Dinniene Appraisal.pdfAPPRAISAL OF
CIVIC CENTER FIELD PROPERTY
OWNED BY
THE EDMONDS SCHOOL DISTRICT
IN
EDMONDS, WA
FOR
THE CITY OF EDMONDS
BY
JACK DINNIENE, MAI
APPRAISAL, JACK DINNIENE
Letter of Transmittal
June 15, 2014
City of Edmonds
700 Main Street
Edmonds, WA 98020
ATTN: Carrie Hite
Parks, Recreation and Cultural Services Director
RE: Appraisal of the Civic Center Field in Edmonds, WA,
Owned by the Edmonds School District #15
Ms. Hite:
Per our contract dated 4-28-14, attached is my appraisal of the Civic Center Field property
which is owned by the Edmonds School District #15. As part of this appraisal I have
personally inspected the property and have conducted a thorough study of pertinent sales and
listings of comparable properties, met with and interviewed governmental officials and
knowledgeable persons, and studied the infrastructure in this area. I also surveyed properties
with the Public zoning. As a result of this investigation it is my conclusion the value of this
property, as of 7-9-14, the date of my last inspection, is:
$2,675,000
This was a complicated assignment. I recommend, to understand this conclusion, a thorough
reading of this report.
This estimate is subject to the Assumptions and Limiting Conditions included in this report
and to the attached Certification, the included Market Value Definition, and the Uniform
Standards of Professional Appraisal Practice.
Thank you for allowing me to accomplish this most interesting and complicated assignment.
Sincerely,
Jack Dinniene, MAI
WA State Certified General
#1100768
Expires 7/28/2015
CERTIFICATION
I certify that, to the best of my knowledge and belief:
-- The statements of fact contained in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by the reported assumptions
and limiting conditions, and are my personal, unbiased professional analyses, opinions, and
conclusions.
-- I have no present or prospective interest in the property that is the subject of this report, and
no personal interest with respect to the parties involved.
-- I have no bias with respect to the property that is the subject of this report or to the parties
involved with this assignment.
w- My engagement in this assignment was not contingent upon developing or reporting
predetermined results.
I have performed no services as an appraiser, or in any other capacity, regarding the property
that is the subject of this report within the three year period immediately preceding acceptance
of this assignment.
-- My compensation for completing this assignment is not contingent upon the development or
reporting of a predetermined value or direction in value that favor the cause of the client, the
amount of the value opinion, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this appraisal.
-- My analyses, opinions and conclusions were developed, and this report has been prepared in
conformity with the Uniform Standards of Professional Appraisal Practice and the Code of
Professional Ethics and Standards of Professional Practice of the Appraisal Institute.
I have made a personal inspection of the property that is the subject of this report and of the
comparable data in this report.
-- No one provided significant professional assistance to the person signing this report.
The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
As of the date of this report, I have completed the requirements of the continuing education
program of the Appraisal Institute.
This appraisal has been made in conformity with the appropriate state and federal laws and
requirements and complies with the contract between the agency and the appraiser.
Jack Dinniene, MAI
State Certified General
#1100768 Expires 7/28/2015
TABLE, OF CONTENTS
Title Page
Letter of Transmittal
Assumptions and Limiting Conditions
Table of Contents
Appraisal Certification
Location Map
Plot Plan
City Center Plan
Subject Photographs
Aerial Photo
APPRAISAL REPORT
Identification of the Subject Property , , , . „ , , . „ .. , . , .. „. , , .. , .. „ . 1
Location of Subject „„,„,..,.„ ............................... 1
Legal Description..,,.„„,..,...,,,,„,.....,.... ............. 1
Authorization „............... ....... ...,,„.„s.,„, 2
Ownership..... --............ ......„„.,.,,,..,.,,,...w,., 2
Purpose and Definition of Market Value * . . . . . . . . . ......... . . . . . ... . 2
Rights Appraised .,.,,„ .... ................ .,„„..,.,.,..„.... 3
Scope of the Appraisal .... , ..... , 3
Summary of the Appraisal Problem ..... , . , .... „ .... „ „ „ „ „ 3
Dates of Inspection „.,...,..,,w,„ .....................„.,,,.., 3
Dates Appraisal Accomplished . . . ... . . ....... . . . „ , „ „ ......... , .. 3
Date of the Appraisal .......................... ...... . . ...... . „ . 3
Assumptions and Limiting Conditions ... „ .. , „ 3
Extraordinary Assumptions .. , ....... „ , . , ..... 4
Hypothetical Conditions ,,,,,,,,,,,,,,,„......,„.....,,.,,„„,., 4
Statement of Authorship ......................„,.,...,....,.,,. 4
Competency ............................„. ........ 4
Area Analysis...................„......,....,.,...,..n..... 4
Neighborhood Analysis ........... ........,,,....... ,,„,„„„,, 4-7
IntendedUsers ........................„.,.,...........,.,,.,. 7
Intended Use ....,,,„............... ...,,.....,...,.. 7
Assessments and Restrictions , , , , „ ... „ „ . , , „ , , , „ .......... . . ... 7-8
Hazardous Waste .............„„ ,...„.„.....................„ 8
Use History ........ . ..... „ 8
Sales in the Past 10 Years ..,,.,,,,„ ............................ 8
Zoning................................................... 8-9
Description of Subject Property ........ „ . , , . „ . < ............ ..... 9
Site........ .............. ......„.,.„„,.,„.„...,.-- 9-10
Improvements. ... d ... ............... „ . , . „ , . , . „ , . 10-11
LargerParcel..m..,„,a....................................... 12
Flood Information ................. ............... ........... 12
TABLE OF CONTENTS
(Continued)
Assessed Value and Real Estate Taxes .. .. « ........... , .. 12
Subject Lease With Edmonds Schools . , ..... .... 13-14
Subject Lease to Boys and Girls Club . . . ......... . . ... .... ..... 15
Highest and Best Use Analysis ...... , . , . 15-23
rRQ Esti YAL! A
Market Data Approach ... . ........ . ... . .............. , . , ... , . 24-29
Final Correlation and Conclusion of Market Value .......... . ... . 30-34
CERTIFICATION
ADDENDA
Comparable Sales Maps
Title Report
Qualifications of Appraiser
APPRAISAL REPORT
II)E'1' rIF ICATIO I k" PROPERTY:
The subject of this appraisal is a part of a former Junior*High complex. The school itself is a
performing arts center, but what is left are the recreation fields of that school. It includes two
tennis courts, a field house with volleyball and basketball on the top level, and game rooms and
offices on the first level. This building is leased by the Boys and Girls Club of Snohomish
County. Also on site is a covered grandstand, a running track, grass fields and sports facilities.
Also included are 4 Bocce-Ptanque Ball courts.
This property is part of an old urban plat which had 110' x 30' lots, separated by a 60' wide street
Right of Way and 15' wide alleys. I estimate the net size to be 6.02 acres without the alleys and
streets. It has 575' of frontage on 6" Ave. S. and the same on 7" Ave. S. It is 600± wide.
The buildings are old and, perhaps, turn of the century, but the fields are in fairly good condition.
The city of Edmonds and the Boys and Girls Club use this property as part of their recreation
programs.
LOCATION OF SUBJECT:
The property's address is 310 6t" Ave. N. and 250 6" Ave. N. in the incorporated city of
Edmonds, WA.
LEGAL D SCHH—TION'
Per Chicago Title Insurance report #500011756, dated 3-20-14:
Lots 1-20 Block 99, all of Block 100, and lots 21-40 Block 101, plat of the City of
Edmonds, according to the plat thereof in volume 2 of Plats, Page 39, records of
Snohomish County, WA.
Situate in the County of Snohomish, State of Washington.
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All"I: IQORIZATIOl" :
Carrie Hite of the City of Edmonds authorized this report in her capacity as Parks, Recreation
and Cultural Services Director.
OWNERSHIP:
aRSIIIP:
The Edmonds School District 415, Snohomish County, WA
>UItPII g, Q"I tIE AIYP AISAL:
The purpose is to estimate Market Value of the property. Market Value is defined as follows.
The most probable price which a property should bring in a competitive and open market under
all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified date and the passing of title from seller
to buyer under conditions whereby:
(1) Buyer and seller are typically motivated;
(2) Both parties are well informed or well advised, and acting in what they consider their
own best interests;
(3) A reasonable time is allowed for exposure in the open market;
(4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
(5) The price represents the normal consideration for the property sold unaffected by
special or creative financing or sales concessions granted by anyone associated with the
sale.
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RIGHTS APPRAISED:
Full Fee Simple subject to the lease on the property.
SCOPE OF THE APPRAISAL:
The scope of the appraisal is the extent of the research towards value. This report is in a self
contained format and is not limited. It is intended to comply with the Uniform standards of
Professional Appraisal Practice and the RCO Acquisition manual. It also adheres to the
standards of the Appraisal Institute of which I am a currently certified member.
For this report I searched for sales of similar properties. I concentrated in Snohomish County,
concentrating from Everett to Edmonds. Further, I investigated the local infrastructure and
consulted with knowledgeable professionals and governmental officials.
Due to the unusual nature of this property, I also researched the Public and Open Space zoning
and transfers between governmental agencies. For this I felt the whole state could be used to see
the effects on value of this zoning.
SUMMARY OF THE APPRAISAL PROBLEMS:
The Public zoning and its effect on value is the biggest appraisal problem.
DATE OF INSPECTION: 5-29-14 and 7-9-14
DATES APPRAISAL ACCOMPLISHED:
This appraisal was conducted during the months of May, June and July, 2014.
DATE OF APPRAISAL: 7-9-14
A S[ MP"KIONS AND Llil" ['l"INC. CONDITIONS.
Standard assumptions and limiting conditions are included after the transmittal letter to this
report.
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EXTRAORDINARY ASSUMPTIONS:
An extraordinary assumption is an assumption directly related to a specific assignment which,
if found to be false, could alter the appraiser's opinions or conclusions. None are included.
IIYPO".I EETICAL CONOJJJONS
A hypothetical condition is one that is contrary to that which exists but is supposed for the
purpose of analysis. None are included.
STATEMENT'..OF .AUTHORSHIP:
1 am the sole author of this appraisal.
COMPETENCY:
I have been appraising this type of property since the early 1970's. I have been awarded the MAI
designation, I am state certified General, and I am included on the WSDOT List of Approved
Appraisers. I have accomplished appraisals in and around Edmonds over this time period. See
my Qualifications at the end of this report.
AREA ANALYSIS:
Not included since my client is well versed in this area.
NFIC41BORHOOD A:NALYSIS:
This will be kept brief since my client is quite familiar with the neighborhood.
The subject of this appraisal is located in the incorporated city of Edmonds, WA. Edmonds,
with 39,950 persons, is the third biggest city in Snohomish county. It is at the county's
southwest corner. Snohomish County has 730,500 persons. Snohomish County grew
moderately over the past 10 years, but Edmonds grew slowly. This is because Edmonds is the
oldest city in the county and has limited land into which to grow.
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NE;1GHBOR1110(11) t1NAl.MST : (Continued)
To the south of Snohomish County is King County, the largest county in the state at 1,981,900
persons. The main city of King County is is Seattle with 730,500 persons. Seattle is now the
21" biggest city in the U.S. and is the financial and administrative capital of the Northwest.
Seattle is 17 miles south of Edmonds.
Edmonds is a transportation hub with a busy ferry dock taking people to Kingston and Kitsap
county. It is one of the busiest public ferry ports in the state. Edmonds has 5f miles of public
waterfront. It slopes down to the west with a large portion of it having views of Puget Sound and
the Olympic Mountains.
The downtown area of Edmonds is to the East of the ferry dock and is small and low rise. It has
restaurants, hobby shops, travel agencies and the municipal buildings. The long sloping hillside
of Edmonds is mostly single residential, whereas multi residential and condos prevail in the
lower reaches.
One major change proposed for Edmonds is moving the ferry dock south. This has not yet been
begun or finalized.
A train track area runs along the waterfrontage featuring freight trains and a passenger train
which goes south to California and north to Canada.
Other big cities near to Edmonds include Everett, the County Seat at 164,200 persons, Lynnwood
35,960, Mountlake Terrace 20,160, Mukilteo 20,440, and Woodway 1,300.
The top private employer in both King and Snohomish Counties is the Boeing Company. Boeing
has a manufacturing plant in Everett at Paine Field. They account for much of the county's
growth in recent years, but are not now in a hiring mode. Other large employers, all in King
County, are Amazon, Microsoft, Starbucks, Real Networks, T. Mobile, Expedia and others.
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-k L SIS: (Continued)
I-5, the major north -south arterial in the state is along its east side. Major entrances to downtown
are Olympic view Drive to the north and Edmonds Way to the south. Traffic is moderate except
for hot weekends and holidays when ferry traffic backs up to Edmonds Way. Edmonds is a
suburban location which is a desired place to live.
The housing market has been on a roller coaster since 2007. This was due to the "Great
Recession" where it was said 40% of savings and wealth of the U.S. residents had been lost,
much of that in home value. Much of that has been regained in Edmonds. Dow Jones Case
Shiller reports area home prices climbed in April 2014 at a rate of one of the highest in the
nation, +2.3% over March. Over the past 12 months it increased 11.2% They report the market
nationwide is still 14% below its July, 2007 peak. They note prices are being supported by cash
sales, low inventories and declining foreclosures and REO sales.
Jones Lange Lasalle reports Seattle area apartment rents had the highest increase in the U.S. with
rents up 6.2% over the past year. Dupree and Scott report apartment vacancy at 3.6% and
predicts 2015 will be a record year for apartments. On the plus side, outside of the S.F. Bay
area, Seattle is the nations top area for tech. It is also one of the top 3 U.S. markets for office
absorption. The unemployment rate early 2014 in Washington was 4.7%. Redfin reports Seattle
housing is selling at the fastest rate in the nation, being on the market 36f days.
On the other hand, a U.W. researcher, the Runstead Center for RE Studies, reported sales of
existing homes slowing down.
A major development proposed for Edmonds is right on the county line at the Southwest corner
of the county, Port Wells. This is a 61 acre waterfront proposed development which was
formerly an industrial use and which requires lots of cleanup. The cleanup is projected to start
in 2016. Planned is apartments, condos and commercial uses. It will be high rise.
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N IGHBORIIOOD ANALYSIS: (Continued)
Edmonds is a fairly quiet city, but an old school just a bit north of the subject was recently
converted into a Performing Arts Center. This has injected some night life into the city. This
was the old junior high school which the subject served.
Median home values as of 4-14 were estimated at $396,300, up 11.7% for the year. Median rent
was $1,854/month, up 3.8% for the year.
Edmonds is considered a high income area with average income at $73,072. 71 % of residents
are homeowners.
Generally, the local economy has been stronger than for much of the rest of the nation. National
housing builders came into the area recently and picked up inventories of local builders. This
has generated significant development locally.
Edmonds has not seen much development in recent years. Most has been infills, the
redevelopment of the old Woodway high School, and some large plats north of Edmonds in the
Meadowdale area have been notable exceptions. It is a quiet, desirable location which should
remain healthy.
INTENDED USERS:
My client, the City of Edmonds, is the intended user of this report.
INTENDED USE:
The intended use is to provide guidance to my client towards a possible purchase of the property.
ASSESSMENTS AND RESTRICTIONS:
The before referenced title report shows as a special exception a lease between the owner, the
Edmonds School District and the City of Edmonds, for 15 years beginning 8-1-77. It includes
other property not specifically mentioned in the lease.
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It also mentions an Addendum to that lease changing the term to 40 years beginning 2-1-81.
HAZARDOUS S :
No evidence of hazardous waste was discovered during this appraisal. They city's maintenance
manager reported the site was once used by local mills to dispose of their waste to wood. This
type of waste is not usually considered hazardous. I could not access the state's hazard waste
base for this appraisal, so I assume it has no hazardous waste.
1w.1SE HISTORY:
I do not know when the Junior high was closed, but at one time it was included with the existing
site and improvements. In the recent past the site has been used for recreation purposes.
,ES IN THE PAST" l0 YEARS:
None. Records show the Edmonds School district obtained this property 9-21-35.
ZONING:
The subject is zoned P, Public, by the City of Edmonds. It has had this zone for 15+ years. This
is also the comprehensive plan designation. The stated purpose of this zone is for the siting and
development of regional public facilities to be located on or near the residential areas and to
minimize impacts on nearby properties. It also states it is to regulate lands and to assure a
continuing availability to the public. Stated permitted uses are regional public facilities, local
public facilities, neighborhood and community parks, schools, athletic structures, incidental
commercial uses, service and support facilities, sewage treatment facilities, water storage and
pumping, stadiums and bleachers, playfield lighting, clubhouses and swimming pools. It calls
for a 35% maximum coverage and a 25' height limit.
The city has one other Public like zone and that is OS, or Open Space. This is designated land
which has been donated or acquired for open space and to regulate land which can't be
developed without severe impacts to the area. Parks and playgrounds are allowed but a
conditional use permit is required.
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ZONING: (Continued)
One other zone is important to this appraisal. The RM 1.5 which is a multi -family zoning
allowing a development of 1,500 SF lots, or 29 lots/acre. This zoning exists north and south of
the subject and would be a logical candidate for a rezone of the subject. See Highest and Best
Use section. It allows single residences, multi -family - retirement homes, group and boarding
homes.
Primary uses requiring a conditional use permit are offices, community facilities, schools,
hospitals, churches, fire houses, police stations, parks and tennis clubs, lodges, museums and
libraries and the like. Minimum lot area per unit is 1,500 SF, maximum height is 25', maximum
coverage is 45%
The purpose of the RM 1.5 zone is to regulate areas for a variety of housing types and a range
of densities greater than the single family zone.
DESCRIPTION OF SUBJECT PROPERTY:
Site:
The site is 575' north and south X 600' east and west, or 345,000 SF, or 7.9± acres. This is a
part of the old plat of the City of Edmonds. It includes 80, 30' x 110' lots and 82,100± (1.88+
acres) of public Right of Way (unvacated).
The subject's size is in question. A city planning document has 7.02 acres. The assessor has
6.07 acres, but it is not known if they included the roadways and alleys. My estimate is 7.9 acres
gross including the platted roadways and 6.02 net. I consider my estimates to be correct.
There are also two 15' wide alleys, one at the north end and one at the south end, which appear
to have been usurped by adjacent ownerships. The subject would be able to use these in all
probability.
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Site: (Continued)
The subject is roughly level and slightly below grade of its street frontage on its east side. It is
near grade on its west side. It has 575±' of frontage on 6`h Ave. S., a city minor arterial, 60 wide
with sidewalks, curbs and gutters along the frontage. It also has 575' of frontage on 7th Ave. S.,
a city street similar to 6" Ave. S.
A look at a soils survey shows the subject's land is a combination of Everett Gravelly Sandy
Loam and is in the Alderwood Urban Land complex.
A creek, Shell Creek, passes to the northeast of the subject. It, itself, doesn't directly impact the
subject. For soils condition, I talked with Rich Lindsey, the city's park maintenance person who
reportedly has been working for the city for 42 years. He reports the site was an old dump side
for some mills in the area. They dumped old cedars and the like, and now it has become like
compost. He reports there is 2' of peat across the whole property. He reports the SE corner is
seasonally wet. It tends to pond from November to mid March. He further reports artesian wells
up in the hills which bubble up on occasion. He reports when you get down two feet it is clay.
The building on site is hooked up to a 6" sanitary sewer. The property is connected to public
water. Storm sewer is at the track area.
Inirovennents:
The site is improved with the former recreation areas of Edmonds Junior High school which
ceased to exist long ago. It includes a 2 story, turn of the century wood framed building, 5,156±
SF in area. Its first floor is 2,578 SF in area, and includes an office, game rooms, restrooms and
a change area. The upper level is a volleyball and basketball court. The Boys and Girls club
rents this building from the city. They also use the basketball courts adjacent and the to the north
of this building. The interior is heated by ceiling mounted Reznor units and lighting is
fluorescent, primarily.
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Improvements: (Continued)
Behind (to the east of this building) is a basic wood constructed storage shed, 414 SF in area, and
a newly constructed skate board park. The park is encircled by a 6' cyclone fence.
At the northwest corner, at the 0" Ave. S. street frontage are two fenced tennis courts and an
asphalt paved and fenced basketball court.
On the south side is a grandstand. It is 25' wide by 254' long with a roof which hangs 8' over on
its north side. It is 35f' high and is wood constructed. It appears quite old. The city provided
me a report by an engineer on this building, by MLA Engineering. It was a cursory investigation.
They note evidence of water intrusion through the roof deck causing a loss of structural integrity.
They recommended a portion of the seating be closed to occupancy. This report was dated 5-29-
14. The structure has been closed to entry by the City of Edmonds.
Beneath the grandstand is a storage area. I was unable to gain entry to this area, but the parks
manager reported it is broken into several storage rooms with the area under the bleachers not
use much.
To the north of the grandstand and adjacent is a cinder running track, 15-25' wide, the center of
which is a soccer or sports field. It appears to be dry and in adequate condition.
At the southeast corner is a children's play area with apparatus and includes a slide.
On the north of the site is a grassy playfield with baseball -softball diamond at its southeast
corner.
At its southwest corner are 4 Bocce Ball-Ptanque courts which look fairly new, each 14 x 50'
with 1-1 /2' of pea gravel. Water faucets for drinking are provided.
It is reported the city uses all this property as a part of the recreation program.
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1�a_ge=�'a�reel:
The larger parcel is that portion of an ownership which has unity of use, ownership and
contiguity. Neither the city or school district owns adjacent property. The city has ownership
of parcels all over this downtown area, but none of them are directly tied to the subject parcel.
I conclude the subject is the larger parcel.
Flood Xnformation: None
Assessed -Value and Ileal Instate Taxes:
The subject is assessed as 3 parcels of land. They are as follows:
The subject is tax exempt.
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Land
Impvts•
Total
Lot 004342- 099-001-00
$1,848,000
$104,100
$1,952,100
004342-100-000-00
$3,969,000
$303,100
$3,999,100
004342-101-021-60
$1,848,000
$169,000
$2,017,000
Size Site 004342-099-001-00
1.52 Acres or
66,211 SF
004342-100-000-00
3.03 Acres
131,987 SF
004342-101-021-60
1.52Acres
66,211 SF
6.07 Acres
264,409 SF
The subject is tax exempt.
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Sub"ect I-+eas+e.
The lease is dated 6-1-77 between the Edmonds School District #15 as lessor and the City of
Edmonds as lessee.
The lease states it was executed since the city wanted to get certain grants and it needed
ownership or a lease for this property.
The lease states, situated on the leased land, are buildings commonly known as Edmonds Junior
High School Fieldhouse and Grandstand. The lease includes the land, the athletic facilities
leased buildings and all personal property (leased furnishings). Unfortunately, Exhibit "A"
which lists these items of personal property was not included in the documents provided. I do
not include them in this appraisal.
The lessor declares leased premises are presently required for limited school district purpose and
are, therefore, available for lease to the City of Edmonds. The leased furnishings can be taken
back at any time by the lessor when needed.
The lease premises shall be used for municipal, recreational and educational purposes and
functions of lessee. Lessee intends to use it for a part of their athletic program held on lessors
several properties. Lessee shall allow reasonable use of leased premises or portions thereof by
lessors and civic -cultural community and neighborhood associations in a manner consistent with
their past use of the leased premises and consistent with use by lessee and approved sublessees,
The term is 15 years; rent is $1.00/year plus lessee will pay cost of maintenance and repairs and
pay all utilities. It would expire 8-t-92.
The lease includes a right of first refusal whereas the lessor shall not sell the leased premises to
a third party without giving the lessee the opportunity to purchase on the same terms offered to
the third party. Lessee has 60 days to accept or reject.
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,'nl"pct I(Continued)
If there is a sale to a third party, the lease agreement shall not be modified or abridged except by
written consent of lessee. This is an important clause since the lease goes on at $1.00/year even
if the parcel is sold.
If lessee purchases during the term of this lease, the lease terminates.
Also, the lessor can't lease this property to a third party upon expiration of this lease without
giving the lessee the opportunity to the same terms offered to the third party.
Existing buildings may be altered or removed with the agreement of lessor.
Further, the lessee shall make the leased premises available to community groups during
reasonable hours. If the lessor mows the lawn, lessor is permitted to use the playfield. Lessor
shall present a schedule to lessee. Lessee can charge a reasonable amount for that use.
Also recorded is an addendum to make substantial capital improvement to the leased space. To
receive full benefits for the leased improvements, the term is extended to 40 years beginning 2-1-
81. It would, then, expire 2-1-21.
That lease also includes a first right of refusal to purchase..
The title report shows the lease contains vacated Sprague and Edmonds St. The title company
mentions they have no record of street vacations in county records. Not mentioned are various
alleys in each block.
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Sublease of Subs
The Boys and Girls Club have subleased the fieldhouse and outside basketball courts adjacent.
They call it 310 6`h Ave. N, plus they acquired the right, on a shared basis, to utilize the Civic
Center playfield when scheduled with additional fees charged accordingly when they are not
scheduled for use by the city. The sublessee has priority on the adjacent asphalt play court and
storage building.
Rent by this lease is $ l .00/year. This lease is for youth activities to 12-31-15, together with the
right of 5 successive 5 year extensions.
Addendum #2 Su lease of Sub"ect (Continued)
This sublease is subject to the city's lease with the Edmonds School District.
This sublease was made 10-18-10. Underthe sublease the sublessee shall maintain the premises.
They will also pay all utilities and liability insurance
ST,:i�11C1 + S'F I R.. AS V -CA NT:
Highest and Best Use is defined as follows:
1. The reasonable use of vacant land that supports the highest present value of vacant land or
improved property, as defined, as of the date of the appraisal.
2. The reasonably probable and legal use of land or sites as though vacant, found to be
physically possible, appropriately supported, financially feasible, and that results in the
highest land value.
3. The most profitable use.
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til :4:_l EST° ANI) 1314.ST USE AS ACAI T (Continued)
The subject is well located near to Edmonds downtown and adjacent to its municipal center.
There is considerable low-rise residential development also adjacent and nearby. Edmonds is
a desirable community in which to reside. The subject is also only 5-6 blocks to Puget Sound
and its ferry crossing to the Kitsap Peninsula.
The subject's zoning is for public use. This is a very restrictive zoning. Cities often use this or
a like zone to acknowledge an actual public or open space use or the city's desire to have a
property so used. In the subject's case it is used and improved for public recreation. The zoning
and most nearby zonings call for a maximum height of 25'.
The subject's lease with the school district calls for the leased premises being used for municipal,
recreational and the educational purposes and functions of the lessee. It states the city intends
to use it for part of their recreational program. It is also to be available to civic, cultural,
community and neighborhood associations which are consistent with other lease allowed uses.
Title data and information from the school district and the city suggest no other restrictions on
the subject which would impair its salability.
Many uses are physically possible on the subject. The soils may require an innovative
foundation or some scraping off of wet soils and additional drainage. Most types of buildings
are physically possible.
As to financially feasible, the city is mature and not much vacant land is available for
development. The housing stock (including multi -family) is in good shape with not much
vacancy. Were the subj ect made available for development, there is nothing to suggest it would
not be quickly tied up and developed.
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HIGHESTAND Br4,,S " USE AS VACANT* (Continued)
Commercial uses are generally not allowed by the zoning, and 25' height maximums keep density
down. The subject is also off the pedestrian area of downtown, discouraging retail uses. My
research shows municipalities typically when categorizing a P type property for sale to the
market frequently consider adjacent zoning and use. To the north and south of the subject is
RM1.5 zoning, to the east is RS6 or single residential, 6,000 SF lots. To the west is more P-1
(municipal uses) and some commercial uses to the west. The most profitable use of the subject
would be served by the RM 1.5 zone as it encourages residential uses in a residential area and
allows the greatest density. RS 6000 is a very low density.
A major issue to be dealt with is, is there a reasonable probability of a rezone of the subject to
a RM 1.5 zone? Towards this I interviewed Kernen Lien, a senior planner with the City of
Edmonds. His opinion was a zero percent chance of such a rezone, however he opined if it were
not P zoned, RM 1.5 is most likely of the remaining zonings.
A method to estimate this involves a study of other requests for a rezone in the city and their
results. Basically this is a mature city with little to no vacant land available. Also there haven't
been any recent requests for a zone change in this area or other similar portions of the city.
The only recent evidence is the sale of Woodway Elementary School, 23708 10`h Ave. W. in
Edmonds) which closed in 2006. It was not needed by the school district and was declared
surplus. It was 11.2± acres in size and included the old school buildings. At sale it was zoned
RS -8, or single residential 8000 SF minimum size lots. The comp plan, however, had it as P-1
or park. The city wanted to buy the whole property, but didn't have the funds for that. They
decided to divide the site in half with 5.61 acres each side, one side a park and the other a single
residential subdivision. 27 single residential lots were created, or 4.81± lots/acre. A public park
was also constructed. This is in a desirable neighborhood. The buyers indicated it cost $15,000
in legal fees and $20,000 In engineering costs to get it rezoned to accept lots.
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HIGUEST AND BEST ILSE, AS VACANT: (Continued)
Another example is the old Lynnwood High school just north of the Alderwood Mall in
Lynnwood, WA. The school district declared it surplus to its needs and put it up for sale in the
market. At a public bidding Cyprus Equities of Dallas, Texas was the successful bidder for the
38.97 acres. It was a high school and will be a mixed use project including a large Costco. The
school district removed the building. At sale the property was zoned P-1 in recognition of its
actual use. Subsequent to sale it was rezoned to a commercial -residential zoning. This was a
special zoning designed for only this parcel. The buyers report they did the rezone work and that
it cost $500,000. This is more complicated than the subject and involved some pioneering.
Corbitt Lock, planner for Lynnwood, reports this is still in process and not formally approved.
It is still zoned P. The parcel was tax lot #270415-001-029-00.
Another example is a parcel located on the west side of 47`h PI W, opposite and east of the
YMCA at 1060147"' W. in Mukilteo, WA. It is lots 1-21 in the Harbour Point Business Park.
This 12.18 acre parcel was level and partly wooded and was zoned Planned Industrial when it
came into play. It was owned by DNR to 2006 and then plans were made to transfer it to the City
of Mukilteo. There was a legislative transfer in `05 and subsequently it was rezoned OS or
Open Space. This rezoning was necessary to conform to a use by the Boys and Girls Club of
recreational.
I verified this with Brian Sullivan, then a state senator who handled this transaction; also with
Glen Pickus, Planner with Mukilteo.
The city of Mukilteo intends to lease this property to the Boys and Girls club for $1.00/year like
with the subject. The club plans to build a 25,000 Sf recreational building on this site.
Northwest Valuation Services Page 18
I-II:G[-EST AND BEST USC AS VACANT: (Continued)
Other data which pertains to this analysis includes:
1) I spoke with Brooke, a planner at the City of Snohomish. She researched their P zoning
history. She said her City Council reviewed it a few years ago and felt it had no
dimensional requirements, so the council considered it flawed. They rezoned all P zone
properties to the adjacent underlying zone. Actual parks were given parks designation,
schools went to the underlying zone. The Open Space zone was retained. In Snohomish
the school district leased a pool site for $1.00/year (403 3" St).
2) John Bingham, facilities Planner with Marysville School District, says all school properties
are on conditional use permits. None of his properties are Public zoned. There is no Public
zoning in Mayrsville.
3) Mike McFarland, of Whatcom County Parks, mentioned he had a wooded site owned by the
Maple Falls School District. He wants it for a park, though it is commercially zoned. He
stated he had it appraised at market value and will pay that price for it.
4) Bill Trimm was the Chief Planner at Whatcom County in the 1980's. They have a zone
called ROS or Recreation - Open Space. It was intended for active or passive recreation.
Mr. Trimm stated it was intended if any of the public zoned properties were to become
privately owned, the zoning would revert to the adjacent underlying zone.
5) Kurt Johnson, a Senior Planner for Skagit County, stated his public zone was OSPS 1. All
so zoned were publically owned. Mr. Johnson stated if any became privately owned the
county would readily rezone them to the adjacent underlying zone.
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MG G11I1 AMID BE `1' 11S1G . M i .C�. - (Continued)
In addition, I called the following knowledgeable parties who are in the governmental sales and
purchasing market. None had knowledge of any P zoned properties which sold or were
purchased.
-- Mike Palacios, City of Everett Right of Way Agent
-- Mike McFarland, Whatcom County Parks
-- Lauri, City of Bellevue Planner
Kyle Guzla, Snohomish county RCO Grant Manager
-- Steve Juntila, Property Manager and Chief appraiser, Snohomish County
-- Shawn Keyes, Chief Appraiser, State Fish & Wildlife
-- Paul Ellis, Capital Projects, City of Arlington
-- Sherri Ringstad, Planner, City of Mill Creek
-- Debra Fulton, Mukilteo Schools Capital Facilities
-- Peter Scholes, the Nature Conservancy - Mr. Scholes has been in the business many years,
He has never dealt with a public zoned property.
-- John Bingham, Marysville Schools
-- Don Miller, Chief Appraiser, Washington Dept. of transportation
-- Carl Jacobs, Agent with RCO
-- Tom Kredlo, Appraiser with DNR
-- Chick Booth, Facilities, Everett School District
-- Kurt Engstrom, King County Lands Agent
-- Ken Graham, Chief appraiser at Washington State Parks
-- Dave Koening, Advanced Planning. City of Everett
Northwest Valuation Services Page 20
HIGHEST AND RES I' USE AS -VACANT: (Continued)
The persons contacted are those most likely to be familiar with P zoned properties. The fact that
none of them had any such experience and the fact many cities don't have such a zone suggest
it is a creation by some cities and jurisdictions out of convenience. I could find no P zoned
property for sale or that sold recently.
Certainly the fact the subject is zoned P impacts its value. Data derived from interviews suggests
there is no developed public or private market for Public zoned properties. The only entities
which use them are government agencies. The 20 persons interviewed represent a good cross
section of the governmental market. Many never had any experience with Public zoned
properties.
Can a public zone such as Open space be considered in the concept of Market Value. A
discussion of the concept of Market Value is useful here.
It requires willing, able and knowledgeable buyers and sellers. It results from the collective
value judgement of market participants; an open and competitive market existed for the property
interest appraised. It requires marketing efforts and a reasonable time was allowed for exposure
to the open market. A property should guarantee an owner a return on investment.
Also noted was (Federal Yellow Book):
"Public space in a park like area is not to be considered for highest and best use."
"Highest and best use is driven by market forces, not public interest."
"Highest and best use can't be based on conservation or preservation,"
The definition of Market Value demands an economic use.
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>FiCiI1'Il' A11 11T USIa AS V:IAII'C„ (Continued)
A competitive market exists for the interest being appraised.
A government agency can't deny reasonable use to a private parry (recent Supreme Court cases).
The P zone is a convenient place to put a governmental use until its status changes. Some
jurisdictions don't even have a Public zone. In others, it is known by planning and government
officials a rezone would be triggered by a sale to a private buyer to a zone which is
complimentary to adjacent and nearby uses. Data in this report supports this. Also, there does
not appear to be an open and competitive market for P zoned properties. Of the 17 persons I
contacted for sales of P zoned properties, not a person knew of such a sale.
The City of Edmonds, in their Woodway Elementary transaction, allowed a comprehensive plan
change from Public to RSB.
The Edmonds School district actively looked for buyers for its Lynnwood School site when it
perceived the money tied up in that valuable property, across from the Alderwood Mall, would
be better put to another use_ It was rezoned from P.
The Mukilteo property was zoned Planned Industrial and when the city wanted to use the
property for the Boys and Girls Club, it was rezoned to OS or Open Space. A $1.00 lease per
year was also negotiated on this property. The city of Snohomish also got a lease from the
school district at $1.00/year.
The data presented pretty much clearly shows a P zoning and use is not the highest and best use
of this property.
I conclude Highest and Best Use is a sale to the market with a likely rezone to RM1.5. Market
Value cannot be estimated without a rezone possibility.
A rezone, however likely and reasonable, is not guaranteed since the Edmonds city council wants
to keep the park as a park, and they can keep it until their lease runs out in 1-31-21 by just paying
$1.00/year. I assume the city will act in its best interest and keep the property until the lease
expires.
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Highest and lest a as Im i-oved;
The subject is improved with recreational improvements, most of which are quite old. These
improvements don't represent the highest and best use of the site and due to the lease can't be
further rented to create income. I conclude these improvements do not add measurable value to
the ownership.
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PROPERTY VALUATION
To estimate Market Value there are three. traditional approaches, the Market or Direct
Comparison Approach, the Cost Approach, and the Income Approach. In this report the Income
Approach is not used since income is not the basis this type of property is usually purchased on.
In this case a non market lease rate of $1.00/year was arbitrarily set for the property as
recreational property.
The Market Data Approach is used in this analysis. It starts with the conclusion there is a
reasonable probability of rezone of this property, and on that basis the highest and best use is as
a multi -family development to a RM1.5 density.
The Cost Approach is not used since the improvements do not represent the highest and best use
of the site.
I will start this analysis with the most pertinent comparables in valuing the subject as rezoned
to its highest and best use.
11 AII.I E° r DATA
Sale_#1,:
Location: 9601 Edmonds Way
Date of Sale:
1-31-11 closed on option dated March, 2010
Sale Price:
$950,000
Size of Parcel:
47,916 SF, or 1.10 Acres
Price/SF:
$19.83±/SF
Zoning:
RM 1.5
Tax Lot #:
00-9379-000-010-00
Seller:
Westgate Green Partners LLC
Buyer:
Columbia State Bank
Northwest Valuation Services Page 24
Sale #l.: (Continued)
Verified: Dale Pinney, First Western Properties, 6-25-14
Description and Additional Information:
This is a mostly level and cleared, vacant parcel, slightly irregularly shaped. Its rear 20f' is a
steep slope which could result in increased development costs.
First Western took an option on this property 10 months before and sold the option to the bank.
Sale #2:
Location: 16212 48" Ave. W, Snohomish County, WA
Date of Sale:
Meeting of the minds, 5-13; not yet closed.
Sale Price:
$35,000/potential unit (not yet closed)
Size of Parcel:
39,640 SF = 0.91f Acres
Price/SF:
Buyer plans 10 units on this site, so price paid is
$350,000 - 39,640 SF = $8.83:i:/SF on 10 lots/acre
Zoning:
RM, Snohomish County - Allows up to 24 units/acre
Tax Lot #:
00-5138-000-107-02
Seller:
Don G. Brown
Buyer:
Kendall Homes
Verified:
W/Kevin of Kendall Homes, 6-23-14
Description and Additional Information:
This is an irregularly shaped parcel of land, improved with an old house. This sale is not yet
closed. The buyer reports he bought raw land at $35,000/lot. He is still trying to find out how
much in the way of frontage improvements will be required. The buyer is not pushing the limit
allowed (permit) by the MR zoning, so the price/SF appears low.
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Sale #3k:
Location: 7919 230`h Way S.W., Edmonds
Date of Sale:
5-24-13
Sale Price:
$261,000
Size of Parcel:
20,038 SF = 0.46f Acres
Price/SF:
$13.021/SF
Price/Unit:
Buyer wants 9 units or $29,000/unit
Zoning:
MR, Snohomish County - allows up to 24 units/acre. This is based on
19/acre.
Tax Lot #:
00-5767-000-004-02
Seller:
Michael Construction
Buyer:
Home Dev. Co. Inc.
Verified:
David Nolan of buyers, 6-19-14
Description and Additional Information:
This is a mostly level lot in a mixed neighborhood of residential and commercial. It is improved
with an old house which will be removed. It will cost $16,000 to tear down the house. The
buyer reports he purchased 20' of additional area on the back of his parcel which he didn't need.
Northwest Valuation Services Page 26
Sale #4:
Location:
23220 Edmonds Way, Edmonds
Date of Sale:
1-15-13, tied up 10-12
Sale Price:
$345,000
Size of Parcel:
20,038 SF, or 0.46 Acres
Price/SF:
$17.22zL/SF
Price/Unit:
10 Units, or $34,500/Unit
Zoning:
RM - 1.5
Tax Lot #:
00-5553-001-009-02
Seller:
Esther J. Shirley
Buyer:
Kautz Route LLC
Verified:
Steven Price, buyer
Description and Additional Information:
The subject is an irregularly shaped unit fronting on busy Edmonds Way. It is improved with
an older, single family residence which will be removed. The buyer confides the shape of the
lot and the fire department's hammerhead road requirement cost him 1 lot at least. He plans 10
lots. He was allowed 21 lots/acre where RM 1.5 could yield 29/acre.
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Sale #5:
Location:
7717 Mukilteo Speedway, Mukilteo, WA
Date of Sale:
8-16-13
Sale Price:
$1,112,500
Size of Parcel:
4.83 Acres, or 210,395 SF
Price/SF:
$5.29-1/SF
Price/Unit:
14 Lots - $79,464/Lot
Zoning:
RD 9.6, Mukilteo
Tax Lot #:
00-6116-008-078-00
Seller:
Lou Ann Hussman
Buyer:
Select Homes
Verified:
Randy Clark of buyer, 6-24-14
Description and Additional Information:
This is an up sloping site, improved with an old house and barn. The site fronts on the busy
Mukilteo Speedway and is subject to ferry traffic. The improvements will need to be removed.
The site has good views of Puget Sound and the Olympic Mountains. This will be a single
family residential subdivision. The project will be called Huntings Hilltop. The site had quite
a bit of wetlands.
...............................................
Northwest Valuation Services Page 28
Sale #6:
Location:
2243184 th Ave W, Edmonds Way
Date of Sale:
Not Closed. Tied up 1-14.
Sale Price:
$675,000 (not closed)
Size of Parcel:
1.14E Acres, or 49,658 SF
Price/SF:
$13.59
Price/Unit:
9 Units = $75,000/Unit
Zoning:
R5 8400, Snohomish County
Tax Lot #:
00-4914-002-003-04
Seller:
Beverly Ferris
Buyer:
Not Closed; Pacific Rim Homes, tied up 1-14
Verified:
Lyn Eschelman, Pacific Rim Homes, 6-5-14
Description and Additional Information:
This is a gently rolling parcel, improved with an old house. All utilities were available. The
buyer is a developer who will remove the house and construct 9 units. This sale was to close in
a few weeks. It will be known as the Arbors at Chase Lake.
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GORRELATION AND CONCLUS10N OE MARKET VALUE
AS 1 EZ NED TO RM 1.5.
There is 344,250 SF, or 7.9 acres gross area on the subject. The old platted streets have not been
vacated nor has the 15' wide alley in the middle. The city is likely to require the roadways for
Sprague and Edmonds remain where they are since they line up east and west with existing
constructed streets. This leaves 6.02 acres net to be replatted. Also, a buyer will need to rezone
the P zoned property to RM 1.5 and to change the comprehensive plan.
Of the 6 sales, most are relatively small, say '/z acre to 1.1 acres in size. Only Sale 5, at 4.83
acres is close in size. Generally a larger sale requires a downward adjustment for size.
Also of the 6 sales, Sales 5 and 6 were for single residential purposes. Sales 1-4 were for multi-
family purposes. The subject's highest and best use is estimated to be for multi -residential
purposes. There is always the possibility a developer will decide to do single residential and not
multi -family, however in the subject's case it is less likely. Note the relatively high per unit price
of Sales 5 and 6. That is because the lots are large. Also, Sale 5 has a nice view.
Of the remaining sales, Sale #1 was purchased for commercial purposes. It can only be
compared on a price per SF basis. The sale's zoning allowed multi -family, but this is adjacent
to a car wash which is not a positive residential amenity.
Sales 2, 3, and 4 yield $35,000 per unit, $29,000 per unit, and $34,500 per unit. Sale #3 is the
lowest indicator since it is in a commercial location trending residential. It is inferior to the
subject. Sale #4 Is on the road into Edmonds. It is a busy road, but has some residential
amenities. Sale #2 is also in an inferior location.
What can't be directly deduced from the sales is the effect of the subject's large size on value or
its close in location to town. Also, density needs to be dealt with. Sale #2 is at 11 units/acre,
Sale #3 19 units/acre, and Sale #4 at 21 units/acre, all three are smaller than the subject, so as to
make for a difficult comparison.
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CORRELA" ION AND CON I, TSION OF '[AR ET VALUE
AS Rli,ZONED TO _RM L5: (Continued)
The city has faced the dilemma of old plats before and has concluded two 30' x 110' lots side by
side are one developable lot. With 80, 30 xl 10' lots on the currently platted subject, this is 40
lots without a replat. This is 6.45 lots/acre. Certainly a higher density is possible for the subject.
I conclude from the best data available, 20 lots/acre are possible, or 120 lots. I estimate those
lots would be worth $30,000/unit.
First Valu :st ua�l As a 0ned:
120 Units x $30,000/Unit = $3,600,000
For a price per unit, Sales 5 and 6 are the least usable at $5.27±/SF and $13.59±/SF. They are
single residential zoned.
Sales 2, 3 and 4 are most pertinent at $18.30/SF, $13.02/SF and $17.22/SF. Sale #1, at $19.83
is purely commercial. I conclude $15.00/SF is appropriate to the subject based on size mainly.
Second Value Estim-a As Rezone '.
262,500 SF x $15 = $3,937,500
Of the two, the price per unit is afforded the most overall reliability.
FINAL VALUE CORRELATION AS REZONED
$3,700,000
Northwest Valuation Services Page 31
Lease:
The lease between the school district and the city doesn't expire until 1-31-2021 and it is at
$1.00/year, clearly not economic. As I read the lease it can't be sold or leased by the school
district without allowing the city to match whatever offer the district could flush out. If it is sold
or leased and the city doesn't match the offer, the lease continues on to its 1-31-21 expiration
unless the city ends it. At this writing I see no reason for the city to end this lease. The 6.5 years
remaining is a gift. The city needs to provide recreational amenities to its citizens. This is the
least expensive way to accomplish that ($1.00/year)).
Any buyer of the subject as of the date of this appraisal would, in all probability, have to expect
they would not be able to develop the subject to its highest and best use until 6.5 years. This
introduces the present value of money. The present worth of any investment is calculated by
discounting the forecast future cash flows at a specified rate of return acceptable to an investor.'
I estimate a 5% rate would be acceptable today to wait 6.5 years for the opportunity to develop
this parcel. Many projects are on hold at this writing, so a 2-3 year wait might be expected in
any case. Also, it takes time to rezone a property and change the comp plan designation.
The present value of a reversion, computed annually for 6.5 years, is 0.728448,
The cost of a rezone and comp plan change is estimated at $75,000 including fees, meetings,
engineering and the like.
A buyer will also have to remove the existing improvements. I note the comparables all had
improvements which needed to be removed, so the cost of that removal is included in my
estimates.
Northwest Valuation Services Page 32
Lease: (Continued)
The final item to be estimated is the risk involved to a buyer that the city would not allow a
rezone of this parcel. I have already concluded there is a reasonable probability of a rezone. The
city, with Woodway Elementary, allowed a single residential development in an area which was
a school. It was, however, zoned R58, allowing that use. They changed the comp plan for the
adjacent park. This was some time ago, however.
Lynnwood High was rezoned from P-1 to Mixed Use, but that was quite expensive.
We have a discount rate and a value today. What remains is will the value 6.5 years from now
be different than today or will value increase or decrease? We are still in the hangover period
of the "Great Recession". Values still haven't fully recovered and developers are still gun-shy
of starting large developments. There is some evidence of an 11 % return on existing residences
in this area over the past year, but that' can't be sustained. I believe an increase in value of
3%/year could be reasonably anticipated over the 6.5 years of the lease.
VALUE TODAV AS _REZONED
$3,700,000
+3%/Year Increase in Value Over 6.5 Years
$4,423,665
Value as Rezoned at End of 6.5 Years
Less Cost to Rezone $75,000
$4,348,665
Northwest Valuation Services Page 33
VAAL1CTliLTODAY A, REZONED: (Continued)
One further item needs consideration. What is the risk factor that the city would not allow a
rezone of this property? I have already concluded there is a reasonable probability it would be
granted, but that granting is not certain. It is reasonable to assume a buyer would put in
something to reflect this risk. Unfortunately there is little market evidence to estimate this factor.
Using the data included in this report, I conclude a 15% deduction from value at the end of 6.5
years properly reflects this risk factor.
The following applies:
Value in 6.5 Years As Rezoned $4,423,665
Less Cost to Rezone -75,000
Less 15% Risk factor .-60
Net Value $3,685,165 (value in 6.5 years as rezoned)
x 5% Discount Value Factor x,,728448 to Present Worth
Value
$2,684,451
Final Value Estimate
Rounded
$2,675,000
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