6. SR 10-30-1995~a
~Ik Ri
ITEM 6.
MEMORANDUM
ver TO:
FROM:
DATE:
SUBJECT:
Mayor & City Council
Pat Klaers, City 's ator
October 30, 199
East Elk River runk Sewer and Water
Project
Most of the evening of October 30, 1995, is scheduled as another in a series of
Council worksessions on the extension of trunk sewer and water utilities to
the east Elk River area. Attached for your review are the minutes from the
last two worksessions on this project. These minutes are from the 7/31/95
and 9/25/95 meetings.
A stated goal of the Council is to get public input on this project. Number 7
in the outline for the 10/30 meeting shows this public meeting being planned
for fall or winter. The purpose of going to the public for either a public
hearing or a public informational meeting is to gauge the response from the
• property owners on the desire or demand for public utilities. Typically
property owners cannot provide this kind of feedback until they know a lot of
details about the project including their cost for the project and the timing of
the project. If the Council wants to have some of this information available
before a public meeting, then the Council will have to make some important
decisions about the project. The other alternative is to go to the public in a
very general manner and simply indicate that trunk utilities are coming, but
that we as a city do not know when or at what exact cost to the property
owner. In this manner we may get some general feedback from the property
owners on the desirability of the project.
Some of the specifics that property owners will want to have answered at a
public meeting may include the following:
• The total project area (east Elk River ultimate sewer and water
district)
• Phase I project area
• The assessment method...one rate for everyone or one rate per
zoning district and what will happen if zoning districts change.
(For a variety of reasons, staff will be recommending one rate for all
properties. This is the same approach that is being used in the
• western area)
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
East Elk River Trunk Sewer Page 2
October 30, 1995
-----------------------
• The assessment rate for the total project area and the rate for
• Phase L
• The timetable for the entire project and Phase I.
Some additional specifics about the project that the Council may want to
know before a public meeting is held include the following:
The city subsidy amount for industrial properties (if any) and
where these funds are coming from and how the subsidy is
administered (i.e. prepayment).
The amount of city "holding" costs, where these funds are coming
from, and the likelihood that the city holding costs will affect the
city tax levy.
The amount of property in Green Acres in Phase I, when it is
estimated that the Phase I Green Acre properties will come off the
tax roll, how the Green Acres property in Phase I will affect the
bond structure, and what is the likelihood of the Green Acres
properties in Phase I requiring a city tax levy.
Without a doubt, one of the biggest concerns of city staff with this project
relates to the "holding" costs. For example, we may go the route of one
• assessment rate for all properties. If this rate is $5500 per acre and the
actual cost for Phase I is $7200 per acre and the assessment area in Phase I
is 750 acres, then the city has $1.3 million plus interest in holding costs
($7,200 - $5,500 = $1,700 x 750 acres = $1.3 million). Using a "zoning"
assessment method and not one rate, but having a project cost for Phase I of
$5.5 million and only assessing out $4.2 million of these costs, would also
give the city holding expenses of $1.3 million plus interest. The city knows
that it will not recapture most of these holding expenses until the end of the
last phase of the project when all of the assessments are paid. This could be
15-20 years in the future before all of the holding costs are recovered. The
reason why the city will recover these holding costs at the end of the project
is due to the fact that the actual project cost in the last phases will be less
than the amount that the city assesses out. This assessment rate in the last
phases will be the same (plus inflation) as what was used in the first phase.
So, if the city has $1.3 million plus interest in "holding" costs for Phase I of
the project, the main question is, where does this money come from? The city
cannot get this money from the bond repayment plan as this approach is
already planned to be used to cover the Green Acre properties. It is common
to structure the bond repayment around anticipated assessment collections.
Approximately 42 percent of the Phase I project is in Green Acres. This large
• amount of Green Acres properties, combined with a two year interest free
policy and a possible slight lack of demand for development, makes the rate
East Elk River Trunk Sewer Page 3
October 30, 1995
-----------------------
of these properties coming out of Green Acres and paying off assessments
• uncertain. Nonetheless, the city should be able to make enough assumptions
in putting together the bond structure so that the Green Acres situation
should be able to be handled without a small city wide tax levy. If our
assumptions are overly optimistic or incorrect, a small city wide levy may be
necessary to make the bond payments.
In addition to the city not being able to use the bond structure for the holding
costs, it should also be noted that the city may not be able to use TIF money
from Districts No. 1 and No. 3 for these expenses. This is because TIF 1 and
3 money, which is about $450,000, may be needed if the city is to subsidize
the industrial assessment rate. The St. Cloud appraisal report indicated that
the benefit to industrial properties for trunk sewer and water is about $3,900
per acre. If the city assesses out the project at $5,500 per acre across the
board, then the city will have to subsidize the industrial assessment rate by
$1,600 per acre. Before any adjustment in the zoning districts based on the
Comprehensive Plan update, there is approximately 135 acres of industrial
land in Phase I. This amounts to a city subsidy of approximately $216,000 or
one half of the funds in TIF Districts No. 1 and No. 3. These monies are not
scheduled to be recovered.
The second benefit analysis or appraisal has been received from Patchin and
• Associates. This analysis shows that the industrial properties can absorb
assessments in excess of $5,000 per acre. If this report is the one the city
endorses and uses, we may be able to assess industrial properties at a higher
rate than what was previously assumed based on the St. Cloud Appraisal
report. This would then possibly free up some TIF money for these "holding"
expenses.
So, if the city cannot use the bond structure for the "holding" expenses, and if
TIF funds are only 1/3 of the total holding costs; then where does the balance
of the "holding'' money come from? This is a very big issue that needs to be
addressed before we move too much further along with this project. Staff
does not have any answer to this question, but the solution will be easier to
find if the holding expenses are less and this may be determined through
additional information derived from the second appraisal.
The current Springsted analysis (before the Patchin report) using existing
zoned areas, some Green Acres assumptions, and the St. Cloud Appraisal
rate of assessments ($3,900 for industrial properties, $5,700 for residential
properties, and $10,900 for commercial properties) shows the project cash
flowing with only a very small city tax levy being necessary. It should be
noted that this includes approximately 160 acres of commercial property in
• Phase I and I do not know if we will find it appropriate to assess these
properties at the rate of $10,900 for trunk sewer and water. This decision
East Elk River Trunk Sewer Page 4
October 30, 1995
depends upon a legal opinion on assessment methods and whether or not the
city can or should assess properties for trunk sewer and water at different
rates based on zoning. (Another Springsted analysis based on the Patchin
report and showing $5,200 per acre assessments for all properties in Phase I
will be available on Monday. This analysis is anticipated to also show the
need for some tax levies to meet our bond payments.)
The second appraisal from Patchin and Associates analyzing the benefit of
trunk sewer and water in east Elk River is enclosed for your review. The
commercial and industrial figures from Patchin and Associates are different
from the numbers in the St. Cloud Appraisal. I don't think that we will be
able to get a joint report from both firms, but we should be able to get an
addendum to the report from each firm. Hopefully, the addendum will show
the numbers being closer together, especially in the industrial benefit area.
If this is the case, these numbers will make it easier to have the city
undertake this project with less concern about: meeting bond obligations;
having a large amount of holding expenses; and having city wide tax levies
for this project.
The city has said in recent years that it is not an issue of if the city is going
east with sewer and water, but it is an issue of when. The question can
logically be raised that if we do not go east with sewer and water in 1996-97,
when will this project happen? The answer to that question is that the city
will go east with sewer and water when it is petitioned for by major property
owners (i.e. Schultz, Hohlen, Powell, etc.). This assumes that the city does
not push the utilities out east in order to have industrial land available. This
petition could be for a school, commercial development, one or two "big box"
commercial projects, or something on that order. When this project is
petitioned for, the development "drags" the utilities out to the east, and while
the developer does not pay 100 percent of the cost of the utilities, the
development will pay closer to the actual cost for the project than what is
currently being debated for assessment rates.
Regarding the workshop goals and outline, it should be noted that I do not
believe we will have sufficient time to talk about Item #8 -the City
development policy and ordinance. This item is on the outline based on a
request from the Mayor to have a list of "pros and cons" developed regarding
our current city development policy and ordinance. This request followed the
denial by the City Council of the Denny Chuba request for development
around Waco Avenue. This topic does need to be discussed in the future and
• the City Council will need to make a decision about changing or not changing
East Elk River Trunk Sewer
October 30, 1995
-----------------------
Page 5
• our development policy. This issue was brought up at the 10/26/95 Planning
Commission public hearing on the Comprehensive Plan.
Regarding the workshop goals and outline Item #1 -Wastewater Treatment
Plant, it should be noted that no figures on the financing of the plant are
offered at this time. Staff is still reviewing and evaluating the available
revenues versus the anticipated bond payment plan. The bond payments are
based on the construction costs and, at this time, the construction costs are
still an estimate. The revenues available to pay the bonds are based on the
growth within the system and SAC charges. The rate of growth will
determine when the additional plant capacity is needed. Financially, staff is
much more comfortable delaying the ordering of this plant expansion until
the spring of 1997 and having the additional capacity available in the fall of
1998. However, if the estimate for the cost of the Treatment Plant is high,
and the actual bids come in at $4.5 million, then it appears that we will be all
right in order to meet our bond obligations, but we will not know this until
the project is bid. One of the key questions for us to look at is when are the
pipes going to be in the ground for the east Elk River trunk utility system
and are these pipes going to be in the ground before fall 1998. If this is the
case, these east Elk River hook ups will require additional capacity at that
time. It is believed that if we don't go east before the fall of 1998, that we
have sufficient capacity until that time. The only outstanding concern would
be another plant RBC failure that would necessitate some costly
improvements or the plant to not meet its discharge limits. Financial
information on the plant expansion will be offered on Monday and additional
information will be available on 11/6/95 before any formal action is taken by
the City Council.
•
SPECIAL MEETING OF THE ELK RIVER CITY COUNCIL.
HELD AT THE ELK RIVER CITY HALL
MONDAY, JULY 31, 1995
•
Members Present: Mayor Duitsman, Councilmembers Dietr, Farber and Holmgren
Members Absent: Councilmember Scheel
Staff Present: Pat Klaers, City Administrator; Lori Johnson, Assistant City
Administrator; Peter Beck, City Attorney
_. _ _. .. _ . ~.,... ~ ..._ ~ ,. ,., ,. ~ y~
11. City Council Worksession on East Elk River Pvblic Improvement Project
City Administrator Pat Klaers provided an introduction as to the current status of
the east Elk River public improvement project. This project was last discussed at a
Worksession of the City Council on June 26, 1995. At that 6/26/95 meeting the
Council reaffirmed their desire to have a fall, 1995, public hearing on the
proposed improvements for east Elk River. This public hearing would follow a
benefit study on this project being reviewed and accepted by the Council and
this public hearing would begin the 429 assessment process.
City Engineer Terry Maurer reviewed with the City Council the overall project for
the County Road 12 corridor and the East Highway 10 corridor which,. combined,
make up the east Elk River public improvement project area. Three different
alternatives were presented as the initial (Phase I) construction project area and
assessment area. It was noted that with either of the three alternatives, there are
some oversizing and start up costs that would be required to be financed through
•
Pale 7
a method other than direct assessments to the construction or project area.
These costs are for such items as lift stations and looping the water system. These
costs would be recaptured in future phases of the project when the actual
construction costs are lower than the assessment amount. The City Council
reaffirmed its desire to have one assessment amount for the entire project and
not have one assessment rate for Phase I, another rate for Phase II, another rate
for Phase 111, etc.
Financial Consultant Dave McGillivray from Springsted reviewed the project cost
for all three alternatives on a per acre basis versus an assessment amount of
$5,060 per acre. Dave indicated that there is a potential of a city wide levy
being necessary in order to meet the bond obligations for all three project
alternatives. A tax levy may not be necessary if other funding was identified,
and/or if the project cost came in lower, and/or if the assessment rate was higher.
All three of the alternatives did not cash flow based on the project cost
compared to the assessment amounts and the worse case scenario identified a
10 to 20 percent tax levy increase for the life of the bonds in order to make the
city bond payments. A handout of the financial information, dated July 27 and
~28, 199S, was distributed to the City Council
Moyor Duitsman and City Council indicated their desire to have a public hearing
on this project in the fall in order to receive public input on the desirability of the
• public improvements in the various project areas. The City Council indicated its
support for aitemative number three which had a bond issue size of
approximately $5.6 million.
Elk River City Council Meeting
July 31, 1995
The City Council spent approximately 45 minutes discussing the potential
improvements to the East Highway 10 area and emphasized its desire to have
utilities in this area for future commercial and industrial development.
MEETING OF THE ELK RIVER CITY COUNCIL
HELD AT THE ELK RIVER CITY HALL
MONDAY, SEPTEMBER 25, 1995
Members Present: Mayor Duitsman, Councilmembers Dietz, Scheel, Farber and
Holmgren
Members Absent; None
Staff Present: Pat Klaers, City Administrator; Lori Johnson, Assistant City
Administrator; Steve Rohlf, Building/Zoning Administrator; Steve
Ach, City Planner; Bill Rubin, Economic Development Coordinator;
Kendra. Lindahl, Zoning Assistant; Terry Mauer, City Engineer
4. Worksession to Review Status of Capital Improvements and Miscellaneous City
Protects
• East Hiahwav 10 Presentation on Assessment Benefit Analvsis by Mike Amo of St
Cloud Appraisal, Inc.
Mike Amo, St. Cloud Appraisal, Inc. reviewed an Assessment Benefit Analysis with
the Council. The report outlined -the benefits of trunk sewer and water
installation within District 1, and Phases 1 and 2 of District 2 of the Urban Service
Area Study Map.
The Benefit conclusions are as follows:
• Industrial Land, Benefit Due to Presence of
City Water and Sewer $ .3,920/Acre
• Residential Land, Benefit Due to Nearby
Proximity to City Water and Sewer $ 4,700/Acre
• Residential Development Land, Benefit Due
to Immediate Proximity to Water and Sewer $ 5,707/Acre
• Highway Commercial Land, Benefit Due to
Presence of City Water and Sewer $10,900/Acre
The Mayor requested that the Council have one more worksession on this
project before a public hearing is held.
•
•
CONS~I,TING ENGINE(~S
1326 Energy Park Drive October 12, 1995
File: 230-151-20
St. Paul, MN 55108
612-644-4389
1-800-888.2923 Mr. Pat Klaers
Fax: 612.644-9446 City Administrator
City of Elk River
13065 Orono Parkway
P.O. Box 490
Elk River, MN 55330
RE: WWTF UPGRADE
ELK RIVER, MINNESOTA
Dear Mr. Klaers:
CIVIL ENGINEERING:
ENVIRONMENTAL The plans and specifications for the wastewater treatment facility upgrade have been
MUNICIPAL completed and are ready for the Council's approval. The project will upgrade the existing
PLANNING facility from its currently rated 1.04 million gallons per day (MGD) capacity to 2.20 MGD
•soLlDwasTE capacity for the Year 2012. Current wastewater flow averages about 0.70 MGD.
STRUCTURAL
suevErlNG As you may recall, the design of the 2.20 MGD upgrade was initiated in the spring of 1993.
TRAFFIC Shortly after the preliminary design, the rotating biological contactors (RBC) failed and
TRANSPORTATION prompted us to proceed with the $914,000 interim improvement project. For the interim
improvement, we basically took the trickling filter pump station and one of the two trickling
ELECTRICAuMECHANICAL filters out of the 2.20 MGD upgrade and installed them earlier to replace the failed RBC. The
ENGINEERING:
Flvac interim improvement project was completed in December of 1994, and the trickling filter has
POWER DISTRIBUTION been in operation since.
SCADA
SYSTEM CONTROLS This project is the continuation of the 2.20 MGD wastewater treatment plant upgrade.
Initially, some process equipment will not be installed per Mr. Darrell Mack's request, due
to the expected low flow condition in the first few years. The intent was to allow the City to
defer approximately $300,000 equipment cost for 5 to 10 years, and also to keep that
equipment from sitting idle for an extended period of time. Since we have finished the design
for a complete 2.20 MGD facility, in addition to the plans and specifications for this
construction, we will also send a copy of the plans and specifications for the deferred
equipment to you as a record for future use.
OFFICES IN:
• MINNEAPOLIS
PRIOR LAKE
ST. PAUL
230/151-1107-oct
WASECA
An Equal Opportunity Employer
- Mr. Pat Klaers
• October 12, 1995
Page Two
In the feasibility study report, our estimated construction cost for a complete 2.20 MGD
expansion was $5,930,000, based on 1995 construction cost index (which was 5350). Deduct
the costs for miscellaneous interim improvements and the equipment deferment as follows.
2.20 MGD Expansion $5,930,000
Digester Rehabilitation ( 18,000)
Interim Improvements ( 914,000)
Equipment Deferment ( 300,000)
Building Repainting ( 19,.0001
Project Cost in 1995 $4,679,000
Inflation ,5650/5350) x 1.05
Project Cost in 1996 $4,913,000
Note: Construction cost index was 5480 in July, 1995
and is projected at 5650 for July of 1996.
We also conducted an engineering cost estimate based on the quantity take-off from the actual
design. Our estimate for the construction cost is $4,720,000, including 5% contingency.
The following is a tentative project schedule:
Submit Plans and Specifications to the City 10-25-95
City Council Authorize Advertisement for Bids 10-30-95
Advertisement 11-09-95
Bid Opening 12-12-95
City Council Award Contract 12-18-95
Pre-Construction Meeting/Notice to Proceed 01-15-96
Construction Commence 04-29-96
Substantial Completion 06-27-97
Project Completion 07-31-97
Recently, we received a few phone calls from Contractors expressing their interest in bidding
this project. At this time, many Contractors are willing to bid projects aggressively as they
are planning next year's work loads. We recommend the City take this opportunity to bid the
project by the end of this year.
.7
230/151-1107.oct
Mr. Pat Klaers
. October 12, 1995
Page Three
Thank you very much for your attention on this matter. If you have any questions, please feel
free to call me.
Sincerely,
MSA, CONSULTING ENGINEERS
Bill Chang, P.E.
BCaw
cc: Mr. Darrell Mack, WWTP Superintendent, City of Elk River
•
230/151-110'7.oct
:•
LIMITED APPRAISAL, RESTRICTED REPORT
WATER AND SEWER TRUNK ASSESSMENT
ELK RIVER, MINNESOTA
DATE OF REPORT:
October 25, 1995
PREPARED FOR:
City of Efk River
13065 Orono Parkway
- P.O. Box 490
` - Elk River, MN 55330
PREPARED BY:
Peter ). Patctrin & Associates, Inc.
1.01 West Burnsville Parkway, Suite #200
Burnsville, MN 55337
•
Peter J. Patchin & Associates, Inc.
Peter J.
Patchin
Associates, Inc.
• valuation Consultants (612) 895-1205
101 West Burnsville Parkway, Suite 200, Burnsville, Minnesota 55337 FAX (612) 895-1521
October 25, 1995
City of Elk River
13065 Orono Parkway
P.O. Box 490
Elk River, MN 55330
ATTN: Mr. Patrick D. Klaers
RE: Limited Appraisal, Restricted Report
Water And Sewer Trunk Assessment
Elk River, Minnesota
• Dear Mr. Klaers:
We have completed our analysis regarding the market benefit of water and sewer trunks to
lands located within the study area in Elk River. The study area is located along and near U.S.
Highway #10 in the southeastern portion of Elk River.
The analysis of this report is limited in both the scope of data researched. and the depth of
analysis. An analysis of far greater depth would have to be performed before a full appraisal
can be rendered. As this is a limited appraisal, we have invoked the Departure Provision of
USPAP. This departure is as follows:
• The scope of research and depth of analysis are not
sufficient to be considered a full appraisal.
This limited appraisal. is reported in a restricted format. As such, only brief summaries of the
data, analysis and conclusions will be presented herein. Additional information regarding our
analysis will be retained in our files.
We have not appraised any individual property within the study area. Rather, we have
analyzed various sales of vacant land parcels, which are useful in isolating-the market benefit
and said trunk lines. Our estimates of market benefit pertain to the .average benefit which
may be realized on a per acre basis within the study area.
Based upon. the attached data and analysis, we estimate the market benefit of the water and
sewer trunks, as of October 18, 1995, to be approximately $5,300 to $6,000 per acre.
CJ
This limited value analysis has been made in conformity with accepted professional, ethical
and performance standards of real estate appraisal practice. It cannot be completely
understood without reading the "Contingent and Limiting Conditions" section of this report,
and should be thoroughly read and understood before relying on .any information or analysis
presented herein. If .you have any questions or comments after reading. the appraisal, please
contact the firm.
The undersigned appraisers hereby certify that we have investigated all informatioh believed
to indicate the value, and that to the best of our knowledge and beliefs, the statements
contained in this limited value analysis, and the opinions expressed herein are correct, subject
to the limiting conditions herein set forth.
Certified to this 25th day of
October, 1995 -
PETER J. PATCHIN & ASSOCIATES, INC.
Clay M. Dodd
~ ~ Minnesota Certified General License #20019812
.~
~ ~ }anon L. Messner, MAI
Minnesota Certified General License #4000836
•
Peter J. Patchin & Associates, Inc.
CERTFFICATION
(Real Estate
• I certify that, to the best of my knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The .reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are my personal, un-
biased professional analyses, opinions, and conclusions.
3. I have no present or prospective interest in the property that is the subject
of this report, and I have no personal interest or bias with respect to the
parties involved.
4. My compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the amount of
the value estimate, the attainment of a stipulated result, or the occurrence
of a subsequent event.
5. My analyses, opinions, and conclusions were developed, and this report
has been. prepared, in conformity with the Uniform Standards of Profes-
~sional Appraisal Practice.
6. I have made a personal inspection of the property that is the subject of this
report.
7. The reported analyses, opinions, and conclusions were developed, and this
• report has been prepared, in conformity with the requirements of the Code
of Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute.
8. The use of this report is subject to the requirements of the Appraisal Insti-
tute relating to review by its duly authorized- representatives.
9. No one provided significant professional assistance to the persons signing
this report, except as noted. herein.
10. The appraisal assignment was not based on a requested minimum valua-
tion, aspecific valuation, or the approval of a loan.
11. This appraisal cannot be completely .understood without reading the "Con-
tingent and Limiting Conditions" section of this report, which should be
thoroughly read and understood before relying on any information or
analysis presented herein.
- _ __ _..
/~- Zs"~~3-"
''Clay M.: Dodd Date
Peter J. Patchin & Associates, Inc.
CERTIFICATION
(Real Estate)
• I certify that, to the best of my knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported. analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are my personal, un-
biased professional analyses, opinions, and conclusions.
3. I have no present or prospective interest in the property that is the subject
of this report, and I have na personal interest or bias with respect to the
parties involved.
4. My compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the amount of
the value estimate, the attainment of a stipulated result, or the occurrence
of a subsequent event.
5. My analyses, opinions, and conclusions were developed, and this report
,has been. prepared, in conformity with the Uniform Standards of Profes-
sional Appraisal Practice.
6. I have not made a personal inspection of the property that is the subject of
this report.
7. The reported analyses, opinions, and conclusions were developed, and this
report has been prepared, in conformity with the requirements of the Code
of Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute.
8. The use of this report is subject to the requirements of the Appraisal Insti-
tute relating. to review by its duly authorized representatives.
9. No one provided significant professional assistance to the persons signing
this report, except as noted herein.
10. The appraisal assignment was not based on a requested minimum valua-
tion, aspecific valuation, or the approval of a loan.
11. This appraisal cannot be completely .understood without. readingthe "Con-
tingent and Limiting Conditions" section of this report, which should be
thoroughly read and understood before relying on any information or
analysis presented herein.
12. As of the date of this report,Jason L. Messner has completed the
requirements under the continuing education program of the Appraisal
Institute.
• ~~ ~` .--
Jason L. srzer, Al date
Peter J. Patchin ~ Associates, Inc.
9563
TABLE OF CONTENTS
LIED'
LETTER OF TRANSMtTTAL ........................................................................
CERTI F1CATiON ........................................................................................
TABLE OF CONTENTS ..............................................................................
SUBJECT LOCATION MAPS ......................................................................
DATE OF APPRAISAL ...............................................................................
PURPOSE AND FUNCTION OF APPRAISAL ............................................
PROPERTY RIGHTS APPRAISED ...............................................................
'MARKET VALUE DEFINED ......... ..................... ...................................
SCOPE OF APPRAISAL ..............................................................................
MARKET BENEFIT ANALYSIS .....................:...............................................
.RESIDENTIAL LANDS ............................................................................
INDUSTRIAL LANDS .............................................................................
COMMERCIAL LANDS ..........................................................................
• SUMMATION ............................................................................................
ADDENDA
CONTINGENT AND LIMITING CONDITIONS ...................................
APPRAISING QUALIFICATIONS OF CLAY M. DODD ........................
APPRAISING QUALIFICATIONS OF JASON L. MESSNER ....................
•
AGE NO.
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5-12
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11-12
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9563
• DATE OF APPRAISAL
1
The effective date of this Limited value analysis is October 18, 1995. The date of
inspection of the subject was also October 18, 1995.
The purpose of this appraisal is to estimate the market value of the fee simple interest of
the subject property. The function or use of this analysis is to assist the client in
determining trunk assessments.
The subject property will be appraised by estimating the market value of the fee simple
• estate of the real estate. For use in this appraisal, the market value of the fee simple estate
m the real estate is subject to the following definition obtained on Page 140 of Ltl~
ictiona of Real Estate ~, raisal, Third Edition, Appraisal Institute.
Absolute ownership unencumbered by any other interest or estate, subject only to
the limitations imposed by the governmeraal powers of taxcuion, eminent domain,
police power and escheat.
Peter J. Patchin & Associates, Inc.
9563
• MARKET VALUE DEFINED
2
Market value as utilized in this appraisal report conforms to the following definition
obtained from Pages 222-223 of The ictiona of Real Es~aXe A~ rap isa1: Third Edition.
The most probable price which a praperry should bring in a competirive 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 a,,~`ected by
undue srimulus. 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:
1. Buyer and seller are typically motivated.
2. Both parties are well informed or well advised, and
each acting in what they consider their own best
interest.
3. A reasonable time is allowed for exposure in the
open market.
• 4. Payment is made in terms of cash in United States
dollars or in terms of financial arrangements
comparable thereto; and
S. The price represents a normal consideration for the
_ property sold una,~ected by special or creative financing
or sales concession granted by anyone associated with
the sale. (USPAP, 1992 Edition.)
Unless otherwise noted in the appraisal report, market value shall represent cash
equivalent terms where the seller receives all cash for his interests. The property may be
financed at typical market terms under this definition.
The above definition describes the market value in exchange concept. Exchange value is
defined as, "The value of a commodity in terms of money to persons generally, as
distinguished from use value to a particular person".'
• * The Dictionary of Real Estate A raisal, Third. Edition, at Page 125.
Peter J. Patchin & Associates, Inc.
9563
• ~'OPE OF,~PPRAISAL
3
This document is a Limited appraisal presented in a restricted format. This is a limited
appraisal only and an analysis of greater depth would be required in order to render a full
and final appraisal.
In this report, we have estimated the market benefit of water and sewer trunks to land
areas located within the study area.. This study area is located along and near U.S
Highway#10 in the southeast portion of Elk River. Lands within the study area include
the following zoning types:
• Single Family Residential
• Highway Commercial
• Light Industrial
• Medium Industrial
• Planned Unit Development
• We estimated the market benefit to lands of each property type (residential, highway
commercial and industrial). The market benefit is estimated on a per acre basis.
We have- not appraised any particular property within the study area. No before or after
value estimate has been made of any of the properties within the study area.. Rather, we
have analyzed various sales in order to isolate the market benefit of the water and sewer
trunks in general
These sales will be briefly summarized for each property type, along with a brief
overview of our analysis. When selecting comparable sales, vve have focused our
attention on .recent sales within the City of Elk River. When needed, we have .sought
sates within other municipalities which provide useful case studies in isolating the benefit
of water and sewer trunks. -
•
Peur J. Patchin & Associates, Inc.
9563
• ~('OPE OF APPRAISAL
4
We have made adrive-by inspection of the accessible portions of the study area. We
have not physically inspected the existing parcels which comprise the study area. We
have not performed a highest and best use analysis of any properties within the study
area. We have assumed that the use of the various property types will generally be
consistent with their zoning.
The study area contains several areas of single family residential lands. We have found a
number of sales of larger tracts of residential land which are located in Elk River. These
sites ranged in distance from water and sewer trunks at the time of their sale. These safes
are briefly summarized and adjusted on the following grid.
•
CJ
Peter J. Patchin & Associates, Inc.
• • •
rn
w
Data of Bu ey r '' D{stanca to ':
Comp location Sale tae ler Size {acres)'<Trunks:(milesy Sales pries pried /Aj
1 Part of SW 1/4 of NW 1/4 of Sec 10 / 93 G. Hagen 24.00 Immediate $175,000 $7,292
35, T 33, R26, North of Co. Rd 13 Deschene
Elk River, MN
2 Part of SW 1/4 of SE 1/4 of Sec Y / 93 Phoenix Enterprises 22.70 Immediate $181,260 $7,985
2T, T33, R26, E of Hwy 169 Chewier
Elk River, MN
3 Part of NW 1/4 of SE 1/4 of Sec 5 1 93 MeadowvaleNeight 38.00 Immediate $306,640 $8,069
29, T33, R26, North of RR V. Gamier
Elk River, MN
Adjustments Adjusted
rime > Size Net AdJust Price / Acr
1.10 1.00 1.10 $8,021
1,15 0.98 1.13 $8,999
1.12 1.06
1.19 $9,580
Average '; x8,867
1.32 $2,265
1.04 53,082
1.12 $3,670
1.23 $3,078
Average 33,024
4 104XX 181st Ave 5 / 93 Plaisted 75.85 0.80 $130,000 $1,714 1.12 1.18
Elk River, MN Peterson
5 Tyler Street NW 4 / 94 Eder 18.50 0.60 $55,000 $2,973 1.08 0.96
Elk River, MN Seelen
6 Part ofi NW 1/4 of SW 1/4 of Sec 7 / 94 S & Z Investments 38.20 0.50 $124,765 $3,266 ' 1.06 1.06
31, T33, R26, Elk River, MN Perlich Realty
7 213th Avenue 3 / 94 J. Mastley 60.00 2.50 $150,000 $2,500 1.08 1.14
Eik River, MN Moritz
9563
6
Residential and
The sales have been adjusted for time of sale based upon an upward adjustment of 5%
per annum.. -The comparables ranged from 18.5 acres to 75.85 acres in size. We have
made a size adjustment based upon a 90% learning curve. This size adjustment was
.applied by adjusting each safes as if being compared to a hypothetical 25 acre site.
comparables #2 and #3 were located in immediate proximity to trunk at the time of safe.
The buyers of these sites assumed a .$3,800 per acre trunk assessment at the time of sale.
The sales prices indicated on the summary grid reflects both the purchase price and the
assumed assessments.
Sales #1 through #3 had immediate proximity to water and sewer trunks. The average
adjusted unit price for these three sales is $8,867 per acre.
Sales #4 through #8 were located from .05 to 2.5 miles from water and sewer trunks. The
average unit price of these four sales was $3,164.
Comparing the average of Sales #1 through #3 to the average of Sales #4 through #7
reveals a difference of $5,704 ($8,867 - $3,164).
Based upon our analysis of the preceding data, we conclude that the market benefit to
residential lands is about $5,700.
•
Peter J. Patchin & Associates, Inc.
9563
• MARKET BENEFIT ANALY.$IS
7
Industrial Lands
The study area contains significant areas of industrially zoned land. The majority of these
lands. are zoned I-1 {fight manufacturing). Permitted uses within the I-1 district include
the following:
• Offices.
• Enclosed storage and warehousing.
• Research laboratories.
• Light manufacturing, including compounding, processing and
packaging of products and materials.
• Screened outdoor storage areas.
• Truck terminal.
Heavy manufacturing. uses do not appear to be permitted within the I-1 district.
• In addition, there is a small area of I-2 (medium industrial) zoned lands. in the "Ultimate
Study Area". Permitted uses within this zoned district include the following:
• User.permitted in the I-1 Light Industria( District.
Open or enclosed storage or warehousing.
• Contracting yards.
• Grain and feed elevators and mills.
• Lumber yards {unenclosed).
• Concrete products processing.
• Animal and poultry processing.
• Freight (rail) yards.
• Processing and storage of natural resources.
•
Peter J. Patchin & Associates, Inc.
9563
• MARKET. BENEFIT ANALYSIS
8
j~dustri I Lands
Again, it does not appear that heavy manufacturing uses are permitted in the I-2 zoning
district.
Once again, we have sought sales of industrial properties within the City of Elk River, in
order to isolate the market benefit of water and sewer trunks. We have found three sales
within Elk River which are useful to our analysis. These three sales are summarized and
adjusted on the following grid.
•
•
Peter J. Patchin & Assceiates, Inc.
9563
• MARKETBENEFIT ANALYSIS
Ind~striaf .Lands
•
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9
9563
MA KET BENEFIT A,~y Y I
10
Industrial .Lands
The sales all occurred during a six month time frame. Thus, no time adjustment has .been
made. A size adjustment has been made using a 90% learning curve. The comparables
have all been adjusted to a hypothetical 2.0 acre site.
Sale #1 has close proximity to area trunks, but was not actually served at the time of sale.
The adjusted sales price of this comparable is $0.43 per SF.
Saes #2 and #3 are located in the study area and have adjusted prices of $0.30 to $0.32
per SF, with an average of $0.31 per SF.
The per acre benefit indicated by these sales is calculated as follows:
Sale #)
•
Average of Sales #2 & #3
Indicated Benefit Per SF
$0.43/SF
~0.31fSF
$0.12
So,
43,560 SF x $0.1.2 Per SF
•
$5,277 Per Acre
Our benefit analysis for industrial lands was based upon three sales comparables only.
We have searched our files. for any other case studies which may be useful to our
analysis. We have been unable to find any other data which can be used to isolate the
benefit of water and sewer trunks only.
The above indicates a per acre benefit which is very similar to the benefit concluded to
for residential (ands.
The analysis for residential lands benefited from several useful sales, providing a strong
indication of value. Our industrial analysis correlates well with the residential analysis.
We conclude that the market benefit for the industrial land is about $5,300 per acre.
Peter J. Patchin & Associates, Inc.
9563
• MARKET BENEFIT ANALYSIS
11
Commercial Lands
The study area contains a signi#icant amount of commercial lands. These commercial
lands are generally located along U.S. Highway #10 anal are zoned C-3 (Highway
Commercial).
After an exhaustive search of our files and public records, we have found two sales which
can be analyzed in order to isolate the benefit of water and sewer trunks. We have
sought commercial land sales of larger acreage parcels. These two parcels are
summarized and analyzed on the following grid.
•
•
Peter J. Pauhin & Associates, Inc.
9563
. MARKET BENEFIT ANALYSIS
•
•
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9563
SUMMATION
13
Our preceding analysis indicates that market benefits for the various land types are as
follows:
Residential Lands $5,700
Industrial Lands $5,300
Commercial Lands $6,000
The estimates of market benefit are .very similar and supportive of one another.
Our analysis of residential lands benefited from eight comparable sales. The residential
study has, by far, the strongest evidence and support.
The commercial and industrial analysis suffer from a lack of data. Two sales were paired
in our commercial analysis, and three sales were paired in our. industrial analysis.
However, these pairings yield results which are. very similar to results obtained from the
• residential study. As such, the residential analysis lends strong support to the commercial
and industrial studies.
We conclude that the market benefit of water and sewer trunks, to lands within the study
area, .range from $5,300 to $6,000 per acre.
•
Peter J. Patchin & Associates, Inc.
•
9563
ADDENDA
•_
C,
14
Peur J. Patchin & Associates, Inc.
•
9563
CONTINGENT AND LIMITING CONDITIONS
(Pages 16-17)
LJ
•
15
Peter 7. Patchin & Assceiates, Inc.
(Real. Estate)
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.
2. The furnished legal description is assumed to be correct.
3. The information contained in this report is not guaranteed, but it has been
gathered from reliable sources. The appraiser certifies that, to the best of
hisknowledge and belief, the statements, information and materials
contained in the appraisal are correct.
4. No responsibility is assumed far matters which are legal in nature. It is
assumed (without survey) that the improvements are located within the
legally described property and that the bui{dings comply with all
ordinances except as noted,
5. A!I 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.
• 6. Estimates herein are based on the status of the national business economy,
and the purchasing power of the dollar as of the date of valuation.
7. The plot plan in this report is included to assist the reader in visualizing the
property. We have made no survey of the property and assume no respon-
_ sibility for its accuracy.
8. The market value herein assigned is based on conditions which were appfi-
cable as of the effective date of appraisal, unless otherwise noted.
9. The appraiser herein 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 his assignment without predetermined arrangements and
agreements.
10. Surveys,. plans and sketches may have been provided in this report. They
may not be complete or be drawn exactly to scale.
11. 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.
12. Information in the appraisal relating to comparable market data is more
fully documented in the confidential file in the office of the appraiser.
• 13. All studies and field notes will be secured in our files for future reference.
Peter J. Patchin & Associates, Inc.
CONTINGENT AND LIMITING CONDITIONS
(Continued)
14. It is assumed that all applicable zoning and use regulations and restrictions
have been complied with, unless anon-conformity has been stated, defined
and considered in the appraisal report. It is assumed that the utilization of
the land and 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.
15. The distribution of the total valuation in this report between land and
improvements 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.
16. It is assumed that there is full compliance with aJl applicable .federal, state
and local environmental regulations and laws unless non-compliance is
stated, defined and considered in the appraisa! report.
17. 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.
18. The appraiser was not aware of the presence of asbestos or other toxic
contaminants in the building(s), unless otherwise noted in this report. The
effect upon market value, due to contamination was not considered in this
appraisal, unless otherwise stated.
19. 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.
20. The value stated in this report is fee simple, assuming responsible owner-
ship and management, unless otherwise indicated. This appraisal recog-
nizes that available financing is a major consideration by typical purchasers
of income producing real estate in the market, and the appraisal assumes
availability of financing to responsible and sufficiently substantial pur-
chasers of the property in amounts similar to those indicated in this report.
21. The appraiser has neither present nor contemplated interest in the property
appraised. His employment is not contingent upon the value reported.
22. Unless otherwise stated in this report, the appraisers have not made a
surveyor analysis to determine whether the property is 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.
Peter J. Patchin & Associates, Ittc.
Peter 7. Patchin & Associates, Inc.
First Interstate Bank of Arizona Stearns County
Peter J. Patchin & Associates, Inc.
JASON L. MESSNER, AS APPRAISER
~P'ROFESSIONAL
AFFILIATIONS
BUSINESS
EXPERIENCE
EDUCATIONAL
WORK
SPECIALIZED
REAL ESTATE
TRAINING
•
APPRAISAL
EXPERIENCE
APPRAISAL
CLIENTS
INCLUDE
•
Member, Appraisal Institute (MAq.
Licensed Reai Estate Appraiser -State of Minnesota, Certified General Real Property,
ID #4000836.
Peter j. Patchin & Associates Inc., Associate Appraiser, 1986 to present.
Century 21 Granite City Real Estate, Residential Salesperson, 1985.
Bachelor of Science Degree, St. Cloud State University, majored in Real Estate, graduated Magna-
Cum-Laude, 1986.
Associates Degree in Business Administration, Willmar Community College, 1984.
Basic Valuation Procedures, American Institute of Real Estate Appraisers. Exam successfully
challenged, 1986.
.Real Estate Appraisal Principles, American Institute of Real Estate Appraisers. Exam successfully
challenged, 1986.
Capitalization Theory and Techniques (Part A), American Institute of Real Estate Appraisers,
Minneapolis, MN, 1987.
Standards of Professional Practice, American Institute of Real Estate Appraisers, Minneapolis, MN,
1988; Appraisal Institute, Minneapolis, MN, 1994.
Capitalization Theory and Techniques (Part B), American institute of Real Estate Appraisers,
Minneapolis, MN, 1989.
Case Studies In Real Estate Valuation, American Institute of Real Estate Appraisers, Minneapolis,
MN, 1990.
Report Writing & Valuation Analysis, Appraisal Institute, Minneapolis, MN, 1991.
Preparation of appraisals for condemnation, tax appeal, litigation, financing, debt restructuring,
acquisition/disposal, .and special assessment appeal. Properties appraised include: office buildings,
warehouses, service stations, manufacturing plants, medical and veterinary clinics, shopping centers,
restaurants, apartment buildings, subsidized housing, research and development buildings, grain
elevators, flour mills, development lands, farm lands, air. rights, avigation easements, utility
easements, highway easements, and various contaminated properties.
Participant in the writing of The Effect of Contamination on The Market Value of Prooertv, federal
Highway Admin.; Office of Right-of--Way, Washington, DC, 1993.
Alliant Techsystems, Inc.
B.P. Oil Pipeline Company
Campbell Soup Company
Control Data Corporation.
Detuxe Check Corporation
Equitable Life Assurance Co.
First Bank Systems
Heitman Realty Company
Honeywell, Inc.
IDS Financial Services
Internal Revenue Service
Louisville Regional Airport Authority
Medtronics, Inc.
Mpls. Community Development Agency
Minnesota Department of Transportation
3M Corporation
Northwest Airlines, Inc.
Northwestern Mutual Life Insurance Co.
.Philips Lighting
Resolution Trust Corporation
Soo Line Railroad. Company
Unisys Corporation
University of Minnesota
U.S.A.A. Real Estate Company
U.S. Fish. & Wildlife
Williams Pipeline Company
Peter J. Patclun & Associates, Inc.
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• •
ESTIMATED ASSESSMENT RATE FOR POSSIBLE URBAN SERVICE AREA
CITY OF ELK RIVER
MSA CONSULTING ENGINEERS
-MAY 1995
•
Estimated Estimated Total Construction Net Assessable Estimated
Area Sewer Construction Watermain Construction Cost Acreage Assessment Rate
Cost $ Cos~$~ $ ~$/acre~___
Option 5 -District 1 1,940,000 1,420,000 3,360,000 787.2 4268.29
'Option 5 -District 2-Phase 1 1,712,200 1,388,900 3,101,100 388.1 7990.47
Option 5 -District 2-Phase 2 1,007,600 1,142,300 .2,149,900. 554.8 3875.09
Option 5 -District 2-Phases 1 & 2 2,719,700 2,531,200 5,250,900 914.0 5744.97
Option 5 -District 3 1,569,100 1,268,200 2,837,300 566.0 5012.90
Option 5 -District 182 ~ 4,659,700 3,951,200 8,610,900 / 1,701 5061.66
Option. 5 -District 18283 5,742,300 4,928,500 10,670,800 2267.2 4706.60
• • •
ESTIMATED ASSESSMENT RATE FOR POSSIBLE URBAN SERVICE AREA
CITY OF ELK RIVER
MSA CONSULTING ENGINEERS
OCTOBER 1995
Area Estimated
Sewer Construction
Cost ($) Estimated
Watermain Construction
Cost ($) Total Construction
Cost
($) Net Assessable
Acreage Estimated
Assessment Rate
($/acre)
Option 5 -Alternative 1 2,353,100 1,825,000 4,178,100 332 12584.64
Option 5 -Alternative 2 3,027,400 2,584,300 5,611,700 837 6704.54
Option 5 -Alternative 3 2,856,600 2,397,900 5,254,500 674 7795.99
Option 5 -Alternative 4 2,966,500 2,482,100 5,448,600 751 7255.13
• . •
ACREAGE INFORMATION
CITY OF ELK RIVER
MSA CONSULTING ENGINEERS
OCTOBER 1995
Option Alternatives Gross Area
(acres) Restricted Soil
Acreage Net Assessable
Acreage Net Developable
Acreage Green
Acreage
5 1 420 87 332 249 114
5 2 969 132 837 627 391
5 3 755 81 674 506 252
5 4 856 106 751 563 351
• •
OPTION 5 -ALTERNATIVE 4 ACREAGE INFORMATION
EAST TRUNK HIGHWAY 10 STUDY
CITY OF ELK RIVER
OCTOBER 1995
•
District Zoning
Designation Gross Area
(acres) Restricted Soil
Acreage Net Assessable
Acreage Net Developable
Acreage Green
Acreage
1 R1a 101 25 77 57 99
1 R1c 227 0 227 170 171
1 R1d 84 0 84 63 81
1 R2b 11 0 11 8 0
1 C3 13 0 13 10 0
1 PUD 55 0 55 41 0
1 SWF 5 0 5 4 0
2 C3 212 68 144 108 0
2 11 148 13 135 101 0
Total - 856 106 751 563 351
Note
R1 c :Single Family Residential
R1 d :Single Family Residential
R2b :Two Family Residential
C3 : Highway Commercial
PUD :Planned Unit Development
SWF :Solid Waste Facility
11 : Light Industrial
U ~~a ~ ~ h C1 O k ~--
Mauch 22, 1495.
ATTN: Bob M.i.n.ton, Cha-i,a
Compnehene-i.ve Phan S.teen~.ng Comm.i..t.tee
DeaK Bob:
Th.i.~s .~e.txea cornea ~'o you ~~com a numbers o~( concenned bub,i.ne~sa and
commenc.ia.~ pnopen~y ownena. l~ .ia aen~t .to expneaa ou~c dea.i.ne ~(on
mun.i.e.i.pa~ aewen/wa.te~c ex~'ena,i.on .to .the eaa.t a.i,de o~( E.~h R.i.vea
along H.i,ghway 10.
we be~.ieve .tha.t now .i.a .the beet Z.tme bon ex.tena.i.on 6aa aevena~. neaaona:
.. Comm ene.i.a.~ and .indua.tn.i.a~ bua.ineaa pnopen.~ty ~,a wa.i.t.i.ng ion
mun-i.e-i.pa~ ~sewen/wa.ten. .i.n~.ta~.~a.t-i.on 6e~(o~ce .i~ w,i.~.2 be deve.~oped.
Th.ia deve.e.opmen~t w.i..~.~ eneaze add~..t-i.ona.~ .tax bate ion ours.
commun~..ty as .~angen p.i.eceb o~( commenc.i.a.~ nand wouPd Zhen become
ava~.Qa6.~e.
.. N.i.ghway aceeaa and v.i.a.i.b~..2.i.~ty ~(on. bua.i.neaa deveQopmen.t .i,a n.ead.i..~y
ava.t.Cab~e.
• .. Inc~ceaaed .land va.~uea and deve.~opmen~ op.t.i.ona wou.~d paov.i.de a
booa.t .to eaa.t a.i.de. bua~.neaa economy.
.. Reduced .tna~~~.e eongea.t,i,on on Non.th N.i.ghway 169, as new eommeae.i.a~
deve~.opmen.ta occurs on east H-i,ghway 10.
.. Bua.i.neaa deve.~opmen.t w-i..~~. enhance ovena.2~. appeananee a.nd .i.mage
a~ ours eommun.t~y as v.i.a.t.toaa en.ten E.~k R.i.ven ~(aom the eaa.t.
Th.i.a an. ea o ~ E.~fz R.i.v en has been dnamaZ~.ea~2.~y he.2d baeft and m.i.a a ed
exee.2.2en.t bins-i,ne~~ oppon.tun-i..t.i.e~s because o~( .the .2acfz o~( ava-i..Cab~e
mun-i,e.i,pa~2 ~s ewea/waken..
The ~o.~~ow.i.ng bua.i.neaa/paopen~ty ownen.a ace axaong.2y .i.n ~avon a~(
the ex~ena.i.an o~ mun.i,e-i.pa.2 ~sewen/waken ~o .the eab~ b.i.de. O~hen
bins-i.nea~s/p~.ope~c.ty owne~c4 were con.tac~ed, w.i.~h tome be.i,ng neu~na.~
and an~.y one oppoaed.
B eeaua e o ~ xhe h.i,g h coax o ~( ~h-i,a change, .i..t .i.a noz .~.ike.2y .to p.Ceaa e
every e-i,.t.i.zen a~(gee.ted; haweven, we do be.2.i.eve .that ~h.i.a wou.2d
be d.n the bead .i.n~enea~t ob E.~1z R-i.ve~c ass a eommun.i.~y. We be.~.i.eve
.th~.a change .i.a neeeaaany and .i,nev.i,~ab.~e and wou.~d .2.i.ke .to aee
mun.i.e-i.pa.~ aewe~c /wa.ten ex.ten~s.i.on beg-i.n .i.mmed.i.a~e.2y.
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TABLE 3 ESTIMATED ASSESSMENT RATE FOR POSSIBLE URBAN SERVICE AREA
CITY OF ELK RIVER
MSA CONSULTING ENGINEERS
APRIL 1995
C7
Area Estimated
Sewer Construction Esti
Watermain
- Cost $ Co
East T.H. 10 Primary Study Area 3 834,000
Steering Committee Proposed Area 2 703,000
mated Total Construction Net Assess
Construction Cost Acreage
st f$1 ~~i
3,537,000
2,843,000
7,371,000
5,54ti,000
1,353
850
TABLE 4 DISTRIBUTION OF GREEN ACREAGE
CITY OF ELK RIVER
MSA CONSULTING ENGINEERS
APRIL 1995
Area
Net Assessable Green
Acreage Acreage ,
East T.H. 10 Primary Study Area
Steering Committee Proposed Area
Percent of Net Assessa
Acreage as Green
1,353 ~~ 949
70..13
850 46$ 55.04
Estimated
Assessment Rate
($lacre)
'~ 5,447.89
~ 6,524.71
,~
•
•
Uctober %5, 1995
~GR~EN I..A~ID SE~VIC~S Ctn.
6200 SH~NOLE CREEK PARKWAY, SUITE 415 • BROOKLYN CEN"fER, MN 55430
PH. 612-566-1036 • FAX 6i 2-566-6811
h,.r. Terry Maurer
IviS;~. Consulting Engineers
1.32b Eaacrgy Park Drive
St. Par!l, l 55108 .
RE: Elk River
I~ea.r Terry:
You requested that I advise you on the process and time required to secure easements for a sewEr at~d
water n~an pro}ect in Elk River.
The procedure we follow is based on the Federal Uniform Relocation and Acquisition Act wlairh is
adc-~atecl by Minnesota. Statutes and Minnesota State Aid Procedures (MSA).
The -first :step in the process is of course the survey and preparation of the descriptions. This would lie
yslur resp~~ns-btlfty.
After the descriptions are prepared the takings need to be valued. Depending on the sire and vah~e of tlae
tak:irgs, tl-is could take up to four weeks. The review appraisal would take two weeks.
t~'ltile the valuation is in process a preliminary title search is done. This verifies the owners arad ;any
encaarnbrances. The necessary documents are also prepared. These activities go on simultaneously.
After the valuation process is completed an "offer letter" with Just Compensation vah~e is prepared for
the City's execution. This process takes abou# one week.
At dais point negotiations begin. The offer letter and landowner pamphlets are given to each owner, 'I'lae
arnount o!rtinte allocated to negotiations is dictated by the date constriction needs to begin.
If negotiations are not successful on some parcels, condemnation may be necessary. To secure right of
entry, this process could require 120 to 150 days, using the "quick take process". The right to enter arty
property under condemnation is not granted until ninety days after filing the petition. To prepare the
petition fc>r filing could require thirty to sixty days.
~0 rJ 11'-it~cl 1S tiS W ^zS = 1: i f"IHL SCE-9Z-1~0
Mr. `1 eery Maurer
October l 8, 1995
Con't page 2
• `I'h.e land~awner is allowed a reasonable time after the offer is made to consider the offer before t1rL
petition is~ filed. This amount of time is not listed in the statutes but MSA procedures states thirty d4tys.
I~iegotiati~:~r~s can and usually do continue while this process goes on.
You also requested that I give you some ideas of the cost to do the acquisition. Phis is difficult to do
beca~ise y°ou are dealing with landowners and these negotiations are not concrete.
The cost of the appraisal could be as high as $1,000.00 to $1,500.00 per parcel depending on the size of
tl~e parcel and. they could be as low as $500.00 per parcel. If the takings are small, the Minimum L~arnage
Ac~uiitican {MDA) valuation could be used. This would reduce both the time and cost of valurtion.
We can, and often do, arrange for the appraisals valuations with the client's approval of the appraiser..
ltor us to do the 1ViDA valuation, preliminary title, prepare documents with the City Attorney's approval,
prepare oft'er letter and brochures and negotiate with the landowners is again difficult to estimate. Sos7~e
parcels that are permanent easements or fee takings could range from $540.00 to $1,000.00 or higher if
larc°lowne.r attorneys get involved. Temporary easements could range from $300.00 to $S00.00.
You advi>ed me that there .are approximately thirty-five parcels involved, twenty-five residential and ten
• conataercial. A rough estimate of costs to secure the necessary rights would be between $22,000.00 to
$27,OQO.C}0.
It would take up to one month to contact ali owners and make the oI~'ers. It would take another thirty to
forty-five days for negotiations to take place. Of course negotiations can take place during the 120 day
"quick. tale" period. This time frame can also be shortened by adding additional staff.
I Dope this is the information you wanted. I would be happy to meet with you and representatives of the
City of Flk River to review this process and answer any questions. .
I will a~wa.i.t to hear from you.
Sincerely,
~l d'am` u.
Staxart "I3~ad" Storm, SRIWA
President
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