Sewer System Project. LOCATION Village Sewer Assessment Township of Pequannock, Morris County, New Jersey

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1 APPRAISAL REPORT Sewer System Project LOCATION Village Sewer Assessment Township of Pequannock, Morris County, New Jersey PREPARED FOR Township of Pequannock 530 Newark-Pompton Turnpike Pequannock Township VALUATION DATE September 14, 2018 Submitted by THEODORE J. LAMICELLA, JR., SCGREA, CTA AND JUSTIN L. LAMICELLA, SR., SCGREA, CTA Copyright 2018 Associated Appraisal Group

2 ASSOCIATED APPRAISAL GROUP REAL ESTATE APPRAISAL SERVICES 6 COMMERCE DRIVE SUITE 303 CRANFORD, NEW JERSEY (908) Telephone (908) Facsimile September 20, 2018 MR. ADAM W. BREWER Township Manager Township of Pequannock 530 Newark-Pompton Turnpike Pompton Plains, New Jersey Re: Village Sewer Assessment Evaluation Township of Pequannock Dear Mr. Brewer: As per your request, we have conducted an analysis of the properties situated within the boundaries of the sewer program to be conducted by the Township of Pequannock and performed a study of all relevant market data comparable to the subject properties. The purpose of this analysis is to estimate the enhancement value attributable to each property due to the presence of municipal sewers. To estimate the enhancement value we have conducted an analysis of sales of properties with sewers and without sewers in order to abstract land values for the basis of comparison. The difference between these two values will be considered the enhancement value attributed to the property due to the presence of municipal sewers. This report shall serve to assist the Township in evaluating all of the properties situated within the project boundaries for the purpose of establishing a special assessment against those as prescribed by law. This report may also be utilized in discussions and preliminary appeal negotiations with the property owner should either event arise. In evaluating the properties in the sewer program, the goal of our appraisal will be to determine the enhancement value for each property as per Statute N.J.S.A. 40:56-27 All assessments levied under this chapter for any local improvement shall in each case be as nearly as may be in proportion to and not in excess of the peculiar benefit, advantage or increase in value which the respective lots and parcels of real estate shall be deemed to receive by reason of such improvement. a full service real estate appraisal corporation

3 MR. ADAM W. BREWER Re: Village Sewer Assessment September 20, 2018 Page Two Benefit is the increment in value to land affected by local improvement for which assessment is made and represents difference between market value of lands before improvement and market value of land immediately after improvement. After a study of the available pertinent data, we have estimated the enhancement value for each property due to the installation of sewers. Our analysis and conclusions are contained within this report. The opinion of value expressed herein is subject to the assumptions, limiting conditions, definitions and conclusions contained in the following report; and to the market research and data analysis which have been retained in the appraiser s file. The conclusions of value stated in this report are for the client only. The report itself is restricted for use by the client in any capacity related to the evaluation, determination, negotiation, and disposition of the subject property as it pertains to the placement of a special assessment for public improvements in the form of municipal sewers. Considering the purpose for which this report was written, the descriptive data, analysis, and conclusions reported herein have been limited to the more important salient facts upon which the opinion of value is based. Since the values reported are based on a hypothetical assumption as dictated by statute (land valued as though vacant), the reported values are in no way applicable or realistic in any capacity other than the purpose for which this report has been written. Our report is attached and made part of this letter of transmittal. Very truly yours, ASSOCIATED APPRAISAL GROUP Theodore J. Lamicella, Jr., SCGREA, CTA State Certified General Real Estate Appraiser License Number: 42RG Justin L. Lamicella, Sr., SCGREA, SCGREA State Certified General Real Estate Appraiser License Number: 42RG

4 TABLE OF CONTENTS DATA SUMMARY...1 INTRODUCTION...2 MARKET VALUE...4 ASSESSED VALUATION, TAX RATE & TAXES...5 MORRIS COUNTY...6 TOWNSHIP OF PEQUANNOCK...9 NEIGHBORHOOD DESCRIPTIONS...11 FLOOD MAP ZONING...13 TAX MAPS...20 HIGHEST AND BEST USE...23 APPRAISAL PROCESS...27 COST APPROACH...28 SALES COMPARISON APPROACH...30 RESIDENTIAL PAIRED SALES ANALYSIS VILLAGE SEWERS...33 COMMERCIAL SALES ANALYSIS VILLAGE SEWERS...37 RECONCILIATION AND VALUE CONCLUSION...41 SPECIAL ASSESSMENT AND PROPERTY SUMMARY...43 PROPERTY SUMMARY VILLAGE SEWER PROJECT CONTINGENT AND LIMITING CONDITIONS...54 CERTIFICATION...55 QUALIFICATIONS OF THE APPRAISERS...56 ADDENDUM...61 Copyright 2018 Associated Appraisal Group Page i

5 DATA SUMMARY Property Location: See Spreadsheet Date of Valuation: September 14, 2018 Property Rights Appraised: Fee Simple Estate Client: Township of Pequannock Owners of Record: See Spreadsheet Lot Size / Shape: See Spreadsheet Zoning: See Spreadsheet Assessed Valuation: Highest and Best Use: (As Vacant Land) Purpose of Appraisal: See Spreadsheet Residential / Commercial Development To Estimate the Enhancement Value of the Sewer Project Function of Appraisal: To help the Township establish a special assessment Enhancement Value: Residential: $18,000 Commercial: $6.00 per square foot Special Assessment: Residential: $6,300 Commercial: $2.12 per square foot Copyright 2018 Associated Appraisal Group Page 1

6 INTRODUCTION PURPOSE OF APPRAISAL The purpose of this analysis is to estimate the enhancement value attributable to each property due to the presence of municipal sewers as of September 14, FUNCTION OF APPRAISAL This report shall serve to assist the Township in evaluating all of the properties situated within the project boundaries for the purpose of establishing a special assessment against those as prescribed by law. PROPERTY RIGHTS APPRAISED The property rights appraised are all rights existing in fee simple as of the appraisal date. These are the legal and economic interests that may rightfully be exchanged for money or equivalent goods. Property rights inherent in the ownership of tangible personal property and intangible benefits of the property itself are not the subject of this report. DELINEATION OF TITLE This report includes four hundred twenty-nine (429) properties and a list of each owner and address is included on the attached spreadsheet. EXPOSURE TIME Exposure Time is a reasonable estimate of the length of time the property interest being appraised would have been offered on the market prior to a hypothetical consummation of a sale at market value on the effective date of this appraisal. Exposure Time for the subject properties would be six to twelve months. Copyright 2018 Associated Appraisal Group Page 2

7 INTRODUCTION, CONTINUED SCOPE OF ASSIGNMENT Associated Appraisal Group, Inc. has been retained by the Township of Pequannock to conduct a valuation analysis of 429 properties in response to the construction of public improvements in the form of municipal sanitary sewers. The value determined will be the enhancement value due to the installation of a sanitary sewer, as described by statute (N.S.J.A. 40:56-27). Each property s enhancement value will be valued as the enhancement to the land value only, as though the subject properties are completely vacant of all improvements and considered legal building lots. This appraisal is a jurisdictional exception to the Uniform Standards of Professional Appraisal Practice in that it does not attempt to value each property affected by the sewer line, but only values the value enhancement contributed by the line to each property owner. This appraisal is of a fractional segment of the subject properties. The values estimated herein cannot be used to determine the value of the whole. Copyright 2018 Associated Appraisal Group Page 3

8 MARKET VALUE Market Value is commonly defined as: 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, for self-interest, assuming that neither is under undue duress." Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and Seller are typically motivated. 2. Both parties are well informed or well advised and each acting in what they consider their best interests. 3. A reasonable time is allowed for exposure in the open market. 4. Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto. 5. 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. 1 1 The Appraisal of Real Estate, Thirteenth Edition, Pages 23-24, published by the Appraisal Institute Copyright 2018 Associated Appraisal Group Page 4

9 ASSESSED VALUATION, TAX RATE & TAXES The subject properties are assessed by the Township of Pequannock, Morris County, New Jersey (see attached spreadsheet for each assessment). The New Jersey Division of Taxation has advised that the following tax rate (per $100 of assessed valuation) and equalization ratio apply to the subject municipality. YEAR EQUALIZATION RATIO (%) TAX RATE/$100 EFFECTIVE TAX RATE ($) % $2.295 $2.068 Copyright 2018 Associated Appraisal Group Page 5

10 MORRIS COUNTY Morris County, which contains a total area of approximately 481 square miles (469 square miles of land and12 square miles of water), is located in the north central portion of the State of New Jersey, approximately 25 miles west of New York City. The county is bounded on the north/northeast by Sussex and Passaic Counties, on the east by Essex and Union Counties, on the south/southwest by Somerset and Hunterdon Counties, and on the west by Warren County. It is the eighth wealthiest county in the United States by median household income and the ninth wealthiest county in the United States by per capita income. The county is traversed by an extensive system of state, county and interstate roadways including Interstate Routes 80 and 287, US Routes 46 and 202, and State Routes 10, 24, and 53, plus an extensive system of local roadways. Morris County has within its reach ready access to the roadways that provide entry to lower and midtown New York City via the Lincoln Tunnel and the Holland Tunnel, as well as access to the George Washington Bridge as a gateway to the New England states. In addition to the extensive system of roadways, transportation facilities include commuter bus and rail service. Regularly scheduled commuter rail service to New York City is provided by New Jersey Transit. The county s population has steadily increased in every decade since the first half of the 19 th century. As of the United States 2010 Census, there were 492,694 people, with a resulting population density of 1,051 inhabitants per square mile. The county is governed by a seven-member Board of Chosen Freeholders. The members are elected at large to serve three-year terms on a staggered basis, with either two or three seats up for election each year. Copyright 2018 Associated Appraisal Group Page 6

11 MORRIS COUNTY, CONTINUED Fifty-three Fortune 500 businesses have headquarters, offices, or a major facility in Morris County. These include AT&T, Honeywell, Colgate-Palmolive, Warner Lambert, Exxon, Novartis, BASF, Bayer and Wyeth. Major industries include finance, insurance, real estate, pharmaceuticals, health services, research and development, and technology. Resident buying income is reflected in the 2010 annual per capita personal income estimate of approximately $47,342 and the median household money income of $96,747. Health care facilities servicing the county include Greystone Park Psychiatric Hospital, Kessler Institute for Rehabilitation, Kindred Hospital New Jersey, Morristown Memorial Hospital, and Saint Clare s Hospitals in Boonton, Denville, and Dover. These hospitals have a combined capacity exceeding 1,500 beds. Public education, kindergarten through 12th grade, is provided by the municipalities throughout its 39 school districts. Additionally, there are parochial schools located within the county. Institutions of higher education include: Assumption College for Sisters, College of Saint Elizabeth, and Drew University. Additionally, the County College of Morris serves students as a two-year public community college. Utilities including water, sewer, natural gas, electricity and telephone services are available throughout the county. Garbage removal is either provided for by the various municipalities or a private service. A range of recreational facilities, museums, historic sites, and entertainment activities are offered. As well, private facilities and parks provide a variety of activities including boating, picnicking, fishing, hiking, ice skating, riding, snowshoeing, athletic fields, and sightseeing. Copyright 2018 Associated Appraisal Group Page 7

12 MORRIS COUNTY, CONTINUED Generally, the county offers those elements needed to attract residential, commercial and industrial development. In addition to the county s proximity to New York City, the county is located in the Middle Atlantic region of the United States representing a multi-billion-dollar market area that stretches from Boston to Northern Virginia. Copyright 2018 Associated Appraisal Group Page 8

13 TOWNSHIP OF PEQUANNOCK Pequannock Township, containing an area of approximately square miles, square miles of which are land and square miles of which are water, is located in the northeastern portion of Morris County. It is estimated that as of 2010, the population of the Township was 15,540. The resulting population density was approximately 2,303 inhabitants per square mile. As of the 2010 U.S. Census, there were 6,471 households in Pequannock. The median household income in the Township was $84,322, the median family income was $109,572, and the per capita income was $42,016. The Township operates within the Faulkner Act (the Optional Municipal Charter Law) under the Council-Manager Plan E form of municipal government. There are five members of the Council who are elected at-large. Members of the council are elected to four-year terms on a staggered basis. Every two years (on even-numbered years) in the November general election, either two or three expiring seats come up for election. At their annual reorganizational meeting, the members of the Council select a mayor and deputy mayor from among their ranks. The Council is also responsible for hiring a Township Manager to serve as chief executive and administrative officer. Pequannock is located in the 11 th Congressional District and is part of New Jersey s 40 th State Legislative District. The Pequannock Township School District serves students in Kindergarten through Grade 12. There are three elementary (Kindergarten through Grade 5) schools, one middle (Grade 6 through Grade 8) school, and one high (Grade 9 through Grade 12) school. Additionally, there are four private/parochial schools in the Township. Two major roadways in that run through a portion of the Township are Interstate 287 and New Jersey State Highway 23. Although not located in Pequannock, New Jersey Transit rail stations in Mountain View and Lincoln Park are nearby and offer service to Hoboken Terminal. Additionally, New Jersey Transit provides bus service to Port Authority Bus Terminal in Midtown Manhattan. Copyright 2018 Associated Appraisal Group Page 9

14 PEQUANNOCK TOWNSHIP, CONTINUED Generally, the community is provided those services demanded by typical inhabitants, including education facilities, recreational facilities, public utilities, health facilities, shopping and police, fire and communication facilities. Copyright 2018 Associated Appraisal Group Page 10

15 NEIGHBORHOOD DESCRIPTIONS The subject neighborhoods are situated in the eastern portion of Pequannock Township. Topography is generally level for all of the lots. All of the properties within this project are contained within the following zones: R-9 Zone (1/5 Acre Residential), R-11 Zone (1/4 Acre Residential), C1 (Community Business District), C-2 (Highway Commercial District) and the C-3 (Regional Commercial District). The present development of these zones consists mostly of single-family residential housing and commercial uses. According to the FEMA map, the subject properties are located in either Zone X or Zone AE. Flood Zone X: Soil Conditions: According to the flood insurance rate map, Community panel number C, effective date September 17, 1992, the subject properties are located in flood zone X. Flood zone X indicates area determined to be outside 500-year floodplain determined to be outside the 1% and 0.2% annual chance floodplains. Few properties are located in flood zone AE indicates area inundated by 1% annual chance flooding, for which BFEs have been determined. A soil engineering report of the subject site has not been provided or reviewed. Flood Zone AE: Soil Conditions: According to the flood insurance rate map, Community panel number C, effective date September 17, 1992, the subject properties are located in flood zone AE. Flood zone AE indicates an area inundated by 1% annual chance flooding, for which BFEs have been determined. A soil engineering report of the subject site has not been provided or reviewed. Copyright 2018 Associated Appraisal Group Page 11

16 FLOOD MAP Copyright 2018 Associated Appraisal Group Page 12

17 ZONING VILLAGE SEWER All of the subject properties located in the project neighborhood are situated in either the R-11, C-1 or C-2 Zone in the Township of Pequannock. The following will outline the requirements of each zone: R-9 (1/5 Acre Residence) Minimum Lot Size: 9,375 Square Feet Minimum Lot Depth: 125 Feet Minimum Lot Width: 75 Feet Minimum Lot Frontage: Shall be the same as lot width provided, however, that for lots around the bulb of a cul-de-sac lot frontage shall be at least fifty percent (50%) of the lot depth. Minimum Rear Yard: 25 Feet Minimum Side Yard: There shall be 2 side yards, each not less than ten (10) feet. Maximum Lot Coverage: No more than seventeen percent (17%) of the area shall be covered by buildings, and not more than forty-two (42%) of any lot shall be covered by impervious surfaces. Maximum Building Height: No structure shall exceed two and one-half (2 1/2) stories or thirty-two (32) feet in height, whichever is less, except that the height for residential structures, located in the Special Flood Hazard Area, may be increased to two and one-half (2 1/2) stories or thirty-five (35) feet, whichever is greater provided the increased height, in excess of the underlying maximum permitted height, is necessary to raise the structure's first floor elevation above the Special Flood Hazard Area. Copyright 2018 Associated Appraisal Group Page 13

18 ZONING, CONTINUED R-9 (1/5 Acre Residence) Minimum Front Yard: There shall be a front yard at least thirty-five (35) feet in depth. The front yard setback of a residential structure located in the Special Flood Hazard Area may be reduced to not less than 25' if the elevation of the structure has been raised above the Special Flood Hazard Area elevation and subject to the limitations contained in the subsection. The purpose of the decreased front yard setback is to provide additional area for that portion of the structure related to the entrance staircase, platform(s)/landings(s) and porch needed in the effort to raise an existing residential structure's first floor elevation above the Special Flood Hazard Area. Such entrance staircase, platform(s)/landing(s) and porch shall not occupy more than 4% of the required front yard area of the residence, where the standard front yard setback is 35'. The entrance staircase structure shall not exceed a maximum of 10 risers to a platform/landing. Such a restriction will ensure that any proposed new entry will not result in a long expansive staircase entrance to the home. The entrance shall be permitted to be covered by a roof to provide both protection from the elements and to provide aesthetic improvement. Such covered structure shall only be over the raised first floor entrance and its encroachment into the required front yard setback shall not exceed the permitted 25' setback associated with the entrance staircase, platform(s)/landing(s) and porch. The area around the entrance staircase and platform(s)/landing(s) shall be landscaped with a variety of evergreen shrubs to provide screenings and coverage of the base or underside of the entrance staircase, platform(s)/landing(s) and porch structure. (4A) All new or elevated structures shall comply with the following requirements: (a) Structures that are built on conventional concrete or concrete block foundations shall provide a maximum exposed foundation of 36. Treatment is required for exposed foundations in excess of the 36 limit and shall include treatments such as natural or faux stone facing, brick facing, wood batten, lattice or siding. Treatment shall not include a skim coat of mortar over concrete block work. (b) Structures that are built on piling or pier type foundations shall enclose the entire foundation with a finished architectural treatment, such as stone, masonry, framed lattice, framed louvers or siding to enclose the entire foundation same to be reviewed and approved by the Construction Official. Copyright 2018 Associated Appraisal Group Page 14

19 ZONING, CONTINUED R-11 (1/4 Acre Residential) Minimum Lot Size: 11,250 Square Feet Minimum Lot Depth: 125 Feet Minimum Lot Width: 90 Feet Minimum Lot Frontage: Minimum Front Yard: Shall be the same as lot width provided, however, that for lots around the bulb of a cul-desac lot frontage shall be at least fifty percent (50/0) of the lot width. There shall be a front yard of at least fifty feet (50') in depth provided, however, that where the average set back is less than fifty feet, the average set back will apply. Minimum Rear Yard: 30 Feet Minimum Side Yard: Maximum Lot Coverage: There shall be 2 side yards, each not less than ten (10) fees, and the aggregate of the two (2) side yards shall be 25 Feet No more than sixteen percent (16%) of the area shall be covered by buildings, and not more than forty percent (40%) of any lot shall be covered by impervious surfaces, including structures. Maximum Building Height: 2½ Stories or 35 Feet Copyright 2018 Associated Appraisal Group Page 15

20 ZONING, CONTINUED C-1 (Community Business District) Minimum Lot Size: 4,000 Square Feet Minimum Lot Frontage: 50 Feet Minimum Lot Width: 40 Feet Minimum Front Yard: There shall be a front yard twenty-five (25) feet in depth. No parking shall be permitted in the front yard. Minimum Rear Yard: Minimum Side Yard: There shall be a rear yard which shall be ten percent (10%) of the depth of the lot, but not less than ten (10) feet. There shall be two side yards, each not less than three feet (3') in width and the aggregate of the two side yards shall not be less than twenty-five percent (25%) of the width of the lot. Maximum Lot Coverage: Maximum Building Height: 2 Stories or 30 Feet No more than thirty percent (30%) of the lot shall be covered by buildings, and not more than ninety percent (90%) of the lot shall be covered by impervious surfaces, including buildings. Screening, landscaping and open space: Landscaping, as required by the approved site plan, shall be maintained for the life of the property to standards as approved in the site plan. Where a non-single-family residential use abuts a singlefamily residential zone or an area which is used as a single-family residence, a buffer of at least five (5) feet in width shall be provided on the non-singlefamily residential lot. Said buffer area shall include a solid fence in conformance with other requirements of this chapter as approved by the Planning Board. This buffer may be located in the required yard area but shall not include parking or driveways and shall be planted and maintained in a manner acceptable to the Planning Board and approved as part of the site plan. The effect of such buffer shall be to screen the business use in the C-1 Zone from the adjacent residences. Special attention shall be paid to screening parking, loading and mechanical systems. Copyright 2018 Associated Appraisal Group Page 16

21 ZONING, CONTINUED C-2 (Highway Commercial District) Minimum Lot Size: 1 Acre Minimum Lot Frontage: 50 Feet Minimum Lot Width: 200 Feet Minimum Front Yard: Minimum Rear Yard: Minimum Side Yard: There shall be a front yard which shall be not less than fifty (50) feet in average depth, but in no case shall any portion of the structure be constructed closer than thirty-five (35) feet to the street line. A maximum of seventy percent (70%) of the front yard shall be used for parking and access drives. There shall be a rear yard of not less than twenty percent (20%) of the depth of the lot, but in no case shall a rear yard be less than twelve (12) feet, nor shall any rear yard be required to exceed twenty (20) feet. No side yard shall be required. Where provided, however, the minimum side yard shall be six (6) feet in width. Maximum Lot Coverage: No more than thirty percent (30%) of the lot shall be covered by buildings, and not more than ninety percent (90%) of the lot shall be covered by impervious surfaces, including buildings. Maximum Building Height: 2 Stories or 30 Feet Screening, landscaping and open space (a) In each case when a lot abuts a residential zone or a park area, there shall be a ten-foot buffer strip which consists of landscaping or natural vegetation as approved by the Planning Board. Said buffer area shall include a solid fence in conformance with other requirements of this chapter as approved by the Planning Board. Such a buffer shall not include the rear or side yard required or any parking or driveways. The object of said buffer shall be to screen year-round the adjacent areas, with particular attention to parking, loading and service area. (b) All landscaping as required by a site plan approval under the terms of this chapter shall be maintained for the life of the property to standards as approved in the site plan. Copyright 2018 Associated Appraisal Group Page 17

22 ZONING, CONTINUED C-3 (Regional Commercial District) Minimum Lot Size: 4 Acre Minimum Lot Frontage: 50 Feet Minimum Lot Width: 350 Feet Minimum Front Yard: There shall be a front yard which shall be not less than seventy-five (75) feet in depth. No more than seventy-five percent (75%) of the front yard shall be used for parking and access drives. Minimum Rear Yard: Minimum Side Yard: Maximum Lot Coverage: Maximum Building Height: There shall be provided a rear yard at least equal to the height of the building, but no rear yard shall be less than thirty (30) feet. At least five (5) feet of the rear yard shall be planted and landscaped. There shall be provided two (2) side yards which shall be at least as great as the height of the building, but in no case shall each side yard be less than thirty (30) feet. At least five (5) feet of the side yard shall be planted and landscaped. Building coverage and coverage by impervious surfaces shall be governed by the following Floor Area Ratio (F.A.R.) Schedule: No structures shall exceed five (5) stories or seventy (70) feet in accordance with the Floor Area Ratio Schedule in this section. F.A.R. Schedule Floor By Building Coverage Area Ratio 1 30% % 2 20% % 3 17% % 4 15% % 5 14% % Land Covered Building Height (stories) Impervious Surfaces Copyright 2018 Associated Appraisal Group Page 18

23 ZONING, CONTINUED (a) All areas of the lot not devoted to use by structures, parking, loading and other functions on the lot shall be left in their natural state or they shall be landscaped in accordance with a site plan approved by the Planning Board. All landscaped areas or natural areas shall be maintained by the owner as approved by the Planning Board. Screening, landscaping and open space (b) Nothing in this section shall prevent an owner from donating to the Township, County, State or Federal Government or other agency or nonprofit organization any open space which results from the construction of a use in accordance with the F.A.R. Schedule, even if this donation reduces the remaining area of the lot or other nonuse requirement of this chapter below the minimum required. Such donation, including the amount and location, shall q be subject to review and approval by the Planning Board. (c) The uses to which the open space which results from use of the F.A.R. Schedule may be put shall be limited to open-space- related uses, including but not limited to parks, flood retention areas, natural areas, public or private golf courses, driving ranges, swim clubs, riding areas, etc., it being the general intention to preserve the open space so as to provide areas which will act as groundwater recharge areas and areas which will not be subject to flood damage. (a) Notwithstanding any other provisions of this section, no structure in the C-3 Zone shall be constructed closer than one hundred (100) feet to the nearest residentially zoned or used property or public parkland, and no parking area or access drive shall be located closer than fifty (50) feet to any residentially zoned or used parcel of land or any public park. Proximity to Residential Zone or Use: (b) A fifty-foot buffer shall be established, which shall be extensively planted in accordance with the requirements of a site plan approved by the Planning Board, but the minimal effect will be to screen the bulk, parking, loading and service areas from adjacent existing or proposed residential or park uses. Said buffer area shall include a solid fence in conformance with other requirements of this chapter as approved by the Planning Board. (c) Buffering areas as required above will not be required when a park area meeting the minimum requirements of the F.A.R. Schedule and open space provisions of this section, including the proximity to residential property, is donated by the developer to the Township, County, State or Federal Government. Copyright 2018 Associated Appraisal Group Page 19

24 TAX MAPS MAP PAGE 9 MAP PAGE 13 MAP PAGE 14 Copyright 2018 Associated Appraisal Group Page 20

25 TAX MAPS, CONTINUED MAP PAGE 19 MAP PAGE 20 MAP PAGE 22 Copyright 2018 Associated Appraisal Group Page 21

26 TAX MAPS, CONTINUED MAP PAGE 23 MAP PAGE 26 MAP PAGE 27 Copyright 2018 Associated Appraisal Group Page 22

27 HIGHEST AND BEST USE The subject property has been valued, according to proper appraisal techniques, in terms of its highest and best use. Highest and Best use may be defined as: the reasonably probable and legal use of vacant land or an improved property, that is physically possible, appropriately supported and financially feasible and that results in the highest value. 2 The definition immediately above applies specifically to the highest and best use of land. It is to be recognized that in cases where a site has existing improvements, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. Implied within this definition is recognition of the contribution of that specific use to community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraiser s judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact to be found. In appraisal practice, the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value), another appropriate term to reflect highest and best use would be most probable use. In the context of investment value, an alternative term would be most profitable use. 2 The Appraisal of Real Estate, Thirteenth Edition, Page , published by the Appraisal Institute Copyright 2018 Associated Appraisal Group Page 23

28 HIGHEST AND BEST USE, CONTINUED AS VACANT Legally Permissible The subject properties are located within the R-9, R-45, R-86, C-1, and C-2 Zoning districts. Properties located in the R-9, R-45, & R-86 zones permit development of residential single-family dwellings consistent with existing neighborhood development patterns and zoning requirements. Properties located in the C-1 & C-2 zones permit development of commercial development consistent with existing neighborhood development patterns and zoning requirements. Physical Possibility We have considered all readily available information pertaining to the physical characteristics of the site including its size, shape, access, topography, flood plain encroachment, and soil characteristics. Based upon our analysis, development of the subject properties consistent with uses allowed in each zoning district is physically possible. Financial Feasibility In order to determine financial feasibility, an appraiser typically estimates the income that can be expected from each potential highest and best use of the property. In order to be financially feasible, revenue from the proposed development must be sufficient to satisfy the required rate of return on the investment. Essentially, a proposed single-family dwelling would be financially feasible if the income to be derived from selling or renting the end product will be sufficient to satisfy the costs of such development. Therefore, it is our opinion that development of each property is financially feasible Maximally Productive Taking all of the above factors into consideration, it has been determined that the subject properties physically support development; it is legally permissible; and the costs incurred in development represent an equitable investment. Copyright 2018 Associated Appraisal Group Page 24

29 HIGHEST AND BEST USE, CONTINUED Therefore, all criteria have been estimated to equitably produce a reasonable return on the land. AS IMPROVED Legal Permissibility The subject properties conform to the zoning requirements in each zoning District. Physical Possibility It is clear that the existing improvements are physically possible. We are unaware of any subsoil or other building conditions which would prevent the continued use of the property for its present utilization. Financial Feasibility In order to determine financial feasibility, an appraiser typically estimates the income that can be expected from each potential highest and best use of the property. In order to be financially feasible, revenue from the proposed development must be sufficient to satisfy the required rate of return on the investment. Essentially, a proposed single-family dwelling would be financially feasible if the income to be derived from selling or renting the end product will be sufficient to satisfy the costs of such development. Therefore, it is our opinion that development of each property is financially feasible Maximally Productive Having found that the existing use does meet the first three tests of a property's highest and best use, we examined other alternative uses and development possibilities of the site. We are unaware of any alternate use that would economically justify the removal of the existing improvements. Therefore, continuation of the existing use embodies the most profitable and productive use of the property as improved. Copyright 2018 Associated Appraisal Group Page 25

30 HIGHEST AND BEST USE, CONTINUED Conclusion After careful consideration of all factors including the property's physical, legal, and economic characteristics, it is our opinion that the highest and best use of the subject sites, if vacant, is for development of an approved use as permitted by the zoning regulations. The highest and best use of the subject sites as improved is for the continuation of their current use. Copyright 2018 Associated Appraisal Group Page 26

31 APPRAISAL PROCESS There are three (3) approaches to the problem of finding market value. All data utilized in these approaches must come from the market place. The approaches are commonly referred to as the Cost, Income and Sales Comparison. The Cost Approach is utilized by estimating, utilizing market costs, the replacement cost of a building and other improvements, deducting depreciation, which is a loss in value from all causes, and adding this depreciated value to the value of the land upon which the improvements are constructed. Depreciation may come from actual physical deterioration, loss in value due to functional inutility, or through a loss in value resulting from economic reasons such as factors in the market place which would cause the property to rent for an amount not adequate to justify the investment in the improvements. The Income Approach to value is utilized by estimating potential gross income, deducting an amount for vacancies and other rent loss and deducting all expenses in order to apply an appropriate capitalization rate to the resulting net income in order to find market value. All income estimates, expense items and capitalization rates must be obtained from the market. "An Appraiser attempts to obtain all income and expense data from income producing properties used as comparables. 3 The Sales Comparison is sometimes referred to as the Direct Comparison Approach to value. Sales of similar properties are compared to the property under appraisal in order to arrive at an estimate of value. Units of comparison in appraising income producing property include location, age, time of sale and other characteristics of the property that may influence value. Adjustments made in making this comparison must have a basis in market experience. In essence, all approaches to value (particularly when the purpose of the appraisal is to establish market value) are market data approaches since the data inputs are presumably market derived. 3 "The Appraisal of Real Estate" Thirteenth Edition, Page 473 published by the Appraisal Institute Copyright 2018 Associated Appraisal Group Page 27

32 COST APPROACH In this report all three approaches to value were considered. Because all of the subject properties are being valued as though they were vacant land, the only applicable approaches to value the enhancement for sewers are the Cost and Sales Comparison. The Cost Approach is based on the proposition that an informed purchaser would pay no more than the cost of producing a substitute property with equal utility and desirability as the subject property. It is particularly applicable when the property being appraised involves relatively new improvements which represent the highest and best use of the land or when relatively unique or specialized improvements are located on the site and for which there exist no comparable properties on the market. The first step of this valuation procedure is to estimate the replacement cost new of the existing structure and all other applicable site improvements. From the cost new we must subtract the dollar amount of accrued depreciation caused by physical wear and tear, functional obsolescence, or economic obsolescence. This gives us the current depreciated value of the improvements. The total cost of the Village sewer project serving approximately 429 properties was certified to be $1,288, ($27, per property). The functional utility of a public sanitary sewer system could also be compared to that of a private disposal system. Based upon estimates from contractors and municipal officials familiar with the subject area, it is estimated that the cost of installation of a typical private disposal system would range in cost from $9,000 to $20,000 based upon site conditions. It is our opinion that although the functional utility may be comparable, a property with sewer has greater lot utility and overall desirability and market demand than that of a property with a private disposal system. Copyright 2018 Associated Appraisal Group Page 28

33 COST APPROACH, CONTINUED After careful consideration of all the pertinent facts, we have estimated an enhancement value of $18,000 for a typical residential property and $6.00 per square foot for commercial properties in the Village Project based upon the cost approach. Copyright 2018 Associated Appraisal Group Page 29

34 SALES COMPARISON APPROACH After careful consideration of all the pertinent facts, we have estimated an enhancement value of $18,000 for a typical residential property in the Village Project based upon the cost approach. The sales comparison approach, also known as the market data approach, reflects and measures the actions of informed purchasers and sellers in the marketplace. The appropriate steps involved in this systematic procedure are: 1. Research recent and current market activity and obtain information concerning transactions, listings, and offerings of property similar to the subject property. 2. Verify all information to determine if the data collected is factually accurate and reflects arms-length transactions. This verification normally involves one of the participants in the transactions. 3. Determine the most relevant unit(s) of comparison in analyzing the comparable sales and develop a comparative analysis for each unit. 4. Make appropriate adjustments to the sales price (or unit price) of each comparable sale. 5. Reconcile the various value indications resulting from the adjustment of the comparables into a single value indication. The sales data found in this section has been gathered from local real estate brokers, assessor offices, land records offices and other information on file at the office of Associated Appraisal Group, Inc. In addition, numerous conversations with buyers and sellers assisted in formulating the sales. Copyright 2018 Associated Appraisal Group Page 30

35 SALES COMPARISON APPROACH, CONTINUED LAND EXTRACTION METHOD Extraction is a variation of allocation in which land value is extracted from the sale price of an improved property by deducting the contribution to value of the improvements from total cost. The remaining value is land. Improved sales in certain areas may be analyzed this way because the contribution of the improvements to the total sales price is small and easy to identify. Land value estimates derived through extraction can be considered together with data gathered from vacant land sales and used in the Sales Comparison Approach. Many of the land value estimates analyzed in this assignment were extracted from the total improved sales price. This was done due to the lack of recent vacant land sales in the Township of Pequannock. The following pages will outline the land extraction method on each of the sales analyzed and a paired sales analysis utilized to estimate the enhancement value of residential property as a result of the sewer installation. We have made adjustments for the following conditions. MARKET CONDITIONS (TIME): Our analysis has revealed the market conditions were stable between 2017 and 2018, therefore no adjustments were warranted. LOCATION: warranted. The properties used in our analysis were in similar locations therefore no adjustments were LOT SIZE: All properties paired were similar in lot size therefore no adjustments were warranted Copyright 2018 Associated Appraisal Group Page 31

36 SALES COMPARISON APPROACH, CONTINUED ZONING CLASSIFICATION: Adjustments for differences in zoning classifications were made when necessary. INFLUENCES TO THE LAND: Adjustments were made for easements and flight hazard risks caused by the Lincoln Park Airport, if warranted. Copyright 2018 Associated Appraisal Group Page 32

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41 COMMERCIAL SALES ANALYSIS VILLAGE SEWERS We have utilized a similar approach in estimating the enhancement value of commercial properties due to the sewer installation. Due to the lack of commercial vacant land sales within the municipality, we have utilized the land extraction method and paired sales analysis in arriving at our estimate of the enhancement value for each commercial/commercially zoned property. Sales of properties with and without sewer were assembled for the purpose of analysis. Each property considered for analysis conveyed the fee simple interest for cash or its cash equivalent and was otherwise considered an arm s length transaction. It was necessary to analyze sales that took place over an extended time period prior to the sewer installation to gain a universe of sales from which to draw our conclusions. Commercial properties have the potential for improvement based upon lot coverage and each commercial property, if vacant, has the same potential for maximum development. Therefore, in contrast to residential lots that have the potential for one dwelling unit, commercial development is governed by size and the value enhancement can be expressed in terms of a price per square foot difference resulting from the presence of sewers. The following pages will outline the land extraction method on several of the sales analyzed and a paired sales analysis utilized to estimate the enhancement value of commercially zoned property due to the presence of sewers. We have made adjustments for the following conditions. LOCATION: An adjustment was made to properties that were not located in major commercial neighborhoods. LOT SIZE: Adjustments for size were made when necessary. ZONING CLASSIFICATION: Adjustments for differences in zoning classifications were made when necessary. Copyright 2018 Associated Appraisal Group Page 37

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45 RECONCILIATION AND VALUE CONCLUSION In this appraisal we have utilized the cost approach and sales comparison approach to estimate the enhancement value of the subject properties due to the installation of municipal sewers. In the cost approach, the actual certified costs of the project and the cost of private disposal systems were considered since the actual cost or the cost of an alternative system of similar utility can be considered to be an indication of value. In the sales comparison approach, sales of properties with and without sewer were assembled for the purpose of analysis. Each property considered for analysis conveyed the fee simple interest for cash or its cash equivalent and was otherwise considered an arms-length transaction. All sales conveyed within a time frame considered representative of the valuation date and are concluded to offer viable purchasing alternatives to the subject properties if they were in fact offered for sale as of the valuation date and in the same condition. Differences for time, location, lot size, zoning classification, and physical characteristics between the comparable sales were evaluated and adjusted to conclude an indication of the value enhancement due to the presence of sewers. We relied primarily upon the sales comparison approach to value in reaching our value conclusions. VILLAGE SEWER ASSESSMENT PROJECT: The three approaches to value have produced the following conclusions: September 14, 2018 Cost Approach Not Applicable Sales Comparison Approach $18,000 per site (Residential) $6.00 per square foot of land area (Commercial) Income Approach Not Applicable Copyright 2018 Associated Appraisal Group Page 41

46 RECONCILIATION AND VALUE CONCLUSION, CONTINUED After making the necessary adjustments and taking into consideration all the relevant data regarding the subject properties, it is our opinion that the typical residential enhancement value in the Village Sewer Project is eighteen thousand dollars ($18,000). We have estimated the typical commercial enhancement value to be $6.00 per square foot of land area. Since the sewer project yielded a total enhancement value greater than or similar to the amount to be raised by special assessment, we have determined an assessment ratio for each project reflecting an assessment that is a percentage of the enhancement value of each property. Our final enhancement value conclusions and the resulting assessments for each property can be found on the attached spreadsheets on the following pages. Copyright 2018 Associated Appraisal Group Page 42

47 SPECIAL ASSESSMENT AND PROPERTY SUMMARY The Special Assessment can be calculated as follows: Total Cost of Project $13,313,7039 Less: Township Contribution (5,712,703) Residents Share $7,600,000 Divided By: Enhancement Value $21,551,415 Residents Share Percentage (Factor) 35.27% Copyright 2018 Associated Appraisal Group Page 43

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