7.0. EDSR 07-11-1994 III . , 7,0
PANGER / B E N S O N Kenneth J. Panger, I F A S
II John C. Benson, I F A S
APPRAISAL P R O F E S S I O N A L S Alice R. Lenzmeier, Assoc.
• Suite 1 • 2233 Roosevelt Road • St. Cloud, MN 56301 • [612] 259-5544
June 15, 1994
Mr. William Rubin
III Economic Development Coordinator
City of Elk River
13065 Orono Parkway
IIIElk River, Minnesota 55330
Re: A 34 acre parcel of land zoned Light Industrial and
located within the City of Elk River, Sherburne County,
ill
MI Minnesota
Dear Mr. Rubin:
111 At your request we have undertaken an appraisal of the property
referenced above and legally described in this report for the
III purpose of estimating the fee simple market value of the real
property as of May 12, 1994.
The value conclusion was reached using the development cost
III approach to value.
As a result of our investigation it is our opinion that the
market value of the subject 34 acre parcel is:
• $148,104
(ONE HUNDRED FORTY EIGHT THOUSAND ONE HUNDRED FOUR DOLLARS)
This equates to $. 10 per square foot, on average, over the
IIIentire site.
This appraisal is subject to the limiting conditions as
11 presented on page (i) .
The scope of this appraisal includes the valuation of land only
subject to existing easements of record.
1111
Thank you for the opportunity to serve you. For further
information concerning the supporting data and rationale of
II our conclusions, your attention is directed to the following
report.
11 Res'.ectfully -ubmitted,
alii6
1101' d A'
I':. ne Pang IFA, IFAS Alice R. Lenzmeier
inn. Lic. #40 88 Minn. Lic. #4000395
II .
ARL/me
IllCommercial • Industrial • Apartments • Residential • Farm • Consultations
a
1:11111EXECUTIVE SUMMARY
RESULTS OF DEVELOPMENT COST APPROACH: $148, 104
FINAL CONCLUSION OF VALUE: $148, 104
SITE: 34 Acres
IMPROVEMENTS none
111 ZONING: Light Industrial
DATE OF VALUE: May 12, 1994
DATE OF VIEWING: May 12, 1994
HIGHEST AND BEST USE: Business Park
PROPERTY RIGHTS APPRAISED: Fee Simple
PROPERTY LOCATION: Sec 32, Elk River
Township, City of Elk
River, Sherburne County,
EMI
MN
•
a
111I
111
11
1111
•
11
INTRODUCTION TO THE APPRAISAL
• PURPOSE OF THIS APPRAISAL
1.1 The purpose of this appraisal is to estimate the fee simple
market value of a vacant un-platted industrial parcel located
in the City of Elk River, Sherburne County, Minnesota, as of
May 12, 1994 . The purpose of this report is to communicate the
data and rationale on which the estimate is based.
PROPERTY DESCRIPTION
The subject property is an un-platted parcel located along U.S.
11 Highway #10, City of Elk River, Minnesota and further legally
described as:
That part of the NW1/4 of the SW1/4 of Section 32, Township
33N, Range 26W, Sherburne County, Minnesota, lying south of
U.S. Trunk Highway 10, containing 34 acres, more or less.
01 ZONING
The subject parcel is zoned PUD under the zoning code of the
01 City of Elk River now in effect with an L1 (Light Industrial)
use.
• The City of Elk River recently adopted Ordinance 94-2 which is
a plan for Business Parks to be used in Li areas such as the
subject. The Business Park Ordinance allows for many different
businesses which generate a high number of jobs per square foot
11 rather than predominately warehouse type uses. Some permitted
uses include light manufacturing, research and development
labs, governmental and professional offices, financial
institutions, outpatient health care facilities, health clubs,
and restaurants. Many service industries are allowed with a
conditional use permit.
11 The subject site has excellent access from U.S. Highway #10 to
attract the type of businesses that would locate in a Business
Park. It is reasonable to assume that service type businesses
11 will locate along the Highway 10 frontage and we estimate that
the front lots may sell for more than the rear lots because of
the exposure to Highway 10. However, for this appraisal
problem we will estimate an average value per square foot of
the entire parcel.
11 All Business Park uses must conform to certain requirements for
density, setback, and parking per the code. The potential use
of the subject site is quite flexible and there are various
site layouts that would work well for this type of light
11 industrial park development.
•
kJ111 1
11
COMPREHENSIVE LAND USE PLAN
• The 1988 land use plan has designated the subject area as Ll,
41 Light Industrial. The subject property is surrounded by L1
and Public land to the west, Highway Business to the east and
Medium Density Residential to the north and south.
TAXES
111 The subject parcel is approximately 34 acres and is part of a
larger parcel that is 40.36 acres. The estimated market value
of the 40. 36 acre p- :cel as set by the Sherburne County
Assessor is $44, 000 for 1994. The property identification
11 number is 75-005-2200.
The 1994 real estate taxes due are $200. The first half taxes
have been paid.
There is $1,558.70 in deferred assessments due on the parcel.
PROPERTY RIGHTS APPRAISED
The property rights appraised are the Fee Simple Estate. Fee
41 Simple Estate is described by the Dictionary of Real Estate
Appraisal as. . . "the maximum estate or right of ownership of
real property continuing forever. Sometimes referred to as fee
• simple absolute. "
Fee Simple Estate is also subject to any easements of record.
STATEMENT OF OWNERSHIP
The subject property has been owned by the Country Ridge
11 Partnership since August 15, 1993 . It was purchased from
Robert S. Hagseth, Conservator for the Estate of Harry and Sue
Lakoduk for $1, 000, 000 and was part of a 159 acre parcel. The
11 Lakoduk's had owned the property for a period of greater than 5
years.
FUNCTION OF THIS APPRAISAL
11
The value estimate provided by this report will be used by the
City of Elk River Economic Development Authority (EDA) as the
basis for the fair market value of the raw land in negotiations
with the owner for acquisition.
11 SCOPE OF THIS APPRAISAL
The scope of the appraisal encompasses the necessary research
and analysis to prepare a report in accordance with the
intended use, the Standards of Professional Practice of the
Appraisal Institute, the National Association of Independent
• Fee Appraisers and the Uniform Standards of Professional
Appraisal Practice.
2
I
01 This appraisal is of land only. No equipment, personal
• property, or crop value was included in the estimate of value.
1114 The property was inspected on May 12, 1994 . All photos included
in this report were taken on May 12, 1994.
01 All additional information about the subject property was
gathered from the county and city records and a physical
inspection of the property.
11 To determine the zoning of the subject we contacted the City
Elk River City Clerk and Sherburne County who informed us that
the site is zoned PUD. The subject site is 34 acres and is
01 part of a larger parcel. We considered the entire site to be
light industrial use as outlined by the comprehensive plan for
the City of Elk River.
10 Our research also examined the soils data for the subject
parcel from the Sherburne County Soils Survey.
10 Regional, city, county, and neighborhood data were based on
information available in our office files, the City of Elk
River, Sherburne County, and published information from the
11
State of Minnesota. Additional data was provided by our
periodic publications from the Appraisal Institute and National
Association of Independent Fee Appraisers.
ii411Our highest and best use analysis considered the site as vacant
and under the parameters as stated above. No feasibility study
has been done regarding the subject property.
This appraisal assignment was performed utilizing generally
accepted appraisal practices. An investigation was made for
recent sales of similarly located comparable industrial land.
We examined the central Minnesota market, including the
Sherburne County Assessor's records.
11 Other sources utilized in gathering data in this report include
non-confidential information contained in our files, and
discussions with other real estate experts including
appraisers, buyers and sellers, brokers, and developers.
The scope of this appraisal did not include commissioning any
environmental studies to check for hazardous waste or
conditions on the site which could be considered to be
contaminated by hazardous waste.
11 Our office maintains files on real estate in the St. Cloud area
and other cities in Minnesota. We have resources available to
us for gathering information in most markets in Minnesota.
11 Data pertinent to this appraisal problem was gathered and
analyzed in the course of this assignment. Based upon all of
• the data assembled for this appraisal assignment and our
analysis of that data, we arrived at our final conclusion of
value.
3
01
CONSIDERATION OF INCOME AT TIME OF APPRAISAL
The subject property is not producing income nor does it have
the potential to produce income as vacant land as of the date
of this appraisal.
01 HAZARDOUS WASTE, CONTAMINATED SOIL
We observed no obvious hazardous or potentially hazardous
conditions that could lead to contamination of the subject site
or neighboring sites during our inspection.
0 We remind the reader that we are not experts in the field of
hazardous material identification and the reference to
existence or non-existence of hazardous materials does not
11 constitute an expert inspection of the property. To be certain
as to the condition of the property with respect to
environmental hazards we recommend that a Phase I audit of the
01 property be conducted by an expert in the field of hazardous
substance and contamination detection. Our inspection of the
subject site should not be relied upon as to whether or not
environmental hazards actually exist on the property.
FLOOD PLAIN INFORMATION
• The subject is not in a flood hazard zone according to the
National Flood Insurance Map Panel No. 27 0436 0015 D, dated
February 19, 1992, which covers the City of Elk River.
DATE OF VALUE
The date of value is May 12, 1994, being the same date as the
01 inspection of the site with Mr. William Rubin the Executive
Director of the Elk River EDA .
EASEMENTS AND ENCROACHMENTS
The subject parcel is subject to the existing roadway and
utility easements along U.S. Highway #10.
11
We observed no obvious encroachments onto the subject property
by improvements outside the property line.
ELK RIVER CITY DATA
Elk River is the county seat of Sherburne County and is located
in the southeast part of the county at a point where the Elk
River empties into the Mississippi River and is about 30 miles
from Minneapolis/St. Paul. The population is 11, 143 and is up
from 6,765 in 1980. The county shows a similar increase to
41,945 in 1990 from 29,908 in 1980.
• Major employers include United Power Association with 440
employees, Tescom Corporation with 204, Guardian Angels of Elk
4
I
IRiver, Inc. with 200, and Alltool Manufacturing Company with
150 employees.
MAI
PI Rail, truck and bus service is available but there is no
airport. The city has its own utility department providing
water and sewage treatment, a volunteer fire department, and a
I full time police department. Eight public and three parochial
schools handle an enrollment of about 7, 000 students. There is
ample land available for future industrial and commercial
111 development.
It is a statutory city with a mayor-council form of government.
Elk River has four wards with one council representative
41 serving each ward in four year terms. The mayor serves a two
year term.
II The City of Elk River has a stable employment base, and shows
good prospects for continued growth. The present growth is
taking place along the Highway #169 corridor but the city is
41 planning for growth along U.S. Highway #10 near the Sherburne
County Government Center.
NEIGHBORHOOD DESCRIPTION AND LINKAGE
4 The subject site lies a short distance east of the Sherburne
County Government center and immediately west of the Sherburne
County Fairgrounds. There is access from U.S. Highway 10 to
11111 the subject property at the Northeast corner of the site.
11 Orono Road, an improved city boulevard, meets Highway 10 at the
Northeast corner of the site.
The subject property is in the City of Elk River. Perimeter
iill: and interior roads to service the proposed Business Park will
be built when the Business Park is developed.
DESCRIPTION OF SUBJECT SITE
The subject parcel is a nearly square parcel fronting on U.S.
Highway #10. The site has good exposure from U.S. Highway #10
11 from both directions of travel and access is available from
both lanes at the intersection of Orono Road.
The area of the site is approximately 34 acres. There is no
survey of the site available at this time.
11 The site is level and the soil appears to be able to support
most structures with minor site correction. There appear to
be no drainage problems.
11 The soil according to the Sherburne County Soils Map is Salida
complex with a 0 to 6% slope. The soil is sandy over deeply
• leached sand and calcareous gravel. The soil has generally a
Ivery low moisture holding capacity.
5
t ,
The site is located within the city limits of Elk River east of
411 the Sherburne County Government Center and at the present time
is not serviced by city services. However, there is a letter
on file with the City of Elk River from Sherburne County asking
for the extension of services to the Government Center. City
services to the site are imminent. A copy of the letter is in
included in the addendum of this report.
DESCRIPTION OF IMPROVEMENTS
There are no improvements on the site.
ABANDONED OR CAPPED WATER WELLS
To the best of our knowledge there are no water wells on the
subject site either in use or abandoned and we saw no evidence
of a well during our inspection. If such a well exists and it
is unused then it must be capped according to state
regulations.
41/
411
6
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.1111
DEFINITION OF HIGHEST AND BEST USE
I
The Appraisal Institute defines highest and best use as
11 follows:
"The most profitable, likely use to which a property can be
put. The opinion of such use may be based on the highest and
most profitable continuous use to which the property is adapted
and needed, or likely to be in demand in the reasonably near
future. However, elements affecting value that depend on
11 events or combination of occurrences that, although in the
realm of possibility, are not fairly shown to be reasonably
probable, should be excluded from consideration. Also, if the
intended use is dependent on an uncertain act of another
person, the intention cannot be considered. "
"That use of the land that may reasonably be expected to
produce the greatest net return to the land over a given period
of time. That legal use that will yield to the land the
highest present value, sometimes called "optimum use. "
• In estimating the highest and best use, there are
essentially four stages of analysis:
1. Possible use. What uses of the site in question are
physically possible?
2. Permissible use (legal) . what uses are permitted by
zoning and deed restrictions on the site in 'question?
3 . Feasible use. Which possible and permissible uses
will produce a net return to the owner of the site?
4. Highest and best use. Among the feasible uses, which
use will produce the highest net return or the highest present
worth?
7
I
HIGHEST AND BEST USE ANALYSIS
POSSIBLE USE
The subject parcel is a nearly square shaped parcel containing
1,481, 040 square feet or 34 acres plus or minus. The site has
good access, no topographical problems, good drainage, and is
large enough to physically accommodate most of the allowable
uses under the current PUD zoning. The City of Elk River
Development Authority intends to develop the subject site into
a Business Park District. The subject parcel is large enough
to develop into a number of platted sites of various sizes. We
conclude that the site meets the "possible" use test.
11
PERMISSIBLE USE
There are no public restrictions which would impede the use of
the subject land for Business Park use under the Elk River
comprehensive land use plan. The site is currently designated
11 as Light Industrial and Ordinance 94-2 sets forth the
documentation to set up a Business Park District on this site.
No easements exist which adversely affect the parcel.
11
Therefore we conclude that the test of "permissible" use is
met.
• FEASIBLE USE
11
Feasibility pertains to the economic productivity of the land.
Which use would produce the highest return? The subject site
is well situated relative to the traffic flow and surrounding
land use. Any use of the site which can take advantage of the
traffic and the convenient location would probably be the most
financially feasible use. The Business Park Ordinance is quite
flexible about the type of uses allowed on the site. We have
11 no doubt that Business Park use would return the highest income
to the land.
The Business Park Ordinance was passed to establish and provide
11 space for industry that can be attracted to the area. These
types of light industrial parks are called "Business Parks"
because not all of the uses allowed are of a light industrial
11 nature. Industries that generate a high number of jobs per
square foot rather then warehouse type uses are encouraged in
Business Parks. Light manufacturing, governmental, business,
11 professional offices, telecommunication, financial or
outpatient health care facilities are some of the possible uses
as established by the recent ordinance. Certain service
industries such as hotels or motels, day care facilities,
trade schools, limited retail, or motor vehicle specialty
• service stations are allowed with a conditional use permit.
8
HIGHEST AND BEST USE CONCLUSION
• The most probable use is Business Park because of present
zoning and the location. The U.S. Highway #10 exposure is an
added benefit in attracting businesses and industries to the
site.
It is our opinion that the highest and best use of the subject
site would be Business Park use.
•
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LAND USE PLAN OF SUBJECT NEIGHBORHOOD
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6
EXAMPLE OF PROPOSED BUSINESS PARK AS
FURNISHED BY CITY OF ELK RIVER
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16
I
VACANT LAND SALES IN SUPPORT OF DEVELOPMENT COST APPROACH
• Sale No. 1 Buyer:
Date: Novco, Inc.
November 1993
Legal: Rail 10, Lot 4, Block 1
Pin: 75-457-0140
Price: $26,500
:-- Size: 1.88 acres, 81,723 square feet
Price/SF: $. 32
Comments: Located in smaller industrial park
platted in 1987. Private well and
septic.
Sale No. 2 Buyer: Larry & Florence Hickman
Date: April 1993
Legal: Rail 10, Lot 3 , Block 2
Pin: 75-457-0230
Price: $32, 000
Size: 1.56 acres, 67,758 square feet
Price/SF: $.47.
Comments: Located in smaller industrial park
platted in 1987 . Private well and
septic.
Sale No. 3 Buyer: Metropolitan Gravel Co. , Inc.
Date: March 1993
1 Legal: Armon Industrial Park, Lot 3 , Block 2
and Lot 4, Block 2
:iiiiiii Pin: 75-501-0240
Price: $40, 000
Size: 1.49 acres, 65,000 square feet
Price/SF: $.62
Comments: Located in 19 lot industrial park
platted in 1979. Private well and
septic. 17 lots are available in this
industrial park.
Sale No. 4 Buyers R & N Corporation
III Date: October 1993
Legal: The Crossroads, Lots 4, 5, 6, 7, 8,
Block 1 and Lot 1, Block 2
III Pin: 75-521-0140, 0150, 0160, 0170, 0180,
0210
Price: $215, 000
Size: 5.32 acres, 231,608 square feet
III Price/SF: $.95
Comments: This property is located in a smaller
commercial park and has private well
Iii and septic. The Crossroads is located
on Highway 10 just south of the
intersection with Highway 101. The .
location is superior to the subject.
illThis property is to be developed with
a car dealership.
•
23
I
Sale No. 5 Buyer: Second Generation Properties
Date: September 1992
Legal: The Crossroads, Lot 2, Block 2
M Pin: 75-521-0220
Price: $70,000
Size: 1.17 acres, 51, 178 square feet
Price/SF: $1.37
Comments: This property is located in the same.
commercial park as Sale No. 4 . The
commercial park is completely sold out
with these two sales. This site is
developed with a NAPA Auto Parts
store.
Sale No. 6 Buyer: Theofil and Deanne Eggert
I Date: October 1993
Legal: Meadowvale Commercial Park,
Lot 1, Block 1
Pin: 75-552-0105
I
Price: $28, 000
Size: 1.415 acres, 61, 637 square feet
Price/SF: $.45
Comments: Located in a 3 lot commercial park
with all city services. Park was not
platted until after services were to
, the site in 1993.
Sale No. 7 Buyer: Richard and Dawn Schulz
• Date: October 1993
Legal: Meadowvale Commercial Park,
Lot 1, Block 2
Pin: 75-552-0205
Price: $28, 000
Size: 1.411 acres, 61,463 square feet
Price/SF: $.46
Comments: Located in same commercial park as
Sale No. 6.
11111
il
I
ii •
24
ANALYSIS OF COMPARABLE SALES
The seven proceeding sales, some typical industrial and some
commercial, represent a cross section of properties that are
similar to the subject. The subject is to be platted into a
Business Park which operates neither as a typical industrial
park or as highway commercial property. The Business Park
concept is a blend of both and we agree that the highest and
best use is Business Park. Some service or retail type
businesses will take advantage of the highway frontage while
light manufacturing businesses will locate on the rear of the
subject property.
We looked for comparable sales in other small communities but
found no Business Park properties. Sales were either in
industrial parks or in highway commercial areas. For that
reason, it was felt that it was better to use local market
comparables and blend them together as the subject is a hybrid
property and represents both types of properties.
Sales 1, 2, and 3 are representative of typical industrial
park sales. Some have city services and some have private well
and septics. All are located in industrial parks with no major
arterial influence.
Sales 4 and 5 are located in a commercial park with Highway 10
frontage. This property is serviced with private well and
septic service. These commercial sites have a superior
location to the subject but are representative of the subject's
highway frontage.
Sales 6 and 7 are located in a commercial park in an industrial
zoned area near the City of Elk River's Industrial Park. The
lots are located in front of a new school and have city
services. These have no major arterial influence.
We feel that the seven sales included here represent the Elk
River market and help to give us the cross section of, sales
that are necessary to value a Business Park situation.
These sales will now be analyzed for their similarity to the
subject site.
•
(24A)
EXPLANATION AND BASIS FOR ADJUSTMENTS
: ll Time: The adjustment for time is an inflationary adjustment
which compensates for the loss in buying power from the dollar.
We have used a 3% per year adjustment to bring all sales into
equality with the subject relative to the date of appraisal.
No evidence of appreciation, over inflation, could be found
from the market.
Traffic: Sales 4 and 5 are located on U.S. Highway 10 just
south of the Highway 101 intersection. The basis for this
adjustment is the higher traffic count in front of these sales
when compared to the subject. A copy of the Minnesota
Department of Transportation 1990 traffic count map is included
in the addendum of this report. The subject has a daily
traffic count of 15, 000 vehicles per day while sales 4 and 5
have approximately a 20, 000 vehicle count per day.
15, 000 divided by 20, 000 equals .75
The reciprocal, .25 is the indicated downward adjustment needed
to sales 4 and 5 to bring them into equality with the subject.
Location: After making the traffic count adjustment above, the
average adjusted price of sales 4 and 5 can be compared to the
average price of the rest of the sales comparables which are
all situated in areas with no direct visibility or access to
major arterial highways.
.90 (average adjusted price of sales 4 and 5)
.45 (average time adjusted price of sales 1, 2, 3, 6, 7, )
.90/.45 = 2.00, indicating a 100% adjustment to those
industrial sales with no major arterial influence.
No other adjustments were deemed necessary. An adjustment for
city services was explored, however, no adjustment can be
measured from the market. Sales 6 and 7 have full city
services. Sales 2 and 3, while similar in other aspects, have
private well and septic systems. Sales 2 and 3 sold for the
same or higher then those lots with city services.
ill The following grid will demonstrate the adjustments necessary
to bring the comparables into equality with the subject
property.
il
ii
e
ell
° 25
I
liCOMPARABLE VACANT LAND SALES GRID
f ADJMT ITEM SALE 1 SALE 2 SALE #3 SALE #4
• SALE PRICE $.32 $.47 $. 62 $. 95
IIDATE OF SALE 11/93 4/93 3/93 10/93
TIME ADJUST 1. 00% 3 .00% 3 . 00% 1. 00%
IIADJUSTED PRICE $. 32 $.48 $. 64 $.96
TRAFFIC .00% . 00% . 00% -25. 00%
LOCATION 100. 00% 100. 00% 100. 00% . 00%
NET ADJMT 100.00% 100.00% 100.00% -25.00%
CALCULATION $. 32 $.48 $. 64 $.96
MULTIPLIER 2 . 00 2 .00 2 . 00 .75
RESULT $.64 $.96 $1.28 $.72
,ADJMT ITEM SALE #5 SALE #6 SALE #7
ISALE PRICE $1.37 $.45 $.46
• DATE OF SALE 9/92 1/94 10/93
TIME ADJUST 5. 00% 1. 00% 1. 00%
I _ ADJUSTED PRICE $1.44 $.45 $.46
TRAFFIC -25.00% .00% .00%
ILOCATION . 00% 100. 00% 100. 00%
NET ADJMT -25.00% 100.00% 100.00%
I
CALCULATION $1.44 $.45 $. 46
IMULTIPLIER .75 2 . 00 2. 00
RESULT $1.08 $.90 $.92
Based on the results of the above grid and weighted analysis it
is our opinion that lots in the established industrial market
in Elk River have an estimated value of $. 90 per square foot.
This value is the basis used to establish the raw land value in
the following development cost approach.
•
26
I
DEVELOPMENT COST OF BUSINESS PARK
. • Having concluded that the highest and best use of the subject
site is development into platted business park use it follows
that a more detailed study of the problem is warranted.
The method of valuation which will be employed to estimate the
present worth of the subject vacant land area is generally
referred to as a Development Analysis, or sometimes also
referred to as the Development Cost Approach to value.
To apply this method, it is necessary for the appraiser to
estimate:
A: The type of development allowed by zoning and that which
would have the greatest market demand in the local market.
B: The physical layout, size and shape of the lots, and access
which would fit the site. Included in this analysis would be
the number or density of sites obtainable from the subject
parcel while conforming to premise A above.
C: The probable sale prices obtainable for the finished and
platted sites.
D: The amount of time required to market or sell off the sites
in the local market place.
• When these four factors have been estimated, the appraiser can
project annual gross sales income during the development phase,
deduct normal and typical development expenses, and discount
the resulting net sale prices using a present worth factor to
arrive at an estimated market value of the raw land as of the
date of the appraisal.
ANALYSIS OF SUBJECT SITE
Suitability: The subject parcel has a total area of 34 acres
which could be platted into a business park subdivision. No
unusual site corrections would be needed before development can
occur.
Location: The location of the subject site along U.S. Highway
10 in the City of Elk River in a PUD area designated with light
industrial land use makes this a prime development area for a
Business Park. In the future city services will be available to
the site as Sherburne County has requested city services at
the earliest possible convenience from the City of Elk River
for the government center located just north of the subject on
U.S. Highway 10. The written request from Sherburne County is
included in the addendum of this report.
Site Characteristics: The site has enough acreage to
• accommodate 11, 13 , or more lots and be able to meet the
Business Park Ordinance minimum lot size of 1. 5 acres.
27
11
11
Preliminary drawings have been made for 11 and 13 lots and
• are included in the addendum of this report. With the exception
!eof one front site that would be about 1.4 acres, minimum lot
sizes would be about 1.86 acres. If preliminary drawings
cannot be reworked to make the one 1.4 acre site 1.5 acres, it
is possible that a variance may be needed to develop the one
II smallest site. The problem is not considered to be significant
because the site is large enough to accommodate various lot
configurations with varying sizes.
IIProbable Sale Price of Platted Lots: Included earlier in this
Ireport is a list of recent sales of vacant industrial platted
lots in the City of Elk River. Each sale has been analyzed
II relative to the subject site. Based on past selling prices of
industrial lots and the weighted analysis herein it is
reasonable to conclude that an average price for an average
11 size lot of 2 . 14 acres in the proposed subject Business Park
would be $83,897 . This price was arrived at after careful
consideration and analysis of recent industrial sales in the
ii City of Elk River. In the following cash flow chart 3% per year
41
inflation has been added to each years gross sales.
The average lot size of 2 . 14 acres was arrived at by dividing
11 27.82 acres by 13 sites. Information provided by the City of
Elk River estimate roadways to need 6. 18 acres leaving 27.82
acres as salable acreage.
il
7
411 Expenses: There is access to the subject site from Orono
Parkway, however, access roads and interior roads to service
the Business Park will need to be built. The Business Park
will also be fully serviced with city services. The cost of
these improvements have been supplied to us from the City of
Elk River and are included in the addendum of this report.
Additional expenses will include: selling expenses, estimated
to be 5% of gross sales; legal, accounting, and advertising
II expenses estimated to be $1,000 per year; real estate taxes
based on today's taxes and estimated tax from other fully
serviced industrial parks in Elk River; and developer's profit
estimated to be 15%.
Absorption time: To determine five years as the absorption
I time for the projected Business Park we analyzed seven
industrial and commercial parks in Elk River. The parks were
11 platted from 1972 to 1993 ; three have full city services, four
have private well and septic. 43 or 55% of the 78 total lots
have been sold. Of the total inventory of 78 lots, 35 have
city services. Of the 35 lots available for sale, 8 have city
services. We now know that 77% of the lots with city services
have been sold and only 8 with city services are available as
11 of this date.
Further, per a conversation with the developer of Meadowvale, a
small commercial park with city services, we know that after
• services were available the park sold out in less then a year.
28
We also know that there are no industrial lots in developed
40• parks available with U.S. Highway 10 frontage.
41 Given these facts, we conclude that a 5 year absorption period
is reasonable for the subject property.
11 RANGE OF VALUE:
Every effort has been made to refine the data to its most
reliable point. Obviously, there exists a potential for error
due to the projections made based on present market conditions.
If the sell-off period is lengthened there might be a decline
in net present value although this could be offset by higher
11 prices. The selling price of the lots could vary from the
projections.
Selection of the discount rate of return is also a key element
in the discounted cash flow analysis. We have selected 10.5%
to be representative of the market because it includes the
typical 4% over the current acceptable rate for longer term
safe investments and an additional 2% for added risk because of
the nature of this particular project. We believe that the
project warrants an additional risk factor because the Business
Park concept is new to the Elk River market and restrictions
for improvements are considerably tighter then in a traditional
industrial park. A change in the discount rate would cause the
11• value estimate to vary.
We remind the reader that the estimate of value considers the
entire 34 acre parcel sold as raw land to one buyer at one
point in time.
In the following grid we have illustrated the cash flow pattern
and the indicated total net present value of the combined cash
flows.
11
I
•
29
DEVELOPMENT COST APPROACH GRID
• In review, the assumptions made are:
1. 34 acres of raw land
!is 2. The number of platted lots would be 13
3 . 5% selling fee, based on gross sales
!II
4. 15% profit to the developer
5. Improvement costs, $604,700
6. Legal, account and advertising, $1,000 per year
7. Real estate taxes, $200 for years 1 thru 3, $3,729
year 4 and $932 year 5
8. 5 year absorption period, 3 lots each of first 4 years,
1 lot in year 5
9. Average selling price of lots $83,897
10. A 10.5% return rate on invested money
•
30
Iii
Ili
YEAR 1 2 3
III GROSS SALES $251, 691 $259,241 $266,792
(3 lots) (3 lots) (3 lots)
IIEXPENSES
Improvement Costs 604,700 0 0
all Sales, (5%) 12,585 12,962 13, 340
Acct, Legal, Adv 1, 000 1, 000 1, 000
11 Real Estate Tax 200 200 200
II15% Profit 37 ,754 38,886 40, 019
TOTAL EXPENSE $656,239 $53,048 $54,559
11 CASH FLOW ($404,548) $206, 193 $212,233
NPV FACTOR .904977 .818984 .741162
NPV ($366, 107) $168,869 $157,299
• YEAR 4 5
GROSS SALES $274, 343 $93,965
I (3 lots) (1 lot)
EXPENSES
li Improvement Costs 0 0
Sales, (5%) 13 ,717 4, 698
Acct, Legal, Adv 1, 000 1,000
Real Estate Tax 3,729 932
15% Profit 41. 151 14,095
IITOTAL EXPENSE $59,597 $20,725
CASH FLOW $214,746 $73,240
11 NPV FACTOR . 670735 . 607000
NPV $144, 038 $44 ,457
6 NPV of the five cash flows is: $148,556
ell $148,556/1,481,040 Sq. Ft. = $.10 per Sq. Ft.
31
1111
RAW LAND SALES
4 We have investigated the market and found only one recent
industrial raw land sale. It is the subject property and is
included here as information only.
Sale No. 1 Buyer: Country Ridge Partnership
Seller: Robert Hagseth, Conservator for the
Harry and Sue Lakoduk Estate
Date: August 1993
Legal: Part of: NW1/4 of SW1/4, S32, T33, R26
PIN: 75-005-2200
Sale Price: $211,559
Size: 34 Acres
Unit/Price: $.14 per square foot
Time Adj: $.14 per square foot
Comments: This is the subject property. The
sale is part of a larger sale of 3
parcels having a total of 159 acres
for $1, 000,000. The subject parcel
has deferred assessments of $1, 558.70
included in the sales price. The
assessments are not considered
significant because the price per
square foot of the property, due to
rounding, would be the same if the
assessments were not included.
i
111
Ili
ill
32
FINAL SUMMATION AND CONCLUSION OF VALUE
The developmental cost approach indicates a value of $. 10 per
• square foot.
for $.14 per squarLess e fothenot. year ago the subject was purchased
a
In our final estimate we have placed most weight on the
developmental cost approach. The developmental cost approach
is based on reliable market data but we must make some
assumptions concerning sell-off period, discount rate and
expenses. Because we have adequate market data we believe that
our assumptions are realistic.
It is our opinion that the subject site has a value of $. 10 per
square foot as of May 12, 1994 .
s , $.10 x 1,481,040 Square Feet = $148,104
al
Rounded to: $148,104
III (ONE HUNDRED FORTY EIGHT THOUSAND ONE HUNDRED FOUR DOLLARS)
MI
IP
141
10
.
101
ill
ill
Ill
1041,
33
11 St--
61111G• hiW1FFSS June 15, 1994
File: 230-223-10
Mr. Bill Rubin _
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
RE: WESTERN AREA BUSINESS PARK
Cr iii ENveNEEtMtr,
Dear Mr. Rubin:
EPtI:.ct M1Nra
As you requested, this correspondence is a follow-up to our discussions regarding the cost
PA.,'•ot`r"` of utilities and streets in the proposed Western Area Business Park. The area in question is
located immediately west of the County fairgrounds and north of Country Crossings 2nd
P.;"N'N(• Addition. It also includes a small portion of the Gagne property north of Sandpiper Estates.
•It'C,ukA Based on a rough sketch prepared by the City, we have estimated the cost of sanitary sewer,
water, storm drainage, and streets to serve the area. We have divided the estimate into two
: No oti;: pieces, those being the cost to serve Joplin Street and the cost of all areas west of Joplin.
Based on our analysis, we would estimate the cost as follows:
or,
A. Joplin Street
'?ANSP::D :cN
Since Joplin Street is a collector, the cost of street and storm drainage improvements
would be based on a front footage assessment of $27.00 per foot, rather than the
actual cost of construction. The estimated cost for sanitary sewer and water,
including the City's typical 28% overhead, is $54,000.
B. Areas West of Joplin Street
The estimated construction cost, overhead, and total cost for improvements in the
areas west of Joplin Street are as follows:
1326 blew Pork Drive $ 31 100
St Pout,MNssio8 Sanitary Sewer ,
Watermain 67,200
612.644-4389 Storm Sewer 51,150
Fax:612.644-9446 Street -116 SQ0
Total Construction Cost $285,950
iiiOverhead (28%} _ RO n509$10 S�e?ad Ptukway Estimated Total Project Cost $3(56,000
Mir.rtQpots,MN 55441
•
6.546-0432 www
•... ... •a
1
I
Mr. Bill Rubin
June 15, 1994
Page Two
' In addition to these costs, the area trunk sanitary sewer and water charge is currently $3,800
per acre and the storm sewer impact fee is $600 per acre.
111,
I hope this information is helpful in your analysis. If you need additional information or
have questions regarding this, please call.
Sincerely,
MSA, CONSULTING ENGINEERS
edwri;Reozaiile0.0
Terry J. Wirer, P.E.
TJM:tw
223-1506,jun
joo13OJ , X .�� _ 5,10-6
(,�v�. 07)Cl
t
wPs-1 o4 30P(.t �L
:1);'t)(> , 100 0
1
•
PA N G E R / BENSO N Kenneth J. Panger, IF AS
John C. Benson, IF AS
APPRAISAL PROFES SIGNALS Alice R. Lenzmeier, Assoc.
• Suite 1 • 2233 Roosevelt Road • St. Cloud, MN 56301 • (612) 259-5544 • FAX: (612) 259-4426
June 17, 1994
Mr. William Rubin
Economic Development Coordinator
City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
Re: A 34 acre parcel of land zoned Light Industrial and
located within the City of Elk River, Sherburne County,
Minnesota
Dear Mr. Rubin:
This letter is follow up to a consultation held at the City of
Elk River at 7: 00 a.m. on June 17, 1994. Those present at the
meeting included the negotiation team, yourself, Ken Panger and
myself. Time was spent reviewing the market value appraisal
presented on the above mentioned property. In addition, we
discussed issues involving a possible offer by the City of Elk
• River to the present owner.
The City of Elk River, being a municipal body, will not incur
some of the traditional expenses a market investor would if
developing this property. Real estate taxes would be one of
those expenses not incurred because the property would be tax
exempt if owned by the City. Another expense not incurred
would be entrepreneurial profit. Indeed, it may not be prudent
for the City to expect to earn a profit on it's development and
in fact, some cities like Becker and Sauk Rapids subsidize
their industrial development.
Because these expenses would not be incurred by the City the
following page shows a cash flow analysis taking these expense
items out. The first of the following two cash flow analysis
assumes a 10.5% discount rate, the same as the appraisal. The
second attached cash flow analysis takes out the expenses
mentioned above as well as reduces the discount rate to 4.5%.
If we assume that the City is not profit motivated a lower
discount rate can be used taking out the additional risk
factors that a typical investor would have. 4.5% is used
because it is the current safe rate and even though the City
may not need to borrow funds for the project, it can be assumed
that the funds used to finance the project would otherwise be
invested and earning a return of at least the safe rate.
•
Commercial • Industrial • Apartments • Residential • Farm • Consultations
This document is meant as information only to aid the
S negotiating team and is not an attachment to the appraisal
delivered to you.
If I or my office can be of further assistance to you, please
to not hesitate to contact me.
Respectfully submitted,
(21,4L / / /
Alice R. Lenzme ie r
Minn. Lic. #4000395
ARL/me
411
•
2
Analysis One - assumes no real estate tax or profit
and a discount rate of 10.5%
YEAR 1 2 3
III
GROSS SALES $251, 691 $259, 241 $266,792
(3 lots) (3 lots) (3 lots)
EXPENSES
Improvement Costs 604,700 0 0
Sales, (5%) 12, 585 12,962 13 , 340
Acct, Legal, Adv 1, 000 1, 000 1, 000
Real Estate Tax 0 0 0
15% Profit 0 0 0
TOTAL EXPENSE $618,285 $13,962 $14, 340
CASH FLOW ($366,594) $245,279 $252,452
NPV FACTOR .904977 .818984 .741162
NPV ($331,759) $200,880 $187, 108
YEAR 4 5
GROSS SALES $274, 343 $93,965
• EXPENSES (3 lots) (1 lot)
Improvement Costs 0 0
Sales, (5%) 13 ,717 4,698
Acct, Legal, Adv 1, 000 1, 000
Real Estate Tax 0 0
15% Profit 0 0
TOTAL EXPENSE $14,717 $5, 698
CASH FLOW $259, 626 $88, 267
NPV FACTOR . 670735 . 607000
NPV $174, 140 $53,578
NPV of the five cash flows is: $283,947
$283,947/1,481,040 Sq. Ft. = $.19 per Sq. Ft.
•
3
Analysis Two - assumes no real estate tax or profit
and a discount rate of 4.5%
YEAR 1 2 3
•
GROSS SALES $251, 691 $259,241 $266,792
(3 lots) (3 lots) (3 lots)
EXPENSES
Improvement Costs 604, 700 0 0
Sales, (5%) 12,585 12 ,962 13, 340
Acct, Legal, Adv 1, 000 1, 000 1, 000
Real Estate Tax 0 0 0
15% Profit 0 0 0
TOTAL EXPENSE $618,285 $13,962 $14, 340
CASH FLOW ($366,594) $245,279 $252,452
NPV FACTOR .956938 .915730 .741162
NPV ($350,808) $224, 609 $187, 108
YEAR 4 5
• GROSS SALES $274,343 $93,965
(3 lots) (1 lot)
EXPENSES
Improvement Costs 0 0
Sales, (5%) 13,717 4, 698
Acct, Legal, Adv 1,000 1, 000
Real Estate Tax 0 0
15% Profit 0 0
TOTAL EXPENSE $14,717 $5, 698
CASH FLOW $259, 626 $88,267
NPV FACTOR . 838561 .802451
NPV $217,712 $70,830
NPV of the five cash flows is: $383,566
III $383,566/1,481,040 Sq. Ft. = $.25 per Sq. Ft.
4
• CHALLENGES AND OPPORTUNITIES IN THE CENTRAL
BUSINESS DISTRICT
I. THE VALUE OF A VIBRANT CBD
• Traditionally,the CBD is the heart of:
• Financial
• Government
• Entertainment
• Hospitality
• Legal
• Medical
• Services
• Retail
• The CBD is a barometer of a community's health.
II. INVESTMENT/REINVESTMENT IN THE CBD
• • Reinvestment likely requires extraordinary costs not found
elsewhere (demolition, site prep, undersized utilities, etc.)
• Without available incentives, investment will locate elsewhere
III. CHALLENGES/OBSTACLES TO CBD INCENTIVES
• TIF law; i.e. narrow definition of blight, state aid losses, etc.
• Limited or finite pool of funds (public and private).
IV. ROLE OF CITY/HRA/EDA
A. Facilitate
• Act as a conduit for development or redevelopment
0 Create TIF Districts; provide TIF grants for
extraordinary costs, etc.
0 Assemble land in anticipation of redevelopment
0 Willingness to absorb some redevelopment costs to
ensure investment in the CBD occurs.
0
• B. Regulate
• Enforce traditional "police powers", i.e., building code, zoning
ordinance, public safety, etc.
V. CALL TO ACTION-- OPPORTUNITIES FOR PUBLIC SECTOR
PARTICIPATION
• Public sector willingness to assemble land on behalf of developers;
willingness to absorb some redevelopment costs - recognizing the
value of a vibrant CBD
• However, public dollars not repaid or left on the table should
not place a burden on the taxpayers.
• Commitment must be long term.
• Financial pockets should be deep enough to ensure a long term
commitment.
• The City Council must identify revenue sources if it agrees that:
• Reinvestment in the CBD is a high priority;
• Reinvestment in the CBD contributes to the City's overall
vitality;
• Reinvestment is necessary because of the extraordinary costs
• of undertaking redevelopment projects;
• Similar projects will occur elsewhere unless public funds
encourage projects in the CBD.
•
Reprinted from June 1993
Minnesota Multi-Housing
Monthly Mini-Mag
•
THE People acquainted with Villa Court called it the apartment complex from hell. Rats
and roaches outnumbered tenants. Graffiti and urine streaks served as wallpaper.
TRANSFORMATION
Gang members had power lunches in the hallways. Police logs in 1992 document
OFVILLA COURT TO more than 200 calls for social activities ranging from gunshots and stabbings to drug
UPTOWN SQUARE dealing and kidnappings. The list of city code violations swelled to the size of a city
phone book. This isn't public housing in New York City. This is Uptown,south
Minneapolis.
But that was late November,when Villa Court was in receivership,awaiting
demolition or a risk-taking buyer. Today this three-building complex at Colfax Ave.
S.andk9th St.is Uptown Square and verges on luxurious. For James Soderberg,
property manager,this transformation surpasses a simple business deal involving a
olice logs in 1992 coat of paint and the eviction of a few rats and tenants. It's a personal challenge and
document more than an opportunity to help preserve The Wedge neighborhood in Uptown. "It took a lot
of hard,fast work to renovate and lease the buildings in just 90 days. This is much
200 calls for social more than a minor facelift,"says Soderberg,who started renovating in December.
activities ranging from Soderberg owns Soderberg Apartment Specialists(SAS),a property management
gunshots and stabbings company based in St.Louis Park. He seems to have a sixth sense for detecting what's
to drug dealing and salvageable and then turning chaos into harmony--both in his buildings and
kidnappings. deteriorating neighborhoods. "You could call us specialists in working with troubled
projects and renovating them. I'm really concerned about the neighborhoods and like
to help out the community,"says Soderberg,who manages three other buildings in
the Twin Cities. "I also enjoy the challenge of these types of projects. I would hate
to buy a building that was in perfect shape."
5
•
ITEMS OF INTEREST In the Villa Court case,Soderberg's renovation challenge was compounded by critics
continued who said the task was too enormous. Yet Soderberg didn't view the purchase as a
risk. "Many people said the property was worthless and should be demolished. A lot
of real estate brokers and investors said it couldn't be done. But I saw it as a real
challenge and a good business investment. It's also an opportunity to preserve the
buildings and have a positive effect on the neighborhood."
// Minneapolis Housing Inspector Jim Edin provided case management for the building
during the transition from receivershipthroughSAS's
with the pace and progress. I think he's going to have purchase.uccs on his handsand pleased
his is one of the prove a lot of people wrong that that property was going to be in ill straights forever,"
most difficult cases I've says Edin,who at one time inspected the buildings only with a police officer on site.
"The situation,prior to receivership,was out of control and dangerous. There were
been on but probably
many problems and this was a large challenge. This is one of the most difficult cases
one of the most I've been on but probably one of the most rewarding." Edin credits the previous
rewarding,"says property manager for whittling down some of the tenant problems and making
Minneapolis Housing
evictions. But the manager didn't have the funds during the receivership period to
Inspector Jim Edin. make building upgrades,says Edin. "Jim has been the white knight on the project
and has to be recognized for putting the dollars together to make the changes."
Soderberg invested nearly a half million dollars into the project,virtually gutting the
buildings,and making the renovation the largest of its kind in the Twin Cities this
year. In addition to standard upgrades like new paint and carpeting,he added
amenities such as mini-blinds,brass light fixtures,controlled door entry systems,new
windows,large bathroom and dining area mirrors,and appliances. In the spring,the
• complex exterior will be refurbished with new paint,awnings,landscaping and
possibly garages.
The upgrades are numerous but not extraordinary. What's notable is Soderberg's
speed. In just ten weeks he completed the bulk of interior renovations and leased all
81 units. "We started out fast and excelled rapidly,"says Soderberg. "It would have
been simple to come in here and take two years and two million dollars to renovate
{ and lease the complex,but we've made really good use of team-
i work,speed and technology,plus a lot of energy." More than 50
r -� _ " y t units were leased during the slowest six-week renting period of
' ` ' • t the year,late November to January. And Soderberg rejected as
''' ' -ks? 'w�;= many applicants as he accepted.
111•1. - Granted,Uptown Square offers what young,single Uptowners
"•
want:up-scale apartments at below market prices,says Cindy
Frattallone,rental consultant with the Apartment Search. "The
• Uptown area has an extremely low vacancy rate and rents below
L ..- the$400 range are hard to find. This is a wonderful addition to
Uptown and an improvement to the neighborhood,"Frattallone
said. "A lot of time and money went into those buildings.
Soderberg Apartment Specialists really strives to provide a
VIIIA COURT quality product and has just provided 81 units to people who really need it."
According to John Meldahl,owner of Uptown Video at Lake St.and Bryant Ave.,the
renovation is one of the most significant events in the neighborhood in recent years.
"Jim's purchase of the building,the eviction of tenants and the renovation is greatly
appreciated and applauded,"says Meldahl,whose store sits just one block from Uptown
Square. "There was a lot of drug dealing going on in Villa Court. It has also had poor
management and ownership,and it's been an eyesore to the Bryant-Lake area for 15
7
•
ITEMS OF INTEREST years." As president of the Lyn-Lake Improvement Association(a coalition of
continued business owners and neighborhood residents working to enhance the Lyndale-Lake
area),Meldahl believes the renovation and the turnaround in tenants will lend a new
climate to the neighborhood. "Jim's been doing a top-notch job. I perceive it to be a
very stabling influence for the area."
0 organize the Soderberg credits teamwork and technology as key components to the rapid success
at Uptown Square. "There's also lot of excitement about this project,"says construc-
project, Soderberg tion foreman Mark Sponsel. "We listen to the residents to get their ideas,wants and
compiled a data base needs. We have a very positive team of employees and vendors who are really
of 4,000 problems excited about the project." Soderberg hired a number of small contracting and
construction fums for the renovation. That way,he says,the owners are personally
and repairs, sorted involved in the work. They're also flexible. In other words,Soderberg had roofers
them by apartment, and out on Friday nights when temperatures dipped below zero.
posted a 30 point To organize the project,Soderberg created a customized computer program to list and
checklist on each door. track apartment upgrades. He compiled a data base of 4,000 problems and repairs,
sorted them by apartment,and posted a 30-point checklist on each door. Because
units were being leased almost daily,workers often completed apartments just hours
before a move in.
<;,. F Soderberg seems to have a knack for breaking
Twin Cities'apartment building renovation
,-•� and leasing records. He's completed three
• .Y _ significant apartment building renovations
'f ' ' u ,., since 1988,when he formed Soderberg-.4
Apartment is _ t „� Apartment Specialists. In business dealings
•.•
.. .. r �M I.
he's conservative and methodical. His
. -..... property management style is simple:he takes
It
things seriously and runs a tight ship. "We
de.-1- '^ lc, jr spoil our good residents,but we don't take
kindly to troublemakers,"says Soderberg,who
. once detained a vandal at his St.Louis Park
_ ,_ building by arming himself with a baseball bat
` - , _ = and a cellular phone to dial 911.
" Now Soderberg lives every property manager's
dream:the luxury of turning away would-be renters. How he and Resident Manager
David VanWyk managed to convince people to lease apartments during the height of
a messy renovation confounds many. But to hear Soderberg and VanWyk talk with
prospective tenants,it's evident that their enthusiasm and sincere belief in this project
e spoil our sold tenants. "We would talk to people about what we are doing and,well,they just
good residents, but we took a leap of faith,"says Soderberg. Yet one woman's leap of faith was thwarted on
don't take kindly a cold day in January. After traipsing over renovation wreckage to reach the rental
to troublemakers." office,Soderberg tells her he's sorry,but he has no vacancies. She stands and stares
at the artist's drawing of the finished complex. "I know it's hard to imagine right
now,"Soderberg says,"but this is what the place will look like when we've com-
pleted the renovations." She turns to leave. "I learned a long time ago,"she sighs,
"never to judge a book by its cover."
PENNY-WISE BANK Like many parents,Miles Chappel gave his children the spare pennies he had in his
pocket at the end of each work day. When they had enough coins,they wrapped
them, took them to the bank where Chappel had an account,and cashed them in.
i or
9
HopkdnsIE.Minn nonkaISI.Loula Park Sun•Sallor—Wed.,Jan.19.1994-134
Renovation turns Park Winds around
Living conditions improve
v-:
in SLP apartment building t t Ak k , °.�
��f 922—,:ns ,.-
By Maureen McAvoy So when James Soderberg, ;,,,,,,,,,,,,,:,,,,,,,;::,4
-F
it s,
president of Soderbergi a
a x .
ir
Dolores Lawrence knows Apartment Specialists(SAS), � *�
what it means to live a approached the city last ,, � � ,
nightmare.For nearly a summer about purchasing and � �-r
decade,her living conditions at renovating the property,it was •'
the former Park Winds a hard sell.Me er said the city �,
Apartments were abysmal. doubted that anyone could ty ,,,,„:1,..,
������T/�jJI�y r ; �� �ht{n
In a matter-of-fact tone, actually do what SAS was ARERBERG . ; •'' _ 1' ; ' 111 nein
Lawrence tells a tale of endless proposing. , t'{yti E P=- .-
floods,water damage,thefts "We were very much z SP E C�q(4 t. .- .
and pestilence.If not confirmed concerned that two buildingst
• by the city of St.Louis Park, were not reclaimable,"Meyer a,� .-4,4 e y _• '
her story would seem said."Our initial accecsment #s" _ i
F '°X -_-.17,---y-'
contrived. 4 ' ,,
But Lawrence's bad dream ,t . A
ended last July.For her and • + r
hundreds of other renters living
in dangerous and unsafe '
•
apartments throughout the "It's like taking a ' ,.
Twin Cities,new and creative diamond in the rough `
renovation efforts are turning ( , •
troubled buildings'into safe and polishing it'til it
housing. sparkles."
When Lawrence moved into
the Park Winds apartments —Jim Soderberg, ?
some 20 years ago,the units owner Park Trails '"`. .o_ , -:
sparkled and the St.Louis Park - f` s1 y•a
neighborhood was quiet and •y ; sa
safe.
It was nice when I first
p'-
moved in,"says Lawrence. _
"Then things got run down and was that they would be Jim
Sod
erd of soderberg Apartment Specialists,punrhased and renovated the former Park
dangerous.It was frightening." demolished." erberg,presid
During the heavy rains in the But Soderberg came Apartments in St.Louis Park.(Photo by Linda Cullen)
1980s,her ceiling caved in and prepared to battle:
water swelled above her knees. "This was truly a complex in trying something different," "Because we are able to rent good investment and the trend
She claims to have lost real disrepak"said Robert Gill said. out as fast as we do,it puts a in the'90s.Beyond that,he
thousands of dollars in Gill,St Louis Park fire chief. So Soderberg played beat the fire under the workers'feet. thrives on the peculiar -
furniture and clothing due to "Winer Jim Soderberg came in clock.In just 14 weeks the bulk You can feel this mass energy challenges that troubled
water damage. and met with me and the city of the renovation was around the office.The projects offer.
When Lawrence complained "It's like taking.a diamond int
to a former manager,she was had a plan grilled him.But completed,called and the complex, construction and s maintenanceadily
he had a for that and we now Park Trails, crews see changes on a daily the rough and polshing it`til it
•told,"I'm not being facetious, looked at what he had done at boasted a waiting list of .. basis and it'keeps them excited sparkles.Besides,today the
but there are other places to Uptown square." prospective tenants. and motivated." - cost of new construction has
live.Why do you stay here?" Soderberg's ammunition was Soderberg admits that Park 'skyrocketed,and the quality
Lawrence stayed for personal scant:a successful renovation Trails was a complicated doesn't compare to that of -
reasons.After the flood,sheand lease at Uptown Square in renovation.The structural older buildings.Renovation is a
sloshed through water to south Minneapolis last year, integrity of the buildings was good deal for everyone—
gather and move her combined with an unswerving questionable and about 12 property owners,cities,my
belongings.She battled heat, conviction that he could apartment ceilings had caved. "He's proven that older workers,banks,tenants and
humidity and bugs as thick as accomplish this task. Nearly$30,000 in vandalism buildings are not the community."
fog due to broken windows and "We had recently completed occurred just prior to the SAS But in the city of St.Louis
torn - the Uptown project," purchase,mainly due to a functionally or Park,the buck stops with Fire
"I used to tell people,'Now I Soderberg said."All of the broken toilet that left waterfinancial) obsolete." Chief Gill.
know how the soldiers felt in workers knew their jobs and seeping through a building for y "Jim probably thinks I'm the
Burma during the war.'" were excited because the last a week.In edition,two broken —Charlie Meyer fire chief from hell—I was
renovation went so well.Our' underground water mains St.Louis Park city manager over there every day
own customized computer created a fountain effect. throughout the renovation.But
software was already in place,. Windows had rotted out and if I found a problem he'd take
and there was a lot of glass was broken.Squirrels, care of it within 24 hours.I was
confidence that we could do cockroaches and other pests very impressed with what Jim
"Jim probably thinks this." nested in the buildings. did there.He kept all of his
To city officials,Soderberg's One of Soderberg's first tasks Per unit renovation costs at commitments to the city.I look
1 m the fire chief from p was pie-in-the-sky stuff was to replace roofs and Park Trails ran close to$6,000, at this as a success for the city
hell—I was over there He claimed to complete the plywood decking on eight well below the typical$15,000 and tenants,and I hope Jim
bulk of a$700,000 renovation in buildings.He then rebuilt average for similar wins on this one.He has shown
every day throughout
three months.On top of that, parking lots,plastered and renovations.Without skimping there are ways to deal with the
the renovation." he'd rent out the building's 101 Sheetrocked units,installed on quality,Soderberg problems so everyone gains."
—Bob Gill, vacancies. - security systems,painted, minimized costs by hiring a Soderberg says he's pleased
St.Louis Park fire chief "It was one of the largest carpeted,added new • specialized construction and with the outcome,but keeps an
problems in the city,"said Gill. appliances and completed a maintenance crew rather than eye open for the next diamond.
"When Jim said he would 33-point check list on each unit. subcontracting all the work. "We've completed two large
complete the project in 90 days, Meanwhile,Don Rock, "I also negotiated some very renovations in the past year.
I was an extreme skeptic.At resident manager,and Jeff good deals with subcontractors, It's been really exciting,and I
one time I was among those Habisch,asset manager,leased which saved us a considerable feel fairly certain that we have
who thought(the best action) 101 apartments in 10 weeks. amount of money,"he said. broken two major records in
Yet developing the coalitions was to raze the buildings." Initially,the vacancy rate was According to Meyer, terms of the fastest renovation
and creative solutions to Gill was well-acquainted with about 60 percent and soared to Soderberg did more than and lease up of apartment
remedy troubled buildings like the complexities of the project 80 percent after tenants left or renovate a troubled building. buildings in Twin Cities'
Park Winds is sometimes more because all multi-housing code were evicted.Rock and "He did something important history.I'd do it again in a,
tedious than bulldozing. - compliance issues and Habisch warned prospective for the city,"Meyer said."The heartbeat if another
According to St Louis Park inspections are administered tenants on the telephone that way that Soderberg did it was opportunity came along."
City ManagerCharlie Meyer, through the city's Fire they'd be walking into a war unique.This was a dramatic And at last,Dolores
the city was skeptical about Department.At Park Winds, zone,but not to worry. change in a short period of Lawrence is happy."It's like
efforts to salvage Park Winds, Gill had noted major structural "Tenants could see we were time.The complex was a blight night and day now,"says
a nine-building,120wnit defects,fire and life safety offering a good product and to the community,and he has Lawrence,who no longer has
complex at 361 Street and problems,animal infestation, fixing up the buildings right," turned it into an asset.He's to sleep with a knife under her
Monterey Drive. extensive water damage,caved Soderberg said."We are in this proven that older buildings are pillow.
"The project was a thorn-in ceilings,criminal and drug- for the long haul,not to turn not functionally or financially "Jim was a godsend.I went
our side,"Meyer said.The related activities and minor around and sell it." obsolete.It is also a really good through hell.People always
buildings had badly arson. Soderberg said the Uptown example of what can be done laughed at me for staying here,
deteriorated and the city Despite some reservations, Square project(a$500,000 through private investment if but now it's paying off.'
became involved with the city officials took a leap of faith renovation to 81 units,with a people are willing to do the
owner.Finally,TCF Bank and gave SAS the go-ahead. lease up of 55 units in two lob." Maureen McAvoy is a
assumed ownership and "We looked at our choices and months)was a warm-up for Soderberg agrees that multi- freelance writer who lives fn
N foreclosed on the property. decided to solve the problem by Park Trails. housing renovation is both a Plymouth.