with the
Professional Ethics of the American Institute of Real Estate
Appraisers. Information in this report was gathered from sources
believed reliable, but it is not guaranteed. 1
It has been a pleasure to serve you, and should you desire further
assistance please call at your convenience. Mr. Seng-Khoy Kee
assisted in the gathering and analyzing of data.
Cordially yours,
MARK A. OEHRLEIN APPRAISALS, INC.
/'24d 41hL 1
Mark A. Oehrlein, MAI
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TABLE OP CONTENTS
11 Item Page No.
•
1 Summary of Salient Facts And Conclusions 2
Location Map 3
Area Map 4
Date of Market Valuation 5
1 Property Identification And Location 5
Statement Of Ownership 5
Legal Description 5
I • Three Year Sale History 6
Tax Information 7
Zoning 7
1 Property Rights Appraised 9
Purpose And Use Of The Appraisal 9
Definition Of Market Value 9
Metropolitan Twin City Data 10
1 Chanhassen City Data 14
Neighborhood Analysis 16
The Site 19
1 Plat Map 19
Site Survey 20
Highest And Best Use 23
II The Market Data Approach To Value 26
Summary And Conclusion 38
Certification 39
I Addenda
Subject Photographs
IOP Industrial Office Park Zoning Ordinance
1 Wetland Protection Zoning Ordinance
Registered Land Survey No. 59 of Carver County, Minnesota
Contingent And Limiting Conditions
Appraiser Qualifications
II
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