1. PARTIAL ACQUISITIONS: TO MOVE OR NOT TO MOVE
IRWA’s 59th Annual International Education Conference
Charleston, WV
Presented by:
International Relocation Assistance Committee
International Valuation Committee
June 24, 2013

2. APPRAISAL BASICS
Rick Pino
Partner
Petersen LaChance Regan Pino, LLC

3. FUNDAMENTAL ELEMENTS
Know purpose and the jurisdiction under which you are performing the valuation assignment
Establish the basis for valuation development and reporting requirements
Uniform Standards of Professional Appraisal Practice (USPAP)
Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA)
Other entities with eminent domain power
Non-federal governmental (state, county, municipal)
Public and quasi-public agency or authorities
Private entities
Determine critical definitions
Market Value
Real Estate/Real Property
Personal Property

4. LARGER PARCEL
Unity of title
Unity of use
Contiguity or proximity

5. HIGHEST AND BEST USE Tests Legally Permissible Physically Possible
Financially Feasible
Maximally Productive
As if Vacant
As Improved

6. Valuation Methodology
Before and After Method
Value of Property Before the Acquisition
(Larger Parcel)
Less the
Value of Property After Acquisition (Remainder)
Value Difference
Value of Part Acquired 
Value of the Acquisition
(Plus) + Severance Damages
(Less) - Special Benefits

7. CASE STUDY 1
Type of Property: Newly constructed 21,320 SF retail building 14,820 SF – Walgreens (drive-through) 6,500 SF – Typical retail space Pad site for 3,260 SF Wendy’s 137,538 SF (3.16 Acres) Site Highest & Best Use: As Vacant – Retail development As Improved – As developed Rents: – Pharmacy $28.00 – Typical Retail Capitalization Rates: 6% - Pharmacy 7% - Typical Retail

8. Affected Property

9. Site Plan - Before

10. Acquisition Plan: Fee, Permanent and Temporary Easements

11. Remainder Property Capitalization Rate: 7% - Typical Retail
Type of Property: Newly constructed 21,320 SF retail
building
14,820 SF – Typical retail space ,500 SF – Typical retail space
99,137 SF (2.28 Acres) Site
Highest & Best Use: As Vacant – Retail development
As Improved – As developed
Rent: $28.00 – Typical Retail
Capitalization Rate: 7% - Typical Retail

12. CASE STUDY 1 SUMMARY
Change in Highest & Best Use Value Before: $ 14,700,000 Value After: $ 8,000,000 Difference $ 6,700,000 No Change in Highest & Best Use Value After: $ 12,200,000 Difference $ 2,500,000

13. CASE STUDY 2. Acquisition:. Washington Street,. Lynn, Massachusetts
CASE STUDY 2 Acquisition: Washington Street, Lynn, Massachusetts Use: A parking lot Site: 18,046 square feet, irregular shape with 99 feet of frontage Improvements: 52 open parking spaces History: Leased with adjacent property Zoning: Central business zoning district Assessment: $36, R. E. Taxes: $1,206.98

14. ACQUISITION & AFFECTED PROPERTY

15. Acquisition: Washington Street, Lynn, Massachusetts Design: Single story commercial building, plus adjacent parking lot Use: Juvenile court facility Site: 18,042 square feet, irregular shape with 50 feet of frontage on Washington St. and 50 feet on Central St., plus adjacent parking lot Improvements: 18,042 square feet of building area History: Recently renovated for $1,971,174 or $109.25/SF of leasable area and recently leased for $28.20/SF of leasable area. Gross rent including tenant imp. costs over term Zoning: Central Business Zoning District Assessment: $1,321,400 R. E. Taxes: $43,936.55
Affected property

16. Juvenile Court Building

17. BUILDING PLAN

18. Highest and Best Use Before
As Vacant
Assemblage parcel for parking and/or future development
$9.00/SF of land area based on commercial
development and/or parking sales range of $6.05 to
$11.47, with average of $8.47/SF of land area
As Improved
Existing use of the property for juvenile court facility
Build-to-suit rents courthouse facility rents range from $24.23 to $32.50, with average of $29.77/SF of leased building area
Highest and Best Use Before

19. Highest and Best Use After
As Vacant Assemblage parcel for parking and/or future development As Improved Use of the property for commercial/industrial use Comparable sales range from $31.74 to $50.97, with average of $40.61/SF of building area Rents range from $3.39 to $6.75/SF, with 10% vacancy, 7.5% expense ratio and cap rates 9% to 12% Requires $180,420 or $10.00/SF for demolition and removal of existing tenant improvement to return the space to market standard

20. VALUE OF DAMAGES
Before and After Method $2,900,000 (Large Parcel) (Less) - $541,000 (Remainder) $2,359,000 (Value Difference) Value of Portion Acquired = $162,000

21. Move or Not to Move ?

22. Take away
Importance of an in-depth BEFORE and AFTER Highest and Best Use Analysis
Outcome of the analysis may affect the Agency’s project plan
Proper planning may include advising agency of changes in use - proactive and may allow time for exploring other design alternatives

23. Concept correlation Janet Cruppi, SR/WA, R/W-RAC
Michelle Colby, SR/WA, R/W-RAC, R/W- NAC
Moderators

24. correlation This same concept is used in relocation planning
A thorough Non-residential Occupancy Interview is critical to establish the BEFORE
The AFTER - What is the effect of the partial acquisition on the business’s:
Access
Deliveries
Parking
Circulation
Ability to operate in a similar manner

25. Real life scenarios
Partial acquisition from a cattle ranch, Thermopolis, Wyoming
Partial acquisition from a restaurant in Homer, Alaska
Partial acquisition from a custom truck building facility in Anchorage, Alaska

26. Faa perspective Rick Etter Airports Acquisition Specialist
Federal Aviation Administration

27. AIRPORT TENANTS & BUSINESSES
Relocate on Airport? Not a displacement for Airfield Users, e.g. Airlines, other support services.
Relocate Off Airport? On airport business leased property needed for project, nowhere to move on airport. Typically displaced.
Off airport service business. Project need several years in future. Option not to be displaced. May leaseback acquired property long term.
Closed Airport. Tenant aviation business. Not displaced, no obligation in lease to continue operations.

28. Relocate on Airport - Airfield Users
Airfield (AOA) Tenant Leases Not Displaced by Airport Development
(Works/Support for On-airport
Operations)
Example: Airline Hangar to be Removed for Airfield Construction
Airfield Lease is Re-negotiated with Airport
New Hangar Location Developed by Airport
As applicable credit unamortized value of Improvements/Moving Expense
Other Issues with Airfield Leases:
Subtenants? Subject to Airfield Lease

29. on Airport tenant – works on & off airport
Example:
On-airport Rental Car
Airport Lease must be broken to use land for project (poor planning)
No on-airport location available, so displaced for project
Eligible for Relocation Assistance and Payments

30. Off airport service business – airport customers & business
Example:
Off Airport Parking, displaced business owner desires to stay on property as long as possible.
Continued Occupancy offers:
Full relocation assistance and payment eligibility must be offered and available now when property purchased. Or;
Leaseback property pending project development in 5 years.
Subject to an 18 month lease, with three 12 month renewal options (extends a maximum of 60 months)
If tenant terminates lease within initial 18 month period, eligible for offered relocation eligibility.

31. FHWa perspective Marshall Wainright Lead Realty Specialist
FHWA Resource Center
Federal Highway Administration

32. Creative solutions Janet Cruppi, SR/WA, R/W-RAC
Michelle Colby, SR/WA, R/W-RAC, R/W- NAC
Moderators

33. Acquired 1 Ac from 3.8 ac site

34. Site concept plan

35. after configuration

36. questions
THANK YOU FOR ATTENDING