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    Remington Veritas Praevalebit
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    2014 Scituate Town Council ordered appraisal of valuation of Mill apartment complexes

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    2014 Scituate Town Council ordered appraisal of valuation of Mill apartment complexes

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    21 views5 pages

    RKG Technical Memorandum

    Uploaded by

    Remington Veritas Praevalebit
    2014 Scituate Town Council ordered appraisal of valuation of Mill apartment complexes

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 5
    ASSOCUTESRC, Economie Planning Real Estate Consultants (634 Central Avenue Dover, Ni 03820 Tel: 603-953-0202 Fax: 603-953-0032 ‘wwew.rkgassociates.com TECHNICAL MEMORANDUM TO: ‘Town of Scituate, Rhode Island ¢/o David M. D'Agostino, Esquire FROM: RKG Associates, Inc. DATE: December 29, 2014 SUBJECT: Preliminary Findings and Peer Review of the Hope Mill Redevelopment Proposal ~ Scituate, RI (On behalf of the Town of Scitvote, Rhode Island, RKG Associates, Inc, (RKG) has completed on independent peer review of the proposed redevelopment of the former Hope Mill. RKG has been tasked by the Town to offer an opinion as to the overall “appropriateness” of the proposed development from < financial and market/economic perspective, relying on information offered by the potential developer. This information includes, but isnot limited fo, an assessment of an appraisal report for the property!, which is nof an appraisal of the current morket value of the property, but rather a valuation reflecting the hypothetical condition that the Hope Mill project was built and the extraordinary assumption thet It would perform ina manner similar to the comparable developments which form the basis of Its valuation. RKG oo considered information provided in the TIF Plan’, particularly with respect to potential taxes. In summery, RKG's findings and conclusions include the following: © There was no market analysis of supply and demand indicators offered, which RKG deems necessory to effectively evaluate the market viability of the proposed development. ‘© The information offered in the approisal is considered “generous” with regard to per unit valve, thereby potentially overstating property taxes derived from each unit ond in total. For example, the appraisal indicates a per unit valve of $172,260, while RKG believes thot the valve per unit may range between $111,500 and $137,100. ©. This is important os the valuation of the new Hope Mill forms the basis for property tax collections, which in tum would provide the revenue stream of 4 potential tax-increment financing district and/or the payment(s) to retire bonded debt for infrastructure and other improvements. © Using the FY 2014 commercial tax rate for Scituate of $21.94/$1,000 ond the cbove referenced per unit values, the property toxes (rounded) for @ 155 unit "This refers to an Appelt Repert ofthe Proposed Hope Mil Aporiment Complex, prepared by Norman Benedict ‘Associates Ie, of Hamden, CT (September 8, 2014) 2 this fers to he Brat Props = Tex heremertalFnancna, Hove (Wil Vllce Redevelcomant Pan (December 201) ASSOCATESINC Hope Mil ~ Project Review Town of Scituate, Rhode December 28, and 2014 Page 2 ‘complex would be $585,800 (from the appraisal] compared with an RKG offered range of $379,000 to $466,400. + The approisal does not provide « specific estimate of property taxes, instead rel} ‘on average costs expressed as a percentage of income based on o survey of four other apartment projects, which is part of the reason that RKG considers the expenses to be understated. If the taxes paid by the Hope Mill project were the $585,800 noted above, these would represent «i tax burden of 26 percent ‘against the effective gross income? (EGI), which is more than double the high end of the comparable range used in the appraisal (12.3 percent). * The TIF Plan offered on estimate of taxes of $2,050 per unit in taxes (cing « market study prepared by the Keystone Consulting Group’) which for a 155 unit complex amounts 10 $277,750 In taxes. That mount would be insufficient to retire a $4 million bond debt (commensurate with the preliminary TIF Plan redevelopment budget which included $1.7 million for an on-site waste treatment system). In order to determine the level of bonding that could be supported by the project, RKG developed c hypothetical debt service model presented in Table 1: Table 1 - Hypothetical Bond Schedule For the Preliminary TIF Redevelopment Plan Principat | ntrest Total OVE] paquired Payment Yor Yeor | princpatustnce | payment _| payment | paymentipaiy | 21200 1 201s ‘$4220.000 | — $206.06] 5124598 S055 56719 2 2016 s3a1g000] —S206000 124599 sunsso 6719 3 2017 $3,708000] $206.00 5124598 3330555, 96719 4 2018 s3smzow| $205.00 rans sxanse5 $679 5 28 $8236 000 |] $206 000 sizasaa 305s 5356.79 6 00 $325n000} $205.00, 124599 sx0558 39679 | 7 an Szaagoq | 5205000 124509 sso $679 8 an 257000] $205 000| 5124599 $0559 356,719 8 203 sza7zo00| $205.00 512459 sx0558 579 0 am $2286 .000] $205.00 sass 330596 5396718 n mms sz0eqe00] $205.00 512459 sx3058 5386 719| 2 ams siasgo00| $206.00 5124599 s330588 536,73 2 2 s.51g000} $205 000 5i24sss 330588 5386718 | u ams $1442.000) $206 000 s12asss 330556 s386718, 5 mms $1236000] $206 000 3124586 30590 $386,718, 6 280 ‘s3pagg00} $206,000 si295ss| 30505 $306 718 a 2st $s2g000] $206 000 s123599| 0599] $386718 ry mea Ssug00] $206,000 s1245s9| 320,599 S386 719 2» 2033 $1000] $206,000 s12gsso| 330599] S679 0 204 6000] $206 000 124509 30599 396719 Total or Average S200 $201.89 ‘Sesuise9| 57594367 Sour BS Anects ne > This s the income produced by 9 propecty (rough rents ond other miceleneovs Income, lie vacaney cote and

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