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HELP! Appraising part of a lake

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Dave Brewer

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Washington
Hello, this is my first posting to this site after discovering it about a month ago. Recently I was engaged by the Washington State Parks Dept. to appraise several parcels of land the make up part of a +/- 400 acre brackish lake on Whidbey Island. The Parks Dept plans to incorporate these lands into an adjacent State Park. Several of the parcels have uplands and could accomodate single family development - a fairly simple appraisal process. However, two of the pieces, being approximately 40 acres and 120 acres in size, are completely covered with water and are part of the lake. My initial thought was to assume the highest and best use of these pieces as a wetland mitigation bank, which would allow "credits" to be sold to the DOT or private developers as part of wetland mitigation. Unfortunately, since the subject entails a wetland preservation (as opposed to an enhancement or creation), which results in the lowest number of credits relative to size, and the costs associated with establishing a mitigation bank are quite high (roughly $200K). Furthermore, there is virtually no future demand for mitigation bank units in this market area, which is generally rural.

So, it seems that my best approach is the sales comparison approach. As you would expect sales of properties 100% encumbered by wetlands are difficult to come by. I have talked to local land trusts and Ducks Unlimited, but have yet to find any good comps. Has anyone out there dealt with a similar property type? Any suggestions or insights would be greatly appreciated! Help me Appraisal Forum, your'e my only hope!
 

Mr Rex

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North Carolina
I think its all worthless and will expect a tax deduction for my $500 offer on the whole shooting match. So prove me wrong.:)
 

CANative

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Retired Appraiser
State
California
Interesting thread which I will follow. I hope there is a good discussion.

I just inspected a residential property in a mountain subdivision of about 2,000 properties. This residence on a steep slopes is contiguous to a creek which supplies water for a small lake which is the water source for the community. It hasn't been dredged for years and the watercourse has changed and is causing problems. The Corps of Engineers wants to dredge it but environmentalists are causing problems about some stupid frogs which only came there after the creek was created.

So they want to buy a very small strip of land from this homeowner. It's about 10 feet x 75 feet and along the creek. Absolutely useless to the property owner. But they have offered him $21,000. You can buy a lot in this subdivision for about $15,000-$20,000.
 

Dave Brewer

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Oct 24, 2007
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Certified General Appraiser
State
Washington
Well, I still haven't found much in the way of comps. I am thinking about doing a paired analysis of properties with wetlands and properties without wetlands. If, for example, I can show a 5 acre piece w/o wetlands sells for $100,000, and an 8 acre piece with 3 acres of wetlands sells for $120,000, then the contributing value of the 3 acres of wetlands is $20,000. Does that seem like a reasonable approach?
 

stefan olafson

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Certified General Appraiser
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North Dakota
Everything is reasonable if well supported!
 

PropertyEconomics

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Jun 19, 2007
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New Mexico
Well, I still haven't found much in the way of comps. I am thinking about doing a paired analysis of properties with wetlands and properties without wetlands. If, for example, I can show a 5 acre piece w/o wetlands sells for $100,000, and an 8 acre piece with 3 acres of wetlands sells for $120,000, then the contributing value of the 3 acres of wetlands is $20,000. Does that seem like a reasonable approach?


Dave the only problem I see with your analysis would be that the wetlands in your example above is adjoining usable land. Your subject is totally unusable except for purposes of wetlands. I would think the extraction would not sufficiently measure the value of your subject as it has no usable portion.
Would it be possible to find 100% wetlands in other areas and then compare those parcels with others which have no wetlands in order to arrive at a percentage difference? If you could establish this then you could use usable tracts within your subject market and apply the percentage to them in order to estimate market value.
While the land values between the comparable and your subject area may be vastly different, you would be applying a market derived percentage to your local market land value.
It is certainly a very interesting assignment I will grant you that.
 

Roger Murdock

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Apr 19, 2005
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Certified General Appraiser
State
New Jersey
The real question is, will your report hold water?
 

Michigan CG

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Nov 1, 2006
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Certified General Appraiser
State
Michigan
We did one of those on the Mississippi River...Ducks Unlimited was our best source followed by wetland mitigation sales....has the state bought any land like this in other areas?

Most people would be surprised, these properties do have value.
 

Dave Brewer

Thread Starter
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Oct 24, 2007
Professional Status
Certified General Appraiser
State
Washington
Thanks for all the input!
Timothy, I actually spoke with the regoinal Ducks Unlimited rep but there is nothing similar they have been involved with. Same goes for local land conservation groups. Unfortunately the only property they are involved with is the one I'm appraising. The person I spoke with at the DOT said most of the wetland properties purchased for use as mitigation banks involved enhancement or creation of wetlands, since these generate more bank credits relative to size than simple protection of existing wetlands.

ProperyEconomics: I agree with your comments, unfortunately I haven't found any sales that were 100% wetlands. I have found a few sales involving waterfront parcels that don't perculate and don't have access (they must be accessed by boat or at low tide). There have been a few of these properties that have sold in the $15,000 to $30,000 range. They do have uplands, so unlike the subject they have some utility.

Another angle I'm looking into is whether or not development rights could be transfered from the subject. For example, under current zoning the 120 acre piece I'm appraising has a zoning density of 1 unit per 10 acres, so perhaps it is possible to transfer development rights for 12 units to another project. I doubt it, but haven't recieved final word back from the county planner.
 

JSmith43

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May 5, 2003
Professional Status
Certified General Appraiser
State
California
DNR appraisers should have their own chat room. I have lost touch of an old appraiser friend that worked or works for MN DNR as an appraiser. Based upon some of the stories I heard, I bet there are many such sales he and his associates have dealt with.

A lot of DNR appraisers were at the IRWA seminars I used to attend. I'd get a directory of the state's IRWA chapter, if available & make some calls, if you get no data hits on this thread.
 
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