Previous Hog Confinement Facility

[Brandi]

I need a little guidance! I inspected a property with a residence situated on 14.5 acres late this afternoon. One of the outbuildings is a 45x50 metal building built in 1994 that was used as a hog confinement. The owner got out of the hog business last year. I have several issues with this scenerio (first being, my discoveries after I quoted a price and showed up for the inspection).

The existence is obviously an environmental concern from what I have read on the EPA's site. However, if the facility is operating and maintaining the correct permits, etc. and disposing of wastes properly it appears to be ok. The issue arises when trying to value a vacant building with possible environmental issues.

Having this building in an area where there are no other confinements within a 30 mile radius could actually be a detriment.

I put a call into the local USDA office to check permits, etc. and see if there is a time frame for one to start back up a confinement once it is closed....legally permissible is the main issue that I need to answer. I might be looking too deep into this but I want to fully understand the problem in order to value it correctly. I'm anticipating a call in the AM.

After discussing the issue with three other local appraisers in the area, I have decided not to place a value on the building even though to reconstruct a similar building would be in the neighborhood of $50,000. I also interviewed several Realtors and it was unanimous that a typical buyer would want to covert the building into storage, which cannot be done due to the extreme odor and environmental concerns. The building has no other use.

Is this the correct logic? Do I explain as I have above why I'm not giving value to the building and explain the possible environmental issues (even though I'm not an environmental specialist and recommend consulting with such?)

Any feedback would be greatly appreciated!
Thanks so much!

 

[timd354]

This sounds like it might possibly be a commercial appraisal....if the hog confinement facility is a permissable use and that building is sitting there, I would say that you have a highest and best use issue...it sounds to me like the highest and best use for this property includes a non-residential commercial use. This may require a certified general appraiser. If the hog facility is not a permissable use and the building is not convertable to storage due to the smell, you still have the problem of demolition of the building and potential environmental cleanup. To simply not give any value to such a structure could be an eggregious error as it sounds to me like the building may liekly have a negative influence on the value of the property that needs to be accounted for. You really need to either take a pass on this assignment or you need to involve someone experienced in dealing with these issues....this is the type of thing that could get you in big trouble if you are not competent to handle this type of issue.

 

[Joker]

I agree with Tim.

I commend you for doing some of your homework but condemn you for this statement:

I have decided not to place a value on the building even though to reconstruct a similar building would be in the neighborhood of $50,000. I also interviewed several Realtors and it was unanimous that a typical buyer would want to covert the building into storage, which cannot be done due to the extreme odor and environmental concerns

.

The building could be used for dog kennels, raising llamas, alpacas, cattle, lambs, pigs, miniature horses, or storage of lawn care equipment, antique farm equipment, etc. Many brokers of "show" livestock operate on less than 20 acres and your facility would be perfect for show jocks of pigs, cattle, horses, lambs, etc.

I doubt that any structure that new and that large on that acreage has a zero value. Keep digging. Have fun.

 

[stefan olafson]

You're heading in the right direction, now find an experienced appraiser who has done hog confinement facilities and associate yourself with that appraiser for this job.

It appears to fall outside the parameters of your license level, at the least.

You just can't not value an improvement that exists! If allowed by the client you could state a Hypothetical Condition that the property is being appraised without an existing improvement, but most lenders won't allow that and I don't really thing USPAP allows it either?

Find someone who has lots of knowledge on these types of structures to help.

 

[Terrel L. Shields]

First, HBU issue. Is the property as if vacant feasible to be a hog operation? B - if it was once then it had an EPA permit. Has the operation been properly closed under that permit? If it has, it is not a hog farm any longer and it has had a proper environmental closure.

Secondly, I have appraised a number of these properties which were closed hog or poultry facilities. Some buildings had to be torn down due to the Environmental requirements. But those that were not closed DID have value as storage and/or shop buildings. They are NOT invisible. If in bad shape or tightly divided into pens, etc., they may not contribute much if any value. The pix below is one that at the time of sale (2 yr ago) I judged the contributory value was about $40,000 (plus there were 3 feed bins that are not visible) for the barn and well (in foreground)

But you imply that there is an "extreme" odor. I have never smelled anything at a closed hog facility. Dry poultry litter is another issue, but normally even those are taken out and land applied and the barn used for round bale storage, etc. I have even seen one hog barn converted to a one bedroom house. Hog and poultry manure is very corrosive and wiring and galvanized metal often corrode in such houses. Since barns are tailored for a particular use - breeding, growout, etc. - each barn style has different characteristics. The wiring in many buildings that must be razed are considered a toxic hazard and must be disposed of in a Class IV landfill.
You can check with the EPA website and locate the property to see if a permit exists. If not, then the property is just what it is - land with a building. Again, proceed with some caution on this one.

FYI - I am reappraising the buildings for the estate. The buyer died recently. He was converting the property to a [chicken litter] composting facility.