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Agenda Item Review Form
Muskegon City Commission
Commission Meeting Date: 6/13/23 Title: Purchase of DMDC Parking Lots at
387 and 401 Morris
Submitted By: Jake Eckholm Department: Development Services
Brief Summary: The DMDC is selling the parking lots behind the Chamber of Commerce and
Russell Block/Century Club buildings and staff is requesting the City acquire them and the
environmental studies completed on them in winter of 2023. for $524,000
Detailed Summary & Background:
In 2022, the DMDC board approached the city about financial difficulties and mentioned that they
were interested in selling the parking lots. City leadership expressed interest, and then DMDC
decided to sell the lots to the Community Foundation, and told staff they would remain public
parking. Some time later, the Foundation mentioned they may end up charging for parking at this
location and that they required that existing building owners with deeded spaces to relinquish
those rights. This caused some disagreement between stakeholders, and so the city offered to
again be the buyer as we would keep the parking public and freely available. Further, in the event
we eventually achieve enough density downtown to necessitate a public parking structure, this lot
is specifically mentioned in our parking strategy documents as an ideal site.
The DMDC and Foundation agreed to this solution, and so we are seeking to move forward with
the purchase of these lots to retain as publicly available parking in the downtown area. The
resources for this purchase are included in the proposed fiscal 2023/24 Public Improvement Fund.
If approved, we will close on the lots and take possession after July 1, 2023. The attached
appraisal completed by a third party informed the asking price, which is consistent with market rate
in the downtown area for improved property.
Goal/Focus Area/Action Item Addressed:
Amount Requested: $524,000 Amount Budgeted: $524,000 (FY 23/24)
Fund(s) or Account(s): Public Improvement Fund(s) or Account(s): Public Improvement
Fund (445) Fund (445)
Recommended Motion: To authorize the purchase of the lots at 387 and 401 Morris as presented
and authorize the mayor and clerk to sign.
Approvals: Guest(s) Invited / Presenting:
Immediate Division Head [i Information Technology C] Yes []
Other Division Heads He Communication [] | No
Legal Review ||
For City Clerk Use Only:
Commission Action:
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77EA697COFE6C
DOWNTOWN MUSKEGON DEVELOPMENT CENTER NO. 1
a Site Condominium
PURCHASE AGREEMENT
Effective June 14, 2023(“Effective Date”), Downtown Muskegon Development Co., a Michigan
nonprofit corporation ("DMDC"), and City of Muskegon, a Michigan municipal corporation ("Buyer"),
agree as follows:
DMDC agrees to sell, and Buyer agrees to purchase Units 1 & 2 (the “Units”) of Downtown
Muskegon Development Center No. 1; a site condominium, located in the City of Muskegon, Michigan
(“Condominium Project”) described as:
Units 1 & 2, Downtown Muskegon Development Center No. 1, a Condominium,
according to the Master Deed recorded in Liber 3702, Page 204, as amended, in the
Office of the Muskegon County Register of Deeds, and designated as Muskegon County
Condominium Subdivision Plan No. 160, together with rights in general common
elements and limited common elements as set forth in said Master Deed, and amendments
thereto, and described in Act 59 of the Public Acts of 1978 as amended (“Master Deed”).
A copy of the Master Deed is available upon request.
The purchase price for the Unit, including a shared interest in the common elements at the
Condominium Project, is Five Hundred Thousand dollars ($500,000). The purchase price shall be paid
in full at Closing.
Buyer agrees to comply with the Development Plan, attached as Exhibit B (the “Development
Plan’). Any modification to the Development Plan by Buyer shall require the written consent of the
THIS AGREEMENT INCLUDES THE STANDARD TERMS AND_ CONDITIONS
ATTACHED AS EXHIBIT A. BUYER SHOULD READ THESE PROVISIONS BEFORE SIGNING
THIS AGREEMENT. BUYER’S SIGNATURE ON THIS AGREEMENT IS BUYER’S
ACKNOWLEDGMENT THAT BUYER HAS READ AND UNDERSTOOD BOTH THE SPECIFIC
AND STANDARD PROVISIONS.
THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE
PARTIES, AND THERE ARE NO OTHER AGREEMENTS, ORAL OR WRITTEN, RELATING TO
THIS TRANSACTION. NO ORAL REPRESENTATIONS OR STATEMENTS SHALL BE
CONSIDERED A PART OF THIS AGREEMENT. THIS AGREEMENT MAY NOT BE AMENDED,
EO. CHANGED EXCEPT BY WRITTEN AGREEMENT SIGNED BY BOTH DMDC
[Signatures appear on the following page]
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77EA697COF6C
BUYER -
City of Muskegon,
a Michigan municipal corporation
DocuSigned by:
By: | be Jolursow
Name: Ken Johnson ~
Title: Mayor
Date:
Title: City Clerk
Date: 6/15/2023
Buyer’s Address and Telephone Number:
933 Terrace St.
Muskegon, MI 49440-1397
(___) =
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77EA697COF6C
DMDC -
Downtown Muskegon Development Co.,
a Michigan non-profit corporation
DocuSigned by:
By: | Stour Alsen
Name: Steve Olsen ~
Title: President
Date: 6/14/2023
761 Alberta Avenue
Muskegon, MI 49441
231-755-1603x18
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77EA697COFE6C
Exhibit A
DOWNTOWN MUSKEGON DEVELOPMENT CENTER NO. 1,
a Site Condominium
STANDARD TERMS AND CONDITIONS OF PURCHASE
1. Escrow of Funds. All funds received by DMDC under this Agreement shall be deposited in escrow with Transnation
Title Insurance, whose address is 570 Seminole Road, Muskegon, Michigan 49444. Transnation Title Insurance
Company is referred to in this Agreement as the "Escrow Agent." The Escrow Agent shall hold such funds in
accordance with the terms of this Agreement. If Buyer terminates this Agreement prior to the expiration of the Due
Diligence Period, all amounts deposited shall be returned to Buyer by Escrow Agent within three (3) business days in
full satisfaction of all rights of Buyer, and this Agreement, and all rights and liabilities of Buyer and DMDC hereunder,
shall be terminated. In all other instances, all deposits made by Buyer shall be non-refundable.
2. Plan and Purpose. Downtown Muskegon Development Center No. 1 Association has been established to administer
the Condominium Project and operate and maintain the common elements. Each co-owner, including Buyer, will be a
member of the Association and will be subject to its bylaws, rules, and regulations. Buyer agrees to abide by the
terms, provisions, declarations, covenants, and restrictions contained in the condominium documents for The
Condominium Project and acknowledges that he or she will, from time to time, be liable for his or her proportionate
share of the Association's assessments for maintenance, repair, replacement, and other expenses of administration as
outlined in the Condominium Bylaws of The Condominium Project.
3. Conveyance of Title.
(a) DMDC shall convey, and Buyer shall accept, marketable record title (or, at the DMDC's option, insurable title) to
the Unit, subject only to zoning ordinances, governmental limitations, existing easements and restrictions, and the
condominium documents for the Condominium Project. As evidence of its title, DMDC shail, at its expense,
provide Buyer with a commitment (issued by Escrow Agent for a standard A.L.T.A. owner's policy of title
insurance in the amount of the purchase price. Such title insurance commitment shall constitute conclusive
evidence of the state of DMDC's title. Within a reasonable time after closing, DMDC will furnish Buyer with the
owner's title insurance policy.
(b) Any encumbrance upon DMDC's title to any Unit which may be removed by paying money may be removed by
DMDC out of the sale proceeds, provided that evidence of this removal satisfactory to the title insurer is presented
to Buyer when the purchase price is paid.
4. Due Diligence. Upon DMDC’s execution of this Agreement, Buyer, and Buyer's agents, employees, contractors and
consultants may, prior to closing, conduct such inspections, investigations, appraisals, feasibility studies, and
determinations of the Unit as Buyer reasonably shall desire in order to determine that the condition of the Unit is
acceptable ("Due Diligence Investigation"). DMDC has authorized Buyer to complete Phase I environmental
assessment, but Buyer shall have no right to perform or cause to be performed a Phase II environmental study or any
invasive or intrusive inspections without first obtaining DMDC’s express written consent. The Due Diligence
Investigation shall end on July 20, 2023 (“Due Diligence Period”). Buyer may request an extension of the Due
Diligence Period if needed to complete the environmental assessment. Such request must be submitted in writing no
less than 7 days prior to the end of the Due Diligence Period.
5. Road Access. The Condominium Project is served by public roads.
6. Closing; Closing Costs. Buyer shall consummate the purchase of the Unit within ten (10) days after the Due
Diligence Investigation ends (“Date of Closing”). At closing, Buyer shall pay all state and county transfer taxes, the
title company’s closing fee, the premium for the title insurance policy, recording fees, all other closing costs, and each
party’s attorney fees. The purchase price shall be paid in immediately available funds. At closing, Buyer will
reimburse The Community Foundation for Muskegon in the amount of approximately $24,000 for its costs incurred in
conducting the Phase I and Phase II environmental assessment.
7. Real Estate Taxes. DMDC shall pay, without proration, all installments of special assessments due and payable and
all real estate taxes which are due and payable against the Unit prior to the Date of Closing and Buyer shall pay special
assessments due and payable and all real estate taxes due and payable against the Unit thereafter, if any.
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77EA697COF6C
Exhibit A
8. Parking Requirements. The Units are subject to a written Parking License among DMDC, Western Avenue
Properties, LLC, and Port City Construction & Development Services, LLC, which requires DMDC to provide 50
parking spaces to Licensee. A copy of the Parking License is attached as Exhibit C.
9. No Other Contingencies. Except for the full execution of the Development Agreement, this Agreement, and the
transactions contemplated by this Agreement, are not subject to any contingencies, including financing contingencies.
10. Intentionally Omitted.
11. Use Restriction. Buyer may use the Unit solely for purposes of a parking facility, but for no other purpose without
first obtaining DMDC’s written consent (or DMDC Successors’ (defined below) written consent in the event DMDC is
no longer in existence), Buyer, at Buyer sole cost and expense, shall be responsible for the maintenance and repair of
the Unit and agrees to keep the Unit and all structures and improvements on the Unit in good condition and repair.
12. Right of First Refusal.
(a) At Closing, Buyer shall grant DMDCa right first refusal to purchase the Unit as follows: In the event Buyer
receives a written offer to purchase the Unit which Buyer desires to accept, it shall provide a copy of such offer to
DMDC. DMDC shall then have ten (10) days to agree to purchase the Unit on the identical terms contained in the
third-party offer. DMDC shall give Buyer written notice within said ten (10) day period of DMDC’s intent to exercise
this right of first refusal and shall then proceed to close on the purchase according to the terms of the third-party offer.
In the event DMDC does not exercise its right of first refusal as to a third-party offer, and in the event Buyer sells the
Unit, this right of first refusal shall lapse. In the event DMDC does not exercise this right of first refusal and Buyer
does not sell the Unit to said third party, this right of first refusal shall remain in full force and effect.
(b) For purposes of this paragraph 12, in the event DMDC is no longer in existence at the time Buyer receives a
written offer to purchase the Unit which Buyer desires to accept, “DMDC” for purposes of this paragraph 12 shall
mean the following three parties: _ (i) Community Foundation for Muskegon County, a Michigan nonprofit
corporation, of 425 W. Western Avenue, Suite 200, Muskegon, Michigan 49440, (ii) Muskegon Lakeshore Chamber of
Commerce, Inc., a Michigan nonprofit corporation, of 380 W. Western Avenue, Muskegon, Michigan 49440; and (ili)
The Paul C. Johnson Foundation, a Michigan nonprofit corporation, of 425 W. Western Avenue, Suite 200, Muskegon,
Michigan 49440 (collectively, “DMDC Successors”). The right of first refusal granted in paragraph 12(a), as well as
the applicable time periods, shall also apply to the DMDC Successors. In order for the DMDC Successors to exercise
the right of first refusal, all three parties that consist of the DMDC Successors shall unanimously consent to the
exercise of such right of first refusal.
13, Default. If Buyer fails to meet Buyer’s obligations under this Agreement and continues in default for ten (10) days
after notification from the DMDC, DMDC may without further notice terminate Buyer's rights under this Agreement
and retain the Deposit as liquidated damages and may pursue any and all other remedies available to DMDC.
14. No Warranty. Buyer agrees to accept the Unit in its present "AS IS" condition, with no warranties concerning its
condition or permitted use. THERE IS NO GUARANTY OR WARRANTY OF ANY UNIT OR THE COMMON
ELEMENTS OF THE CONDOMINIUM PROJECT OTHER THAN AS SPECIFIED HEREIN, INCLUDING, BUT
NOT LIMITED TO, A WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY.
IN NO CASE SHALL DMDC BE LIABLE FOR LOST PROFITS, OR CONSEQUENTIAL OR INCIDENTAL
DAMAGES OF ANY KIND. The limitations on liability for lost profits, incidental damages or consequential damages
shall survive any failure of essential purpose of this limited warranty. In all cases, the DMDC's liability shall be
limited to return of the Deposit.
15. Notices. All notices, approvals, consents and other communications required under this Agreement shall be in
writing and shall be deemed given: (i) when delivered in person; (ii) when sent by fax or email: (iii) when sent by a
nationally-recognized receipted overnight delivery service with delivery fees prepaid; or (iv) when sent by United
States first-class, registered, or certified mail, postage prepaid. The notice shall be effective immediately upon personal
delivery or upon transmission of the fax or email; one day after depositing with a nationally recognized overnight
delivery service; and five days after sending by first class, registered, or certified mail.
Notices shall be sent to the parties as follows:
To DMDC: Downtown Muskegon Development Co.
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77EA697COF6C
Exhibit A
Attn: Steve Olsen
761 Alberta Avenue
Muskegon, MI 49441
Email: solsen@nmtdie.com
With Copy to: Parmenter Law
Attn: Christopher L. Kelly
601 Terrace Street, Suite 200
Muskegon, Michigan 49440
Email: chris@parmenterlaw.com
To Buyer: City of Muskegon
Attn:
933 Terrace St.
Muskegon, MI 49440-1397
Email:
With Copy to: Parmenter Law
Attn: Christopher L. Kelly
601 Terrace Street, Suite 200
Muskegon, Michigan 49440
Email: chris@parmenterlaw.com
16. Usage of Terms. The pronouns and relative words in this Agreement used when referring to the Buyer are written in
the singular masculine and feminine only. If the Buyer is joint or a business entity, such words shall be read as if
written in plural or as appropriate in the circumstances.
17. Partial Invalidity. The invalidation of any portion of this Agreement shall not affect the validity of the remainder.
18. Binding Effect. This Agreement shall supersede any and all previous agreements between DMDC and Buyer with
respect to each Unit and bind DMDC and Buyer, and their respective heirs, personal representatives, administrators,
executors, assigns, and successors. Buyer may not assign or transfer Buyer’s rights and obligations under this
Agreement.
19. Preparation by Intermediary. DMDC and Buyer each acknowledge and agree that this Agreement and all
documents to be executed in connection with the closing of the transaction were prepared by Parmenter Law as an
intermediary between DMDC and Buyer only; that Parmenter Law has represented and continues to represent both
DMDC and Buyer with regard to personal and business matters; that Parmenter Law has fully disclosed and discussed
the prior representations and the conflict with both parties; that conflicts may exist or arise between the individual
interests of DMDC and Buyer and that legal counsel is prohibited from representing parties where a legal conflict
exists; that DMDC and Buyer have each been advised to seek (and have had an adequate opportunity to seek) advice
from independent legal counsel with respect to their respective rights, this transaction, and the execution of this
Agreement and documents referenced herein; and that both DMDC and Buyer hereby waive the conflict and
affirmatively consent to the intermediary representation of both parties by Parmenter Law.
DocuSign Envelope ID: 6C1F6B2B-C63A-4756-9585-77 EA697COF6C
Exhibit B
DEVELOPMENT PLAN
The City of Muskegon agrees that the Unit shall be used solely for the purpose of a parking facility,
including a parking structure, and for no other purpose without first obtaining DMDC’s express written consent.
Buyer shall be solely responsible, at Buyer’s expense, for all maintenance and repair of the Unit and the
improvements on the Unit and agrees to keep the same in good condition and repair.
In the event DMDC is no longer in existence at the time the City of Muskegon requests the Unit be used for
any purpose other than a parking facility, the City of Muskegon shall obtain such consent, which must be
unanimous and in writing, from DMDC’s successors in interest, which parties are as follows: (1) Community
Foundation for Muskegon County, a Michigan nonprofit corporation, of 425 W. Western Avenue, Suite 200,
Muskegon, Michigan 49440; (ii) Muskegon Lakeshore Chamber of Commerce, Inc., a Michigan nonprofit
corporation, of 380 W. Western Avenue, Muskegon, Michigan 49440; and (iii) The Paul C. Johnson
Foundation, a Michigan nonprofit corporation, of 425 W. Western Avenue, Suite 200, Muskegon, Michigan
49440 (collectively, “DMDC Successors”). In the event the City of Muskegon does not obtain such necessary
unanimous consent from the DMDC Successors, the Unit shall continue to be used solely for the purpose of a
parking facility until such time as the City of Muskegon receives unanimous consent from the DMDC
Successors.
DocuSign Envelope 1D: 6C1F6B2B-C63A-4756-9585-77 EA697COF6C
Exhibit C
Parking License
[See attached]
Broersma & Broersma
Real Estate Appraisers
384 Saddleback Drive NE
Grand Rapids, Michigan 49525
Telephone: 616-454-2044
e-mail: stacey@broersma-appraisers.com
Restricted Appraisal Report
of
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Client:
Downtown Muskegon Development Company
Attn: Mr. David Medendorp
3024 Glade Street
Muskegon, Michigan 49444
Date of Report:
September 22, 2022
Date of Physical Inspection:
August 18, 2022
Effective Date of Report:
August 18, 2022
Appraiser:
Stacey L. Broersma GAA
Certified General Real Estate Appraiser
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Restricted Appraisal Report
This is a Restricted Appraisal Report which is intended to comply with the reporting
requirements set forth by the Uniform Standards of Professional Appraisal Practice for
an Appraisal Report. As such, it presents some discussions of the data, reasoning, and
analyses that were used in the appraisal process to develop the appraiser's opinion of
value. Supporting documentation concerning the data, reasoning, and analyses is
contained in the appraisal, addendum and the appraiser’s file. The depth of discussion
contained in this report is specific to the needs of the client and for the intended use
stated within this report. The appraiser is not responsible for unauthorized use of this
report.
CLIENT: Downtown Muskegon Development Company
c/o Mr. David Medendorp
3024 Glade Street
Muskegon, Michigan 49444
APPRAISER: Stacey L. Broersma GAA
Certified General Real Estate Appraiser
Broersma & Broersma Real Estate Appraisers
SUBJECT: Parcel #1
387 Morris Avenue, Muskegon, Muskegon County, MI
Parcel #2
401 Morris Avenue, Muskegon, Muskegon County, MI
The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared
a pandemic by the World Health Organization (WHO). The reader is cautioned and
reminded that the conclusions presented in this appraisal report apply only as of the
effective date(s) indicated. The appraiser makes no representation as to the effect on
the subject property of any unforeseen event, subsequent to the effective date of the
appraisal”
Taken with permission from LIA Administrators & Insurance Services.
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Summary of Salient Facts and Conclusions:
Date of Appraisal Report: September 22, 2022
Date of Physical Inspection of Property: August 18, 2022
Effective Date of the Appraisal: August 18, 2022
Addresses: Property #1
387 Morris Avenue
Muskegon, Muskegon County,
Michigan
Property #2
401 Morris Avenue
Muskegon, Muskegon County,
Michigan
Interest Appraised: Fee Simple Estate
Permanent Parcel #’s: Property #1
61-24-233-000-0001-00
Property #2
61-24-233-000-0002-00
Ownership: Property #1
Downtown Muskegon
Development Center Company
Property #2
Downtown Muskegon
Development Center Company
Land Size: Property #1
24,572 SF (.56 acres)
Property #2
24,572 SF (.56 acres)
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Summary of Salient Facts and Conclusions: (continued)
Flood Plain Designation: The subject properties are
not located within a
Special Flood Hazard Area
and do not qualify under
the Federal Flood
Insurance Program.
Zoning: B-3, Central Business
District
Type of Property: Vacant Land
Highest and Best Use, as Vacant: Future mixed-use
development
Exposure Time: 4 to 8 months
Hypothetical Conditions: None
Parcel #1
Market Value via Cost Approach: N/A
Market Value via Capitalization Approach: N/A
Market Value via Sales Comparison Approach: $250,000
Parcel #1
Market Value via Cost Approach: N/A
Market Value via Capitalization Approach: N/A
Market Value via Sales Comparison Approach: $250,000
Estimated Market Values: Parcel #1
$250,000
Parcel #2
$250,000
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Certification
THE UNDERSIGNED DOES HEREBY CERTIFY THAT, EXCEPT AS OTHERWISE
NOTED IN THIS APPRAISAL REPORT:
1. To the best of my knowledge and belief, the statements of fact contained in
this appraisal report, upon which the analyses, opinions and conclusions expressed
herein are based, are true and correct.
2. | have no present or contemplated future interest in the real estate that is the
subject of this appraisal report.
3. | have no personal interest or bias with respect to the subject matter of this
appraisal report or the parties involved.
4. This appraisal report sets forth all of the limiting conditions (imposed by the
terms of our assignment or by the undersigned) affecting the analyses, opinions and
conclusions contained in this report.
5. My analysis, opinions, and conclusions were developed and this report has
been prepared, in conformity with Title XI of the Federal Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (FIRREA) and its regulations, as well as the
Code of Professional Ethics and the Uniform Standards of Professional Appraisal
Practice of the Appraisal Foundation and the Appraisal Institute.
6. No one other the undersigned prepared the analyses, conclusions and
Opinions concerning real estate that are set forth in this appraisal report.
7. My compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the amount of the value
estimate, the obtainment of a stipulated result or the occurrence of a subsequent event.
8. Stacey L. Broersma GAA, Certified General Real Estate Appraiser, has
personally inspected the subject property.
9. This appraisal assignment was not based on a requested minimum valuation,
a specific valuation or the approval of a loan.
10. The use of this report is subject to the requirements of the Appraisal Institute
relating to review by its duly authorized representatives.
11. As of the date of this report, Stacey L. Broersma GAA, Certified General
Real Estate Appraiser, has completed the continuing education program of the State of
Michigan.
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Certification (continued)
12. Disclosure of the contents of this appraisal report is governed by the By-Laws
and Regulations of the Appraisal Institute.
13. Neither all nor any part of the contents of this report (especially any
conclusions as to value, the identity of the appraisers or the firm with which he/she is
connected, or any reference to the Appraisal Institute) shall be disseminated to the
public through advertising media, public relations media, news media, sales media or
any other public means of communications, without the written consent and approval of
the undersigned.
14. The appraiser has been a Certified General Real Estate Appraiser in the
State of Michigan since 1996. The appraiser has experience in evaluating various types
of commercial, multiple-family, office and industrial facilities, as well as vacant land and
special purpose properties. The appraiser also has experience appraising numerous
properties within the subject property's market area. Therefore, the appraiser is
considered to be competent to prepare this report. Further, | have complied with the
Competency Provision of the Uniform Standards of Professional Appraisal Practice of
the Appraisal Standards Board of The Appraisal Foundation.
15. The appraiser has not previously prepared a Market Value of the subject
property within the past 3 years.
16. In Michigan, appraisers are required to be licensed/certified and are
regulated by the Michigan Department of Licensing and Regulatory Affairs, P.O. Box
30670, Lansing, MI 48909.
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Certification (continued)
Based upon the reasoning contained in this appraisal report and on the Assumptions
and Limiting Conditions as contained herein, it is my opinion that the subject properties
have Market Values as of August 18, 2022, excluding any Furniture, Fixtures &
Equipment (FF&E), Going Concern and Intangible Items, as follows:
Parcel #1 — 387 Morris Avenue $250,000
Parcel #2 — 401 Morris Avenue $250,000
Stacey L. Broersma GAA
Certified General Real Estate Appraiser
Permanent ID No. 1205003358
The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared
a pandemic by the World Health Organization (WHO). The reader is cautioned and
reminded that the conclusions presented in this appraisal report apply only as of the
effective date(s) indicated. The appraiser makes no representation as to the effect on
the subject property of any unforeseen event, subsequent to the effective date of the
appraisal”
Taken with permission from LIA Administrators & Insurance Services.
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Statement of Assumptions and Limiting Conditions
This appraisal report was made subject to the following limiting conditions and
assumptions:
1. No responsibility is assumed for legal description provided or for matters
pertaining to legal or title considerations. Title to the property is assumed to be good
and marketable unless otherwise stated.
2. The property is appraised free and clear of any or all liens or encumbrances
unless otherwise stated.
3. Responsible ownership and competent property management are assumed.
4. The information furnished by others is believed to be reliable, but no warranty
is given to accuracy.
5. There is absolutely no contingency between the compensation for this
appraisal report and the values reported.
6. All engineering studies are assumed to be correct. Any sketch in this report
may show approximate dimensions and is to be used for reference purposes only, no
guarantee as to accuracy is expressed or implied unless otherwise stated in this report.
The plot plans and illustrative material in this report are included only to help the reader
visualize the property.
7. Itis assumed that there are no hidden or unapparent conditions of the
properties, subsoil, or structures that render it more or less valuable. No responsibility
is assumed for such conditions or for obtaining the engineering studies that may be
required to discover them.
8. Itis assumed that the property is in full compliance with all applicable federal,
state and local environmental regulations and laws unless the lack of compliance is
stated, described and considered in the appraisal report.
9. It is assumed that the property conforms to all applicable zoning and use
regulations and restrictions unless a nonconformity has been identified, described and
considered in the appraisal report.
10. It is assumed that all required licenses, certificates of occupancy, consents
and other legislative or administrative authority from any local, state or national
government or private entity or organization have been or can be obtained or renewed
for any use on which the value estimate contained in this report is based.
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Statement of Assumptions and Limiting Conditions
(continued)
11. Itis assumed that the use of the land and improvements is confined within
the boundaries or property lines of the property described and that there is no
encroachment or trespass unless noted in the report.
12. Unless otherwise stated in this report, the existence of hazardous materials,
which may or may not be present on the property, was not observed by the appraiser.
The appraiser has no knowledge of the existence of such materials on or in the
property. The appraiser, however, is not qualified to detect such substances.
13. The presence of substances such as asbestos, ure-formaldehyde foam
insulation and other potentially hazardous materials may affect the value of the
property. The value estimated is predicated on the assumption that there is no such
material on or in the property that would cause a loss in value. No responsibility is
assumed for such conditions or for any expertise or engineering knowledge required to
discover them. The client is urged to retain an expert in this field, if desired.
The appraisal report has been made with the following general limiting conditions:
1. Any allocation of the total value estimated in this report between the land and
the improvements applies only under the stated program of utilization. The separate
values allocated to the land and building must not be used in conjunction with any other
appraisal and are invalid if so used.
2. Possession of this report, or a copy thereof, does not carry with it the right of
publication.
3. Neither all nor any part of the contents of this report (especially any
conclusions as of to value, the identity of the appraisers or the firm with which the
appraisers are connected) may be used for any purpose by any person other than the
party to whom it is addressed without the written consent of the appraisers or in any
event without the proper written qualification and only in its entirety. This appraisal
report shall not be disseminated to the public through advertising, public relations,
news, sales or other media without the prior written consent and approval of the
appraisers.
4. The appraiser, by reason of this appraisal, is not required to give further
consultation or testimony or to be in attendance in court with reference to the property in
question unless arrangements have been previously made.
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Statement of Assumptions and Limiting Conditions
(continued)
5. Any value estimates provided in the report apply to the property it its entirety
and any proration or division of the total into fractional interests will invalidate the value
estimate, unless such proration or division of interest has been set forth in the report.
6. The forecasts, projections or operating estimates contained herein are based
on current market conditions, anticipated short-term supply and demand factors and a
continued stable economy. These forecasts are, therefore, subject to changes with
future conditions.
7. The American with Disabilities Act ("ADA") became effective January 26,
1992. | (we) have not made a specific compliance survey and analysis of this property
to determine whether or not it is in conformity with the various detailed requirements of
the ADA. Itis possible that a compliance survey of the property, together with a
detailed analysis of the requirements of the ADA, could reveal that the property is not in
compliance with one or more of the requirements of the Act. If so, this fact could have a
negative effect upon the value of the property. Since | (we) have no direct evidence
relating to this issue, | (we) did not consider possible noncompliance with the
requirements of ADA in estimating the value of the property. Broersma & Broersma is
not qualified to render an opinion as to whether the subject building meets or will meet
the requirements for compliance with ADA. For this appraisal, it is assumed the subject
property either meets the requirements of the ADA or will be made to conform to those
requirements.
8. ENVIRONMENTAL DISCLAIMER: The value estimated is based on the
assumption that the property is not negatively affected by the existence of hazardous
substances or detrimental environmental conditions unless otherwise stated in this
report. The appraisers are not trained or qualified to recognize or evaluate such
hazards, nor to estimate the cost of detection, containment, removal or cleanup. No
responsibility is assumed for such conditions or for engineering studies which may be
required to discover them. The appraisers’ routine inspection of and inquiries about the
subject property did not develop any information that indicated any apparent significant
hazardous substances or detrimental environmental conditions which would affect the
properties negatively unless otherwise stated in this report. It is possible that tests and
inspections made by a qualified hazardous substance and environmental expert would
reveal the existence of hazardous substances on or around the property that would
negatively affect its value. This appraisal and conclusion of value is made exclusive of
any consideration for such costs if necessary and their impact on value.
9. The appraiser assumes that the reader or user of this report has been
provided with copies of available building plans and all leases and amendments, if any,
that encumber the property.
10
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
The Valuation Process
The Appraisal of Real Estate, 14'" Edition (Chicago: Appraisal Institute, 2013)
describes the valuation process as follows:
“The valuation process is a systematic procedure an appraiser follows to provide
answers to a client's questions about real property value. It is a model that can be
adapted to a wide variety of questions that relate to value. It can also be used-perhaps
with some modification-to answer questions not directly related to value, as in case of
review and consulting assignments.
The valuation process begins when the appraiser enters into an agreement with a client
to provide a valuation service. Generally, the terms of the agreement are satisfied when
the appraiser delivers the assignment results (opinions and conclusions) that were
agreed upon with the client. The objective of most appraisal assignments is to develop
an opinion of market value. The valuation process contains all the steps appropriate to
this type of assignment. The model also provides the framework for developing an
opinion of other defined values.
The valuation process is accomplished through specific steps. The number of steps
followed depends on the intended use of the assignment results, the nature of the
property, the scope of work deemed appropriate for the assignment, and the availability
of data. The model provides a pattern that can be used in any appraisal assignment to
perform market research and data analysis, to apply appraisal techniques, and to
integrate the results of these activities into an opinion of defined value. In addition to
assisting appraisers in their work, models that apply the valuation process are
recognized by the market of appraisal users and facilitate their understanding of
appraisal conclusions.
Research begins after the appraisal problem has been identified and the scope of work
required to solve the problem has been determined. The analysis of data relevant to
the problem starts with an investigation of trends observed at the market level-
international, national, regional, or neighborhood. This investigation (i.e. market
analysis) helps the appraiser understand the interrelationships among the principles,
forces, and factors that affect real property value in the specific market area. Research
also provides raw data from which the appraiser can extract quantitative information and
other evidence of market trends. Such trends may include positive or negative
percentage changes in property value over a number of years, the population
movement into an area, and the number of employment opportunities available and
their effect on the purchasing power of potential property users.
11
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
The Valuation Process (continued)
In assignments to develop an opinion of market value, the ultimate goal of the valuation
process is a well-supported value conclusion that reflects ail of the pertinent factors that
influence the market value of the property being appraised. To achieve this goal, an
appraiser studies a property from three different viewpoints, which are referred to as the
approaches to value.
1. In the cost approach, value is estimated as the current cost of reproducing or
replacing the improvements (including an appropriate entrepreneurial incentive
or profit) minus the loss in value from depreciation plus land value.
2. In the sales comparison approach, value is indicated by recent sales of
comparable properties in the market.
3. In the income capitalization approach, value is indicated by a property's
earning power, based on the capitalization of income.
Traditionally, specific appraisal techniques are applied within the three approaches to
derive indications of real property value. One or more approaches to value may be
used depending on which approaches are necessary to produce credible assignment
results, given the intended use.
The three approaches are interrelated. Each requires the gathering and analysis of
data that pertains to the property being appraised. Each approach is outlined briefly in
this chapter and discussed in detail in subsequent sections of the book. From the
approaches applied, the appraiser develops separate indications of value for the
property being appraised. To complete the valuation process, the appraiser integrates
the information drawn from the valuation process, the appraiser integrates the
information drawn from market research, data analysis, and the application of the
approaches to reach a value conclusion. This conclusion may be presented as a single
point estimate of value or, if the assignment permits, as a range within which the value
may fall (or as a point referenced from a benchmark). An effective integration of all the
elements in the process depends on the appraiser's skill, experience, and judgment.
For the reasons discussed herein, the subject properties have been valued by utilizing
the Sales Comparison Approach only.
The components of the valuation process are shown in Figure 7.1 (taken from The
Appraisal of Real Estate, 14° Edition (Chicago: Appraisal Institute, 2013), which is
detailed as follows:
12
Figure 4.1 The Valuation Process
tdentification of theProblem
ee
Identify Identify the | Identify the purpose Identify the | Identify the relevant | Assignment
client and intended use | ofthe assignment | effective date characteristics conditions
intended users (type and definition | of the opinion of the property
of value)
[ ~ Scope of Work Determination |
ea Data Collection and Property Description y
Market Area Data Subject Property Data Comparable Property Data
General characteristics of Subject characteristics of Sales, listings, offerings
region, city, and neighborhood land use and improvements, vacancies, cost and depreciation,
personal property, business income and expenses,
assets, etc, capitalization rates, etc.
_ Data Analysts |
) Market Analysis Highest and Best Use Analysis
Demand studies Land as though vacant
Supply studies Ideal improvement
Marketability studies Property as Improved
Pe F Land Value Opinion
Pie Application of the Approaches toValue
Sates Comparison Approach Income Capitalization Approach Cost Approach
Fe Reconelilation of Value Indications and Final Opinion of Value al
5 t Valo
of Defined
fiopor al
The Valuation Process 37
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Purpose of the Appraisal
The purpose of this appraisal report is to develop an opinion of the Market Values of the
owner's rights and interest in the subject properties, subject to any lease or leases in
effect as of the date of the appraisal, but as if free and clear of debt. Furthermore, this
appraisal estimates the Market Values of the subject properties as of August 18, 2022,
the date of physical inspection of the subject properties.
Market Value is defined in The Dictionary of Real Estate Appraisal, 6" Edition
(Chicago: Appraisal Institute, 2015), as “A type of value that is the major focus of most
real property appraisal assignments. Both economic and legal definitions of market
value have been developed and refined, such as the following:
1. The most widely accepted components of market value are incorporated in the
following definition: The most probable price, as of a specified date, in cash, or in terms
equivalent to cash, or in other precisely revealed terms, for which the specified property
rights should sell after reasonable exposure in a competitive market under all conditions
requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably,
and for self-interest, and assuming that neither is under undue duress.
2. Market Value is described, not defined, in the Uniform Standards of Professional
Appraisal Practice (USPAP) as follows: A type of value, stated as an opinion, that
presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights),
as of a certain date, under specific conditions set forth in the definition of the term
identified by the appraiser as applicable in an appraisal.” (USPAP, 2016-2017 ed.)
Comment:
Forming an opinion of market value is the purpose of many real property appraisal
assignments, particularly when the client’s intended use includes more than one
intended user. The condition included in market value definitions establish market
perspectives for development of the opinion. These conditions may vary from definition
to definition but generally fall into three categories:
a. The relationship, knowledge, and motivation of the parties (i.e. seller and buyer);
b. The terms of the sale (e.g. cash, cash equivalent, or other terms); and
c. The condition of sale (e.g. exposure in a competitive market for a reasonable
time prior to sale).
USPAP also requires that certain items be included in every appraisal report. Among
these items, the following are directly related to the definition of market value:
14
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Purpose of the Appraisal (continued)
Identification of the specific property rights to be appraised.
Statement of the effective date of the value opinion.
Specification as to whether cash, terms equivalent to cash, or other precisely
described financing terms are assumed as the basis of the appraisal.
If the appraisal is conditioned upon financing or other terms, specifications as to
whether the financing or terms are at, below, or above market interest rates
and/or contain unusual conditions or incentives. The terms of above-or below-
market interest rates and/or other special incentives must be clearly set forth;
their contribution to, or negative influence on, value must be described and
estimated; and the market data supported the opinion of value must be described
and explained.
The following definition of market value is used by agencies that regulate
federally insured financial institutions in the United States. The most probable
price that a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as a specified date and
the passing of title from seller to buyer under conditions whereby:
Buyer and seller are typically motivated;
Both parties are well informed or well advised, and acting in what they consider
their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and
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. (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24,
1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal
Register 29499, June 7, 1994)
15
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Purpose of the Appraisal (continued)
4. The International Valuation Standards Council defined market value for the purposes
of international standards as follows: The estimated amount for which an asset of
liability should exchange on the valuation date between a willing buyer and a willing
seller in an arm’s length transaction, after property marketing and where the parties had
each acted knowledgeably, prudently and without compulsion. (IVS).
5. The Uniform Standard for Federal Land Acquisitions defines market value as follows:
Market Value in the amount in cash , or on terms reasonably equivalent to cash, for
which in all probability the property would have sold on the effective date of the
appraiser, after a reasonable exposure time on the open competitive market, from a
willing and reasonably knowledgeable buyer, with neither acting under any compulsion
to buy or sell, giving due consideration to all available economic uses of the property at
the time of the appraisal, (Uniform Appraisal Standards for Federal Land Acquisitions).
The most recently listed definition (No. 3) is the definition of Market Value utilized for
purposes of this value estimate.
Client and Intended User of the Appraisal
This appraisal report was completed for the sole purpose of assisting the client,
Downtown Muskegon Development Company, as stipulated by the assignment, in the
determination of the Market Values of the subject properties. The intended use of this
appraisal report and its concluded value estimate is to assist the client in making
internal decisions in regards to the real estate portion of the subject properties.
Interest Value (Property Rights Appraised)
The subject properties consist of vacant parcels of land that are not leased via Land
Leases. Due to this condition, the subject properties are considered to be available in
Fee Simple Estate. Fee Simple Estate is defined as "Absolute ownership
unencumbered by any other interest or estate, subject only to the limitations imposed by
the governmental powers of taxation, eminent domain, police power and escheat." The
Dictionary of Real Estate Appraisal, 6" Edition (Chicago: Appraisal Institute, 2015
16
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
The Appraisal Process
There are 3 methods that are available when estimating the market value of real estate.
They are the Cost Approach, the Sales Comparison Approach and the Income
Capitalization Approach.
The Cost Approach is defined in The Appraisal of Real Estate, 14 Edition (Chicago:
Appraisal Institute, 2013) as "A set of procedures through which a value indication is
derived for the fee simple estate by estimating the current cost to construct a
reproduction of (or replacement for) the existing structure; including an entrepreneurial
incentive or profit, deducting depreciation from the total cost, and adding the estimated
land value. Adjustments may then be made to the indicated fee simple value of the
subject property to reflect the value of the property interest being appraised.”
Depreciation to real estate can result from 3 causes which are curable and incurable
physical depreciation and functional obsolescence and external obsolescence. Physical
depreciation is the result of the actual physical wearing out of the property, functional
obsolescence is caused by inadequacies or super adequacies within the property itself
and external obsolescence is caused by factors outside the property. Added to this
estimated depreciated value is the value of the land, which is estimated based on actual
market sales.
The Sales Comparison Approach is defined in The Appraisal of Real Estate, 14"
Edition (Chicago: Appraisal Institute, 2013) as "The process of deriving a value
indication for the subject property by comparing similar properties that have recently
sold with the property being appraised, identifying appropriate units of comparison, and
making adjustments to the sale prices (or unit prices, as appropriate) of the comparable
properties based on relevant, market-derived elements of comparison. The sales
comparison approach may be used to value improved properties, vacant land, or land
being considered as through vacant when an adequate supply of comparable sales is
available.”
The Income Capitalization Approach is defined in The Appraisal of Real Estate, 14"
Edition (Chicago: Appraisal Institute, 2013) as a set of procedures through which "An
appraiser analyzes a property's capacity to generate future benefits and capitalizes the
income into an indication of present value. The principal of anticipation is fundamental
to the approach. Techniques and procedures from this approach are also used to
analyze comparable sales data in the sales comparison approach and to measure
obsolescence in the cost approach.” In addition, the income capitalization approach is
defined as “Specific appraisal techniques applied to develop a value indication for a
property based on its earning capability and calculated by the capitalization of property
income.” The Dictionary of Real Estate Appraisal, 6" Edition (Chicago: Appraisal
Institute, 2015).
17
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Scope of Work:
The Scope of Work is defined in The Appraisal of Real Estate, 14'* Edition (Chicago:
Appraisal Institute, 2013) as "The type and extent of research and analyses in an
assignment.” “The scope of work for an assignment is acceptable if it leads to credible
assignment results, is consistent with the expectations of parties who are regularly
intended users for similar assignments and is consistent with what the actions of the
appraiser’s peers would be in the same or similar assignment.”
In the performance of this appraisal assignment, the appraiser was engaged by Mr.
David Medendorp on behalf of Downtown Muskegon Development Company, as
stipulated by the assignment, in the determination of the Market Values of the subject
properties. The appraiser has not previously prepared an appraisal report to estimate
the Market Values of the subject properties within the past 3 years. In the process of
preparing this value estimate, the appraiser viewed the subject sites. | then gathered
pertinent information on the subject properties, such as ownership, sales history, the
property rights being appraised, the purpose and function of the appraisal and lease
information. | also secured current information on the subject properties such as legal
description and size and shape of the sites. Governmental data was also obtained
including the assessed and taxable valuations and zoning data. The subject properties
are identified within this appraisal report via addresses and legal descriptions, which
were taken from the Assessment Records of the City of Muskegon.
The description of the subject sites is based upon a personal inspection and plat maps
that were prepared by the Muskegon County GIS. Photographs of the properties were
taken at the time of physical inspection and are included as a part of this appraisal
report. The appraiser observed the general area and the specific neighborhood in
which the subject properties are located.
The appraiser then analyzed all this information to determine the Highest and Best Use
of the subject site, as vacant and as improved. The Highest and Best Use of the
property was analyzed in the context of the reasonable and probable use which will
yield the highest value as of the effective date of the appraisal. The next step in this
appraisal process was to consider 3 approaches to value: Cost Approach, Sales
Comparison Approach and Income Capitalization Approach.
The Cost Approach is a valuable tool when estimating the Market Value of new or
special purpose properties, where the actual construction costs are known and where a
reliable estimate of depreciation and obsolescence can be made. The subject
properties consist primarily of a vacant parcel of land (properties do have some site
improvements) and the Cost Approach is not considered to be an applicable approach
when estimating the Market Values of the subject properties.
18
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Scope of Work: (continued)
The Income Capitalization Approach considers the subject property from an investment
standpoint, recognizing the quality and quantity of the potential income stream. The
subject properties consist primarily of vacant parcels of land (properties do have some
site improvements) that are unencumbered by any Land Lease agreement(s) and are
considered to be available in Fee Simple Estate. As a result, the Income Capitalization
Approach was not utilized in the valuation of the subject properties.
The Sales Comparison Approach allows the appraiser to estimate the value of Real
Estate by comparing recent sales of similar properties in the surrounding or competing
areas to the subject property. Inherent in this approach is the principle of substitution,
which “holds that the value of a property tends to be set by the price that would be paid
to acquire a substitute property of similar utility and desirability within a reasonable
amount of time.” The Sales Comparison Approach is based on current listings, pending
sales and closed sales of vacant sites that allow similar uses. These sales were
verified, analyzed and then adjusted to reflect any dissimilarities between each of the
properties and the sale.
In the valuation, where factual market information as used to arrive at a conclusion, the
appraiser verified those facts, or relied on the verification of other credible persons,
such as Sellers and Buyers, as well as local commercial real estate brokers and
lenders.
The appraiser prepared this appraisal in a narrative Restricted Report format. This is
intended to contain sufficient summary information to enable the client to understand it
without being misled or confused. This appraisal is subject to the Assumptions and
Limiting Conditions, discussed in a previous section of this report.
The consideration of the effect of possible toxic or hazardous substances upon the
subject properties is beyond the scope of this appraisal, which is intended solely to
provide a base Market Value as if unaffected by any hazardous materials that may be
subsequently confirmed and quantified by qualified experts in this field. The appraiser
cautions against the use of this appraisal without the knowledge of the intended
purpose and scope of the appraisal.
19
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Permanent Parcel # and Governmental Data:
The subject properties are situated in the City of Muskegon, Muskegon County,
Michigan, within the Muskegon City Public School District. The subject properties are
identified for tax purposes as Tax ID#'s:
387 Morris Avenue 61-24-233-000-0001-00
401 Morris Avenue 61-24-233-000-0002-00
Legal Descriptions:
387 Morris Avenue
Unit 1, Subject to Easement for Overhead/Underground Electric Lines recorded
3724/701, to the City of Muskegon, Muskegon County, Michigan.
401 Morris Avenue
Unit 2, Subject to Easement for Overhead/Underground Electric Lines recorded
3724/701, to the City of Muskegon, Muskegon County, Michigan.
Appraiser’s Note:
These legal descriptions were taken from the Assessment Records of the City of
Muskegon, are assumed to be correct and should be compared with a title insurance
policy or abstract of title for accuracy, easements or exceptions. |
Land Description:
Current locational or boundary surveys on the subject properties were not supplied to
the appraiser in the preparation of this appraisal report and its concluded value
estimate. As a result, your appraiser relied upon plat maps that were prepared by the
Muskegon County GIS. According to this plat map, the property that is legally described
as Muskegon County Permanent Parcel #61-24-233-000-0001-00 (387 Morris Avenue),
consists of a rectangular-shaped parcel of land that is located on the southerly side of
Morris Avenue. Beginning in the far north corner of the site, land runs southeasterly
141.59 feet, then runs southwesterly 199.71 feet along the northerly side of an 18’ wide
alley, then runs northwesterly 123 feet, then runs northeasterly 199.84 feet along the
southerly side of Morris Avenue to the point of beginning, and the site contains 24,572
square feet (.56 acres), more or less (see copy of plat map in Addenda section of this
appraisal report for approximate site dimensions and configuration).
20
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Land Description: (continued)
Further, according to the Muskegon County GIS plat map, the property that is legally
described as Muskegon County Permanent Parcel #61-24-233-000-0002-00
(401 Morris Avenue), consists of a rectangular-shaped parcel of land that is located at
the southeasterly corner of Morris Avenue and Third Street. Beginning in the far north
corner of the site, land runs southeasterly 123 feet, then runs southwesterly 199.71 feet
along the northerly side of an 18’ wide alley, then runs northwesterly 123 feet, then runs
northeasterly 199.83 feet along the southerly side of Morris Avenue to the point of
beginning, and the site contains 24,572 square feet (.56 acres), more or less (see copy
of plat map in Addenda section of this appraisal report for approximate site dimensions
and configuration).
The subject sites consist primarily of vacant parcels of land. These sites do have some
asphalt paving, exterior light poles and landscaped poured concrete islands.
Terrain of the sites is relatively level being at Morris Avenue and Third Avenue grades.
The surface drainage on these sites appeared acceptable at the time of inspection,
however, seasonal variations may occur and subsurface drainage conditions are
unknown.
The subject properties are not located in close proximity to any known hazards or
nuisances that would have a negative impact on the subject properties’ Market Values.
Morris Avenue traverses in a northeasterly/southwesterly course, is 2 lanes with paved
surface and is improved with poured concrete curbs and sidewalks. Third Street
traverses in a northwesterly/southeasterly course, is 2 lanes with paved surface and is
improved with poured concrete curbs and sidewalks.
Utilities available to the subject property include municipal water, sanitary sewer, natural
gas, electricity, telephone and internet
Unless otherwise noted, standard utility and right-of-way easements are insignificant to
value. Surveys on the subject properties were not supplied to the appraiser which may
reveal encroachments, zoning violations or other matters of interest that could warrant
modification of the appraised values. If such items would be revealed, the values of the
properties may require modification.
The appraiser has made no special effort to discover any adverse environmental
conditions and accepts no responsibility for such discovery. The appraiser has no
special expertise regarding environmental hazards and this report must not be
considered as an environmental assessment of the properties. The appraiser was not
furnished with an environmental report during the preparation of this appraisal report
and its concluded value, and it is not known if a Phase | Environmental Site Assessment
21
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Land Description: (continued)
has been prepared on the subject sites. It is the recommendation of the appraiser that
a new Phase | Environmental Site Assessment be completed on the subject properties.
This assessment should be prepared by a Certified environmental firm to determine if
any past, present or potential contaminants exist on the subject properties. These value
estimates are made predicated upon the assumption that there are no contaminated
soils on the sites. If adverse environmental conditions were observed, the value
estimates would likely require modification.
When determining if the subject properties are located in a Special Flood Hazard Area,
the appraiser relied upon information prepared by CoreLogic FloodInsights, prepared by
the Federal Emergency Management Agency. According to this data, the subject
properties are not located within a Special Flood Hazard Area and therefore does not
qualify under the Federal Flood Insurance Program (see copy of the CoreLogic
Floodinsights Flood Zone Determination Report; Map Number: 26121C0257E; Panel
Date October 7, 2021, in Addenda section of this appraisal report).
Ownership and Sales History of the Property:
According to the Assessment Records of the City of Muskegon, the subject properties
are reported to be in the ownership of Downtown Muskegon Development Company,
whose address is c/o 380 W. Western Avenue, Suite 202, Muskegon, Michigan 49440.
In accordance with the Uniform Standards of Professional Appraisal Practice (USPAP),
the appraiser must consider and analyze any prior sales of the properties which have
occurred within the last 3 years, as well as any current agreements of sale, options, or
listings of the properties. According to the Assessment Records of the City of
Muskegon, there have been no reported arm’s length sales of the subject properties
within the past 3 years.
According to the local Multiple Listing Services (CAR and FlexMLS) the subject
properties are not currently and have not been listed available for sale or lease during
the past 3 years of this value estimate. The appraiser is unaware of any signed
agreements to purchase or lease the subject properties.
22
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
State Equalized Value, Taxable Value, True Cash Value and
Tax Payments:
Each property assessed for real estate purposes in the State of Michigan has an S.E.V.
(State Equalized Valuation), Capped Value, and Taxable Value. State Equalization
Value is initially established by the local assessor and is statutorily required to reflect
50% of the True Cash Value (also known as “market value”) of the property on the tax
day, December 31, of each year. The local assessment is then subject to equalization,
which results in the property’s State Equalized Value (S.E.V.).
To determine the current year’s Taxable Value, the assessor must calculate Capped
Value. Capped Value is calculated by deducting losses from last year’s Taxable Value,
then multiplying by the Consumer Price Index or 5% (which is less), and finally including
additions. The lesser of the S.E. V. or Capped Value is the current year’s tentative
Taxable Value of the subject property. When a transfer of ownership occurs, the next
year’s Taxable Value is based on the S.E.V. that is calculated annually. Under MCL
211.27, the actual sale price is not the sole basis of the new S.E.V. for that property.
Real Property taxes are determined on the basis of tax rate per thousand dollars of
taxable value.
Following are the properties’ 2020, 2021 and 2022 True Cash Values, State Equalized
Values, Taxable Values and Actual Tax Payments:
387 Morris Avenue - 61-24-233-000-0001-00
Vear True Cash State Taxable Value *Actual Tax
Value Equalized Payments
Value
2020 $93,000 $46,500 $46,500 $4,938.56
2021 $92,800 $46,400 $46 400 $4,956.99
2022 $93,600 $46,800 $46,800 -
*Includes 1% administration fee
401 Morris Avenue — 61-24-233-000-0002-00
Year True Cash State Taxable Value *Actual Tax
Value Equalized Payments
Value
2020 $92,200 $46,100 $46,500 $4,878.48
2021 $92,200 $46,100 $46,400 $4,903.05
2022 $93,200 $46,600 $46,800 -
23
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
State Equalized Value, Taxable Value, True Cash Value and
Tax Payments: (continued)
*Includes 1% administration fee
According to the Muskegon County Treasurer’s Office, no delinquent taxes are currently
owed on the subject properties. In arriving at the final estimates of value, the appraiser
has assumed that any outstanding special assessments and/or delinquent taxes have
been paid in full.
Zoning:
According to the zoning map of the City of Muskegon, the subject properties are zoned
B-3, Central Business District. “The City of Muskegon B-3 Central Business District is
designed and intended to provide for and regulate land and building uses so as to
continue to create a shopping, living, cultural, governmental, office, heritage, and
institutional focal point for the City of Muskegon and the Muskegon Area. The District is
designed to provide flexibility to encourage a diversity of uses, yet provide regulatory
standards to create and maintain a safe and aesthetic environment.”
Permitted uses in this district include the following: retail sales, professional and
personal services, banks, including those with drive-in windows, and other financial
institutions, restaurants, cocktail lounges and brewpubs, business schools or private
schools operated for profit, offices of business, government and the professions, hotels
and motels, indoor theaters, micro-breweries, small wineries and small distilleries,
residential uses as part of a building in this business zone and accessory buildings (see
Addenda in latter section of this appraisal report for a copy of the B-3, Central Business
District zoning ordinance and all its permitted uses).
The subject sites are currently improved with asphalt paving, exterior light poles and
landscaped poured concrete islands and these sites are utilized as off-street parking
lots. It is assumed that local building and zoning officials have allowed a parking use for
these properties that all necessary building permits were obtained for this use.
Statements regarding the zoning compliance are intended only in the most general
sense. Zoning and building ordinances vary significantly from one municipality to
another and can be extremely detailed. The subject properties are improved with
asphalt paving, exterior light poles and landscaped poured concrete islands and are
utilized as off-street parking lots. Only in this general sense is a parking lot use of these
sites considered to legally comply with the local zoning ordinance. The appraiser did
not include a comparison of every potentially significant characteristic of the subject
properties’ site and improvements relative to zoning and building ordinances.
24
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Neighborhood Life Cycle:
Neighborhoods and their land use typically evolve through a 4-stage life cycle detailed
as follows:
1) Growth — a period during which the market area gains public favor and
acceptance
2) Stability — a period of equilibrium without market gains or losses
3) Decline — a period of diminishing demand
4) Revitalization — a period of renewal, redevelopment, modernization, and
increasing demand
The area is considered to be in the Growth stage of its life cycle.
25
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Improvement Description:
The subject sites are not improved with buildings; however located on the sites are
asphalt paving, exterior light poles and landscaped poured concrete islands.
Highest and Best Use:
One of the requirements of this appraisal is to determine the highest and best use of the
subject property, as though vacant and as improved. Highest and best use is defined
in The Dictionary of Real Estate, 6" Edition (Chicago: Appraisal Institute, 2015) as:
1. “The reasonably use of property that results in the highest value. The four
criteria that the highest and best use must meet are legally permissibility,
physical possibility, financial feasibility, and maximum productivity.
2. The use of an asset that maximizes its potential and that is possible, legally
permissible, and financially feasible. The highest and best use may be for
continuation of an asset’s existing use or for some alternative use. This is
determined by the use that a market participant would have in mind for the asset
when formulating the price that it would be willing to bid. (IVS)
3. [The] highest and most profitable use for which the property is adaptable and
needed or likely to be needed in the reasonably near future (Uniform Appraisal
Standards for Federal Land Acquisition).”
Highest and best use is shaped by the competitive forces within the market where the
property is located or in other words highest and best use is an economic study of
market forces focused on the subject property. The objective of the highest and best
use analysis is to identify the property use that can be expected to produce the highest
overall return for each dollar of capital invested. Highest and best use is the foundation
on which market value rests.
Highest and Best Use of land or a site as though vacant:
“Among all reasonable, alternative uses, the use that yields the highest present land
value, after payments are made for labor, capital, and coordination. The use of a
property based on the assumption that the parcel of land is vacant or can be made
vacant by demolishing any improvements.” The Dictionary of Real Estate, Fifth Edition
(Chicago: Appraisal Institute, 2010).
26
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Highest and Best Use: (continued)
Land as though vacant is a fundamental concept of valuation theory and the basis for
the cost approach. Questions to consider when determining the highest and best use,
as vacant are what use should the land be utilized, what type of building, if any, should
be constructed and when should these buildings be constructed. In some cases, land
should be held for speculation, i.e. to remain vacant until development is justified by
market demands.
Each of the subject sites contain 24,572 square feet (.56 acres) of land area and is
zoned B-3, Central Business District, which allows for many commercial uses. Each
site is rectangular in shape which is considered to be more desirable as opposed to a
highly irregular shaped parcel which may be less costly to develop. The sites have
access to all common utilities and frontage, depth and access to the sites are good fora
commercial use. The properties are located in the central business district of the City of
Muskegon, in an area that has and continues to be developed with new mixed-use
developments Many of these developments include buildings that have commercial and
office on the main floor or first few floors with apartments above. The properties are
located in close proximity to the primary arteries and expressways of the area. Due to
these factors, a mixed-use commercial and residential use is considered to be the
properties highest and best use.
Highest and Best Use of property as improved:
“The use that should be made of a property as it exists. An existing improvement
should be renovated or retained as is so long as it continues to contribute to the total
market value of the property, or until the return from a new improvement would more
than offset the cost of demolishing the existing building and constructing a new one.”
The Dictionary of Real Estate, Fifth Edition (Chicago: Appraisal Institute, 2010).
The subject sites are each improved with asphalt paving, exterior light poles and
landscaped poured concrete islands. Each site is utilized as a parking lot. Itis
concluded that the highest and best use of these sites is for an interim parking lot use
until such time that the sites would be required for a more concentrated mixed-use
(commercial and residential).
27
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Cost Approach:
The Cost Approach is defined in The Dictionary of Real Estate Appraisal, 6" Edition
(Chicago: Appraisal Institute, 2015) as “A set of procedures through which a value
indication is derived for the fee simple estate by estimating the current cost to construct
a reproduction of (or replacement for) the existing structure; including an entrepreneurial
incentive or profit; deducting depreciation from the total cost; and adding the estimated
land value. Adjustments may then be made to the indicated value of the Fee Simple
Estate in the subject property to reflect the value of the property interest being
appraised.”
The Cost Approach is a valuable tool when estimating the Market Value of new or
special purpose properties, where the actual construction costs are known and where a
reliable estimate of depreciation and obsolescence can be made. The subject
properties consist primarily of a vacant parcel of land (properties do have some site
improvements) and the Cost Approach is not considered to be an applicable approach
when estimating the Market Values of the subject properties.
28
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Income Capitalization Approach:
The Income Capitalization Approach is defined in The Dictionary of Real Estate
Appraisal, 6 Edition (Chicago: Appraisal Institute, 2010) as "Specific appraisal
techniques applied to develop a value indication for a property based on its earning
capability and calculated by the capitalization of property income.”
The Income Capitalization Approach is based on the basic principles of real estate
appraisal, which are as follows:
*Anticipation and Change
*Supply and Demand
*Substitution
*Balance
*Externalities
Anticipation and Change:
The perception that value is created by the expectation of benefits to be derived in the
future. For this appraisal, the appraiser selected a capitalization rate that implicitly
reflects the anticipated pattern of change in income over time.
Supply and Demand:
In economic theory, the principle that states that the price of a commodity, good, or
service varies directly, but not necessarily proportionately, with demand, and inversely,
but not necessarily proportionately, with supply. In a real estate appraisal context, the
principle of supply and demand states that the price of real property varies directly, but
not necessarily proportionately, with demand and inversely, but not necessarily
proportionately, with supply. This principle is important when forecasting future benefits
and estimating rates of return in the income capitalization approach. This theory states
that if demand increases, rents may increase; vacancy rates will most likely drop and
developers will then find construction profitable and property values may increase until
supply and demand are in balance. This theory is also true in the reverse.
Substitution:
The appraisal principle that states that when several similar or commensurate
commodities, goods, or services are available, the one with the lowest price will attract
the greatest demand and widest distribution. This is the primarily principal upon which
the cost and sales comparison approaches are based.
Balance:
The principal that real property value is created and sustained when contrasting,
opposing, or interacting elements are in a state of equilibrium.
29
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Income Capitalization Approach: (continued)
Externalities:
The principle that economies outside a property have a positive effect on its value while
diseconomies outside a property have a negative effect on its value. In appraisal, off-
site conditions that affect a property’s value. Exposure to street noise or proximity to a
blighted property may exemplify negative externalities, wnereas proximity to attractive
and well-maintained properties or easy access to mass transit may exemplify positive
externalities.
If the Income Capitalization Approach is utilized, the first step when estimating the
Market Value of a property when utilizing the income capitalization approach is to
estimate the property's market rent. Market rent is defined in The Dictionary of Real
Estate Appraisal, 6 Edition (Chicago: Appraisal Institute, 2015) as "The most probable
rent that a property should bring in a competitive and open market reflecting the
conditions and restrictions of a specified lease agreement, including the rental
adjustment and revaluation, permitted uses, use restrictions, expense obligations, term
concessions, renewal and purchase options, and tenant improvements (TI’s).”
The Income Capitalization Approach values a property based on the property owner's
anticipation of receiving future benefits. These benefits can accrue to the property
owner both during and at the end of the holding period. During the holding period, the
owner receives all cash flows generated from the ongoing operations of the property. At
the end of the holding period, the owner receives the cash flow resulting from the
reversion of the property. The Income Capitalization Approach attempts to value these
future economic benefits through a process called capitalization.
The Income Capitalization Approach considers the subject property from an investment
standpoint, recognizing the quality and quantity of the potential income stream. The
subject properties consist primarily of vacant parcels of land (properties do have some
site improvements) that are unencumbered by any Land Lease agreement(s) and are
considered to be available in Fee Simple Estate. As a result, the Income Capitalization
Approach was not utilized in the valuation of the subject properties.
30
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Sales Comparison Approach:
The Sales Comparison Approach is defined in The Dictionary of Real Estate
Appraisal, Fifth Edition (Chicago: Appraisal Institute, 2010) as "The process of deriving
a value indication for the subject property by comparing market information for similar
properties with the property being appraised, identifying appropriate units of
comparison, and making qualitative comparisons with or quantitative adjustments to the
sale prices (or unit prices, as appropriate) of the comparable properties based on
relevant, market-derived elements of comparison.”
The Sales Comparison Approach allows the appraiser to estimate the value of Real
Estate by comparing recent sales of similar properties in the surrounding or competing
areas to the subject property. Inherent in this approach is the principle of substitution,
which “holds that the value of a property tends to be set by the price that would be paid
to acquire a substitute property of similar utility and desirability within a reasonable
amount of time.”
By analyzing sales that qualify as arm’s-length transactions between willing and
knowledgeable buyers and sellers, the appraiser can identify market value and price
trends. Comparability in physical, location, and economic characteristics are important
criteria in evaluating the sales in relation to the subject property. The basic steps
involved in the application of this approach are as follows:
1) Research the competitive market for information on sales transactions, listings,
and offers to purchase or sell involving properties that are similar to the subject
property in terms of characteristics such as property type, date of sale, size,
physical condition, location, and land use constraints. The goal is to find a set of
comparable sales as similar as possible to the subject property.
2) Verify the information by confirming that the data obtained is factually accurate
and that the transactions reflect arms-length market considerations. Verification
may elicit additional information about the market.
3) Select relevant units of comparison (e.g. price per acre, price per square foot,
price per front foot) and develop a comparative analysis for each unit. The goal
is to define and identify a unit of comparison that explains market behavior.
4) Look for differences between the comparable sale properties and the subject
property using the elements of comparison. Then adjust the price of each sale
property to reflect how it differs from the subject property or eliminate that
property as a comparable. This step typically involves using the most
comparable sale properties and then adjusting for any remaining differences.
31
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Sales Comparison Approach: (continued)
5) Reconcile the various indications produced from the analysis of comparable
sales into a single value indication or a range of values.
According to the Assessment Records of the City of Muskegon, the subject properties
are reported to be in the ownership of Downtown Muskegon Development Company.
There have been no reported arm’s length sales of the subject properties within the
past 3 years.
According to the local Multiple Listing Services (CAR and FlexMLS) the subject
properties are not currently and have not been listed available for sale or lease during
the past 3 years of this value estimate. The appraiser is unaware of any signed
agreements to purchase or subject properties.
When estimating the Market Value of the subject properties, consideration is given to
current listings, pending sales and closed sales of similar vacant sites that are located in
similar areas as of the subject properties. The appraiser is a member of CAR
(Commercial Alliance of Realtors) and conducted a recent search on the Catylist
and FlexMLS systems, as well as CoStar, in order to obtain current listings and recent
sales of similar vacant sites.
The appraiser did a search of similar properties located in Muskegon County that are
similar to the subject properties. Following are the details of the recent listings that are
available for sale. This list is not meant to be all inclusive.
Address Asking Price SF Size Asking Price/Acre
1195 W. Western Ave. $249,000 .91 acres $273,626
Muskegon, MI
1133 W. Western Ave. $500,000 1.22 acres $409,836
Muskegon, MI
E. Sherman Bivd. $395,000 1.30 acres $303 846
Muskegon, MI
1355 E Sherman Bivd. $175,000 .46 acres $380,435
Muskegon, MI
1257 E. Sherman Blvd. $112,900 .23 acres $490,870
Muskegon, MI
It is concluded that there is very limited inventory of similar vacant land sales within the
central business district of the City of Muskegon or similar areas within the metropolitan
Muskegon area.
32
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Sales Comparison Approach: (continued)
Also considered when estimating the Market Value of the subject property, are closed
sales of similar vacant land sales that are located within the metropolitan Muskegon
area. The appraiser selected 4 closed sales which were examined through a process of
direct comparison to the subject considering the basic elements of comparison which
include rights conveyed, financing terms, condition of sale, market conditions, location,
topography, shape, land size, utilities and highest & best use.
Following is a recapitulation of the 4 closed sales and the unit of comparison chosen is
the price paid per acre of land area.
33
GS-902
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LE$OP 9568S 0'9E$
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Sales Comparison Approach: (continued)
Basis for Adjustments:
As no two properties are exactly the same, the comparables must be adjusted for the
various physical and economic differences. In keeping with approved appraisal
practice, the comparables are adjusted to the subject. The less desirable traits of the
comparables receive positive (+) adjustments to more closely equate them to the
subject's greater desirability. Conversely, the superior traits of the comparables are
assigned negative (-) adjustments.
Units of Comparison are the components into which a property may be divided for
comparison purposes. The type of appraisal problem determines the unit or units to be
selected and attempts to reflect the way the market buys and sells this property type.
For example, an apartment may be analyzed on the basis of price per unit or price per
square foot. For the purposes of this value estimate, the price per square foot of
building area, including land, is considered to be the most appropriate unit of
comparison in valuing the subject.
PROPERTY RIGHTS CONVEYED:
All comparable properties were conveyed in fee with no adverse legal encumbrances.
As a result, no adjustment is necessary for this condition.
FINANCING TERMS:
Where required, owner-carried contract financing is adjusted to equate to the basic
definition of Market Value that calls for a cash transaction or its financial equivalent.
Each of the comparables had sale terms that were considered to be at market rates
(either cash or cash equivalent) and no adjustment is made for financing.
CONDITIONS OF SALE:
The comparables are analyzed to ascertain whether or not they are fully arm’s length in
nature. All the sales were arm’s length transactions between unrelated parties, not
acting under duress and no condition of sale adjustment is made to these sales.
MARKET CONDITIONS:
These closed sales have taken place between January 2019 and March 2022. The
overall market for vacant commercial land in the central business district of the City of
Muskegon and surrounding areas has been increasing between January 2019 to
present. As a result, a positive adjustment is made to all sales to reflect for the
improving market conditions.
35
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Sales Comparison Approach: (continued)
Basis for Adjustments: (continued)
LOCATION:
The subject properties are located on Morris Avenue within the central business district
of the City of Muskegon. This general area has and continues to experience a
considerable amount of new commercial, office and residential development. This trend
of development and redevelopment is expected to continue. No major vacancy
problems in this area were observed. The subject property has good access to the
major arteries and expressways of the area. Sales 206-54 & 206-56 are considered to
be located in similar locales when compared to the location of the subject property. As
a result, no adjustment is made to these sales for location. Sale 206-55 is considered
to be located in an inferior locale when compared to the location of the subject property
and a positive adjustment is made to this sale for location. Sale 206-57 is considered to
be located in a superior locale when compared to the location of the subject property
and a negative adjustment is made to this sale for location.
TOPOGRAPHY:
The topography of the subject site is level, which is typically less costly to develop as
opposed to a highly rolling/sloping site. The topography of the comparable sales is level
and no adjustment is required to be made to these sales for this condition.
SHAPE:
The market indicates that highly irregular-shaped parcels of land are often more costly
to develop as opposed to rectangular, mostly rectangular or slightly irregular-shaped
parcels of land. The subject site, along with Sales 206-54, 206-55 & 206-56 are
rectangular or mostly rectangular in shape, and no adjustment is required to be made to
these sales for this factor. Sale 206-57 is highly irregular in shape and this sale is
trended upward for shape.
LAND SIZE:
Each of the subject properties contain .56 acres. Typical market purchaser will pay a
higher per unit price for smaller sites. Sales 206-54 & 206-56 are smaller in land size
when compared to the land size of the subject sites and a negative adjustment is made
to these sales. Sale 206-57 is larger in land size when compared to the land size of the
subject sites and a positive adjustment is made to this sale.
UTILITIES:
The subject site and all comparable sales have access to all common utilities and no
adjustment is necessary for utilities adjustment.
36
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Sales Comparison Approach: (continued)
Basis for Adjustments: (continued)
HIGHEST & BEST USE:
The subject sites, along with all comparable sales, have similar highest & best uses and
no adjustment is required for this condition.
These 4 closed sales indicate a Market Value for each of the subject sites, “As Though
Vacant”, that ranges from between $360,000 and $839,563 per acre. It is estimated
after making this analysis and after reviewing other known sales and offerings to sell,
similarly zoned vacant sites, that the market indicates a per acre land value for the
subject sites, in the amount of $450,000.
Based upon this study, the estimated Market Values of the subject properties,
“As Thought Vacant” via the Sales Comparison Approach, are estimated as follows:
Indicated Market Values from the Sales Comparison Approach: _- “As Though Vacant”
387 Morris Avenue - .56 acres @ $450,000/acre $252,000
Called $250,000
401 Morris Avenue - .56 acres @ $450,000/acre $252,000
Called $250,000
37
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Exposure Time:
A further requirement of this appraisal assignment is to estimate the Exposure Time of
the subject property. Exposure time is defined The Dictionary of Real Estate
Appraisal, 6" Edition (Chicago: Appraisal Institute, 2010) as:
1) The time a property remains on the market.
2) [The] estimated length of time that the property interest being appraised would
have been offered on the market prior to the hypothetical consummation of a sale
at market value on the effective date of appraisal. Comment: Exposure time is a
retrospective opinion based on an analysis of past events assuming a
competitive and open market (USPAP, 2016-2017 ed.).
Exposure time is different for various types of real estate and under various market
conditions. It is noted that the overall concept of reasonable exposure encompasses
both adequate, sufficient, and reasonable time and also adequate, sufficient and
reasonable effort. This statement focuses on the time component. The fact that
exposure time is always presumed to occur prior to the effective date of the valuation is
substantiated by related facts in the valuation process: supply and demand conditions
as of the effective date of the valuation disclosure; the use of current cost information;
the analysis of historical sales information (sold after exposure and after completion of
negotiations between the seller and buyer).
When estimating the exposure time, consideration is given to the length of time a similar
property was placed on the open market for sale and when the property was sold. After
reviewing this data and after having discussions with local real estate agents and
investors who are familiar with properties similar to the subject property, it is my opinion
that exposure time for the subject property would be 4 to 8 months prior to the effective
date of the appraisal.
The estimate of exposure time assumes a reasonable and sufficient effort in
professionally marketing these types of properties. Furthermore, the above estimate is
not a prediction of a date of sale.
38
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Conclusion and Final Value Estimate:
There are 3 approaches that are normaily utilized when estimating the Market Value of
Real Estate. They are the Cost Approach, Sales Comparison Approach and the Income
Capitalization Approach. For reasons that are discussed in preceding sections of this
appraisal report, the Cost Approach and Income Capitalization Approach were utilized.
When estimating the Market Values of the subject properties, total reliance is placed
upon the Sales Comparison Approach.
Based upon the reasoning contained in this appraisal report and on the Assumptions
and Limiting Conditions as contained herein, it is my opinion that the subject properties
have Market Values as of August 18, 2022, excluding any Furniture, Fixtures &
Equipment (FF&E), Going Concern and Intangible Items, as follows:
Parcel #1 — 387 Morris Avenue $250,000
Parcel #2 — 401 Morris Avenue $250,000
39
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Qualifications of Stacey L. Broersma GAA
Company Broersma & Broersma
Phone: 616-454-2044
Email: stacey@broersma-appraisers.com
Tax ID #36-4551612
License State of 6426 — 100thMichigan
Certified General Real Estate Appraiser (1996)
Permanent ID No. 1205003358
Expiration Date: July 31, 2023
Professional Designation GAA - General Accredited Appraiser of the
Real Estate Appraiser Section of the National
Association of REALTORS®
Membership Grand Rapids Association of REALTORS® Appraiser
Michigan Association of REALTORS®
National Association of REALTORS®
National Association of REALTORS®,
Appraisal Section
Education Graduate of Hope College with BA Degree
in Business Administration - 1992
40
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Qualifications of Stacey L. Broersma GAA (continued)
Appraisal Education Uniform Standards of Professional Appraisal Practice
(2020-2021)
Real Estate Appraisal "One"
Real Estate Appraisal "Two"
Real Estate Institute “One”
Holloway's Real Estate Institute
Course 301: Income Capitalization
Course 302: Commercial Cost Approach
Course 303: Sales Comparison Approach
Course 307: Small Business Valuations
Northern Michigan University
Course 110: Appraisal Principles
Course 120: Appraisal Procedures
Course 310: Basic Income Capitalization
Course 320: General Applications
Course 410: Standards of Professional Practice
Parts A&B
Course 510: Advanced Income Capitalization
Course 520: Highest & Best Use and Market Analysis
Appraisal Institute
Continuing Education by participating in courses
offered by Appraisal Institute
Appraisal Experience Full-time Certified General Real Estate Appraiser
for Broersma & Broersma specializing in Multi-Family,
Commercial, Industrial, Office and Special Purpose
properties since July 1992
41
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Partial Client List
Financial institutions served during full time fee appraising:
Adventure Credit Union
Byron Bank
Chemical Bank
ChoiceOne Bank
Comerica
Commercial Alliance
Community Choice Credit Union
Community Shores Bank
Fifth Third Bank
First Union Small Business Capital
Founders Bank & Trust
Flagstar Bank
Grand River Bank
Huntington National Bank
Independent Bank
Irwin Union Bank
JPMorgan Chase Bank
Lake Michigan Credit Union
Kent Commerce Bank
Macatawa Bank
Members First Credit Union
Mercantile Bank of Michigan
Michigan Commerce Bank
National City
Paragon Bank
Republic Bank
Select Bank
Union Bank
West Michigan Community Bank
West Shore Bank
Numerous Attorneys, Contractors and Developers, and Municipalities
42
Addenda for:
387 & 401 Morris Avenue
Muskegon, Muskegon County, Michigan
Includes:
Muskegon County GIS Plat Maps
Flood zone Determination Report —- CoreLogic RiskMeter
C-3, Central Business District Zoning Ordinance
Comparable Vacant Land Sales
MILUSKEGON COUNTY
387 Morris Avenue
G | S (« a, This report has been generated from the Muskegon County GIS Property Viewer. While
every effort has been made to provide accurate information, Muskegon
Muskegon County County and Muskegon County GIS shall not be held liable for the information
presented herein. All data shall be verified by the municipal assessor.
rty Report
1 Ai, r ay
MLUSKFGON COUNTY
401 Morris Avenue
GISG
Muskegon County
This report has been generated from the Muskegon County GIS Property Viewer.
While every effort has been made to provide accurate information,
Muskegon County and Muskegon County GIS shall not be held liable for the
Property Report information presented herein. All data shall be verified by the municipal assessor.
ay
©
CoreLogic’
RiskMeter
387 MORRIS AVE MUSKEGON, MI 49440-1138
LOCATION ACCURACY:
Flood Zone Determination Report
Flood Zone Determination: OUT
COMMUNITY 260161 PANEL 0257E
PANEL DATE October 07, 2021 MAP NUMBER 26121C0257E
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___ X500 or B Zone |
(A Zone
HMB OV Zone |
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Historic\ Site eee gaa Ph % |
|
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© 2022 CoreLogic, Inc. All rights reserved. CORELOGIC, RISKMETER, PXPOINT and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries. All other trademarks are the
property of their respective holders.
ARTICLE XII - B-3 CENTRAL BUSINESS DISTRICT
PREAMBLE
The City of Muskegon B-3 Central Business District is designed and intended to provide for and
regulate land and building uses so as to continue to create a shopping, living, cultural,
governmental, office, heritage, and institutional focal point for the City of Muskegon and the
Muskegon Area. The District is designed to provide flexibility to encourage a diversity of uses,
yet provide regulatory standards to create and maintain a safe and aesthetic environment.
SECTION 1200: PRINCIPAL USES PERMITTED [amended 6/07]
In the B-3 Central Business District, no building or land shall be used and no building shall be
erected, structurally altered, or occupied except for one (1) or more of the following specified
uses, unless otherwise provided in this Ordinance.
1. Retail sales of new merchandise and commodities provided that all sales are made from a
completely enclosed building except that this section shall not prohibit the sales of
antique collector items, this section shall prohibit the operation of a store whose primary
sales are previously used products, except as further regulated.
2. Professional and personal services of any type where any repair work done on the
premises is incidental to the service rendered.
3. Banks, including those with drive-in windows, and other financial institutions.
4. Restaurants, cocktail lounges and brewpubs. [amended 3/12]
5. Business schools, or private schools operated for profit. Examples of private schools
permitted herein include, but are not limited to, the following: dance schools, music and
voice schools, and art studios.
6. Offices of business, government, and the professions.
7. Hotels and motels.
8. Indoor theaters.
9, Micro breweries, small wineries and small distilleries, as long as the brewing area is less
than 2,500 square feet. [amended 3/12]
10, Residential uses as part of a building in this business zone shall be allowed upon issuance
of Certificate of Occupancy from the Department of Inspections. [amended 12/06]
11. Accessory buildings and accessory uses customarily incidental to the above Principal
Uses Permitted.
98
47
12. Uses similar to the above Uses Permitted.
SECTION 1201: SPECIAL LAND USES PERMITTED [amended 6/07]
The following uses, and their accessory buildings and accessory uses, shall be permitted under
the purview of Section 2332 after review and approval of the use (and a site plan, if required) by
the Planning Commission, after Public Hearing, subject to the applicable conditions and any
other reasonable conditions imposed by the Planning Commission.
1. Automobile service stations for the sale of gasoline, oil, and minor repair, not including
major repair such as engine rebuilding, undercoating, and similar industrially oriented
activities and subject further to the following:
a. The curb cuts for ingress and egress to a service station shall not be permitted at
such locations that will tend to create traffic hazards in the streets immediately
adjacent thereto. Entrances shall be no less than twenty-five (25) feet from a
street intersection (measured from the roadway) or from adjacent residential
property, and subject to other Ordinances of the City.
b. The minimum lot area shall be ten thousand (10,000) square feet, and so arranged
that ample space is available for motor vehicles which are required to wait.
c. There shall be provided, on those sides abutting or adjacent to a residential district
or residential uses a four foot (4') completely obscuring wall or fence. The height
of the wall or fence shall be measured from the surface of the ground.
d. All lighting shall be shielded from adjacent residential districts and from abutting
streets.
2. Amusements and recreational facilities, including bowling alleys and skating rinks.
3. Commercial parking lots and parking structures.
4, Churches and other facilities normally incidental thereto subject to the following
conditions:
a. The site shall be so located as to provide for ingress and egress from said site
directly onto a major or secondary thoroughfare.
b. The principal buildings on the site shall be set back from abutting properties
zoned for residential use not less than thirty (30) feet.
c. Buildings of greater than the maximum height allowed in Section 2100 may be
allowed provided front, side, and rear yards are increased above the minimum
requirements by one (1) foot of building that exceeds the maximum height
allowed.
99
48
5. Specialized adult educational programs, under the following conditions: [amended 1/02]
a. The program must be associated with a school district.
b. No residency will be permitted in the facility.
c. The hours of operation will be limited to the regular school hours of the associated
school district.
d. The facility must be located either on a major street or within two (2) blocks of
regular bus service.
e. No more than 75 students can be associated with the program.
6. Live music concert halls, under the following conditions: [amended 8/02]
a. The business will operate in such a manner as to comply with the Noise
Ordinance enacted by the City of Muskegon. No music (either live or piped) will
be permitted outside the building.
b. The business will maintain security staff, both inside and outside the building, at
all times when open to customers. Loitering will not be permitted on or around
the site.
c. The business will not operate between the hours of 3:00 a.m. and 8:00 a.m. No
person of 16 years of age or younger will be permitted within the business after
midnight and must directly exit the premises after that time.
d. The site and general vicinity will be maintained and litter-free, and will be
checked for litter every day before opening.
e. Security lighting will be provided for the site.
7. Multiple family residential uses of various types and densities. Any new multiple family
construction shall be compatible and/or complementary to the character of the
surrounding area as determined by the Planning Commission. [amended 12/06]
8. Private clubs, lodge halls, social and similar organizations, including assembly or rental
halls.
9. Galleries and museums.
10. Antique shops.
11. | Wind Turbine Facilities [amended 10/09].
100
49
12. Micro breweries, small wineries and small distilleries with brewing areas larger than
2,500 square feet [amended 3/12]
13. Accessory buildings and accessory uses customarily incidental to the above Special Land
Uses Permitted.
14. Uses similar to the above Special Land Uses Permitted.
SECTION 1202: PLANNED UNIT DEVELOPMENTS [amended 10/98]
Planned developments may be allowed by the Planning Commission under the procedural
guidelines of Section 2101. The intent of Planned Unit Developments in the B-3 Central
Business District is to allow mixed land uses, which are compatible to each other, while
prohibiting nonresidential uses which would not be compatible or harmonious with residential
dwellings or other commercial uses. [revised 4/04 to reflect 10/98 changes]
SECTION 1203: AREA AND BULK REQUIREMENTS [amended 4/00]
l. Minimum lot size: 4,000 sq. feet.
2. Maximum lot coverage:
Buildings: 100 %
Pavement: 25%
3. Lot width: 30 feet (shall be measured at road frontage unless a cul-de-sac, then measured
from setback).
4. Width to depth ratios: The depth of any lot(s) or parcel(s) shall not be more than three (3)
times longer its width.
5. Height Limit:
Maximum height: 6 stories or 90 feet
Minimum height: 2 stories or 35 feet.
Minimum heights are in the form of an "overlay district" on the following street
corridors:
Western Avenue from Ninth Street to Pine Street.
Clay Avenue from Seventh Street to Fourth Street.
Pine Street; from Western Ave. to Apple Avenue.
Height measurement: In the case of a principal building, the vertical distance measured
from the average finished grade to the highest point of the roof surface where the building
line abuts the front yard, except as follows: to the deck line of mansard roofs, and the
average height between eaves and the ridge of gable, hip, and gambrel roofs (see Figure
101
50
2-2). If the ground is not entirely level, the grade shall be determined by averaging the
elevation of the ground for each face of the building (see Figure 2-3).
6. Front Setbacks: [amended 1/05]
Minimum:
Expressway or Arterial Street: 30 feet
Collector or Street: 20 feet
Minor Street: 10 feet
Maximum:
Expressway, Arterial Street or Major Street: 50 feet
Collector Street: 40 feet
Minor Street: 30 feet
Note: For minimum front setbacks new principal structures on minor streets may align
with existing principal structures in the immediate area even if the setback is below the
minimum required.
Rear setback: 10 feet
Setback from the ordinary high water mark or wetland: 75 feet (principal structures
only).
Side setbacks: no requirement
Note, setback measurement: All required setbacks shall be measured from the right-of-
way line to the nearest point of the determined drip line of buildings. [amended 10/02]
10. Zero lot line option: New principal buildings may be erected on the rear lot line
provided: [amended 10/02]
a. The building has an approved fire rating for zero-lot line development under the
building code.
b. The building has adequate fire access preserved pursuant to fire code
requirements.
c. The zero lot line side is not adjacent to a street.
d. A maintenance access easement is granted by the adjacent property owner and
recorded with the County Register of Deeds and provided to the zoning
administrator with the site plan or plot plan.
e. It is not adjacent to wetlands, or waterfront.
ll. All required side and rear setbacks shall be landscaped, greenbelt buffers, unless zero-lot-
line is employed for a structure or fire access. At least fifty percent of all required front
102
51
setbacks shall be landscaped and adjacent to the road right-of-way. An average minimum
greenbelt of 10 feet shall be maintained along each street frontage. [amended 12/01,
amended 10/02]
103
52
LAND SALE NO. 206-54
Address: 593 W. Western Avenue
Muskegon, Muskegon County, Michigan
Permanent Parcel #: 61-24-205-316-0005-00
Land Size: Rectangular-shaped parcel of land that is
located on the southerly side of W. Western Avenue.
Land has 78 feet of frontage on W. Western Avenue,
has 78 feet of frontage on the northerly side of an
alley, extends to a depth of 140 feet, and the site
contains 10,920 square feet (.25 acres), more or less.
Topography: Level
Shape: Rectangular
Access: Good
Visibility: Good
Environmental:
Conditions: None known
Zoning: B-3, Central Business District
Utilities: All common
Date of Sale: January 8, 2019
Financing Terms: Conventional Financing
Sale Price: $140,000
Cash Price: $140,000
Seller: Muskegon Lakeview Condos, LLC
Purchaser: Mulder Western Avenue, LLC
53
LAND SALE NO. 206-54
Real Property Rights: Fee Simple Estate
Condition of Sale: Arm's Length
Confirmed by: Assessment Records of the City of Muskegon.
Highest & Best Use: Future commercial development
Price/SF: $140,000 / 10,920 SF = $12.82/SF
Price/Acre: $140,000 / .25 acres = $560,000/acre
54
MIISKEGON COUNTY
593 W. Western Avenue
GISG
Muskegon County
This report has been generated from the Muskegon County GIS Property Viewer.
While every effort has been made to provide accurate information,
Muskegon County and Muskegon County GIS shall not be held liable for the
information presented herein. All data shall be verified by the municipal assessor.
Property Report
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LAND SALE NO. 206-55
Address: 785 Spring Street
Muskegon, Muskegon County, Michigan
Permanent Parcel #: 61-24-205-177-0001-00
Land Size: Mostly rectangular-shaped parcel of land that is
located at the southwest corner of Spring Street and
Clay Avenue, on the northerly side of Webster
Avenue. Beginning in the far north corner of the site,
land runs southeasterly 264.44 feet along the westerly
side of Spring Street, then runs southwesterly 113.51
feet along the northerly side of Webster Avenue, then
runs northwesterly 166.61 feet, then runs easterly
20.96 feet, then runs northwesterly 108.51 feet, then
runs northeasterly 95.3 feet along the southerly side
of Clay Avenue to the point of beginning, and the site
contains 28,146 square feet (.65 acres), more or less.
Topography: Level
Shape: Mostly rectangular
Access: Good
Visibility: Good
Environmental:
Conditions: None known
Zoning: B-4, General Business District
Utilities: All common
Date of Sale: July 29, 2021
Financing Terms: Conventional Financing
57
LAND SALE NO. 206-55
Sale Price: $200,000
Cash Price: $200,000
Seller: Corepark Investments, LLC
Purchaser: Samaritas Affordable Living Muskegon Ltd.
Real Property Rights: Fee Simple Estate
Condition of Sale: Arm’s Length
Confirmed by: Assessment Records of the City of Muskegon.
Highest & Best Use: This site was purchased for the construction of a
4-story apartment building that was constructed for
affordable housing.
Price/SF: $200,000 / 28,146 SF = $7.11/SF
Price/Acre: $200,000 / .65 acres = $307,692/acre
58
MIISKEGON COUNTY
785 Spring Street
GIS
Muskegon
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This report has been generated from the Muskegon County GIS Property Viewer.
While every effort has been made to provide accurate information,
Muskegon County and Muskegon County GIS shall not be held liable for the
information presented herein. All data shall be verified by the municipal assessor.
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LAND SALE NO. 206-56
Address: 623 W. Clay Avenue
Muskegon, Muskegon County, Michigan
Permanent Parcel #: 61-24-205-322-0003-00
Land Size: Rectangular-shaped parcel of land that is located on
the north side of W. Clay Avenue. Land has 66.5 feet
of frontage on W. Clay Avenue, has a north
dimension of 67.4 feet, extends to a depth of 141.8
feet, and the site contains 9,492 square feet
(.22 acres), more or less.
Topography: Level
Shape: Rectangular
Access: Good
Visibility: Good
Environmental:
Conditions: None known
Zoning: B-3, Central Business District
Utilities: All common
Date of Sale: November 29, 2021
Financing Terms: Conventional Financing
Sale Price: $185,000
Cash Price: $185,000
Seller: Vincent A. Labozzetta
Purchaser: 639 W. Clay Partners, LLC
61
LAND SALE NO. 206-56
Real Property Rights: Fee Simple Estate
Condition of Sale: Arm's Length
Confirmed by: Assessment Records of the City of Muskegon.
Highest & Best Use: Future commercial development.
Price/SF: $185,000 / 9,492 SF = $19.49/SF
Price/Acre: $185,000 / .22 acres = $840,909/acre
62
MUSKEGON COUNTY
| 623 W. Clay Avenue
GISG This report has been generated from the Muskegon County GIS Property Viewer.
Muskegon County Muskegon County and Muskegon County GIS shall not be held liable for the
While every effort has been made to provide accurate information,
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Property Report
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LAND SALE NO. 206-57
Address: 120 Viridian Drive
Muskegon, Muskegon County, Michigan
Permanent Parcel #: 61-24-607-000-0009-00
Land Size: Highly irregular-shaped parcel of land that is
located on the northerly side of Lakefront Drive, on
the south shoreline of Muskegon Lake. Beginning in
the northwest corner of the site, land runs easterly
165.82 feet along the south shoreline of Muskegon
Lake, then runs south 125 plus or minus feet, then
runs east 192.48 feet, then runs southerly and
southeasterly 120.49 feet, then runs southwesterly
56.04 feet, then runs northwesterly and westerly a
total of 378.46 feet along the northerly side of
Lakefront Drive, then runs north 124.23 feet to the
point of beginning, and the site contains 51,836
square feet (1.19 acres), more or less.
Topography: Level
Shape: Highly irregular
Access: Good
Visibility: Good
Environmental:
Conditions: None known
Zoning: PUD, Planned Unit Development
Utilities: All common
Date of Sale: March 10, 2022
Financing Terms: Conventional Financing
65
LAND SALE NO. 206-57
Sale Price: $400,000
Cash Price: $400,000
Seller: Daniel C. Stoeman Living Trust
Purchaser: Muskegon Lakefront, LLC
Real Property Rights: Fee Simple Estate
Condition of Sale: Arm's Length
Confirmed by: Assessment Records of the City of Muskegon.
Highest & Best Use: Future commercial/residential development
Price/SF: $400,000 / 51,836 SF = $7.72/SF
Price/Acre: $400,000 / 1.19 acres = $336,134/acre
66
MUSKEGON COUNTY
120 Viridian Drive
GISG
Muskegon County
This report has been generated from the Muskegon County GIS Property Viewer.
While every effort has been made to provide accurate information,
Muskegon County and Muskegon County GIS shall not be held liable for the
Property Report information presented herein. All data shall be verified by the municipal assessor.
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