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9614 13 <br /> <br />HIGHEST AND BEST USE <br /> <br />As If Vacant lAnd/Or) As Vacant <br /> <br />highest and best use, that cost does not equal value. This is especially <br />true when the cost are paid by a third party (City) in order to generate <br />an unrelated benefit (tax base). <br /> <br />While industrial development is beneficial, to the community by <br />creating jobs and tax base, the value of properties is driven by supply <br />and demand in the market. If the market for improved industrial <br />properties can absorb new development created by municipal subsidies, <br />then these subsidies will not effect highest and best use. However, if <br />sales of improved properties do not reflect their depreciated <br />replacement (cost plus land value), then external obsolescence has been <br />created by municipal subsidies. <br /> <br />Municipal subsidies can speed up the rate of industrial development <br />and, in certain cases, cause a user to choose one city over another. <br />Subsidies cannot, however, alter the long term demand for industrial <br />properties (land and buildings). <br /> <br />The purpose of this appraisal is to estimate the land value increase <br />caused by the construction of municipal utilities (sewer and water). For <br />industrial land, this increase can only be realized by land which has a <br />reasonable probability of being developed. Without municipal <br />subsidies, little industrial land in Elk River has a reasonable probability <br />of being developed in the immediate future. <br /> <br />Thus, the benefit of sewer and water will likely be limited only a <br />portion of the I-1 zoned lands. In this limited appraisal we will estimate <br />that portion to be approximately 60 acres of undeveloped industrial <br />land near 171st Street. <br /> <br />The remaining industrial land in the project area has some long-term <br />development potential. However, the appraisers observe that long term <br />demand is clouded by the immense amount of existing and projected <br />industrial land served with municipal utilities in the Twin Cities <br />Metropolitan area. <br /> <br />The appraisers see a much greater demand for medium and heavy <br />industrial sites. The project area contains some ideal land for this type <br />of development. The screening provided by the rail road, light <br />industrial land northeasterly of the rail road, and the commercial <br />corridor along the highway would lessen the negative impacts of such <br />development, in addition, the existing solid waste facility in the <br />southerly portion of the project area would be less of a detriment to <br />medium and heavy industrial users than light industry. <br /> <br />Patchin & Associates, Inc. <br /> <br />Valuation Consultants <br /> <br /> <br />