HBU of Church with high land value as vacant

[DREA Dean]

Not sure there is a really good way to empirically prove HBU as improved is redevelopment aside from what I indicated earlier using a larger data set and demonstrating that the highest price paid for a church intended for continued church operation is XX, and the underlying land value of the subject for redevelopment is many times XX so HBU as improved is concluded to be redevelopment.

That is exactly the evidence that shows that redevelopment is the H&BU. Recent sales of older churches for continued church use sell for less than the subject site's land value under the H&BU as vacant. I don't see that you need to do any more, and then just value the land and subtract demolition costs to get to market value.

 

[J Grant]

Are you appraising a "church", or are you appraising a property that might appeal to other buyers outside of a niche pool of "church buyers?"

Maybe you are appraising to something other than market value, but market value means the property is exposed to the open market. Open market would mean a "church buyer" is competing with a spec builder buyer for the property. Unless for some reason that would not be the case.

 

[Terrel L. Shields]

market value means the property is exposed to the open market.

so what is the open market for a church?
This property HBU as if vacant is different from its HBU as improved. Residential N, W, and E. Commercial S, and it is zoned "institutional"

 

[bnmappraisal]

Did you really mean that SFR land values are $60-65 psf of land area? That would be $1.5 million or more for a 25,000 SF parcel.

I do NOT do COMM work .. but that being said ... welcome to FL land values (in some/certain areas! - RES or COMM)
(FTR, I like a lot of your comments/posts on here Dean)

 

[J Grant]

so what is the open market for a church?
This property HBU as if vacant is different from its HBU as improved. Residential N, W, and E. Commercial S, and it is zoned "institutional"
View attachment 41794

View attachment 41793

The site is zoned for single family residential use.
From the OP's first post.

 

[Terrel L. Shields]

The site is zoned for single family residential use.

Who is going to turn a church into a SFR? If so it needs to be a very small church. Why spend $1,000,000 to remediate a site when you can go to the edge of town and build a new subdivision cheaper?

 

[Deleted member 152047]

I would say this only applies if the existing use is determined to be the H&BU as improved. In other words, that the H&BU is indeed as a church. If the H&BU is to demolish the church and redevelop, then adding the land value to the depreciated value of the church building will give you a SCA value that is much too high.

To my way of thinking, the high land value where the church sits is of relatively little importance to the value of the property for use as a church. A church does not want $1.5 million tied up in land if there are reasonable alternative sites/locations where land is much cheaper. So, as a church, the land is probably worth much less than the vacant land value as available for development. If H&BU is to demolish the church and develop the site, you value the vacant land and subtract demolition costs and that's the end of the appraisal. There is no SCA if the H&BU is to demolish the church.

Now, if the client insists on a "value in use" as a church, (in the cost approach) I would look at land sales bought for church, private school, recreational center or other "institutional" uses to determine land value. Not prime commercial or residential land that is worth a lot more.

There are a lot of assumptions here. Generally, I agree with the first part. I suggested a methodology, it is ultimately the ops job to determine the best use for the property.

I would add that I do not agree with a blanket statement that religious facilities located on high value land parcels are not the highest and best use of a given property as improved.

 

[DREA Dean]

There are a lot of assumptions here. Generally, I agree with the first part. I suggested a methodology, it is ultimately the ops job to determine the best use for the property.

I would add that I do not agree with a blanket statement that religious facilities located on high value land parcels are not the highest and best use of a given property as improved.

I don't disagree. If the church has exquisite architecture and a long history of serving a community's needs, then perhaps the H&BU is still the church. But for a run-of-the-mill 50 year old church, it might very well be to demolish and redevelop. This really is a case-by-case analysis. I think the OP has enough input and ideas to figure out how to proceed.

 

[J Grant]

Who is going to turn a church into a SFR? If so it needs to be a very small church. Why spend $1,000,000 to remediate a site when you can go to the edge of town and build a new subdivision cheaper?

If it costs similar to demolish a modest size church as it costs to demolish a house, a spec developer won't care . Sentimentally of the church aside, unless it has a conveyed protection of some kind, to a developer it's just a means to an end ( $), which is why some communities or individuals detest developers/spec builders. True they are allowed to make $ in a free market, and sometimes they improve an area. On the other hand, unless stopped by zoning or other protections, they can destroy the character of an area, demolishing older charming homes, churches, barns etc.

 

[DREA Dean]

Who is going to turn a church into a SFR? If so it needs to be a very small church. Why spend $1,000,000 to remediate a site when you can go to the edge of town and build a new subdivision cheaper?

Perhaps not if you are thinking about a single house. But what if the church is sitting on one acre in the middle of a resurging neighborhood that allows SFR lots as small as 7,000 SF. Pay $15,000 to demolish the church and you have a nice already-graded parcel with utilities. There might already be a sidewalk in front. You might get 4 or 5 small lots on the same parcel with relatively little land development work.