APPRAISAL REPORT OF Restaurant/Bar and Paid Public Parking ...

APPRAISAL REPORT OF Restaurant/Bar and Paid Public Parking Lot Property
203-207 S. Atlantic Avenue New Smyrna Beach, Volusia County, Florida
PREPARED BY
PREPARED FOR
MIDFLORIDA Credit Union 129 South Kentucky Avenue, Suite 500
Lakeland, Florida 33801
DATE OF VALUATION
July 17, 2019
DATE OF REPORT July 19, 2019
498 Palm Springs Drive, Suite 100, Altamonte Springs, FL 32701 Office: 407-369-8080 [email protected]
July 19, 2019
Ms. Daniela Hughes AVP Commercial Loan Administrator MIDFLORIDA Credit Union 129 South Kentucky Avenue, Suite 500 Lakeland, Florida 33801 RE: Appraisal Report –Restaurant/Bar and Paid Public Parking Lot Property, located at 203-207 S.
Atlantic Avenue, in New Smyrna Beach, Volusia County, Florida Dear Ms. Hughes: At your request, I have personally inspected and appraised the above-referenced property. The subject property consists of a 40,930-square-foot site, which is divided into two parts. The northern portion of the property contains 25,350 square feet of land area, and is improved with a two-story restaurant and bar containing a total of 7,615 rentable square feet, all of which is air-conditioned space. The southerly portion of the property contains 15,580 square feet of land area, and is improved with a 30-space parking lot, which is available to the public for daily paid parking. The purpose of this appraisal is to estimate the market value of the fee simple interest in the subject property, under market conditions prevailing on July 17, 2019. The value is subject to the assumptions and limiting conditions outlined within this report. The results of the valuation are discussed herein. An appraisal report, in compliance with the Uniform Standards of Professional Appraisal Practice Standard 2-2(a), has been completed. Based upon the assumptions, conditions, and contingencies as discussed in this report, it is my opinion and conclusion that the estimated market value of the fee simple interest in the subject, under market conditions prevailing on July 17, 2019, is:
SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS ($7,900,000)
Christopher A. Rolly, MAI Cert Gen RZ1743
Restaurant/Bar and Paid Public Parking Lot Appraisal
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© Commercial Investment Appraisers
TABLE OF CONTENTS
SUMMARY OF RELEVANT FACTS ...................................................................................................................... 1 APPRAISAL PREMISES ............................................................................................................................................ 2 IMPORTANT DEFINITIONS .................................................................................................................................. 3 GENERAL PROPERTY CHARACTERISTICS ........................................................................................................ 4 LOCATION MAPS ................................................................................................................................................... 6 AERIAL MAP ............................................................................................................................................................ 10 PHOTOGRAPHS .................................................................................................................................................... 11 ECONOMIC CONDITIONS ................................................................................................................................ 25 METROPOLITAN STATISTICAL AREA OVERVIEW ....................................................................................... 34 COUNTY CENSUS DATA .................................................................................................................................... 38 NEIGHBORHOOD DESCRIPTION ................................................................................................................... 41 SITE DESCRIPTION ................................................................................................................................................ 44 IMPROVEMENTS DESCRIPTION ....................................................................................................................... 49 HIGHEST AND BEST USE ANALYSIS ................................................................................................................ 51 VALUATION METHODOLOGY ........................................................................................................................ 53 COST APPROACH ................................................................................................................................................ 54 SALES COMPARISON APPROACH .................................................................................................................. 62 INCOME APPROACH .......................................................................................................................................... 67 RECONCILIATION/FINAL ESTIMATE OF VALUE .......................................................................................... 80 LIQUIDATION VALUE .......................................................................................................................................... 81 GENERAL UNDERLYING ASSUMPTIONS AND LIMITING CONDITIONS .......................................... 82 CERTIFICATION ..................................................................................................................................................... 84 QUALIFICATIONS OF CHRISTOPHER A. ROLLY, MAI ............................................................................... 86 ADDITIONAL EXHIBITS ....................................................................................................................................... 87
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©Commercial Investment Appraisers Page | 1
SUMMARY OF RELEVANT FACTS Property Type Restaurant/Bar and Paid Public Parking Lot Location The subject is located on the east side of S. Atlantic Avenue, south of Flagler Avenue, in New Smyrna Beach, Volusia County, Florida. The physical address is 203-207 S. Atlantic Avenue, New Smyrna Beach, Florida 32169. Date of Valuation July 17, 2019 Property Rights Appraised Fee simple interest Land Size 40,930 total square feet, with 25,350 square feet allocated to the restaurant/bar, and 15,580 square feet allocated to the parking lot Improvements Two-story restaurant/bar building totaling 7,615-gross-square-feet; 30 space paid parking lot with electronic parking meter Zoning MU, Mixed Use (Central Business District), by New Smyrna Beach, Florida Land Use Commercial, by New Smyrna Beach, Florida Highest and Best Use Commercial Retail/Parking Lot (As Vacant) Bar/Restaurant/Parking Facility (As Improved) Fee Simple Interest Value Cost Approach $5,580,000 Sales Comparison Approach $7,970,000 Income Approach $7,750,000 Reconciled Value $7,900,000 Land Value $2,250,000
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APPRAISAL PREMISES Purpose/Property Rights Appraised/Date of Valuation The purpose of this appraisal is to estimate the market value of the fee simple interest in the subject, under market conditions prevailing on July 17, 2019. Intended Use of the Appraisal The intended use of this appraisal report is for determining loan and credit underwriting decisions that will be made MIDFLORIDA Federal Credit Union. Client and Intended User of the Appraisal The client and intended user of the appraisal is MIDFLORIDA Federal Credit Union and/or its assigns. Appraiser Christopher A. Rolly, MAI Scope of the Assignment The subject property is located in the Orlando MSA, in New Smyrna Beach, Florida. The appraiser completed the research and analysis necessary to arrive at a supported opinion of value. The subject property and surrounding neighborhood were inspected. County records were researched for ownership information, real estate taxes and assessments, utilities, and zoning regulations. Similar properties and sales were examined. Comparable sales were verified with a party related to the transaction. The highest and best use of the subject property was determined as if vacant and as improved. The Cost, Sales Comparison, and Income Approaches were used to estimate the fee simple value of the subject. The applicability, dependability, weaknesses and strengths of the approaches were considered, and a final reconciliation of market value is estimated. Finally, a report of the defined value is prepared. Competency Provision Appraisals of similar commercial-related properties throughout the State of Florida have been performed by Christopher A. Rolly, MAI since 1989. Based on the appraisals completed by the above individual and his general knowledge of the market area, the competency provision has been satisfied. Exposure/Marketing Time It is the appraiser’s opinion that the exposure time and the marketing time are the same, under current market conditions, estimated at six to 12 months at the appraised value herein. The exposure/marketing period has been estimated from conversations with real estate brokers in the subject’s market, along with an analysis of comparable properties that have sold recently. Hypothetical Conditions None Extraordinary Assumptions None
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IMPORTANT DEFINITIONS Market Value The most probable price in cash which a property should bring in a competitive and open market under all conditions requisite to 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 consummation of a sale as of a specified date and passing the title from seller to buyer under condition whereby:
• Buyer and seller are typically motivated;
• Both parties are well informed or well advised and each acting in what he considers his own best interests;
• A reasonable time is allowed for exposure in the open market
• Payment is made in cash in U.S. Dollars or in terms or 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. (The Appraisal of Real Estate, 13th Edition and Chapter 12, Code of Federal Regulation, Part 34.43(g))
Highest and Best Use The reasonably probable and legal use of vacant land or improved property which is physically possible, appropriately supported, financially feasible, and that results in the highest value. (The Appraisal of Real Estate, 13th Edition) Fee Simple Absolute ownership unencumbered by any other interest or estate. (The Appraisal of Real Estate, 13th Edition) Fee simple An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; the rights of the lessor or the fee simple owner and fee simple are specified by contract terms contained within the lease. (The Appraisal of Real Estate, 13th Edition)
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GENERAL PROPERTY CHARACTERISTICS Owner BBMD Properties LLC 364 Flagler Avenue New Smyrna Beach, Florida 32169 Three-Year Ownership History The subject property has been owned by BBMD Properties, LLC since August of 2016. Although the property was improved with a bar, it was purchased mostly for the underlying land from Flagler Dunes, LLC for the amount of $1,700,000. The previous owner purchased the property in 2004. The $1,700,000 purchase price for the underlying land is below the estimated current land value of $2,250,000; however, according to the developer, they got a very good deal on the property. No other arm’s length transactions involving the subject have been recorded in the public records of Volusia County for the past three years. Legal Description Lot 1 and the South 20 feet of Lot 2, Block 9, W.L. COOPER’S SUBDIVISION, according to the plat thereof as recorded in Map Book 5, Page(s) 165, of the Public Records of Volusia County, Florida, West of Buenos Ayres Avenue. And Lots 3 and 4 and the North 30 feet of Lot 2, Block 9, less and except the westerly 10 feet of the northerly 30 feet of Lot 2, and the Westerly 10 feet of Lots 3 and 4, Block 9, W.L. Cooper Resubdivision of Lot 4, Section 9, Township 17 South, Range 34 East, according to the Plat thereof recorded in Map Book 5, Page 165 of the Public Records of Volusia County, Florida. Tax I.D. Numbers 09-17-34-06-09-0010; 09-17-34-06-09-0030 Real Estate Assessment and Taxes The subject property is currently assessed and taxed by Volusia County. The current assessment and taxes for the subject are as follows:
2018 Restaurant Assessment: $724,318
Total 2018 Assessment: $1,095,427
Taxes and Assessment
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The subject’s assessed value is well below the market value estimated herein. Florida tax laws require that properties be assessed based on "just value," a concept which is not adequately defined by the statutes. While it is generally taken to mean "full value," in practice assessments vary widely and do not provide reliable indications of market value as defined herein. Real property taxes are due March 1st, and the tax assessment is discounted 4% if paid in November, 3% if paid in December, 2% if paid in January, and 1% if paid in February. The subject has no delinquent taxes according to the Volusia County Tax Collector’s office.
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LOCATION MAPS
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AERIAL MAP
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PHOTOGRAPHS
A southerly view of S. Atlantic Avenue with the subject on the left
An easterly view of the subject from S. Atlantic Avenue
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An easterly view of the restaurant parking area
A southeasterly view of the subject from the parking lot
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A northerly view of the subject from the paid parking lot
A westerly view of the subject’s paid parking lot
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A view of the subject’s electronic parking meter
A southerly view of Buenos Aires Street with the subject on the right
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A westerly view of the subject
A northerly view of Buenos Aires Street with the subject on the left
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A westerly view of the subject’s parking lot
An easterly view of the paid parking lot from S. Atlantic Avenue
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An interior view of the subject’s restaurant building
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ECONOMIC CONDITIONS For the second consecutive year, the U.S. economy outperformed expectations and broke from recent trends by a substantial margin. In June 2017, the Congressional Budget Office projected that during the four quarters of 2018, real gross domestic product (GDP) would grow by 2.0 percent, the unemployment rate would decline by 0.1 percentage point, to 4.2 percent, and employment growth would average 107,000 jobs per month. Instead, real GDP in the first three quarters of 2018 grew at a compound annual rate of 3.2 percent— above the Trump Administration’s own fourth quarter–over–fourth quarter forecast for the second successive year—the unemployment rate declined by 0.4 percentage point, to a near-50-year low of 3.7 percent, and employment growth averaged 223,000 jobs per month. Growth in labor productivity, which averaged just 1.0 percent between 2009:Q3 and 2016:Q4, doubled to 2.0 percent in 2018. Capital expenditures by nonfinancial businesses rose 13.9 percent at a compound annual rate through 2018:Q3. Figures I-1 through I-4 show that the strong economic performance in 2017 and 2018 was not merely a continuation of trends already under way during the postrecession expansion, but rather constituted a distinct break from the previous pace of economic and employment growth since the start of the current expansion in 2009:Q3.
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The figures depict observed outcomes before (blue) and after (red) the election, with the dotted lines representing the projected trend estimated on the basis of preelection data. Consistent with conclusions in the 2018 Economic Report of the President, investment, manufacturing employment, worker compensation, and new startups have all risen sharply in the two years since the 2016 election. In addition, overall economic output by the third quarter of 2018 was $250 billion, or 1.3 percent, larger than projected by the 2009:Q3–2016:Q4 trend, with the compound annual growth rate up 1.2 percentage points over trend. Higher output growth was driven by a marked rise in real private investment in fixed assets, which was 10.6 percent over the projected trend as of the third quarter. In the first three quarters of 2018, the contribution of real private nonresidential fixed investment to GDP growth rose from 0.6 percentage point, the average of the preceding expansion, to 1.0 percentage point, while investment as a share of GDP rose to its second-highest level for any calendar year since 2001. Real private nonresidential fixed investment by nonfinancial businesses rose 8.3 percent at a compound annual rate through 2018:Q3, climbing to a level 14.7 percent above that projected by the 2009:Q3–2016:Q4 trend. As of December 2018, average nominal weekly earnings of goods producing production and nonsupervisory workers had risen $2,300 above trend on an annualized basis. In the chapters that follow, we demonstrate that these departures from the recent trend are not accidental but rather reflect the Trump Administration’s deliberate measures to create and maintain conditions under which the U.S. economy can achieve maximum employment, production, and purchasing power. Specifically, a unifying theme is that these conditions are generally achieved by providing maximum scope for the efficiency of free enterprise and competitive market mechanisms, and ensuring that these mechanisms are operative in both domestic and global markets. Current data was used to examine the Tax Cuts and Jobs Act’s (TCJA’s) anticipated and observed effects, with particular attention to the relative velocities of adjustment along each economic margin. By lowering the cost of capital, the TCJA had an instant and large effect on business expectations, with firms immediately responding to the TCJA by upwardly revising planned capital expenditures, employee compensation, and hiring. Revised capital plans translated into higher capital expenditures and real private investment in fixed assets, with nonresidential investment in equipment, structures, and intellectual property products growing at a weighted average annual rate of about 8 percent from 2017:Q4 through 2018:Q3, climbing to $150 billion over the pre- TCJA expansion trend of 2009:Q3 through 2017:Q4. (Equipment investment trends are calculated through 2017:Q3, because the TCJA’s allowance of full expensing of new equipment investment was retroactive to September 2017.) In addition to tallying more than 6 million workers receiving bonuses directly attributed to the TCJA, with an average bonus size of $1,200, it was also estimated that real disposable personal income per household rose to $640 over the trend by the third quarter of 2018, or 16 percent of the CEA’s estimated long-run effect of $4,000 per household. In real terms, median usual weekly earnings of all full-time wage and salary workers were up $805 over trend on an annualized basis. There is evidence of a reorientation of U.S. investment from direct investment abroad to investment in the United States, as the TCJA attenuated incentives to shift productive assets and profits to lower-tax jurisdictions. Specifically, in the first three quarters after the TCJA’s enactment, U.S. direct investment abroad declined by $148 billion, while direct investment in eight identified tax havens declined by $200 billion. In the first three quarters of 2018, U.S. firms repatriated almost $600 billion in overseas earnings. Based on extensive evidence from a large body of corporate finance literature, we conclude that shareholder distributions through share repurchases are an important margin of adjustment to a simultaneous positive shock to cash flow and investment, constituting the primary mechanism whereby efficient capital markets reallocate capital from mature, cash-abundant firms without profitable investment opportunities to emerging, cash-constrained firms with profitable investment opportunities.
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The Administration’s important deregulatory efforts have led to improved performance over the previous two years. A framework was developed to analyze the cumulative economic impact of regulatory actions on the U.S. economy. As the first Administration to use regulatory cost caps to reduce the cumulative burden of Federal regulation, the Trump Administration in 2017 and 2018 issued more deregulatory actions than regulatory actions and reversed the long-standing trend of rising regulatory costs. By raising the cost of conducting business, regulation can prevent valuable business and consumer activities. More important, however, regulations in one industry affect not only the regulated industry or sector but also the economy as a whole. This implies that official measures understate regulatory costs and therefore also understate the regulatory cost savings of the Trump Administration’s regulatory reforms because they do not account for relevant opportunity costs, especially those accruing outside the regulated industry. The official data show that from 2000 through 2016, the annual trend was for regulatory costs to grow by an average of $8.2 billion each year. In contrast, in 2017 and 2018 Federal agencies took deregulatory actions that resulted in costs savings that more than offset the costs of new regulatory actions. The official data show that in fiscal year 2017, the deregulatory actions saved $0.6 billion in annualized regulatory costs (with a net present value of $8.1 billion); and in fiscal year 2018, the deregulatory actions saved $1.4 billion in annualized regulatory costs (with a net present value of $23 billion). Looking at just three important deregulatory case studies, the CEA calculates that the three actions will reduce annual regulatory costs by an additional $27 billion. Expanding labor force opportunities for every American has had a dramatic effect on the revival of the economy and the labor markets. Consistent with the robust pace of economic growth in the United States, the labor market is the strongest that it has been in decades, with an unemployment rate that remained under 4 percent for much of 2018. Employment is expanding and wages are rising at their fastest pace since 2009. Whenever both quantity and price go up in a market, this must be partly driven by a rise in demand. This suggests that an important change in the labor market has been an increase in the demand for labor, induced potentially by a supplyside expansion enabled by tax reform and deregulation. Although the low unemployment rate is a signal of a strong labor market, there is a question as to whether the rapid pace of hiring can continue and whether there are a sufficient number of remaining potential workers to support continued economic growth. This pessimistic view of the economy’s potential, however, overlooks the extent to which the share of prime-age adults who are in the labor market remains below its historical norm. As is explored, potential workers could be drawn back into the labor market through Administration policies designed to reduce past tax and regulatory distortions and to encourage additional people to engage in the labor market. Policies examined that intend to increase labor force participation include reducing the costs of child care, working with the private sector to increase employer training and reskilling initiatives, and pursuing criminal justice reform to increase labor force engagement among affected communities. We also highlight the potential benefits of reducing occupational licensing, and incentivizing investment in designated Opportunity Zones to improve economically distressed areas, as provided for in the TCJA. Enabling choice and competition in healthcare markets seek to address the 1946 mandate to analyze how to “foster and promote free and competitive enterprise” to a greater extent in the U.S. healthcare sector. The rationales commonly offered for government intervention in healthcare explain why such interventions often, and unnecessarily, restrict choice and competition, demonstrating that the resulting government failures are frequently more costly than the market failures they attempt to correct. Recent public proposals to dramatically increase government intervention in healthcare markets, such as “Medicare for All,” were estimated to eliminate or decrease choice and competition. As a result, these proposals would be inefficient, costly, and likely reduce, as opposed to increase, the population’s health. Funding them would create large
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distortions in the economy, with the universal nature of “Medicare for All” constituting a particularly inefficient way to finance healthcare for lower- and middle- income people. Such proposals are contrasted with the Trump Administration’s actions that are increasing healthcare choice and competition for healthcare. The focus has been on the elimination of the Affordable Care Act’s individual mandate penalty, which will enable consumers to decide for themselves what value they attach to purchasing insurance and which we project will generate $204 billion in value over 10 years. Expanding the availability of association health plans and short- term, limited-duration health plans will increase consumer choice and insurance affordability. Taken together, these three sets of actions will generate a value of $453 billion over the next decade. On the pharmaceutical front, the Food and Drug Administration is increasing price competition by streamlining the drug application and review process at the same time that record numbers of generic drugs are being approved, price growth is falling, and consumers have already saved $26 billion through the first year and a half of the Administration. In addition, the influx of new, brand name drugs resulted in an estimated $43 billion in annual benefits to consumers in 2018. Chapter 5, “Unleashing the Power of American Energy,” discusses the important role of energy markets in the new economic revival and the Administration’s goal of stimulating free market innovation to enable U.S. energy independence. Coal production stabilized in 2017 and 2018 after a period of contraction in 2015 and 2016. The United States is now a net exporter of natural gas for the first time in 60 years, and petroleum exports are increasing at a pace that suggests positive net exports by 2020. Taking advantage of America’s abundant energy resources is a key tenet of the Trump Administration’s plan for long-term economic growth as well as national security. This is best achieved by recognizing that price incentives and the role of technological innovation—which is guided by the price incentive in a market economy like that of the United States—are critical for understanding the production of both renewable natural resources and nonrenewable natural resources like petroleum. By enabling domestic production, the Administration seeks to facilitate the evolution of the U.S. economy’s role in global markets. Since the President took office, the U.S. fossil fuels sector has set production records. These were led by technological improvements, tax changes that lowered the cost of investing in mining structures, elevated global prices, and deregulatory actions that raised the expected returns of energy projects. In order to ensure a balanced financial regulatory landscape, the causes and consequences of, and responses to, the financial crisis of 2008 were analyzed. In particular, the absence of actuarially fair pricing of implicit government guarantees of financial institutions and markets was a major factor exacerbating the crisis were analyzed. Unfortunately, it was found that the salient legislative response to the crisis—the 2010 Dodd-Frank Act—not only failed to resolve this flaw but also excessively raised regulatory complexity, with the increased cost of compliance falling disproportionately on small and midsized financial institutions, which account for a disproportionate share of commercial and industrial lending to small and medium-sized enterprises. In addition to articulating the Administration’s approach to achieving the Seven Core Principles for financial regulation, established by Executive Order 13772, chapter 6 also demonstrates how the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 released small and medium-sized banks from the more restrictive provisions of Dodd-Frank, while preserving heightened regulatory oversight of genuinely systemically important financial institutions. Again reflecting the CEA’s 1946 mandate to evaluate current and foreseeable trends in the levels of employment, production, and purchasing power, adapting to technological change with artificial intelligence while mitigating cyber threats analyzes how technological change in information technology is likely to affect future U.S. labor markets. a review of the latest developments in artificial intelligence (AI) and automation, conclude that a narrow, static focus on possible job losses leads to a misleading picture of the likely effects of AI on the Nation’s economic well-being. Technological advances might eliminate specific jobs, but they do not generally eliminate work, and over time they will likely greatly increase real
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wages, national income, and prosperity. For example, technological change enabled many agricultural economies to transition from having a majority of the economy being devoted to food production to a small percentage of the economy being able to better feed its population than before. Automation can complement labor, adding to its value, and even when it substitutes for labor in certain areas, it can lead to higher employment in other types of work and raise overall economic welfare. That appears likely to be the case as AI applications diffuse through the economy in the future, though important new challenges will arise concerning cybersecurity. Indeed, AI appears poised to automate or augment economic tasks that had long been assumed to be out of reach for automation. Despite the economic resurgence of the past two years, there has been a rise in interest in vacating the free enterprise principles that have been instrumental to that recovery, and in turning instead to more socialized production methods that have generally been abandoned in countries that have tried them. An analysis of Markets versus Socialism shows the empirical evidence on the economic effects of varying degrees of socialization of productive assets and the income generated by those assets. Hayek (1945) argued that the essential role of a competitive market price mechanism is to communicate dispersed and often incomplete knowledge, whereby firms will expand and consumers contract activity when prices are high and vice versa when prices are low, with both sides of the market thereby being guided by prices to equate demand with supply. It was found that experiences of socialism that do not use prices to guide production and consumption this way have generally been characterized by distorted incentives and failures of resource allocation—in some extreme instances, on a catastrophic scale. In addition to quantifying the human and economic costs of highly socialist systems, we also estimate the effects of more moderate degrees of socialization. We find that even among market economies, average income and consumption are lower in those with relatively high levels of government taxes and transfers as shares of output— such as Denmark, Sweden, Norway, and Finland—than in the United States. This is because the relatively high average tax rates on middle incomes that finance this “Nordic model” also disincentivize generating income in the first place. It was estimated that if the recent U.S. proposals for socialized medicine in terms of “Medicare for All” were implemented and financed by higher taxes, GDP would decline by 9 percent, or about $7,000 per person, in 2022. Reducing poverty and improving self-sufficiency in America has had an impact on the revival of the economy, more specifically on low-income households, and the Trump Administration’s approach to escaping poverty through economic growth and work-based public policies. President Lyndon B. Johnson declared a War on Poverty in January 1964. When using a full-income measure of poverty that is capable of capturing success in the War on Poverty, it was found that poverty declined from 19.5 percent in 1963 to 2.3 percent in 2017. This far exceeds the decline from 19.5 to 12.3 percent according to the Official Poverty Measure. However, victory was not achieved by making people self-sufficient, as President Johnson envisioned, but rather through increased government transfers. A new war on poverty should seek to further reduce material hardship based on modern standards, but should do so through incentives to achieve work and self-sufficiency. The Trump Administration has implemented important actions along these lines, which include: expanding work requirements for nondisabled, working-age welfare recipients in noncash welfare programs; increasing child care assistance for low-income families; and increasing the reward for working by doubling the Child Tax Credit and increasing its refundability. Overall, assuming full implementation of the Trump Administration’s economic policy agenda, it was projected that real U.S. economic output to grow at an average annual rate of 3.0 percent between 2018 and 2029. To this end, there is evidence supporting the CEA’s endorsement of free, competitive enterprise relying on market prices to guide economic activity over alternatives
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demanding increased socialization of productive assets and a consequently diminished role for market prices. (Source: Economic Report of the President) Significant economic indicators are shown in the following tables:
Source: Mergent’s (Formerly Moody’s) Bond Record
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Source: bankrate.com
Source: InflationData.com
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U.S. GDP Growth Rate - Source: TradingEconomics.com
Source: U.S. Bureau of Labor Statistics
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Source: RealtyTrac
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METROPOLITAN STATISTICAL AREA OVERVIEW The Orlando Metropolitan Statistical Area includes Lake County, Orange County, Osceola County and Seminole County. Major cities in the Orlando MSA include Orlando, Kissimmee, Winter Park, Altamonte Springs, Clermont, Lake Mary, Longwood, Maitland, Sanford and St. Cloud. The Orlando MSA is located in Central Florida, about 30 miles from the east coast and 75 miles from the west coast. The Orlando MSA is Florida's third-largest metropolitan area, behind the Miami-Fort Lauderdale MSA and Tampa-St. Petersburg-Clearwater MSA, and is the 26th largest MSA in the country, and the fifth largest in the Southeast. Already with a population of more than 2 million, Metro Orlando is projected to be among the nation's fastest-growing regions in this decade, with over one third of its population between the ages of 18 and 44. The Orlando–Kissimmee–Sanford MSA is further listed by the U.S. Office of Management and Budget as part of the Orlando– Deltona–Daytona Beach, Florida Combined Statistical Area. This includes the Metropolitan Statistical Areas of Deltona–Daytona Beach–Ormond Beach (Volusia County) and Palm Coast (Flagler County), as well as the micropolitan area of The Villages (Sumter County). The Combined Statistical Area was estimated to have a population of 2,818,120. The leading industries in the greater Orlando area are leisure and hospitality, 21.3%, Professional Business Services, 16.9%, Education and Health Services 12.6%, and Retail Trade, 12.2%. Tourism is the largest employer in Metro Orlando, with direct industry jobs accounting for 24.2% of the area's total employment. The largest employer is Walt Disney World, with over 74,000 employees, followed in descending order by Universal Orlando with 21,000 employees; the Adventist Health System with 20,413 employees; Publix with 19,783 employees; Orlando International Airport with 18,000 employees; and Orlando Health with over 16,828 employees. Other major employers include Darden Restaurants, Seaworld Parks & Entertainment, and Lockheed Martin. The Orlando area’s main economic power is tourism. The globally recognized tourism industry saw a record 66 million visitors in 2015. There are three major theme parks in Orlando including Walt Disney World, Universal Studios, and Sea World. Outside of those parks there are many other small attractions throughout the area. Additionally, the ocean beaches in eastern Volusia County are a major draw for tourists. Some of the biggest hotels in the country are located in Orlando, including Orlando Marriott World Center, JW Marriott/Ritz-Carlton Orlando Grande Lakes, and Peabody Orlando, as well as many large Disney resort hotels. The Orange County Convention Center is the second largest convention center in the United States, with 2.1 million square feet of exhibition space, and 480,000 square feet of function space. The area's economy is also heavily concentrated in manufacturing. The manufacturing industry is marked by a total of over 4,000 companies, and Orlando holds a ranking as one of the top 50 MSAs for manufacturing. Lockheed-Martin has a large manufacturing facility for missile systems, aeronautical craft and related high tech research. Other engineering firms have offices or labs in the Central Florida area including KDF, General Dynamics, Harris, Westinghouse, Siemens, multiple USAF facilities, Naval Air Warfare Center Training Systems Division, Delta Connection Academy, Embry-Riddle Aeronautical University, GE, Air Force Agency for Modeling and Simulation, Army Simulation Training and Instrumentation Command, AT&T, Boeing, CAE Flight Systems & Simulation Training, HP, Institute for Stimulation and Training, Northrop Grumman, and Raytheon Systems. The region has three international airports, including Orlando International Airport (which is the fifth largest origin & destination airport in the U.S.), and Orlando-Sanford International Airport, which handled more than 2 million passengers in 2015 along with 1,316 tons of cargo. Additionally, the Daytona International Airport is located approximately one hour east of Orlando. The area also has municipal airports that include Orlando Executive Airport, Kissimmee Gateway Airport, Ormond
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Beach Municipal Airport, and Deland Municpal Airport. The Orlando MSA also has proximity to two deep water ports, including Port Canaveral on the east coast and the Tampa Cruise Terminal on the west coast. The MSA also has extensive road and rail systems. The largest rail network in the eastern United States, CSXT is the core business unit of CSX Corporation. CSXT provides rail freight transportation over a network of more than 23,000 route miles in 23 states, the District of Columbia and two Canadian provinces. With its headquarters in Jacksonville, FL and key facilities in Tampa, Orlando and Pensacola, CSXT owns and maintains approximately 1,750 route miles in Florida. Their customers represent some of the state's largest industries, specializing in processed foods, phosphates and fertilizers, forest products and manufactured goods. The company employs more than 6,800 Florida residents. The Florida Central Railroad was established in 1986 and expanded in 1990 as part of the Pinsly Railroad Company. It is located in the heart of central Florida. The FCEN operates 68 miles of track and directly serves industries in Orlando, Plymouth, Zellwood, Mt. Dora, Tavares, Eustis, Umatilla, Ocoee, and Winter Garden. All interchanges are made with CSXT in Orlando, Florida. Due to its centralized location, the FCEN provides a competitive alternative to trucking and easy access to markets across Florida. Florida’s Turnpike and Interstate 4 bisect in Orlando. The I-4 Ultimate construction project is one of the largest infrastructure projects in the nation. The 21-mile makeover — from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County — will transform the region. Toll roads include State Road 528, State Road 408, State Road 417 and State Road 429 — 100 miles encircling Orlando. Wekiva Parkway, the final portion of the toll beltway, is under construction. The Central Florida Expressway Authority (CFX) and Florida’s Turnpike Enterprise manage this network and operates an electronic toll collection system known as E-PASS, one of the first and most widely- used systems of its kind in the U.S. Current or upcoming transportation infrastructure investments include:
-$2.3 billion in I-4 Ultimate, an overhaul of Interstate 4 which connects the Gulf of Mexico to the Atlantic Ocean; -$2.2 billion express train connecting Orlando to Miami called Brightline by All Aboard Florida; -$1.8 billion expansion at Orlando International Airport; -$1.6 billion creation of the Wekiva Parkway, completing Orlando’s beltway system; -$650 million expansion at Port Canaveral; and -$615 million investment in the region’s commuter rail system, SunRail.
The University of Central Florida currently has more than 60,000 students, and is now the second
largest university in the United States, with the 6th largest campus in the nation. The University has
an international reputation for innovation in laser/optics and hospitality, and has a newly opened
medical school, as well. The University is also home to one of the nation's top Tech Incubators and
boasts more than $122 million in annual research dollars, many of which are matched with
company dollars in joint research projects. The University of Central Florida’s Institute for Simulation
& Training developed the nation’s first masters and PhD programs in simulation and human
performance enhancement.
Located in Winter Park is Rollins College, which is ranked the number one regional university in the
south and number one MBA program in the state. Also included in the state college system are
Valencia College, Lake-Sumter State College, and Seminole State College; as well as Embry Riddle
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Aeronautical University, the Florida A&M University School of Law, Stetson University, Bethune-
Cookman University, Barry University School of Law, and the first stateside campus of Puerto Rican-
based Ana G. Mendez University.
Healthcare in the region is comprehensive, with internationally recognized programs in cardiology,
cancer, women’s medicine, neurology, diabetes, orthopedics and rehabilitation. According to the
American Hospital Association, two of the nation’s largest healthcare systems, Florida Hospital and
Orlando Health are headquartered in the region.
Orlando is home to an emerging 'medical city' at Lake Nona. Medical City at Lake Nona represents a deliberate strategy to create a centralized focus of sophisticated medical treatment, research and education in Central Florida. Some of the major corporations within the Medical City include SanfordBurnham Medical Research Institute, VA Medical Center (134 inpatient beds, 120 community living center beds, a 60 bed domiciliary), Nemours Children’s Hospital (137 beds), Florida Hospital (36 exam rooms & future surgery center), the University of Central Florida Health Sciences Campus and the University of Florida Academic & Research Center. Medical City projects planned or under construction are expected to have a $7.6 billion impact and add 30,000 jobs by 2017 transforming Central Florida into a world-class bio hub. Currently over 150 biotech and life sciences firms operate within the area.
Other significant highlights of the Greater Orlando MSA are as follows:
• The City of Orlando has a vibrant, downtown core with Amway Center, home of the Orlando Magic.
• The Dr. Phillips Center for the Performing Arts, in the heart of downtown Orlando, is a premiere destination for world-class arts, culture and entertainment.
• Orlando’s Camping World Stadium (Formerly the Citrus Bowl), which underwent extensive renovations, is the only facility in the world that plays host to back-to-back NCAA Bowl games: the Russell Athletic Bowl in December and the Capital One Bowl on New Year’s Day.
• National Training Center, a facility where local residents, national and international athletes of all levels gather to train and build strength. World-class track and field athletes from the USA, Bahamas, Trinidad and Tobago, Great Britain, Jamaica, Netherlands/Antilles, Nigeria and Barbados are among those who have took advantage of this resource while training for the Olympic Games.
• The region is home to more than 100 top-rated golf courses, which are available for play 365 days a year. The annual Arnold Palmer Invitational and The World Challenge are just a few of the tournaments that attract top players to Central Florida.
• Orlando is home to a new commuter rail system, SunRail, whose first phase began operation in May of 2014. Also in the planning stages is All Aboard Florida, a privately founded intercity passenger rail service that will connect Miami and Orlando.
• Metro Orlando has a rapidly growing $13.4 billion technology industry employing 53,000 people.
• Orlando has nationally recognized clusters of innovation in digital media, agritechnology, aviation and aerospace, and software.
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• Industry giant Electronic Arts - the world's leading independent developer and publisher of interactive entertainment software - creates some of the world's top-selling games in Metro Orlando, including the popular Madden NFL Football, Tiger Woods PGA Tour and several other game series.
• Daytona International Speedway is the home of "The Great American Race" -the DAYTONA 500. Though the season-opening NASCAR Sprint Cup event garners most of the attention - as well as the largest audience in motorsports - the enormous 480-acre motorsports complex boasts the most diverse schedule of racing on the globe, thus earning it the title of "World Center of Racing." In addition to eight major weekends of racing activity, rarely a week goes by that the Speedway grounds are not used for events that include civic and social gatherings, car shows, photo shoots, production vehicle testing and police motorcycle training.
• Metro Orlando has the 7th largest research park in the country (Central Florida Research Park) with over 1,025 acres. It is home to over 120 companies, employs more than 8,500 people, and is the hub of the nation’s military simulation and training programs.
• Metro Orlando is home to the simulation procurement commands for the U.S. Army, Navy, Air Force, Marines and Coast Guard.
• In 2016 Orlando will also be home to more than 100 tennis courts as the “new home of American tennis” with the United States Tennis Association and a brand new $27 million sports complex in Seminole County.
• A new 19,500-seat soccer stadium, scheduled to open in 2017, will be home to the MLS's Orlando City Soccer Club and the NWSL's Orlando Pride.
More than 150 international companies, representing approximately 20 countries, have facilities in Metro Orlando. Summary While Metro Orlando is renowned worldwide for its tropical climate and relaxed lifestyle, the region also is one of the top 10 locations in the country for business. From corporate headquarters to regional distribution centers, from product manufacturing to high tech research, the region of Orange, Seminole, Lake, Volusia, and Osceola counties and the City of Orlando spans a dynamic economic spectrum. The Orlando areas convenient, central location and excellent roadway system make it easily accessible to the state of Florida, and Orlando is listed among the top locations for quality of life.
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COUNTY CENSUS DATA
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NEIGHBORHOOD DESCRIPTION
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The neighborhood is the area which has the most direct influence on the subject property. Neighborhood boundaries are frequently delineated by physical barriers such as roads or bodies of water, or changes in property use. A neighborhood is defined by The Appraisal of Real Estate, 13th Edition, as a group of complementary uses. The neighborhood boundaries are determined by physical boundaries and property types and uses. The subject neighborhood boundaries were chosen based primarily on the extensive road system that traverses the neighborhood, providing excellent transportation routes for a commercial market. A map depicting the neighborhood boundaries is shown on the previous page. The neighborhood boundaries for the subject are as follows:
Neighborhood Boundaries
East Atlantic Ocean 0.25
West Indian River 0.40
The subject property is located in the eastern portion of Volusia County along the Atlantic Ocean within the City limits of New Smyrna Beach. New Smyrna Beach is approximately 56 miles northeast of Orlando and 15 miles south of Daytona Beach. The subject’s neighborhood consists of the properties located south of Sapphire Road, north of E. 5th Avenue, west of the Atlantic Ocean and east of the Indian River. Land Uses The neighborhood is generally characterized by commercial development along S.R. 44, S. Atlantic Avenue, and Flagler Avenue, backed by residential development. The subject neighborhood can only be accessed via causeways over the Indian River. This area is over 95% developed with limited amounts of vacant land suitable for newer development. Recent new development in the area consists of the subject restaurant/bar, a Marriott Hotel, and a Hampton Inn Hotel & Suites. The commercial development in close proximity to the subject along Flagler Avenue caters to the areas vibrant tourism industry and consists of primarily retail-oriented businesses. The area includes a number of retail shops, restaurants, and real estate offices. Businesses in the area include Gone Bonkers, Manzano’s Beachside Deli, Angels by the Sea, Anthony Bell Creations, Nejma’s Boutique, Hampton Inn New Smyrna Beach, a recently built bed and breakfast, Beach Realty, Collado Real Estate, Grade Realty, Breakers Restaurant, Flagler Tavern, and many other tourist-related businesses. The subject is located on S. Atlantic Avenue along the Atlantic Ocean. This area includes a number of resorts and other tourist-related businesses. Development in the area includes Atlantic Plaza, Coconut Palms Beach Resort, Wild Side Clothing, Sea Fox, New Smyrna Beach Fish House, and the Ocean Beach Club. Additional commercial development in the subject neighborhood is located along E. 3rd Street to the south of the subject. The area includes restaurants, anchored shopping centers, and freestanding retail stores. The local real estate market has experienced resurgence due to overall national, state and local economies over the past one to two years. The subject’s neighborhood has been positively impacted by the economic recovery, resulting in higher rental rates and increased sale prices for retail real estate. Additionally, it was indicated by multiple brokers in the neighborhood that the market along Flagler Avenue has been steadily improving. The area has strong occupancies and
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sales prices and lease rates have been increasing recently. The daily beach visitors create strong vehicular and pedestrian traffic counts along Flagler Avenue. Life Cycle Stage Ordinary physical deterioration and market demand have indicated four stages through which a neighborhood will pass, in terms of the effects of change on real property. These four stages of neighborhood life include: Growth - A period during which there are gains in public favor and acceptance, with demand increasing. Stability - A period of equilibrium without marked gains or losses, and no real obvious change. Decline - A period of diminishing demand and acceptance. Renewal - A period of rejuvenation and rebirth of market demand. Properties throughout the neighborhood vary widely in age and are in average condition. It was estimated that the subject’s neighborhood is in the growth/stability stage of the life cycle. Due to the lack of vacant land available, there is limited new development in the region; however, development is expected to increase with the acquisition and redevelopment of older properties in the area. Transportation The subject neighborhood benefits from a good network of roadways. Major roadways include E. 3rd Street, State Road 44, Flagler Avenue, and S. Atlantic Avenue. E. 3rd Street is a four-lane, east-west, asphalt-paved, roadway with a middle turn-lane that provides the primary access point to the subject neighborhood. E 3rd Street begins at S. Atlantic Avenue to the east, and terminates into State Road 44 to the west. State Road 44 is a four-lane, asphalt-paved roadway that runs in an east-west direction from Florida’s east coast in New Smyrna to Inverness on Florida’s west coast. It intersects with many major roadways across central Florida including U.S. 1, Interstate 95, Interstate 4 and Interstate 75, as well as other minor roadways. Atlantic Avenue is a two-lane, north-south, asphalt-paved, roadway with a middle turn-lane that runs parallel with the Atlantic Ocean. Atlantic Avenue terminates at Sapphire Avenue to the north and provides access to the Canaveral National Seashore to the south. Flagler Avenue is a two-lane, east-west, asphalt-paved, roadway that runs through the middle of the subject neighborhood. Flagler Avenue in characterized by commercial development that caters to the area’s tourism industry. Conclusion In summary, the subject’s immediate neighborhood along Flagler Avenue is a mixture of commercial retail and office uses, backed by single-family residential housing. The subject neighborhood is in excess of 95% improved with limited land for future development. The neighborhood is easily accessible and convenient to all essential support services and transportation networks. The area has been showing signs of increased development over the last one to two years, and conditions are expected to continue to improve over the next few years.
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SITE DESCRIPTION
Location and Access The subject is located at the northeast corner of S. Atlantic Avenue and Columbus Avenue, in New Smyrna Beach, Volusia County, Florida. The subject has additional frontage along Buenos Aires Street, which provides access to the parking for the restaurant/bar, as well as the paid public parking lot. The physical address of the subject is 203-207 S. Atlantic Avenue, New Smyrna Beach, Florida 32169. Access to the subject is considered good. Street Improvements S. Atlantic Avenue is an asphalt-paved, two-lane, moderately-travelled, north-south roadway at the subject site. This roadway is improved with sidewalks and curbing, overhead lighting and electric, and municipal storm water drainage at the subject site. Columbus Avenue is a two-lane, lightly travelled, asphalt-paved roadway with a concrete sidewalk at the subject site. Buenos Aires Street is a two-lane, asphalt-paved, north-south roadway at the subject site. This roadway provides access to the subject’s parking areas. Shape, Size and Frontage The subject site is irregular in-shape and contains a total of 40,930 square feet of land area. The subject has approximately 202 feet of frontage along the east side of S. Atlantic Avenue, and approximately 205 feet of frontage along the north side of Columbus Avenue. The property also has approximately202 feet of frontage along the west side of Buenos Aires Street.
Tax Map
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Easements, Encumbrances, and Encroachments Based on the legal description, and a visual inspection, there appear to be no easements, encumbrances or encroachments evident that would adversely affect the use or value of the subject. Off-Site Influences The surrounding area consists of mixed improvements including mostly office, retail and residential uses. There were no other nuisances, hazards or detrimental influences in the subject’s area that would negatively affect the property. Topography, Drainage and Soils The subject property is generally level and at the road grade. The property utilizes the municipal storm water drainage along the surrounding roadways. There were no apparent drainage or soil problems observed upon inspection of the site. The soils appear to be adequately drained to support most improvements that would be typical for this site. No evidence of environmental contamination was physically evident; however, this report assumes that the subject is free of any environmental hazards. Determining soil contamination is beyond the scope of my expertise. It is highly recommended that a subsoil survey be performed to determine if any contamination exists on the site. I reserve the right to alter my value estimate and appraisal if any negative subsoil conditions exist. Utilities The subject property is provided with the following utilities and services: * Electric New Smyrna Beach Utilities Commission * Water New Smyrna Beach Utilities Commission * Sewer New Smyrna Beach Utilities Commission Flood Zone Information The Federal Emergency Management Agency, through the National Flood Insurance Program, has compiled flood insurance rate maps for all areas of the country. Based upon my inspection of the Flood Insurance Rate Map No. 12127C0542J of the National Flood Insurance Program for Volusia County, dated September 29, 2017, it appears that the subject site is located within Flood Zone X. Zone X is considered an area of minimal risk with less than a .2% annual chance of flooding (above 500-year flooding). In communities that participate in the National Flood Insurance Program, mandatory flood insurance is not required for properties located within Flood Zone X encumbered by mortgages from federally-regulated lenders. Your attention is directed to the following copy of the flood zone map.
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Zoning The subject site is zoned MU, Mixed Use (Central Business District), by the City of New Smyrna Beach, Florida. The MU, Mixed Use District forms the metropolitan center for commercial, financial, professional, governmental, and cultural activities. Uses are permitted which require a central location convenient to the general citizenry and provide a supportive relationship to each other. Retail goods and services together with accommodations for tourists, transients, and permanent guests or tenants are permitted. Intermixing of business, professional, and multifamily for new residential uses permit people to live and work in or near the downtown area if they so desire. The subject condominium is considered a conforming use under the current zoning classification. Furthermore, the subject appears to conform to all zoning standards and setbacks.
Subject
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Land Use The subject’s future land use designation is Commercial, by the City of New Smyrna Beach. This land use designation is consistent with the subject’s current zoning. Conversations with the Zoning Department for the City of New Smyrna Beach indicate no plans to change the current zoning or land use district of the subject.
Site Description Summary Based on the subject’s site characteristics, including the site dimensions, shape, topography, drainage, soils, available utilities, and access to the site, the property is adequate for development.
Land Use Map
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IMPROVEMENTS DESCRIPTION The subject is improved with a bar and restaurant component, and a paid public parking lot component. The restaurant/bar facility is a two-story, 7,615 square foot building, located on the northern portion of the property, within 25,350 square feet of land area. This building received the Certificate of Occupancy (CO) on January 23rd, 2018. The entire building is air-conditioned space. The first floor contains 5,165 square feet, and includes a kitchen, a large dining room area, two bars, a lounge area, a 7-fixture men’s restroom and a 6-fixture women’s restroom. The second floor contains 2,450 square feet and includes a bar and dining area. There are two internal staircases, and a lift for handicapped access to the second floor. The bar/restaurant component has 23 parking spaces (independent of the paid public parking lot) which meets the parking standards of New Smyrna Beach for the new development. The paid public parking lot facility is located on the southerly portion of the property and contains 15,580 square feet of land area. The paid public parking lot has a total of 30 parking spaces and is equipped with an electronic parking meter. Based on the restaurant/bar site’s land area of 25,350 square feet and gross building area of 7,615 square feet, the restaurant/bar property reflects a building coverage ratio of 30%. Similar restaurant and bar properties typically reflect floor area ratios of 10% to 30%, indicating no excess land exists. A general description of the restaurant/bar improvements is as follows: Foundation Reinforced 5” concrete slab and stemwall Roof Structure Metal decking over steel I-beams, covered with 2” foam insulation and TPO membrane Exterior Walls Painted concrete block with stucco Doors Plate glass entry doors in aluminum frames; Wood and metal interior doors Windows Hurricane rated plate glass windows on first floor; Retractable 80-mph rated clear panels on second floor, can be put up or down depending on weather conditions Interior Walls Painted and textured drywall Ceilings and Interior Lighting Ceilings are combination of painted and textured drywall and exposed metal beams. Combination of fluorescent and incandescent lighting fixtures Floors Polished, stained concrete flooring throughout, with ceramic tile flooring in the restrooms Heating and A/C Centrally controlled HVAC systems
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Restrooms The subject features a 7-fixture men’s restroom and a 6-fixture women’s restroom, both located on the first floor Site Improvements The restaurant/bar portion of the property is improved with an asphalt paved parking lot with approximately 23 parking spaces, and landscaping around the perimeter of the site. The paid public parking lot portion of the property is improved with 30 parking spaces, and landscaping around the perimeter of the parcel. Deferred Maintenance Based on the new construction, no deferred maintenance is noted. Actual Age/Effective Age/Economic Life The subject was completed in 2018 and has an actual age of 1 year. The economic life for properties similar to the subject is approximately 50 years; therefore, the subject has a remaining economic life of 49 years. Functional Utility The improvements have good utility for the current use and exhibit no functional obsolescence. External Obsolescence No external obsolescence was noted in the subject neighborhood.
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HIGHEST AND BEST USE ANALYSIS A site is always valued in terms of its highest and best use. The determination of the highest and best use of a property is a sequential process. Potential uses for a property are tested as being physically possible, legally permissible, financially feasible, and maximally productive. That use which provides the highest value is the highest and best use. The appraiser must determine the highest and best use of the site as though it were vacant as well as improved. The highest and best use as vacant is generally used to estimate the land value for the subject property. The four tests of highest and best use follow.
• Physically Possible. An analysis of the physical characteristics of the site such as size, frontage, access, topography, and soil types, is made to determine the suitability of the site for development.
• Legally Permissible. The zoning regulations, future land use plan, building codes, deed restrictions, and any other governmental or environmental restrictions that may apply are considered.
• Financially Feasible. Uses must be found to be feasible, which is dependent upon the demand for certain types of property, the existing supply, and the demographics of the surrounding area of influence.
• Maximally Productive. The use which meets the aforementioned criteria, and is expected to generate the greatest rate of return to the land over a given period of time, is maximally productive.
AS THOUGH VACANT Physically Possible – As Vacant Size, shape, frontage, and depth are characteristics of a site that affect the uses for which a site may be physically developed. The subject site is irregular in-shape and contains a total of 40,930 square feet of land area. The subject has approximately 202 feet of frontage along the east side of S. Atlantic Avenue, and approximately 205 feet of frontage along the north side of Columbus Avenue. The property also has approximately202 feet of frontage along the west side of Buenos Aires Street. The site is generally level, and above the road grade of S. Atlantic Avenue, but at the road grade of Buenos Aires Street. The subject appears to be adequately drained. Specific soil conditions are not known; however, given the characteristics of other improvements in the surrounding area, it would appear that soil and subsoil conditions are suitable for development. The physical characteristics of the subject site are considered typical of other properties in the neighborhood. The access and exposure to the site are considered average. The physically possible uses for the subject site are numerous. In general, any improvement that is not restricted by the size of the site is physically possible. Legally Permissible – As Vacant After considering those uses that are physically possible, the uses that are legally permissible are determined. Consideration is given to the present zoning or a future rezoning if such is determined to be possible, and other governmental regulations that affect the subject property. The subject is located in the MU, Mixed-Use zoning district, and has a future land use of commercial. This zoning district and land use designation allows for a wide variety of commercial uses including office, retail, and hotel/motel.
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It is unlikely that a change in zoning classification for the subject site or its immediate area will occur in the foreseeable future, given the future land use designation of the site. Therefore, any improvement that complies with the current zoning classification is legally permissible. Financially Feasible – As Vacant As discussed in the Neighborhood Description section of the report, the subject’s immediate area is developed with primarily commercial uses of retail and office. From the previous analysis of the physically possible and legally permissible uses, it is determined that a commercial development is a financially feasible use for the subject site. Maximally Productive – As Vacant The ideal improvement for the maximally productive use is dictated by similar uses in the area. Based on the surrounding uses, a commercial retail development would be the maximally productive use of the site given the subject’s tourist-oriented location at the beach. AS IMPROVED Physically Possible – As Improved The subject property is improved with a bar and restaurant component, along with a paid public parking lot component. The bar/restaurant contains a total area of 7,615 square feet, and the paid public parking lot has 30 parking spaces. These improvements are considered physically possible. Legally Permissible – As Improved The subject property is a legal conforming use within the MU zoning district. The current use is both physically possible and legally permissible. Financially Feasible – As Improved Of the uses that are physically possible and legally permissible, it must be determined which are also financially feasible. One method of determining the financial feasibility of a property's use is through an analysis of surrounding land uses. The surrounding area along S. Atlantic Avenue is a tourist-oriented beach area with retail, office, and residential uses. The existing bar/restaurant/parking facility is estimated to be financially feasible. Maximally Productive – As Improved Of the uses that are physically possible, legally permissible, and financially feasible, the maximally productive use is the one use that results in the highest land value. Based on a comparison of uses in the area, the existing use as a bar/restaurant/parking facility is estimated to be maximally productive. The analysis above indicates that the highest return for the subject is for the continued use as a bar/restaurant, along with a paid public parking facility.
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VALUATION METHODOLOGY Real estate appraisal practice ordinarily requires the use of three basic approaches to value. These approaches, commonly referred to as the Cost Approach, the Sales Comparison Approach, and the Income Approach, provide the basis for arriving at a final value estimate. An explanation of each method and its applicability to the subject valuation is as follows: Cost Approach The Cost Approach is predicated on the principle of substitution, which states that a prudent buyer will not pay more for a property than the cost to build similar improvements on another site. The Cost Approach estimated the cost to replace the current improvements with improvement that have similar utility. The replacement cost new is then depreciated and the land value, estimated using the Sales Comparison Approach, is added to the depreciated replacement cost for the total value. Although there are other approaches by which the value of the land may be derived, the Sales Comparison Approach is the most common and generally relied upon when sales of comparable properties are available. Sales Comparison Approach The Sales Comparison Approach compares the sales of similar properties that have recently sold to the subject property. Dissimilarities are accounted for in the form of adjustments. This approach is most meaningful when there is adequate data involving comparable sales. The reliability of the Sales Comparison Approach varies directly with the quantity and quality of market data. Income Approach The Income Approach is typically utilized in the valuation of income-producing properties. The principle of anticipation is the basic underlying principle of this approach which states that the buyer or investor will pay no more than the present worth of the anticipated future benefits. This approach typically uses either direct capitalization or discounted cash flow analysis. In direct capitalization, the net operating income the property is capable of producing is estimated and is then capitalized at a market-derived capitalization rate that reflects the risk and return characteristics of the investment. In the discounted cash flow analysis, income and expenses are analyzed for each year of the projection or holding period, and the net income is discounted to the present value indication by applying an appropriate yield rate (discount factor). The value for the subject is estimated by summing the present values of cash flows during the projection period and the present value of the reversion at the end of the holding period (less typical sales costs). All three approaches were used to estimate the fee simple interest in the subject property.
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COST APPROACH TO VALUE The Cost Approach was used to estimate the market value of the subject property. This approach is established on the principle of substitution which states that a knowledgeable buyer will not pay more for a property than the cost to build similar improvements on another site. The first step in the Cost Approach is to estimate the market value of the land as if vacant, via the Sales Comparison Approach, in which comparable land sale transactions are analyzed for their comparability to the subject property. The next step is to estimate the replacement costs new of the subject improvements. Construction estimates were derived from the development costs provided by the owner and/or by using an independent cost analysis via Marshall Valuation Service. Any appropriate physical, functional or external depreciation was deducted from the replacement cost new to arrive at a contributory value of the improvements. Finally, the estimated land value was added, resulting in a value indication via the Cost Approach. LAND VALUE ESTIMATE The Sales Comparison Approach is used to estimate the value of the subject land as vacant. This approach compares the subject property's characteristics with those of comparable properties which have recently sold in similar transactions. The sales comparison approach is based upon the principles of supply and demand, as well as upon the principle of substitution. Supply and demand indicate value through typical market behavior of both buyers and sellers. Substitution indicates that a purchaser would not purchase an improved property for any value higher than it could be replaced for on a site with equivalent utility, assuming no undue delays in construction. In practice, the most common Sales Comparison Approach method used by real estate appraisers is the sales adjustment grid. It uses a small number of recently sold properties in the subject’s market to estimate the value. Sales are chosen based on their similarity to the subject property, with features including location, size, shape, exposure, zoning, topography and other property characteristics considered. Adjustments to the comparables may be determined by using either quantitative or qualitative analyses. The indications of value from the various market sales are then correlated into a final value estimate for the subject property. Conversations with market participants indicate that the price per square foot is a valid unit of comparison for industrial sites. This was estimated to be the most meaningful unit of comparison and was given primary consideration in estimating the value of the subject. The sales search for the subject involved an analysis of recent land sales of parcels with analogous development potential within similar the subject’s beachfront neighborhood. Unfortunately, there were no commercial land sales found with beachfront locations anywhere near the subject. The search was expanded to include beachfront properties along the east coast of Florida with similar development potential. Three sales were found, with sale dates that ranged from October of 2017 to April of 2019. The locations of the sales in relation to the subject are indicated on the map located on the following page. Following the map is an adjustment grid summarizing the sales, which is followed by a discussion for each of the sales.
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Comparable Land Sales Map
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Comparable Land Sales Chart
Comparable: Subject 8437-2418 7519-0390 7456-3255
NEC S Atlantic Ave SWC Wave Crest Ave E side SR A1A E side SR A1A
& Columbus Ave & Fifth Ave at Seaway Avenue S of Park Ave
New Smyrna Beach, FL Indialantic, FL Daytona Beach Shores, FL Daytona Beach Shores, FL
Sale Price: N/A $1,675,000 $2,400,000 $2,750,000
Sale Date: Jul-19 Apr-19 Mar-18 Oct-17
Appraisal Date
Location: Good Good Good Good
Access/Frontage: Good Good Good Good
Shape: Irregular Irregular Irregular Rectangular
Retention: Off-site Off-site Off-site Off-site
Zoning: MU, Mixed Use C-2, Commercial R-60, High Density MF T, Hotel/Motel District
by New Smyrna Beach by Indialantic by Daytona Beach Shores by Daytona Beach Shores
Land Size (SF): 40,930 30,056 45,302 44,867
Sale Price/SF: N/A $55.73 $52.98 $61.29
Property Adjustments
Land Value: $55.00 / SF x 40,930 SF = $2,251,150
Rounded: $2,250,000
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Discussion of Sales The comparable sales are briefly discussed in order of date of transaction. Comparable Vacant Land Sale 8437-2418 ($52.94 per square foot, after adjustments) is the purchase of a 30,056-net-square-foot vacant parcel of land located at the southwest corner of Wave Crest Avenue and Fifth Avenue, in Indialantic, Brevard County, Florida. The property was purchased in April of 2019 for the price of $1,675,000, or $55.73 per square foot before adjustments. The site is zoned C-2, Commercial, by Indialantic, Florida. A 5% downward adjustment was made for the smaller size of this parcel, since smaller parcels generally sell for higher unit prices. No other adjustments were required to this sale. Overall, this sale is considered to be superior to the subject. Comparable Vacant Land Sale 7519-0390 ($55.63 per square foot, after adjustments) is the purchase of a 45,302-net-square-foot vacant parcel of land located on the east side of SR A1A, at its intersection with Seaway Avenue, in Daytona Beach Shores, Florida. The property was purchased in March of 2018 for the price of $2,400,000, or $52.98 per square foot before adjustments. The site is zoned R-60, High-Density Multifamily, by Daytona Beach Shores, Florida. A 5% upward adjustment was made for the inferior zoning of this parcel. No other adjustments were required to this sale. Overall, this sale is considered to be inferior to the subject. Comparable Vacant Land Sale 7456-3255 ($61.29 per square foot, after adjustments) is the purchase of a 44,867-net-square-foot vacant parcel of land located on the east side of SR A1A, at its intersection with Seaway Avenue, in Daytona Beach Shores, Florida. The property was purchased in October of 2017 for the price of $2,750,000, or $61.29 per square foot before adjustments. The site is zoned T, Hotel/Motel District, by Daytona Beach Shores, Florida. No adjustments were required to this sale. Overall, this sale is considered to be comparable to the subject. Reconciliation of Land Value The sales analyzed formed a range of $52.94 to $61.29 per square foot after adjustments, with an average of $56.62 per square foot. Equal weight was given to each of the sales since all the sales were located in similar markets as the subject. Giving primary weight to location and size the appraiser has reconciled a unit value of $55.00 per square foot. Applying the estimated unit value of $55.00 per square foot to the subject’s site area of 40,930 square feet resulted in a land value of $2,251,150, which was rounded to $2,250,000.
2019-164
COST ESTIMATE The next step in the cost approach to value is to estimate the replacement costs for the subject improvements. Typically, two methods would be used to estimate the subject’s replacement costs, including the Marshall Valuation analysis, and the actual costs method. However, the actual cost estimate provided by the developer did not have a detailed breakdown of costs. Therefore, the appraiser was unable to determine if soft costs were included, and whether the developer had included any profit in the estimate. Therefore, the Marshall Valuation analysis was used to estimate the replacement costs for the subject. Marshall Valuation Analysis Direct costs can either be estimated as a reproduction cost or a replacement cost. Reproduction cost is the estimated cost to construct, at current prices, an exact duplicate or replica of the buildings being appraised, using the same materials, construction standards, design, layout, and quality of workmanship, and embodying all the deficiencies, super-adequacies, and obsolescence of the subject building (The Appraisal of Real Estate, 13th Edition). Replacement cost is the estimated cost to construct, at current prices, a building with utility equivalent to the buildings being appraised, using modern materials and current standards, design, and layout (The Appraisal of Real Estate, 13th Edition). For the purposes of this appraisal, the replacement costs are estimated for the subject. Replacement costs for the subject have been estimated by the Marshall Valuation Service using the Calculator Method. The Calculator Method uses average square foot costs for typical buildings. This square foot cost is then adjusted for building size and shape, building height, and number of stories to derive an adjusted square foot cost. This figure is then adjusted for current costs and locale through the use of cost multipliers. The result is a final price per square foot for building area. Site improvements are added as a separate line item. The "Marshall" cost manual contains average square foot costs for various classes, occupancy types and quality of buildings, together with modifications for deviations from the descriptions of the buildings listed. The calculator cost form is shown below.
2019-164
Marshall Valuation Service
Calculator Cost Form
Restaurant/Bar
Quality................... Excellent
Class................... A-B
Number of stories......... 2
Height per story.......... 20
Average floor area........ 7,615
SQUARE FOOT REFINEMENTS
FINAL CALCULATIONS
Area...................... 7,615
2019-164
The cost estimates reflect some soft costs in addition to the hard costs. The soft costs include architect and engineer's fees, plans, permits, surveys, sales taxes, insurance, contractor's profit and financing costs. The base square foot cost of the building was estimated using an average, class “A” and “B” Restaurant classification. This reflected $345.74 per square foot after applying story height, perimeter, current and local multipliers. Multiplying the base cost by the net building area resulted in a building replacement cost new of $2,632,781. Additional replacement costs were considered for parking, paving, exterior lighting, and landscaping, and were estimated at $164,750. Other indirect costs not included in the Marshall Valuation Service base cost include impact fees, professional fees and permanent financing, were also added. These fees and other costs are estimated at $32,395. Your attention is directed to the end of this section for a breakdown of the various costs shown on the Cost Approach Summary. The next item considered in the Cost Approach is the entrepreneur's profit for acquiring the site, coordi- nating and meeting with the architect and builders, overseeing the project during construction and managing the project to the point of occupancy. Past experience and a review of the market has indicated entrepreneur's profits ranging from less than 10% to approximately 20% in the Central Florida market for this type of property. Since no prudent investor would build the subject without realizing a profit, a 20% entrepreneur's profit was concluded. The total replacement cost for the subject, after adding the building costs to the site costs, miscellaneous costs and entrepreneurial profit, is $3,395,911. It should be noted that the subject&

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