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HomeMy WebLinkAboutBack-Up DocumentsArmada Appraisal & Consulting Company PO Box 1247 South Miami, FL 33243 Telephone: 305-266-3930 Cell: 786-208-4983 October 24, 2019 Monique Finlay, MBA City of Miami 444 SW 2 Avenue, 3rd Floor Miami, FL 33130 RE: Appraisal Report of the Little River Commerce Park located at 8034 NE 2nd Avenue, Miami, Miami Dade County, Florida 33138. Dear Ms. Finlay: As requested, the above referenced property has been examined for factors deemed pertinent in arriving at market rent. One component of our analysis required to estimate the fee simple market value of the subject property as vacant land. In order to carry out this assignment, a market study of real estate activity in the vicinity of the subject property has been conducted. This investigation included the collection and analysis of sales, offerings, and information pertaining to other development that has occurred in the area in the recent past. The sources of this data included county deed records, our own data bank, other real estate brokers, appraisers, news releases and knowledgeable individuals active in the area. We have also gathered as extensive information as was possible from competitive markets related to the subject matter of outside seating capabilities. Based upon the investigation, our conclusion as to the market rent indication for the subject property for seating is as follows: MARKET RENT CONCLUSIONS Market Rent - Annual $30,000 Market Rent - Monthly $2,500 The opinions of value stated above, as well as every other element of this appraisal, are qualified in their entirety by the Contingent and Limiting Conditions set forth in another part of this report which is an integral part of the appraisal. As part of the Contingent and Limiting Conditions, the value conclusion is subject to completion of an Americans with Disabilities Act (ADA) compliance survey of the property. It is possible that a compliance survey with a detailed analysis of the provisions associated with ADA could reveal that the property is not in compliance with one or more stipulations. If so, this fact could have an effect upon the value of the property. Since I have no direct evidence relating to the issue, I did not consider possible noncompliance with the requirements of ADA in estimating the value of the property. Exposure Time - It is reasonable to conclude that for the subject property to rent at a price equal to our market rent estimate on the appraisal date, it would have been exposed on the market for a period of 9 to 12 months. Marketing a property like the subject is not a typical real estate transaction, especially when the use is prescribed as reported. For such a property, either the adjoining owner contacts the entity that owns the property to inquire as to its availability or the owning entity contacts the adjacent owner to inquire as to its interest. In either case, no marketing period as identified with typical market transactions was known. Our conclusion is considered a reasoned estimate based on availability and potential interest, as noted. The appraiser(s) certify and agree that: 1. The appraiser(s) have no present or contemplated interest in the property appraised and that neither the employment to make this appraisal nor the compensation for it is contingent upon the appraised value of the property. 2. The appraiser(s) have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. 3. He has performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 4. Albert J. Armada, MAI, SRA has personally inspected the subject property. 5. According to the best of my knowledge and belief, all statements and information in this report are true and correct; and the appraiser(s) have not knowingly withheld any information. 6. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. 7. The analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). 8. I certify that to the best of my knowledge and belief, the reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. I certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 9. As of the date of this report, Albert J. Armada has completed the requirements of the continuing education program of the Appraisal Institute. 10. No one provided significant professional assistance to the person signing this report. Albert J. Armada, MAI, SRA has prepared all conclusions and opinions concerning the real estate that are set forth in the appraisal. Assistance was solicited from Nicholas L. Armada, State Certified Residential Real Estate Appraiser, RD 5035 — Bachelor's Degree in Hospitality Management, Florida International University as well as Christopher Martinez, Bachelor's Degree in Hospitality Management, Florida International University. 11. My compensation for completing this assignment was not contingent upon the development of reporting of a predetermined value or direction of value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or occurrence of a subsequent event directly related to the intended use of this appraisal. 12. My engagement in this assignment was not contingent upon developing or reporting predetermined results. 13. Based on my experience, it is my opinion that I meet the qualifications to provide the following opinion of the subject property's value. 14. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. No changes of any item of the appraisal report shall be made by anyone other than the appraiser(s), and the appraiser(s) shall have no responsibility for any such unauthorized changes. This letter of transmittal and the pages that follow constitute my report, including the data and analyses utilized in forming an opinion of value. Should you have any questions concerning this report, please do not hesitate to call my office. Respectfully submitted, Albert J. Armada, MIB, MAI, SRA State Certified General Real Estate Appraiser No. RZ 397 CONTINGENT AND LIMITING CONDITIONS The certification of the appraisers appearing in this appraisal report is subject to the following conditions and to such other specific conditions as are set forth by the appraisers in the report. 1. The appraisers assume no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor do the appraisers render any opinion as to the title, which is assumed to be marketable. The property is appraised as though under responsible ownership. 2. Any sketch in this report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraisers have made no survey of the property. 3. The appraisers are not required to give testimony or appear in court because of having made this appraisal with reference to the property in question unless arrangements have been made therefore. 4. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. 5. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. The appraisers assume no responsibility for such conditions or for engineering which might be required to discover the factors. 6. Information, estimates, and opinions furnished to the appraisers and contained in this report were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the appraisers can be assumed by the appraisers. 7 Disclosure of the contents of this appraisal is governed by the by-laws and regulations of the professional appraisal organizations with which the appraisers are affiliated. 8. Neither all nor any part of the contents of this report or copy thereof (including conclusions as to property value, the identity of the appraisers, professional designations, reference to any professional appraisal organizations, or the firm with which the appraisers are connected) shall be used for any purposes by anyone but the client or his assigns without the previous written consent of the appraisers, nor shall it be conveyed by anyone to the public through advertising, public relations, news, sales, or other media without the written consent and approval of the appraisers. 9. On all appraisals involving proposed construction, the appraisal report and value conclusions are contingent upon completion of the proposed improvements, if any, in accordance with the plans and specifications. 10. Unless otherwise stated in this report, the existence of hazardous material, including, but not limited to, asbestos, polychlorinated biphenyls, petroleum leakage or agricultural chemicals, which may or may not be present on the property, were not called to the attention of, nor were they observed by the appraisers. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of substances as listed above, or substances such as asbestos, urea -formaldehyde foam insulation, chemical or toxic waste, or other potentially hazardous materials may affect the value of the property. The value opinion is predicted on the assumption that there is no such material on or in the property, or on or in adjoining properties that would cause a loss in value to the property being appraised. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required discovering them. The client is urged to retain an expert in this field, if desired. In the event that a conclusion is reached whereby corrective action will be required to clean up any environmental contamination, the appraisers will at that time retain the right to modify and/or change the value conclusions presented herein. 11. The values as concluded herein are entirely contingent upon the subject property not being within or subject to a federally designated potential Endangered Species area as defined by the U.S. Fish and Wildlife Service, which, as a result might otherwise limit, restrict, and/or prevent development of the subject to its highest and best use. 12. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. 13. Responsible ownership and competent property management are assumed. 14. All engineering information, if any, is assumed to be correct. 15. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. 16. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in the appraisal report. 17. It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value opinion contained in this report is based. 18. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 19. The forecasts, projections, or operating estimates contained herein are based upon current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to change as a result of variations in the market. 20. The construction and condition of the improvements mentioned in the body of this report are based on observations. No engineering study has been provided which would assist in the discovery of any latent defects. No certification as to any of the physical aspects could be given unless a proper engineering study was made. 21. Possession of this report or a copy thereof does not carry with it the right of publication. It may not be used for any purpose by anyone other than the addressee or the Appraisal Institute without the previous written consent of the appraisers. TABLE OF CONTENTS Letter of Transmittal Title Page Page INTRODUCTION 1 SUMMARY OF SALIENT FACTS AND CONCLUSIONS 1 EFFECTIVE DATE OF THE APPRAISAL/DATE OF THE REPORT 2 PURPOSE OF THE APPRAISAL 2 INTENDED USE OF THE APPRAISAL 2 MARKET VALUE DEFINED 2 MARKET RENT DEFINED 3 PROPERTY INTERESTS APPRAISED 3 PROPERTY IDENTIFICATION 3 PROPERTY SALES HISTORY 3 EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS 4 SCOPE OF THE APPRAISAL 6 FACTUAL DESCRIPTIONS 7 MARKET AREA DESCRIPTION AND ANALYSIS 7 SITE ANALYSIS 15 ZONING 16 ZONING MAP 17 AERIAL MAP 18 PLAT ADJACENT TO SUBJECT 19 FLOOD MAP 20 TRAFFIC MAP 21 REAL ESTATE TAX INFORMATION 22 IMPROVEMENTS DESCRIPTION 22 ANALYSIS OF DATA AND OPINIONS OF THE APPRAISER 23 HIGHEST AND BEST USE ANALYSIS 23 LAND VALUE OPINION 24 ANALYSIS OF MARKET RENT 35 INCOME APPROACH — GROUND RENT CAPITALIZATION 35 DIRECT RENT COMPARISON 38 RENT EXTRACTION, ALLOCATION RESIDUAL 42 RECONCILIATION AND FINAL VALUE ESTIMATE 46 ADDENDA 48 SUBJECT PHOTOS 48 REGIONAL DESCRIPTION AND ANALYSIS 51 AUTHORIZATION 57 APPRAISER'S QUALIFICATIONS 58 INTRODUCTION SUMMARY OF SALIENT FACTS AND CONCLUSIONS Client: City of Miami Property Owner: City of Miami Intended User: City of Miami Property Address: 8034 NE 2nd Avenue, Miami, Miami Dade County, Florida 33138 Property Type: Land Inspection Date: September 27, 2019 Effective Date of Appraisal: September 27, 2019 Report Date: October 24, 2019 Property Rights Appraised: Leasehold interest (future lease of demised premises) Classification of Report and Appraisal: Appraisal Report Land Size: 0.145 Acres Usable Land: 6,295 SF Building Size: N/A Rentable Area: 6,295 SF Highest and Best Use as Vacant: Outdoor seating Highest and Best Use as Improved: Outdoor seating MARKET RENT ESTIMATE Effective Date Market Rent - Annual $30,000 September 27, 2019 Market Rent - Monthly $2,500 Exposure period: 9 to 12 months Marketing a property like the subject is not a typical real estate transaction, especially when the use is prescribed as reported. For such a property, either the adjoining owner contacts the entity that owns the property to inquire as to its availability or the owning entity contacts the adjacent owner to inquire as to its interest. In either case, no marketing period as identified with typical market transactions was known. Our conclusion is considered a reasoned estimate based on availability and potential interest, as noted. Page 11 EFFECTIVE DATE OF THE APPRAISAL/DATE OF THE REPORT INSPECTION DATE: September 27, 2019 EFFECTIVE DATE: September 27, 2019 DATE OF THE REPORT: October 24, 2019 PURPOSE OF THE APPRAISAL The purpose of this appraisal is to provide an estimate of market rent for the subject property, for the purpose of outdoor seating. INTENDED USE OF THE APPRAISAL The intended use of this appraisal is to assist the client in making a business decision on the subject property for outdoor seating. MARKET VALUE DEFINED Market value, as used in this appraisal report, is defined by the Appraisal Foundation, as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. 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: Buyer and seller are typically motivated; Both parties are well informed or well advised, and acting in what they consider their own best interests; A reasonable time is allowed for exposure in the open market; Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 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. This appraisal has been completed in accordance with (a) all Federal banking regulations (primarily OCC Regulation 12 CFR Part 34, FDIC Regulation 12 CFR Part 323 and Title XI of the Financial Institution Reform, Recovery Enforcement Act of 1989 ("FIRREA"), and (b) the Uniform Standards of Professional Appraisal Practices and Conduct ("USPAP") as promulgated by the Appraisal Standards Board of the Appraisal Foundation. Page 12 MARKET RENT DEFINED "Market Rent" according to the 14th Edition of The Appraisal of Real Estate, a publication sponsored by the Appraisal Institute, is defined as: "Market rent is the rental income a property would probably command in the open market. It is indicated by the current rents that are either paid or asked for comparable space with the same division of expenses as of the date of the appraisal. Market rent is sometimes referred to as economic rent." And further: "The amount of data needed to support a market rent estimate for a subject property depends on the complexity of the appraisal problem, the availability of directly comparable rents, and the extent to which the pattern of adjusted rent indications derived from the comparables differs from the income pattern of the subject property. When sufficient, closely comparable rental data is not available, the appraiser should include other data, preferably data that can be adjusted. If an appraiser uses proper judgment in making adjustments, a reasonably clear pattern of market rents should emerge." PROPERTY INTERESTS APPRAISED Fee simple as to land value; leased fee as to market rent PROPERTY IDENTIFICATION Folio Number: 01-3113-000-0030 Legal Description: Beginning 165 feet South of NE corner of SE 1/4 of SE 1/4 of NE 1/4 West 157 feet South 61 feet East 157 feet North 61 feet to beginning. No survey was provided for review. The legal description provided above was based on the records of the Miami Dade County's Property Appraiser's Office. SALES HISTORY No other transfers of title are known to have occurred over the past three years. Page 13 EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS Extraordinary Assumption: This report does not rely on any extraordinary assumption except for one notable condition. The subject is zoned Civic Space (CS). The CS zoning contends that buildings must conform with regulations of the most restrictive abutting Transect Zone. The subject property is an appendage onto the T6-8-O zoning class which is Urban Core Open; it is enveloped by areas zoned accordingly. Yet in fact at its westernmost property line it abuts a T5-O zoned area, which is Urban Center Open. Whatever is to be build within the subject property must comply with the more restrictive abutting zoning, namely Urban Center Open. The use of the property pursuant to this analysis is for outside seating; said use sets the analysis as to vacant land. This proposed use must be connected to intensive commercial activity, which would result as stated, by the subject property being engulf in all directions except to the west by commercial development in conformity to the T6-8-O zoning class. We have therefore made the extraordinary assumption that the subject property's use would be in compliance with the more intensive uses commensurate with the Urban Core Zoning, T6-8-O. As an extension of this assumption, the land use is therefore comparable to the more intensive zoning class, given the more intensive uses of most of the abutting areas. This extraordinary assumption does not conflict with any future buildings on site, which still must comply with the Urban Center Open class. For clarification, Extraordinary Assumption is defined as "An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. An extraordinary assumption may be used in an assignment only if: • It is required to properly develop credible opinions and conclusions; • The appraiser has a reasonable basis for the extraordinary assumption; • Use of the extraordinary assumption results in a credible analysis; and • The appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions. (USPAP, 2002 ed.) Hypothetical Condition This report does not rely on any hypothetical condition. Hypothetical conditions are contrary to what exists, but the conditions are asserted by the appraiser for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis. A hypothetical condition may be used in an assignment only if: Page 14 • Use of the hypothetical condition is clearly required for legal purposes, for purposes of reasonable analysis, or for purposes of comparison; • Use of the hypothetical condition results in a credible analysis; and • The appraiser complies with the disclosure requirements set forth in USPAP for hypothetical conditions. (USPAP, 2002 ed.) Page 15 SCOPE OF THE APPRAISAL Land Value - Market Rent The appraiser researched, confirmed, and analyzed data in defining the subject product -type, competitive product types, subject market and related supply and demand trends, physical characteristics, intangible characteristics, units of measurements and comparison, rental rates, leasing terms and applicable methodologies. To develop an opinion of market rent for the subject property, the appraiser performed an appraisal process, as defined by the Uniform Standards of Professional Appraisal Practice. As a part of the valuation process, the appraiser inspected the subject and surrounding properties, the market area and comparables properties. The highest and best uses were analyzed and determined for the comparable properties commensurate with the prescribed and proposed uses for the subject property. A search for comparable land sales was made based upon, but not limited to the following search criteria: 1) Similarly located land within the specific market area. 2) Date of sale within the past several years and 3) Similar potential use. The most comparable sales were then selected from those transactions which met these criteria. The Sales Comparison Approach relies heavily upon the principle of substitution. Recent sales of competitive vacant land sales or considered as vacant land at the time of sale were gathered, and a meaningful unit of comparison was developed; sales price per square foot of net land area. Then, a comparative analysis between the sales and the subject involves consideration for differences in time, terms of sale, location and physical characteristics. The reliability of the Sales Comparison Approach depends, to a large extent, upon the degree of comparability between the sales and the subject. The major strengths of this approach include the reflection of actual market transactions and the fact that common denominators are fairly easily determined. The potential weaknesses of this approach arise from the fact that the data is historical and ideal comparables are usually very difficult to obtain. The principle of substitution is also at play in estimating market rent, or economic rent, as it is indicated by the current rents that are either paid or asked for comparable space with the same division of expenses as of the date of the appraisal. Competitive rental rates were gathered and analyzed from the immediate market as well as competitive markets. The Income Capitalization Approach to value is predicated upon the relationship between income and value. Although all of the appraisal principles are involved in this approach, the principle of anticipation is particularly applicable. This appraisal technique converts anticipated annual net income into an indication of value. This process is called capitalization, and it involves multiplying the annual net income by a factor or dividing it by a rate that weighs such considerations as risk, time, return on investment, and return of investment. The appropriateness of this rate or factor is critical, and there are a number of techniques by which it may be developed. Page 16 The rate (or factor) is applied when using the direct capitalization approach to arrive at market rent. The basic formula for direct capitalization which applies in estimating market rent for the subject property is — Income (Rent) = Rate X Value. This is also known as the ground rent capitalization. FACTUAL DESCRIPTIONS MARKET DESCRIPTION AND ANALYSIS Defining the market area was considered of primary importance, in order to subsequently identify similar and competitive product types to assist in the solution of the appraisal problem. Considerable investigation and analysis were undertaken in defining the subject property's market area. It was concluded that the subject property's market area can be defined both by geography and use and utility. "Market analysis makes it possible to identify the effective demand for and competitive supply of a particular property type in a specific location at a specific time." "Market analysis examines the productive attributes of a property; the relationship of supply and demand, thereby delineating the market in which the property competes." Source: Market Analysis of Real Estate, Appraisal Institute, 2005 The above description, or definition, regarding market analysis, in practical terms, point towards two specific areas of concentration; geography and use and utility. As such a market analysis must focus on both use and geography, which can operate as if synonymous of one another, they can overlap in part or entirely, or they can be separate and distinct from one another. In the case of the subject property the market area is defined both geographically and subsequently by use and utility. The first factor considered is geography, defined by the immediate market area. The subject property and the immediate market area are part of the northeast quadrant of the incorporated area of the City of Miami. The market area is more specifically known as Little River. Please refer to the following map of the northeast neighborhoods of the City of Miami, illustrating the location of Little River within the city. WEST LITTLE RIVER NW/ NW715T BROWNSVILLE MIAMI SHORES)' / NEB751 LITTLE RIVER SHORECRE BELLE ME DE LIBERTY CITY LEMON CITY (LITTLE HAITI) BUENA VISTA f-, bESIGN DISTRICT) BAY UPPER EAST SIDE MORNING SIDE BAY PEiI 1T Page 17 We conducted a study of vacant land sales from the market because the subject property is considered vacant land. This report contains a thorough analysis of vacant land sales competitive with the subject property in size, zoning and location. Concurrently we conducted a study of rental rates from the immediate market area. All of these competitive properties identified and analyzed are part of the market area which is the Little River neighborhood. Said study assisted in defining the specific market area. Little River is a neighborhood in Miami, Florida. The neighborhood takes its name from the Little River that runs along its northern edge. Little River was established in the late 1800s and was incorporated into the city of Miami in 1925. The formerly industrial neighborhood takes its name from the Little River that passes through the northern part of Miami and empties into Biscayne Bay. The neighborhood is bordered to the north by El Portal, to the south by Little Haiti (Lemon City), to the east by the Palm Grove Historic District, and to the west by West Little River. The Little River district in Miami is illustrating evidence of redevelopment. The district is centrally located minutes from Wynwood, Midtown, the Design District, and Miami Beach. It is as of recent an untapped area of opportunity and possibility which has captured the attention of the local design and development community, succinctly the fact is that the area has changed and is continuing to change. Little River has large area dedicated in the past to industrialization, warehouses in the area serve different industries and have multiple purposes. This brought about young creatives that are turning the area into the hip new spot to live, work, and play. The neighborhood is attracting a flood of designers, artists, galleries, restaurants, and more. It's easy to see why, with affordable prices and a budding creative arts scene. Developers and investors have seen Little River as a cheaper alternative to the Design District and Wynwood. Most investors are purchasing homes and apartments, upgrading retail plazas and office building and turning warehouse previously used as storage space, mechanics' shops and artists' workshops into high -end retail and office. About $113 million in commercial sales took place in Little River between 2011 and 2018. A newly designated Opportunity Zone in Little River by Miami Dade County has been another source of motivation for investors where they can develop properties and save taxes on their capital gains, especially if the investments are held longer than five years. Little River has both historical sites as well as new and exciting redevelopments, coming developments, and wide variety of services. Among them are the following: Cathedral of St. Mary is a historic church, which was originally built in 1929, and is the only cathedral in Miami. It is located at 7525 NW 2 Avenue. Miami Ironside located at 7610 NE 4 Court is a vibrant mixed -use urban center with 60 plus design showrooms, event spaces, pop up studios, playrooms and galleries. It is home to a diverse group of architects, interior designers, material and furniture designers, boutique retailers, creative services, art galleries, pizza shops and more. Page 18 Earth N US Farm is located at 7360 NE 1 Avenue. It is a surreal and serene experience, with animals you'd never expect to see and lush landscapes. It was founded in 1977, this 2-acre "urban eco- village" offers community -based activities, vegetarian culinary offerings, and much, much more. Little River Studios is a beautiful and stunning production studio which sits on an acre of open land. This deluxe studio provides one -of -a -kind backdrops for products, prints and weddings. Their complex is full of different sets that are inspired by popular destinations all over the world. It is located at 300 NE 71 Street. Bousa Brewing and Taproom located at 7235 NE 4 Avenue is a craft brewery and taproom. They use local ingredients and local stories as inspiration for each recipe to deliver a true Miami experience. Eden at 235 NE 79 Street includes four 60-plus-year-old buildings transformed into retail through adaptive reuse, comprised of restaurants, retail and office. This is a 42,000 square foot mixed -use development mirrors the grass roots movement that is defining this unique neighborhood. Magic City Innovation District is a planned project in the approval phase. It could be the most impactful of projects affecting Little River. It is a sprawling project that would have buildings as tall as 25 stores on 17.8 acre of land and would include 2,246 residential units, as well as offices, hotels, retail and educational uses. This project is facing strong resistance from local activists. The vintage -inspired decor alone is worth a visit to Sherwood Bistro. The bathroom fixtures and tiles are said to have been salvaged from the French Embassy in Portugal. There's a piano for live jazz, an expansive menu and plenty of space indoors and outdoors. It is located at 8281 NE Second Ave. The Citadel located at 8300 NE 2 Avenue is Miami's newest food hall with 15 eateries, including Asian and Caribbean fare, pizza and charcuterie. Rose Coloured Floral is a wild boutique floral business that also houses a jewelry shop, gallery and design studio. It is found at 7338 NW Miami Cindy Lou's Cookies is a shop that bakes palm -size cookies in nostalgic flavors located at 7320 NE 2 Avenue. At 7299 NW 2 Avenue is an unexpected mix of all things motorcycle and coffee - the Imperial Moto Cafe. Helmets and bikes are spread across this shop that includes clothing, accessories and pastries. Subject Census Tract The subject property's census track is 14.02 but its neighboring census tract - 14.01 - constitute most of the Little River district. These census tracts are geographically illustrated in the map below. They almost entirely incorporate the market area of the subject property. Page 19 Map 1 Subject Census Track (14.02 and 14.01) PNMTh Si MN' WWI St NW B5Th s1 rhm 87T n st 0010.06 NA7EsThs a rr'l' F2>.0 S1 NW fah s: 0019.0 i NW 63Rd St 0011.04 NE 881 h St 0014,02 77 4 7 7 NL75Th81 { T. re, rs ^7T0.01 NE 0STh' NE 077 F st NE SG; n • E 74Th NE 63RGTei NE 82M7d Si E: 76T h S1 NE 73Nd' vr'E.r. Thy According to the U.S. Census Bureau, the combined population in census tract 14.02 and 14.01 was 9,556, or 0.38% of the population of Miami Dade County. There were 3,901 housing units of which 12.13% were reported vacant. Occupied units were reported to be 3,428 (87.8% of the number of housing units), of which 82.5% were renter occupied. Distribution among ethnicity consisted of 83.82% not Hispanic or Latino and 12.68% Hispanic / Latino, and by race 83.8% Black or African Americans alone, 10% White alone, and 3.7% Two or More Races. Median family income level for the two census tracts are classified as low. The average median family income estimated for 2019 was $25,899, representing 47.17% of the median family income of $54,900 estimated for 2019 for Miami Dade County. Page 110 Demographic and Economic Data for Census 14.02 and 14.01 Subject Census + Neighboring Census 14.01 14.02 Sum POPULATION Total Population 4,703 4,853 9,556 POPULATION, RACE White alone Black or African American alone American Indian and Alaska Native alone Asian alone Native Hawaiian and Other Pacific Islander alone Some Other Race alone Two or More Races 392 4,023 12 8 2 70 196 582 3,987 16 17 0 90 161 974 8,010 28 25 2 160 357 POPULATION, HISPANIC OR LATINO ORIGIN Not Hispanic or Latino 4,117 4,227 8,344 Hispanic or Latino 586 626 1,212 POPULATION, SEX BY AGE Male: 2,206 2,358 4,564 Female: 2,497 2,495 4,992 MEDIAN AGE BY SEX Both sexes Male Female 33.2 34 32.6 31.7 31.1 32.1 32.45 32.55 32.35 HOUSEHOLDS Total: 1,577 1,851 3,428 HOUSING UNITS Total Housing units 1,837 2,064 3,901 HOUSING UNITS, OCCUPANCY STATUS Occupied 1,577 1,851 3,428 Vacant 260 213 473 HOUSING UNITS, OCCUPIED, TENURE Owned with a mortgage or a loan Owned free and clear Renter occupied 277 111 1,189 168 43 1,640 445 154 2,829 Census Tract Income Level 2015 MSA/MD/Statewide non-MSA/MD Median Family Income 2019 MSA/MD/Statewide non-MSA/MD Median Family Income 2015 Census Tract Median Family Income 2015 Census Tract Household Income 2019 Estimated Census Tract Median Family Income MDC Sum/MDC 2,496,435 0.38% 1,841,887 0.05% 472,976 1.69% 5,000 0.56% 37,669 0.07% 675 0.30% 79,351 0.20% 58,877 0.61% 872,576 0.96% 1,623,859 0.07% 1,208,364 0.38% 1,288,071 0.39% 38.2 36.9 39.4 867,352 0.40% 989,435 0.39% 867,352 0.40% 122,083 0.39% 360,923 0.12% 122,951 0.13% 383,478 0.74% Low Low $49,264 $54,900 Average Census Tracts Percentage of Actual 2015 $23,954 $22,531 $23,243 47.18% $20,873 $18,403 $19,638 Estimated 2019 $26,692 $25,106 $25,899 47.17% Page 111 The second factor considered in defining the subject market is use and utility. The proposed used of the subject property for outdoor seating defines the market area. The subject property categorization for outdoor seating is significant, especially in identifying similar and competitive product types. Competitive product types — restaurant seating - were identified throughout South Florida and serve to define the subject market in use and utility. These product types have certain specific characteristics in common. The shared characteristics consist of exposure, visibility, and access. These characteristics advertise to the customers, attracts and invites them to the premises. As such, the subject market area for the subject property given its proposed use is defined as an expanded geographic area. Participants in this market are not defined by geographic proximity but utility. We conducted surveys of seating spaces. We have looked at outdoor seating in privately owned shopping centers, where restaurants often have open outside seating. We also surveyed seating arrangements in public right-of-ways, again where restaurants which lease retail space from the private sector often have outside seating on sidewalks arrangements, and finally we have also analyzed seating arrangements in traditional retail space used by restaurants within air-conditioned space. In doing so, we have identified and analyzed other elements, which nonetheless defined the subject property's market area. Summary and Conclusion Over the last four decades, Miami Dade County's growth has been explosive in comparison with the nation as a whole. With time the area has matured, its economy has diversified and gained importance as an international trade and finance center. This diversification and increased independence from tourism is a trend which can be expected to continue in the long term. The national economy after the last intense and widely visibly recession began to recover slowly and over time. The residential real estate market suffered significant declines in the volume of transactions and in many in prices (values). The commercial real estate markets also experienced a similar slowdown in volume and in more isolated cases declines in prices (values) — albeit at a slower pace than residential product types. The slowdown, correction and reversion in the real estate markets were widespread, coupled with the credit crunch. This was due to the financial credit markets exhibiting a significant decrease in the amount of capital available for real estate transaction both in the residential and commercial sectors. In particular Miami Dade County experienced a significant correction in the real estate market for all product types — but especially for the housing sectors — generally considered more acute than in most parts of the country. Miami was at one point reported to be the most oversupplied housing market in the nation, by the National Association of Realtors; most of the vacant inventory consisted of condominiums. Miami was also reported to suffer from one of the highest foreclosure rates in the nation. Page 112 Miami and Miami Dade County, it must be noted are very resilient. Before the great recession, the area experience incredible changes, both natural and man-made, but it still continued to thrive. Major employers in the area such as Eastern Airlines and Pan Am have ceased to exist, yet Miami and Miami Dade County maintained relative strength. Hurricanes have taken their toll in the past, and yet the area bounces back. It is widely recognized that Miami and Miami Dade, ultimately fared better than most national economic/populations hubs as a result of its ties to the Caribbean and South America. The area will likely continue to benefit from international trade and tourism. Also, the sustained population growth over the last four decades can only continue to force economic growth. Commencing in 2012 the national economy began to experience a period of sustained growth until the present. The national economy began to experience notable upticks - even if on an intermittent basis - via different national measurements, which were in turn reflected in South Florida as well. Since 2013, especially in South Florida, real estate markets have improved if not entirely recovered and rebounded. This was translated into real estate markets for all product types. Continued reasonable strengthening is palpable at present and is expected into the foreseeable future. Property values for commercial properties continue to show signs of movement towards stabilization, with 2012 establishing the lowest threshold ever reported for the area in terms of average sales prices as well as volume of transactions. Today all real estate product types illustrate increased strengths. Property values for commercial income producing properties are increasing, with the housing market currently experiencing an increasing resurgence. The broad strength is palpable in most markets, defined by property types and geographic areas, with continued reasonable gains into the future expected. With increased demand, pricing (value) is in the increase. Commercial rental rates for all product types have also increased but they have been followed with mixed signs on vacancy levels. Given the economic, social, governmental, environmental and locational influences at play, the subject property, and the market area, is poised to benefit from potential growth in the future - steady and continued strength — albeit tempered from the height of the market. Property values for all commercial properties are expected to remain stable, with upward pressures on prices and values. All commercial real estate product types are expected to illustrate reasonable strength in the future. A growing population base, an excellent climate, a constantly diversifying economic base, and an extensive, expanding and improving transportation system all contribute to the desirability of the area. Miami -Dade County and Miami will continue to illustrate strength in the long term. This is attributed in particular to the area being the recipient of considerable influx of capital flight from South America; a phenomenon that has assisted the entire South Florida area in its economic revival. These trends are expected for all property types in the area. Nevertheless, into the future particular attention must be given to the impact on the recovery on mid income, local populations, with less emphasis on the higher income, high price, international buyers/investors. Page 113 It is our opinion that such economic forces are at work in the immediate area of the subject, namely in Little River. This has been noted above in view of developers and investors focusing on Little River as a cheaper alternative to the Design District and Wynwood. It has been reported that about $113 million in commercial sales took place in Little River between 2011 and 2018 with new and exciting redevelopments, coming developments, and an expanse of services. Concurrently it must be noted that — although recognized to be lagging indicators — the census data for the two tracts which encompass most of what is the geographic area of Little River portrays a different and contradictory picture. These census tracts report a population of less than 10,000 people, with 82.52% of the occupied housing units inhabited by renters, with a low income categorization, with an average medium family income of $23,243 for 2015 and $25,899 estimated for 2019, representing only slightly above 47% of the Miami Dade medium family income for 2015 of $49,264 as well as estimated for 2019 of $54,900. These conflicting forces are worrisome for the future. In other words the area's demographic data along with indications of neighborhood gentrification. Page 114 SITE ANALYSIS Address: Folio Number: Land Area: Gross Land Area: Usable Land Area: Primary Road Frontage: Secondary Road Frontage: Average Depth: Access: Shape: Corner Lot: Visibility: Paved Street: Sidewalk: Curb and Gutter: Storm Sewer: Utilities Public Electricity: Water Supply: Public Sewer: Natural Gas: Underground Utilities: Adequacy of Utilities: Street Lighting: Traffic Count: Landscaping: Topography: Flood Plain: Easements/Encumbrances: Environmental Issues: 8034 NE 2nd Avenue Miami, Florida 33138 01-3112-000-0030 6,295 SF 0.145 Acres 6,295 SF 51.6'- NE 2nd Avenue 122'- NE 80th Terrace 122 Ft Direct by NE 2nd Avenue & NE 80th Terrace. Rectangular Yes Visibility from NE 2 Avenue and surrounding development is rated as good. Yes Yes Yes Yes Yes Municipal Public Yes No No Average Yes 10,600 AADT in 2018 Substantial tree coverage Basically level The Flood Insurance Rate Maps, published by the Federal Emergency Management Agency panel number 12086C0-320L dated September 11, 2009, indicate the following flood zone - X. Areas determined to be outside the 0.2% annual chance floodplain. N/A; no survey was provided for review. N/A; no environmental survey was provided for review. Page 115 Conclusion: The subject land tract contains a total site area of 0.145 acres. Improvements to the site include park structure and covered terraces; not part of this valuation. The shape of the property is rectangular and benefits from having direct access from both NE 2nd Avenue and 80th Terrace. Visibility to the site is considered good. Site Size - The subject property is not platted. According to the public records promulgated by the Miami Dade County's Property Appraiser's Office the subject's legal description is based on the meets and bounds system. Pursuant to that legal description the subject property appears to have 9,577 square feet of land area based on 61 feet by 157 feet dimensions. Those same records report the subject site to contain 8,662 square feet of land area. We have analyzed the plat of the adjoining property which envelopes the subject site to the north and west. That plat suggest that the subject property consists of 51.60 feet by 122 feet, or 6,295 square feet of net land area, in this case meaning usable. This is the figure which is reported as the size of the subject property' site. Topography and Soil Conditions - A topographical survey was not provided; however, the land appeared to be relatively level and at grade with the adjoining public right-of-ways. We have no data on subsurface conditions, but due to improvements on this and adjoining parcels, it is apparent that the load bearing capacity of the site is sufficient to support improvements to the site. ZONING Zoning: CS, Civic Space Legally Conforming: Yes Zoning Change Requested: No Likely: No New Zoning: N/A Comments: • A Civic Space (CS) Zone is a zone for public Civic Spaces • A Civic Space should have a minimum of fifty percent (50%) of its perimeter enfronting a Thoroughfare, or otherwise permitted by process of Exception. Civic Spaces shall be entered directly from a Thoroughfare. • Civic Spaces shall conform to and be developed consistent with the standards in Article 4, Table 3, 4 and 7. • One or more Buildings may be built in each Civic Space. Building floor area shall not exceed twenty-five percent (25%) of the lot area of the Civic Space, and shall support the principal use of the Civic Space. Recreational Buildings that exceed the twenty-five percent (25%) shall be subject to approval by Exception and review by the Parks and Recreation Advisory Board. • In Civic Spaces, Buildings shall conform to the regulations of the most restrictive Abutting Transect Zone, except as modified by City of Miami's Parks and Public Spaces Master Plan. • All Community facility and Recreational facility Uses shall be government related only. Page 116 Adjacent Plat 5 dp702 45'W IP+S.l.7C' • I /OO. pO' 3T` + ! IT TL E le`} ✓E` RO-Ns d/ick I C 6 .9) B d T I 6 5 V 447 /Peres rt +L Permanent OPf•Sficei44; h N A]=5i=53"G N'A9`irl /7P.ao.• fV4 -del. /1' •o!'-sd'c irac/ i9 •P .9erer 5,0 Alf 6•s9.99 h 'l1 /r QQ h` 8, = a 4-yr i") &A, -dens %6-el Irs." 0 0 Page 119 7-Angen rg .4. , Plt-•'''' r . ...i...... 1 ..6......,...i°411: ,711M,•• ' '• - . . t • • 4 •••ILO %-t. - 1.1Ir . ' 1AL 1'1 A 'AEI.— - a- — sr 'Y'rli 4 ar 14 ' :1, "' '! - 'Li • 4 _ 1208603021 \ [01., ws;IJiitji, NI*, REAL ESTATE TAX INFORMATION A summary of the assessment of the subject is provided in the following tables. 'ASSESSMENT & TAXES - TAX YEAR 2019 Parcel 1 01-3112-000-0030 $69,296 $3,483 $8,685 (Total Assessed Land Value Total Assessed Building Value Total Assessed Other Value Total Assessment $69,296 $3,483 $8,685 $81,464 City Tax Rate County Tax Rate Other Tax Rate 0.00000% 0.00000% 0.00000% Combined Rate 0.00000% Assessment Ratio 0.00% Total Estimated Tax Amount $0 Total Estimate/GBA $0.00 'Total Estimate/Acre $0 GENERAL IMPROVEMENTS DESCRIPTION The subject property has park amenity type improvements. Their condition was not assessed. Said improvements are not part of this valuation. Tax Parcel #. Market Value Assessed Land Value Assessed Building Value Other Value Page 122 ANALYSIS OF DATA AND OPINIONS OF THE APPRAISER HIGHEST AND BEST USE ANALYSIS Four criteria are examined in order to determine the highest and best use of the subject property. The criteria and their applicability to the subject, both "as vacant" and "as improved" are as follows: Physically Possible: the size, shape and topography affect the uses to which land may be developed. The utility of a parcel is dependent on its frontage and depth. Sites with irregular shapes may be more expensive to develop, and topography or subsoil conditions may make utilization too costly or restrictive. Highest and best use as improved also depends on physical characteristics such as condition and utility. Legally Permissible: a legally permissible use is determined primarily by current zoning regulations. However, other considerations such as long-term leases, deed restrictions, and environmental regulations may preclude some possible highest and best use. Financially Feasible: the use of the property is analyzed to make a determination as to the likelihood that the property is capable of producing a return which is greater than the combined income needed to satisfy operation expenses, debt service, and capital amortization. Any use that is expected to produce a positive return is classified as financially feasible. Maximally Productive: the use that provides the highest rate of return among financially feasible uses is the highest and best use. The use of the land must yield a profitable net return, and the quantity of land devoted to any specific use must be limited to that quantity which will yield a maximum return to each owner. The subject property's highest and best use has been prescribed by Exhibit "A" Appraisal Assignment as part of the Request For Appraisal Quote Job No. Little River Commerce Park. Page 123 LAND VALUE OPINION There are several methods appraisers can employ when developing an opinion land value. The six basic procedures are the Sales Comparison Approach, Allocation Method, Extraction, Subdivision Development Method, the Land Residual Technique, and the Ground Rent Capitalization Method. All six methods are derived from the three basic approaches to value. Sales Comparison and income capitalization (i.e. Ground Rent Capitalization) can be directly applied to land valuation. Allocation and Extraction procedures reflect the influence of the Sales Comparison and Cost approaches; the Land Residual Technique is based on the income capitalization and the Cost Approach. Subdivision Development draws on elements of all three approaches. The Sales Comparison Approach will be used in this report. Sales Comparison Approach (Land Valuation) The Sales Comparison Approach is a process of comparing actual comparable property sales. This approach to value is based upon the Principle of Substitution, which holds that "the value of a property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time. This principle implies that the reliability of the Sales Comparison Approach is diminished if substitute properties are not available in the market." This approach is based upon the collection of similar sales and offering data for comparison. Market - derived adjustments for relevant factors can sometimes be extracted from these and other sales. The sales data is compared to the subject on the basis of those elements of comparison which include real property rights conveyed, financing terms, conditions of sale, and date of sale. Location and other physical characteristics are then considered. Physical characteristics typically used in comparison are shape, topography, utilities, zoning, frontage, and flood plain. Because adjustments for these relevant factors are market derived, the desires and actions of typical buyers and sellers are reflected in the comparison process. Listed on the following pages are sales, which were considered to be the most comparable to the subject property. Page 124 Land Listing 1 Land Listing Location Data Location: County: Folio No: Market Type: Physical Data 7651 NE 2 Ave. Miami, FL 33138 Miami Dade 01-3207-039-0270 Suburban Type: Land Area Acres: Land Area SF: Net Land Area SF: Topography: Shape: Corner: Utilities Telephone: Electricity: Water: Sewer: Gas: Off -site Costs: Zoning: Flood Plain: Adverse Esmnts: Environmental: Imprvmts. At Sale: Proposed Use: Confirmation Source: Confirmed By: Comments Land 0.115 5,000 5,000 Basically Level Rectangular Yes Yes Yes Yes Yes No $0 T6-8-O, Urban Center No No U/K 1,882ft2SFH, 1926 built N/A MLS/PR AJA Sale Data Sale Status: Date: Marketing Time: Grantor: Grantee: Document No: Sale Price: Financing: Cash Eq. Price: Price Per Acre: Price Per SF of Land: Price Per Front Feet: Price Per Unit: Listing Days Harry D. Metayer N/A MLS A10748740 $425,000 N/A $425,000 $3,702,600 $85.00 $8,500.00 N/A Property is zoned Miami 21 mixed use. Corner lot located right off NE 2nd Ave between The Citadel Food Hall and Magic City Innovation District. Property is currently being used as a tri-plex and a tax business in the front. Zoning permits building 2-8 floors, hotel, restaurant; investment opportunity. Page 125 Land Sale 2 Land Sale Location Data Location: County: Folio No: Market Type: Physical Data 295-93 NE 80 Terr. Miami, FL 33138 Miami 01-3207-029-0110/0120 Suburban Type: Land Area Acres: Land Area SF: Net Land Area SF: Topography: Shape: Corner: Utilities Telephone: Electricity: Water: Sewer: Gas: Off -site Costs: Zoning: Flood Plain: Adverse Esmnts: Environmental: Imprvmts. At Sale: Proposed Use: Confirmation Source: Confirmed By: Comments Land 0.376 16,400 16,400 Basically Level Rectangular No Yes Yes Yes Yes No $0 T6-8-O, Urban Center No No U/K Yes; 6 SFHs cluster N/A MLS/PR/Deed AJA Sale Data Sale Status: Date: Marketing Time: Grantor: Grantee: Document No: Sale Price: Financing: Cash Eq. Price: Price Per Acre: Price Per SF of Land: Price Per Front Feet: Price Per Unit: Sale August 15, 2019 238 Days Howard Farson & Rosa N/A A10516560 $962,500 Cash to Seller $962,500 $2,556,494 $58.69 $8,517.70 N/A Development opportunity fueled by the explosive Magic City billion -dollar development. Build up to 8 stories/45 + units. (150 units per acre). Qualified as an opportunity zone. Possible uses for the property include office/restaurant/retail/hotel/apartment residential (no warehouses). Currently contains 6 single family homes. A few blocks from the Design District, the burgeoning arts center in Little Haiti and the major highways. Property was initially listed for $1,200,000. Page 126 Land Sale 3 Land Sale Location Data Location: County: Folio No: Market Type: Physical Data 183 NE 78 St. Miami, FL 33138 Miami Dade 01-3112-010-0040 Suburban Type: Land Area Acres: Land Area SF: Net Land Area SF: Topography: Shape: Corner: Utilities Telephone: Electricity: Water: Sewer: Gas: Off -site Costs: Zoning: Flood Plain: Adverse Esmnts: Environmental: Imprvmts. At Sale: Proposed Use: Confirmation Source: Confirmed By: Comments Land 0.171 7,450 7,450 Basically Level Rectangular No Yes Yes Yes Yes No $0 T6-8-O, Urban Center No No U/K No; Vacant land N/A MLS/PR/Deed AJA Sale Data Sale Status: Date: Marketing Time: Grantor: Grantee: Document No: Sale Price: Financing: Cash Eq. Price: Price Per Acre: Price Per SF of Land: Price Per Front Feet: Price Per Unit: Sale March 09, 2018 274 Days Marbo Global Holdings, LLC 78 Street Partners 2, LLC 30895-1617 $330,000 Cash to Seller $330,000 $1,929,503 $44.30 $6,600.00 N/A Booming area next to Wynwood, Art and Design District, minutes from N. Miami Beach. Located between N. Miami Ave and 1st NE. Little River Gardens: Cathedral of St. Mary; B&M Market - West Indian cuisine. MacArthur Dairy A dairy processing and distribution plant. Little River Studios, popular photography and film production. Little River Cooperative (formerly Little River Market Garden). Earth N Us Farm, "urban eco-village. Property was initially listed for $349,500. Page 127 Land Sale 4 Land Sale Location Data Location: County: Folio No: Market Type: Physical Data 7640 NE 2 Ct. Miami, FL 33138 Miami Dade 01-3207-039-0190 Suburban Type: Land Area Acres: Land Area SF: Net Land Area SF: Topography: Shape: Corner: Utilities Telephone: Electricity: Water: Sewer: Gas: Off -site Costs: Zoning: Flood Plain: Adverse Esmnts: Environmental: Imprvmts. At Sale: Proposed Use: Confirmation Source: Confirmed By: Comments Land 0.115 5,000 5,000 Basically Level Rectangular No Yes Yes Yes Yes No $0 T6-8-O, Urban Center No No U/K No; Vacant N/A PR/Deed AJA Sale Data Sale Status: Date: Marketing Time: Grantor: Grantee: Document No: Sale Price: Financing: Cash Eq. Price: Price Per Acre: Price Per SF of Land: Price Per Front Feet: Price Per Unit: Sale April 01, 2016 N/A Little River 78, LLC Luis Properties, LLC 30038-0819 $170,000 Cash to Seller $170,000 $1,481,040 $34.00 $3,617.02 N/A This was an off -market transaction. Page 128 Land Sale 5 Land Sale Location Data Location: County: Folio No: Market Type: Physical Data 7629 NE 2 Ave. Miami, FL 33138 Miami Dade 01-3207-039-0250 Suburban Type: Land Area Acres: Land Area SF: Net Land Area SF: Topography: Shape: Corner: Utilities Telephone: Electricity: Water: Sewer: Gas: Off -site Costs: Zoning: Flood Plain: Adverse Esmnts: Environmental: Imprvmts. At Sale: Proposed Use: Confirmation Source: Confirmed By: Comments Land 0.103 4,500 4,500 Basically Level Rectangular No Yes Yes Yes Yes No $0 T6-8-O, Urban Center No No U/K No; Vacant N/A PR/Deed AJA Sale Data Sale Status: Date: Marketing Time: Grantor: Grantee: Document No: Sale Price: Financing: Cash Eq. Price: Price Per Acre: Price Per SF of Land: Price Per Front Feet: Price Per Unit: Sale March 15, 2016 N/A J.C. Aristil & J.E. Beaugris My Little Bike Shop, LLC 30001-0462 $175,000 Cash to Seller $175,000 $1,694,000 $38.89 $3,431.37 N/A This was an off -market transaction. Page 129 Land Sales Analysis Land Sales Location Map . Land Sale Map Subject' 8034 NE 2 Avenue _ z -Gtiogle Earh SSale 2. 295-93 NE 8091err 4SubjecL8034 NE 2 Avenue Listing 117651 .,10Sal'4Q7640 NEr2 Court — /Sale 5 629NE2Ave — ;7629 NE,2ncf Ave Listed on the preceding pages are those sales, deemed to be the most comparable as compared to the subject. In order to arrive at a value conclusion for the subject, it is necessary to adjust the comparable sales prices for characteristics (Elements of Comparison) that are dissimilar from those of the subject property. The characteristics that may require adjustments include transactional such as real property rights conveyed, financing terms (cash equivalency), conditions of sale (motivation), expenditures immediately after purchase, market conditions (time), and property characteristics such as location, physical characteristics, available utilities, and zoning. Differences in elements of comparison may be expressed as percentage or dollar adjustments. Isolated percentage or dollar adjustments, if such measurable adjustments can be extracted or derived from differences in elements of comparison between sales and/or listings, would result in the application of quantitative analysis. The source of dollar or percentage adjustment must be readily understood by the reader of the appraisal report. Page 130 We have analyzed the selected sales, and although there were some noted differences among the sales and between the sales and the subject property, no adjustment was able to be reliably isolated through quantitative techniques. We were not able to isolate percentage or dollar adjustments that could be readily illustrated quantitatively through the techniques applied. Whenever differences in elements of comparison between sales are unable to be isolated and measured, resulting in a percentage or dollar adjustment, qualitative analysis is undertaken. In comparison to the subject, superior characteristics in the sales are adjusted downward and inferior characteristics are adjusted upward. The conclusions of qualitative analysis may be described in terms that clearly convey the direction and often the magnitude of the difference between the comparable property and the subject in regard to each element of comparison. After careful analysis of the sales presented, through the use of both quantitative and qualitative techniques, we have presented the relevant sales in the adjustment grid on the following page. We have made percentage adjustments to the comparables reported based on noted differences between them and the subject property. However, while the direction of the adjustments is generally supported by trend analysis, from among the comparables reported and from competitive markets, the magnitude of the adjustment was not extracted from the market with a reasonable degree of confidence and as such it is founded in judgment; therefore what at first may be construed as a quantitative analysis, is in fact qualitative. Property Rights - The transaction price of a sale is always based on the real property interest conveyed. In this instance, an adjustment for this attribute was not considered necessary. Financing Terms - Prices paid in acquiring property may differ significantly due to the financing involved, if any. Cash or cash equivalencies are the basis of value, whereas extended, above market interest rate and/or leverage investor terms sales, generally represent the higher portion of a sales price range. Therefore, some methods of converting these financing terms to cash must occur so that the adjustment process may be applied to the sales. In reviewing the comparables, an adjustment was not required for atypical financing. Conditions of Sale - Adjustments made for conditions of sale usually reflect atypical motivations of the buyer and seller at the time of conveyance. A sale may be transacted at a below market price if the seller needs cash in a hurry. A financial, business, or family relationship between the parties may also affect the price of property. Interlocking corporate entities may record a sale at a non -market price to serve their business interest. When non -market conditions of sale are detected in a transaction, the sale must be thoroughly researched before an adjustment is made. Within the confirmation process, detailed attention was made to ensure the conditions of each sale. Based upon the research performed, it is believed that all of the comparable sales involved regular arms -length transactions without the presence of duress or adverse market influence. As such, no adjustments were warranted. Page 131 Market Conditions/Time - Market conditions may change between the time of sale of a comparable property and the date of the appraisal of the subject property. Changed market conditions often result from various causes, such as inflation, changing demand, and changing supply. Time itself is not the cause for the adjustment. It is the general consensus among brokers, developers and property owners that property prices have been increasing over the past years. Data extracted from the market support an annual percentage adjustment of 8% which will be used herein. Size - The subject is 0.145 acres in size. Typically, with all factors being equal, larger developments tend to sell for a lower price per square feet than do smaller projects. However, it was noted that in the case of Sale 2 the reverse is true. The primary reason is larger sites allow for larger developments and coincide with more capital -intensive investments, thus larger sites are more desirable to investors and developers. When reviewing the comparables, Sale 2 was the largest among the sales reported. It was deemed superior and was adjusted downward as low as-15.00%. Corner/Frontage - Corner located commercial properties generally bring a premium in the marketplace due to increased visibility and ease of access. The subject is a corner located property. Some of the sales analyzed were not considered comparable to the subject property and were adjusted accordingly. The sales that are non -corner located parcels were deemed inferior and thus adjusted upward by as much as 15.00%. Zoning — No adjustment was made for zoning; all of the comparables are reported to have Urban Core Open — T6-8-O. As indicated in the highest and best use section of this report, the subject property's use was prescribed by the Appraisal Assignment of the Request For Appraisal Quote; namely outside seating. The subject is zoned Civic Space (CS) which contends that proposed buildings must conform with regulations of the most restrictive abutting Transect Zone. The subject property at its westernmost property line abuts a T5-O zoned area, which is Urban Center Open. We found only limited sales of T5-O zoned properties within the immediate area that were considered reasonable. Prices were found difficult to illustrate reasonable trends. Notwithstanding some of those sales considered were significantly below the price range provide by the sales reported. In fact resulting rent indicators via the income approach or ground rent capitalization would not permit development of credible opinions and conclusions pursuant to the subject's prescribed use. The subject property is an appendage onto the T6-8-O zoning class which is Urban Core Open; it is enveloped by areas zoned accordingly. The use of the property prescribed for this analysis is for outside seating; said use sets the stage for analysis as vacant land. This proposed use must be connected to intensive commercial activity, which would result as stated, by the subject property being engulf in all directions except to the west by commercial development in conformity to the T6-8-O. As such an extraordinary assumption that the subject property's use would be in compliance with the more intensive uses commensurate with the Urban Core Zoning, T6-8-O was made. This extraordinary assumption renders the methodology in estimating market rent as credible. This is especially true in view of other Page 132 methodologies used in this analysis. We have assumed that the subject's zoning is T6-8-O to permit its prescribed use. The relevant land sales reported are presented below in an adjustment grid. SUMMARY OF LAND SALES WITH ADJUSTMENTS 1 Comp No. I Sub.ect 2 3 4 5 Property Name Address City Date of Sale Sale Price Land Area (Acre) Land Area (SF) Front Feet Price/Square Feet Property Rights Financing Conditions of Sale Little River Commerce Park 8034 NE 2nd Avenue Miami --- --- 0.145 6,250 52 --- --- --- --- Land Listing 7651 NE 2 Ave. Miami 01/00/00 $425,000 0.115 5,000 50 $85.00 Fee Simple N/A Arm's Length Land Sale 295-93 NE 80 Terr. Miami 08/15/19 $962,500 0.376 16,400 113 $58.69 Fee Simple Cash to Seller Arm's Length Land Sale 183 NE 78 St. Miami 03/09/18 $330,000 0.171 7,450 50 $44.30 Fee Simple Cash to Seller Arm's Length Land Sale 7640 NE 2 Ct. Miami 04/01/16 $170,000 0.115 5,000 47 $34.00 Fee Simple Cash to Seller Arm's Length Land Sale 7629 NE 2 Ave. Miami 03/15/16 $175,000 0.103 4,500 51 $38.89 Fee Simple Cash to Seller Arm's Length QUANTITATIVE ADJUSTMENTS Property Rights Financing Terms Conditions of Sale Months Elapsed Market Conditions/Time 0.00% 0.00% 0.00% 0.00 0.00% 0.00% 0.00% 0.00% 2.13 1.40% 0.00% 0.00% 0.00% 19.60 13.10% 0.00% 0.00% 0.00% 43.17 28.80% 0.00% 0.00% 0.00% 43.73 29.20% Adj Price/Square Feet $85.00 $59.51 $50.10 $43.79 $50.24 Size Comer/Frontage 0.00% 0.00% -15.00% 15.00% 0.00% 15.00% 0.00% 15.00% 0.00% 15.00% Total Net Adjustments Net Percent Adjustment $0.00 0.00% $0.00 0.00% $7.51 15.00% $6.57 15.00% $7.54 15.00% Total Adj. Price/Square Feet $85.00 $59.51 $57.61 $50.36 $57.78 Page 133 Conclusion After making adjustments the comparables have a value range of $50.36 to $85.00 per square feet with an adjusted mean of $62.05. The appraiser's estimate of value for the subject property, assuming an intensive zoning classification commensurate with its prescribed use, after reviewing the land sales and considering the current market conditions is represented in the following table and rounded. LAND SALES ANALYSIS ADJUSTED PRICE/SQUARE FEET ANALYSIS Sale No. Price/Square Feet Net Adjustment Adj. Price/Square Feet I T Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 STATISTICAL ANALYSIS Minimum $50.36 MARKET VALUE ESTIMATE Estimated Price/Square Feet $85.00 $58.69 $44.30 $34.00 $38.89 Average $62.05 $0.00 $0.82 $13.32 $16.36 $18.89 Maximum $85.00 $85.00 $59.51 $57.61 $50.36 $57.781 Square Feed Estimated Value $58.00 6,295.00 $370,000 Less Adjustment: Land Value As Is: $0 $370,000 VALUE EST1MATE SUMMARY Valuation Premise Effective Date Estimated Value -AS ISr September 27, 2019 $370,000 Page 1 34 ANALYSIS OF MARKET RENT - INCOME APPROACH — Ground Rent Capitalization The Income Approach to value presumes that no prudent buyer will pay more for the right to receive the future income stream for the subject property than an amount for which he can obtain the rights to a substitute future income stream, assuming similar quality, quantity, and durability of the income streams. The quality of the future benefits affects investment risk and the buyer's ability to receive a return on his initial investment, as well as, a return of his investment. The quantity of the future benefits reflects the amount of the future income stream plus potential appreciation or depreciation over the buyer's term of ownership. Durability relates to the amount of time that an investment will continue to provide positive benefits of ownership adequate to meet the investor's criteria. There are two accepted applications of the Income Approach, which can be employed. These methods are the Direct Capitalization and Discounted Cash Flow Analysis. The Discounted Cash Flow Analysis is used when multiple tenants are in -place and/or the income stream will vary throughout the holding period. Alternatively, the Direct Capitalization Technique is most often used when a property is currently operating at or near a stabilized occupancy level, or when a property is projected to have a relatively level income stream, as would be the case for the subject property which is vacant land and our intent is to establish market rent. The valuation of land rent can involve several possible methods of valuation, including (1) direct rental comparison, (2) rental extraction, (3) rental allocation, (4) land rent residual method, (5) subdivision development analysis and (6) direct capitalization. Each approach should be considered to determine whether it is appropriate and can lead to credible results. In the case of the subject property various applications or derivations and combinations thereof have been considered. One of the most appropriate application is considered to be through the use of direct capitalization particularly when the value of land is known as has been established above. Direct Capitalization The basic formula for the application of Direct Capitalization is Value = Income/Rate. The other derivations of this formula are Rate = Income/Value and Income = Rate X Value. The formula for direct capitalization which applies in estimating market rent for the subject property is — Income (Rent) = Rate X Value. This is also known as ground rent capitalization. We have had discussion with other appraiser — colleagues — as well as with developers on this matter. Over the years interviews have been had with a number of market participants with regard to land lease rates as a percentage of land values. Such peer analysis, research and publish data (secondary sources) have allowed for the formulation that there is a distinct difference between return rates available for extractions from existing net leases in the market (second -generation) and returns on investment demanded in new lease agreements (first -generation). Buyers purchasing net leased properties benefit from the packaged transaction; the building is in place, the lease agreement is signed, and, in most cases, the lessee has already established a pattern of consistent rent payments. In a new lease negotiation — first -generation - none of those elements is present. In the sale of a Page 135 second -generation net lease the developer is the beneficiary and recipient of a profit margin by having leased, developed the property, and establishing a durable income stream — first -generation. The valuation scenario being considered here is the subject site, as vacant land and subject to the potential of a relatively long-term lease agreement. Therefore, the valuation is not of a seasoned net leased investment packaged for resale, but of an anticipated new land lease agreement — first - generation. Again, these land rent rates are not to be confused with capitalization rates indicated by sales of net leased properties where regional and national credit tenants are in place and passive investors are buying a low -risk income stream. Market rent for land reflects the higher risk position of creating the lease, getting the tenant established and working through the permitting and construction phases of development. Overall Capitalization Rates It is difficult to identify and isolate through a review of available market data, current rental information regarding vacant land. After research conducted both via MLX and CoStar, we were unable to identify current rental or lease information about land zoned commercial/business in Miami Dade County. The following table provides rent amounts and rental rates for the lease of vacant land, and more significantly provides overall rates for land subject to ground lease agreements for development and/or use, where the value of the land is known or can be estimated, concurrent with the date of lease; first -generation. This rental data is confidentially known to the appraiser. No Property Land Land Value Lease Land Rent/ Land Address Ft2 Acres @ lease Date Rent Ft2 OAR 1 13855 SW 288 St. 465,495 10.69 11,637,375 2 2531 & 75 NE 8 St. 177,752 4.08 3,555,040 3 6700 N SR 74 33,708 0.77 3,591,000 4 11190 SW 211 St. 46,650 1.07 1,200,000 5 8445 SW 72 St. 66,804 1.53 1,336,080 6 NW 37 Ave/38 St. 53,960 1.24 700,000 2007 2009 2010 Asking 2017* 2019 1,000,000 2.15 8.59% 324,500 1.83 9.13% 286,230 8.49 7.97% 100,000 2.14 8.33% 106,886 1.60 8.00% 60,000 1.11 8.57% Legend: in the value @ lease column bold figures represent actual sale or asking price; * negotiated but not executed The rental rates provided above range from $1.60 to $8.49 per square foot. This measurement is not particularly helpful as indicators of a measurement of rental rates because the data is broad in terms of various characteristics, including date of lease, land size, and location. What is significant is that we are able to detect and isolate the actual overall capitalization rate by knowing annual rent amounts for the lease of vacant land and land values concurrent with the date of lease, either because the land sold or through estimation. Comparable 1 was developed and improved as a Home Depot store in 2007. Home Depot as tenant entered into a contract with an initial period of 10 years. The ground rent was $1,000,000 under triple net terms. This translates to a rental rate of $2.15 per square foot of net land area. We have estimated the land value at the time of execution of the lease agreement to be $25 per square foot or $11,637,375. As such the overall capitalization rate (OAR) for the ground lease is 8.59%. Page 136 Comparable 2 is a site which contained 177,752 square feet of net land area. The value of this site was estimated to be $20 per square foot, or $3,555,040. The ground rent for the lease and development of this site into two restaurant operations, as of 2009, was $324,500 or $1.83 per square foot of land. The OAR for the ground lease is 9.13%. Comparable 3 was developed and improved with a TD bank branch as of 2010/2011. The annual rent for the ground lease is $286,230 under triple net terms, or $8.49 per square foot of net land area. The land was purchased in 2010 for $3,591,000. The OAR for the ground lease is 7.97%. Comparable 4 contains 46,650 square feet of net land area. It was offered in the open market as vacant land for $1,200,000 as a sale or for lease for $100,000 under triple net terms. It sold for the asking price on 2016 or $2.14 per square foot of net land area. Applying the asking rental figure to the actual sales price results in an OAR of 8.33% Comparable 5 consists of a portion of a property located in the Salvation Army site located in Sunset Drive. The site in question contains 66,804 square feet of vacant land which was leased to a school. The land value was allocated to the site by an appraisal conducted on the entire property. The reported OAR is 8%. This rental rate and OAR were negotiated as of 2017 but was not finally executed; there was however a meeting of the minds as of that moment. Comparable 6 consists of an irregular shape property which was a portion of a larger purchase with multiple parcels and recordation data. This tract was packaged with a complete set of plans for a 93- unit hotel at an asking price of $21,500 per unit or $1,995,000. The land rental rate is $5,000 per month or $60,000. At the purchase price the OAR is 8.6%. While at the packaged sales price — 2nd generation — the rate is 3%. The range of rates indicated by this data set is from about 7.3% to 9%. The leases are for periods usually of ten years with options for the tenant to renew, with periodic rent increases to recognize changing values. Based on the market information, an 8% rate would be reasonable to calculate the market rent of the subject land. We have concluded on a rent rate of 8% to calculate the subject rent rate. In the application of direct capitalization to arrive at market rent from land value (Rent = Rate X Value) requires implementation of the following steps: • The market value of the land (fee simple) is estimated. This has been accomplished and reported earlier under the heading of Sales Comparison Approach (Land Valuation). • A market land capitalization rate is extracted from market rent data and market sales data as reported above in this section. • The subject's estimated land market value is multiplied by the land capitalization rate (market - derived) to arrive at an indication of its market rent. This is simply an algebraic procedure. Market Rent Estimate The purpose of this valuation report is to estimate a current market rent for the subject site. When utilizing direct capitalization to estimate an indication of market rent, the formula is a derivation of Value = Income/Rate. The formula for direct capitalization which applies in estimating market rent for Page 137 the subject property is in fact Income = Rate X Value. We previously focused the discussion on this particular subject matter, with the intent of concluding upon a land capitalization rate. The various manners discussed and within which we attempted to resolve this appraisal problem is summarized in the following table. Range 7.30% 9.00% Conclusion 8.00% The market rent for the subject site is expressed as a percentage return on the fee simple value of the land. Estimation of that rate appears reasonable at 8.00% for the subject property in view of its location and physical characteristics of the site. We have applied, therefore, an 8% capitalization rate to the estimated fee value of the subject land to determine market rent. Value of Subject Land - $370,000 Return Rate - 8.00% Market Rent - $29,600 Market Rent / Sq. Ft. $4.74 Based upon the preceding information, it is the appraiser's opinion that the market rental rate for the subject should be $29,600 annually. This translated into monthly payments of $2,467. It results in a rental rate of $4.74 per square foot. This application and result are considered significant because it is based on the value of land immediately competitive with the subject property. Direct Rental Comparison As noted above land rent valuation can involve several possible methods, another one is the direct rental comparison. This technique had been analyzed through two prisms: the private and public sectors. Private Sector As discussed earlier the request to establish market rent for the subject property given its location, physical characteristics and proposed use is somewhat atypical. We attempted to search through our data sources rental rates for open air space used for patron seating in an outside cafe environment. We were not successful in identifying such products in the open market. It is not that such products do not exist — on the contrary in South Florida it is rather common — it is that rental rates data for open space areas are not readily available in the market. We mentioned above that in fact it is often the case that in privately owned and operated shopping centers, some limited sections of the center's walkways are used by retail restaurant tenants for outdoor seating. We researched this particular arrangement in that it was presumed to be comparable to the subject property's propose use. It was discovered that such spaces, which are generally along walkways in front of the linear footage of the rented retail stores, used for open air outdoor seating, are conceived by restaurateurs as part of their demised premises. In other words, part of their rented space. We have interviewed various operators and landlord of such facilities and Page 138 in general terms landlords agree to such arrangements if it would strengthen the tenant's business concern. We were able to confirm this arrangement through the following noted examples. This operation is that of a Shula's Burgers. Part of the walkway space in front of their retail space is used for outside seating, where tables and chairs are place. This space according to the manager is part of their rental arrangement and is included with the rent. No additional payments are made to the landlord for the outdoor seating and eating area. 12311 South Dixie Highway, Pinecrest, Florida. Another business that utilizes portions of the walkway — which in this case is more like a covered terrace provided via architectural design — that is part of a privately -owned shopping center, in front of the tenant's occupied retail space for seating is the Hookah Village lounge located at 9457 SW Miller Drive (SW 56 Street). This arrangement is in full agreement with the landlord, who does not charge additional rent for the outdoor seating space. A third and final example, illustrated in the two photos above, consist of a mixed -use complex located at 8100 SW 81 Drive. This complex consists of both retail and office space. There is an area in the retail space that faces a moderately traveled roadway; SW 81 Drive. This space has been traditionally occupied by two retail operators catering to food service patronage both local and captive to the complex; one cafeteria and one restaurant. Both operations share spaces that are either covered walkway space or open space for seating. It is known to the appraisers that one operator of these two spaces reportedly did not pay additional rent for the use for seating of the open-air areas but was included in demised premises under lease and in the rent. Our efforts to obtain information as to rental arrangements for the use of walkway space in private properties like in shopping centers such as those described above — for seating, dinning or lounging - proved that use of said space is generally allowed without requirements of additional rents. It is conceived as part of the space rented in terms of the occupied, air-conditioned space under lease. This conclusion was derived based on conversations with both tenants and landlords. It illustrates Page 139 however the difficulty in establishing market rent for a property like the subject, which is not attached to a retail space under air-conditioned and it is usable land. Public Right -of -Ways A survey was undertaken of open space used by retail operations, most notably by restauranteurs for seating and dinning, along public right-of-ways. It is important to note that the most readily available information on rates for open outdoor seating was obtained from the rental of right-of-ways by operators/landlords of abutting retail air-conditioned space, from governmental entities with jurisdiction. Our research was as broad as possible; throughout South Florida. This is because some local governmental entities were very sophisticated about this subject matter — presumably due to demand — whereas others have either regulations but do not charge rental fees only nominal application fees, the regulatory process is very obtuse and/or specific for each location and is difficult to calculated rental fees, or simply no regulations or process exist over this issue. Some of those municipalities include the Town of Cutler Bay, the Town of Palmetto Bay, the City of North Miami and The City of North Miami. Those that were found to be most straightforward were collected and reported in the table below. Area Districts Source Rent/Ft2 Coral Gables Miracle Mile & Giralda Sidewalk Cafe Open -Air Dinning Manual $15.00 South Miami $55/seat & $520/table Application for Outdoor Seating/Fee Schedule City of Miami Miami Beach Surfside Lauderdale/Sea* Delray Beach 20* ft2 x 4 = 80 ft2; Not Specified Ocean Drive/Lincoln Road Not Specified $1.50/ft2/Monthx12 = $18.00 Not Specified $65 x 4 + 520 = $780; $780 + 80 ft2 = $9.75 Code of Ordinance, Sec. 54-224 Code of Conduct/Ordinance 2008-3601 Code of Ordinance 18-90 to 93 Sea Sidewalk Cafe Application Code Enforcement Section 6.3.3 $9.75 $11.50 $25.00 $15.00 $18.00 $4.75 * 20 square feet is the space noted in specialized source publications of the restaurant field as the space needed to be allocated per each person to sit in a table as well as space to walkabout without interruptions for both patrons and servers. This figure allows calculations of seating capacity within a given space. Thus, the space required for four persons and one table is 80 square feet. Lauderdale by the Sea" The information gathered was obtained primarily through governmental promulgation by each of the noted municipalities for the regulation of such activities, brochures, or through conversation with municipal representatives with knowledge of this subject matter. Most of the information provided was based on the annual rental of square feet of right-of-way. One of the most sophisticated regulatory operations was that of the City of Coral Gables which has its own Sidewalk Cafe Open -Air Dinning Manual. Some required calculations that could be readily understood and subsequently reported as illustrated in the table above. Once gathered, we were then primarily concerned with testing the accuracy of this information. The photograph to the left is of a restaurant operation known as Clutch Burger. It is located in 146 Giralda Avenue in Coral Gables. Giralda Avenue has been recently closed to automobile traffic and converted into a pedestrian plaza. The outdoor seating is regulated by the City of Coral Gables and the rate is $15 per square foot of right- of-way, or $6,000 per year. The outside space Page 140 rented is rather small, about 400 square feet. We have information on the rental of the air-conditioned space which is reported to be $60 per square foot under triple net terms. This is notable only because the outdoor seating space is rented for 25% of the inside air-conditioned retail space. Information was obtained through management. Information was obtained through management. PokeBao is the restaurant operation in the photograph to the left. It is located in 153 Giralda Avenue in Coral Gables. The sidewalk cafe space is regulated by the City of Coral Gables. Information regarding the rental rate for the interior space was not made available. The rental rate for the outdoor space was $15 per square foot of right-of-way. Again, the outside space rented is small, approximately 400 square feet. The photograph to the left is of a vacant space offered for lease. It is also located in Coral Gables at 120 Giralda Avenue. The listing agent was contacted and reported that the asking rent for the retail space — interior air-conditioned — was $58 per square foot under triple net terms. We inquired as to the rental rate for the outdoor space and were told that that arrangement had to be made with the City of Coral Gables both in terms of space and rates, which fits our findings about this type of operations. Presuming a rental rate for the outdoor space under similar terms as reported, that rate is 25.9% of the inside air- conditioned space. Open air space available for seating in public right-of-ways primarily in front of the linear footage of a restaurant or other storefront operation - the air-conditioned spaced leased by private owners of retail properties or shopping centers — can and are rented by the governmental entity with jurisdiction. It appears that this activity is driven by demand not necessarily just by the presence of sidewalks in front of leased retail space. It was our impression that some markets, again apparently driven by demand — augmented by tourism - were much more sophisticated as to the subject matter of renting right-of-way spaces for restaurant seating. This was illustrated in the level of regulations and requirements involved as well as the rental rates. As such we considered Coral Gables in that vein. Other markets, surprisingly, in terms of regulatory oversight were either silent or were not up to speed on this subject matter. We found that such small town or municipalities like Palmetto Bay or Cutler Bay in the south did not appear to have much in their codes or operational guidelines on the subject matter of renting right-of-way space for outdoor seating. Similarly, and closer to the area of the subject property, the same applied to North Miami and North Miami Beach. Among those municipalities that we were able to identify regulations as to the use of right-of-ways for outdoor seating connected to restaurant operations, in some instances we were able to also obtain Page 141 rentals rates. Most were straight forward in term of rent per square foot of right-of-way, while others rented these areas in less direct fashion charging per chair and table. In the latter case we were able, with industry standards, to convert such rates per square footage. These rates range from $4.75 to $25 per square foot of right-of-way. Again, it is our impression that these rates depend on demand and likely tourism. Thus, such areas known for high demand and tourism like Miami Beach are able to rent right-of-way space at $25 per square foot. Coincidentally, retail space say in Ocean Drive can be as high as $120 per square foot under triple net terms for retail air-conditioned space by the private sector. The rental of right-of-way square footage is 20.8% of the retail air-conditioned space. This pattern was noted earlier in our discussion through other comparable data. Another point to be made based on observations and direct data gathered, these spaces that are right-of-ways rented for outside seating are generally small ranging from 400 to 1,000 square feet of area. The subject property is located in an area — Little River - where pursuant to our market area description and analysis illustrates dual or contradictory characteristics. The area's demographic data versus indications of neighborhood gentrification. As such in terms of demand and tourism we would categorize the market as fair to average at this time; coinciding in one aspect with its up and coming image. In term of size we have reported the subject property to contain 6,295 square feet of net land area. Which is at first glance larger than any data we have been able to identify under rental arrangements for outside seating in right-of-ways. It is the appraisers' conclusion through this exercise, and based upon the preceding information, that the market rental rate for the subject through direct rental comparison should fluctuate towards the lower end of the right-of-way rental rate or $4.75 per square foot of net land area. This is due to the two issues noted immediately above. Our conclusion on rental rate translates into $29,900 annually, or $2,492 per month. Rent Extraction, Allocation and Residual Method Applications Land rent valuation can involve other methods. In this application we have combined the techniques of three methods; rent extraction, allocation and residual applications. We engaged in a survey of rental rates for typical and traditional air-conditioned restaurant space. Primarily it was attempted to restrict our search from within the immediate market area of the subject property and found little if any information from our sources of data specifically for restaurant uses. We focused on open market information in this exercise. Secondly, we searched for data in a broader area where we obtained information from northern parts of Miami Dade County along similar latitudes as the subject property if not to the north, as well as in other competitive neighborhoods within the City of Miami also in the north. Our attempt was to focus specifically on restaurant uses. The results of our investigation are presented in the table on the following page. The table presented in the following page is a typical market rent analysis of restaurant rates for air- conditioned retail space either in shopping centers or free-standing buildings. It reports the location, Page 142 the size of the retail space, terms of the lease arrangements, and finally - and most significantly - the rental rates. No Address Restaurant Ft2 Contract Terms Date Rent 1 19701 NW 37 Ave 2,100 N/A NNN Oct-19 $40.00 2 4078 NW 167 St 2,000 N/A MG May-19 $24.00 3 18380 NW 7 Ave 2,500 N/A NNN Jan-19 $25.00 4 2846 Palm Ave 3,669 Oct-21 MG Oct-18 $19.62 5 1911-15 NW Miami Ct 3,677 3 Yrs NNN Oct-18 $24.00 6 7490 NW 25 St 2,729 N/A NNN Sep-18 $48.00 7 18361 NW 27 Ave 2,050 2 Yrs NNN Jun-18 $17.50 8 2190 NW 183 St 4,486 N/A NNN May-18 $30.00 9 1601 NE 123 St 1,200 1 Yr MG Jun-17 $50.00 10 19801 NW 27 Ave 1,200 N/A NNN Jun-17 $45.00 11 2093 Palm Ave 2,298 5 Yrs NNN Mar-17 $22.00 12 4705 NW 183 St 2,160 3 Yrs NNN Feb-17 $16.00 The table above reports that for restaurant space ranging in size from 1,200 square feet to 4,486 square feet, the rental rates range from $16 to $48 per square foot, generally under triple net terms. The rates are dependent on size but most importantly by location. As such we find a rental comparable - Rental 6 - in the Doral market area for a free-standing restaurant building which went under lease in September 2018 for $48 per square foot. Conversely it is noted that a space within a multiple tenancy shopping center in Miami Gardens leased for $16 per square foot. These group of rental rate data provides indicators of central tendency at $30 per square foot in the average, with a median of $24.50. This presentation would be enough upon analysis to conclude on a market rental rate for the location of the subject property for air-conditioned restaurant space. However, in this valuation that is insufficient to address the appraisal problem. Based on industry data we note that in a typical retail air-conditioned space approximately 60% of the space is for patrons and 40% is for kitchen, storage and prep areas. The table below repeats some of the data presented above but calculates the dinning square footage based on 60% of the demised premises and calculates the dinning space rent separate from the total rent. We have thus isolated the total annual rent allocated to the dining space at the rental rate reported for each comparable. No Address Restaurant Ft2 1 19701 NW 37 Ave 2,100 2 4078 NW 167 St 2,000 3 18380 NW 7 Ave 2,500 4 2846 Palm Ave 3,669 5 1911-15 NW Miami Ct 3,677 6 7490 NW 25 St 2,729 7 18361 NW 27 Ave 2,050 8 2190 NW 183 St 4,486 9 1601 NE 123 St 1,200 10 19801 NW 27 Ave 1,200 11 2093 Palm Ave 2,298 12 4705 NW 183 St 2,160 Dining Ft2 1,260 1,200 1,500 2,201 2,206 1,637 1,230 2,692 720 720 1,379 1,296 Dining Rent $50,400 28,800 37,500 43,191 52,949 78,595 21,525 80,748 36,000 32,400 30,334 20,736 Page 143 The following table is a restatement of data noted earlier in the direct rental comparison method above. Address 146 Giralda Avenue 120 Giralda Avenue Ocean Drive Interior Rent $60 $58 $120 ROW Rent $15 $15 $25 ROW/Interior 25.00% 25.86% 20.83% From the above information obtained from the market, the rates for the use of right-of-way space for outdoor seating is equivalent of 20% to 25% of the rental rates for retail space under air-conditioning. This relationship may in fact indicate how right-of-way rates are established; as a percentage of the market retail rents. In any case this relationship provides a useful indication as to differentiate the rental rate for open outdoor space. The table below repeats some of the data presented above but now calculates, from the total annual rent allocated to the dinning space, based on 25% of the former - the differential for open space rates for right-of-ways - the rent as if outdoor space. In other words, we have thus converted the rent for dining space into rent for outdoor space; dining space converted as if outdoor space. No Address 1 19701 NW 37 Ave 2 4078 NW 167 St 3 18380 NW 7 Ave 4 2846 Palm Ave 5 1911-15 NW Miami Ct 6 7490 NW 25 St 7 18361 NW 27 Ave 8 2190 NW 183 St 9 1601 NE 123 St 10 19801 NW 27 Ave 11 2093 Palm Ave 12 4705 NW 183 St Dining Ft2 1,260 1,200 1,500 2,201 2,206 1,637 1,230 2,692 720 720 1,379 1,296 Dining Rent $50,400 28,800 37,500 43,191 52,949 78,595 21,525 80,748 36,000 32,400 30,334 20,736 Outdoor Rent $12,600 7,200 9,375 10,798 13,237 19,649 5,381 20,187 9,000 8,100 7,583 5,184 Outdoor Rent Ft2 $10.00 6.00 6.25 4.91 6.00 12.00 4.38 7.50 12.50 11.25 5.50 4.00 This analysis is based on the available data obtained from the market. It stems from market rental rates available for the occupancy of retail space for restaurants, considered competitive to the subject property's location, and from the only rates readily available for the rental of open outdoor seating, namely right-of-ways. We have furthermore reported pursuant to the rationale described heretofore the rental rates per square foot for the dinning space converted into outdoor space. These rates range from $4 per square foot to as high as $12.50. There appears to be an inverse relationship between size and price, to some degree. Some of the highest rates reported are for smaller spaces, while some of the lower rates reported are for the larger spaces. Although none of the spaces reported from among this set of data is close to the subject in size, it is reasonable to concluded on an indication of market rent pursuant to this methodology towards the lower end of the rental rate range. We have arraigned the data reported in the table on the following page from smallest to largest in size. The relationship mentioned with some exceptions is provided therein. Page 144 No Address Dining Ft2 Outdoor Rent Ft2 9 1601 NE 123 St 720 $12.50 10 19801 NW 27 Ave 720 11.25 2 4078 NW 167 St 1,200 6.00 7 18361 NW 27 Ave 1,230 4.38 1 19701 NW 37 Ave 1,260 10.00 12 4705 NW 183 St 1,296 4.00 11 2093 Palm Ave 1,379 5.50 3 18380 NW 7 Ave 1,500 6.25 6 7490 NW 25 St 1,637 12.00 4 2846 Palm Ave 2,201 4.91 5 1911-15 NW Miami Ct 2,206 6.00 8 2190 NW 183 St 2,692 7.50 It is the appraisers' conclusion through this exercise, and based upon the preceding information, that the market rental rate for the subject through a compilation of various methodologies - rent extraction, allocation and residual - that in view of the subject property's net land area it is reasonable to concluded on an indication of market rent towards the lower end of the rental rate range or $4.91 per square foot of net land area. This conclusion is based on Rental 4, one of the largest spaces reported and located in an overall competitive area. It is a free-standing building with a land to building ratio of 3.4. Rental 5 is in the area of Wynwood considered superior in location. Finally, Rental 8 the largest in size, is a free-standing building with an atypical land to building ratio of 10. This conclusion as to market rent via a compilation of methodologies equals annually to $30,900 annually, or $2,575 per month. Our analysis of rental rates specifically for restaurant uses were not available from the open market as noted earlier, notwithstanding our research resulted in rental rates for retail space - not specific to restaurants. These are presented below and were quoted under terms atypical for the rental of restaurant spaces which is triple net. No Address Retail Ft2 Terms Rent Cvrt NNN D-Ft2 D-Rent 0-Rent 0-Rent Ft2 3 7120 Biscayne 800 NNN $40.00 $0.00 $40.00 480 $19,200 $4,800 $10.00 1 7316 NE 2 Ave 1,200 MG+UtI 24.00 1.50 22.50 720 16,200 4,050 5.63 2 355 NE 79 St 1,700 MG 18.00 2.50 15.50 1,020 15,810 3,953 3.88 5 7320 Biscayne 3,000 MG 42.00 2.50 39.50 1,800 71,100 17,775 9.88 4 3550 NE 79 St 4,006 MG 18.00 2.50 15.50 2,404 37,256 9,314 3.88 The above table of retail space in the immediate area of Little River illustrates similar results as those of the restaurant rental data presented above. These rentals spaces have been converted into triple net terms, the dinning space has been separated from the total space, the rent for the dinning space has been reported, the rent for the open spaces differential has been calculated and the outside rent has been extracted both annually and on a per square foot of open space. These rates range from $3.88 to $10 per square foot. They illustrate generally an inverse relationship between size and price. Some of the highest rates reported are for smaller spaces, while some of the lower rates reported are for the larger spaces. This presentation of local data from the immediate area of Little Rive serves to support our conclusion above. Page 1 45 RECONCILIATION AND FINAL VALUE ESTIMATE In this section of the report, the appraiser(s) bring together all of the data gathered during the appraisal, culminating with their opinion of the most probable value. It is in this section that they summarize their thoughts about the property to reconcile the value indicators into a final conclusion. Your attention is directed to the following which summarizes the value estimates presented throughout this report. The value of the land was arrived by the use of the sales comparison approach to estimate the value of land. The land valuation is reported in the table below. MARKET VALUE CONCLUSIONS LValuation Methodology As Is Land Value $370,000 Reconciled Value $370,000 The valuation of land rent can involve several possible methods of valuation. We have in this case undertaken three: (1) direct capitalization, (2) direct rental comparison, and (3) rental extraction, allocation, and rent residual methods — a compilation. Each approach was considered appropriate and lead to credible results. In fact, it was considered significantly important that their results supported one another and thereby strengthened any perceived weakness. Notwithstanding in the case of the subject property the most appropriate application is considered to be through the use of direct capitalization or ground rent capitalization. Our results through this methodology are presented in the table below: Direct Capitalization Method Value of Subject Land - $370,000 Return Rate - 8.00% Market Rent - $29,600 Market Rent / Sq. Ft. $4.74 Market Rent Monthly $,2,467 Our results via the other two methodologies used are presented in the following tables: Direct Rental Comparison Market Rent - $29,900 Market Rent / Sq. Ft. $4.75 Market Rent Monthly $2,492 Page 146 Rent Extraction, Allocation and Residual Method Applications Market Rent - $30,900 Market Rent / Sq. Ft. $4.91 Market Rent Monthly $2,575 Pursuant to our applications of the above noted methodologies we have concluded on a market rent value for the subject property for the prescribed use of outdoor seating, under triple net term, to be $30,000 per year or $2,500 on a monthly basis. Please refer to the table below: MARKET RENT CONCLUSIONS Market Rent - Annual $30,000 Market Rent - Monthly $2,500 Exposure Time - It is reasonable to conclude that for the subject property to sell at a price equal to our market value estimate on the appraisal date, it would have been exposed on the market for a period of 9 to 12 months. Marketing a property like the subject is not a typical real estate transaction, especially when the use is prescribed as reported. For such a property, either the adjoining owner contacts the entity that owns the property to inquire as to its availability or the owning entity contacts the adjacent owner to inquire as to its interest. In either case, no marketing period as identified with typical market transactions was known. Our conclusion is considered a reasoned estimate based on availability and potential interest, as noted. Page 1 47 ADDENDA Subject Photoqraphs View of Subject Property from NE 80th Terrace Looking Northeast View of Subject Property from NE 2nd Avenue Looking West Page 148 Subject Photographs View of Subject Property from NE 2nd Avenue and 80th Terrace Looking Northwest Interior View of Subject Property Page 149 Subject Photographs West View of NE 80th Terrace East View of NE 80th Terrace with Subject Property to the Left Page 150 Regional Analysis - Economic Overview and Outlook FLORIDA - GEOGRAPHY The most southeastern state in the union is Florida; it juts out as a peninsula thus becoming a noticeable appendage to the United States mainland. Florida sits on the Floridian plateau, a platform that is 500 miles long and 250 to 400 miles wide. The Floridian Plateau has a core of metamorphic rocks buried under 4,000 feet of sedimentary rocks. It separates the deep waters of the Atlantic Ocean from the deep waters of the Gulf of Mexico. The Floridian Plateau has existed for millions of years where at times it has been either dry land or covered by shallow waters. This platform is distinguished as one of the most stable areas in the world. Therefore Florida is almost void of seismic activity. Florida's state boundaries are Georgia, directly to the north, and Alabama, to the northeast. The Atlantic Ocean and the Gulf of Mexico serve as natural boundaries to the east and west respectively. The state of Florida covers an area of 58,677 square miles of which 4,424 are water. Right in the middle of the state is Lake Okeechobee the largest freshwater lake located entirely in one state in forty-eight adjoining states. Recently the State Bureau of Geology discovered land elevated over 345 feet in Walton County thus making this the highest known elevation in the state. Florida is located in the Tropic of Cancer and is thus blessed with a great climate. Because no part of Florida is located more than 70 miles from salt water it benefits from the ocean breeze. One of these breezes is the Trade Winds which is swept from the warm Atlantic ocean. The Gulfstream's water is also a prevailing factor in Florida's climate. The Gulfstream can best be described as an underwater river that runs from the island of Cuba through the southeastern part of the United States. Florida's weather, long known as a haven for northerners in those cold winter months, is seldom out of the seventy to eighty degree range. The warmest months of July and August sometimes make southern Florida reach the ninety degree mark. Because of the weather, most Florida homes are equipped with air-conditioning to alleviate the hotter, humid days. Rain is plentiful in this peninsular state. The rain falls mainly in a four month period from June through September. These months are referred to as the rainy season. During these months rain can fall at any time from a previously clear sky. Even though at times days may start cloudy, it is seldom that Florida has a day without sunny skies. Because of the annual abundance of sunny days, Florida is known as the "Sunshine State". Unfortunately Florida is susceptible to some of nature's destructive powers. Florida has sometimes fallen prey to tornadoes tropical storms. The latter sometimes reaches hurricane proportion. Although warning of upcoming hurricanes is given with sufficient time to protect human life, it is sometimes impossible to make structures impervious to the high winds. The last major storm to hit Florida was Hurricane Andrew. Because of the damaged caused by its nearly 200 mile an hour winds, building codes were made stricter for family dwellings. Page 151 Florida's topography is uncomplicated. It is mostly a flat state with few variations. For the most part Florida is all coastal land. It is difficult to ignore the ocean's influence even in the most inland parts of the state. The many lakes and inlets make the state an ideal water sport state. In describing Florida's characteristics one cannot ignore its rich marine resources. The coral reefs that can be seen just minutes off the coast are considered natural wonders unparalleled. The estuaries that occur when salt water and fresh water meet thus forming a habitat for many creatures are magnificent. Florida is also home for various species of bird and plant life that are indigenous to this state. If there is truly a state that is nature friendly, it is Florida. SOUTHEAST FLORIDA Southeast Florida can be divided into two district topographical areas: (1) the Atlantic coastal ridge, and (2) the Everglades. The Atlantic coastal ridge is where Florida's major cities are situated. These cities include Ft. Lauderdale, West Palm Beach and, its best known city Miami. West of these major cities are bedroom communities, some of which are incorporated, such as Coral Spring, Weston and Pembroke Pines in Broward County, and Doral, Hialeah, and Hialeah Gardens, as well as unincorporated areas such as Kendall, in Miami -Dade County. Further west of these areas, in both Broward and Miami -Dade, is the Everglades. The Everglades which is now considered a national park has been the focus of much development in the past. A considerable amount of Florida's dry -land has been taken away from the swampy Everglades region. The Everglades has been eroding through many factors but its recession is predominantly due to human intervention. It has been known, only recently, that the depletion of this area may turn out to be very harmful to Florida's future. The Everglade's conservation is being very closely monitored by scientist and politicians alike. Currently great strides are being made to restore The Everglades. There are majors programs under way to acquired huge swabs of land, as well as specific engineering projects to increase water flows. MIAMI-DADE — (Geography — Climate) Miami Dade County is physically the largest county in the state of Florida. It is situated in the southeastern -most corner of the state. Its boundaries hold 1,955 square miles of land, and are bordered to the east by the Atlantic Ocean, to the west by Florida Everglades, to the north by Broward County and Monroe County to the south. Miami Dade County has 84 miles of Atlantic coastline, sixty- seven square miles of inland water areas, and nearly 633 thousand acres of protected national, state, and local community parks. Miami Dade County has a subtropical climate, with an average temperature of seventy-five degrees, about 60 inches of rainfall annually, relative humidity ranging from 80% in the morning to 60% in the early afternoon, and annual sunshine probability of 68%. Page 152 OVERVIEW - (Political — Social — Economic) Miami -Dade County consists of 33 municipalities and a vast unincorporated area. Each municipality has its own government and provides city services, such as police and zoning protection. The three largest cites in Miami -Dade County are Miami (365,204), Hialeah (211,201) and Miami Beach (94,012). The county's economy has become increasingly more diversified. The Miami -Dade County economy has a gross county product exceeding $80 billion. A traditional major economic sector driving the local economy is the tourism industry. Another major sector of the area's economic vitality is closely linked to Latin America and the Caribbean Basin. It is estimated that over 30% of the labor force in the Miami Dade County Area is directly involved with international trade and commerce. Miami -Dade County is the Business Center of the Americas, attracting businesses worldwide that choose to open their Latin American headquarters in South Florida. There are over 1,350 multinational corporations established in South Florida. Miami Dade County has a disproportional number of Edge Act Banks when compared to the rest of the country. Florida's increasing trade with Latin America and Europe helps to account for the large number of Edge Banks in Dade County. Wholesale and retail trade and services is also one of Miami-Dade's largest business sectors. Manufacturing is strongly promoted and is another important component of the area's economy. As Florida's number one manufacturing county, both in employment and number of establishments, Miami Dade County is home to manufacturers producing a wide array of products. The greatest concentration is in the apparel, printing and publishing and medical industries. More than 1.1 million people make up Miami -Dade County's labor force. The employment growth sectors in Miami -Dade County include professional and business services, health services, wholesale trade, and construction. In addition to the tourism industry, another fact that accounts for the local employment picture is the continued expansion of the Latin American economies is foremost. This has led to record levels of international trade, fueling the expansion of Miami-Dade's wholesale trade, transportation and financial activities. Also, Miami is succeeding in becoming a premiere global leisure travel destination and as the music and entertainment capital of Latin America. The Miami destination has enjoyed moderate growth with strong increases in room rates and occupancy levels at hotels and motels. This factor stimulates retail trade services and other consumer related activities. Page 153 Demographic Data The U.S. Office of Management and Budget (OMB) announced a number of new metropolitan statistical areas (MSA) and divisions In June 2003. The new South Florida metropolitan statistical area includes Broward, Miami -Dade and Palm Beach counties. The name of this new MSA is Miami - Fort Lauderdale -Miami Beach. The new Miami -Fort Lauderdale -Miami Beach MSA has over 5.2 million people. The Miami -Fort Lauderdale -Miami Beach MSA population ranks as the fifth largest MSA in the United States, trailing only Los Angeles, New York, Chicago and Philadelphia. Miami -Dade County is a microcosm of America with a large diversity of languages, accents, foods and cultures. Miami -Dade has the highest percentage of Hispanics of any large county in the nation, outstripping even Bexar County, Texas - home to San Antonio - which took the title a decade ago. Immigrants, mostly racial and ethnic minorities, have streamed into Miami -Dade over the past 40 years. As of 2010 the total population was reported to be 2,496,435, a growth of nearly 11 % since 2000, or slightly over 1% per year. The County's growth is mostly because of immigration. That makes Miami -Dade the second-largest county on the East Coast. The population of this culturally diverse community is 21 percent non -Hispanic white, 21.6 percent black, and 57 percent Hispanic. While the Hispanic culture in Miami -Dade has traditionally been of Cuban background, significant changes have occurred. While Cubans remain by far the largest group, they are increasingly living alongside other Latin Americans. Since 1990, in Miami -Dade, immigrants from Paraguay increased 161 percent; Venezuelans were up by 119 percent; and Mexicans 65 percent. By comparison, Miami-Dade's Cuban population grew 15 percent. All told, the number of non -Cuban Hispanics in Miami -Dade is now roughly equal to the number of those with Cuban ancestry. Changes have affected South Florida's coastal retirement communities, turning them into family cities, as the median age dropped and the number of families with children rose sharply. The push to the suburbs continues as once isolated edges of Miami -Dade become sprawling suburbs in areas such as Aventura in the northeast and West Kendall and Doral to the West. Cost of living The cost of living in Miami -Dade County is below that of many other major cities such as Manhattan, Boston, Los Angeles, Washington, Philadelphia, and San Jose. Miami's sales tax is below the national average and there is no state income tax and no local income tax. Labor and Education Miami -Dade County's workforce - its size, diversity and range of skills - is the heartbeat of its economy. There are several resources for workforce training. Page 154 Miami -Dade County Public Schools offer customized training for businesses at minimal cost. Miami - Dade County has the fourth largest public school district in the United States, with more than 364,000 students. More than 80% of graduating seniors continue their education, and approximately 119,656 residents pursue vocational and adult education studies. Miami -Dade College (MDC) offers on -site training for businesses in the following areas: management, supervision, computers, foreign trade, professional development and corporate training, vocational and occupational training certificate programs and Associate degree programs. Miami -Dade County has many top private and public universities and the nation's largest community college. Approximately 113,509 college students are studying at institutions of higher learning. Tourism/Visitor Industry More than 10 million Europeans, Latin Americans, North Americans, and Asians flock to Miami -Dade to savor the region's 15 miles of pristine beaches, and vibrant nightlife. The visitor industry is the county's number one moneymaker, employing approximately 14 percent of Miami -Dade County's workforce, and injecting $13.5 billion into the local economy each year. Countering the nationwide trend, Miami-Dade's tourist figures and dollars continue to rise. International Trade Miami -Dade stands at the intersection of the Americas and the world, and is the meeting ground for more than 1,000 multinational corporations including Apple, Oracle Corp., IBM, Clorox, Burger King and Porsche. Miami-Dade's enviable proximity to Latin America and the Caribbean has made it the uncontested center of international trade with those pivotal regions. High percentages of all U.S. trade with Central America, the Caribbean and South America flowed through the Miami Customs District. The Miami Customs District is made up of all Florida seaports and airports south of Tampa. Miami International Airport, the Port of Miami and the city's highways and railways make up the infrastructure that feeds the region's thriving international trade. The top exports flowing out of the Miami Customs District were electrical and electronic machinery and equipment, aircraft parts and medical equipment, bound for Latin American or Caribbean countries. Top imports include accessories and apparel. Leisure Miami -Dade is one of the most multiethnic and multicultural areas in the world, bringing with it the music of the many languages that are spoken here. This is a melting pot in the truest, most wonderful sense of the word - no matter where you come from, you will feel not just accepted, but embraced. Page 155 Leisure opportunities such as year-round sports, entertainment, cultural activities, and shopping are often mentioned as key reasons for being based here. The possibilities are endless — sunning on the white sands along the coast; an airboat ride through the Everglades; taking the kids biking at a waterfront park in Coconut Grove; visiting galleries in Coral Gables or Miami Beach; hitting those unbelievably chic stores in Bal Harbour; a romantic dinner for two; or golfing and fishing. With an average annual temperature of 75 degrees (23 degrees Celsius), a low cost of living, a diverse and welcoming population, wonderful neighborhoods, excellent schools, an endless array of leisure and cultural activities, and easy access to and from Latin America and the Caribbean, it is no surprise that so many call Miami -Dade home. Transportation Miami -Dade County has a comprehensive transportation network, designed to meet the needs of residents, travelers and area businesses. A public mass transportation system, known as the Metrorail is a 20.5 mile elevated rapid transit system. Presently, and nearing completion, a new leg to the Metrorail system is under construction. The Metrorail Extension Project is a 2.4 mile extension that will run from the exiting Earlington Heights station to the Miami Intermodal Center (MIC). At a cost of $506 million, this project will provide connections between the Miami International Airport and rapid transit. The Metromover is a free and convenient way to get around downtown Miami -Dade County. Riding on rubber tires, the automated trains cover a 4.4 mile loop around downtown Miami, the Brickell financial district and Biscayne Bay. Passengers are treated to a scenic view from the elevated height of the single car train as it winds past the business districts. The Metromover connects with the Metrorail at two stations, taking passengers on a 21.5 mile aboveground route northwest to Hialeah and south through Coconout Grove and Coral Gables to Kendall. The extensive Metrobus network connects all corners of the County. Amtrak trains run out of Miami, while the 65 mile Tri-Rail connects Miami International Airport to Hollywood, Fort Lauderdale, Boca Raton and West Palm Beach. With the third highest international passenger traffic in the United States, Miami International Airport is commonly known as the "Hub of the Americas," serving as a vital gateway between the United States and Latin America. More than 100 airlines fly passengers each year. The bustling airport is in the process of billions of dollars in expansion programs to accommodate more passengers. Massive cruise ships leisurely make their way out to the sea from Florida's largest port, the Port of Miami, which saw 3.3 million passengers last year. Approximately 8 million tons of cargo passes through the busy port each year, and a five-year, $171 million capital improvement program has resulted in the renovation of existing structures and facilities and the construction of new ones. Page 156 Authorization to Proceed Request for Appraisal - USPAP Residential Uniform Report - 8034 NE 2nd Avenue Miami, Florida 33138-4404 - Little River Commerce Park Finlay, Monique <FV1Finlayamiamigov.comm> To: Albert Armada <alarmada001©gmail.corn> Cc: "Burns, Mark" <MBurnsmiamigov.com: Hi Albert, Wed, Sep 25, 2019 at 4.04 PM Please proceed with the project. Please advise when you anticipate having the project completed. Thanks in advance. Best regards, Monique Finlay, MBA Quality Control & Financial Modeling Analyst City of Miami Department of Real Estate and Asset Management 444 SW 2 Avenue, 3rd Floor Miami, Florida 33130 Phone: 3D5.416.1432 Facsimile: 305.400.5051 Email: MFinlay c7 miamigov_com Page 157 Appraiser's Qualifications Document Resident of Miami, Dade County, Florida since 1961 State Certified General Real Estate Appraiser, State of Florida (Certificate Number RZ397) Licensed Real Estate Broker, State of Florida Graduate of Miami -Dade Junior College (now Miami -Dade College) — Awarded Associates of Arts degree, 1972 University of Florida, Gainesville, Florida - Awarded Bachelor of Arts, with Honors, in Psychology, 1974 University of Miami, Coral Gables, Florida — Awarded Certificate of Middle Management, 1979 Florida International University — Awarded Master of International Business, 1984 Consultant — Affiliated, as an independent sub -contractor: Gallaher Valuations, Inc (2018 to present) Hedg-peth & Gallaher, Inc (1997 to 2001) Blazejack & Company (1988 to 1989) The Republic Appraisal Company (1986 to 1987) Employment: Armada Appraisal & Consulting Company, Principal/Appraiser/Consultant 1993 to Present City of Miami in various positions, 1977 to 1993, including Property & Lease Manager (1984 to 1993); Acting Assistant Director, Finance Dept (1983 to 1984); Lease Manager (1982 to 1983); Projects Supervisor, Community Development Dept.(1980 to 1982); Administrative Assistant (1979 to 1980); Personnel Office, Human Resources Dept. (1977 to 1979) Miami -Dade County, Program Director/Unit Supervisor, Health & Human Resources (1975 to 1977) State of Florida as Youth Counselor, Dept. of Health & Human Resources (1974 to 1975) Special Magistrate — Miami -Dade County Value Adjustment Board (2008 to 2018) Appraisal Experience: Has participated in appraisals in Miami -Dade, Broward, Monroe and other counties in Florida of various types of residential and commercial properties, including office buildings, shopping centers, apartments, warehouses and developments, partial interests and litigation appraisals. Expert Witness: Qualified as an expert in real estate valuation in Miami -Dade Circuit and Family Courts. Has testified in deposition and in trial in matters of bankruptcy, divorce, deficiency judgments and other issues. Member of: Appraisal Institute, with designations MAI and SRA. Certified Under Continuing Education Program through December 2021 President of South Florida Chapter 2015 Director of South Florida Chapter 2009 to 2016 Former Member of: Certified Commercial Investment Member of the National Association of Realtors (designation of CCIM); relinquished 2016 American Society of Appraisers (Designation ASA, Urban); relinquished 2012 Candidate for Miami Dade County Appraiser, August 2014 Has been a managing member or investor in Miller Ludlam LLC, an owner of retail stores; and 4-B Warehouses, LLC, an owner of multi -tenant warehouses. Page 1 58 APPRAISAL OF MARKET RENT FOR THE PROPERTY LOCATED AT 8034 N.E. 2 AVENUE MIAMI, FLORIDA Prepared For The City of Miami Department of Real Estate and Asset Management 444 S.W. 2 Avenue, Third Floor Miami, Florida 33130 Prepared By Investors Research Associates, Inc. 5730 S.W. 74 Street, Suite 100 South Miami, Florida 33143 DATE OF VALUE November 3, 2019 1 19-2581 investors research associates, inc. 5730 s,w, 74 street, suite 100 south miami, fiorida 33143-5381 telephone 305-665-3407 fax 305-665-4921 December 4, 2019 real estate consultants and appraisers licensed real estate broker Monique Finlay Department of Real Estate and Asset Management City of Miami 444 S.W. 2 Avenue, Third Floor Miami, Florida 33130 Re: Market rent for the property located at 8034 N.E. 2 Avenue, Miami, Florida Dear Ms. Finlay: The attached appraisal is being submitted according to your request. This report contains the results of investigations and analyses made in order to furnish an estimate of the market rent for the property located at 8034 N.E. 2 Avenue and owned by the City of Miami. This appraisal is intended to comply with the following: The Uniform Standards of Professional Appraisal Practice (USPAP), as adopted by the Appraisal Standards Board of the Appraisal Foundation; requirements of the Real Estate Appraisal Board of the Florida Department of Professional Regulation; and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. A Summary of Facts and Conclusions is provided in the front of the report and a Certification of Value appears in the final section. Respectfully submitted, Edward N. Parker, MAI State Certified General Appraiser No. RZ144 Geoffrey D. Heath, MAI State Certified General Appraiser No. RZ1456 2 19-2581 TABLE OF CONTENTS TABLE OF CONTENTS 3 I. SUMMARY OF FACTS AND CONCLUSIONS 5 II. SCOPE OF THE ASSIGNMENT 6 A. IDENTIFICATION OF THE PROPERTY 6 B. PURPOSE AND SCOPE OF THE ASSIGNMENT 6 C. DEFINITION OF MARKET VALUE 7 D. DEFINITION OF MARKET RENT 8 E. PROPERTY RIGHTS APPRAISED 8 F. EFFECTIVE DATE OF VALUE 8 G. INTENDED USE OF THE APPRAISAL 8 H. INTENDED USER OF THE APPRAISAL 8 I. APPRAISERS 8 III. ECONOMIC PERSPECTIVE 9 A. MIAMI-DADE COUNTY OVERVIEW 9 B. THE NEIGHBORHOOD 11 C. COMMERCIAL REAL ESTATE MARKET 13 IV. PROPERTY DESCRIPTION 20 A. OWNERSHIP AND HISTORY 20 B. LOCATION AND ACCESS 20 C. SITE DESCRIPTION 20 D. IMPROVEMENTS 21 E. ZONING AND PLANNING 21 F. ASSESSMENT AND TAXES 23 V. ANALYSIS OF DATA AND VALUE CONCLUSION 24 A. HIGHEST AND BEST USE 24 B. METHODOLOGY 24 C. LAND VALUE 25 D. CONTRIBUTORY VALUE OF SITE IMPROVEMENTS 39 E. MARKET VALUE OF THE APPRAISED PROPERTY 40 F. MARKET RENT OF THE APPRAISED PROPERTY 40 VI. ASSUMPTIONS AND LIMITING CONDITIONS 43 VII. CERTIFICATION 45 QUALIFICATIONS 49 3 19-2581 SUBJECT PROPERTY MKAM Miami -Dade County Basemap NE 215TH ST ® NE OSTFf NW zozNn ST STH ST ��' 1 sik- ammign ®- ; moral Eirirrairmarene aiisieF ismodessugamiza_abc_.,i, mai ingrappippz IMILIBIBMIrsziellatt- 441MIIIMMINIMINitilr -4*Eaaa©r�■��e BialiarlIN. 3La��3y7FiEi Ell ® �r,■■mEa»oliga� I it SBTH ST -12 FAIIINIIHREMI I! F.. NW 33R� iguALI j ��o �W����l ! Illha 2015 Urban De0eleprnent Boundary 2025 Urban Expansion Area Beurndary a —1 Miles 0 1 2 Department of Planning and Zoning 4 19-2581 I. SUMMARY OF FACTS AND CONCLUSIONS The Assignment: Location: To estimate the market rent for the Little River Commerce Park property assuming the lessee will use the property as a public park, with no more than 25 percent of the property in support of lessee commercial activities such as outdoor seating. The northwest corner of N.E. 2 Avenue and N.E. 80 Terrace in the City of Miami. The street address is 8034 N.E. 2 Avenue. Property Owner: City of Miami Description of the Site: A rectangular land parcel containing 6,162 square feet with 51.6 feet of frontage on N.E. 2 Avenue and 122 feet of frontage on N.E. 80 Terrace. Description of Improvements: Public park improvements including concrete patios, walls and walkways; covered gazebo; lighting; flagpole, water fountain and benches; and mature landscaping comprising oak trees, shrubbery and ground cover. The Appraised Property: Little River Commerce Park, a small neighborhood public park owned by the City of Miami. Zoning: CS, Civic Space by the City of Miami Future Land Use Designation: Parks and Recreation Highest and Best Use: Commercial use supportive of outdoor recreation activity as permitted by zoning. Conclusion of Market Rent: $12,600 net annually Date of Value: November 3, 2019 Appraisers: Edward N. Parker, MAI Geoffrey D. Heath, MAI 5 19-2581 II. SCOPE OF THE ASSIGNMENT A. Identification of the Property The appraised property comprises a small public park on the northwest corner of N.E. 2 Avenue and N.E. 80 Terrace in Miami. The street address is 8034 N.E. 2 Avenue. The legal description of the appraised property below has been taken from the survey prepared by John Ibarra & Associates and dated July 29, 2019. LEGAL [SCR#PTJON: COMMENCE AT THE SOUTHWEST CORNER OF TRACT "A", DOBBS BUSINESS CENTER, ACCORDING TO THE PLAT THEREOF AS,RECORDED IN•PLA T BOOK 53, PAGE 73 OF THE PUBLIC RECORDS OF MIAMI-DADE COUNTY, FLORIDA, THENCE N 99°54'53" E, ALONG THE SOUTH LINE OF TRACT'A", A DISTANCE OF 104.99•FEET, TO THE POINT THE BEGINNING, THENCE NORTH, ALONG THE MOST SQUTH•AND EAST LINE OF TRACT "A", A DISTANCE OF 51.60'FEET, THENCE N 89°54'53" E, ALONG THE SOUTH LINE OF TRACT "A", A•DISTANCE OF 122.00 FEET, THENCE SOUTH, A DISTANCE OF 28 64-FEET, ALONG THE WEST RIGHT OF WAY LINE OF NE 2nd AVE, SAID LINE BEING 35 FEET WEST OF CENTER LINE OF NE 2nd AVENUE, TO A POINT OF CURVATURE, SAID'CURVE CONCAVE TO THE NW AND HAV/NGFOR ITS ELEMENTS A RADIUS 25,00 FEETANDA CENTRAL ANGLE OF 89°54'53 , THENCE SOUTHERLY, SOUTHWESTERLY AND WESTERLY FOR AN ARC DISTANCE OF 39.23 FEET TO A POINT OF TANGENCY, THENCE S 99°54'53" W, A DISTANCE OF 97.04 FEE?, ALONG TIME NORTH RIGHT OF WAY LINE OF NE 60th TERRACE, SAID LINE BEING 2.5 FEET • NORTH•OF THE CENTER LINE OF NE 80Nh TERRACE, TO A POINT OF BEGINNING; AND HAVING ±6161.53 SQ.FT. OR J0.1414 ACRES B. Purpose and Scope of the Assignment The purpose of the appraisal is to estimate the market rent of the property described herein assuming the lessee will use and occupy the property as a public park for the enjoyment of the public and the invitees of the lessee. The property may also be used in support of commercial activities (including outdoor seating for food and beverage services) of the lessee. However, in no event shall more than 25 percent of the property be used to support such commercial activities of the lessee. The function of this appraisal is to provide the City with an estimate of market rent for lease negotiation purposes. The scope of the assignment encompasses the following steps performed within the framework of commonly accepted appraisal procedures: 6 19-2581 • Inspected the property being appraised and the surrounding neighborhood and marketplace. • Researched zoning and planning matters relative to the appraised property including use provisions stipulated in the proposed lease of the property. • Gathered and confirmed data on land sale prices and ground rental rates considered relevant to this appraisal. • Reviewed case studies pairing sales of land parcels without restricted use provisions with sales of similar parcels with restricted use due to a number of factors. • Formulated reasonable opinions and judgments based on supply and demand factors, as well as physical and functional considerations relative to the highest and best use of the subject property. • Analyzed these data in order to formulate sound valuation judgments within the framework and application of the appropriate approach to value. C. Definition of Market Value The following definition of market value is provided by the Appraisal Foundation. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. 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 acting in what they consider their own best interest; 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; and 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. 7 19-2581 D. Definition of Market Rent The following definition of market rent was taken from the Dictionary of Real Estate Appraisal. The rental income that a property would most probably command in the open market; indicated by current rents paid and asked for comparable property as of the date of appraisal. E. Property Rights Appraised This appraisal is made with the understanding that the present ownership of the property includes all the rights that may lawfully be held under a fee simple estate. F. Effective Date of Value November 3, 2019 G. Intended Use of the Appraisal The intended use of the appraisal is to provide the client with valuation information to be used in the negotiation of a potential lease of the appraised property. H. Intended User of the Appraisal The intended user of the appraisal is The City of Miami. I. Appraisers Edward N. Parker, MAI Geoffrey D. Heath, MAI 8 19-2581 III. ECONOMIC PERSPECTIVE A. Miami -Dade County Overview Miami -Dade County is divided into 36 municipalities with the largest being the cities of Miami, Hialeah, Miami Beach, North Miami and Coral Gables. It encompasses approximately 1,973 square miles in southeastern Florida. The eastern part of the county is intensely developed and much of the density is concentrated within a few miles of the Atlantic Ocean and Biscayne Bay. Most of the western part of the county is undeveloped or sparsely developed. This area is mostly low-lying, subject to seasonal flooding and serves as the recharge area for South Florida's sole source aquifer. Miami -Dade County appears to have a vast supply of open land for urban expansion. However, the Everglades, the aquifer and other critical environmental conditions effectively have limited the supply of developable land. In addition, the 1985 Florida Growth Management Act made it much more difficult to change zoning and land use patterns. Development now requires a much more costly and time-consuming approval process. The result has been to concentrate new development within existing urbanized areas of the county. Beginning in 2003, Miami -Dade County experienced a period of unprecedented housing construction in all developable areas of the county. From 13,520 new housing units authorized in Miami -Dade County during 2003 activity peaked at 27,212 units authorized in 2005. Reflecting deteriorating economic conditions and significant overbuilding, however, authorizations eased to 16,536 new units in 2006 and plummeted to 4,026 units in 2008 and 2,657 units in 2011. However, local housing markets have since experienced a strong recovery marked by declining unsold inventories, increasing price levels, and increases in new construction activity. New housing unit authorizations in the county have exceeded 10,000 annually since 2013 (10,260 in 2018). Population From 1970 to 1990, Miami -Dade County was one of the fastest growing urban regions in the United States. However, following the double impact of the recession of the early 1990s and Hurricane Andrew in 1992, population growth in the county moderated significantly. After adding almost 40,000 residents annually prior to 2000, population growth has recently eased to below 25,000 new residents annually. The most recent Census data estimates the 2018 population of the county to be 2,752,000. As the county matures and reaches the outer limits of the Urban Development Boundary, population growth has logically shifted north to Broward and Palm Beach Counties. 9 19-2581 An unusually high proportion of Miami -Dade' s growth results from births. Also, the immigrant population is typically youthful. As a result, Miami -Dade has a relatively young population, with about 30 percent of its residents under the age of 25 (compared to 38 percent in Palm Beach County and 28 percent in Broward County). A young and generally less -educated immigrant population contributes to Miami -Dade County's relatively low-income levels. At $49,930 in 2017, the median county household income was below that of both the State of Florida ($52,594) and the United States ($60,336). Employment The general trend in employment within Miami -Dade County over the past five years is illustrated below. Non -Agricultural Employment Trends Miami -Dade County 2014-2018 Industry 2014 2015 2016 2017 2018 Total Nonagricultural Employment 1,104,700 1,135,900 1,169,900 1,191,800 1,190,300 Construction and Mining 39,100 38,500 44,700 47,800 54,400 Manufacturing 38,900 37,200 39,000 43,500 48,800 Transportation and Public Utilities 85,400 89,900 89,600 98,800 98,600 Trade 219,500 227,900 220,500 219,300 217,800 Finance, Insurance and 75,800 79,300 82,500 81,400 80,300 Real Estate Services 507,200 525,300 543,500 558,200 553,000 Government 138,800 137,800 139,100 143,800 138,900 Civilian Labor Force 1,219,400 1,205,839 1,236,680 1,247,900 1,241,200 Unemployment 85,000 69,950 66,780 63,200 50,900 Unemployment Rate 6.5% 5.8% 5.4% 4.5% 4.1% Total county nonagricultural employment in 2018 showed a stabilization after five years of consistent increases. This is a reflection of improving national economic conditions. The trade and service sectors continue to dominate local employment, accounting for approximately 65 percent of 2018's total employment of 1,190,000. Both the manufacturing and construction sectors showed significant increases in 2018, with the remaining sectors showing stabilization. Consistent with national and state trends, Miami -Dade County's unemployment rate has shown steady improvement after peaking at 13.0 percent in 2010. Countywide unemployment was 3.5 percent in August 2019, compared to the state average of 3.3 percent and the national average of 3.7 percent. 10 19-2581 Conclusion Recent population growth and economic activity in the county have clearly moderated from historic levels. The source of past population growth in Miami -Dade County is not especially conductive to economic growth. Miami -Dade County has a higher than average birth rate and a large, low-income immigrant population. Based on historic patterns, the long-term prognosis is more positive. Immigrants to Miami -Dade have proven to be energetic entrepreneurs and most job creating comes from small businesses. The single most significant growth industry in Miami -Dade is international trade, which generates demand for warehouse and distribution space, transportation services, as well as legal and banking services. The strength of this industry is attributable to Miami's largely bilingual population in addition to the area's linkages to Latin America. B. The Neighborhood The appraised property is located within the Little River neighborhood of the City of Miami, approximately six miles to the north of the central business district. This small neighborhood lies in the area to the south of the Little River (for which it is named), west of N.E. 4 Avenue, east of North Miami Avenue and north of N.E. 71 Street. After being annexed by the City of Miami in 1925, Little River evolved into an industrial area. During the 1970's it became an affordable place for Haitian immigrants to live and set up businesses. As a result, most of the Little River neighborhood became known as Little Haiti. Most recently the Little River neighborhood has caught the eye of developers and investors as a more affordable alternative to the pricey nearby neighborhoods of Wynwood and the Design District. These parties have been actively purchasing homes and apartments; upgrading retail plazas and office buildings; and turning warehouses primarily used as storage space and mechanic shops into high -end retail and office spaces. Data compiled by local realtors indicates that this recent investment activity has led to a 156 percent increase in Little River home prices over the past five years. Commercial real estate prices have also experienced similar increases. Fueling commercial real estate activity in the Little River neighborhood is the displacement of small business owners and startups from the downtown area and Wynwood. These tenants are finding the same gritty and edgy atmosphere that attracted them to Wynwood, but at far more reasonable rents in Little River. An additional factor driving recent investment activity in Little River is the tax advantages associated with its designation as an "Opportunity Zone." 11 19-2581 6th Ave kui NE 1st AV4 NE 11:111 Ave NEid C NEM kit iw NE bin cr fJEiFI td Biscayne Blvd NE 5th Awe NE AM Gt 1— NE: AO NE 3td Aye 1,4 NE 2nd Ct 2nd Ave NE 2nd the III A i NE il 11 a LI NE I sl Ct 74 lai `t7: NE 1st Ave > g _ f Cr Z • Z Z :.'" NE hoiwr., Ct 1,t Ave Miami Ave ▪ nr6 r- ot , Apo as mina l'AWr _11-1-1 • co curl Ert _ • E;> 42, a7, R M "a•M NW 2nd Ave. ec, Nom 2rul AZveZ sin II ind NW 3rd ,4,°e NW 4th ve.jaz 114, 11,4 NN 0;4' h 5th 111 NW 5th PI . NW Ea Ave JIM i1,111" ANP NW St Ave =7 Z6 5 • r- N Miami Ave VII loth Awe NLE,111 E. NW 1 athatimi LITTLE RIVER NEIGHBORHOOD MAP The recent levels of investment activity and the associated price increases which have occurred in the Little River neighborhood have led to disruptions and relocations for many of the long time businesses and residents. Nevertheless, efforts are being made to mitigate these negative impacts associated with the natural progression of development occurring all along the eastern core of Miami. Overall the outlook for the Little River neighborhood is clearly a positive one. C. Commercial Real Estate Market The Miami retail market has fared very well in recent years. A number of firms survey the county retail market on a regular basis. Statistics completed by Colliers International in their Second Quarter 2019 survey reported the following trends since 2015. Miami Dade County Retail Market 2Q — 2019 S.F. Under Year Construction 2015 1,582,000 2016 2,286,000 2017 1,804,000 2018 2,627,000 2019 — 2Q 3,678,000 S.F. Net Absorption 1,028,000 613,000 1,726,000 214,000 150,000 Total Vacancy Rate 3.5% 3.5% 3.3% 3.9% 4.0% Average S.F. Net Rent $25.38 $30.47 $35.45 $35.04 $39.35 As indicated the overall retail vacancy rate in the County has consistently remained at or below four percent since 2015. Some upward movement in vacancy since 2017 is a reflection of record levels of new retail construction. Local analysts attribute the underlying strength of this market to a growing area population with strong demographics and a booming tourism sector. This strength is evident in the continued increases in average county retail rent despite the high levels of new construction. Additional statistics below compiled by Colliers International characterize the individual retail submarkets in the County. 13 19-2581 Miami Retail Submarkets 2Q - 2019 Total S.F. Total Vacancy S.F. Under Submarket Inventory Rate Construction Northeast Dade 13,789,000 3.1% 1,301,000 Downtown Miami 6,397,000 14.3% 411,000 Coral Gables 6,129,000 4.9% 217,000 Northwest Dade 14,820,000 3.6% 412,000 Miami Beach 6,271,000 7.6% 197,000 Miami Airport 13,986,000 2.3% 50,000 Kendall 17,266,000 2.8% 57,000 South Dade 9,481,000 3.0% 528,000 Miami Central 5,634,000 4.2% 393,000 West Miami 4,978,000 2.2% 0 Total 103,091,000 4.0% 3,678,000 The appraised property is located within the Collier International defined Miami Central submarket, with an estimated 5.6 million square feet of retail space and an average vacancy rate of 4.2 percent. This average vacancy is consistent with the countywide experience. An average lease rate of $23.07 in the Miami Central submarket is significantly below the county average and a reflection of the older average age of its existing retail facilities. The total of 3,678,000 square feet of new retail space reported currently under construction in the Miami market represents an expansion of 3.6 percent to the existing inventory of 103.1 million square feet. Total net absorption in the Miami market during 2017 and 2018 averaged approximately one million square feet of space. Based on this experience, retail space now under construction would represent an approximate 36- month supply. All indicators suggest the outlook for Miami's retail real estate market is positive, once the above average level of new construction is absorbed. 14 19-2581 AERIAL VIEW OF APPRAISED PROPERTY 15 19-2581 PHOTOS OF THE APPRAISED PROPERTY 2. Looking west on N.E. 80 Terrace at the appraised property frontage on N.E. 2 Avenue. Looking north at the appraised property from N.E. 80 Terrace along N.E. 2 Avenue. Looking northwest at the appraised property frontage on N.E. 80 Terrace. 16 19-2581 PHOTOS OF APPRAISED PROPERTY 5. Looking north from N.E. 80 Terrace at the gazebo area on the appraised property. Looking west across the appraised property from N.E. 2 Avenue. Looking north from N.E. 80 Terrace at the west end of the appraised property. 17 19-2581 I y Pz ed. _ _I -' I- 6'3237 , N d?"d Sr , se 7TLFR/YFRC7AROews PO YA L PhGM --_I L—�- - iys•ac 15'I -_---7 es, Ik 6 I I I— 1 /3 /7 /r I, 3 Im I' 4 akOP .0 I I Qk 4 So I I I 5 8 422'. �S'[N/' I I , /0 1 3 6 RaiRc P.aro G44D -tvs B/oc/r7 rI 7- 7/.,,/ I I � I I I L/I7-7-LE fly✓eR 64I8De*. B/dck3 6 d) 3 7 G / 1 .fie' I .. _J — I�• =- - - W N-B879'24"F ' `n %EC l�� 80 / e/C, o---- 7 G.9 R O G/V3 17- 7,1 r�5^-hPPM, /74,196' 32q� S- A9 Q5:a2"fy PRM aS /A4 • M41 Ih° _ / Gp6pry h h I--- �1a- T _ - 6 'I,a n \1 �� 10�A? k° �� 't�4 RI a� ex ova, h ---- h M 3�h F h h 1M, 3 w k, ti y lS Q y'>• I N-d -'. 59'- S3 e /N r/ 6ine 7 -7:, ., _ ::at,:' /7P, oo • 1; Se seyi.re7l' ` 3.S' .I V 37, - L 1 .G 1h-o2". el e foes. o o ' Trod ".„5 V a 47 Acras ti NPcrmo/7enf ©ffSfreefPork/4 o h - I---------/s�.7s (a-sd I I g, L /'t�`Je f�iycr Gardens ("6-e1 So. o/(i ti I APPRAISED PROPERTY h PLAT MAP OF APPRAISED PROPERTY I3p.----�2Z_-- ' " nI P< o cl Trac,r '.:74' No / /2 Acres N} lki 18 19-2581 umc tr-ur Poo IL I/2' NO CAP Li • 2 iLiP IL MAN WAIL 1,.3$1 C L.r 3" WM.. 148054'6PE 122.00' PLAtTER - i071 - - - I 11 I. 1 - I • ,1 Lii",toiti ADJACENT ONE STORY L OIMAIEW•a/AL WAREHOUSE MOM i LP. Fa 1:021 t 3' WALL COtic. NiIrS4SilE ST.Or _ .............. — tri LNI iltt341 35' t5PtIALr 111..11. CCM 5.1r1.1.1. 51.1.11. CS. M at— B,141 it CA. C.IG. ". Fit IP' ORICAJA1 101 L5E-7— Fl POLE 1 .3..1.4 TO' AfE 80th TERRACE 50 TOTAL HIGH I- 111. -WAT 7 k. - BUILDING BASE LINE .e. -- Sty. co )6 f m fe / 5 UJ p E . 1.41 zo [il 5.110.4. L-39.23' 12-25.00 17=2-4 .gc- CH.35,33' CHO.N44°572WE ILI' ND SURVEY OF APPRAISED PROPERTY ON FEET) I INCH' .20 FEET 19 19-2581 IV. PROPERTY DESCRIPTION A. Ownership and History The appraised property is owned in the name of the City of Miami. The public records indicate the City acquired title to the property in January 1977 from Spyros and Maria Gousias (OR 9565, Page 618). Subsequent to this acquisition the City improved the appraised property as a neighborhood public park in 1979. These improvements included concrete patios, walkways and walls; a gazebo; lighting; and now mature landscaping. At the present time the perimeter of the appraised property is temporarily secured with an eight foot high chainlink fence. B. Location and Access The appraised property is located on the northwest corner of N.E. 2 Avenue and N.E. 80 Terrace in the Little River neighborhood of the City of Miami. This signaled intersection lies approximately six miles north of the Central Business District of the City. N.E. 2 Avenue is a two lane bidirectional north/south arterial providing direct access to downtown Miami. N.E. 80 Terrace is a two lane bidirectional neighborhood street which jogs to the north at its intersection with N.E. 2 Avenue. Regional access to this neighborhood is available via I-95, with a full interchange at N.W. 79 Street, two miles west of the appraised property. N.E. 79 Street in turn intersects with N.E. 2 Avenue one block to the south of the appraised property. Vehicular access onto the appraised property is not currently available but could potentially be made available with curb cuts on N.E. 80 Terrace or N.E. 2 Avenue. C. Site Description The appraised property is a rectangular shaped land parcel as depicted on the aerial photo, plat map and survey included herein. Calculations by the County Property Appraiser indicate a total site area of 8,662 square feet. However, this area excludes provision for street dedications on N.E. 2 Avenue and N.E. 80 Terrace. As depicted on the attached survey, after these street dedications the appraised property has a frontage of 122 feet on N.E. 80 Terrace and a frontage of 51.6 feet on N.E. 2 Avenue. Total site area indicated by the legal description on the survey is 6,162 square feet. 20 19-2581 Topography of the site is level and slightly above the elevation of fronting street grades. According to FEMA Map No. 12086C0302L dated September 11, 2019, the appraised property lies in an area outside of the 0.2 percent annual chance flood. D. Improvements The appraised property is currently improved as a neighborhood public park. Site improvements include concrete patios and walkways; a gazebo; lighting; and mature landscaping comprising trees, shrubbery and ground cover. Based on visual observation and records of the County Property Appraiser, the following site improvements are located on the property: - 1,800 S.F. of concrete patio and walkway area - 600 S.F. of CBS wall - 3 light poles - 225 S.F. gazebo with tile roof - A flagpole, water fountain and 12 park benches An additional significant site improvement on the appraised property is the mature landscaping which provides an attractive canopy over the entire site. The highlight of this landscaping is the eight mature oak trees which demark the site as an inviting, shaded, urban oasis. These eight large trees along the perimeter (6) and on the interior (2) of the site are estimated to be 35+ feet tall. E. Zoning and Planning The appraised property is zoned CS, Civic Space, by the City of Miami. The Civic Zone consists of public use space and facilities that may contrast in use to their surroundings while reflecting adjacent setbacks and landscape. This classification allows a wide range of recreational uses, as well as a number of commercial support uses including food service establishments, open air retail, general commercial, marine related facilities, and learning centers. Common commercial support services on CS zoned parcels in the City include restaurants, snack bars, recreation related stores, and retail shops. Development restrictions specific to the CS zone include: • Buildings and walls shall conform to regulations of the most restrictive abutting zone • Building floor areas shall not exceed 25% of the CS lot area and shall support the principal use. • Provision for parking is stipulated based on the specific CS use intended. 21 19-2581 - _ 9 ;2' 0 JCS V1 LL d 1:51 3N Ff Q 3AV®8E3N 58 L3 ONZ 3N TI8 w CVVII13N wn� �• �' F, _ _ _ J 911S 3n0ISO °Naha° 'j' 76 Hlr 3N w �d QHE EN _iDINVIW31+1 7,1‘3`r-hrIY-rin`trii I 913 1.1.11:t7'C177'lI7rTl7Till.� tvud�w rc N W ZONING MAP As indicated, development of building and walls in the CS zone must conform to regulations of the most restrictive abutting zone. In this instance the appraised property abuts T6-80 zoning on the north and T5-O zoning on the west. The T5-O district is the more restrictive of these designations and the one that is assumed to apply in this instance. The intent of the T5-O district is to promote pedestrian oriented retail and service development in combination with residential uses. General provisions of the T5-O district include: Minimum Lot Size: Minimum Lot Width: Maximum Building Height: Maximum Floor/Lot Ratio: 5,000 square feet 50 feet 5 stories Not applicable Minimum Setbacks: Front: 10 feet Side: 0 feet Rear: 0 feet Maximum Lot Coverage: 80 percent Maximum Residential Density: 65 units/acre Minimum Open Space: 10 percent of lot The CS zoning of the appraised property is consistent with the City's Future Land Use Map which designates the property as Parks and Recreation. F. Assessment and Taxes The appraised property is currently assessed under folio number 01-3112-000- 0030. The assessment for 2019 is: Land Value $ 69,296 Improvement Value: $ 12,168 Total $ 81,464 As a tax exempt entity, no real estate taxes are paid by current ownership. 23 19-2581 V. ANALYSIS OF DATA AND VALUE CONCLUSION A. Highest and Best Use Highest and best use is a fundamental premise of real estate valuation and may be briefly defined as: Highest and best use is the reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and results in the highest value The CS zoning of the appraised property provides for a range of civic and civic support uses including recreational facilities, marinas, learning centers, and support services such as food service, general commercial and open air retail. These uses are consistent with the land use plan designation of the appraised property as well as provisions of the contemplated lease of the property. This lease stipulates the property will be utilized as a public park with no more than 25 percent of the property in support of commercial activities such as outdoor seating. The appraised property comprises a 6,162 square foot rectangular parcel at a signalized intersection and offers direct frontage on a commercial arterial. The site is level, at grade and all utilities are available. The size and configuration of the site would support most of the land uses permitted, particularly on a smaller scale. The neighborhood of the appraised property is undergoing a resurgence in commercial activity. This has been precipitated by rapidly rising rent levels in areas immediately to the south and east. An additional factor is the tax advantages of the neighborhood's Opportunity Zone designation. Recent reported vacancy rates among commercial space in the neighborhood of the appraised property (see earlier discussion) suggest commercial market conditions are very healthy. While a feasibility study is beyond the scope of this appraisal, consideration of the factors above lead us to conclude that a commercial use supportive of outdoor recreation activity (as permitted by CS zoning) is the highest and best use of the appraised property. B. Methodology The purpose of this appraisal is to estimate the market rent for the appraised property as a CS zoned public park. To estimate market rent in this instance, an appropriate capitalization rate was applied to an estimate of the market value of the property. 24 19-2581 Because CS zoned land is rarely sold on the open market, we first considered sales of other sites in the neighborhood which were similar to the appraised property except for their use not being restricted to public park use. These land sales were then compared to other sites which were restricted in use due to a variety of factors. These comparisons were utilized to assess the impact of public park use restrictions on the land value of the appraised property. The contributory value of the public park site improvements on the appraised property (based on depreciated replacement cost estimates) was then added to the concluded land value to develop an estimate of the market value of the property as a CS zoned public park. C. Land Value 1. Land Sales As a CS zoned site utilized as a public park, sales of directly comparable land are necessarily very limited. The CS designation stipulates that buildings and walls must conform to regulations of the most restrictive abutting zoning. As discussed above, this is assumed to be the T5-O district in this instance. The six land sales presented on the following pages were considered most relevant as a means of bracketing an appropriate land value for the appraised property as a T5-O zoned site. 25 19-2581 Land Sale No. 1 Location: Sale Date: Grantor: Grantee: O.R Book and Page: Folio No. Site Size and Frontage: Zoning: Land Use Plan: Sale Price and Terms: Sale Price Per S.F. of Land: 46 N.E. 82 Street, Miami, Florida 33138 February 21, 2019 E Y M Investments Corp. Architecture Experience Inc. 31335/4950 01-3112-013-0140 4,080 square feet; with 48 feet on N.E. 82 Street T5-O Medium Density Restricted Commercial $120,000 — Cash to the seller $29.41 Comments: This small vacant site fronts on N.E. 82 Street and was listed for sale at an asking price of $155,000. The T5-O zoned parcel sold for $120,000 after seven months on the market. 26 19-2581 Land Sale No. 2 Location: Sale Date: Grantor: Grantee: O.R. Book and Page: Folio Nos. Site Size: Zoning: Land Use Plan: Sale Price and Terms: Sale Price Per S.F. of Land: 8021 N.E. Miami Court, Miami, Florida 33138 August 14, 2018 Shopping Center Developers LLC Sunshine Real Estate Holdings, LLLP 31120/436 01-3112-013-0590 and 0600 22,627 square feet; with 170 feet on N. Miami Ave T5 -O Medium Density Restricted Commercial $750,000 — Cash to the seller $33.15 Comments: This T5-O zoned corner site fronts directly on N. Miami Avenue, a north/south commercial arterial. The grantee owns an adjacent service station. The sale property has recently been listed for sale for $1,100,000, or $48.61 per square foot. 27 19-2581 Land Sale No. 3 Location: Sale Date: Grantor: Grantee: O.R. Book and Page: Site Size: Folio Nos. Zoning: Land Use Plan: Sale Price and Terms: Sale Price Per S.F. of Land: 8250 North Miami Ave, Miami, Florida 33150 February 2, 2018 8250 Corp. 8238 D.V. Properties, LLC 30873/1366 15,870 square feet; with 115 feet on N. Miami Ave 30-3112-038-0110 and 0100 BU-1 Business and Office $600,000 — Cash to the seller $37.81 Comments: This commercial zoned site fronts directly on N. Miami Avenue, a north/south arterial. Older improvements on the site had no contributory value. The property had been listed for sale for $690,000. 28 19-2581 Land Sale No. 4 Location: Sale Date: Grantor: Grantee: O.R. Book and Page: Folio No. Site Size: Zoning: Land Use Plan: Sale Price and Terms: Sale Price Per S.F. of Land: 183 N.E. 78 Street, Miami, Florida 33138 March 9, 2018 Marbo Global Holdings LLC 78 Street Partners 2, LLC 30895/1617 01-3112-010-0040 7,450 square feet; with 50 feet on N.E. 78 St. T6-80 Restricted Commercial $330,000 — Cash to the seller $44.30 Comments: This T6-80 zoned site fronts on N.E. 78 Street just west of N.E. 2 Avenue. The property had been listed for sale for $350,000 and sold after nine months on the market. 29 19-2581 Land Sale No. 5 Location: Sale Date: Grantor: Grantee: O.R. Book and Page: Folio Nos. Site Size: Zoning: Land Use Plan: Sale Price and Terms: Sale Price Per S.F. of Land: 184 N.E. 83 Street, Miami October 22, 2018 Toy Max 2000, Inc. LROF 1 LLC 31203/3264 01-3112-008-0290 and 0280 17,475 square feet; with 175 feet on N.E. 83 St. T6-80 Restricted Commercial $875,000 — Cash to the seller $50.07 Comments: This corner T6-80 zoned site fronts on N.E. 83 Street just west of N.E. 2 Avenue. The sale property is located opposite the recently constructed Citadel retail center on N.E. 2 Avenue. 30 19-2581 Land Sale No. 6 Location: Sale Date: Grantor: Grantee: O.R. Book and Page: Folio No.: Site Size: Zoning: Land Use Plan: Sale Price and Terms: 116 N.E. 83 Street, Miami, Florida 33138 August 14, 2019 Jose A. Perez Florecer Investments LLC 31577/4241 01-3112-012-0271 4,058 square feet; with 67 feet on N.E. 83 St. T5-O Medium Density Restricted Commercial $225,000 - $40,000 cash and $185,000 PMM with interest at 5% Sale Price Per S.F. of Land: $55.45 Comments: This small T5-O zoned site was improved with a duplex structure which had some contributory value as an interim income source. The property had been listed for sale for $250,000 and sold for $225,000 with seller financing of $185,000. 31 19-2581 ) St h St NW 84th g! z ✓ any Ewe?W N NW 7Bth St tz NW 77th St rP NW 76th St n NE 76th S NF 76th St NE 82nd St z z m NE 83rd St IJ O o. ro 0 NE 82nd Terrace z r" NE761h St 0 z z c NE 82nd St San Tcrrn, 0 NE 77th St z z rn Nf 82nd Terear.e NE 82nd St NE 82nd St APPRAISED PROPERTY LAND SALES LOCATION MAP NE781h St N F. 77th St z NE 76th St 0 ▪ HE79th5t O z 32 z rn A NE 19-2581 LAND SALES SUMMARY Sale No. Location Street Frontage Date of Sale Site Size (S.F.) Zoning Land Use Designation Sale Price/S.F. Improvements 1 46 N.E. 82 St. 48' on N.E. 82 St. February, 2019 4,080 T5-O Med. Density Restr. Comm. $29.41 None 2 8012 N.E. Miami Ct. 170' on N. Miami Ave August, 2018 22,627 T5-O Med. Density Restr. Comm. $33.15 None Listing 22,627 T5-O Med. Density Restr. Comm. $48.61 (Asking) None 3 8250 N. Miami Ave 115' on North Miami Ave February 2018 15,870 BU-1 Business/Office $37.81 1,800 S.F. garage (No value) 4 183 N.E. 78 St. 50' on N.E. 78 St. March 2018 7,450 T6-80 Restr. Comm. $44.30 None 5 184 N.E. 83 St. 175' on N.E. 83 St. October 2018 17,475 T6-80 Restr. Comm. $50.07 None 6 116 N.E. 83 St. 67' on N.E. 83 St. August 2019 4,058 T5-O Med. Density Restr. Comm. $55.45 Duplex 33 19-2581 2. Market Value As T5-O Zoned Site The six land sale considered reflect an unadjusted price range of $29.41 to $55.45 per square foot for sites of 4,058 to 22,627 square feet in size. Each of the sale properties is located within three blocks of the appraised property and is zoned to permit a range of commercial mixed uses. Adjustments appropriate to each of the sales in comparison to the appraised property are discussed below and summarized on the following page. Sale Conditions — Sales 1 to 5 were each arms -length all cash transactions. Sale 6 included favorable seller financing and warrants downward adjustment for this factor. In addition, Listing 2 requires some downward adjustment for its listing status. Market Conditions — The six sales occurred between March 2018 and August 2019. The market for commercial land in the neighborhood of the appraised property has been in a clear upward trend. As a result, those sales which occurred over 12 months ago (Sales 2, 3 and 4) are adjusted upward for improving market conditions. Location — While all of the sale properties are located within three blocks of the appraised property, their commercial desirability as to access and exposure varies. Sale Properties 1 and 6 are both interior sites on neighborhood streets away from a commercial arterial. They are inferior to the appraised property in this regard. Sale Properties 2 to 5 are either corner sites or located adjacent to a commercial arterial. Access and exposure of these sales are more comparable to the appraised property. Zoning — Sale Properties 1, 2 and 6 are each zoned T5-O (same as the appraised property) and have the same land use designation. The BU-1 designation of Sale Property 3 also provides for similar land uses and densities. Sale Properties 4 and 5, are both zoned T6-80. This designation permits uses similar to the T5-O designation but at a higher density. Downward adjustment is warranted for the permitted intensity of development under T6-80 zoning. Improvements — Sale Properties 1, 2, 4 and 5 were unimproved sites at the time of sale. An older garage structure on Sale Property 3 had no contributory value. A duplex structure on Sale Property 6, however, provides a source of income prior to eventual development, and requires a downward adjustment. Site Size/Configuration This six sale properties are each rectangular sites ranging in size from 4,058 to 22,627 square feet and bracket the appraised property 6,162 square feet. The size and configuration of Sale Properties 2 to 6 is sufficient to make them fully buildable. The size and frontage of Sale Property 1 is below zoning code minimums 34 19-2581 LAND SALE ADJUSTMENT GRID Sale 1 Sale 2 Listing 2 Sale 3 Sale 4 Sale 5 Sale 6 Date of Sale February 2019 August 2018 Listing February 2018 March 2018 October 2018 August 2019 Site Size (S.F.) 4,080 22,627 22,627 15,870 7,450 17,475 4,058 Zoning T5-O T5-O T5-O BU-1 T6-80 T6-80 T5-O Sale Price/S.F. $29.41 $33.15 $48.61 $37.81 $44.30 $50.07 $55.45 Adjustments Sale Conditions - Market Conditions = + _ + + Location + _ _ _ _ _ + Zoning ImprovementsSite Size/Configuration + Overall Adjustment + + - + 35 19-2581 and poses a potential development constraint. Upward adjustment for this factor is warranted. The adjustments discussed above are summarized on an attached table. As indicated Sales 1, 2 and 3 ($29.41 - $37.81/S.F.) all require overall net upward adjustment. Listing 2 and Sales 5 and 6 ($48.61 - $55.45/S.F.) each warrant net downward adjustment. Sale 4 ($44.30/S.F.) does not require any net adjustment. On this basis, we conclude with a unit land value for the appraised property as a T5-O zoned site of: $45.00 Per Square Foot of Land 3. Market Value As Restricted to Public Park Use As stipulated by the proposed lease of the appraised property, use and occupancy of the property would be limited to a public park for the enjoyment of the public and invitees of the lessee. This use would be consistent with the CS zoning of the site. However, this restriction on use represents a significant limitation on the utility of the property were it a T5-O zoned site. In order to value the appraised property as limited to public park use we first reviewed "utility" or "value loss" factors indicated by actual case studies considered to have comparability. This was accomplished by analyzing paired land sales which were comparable to each other in all respects except their degree of utility or developability, i.e, a land parcel with full and unlimited utility (developability) is compared to one with limited or restricted utility (developability). While no restricted situation is going to be identical to that of the appraised property, the intention is to draw a comparison based on the degree of restricted utility. Pertinent details of seven diminished value case studies are summarized below (details of each sale considered are contained in the Addenda). These pairings address losses attributed to restricted utility sites due to restrictions on their use. While the sale dates associated with many of these pairings are dated, the underlying relationship is believed to be applicable to current market conditions. The resulting price/value losses indicated by these pairings are discussed further below. 36 19-2581 Restricted Value Nature of Utility Pairing Full Utility Site Utility Site Loss Loss A Sale No. 19 20 -70% Elevated Metrorail Price/S.F. $37.26 $11.25 easement FPL powerline B Sale No. 21 22 -80% easement in industrial area Sale No. 23 24 -50% FPL powerline Price/S.F. $13.75 $6.82 easement in industrial area Sale No. 23 25 -66% FPL powerline Price/S.F. $13.75 $4.73 easement in industrial area Sale No. 26 27 -85% FPL powerline Price/S.F. $11.68 $1.70 easement for public park Sale No. 26 28 -87% FPL powerline Price/S.F. $11.68 $1.54 easement for public park G Sale No. Price/S.F. 29 30 -74% $38.54 $10.10 Overhead Metrorail easement Each of the pairings above reflects a loss of utility arising from easement restrictions considered to have comparability to the use restrictions on the appraised property. Pairing A and G easements are the result of elevated Metrorail tracks; Pairing B to F easements are the result of FPL overhead powerlines. These easements effectively limit any use of the property to surface uses and prohibit permanent building structures. Common uses within these FPL and Metrorail easements include surface parking, open storage, plant and tree nurseries, landscaping, open space and public parks. An attached aerial photograph shows land under FPL powerlines which was acquired by the City of Hialeah for use as a public park. 37 19-2581 The price/value losses indicated by these pairings reflect a range of 50 percent to 87 percent. Considering the specific physical and locational characteristics of the appraised property, we conclude a value diminution of 70 percent is appropriate in comparing the appraised property as restricted to public park use with T5-O zoned sites that are developable to their highest and best use. On this basis a value estimate for the appraised property land as restricted to public park use can be calculated as follows: Value As T5-O Zoned Site $45.00/Sq. Ft. Value As Restricted One -Diminution Factor To Park Use x (1-0.70) _ $13.50/Sq. Ft. As restricted to public park use the concluded value of the appraised property land is: $13.50 Per Square Foot of Land D. Contributory Value of Site Improvements As described earlier, site improvements on the appraised property include mature trees; concrete patios, walls and walkways; a gazebo; lighting; flagpole; water fountain; and benches. These improvements clearly enhance the value of the property as a public park. In estimating the contributory value of these items we considered replacement cost and depreciation data compiled by Marshall Valuation Services as well as the opinions of both a local contractor and tree appraiser. APPRAISED PROPERTY SITE IMPROVEMENTS 600 S.F. 3 ft. concrete wall $ 7,740 1,800 S.F. concrete patios/walkways $14,022 225 S.F. gazebo $11,062 1 water fountain $ 910 1 flagpole $ 1,520 3 light poles $12,066 12 benches $ 8,388 Total Cost New $55,708 Less Depreciation — 50% average $27,854 Depreciated Value $27,854 Mature trees $20,000 Contributory Value of Site Improvements $48,000 Rnd 39 19-2581 E. Market Value of the Appraised Property The appraised property is currently improved as a neighborhood public park including mature landscaping; patios and walkways; and a gazebo. This use is consistent with both the CS zoning and Parks and Recreation land use designation of the property. The proposed lease of the appraised property stipulates that the lessee will occupy the property as a public park for the enjoyment of the public and the invitees of the lessee. However, up to 25 percent of the property may be used in support of commercial activities of the lessee (including outdoor seating for food and beverage services). The balance of the property must be maintained by the lessee as a public park. Utilizing the estimates of land and improvement value derived earlier in this report, market value of the appraised property under the conditions of the proposed lease can be calculated as follows. Land Value — Lessee Commercial Activities 1,541 S.F. (25%) x $45.00/S.F. = $ 69,345 — Public Park Use Only 4,621 S.F. (75%) x $13.50/S.F. = $ 62,384 $131,729 Contributory Value of Site Improvements $ 48,000 Market Value of Appraised Property F. Market Rent of the Appraised Property $179,729 $180,000 Rnd An estimate of market rent for the appraised property was developed by applying a rate of return to the previously estimated market value of the property. This methodology requires selection of a capitalization rate appropriate to an assumed longer term lease on the appraised property. In this instance the lease is effectively a ground lease (land and minor site improvements). For this purpose, consideration has been given to the reported rates of return indicated by a variety of ground lease uses in South Florida as summarized below. 40 19-2581 GROUND LEASES IN SOUTH FLORIDA Property Location Land Use Site Size Rent As % of Land Value Private 11211 Pine Boulevard - Pembroke Pines Restaurant 1.2 acres 5.3% 2880 N.E. 8 Street - Homestead Restaurant 1.0 acres 4.3% 6601 S. Dixie Highway - Miami Bank 0.6 acres 4.5% 7400 Bird Road - Miami Bank 1.3 acres 5.1% 1177 S.W. 8 Street - Miami Drugstore 2.2 acres 5.5% 16795 S. Dixie Highway - Miami Drugstore 1.2 acres 6.0% 3355 N.W. 22 Street Road - Miami Car lot 6.4 acres 7.0% 2500 Broward Boulevard - Ft. Lauderdale Walmart 15.6 acres 5.0% 2301 N.W. 33 Avenue - Miami Car lot 7.3 acres 7.4% 580 W. Palm Drive - Hialeah Store 1.3 acres 7.3% 13295 N.W. 27 Avenue - Miami Store 0.8 acre 6.7% Municipal Dadeland Station - Kendall Offices 10.6 acres 5.0% BCCC Hotel - Ft. Lauderdale Hotel 4.4 acres 7.1% Merrick Park - Coral Gables Retail 8.4 acres 7.3% Merrick Center - Coral Gables Mixed Use 2.7 acres 5.0% Miami International Airport Hangers Various 7.0% Factors influencing the range of cap rates indicated above include lease terms and locational characteristics of the property. Logically the lowest end of the rate range reflects longer term leases to the highest credit tenants in superior commercial locations. This would include outlets of large national banks, restaurants and stores such as McDonalds, Walgreens and Walmart. Additional ground lease rates of return are reported in national investor surveys conducted by Realty Rates on a regular basis. Rates of return (cap rates) are reported for a wide range of property types. Reported rates reflect the initial rate of return on appraised value for vacant land proposed for development. They do not address locational, quality or lease term differences. Summarized below are results from the Realty Rates Fourth Quarter 2019 survey. 41 19-2581 Land Lease Capitalization Rates Cap Rate Property Type Minimum Maximum Average Apartments 1.9% 9.5% 6.8% Golf Course 1.8% 15.5% 8.3% RV Park 1.9% 12.4% 7.2% Restaurant 3.3% 14.7% 7.8% Retail 2.1% 10.6% 6.4% Lodging 1.8% 15.1% 6.9% Averages 1.8% 15.5% 7.1% The averages of the ground lease cap rates presented fall in a general range of 4.3 to 8.3 percent. Considering the specific characteristics of the appraised property, we conclude the cap rate applicable to a lease of the property should be in the upper half of the range indicated by the data, or 7.0 percent in this instance. Annual net market rent for the appraised property can therefore be calculated as follows: Market Value of the Appraised Property: $180,000 Capitalization Rate x .07 Annual Market Rent: $ 12,600 This rent would be on a total net basis with some provision made for rent escalation over the term of the lease. At the present time the property is not subject to real estate taxes because it is owned by the City of Miami. Should the Property Appraiser elect to assess and tax the subject property in the future this market rent conclusion assumes the lessee is responsible for these taxes. It is noted that the concluded market rent of $12,600 annually is equivalent to $8.18 per square foot for the 1,541 square feet of the appraised property which may be utilized by the lessee in support of commercial activities. This rate is considered reasonable and consistent with comparable lease rates we are aware of. 42 19-2581 VI. ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report has been made with the following general assumptions: 1. No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed to be reliable and, whenever possible, it was cross checked with another source. However, no warranty is given for its accuracy. 5. All engineering is assumed to be correct. The plot plans, plats, maps, and illustrative material in this report are included only to assist the reader in visualizing the property. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them. 7. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. 8. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal report. 9. It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 10. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 11. The existence of hazardous material, which may or may not be present on the property, was not observed by the appraisers. The appraisers have no knowledge 43 19-2581 of the existence of such materials within or near the property. The appraisers, however, are not qualified to detect such substances. The presence of substances such as asbestos, urea -formaldehyde foam insulation or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material within or near the property that would cause a loss in value. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. The appraisal is intended to comply with the appraisal requirements of the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Institute. This appraisal report has been made with the following general limiting conditions: 1. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. 2. Possession of this report, or a copy thereof, does not carry with it the right of publication. 3. The appraiser, by reason of this appraisal, is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made. 4. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser. 5. Any value estimates provided in the report apply to the entire property, and any proration or division of the total into fractional interests will invalidate the value estimate, unless such proration or division of interests has been set forth in the report. 44 19-2581 VII. CERTIFICATION We certify that, to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest or bias with respect to the parties involved. 4. Our compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. 5. The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. 6. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, and the requirements of the State of Florida for state -certified appraisers. 7. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 8. No one provided significant professional assistance to the undersigned. 9. As of the date of this report, the undersigned have completed the requirements of the continuing education program of the Appraisal Institute. 10. The use of this report is subject to the requirements of the State of Florida relating to review by the Real Estate Appraisal Subcommittee of the Florida Real Estate Commission. 11. Geoffrey Heath has made an inspection of the property that is the subject of this report. 45 19-2581 12. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three year period immediately preceding acceptance of this assignment. It is the opinion of the undersigned that the property described herein has the following annual market rent, as of November 3, 2019: Edward N. Parker, MAI State Certified General Appraiser License #RZ144 $12,600 Net Annually Geoffrey D. Heath, MAI State Certified General Appraiser License #RZ1456 46 19-2581 ADDENDA 47 19-2581 SUMMARY OF PAIRED LAND SALES Sale No. Date of Sale Sale Price O.R. Book & Page Location Site (S.F.) Zoning Price/S.F. Source of Utility Loss 19 1-Dec-96 $1,575,000 17500/4285 3655 S. Dixie Highway, Miami 42,267 C $37.26 None 20 1-Dec-96 $264,000 Surface rights lease 3655 S. Dixie Highway, Miami 29,360 C $11.25 Section of overhead Metrorail ROW suitable for parking 21 1-Nov-99 $3,344,660 18851/3075 9505 N.W. 108 Avenue, Miami -Dade County 669,081 IU-2 $5.00 None 22 1-Nov-99 $237,840 18851/3075 9505 N.W. 108 Avenue, Miami -Dade County 237,837 IU-2 $1.00 Powerline easement 23 11-Jun-09 $525,000 26902/3430 Southwest corner of N.W. 98 Avenue and N.W. 122 Street, Miami -Dade County 38,333 IU-1 $13.75 None 24 16-Aug-10 $180,000 27457/1671 N/S of W. 34 Place west of 14 Avenue, Hialeah 26,570 I $6.82 FPL in industrial area 25 1-Feb-08 $125,000 26258/160 N/S of W. 34 Place west of 14 Avenue, Hialeah 26,408 I $4.73 FPL in industrial area 26 14-Jun-13 $65,000 28692/1214 5735 W. 12 Lane, Hialeah 5,565 R-2 $11.68 None 27 28-Dec-12 $175,000 28425/3118 1850 W. 76 Street, Hialeah 103,237 R-2 $1.70 FPL in residential area for park 28 13-Nov-12 $150,000 28368/3233 1850 W. 76 Street, Hialeah 97,514 R-2 $1.54 FPL in residential area for park 29 01-Sept-95 $1,650,000 17695/2208 200 S.W. 13 Street, Miami 42,812 C-1 $38.54 None 30 01-Oct-95 $342,187 Surface rights lease S.W. 13 Street and S.W. 1 Avenue, Miami 33,976 C- I $10.10 Overhead Metrorail ROW suitable for parking 48 19-2581 QUALIFICATIONS EDWARD N. PARKER, MAI Investors Research Associates, Inc. 5730 S.W. 74 Street, Suite 100 South Miami, Florida 33143-5381 Phone No.: (305) 665-3407 Fax No.: (305) 665-4921 Academic University of Alabama - B.S., Marketing University of Miami - M.B.A. Experience Mr. Parker began his career as a real estate consultant in 1972 with the Reinhold P. Wolff Economic Research Company in Coral Gables, Florida. As a staff analyst, he was responsible for the preparation of market feasibility studies, retail studies, economic use analyses, and site location studies. In 1974, Mr. Parker joined the Miami office of Real Estate Research Corporation (RERC), a wholly owned subsidiary of the First National Bank of Chicago. As a staff appraiser and analyst, Mr. Parker prepared appraisals of all types of income producing properties located throughout the United States and the Caribbean. These valuations involved fee simple interest, leaseholds, partial interests, and going -concern valuations. He has also appraised a large number of special purpose properties including schools, marinas, resorts, and specialized manufacturing facilities. Mr. Parker's administrative responsibility at RERC included the coordination of the appraisal of the assets of two major Miami -based REITS during their orderly portfolio disposition. Mr. Parker also managed the annual ongoing portfolio appraisal of the properties comprising the First National Bank of Chicago commingled pension trust known as Fund F. In June, 1981, Mr. Parker joined Investors Research Associates, Inc. as a principal. The firm specializes in income property appraisals, highest and best use and market studies, as Ill as consultation services for major lending institutions, insurance companies, real estate syndicators, developers, pension funds and governmental agencies. Discounted cash flow and sensitivity analyses, as I11 as absorption studies are some of the services provided to clients. The firm has successfully completed a number of very complex valuation assignments involving environmentally sensitive wetlands including offshore island properties for private and public clients. Agricultural properties including row crop land, groves, and tree nurseries are another specialty. Mr. Parker's experience includes condemnation appraisals for both public and private clients. The public client list includes the Florida Department of Transportation, South Florida Water Management District, National Park Service, U.S. Department of Justice, Dade County HUD, Dade County Department of Facilities Management, and Miami -Dade Water and Sewer Department. Property types appraised for condemnation purposes include office buildings, retail stores, restaurants, service stations, banks, churches, apartments, vacant sites, agricultural (crop land and tropical fruit groves), and environmentally sensitive We tlands Mr. Parker has qualified as an expert witness in Dade, Broward, Monroe and Duval County Circuit Courts, U.S. District Court, and U.S. Bankruptcy Court. He is also currently certified under the continuing education program conducted by the Appraisal Institute. Affiliations Member of the Appraisal Institute - MAI Licensed Real Estate Broker - State of Florida State Certified General Appraiser-0000144 49 19-2581 Geoffrey D. Heath, MAI Academic London School of Economics, M.Sc., Economics University of Chicago, M.B.A., Finance Lehigh University, B.A., Finance Experience Before associating with Investors Research Associates, Mr. Heath served as Senior Vice President of Real Estate Research Corporation as a specialist in the economics and appraisal of real estate. Prior experience includes Deputy Director of all appraisal services for that firm. He has directed numerous major appraisal assignments throughout the country. They have included valuations of substantial commercial real estate portfolios for a variety of purposes including merger, acquisition, divestiture, and current value reporting. Mr. Heath has appraised a large number of special-purpose properties including schools, mobile home parks, marinas, resorts, and specialized manufacturing facilities. These valuations have involved fee simple interests, leaseholds, as well as partnership and partial interests. They have included both existing and proposed projects. Within South Florida, significant appraisals include: valuation of a major Miami -Dade County portfolio including a hotel and resort complex, 11 office buildings, 5 shopping centers, 31 industrial buildings, 5 apartment complexes, and 228 acres of prime land; a multiuse high rise comprising office, apartment and parking uses within the Jackson medical complex; the 1,200-room Fountainbleau Hilton Hotel; market rent assessments for 30 U.S. government offices and warehouses; and appraisals of 8 major mobile home communities with over 5,500 homesites. Mr. Heath has performed numerous economic and marketability studies for new suburban developments as well as downtown redevelopment. These assignments have involved the evaluation of retail potential, office space demand, and hotel and housing marketability. In addition, he has served as land disposition and economic consultant to a number of U.S. cities. Affiliations Appraisal Institute, MAI, Certificate No. 6090 Florida Real Estate Broker South Florida Chapter 24, Appraisal Institute (Board of Directors, Admissions Committee) State of Florida Certified General Appraiser No. RZ0001456 50 19-2581 CITY OF MIAMI OFFICE OF THE CITY ATTORNEY MEMORANDUM TO: Nikolas Pascual, City Manager's Office FROM: Jihan M. Soliman, Assistant City Attorney DATE: October 2, 2019 RE: Opinion on an exception set forth in Sec. 29-B(f) of the City Charter for neighboring property owner seeking to acquire an interest in a City park located at 8034 NE 2nd Avenue Matter ID No.: 19-1442 You have asked substantially the following question: Can the City legally convey the property located at 8034 NE 2 Avenue to Rivercow, LLC pursuant to the provisions of Section 29-B(f) of the Charter of the City of Miami Florida, as amended? BRIEF ANSWER Yes, because Commerce Park is non -waterfront property, has a lot size less than 7,500 square feet, and Rivercow, LLC is located directly adjacent to Commerce Park, the proposed transaction fulfills the requirements of Sec. 29-B(f) of the City Charter. ANALYSIS In addition to the Code of the City of Miami, Florida, as amended ("City Code"), the City Charter imposes requirements on the City of Miami ("City") when conveying City -owned property; however, the City Charter also provides for exemptions to those requirements. Sec. 29- B of the City Charter enumerates several exemptions that, if applicable, would allow the City to convey City -owned property without having to apply any other City requirements of competitive bidding. Specifically, Sec. 29-B(f) of the City Charter exempts the City from any City competitive bidding requirements when conveying City -owned property if the City is "disposing of non - waterfront property to the owner of an adjacent property when the subject property is 7,500 sq. ft. or less or the subject non -waterfront property is non -buildable." Accordingly, Sec. 29-B(f) of the City Charter requires three factors to be met for any conveyance of City property to be exempted from City competitive bidding requirements. The three factors are: (i) the City -owned property being conveyed is non -waterfront, (ii) the Grantee of the City -owned property must be adjacent to the City property being conveyed, and (iii) the City -owned property being conveyed is (a) 7,500 sq. ft. or less or (b) is non -buildable. The City property that is subject to this memorandum is located at 8034 NE 2nd Avenue, Miami, Florida and referred to as Commerce Park ("Park"). The Park, as seen from the Survey attached and incorporated as Exhibit "1", is on the corner of a block nearly a mile from any waterway or natural body of water. Thus, the Park, which is the subject of the proposed conveyance, satisfies the first factor to Sec. 29-B(f) of the City Charter which requires the City - owned property to be non -waterfront. The second factor of Sec. 29-B(f) of the City Charter requires the grantee of the City -owned property to be located directly next to, or adjacent to, the City property being conveyed. Rivercow, LLC is the owner of the property located at 8032 NE 2nd Avenue, Miami, Florida ("Property"). As depicted in Exhibit "1", the Property is directly adjacent to the Park on the western and southern boundary lines of the Park. The Grantee satisfies the second factor required by Sec. 29-B(f) of the City Charter. Lastly, the exemption contained in Sec. 29-B(f) of the City Charter requires the City -owned property being conveyed to either be have a lot size of 7,500 sq. ft. or less or be non -buildable. The Park's lot area is 6,161.53 sq. feet. Accordingly, the Park satisfies the third and last factor of Sec. 29-B(f) of the City Charter. Thus, the Park and the proposed Grantee satisfy all factors necessary to utilize Sec. 29-B(f) of the City Charter. CONCLUSION The proposed conveyance satisfies all requirements of Sec. 29-B(f) of the City Charter allowing the conveyance to be exempt from competitive bidding; however, there are other legal requirements and considerations still applicable. The disposing of the Park must still be approved by an affirmative vote of the City Commission. The City Commission may want to impose requirements and/or restrictions on the conveyance such as the Park remains a Park or the Park remains accessible to members of the public. In order for the City Commission to exercise its discretion to consider the conveyance, the item must be approved by the City Commission by an affirmative vote.' 1 This memorandum is limited to addressing the legal issues of interpreting the City Charter. This memorandum does not opine on any political or business considerations of the conveyance.