destin pointe 11.77-acres vacant land destin, florida

Transcription

DESTIN POINTE
11.77-ACRES VACANT LAND
DESTIN, FLORIDA
PART ONE: INTRODUCTION
ii
SELF-CONTAINED
APPRAISAL REPORT
TITLE PAGE
PROPERTY
Vacant Land
LOCATION
Northeast Corner of Destin Pass
Destin, Florida
DATE OF VALUE
DATE OF REPORT
September 24, 2008
October 15, 2008
PREPARED FOR
Burds & Kuntz, P.C.
2200 West Port Plaza Drive, Suite 203
St. Louis, Missouri 63146
Fruitticher Lowery Appraisal Group
3000 Langley Avenue, Suite 402
Pensacola, Florida 32504
iii
October 15, 2008
Burds & Kuntz, P.C.
2200 West Port Plaza Drive, Suite 203
St. Louis, Missouri 63146
ATTN: Mr. Jeff Burds,
Letter of Transmittal
RE: A Self-Contained Appraisal Report of the
11.77-Acres of Vacant Land located on the
northeast corner of the Destin Pass on Holiday Isle
in Destin, Florida.
Dear Mr. Burds:
At your request, an inspection has been made of the above referenced property for the
purpose of estimating the current market value of the fee simple interest. In compliance with
the "Uniform Standards of Professional Appraisal Practice", this letter of transmittal is
followed by a self-contained appraisal reported in which all applicable approaches to value
are used and with the value conclusion reflecting all known information about the subject
property, current and projected market conditions, and other available data. This report
contains to the fullest extent possible and practical, explanations of the data, reasoning and
analysis used to develop the opinion of value. It also includes thorough descriptions of the
subject property, the property’s locale, the market for the property type, and my opinion of
highest and best use.
Market value will be defined in the appraisal report, but basically assumes a willing
buyer-seller, both knowledgeable of the subject real estate market and with the valuation at
the property's highest and best use.
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Mr. Jeff Burds
October 15, 2008
Page Two
The subject property consists of approximately 11.77-acres or 512,701 square feet of
vacant land located just north of the Destin Pass and south of the Destin Harbor on Destin
Pointe in Destin, Florida. There are approximately 1.25-acres of wetlands located on the
southeastern edge of the parcel and a 6.5-acre Army Corps of Engineering dredging spoil
easement. Considering the location of the wetlands and the easement, the subject parcel
appears to be developable on the remaining area of uplands. The subject is zoned “HDR”,
High Density Residential, allowing for a variety of residential uses, with a maximum density
allowance of 234 units.
Subject to the above and the limiting conditions and certification as set forth herein, it
is our opinion that the market value of the leasehold interest as of the last date of inspection,
September 24, 2008 was:
THIRTY NINE MILLION DOLLARS
*$39,000,000
*The above value indication is the value of the land based on the extraordinary
assumption that the subject property can be developed its maximum density allowing
19.90 units per acre or a total density of 234 units. Should the number of proposed
units be decreased or increased, the value opinion could change proportionately.
We hereby certify we have no interest, present or contemplated, in the appraised
property. This appraisal has been prepared utilizing all of the requirements set forth as
Standards for Real Estate Appraisals as established for federally related transactions and the
State of Florida. The appraisal conforms to the Uniform Standards of Professional Appraisal
Practice (USPAP). The fee for this appraisal was not based on a minimum value nor was the
assignment undertaken based on a pre-determined value or guaranteed loan amount.
We appreciate the opportunity of doing this work for you and your client. After your
review, should you have questions, please call.
Respectfully submitted,
Rodger K. Lowery, MAI
Steven E. Campbell
State-Certified General Real Estate Appraiser #RZ1922
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TABLE OF CONTENTS
PART ONE: INTRODUCTION ...............................................................................................................................II
TITLE PAGE ........................................................................................................................................................... III
LETTER OF TRANSMITTAL ....................................................................................................................................... IV
TABLE OF CONTENTS ........................................................................................................................................ VI
SUMMARY OF SALIENT FACTS AND CONCLUSIONS ...................................................................................1
DESCRIPTION OF THE APPRAISAL PROCESS .................................................................................................3
PROPERTY RIGHTS APPRAISED ........................................................................................................................5
PURPOSE OF APPRAISAL ....................................................................................................................................5
INTENDED USE OF APPRAISAL .........................................................................................................................5
DATE OF VALUE AND OF PROPERTY INSPECTIONS.....................................................................................6
MARKET VALUE DEFINITION AND IMPLICATIONS .....................................................................................6
IDENTIFICATION OF THE PROPERTY...............................................................................................................7
HISTORY OF THE PROPERTY .............................................................................................................................9
PART TWO: DESCRIPTIONS, ANALYSIS AND VALUE CONCLUSIONS ..................................................11
GENERAL AREA LOCATION MAP ...................................................................................................................12
GENERAL AREA DATA ......................................................................................................................................13
NEIGHBORHOOD LOCATION MAP .............................................................................................................23
NEIGHBORHOOD ANALYSIS............................................................................................................................24
TAXES AND ASSESSMENT ANALYSIS ...........................................................................................................31
LAND USE PLANNING, ZONING, CONCURRENCY.......................................................................................32
PUBLIC AND PRIVATE RESTRICTIONS ..........................................................................................................32
ENVIRONMENTAL CONCERNS........................................................................................................................33
SITE PLAN .............................................................................................................................................................39
SUBJECT PHOTOGRAPHS..................................................................................................................................36
SITE DESCRIPTION .............................................................................................................................................40
HIGHEST AND BEST USE...................................................................................................................................43
THE VALUATION PROCESS ..............................................................................................................................47
SALES COMPARISON APPROACH ...................................................................................................................48
PART THREE: CERTIFICATIONS AND ADDENDA........................................................................................69
CERTIFICATION ..................................................................................................................................................70
ASSUMPTIONS AND LIMITING CONDITIONS ...............................................................................................72
POLICY STATEMENT OF THE APPRAISAL INSTITUTE ...............................................................................74
QUALIFICATIONS AS AN APPRAISER ............................................................................................................81
ADDENDA ............................................................................................................................................................80
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1
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
CLIENT:
Burds & Kuntz, P.C.
INTENDED USERS:
Burds & Kuntz, P.C.
OWNERSHIP:
AMT, LLC
USE OF APPRAISAL:
This appraisal is being prepared for use by Burds &
Kuntz, P.C. for their investment and financing decisions.
PROPERTY LOCATION:
The subject property is located on Holiday Isle on the
northwest side of the Destin Pass in Destin, Florida
SITE SIZE:
11.77-Acres or 512,701 square feet
IMPROVEMENTS:
The subject property is vacant with no improvements
ZONING:
“HDR” High Density Residential
ENVIRONMENTAL CONCERNS: While there are no environmental concerns noted, there
are approximately 1.25-acres of wetlands located in the
southeast corner of the subject parcel
HIGHEST AND BEST USE:
EXTRAORDINARY
ASSUMPTION:
DATE OF VALUE:
The highest and best use for the subject property
is considered to be the future development of multi-unit
residential condominiums at a time when market
conditions return to a favorable position for
development.
This appraisal is being performed under the extraordinary
assumption that the subject property can be developed to
maximum density under the current zoning, which allows
for 19.90 units per acre or a total density of 234 units.
The current market value date is the date of the last
inspection, which was September 24, 2008.
2
Summary of Salient Facts and Conclusions (Cont’d.)
ASSESSED VALUE:
PROPERTY TAX:
$2,401,206 (2007)
$31,896.90 (2007)
PROPERTY RIGHTS APPRAISED:
Leasehold Interest
LAND VALUE:
$39,000,000
FINAL VALUE RECONCILIATION:
$39,000,000
3
SUBJECT PHOTOGRAPH
Subject Property
4
SCOPE OF WORK
In an effort to meet your requirements as well as conforming to the Uniform Standards
of Professional Appraisal Practice (USPAP), a visual inspection was made of the subject
land. Photographs and notes were taken of the property for the description write-ups found
within this report.
In addition to the physical inspection, research was conducted on a regional and
neighborhood basis in an effort to identify trends and factors, which have an effect on area
property values. Once these trends and factors were identified, a highest and best use analysis
was conducted.
Upon determination of the land’s highest and best use, similar land sales were
researched for use in the sales comparison approach to value. The sales were extracted from
the public records information, confirmed with one of the parties to the sale, and then written
up in detail in the body of the applicable approach to value. These sales were adjusted for
various differences to indicate separate value estimates with appropriate weight given to each
for reconciliation into a final value conclusion. Active listings were researched, and realtors
as well as developers active in the Destin market area were interviewed.
As the property has no improvements, the cost approach and income approach are
being eliminated from consideration. As this is the valuation of land only, the elimination of
the cost approach and the income approach does not affect the final value opinion.
5
PROPERTY RIGHTS APPRAISED
The property is subject to a 99 year perpetual lease, which is renewable for an
additional 99 years. This type of lease is typical for almost all waterfront land in the Destin
area.
Although the bundle of rights are legally identified as the leasehold interest, the
property rights are considered similar to those of a fee simple estate.
The property rights appraised are those of the leasehold interest. “Leasehold Interest”
has been defined as:
"The interest held by the lessee (the tenant or renter) through a lease transferring the
rights of use and occupancy for a stated term under certain conditions."1
PURPOSE OF APPRAISAL
The purpose of this appraisal is to give the client a basis for evaluating the investment
and financing opportunities on the subject property and/or for risk management purposes.
The objective of this report is to present the data and reasoning used to form this opinion of
value.
INTENDED USE OF APPRAISAL
This appraisal is being prepared for use by Burds & Kuntz, P.C. for their financing
and investment business decisions.
1
The Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th Edition. (Chicago, Illinois: Appraisal Institute,
2002), pg. 162.
6
DATE OF VALUE AND OF PROPERTY INSPECTIONS
The property was last inspected on September 24, 2008, which is also the current date
of value. This report was prepared on October 15, 2008.
MARKET VALUE DEFINITION AND IMPLICATIONS
Market Value - A type of value, stated as an opinion, that presumes the transfer of a
property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under
specific conditions set forth in the definition of the term identified by the appraiser as
applicable in the appraisal (as stated in the Code of Professional Ethics & Standards of
Professional Appraisal Practice of the Appraisal Institute 2005 edition, USPAP section, page
3).
The definition of market value as currently stated in the most recent editions of The
Appraisal of Real Estate is 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, 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:
A.
B.
C.
D.
E.
2
Buyer and seller are typically motivated;
Both parties are well informed or well advised and each acting in what they
considers their own best interest;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto;
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.”2
The Appraisal Institute, The Dictionary of Real Estate Appraisal 4th, ed. (Chicago Illinois, Appraisal Institute 2002),
page 23.
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IDENTIFICATION OF THE PROPERTY
PROPERTY ADDRESS:
The subject property is located on Holiday Isle
located between the Destin Harbor, which is north
of the subject and the Destin Pass on the south side
of the subject property.
LEGAL DESCRIPTION:
Please refer to legal description on the following
page.
CURRENT OWNER OF RECORD:
AMT, LLC.
TYPE OF OWNERSHIP:
Leasehold Interest
PHYSICAL:
The subject property includes a total of
approximately 11.77-acres of vacant land. The
property is subject to a 6.5-acre dredging spoils
easement placed by the U.S. Army Corps of
Engineers. The easement extends north past the
subject property into contiguous parcels and is
identified as land tract 101-E-6 containing a total
land area of 9.63-acres, with 6.5-acres located on
the subject property. The location of the easement
on the subject property is no longer considered to
be beneficial as a spoils easement. The U.S. Army
Corps of Engineers and the owners of the subject
property have initially agreed to relocate the
easement to the southern edge of the parcel. The
owners have also agreed to deed a pathway
allowing access to the easement. In doing this, the
total allowable density is not affected and will
improve the site plan by allowing the placement of
future buildings on the north edge of the parcel,
which will increase the overall beach area and view.
There is also approximately 1.25-acres of wetlands
located in the southeast corner of the subject parcel.
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LEGAL DESCRIPTION
9
HISTORY OF THE PROPERTY
The subject property, according to Okaloosa County Public Records, was purchased
by AMT, LLC from Destin Guardian Corporation on May 6, 2003 for $1,000,000. This
purchase price included the subject parcel and an additional 0.92-acre parcel that was
improved with a three-story office building. The subject parcel is identified by Okaloosa
County under parcel number 24-2S-000-00000-220-00A and contains approximately 11.77acres.
Based on a recent survey of the subject property, approximately 6.5-acres of the
northern half of the subject property is subject to a dredging spoil easement placed by the
U.S. Army Corps of Engineering sometime around 1963. This easement is approximately
9.63-acres and extends northward into contiguous parcels on the north side of the subject
parcel.
The current owners have developed an initial site plan calling for all
construction to be on the northern half of the subject parcel. They have contacted the U.S.
Army Corps of Engineering and both parties have initially agreed to move the easement to
the southern portion of the parcel and reducing the easement to a total land area of
approximately 3.89-acres. The U.S. Army Corps of Engineering have agreed to this as long
as they can be deeded a small pathway for access to the easement and to the jetty wall along
the shoreline.
The owners of the property have also been approached by the City of Destin to either
sell or donate a portion of the land area in order for the City of Destin to create a public
beach area. In doing this, the City of Destin has agreed to grant the owners tier three
development status, which could increase the overall allowable density to approximately 300
units.
However, it should be noted that this arrangement would need to be voted and
approved by the city council. Considering that this has yet to happen, the current zoning
“HDR”, High Density Residential, which allows for a maximum density of 19.90 units per
acre, or 234 units for the subject property will be applied throughout this appraisal report.
The owners currently have the property listed for sale with LoopNet, a national real
estate listing service for an initial installment of $21,948,000 with the remaining amount to
10
be negotiated upon a final development order that will establish the exact number of
allowable dwellable units.
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PART TWO: DESCRIPTIONS, ANALYSIS AND VALUE CONCLUSIONS
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GENERAL AREA LOCATION MAP
Subject
13
GENERAL AREA DATA
There are four basic interrelated forces that influence the value of a property:
Social/population trends, economic changes and adjustments, governmental controls and
regulations, and physical or environmental changes. These forces are considered in
every phase of the evaluation process but are best discussed in the General Area Data
and Neighborhood Data sections of the report. The subject’s general area is considered
to be the Southern Okaloosa and Walton County area, which includes the communities
of Mary Esther Fort Walton Beach, Destin, Sandestin and Santa Rosa Beach. The
interrelated forces influencing this general area, as listed above, follow:
OKALOOSA COUNTY
SOCIAL/POPULATION
One of the more important factors that should be considered in an appraisal of a
commercial property or high density residential properties are the area population trends
and the factors that effect the expected future population. As per the latest population
estimates compiled by the 2000 census and reported in the Summer 2006 addition of the
Northwest Florida Economy published by the Haas Center for Business Research, the
Okaloosa and Walton County population was 211,099, which is an increase of 23% over
the 1990 census. Projections for the year 2010 are for the population to continue to
grow to 261,959, an increase of 24%. This increase results in an average annual increase
of 5,086 people per year. Most of this increase is related to migration versus natural
change indicating this to be a desirable area in which to relocate.
The estimates for 2008 are for a total population of 240,385 people in Okaloosa
and Walton Counties. The current average household size is about 2.5 people per
residence indicating there to be a total of 96,154 current households. With 5,086 new
people moving to the area each year, the estimated annual new households required will
be 2,034 (5,086 people ÷ 2.5 people per household = 2,034 new households per year).
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General Area Data (Cont’d.)
This increase will have positive effects on the construction market as new residences
will have to be constructed. A rippling effect will also be felt in the retail and wholesale
industries as well. As new homes are built and purchased, new appliances will be
required, new furnishings, etc. Additionally, the retail businesses selling the day-to-day
necessities will also realize surges in their sales creating demand for additional
competition.
In addition to retail sales, commercial real estate markets should also benefit
from the population growth. As people move into the area, new offices will be required
along with new retail facilities and warehouses or industrial facilities. This commercial
growth used to support the new population should create continued upward pressures on
rents and property values.
Some of the impetus behind the area population growth is the increasing size of
the area military bases. The United States Government has been downsizing and closing
military bases all over the world as well as within this country. Rather than being
downsized, the area bases have been realizing net gains as departments and personnel
from closed bases are being relocated to this area. I have talked to public affairs officers
at Hurlbert Field Air Force Base and Eglin Air Force Base. At the present time Hurlbert
Field is said to be stable with a total of about 8,270 personnel (770 civilians and 7,500
active duty personnel). All of the civilians live off base and an indicated 4,480 active
duty personnel and their families live off base. Eglin AFB is also said to be stable with
a total work force of 18,000 (7,000 civilians and 11,000 active duty military personnel).
As with Hurlbert Field, all of the civilian population lives off base and 6,000 of the
military personnel live off base.
Eglin AFB has received high honors for operations during the past several years
and would be considered stable as a result. Further, Eglin is one of the largest military
bases in the world with over 724 square miles of land area and an additional 97,963
square miles of water ranges in the Gulf of Mexico. This base stretches out over a four
15
county area and separates northern Okaloosa and Walton Counties from southern
Okaloosa and Walton Counties. The northern county areas are largely rural in make-up
and the southern county areas where most of the population resides is urban in make-up.
The influence from Eglin AFB has created strong demand for high technology
companies in the immediate area and as a result, Fort Walton Beach is gaining the
reputation as a “technology corridor” with dozens of small and midsize companies
designing and manufacturing products for military and industrial use. These businesses
try to maintain a low profile and their associated buildings offer state of the art security
features. The impact of these companies on the local economy is great by providing
opportunities for professionals who are highly skilled, educated, and well paid.
As per the Haas Center’s publication of the Northwest Florida Economy: Larry
Sassano, Executive Director of Okaloosa’s Economic Development Council, indicated
“The Fort Walton Beach Commerce and Technology Park” represents a comprehensive
cross-section of our community’s technology-based industries. Companies like Boeing,
Manufacturing Technology Inc. and Lockheed Martin, illustrate to visitors why Fort
Walton Beach is an important community for aerospace research and development as
well as light manufacturing. The Commerce and Technology Park is a showcase for
attracting new technologies to Northwest Florida.”
An additional impetus behind the area growth is the location in the “Sunbelt”
along the Gulf Coast of Florida. The sugar white beaches and clear waters of the Gulf of
Mexico attract thousands of visitors every year. Realizing the area benefits (year-round
sunshine, warm temperatures, no snow), many of these visitors choose to make this area
their permanent home or secondary home. We have contacted owners of area motels and
hotels, all of whom state similar tourism increases. Over the past three to four years,
tourism numbers are stated to have increased at a rate of about 10% annually or better.
With continued tourism growth expected, the year-round population increase spin-off is
expected to also continue.
16
The increasing area population has created a great deal of pressure on housing
demand. According to the Multiple Listing Statistical report from the Emerald Coast
Association of Realtors, in 2003/2004 the number of condominium sales totaled 3,493
units and the average sale price was $395,953. In 2004/2005 the sales decreased slightly
to 3,050 units (-13%) but the average sale price increased to $548,842 (+39%). In
2005/2006 the sales again declined to 2,499 units sold (-18%) and the average sale price
was $421,453. This information would tend to indicate that the 2004/2005 year was
somewhat of a anomaly and prices are now returning to normal. The 2005/2006 price is
6% above the 2003/2004 price, which is more of a normal appreciation rate. Similar
results were noted among detached single-family home sales.
The multi-family market is also realizing upward pressure on occupancies and
rents. Demand for multi-family housing is high with area property managers reporting
95% to 100% occupancies. Due to the lack of availability, apartment rents have realized
upward pressures that have been keeping pace with or exceeding CPI increases. Rents
are indicated to have been increasing from about 1.5% up to 3% over the past two years
with the average increase being about 2.5%.
Overall, the area population increase has had a positive impact on the area’s
economy. The area has seen a proliferation in single family, multi-family,
condominiums and commercial properties. Along with the strong demand, property
values have increased as have rents of both commercial and residential properties.
ECONOMIC CHANGE AND ADJUSTMENTS
In addition to considering the area’s population and expected increases, an
income producing development or large residential development study should also
consider area economics. Even if the population continues to increase, the new residents
17
must be able to afford to live in the area; therefore, it becomes necessary to look at the
area’s economic conditions and the projected economic future.
The Okaloosa/Walton County area is currently and has historically maintained an
unemployment rate below the Florida average. Current area unemployment rates are
indicated to be about 2.5% by the Florida Agency for Workforce Innovation, while the
State’s average is currently around 3.0% (First Quarter 2006) and the national average
is 5%. Median family income is currently estimated in this MSA to be $57,800 annually
by the US Department of Housing and Urban Development.
The two county labor force is indicated to include 124,002 people (first quarter
2006) by the Florida Agency for Workforce Innovation, which is an increase of about
10% over the previous year. Even with the increasing labor force, the unemployment
rate has decreased by about 1.2% indicating strong job growth for the area. Of the total
labor force about 50% are indicated to have white-collar occupations, 20% have bluecollar occupations and 16% have service occupations. A total of about 16% of the
population has a college degree. With so many college degree people and such a large
white-collar work force, the area is considered to be made up largely of an upwardly
mobile population.
Some of the major area employers include: BAE Systems (1,250 employees),
Metric Systems (600 employees), Manufacturing Technology, Inc. (350 employees),
Crestview Aerospace Corp. (300 employees), STC Keltec (260 employees), Boeing SOF
Aerospace (227 employees), Northwest Florida Daily News (165 employees), Burton
Golf, Inc. (150 employees), Micro Systems, Inc. (100 employees), and Pex NA Ltd. (80
employees). These employers are considered to be stable and area job security is
considered to be good.
The Okaloosa County has four industrial parks, which offer 925 acres zoned for
manufacturing uses and Walton County has pockets of clean air industrial zoned
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properties that are largely occupied by building industry businesses. The largest
employers include Vitro Services with 1,250 employees, Abbott Resorts with 800
employees, Metric Systems with 675 employees, Russell Clothing Corporation with 430
employees and Sverdrup Technology, Inc. with 400 employees, to name a few.
Overall, the area economy is considered to be stable. A new industry to the area
will find a healthy and young work force with 39% of the population being between the
ages of 18 to 44. The personal income is increasing at rates similar to inflation and the
cost of living is considered to be very desirable being one of the lowest in the state
while the quality of life is deemed to be good. Area incomes are considered to be stable
and are at levels, which make housing affordable.
GOVERNMENTAL CONTROLS AND REGULATIONS
A general area analysis of a growing area would not be complete without
considering the area’s government and its outlook on future expansion. If the local
government is anti-growth, laws can be enacted which would stifle development and
population growth. On the other hand, if the government is pro-growth, taxes, zoning,
agencies and personnel can be used by the government to promote new businesses’
development creating a larger economic base and additional population growth, which
would support the existing and planned income producing developments. The Okaloosa
County governing body is considered to be pro-growth but Walton County is placing
more and more restrictions on development indicating a desire to slow growth.
The Okaloosa and Walton County governments are made up of boards of
commissioners elected every four years by their districts. They appoint a county
administrator who oversees the county budget and operations.
19
The counties currently have zoning ordinances in effect. The northern end of the
counties is primarily rural in nature and has an agricultural base. The southern end,
separated from the northern end by Eglin AFB, has more of a suburban make up, which
caters to the tourism industry and the Air Force Base.
General revenues are raised through an ad valorem tax system. The County
Appraiser’s Offices assess the property at “just value” which is supposedly about 85%
of market value but more typically ranges from about 20% to 70% of market value. The
current millage rate for Okaloosa County is 12.5940 and Walton County is 12.2929,
which is very similar to Okaloosa (municipalities have additional taxing authority). The
area property taxes are among the lowest in the state, which makes it more affordable
for new business development.
The county governments also work closely with private businesses in efforts to
attract additional business to the area. Okaloosa County is also on the world trade
council.
Overall, the local governmental agencies are considered to aid in the
development of Okaloosa and Walton Counties. Zoning along with the Future Land Use
Plans are used to insure organized, homogeneous growth, which adds to the area’s
appeal. The low taxes are also an enticing factor for future prospective businesses. The
government’s willingness to aid in the development of the economic base also creates a
stronger population base both physically and economically.
LOCATION AND PHYSICAL FACTORS
The location and physical factors of the area are considered to be important as
they are a major impetus in the relocation of population as well as businesses. Available
land, good weather, water and recreational aspects are all factors considered by a
20
potential future resident of the area. If these factors are congenial, they will aid in the
population increase resulting in additional economic growth.
Okaloosa and Walton Counties have a combined land area of approximately
1,990 square miles. The altitude ranges from sea level to about 120 feet above sea level.
The western boundary is Santa Rosa County, the eastern boundary is Bay County, the
southern boundary is the Gulf of Mexico and to the north is Alabama.
The sun is said to shine approximately 343 days of the year making this area part
of the “Sun Belt” of the United States. The “sun belt” states, especially Florida, have
been growing in population faster than other areas of the country in recent years. The
annual mean temperature is about 70 degrees and the average rainfall is from about 62
to 87 inches.
Major roadways create easy transportation to and from the counties. Interstate 10
runs through the middle of the counties in an east/west direction and connects to the
East Coast of Florida to the West Coast of California. Highway 98 is found in the
southern end of the counties and provides easy transportation to the near by
communities of Panama City and Pensacola. Highways 85, 285, 83 and 81 provide easy
transportation from the southern end of the county to I-10. Located in the northern Fort
Walton Beach area is the Okaloosa County Air Terminal, which utilizes the Eglin Air
Force Base Air Strip for public air transportation to all parts of the country. In Destin is
a small private airplane airport that is widely used with take-offs and landings taking
place at regular intervals throughout the day. Just to the east in Bay County near the
Walton County line, a new international airport is planed. The land for the new
international airport has been donated by the St. Joe Company and the FAA has given
its preliminary approval and development should be complete within the next five years.
21
The Gulf of Mexico makes up the county’s southern boarder and provides
excellent recreational facilities. The Gulf beaches are lined with sugar white sand,
which draw thousands of tourists every year. In addition to the Gulf of Mexico, the
southern end of the county offers Santa Rosa Sound (an intracoastal water way), and
Choctawhatchee Bay both of which provide exceptional facilities for water activities.
Water activities enjoyed include swimming, surfing, sailing, motor boating, fishing and
diving to name a few.
Overall the area’s physical characteristics are considered a real asset for the general area of
Okaloosa and Walton Counties. There is available land for additional business and residential
development; however, it is rapidly being used up resulting in increasing property values. As the
southern end of the county is the main economic producer, it is considered to be the most likely
place for continued future growth. The moderate temperatures and year-round sunshine also
entice a large number of new businesses to the area, which aid in creating a larger
population base. South Florida has had problems in past years with dwindling drinking
water supplies; however, the Okaloosa County area has an abundance of drinking water
adding to its future development potential.
GENERAL AREA DATA CONCLUSION
The Okaloosa/Walton general area is considered to have a very bright future. The rapidly
increasing economy and population is creating a great deal of demand on area commercial
properties, which are realizing strong occupancy levels and healthy rental increases. Low interest
rates and high demand have also created upward pressure on area property values; however, this has
slowed in the last year. Interest rates are now stable, which should aid in normal continued growth.
Local individual investors, as well as national corporate investors, have recognized the area's
financial potential and are actively buying and developing restaurants, motels, offices,
condominiums and shopping complexes to meet the resort traveler and local residence needs. The
22
driving force behind this growth is the strong condominium market, which is attracting buyers from
all over the United States as well as many European Countries and Canada. While condo sales have
slowed over the last year, they are still realizing fairly healthy absorption rates. Prices are no longer
increasing like they did over the past couple of years, but this could be a healthy trend for the area.
With several new condominium projects now under construction, or planned for the near future, the
growth is expected to continue.
23
NEIGHBORHOOD LOCATION MAP
Subject
24
NEIGHBORHOOD ANALYSIS
A neighborhood is defined in The Dictionary of Real Estate Appraisal, Fourth Edition
2002 as: "A group of complementary land uses; a congruous grouping of inhabitants,
buildings, or business enterprises.”3 Neighborhood boundaries are defined because properties
within neighborhoods tend to be similar in characteristics with regard to land use,
desirability, and are affected by similar physical, economic, governmental and social forces.
Using the map on the preceding page, the subject neighborhood is defined as the
community of Destin. Boundaries are considered to be the Destin Pass to the west, SanDestin
Resort to the east, the Gulf of Mexico to the south and Niceville to the north. Highway 98 is
the only major east/west arterial found within this neighborhood providing convenient access
to downtown Destin to the west and the SanDestin Resort found to the east. The City of
Destin is now actively buying properties and will be creating a second east/west arterial that
will start at the Mid Bay Bridge Road on Commons Drive and will extend west to Highway
98 at Calhoun Avenue. The Mid Bay Bridge provides convenient access to Niceville, area
Military Bases and I-10 found to the north.
The majority of the vacant land found in this neighborhood was once a turpentine
plantation owned by Mr. & Mrs. Kelly. Turpentine has not been harvested for many years but
the Kelly’s chose to hold on to this land. There has been great demand for this land for many
years and upon the deaths of Mr. & Mrs. Kelly, the heirs began to sell off portions of the
estate resulting in the rapid growth that has taken place over the past fifteen years. The
trustees of the property have ensured that the area be developed in a well-planned, first class
manor. While deed restrictions have not been placed on most of the land, they have created
development plans on their own and with buyers to ensure a desirable community. The areas
found along Highway 98 are reserved for commercial development and the areas found north
and south of the Highway are utilized for residential development. Located along new & old
Highway 98,
3
The Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago, Illinois: Appraisal Institute,
2002), pg. 193.
25
Neighborhood Analysis (Cont’d.)
which runs along the Gulf of Mexico and Destin Harbor, are numerous condominium
developments and high-density single-family subdivisions as well as several restaurants.
Destin is located on a peninsula separating the Gulf of Mexico from Choctawhatchee
Bay. Destin is also located near several other cities in the region, with Fort Walton Beach
located to the west at the inlet of Santa Rosa Sound into Choctawhatchee Bay. North of
Destin across the bay is Niceville, Florida, with the Mid-Bay Bridge linking the two cities by
road.
Located approximately 50 miles west of Destin is Pensacola, Florida and
approximately 50 miles east of Destin is Panama City. Both of these cities offer large
airports and are in close enough proximity to Destin to bring in a large amount of tourist
every year to Destin and surrounding areas. The western tip of the peninsula is East Pass
(also known as Destin Pass), separating it from Santa Rosa Island to the west. East Pass is
the only outlet of Choctawhatchee Bay into the Gulf of Mexico.
Frequent dredging is
required to keep East Pass navigable. Another significant point of interest in the East Pass is
“Crab Island”, a significant large sandbar where local boaters are able to anchor and walk to
others in waist high water.
Destin has been a strong tourist area for many years and in recent years has surpassed
nearby Pensacola and Panama City as a leader in Northwest Florida tourism. With white
beaches and emerald colored waters, approximately 80% of the annual Emerald Coast’s 4.5
million visitors travel to the area to visit Destin. To maintain and increase the level of
tourism in the Destin area, several attractions have been constructed in and around Destin,
including the large family oriented water park Big Kahuna’s.
A more recently added
attraction is Destin Commons, which is an open air shopping mall located to the east of the
city. This shopping area includes a 14-screen Rave motion picture theater, a Hard Rock
Café, and numerous national retail tenants such as Bass Pro Shops, Belk, Book-A-Million,
Banana Republic and Abercrombie & Fitch.
With a large tourism market, several condominiums and hotels were constructed,
beginning mostly in the 1970’s. As more tourist visited the area, many decided to become
permanent residents, which in turn, led to an increase in residential development for the area.
26
Within the neighborhood, the 2000 census population was estimated to be 13,865 and has
grown to 22,767 as of 2007, an increase of 8,902 people or 64% (9% average annual growth).
Over the next five years the growth is expected to slow slightly to 4.7% per year. The average
household income is $86,731 and the median household income is $64,440. This is much greater
than the neighboring Fort Walton Beach Community that has an average income of $39,987 and
the mean household income of $33,817 indicating the more affluent people in the county prefer
the Destin area.
Throughout the past twenty years, Destin has realized a moderate growth rate.
However, in the last five years, that growth expanded as the national and local real estate
markets began to flourish. This created a profitable opportunity for developers as demand for
residential condominiums grew dramatically. A large reason for this increase in demand was
due to investors who began “flipping” condominium units, which in turn, created inflationary
pricing for these condominium units.
residents who moved into the area.
The increase demand also included permanent
The increase in population allowed for additional
commercial growth to compliment the increasing population in the Destin area. During this
time, from early 2003 to mid 2006, prices for area real estate increased at dynamic rates with
rapid absorption rates. Almost all condominium developments that started in 2003 and 2004
were mostly sold out prior to completion.
The large and rapid growth rate experienced in the Destin market quickly turned
downward as the real estate growth “bubble” burst and over inflated real estate values began
to decrease. With the same events taking place on a national level, the housing market was
caught with too many developers and investors that had increased price levels to a point that
the end user was unable to afford. As the investors dropped out of the market, the overly
inflated prices caused a stall in the growth of the real estate market and created a mortgage
crisis that then affected the national economy and played a large part in the current downturn
of the national economy.
27
According to the MLS statistical research for the trailing 12 months of 2007, a total of
608 condominiums sold in the Destin City limits and the average condo sale price for this
neighborhood was indicated to be $604,868. The previous year’s average price was $586,594
indicating an increase of 3.1% with 699 sales, up from 472 sales in the previous year. In 2005
the average sale price reflected somewhat of a “bubble” being $662,464 (-10.4% over 2008), but
the past three years has seen something of a decline as the market is beginning to stabilize to a
more normal trend. As of September 30, 2008, there have been 174 condominiums sold to date
in 2008 (a rate of 19.3 units per month) and the average price of $595,588 indicating a decrease
in value of approximately 1.8% from 2007. Currently, there are 937 active listings for condo
units in Destin indicating a 4 year supply if sales continue at the current rate. These trends are
shown on the following charts.
Destin Condominium Sales (as of 10/2008)
Year
# Sales/YR
Average $
% Change
$543,608
2004
863
$662,464
2005
699
+21.9%
$586,594
2006
472
-11.5%
$604,868
2007
608
+3.1%
$593,840
2008 T/D
175
-1.8%
Similar trends were noted for residential lot sales in the Destin City limits. These trends
are shown on the following chart:
Destin Single-Family Residential Sales (as of 10/2008)
Year
# Sales/YR
Average $
% Change
$617,890
2004
519
$717,318
2005
374
+16.1%
$724,389
2006
219
+9.9%
$668,004
2007
187
-7.8%
$468,295
2008 T/D
164
-29.9%
28
As previously discussed, condominium and home sales were brisk through 2004 and
spiked in 2005 as shown on the previous charts. After peaking in 2005, values fluctuated over
the next three years showing some decreases in value as the market is beginning to stabilize to a
more normal trend. The current average price to date for 2008 is similar to or slightly below
2004 prices. Overall, the average sales price for condominium units occurring in 2008 is down
approximately 10.4% from 2005 while single family residential values show a much larger
decrease of 34.7%. The average single family residential sales to date for 2004 are down 24%
from 2004.
Within the five mile ring study, there is a total of 101 restaurants that include fast food
and the more formal sit down restaurants. Complete information was not available for all of the
restaurants’ gross sales due to years in business but an indicated 11 restaurants have gross sales
between $1,000,000 and $2,000,000; 13 restaurants have gross sales between $2,000,000 and
$5,000,000; 2 restaurants have gross sales between $5,000,000 and $10,000,000. The total gross
sales for restaurants in the area were indicated to be $40,904,852. Currently area strip centers are
realizing good occupancies with vacancies of less than 5%. Area restaurant properties appear to
be doing well with long waiting lines noted during the peak times. The low vacancy rates and
expected population increase of nearly 1,070 people per year combine to create a very healthy
market for commercial endeavors and is reflective of the strong tourist market.
The “Central Core” area of Destin is found at the foot of the Destin Pass Bridge and
extends the length of the Destin Harbor. This area includes many of the commercial facilities
that make life in Destin convenient and enjoyable. Located to the east is a Fishing Museum, the
Community Center and a strip shopping center offering restaurants, shops and offices. Located
on the Harbor Walk Village site (at the foot of the Destin Pass Bridge) are numerous restaurants,
bars, shops and the Destin Fishing Fleet. This Harbor Walk Village is adding 80,143 square feet
of additional shops and restaurants and 281 condominium units were recently completed and the
developer has realized over $250,000,000 in sale closings last year that were not reflected in
MLS sales. The Destin City Hall is found just to the east. One of the main draw backs of the
29
Destin Community is the traffic problems found along Highway 98 during the summer season.
While the permanent population may only be 24,265, the tourism market adds over 250,000
additional people to the area. The City has recognized the problem and is creating a new
boardwalk that runs along the northern water line of the Harbor creating a pedestrian friendly
environment that will help to ease the traffic problems. Having a residence in this “Central Core”
area, which is where the subject property is found, allows the owner or visitor to park their car
and walk to all of these desirable locations. Further, many of the resort developments are being
constructed as self contained communities that offer on-site shopping, restaurants and
entertainment, the subject’s development being one of these. Several of the larger developments
also include private Gulf front beaches and or golf courses.
Destin has also realized rapid growth among motel/hotel properties, all of which
appear to be doing very well and will aid in condominium unit sales by exposing new
potential buyers to the area. There are several newer motels/hotels that were recently
constructed in the Destin market, which is considered to be strong. I obtained a Smith Travel
Research report identifying 13 properties in Destin, which make up the majority of the
limited service properties in the area. The study takes into consideration the 100 room
Comfort Inn, the 83 room Country Inn & Suites, the 101 room Extended Stay America, the
94 room Wingate Inn, the 74 Room Holiday Inn Express, the 77 Room Sleep Inn Destin, the
104 Room Hampton Inn Destin, the 72 Room Motel 6, the 72 Room Best Western
Summerplace Destin, the 120 Room Residence Inn, the 174 room Courtyard, the 74 room
Hampton Inn and the 62 room Ramada Limited.
The 74 room Hampton Inn Suites was added in 2005. In addition, the 174 room
Courtyard Sandestin and the 120 room Residence Inn were added in 2006. These 368 new rooms
represent an increase in available room of 8% in 2005 and 30% in 2006, considering the 13
properties included in the study. The room supply increases differ slightly from the available
room nights due to the time of year in which the rooms were added. Even with the added rooms,
the hotel market is considered to be healthy with area quoted occupancy rates above 66.4% and
increasing ADRs.
30
There are some large scale mixed use properties currently planned for the harbor area
along the water that will include a few hundred additional hotel rooms. These developments are
currently in the conceptual stage of development and will cater to an upscale client, which is not
considered to be the subject market. In any case, considering the planning, sales and construction
time these new developments are not expected for at least the next four years. No other new
hotel/motel properties are known to be planned.
Overall, the Destin neighborhood appears to have a bright future. Although current
market conditions are at a point that new development is mostly being put on hold, the constant
tourism should allow the current over supply to eventually be absorbed and then create demand
for new residential and commercial developments. As the area population increases, and once
the real estate market stabilizes, there should be moderate growth with slight increases in
property values. Although the appreciation rates will be slower than in years past, the overall
neighborhood offers a variety of activities, a high quality of life that will allow for the continued
growth of the Destin neighborhood.
31
TAXES AND ASSESSMENT ANALYSIS
The subject property is currently assessed as Tax ID # 00-2S-24-0000-0022-000A. In
2007, the subject property was assessed a value by the Okaloosa County Property Appraiser’s
Office of $2,401,206, which is the same assessed value as indicated in 2006. It should be noted
that the preliminary 2008 assessed value for the subject property is indicated to be $2,362,500.
This slightly lower value is most likely a reflection of lower property values found throughout
the market area. The indicated property taxes for the subject in 2007 were indicated to be
$31,896.90 based on a current millage rate of 13.2837 mills. According to the Okaloosa
County Tax Collector’s Office, the property taxes are paid with no past due taxes for the
subject property.
It is noted that a sale of the property or improvements placed on the subject property would
trigger a reassessment of the property, and a potential buyer of the property should anticipate taxes
based on their purchase price and not the historical taxes of the property. This is considered to be
reasonable and would have no negative effect on the property value or its marketability.
32
LAND USE PLANNING, ZONING, CONCURRENCY
The Future Land Use is a broad category designation used for large areas to aid in
ensuring controlled and well planned growth. Okaloosa County currently has a Future Land
Use Plan that has been approved by the county and state. This plan is used as a guide for
development by the county. The subject property is located within the City of Destin in a
High Density Residential district, which allows for high density residential uses.
More
specific uses are designated by the City Zoning Ordinances.
Specific uses allowed on individual tracts of land are more precisely identified by
zoning laws. The City of Destin Zoning Ordinance provides typical zoning classifications
with the subject being within a “HDR”, High Density Residential zoning district. The zoning
district applies to areas developed, redeveloped and/or maintained and conserved as
permanent or seasonal single-family detached or multi-family attached dwelling units. It is
the intent of this zoning district to specifically not allow commercial hotels, motels, bed and
breakfast establishments, or other commercial transient living accommodations and all nonresidential uses.
The High Density Residential zoning district allows for a maximum density of 19.90
units per acre with a maximum building height under tier one of 80 feet or 7 stories. Floors that
are designated for parking do not count towards the total building height and under this zoning.
With a total land area of approximately 11.77-acres, the subject property can be developed up
with up to 234 dwellable units. Overall, the subject parcel conforms well and fits in with the
surrounding properties. The developable land will offer unobstructed water views and once
developed, should conform to the surrounding improved properties.
33
PUBLIC AND PRIVATE RESTRICTIONS
Public restrictions as to "use" are discussed within the preceding zoning section. No
plat, deed or other private restrictions are known to the appraiser.
ENVIRONMENTAL CONCERNS
Considering that the subject property is vacant land, there is no logical reason for
environmental concerns, and it is assumed that no environmental concerns exist. No evidence
of surface soil stain was noted on the property. The U.S. Army Corps of Engineering spoils
dredging easement is located on the northern half of the parcel, away from the current
shoreline. Originally, this easement was located along the shoreline, but with the accretion
of the subject parcel due to the dredging of Destin Pass, the easement location does not serve
the U.S. Army Corps of Engineering. Considering this, the owners of the parcel and the U.S.
Army Corps of Engineering have agreed to move the easement to the south side of the parcel,
allowing development along the northern edge of the parcel. There are approximately 1.25acres of wetlands located on the southeast portion of the parcel that should not have any
negative impact on the subject property.
The above is a very important assumption and limiting condition to the appraisal.
From the inspections, we observed no evidence of hazardous substances “obvious to the
untrained person” and received no communication “through a reasonably reliable person”
indicating possible contamination.
34
SURVEY
35
36
SUBJECT PHOTOGRAPHS
View of Subject Property
View of Subject Property Facing the Destin Pass
37
SUBJECT PHOTOGRAPHS
View from Subject Property Facing Destin Bridge
View from Center of Subject Property Facing Towards Destin Pointe
38
SUBJECT PHOTOGRAPHS
View of Melrose Avenue from Subject Property
View of Rosalie Drive from Subject Property
39
AERIAL VIEW OF SUBJECT
Subject Parcel Outlined in Red
40
SITE DESCRIPTION
For better visualization of this narration, please refer to the preceding drawings and
photographs.
AREA:
11.77-Acres or 512,701 Square Feet
SHAPE:
Irregular
DIMENSIONS:
218.94’ x 44.00’ x 304.00’ x 32.00’ x 346.24’ x 67.30’ x 51.90’
x 38.52’ x 43.88’ x 797.93’ x 367.44’ x 400.00’ x 200.00’ x
394.41’
INGRESS/EGRESS:
As shown by the photographs and maps, the subject property is
located on the east side of the Destin Pointe Planned Unit
Development on Holiday Isle in Destin, Florida. The subject
property is on the northwest edge of the Destin Pass and south of
the Destin Harbor. There are no roads into the property and
access to the parcel is available via Melrose Avenue and Rosaria
Drive, which are private roads running through the Destin Pointe
Planned Unit Development. The subject property is also
accessible from the Destin Pass. The ingress and egress for the
subject property is currently limited although extending the two
private roads into the subject property would make the ingress
and egress of the subject property good.
TOPOGRAPHY:
The site is basically level with no irregular topographical
features noted.
FLOOD DATA:
Per FIRM #12091C 0469H dated December 6, 2002 the subject
property is located in Flood Zone “VE”, with a minimum
elevation of 13 feet required. Zone VE is the flood insurance
zone that corresponds to areas within the 1-percent annual
chance coastal floodplain that have additional hazards associated
with storm waves.
Mandatory flood insurance purchase
requirements apply to this area.
DRAINAGE:
The land appears to be well drained and there was no standing
water present during the physical inspection of the property.
There are approximately 1.25-acres of wetlands located on the
southeast edge of the parcel.
41
Site Description (Cont’d.)
SOIL COMPOSITION:
The soil is a sandy composition that is typical of properties in
the area. This soil is considered to be suitable for single-family
and multi-family residential development as evidenced by the
surrounding residential developments having similar soil types
as the subject property.
UTILITIES ON SITE:
There are currently no public or private utilities on the subject
property, however, all public and private utilities are available to
this site.
SITE IMPROVEMENTS:
The subject property is vacant with no improvements
EASEMENTS:
Currently, there is a 6.5-acre U.S. Army Corps of Engineering
dredging spoil easement located from the center of the parcel
north over onto contiguous parcels. The overall size of the
easement is 9.63-acres and is identified as tract 101-E-6. The
location of the easement would prevent construction on the
northern portion of the subject parcel. The current location of
the easement is not considered advantageous for the property
owners or towards the U.S. Army Corps of Engineering.
Considering this, the owners and the U.S. Army Corps of
Engineering have arranged to move the easement to the southern
portion of the parcel. It has been agreed by both parties to this
easement that moving the location of the easement will be
beneficial to both parties. It should be noted that the easement
will not prevent the subject property from being able to be
developed to its maximum allowable density, as should the
easement location remain unchanged, the owners could
construct on the south side of the easement closer to the
shoreline.
42
Site Description (Cont’d.)
CONCLUSION OF
CONFORMITY:
The subject property consists of a large vacant parcel of land
containing approximately 11.77-acres.
The southwestern
corner of the parcel fronts along the north shoreline of Destin
Pass, which allows passage into the Gulf of Mexico and
Choctawhatchee Bay. The subject property is bordered by
several residential developments, including the Destin Pointe
Planned Unit Development, which is located on the east side of
the subject parcel. The large parcel directly south of the subject
parcel is owned by the State of Florida and is designated for
conservation use only. The subject parcel is currently zoned
“HDR”, High Density Residential, which is similar zoning to the
other privately owned land surrounding the subject parcel.
There is a dredging spoil easement on approximately 6.5-acres
of the parcel and there are approximately 1.25-acres of wetlands
located on the southeast corner of the parcel. The subject
property is vacant and ready for future development.
Considering the surrounding uses are almost exclusively
residential, the future construction of a multi-unit residential
condominium development would mix in well and conform to
the surrounding area.
43
HIGHEST AND BEST USE
A brief definition of the term "highest and best use" would be:
"The reasonably probable and legal use of vacant land or an improved
property, which is physically possible, appropriately supported, financially
feasible, and that results in the highest value. The four criteria the highest and
best use must meet are legal permissibility, physical possibility, financial
feasibility, and maximum productivity."4
Implied within this definition is recognition of the contribution of that specific use to
community environment or to community development goals in addition to wealth
maximization. Also implied is that the determination of highest and best use results from the
appraiser's judgment and analytical skills, i.e., that the use determined represents an opinion,
not a fact.
The Highest and Best Use section of this report is the pivotal point in the appraisal
process. All previous data is used to test the four criteria of: (1) legally permitted, (2)
4
Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), pg.
135.
44
physically possible, (3) economically feasible, and (4) maximally productive.
LAND AS THOUGH VACANT
Legally Permissible - All legally permissible uses should be analyzed when
considering a site's highest and best use. The subject property is located within a “HDR”
High Density Residential district. This district is intended exclusively for residential uses,
with allowances for high density dwellings.
The subject property is encumbered by a
dredging spoils easement in favor of the Army Corps of Engineers that consists of
approximately 6.5-acres of the overall 11.77-acres. There are also approximately 1.25-acres
of wetlands located in the southeast corner of the subject parcel. Subtracting the easement
and the wetlands from the overall parcel size indicates that there are approximately 4.02acres of developable land. The subject property has an allowable density under the “HDR”
zoning of 19.90-units per acre, based on the entire 11.77-acre parcel, which according to
Community Development Director Ken Highest and Best Use (Cont’d.)
Gallander, is transferable to the 4.02-acres of developable land area. Considering this, the
total allowable density for the subject property of 11.77-acres is 234 condominium units,
which can transfer to the developable 4.02-acres.
Physically Possible - Of the legally permissible adaptations of the site, those
physically possible uses require consideration and analysis. The size and location of the
parcel are important aspects of value. The subject parcel contains approximately 11.77-acres
or 512,701 square feet. There are two existing issues that will affect the possible uses for the
subject parcel. The parcel is currently subject to a dredging spoil easement in favor of the
U.S. Army Corps of Engineers. The easement is located from the center of the parcel north,
extending into contiguous parcels on the north side of the subject property. Based on the
current location of this easement, there could be no development on the northern half of the
subject parcel. However, the owners and the U.S. Army Corps of Engineering have initially
agreed to move this easement to the southern half of the parcel, which both parties to the
easement agree will be more beneficial for each party involved. With the easement located
45
on the southern portion of the parcel, the northern half can be fully developed to the legally
maximum density based on the current zoning of “HDR”, High Density Residential.
Should the agreement to move the easement not go through, which both parties agree
should, it will still be possible to develop the property to it’s maximum density of 234 units.
By moving the easement, the development will take place on the northern portion of the
parcel, leaving the southern parcel as vacant beach front.
Financial Feasibility - Of the legally permissible and physically possible adaptations
of the site, only those uses which are financially feasible should be considered. The subject
property is a large vacant parcel located on the western edge of Destin Pointe, with a large
amount of waterfront along the Destin Pass. The area surrounding the subject property is
developed with Gulf front condominiums and commercial developments that support the
tourism industry. The area has benefited from tremendous growth over the previous decade,
with an increase in commercial developments that created an infrastructure able to support
the Highest and Best Use (Cont’d.)
community year round.
However, in the past few years, the local market, along with
surrounding similar tourist areas such as Pensacola Beach and Panama City, have slowed
tremendously. Due to the current market conditions, almost all future planned commercial
and residential developments have been put on hold. This situation is intensified by a slowmoving economy and the residential mortgage crisis, which is reshaping current lending
policies by almost all financial institutions. The tightening of lending policies has made it
harder for investors to move forward with new development.
Considering current market conditions, it does not appear to be financially feasible for
any type of large scale commercial or residential development, which the subject property is
legally and physically able to sustain. Due to this, the only financially feasible use of the
land is to hold for future development when market conditions return to a favorable condition
and demand makes such developments financially feasible.
Maximally Productive - The financially feasible use which results in the greatest
return to the land is the one which is considered to be the highest and best use of the land.
Based on the limited types of development available under the High Density Residential
46
zoning, developing a multi-family high density condominium development appears to offer
the highest return on investment. However, until current market and economic conditions
turn around and demand increases for such developments in the subject’s immediate area, the
current maximally productive use of the land is to hold for future development of a high
density, multi-unit residential condominium development.
CONCLUSION – The highest and best use of the land is considered to be to hold the
land for the future development of the site with commercial retail and residential condominiums
at a time when the area real estate market begins to turn upward and such development is then
considered financially feasible.
analysis.
This conclusion is considered in the following valuation
47
THE VALUATION PROCESS
There are three (3) commonly accepted approaches to value: The Cost Approach,
Income Approach, and Sales Comparison Approach. All three utilize market derived
information and are “market driven” approaches, as will be shown in the analysis.
The Cost Approach is a summation of land value and improvement value. The land is
valued as though vacant and available for its highest and best use. The improvement is valued
by first estimating the reproduction costs new from which all forms of depreciation are
deducted. Depreciation can be both from deterioration and obsolescence. Obsolescence is
further categorized as functional or external. The analysis of obsolescence, based on the
highest and best use analysis, accounts for deductions necessary if the improvement is not
adequate for the site.
The steps for the Income approach are to first estimate an economic rent for the
subject. This analysis is made even if the property is owner occupied. From the gross
potential income there is first deducted allowance for vacancy and collection loss with further
deductions then made for the expenses applicable to the type property being valued. This net
operating income is then capitalized into an indication of value through the use of an
appropriate capitalization rate.
The Sales Comparison Approach is an estimation of the property value by comparison
with recent sales of similar or competitive properties extracted from the subject’s market.
The “market”, rather than being the immediate proximity to the subject, is considered that
area, local, regional or even national that would be considered by a prospective buyer of the
subject property.
These approaches do not make value. They are merely tools in the hands of the
appraiser who must carefully weigh each value indication, give appropriate weight to the
approach and reconcile into a final value conclusion.
48
SALES COMPARISON APPROACH
The sales comparison approach involves direct comparisons to the subject property of
similar properties that have sold in the marketplace. The approach consists of searching the
market for sales, qualifying the sales prices and terms with one of the participants in the sale,
comparing the sales to the subject property for differences, adjusting the sales for those
differences and formulating an opinion of value from the adjusted value indications. The
improved sales which are utilized will be compared on a cost per unit basis depending on the
“typical” unit used by market participants.
The market derived adjustments follow a specific, logical order so as not to skew the
results. The adjustments listed in order include: Property rights, financing, condition of sale,
date of sale or market conditions, location and various physical adjustments which can be
considered together. While an adjustment for each may not be required, they are considered
resulting in a comparable unit of measure.
The units of comparison may be physical, such as dollars per square foot of area, or
they may be economic, such as gross rent multipliers. These units of comparison yield a
pattern which is reconciled and converted to a value indication for the subject via the sales
comparison approach.
49
LAND VALUATION
50
COMPARABLE LAND SALE #1
File
R.E. Zone
Location
Date
Reference
Grantor
Grantee
Waterfront Land 17
15
This property is located at the western dead end of Gulf Shore Drive in
Destin, Florida
May 28, 2004
O.R. 2537 Page 2079
C.B.S. Development Corporation
Pointe One
Legal
Lengthy legal description but the property can be identified by the County
Tax #00-2S-24-0000-0034-0000
Sales Price
$31,178,800*
Rights Transferred
This is an assignment of a 99 year lease with terms similar to fee simple
ownership.
Financing
A conventional loan was obtained with terms considered similar to a cash
sale.
Condition of Sale
Dimensions
Zoning
Arms Length Transaction
Numerous Calls
HDR – High Density Residential & “RIA” Residential Intensive
Apartment
All public and private utilities were available.
Utilities Available
Size (Square Foot)
Size (Acre)
Size (Front Foot)
Size (D.U.)
Prop Bldg Size (SF)
Confirmation
Comments
169,448 SF
Price/Square Foot
3.89 Acres
Price/Acre
1,085 FF
Price/Front Foot
79 DU
Price/D.U.
261,255 Sellable SF
Price/S.SF
Tom Fruitticher, MAI confirmed this information
the buyers (404-409-7186) on January 20, 2006.
$184.00/SF
$8,015,116/Acre
$28,735/FF
$394,668/DU
$119.34/SSF
with Pat Barcus, one of
*Doc Stamps on the deed indicated a purchase price of 22,360,000 but Mr. Barcus also
indicated they additionally paid off a note for the seller for $950,000, bought out one of the seller’s
partners for $6,100,000, paid for a seawall the seller contracted at $1,650,000 and paid the seller interest
in the amount of $118,800 prior to closing bringing the total acquisition price to $31,178,800, which was
used. This property is found on the extreme end of Holiday Isle and offers water frontage along two sides.
The western property line fronts along the Destin Pass and offers clear views to the Gulf of Mexico. The
eastern property line fronts along Destin Harbor. There is a large sand beach to the north that is dredging
spoils from the pass that will never be developed and will provide a pleasant amenity to this site.
According to the city development department, the property owner has applied for permits for a 79 unit
condominium that will have nine stories and will be known as Norriga Pointe. The buyer indicated that
this building will have a total sellable building area of 261,255 square feet and they plan to market the
units at $1,000/SF.
51
Sale #1
Subject
52
File
R.E. Zone
Location
Date
Reference
Waterfront Land 42
14
North and south sides of Scenic Highway 98 adjoining the western side of
the Henderson Beach State Park in the Crystal Beach area of Destin,
Florida.
March 21, 2005
O.R. Book 2603 Page 271
Grantor
Grantee
Henderson Park, LLC
Dunavant Gulf, LLC
Legal
Lengthy legals in Section 00, Township 2 South, Range 22 West,
Okaloosa County Florida. Parcel I.D. #00-2S-22-0000-0031-0000, 00-2S22-0000-0030-0000, 00-2S-22-0000-0032-0000 and several others.
Sales Price
$34,000,000
Rights Transferred
Fee Simple
Financing
This sale was financed with a conventional loan with terms similar to a
cash sale.
Condition of Sale
Dimensions
Numerous
Zoning
“CBR” Crystal Beach Resort
Utilities Available
Size (Square Foot)
Size (Acre)
Size (Front Foot)
Size (D.U.)
Prop Bldg Size (SF)
Confirmation
231,809 SF
Price/Square Foot $146.67/SF
5.32 Acres
Price/Acre
$6,390,977/Acre
301.58 FF
Price/Front Foot
$112,740/FF
126 DU
Price/D.U.
$269,841/DU
252,000 Sellable SF
Price/S.SF
$134.92/SSF
Tom Fruitticher, MAI confirmed this information with Rick Olson,
Grantee and Wayne Jones, Grantor during an appraisal of the property at
the time of sale.
Comments
This property includes a 1.57 acre Gulf front parcel with 301.58 feet of frontage along the
Gulf of Mexico and a 3.75 acre interior parcel separated from the Gulf front site by Scenic Highway 98.
The land is level and there were no wetlands associated with either site. The shapes are slightly irregular
but the utility is good. The buyers are planning to develop the southern Gulf front site with 36 condo units
and the northern interior site with an additional 90 units for a total project size of 126 units. Henderson
Park, LLC previously purchased this property for $18,000,000 on 11/1/04 per O.R. 2573/3080 &
O.R.2573/3078. This was an arm’s length transaction that shows an 89% increase in value over the four
months between sales or about 22% per month. This rapid increase was associated with a zoning change
that allowed a greater density on the land.
53
Sale Site
Sale Site
54
File
R.E. Zone
Waterfront Land
17
Location
South side of Harbor Boulevard (Highway 98) adjoining the east side of
the Marbella Condominium property in Destin, Okaloosa County, Florida
Date
Reference
Grantor
Grantee
June 29, 2005
Oak Harbor Development, LLC
Marbella Condominium Developers, LLC
Legal
Lengthy legal in Section 00, Township 2 South, Range 22 West, Okaloosa
County, Florida (Tax I.D. #00-2S-22-0702-0000-0070)
Sales Price
$17,500,000
Rights Transferred
Financing
Fee Simple
The buyer paid $7,500,000 in cash and financed the remaining
$10,000,000 with terms similar to a cash sale.
Condition of Sale
Dimensions
Zoning
Utilities Available
Size (Square Foot)
Size (Acre)
Size (Front Foot)
Size (DU)
Size (Buildable SF)
Confirmation
Approximately 274.89 Water FF x 134.3 x 46.13 x 256.92 x 142.27 x
97.67 x 122.55.
“SHMU” South Harbor Mixed Use
116,925 SF
Price/SF
$149.67/SF
2.68 Acres
Price/Acre
$6,529,851/Acre
274.89 FF
Price/FF
$63,662/FF
52 DU
Price/DU
$336,538/DU
125,000 SF
Price/S.SF
$140.00/SSF
Tom Fruitticher, MAI confirmed this information with Todd Switzer,
Grantor (850-259-5998) on 1/25/06.
Comments
This is an irregular shaped parcel that offers 274.89 feet of frontage along the
Destin Harbor and 122.55 feet of frontage along Harbor Boulevard. The property is fairly level
and then drops off dramatically near the water. This site sold with approval for the development
of a 52 unit condominium building offering 125,000 square feet of sellable building area. Mr.
Switzer indicated that due to the location at the entrance of a canal, this site was unable to offer
boat slips for sale to the buyers of the condominium units. The units are being offered for sale at
prices that range from $612/SF to $637/SF. At the time of confirmation, they had 12 reservations
in place and had just started the marketing. Mr. Switzer was a member of the selling entity and
also owned a smaller percentage of the buying entity but indicated the purchase price was a
market price arrived at through negotiations with the other partners.
55
56
File
R.E. Zone
Waterfront Land
17
Location
194 Harbor Boulevard in Destin, Okaloosa County, Florida
Date
Reference
Grantor
Grantee
October 31, 2005
Carol J. & Thomas G. Moody
Davis Companies, LLC
Legal
County, Florida (Tax I.D. #00-2S-22-0630-0000-07I1)
Sales Price
$5,100,000
Rights Transferred
Financing
Condition of Sale
Fee Simple
Conventional loan was used to secure this sale with terms similar to cash.
Dimensions
Zoning
Utilities Available
Approximately 116.11’ x 407’ x 63’ x 320.74’ x 200’
BT – Business Tourism Zone
Size (Square Foot)
Size (Acre)
Size (Front Foot)
Size (DU)
Size (Buildable SF)
Confirmation
36,457 SF
Price/SF
$139.89/SF
0.84 Acres
Price/Acre
$6,071,429/Acre
63 FF
Price/FF
$80,952/FF
8 DU
Price/DU
$637,500/DU
18,229 SF
Price/S.SF
$279.77/SSF
Tom Fruitticher, MAI attempted to confirm the information with one of
the parties to the sale but was unable to reach any of the principals. The
information was obtained from the county offices and public records.
Comments
This is an irregular shaped parcel that offers 116 feet of frontage along the south
side of Highway 98 (Harbor Blvd) and 63 feet of frontage along Destin Harbor. Considering the
size of the property, it could only qualify for the Tier I development potential, which allows a
Floor to Land Area Ratio of 0.5. The land is fairly level but has a rapid drop off near the water,
which is typical of the area. At the time of sale, the property was improved with single family
house that was built in 1961 and no longer contributes value to the land. This house will be
removed to make way for a more intense development that takes advantage of the allowable
density.
57
58
ACTIVE LISTING #1
File
R.E. Zone
Waterfront Land
17
Location
Date
Reference
Grantor
Grantee
Current
MLS #494242
People’s First Community Bank
N/A
Legal
County, Florida (Tax I.D. #00-2S-22-0702-0000-0070)
Sales Price
$10,800,000 (Current List Price)
Rights Transferred
Financing
Condition of Sale
Fee Simple
Conventional
Dimensions
Approximately 274.89 Water FF x 134.3 x 46.13 x 256.92 x 142.27 x
97.67 x 122.55.
“SHMU” South Harbor Mixed Use
Zoning
Utilities Available
Size (Square Foot)
Size (Acre)
Size (Front Foot)
Size (DU)
Size (Buildable SF)
Confirmation
116,925 SF
Price/SF
$149.67/SF
2.68 Acres
Price/Acre
$6,529,851/Acre
274.89 FF
Price/FF
$63,662/FF
52 DU
Price/DU
$336,538/DU
125,000 SF
Price/S.SF
$140.00/SSF
Steve Campbell confirmed this listing and the details concerning this
property with the listing agent Robert Ward with Pelican Real Estate (850)
585-4101 and with Deborah Hunt, real estate manager with Peoples First
Community Bank in Panama City, Florida (850) 770-7217 on October 13,
2008.
Comments
This property was originally purchased in June 2005 (O.R. Book 2633 Page 4911)
for $17,500,000 with 10,000,000 financed through Peoples First Community Bank. The site was
approved for a 52 unit condominium building offering 125,000 square feet of sellable building
area. The development was unable to close on enough units to begin construction and the
property was foreclosed on August 29, 2008 for a foreclosed indicated price of $5,281,500. The
current asking price represents a 38% decrease in value from the original sale price in 2005.
59
60
ACTIVE LISTING #2
File
R.E. Zone
Waterfront Land
17
Location
Date
Reference
Grantor
Grantee
Current
LoopNet ID #15885184
Barbra S. Dekle, Life Estate
N/A
Legal
DESTIN M/P COM CON MARKER SE COR OF LOT 13 THC S 7 DEG 40 MIN W
100 FT TO POB THC CONT S 7 DEG 52 MIN 40 SEC W 280.56 FT TO NE COR LOT
11 A THC N 72 DEG 8 MIN 50 SEC W 488.92 FT TO BAY THROUGH IRON PIPE
23 FT FROM SHORE LINE NELY DIREC 280 FT TO PT S 7 DEG 52 MIN 40 SEC W
100 FT FROM N BOUND OF LOT 12 THC S 72 DEG 68 MIN 50 SEC E 500 FT TO
POB
Sales Price
$12,000,000* The property is listed on LoopNet for $14,000,000 but has
been put under auction with a starting bid of $9,900,000.
Rights Transferred
Financing
Condition of Sale
Fee Simple
Conventional
Dimensions
Zoning
Utilities Available
Approximately 307.89 Water FF x 447.12’ x 278.91’
“CMU” Calhoun Mixed Use
Size (Square Foot)
Size (Acre)
Size (Front Foot)
Size (DU)
Confirmation
155,074 SF
Price/SF
$77.38/SF
3.56 Acres
Price/Acre
$3,370,787/Acre
307.89 FF
Price/FF
$38,975/FF
56 DU
Price/DU
$214,286/DU
Steve Campbell confirmed this listing and the details concerning this
property with the listing agent Vanessa Havel with Capital Commercial
Real Estate Group, Inc. (954) 455-3366 ext. 273 on October 15, 2008.
Comments
This is a 3.56-acres property with water frontage along Choctawhatchee Bay in
Destin, Florida. The property is zoned CMU and allows for up to 16 units per acre or 56 total
dwellable units. The owner of the property was approached with an offer to buy the property for
$14,000,000 sometime in 2007. However, this offer never came through and the owner has
decided to sell with the list price being based on the original offer. The listing agent indicated
that the seller understood current market conditions and agreed to put the property up for auction
with the beginning bid starting at $9,900,000 with a expected offer of $12,000,000 to be
accepted. The property is contiguous with an additional 9-acres that could be sold for one large
development.
61
Active Listing #2
62
LAND SALES LOCATION MAP
Active Listing #2
Active Listing #1
Sale #4
Sale #1
Subject
Sale #3
Sale #2
63
COMPARATIVE ANALYSIS
LAND SALES SUMMARY GRID
Item
Property Rights
Transferred
Financing
Conditions of Sale
Date of Sale
Location
Sale Price
# of Developable
Units
Land Size
Sale $/SF
Sale $/Dev. Unit
Sale 1
Sale 2
Sale 3
Sale 4
Active 1
Active 2
Leasehold
Conventional
Arms Length
5/25/2004
Fee Simple
Conventional
Arms Length
3/21/2005
Fee Simple
Conventional
Arms Length
6/29/2005
Fee Simple
Conventional
Arms Length
10/31/2005
Fee Simple
Conventional
Arms Length
N/A
Holiday Isle
$31,178,800
Scenic 98
$34,000,000
Harbor Blvd.
$17,500,000
Harbor Blvd.
$5,100,000
Harbor Blvd.
$10,800,000
Fee Simple
Conventional
Arms Length
N/A
Calhoun
Ave.
$12,000,000
79 Units
169,448 SF
$184.00/SF
$394,668/DU
126 Units
231,809 SF
$146.67/SF
$269,841/DU
52 Units
116,925 SF
$149.67/SF
$336,538/DU
8 Units
18,229 SF
$139.89/SF
$637,500/DU
52 Units
116,925 SF
$92.37/SF
$207,692/DU
56 Units
155,074 SF
$77.38/SF
$214,285/DU
Review
The subject property is identified as an 11.77-acre or 512,701 square foot vacant
parcel located on Holiday Isle between the Destin Pass and the Destin Harbor in Destin,
Florida. The subject property is zoned “HDR”, High Density Residential, allowing for a
maximum density of 19.90 units per acre, or 234 total units.
The City of Destin and the owners of the subject property have been in discussion to
allow for the owners to donate a portion of the land to the City of Destin for use as public
beach area in return for granting the property Tier III density, which would allow for
approximately 280 dwellable units.
Considering the location of the subject property, the only use of the land that would
be maximally productive would be the development of a multi-family residential
condominium. Based on this, commercial land similar to the subject property is typically
valued on a “per unit” basis or on a “per sellable square foot” value. As market investors and
developers would value land on a similar basis, the subject property will be valued on a “per
unit” basis, which is considered to be the most indicative measurement of market value as the
total number of developable units allowed is known.
64
Sales Comparison Approach (Cont’d.)
A search was made for the most current and similar vacant land sales compared to the
subject property. In the previous decade, the Destin area has witnessed extensive growth and
development of almost all waterfront property. The sales found are considered to be the most
recent and similar sales. The adjustments considered are as follows.
PROPERTY RIGHTS SOLD – In all of the comparable sales, the property rights sold
were either the fee simple or leasehold interest. In Destin, much of the waterfront land is leased
with 99 year leases that automatically renew for an additional 99 years, which is equivalent to
the fee simple interest as there is no real limit on the ownership with such leases. As the
interests sold are similar to the interest being appraised, no property rights adjustments are
considered to be necessary.
FINANCING - The properties also sold for cash or terms considered to be similar to a
cash sale requiring no financing adjustments.
CONDITIONS OF SALE – All of the sales were arms-length transactions requiring
no conditions of sale adjustments.
MARKET CONDITIONS ADJUSTMENT – The four comparable sales took place
between May 2004 and October 2005. These four closed sales are considered to be the most
recent sales that are similar to the subject property within a similar location. Since the last sale
took place in 2005, the market has declined to a point that there have been no recent sales and
that almost all planned development has been put on hold until market conditions return to a
favorable position for developers.
In early 2004 the real estate market was considered very stable and was offering strong
returns on investments. The residential housing market, and the increased demand for multifamily condominiums, resulted in a building growth period from 2004 through late 2005. In this
time period, prices for residential houses and residential condominiums increased tremendously
and attracted many new investors and speculators into the real estate market. The increased
demand was driven by the apparent opportunity for speculators to “flip” properties while
demand was at such a high level and to record very large and significant profits.
65
As the residential housing market kept expanding, the increase in new construction
helped drive the national economy, which in turn, led to businesses expanding, creating a low
unemployment rate, disposable incomes and increased consumer spending. However, as the
residential housing market created artificially inflated prices, many banks were relaxing their
credit policies, approving loans based on the premise that the home values would continue to
increase, creating an equity position for the borrower.
Once housing prices became too high, around early to mid 2006, many investors and
speculators pulled out of the market, fearing that the market had peaked. This left actual end
users that were unable to afford the artificially high prices that were due to the earlier speculators
and flipping of properties. Market demand waned and as a result of the construction boom, there
was a surplus of product on the market. With an oversupply, buyers were suddenly put into a
favorable position as demand lowered due to high prices and an over supply of houses.
With house prices stalling and beginning to lower at a faster pace every month, many
large investment banks were caught holding sub-prime mortgages that were now going into
default. This has, in the past few months of this appraisal report, caused several large investment
banks to either go under or to be bought out for pennies on the dollar. Once the housing market
stalled, the national economy followed and started into a steep decline. Higher fuel costs, a
slumping housing market eventually affected the commercial side of real estate as businesses
started to downsize and the need for new office space or retail space declined.
The downward turn of the economy and the real estate market is evidenced by the lack of
recent sales similar to the subject property, which as indicated, has a highest and best use for
high-density residential condominium use. A good indication of the recent downturn of the real
estate market and the economy, which has caused a halt to almost all new development is sale
three, which took place in June 2005. This sale was for a vacant parcel with frontage along the
Destin Harbor and was originally purchased for $17,500,000 or $336,538 per dwellable unit.
This property was purchased with a loan from Peoples First Community Bank of $10,000,000
and an additional $7,500,000 cash from the buyers. The purchasers planned to develop the
parcel Sales Comparison Approach (Cont’d.)
66
with a 52 unit residential condominium. However, from the initial purchase in 2005, the market
conditions eroded to a point that it was unfeasible to build as condominium unit prices had
dropped upward of 25% from 2004 to 2006.
In August 2008, the property was foreclosed on by Peoples First Community Bank for
the outstanding loan balance of $5,281,500 and the property is currently listed on the market for
$10,800,000. The new listing represents an overall decline in value from the original sale price
in 2005 of 38%. This decline in market value for vacant land appears reasonable when looking
at finished condominium sales in the subject area. The newest condominium development
located in Destin is the Emerald Grande, a 281 unit high-end luxury condominium development
located at the foot of the Destin Bridge in Destin, Florida. In 2007, there were 111 closed sales,
although many of these were under contract in 2005 and 2006. However, in 2008, as of the date
of this appraisal, there have only been a total of 11 sales and there are currently 132 units that are
being marketed and sold in fractional ownership. An analysis of the 2008 sales compared to the
2007 sales indicate a decline in value ranging from 3% to 28% while there was only one sale
indicating a increase in value of only 5%.
Considering this, and coupled with the fact that properties listed are not moving and that
there have been no significant waterfront land sales in the Destin area since 2005, it appears
reasonable to apply a downward market condition adjustment of 38% to all four closed sales. In
doing this, sale one has a market adjusted price of $244,694, sale two has a market conditions
adjusted price of $167,301, sale three has a market conditions adjusted price of $208,654 and
sale four has a market conditions adjusted price of $395,250.
SIZE – The subject property, based on its size and zoning, can be legally developed with
234 dwellable units, which is larger than the four closed sales and the two active listings with
sale two considered to be the closest with 126 dwellable units. Typically, the smaller the number
of units available to be developed, the higher the price per unit will be and as the number of
developable units increases, the price paid per unit will decrease.
This is stated as the economies of scale theory, which states that there is a reduction in cost of
67
production per unit due to a large number of items produced.
With sale two the most similar in size to the subject property, and that many developers
have stated that once a development reaches a certain size point, additional units will generally
cost the same, the other closed sales can be compared to sale two for a size adjustment. In doing
this, sale one, which contains 79 units is adjusted downward 32% for a size adjusted price of
$166,392 per unit. Sale three and active listing one both contain 52 units and active listing 2
contains 56 units and are adjusted downward 20% for a size adjusted price of $166,923 per unit
for sale three, $166,154 per unit for active listing one and $171,429 per unit for active listing
two. Sale four is the smallest among the four closed sales with 8 units and is adjusted downward
58% for a size adjusted price of $166,005 per unit.
With no further adjustments considered necessary, the previously indicated adjustments
are illustrated on the land sales adjustment grid below.
LAND SALES ADJUSTMENT GRID
Item
$/Dev. Unit
Market Conditions
Adjustment
Market Conditions
Adjusted Value
Size Adjustment
Indicated Value
Sale 1
$394,668/DU
Sale 2
$269,841/DU
Sale 3
$336,538/DU
Sale 4
$637,500/DU
Active 1
$207,692/DU
Active 2
$214,286/DU
-38%
-38%
-38%
-38%
-0-
-0-
$244,694/DU
-32%
$166,392/DU
$167,301/DU
-0$167,301/DU
$208,654/DU
-20%
$166,923/DU
$395,250/DU
-58%
$166,005/DU
$207,692/DU
-20%
$166,154/DU
$214,286/DU
-20%
$171,429/DU
Reconciliation
The adjusted sales indicate a tight range of value from $166,005/DU to $167,301/DU
with the active listing one at $166,154/DU and active listing two at $171,429/DU, which sets the
upper limit of value. The four comparable sales were considered to be the most similar to the
subject based on location and highest and best use. The four comparable land sales are the most
recent sales with the active listings used to indicate the current market direction.
Although the four comparable closed sales reconcile to within a rather tight range of
68
value, the fact that there have been no recent sales and that it appears the subject’s market area is
over developed with residential condominiums at this point, the active listings should factor into
the final reconciliation to value. Although not given as much weight as the closed sales, the
active listings represent the current market status and create the upper limit of value.
Considering this, the subject property is indicated to have a market value slightly above the four
comparable sales but below the current active listings, indicating a value for the subject property
of $166,500 per developable unit.
Applying the indicated value of $166,500 per dwellable unit to the subject’s allowable
density of 234 units indicates a value for the land, assuming entitlements to develop 234
condominium units, of $38,961,000, which is rounded to $39,000,000.
INDICATED LAND VALUE
$39,000,000*
*This value is based on the extraordinary assumption that the subject property can
be developed to the maximum density allowed based on current zoning of 234 units.
Should the number of proposed units be decreased or increased, the value opinion could
decrease proportionately.
69
PART THREE: CERTIFICATIONS AND ADDENDA
70
CERTIFICATION
We certify that, to the best of my knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting
conditions, and is our personal, unbiased professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in the property that is the subject of this report and we have no
personal interest or bias with respect to the parties involved.
4. Our compensation is not contingent upon the reporting of a predetermined value or direction in value that
favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the
occurrence of a subsequent event.
5. This appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of a
loan.
6. My analyses, opinions, and conclusions were developed, and this report has been prepared in conformity
with the Uniform Standards of Professional Appraisal Practice.
7. I have made a personal inspection of the property that is the subject of this report.
8. No one provided significant professional assistance to the person signing this report.
9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in
conformity with the requirements of the Code of Professional Ethics and the Standards of Professional
Appraisal Practice of the Appraisal Institute.
10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly
authorized representatives.
11. As of the date of this report, we have completed the requirements of the continuing education program of
the Appraisal Institute.
12. The subject of this appraisal report is identified as 11.77-acres of vacant land located on Holiday Isle in
Destin, Florida. The estimated value of the real estate as of September 24, 2008, the last date of inspection,
was $39,000,000.
Rodger K. Lowery, MAI
Steven E. Campbell
71
72
ASSUMPTIONS AND LIMITING CONDITIONS
1. No responsibility is assumed for legal or title considerations. Title to the property is assumed to
be good and marketable unless otherwise stated in this report.
2. The property is appraised free and clear of any or all liens and encumbrances unless otherwise
stated in this report.
3. Responsible ownership and competent property management are assumed unless otherwise stated
in this report.
4. The information furnished by others is believed to be reliable. However, no warranty is given for
its accuracy.
5. All engineering is assumed to be correct. Any plot plans and illustrative material in this report are
included only to assist the reader in visualizing the property.
6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or
structures that render it more or less valuable. No responsibility is assumed for such conditions or
for arranging for engineering studies that may be required to discover them.
7. It is assumed that there is full compliance with all applicable federal, state, and local
environmental regulations and laws unless otherwise stated in this report.
8. It is assumed that all applicable zoning and use regulations and restrictions have been complied
with, unless a nonconformity has been stated, defined, and considered in this appraisal report.
9. It is assumed that all required licenses, certificates of occupancy or other legislative or
administrative authority from any local, state, or national governmental or private entity or
organization have been or can be obtained or renewed for any use on which the value estimates
contained in this report are based.
10. Any sketch in this report may show approximate dimensions and is included to assist the reader
in visualizing the property. Maps and exhibits found in this report are provided for reader
reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise
stated in this report. No survey has been made for the purpose of this report.
11. It is assumed that the utilization of the land and improvements is within the boundaries or
property lines of the property described and that there is no encroachment or trespass unless
otherwise stated in this report.
12. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by
the appraiser that might suggest the possibility of the presence of such substances should not be
taken as confirmation of the presence of hazardous waste and/or toxic materials. Such
determination would require investigation by a qualified expert in the field of environmental
assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or
other potentially hazardous materials may affect the value of the property. The appraiser’s value
estimate is predicated on the assumption that there is no such material on or in the property that
would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for
any environmental conditions, or for any expertise or engineering knowledge required to discover
them. The appraiser’s descriptions and resulting comments are the result of the routine
observations made during the appraisal process.
73
ASSUMPTIONS AND LIMITING CONDITIONS (Cont’d.)
13. Unless otherwise stated in this report, the subject property is appraised without a specific
compliance survey having been conducted to determine if the property is or is not in conformance
with the requirements of the Americans with Disabilities Act. The presence of architectural and
communications barriers that are structural in nature that would restrict access by disabled
individuals may adversely affect the property’s value, marketability, or utility.
14. Any proposed improvements are assumed to be completed in a good workmanlike manner in
accordance with the submitted plans and specifications.
15. The distribution, if any, of the total valuation in this report between land and improvements
applies only under the stated program of utilization. The separate allocations of land and
buildings must not be used in conjunction with any other appraisal and are invalid if so used.
16. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may
not be used for any purpose by any person other than the party to whom it is addressed without
the written consent of the appraiser, and in any event only with proper written qualification and
only in its entirety.
17. Neither all nor any part of the contents of this report (especially any conclusions as to value, the
identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated
to the public through advertising, public relations, news sales, or other media without prior
written consent and approval of the appraiser.
74
POLICY STATEMENT OF THE APPRAISAL INSTITUTE
1.
It is improper to base a conclusion or opinion of value upon the premise that the
racial, ethnic or religious homogeneity of the inhabitants of an area or of a property is
necessary for maximum value.
2.
Racial, religious, and ethnic factors are deemed unreliable predictors of value trends
or price variance.
3.
It is improper to base a conclusion or opinion of value or a conclusion with respect to
neighborhood trends upon stereotyped or biased presumptions relating to the effective
age or remaining life of the property being appraised or the life expectancy of the
neighborhood in which it is located.
75
QUALIFICATIONS AS AN APPRAISER
RODGER K. LOWERY, MAI
EDUCATION
Bachelor of Science Degree - 1991
Florida State University
Tallahassee, Florida
Core Courses - Real Estate Major
Real Estate Feasibility Analysis, Real Estate Market Analysis, Real Estate
Finance, Real Estate Appraisal, Legal Environment of Real Estate, Commercial
Bank Administration, Urban Planning and Growth Management, Comprehensive
Planning
Appraisal Institute Courses:
110: Appraisal Principles - 1994
120: Appraisal Procedures - 1994
310: Basic Income Capitalization - 1993
410/420: Standards of Professional Practice – 1992
430: Standards of Professional Practice Part C - 1999
510: Advanced Income Capitalization – 1993
520: Highest and Best Use and Market Analysis - 2000
530: Advanced Sales Comparison and Cost Approaches - 1998
540: Report Writing and Valuation Analysis - 1994
550: Advanced Applications - 1994
Appraisal Institute Seminars
Non-Residential Demonstration Appraisal Report Writing Seminar - 1995
Uniform Standards of Professional Appraisal Practice Seminar; 1997
National USPAP Update Course – 2003
Data Confirmation and Verification Methods - 2001
Effective Report Writing - 2003
APPRAISAL EXPERIENCE
5/97 – Present
Residential and Commercial Real Estate Appraiser, Fruitticher-Lowery
Appraisal Group (Owner/Appraiser).
Performing commercial and
residential real estate appraisals, reviews and consultations. Specializing
in the Northwest Florida and South Alabama markets.
76
APPRAISAL EXPERIENCE (Cont'd.)
6/95 - 4/97
Residential and Commercial Real Estate Appraiser, RKL Appraisal
Services, Inc. (President). Performing commercial and residential real
estate appraisals, reviews and consultations.
Specializing in the
Northwest Florida and South Alabama markets.
6/95 - 9/96
Commercial Real Estate Appraiser, Laureate Realty Services, Inc.
(Formerly Camp and Company), Mobile, Alabama. Income analysis and
appraisal of neighborhood, community and regional shopping centers,
malls, multi-tenant office buildings, apartments and hotels. Properties
located in the southeast region, primarily Florida, Alabama, Mississippi
and Louisiana.
9/92 - 5/95
Residential and Commercial Real Estate Appraiser, M. Eugene Presley
and Associates.
Commercial and residential fee appraiser.
Responsibilities include the valuation of commercial properties, vacant
commercial land, large acreage tracts, and environmentally sensitive
properties. Numerous eminent domain appraisals, specifically including
the Burgess Road and Airport Boulevard DOT projects. Eminent domain
appraisals performed for the property owners.
12/91 - 9/92
Commercial Real Estate Appraiser, Marshall Appraisals, Inc. Associate
appraiser. Responsibilities include the valuation of office buildings,
banks, hotels, and other large commercial properties throughout Florida.
4/91 - 12/91
Research Assistant, State of Florida, Office of the Auditor General,
Division of Real Estate. Responsibilities include the review of State of
Florida county appraisal files audited by the Department of Revenue, as
well as the review and confirmation of data within privately contracted
appraisals performed for the Department of Natural Resources.
Expert Witness Experience
First Circuit Court, Santa Rosa County
Escambia County Circuit Court
Santa Rosa County Commission
Okaloosa County Commission
77
PROFESSIONAL LICENSES/AFFILIATIONS
Member, Appraisal Institute, Member #11029
State-Certified General Real Estate Appraiser, State of Florida, License #RZ 0001922
State-Certified General Real Property Appraiser, State of Alabama, License #G00445
Real Estate Broker, State of Florida, License # BK0573361; FLAG Realty, Inc.
Real Estate Broker, State of Alabama, License #065378 (Reciprocal Brokers License)
Developer – FLAG Leasing, Inc. and FLAG Realty, Inc.
Member - Pensacola Association of Realtors, Florida Association of Realtors and the National
Association of Realtors
Member - Home Builders Association of West Florida
Member – City of Pensacola Zoning Board of Adjustments
Member – Leadership Escambia And Pensacola (LEAP) Class of 2001
Member – American Diabetes Association of Northwest Florida, Board of Directors
Member – Fiesta of Five Flags, Board of Governors
Past Member – WSRE Planned Giving Council, Board of Directors
Past Member - Pensacola Chamber of Commerce Relocation Committee
CLIENTS
The Guardian Life Insurance Company
Nationwide Insurance Company
Allmerica Financial
Business Men’s Assurance Company
Column Financial
Sun Life Assurance Company
Lehman Brothers
Laureate Realty Services
Saad Development Group
Wade Ward Properties
Moulton Properties, Inc.
Beach Community Bank
Vision Bank
Union Planters Bank
Peoples First Community Bank
Merrill Land Company
First National Bank of Florida
MembersFirst Credit Union of Florida
Bank of Pensacola
Compass Bank
Southtrust Bank
SunTrust Bank
Regions Bank
Whitney Bank
AmSouth Bank of Florida
AmSouth Bank of Alabama
Pen Air Federal Credit Union
Peoples First Community Bank
78
QUALIFICATIONS AS AN APPRAISER
STEVEN E. CAMPBELL
State Certified General Real Estate Appraiser #RZ3224
EDUCATION
Bachelor of Science Degree – 1991
Florida State University
Tallahassee, Florida
Core Courses -
Finance Major
Accounting, Cost Accounting, Quantitative Methods of Business, Statistics, Real Estate
Market Analysis, Real Estate Finance, Commercial Investments
Appraisal Institute Courses:
110: Appraisal Principles – 2005
120: Appraisal Procedures – 2005
210: Residential Case Studies – 2005
310: Basic Income Capitalization – 2005
410: USPAP Course – 2005
320: General Applications – 2006
402G: General Appraiser Site Valuation & Cost Approach – 2007
Other Courses:
McKissock, Florida National USPAP Update Equivalent – 2006
McKissock, Florida Appraisal Laws and Regulations – 2006
79
APPRAISAL EXPERIENCE
9/05 – Present Commercial Real Estate Appraiser, Fruitticher Lowery Appraisal Group.
State-Certified General Real Estate Appraiser – Performing commercial based appraisals
on various commercial properties including but not limited to: Apartments, MultipleTenant Office Buildings, Retail Buildings, Mining Pits, Restaurants, Condominiums and
Vacant Land.
5/05 – 9/05
Research Assistant, Tallent & Jackson Real Estate Services. Responsibilities
included property inspection, data collection and confirmation.
80
ADDENDUM

destin pointe 11.77-acres vacant land destin, florida

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