Effect Of Paved Parking Lot Vs Easement Of Parking Lot On Property Value

[Lalocoloba]

Because of the city's violation of several ADA Federal laws, they have to do some quick fixing of the sidewalks near our church. A solution they came up with is to replace the ADA required sidewalks and create an easement on our church's parking lot that created open parking for the businesses around our building. In exchange for the easement, they are offering to pave and stripe our parking lot.

If we were planning on staying there, we agree that it would be a pretty sweet deal, because we already, through a gentleman's agreement, allow the other businesses to use our parking when we don't have service.... but it is ours. So, getting it paved would be a boost, we think to the value of the property.

We are in talks, however, about selling the property, including our church buildings to one of the nearby businesses, which currently uses our lot for parking.

We'd like to know how the balancing of the easement minus and the paving plus might affect the value of the property. We don't want to cheat the businessman, but we want to be wise in our business decisions. How does that work?

 

[George Hatch]

There are a bunch of different possibilities here that an appraiser wouldn't be able to address without seeing things in person. Just for starters:

If your property has commercial, office or industrial zoning and is not a likely candidate for redevelopment into a residential use at any point in the foreseeable future then it's possible that the most likely buyer for the property would also be a religious use, and would also be amenable to that parking arrangement because it doesn't conflict with their usage.

If that user was planning on adding a preschool or K-12 as part of their program they may have other uses in mind for that area - in which case the parking agreement is adverse to those plans.

If your property has a high demand commercial location - or a high demand residential zoning classification - such that the underlying site value to a developer is higher than the value as a religious use to one of those buyers, then the parking agreement would inhibit them from redeveloping the site althogether; thus limiting the property's utility to its current use.

The site zoning, how many vacant sites there are that could serve as alternatives, what the trends are for property uses along that road - there are a bunch of different aspects of the problem that we cannot guess at from our end. If you want to get an informed opinion then it might be time to call a local appraiser to see what they think.

 

[Tim The Enchanter]

George gives good advice.
Does your church have members that are accountants, lawyers, appraisers, etc?
You need pro advice, maybe you can tap your members.

 

[Howard Klahr]

We don't want to cheat the businessman, but we want to be wise in our business decisions. How does that work?

Real estate values are local in nature and therefore you would be best served obtaining a appraisal from a local commercial appraiser to help address the answers to your questions as they are specific to your property.

 

[Mark K]

So you would give up control of your parking lot, in perpetuity assuming a permanent easement, for some asphalt and paint? Are they going to maintain it in the future also?

Maybe you should pave and paint and lease the parking to the city?

You need to get an appraisal from a qualified appraiser.

 

[KHS445]

The others have given you good advice, get with a local appraiser who has experience appraising commercial property. Real estate comes with a bundle of rights and right now (subject primarily to zoning) your organization owns and controls all of those rights in regards to the parking lot. You provide the City with a use easement in exchange for paving you will have lost a very important right. That being unrestricted control over the use, development and sale of the property.

I understand your long-term plans for the property are up in the air. An alternative might be to work out a written agreement with the City whereby they will pave the parking lot in exchange for the requested easement. The caveat would be that within the agreement you would have a declining payment schedule whereby you or the then owner of the property could repurchase the easement rights from the City at some point in the future for a specified amount of money. That way in the short-term you would get your lot paved and the City gets their easement. Long-term the easement could be repurchased by whoever owns the property if it makes financial sense to do so. The only problem is if a potential purchase of the property wants to use it for something other than a parking lot, the cost of repurchasing the easement may affect what they are willing to pay for the property.

In addition to the declining payment schedule the one thing that would have to be determined and agreed to by all parties is the value of the paving and striping equal to, greater than or less than the value of the easement. Again a commercial appraiser with experience in your area could assist you with this issue and other possible issues.