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EAST PENNSBORO AREA SCHOOL : IN TIlE COURT OF COMMON PLEAS OF
DISTRICT. : CUMBERLAND COUNTY. PENNSYLVANIA
Appellant
v.
: CIVIL ACTION -- LAW
CUMBERLAND COUNTY BOARD
OF ASSESSMENT and PROSPERITY
DEVELOPMENT COMPANY.
Appellees : No. 97-2769 CIVIL TERM
IN RE: TAX ASSESSMENT APPEAL
BEFORE OLER. J.
ORDER OF COURT
AND NOW, this 21st day of September. 1998, upon consideration of the tax
assessment appeal filed herein. following a hearing and in accordance with the
accompanying Opinion. it is ordered as follows:
THE MARKET VALUE as of August 1, 1996 (and for succeeding years until
revised), for the 10.37 acre parcel owned by Appellee Prosperity Development Company.
situated in East Pennsboro Township, Cumberland County. Pennsylvania. and bearing tax
parcel number 09-20-1854-004. is fixed at $8,500.000.00.
THE PERTINENT COMMON LEVEL RATIO for Cumberland County has been
stipulated to be seven percent. The predetennined ratio was 25 percent.
THERE BEING A DIFFERENCE of more than 15 percent between the common level
ratio and predetermined ratio, as a result of which assessments are to be detennined by
application of the common level ratio to market value. the assessment with respect to the
aforesaid parcel is fixed at $595,000.00 as of the aforesaid date.
BY THE COURT.
.f.!~1
EAST PENNSBORO AREA SCHOOL : IN THE COURT OF COMMON PLEAS OF
DISTRICT, : CUMBERLAND COUNTY, PENNSYLVANIA
Appellant
v.
: CIVIL ACTION -- LAW
CUMBERLAND COUNTY BOARD
. OF ASSESSMENT and PROSPERITY
DEVELOPMENT COMPANY,
Appellants : No. 97-2769 CIVIL TERM
INRE: TAX ASSESSMENT APPEAL
BEFORE OLER, J.
OPINION and ORDER OF COURT
OLER, J., September 21,1998.
This case is a tax assessment appeal filed on behalf of East Pennsboro Area School
District with respect to certain real estate owned by Prosperity Development Company. A
hearing on the matter was held on June 3,1998.
The county board of assessment initially detennined the market value of the property
to be $6,590,000.00: On the present appeal, the owner's expert has placed its value at
$7,830,000.00.2 The school district's expert has placed its value at $9,000,000.00.3
Based upon the evidence presented at the hearing, the following Statement of Facts,
Discussion and Order of Court are made and entered.
I This valuation followed an appeal to the board by the owner of an assessment of
$662,100.00, which indicated a market value of $9,458,571.00. See Appellant's Petition and
Notice of Appeal, paragraphs 6-8; Reply of Appellee Prosperity Development Company,
paragraphs 6-8.
2 Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co., Inc.), at 67,
3 Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 83.
1
STATEMENT OF FACTS
Appellant is the East Pennsboro Area School District, a public school district in
Cumberland County, Pennsylvania, having offices at 890 Valley Street, Enola,
Pennsylvania.4 Appellee Cumberland County Board of Assessment is the board which hears
and detennines appeals from assessments made by the chief county assessor.s Appellee
Prosperity Development Company, is a business entity having offices at 2525 North 7th
Street, Harrisburg, Dauphin County, Pennsylvania. and is the record owner of a 10.37 acre
tract of land situated generally at the intersection of North 21st Street and Routes 11/15
(Camp Hill Bypass) in East Pennsboro Township, Cumberland County, Pennsylvania.6 It
bears Tax Parcel Number 09-20-1854-004.7
This property is located in the south-central part of the Commonwealth, about three
miles west of Harrisburg, the state capital (and county scat of Dauphin County), and about
15 miles cast of the Borough of Carlisle, the county scat of Cumberland County.8 The area
is generally prosperous.9 The property is within five miles of an interchange of the
4 Appellant's Petition and Notice of Appeal, paragraph 1; Reply of Appellee
Prosperity Development Company, paragraph 1.
S Appellant's Petition and Notice of Appcal, paragraph 23; Reply of Appellee
Prosperity Development Company. paragraph 23; Act of May 21, 1943, P.L. 571,
~302(b)(I), as amended, 72 P.S. ~5453.302(b)(l).
6 Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co,. Inc.), at 10; Appellant's
Exhibit 1 (Appraisal of Hirsh Valuation Group), at 9, 21. Access to the property is available
only from North 21st Street./d., at 21.
7 Appellant's Petition and Notice of Appeal, paragraph 4; Reply of Appellant
Prosperity Development Company, paragraph 4.
8 Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 9.
9 In 1996. the Harrisburg Area population was estimated to be 613,062, with a
population growth rate of 4,3 percent. /d. at 10. As of August 1996. the unemployment rate
2
Pennsylvania Tumpike.1O
The land is zoned Commercial General by the municipality, according to one expert,lI
and Professional Office District, according to another,u The improvements on the tract, in
addition to a pump station,I,1 have been summarized as follows:
The site currently is improved with a I-story detached
service station building, a I-story detached fast-food restaurant
building, a 5-story detached office building, a 3-story detached
office building, and a retail strip center with a I-story semi-
detached drugstore, and a I and part 2-story semi-detached
restaurant building with a mezzanine:4
More specifically, these improvements are occupied by an Exxon gasoline service
station, a Wendy's fast-food establishment, an office building known as Plaza 21, an office
building known as the American Office Center, and a strip shopping center consisting of a
Weis food market, a Thrift drug store, and a J.C. Dunphy's Pub. 15 Paved drive and parking
areas surround the buildings.16
The areas and property rights associated with the buildings have been outlined as
follows:
in Cumberland County was the lowest in the state (2.7%), and the unemployment rate in
Dauphin County was the second lowest in the state (3.0%). [d., at 13.
10 Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co., Inc.). at 3.
II Appellant's Exhibit's 1 (Appraisal of Hirsh Valuation Group) at 26.
12 Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co., Inc.), at 10.
IJ Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 21.
14 [d.
15 [d., at 6.
16 [d, at 22.
3
The subject site is owned by Prosperity Development
[Company). The subject improvements are owned as follows:
1. Semi-detached retail building, 35,897 SF,
owned by Prosperty Development [Company] and
leased to Weis Markets
2. Semi-detached retail building, 14,000 SF,
owned by Prosperity Development [Company] and
leased to Thrift Drug
3. Semi-detached restaurant building, 5,597 SF,
owned by Prosperity Development [Company] and
leased to J,C. Dunphy's
4. Detached fast-food restaurant building, 2,685
SF, owned by Wendy's of New York (land-lease)
5. Detached gas-station building, 1,854 SF,
owned by Thomas E. Zimmerman (land-lease)
6, Detached 4-story [sic] office building, 63,010
SF, owned by Plaza 21 Realty Associates (land-lease)
7. D:ltached I-story pump house, 500 SF
8. Detached 3-story office building, 46,638 SF,
owned by Penn 21 Associates (land lease) 17
These enterprises are compatible with other uses in the vicinity ,18 One negative aspect
of the site is that ingress and egress can be hampered by traffic congestion.19 Parking on the
premises, in the form of 604 spaces. is also somewhat below the optimal amount.20
Leases, including renewal options, applicable to the Weis market occupancy provide
for gradual increases in rent for the building from $2.23 per square foot in 1987 to $6.10 in
17/d., at 6,
18/d., at 23.
19 Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co., Inc.), at 3.
20/d.. at 8-9.
4
2007. and gradual increases in rent for a parking area from $14.175.00 per year in 1987 to
$17,550.00 in 2010.21 The lease, including renewal options. applicable to the Thrift drug
store occupancy. provides for rent of $3.57 per square foot, plus 2.5% of net annual retail
sales in excess of about $2.000,000.00.22 The lease, including renewal options, applicable
to the J.C. Dunphy's occupancy, provides for gradual increases in rent from $11.29 per
square foot in 1995 to $23.73 per square foot in 2014.
The ground lease. with renewal options, applicable to Wendy's occupancy provides
for an annual base rent of $40,000.00, plus 5% of gross sales in excess of $800,000.00, until
2009,2J
The ground lease, with a renewal option, applicable to the Exxon Station occupancy,
provides for an annual base rent of $30,000.00 in 1993, increasing by 4% each year thereafter
until 2023.
Lessees in the Plaza 21 Office Building include. or have included, a medical group.
a renal treatment center, an accounting firm, and Pennsylvania Blue Shield.24 Lessees in the
American Office Center include several medical practitioners or groupS,z5
An appeal to the county board of assessment by the property owner (from an
assessment implying a market value of $9.458.571.00) was filed on August I, 1996. The
board reduced the assessment so as to indicate a market value of $6,590,000.00.26 The
township appealed to this court from this determination by the board on May 23,1997.
21/d,. at 19.
22/d.. at 16. Traditionally. sales at this location have not reached this figure.
2J /d., at 21. Gross sales appear generally to exceed this amount. /d.
24 /d.. at 29-31.
25/d.. at 24-28.
26 See note 1 supra and accompanying text.
5
At the hearing on the township's appeal from the board's determination, it was
stipulated by counsel that the applicable common level ratio was seven perccnt. The
county's predetermined ratio was 25 percentP
Appellant (the township) presented the tcstimony of Laurence A. Hirsh, CRE, MAl,
president of the Hirsh Valuation Group, on the subject of the property's market valuc.
Appcllee Prosperity Dcvclopmcnt Company prcscnted the testimony of William T. BOil,
MAl, CCIM, a principal of Equity Appraisal Co., Inc., on the subject.
Both experts felt that, as improved, the property was being subjected to its highest and
best use.28 Both believed that an income approach was a useful method for valuation of the
property,Z9 that a sales comparison approach was also useful,JO or at least helpful for certain
purposes,JI and that a cost approach was not helpful. J2 Both experts viewed the Weis market
and Thrift drug leases as below market.JJ
The township's expert. with respect to the income approach, valucd thc property by
27 See In re: Appeal of Penn Harris Company, 43 Cumberland L.J. 51 (1993).
28 See Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 44; Appellec's
Exhibit 1 (Appraisal of Equity Appraisal Co" Inc.), at 11.
Z9 See Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 80; Appellee's
Exhibit 1 (Appraisal of Equity Appraisal Co,. Inc,), at 12,34.
JO See Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 56.
JI See Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co., Inc.), at 42.
lZSee Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group). at 46; Appellce's
Exhibit 1 (Appraisal of Equity Appraisal Co., Inc,), at 12.
JJ See Appellant's Exhibit I (Appraisal of Hirsh Valuation Group), at 66; Appellee's
Exhibit 1 (Appraisal of Equity Appraisal Co,. Inc,). at 14.
6
the direct capitalization, band of investment, method..14 This method was described as
follows:
In order to convert net operating income into an indication of
value which is reflective of market conditions, a capitalization
rate must be used .., which also is reflective of the market. This
capitalization rate blends the rate necessary to service a typical
mortgage ... with the rate required to attract equity investment
at similar levels of risk. This blending method, known as the
band of investment. combines these two components as a
weighted average to form the overall rate of capitalization by
which net operating income will be capitalized..15
Utilizing market (as opposed to actual) income and estimated expenses and vacancy
rates to arrive at net operating income, and applying a uniform capitalization rate of 11.5
percent (10.2% plus a 1.3% tax 10adl6). the township's expert valued the components of the
property as follows:
Plaza 21 Office Building $3.237.065
American Office Center $2.100.343
Exxon Service Station $217,630
Fast-Food [Wendy's] Restaurant $315,176
Strip Center $3,147,45537
The total estimated value for the property on the basis of this application of the
income approach was rounded off to $9.000,000,OO:lK The same figure was reached by this
34 See Appellant's Exhibit} (Appraisal of Hirsh Valuation Group), at 78.
35 See Appellant's Exhibit} (Appraisal of Hirsh Valuation Group). at 69.
l6 "Real estate tax [has been] loaded into the overall capitalization rate:' Appellant's
Exhibit 1 (Appraisal of Hirsh Valuation Group), at 68.
37 Appellant's Exhibit} (Appraisal of Hirsh Valuation Group), at 78,
,lK Appellant's Exhibit} (Appraisal of Hirsh Valuation Group), at 83.
7
expert utilizing the comparable sales approach.JY
The property owner's expert relied primarily upon an income approach to value the
components of the property, with the exception of the service station, which was valued by
the comparable sales approach.40 As to those components valued according to the income
approach, the expert employed one of the following two methods:
(1) Estimate and divide first-year stabliized net income before
debt service by an appropriate overall capitalization rate, This
procedure is known as direct capitalization,
(2) Extimate over a normal projection period future annual net
incomes and reversionary value, and discount all net cash flows
by a rate sufficient to attract investment capital. Commonly
known as yield capitalization, this method can employ
discounted cash flow analysis, or an overall capitalization rate
which weight the effect of debt cost. loan amortization, equity
yield, and changes in income and property value over a normal
projection period.41
The first technique was used for the two office buildings, the building occupied by
Wendy's and that occupied by J.P. Dunphy's Pub;4z a capitalization rate of 12,3 percent (with
a 1.31% tax load factor included) was utilized for the office buildings, and a capitalization
J91d.
40 This exception was explained by the expert as follows:
Existing gas stations generally lease based on a percentage of
gas sales. In order to avoid the inclusion of business value for
this portion of the subject, the value of the service/gas station on
support land will be determined only through the Sales
Comparison Approach.
Appellee's Exhibit I (Appraisal of Equity Appraisal Co.. Inc.). at 32.
41 Appellee's Exhibit I (Appraisal of Equity Appraisal Co,. Inc,), at 14.
4Z ld,. at 14.
8
rate of 10.5 percent was utilized for the Wendy's and J.P. Dunphy's components.4J The
second technique was used for the Weis market component and the Thrift drug component.44
These applications by the property owner's expert yielded the following valuations:
Plaza 21 Office Building $2,940.000,00
American Office Center $2.350,000.00
Exxon Service Station $200.000.00
Wendy's and Dunphy's $810,000.00
Thrift Drug $291.000.00
Weis Market $1,236.000.00
The total estimated value for the property on the basis of this analysis was rounded
off to $7.830.000.00.45 An overall evaluation based primarily on the comparable sales
method was not provided by the property owner's expert.
As will be discussed hereinafter in this opinion. the court, after weighing the opinions
of the experts, has concluded that the market value of the property should be set at
$8.500,000.00.
STATEMENT OF LAW
In tax assessment cases. the taxing authority's assessment is given a rebuttable
presumption of validity. Deitch Co. v. Board of Property Assessment Appeals and Review
of Allegheny County. 417 Pa, 213, 221, 209 A.2d 397,402 (1965). The taxpayer. then. must
come forward with credible, relevant evidence to overcome this presumption. /d. Once the
4J /d. 36-38.
44 "We have chosen to value the subject property using both direct and yield
capitalization.... The current leases with the exception of Weis Market and Thrift Drug, are
generally at market. Because of the long tenn, below market leases associated with the Weis
Market and Thrift Drug space. these portions of the subject have been value[d] using a
discounted cash flow analysis," /d.. at 14.
45/d.. at 67.
9
taxpayer has done so. the taxing authority's presumption of validity ends. Id. at 221-22. 209
A.2d at 402.
"In a tax assessment appeal the trial court hears the case de novo and must determine
the fair market value of the property based on the competent, credible and relevant evidence.
If. as is typically true. the expert testimony conflicts, the trial court must determine the
weight and credibility it will afford to each expert." Pittsburgh-Des Moines Steel Co., Inc.
v. McLaughlin. 77 Pa. Cornmw. 565. 568. 466 A,2d 1092. 1094 (1983); see Act of May 21.
1943. P.L. 571, ~ 704, as amended, 72 P,S. ~ 5453.704 (1993 Supp.). The market value is
to be determined "as of the date such appeal was filed before the board of assessment
appeals." Id.. ~ 704(b)(l), as amended. 72 P.S. ~ 5453.704(b)(l).
"Pennsylvania case law has consistently held that actual market value is that price
which a purchaser. willing but not obliged to buy. would pay an owner. willing but not
obliged to sell, taking into consideration all uses Ito] which the property is adapted and might
in reason be applied" County of Monroe v, Pinecrest Development Corp" 98Pa. Commw.
200.203.510 A.2d 1274. 1276 (1986); see In re Johnstown Associates, 494 Pa. 433, 431
A,2d 932 (1981); Serlueo v. Cumberland County Board of Assessment and Revision of Taxes.
41 Cumberland LJ. 286 (1991).
"The function of the [court] in a tax assessment case is not to independently value the
property... but to weigh the conflicting testimony and values expressed by the competing
experts and arrive at a valuation based on the credibility of their opinions." County of
Monroe v. Bolus, 149 Pa. Commw. 458. 463. 613 A,2d 178, 181 (1992). Moreover. the court
"is not bound to accept the expert's testimony merely because it is the testimony of someone
having special skill or knowledge. All the components that the expert considered are matters
which the [court] considers in determining the persuasive quality of the testimony." In re
Appeal of Aveo Corp.. 100 Pa. Commw. 616. 621. 515 A.2d 335, 338 (1986).
Approaches to valuation are the "cost .... comparable sales and income approaches ......
10
Act of May 21. 1943. P.L. 571.~ 602(a). CIS Clmended, 72 P.S. ~ 5453.602(a). "The
Assessment Law... requires that all three approaches 'must be considered in conjunction
with one another,''' Serluco v. CumberlCllld County Board of Assessment and Revision of
Taxes. 41 Cumberland L. J. 286. 290 n.13 (1991).46
"The cost approach values the property by considering the reproduction or
replacement cost of the property. less dcpreciation and obsolescence," In re Appeal of
Property ofCynwyd Investments. 679 A.2d 304. 308 n.2 (Pa. Commw, 1996) (citations
omitted).47 Under the income approach, the value of a property [generally] is calculated by
capitalizing the property's annual net income (gross income minus expenses). In re Appeal
of V. v.P. Partnership. 167 Pa. Commw, 282, 285 n.1. 647 A.2d 990, 991 n.l (1994).
Finally. under the comparable sales approach the value of a property is determined by
comparing the property to several similar properties. taking into consideration differences
in size, age, physical condition. location and other relevant factors. In re Appeal of Property
ofCynwyd Investments. 679 A.2d 304. 308 n.3 (Pa. Commw. 1996) (citations omitted).
With respect to the income approach, in determining the net rental income for a
property an appraiser will employ either contract rent or market rent for the property. In re
Appeal of Property of Cynwyd Investments. 679 A.2d 304 (Pa. Commw. 1996). "Contract
rent is '[t1he actual rental income specified in a lease,''' American Institute of Real Estate
Appraisers, Dictionary of Real Estate Appraisal 71 (1984), quoted in In re Appeal of
46 Act of May 21,1943. P.L. 571, ~ 602(a). as amended. 72 P,S. ~ 5453.602(b); see
Reichard-Coulston v. Revenue Appeals Bd.. 102 Pa. Commw. 227. 517 A.2d 1372 (1986),
allocatur denied, 517 Pa. 611, 536 A.2d 1335 (1987).
47 "Specifically, this method entails (1) estimating the value of the land assumed
vacant and available for its highest and best use; (2) estimating the reproduction cost or cost
new of the facility; (3) subtracting from the latter amount the facility's depreciation; and (4)
adding to this depreciated balance the value of the land estimated in (1) above," In re
Appeal of Property of Cynwyd Investments. 679 A.2d 304, 308 n,2 (Pa. Commw. 1996)
(citations omitted).
II
Property ofCynlVyd InI'estments, 679 A.2d 304, 308 n.5 (Pa. Commw. 1996). "Markct rcnt
is '[t]hc rcntal incomc that a property would most probably command in thc opcn market;
indicatcd by currcnt rcnts paid and asked for comparable space as of the datc of appraisal.
Id. n,6.
Normally. contract rent should be utilized in determining thc nct rental incomc for
purposes of the income capitalization approach only if two conditions arc met:
First, the remaining term of the lease must be of adequate length
so that if the property were placed on the market. a potential
purchaser would recognize the lease and be willing to pay more
or less for the property because of its existcnce than if the
property were unemcumbered by the lease. Sccondly. the
contract rent must be cither higher or lower than existing market
rcnt. Again. the difference between the contract rent and the
markct rent must be large enough to affect what an able and
willing buyer would pay for the property.48
Where a long-term lease is below market value. it is appropriate to utilize contract rent
for purposes of determining net operating income. See In re Appeal of Marple Springfield
Center, Inc., 530 Pa. 122.607 A.2d 708 (1992).
To arrive at an assessed value of property. "[tlhe court, after determining the market
value of the property.... shall then apply the established predetermined ratio to such value
unless the corresponding common level ratio... varies by more than fifteen pcrcentum (15%)
from the established predetermined ratio, in which case the court shall apply the respective
common level ratio to the corresponding market value of the property."49 The "established
predetermined ratio" is "the ratio of assessed value to market value established by the board
4Illn re Appeal of Property ofCynlVyd Investments, 679 A.2d 304, 308 ( Pa. Commw.
1996).
49 Act of May 21, 1943, P.L. 571. ~ 704(c). as amended. 72 P,S. ~ 5453.704(c).
12
of county commissioners ...,'.50 The "common level ratio" is "the ratio of assessed value to
current market value used generally in the county as last determined by the State Tax
Equalization Board ...."51
APPLICATION OF LAW TO FACTS
In the present case. the court was impressed with the analyses of both experts. In this
regard, each expert frankly acknowledged the existence of factors which tended to support
a result less favorable to the party which had engaged him. The school district's expert. for
instance, noted that "the site has limited parking. as well as difficult egress to North 21st
Street due to traffic congestion at the traffic light at its intersection with US 11/15 (Camp Hill
Bypass),',s2 The property owner's expert asssumed that one of the operations, which had
been producing declining revenues, would reverse this trend,s3 and that an existing 31 percent
vacancy rate in one of the office buildings would not continue;s4 this expert also declined to
support the relatively low value placed upon the property by the board.
It is the court's view that a willing buyer and willing seller would find both of the
reports submitted on the subject of the value of the property helpful. The report of the
property owner's expert appears to the court to have been more faithful to the principle that
contract rent, as opposed to market rent, is appropriately considered in the case of long-term.
below market leases. In addition. the report of the property owner's expert endeavored to
treat the components of the property more individually in terms of capitalization rate and
method of appraisal.
50 Id. ~ 102. as amended, 72 P.S. ~ 5453.102.
SlId
52 Appellant's Exhibit 1 (Appraisal of Hirsh Valuation Group), at 23.
53 Appellee's Exhibit 1 (Appraisal of Equity Appraisal Co., Inc.), at 35,
54 Id., at 14.
13
The report of the school district's expert had the virtue of presenting a fully developed
and compelling comparable sales analysis and a more comprehensive explanation of the
expert's position. It also displayed more familiarity with local conditions.
Being cognizant of the court's obligation to weigh the conflicting testimony and
values expressed by the competing experts, and to refrain from independently valuing the
property, the court is of the view that the value of the property in question lies between the
appraisals of the experts, with the position of the school district's expert being accorded
slightly more weight primarily because of a more developed comparable sales analysis. The
result is a valuation of $8,500,000.00.
For the foregoing reasons, the following order will be entered:
ORDER OF COURT
AND NOW, this 21st day of September, 1998, upon consideration of the tax
assessment appeal filed herein, following a hearing and in accordance with the
accompanying Opinion, it is ordered as follows:
THE MARKET VALUE as of August I, 1996 (and for succceeding years until
revised), for the 10.37 acre parcel owned by Appellee Prosperity Development Company,
situated in East Pennsboro Township, Cumberland County, Pennsylvania, and bearing tax
parcel number 09-20-1854-004, is fixed at $8,500,000,00.
THE PERTINENT COMMON LEVEL RATIO for Cumberland County has been
stipulated to be seven percent. The predetermined ratio was 25 percent.
THERE BEING A DIFFERENCE of more than 15 percent between the common level
ratio and predetermined ratio, as a result of which assessments are to be determined by ap-
14
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LAW OFFICES
SNELDAKER.
BRENNEMAN
a SPARE
B. PROSPERITY DEVELOPMENT COMPANY, having its
office at 2525 North 7th Street, Harrisburg, PA 17110,
hereinafter called "Appellee Owner".
3. Appellee Board is the duly constituted entity created by
law to hear and decide real estate tax assessment appeals and was
so acting at all times relevant hereto.
4. Appellee Owner is the reported owner of certain real
estate known and identified as Tax Parcel No. 09-20-l854-004 as
shown on the Cumberland County Real Estate Tax Assessment records
located in the Township of East Pennsboro in Cumberland County,
Pennsylvania (hereinafter called "Subject Real Estate").
5. Appellant School District is a public taxing body which
imposes real estate taxes on real estate located in the Township
of East Pennsboro, including the Subject Real Estate.
6. The Cumberland County Assessor fixed and determined the
real estate tax assessment for the Subject Real Estate for the
1997 tax year at $662,100 (which reflects an indicated market
value of $9,458,571.00 based upon the common level ratio of .07
or 7%).
7. Appellee Owner filed an appeal from such assessment with
the Appellee Board contesting the amount of said assessment. The
Board held a hearing on said appeal in its appellate capacity.
Appellant appeared at said hearing.
8. Appellee Board rendered its decision on April 30, 1997,
and gave written notice thereof to Appellant School District on
the same date, reporting that it established the market value of
-2-
LAW OP'P'ICE8
SNELBAKER.
BRENNEMAN
a: SPARE
the Subject Real Estate at $6,590,000.00.
9. Said market value translated into tax assessment equals
$461,300 based upon the common level ratio aforesaid.
10. The effect of such decision is to reduce substantially
the tax base of Appellant School District.
ll. The decision aforesaid is erroneous for the following
reasons:
A. The decision does not reflect the true market
value of the Subject Real Estate, said decision being
insufficient and below the true market value.
B. The decision is not based upon competent
evidence.
C. The decision is contrary to law.
D. The decision is not supported by competent
facts.
E. The decision constitutes an abuse of
discretion.
12. Appellant School District believes and, therefore, avers
that the market value of the Subject Real Estate is greater than
$6,590,000.
13. Other taxing bodies which impose real estate taxes on
the Subject Real Estate and which may have an interest in this
appeal are:
A. Countv of Cumberland: Board of County
Commissioners, Cumberland county Court House, 1
Court House Square, Carlisle, PA 17013.
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BAST PENNSBORO AREA : IN THE COURT OF COMMON PLBAS
SCHOOL DISTRICT, CUMBBRLAND COUNTY, PENNSYLVANIA
Appellant, :
:
v, :
:
CUMBBRLAND COUNTY BOARD :
OF ASSBSSMENT and : CIVIL ACTION - LAW
PROSPERITY DEVELOPMENT :
CORPORATION, :
Appellee : NO, 97-2769 CIVIL TERM
REPLY
AND NOW, comes Prosperity Development Company by and through
its attorney the Law Offices of Darrell C. Dethlefs and files this
Reply of which the following is a statement:
1. Admitted.
2 (A-B) Admitted.
3. Admitted.
4, Admitted.
5. Admitted.
6, Admitted.
7. Admitted.
8, Admitted.
9. Admitted.
10. Denied.
conclusions of law
The averments in this paragraph contain
to which no responsive pleading is required.
11. (A-El Denied, The averments in this paragraph contain
conclusions of law to which no responsive pleading is required,
If it is deemed that an Answer is required to these allegations it
is specifically denied that the Decision made foresaid is erroneous
in that it does not reflect the true market value of the subject
real estate and that said Decision is insufficient and below the
true market value, It is further denied that the Decision is not
based upon competent evidence and it contrary to law. It is
further denied that the Decision is not supported by competent
facts and that the Decision constitutes an abuse of discretion.
Proof to the contrary is demanded at the time of trial.
12 . Denied. The averments in this paragraph contains
conclusions of laws to which no responsive pleading is required.
If a Response is deemed necessary it is denied that the market
value of the subject real estate is greater than Six Million five
hundred ninety thousand ($6,590,000.00) Dollars and 00/100 proof to
the contrary is demanded at the time of trial.
13 (A-B) Admitted.
WHEREFORE, Appellee, Prosperity Development Corporation prays
your Honorable Court for an Order confirming the market value and
resulting assessment as fixed by the Cumberland County Board of
Assessment Appeals, or fixing the market value of the property at
such lower valuation as the Court may deem proper.
Respectfully Submitted,
Date: L,{ P.{4i
205
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BAST PENNSBORO AREA SCHOOL
DISTRICT ,
Appellant
IN THE COURT OF COMMON PLBAS
CUMBERLAND COUNTY, PENNSYLVANIA
No. 97-2769
v.
CUMBBRLAND COUNTY BOARD OF
ASSBSSMENT AND PROSPBRITY
DBVBLOPMBNT COMPANY,
Appellees
Real Bstate Tax Assessment
Appeal
ORDBR OF COURT
AND NOW, this l<i~ day of ':-~~Nl.>l ' 1998, upon
consideration of the within Motion, this matter is hereby re-listed
for a hearing which will be held on the 3 4A ./ day of J ~ .i\ Q ~ ,
1998,at 9.'00 o'clock ~.m. in Court Room # -L.
BY THE COURT:
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BAST PENNSBORO AREA SCHOOL
DISTRICT
Appellant
IN THE COURT OF COMMON PLEAS
CUMBBRLAND COUNTY, PENNSYLVANIA
No. 97-2769
v.
CUMBBRLAND COUNTY BOARD OF
ASSBSSMENT AND PROSPERITY
DEVELOPMENT COMPANY,
Appellees
Real Bstate Tax Assessment
Appeal
TO THE HONORABLB JUDGB WESLBY OLBR,JR.:
MOTION TO RB-LIST FOR A HEARING
Appellee, Prosperity Development Company, by and through their
Attorney The Law Offices of Darrell C. Dethlefs, hereby file this
Motion to Re-List for a Hearing and in support thereof avers as
follows:
1. On May 23, 1997, Appellant by and through their counsel
filed an Appeal relative to the Determination of the CUmberland
County Board of Assessment and Revision of Taxes relative to the
property identified as Parcel Number 09-20-1854-004.
2. A hearing was set by The Honorable Wesley Oler, Jr. for
October 2, 1997.
3. By Motion of Appellant's Attorney with concurrence of
Appellee I s Attorney, the Appellant School District requested a
Continuance of the October 2, 1997 hearing. Said Continuance was
granted,
4. At this time, the Appellee of Prosperity Development
Company wishes this matter to be re-listed for hearing.
LAW O'flCtS
SNELDAKER.
BRENNEMAN
8: SPARE
EAST PENNSBORO AREA SCHOOL
DISTRICT,
.
.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
Appellant, :
.
.
vs.
CIVIL ACTION - LAW
CUMBERLAND COUNTY BOARD
OF ASSESSMENT and
PROSPERITY DEVELOPMENT
CORPORATION,
.
.
NO. 97-2769 CIVIL TERM
Appellees :
MOTION TO CONTINUE HEARING
TO: HONORABLE J. WESLEY OLER, JR.
AND NOW, comes East pennsboro Area School District by its
Attorneys, snelbaker, Brenneman & Spare, P.c., and respectfully
moves the Court as follows:
1. East Pennsboro Area School District ("Appellant") has
appealed from a decision of the Cumberland County Board of
Assessment Appeals concerning the real estate assessment of
property owned by Prosperity Development corporation ("Appellee
Owner") known and identified as Tax Parcel No. 09-20-lB54-004.
2. By Order dated May 2B, 1997, your Honorable Court fixed
a de novo hearing in said appeal for October 2, 1997, a true copy
of said Order being attached hereto marked "Exhibit A".
3. Appellant promptly entered upon its preparation for said
hearing and engaged Hirsh Appraisal Group (Harrisburg, PAl to
make a formal appraisal of the subject real estate.
4. Said appraisal firm has advised Appellant that it will
be unable to complete its work by October 2, 1997, because of its
EAST PENNSBORO AREA .
.
SCHOOL DISTRICT, .
.
Appellant, .
.
.
.
v.
.
.
CUMBERLAND COUNTY BOARD .
.
OF ASSESSMENT and .
.
PROSPERITY DEVELOPMENT .
.
CORPORATION,
Appellees .
.
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 97-2769 CIVIL TERM
ORDER OF COURT
AND NOW, this 2.~1~ day of May, 1997, due to a scheduling
conflict, the hearing previously scheduled for September 4, 1997,
is RESCHEDULED to Thursday, October 2, 1997, at l:30 p.m. in
Courtroom No.5, Cumberland County Courthouse, Carlisle,
Pennsylvania.
BY THE COURT,
Richard C. Snelbaker, Esq.
44 West Main Street
Mechanicsburg, PA l7055
Attorney for Appellant
Michael J. Pykosh, Esq.
355 North 21st Street
Camp Hill, PA l701l
Attorney for Appellee Owner
Stephen D. Tiley, Esq.
5 South Hanover Street
Carlisle, PA 17013
Attorney for Appellee Board
Horace A. Johnson, Esq.
Cumberland County Courthouse
1 Courthouse Square
Carlisle, PA 17013
Attorney for Cumberland County
EXIIIBI'f .\
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EAST PENNSBORO AREA SCHOOL
DISTRICT.
Appellant
y,
CUMBERLAND COUNTY BOARD OF
ASSESSMENT and PROSPERITY
DEVELOPMENT COMPANY.
Appellees
@ JUN 1 7 1998
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY.
PENNSYLVANIA
NO. 97-2769 CIVIL TERM
CIVIL ACTION - LAW
REAL ESTATE TAX ASSESSMENT
APPEAL
POST TRIAL BRIEF OF APPELLEE PROSPERITY DEVELOPMENT COMPANY
Backoround
The CUmberlllnd County Assessor fixed lInd determined the Relll Estllte TlIx
Assessment for the 1997 tllX yellr for the property In Questfon lit 662,100 (Which
reflects 1In Indlcllted mllrket YlIlue of $9,456,571.00 bllsed upon the common level
ratio of ,07 rr 7 percent.)
Appellee, owner, ftled lIl1l1ppelll rellltlve to the tllX lISsessment for the 10,37
lIcre pllrtelloCllted In ElIst Pennsboro Township, Cumberland County, Pemsylvllnla.
Identlfled as plll"cel number 09-20-1654-004, The aforementioned Appeal was filed
rellltlve to the 1997 tllX yecr,
On April 30, 1997 the ClIl1berlllnd County BOllrd of Assessment rendered Its
DecisIon reporting thet It estllbllshed the MlIrket VlIlue of the Subject Real Estllte lit
$6,590,000.00.
ElIst Pennsboro Arell School D1str1ct lIppellled the aforesllld Decision.
A Hellrlng rellltlve to sllld appelll was held on June 3, 1996.
Questions Presented
1. Should the falrmllrket YlIlue of 1I mixed use Investment property be
detennlned by tllklng Into lIccount the lIctulll long tenn lellses presently
In effect, rather thlln by lIttemptlng to estllbllsh flllr mllr1cet value
bllsed upon a mllrket rent? Proposed Answer On the Afflrmlltlve)
2, Does the Court hllve JurlSdlctlon to set the flllr mar1cet value for the
tllx yellr, 1996 In lIn llppecl, In which the Bocrd of Assessment Appelll
established fair market value for the tllX yellr of 199n Proposed
Answer (In the Neglltlve)
In support of Its Appecl, Appellant presented the expert testlmolll of Laurence
Hirsh, who testifIed thllt It WllS his opinIon thet the fair mllr1cet vlllue of the pllrtel In
Questlon Is nIne ($9,000,000.00) m11110n dOl1l11"S,
I
. -,
Appellants expert derived his opInion based upon a .Market Rent., Which he
determined based upon What he believed the parcel could demlllld In rents,
Appellant.s expert did not take Into accotllt What the actual rents yield.
On cross examination, Appellant's expert agreed that the property In ~estlon
Is a mixed used parcel, and that the most likely purchaser would be an Investor. Mr,
HIrsh also alreed that an Investor would take long term leases Into account When
determining how much to pUrchase a property slml1ar to the subject property. Mr.
Hirsh also agreed that the Income Approach Is the best method of valUIng the subject
parcel.
Upon further questioning, Mr. HIrsh agreed that along term lease Is one whIch
has a term of 3-5 years or more, It was also agreed that all of the leases relative to
the subject property are long term leases.
The leases currently In effect expire as follows:
Tenant
Explratfon of Lease
1.
2.
3.
4,
5.
6.
J,C, Dunphy Pub
Thri ft Drug I nc,
Wets Market
Wendy's RestllUrant
Exxon
American Office Center
2005
2014
2012
2009
2013
2007
Appellee's expert, on the other hlllld, used the current long term leases to
determIne the current faIr market value, which In his opinion Is $7,630,000.00,
The Pennsylvania Supreme Court In Aooeal ofMarole Sonnqfleld Center. Inc.
607 A2d 706 CPA 1992) reversed the Commonwealth Court and held that:
The capltallzatlon-of-lncOll1e approach to
tax lljlpralsals Is the most appropriate If
not the only valld means of estllbllshlng faIr
mlll"ket value of real estate when the rental
Income Is below what would otherwise be
the current market level but fer along-term
commercial lease, because such long-term
leases are an accepted aspect of commercial
real estate transactfons and theIr effects
have a decisive Impact on the price a bllJer
would pay for the affected property, To Interpret
the tax assessment statute as requlnng
valuation of property In ~pothetlcal .unencllnbered
form,. as Commonweal th Court did, I s to Ignore the
economic realltles of cOll1merc1al real estate
transectlons. Under the rationale we followed
In .Iolns/own A.t;SO('J4/~, I t was proper for the
trial court to utlllze the capltallzatlon-of-Income
approach In this case as II means of establlshlng
fair market value. Id at 710
I
~
Appellant
@JUN 1 7 1998
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
EAST PENNSBORO AREA SCHOOL
DISTRICT,
Y.
NO. 97-2769 CIVIL TERM
CIVIL ACTION - LAW
CUMBERLAND COUNTY BOARD OF
ASSESSMENT and PROSPERITY
DEVELOPMENT COMPANY,
Appellees
REAL ESTATE TAX ASSESSMENT
APPEAL
POST TRIAL BRIEF OF APPELLEE PROSPERITY DEVELOPMENT COMPANY
Bnckoround
The Cumberlllnd County Assessor fixed Ilnd determined the Ralll Estllte Tllx
Assessment for the 1997 tllX yellr for the property In Quest10n lit 662,100 (which
reflects llI1lndlcllted mllrket VIllue of $9,456,571.00 bllsed upon the common level
rllt I 0 of .07 or 7 percent.)
Appellee, owner, filed Iln Ilppelll relllttve to the tllX llSsessment for the 10.37
Ilcre pllrcellocllted In Ellst Pennsboro Township, Cumberlllnd County, Pemsylvllnla.
Identified liS pllrcel number 09-20-1654-004. The Ilforement1oned Appelll WllS flied
rellltlve to the 1997 tllX yelll".
On April 30, 1997 the ClIl1berlllnd County BOllrd of Assessment rendered Its
Decision reportIng thllt It estllbllshed the MUket Vlllue of the subject Relll Estllte lit
$6,590,000,00.
Ellst Pennsboro Arell School DIstrict Ilppellled the Ilforesllld DecIsion,
A Hellrlng rellltlve to sllld Ilppelll WIlS held on June 3, 1998.
Questions Presented
1. Should the flllr mllrket VIllue of Il mixed use Investment property be
detennlned by tllklng Into Ilccount the Ilctulll long tenn lellses presently
In effect, I'lIther thlln by Ilttempttng to estllbllsh flllrmllrl<et vlllue
bllsed upon Il mllrket rent? Proposed Answer On the Afflrmlltlve)
2. Does the Court hllve jurlsdlctloo to set the flllr mllr1<et vlllue for the
tllX yellr, 19981n Iln Ilppeol, In which the BOlll"d of Assessment Appelll
estllbllshed flltr /l'lllrket vlllue for the tllX yellr of 19977 Proposed
Answer (In the Neglltlve)
In support of Its Appeol, Appellllnt presented the expert testtmollJ of Lllurence
Hirsh, who testified thllt It WllS his opInion thllt the flllr mllrl<et vlllue of the pllrce! In
Question Is nine ($9,000,000,00) mll1lon dolllll"S,
Appellents expert derived his opinion besed upon e "Merket Rent", which he
determfned besed upon Whet he believed the percel could demend In rents,
Appellent.s expert did not tllke Into eccolllt Whet the ectuel rents yield.
On cross exemlnetton. Appellent's expert llgreed thet the property In ~estlon
Is e mixed used percel, end thet the most likely purcheser would be en Investor. Mr.
Hirsh elso ejJ"eed thet en Investor would teke long term leeses Into llCcount Yr1len
determining how much to purchese e property slmtJer to the subject property, Mr,
Hirsh elso egreed thet the Income Approech Is the best method of YCI1ulng the subject
percel.
Upon further questtonlng, Mr. Hirsh egreed thet elong term leese Is one which
hes e term of 3-5 yeers or more, It wes elso egreed thet ell of the lllllses reletlve to
the subject property ere long term leeses,
The leeses currently In effect expire es follows:
Tenent
Expll'lltton of Leese
l.
2,
3.
4.
5.
6,
J,C. Dunp hy Pub
Thrift Drug Inc.
Wels Merket
Wendy's RestllUrent
Exxon
Amerlcen Offtce Center
2005
2014
2012
2009
2013
2007
Appellee's expert, on the other hend, used the current long term Illllses to
determine the current fefr merket veJue, which In his opinion Is $7,630,000,00.
The Pennsylvenle Supreme Court In Aooeel of Hero Ie Sorfnofleld Center. Inc,
607 A2d 706 (PA 1992) reversed the Commonweelth Court end held thet:
The cepltellzetlon-of-lncOOle epproech to
tOll llPPl'lllsels Is the most llPProprlete If
n!Jt the only velld meens of estllbllshlng felr
merket velue of reel estete when the rente1
Income Is below Yr1let would otherwise be
the current merket level but fer e long-term
commercl el leese, becllUse such long-term
1 eeses ere en eccepted espect 0 r corrrnercl el
reel estete trensectlons end thefr effects
heve e decisive Impect on the price e b~er
would pey for the effected property. To Interpret
the tex essessment stetute es requiring
veluetlon of property In '-dpothettcel "unenclll1bered
fonn," lIS Commonweelth Court did. Is to Ignore the
economic reellttes of cOOlmercfe1 reel estete
tl'llnSllctlons, Under the I'lltlonele we followed
In -'Dlnstown A.!:SOCI4t~, It wes proper for the
trlel court to utilize the cepltellZlltlon-of-lncome
epproech tn this cese es e meens of estebllshlng
fefr merket velue, Id et 710
11
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PLAZA 21
MR. MORRIS SCHWAB
Our findings are being transmitted In a concise format. Additional Information
collected during our analysis and utilized In arriving at our conclusions has been retained
In our files for future reference.
Our value estimate applies to the land as physically constituted, the Improvements
~ In existence, and the leases In effect on the valu Ion date and It reflects prevailing trends
,I In the Cumberland County retal r es ate market. We have made a careful Inspection.
study, and analysis of the property, and have considered all factors which, In our opinion,
I~ would tend to Influence the market value of the subject.
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We have prepared the report subject to the following assumptions and
limiting conditions.
This is a Summary Appraisal Report which is intended to comply with the
reporting requirements set forth under Standard Rule 2-2{b) of the Uniform
Standards of Professional Appraisal Practice for a Summary Appraisal
Report. As such, It might not include full discussions of the data, reasoning,
and analyses that were used In the appraisal process to develop the
appraiser's opinion of value. Supporting documentation concerning the
data, reasoning, and analyses is retained in the appraiser's file. The
information contained In this report is specific to the needs of the client and
for the Intended use stated in this report. The appraiser Is not responsible
for unauthorized use of this report.
No responsibility is assumed for legal or titie considerations. Titie to the
property is assumed to be good and marketable unless otherwise stated
in this report.
The property is appraised free and clear of any or all liens and
encumbrances unless otherwise stated In this report.
Responsible ownership and competent property management are assumed
unless otherwise stated in this report.
The Information furnished by others is believed to be reliable. However, no
warranty Is given for its accuracy.
All engineering is assumed to be correct. Any plot plans and illustrative
material in this report are included only to assist the reader in visualizing the
property .
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
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PLAZA 21
MR. MORRIS SCHWAB
responsibility Is assumed for such conditions or for arranging for
engineering studies that may be required to discover them.
It is assumed that there Is full compliance with all applicable federal, state,
and local environmental regulations and laws unless otherwise stated In this
report.
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 this appraisal report.
It is assumed that all required licenses, certificates of occupancy or other
legislative or administrative authority from any local, state, or national
governmental or private entity or organization have been or can be
obtained or renewed for any use on which the value estimates contained
in this report are based.
Any sketch In this report may show approximate dimensions and Is
Included to assist the reader In visualizing the property. Maps and exhibits
found in this report are provided for reader reference purposes only. No
guarantee as to accuracy is expressed or implied unless otherwise stated
In this report. No survey has been made for the purpose of this report.
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 otherwise stated In this report.
The appraiser is not qualified to detect hazardous waste and/or toxic
materials. Any comment by the appraiser that might suggest the possibility
of the presence of such substances should not be taken as confirmation of
the presence of hazardous waste and/or toxic materials. Such
determination would require investigation by a qualified expert in the field
of environmental assessment. The presence of substances such as
asbestos, urea-formaldehyde foam insulation, or other potentially hazardous
materials may affect the value of the property. The appraiser's value
estimate Is predicated on the assumption that there is no such material on
or in the property that would cause a loss in value unless otherwise stated
In this report. No responsibility is assumed for any environmental
conditions, or for any expertise or engineering knowledge required to
discover them. The appraiser's descriptions and resulting comments are
the result of the routine observations made during the appraisal process.
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Unless otherwise stated In this report, the subject property Is appraised
without a specific compliance survey having been conducted to determine
if the property is or Is not In conformance with the requirements of the
Americans with Disabilities Act. The presence of erchltectural and
communications barriers that are structural In nature that would restrict
access by disabled Individuals may adversely affect the property's value,
marketability, or utility.
Any proposed Improvements are assumed to be completed in a good
workman-like manner In accordance with the submitted plans and
specifications.
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.
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 any person other
than the party to whom it Is addressed without the written consent of the
appraiser, and In any event, only with properly written qualification and only
In Its entirety.
Neither ali 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) shali be disseminated to the public through
advertising, public relations, news sales, or other media without prior written
consent and approval of the appraiser.
We certify to the best of my knowledge and belief that:
The statements of fact contained in this report are true and correct.
The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal,
professional analyses, opinions, and conciuslons.
We have no present or prospective Interest In the subject. The fee for this
appraisal is not contingent upon a reduction in the subject property's real
estate tax liability.
Our analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Code of
TABLE OF CONTENTS
PHOTOGRAPHS OF SUBJECT PROPERlY. . . . . . . . . . . . . . . . . .. . . . .. . . . . . .
EXTENT OF THE DATA COLLECTION PROCESS. . . . . . . . . . . . . . . . . . . . . . .. 1
PURPOSE AND INTENDED USE OF APPRAISAL ........................ 1
DEFINITION OF MARKET VALUE
1
.................................. I.
PROPERlY RIGHTS APPRAISED
1
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LOCATION MAP. ., . . . .... ... .' ......... ............ ............. 2
LOCALllY ..................................................... 3
~ SITE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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SITE DESCRIPTION .............................................. 5
IMPROVEMENT DESCRIPTION . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
OWNERSHIP AND OCCUPANCy............ ....... .... .......... ... 10
REAL ESTATE ASSESSMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. 10
ZONING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 10
HIGHEST AND BEST USE ......................................... 11
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METHOD OF VALUATION ......................................... 12
SUMMARY INCOME APPROACH .................................... 14
SUMMARY SALES COMPARISON APPROACH ......... . . . . . . . . . . . . . . . .. 42
CORRELATION OF VALUE.. .. . . . ., ........ ... ............... ...... 67
ADDENDUM
ACTUAL INCOME AND EXPENSES
PROFILE OF APPRAISERS
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EXTENT OF THE DATA COLLECTION PROCESS
Preparation of this appraisal Involved Inspecting the subject property, reviewing the
subject's site plan and assessment records, and Investigating and analyzing factors
affecting market value including, but not limited to, location, zoning, public utilities, site
characteristics, building condition and utility, supply and demand, marketability,
neighborhood development and trends, and market conditions. Where applicable, the
subject's market value was predicated upon saies and offerings of reasonably similar and
competitive properties; the present value of prospective income attributable to real
property; and/or the addition of land value, as though vacant and available for
development to its highest and best use, and the Improvement's depreciated cost new.
Sale and lease data employed in our analysis were inspected and verified with one or
more parties involved in the transaction.
PURPOSE AND INTENDED USE OF APPRAISAL
The objective of this report is to estimate the actual value, or market value, of the
property rights described herein as of September 1, 1996. In the State of Pennsylvania,
actual value is equivalent to market value, as defined below. We understand this report
will be used in conjunction with a 1997 real estate assessment appeal.
DEFINITION OF MARKET VALUE
Market Value Is the most probable price in cash, terms equivalent to cash, or in
other precisely revealed terms, for which the subject property will sell in a competitive
market under all conditions requisite to a fair sale, the buyer and seller, each acting
prudently, knowledgeably, and for self.interest, and assuming that neither Is under
duress.
PROPERlY RIGHTS APPRAISED
The property's fee simple interest subject to existing leases has been valued in this
report. Our value estimate assumes the property is fee of liens and encumbrances
except those specifically identified in the body of the report.
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LOCALITY
The subject property Is located at the northeast corner of the Intersection of North
21st Street the Camp Hill Bypass, In East Pennsboro Township, Cumberland County,
Access to the property Is provided by three entrances on North 21 st Street. The subject
enjoys good visibility from 21 st Street and limited visibility from the Camp Hill Bypass.
21 st Street connects with Route 11/15 just south of the subJect. The Camp Hill
Bypass connects with Route 11/15 at this Intersection and is also accessed just east of
the subject from Erford Road. The intersection of 21 st Street and the Camp Hill Bypass
Is subject to heavy traffic flow and congestion. An interchange of the Pennsylvania
Turnpike is accessed within 5 miles southwest of the subject from Route 15.
. North 21 st Street Is primarily Improved with a combination of office and residential
uses, and also includes some residential development. Holy Spirit Hospital adjoins the
subject to the north. Much of the office space along this section of 21 st Street Is medical
related. Older retail and office space within the subject market have suffered In recent
years as the bulk of the prime tenants and consumer shopping is attracted to more
modern and easier accessed space found to the south west along Route 15 In the vicinity
of the Turnpike.
In summary, the subject is located near one of the area's major highways, Route
11/15, which in turn connects to other regional routes serving south-central Pennsylvania.
Although impeded by traffic congestion, the subject enjoys good road frontage. The
subject is in a mixed-use setting with direct access and visibility limited to a secondary
road. Area retail and office trends indicate a shift of demand towards space along Route
11/15, although office demand in the immediate area of the subject is fueled by the
adjoining hospital.
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BUILDING DESCRIPTION
The subject property Is improved with various retail and office building
Improvements. Outlined below Is a summary grid of the buildings by type and size. A
more detailed description of each building follows.
UNIT GROSS BUILDING NET RENTABLE
AREA (SF) AREA (SF)
Retell Strip Units
Wels Market 36,389 SF same
Thrift Drug 14,000 same
J,C. Dunphy's 4,430 same
Total Retail Strip 54,819 SF same
Freestanding Wendy's 2,685 same
Freestanding Exxon 1,854 same
Total Retail 59,358 SF same
Plaza 21 Office Building 63,010 SF 53,415 SF
American Office Center 46,638 37,500
Total Office 109,648 SF 90,915 SF
Retail Strip Center
The original portion of this center, Wels Market and Thrift Drugs, was constructed
In the late 1960's. The Weis Market unit was expanded in 1975 by 5,693 square
feet and again in 1984 by 10,243 square feet. Construction of the restaurant was
completed in October 1995. The center is primarily one-story, with only the
restaurant having a partial upper level constructed In a mezzanine style (included
In rentable area). Each unit has a front customer entrance and a rear delivery
entrance. Construction features include concrete block exterior walls, steel framing
and poured concrete floors. The roof of the original portion is a flat, built-up
surface. The restaurant addition has a vaulted roof with asphalt shingle cover.
Mechanical systems Include Individual heat pump units for each store and electric
hot water heaters for each store.
Freestandlna Wendv's
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This Is a one-story, concrete block building with exterior brick facade and vinyl
mansard and flat, built-up roof. The building was constructed In 1979. Interior
finish includes built-In seating, counters, and kitchen equipment, and quarry tile
floor cover, Fenestration consists of double glazed glass In aluminum frames.
Freestandlna Exxon
The Exxon improvements were constructed from nominal existing Improvements
In 1993. Improvements consist of two, canopied gas pump Islands (four pumps)
and a three-bay service building. The service building Includes a small retail area,
three bays and two, two-fixtured restrooms. The building is a block structure with
exterior brick facade, asbestos shingle trim at gabled ends, and a gabled roof with
asphalt cover.
Plaza 21 Office Buildino
The Plaza 21 building Is a four-story, Inciuding a finished basement level, concrete
block, Class B office building constructed in 1974. The building's exterior does not
conform to the professional office aesthetics of the buildings that surround it. .
While there Is some face brick at the buildings front and rear, the concrete block
sides area covered by a 120 foot long, four story high metal grate. An aged and
discolored metal grate Is the face the building presents to the highway.
Construction details are as follows:
Foundation:
Frame:
Exterior Walls:
Interior Walls:
Roof System:
Floors:
Ceilings:
Quality of Finish:
Doors and Windows:
Plumbing:
Elevators:
HVAC:
Concrete block
Reinforced masonry, beams and columns
Face brick or metal grate over concrete block
Drywall
Flat roof with buill-up surface
Medium grade commercial wall-to-wall carpet
Suspended acoustic panels
Average/medical office
Doors are glass and metal, windows are metal clad,
double hung
2 restrooms per floor with average of four fixtures each
2 five-stop elevators of 2,500 lb. capacity
Electric heating and cooling
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American Office Center
The American Office Center building Is a three-story, masonry, Class B office
building constructed In 1985. The building was constructed on fill which has since
settled, causing vertical cracks In the building. Construction details are as follows:
Foundation:
Frame:
Exterior Walls:
Interior Walls:
Roof System:
Floors:
Ceilings:
Quality of Finish:
Doors and Windows:
Concrete
Steel
Dryvlt
Drywall
Flat roof with rubber surface
Tile squares and some commercial carpet
Suspended acoustic panels
Average/medical office
Doors are giass and metal, windows are metal clad,
horizontal sliders
2 restrooms per floor with average of four fixtures each
2 three-stop elevators of 2,500 lb. capacity
Electric heating and cooling
Plumbing:
Elevators:
HVAC:
Condition and Deoreciation
The subject Improvements, constructed at various times, appear to have received
a normal level of maintenance and were fair to good physical condition on the valuation
date. The most Significant items of deferred maintenance Include the discolored metal
grate facade at the front of the Plaza 21 office building, the older looking facade on Wels
Market and Thrift Drug, and numerous cracks within the macadam paving. Subsequent
to the valuation date, Weis Market renovated their space with a new facade and Interior
alterations.
Functionally, the existing Improvements were designed for their current occupancy
and are well suited for their Intended use although they are not completely in keeping
with modern standards in regards to size, finish and energy efficiency. Wels Market is
small as compared to modern supermarkets and would therefore have difficulty In
releasing as a supermarket. The office buildings have efficiency ratios In the approximate
85% range. This indicates a somewhat inefficient use of space as compared to more
modern office buildings. Parking, totaling 604 spaces, is below standard to support the
12
METHOD OF VALUATION
Market value can be measured by the price of acquiring an existing substitute
property with the same utility as the subject property (Sales Comparison Approach); the
price of acquiring an Income-producing Investment with the same dollar potential at the
same risk rate as In the subject property (Income Approach); or the price of producing
a substitute property with the same utility as the subject property (Cost Approach). In
this analysis, each of the three approaches to vaiue has been considered, with only the
Income and Sales Comparison Approaches developed. The Cost Approach has little
current significance In the valuation of older retail and office Improvements such as the
subJect.
Factors either contributing to or detracting from the subject have been weighed
In the valuation of the subject. The following aspects are considered most Important:
Location
The subject Is located In Immediate proximity to highway access and enjoys
reasonably good visibility. However, this location faces heavy traffic
congestion and competition from nearby, more modern office and retail
centers.
Site Characteristics
The site Is somewhat Irregularly shaped with good road frontage, but
access limited to one secondary street. Topography is roiling and water
drainage Is adequate.
Building Characteristics
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The subject consists of retail and office improvements of various
construction dates and design. The Improvements range from fair to good
physical condition, and are generally in average condition. A portion of the
retail and office Improvements suffer from dated finish, most notably the
older facade of the Plaza 21 office building, Wels Market and Thrift Drug.
Functionally, the Improvements generally have average utility. Detracting
from the utility is the below standard number of parking spaces, the below
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SUMMARY INCOME APPROACH
The Income Approach is an examination of the present value of all future economic
benefits associated with property ownership. A market value Indication via the Income
Approach is typically determined by one of two techniques:
(1) Estimate and divide first-year stabilized net income before debt
service by an appropriate overall capitalization rate. This procedure
Is known as direct capitalization.
(2) Estimate over a normal projection period future annual net Incomes
and reversionary value, and discount all net cash flows by a rate
sufficient to attract investment capital. Commonly known as yield
capitalization, this method can employ discounted cash flow analysis,
or an overall capitalization rate which weighs the effect of debt cost,
loan amortization, equity yield, and changes in income and property
value over a normal projection period.
We have chosen to value the subJect property using both direct and yield
capitalization, and the process Is subsequently summarized. The current leases with the
exception of Weis Market and Thrift Drug, are generally at market. Because of the long
term, below market leases associated with the Weis Market and Thrift Drug space, these
portions of the subject have been value using a discounted cash flow analysis. This
process is also subsequently summarized.
As of the valuation date, the subject Improvements were at stabilized occupancy
with the exception of the American Office Center which had 31% vacancy. A review of
historical occupancy for this building, and discussions with the leasing agent, indicates
that this level of vacancy is not typical. The retail improvements and service station were
100% occupied and the Plaza 21 Office Building was 98% occupied. Summaries of the
existing leases follow.
19
LEASE SUMMARY - WEIS MARKETS
Tenant
Wels Markets
Commencement Date
August 18, 1975 (assigned to Wels Markets
April 9, 1987)
Original term expired 9/14/90; two 10-year
renewal options; one 5-year renewal option
Term
Unit Size
Approximately 11 ,248 square feet of land near
the northeast corner of 21 st Street and Routes
11/15
~ Base Rent
I j 1 st option
2nd option
3rd option
Percentaae Rent
Tenant Exoenses
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Asslanment/Sublettlng
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Comments
9/15/87 . 9/14/90:
9/15/90 - 9/14/95:
9/15/95 - 9/14/00:
9/15/00 - 9/14/05:
9/15/05 - 9/14/10:
9/15/10 - 9/14/15:
$14,175
$14,850
$15,525
$16,200
$16,875
$17,550
None
Tenant responsible for a prorata share of real
estate taxes, insurance, water and sewer and
utilities.
Lessee may not assign this lease or sublet
demised premises without written consent of
lessor which may be withheld at lessor's sole
discretion
This is the assignment of a land lease between
Commonwealth National Bank and Prosperity
Development Company. The bank relocated off
site.
Parcel was to be used as additional parking
area for Weis's adjoining supermarket. A
highway access cut exists on the property to
provide ingress and egress from North 21 st
Street. This access is required under the lease
to remain open. Any costs associated with the
32
Potential Annual Gross Income
..,
I I
Based on a review of the subject leases in comparison to the market, it is deemed
that the Wendy's retail unit is at market rent. In addition to base rent, Wendy's Is
contracted to pay percentage rent. Although sales volume has fluctuated over the years,
Wendy's has consistently exceeded their percentage rent break point. An average sales
volume of $900,000 Is projected for the stabilized analysis within this report. Dunphy's
retail unit was leased with the tenant paying a portion of the improvement construction
costs. An economic rent above Dunphy's current contracted rent was estimated based
on a typical ratio of rent to restaurant sales volumes. Wendy's pays a higher rental rate
than the projected Dunphy's rate due to Wendy's smaller size and proportionately higher
amount of support land required for the drive-through service.
Contracted rents for Weis Market and Thrill Drug are considered well below
market. Thrill Drugs has not met its percentage rent breakpoint since 1992. A survey
of market rentals for supermarkets and drugstores or other similar sized retail units has
been completed by the appraiser and retained on file. Based on this market data, a net
economic rental rate of $8.50 per square foot is estimated for Weis Market and $10.00
per square foot for Thrill Drug,
The gas/service station Is currently occupying the site under a land lease, as the
Improvements were mostly constructed by the tenant In place. Existing gas stations
generally lease based on a percentage of gas sales. In order to avoid the Inclusion of
business value for this portion of the subject, the value of the service/gas station on
support land will be determined only through the Sales Comparison Approach.
Rental rates for the subject's office space tends towards $13,00 to $14.00 per
square foot, full service. An economic rental rate of $13.00 per square foot Is estimated
for the Plaza 21 office building, the older of the two office buildings. The American Office
Center is estimated to have an economic rental rate of $14.00 per square foot. This is
in keeping with the market and the current quoted rate for the subject's vacant office
space.
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Deductions from Potential Annual Gross Income
The adjustments, or subtractions, from the subject's gross income are required to
reflect costs associated with producing and collecting rental Income, based on the
respective lease terms.
A 7% vacancy and collection loss allowance was made for the subject's retail and
office space assumed rented at market levels" or all space except Wels Market and Thrift
Drug. The year end 1995 Harrisburg office surveys completed by LandMark Commercial
Realty and New America Network indicate office vacancy for Class B buildings In the 3%
to 8% range. The third quarter 1996 office survey completed by LandMark Commercial
Realty indicates an average vacancy rate of 7% for Class B buildings In the West Shore,
HarriSburg market. Neighborhood retail centers average 4% vacancy. The subject office
space benefits from its proximity to Hoiy Spirit Hospital. The demand for the subject's
retail space is hindered by the site's congested access and residential surroundings.
Based on these factors, the rate selected is considered to be adequate for the subject
property.
i't
Wendy's and Dunphy's are both leased on a modified net basis with ownership
responsible for only common area maintenance, which includes snow removal and
landscaping, and a portion of insurance. This expense was estimated at $0.50 per
square foot of gross leasable area. Ownership is also responsible for management and
roof and structural repairs and replacement. The former was charged at 5% of effective
gross income. The roof and structural repairs and replacement reserve was estimated
at $,20 per square foot of gross leasable area.
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Weis Market and Thrift Drugs are aiso leased on a modified net basis. According
to information provided by ownership, landlord expenses associated with the Wels Market
lease include management, fire insurance, and roof and structural repairs and
replacement. Ownership expenses associated with the Thrift Drug lease Include
management, fire insurance, a portion of building and common area maintenance, base
year real estate taxes of $3,075, and roof and structural repairs and maintenance.
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Management and replacement reserves were estimated at the same amount noted above,
or 5% and $0.20 per square foot, respectively. The remaining expenses were projected
based on actual operating statements for the units, as appended.
The office leases are generally written on a full service basis, although some of the
existing leases call for partial expense reimbursement and tenant paid electric, excluding
heat. The estimated economic rate of $14.00 per square foot assumes a full service
expense structure. Under this assumption, the landlord Is responsible for all expenses.
Expenses were projected based on market standards and the subject's historical
operating history, as appended. Individual expenses are outlined on the Income
Approach Summary.
Overall Capitalization Rate
We have used an overall capitalization rate of 10.5% for our stabilized analysis of
the subject's retail improvements deemed to be at market rent. An overali rate, before
adjustment for real estate taxes, of 10.9% was used for the American Office Center and
a slightly higher rate of 11.0% for the Plaza 21 Office Center due to its age and physical
condition. These rates are in keeping with national surveyed data and market derived
overall rates as outlined under the Sales Comparison Approach, and reflect the perceived
risk associated with Investment In the subject property. The effective tax rate of 1.31%
was added to the overall rate used for the office valuation to reflect ownership's
responsibility for the real estate tax expense.
Leased Fee Value - Weis Market and Thrift Drua
Determining the market value of the leased fee interest of Weis Market and Thrift
Drug, based on the existing leases as previously outlined, entailed discounting to present
value the projected cash flows to be received during the remaining terms of the leases
and the value of the reversionary interest at the termination of the lease. In addition to
contract rent, an economic rent of $5.00 per square foot, Increasing at 5% every five
years, was ascribed to the 10,243 square foot expansion of the Weis unit since this
iii
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expansion was paid for by the tenant. The original contract rent was increased at the
time of the expansion to allow for at least rental of the land. The estimated economic rent
is consioered appropriate for the contributory value of the expanded portion of the
building.
Ii
Thrift Drug Is contracted to pay percentage rent, although they have not met the
percentage rent breakpoint since 1992. Furthermore, Thrift Drug's sales volume has been
steadily decreasing. For the purpose of this analysis, we will assume that the sales
voiume will stabilize and begin to grow over the next several years, reach breakpoint
during the fifth year of the anaiysis, and continue to grow at 2.5% per year thereafter.
The value of the reversionary Interest was estimated based on the previously noted
economic net rental rates, vacancy and ownership expenses. Although the estimated
economic rental rate is projected to increase during the holding period, economic
appreciation will be partially offset by the physical depreciation of the Improvements after
assuming a normal level of maintenance throughout the holding period. A vacancy rate
of 10% was assumed. This rate is higher than the 7% vacancy ascribed to the smaller
retail units, reflecting the perceived difficulty in obtaining tenants for the larger units at the
subject center, The net income derived from these assumptions was capitalized at a rate
of 12%. Selling costs of 3% was deducted from the reversionary value in order to reflect
the costs associated with liquidating the investment.
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The final step in this analysis requires the determination of an appropriate discount
rate to equate the cash flows and reversion to present value. A review of rates of return
on alternative investments was considered. Given the remaining terms of the subject
leases, sixteen and eighteen years, and the credit worthiness of the tenants in question,
a 15% discount rate was estimated for this analysis.
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Ownership is responsible for Thrift Drug's base year proportionate share of real
estate taxes. This equates to 2,6% of the total current reai estate liability for the subject
property. The discount rate was loaded for this portion of the effective tax rate. A
summary of these analyses follows,
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lOll
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Potential Grosa Income
Vacancy and Collection Allowance
Elfective Gross Income (EGI)
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Expenses:
INCOME APPROACH SUMMARY
AMERICAN OFFICE CENTER
37,500 sl @
@ 7.00%
S14.00 1.1
Insurance S
Repairs & Mslntenance S
Utilities S
Water and Sewer S
Landscaping/Snow Removal S
CleaninglTrash Removal S
Administrative
Replacement Reserve
Total Expenses
Nel Operating Income (NOll belore real estate taxes
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Allum lions:
Mort !Q.lnl Rate
Loa~~!~ RllIo
Mol1gag. Tlrm
Mot1gaglll Flclor
0,70 (L/VRoUo)
Equity Foolo,
0.30 (E IV Rollo)
0.15 IsIGRA
0.50 IsI GRA
2.50 IsI GRA
0.12 IsIGRA
0.35 IsI GRA
0.85 IsI GRA
5% EGI
SO.20 IsI NRA
Development or Overall Rale
Dlrecl Ca ltallzellan Mart a e.E ul .eand ar Inveslmenl
e.75'"
70.00%
20 Vears
Morti~i!-. eonsl8n1
I., y, Equ~ R.lum
x
Calculallons
0.1060453 (AMe)
x
0.11750
(hI y, Equity ROlum)
= S525.000
(S38.750)
$488.250
5,625
18.750
93.750
4.500
13.125
31.875
24.413
7.500
S199,538
= S288,713
10.~5'"
11.7511
.
0.07~23
.
0.ll3S25
0.109<48
0.01310
0.12258
12,3011
Over.11 Cap Rail .
Re.1 Estate T..lOld Factor .
Overall Cap R'II Adjulttd for Rul Estat, Taxll .
Rounded To:
Valuallan
NOI
Overall Cap Rate
=
S288,713
12,30%
=
Value ar Omce/mpravemenrs an Support Land
=
Raunded Ta
VALUE VIA THE INCOME APPROACH
52.350.000
Value
$2,347,258
S2,347,258
S2,350.000
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INCOME APPROACH SUMMARY
PLAZA 21 OFFICE CENTER
Potential Gross Income
Vacancy and Collection Allowance
Effectiva Gross Income (EGI)
53,415 sf @
@
Expenses:
Insurance $
Repairs & Malnlenance $
Utilities $
Water and Sewer $
Landscaping/Snow Removal $
CleanlnglTrash Removal $
Administrative
Replacement Reserve
Tolal Expenses
Net Operating Income (NOI) before real estate taKSs
$13.00 laf
7.00%
0.15 lefGRA
0.50 Isf GRA
2.50 Isf GRA
0.12 Isf GRA
0.35 Isf GRA
0.85 Isf GRA
5'., EGI
$0.25 Isf NRA
37
u $894.395
($48,808)
$845.787
8,012
28,708
133.538
6.410
18.695
45,403
32.289
13,354
$284.408
= $361,379
Development of Overell Rale
OIreet Ca Itallzatlon Mort e a.E ul -Band of Inveatment
Allum lions:
MOItg!i~,!!!~~_~!!.
loan to Valul RaUo
MOrt~. T!!!!,
_8.7~% _ MO!1Il!lloCon.tanl
____?O.~'I!_______.l!!.~r Egully Roturn
20 Yeara
_.________._ n._._____._
Mor1gage F-=IOl
0.70 (L IV Rallo)
Calculations
0.1080453 (AMC)
x
Equity FoelDr
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0.30 (E I V Rallo)
0.12000
(111 Vr Eqully R,lu,n)
x
10.~5%
12.00%
avlr.1I C.p Rail.
RI.I Eltall Tax Load Factor .
Ovarall Cap Ratl AdJulted for Real Estlte TaxIS .
Rounded To:
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Valuation
NOI
Overall Cap Rate
$361,379
12.30%
=
=
Value of Ornce ImprovemenlS on Support Land
=
Rounded To
!
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VALUE VIA THE INCOME APPROACH
$2.940.000
,
...
Value
$2,938,042
$2,938,042
$2,940.000
.
0.07423
.
0.03800
0.11023
0.01310
0.12333
12.30%
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INCOME APPROACH SUMMARY
J,C, DUNPHY'S AND WENDY'S
n
Potential Gro.. Sase Rents
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J.C, Dunphy's
Wendy's
Tolal
Vacancy and CoUectlon Allowance
EffectJve Grass Sase Rents (EGSR)
4.430 sl @
2,685 sl @
7,115 slNRA
@ 7,00%
$14,90 's'
= $55,000
= $40.007
95,007
($6,650)
$88,356
6,320
$94.676
3.558
4,418
1,423
$9,398
= $85.278
j
Percentage Rent
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EffectJve Grass Income (EGI)
Expenses:
J
Cammon Area Maintenance
Management
Replacement Reserva
Total Expenses
Net Operaling Income (NOI) before real estate taxes
$0,50 'sl NRA
5% EGBR
$0.20 'sl NRA
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Development 01 Overall Rate
Dlrecl Ca IlIlIzallon Morl a e.E ul .Band 01 Investmenl
Assum lions:
MoItg.golnt R.lo
LOIn to Value RaUo
Mortg.!!. Toim
e.75%
7Q,~%
20 Vear.
Mo~Con'tlnt
1'lY,EquItyRlturn
106045%
10.25%
Moffgago Fador
0.70 (L/VRaUo)
x
Calculallons
0,1060453 (AMC)
.
0.07.23
Equity Factor
0.3D (E IV Rallo)
x
0.10250 (loIYrEquItyR.lUrn)
.
003075
0.10491
lD.50%
11
....
OvlraUClpRa" .
Roundad To:
Veluallon
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Overall Cap Rate
=
Value
$85,278
10,&0%
=
$812,189
: ,
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Value 01 Improvements on support Land
Rounded To
=
$812,189
$810,000
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VALUE VIA THE INCOME APPROACH
$810.000
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Street Frontage 173.59' on North 21st Street and 254.75' on
the Camp Hili Bypass
Zoning R-3, Residential District
Public Utilities All available and connected
Site Improvements Macadam paved parking (100 spaces) and
driveways
Imorovement
Type Multi-tenant office
Size 28,745 square feet
Age 1970:!:
Stories Three excluding basement
Construction Quality Average
.., Physical Condition Good
Land/Building Ratio 2.33 to 1
.~ INDICATED UNIT PRICE $40.00 per square foot of gross building area
Including land
COMMENTS Improvements consist of a Class B, multi.
tenanted office building located at a heavily
traveled, signal controlled Intersection.
Construction features Include steel framing,
masonry exterior walls, flat roof with built-up
surface, elevator, electric heat and air
conditioning, and average quality office finish.
Net rentable area totals 23,138 square feet.
Occupancy at the time of sale was 48%. The
high vacancy level is partially attributed to the
recent vacating (7/97) of a 6,000 square foot
unit on the second floor. Estimated effective
gross income (based on a 5% vacancy rate)
at the time of sale was $266,000. Estimated
net operating income was $127,200, reflecting
a somewhat high expense ratio due to the
... building's all electric heating system. An
overall rate of 11.3% Is Indicated.
...
VERIFICATIQN Grantor
..,
46
.., Site Improvements
Imorovement
.., Type
Size
Age
Stories
Construction Quality
Physical Condition
.., Land/Building Ratio
INDICATED UNIT PRICE
~
COMMENTS
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Macadam paved parking and driveways
Multl-tenant office
28,560 square feet
1969
Three
Average
Average to Fair
3.08 to 1
$42.02 per square foot of gross building area
Including land
Masonry office building fully vacant at the time
of sale. The building was In need of cosmetic,
roof and mechanical repairs. The broker
estimated that the new owner put $750,000 to
$1,000,000 into the building after purchase.
The property had been listed for sale since
July 1995.
Dan Alderman of CIR
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47
IMPROVED OFFICE SALE NO.3
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lYPE Office
LOCATION 3552 Gettysburg Road
Lower Allen Township
Cumberland County, PA
Tax Map #13-23-553-67
GRANTOR Alice F. and Bett J. Adler
GRANTEE David L. Ellis
DATE OF SALE January 1996
RECORDING Deed Book 134, Page 427
., CONSIDERATION $675,000 (Cash to seller)
PHYSICAL DESCRIPTION
Land
, Size 0.8499 Acres
Shape/Topography Rectangular
Street Frontage 157.90' on Gettysburg Road
." Zoning C-2, General Commercial
Public Utilities All available and connected
60
IMPROVED RETAIL SALE NO, 2
lYPE Retail Center
LOCATION 25th Street Shopping Center
2431 Butler Street
Wilson Borough
Northampton County, PA
Tax Map #L9-43-1, 2 and 3
GRANTOR Carriage Associates, L.P.
GRANTEE A. Mehra Associates L.L.C.
DATE OF SALE May 1997
'1 RECORDING Deed Book 19971, Page 48707
J
CONSIDERATION $2,900,000 (Cash to seller)
... PHYSICAL DESCRIPTION
. ,
, Land
... Size 5.97 Acres
Public Utilities All available and connected
.. Site Improvements Macadam paved parking and driveways
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IMPROVED RETAIL SALE NO, 3
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lYPE Retail Center
LOCATION Carlisle Commerce Center
White Street - Off Carlisle Road (Route 124)
West Manchester Township
York County, PA
. I Tax Parcel #51-JH-55D
GRANTOR Woodman of the World c/o Bennett Williams
, ,
GRANTEE Carlisle Commerce Center, Ltd.
DATE OF SALE November 1996
RECORDING Deed Book 1277, Page 8398
CONSIDERATION $5,800,000 (Cash to seller)
PHYSICAL DESCRIPTION
Land
Size 8.20 Acres
Shape!Topography Generally rectangular/Mostly level
.,. Street Frontage Along White Street
Zoning Commercial
...
...
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SCHEDULE III ' RENTAL OPERATIONS BY LOCATION
(INCOHE TAX BASIS)
FOR THE YEARS ENDED DECEHBER 31
ItlBl!!.2RUG S~. EAST PENNSBOBO TOWNS~IP. PENNSYLVAN~
.... .1996..... .... .1995.....
PERCENTAGE PERCENTAGE
OF RENTAL OF RENTAL
AHDUNT INCOME AMOUNT INCOHE
RENTAL INCOHE:
F 1 xed Rent....... . . . . . . . . . . . . . . I . . I . S 49.980 97.3 f S 49.9BO 97,3 f
Common Facilities Maintenance Charge 1. 400 2.7 1.400. 2.7
Total Rental Income. . . . . . . . . . . S 51.380 100.0 f .t. 51.380 100.0 ;
DIRECT EXPENSES:
Real Estate Taxes' Net..,.,... ,.... S 17 S (26B) (.m
Insurance..... ......... ............. 1.991 3.9 f 1.886 3.7
Maintenance. Exterior.............. 3.970 7.7 7.635 14.8
Total Direct Expenses......... S S.978 11.6 ; S 9,253 18.0 f
NET RENTAL INCOME BEFORE
DEPRECIATION AND GENERAL EXPENSES..., s 4S.402 a8.4 t S 42.127 82.0 f
DEPRECIATION. . . . . . . . . . . . . , . . . . . . . . . . . . 12.181 23.7 12. n8 24.a
NET RENTAL INCOHE BEFORE GENERAL
EXPENSES AND ENVIRONMENTAL COSTS..... ~ 33.221 64.7 f S 29.409 sp i
CASH fLOW BEfORE GENERAL
EXPENSES. ENVIRONMENTAL COSTS
AND CAPITAL ADDITIONS..... ........... S 45,402 8a,4 .t S 42.127 82,0 f
REAL ESTATE TAX ESCALATION
PAID BY TENANT...........,........... S 10.200 19.9 .t .u0.200 19.9 t
SI!I! dc:c:ountant's review report.
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JH, RSR REAL ESTATE
10, 7831868
PAGE 3
. 16 .
SCHEDULE III . RENTAL OPERATIONS BY LOCATION
(INCOME TAX BASIS)
FOR THE YEARS ENDED DECEMBER 31
.... .1994..... .... .1993....,
PERCENTAGE PERCENTAGE
OF RENTAL OF RENTAL
AMOUNT INCOHE AMOUNT INCOME
RENTAL INCOHE:
F1 xed Rent........ If. . . . . . . . . . . . . . . . S 49.B9B 97.3 t $ 49.000 97.2 t
Common Facilities Maintenance Charge 1. 400 2.7 1. 400 2.8
Total Rental Income... ....... . $ 51.298 100.0 t $ 50,400 100.0 t
DIRECT EXPENSES:
Real Estate Taxes. Net............. $ 901 1.7t S 930 1.9t
Insurance. . . . . . . . , . . , . . . . . . . . . . . , . . , 1.741 3.4 1. 633 3.2
Haintenance ' Exterior..........,... 14.294 27.9 2,277 4.5
Amortization of Lease Fee.......,... 116 .2 1.333 2.6
Total Direct Expenses.,...".. $ 17 .052 33.2 t $ 6.173 12.2 t
NET RENTAL INCOHE BEFORE
DEPRECIATION AND GENERAL EXPENSES.... $ 34.246 66.8 t $ 44.227 87.8 t
DEPRECIATION, . . . . . . . . . . , . . . . . . . . . , , . . , 13.255 25.9 12.903 25.6
NET RENTAL INCOME
BEFORE GENERAL EXPENSES.... . . . , . . , . . . , 290991 40.9 t ~ 31.324 62.2 t
CASH FLOW BEFORE GENERAL
EXPENSES AND CAPITAL ADDITIONS,. .,... S 34.362 67,0 t $ 45,560 90,U
CAPITAL ADDITIONS: NFW ROOF..,.,...... ~.,620 50,8 t
REAL ESTATE TAX ESCALATION
PAID BY TENANT.. .. .. . .. .. .. . .. .. .. .. . S g.O!} 17.7 t S 6.14~ 16.2 t
See accountant's review report.
RSR REAL ESTATE
10, ?S~IS6S
PAGE 8
. 19 .
PROSPERITY ~~NT COMPANX
SCHEDULE III . RENTAL OPERATIONS BY LOCATION
(INCOME TAX BASIS)
FOR THE YEARS ENDED DECEMBER 31
~s MARK~EAST PEN~~~ORO TOWNSHIP. PENNSYLVANI~
.,.. ,1994..... .... .1993..,..
~ PERCENTAGE PERCENTAGE
.J OF RENTAL OF RENTAL
AMOUNT INCOHE AHOUNT INCOHE
RENTAL INCOME..."........."...,.,.,. S 85.992 100.0 ~ $ 85,992 100,0 t
...
DIRECT EXPENSES:
Insurance.............. ............. $ 1. 094 1.3 % $ 930 1.1%
Total Dlrect Expenses...".... $ 1.094 1.3% L 930 1.1%
., NET RENTAL INCOME BEFORE
DEPRECIATION AND GENERAL EXPENSES. '" $ 84.898 98,7 % $ 85.062 98,9 %
DEPRECIATION. . . . . , . , . . . . . . . . . . . . . . . . . . 10,549 12.3 10.549 12.3
NET RENTAL INCOME
BEFORE GENERAL EXPENSES.........,..., 111...349 86.4 % S 74,513 86J 6 %
CASH FLOW BEFORE GENERAL
EXPENSES AND CAPITAL ADDITIONS..,.", S 84,898 98.7 % !-85.062 98.9 t
REAL ESTATE TAXES PAID BY TENANT.".,. $ 10,874 12.6 % S 9.940 11,6 t
~,
'.
I
SP.P. accountant's revlew report.
. ~
Fe," 8825
Rental Real Estate Income and Expenses 01 a
Partnership or an S Corporation
.. Se. In"ructlons on back.
to Attach to Form 1085 or Form 1120S.
. .
...---. .,
.
D,p'I)"',nl 01 the Tr.uUfy
Inlltn.l.l A,v.nuI S.Me.
1994
Na",. Employ.r IdenlUlcatlon numb.,
PENN 21 ASSOCIATES 23-2302801
- 1 Shew thl kind Ind IocoUon 01 IIch PICPIr1y, SII pagl 2 lor addlUonal PICp.rtJla,
OFFICE BUILDING
A ::::::::: :CNiR: :~~:~t:;.:: R~:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
8
.,........................................................".................................................................................
.....,.........................,.............................................................................................................
c
..................................................................,..........................................................................
. .....................................................,......................................................................... ..........
o
................................................................................................................................. ..........
................................................................................................................................. ....... ...
.~
Propertle.
Rental Real Estate Income A B C 0
2 Gnl.. ronll 2 432.484
.....................
Rental Real Estate Exps.
3 Advll1lslng .................,.., 3
4 Auto Ind trav" 4
................. 454
5 Ceanlng and maintenance 5 21
......
6 CommlssloM 6
................... 06S
7 Insurance 7 8
...................... 282
8 Legal and othor profl..lon" tooa 8 9
9 Interut 9 81,919
......................... 851
10 Ropalrs .................. ...... 10 61
11 Taxos 11 32 . 010
.......................... 76,906
12 UUUU.. 12
.........................
13 Wagos and salarl.. ..........,.. 13
14 CoproclaUon (SOl Inslrllc1lons) 14 115 307
15 Othor(lIst) ~
~~~. ,l?,C;:'~~~H~~:::::::::: 15 64 484
................................
16 Total upons.. lor oach proporty.
Add Un.. 3 tluough 15 .......... 16 471 281
17 Total grass ronll. Add grass renll from Unl 2. coIumM A tluough H .."".,."".",."."",.",."".,.... 17 432,484
18 Total UP"M". Add total UP"M" from Unl 16, coIumM A tluough H .""".""""""",."",.,..",., 18 471,281 )
19 Nit gain (1osI) from Form 4797, Pari II,Unl 20. from thl dlaposlUon 0' proporty from rental real
utateacttvtUu .......................................................................................... 19
20a Nollncoml (loss) from rental rooI Islall acUvlll.. from partnlrshlpa, ..latla. and trulllln which
this partnOl1h1p or S corporaUon b a partnlt or blnll\clary (from Schadull K-l) .."""",.."",......"..., 208
b IdonUfy bolow thl partnOl1h1pa, lllalos, or trusts from which nit Incoml (loss) b ahown on Unl 201. 'f"
Attach a schadulo" mora apacI b nladad: /.,...,.
(1) Naml (2) ElN ?
"' ~l
..................................................J................................ ...................
................................................................................... ...................
................................................................................... ...................
21 Nlllncoml (to..) from rlntal rooIlllall IcUvlUII. Comblnl Unll 17lhrDugh 201. Entlt rlault
hire and on Schadull K, Unl 2 21 -38,797
..,
-.
-.
Fer Paplrwork RlducUon Ad NoUco, .1. back ollorm.
..4 01$2
form 8825 c....,
, ,
NIITIII
..0.....' "ca. =tDte Income anCl ~pen5e5 01 II
Partnership or an S Corporation
.. 541. Instruction, on bac_.
.. Anach 10 Form 106$ or Fn,m t 120S.
...... .,.. ..
p.mrl)6~5
J
~~:,~m~,~.O~~::.T~~~~~
1995
PENN 21 ASSOCIATES
1 Show the kJnd and location of each m e
OFFICE BUILDING
A ....'CAMp..HILL..'PA.....'....
......................t................
. See II II 2 to, addltlonal rt) eltles.
Employ., ldentmc..llon nUm~,
23-2302801
B
-.. C
............" .............,
.....................................
o
............................................... ... ..... ...."....
..................................................................................................................................,.......
,.,
Properties
Rental Real Estate Income A B C 0
2 Gress rents 2 429 629
.....................
Rental Real Estate Exp,
3 Advor1lslng ................ ...., 3
4 Aulo and travol 4
................. 5
5 aoanlng and malntonanco ....', 15 911
6 Commissions 6
...................
7 Insurance 7 7 950
......................
8 Legal and othor ptef...lcnaJ toas 8 7,450
9 Intorest 9 99.919
.........................
10 Ropalrs ........................ 10 38 022
11 Taxas .......................... 11 32.010
12 Utilities 12 75 387
.........................
13 Wages and saJaries ............. 13
14 Oopreclallcn (soolnstrucUons) 14 98 8S4
15 Othor (1bt) ~
~!'!!'!. ,~,C;:~~~H~~:::::::::: 15 60.255
................................
16 Tolal exponses tor each p"'porty,
Add Un.. 3lhrcugh 15 .........' 16 435 788
17 TolaJ gro.u ~nts. Add gnlSS ~nts trcm Un. 2. celumnsA lhrcugh H ...,.. ..............,.. ...., ...'......... 17 429 629
1S TolaJ uponses. Add tclaJ exponsas trcin IIn. 16, celumns A lhrcugh H /. 18 435.788 )
19 Nol galn (less) trcm Form 4797, Par1Il, Uno 20. from tho dlspcsJUon 0' pr;,j,'.;;y ~;,; ~~~i ~' , , , , ,. , ~ ' , , ,
eslAt.acllvl1les "',...,""",..,"",.,.,"',.,"',..,""""""""""',.,',.,""",.,""',.~ r;V. . 19
...
20a Not Incomo (less) from ~nlaJ real eslAt. actlvlUas from partnerships. eslAtas. and trusts In which
this partnonhlp or S COIpCI1lUon Is a partnor or bonoftclaly (trcm Schedule K-l) ".,'.',..""""."""",., 20a
b IdanUIy baJcw tho partnorshlps, aslAtas, or trusts from which not Incom. (less) Is shewn on Uno 2Oa.
Attach a schedulon mere spac.1s noeded:
(1) Name (2) EIN
................................................................................... ...................
.....................................................1............................. . ...................
................................................................................... ...................
21 Notlnccmo (less) from ~nlaJ real eslAto actlvltles, Comblnollnas 17lhrcugh 200. Entar resun
horo and on Schedul. K. Uno 2 21 -6.159
l
I
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-
.....
For Paperwork Reduction Act NcUce, '0' back ollorm.
,OM
Foml8825 11""
11
-,
,
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Form 8825
Rental Real Estate Income and Expenses of a
Partnership or an S Corporation
to See Instructions on back.
. Attach 10 Form 1065 or Form 1120S.
0,",0 "'0. 15.~.111O
O'~"lm.m olin, TIUIU'';'
.nlOrn..R.....nu.5."'IU
N.m.
1995
_PROSPERITY DEVELOPMENT COMPANY
1 Show the k.Jnd and location of each ro e . Se. a 82 fer additional ro ertles.
COMMERCIAL PROPERTIES
A . CAMPHILL'PA . . .
.. - _,.... ,t....,....... ..,.
Employorldonll1lcatlon numbor
23-1945101
B
. . . . . . . . . . . . . . . . . . . .
c
.....................
....................... ..........
-,
., ............................................ """""
D
.,
................................... ...................................................................... ...........
. . , . . . . . . . . . . . . . . . . . . . . . . . .. .,.......,...................... ...........
. Properties
. Rental Real Estate Income A B C D
2 Gross rents 2 225 550
, .....................
Rental Real Estate Exp,
, 3 3
AdvertiSing...........,........ .
, 4 Auto and lnIvel 4
. . . . . . . . . . . . . . . . .
5 Cleaning and maintenance 5 7 635
......
. 6 Commissions 6
. . . . . . . . . , . . . . . , . . .
. 7 Insurance 7 3,780
. . . . . . . . . . . . . . . . . . . . . .
S Legal and other prtltesslonal fees 8 9 178
. 9 Inlerest 9 43 494
.. ......................
10 Repairs 10
. 11 ........................ 11
Taxes .... ...................... -268
12 Utilities 12
. 13 ........................,
Wages and solanes ......,..,.,. 13
.14 Depreciation (see Instructions) 14 37.638
15 other (list) .
, See SCIl~~~~:~::::::::: : 15 20.101
'. .. .. . . . . . . . , . . . . . . . , . . . .
16 Total expenses tor 8ach property.
,
Add lines 3 through 15 '......... 16 121. 558
'.
17 Total gross rents. Add gross rants from line 2. columns A through H ...".....,. 17 225.550
. . . . . . . . . . . . . . , . . . . ..... ...
,
18 Total expensas, Add lotalexpenses from line 16. columns A through H .. 18 121.558 )
......., . . . . . . . . . . . . . . . . . . . . . . .....
19 Net gain (loss) from Form 4797. Part II. line 20, from the disposition of property from rantal raal
estate actMties 19
...............................................,..................................... .....
"'20a Net Income (loss) from rantal realestale ecWlties from partnerships, estates, and trusts In which
this partnership or S corporation Is e partner or benenclary (from Schedule K-l) .,.,.,..,.".,...".,.., 20a -1.715
.....
b Identify below the partnerships, estates, or trusts from which net Income (loss) Is shown on line 200, I,,;};;:
... Attach a schedule It more space Is needed: 1%>",
(1) Name , (2) EIN
. PI::NN ..21 l\SS.o.9,I~~E:S. . .2,3:-:~302.801 .c"<
.............. ..... ........ ...." ..... ....... ii
... ..................... . . . . , . . . . . . . . .." ........ ...... ...... ...", ...... '.c..'
..
.. . . . . . . . . , . . . . . . ...................................... . . . . . . . ,.... ... ......
21 Net inceme (/oss) from rental real estate activities. Combine lines 17 through 20a. Enter result
here and on Schedule K. line 2 21 102.277
-
,
For Paperwork Reduction Act Notice. see back of 'orm.
~('lrm.
8825
Hental Real Estate Income and Expenses 01 a
Partnership or an S Corporation
.. Se. Instructions on blCk.
.. Attach to Form 1085 or Form 11205.
1994
....t. .... "t,
O'ClllmlFlI 01 tn, T,...",)'
Int"n,IR.",nll' S'''''l~
'.,m,
Employer Identification number
23-1945101
PROSPERITY DEVELOPMENT COMPANY
1 Show the kind and location of each ro e . See 82 for addttlonal ro ertles.
COMMERCIAL PROPERTIES
~ A : :::::::: :CNiR::~~:~~:;': :R?\:::::::::::::::::: ::::::::::::::::::::::::::::::::::.::::::::::.::::::
.."........,. ..
~B
.......,..........................................................................................................................,
.........................................................................................................................................
~C
'.. ..... ...........................................................................................................,.....................
........................................................................,.........................................'.......................
D
...........................................................................................................................................
.............................................................................................................................................
,
Propertlel
Rental Real Estate Income A B C D
2 Gross nnts 2 210 349
.....................
Rental Real Estate Exps.
3 Adver1l.lng ..................... 3
4 Auto and travel 4
.................
5 Cleaning and maintenance ,'.". 5 19 642
6 Commissions 6 866
...................
7 Insurance ...................... 7 3 174
8 Legal and other prof...lonal Ie.. 8 11 197
9 Interest 9 41 674
........................
10 Repairs .............,.......... 10
11 Tax.. .......................... 11 901
12 UUlltie. ......................... 12
13 Wagesand ..Iarle. ............. 13
14 OepreclaUon (.ee Insll\lcUon.) 14 37 301
15 Other (Ii.t) .
~~~. .S.c;:n~4H~~::::::::: 15 18 573
................................
16 Tolal expen.e. for each properly.
Add line. 3 through 15 .......... 16 133 328
17 Tolal gross rents. Add gross rents from line 2. column. A through H ",."".."., "., "",."'.",.,..",,,. 17 210 349
18 Tolal expen..., Add Iolal expen... from line 16. column. A ltuough H 18 I 133,328 )
......................................
19 Net gain (loss) from Form 4797, Part 1I,lIn. 20. from the dl.posltlon of properly from renW real
estate activities 19
..........................................................................................
20a Nellncome (loss) from renW real e.late ectlvlUe. from partnership., ..lat.., and lI\I.ts In which
thl. partnership or S corporaUon Is a partner or benenclary (from Schedule K-l) 20a -2 705
b Idenllly below th. partnership., astat.., or lI\I.ts from which nellncome (loss) I. ~h~;';~'~~'li~~'~' .. . , . , , .. , . ",,"
Atlach a .chedul. tt more .pace Is needed: !~~?102~" II
(1) Name
.l'E:N.l:l, ..43" .~~.~,9,c;:.J;~~E:~..,.,....,.,..,..,...,.... .........,'.......,...
...................................................................................
.
.... ............................................................................... ...................
21 Net Income (loss) from renW rea' ..late actlvlUes, Combine lines 17 through 208. Enter re,uII
here and on Schedule K. IIn. 2 21 74 316
..
...
f.....
...
""
...
For Paperwork Reduction Act Notice. .e. back of form.
O'~2
'..m 8825 1100'1
, . .:.~:.:;.~:. ~i~~.:' ,.;", '.': \
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II, ISSUES
It appears to Appellant that two primary issues have arisen
in the course of the hearing:
A, The capitalization rate to be applied in the
implementation of the income approach to
valuation,
B. The use of "contract" rent or "economic" rent in
valuing the Weis Market and Thrift Drug portions
of the subject real estate.
Each is discussed below,
III. APPELLANT'S ARGUMENTS
A. CAPITALIZATION RATE
The experts have disagreed in the capitalization rates to
be applied in using the income approach to valuation, For the
Court's review, we summarize their rates per lease (without tax
load):
Plaza 21
American Office Center
Wendy's
Dunphy's
Weis Market
Thrift Drug
Exxon
HIRSH
10.2%
10.2%
10.2%
10,2%
10.2%
10.2%
10.2%
BOTT
11,023%
10,948%
10,50%
10.50%
15.00% (Discount rate)
15.03% (Discount rate)
NONE USED
It should be noted that School District's expert applied a
LAW OI"f"lCES
SNELDAKER.
BRENNEMAN
a SPARE
single and, therefore, consistent rate which is dictated by the
obvious simple fact that only QDg parcel of real estate is
involved. Conversely (and erroneously) the Owner's appraiser
-3-
LAW O"'ICE8
SNELDAKER.
BRENNEMAN
B: SPARE
applied varying rates where used and mixed valuation methods
among the structures thereby destroying consistency and
contributing to the obfuscation of his overall approach.
In all cases, Mr, Bott's rates are higher than those used
by Owner
which has the effect of reducing the end value.
Mr. Bott has provided the Court with no evidence as to how
he arrived at the rates applied, At most, he says his rates for
the 2 office buildings "are in keeping with national surveyed
data and market derived overall rates as outlined in the Sales
Comparison Approach .
"
, ,
(Emphasis added,)
(Page 34,
Appellee Exhibit 1.) He provides no support data for his
judgment.
Mr. Hirsh, on the other hand, explains at length with
considerable relevant supporting data how he came to his
conclusion (Page 69 et seq., Appellant's Exhibit 1). He gives
the Court various money interest rates and provides detailed
narrative material to explain his use of the figures,
More important than monetary data is the basis for making
the judgment. Mr, Hirsh testified at length (without
contravention) about his experience and resulting knowledge from
personally dealing in the market area -- particularly the
economically prosperous general office center within a radius of
2 miles of the subject property, There was no doubt that Mr,
Hirsh was fully acquainted with rents, demand for leases and the
multitude of market forces which dictate the true bases of
expected returns. It is contended that Mr, Bott's
-4-
LAW OfFICES
SNELDAKER.
BRENNEMAN
it SPARE
capitalization rates should be discarded in favor of the
consistent 10.2\ (plus tax load) submitted by Mr. Hirsh,
It is interesting that Mr, Bott justifies his
capitalization rates based on some sales which he selected as
comparable (pages 52-65, Appellee's Exhibit 1):
A.
B.
C.
D.
E.
F.
Office Building: 355 N. 21st st., Camp Hill
Office Building: 600 Wilson Rd., Upper Allen Twp.
Retail center: Summerdale Plaza, East pennsboro Twp.
Retail Center: Northampton county
Retail center: West Manchester Twp., York County
Retail Center: Prospect, Lancaster County
11.3\
16.5\
11. 0\
11. 85\
11.21\
11. 75\
While these reports tend to support Mr. Bott's conclusion, the
sales are skewed to be most favorable to the upper level of
rates. The Court should recall Mr. Bott's responses on cross-
examination with respect to the above properties (referenced
below by corresponding letter from above):
A. 52\ of the rentable area was vacant at time of
sale, which explains an 11,3\ rate. An investor
obviously would be concerned over whatever
factors caused more than a majority of area to be
vacant.
B. A one-tenant facility with a lease in place but
not likely to be renewed, which explains the
C,
16.5\ rate. Obviously an investor wonl" be
hesitant to pay a higher value when faced with an
expiring lease and the uncertainty of a single
tenant for a large 3-story building.
Mr. Bott admitted that the Summerdale area was
-5-
LAW O'FICeS
SNtLOAKER.
BReNNEMAN
8: SPARE
not similar to the prime area of the subject
property, thus justifying a higher rate.
D., E" and F. It is the School District's position
that none of these are relevant to the
present litigation. All are located at a
considerable distance from the subject property
and obviously not influenced by the premier
neighborhood of the subject property,
The Owner has a clear motive to raise the capitalization
rate as high as possible. By engaging an appraiser who is not
familiar with the market area of the subject property, the
owner's expert can rely on high-sounding "national surveyed
data" while ignoring the reality of the local scene.
On the other hand, the School District's expert clearly
relied upon the local financial climate, uninfluenced by
"national" trends, We consider Mr, Hirsh's testimony on
capitalization to be totally flawless, as confirmed by the
absence of challenge on cross-examination. Mr. Hirsh is an
expert in the fullest sense of the term, having researched and
participated in the local market for many years. It is
respectfully suggested that the Court should accept his base
rate of 10.2% in its determination of market values when
reviewing the income approach,l
lThe significance of the capitalization rate can be
seen mathematically by applying Mr, Hirsh's capitalization
rate (with tax load) to Mr, Bott's determination of income,
which produces a value in excess of $8,3 million,
-6-
LAW O'lI'ICr:S
SNELDAKER.
BReNNEMAN
B: SPARE
B. "CONTRACT" vs, "MARKET" RENT
It is contemplated that the Owner will attack the School
District's income approach evidence because Mr, Hirsh used the
market rent for all structures and leases. The Owner will
probably emphasize Appeal of Marple Sprinafield Center. Inc.,
607 A.2d 708 as decided by the Pennsylvania Supreme Court in
1992.
The School District is well aware of the Marple Sprinafield
decision which requires the use of the actual or contract rent
in determining the gross income for the application of the
income approach to value where there is a lona-term lease. In
Marple Sprinafield, the Court was dealing with a single lease
which had a probable term of about 75 years, having commenced in
1968 and with an expiration date of 2044. There is no question
that this was a "long-term" lease.
The School District's expert did not confine himself to the
"contract" rent, but applied the "market" rent to all structures
and the several leaseholders. We believe this is proper (and
proven by the sales comparison approach) and that Marple
Sprinafield is not applicable per se for two significant
reasons.
First, the Court in Marple Sprinafield was dealing with
only one lease -- not 15 as in the instant case. Here, the
Court is required to make a determination of the value of a
single tract of land (Tax Parcel #09-20-1854-004) improved with
5 structures sharing common necessary amenities: access,
-7-
LAW OFFICeS
SNELBAKER.
BRENNEMAN
8: SPARE
parking, pedestrian paths, lighting, etc. Each of the 15
tenants accesses and uses the common elements,
The School District contends that a single methodology must
be applied for all leases in order to have a single result, As
in the case of the capitalization argument above, the absence of
consistency obfuscates the real issue: the market value of the
single tax parcel. Marole Sorinafield provides no authority for
the varying methodology, The School District contends that the
case is authority for only a single lease case.
Secondly, the leases at issue are not of the "long-term"
category observed in Marole Sorinafield. Here, the several
leases (with future options assumed to be exercised) will
expire:
Plaza 21: (1) - 2003
(2) - 2004
(3) - 2008
(4) - 2004
American Office Center: (1) - 2005
(2) - 2007
(3) - 2005
(4) - 2003
(5) - 2009
(6) - 2006
Wendy's - 2009
Dunphy's - 2005
Exxon - 2013
Weis Market - 2012
Thrift Drugs - 2018
The leases spread between 2003 to 2018. Mr. Bott
apparently considers all of the office leases in Plaza 21 and
American Office Center to be other than long-term, as well as
Wendy's, Dunphy's and Exxon, He cites only Weis and Thrift as
-8-
LAW OFFICES
SNELDAKER.
BRENNEMAN
6: SPARE
"long-term", even though Exxon is longer than Weis and only 6
years separates Thrift and Weis, While Weis and Thrift may have
been longer in overall duration, it is only their remaining
terms which are relevant. They' certainly don't compare with the
end date of 2044 in Marple Sprinafield.
Owner classifies Weis and Thrift as "long-term" in order to
apply the rule of Marple Sprinafield, However, by comparison
with the lease term in Marple Sprinafield, they are relatively
short-term and cannot be automatically elevated to the Marple
Sprinafield doctrine. While the Weis and Thrift terms may be
longer than the others on the subject property, the mere
difference does not merit the application of the "long-term"
rule. Using the Owner's argument, any lease longer than any
other is tantamount to "long-term" treatment -- a corollary
which should not be used in light of the substantial term in the
Marple Sprinafield scenario.
It is respectfully contended that Mr. Hirsh's use of the
"market" rent is not only logical but proper, particularly when
applied uniformly to all leases/structures on the single tax
parcel. The proof of this conclusion is the confirming test of
the sales comparison approach. Mr. Hirsh valued the entire tax
parcel by the latter method at $9,000,000 based upon a host of
comparable sales. It is noted that the Owner did not challenge
Mr. Hirsh's sales approach in the course of the hearing. It
must be presumed that the cited comparable sales included leases
with comparable terms,
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LAW OrFlClE8
SNELDAKER.
BneNNEMAN
8: SPARE
C. OWNER'S LACK OF SUPPORTING DATA
In his effort to substantiate the use of "contract rent" in
dealing with the Weis Market and Thrift Drug leases, Mr. Bott
concluded that the rents were below market rates, but failed to
support the conclusion with credible evidence. He only supplied
~ conclusion at $8.00 and $10.00 per square foot (page 32,
Appellee's Exhibit 1), He submitted no research material in his
report and offered no oral testimony to support his conclusion,
It is impossible to evaluate such conclusion in the absence of
support data and, therefore, should be ignored.
The argument is equally applicable in his evaluation of
other leases. Again, he gives a conclusion but supplies no
evidence.
0, OWNER'S MISAPPLICATION OF INCOME APPROACH
The Owner's expert, William Bott, valued the subject
property by both the income and sales comparison approaches.
However, he erred in his income approach by mixing it with the
sales comparison approach,
Specifically, while touting the use of the.'income approach
as the most reliable method (Appellee's EXhibit 1, Page 67), Mr,
Bott ignored the method when valuing the service station
(Exxon), Instead, he used the sales comparison approach which
further obfuscates his overall valuation.
Such arbitrary attribution is obviously improper, To apply
the sales comparison approach to Exxon, Mr, Bott had to assume
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LAW OFFICEII
SNELBAKER.
BRENNEMAN
& SPARE
some parcel of land being sold. All of his comparables included
land: #1 - 0.34 acre; #2 - 0.73 acre; #3 - 0.63 acre. In the
instant case there is nQ land. No subdivision has occurred and
Mr. Bott neglected to determine whether any could occur under
prevailing land use regulations. Thus, the Court is expected to
deal with an "apples and oranges" assimilation in determining
the value of a single 10.37 acre tax parcel. The credibility of
Mr. Bott's income approach is seriously impeached and should be
discarded.
E. TAX YEAR 1998 IS ALSO AT ISSUE
This case arose when the Owner filed its appeal in 1996
with the County Board of Assessment Appeals, thereby bringing
into issue the assessment for the tax year 1997. The Board
decided the case on April 30, 1997. The School District
appealed to this Court by Petition and Notice of Appeal on May
23, 1997. The case came to hearing on June 3, 1998 -- after the
beginning of the next (1998) tax year.
Section 704 of the Fourth to Eighth Class County Assessment
Law permits the School District to appeal to the Board below and
to this Court ", .
. .
with like effect as if such appeal were
taken by a taxable with respect to his assessment." (72 P. S. S
5453.706).) Section 704 requires the appellate body to
determine all subsequent years during the pendency of the
)See similar prOV1Slon in section 520 of the General
County Assessment Law (72 P.S. S 5020.520).
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TABLE OF CONTENTS
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SCOPE OF THE APPRAISAL ..............................................................................................4
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS ...........................................6
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Regional Location Map ............................................................................................... 9
Regional Analysis ........................................................................................................... 9
Popu lalian ................................................................................................................... 10
Household formation ...... ............................................................................................10
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Age.............................................................................................................................11
Education .................................................................................................................... 11
Medical Care ............................................................................................................... 12
Summary of Social Trends ...........................................................................................12
labor Market Segmentation .........................................................................................13
Employment ...... ..........................................................................................................13
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Major Industry and Employers .....................................................................................14
Business and Industry Development ............................................................................14
Real Estate Market ....... ................................................................................................14
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Median Household Income .........................................................................................15
Summary of Economic Circumstances.......................................................................... 16
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Highway System ..........................................................................................................1 7
Other T ransportat ion . ...... ...... ......... .............. ...... ............ .............. ........................ ....... 1 7
Conclusion ..................................................................................................................18
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Neigh borhood Analysis ............................................................................................18
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Street Photogra phS ..................................................................................................18
Site Location Map.....................................................................................................19
PROPERTY DESCRI PTION. ......... ..... ....... ............................. ............... ... .... ......21
Photographs of the Subject Property .....................................................................21
Site Descri ption ........................................................................................................21
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Tax Map .....................................................................................................................24
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Flood Map ............. .................................................................................................... 25
Zoni ng........................................................................................................................ 26
Descri ption of I mprovements .................................................................................. 28
Photographs of the Subject Property .....................................................................28
Zoni ng Map ............................................................................................................... 29
Layout, Design and Finish .......................................................................................30
Layout, Design and Finish .......................................................................................32
Layout, Design and Finish .......................................................................................33
Layout, Design and Finish .......................................................................................34
Layout, Design and Fi ni sh .. ..................................................................................... 35
Layout, Design and Finish .......................................................................................36
Layout, Design and Finish .......................................................................................38
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APPRAISERS. CONSULTANTS
LAURENCE A. HIRSH. eRE, MAl
DiRISTI/IE L FAKE
JAMES W a, SPRAGUE
ALAN M, HARRIS
JUDITH G, HIRSH. ESO.
STEPHANI: H. ClUCK
JUDITH N, STUM
WRllS H, O'HILL
.....
May 22, 1998
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Mr. Robert E Burgett, Business Manager
East Pennsboro Area School District
c/o Richard C, Snelbaker, Esq" Counsel
Snelbaker, Brenneman & Spare
44 West Main Street
Mechanicsburg, Pennsylvania 17055
Ref: Appraisal, Plaza 21 Shopping Center, NE
Corner of Camp Hill Bypass (US Route
11/15) and 21'1 Street, East Pennsboro
Township, Cumberland County, PA, in re Real
Estate Tax Assessment Appeal, East
Pennsboro Area School District v. Prosperity
Development Corporation
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Dear Mr. Burgett:
At your request by proposal dated May 5, 1997, and accepted May 12, 1997,
we have appraised the property referenced above to estimate the market value
of its fee simple interest in the real estate as of the appraisal date. Laurence A.
Hirsh and Alan M. Harris inspected the property July 17, 1997, without
assistance, and Alan M. Harris inspected the property August 12, 1997, with
the assistance of Charlie Davis, MATT Corp. The date of the appraisal is
January 1, 1997, the date of the tax appeal.
We have considered location, condition, size, zoning, functional utility, sales of
comparable properties, the uses for which the properties could be employed,
operating costs, and other pertinent data.
It is our opinion, and we certify, that the market value of the fee simple
interest in the subject property before the taking, appraised at its highest and
best use as improved, as currently used, as a mixed.use office and
commercial center, as of January I, 1997, was:
... NINE MILLION ($9,000,000) DOLLARS...
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The reasoning upon which these values are based is contained in the
accompanying appraisal report.
This appraisal has been completed in conformity with the Uniform Standards
of Professional Appraisal Practice of the Appraisal Institute (USPAP). As of the
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2213 forest hills drive, suite #3 . harrisburg, pa. 17112
phone 717.652.9800 . 1.8[)()'775.2669 . fax 717.652-8267
http://www.hirshval.com
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ACKNOWLEDGMENT
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Hirsh Valuation Group wishes to acknowledge the contribution made to this
report by Gary R. Fake Jr" Judy N. Sturn and Stephanie H, Cluck, Mr, Fake,
Ms. Sturn and Ms, Cluck have assisted us in research and assemblage of data
and the analysis of the subject properties; however, we have developed the
conclusions reported, and assume full responsibility for such conclusions,
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SCOPE OF THE ApPRAISAL
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The purpose of this appraisal is to estimate the market value of the fee
simple interest in the real estate as of January 1, 1997; and the function of the
appraisal is to serve as a guide in establishing an equitable real estate tax
assessment.
, .
The subject improvements include a service station building, 2 office
buildings, a pump house, a fast.food restaurant, and a strip center with 3
semi.detached buildings, including 2 commercial retail buildings and a
restaurant building. Prosperity Development Corporation owns the subject
site, That owner ground leases the sites for the two office buildings, the
service station, and the fast food restaurant (along with a small unimproved
area to Weis Markets) to their respective owners.
The building improvements were constructed from 1967 to 1996, some
prior to adoption of the current zoning ordinance.
The scope of this appraisal involved the accumulation of data necessary to
estimate market value by application of the three accepted appraisal
approaches: The sales comparison approach, the income approach, and the
cost approach. Data gathered included sale prices, lease rents, terms and
structures. An inspection of the subject property was conducted and
courthouse records were reviewed.
In addition, the appraisers consulted with owners or managers of similar
properties in the surrounding area through telephone interviews and visited
properties considered most similar to the subject.
Data gathered as a result of this research was combined with information
already on file, which includes information which may have been generated
through prior appraisals and/or feasibility studies. Also, we have researched
and confirmed sales of properties considered comparable to the subject
property, and inspected those properties, whenever possible.
The highest and best use of the subject property has been determined for
the property, and each of the three recognized approaches to value has been
considered in this valuation. The final estimate of value for the subject is
$9,000,000. More weight in the final estimate of value was given to the
income approach. with support from the sales comparison approach.
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II
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS
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Location: The subject property consists of a 10,37'acre site improved with two
detached office buildings, a detached pump house, a detached service station
building, a detached fast.food restaurant building, and a strip center with
three semi,detached buildings, including a 2 commercial retail bUildings and a
restaurant building. The subject site fronts the east right.of.way of 215t Street,
and is bounded on the south by the Camp Hill Bypass (US Route 11/15) north
right,of.way, The subject property lies in East Pennsboro Township,
Cumberland County, Pennsylvania, The property is identified as Cumberland
County tax parcel 09,20,1854,004.
Ownership: The subject site is owned by Prosperity Development Corporation,
The subject improvements are owned as follows:
1. Semi,detached retail building, 35,897 SF. owned by Prosperity Development
Corp. and leased to Weis Markets
2, Semi.detached retail building. 14.000 SF. owned by Prosperity Development
Corp, and leased to Thrift Drug
3. Semi.detached restaurant building, 5,597 SF, owned by Prosperity
Development Corp, and leased to J.C. Dunphy's
4. Detached fast,food restaurant building. 2,685 SF, owned by Wendy's 01 New
York (land, lease)
5. Detached gas,station building, 1,854 SF, owned by Thomas E. Zimmerman
(Iand.lease)
6. Detached 4,story office building, 63,010 SF, owned by Plaza 21 Realty
Associates (land,lease)
7. Detached l,story pump house, 500 SF
8. Detached 3.story office building, 46,638 SF, owned by Penn 21 Associates
(land lease)
Land Area: The subject site contains approximately 10.37 acres,
Improvements: The subject site is improved with an asphalt,paved parking lot
and landscaping typical of a strip shopping center and office facilities. It is
improved also with the following building improvements:
. Semi.detached 1.story retail building measuring approximately 35,897 SF
. Semi.detached I-story retail building measuring approximately 14,000 SF
. Semi.detached 1.story restaurant building measuring approximately 5,597 SF
. Detached 1.story last-load restaurant building measuring approximately 2.685 SF
. Detached l,story gas-station building measuring approximately 1,854 SF
. Detached 4.story office building measuring approximately 63,010 SF
. Detached l,story pump house measuring approximately 500 SF
. Detached 3-story office building containing approximately 46,638 SF
Tax Identification Number: The subject property is identified by Cumberland
County as tax parcel 09-20,1854-004.
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SUMMARY OF IMPORTANT FACTS ,\NIl CONCLUSIONS (CONTINUED) 7
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Identification of Property Rights: The property is being appraised for its fee
simple interest.
Purpose of the Appraisal: We are appraising the property to estimate the
market value of its fee simple interest.
Function of the Appraisal: The function of the appraisal is to serve as a guide
in establishing an equitable real estate tax assessment of the property,
Appraisal Date: The date of the appraisal is January 1, 1997, the date of the
real estate tax assessment appeal.
Definition of Market Value:
"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:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and each acting in what he
considers his own best interest;
3, a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in US dollars or in terms of financial
arrangements comparable thereto; and
5. the price represents the normal condition for the property sold unaffected
by special or creative financing or sales concessions granted by anyone
associated with the sale,"
Zoning: The site is located within the Commercial General (CG) zoning district
of East Pennsboro Township.
Highest and Best Use: The highest and best use of the SUbject property, both
as if vacant and as improved, is as currently used, as a mixed,use office and
commercial center,
Assessment and Taxes: The subject property as of the appraisal date was
assessed at $662,100, The assessed value includes the entire 10,37.acre site
and the improvements. Based on the current Cumberland County, East
Pennsboro Township, and East Pennsboro Area School District tax rate of
$183.5 per $1,000 of assessed value (183.5 mills), the annual tax liability
calculates to $121,495,35,
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LOCATION ANAlYSIS (CONTINUED) 111
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corridor from Carlisle to Lebanon and includes the following counties;
Cumberland, Dauphin, Perry, and Lebanon,
Population and income in the region depend on employment that
constitutes the area's economic base, This base is the economic activity of a
community that enables it to attract income from outside its borders, The
value of real property reflects and is influenced by the interaction of basic
forces that motivate human activity. The four major categories of these forces
are social trends, economic circumstances, governmental controls and
regulations, and environmental conditions.
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Social Trends
POPUlATlO' GROIVTII
Population characteristics define
social forces that affect the subject
property. We have analyzed the
demographic composition of the
region to estimate future trends. This
data and our projections reveal the
basic demand for real estate,
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Population
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According to US Census figures,
in 1990, the Harrisburg Area population was 587,986, which increased to an
estimated 613,062 in 1996, indicating a population growth rate of 4.3% for
the period, We have compared the population growth in this area to adjoining
counties and metropolitan areas. The charts on the preceding page illustrate
growth patterns compared to these adjoining areas.
Compared with the State of Pennsylvania, the Harrisburg area is growing at
a faster rate, but at a slower rate than the nation as a whole, The adjoining
counties of York and Lancaster are also growing at a faster rate than the
Harrisburg area, As seen in the charts on the preceding page, Cumberland
County is the fastest growing county among the four that make up the
Harrisburg MSA, followed by Perry County, The chart also indicates that
Dauphin and Lebanon Counties are lagging behind in population growth
compared with Cumberland and Perry Counties and the adjoining counties of
York and Lancaster.
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We have compared household formations in the Harrisburg MSA to other
areas, using US Census figures, The formation of households in the Harrisburg
area increased at a higher rate than its population growth from 1990 to 1996,
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lOCATION ANALYSIS (CONTINUED) 1-1
Major Industry and Employers
Some of the larger employers in the Harrisburg area include:
Commonwealth of Pennsylvania, Hershey Foods Corporation, AMP
Incorporated, HERCO, Inc" Bethlehem Steel, Harrisburg Hospital, IBM,
Pennsylvania Blue Shield, Rite Aid Corporation, Bell Telephone Company, and
Hershey Medical Center,
Moreover, the location of major financial institutions' branch offices in the
Harrisburg area allows for easier access to financing for development projects.
Among these financial institutions are Mellon, PNC Bank, Core States Bank,
Meridian Bank, and Dauphin Deposit Bank and Trust Company, among others,
Business and Industry Development
The Harrisburg area is also served by several organizations, which help
encourage business activity from outside the Area, Among these organizations
are CREDC (Capitol Region Economic Development Corporation), the Chamber
of Commerce for the Capital Region, Greater West Shore Area, Mechanicsburg
area, and Carlisle area. CREDC has played a significant role in contributing to
the growth of the Harrisburg area in the past decade by inspiring new
development and drawing large corporations to the area to set up
headquarters, thereby providing new jobs,
Real Estate Market
Influenced by these
financial trends and the
activities of the
institutions involved in
the financial market, the
commercial and
industrial real estate
market in the Harrisburg
area experienced a
significant amount of
development in the late
1980's,
However, this growth
rate declined drastically in 1990 due to the state of the economy and the large
supply of space versus the smaller demand for such space, Discussions with
local real estate professionals in the Harrisburg Area indicate that there
continues to be a supply of both commercial and industrial type space and
new development has been very slow. However, from the end of 1994 to today,
.of
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lOCATION ANALYSIS (CONTINUED) 15
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space is beginning to lease at a slightly higher rate than in 1990,1993,
Nevertheless, financing for new projects continues to be somewhat difficult to
obtain unless the majority of the property is owner occupied or pre, leased,
As shown in the box on the preceding page, except for class,A office space
vacancy rates in the area generally are high, indicating an overbuilt market.
Vacancy rates for class.A office, residential, and industrial space are lower,
indicating more reasonable absorption,
Median Household Income
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According to Sales
and Marketing
Management's 1995 SbO.OOO
Survey of Buying Power, $iO.OOO
the median household
effective buying income S~O.OIlO
in the Harrisburg,Carlisle, $30.000
Lebanon area was
$40,072 as of 1995, as $20.000
compared to $44,037 for $10.000
Cumberland County
individually, $39,087 in
Dauphin County, $41,773
in Lancaster County, and
$41,485 in York County, all indicating increases over previous years, As of
1989, the median household income for the Harrisburg,Carlisle,Lebanon Mea
was $28,332. From these statistics, it is fair to conclude the subject's location
in the Harrisburg MSA, an area considered to have potential for future
economic development, should have a positive effect upon the future success
of the subject property.
The 1990 US Census shows the Harrisburg area's median home price to be
$75,000. This compares with state and national median home prices of
$69,689 and $79,098, respectively. Median prices are not averages, but
midpoints on the value line. Approximately 60,7% of the households in the
MSA were owner, occupied in 1990.
Development in the Harrisburg area at the present time consists mainly of
middle to upper end housing and well tenanted commercial properties and is
widely considered to be at a steady pace. This pace is affected by access to
development financing which is currently available to a limited group of well
qualified borrowers, as well as general economic conditions, which have been
previously discussed, Speculative development is occurring again,
MIIlIM' I Mill Y ItOUSrHOfO INCOMr CoROIVIH
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LOCA liON ANALYSIS (CONTINUED) 1 (,
Summary of Economic Circumstances
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In summary, compared to the national economy, the Harrisburg area is
experiencing minimal problems. The local economy is considered diverse and
stable with a favorable mix of industries, which should help to insulate the
community from some of the post,recessionary impact, experienced by other
areas of the country.
Government Controls and Regulations
Governmental, political, and legal forces have important influences on
property values, The legal climate can overshadow the natural market forces
of supply and demand. The government provides many necessary facilities
and services that affect land,use patterns, We have examined the influences of
public service, local zoning and building codes (especially those that obstruct
or support land use), national, state and local fiscal policies, and special
legislation that influences property values (rent control, etc,),
We have concluded that generally the political environment for real estate
development in the Harrisburg area in the future is favorable. This fact is
demonstrated by a number of recent developments in the city, including
several new office buildings, Also, a large amount of office and retail space has
been developed on both the East and West shores in the late 1980's into
1990, with space remaining to be absorbed into the market. Included among
these recent (early 1990's) large development projects are the Vartan
Business Park, Colonial Commons Shopping Center, Hampden Square
Shopping Center and Silver Spring Commons Shopping Center, several
residential developments, as well as the Dauphin Highlands Golf Course, In
addition, the new headquarters of Pennsylvania National Insurance on the
Square in Harrisburg was in the lease.up stage during 1996,
Private individuals and groups and township boards concerned about
environmental issues have at times during recent years opposed development
in the Harrisburg area, but such activity at the present is not at a level likely to
inhibit prospects for development.
Other governmental factors influencing growth in the area include zoning,
public water and sewer availability, and environmental limitations. Other than
those discussed, no factors that could enhance or limit growth appear to be
present.
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Both natural and man, made environmental forces contribute to the nature
and desirability of an area, Harrisburg is surrounded by the Appalachian
Mountains both to the north and south and the Susquehanna River flows
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hirsh
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lOCATION ANALYSIS (CONTINUED) 17
through the heart of the area, separating this MSA into two regions, the East
and West shores, Several smaller waterways flow into the Susquehanna River,
including the Yellow Breeches and Conodoguinet Creeks. These geographical
features allow Harrisburg area residents to take advantage of many outdoor
recreational activities. The topography in the Harrisburg area, in general, is
described as gently rolling, and is suitable for many types of development.
Highway System
DISTANCES TO MAJOR CITIES
Pittsburgh 200 ml,
Philadelphia 100 mi,
New York 180 mi.
Washington, DC 110 ml,
8altlmore 75 mi,
Richmond 220 mi,
Lancaster. PA 40 mi,
York, PA 25 ml,
Stale College. PA 85 mi,
The region surrounding the Harrisburg area
contains an excellent primary highway system,
US Interstates 81,83, and 76 all serve the area
and run through both Cumberland and Dauphin
Counties, These highways provide important
links to other markets in Pennsylvania and
other markets in the northeast. Other
important highways serving the area include
Routes 322 and 30, This highway system surrounding the Harrisburg area is
extremely important, since Harrisburg is located within 250 miles of 25% of
the nation's population,
Due to the strength of the highway system serving the area, Harrisburg has
become a center for motor carrier truck terminals, with approximately thirty
terminals and seventy,five carriers serving the area,
Rail service is provided by
Amtrak on Conrail's main line
(formerly Penn Central and
Reading Companies), The rail
terminal is located in
downtown Harrisburg, Bus
service is provided through
the Greyhound and
Continental Trailways lines
with charter bus service
available and local service
provided by Capital Area
Transit. The bus terminal is located in the same facility as the rail passenger
terminal, which was part of a historic restoration project.
The area also is served by the Harrisburg International Airport, which has
undergone major improvements in recent years, This airport serves the major
Other Transportation
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City
Pittsburgh
Philadelphia
New York
Chicago
Delrolt
Boslon
Baltimore
Washington. DC
Atlanta
Raleigh-Durham
Charlotte
Cincinnati
AIR SERVICE AT HIA
Airline
USAlrways
USAirExpress
USAirExpress
American/United
Northwest
USAirways
USAirExpress
USAlrExpJUniled
Delta
American
USAirways
Delta
Flying Time
40min,
30min,
60min,
1 hr, 45 min,
1 hr, 30 min.
60 min.
30 min.
35 min.
1 hr, 40 min.
1 hr,15 min.
1 hr, 30 min.
60 min.
valuation group
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LOCATION ANALYSIS (CONTINUED) 111
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carriers, including USAir, United, Continental, Delta, American, and
Northwest. General aviation is served by two airports; Capital City Airport and
Carlisle Airport.
Conclusion
The generally favorable social, economic, governmental, and environmental
forces in the Harrisburg area should continue to contribute to the demand for
real estate in the area, There is a good balance of land uses, a strong
economic base, an adequate supply of housing and labor, and a well
developed transportation system. These factors contribute to making the area
attractive for commercial, industrial, and residential development. Moreover,
these factors will be significant for the long,term growth prospects of future
development.
In summary, the region's desirable attributes include a high median
income, an excellent transportation system that places various types of
businesses within reach of a larger segment of the population, and a stable
and diverse local economy,
NEIGHBORHOOD ANALYSIS
~. ,
The subject property fronts the
east right. of, way of N. 21st Street
and the north right.of,way of US
Route 30 (Camp Hill Bypass) at their
intersection, in East Pennsboro
Township, Cumberland County, west
of the City of Harrisburg, the state
capital. Access to the site is from N,
21 st Street.
The subject neighborhood is
bounded on the west by N. 2pt
Street, on the south by the Camp Hill Bypass, on the north by Poplar Church
Road, and on the east by Erford Road,
N. 2151 Street is a two and three. lane major thoroughfare which links East
Pennsboro Township with major highways that provide access to the region.
US Route 11/15 (Camp Hill Bypass) is a four.lane major thoroughfare which
provides access south (via US Route 15) to Gettysburg and Frederick,
Maryland, east to the City of Harrisburg, and west to Carlisle and 1,81.
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21
PROPERTY DESCRIPTION
SITE DESCRIPTION
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The subject property consists of a 10,37.acre irregularly shaped site
improved with a strip.shopping center containing a retail supermarket
building, a retail drug store building, and a full,service restaurant building, In
addition, the site is improved with a 5,story office building, a 3.story office
building, a fast.food restaurant building, and a gasoline service station, The
subject site fronts on the western right. of, way of North 2151 Street and on the
northern right.of.way of US Highway 11/15 (Camp Hill By'pass), We were not
furnished with a site plan, boundary survey map, or topographic map of the
subject site.
The subject property lies in East Pennsboro Township, Cumberland
County, Pennsylvania, and is more fully described below:
Size: The site measures approximately 10,37 acres, The size of the site
is considered adequate for similar uses, with the reservation that the
number of parking spaces available at the site is less than the minimum
number of parking spaces required by zoning regulations, and that
parking can be congested at times,
Shape: The subject parcel is irregular in shape.
Topography: The subject site slopes gradually downward from the
northwest corner to the southeast corner, It is at grade with 21'1 Street,
but below the grade of US Highway 11/15, to which there is no access,
Frontage: The subject site has approximately 600 feet of frontage on N,
2151 Street, with access, It also has approximately 700 feet of frontage
on the Camp Hill Bypass, but no access,
Drainage: The site is adequately drained from high areas on the
northwest to low areas on the southeast.
Main Improvements: The site currently is improved with a 1.story
detached service station building, a l,story detached fast,food
restaurant building, a 5,story detached office building, a 3,story
detached office building, and a retail strip center with a l,story semi.
detached supermarket building, a 1.story semi,detached drug store,
and a 1 and part 2,story semi.detached restaurant building with a
mezzanine,
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valuation group
.
PUOI'ERTY DESCRIPTION (CONTINUED) 22
Parking: There are 594 parking spaces.
Location of the Building Improvements on the Site: The Plaza 21 office
building is located near the southwest corner of the site adjacent to
Camp Hill Bypass, and behind the service station, which occupies the
southwest corner of the site. The strip shopping bUildings are located
along the north property line near the northwest corner of the site, The
Wendy's bUilding is located adjacent to the north property line between
the strip center buildings and the American Office Center building on
the northeast corner and the southeast corner, Paved drive and parking
areas surround the improvements,
Land-to-Bulldlng Ratio: Based on total building area, 2,65 to 1
(451,717 SF of land + 170,181 SF GBA); based on building footprint
area, 5,19 to 1 (451,717 SF of land.;. 87,033 SF total footprint),
Access: Access is via two curb cuts to North 21st Street on the west
side of the subject site. North 21't Street is a three-lane (including a
center turn lane) macadam-paved road with concrete curb and gutter, It
intersects with US Highway 11/15 (Camp Hill By-pass) at the southwest
corner of the subject site,
Visibility: The subject property is highly visible from US 11/15 and
from North 215t Street.
Landscaping: The subject property is professionally landscaped, The
landscaping is typical of strip shopping and office facilities similar to
the subject.
Sidewalks and Curbs: There are concrete sidewalks providing access
from the parking areas to the building improvement, with concrete
curbs along North 2151 Street.
Curb Cuts: There are two curb cuts on North 2pt Street.
Exterior Lighting: Exterior lighting consists of a twin, lamp pole-
mounted mercury or sodium,vapor area lights in the parking area, and
some building.mounted sodium or mercury vapor and incandescent
fixtures,
Underground Tanks: There are no underground tanks either disclosed
to us or noted by us, except as noted on page 37,
Street Improvements: A macadam, or asphalt,paved drive and parking
apron exists around the building improvements. and covers nearly all
the site,
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valuation group
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PROPERTY DESCRIPTION (CONTINUED) :z:I
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Flood Zone: The subject is in an area classified as "Zone C," which is
outside the 500,year flood plain.! A copy of the flood map is contained
In this section,
Aboveground or Underground Easements: There are no aboveground or
underground easements disclosed to us or noted by us, other than
typical utility easements,
Public Utilities: The subject site is served by all available utilities at the
site's perimeter, including public water, natural gas, electricity, and
telephone.
Tax Identification Number: Cumberland County identifies the property
as tax parcel 09,20,1854.004.
Favorable Site Attributes: The site's location near major transportation
routes and central location in the Harrisburg metropolitan area, the
relatively level topography, and the excellent visibility from North 21'1
Street and US Highway 11/15 (Camp Hill By,pass), all are considered
favorable attributes.
Relationship to and Conformity of the Site with Its Surroundings: The
subject site fronts North 21'1 Street at the southwest corner of its
intersection with US Highway 11/15 (Camp Hill By.pass), in East
Pennsboro Township, Cumberland County, Pennsylvania. In terms of
shape, topography, zoning, and utilities, the site is typical of market
commercial retail and office sites. In terms of size, the site is similar to
those with similar facilities, We are aware of no nuisances, hazards or
easements that could have a negative effect on the value of the
property, other than the traffic backups on N, 21'1 Street at its
intersection with Camp Hill Bypass, The backups occur as a result of
the signal for left turns onto Camp Hill Bypass, restricting ingress and
egress to the site, The site is considered appropriate for its current use
as a commercial retail and office. facility site.
Functional Adequacy of the Site: Based on our analysis of the subject
site, we have concluded that the physical and functional characteristics
of the property meet the desires and standards of the typical purchaser
of commercial retail and office sites, with the reservations that the site
has limited parking, as well as difficult egress to North 21'1 Street due
to traffic congestion at the traffic light at its intersection with US 11/15
(Camp Hill Bypass).
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I Flood Insurance RaJe Map for East Pennsboro Township, Cumberland County, Pennsylvania, US Dept,
of Housing and Urban Development, Federaltnsurance Administration, Community No. 4203598, Panel
H&I-03, dated April 15. 1977.
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FLOOD MAP
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ZONING
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The subject property is
located in the Commercial
General (CG) zoning district of
East Pennsboro Township,
Permitted uses in the CG
district include the following:
Apartment
buildings.
Tourist homes and
motels.
Commercial
uses...including but
not limited
to,..retail drug
stores, food sales,
wearing apparel
shops, auto and
home appliance
sales and service,
restaurants and tea
rooms, jewelry and
gift shops,
department stores,
dry goods and
notion stores,
furniture sales,
banks and lending
institutions, barber
and beauty shops,
studios, paint,
paperhanging and
glass shops.
Office buildings
professional offices
and services and
personal services.
Newspaper and job printing establishments.
Theaters, assembly halls, places of amusement, and commercial
recreation establishments including skating rinks, swimming pools, golf
driving ranges, and outdoor movies.
Public garages for storage. repair, and servicing of motor vehicles when
in a completely enclosed structure; public and private off. street parking
lots.
Gasoline filling stations for servicing but not major repairing of motor
vehicles [subject to Part 19].
Public and semi. public uses such as churches, libraries, schools,
recreational facilities, and municipal buildings of all types.
10. Post office, central telephone exchanges and transformer substations.
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1.
2.
3.
4,
5.
6.
7.
8.
9.
I'ROI'ERTY DESCRIPTION (CONTINUED) 2(,
SUMMARY OF BULK AND AREA REGULATIONS
East Pennsboro Township
Maximum building height' ........,..................... 40 (eet
Minimum lot area..,.............,..............,..,.... 10,000 SF
Minimum lot width at building line..,............ 100 (eet
Residential & Conv, Apt. Use:
1 dwelling unit,..,..........,.............................. 4,000 SF
2 dwelling units..,......................................... 7,000 SF
3 dwelling units..,..........,.......,...................... 9,000 SF
4 dwelling units...,..,................................... 12,000 SF
Each additional dwelling unit......................, 1,000 SF
Maximum lot coverage..................................,....,40%
Minimum open space.....,..............................,....,10%
Minimum (ront yard' ......,..........,....................,30 (eet
Minimum side yards'..............,......................., 10 feet
Minimum rear yard ....,..............................,...., 30 (eet
Buffer yards' ..,........,..............,................,....,..,20 (eet
'Height limit may be increased one foot for each
additional foot that yard width exceeds minimum
required.
'Or 50"10 o( the width of the right-of.way upon which
the lot abuts, whichever is greater,
'No side yard required where 2 or more commercial
uses join side to side, pursuant to mutual wrinen
agreement of adjoining property owners,
'Required dong residential district boundary line, or
when commercial use abuts existing residential use
[subject to Part 19 o( the zoning ordinance).
Nole: Where adjoining buildings abut or parallel a
public right-of-way, a buffer yard of not less than 20
feet in width is required at intervals of not more than
400 (eet, Common walls are not permlned between
properties of separate ownership,
Note: Off-street parking must be provided in
accordance with Part 21 of the zoning ordinance.
Source: Easl Pennsboro Township Zoning Ordinance
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valuation group
PROI'ERTY DESCRIPTION (CONTINUED) 'J.i
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11. Undertaking parlors and funeral homes.
12, Laundry, dry cleaning or dyeing, tailoring, dressmaking, shoemaking and
repair Shops when primarily service or service and sales shops and not
manufacturing plants.
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IZONING MAP REPRESENTATION I
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13. Wholesale businesses when incident to a permitted use, but not including
wholesale storage warehouses.
14. Signs [subject to part 20], including
. Any signs permitted in any residential zone.
. Business or identification signs not exceeding 300 square feet in total
area per business premises; advertising signs in total square footage
not exceeding four times the lineal front footage of the premises on
which located.
. Service and real estate signs not exceeding 16 feet in total area per
business premises.
15, Residential use in existence at time of adoption of ordinance; dwelling
incidental to permitted use; conversion apartments.
16. Conversion apartments meeting requirements of building code and off.
street parking requirements [part 21].
17. Dance or music studios.
18. Dog kennels and veterinary hospitals.
19. Accessory uses customarily incidental to permitted uses.
20. Public utility facilities.
All other uses are prohibited, Area and bulk regulations are shown in the
box on the preceding page,
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PROPERTY DESCRIPTION (CONTINUED) 28
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The subject uses all are permitted uses in accordance with the C,G district
zoning regulations, The subject improvements were constructed at various
times, some prior to the adoption of the zoning ordinance March 18, 1980,
According to township officials, the minimum parking required at the site,
based on Part 21 of the zoning ordinance, is 724 spaces; however, only 594
spaces are available. (Although parking appears generally to be adequate,
parking can be a problem at peak usage times.) Consequently, the subject
uses are considered to be legal non,conforming uses.
A copy of the applicable sections of the East Pennsboro Township Zoning
Ordinance, including height, area and bulk regulations, and parking
requirements, is contained among the addenda of this report, A representation
of the applicable section of the zoning map is shown on the preceding page,
and a copy of the official East Pennsboro Township Zoning Map is contained in
the addenda,
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DESCRIPTION OF IMPROVEMENTS
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BUilding plans and specifications were not available to us, Our description
of the improvements is based on our observation, on information related to us
by Charley Davis of MATT Corporation, the property manager for Prosperity
Development Company, and on data contained in the Cumberland County Tax
Assessor's Office property cards, The subject property currently is improved
with the following:
. A del ched 5-story class B office building containing approximately
63,010 SF of gross building area (GBA)
. A detached I-story pump house containing approximately 500 SF of GBA
. A detached 3-story class B+ office building containing approximately
46,638 SF of GBA
. A detached 1.story service station building containing approximately
1,854 SF of GBA
. A detached 1-story fast-food restaurant building containing
approximately 2,685 SF of GBA
. Semi,detached strip I-story shopping center improvements, including
. a retail supermarket building containing approximately 36,389 SF of
GBA
. a retail drug store building containing approximately 14,000 SF of
GBA
· a restaurant building containing approximately 9,555 SF of GBA
The improvements are more fully described as follows:
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1)1l0I'[IlTY DrSCIlII'T10~ (C()NTI~U[l))\11
Heating and cooling is
provided by a water,source
heat pump forced.air
system with a cooling
tower, Water heating is by
electric units, We could not
inspect the electrical
system, It is assumed to be
adequate for an office
facility of the subject type.
Two 2,500,lb.,capacity
Centre elevators provide
access to all floors from the
lobby areas on the east end.
There are both men's and women's restrooms located in the east.
end lobby areas on each floor. They contain ceramic.tile floors,
papered walls and surface acoustic tile ceilings with recessed
fluorescent lighting. All are handicap.equipped.
Layout. Design. and Finish
The building improvement is rectangular in shape, Interior finish
generally is average quality in the areas leased for non,medical,office
use, and higher quality in the medical.use areas.
The main entrance to the building is by a covered portico located at
the east end which provides access to the main lobby located on the
2nd level. Access to the building also exists on the west end,
Restrooms are located on each floor at the southeast and northeast
corners of the lobby areas, with stairwells off the north and south
sides of the lobby areas, and elevators against the east wall,
Parking
Access to the subject site is by curb cuts on 21 st Street. The parking
area, which surrounds the building on the north, sOLlth and east
(with a drive on the west end), is asphalt.paved and divided from the
strip.shopping area to the north by an elevated grade planted with
shrubbery, but connected at the west and east ends of the site. Pole,
mounted sodium or mercury-vapor fixtures illuminate the parking
area. Total parking available to the entire site is 594 spaces,
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valuation g,'ollP
!'IHlI'nn" D[~( 1I11'T10N (CONlINum) 11
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AMERICAN OFFICE CENTER (Detached 3,Storv Office Building)
Exterior Description
Foundation: The foundation
of the building is poured
concrete perimeter and
footings,
Slabs: The floor slab is
concrete slab over crushed
stone base.
Framing: Framing is steel
and concrete block.
Insulation: Roof insulation
and interior insulation type is unknown, but is considered adequate
by the owner.
Exterior Walls/Facade: Exterior walls are masonry.
Floors: Floors are concrete slab covered with carpet, composition
floor covering and ceramic tile.
Exterior Doors: Exterior doors are glass.pane with wood frame, and
metal with metal frame.
Windows: Windows are insulated glass in metal frame.
Roof: The roof is built.up composition or rubber membrane over
steel deck and roof structure.
Drainage System: The drainage system is internally mounted gutter
and downspouts.
Basement: Unknown.
Interior Description
Interior finish: Interior walls generally are papered and wood.panel,
and ceilings are suspended acoustic tile. Lavatory areas contain
ceramic.tile floors and vinyl.panel walls and ceiling, Floors are
terrazzo and carpet over concrete. Finish is high.quality, and
hallways are 6.feet wide. Interior doors are wood and metal
personnel doors
Heating and cooling is provided by an electric heat pump forced,air
system. Water heating is by electric units. We could not inspect the
electrical service, It is assumed to be adequate. There are two Otis
2,500,lb"capacity elevators that provide access to the lobby areas
on each floor at the south end.
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PROPERTY DESCRIPTION (CONTINUED) J:.!
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There are both men's and women's restrooms located in the lobby
areas on each floor, with other restroom facilities in each suite. All
are handicap,equipped,
Layout, Design, and Finish
The building improvement is rectangular in shape, Interior finish is
superior,quality. The main entrance is through a ground.level lobby
area on the south end, Access from the north end also is possible,
Restrooms are located on each floor and in each suite, Stairwells are
near the elevators on the north end,
Parking
Access to the subject site is by curb cuts on 21st Street. The parking
area, which borders the building on the west and south, is asphalt.
paved and divided from the strip. shopping area to the west by a
planted divider, but connected at the west and south ends of the
site, Pole,mounted sodium or mercury,vapor fixtures illuminate the
parking area. Total parking available to the entire site is 594 spaces,
~
WEIS MARKET (Semi.Detached Commercial Retail rSuoermarketl Buildinl1')
Exterior Description
Foundation: The foundation
of the building is poured
slab,
Slabs: The floor slab is
concrete slab over crushed
stone base.
Framing: Framing is block
and steel.
Insulation: Roof insulation
and interior insulation type is unknown, but is considered adequate
by the owner.
Exterior Walls/Facade: Exterior walls are painted brick and block
with metal trim,
Floors: Floors are concrete slab covered with composition floor
covering,
Exterior Doors: Exterior doors are glass, pane with metal frame,
Windows: Windows are glass in metal frame,
Roof: The roof is built,up or rubber membrane over steel deck.
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PROI'ERTY DESCRIPTION (CONTINUED) 33
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Drainage System: The drainage system is externally mounted gutter
and downspouts,
Interior Description
Interior finish: Interior finish is minimal, with painted walls and
vinyl.tiIe floor, Ceiling is suspended acoustic tile with recessed
fluorescent lighting, Heating and cooling is by a ceiling mounted
recovery system. The building is sprinklered, A restroom is provided
for employees and the public, We could not inspect the electrical or
mechanical systems. They are assumed to be adequate,
Layout, Design, and Finish
The building improvement is rectangular box,type, with public area
in front and storage, office and loading area in the rear. The
entrance is on the south side,
....
Parking
Access to the subject site is by curb cuts on 21st Street. The parking
area, which borders the building on the west and south, is asphalt.
paved and divided from the office buildings to the east and south by
a planted divider and an elevated grade planted with shrubbery, but
accessible from the office buildings, Pole, mounted sodium or
mercury,vapor fixtures illuminate the parking area, Total parking
available to the entire site is 594 spaces.
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ECKERD DRUGS (Semi.Detached Commercial Retail [Drug Store] Building)
Exterior Description
Foundation: The foundation
of the building is poured
slab,
Slabs: The floor slab is
concrete slab over crushed
stone base.
Framing: Framing is block
and steel.
Insulation: Roof insulation and interior insulation type is unknown,
but is considered adequate by the owner,
Exterior Walls/Facade: Exterior walls are painted brick and block
with metal trim.
Floors: Floors are concrete slab covered with composition floor
covering.
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PROPERTY DESCRIPTION (CONTINUED) 34
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Exterior Doors: Exterior doors are glass.pane with metal frame,
Windows: Windows are glass in metal frame,
Roof: The roof is built,up or rubber membrane over steel deck,
Drainage System: The drainage system is externally mounted gutter
and downspouts.
Interior Description
Interior finish: Interior finish is minimal, with painted walls and
vinyl,tile floor. Ceiling is suspended acoustic tile with recessed
fluorescent lighting. Heating and cooling is by electric heat pump.
The building is sprinklered. A restroom is provided for employees
and the public. We could not inspect the electrical or mechanical
systems, They are assumed to be adequate,
Layout, Design, and Finish
The building improvement is rectangular box.type, with public area
in front and storage, office and loading area in the rear, The
entrance is on the south side.
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Parking
Access to the subject site is by curb cuts on 21st Street. The parking
area, which borders the building on the south, is asphalt.paved and
divided from the office buildings to the east and south by a planted
divider and an elevated grade planted with shrubbery, but accessible
from the office buildings. Pole,mounted sodium or mercury,vapor
fixtures illuminate the parking area, Total parking available to the
entire site is 594 spaces.
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J. C. DUNPHY'S (Semi,Detached Commercial Restaurant Building)
Exterior Description
Foundation: The foundation
of the building is poured
concrete slab,
Slabs: The floor slab is
concrete slab over crushed
stone base.
Framing: Framing is wood,
Insulation: Roof insulation
and interior insulation type
is unknown, but is
considered adequate by the owner.
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PROI'ERTY DESCRIPTION (CONTINUED) 35
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Exterior Walls/Facade: Exterior walls are painted composition lap
siding,
Floors: Floors are concrete slab covered with carpet and vinyl tile,
Exterior Doors: Exterior doors metal with metal frame,
Windows: Windows are insulated glass in wood frame,
Roof: The roof is asphalt or Fiberglas.shingle over wood sheathing,
Drainage System: The drainage system is externally mounted gutter
and downspouts,
Interior Description
Interior finish: Interior walls are painted drywall and wood panel,
and floors are carpet and vinyl tile over concrete, The building
contains a mezzanine approximately 12 feet wide supported by steel
posts. Lighting is incandescent. The ceiling is cathedral,type with
wood finish, Interior doors are wood and metal personnel doors, .
Heating and cooling is by electric heat pump, We could not inspect
the mechanical and electrical systems, They are assumed to be
adequate, There are public restrooms in the building, We could not
inspect the interiors.
Layout, Design, and Finish
The building improvement is rectangular in shape, with entrance on
the south end, public dining area on the south two.thirds of the
building (and with seating on the mezzanine), and kitchen, dock and
storage areas on the north end,
Parking
Access to the subject site is by curb cuts on 21 st Street. The parking
area, which borders the building on the east and south, is asphalt,
paved and divided from the office buildings to the east and south by
a planted divider and an elevated grade planted with shrubbery, but
accessible from the office buildings, Pole,mounted sodium or
mercury,vapor fixtures illuminate the parking area, Total parking
available to the entire site is 594 spaces,
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1)IWI'Uln D[SCRII'rION (CON rlNUm) ]11
WENDY'S (Detached Commercial Fast,Food Restaurant Building)
Exterior Description
Foundation: The foundation
of the building is poured
concrete slab
Slabs: The floor slab is
concrete slab over crushed
stone base,
Framing: Framing is wood.
Insulation: Roof insulation
and interior insulation type
is unknown, but is considered adequate by the owner,
Exterior Walls/Facade: Exterior walls are face brick with metal roof
trim.
Floors: Floors are concrete slab covered with ceramic tile,
Exterior Doors: Exterior doors are metal with metal frame,
Windows: Windows are insulated glass in wood frame,
Roof: The roof is asphalt or Fiberglas.shingle over wood sheathing.
Drainage System: The drainage system is internally mounted gutter
and downspouts.
Interior DescrlDtion
Interior finish: Interior finish including the food-preparation area, is
typical of fast,food restaurant facilities, with tile floor, painted
drywall and exposed brick, and suspended acoustic tile ceiling with
recessed lighting.
Equipment and Mechanical Systems: Heating and cooling is
provided by an electric heat pump system, We could not inspect the
mechanical and electrical systems. They are assumed to be
adequate. There are two restrooms available to the public and
employees.
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Layout, Design, and Finish
The building improvement is rectangular in shape, with public
entrances on the east and west. and employee entrance on the
north. The dining area is along the south and east sides, with
serving counter to the north of the dining area, Loading, office.
storage and food, preparation areas are on the north end of the
building.
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1'1l01'[IlTY ()[SCIlII'T10N (CONTlNlJW) Ji
Parking
Access to the subject site is by curb cuts on 21 st Street. The parking
area, which borders the building on the east, south and west, is
asphalt, paved and divided from the office buildings to the east and
south by a planted divider and an elevated grade planted with
shrubbery, but accessible from the office buildings, Pole,mounted
sodium or mercury.vapor fixtures illuminate the parking area. Total
parking available to the entire site is 594 spaces,
EXXON SERVICE STATION (Detached Commercial Service Station Buildimz)
Exterior Description
Foundation: The foundation
of the building is poured
concrete slab,
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Slabs: The floor slab is
concrete slab over crushed
stone base.
Framing: Framing is block
and wood.
Insulation: Roof insulation
and interior insulation type is unknown, but is considered adequate
by the owner.
Exterior Walls/Facade: Exterior walls are brick.
Floors: Floors are concrete slab covered with vinyl tile in the sales
area, and exposed slab in the bays.
Exterior Doors: Exterior doors are metal with metal frame,
Windows: Windows are glass in wood frame,
Roof: The roof is asphalt or Fiberglas.shingle over wood sheathing.
Drainage System: The drainage system is externally mounted gutter
and downspouts,
Underground Storage Tanks: There are underground gasoline and
oil storage tanks present. number and capacity unknown, It is known
from lease information that they are electrically monitored for leaks.
Interior Description
Interior finish: Interior finish is minimal in the sales area and
unfinished in the bay area. Lighting is incandescent and fluorescent
ceiling mounted. Exterior lighting is mounted in the pump-area
canopy. Mechanical, heating and cooling, and electrical systems are
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PROPERTY DESCRIPTION (CONTINUED) 39
The subject property building improvements, gross building areas, and
year constructed (according to Cumberland County tax records, except for
Weis Market and J,C, Dunphy's2) are listed as follows:
Building Improvement
Detached 5.story office building (Plaza 21)
Detached 3.story office building (American Ofc, Center)
Detached 1.story service station (Exxon)
Detached 1.story fast.food restaurant (Wendy's)
Detached 1.story pump house
l,story strip center semi.detached buildings including:
Supermarket building (Weis Market)
Drug store building (Eckerd Drugs, formerly Thrift)
Restaurant building (J, C. Dunphy's)
Total SF/GBA
.Renovated in 1988, according to tax records.
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AGE AND CONDITION OF THE IMPROVEMENTS
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SF /GBA
63,010
46,638
1,854
2,685
500
35,897
14,000
5,597
170,181
IMl1
1974
1985
*1967
1979
1974
1967
1978
1994
The site also is improved with an asphalt or macadam parking and
driveway area which covers most of the site. The building conditions are
typical of buildings of similar age and construction, and appear to have been
well,maintained. The parking area also is well,maintained and in favorable
condition, The improvements are serving the purpose for which they were
constructed,
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1 This gross building area is based on our measurement, Cumberland County tax records idenlifies me
original area of me building as t8,746 SF, and subsequent addition(s) as t7,643 SF. or a total of 36,389.
The second amendment to me June. 1966. lease (modified by letter June 28, 1966 [which letter
subsequently was cancelled Nov. 12, 1975), and amended March 17, 1975. and Novennber 12. 1975).
dated May 14, 1984. calls for proration of charges based on a SF-numerator of 35,038. tt identifies
original building area as 24,09t SF, and me addilion mat is me subject of me amendment as 10,533 SF.
for a lotal of 36,624 SF. The Nov. 12, 1975, amendment. refers to a building expansion of 5,693 SF.
Based on our measuremenl, J.C, Dunphy's lotal area is 5,597 SF, including a 12'-wide mezzanine, and
a small 2-stor)' area; however, me tax records state 9,555 SF. The lease to J.C, Dunphy's Pub, Inc.,
dated August 17, 1994, specifies a 4,430-SF area, We were not furnished with building plans or
specifications,
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HIGHEST AND BEST USE
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Basic to the determination of a property's value is its "highest and best
use," This is "the reasonable and probable use that supports the highest
present value, as of the date of the appraisal."
The highest and best use must be:
· Physically Possible: The use must be physically possible on
the site or in the improvements planned or existing,
· Legally Permissible: The use must be permitted under
zoning and other municipal, county, state, and federal
regulations,
. Financially Feasible: The use must be capable of producing a
positive return,
. Maximally Productive: The use must represent the maximally
productive use for the subject property,
The highest and best use of the site as vacant may be different from the
highest and best use of the improved site. This occurrence is most likely for
older properties where market conditions and the neighborhood have changed
significantly since construction of the improvements. The existing use will
continue to be the highest and best use unless the land value at its highest
and best use exceeds the sum of the value of the entire property as improved
and the cost to remove the improvements,
Based on the premise that the physical condition of improvements and
neighborhood characteristics change, the definition of highest and best use
indicates that there are two types: Highest and best use as if vacant; and
highest and best use as improved,
The subject property, as of the valuation date, is a 10,37.acre site
improved with commercial retail, full,service and fast,food restaurants, a
service station, and two office buildings. Typically, land is valued in terms of
the most profitable use for the total property, The access, visibility, zoning
and terrain of the property make it suitable for residential, commercial,
industrial or recreational use. The highest and best use of the property will be
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HIGIt[ST AND BEST USE (CONTINUED) 42
the use that is physically possible, legally permissible, financially feasible, and
maximally productive,
PHYSICALLY POSSIBLE
The subject site is an irregularly shaped, 10,37 ,acre parcel, As if vacant,
the topography allows for all legal uses possible. The utility of the site is not
diminished by its shape, and the size of the site is adequate for most legal
uses, The availability of public utilities at or near the site's perimeter
enhances the prospects for development of the site for legally permitted uses,
The use of the subject for commercial retail and restaurant, service.station,
and office uses, along with other commercial, industrial, residential and
recreational uses is considered physically possible on the subject site.
As improved, the subject is a 10,37'acre site improved with an 1,854.SF
detached service station, a 2,285,SF detached fast,food restaurant, a 63.010,
SF detached office building, a 46,638.SF detached office building, a 500,SF
detached pump house, and a strip shopping center containing a 36,389,SF
retail supermarket building, a 14,000,SF drug store building, and a 9,555,SF
restaurant facility,
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LEGALLY PERMISSIBLE
The zoning district largely controls uses that are legally permissible at the
subject site. The subject site lies within the Commercial General (C,G) zoning
district of East Pennsboro Township, The C.G district permits apartment
buildings, tourist homes and motels; office buildings; theaters and
commercial recreation establishments; automobile parking and service
garages; service stations; post office buildings; and public and semi,public
uses such as churches, libraries, schools, and recreational facilities. Also
permitted are funeral homes; storage warehouses and wholesale businesses;
music and dance studios; veterinary hospitals; and a variety of other
commercial uses, as well as accessory uses to those permitted uses,
As if vacant, there are no known private restrictions, building code
limitations, or environmental controls which would prohibit any of the uses
permitted by the zoning. Uses that are physically possible and legally
permissible, therefore, are those cited in the preceding paragraph.
As improved, all of the subject uses are permitted within the C.G zoning
district. The subject site does not provide for the minimum number of parking
spaces required by zoning; therefore, the subject is a legal non,conforming
use within the C,G zoning district. Bulk and area regulations for the C,G
district are summarized in the property description section, and copies of the
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HIGHEST AND BEST USE (CONTINUED) -13
applicable parts of the East Pennsboro Township Zoning Ordinance are
included in the addenda,
FINANCIALLY FEASIBLE
To determine financial feasibility, first for the site as if vacant, and then for
the site as improved, those uses which are physically possible and legally
permissible are further analyzed to determine which uses are likely to produce
an income equal to or greater than the amount needed to satisfy capital
amortization, operating expenses and financial obligations,
First, the physically possible and legally permissible uses must be reduced
to those which are logical, Those uses which are financially feasible also are
tested to find the use that produces the highest value consistent with the rate
of return warranted by the market for that use,
As If Vacant
Public uses are illogical because those uses typically are not run for profit.
An accessory use is secondary to a primary use,
The remaining uses allowable by zoning (detailed in the property
description section and summarized previously in this section, have been
analyzed and most judged to be uses that could afford returns similar to those
for the subject as improved,
Therefore, use of the property as if vacanf and as improved could afford
similar returns. The subject site fronts, and has access to, North 21'1 Street, a
major thoroughfare that intersects at the southwest corner of the subject site
with US Highway 11/15 (Camp Hill Bypass), and enjoys excellent visibility
from both North 21'1 Street and US Highway 11/15.
As researched and analyzed in the income approach, the subject, as of the
valuation date, is achieving a positive return that is assumed to be equal to or
greater than the amount necessary to satisfy capital amortization, operating
expenses and financial obligations, Therefore, it is concluded that the subject
use both as ifvacanf and as improved is financially feasible.
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MAXIMALLY PRODUCTIVE
The most logical and financially feasible use of the site as if vacant is as
improved, as a mixed,use office and commercial center site developed for
commercial retail, service station, and restaurant uses, and office uses, all of
which are physically possible and legally permissible uses, and the maximally
productive-and therefore highest and best-use,
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45
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ApPRAISAL PROCESS
As a requisite to estimating the market value of the fee simple interest in
the subject real estate, we have considered all three approaches to value: The
sales comparison approach, the income approach, and the cost approach, In
the case of the subject property all approaches to value were considered in
developing a final value conclusion. In addition, the subject market area and
other influences on value were considered,
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Sales Comparison Approach
The sales comparison approach assumes that under normal conditions, a
number of parties, acting intelligently and voluntarily, tend to set a pattern
from which value can be estimated, Application of this approach relies on a
comparison of the subject property with a sufficient number of recent sale
transactions of comparable properties in the market, based on a common unit
such as a price per square foot, price per acre, price per lot, price per square
foot of building, gross income multiplier (GIM), or overall rate (Ro).
We developed the sales comparison approach by researching recent sales
of commercial retail, restaurant, service station, and office facilities and
comparing those sales to the subject. The units of comparison that could be
developed from the sale data were price per square foot of building including
land, and in the case of shopping center sales, overall capitalization rate, A
sufficient number of recent sales supports our conclusions, Consequently, the
value estimated by the sales comparison approach is deemed reliable due to
the quantity and quality of sale data.
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Income Approach
The income approach analyzes the present worth of the future potential
benefits of a property, The initial estimate involves the net income, which a
fully informed person is justified in assuming the property will produce during
its remaining useful life, The estimated net income then is capitalized into a
value estimate, based upon the level of risk as compared with investments of
similar type and class,
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AI'I'RAISM PROCESS (CONTINUED) -II>
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The income approach was developed using information about lease rentals
obtained through our survey of similar properties, which provided us with
sufficient data with which to estimate economic rent. Because the subject
office rents are within market range and leases for the other subject use are
expected to be on a net basis for five years or longer, income and expenses
are considered stabilized, Our market research data concerning expenses for
properties similar to the subjects' with regard to physical characteristics and
lease,type, supports the estimates of net operating income, Typical mortgage
and equity rates in the market support our estimate of the capitalization rate,
As a result, we consider the value indicators for the subject developed by the
income approach to be both reliable and valid.
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Cost Approach
The cost approach to value is based on the assumption that the
reproduction cost of a building, plus land value, often sets the upper limit of
value, A key assumption is that a newly constructed building has advantages
over an existing building. Therefore, evaluation focuses upon disadvantages or
deficiencies (depreciation) of the existing improvements compared to a new
facility, The cost approach is most valid when applied to newer structures for
which minimal depreciation has occurred. Plans, specifications, and a
qualified construction,cost estimate for the subject improvements were not
available, making an accurate estimate of reproduction cost new (RCN)
difficult. The subject improvements' ages range from new to 29 years,
rendering unreliable an estimate of accrued depreciation. For those reasons,
an estimate of value by the cost approach would be speculative and
unreliable, and was not developed,
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Influences on Value
In developing the approaches to value, many factors, positive and negative,
have been considered. Positive influences include:
. Location close to major transportation routes
. Access to US Highway 11/15 (Camp Hill Bypass), a major
route, via North 2151 Street a major feeder route
. Excellent visibility from all directions
. Central location in an area with a growing economy and low
unemployment
Negative influences include:
. Difficult egress due to traffic back,ups on North 21'1 Street at
the US 11/15 intersection
. Limited parking at the site
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SALES COMPARISON ApPROACH
The sales comparison approach is a process of comparing market data, that
is, the prices paid for similar properties, prices asked by owners, offers made by
prospective purchasers willing to buy, and rents and leases,
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In applying the sales comparison approach,
various appraisal principles are applied,
ensuring that all relevant issues have been
included in the analysis, The principles of
primary importance are supply and demand,
balance, substitution, and externalaties,
Additionally, a fundamental premise of the
sales comparison approach is the concept, that
from analysis of sales of reasonably similar
properties, an appraiser has a factual basis upon which to estimate the value of
his subject. Proper application of the sales comparison approach requires that:
· Only market transactions be weighed, and the data of
each transaction be confirmed to the greatest extent
possible.
. The degree of comparability of each sale to the subject
be considered,
· The value conclusion be consistent with the analysis of
the sales data.
Sales Comparison
Approach: Estimating value
by comparing to the
subject similar properties
sold in the same market
and adjusting the sale
prices for differences.
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A definition of market value is '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.' For a conveyance to
qualify as a 'market transaction,' four factors must be present:
1, The conveyance must be 'arm's length'-that is, it must either be
between two non,related parties or between related parties who
have negotiated a price at a level that, if the buyer were the seller,
the price he is paying is also the price he would accept for the
property; and conversely, if the seller were the buyer the price he is
accepting is also the price he would pay for the property. To this
extent, a conveyance resulting from a buy,sell agreement, right of
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SALES COMPARISON ApPROACH (CONTINUED) -19
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first refusal agreement, or lease/purchase optional agreement
could be arm's length even though the buyer and seller are not
entirely non, related,
2, Neither the buyer nor seller would have been under compulsion to
act.
3, The property should be available on the open market to the class of
purchasers best able to utilize the facility,
4, The price must be expressed in the equivalent of cash, adjusted for
any special financing, concessions, or terms.
The degree of comparability that exists between a sale and the subject is
often a function of the volume of sales activity in a market. For any class of
real estate, if sales are infrequent, the market area must be expanded in scope
of time and or geography to whatever extent is necessary to accumulate
sufficient data on which to base a judgment.
To judge the degree of comparability between a sale and the subject.
several guidelines can be applied.
. The sale should be in the same market as the subject. To the
extent that a market is a meeting place for buyers and sellers of
real estate of a given type, the boundaries of the market are set by
the partiCipants in merchandising and absorbing competitive
properties. The boundaries of a market area are consequently
economic in character and not purely physical or geographic.
. Physical characteristics of the sale and subject should be as
similar as pOSSible in terms of size and amenities customarily
found within the applicable class of real estate,
. Real estate price trends over time must be taken into
consideration,
. The functional adequacy of the sale property and the subject
should be competitive in terms of the ability of each to support
similar functions.
Sales of similar properties in the region were researched and compared to
the subject property and its characteristics, Facts pertaining to the
comparable sales were verified with principals and/or brokers involved in the
transaction whenever possible. For features which are dissimilar between the
sales and the subject, adjustments are made leading to an indication of the
price at which the property being appraised could be expected to sell. 3
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J Note: Downward adjustment indicates superiorily of comparable propeny. Upward adjustment indicates
inferiority of comparable propeny, Typically, smaller sites and/or improvements will command higher
per-unil prices,
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SALES COMPARISON ApPROACH (CONTINUED) 50
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In making adjustments, all relevant factors are considered including:
. Property rights conveyed.
. Cash equivalency of the price attributable to the real estate,
. Time considerations,
. Neighborhood characteristics,
. Functional adequacy of the site,
. Current zoning and zoning regulations,
. Age, condition, and quality of the improvements.
. Functional adequacy of the building and layout.
In developing the sales comparison approach, we have applied various
appraisal principles ensuring that all relevant issues have been included in the
analysis, These principles of primary importance are supply and demand,
balance, substitution, and externalties. We have considered the date of sale,
location, site characteristics and conditions of sale in arriving at adjustment
conclusions and in estimating the value of the subject property by the sales
comparison approach,
The subject property is being appraised for the market value of the fee
simple interest at its highest and best use, as improved, as a mixed.use office
and commercial center,
The subject property is a 10,37'acre site improved with two office
buildings, a service station, a fast-food restaurant, and a strip shopping center
comprised of three semi,detached buildings occupied by a supermarket, a
drug store, and a restaurant. In order to estimate the value of the subject ad
described above, each of the uses is considered to occupy a part of the site as
described in the subject property leases as available parking area, We
researched sales of similar properties judged to be comparable to the subject
uses.
The only unit of comparison that could be developed from the sales data
was sale price per square foot of building including land, except for shopping
center sales, for which gross income multipliers (GIM) and overall
capitalization rates (OAR) could be developed. Variations in unit rates are due
to the variations in site sizes and physical characteristics, improvements size,
construction and condition, and location, visibility and access,
The unit sale prices for the sales researched were compared to the subject
properties and adjusted for the usual elements of comparison, Summaries of
the sales researched are shown in the section; however, the individual sale
pages are contained in the addenda of this report, Adjustments to the sales
are not discussed on the individual sale pages, but are discussed along with
the summaries in this section.
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SALES COMPARISON ApPROACH (CONTINUED) 51
Office Building Sales
Office building sales researched were located in Cumberland, Dauphin,
Lancaster and York counties, The sale prices range between $31.95/SF of
building including land and $76.92/SF, The Plaza 21 land.to.building ratio is
1.53:1, and the American Office Center's is 1.85:1, lower than most of the
sales' ratios, Following is a summary of the sales researched:
SUMMARY OF OFFICE BUILDING SALES
I D' Location
Sale
Price
Sale Bldg UB Sale
Dale Acreage SF Ratio $ISF
69954750 Delbrook Rd, Hampden S1,200,OOO Feb-97 2,00 17,544 4,96:1 S68.40
Twp, Cumberland Co
6603 2080 linglestown Rd, SI,300,OOO Jul.96 1.32 20,064 2,87:1 S64,79
Susquehanna Twp, Dauphin Co
6192801 East Park Dr,Lower Paxton S1,050,OOO Apr.96 2.20 18,291 5.24:1 SS7.41
Twp, Dauphin Co
5010415 Fallowfield Rd, Hampden S1,200,OOO Feb-96 0.37 28,560 3.08:1 S42.02
Twp, Cumberland Co
o~'401O 415 Fallowfield Rd, Hampden S2,OOO,OOO Feb-96 0.37 28,560 3.08:1 S70.03
~~e. Twp, Cumberland Co
4547600 N 121h 5t,lemoyne Bor, S1,350,OOO Oct.95 0.79 17,550 1,96:1 S76.92
. Cumberland Co
4432 600 Wilson Rd, Upper Allen S1,250,OOO Oct.95 2,24 19,044 5.12:1 S65,64
Twp, Cumberland Co
37081149 Harrisburg Pk, Middlesex S2,OOO,OOO Nov-94 14.88 39,313 16,36:1 SSO.87
Twp, Cumberland Co
35561650 Manheim Pk, Manheim S1,400,OOO Nov.94 3,66 43,824 3.64:1 S31.9S
Bor, Lancaster Co
33443314 Market 51, Camp HiII80r, S1,100,OOO Aug-94 1.48 25,092 2.57:1 S43,84
Cumberland Co
3557 2S56 Kingston Rd, York, York S2,250,OOO Jul.94 4.63 S4,367 3,70:1 S41,39
Co
Sale no, 3557 ($41.39/SF) is most like Plaza 21 in size, and sale no, 3556
($31.95/SF) is most like American Office ~--nOl",ci8u"';;;;cs"'IP"a~.--m_.
Center, Sale no. 3557 is adjusted down for its 190,00
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superior quality, and up for its less favorable 170,00 ----., -,--~ ..
location and rent rates at the time of sale. ::::~
Overall it indicates a higher unit rate for the :;g:~
sub)' ects, 110,00
$10.00
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Sale no, 4547 ($76.92/SF) is most like the
subject properties in land,to,building ratio. It
is adjusted down for its smaller building size.
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SALES COMPARISON ApPROACH (CONTINUED) 52
-., Overall it indicates a lower unit rate for the subjects.
Based on the sales researched, and on the preceding analysis, we think the
appropriate unit rate for the subjects lies between the adjusted rates for the
sales cited, Therefore, we estimate unit rates for the subjects of $46/SF for
Plaza 21 and $55/SF for American Office Center. Applied to the subjects, the
unit rates indicate values as follows:
Plaza 21 $46/SF x 63,010 SF = $2,898,460
American Office Center $55/SF x 46,638 SF = $2,565,090
Service Station Sales
The SUbject service station was built in 1967 and renovated in 1988, It is
located in a prime location with favorable visibility and traffic count. Service
station sales researched range in sale price/SF between $55,56 and $202,92,
with most between $91 and $117/SF, Following is a summary of the sales
researched:
SUMMARY OF SERVICE STATION SALES
Sale Sale Bldg UB Sale
JO, Location Price Date Acreage SF Ratio $ISF
6009 248 5 Progress Ave, S300,OOO Oct.96 0.25 4,030 2.68:1 S74.44
Susquehanna Twp, Dauphin Co
6015 560 W High St, Carlisle Bor, S260,OOO Sep-96 2,218 S117.22
Cumberland Co
51994300 Derry St, Swatara Twp, S225,OOO Apr-96 0.S8 1,606 15.73:1 S140.10
Dauphin Co
5071 Paxton St, Swatara Twp, S453,696 )an-96 1,70 4,941 14.99:1 S91.82
Dauphin Co
8046 1-83 Exit 13, Newberry Twp, S175,OOO Sep-9S 0.45 1,798 10,90,1 S97,33
York Co
4667 Prospect & Haines Rd, S398,OOO Jan-95 1.09 2,668 4,90,1 S149.18
- Springettsbury Twp, York Co
3704 620 Enola Rd, East Pennsboro S80,OOO Nov-94 1,440 SSS.56
Twp, Cumberland Co
.- 4995 102 lewisberry Rd, Fairview S210,OOO Sep-94 0.66 3,456 8.27:1 S60.76
Twp, York Co
2083 1101 Carlisle Rd, lower Allen S200,OOO Jul-93 0.39 1,724 9.85:1 S116,01
- Twp, Cumberland Co
3232 5S23 Carlisle Pk, Hampden S250,OOO Feb-93 0.34 1,232 12.02:1 S202.92
Twp, Cumberland Co
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Sales no, 8046 ($97,33/SF) and 2083 ($116,Ol/SF) are most like the
I subject building size, Sale no, 8046 is adjusted up for its lower land, to.
-- building ratio. Sale no. 2083 is adjusted up for its lower land,to,building ratio,
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SALES COMPARISON ApPROACH (CONTINUED) S..
SUMMARY Of fAST FOOD RESTAURANT SALES
Sale Sale Bldg UB Sale
10. Location Priee Dale Acreage SF Ratio S/Sf
6941 921 Markel Street. Lemovne 52S0.000 Dec-96 2,169 511S.26
Bar, Cumberland Co
6938 4230 Trlndle Rd. Hampden 5747.142 Dec-96 2.861 S261,1S
Twp, Cumberland Co
5695 20 N J2nd 51, Camp HIli Bar. 5340.000 Aug-96 808 5420,79
Cumberland Co
4121 2001 N 6th 51. Harrisburg. 51 SO.OOO MaV.95 0048 2.461 8,55:1 560,9S
Dauphin Co
4124 1314 Market St, Harrisburg, 5130.000 MaV-95 2.000 565,00
Dauphin Co
41 S4 331 N Enola Dr, East Pennsboro 522S.000 Mav.95 2,166 5103.88
Twp, Cumberland Co
2647 100 N Progress Ave, 5S2S.000 Apr-94 0.90 2.SS6 lS.32:1 520SAO
Susquehanna Twp. Dauphin Co
3825 Hershevpark Dr, Derry Twp, 5300,000 Feb-95 O.SO 3.116 7.02:1 596.28
Dauphin Co
13363421 Simpson Ferry Rd. 5B31,792 Sep-94 S.876 5141.S6
Hampden Twp. Cumberland Co
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Sales no. 6938 ($261.15/SF) and 2647 ___________________
($205.40/SF) are most like the subject in FAST-fOOD RESTAURANT SALE PRICEJ5F
building size, Sale no. 6938 is a 1500.00
MacDonald's restaurant, adjusted down 5.00,00
due to its more favorable accessibility, 5300,00
Sale no. 2647 is a Wendy's, adjusted down 5200,00
for its larger site size, 5'00,00
50,00
Sale no, 4154 ($103,88/SF), a KFC ' 2 3 . 5 6 7 8 9
restaurant, is closest in proximity to the S,I. Ptoponl..
subject. It is adjusted up for its less -'. -- --------.---
favorable location relative to major thoroughfares,
Based on the sales researched, and on our analysis, the appropriate unit
rate for the subject is judged to lie between the adjusted unit rates for the
sales cited, Thus, the unit rate estimated for the subject is $110/SF, Applied
to the subject, the unit rate indicates a value of $295,350 ($110/SF x 2685
SF),
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Shopping Center Sales
The subject is a strip Shopping center containing three semi,detached
buildings occupied by a supermarket, a drug store, and a restaurant. The
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hirsh
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valuation group
SALES COMPARISON ApPROACH (CONTINUED) 55
~
supermarket and drug store buildings are older construction, while the
restaurant is less than 3 years old,
Sales researched, with two exceptions, are in the subject region, Sales
range in sale price/SF between $29,87/SF and $86,36/SF. Following is a
summary of the sale researched:
SUMMARY OF SHOPPING CENTER SALES
....
~
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Sale Sale Sale
ID. Location Price Date Size GIM OAR S1SF
6588 Silver Springs Commons, 520.7S0.000 lul-96 267,809 N/A N/A 577.48
Cumberland Co. PA
6589 Union Square, Dauphin Co, PA 516.000.000 Nov-96 291,504 N/A N/A 554,89
6582 Dlllsburg Shopping Center. York 5S,700,000 Oct.96 66,000 N/A N/A 586.]6
Co.PA
6423 Food lion Shopping Center. 52.800.000 Jul-96 38,600 8,9 9.6" 572.54
York Co, PA
6422 Maple Village II. York Co. PA 51,280.000 Jun-96 18.820 6.7 10.1 " 568.01
8047 Shops at Prospect, Lancaster Co, 5],SSO,OOO Aug-95 63.000 0.0 11.8" 556.]5
PA
8048 Orchard Plaza, Lucas Co. OH 51,8S0.000 Jun-95 61.930 6.2 11.8" $29,87
8049 Village Shops at Voorhees. 54,87S.000 Jul-94 79,900 6.6 11.9" Sf,1.01
Camden CO, NJ
5657 Shiloh Shopping Center. York 52,200.000 5ep-93 25.681 N/A N/A 585.1.7
Co.PA
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Sales no. 8047 ($56,35/SF; 11.8%
OAR) and 6582 ($86.36/SF) are more like
5100,00
the SUbject in size, Sale no. 6582 is close
in proximity to the SUbject, but details of
the sale transaction could not be
confirmed. Sale no, 6423 ($72,54/SF; 8,9
GIM; 9,6% OAR)is most like the subject in
terms of tenant mix, but is smaller with
regard to building size,
Sale no, 8047 ($56.35/SF; 11.8% OAR)
is considered similar to the subject and not adjusted. Sale no. 6423
($72,54/SF; 8,9 GIM; 9,6% OAR) is adjusted down due to the smaller
improvement size and to its recent construction.
Based on the sales researched and on our analysis, we think the
appropriate unit rate for the subject lies near the adjusted unit rates for sales
no, 8047 and 6423. Consequently, the unit rates estimated for the subject are
$55.00/SF of building including land, and 10,5% OAR, (The OAR Is similar to
the one estimated in the income approach. and supports that conclusion.)
Sttll'FHl ceIltR SALE ~8f
...
$8000
$8000
.~
S4000
520 00
$000
'234&0711
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INCOME ApPROACH (CONTINUED) 58
. Net Operating Income (NOI) will be developed by estimating
operating expenses and deducting this estimate from effective
gross income,
. Capitalization of net operating income will be done by the
division of the net operating income by a rate selected
through the band of investment method to arrive at a
conclusion of value by the income capitalization approach,
It was determined that the highest and best use of the subject property is
as improved and as currently used. as a mixed, use site with two office
facilities, a fast,food restaurant. a service station, and a retail strip,center
facility, Although the subject has a substantial operating history. we were not
furnished with Income and expense data for the SUbject property operations,
The subject site is leased by Prosperity Development Co,. Lessor, FOllowing
is a summary of ground leases:
SUMMARY OF PROSPERITY DEVELOPMENT CORPORATION LEASES
51 lMt .... .... , No. Opt.
TtNnI luMd Comm. '""" lMT. ,... Opt. 'tnn II 'a
WIk MIoIUtt, Inc: nDle "lflU afllm J s"" ,"''"
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T1vtftCld.tnbDnc.lnc 14.000 v,,.. Illlm IHmo!1 17 .... ,..... tntOf l~ ,_ I.... t.49.geO UJ7
Inww..
J~',"Inc. ""no 9I11.'9S ......, INoCf>ll , n... I..... Ift\OI'l",... I",", 1lCpIft. .50.000 SlU9
Wnfy'. Old'MIcned
HMnbufpn of New yon.
''''' J7J6S lnY1'l 7/14M I~JI .. , .... 1- 1"""lnIft' I..... ....000 '1.-47
Thon'IIILI~", 11.46111MJ IlnOOJ I 10,' I..... I",", Iftw 1_ Sl1.74ft 50,"
raw 21 INtty AMocYtft 96.877 111m "JOI1J I..... I..... I..... 126.61l IOJ'
PtM21A11Dda1IM a6,"U fJ1W<l 1fI41... INdP"1 I_ I""" I,"", 1- SH.DOO 5OJ.
NOIt I: Contlllll'ftl rt'ftIof 2.S\' d N1 rNll,*, In.U1'U of 11.999.100 ~II).
NOlt1: I..", conlainlkhfdulf'dinc",.tn.
NOlt): PM,"",,"" of ,... aI poIl...Ift In hem Dl MOO.ooo.
Nolf4: bf'It It p...of UUXXl Of ,.. oIpo1l11'f'8.
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The two office buildings on the subject site are owned by Plaza 21 Realty
Associates and Penn 21 Associates as ground lessees, A summary of building,
tenant leases is shown on the following page,
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,.j valuation group
Economic Rent
In order to determine whether the subject contract rents are within market
ranges, economic rent must be estimated. The subject uses are considered
capable of commanding lease rents similar to those of other similar
permissible commercial uses, Therefore, we have researched leases for
facilities considered comparable to the subject in order to estimate the
potential gross income for the subject.
The leases researched include office leases, restaurant leases, fast.food
restaurant leases, shopping center leases, and service station leases,
Adjustments to the leased properties
were made for location, size of
improvement, land.to,building ratio, lease
term, and physical characteristics of the
improvement.
Office Leases
According to an analysis of the
Harrisburg Area West Shore Office Market
by Landmark Commercial Realty,4 class
B+ office space 1996 year,end asking rents were in the range of
$14,75/SF/annually, and class B asking rents were $12.50, The 4th Quarter
'96 class B+ occupancy rate (the inverse of vacancy rate) was estimated at
93%, while the class B rate was estimated to be 94%, The Plaza 21 Office
Building is considered to be class B, and
the American Office Center is considered
class B+ space,
While the subject office lease rents
appear to be within the market ranges
indicated in the Landmark analysis, we
researched recent leases for office space in
the subject vicinity for further support.
Following is a summary of the leases
researched:
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INCOME ArrROACH (CONTINUED) 60
WIST SHORE OFFICI MARKET
1996 Yr.,..(nd Mkinl !tenl,
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So.oo
$5,00 SIO.OO $15.00 $2000
Grms Rl!!nllblrV5F/Ann~lly
(Sourer: lWlNl'k Commrrml RriltyJ
MST SHORE ()f'Fla MARKET
4th-Quutrr 1996 OccuIW'lCY R.al"
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60...
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100'10
ToWAvii~IfS~B"of TWllnvrttory
lSour~: LMldnwk Cornmtrdal Rf'~ryl
, Thomas T, Posavec. 1996 Y~ar-End OjJic~ Mark~1 Analysis. Landmark Commercial Realty. The
glossary delines Class B+ as .newer buildings or facilities that have received substantial upgrades;" and
Class B as .older buildings that have received some renovations and upgraded from Class C facilities ant
anract mid-tier rental rates, "
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valuation group
INCOME ApPROACH (CONTINUED) 62
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Service Stat/on Leases
The subject service station was built in 1967 and renovated in 1988, Its
location Is considered to be prime; however, the favorable location Is
diminished somewhat due to the traffic backups on 21'1 Street at the Camp
Hill Bypass intersection left,turn signal, We researched leases for service,
station properties In the subject region, although few were found, Following is
a summary of the leases researched:
SUMMARY OF COMMERCIAL LEASES (Service Station)
'.
Rent!
Commence Lease Leased Term SFlYr
ID. Location Date Type Area (SF) Yrs!Mo (Avg.)
542 1120 5 St. Johns Rd, Lower Jul-95 Net 1,500 3/0 $8.00
Allen Twp, Cumberland Co
492 1901 Spring Rd, N Middleton Jun-95 Net 4,024 210 $2,98
Twp, Cumberland Co
274 4624 Jonestown Rd, Lower Mar-94 Net 7,530 10/0 $7.00
Paxton Twp, Dauphin Co
9999 Carlisle Rd & Palomino Rd. Oct-92 Net 2,940 15/0 $13.88
Dover Twp, York Co
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The range of lease rents for the properties researched is $2.98/SF annually
to $13,88/SF, Lease comparable no, 492 ($2,98/SF) is restricted from selling
gasoline. Lease comparable no, 9999 includes a mini, market. The other two
comparables are primarily repair garages. The subject location is considered
to be superior to the comparables'. Lease . ,u"', "., .
comparable no. 542 is most like the subject S!RVlUSTATIllN RINTSUMMARY
in building size, and has a similar land,to, $1S00
building ratio, Based on the leases researched $1noo
and the preceding analysis, we estimate that
55,00
the subject service station property could
command a net rent of $15,OO/SF of building 1000
including land.
Fas~FoodRestaurantLeases
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lpNd Propertip,
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A part of the subject site. approximately 0.65 acres, or 27,265 SF, is
ground, leased to Wendy's Old Fashioned Hamburgers, which owns the
improvement, a 2,685,SF fast,food restaurant building, In order to estimate
the market value of the fee simple interest by the income approach, it is
necessary to estimate a market lease rent for the subject land and
improvement.
We researched leases for fast.food restaurants in the subject region:
however, data for only three such leases was available. The rents for the three
properties researched are $9.52/SF annually. $24.29, and $10,32. Lease
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valuation group
INCOME API'ROAClI (CONTINUED) (,3
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comparable no, 632 ($9.52/SF) is a former Hardee's; no 864 ($24,29/SF) is a
MacDonald's, and no. 538 ($10.32/SF) is a pizza restaurant. Compared to the
subject, lease no. 632 site is much larger, the improvement is similar in size,
and the location is less favorable, Lease comparable no, 864 is larger than the
subject in site size, similar in improvement size, and in a similarly favorable
location, although with better accessibility, Lease comparable no, 538 is
smaller than the subject in site and improvement size, and is in a less
favorable location. Following is a summary of the leases researched:
SUMMARY OF COMMERCIAL LEASES (Fast Food Restaurant)
Rent!
Commence Lease Leased Term SFlYr
IDII Location Date Type Area (Sf) YrslMo (Avg.)
632 2501 Old Gettysburg Rd. May.95 Nel 3.150 5/0 $9.52
Lower Allen Twp. Cumberland
Co
'-. 864 Shadow Oaks Drive. Silver Jan-95 Nel 2,435 20/0 $24.29
Spring Twp. Cumberland Co
538 3400-3402 Walnut St. Jan-95 Nel 1.860 5/4 $10.32
.... Susquehanna Twp, Dauphin Co
Accordingly, the subject is considered
capable of commanding a rental rate that
lies between the adjusted rates of the lease
com parables cited, Based on the preceding
analysis, we estimate Wendy's rent at
$15,OO/SF net annually,
fAST-fOOD R(STAURANT RENT SUMMARY
$10_00
SUDO
S20.00
115.00
SIO.OO
S5.00
so.OO
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Shopping Center Leases '....d Propon'"
According to information contained in -"-"--~'-'--
the sUbject leases, the Plaza 21 shopping center site contains 245 parking
spaces. That part of the total site is the basis for estimating the market value
of the fee simple interest for the shopping center, which consists of three
semi,detached commercial improvements occupied by Weis Markets, Eckerd
Drugs (formerly Thrift Drug), and J, C, Dunphy's Pub. In order to estimate
market rents for the shopping center improvements, we researched
commercial leases for retail and shopping center space, including restaurant
space and supermarket space, Lease information for space occupied by drug
stores could not be found. Typically, lease rents for space like the subject are
net, for terms of three years and more, A summary of the supermarket leases
researched is contained on the following page.
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INCOME ApPROACH (CONTINUED) 6"
SUMMARY OF COMMERCIAL LEASES (Supermarket)
Rentl
Commence Lease Leased Term SFNr
ID' Location Date Type Area (Sf) YnlMo (Avg.)
1108 Main St, Lower Safford Twp, Mar.97 N/A 42,902 20/0 $12.50
Montgomery Co
1125 US 422 & Walnul St, Limerick Jul-95 N/A 40,000 20/0 $11.25
Twp, Montgomery Co
1127 PA Rtl00 & Shoemaker Rd, jun-95 N/A 45,000 20/0 $8.50
POllstown Bor, Montgomery Co
1097 Penn Dr, N Whitemarsh Twp, Apr-95 Net 51,290 20/0 $9,50
-, Lehigh Co
1121 MacArthur Town Cenler, Jan.95 Net 49,000 20/0 $9,00
Whitehall Twp, Lehigh Co
,,"t 1116 PA 73 & Friedensburg Rd, Oley Aug-94 N/A 39,178 20/0 $8.50
, Twp, Berks Co
1130 PA 625, Kenhorst Bor, Berks Co Apr-94 N/A 45,000 2010 $7.50
"'",
, 1124 S Mountain Plaza, Allentown, Feb-94 Net 40,000 100 $5.50
,/ Lehigh Co
.- .~ 9999 Silver Spring Commons, Silver 0/93 Net 53,800 N/A $11.40
, Spring Twp, Cumberland Co
-.
Following is a summary of leases for mixed,use retail space:
SUMMARY OF COMMERCIAL LEASES (Retail Mixed Use)
RentJ
..... Commence Lease Leased Term SFNr
10' Location Date Type Area (Sf) YrslMo (Avg,)
581 4713 Carlisle Pk, Hampden Sep-95 Net 1,574 3/7 $12,00
,.. Twp, Cumberland Co
582 4713 Carlisle Pk, Hampden jun.95 Nel 3,500 5/0 $10,10
Twp, Cumberland Co
-J 540 5517 Carlisle Pk, Hampden Jan-95 M, Gross 7,200 5/0 $8.00
Twp, Cumberland Co
536 4700 Carlisle Pk, Hampden jan.95 Nel 2.400 5/0 $12,50
- Twp, Cumberland Co
183 4407.F Carlisle Pk, Camp Hill, Mar-94 Nel 1,050 1/0 $10.28
Cumberland Co
, 21 4713 Carlisle Pk, Hampden Jan-93 Nel 9,410 3/3 $4,45
... Twp, Cumberland Co
219 4900 jonestown Rd, Lower May-94 Nel 10,000 3/0 $9,50
... Paxton Twp, Dauphin Co
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valuation group
INCOME ApPROACH (CONTINUED) 65
....,
Following is a summary of shopping center store leases researched:
SUMMARY OF COMMERCIAL lEASES (Store/Shopping Center)
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939
location
Meadowbrook Village, York,
York Co
3401 Hartzdale Dr, lower
Allen Twp, Cumberland Co
6108 Carlisle Pk, Hampden
Twp, Cumberland Co
6110 Carlisle Pk, Hampden
Twp, Cumberland Co
4713 Carlisle Pk, Hampden
Twp, Cumberland Co
Carpel Mart Plaza, Carlisle Pk.
Mechanicsburg. Cumberland
Co
Commence
Date
Apr.97
Jan.96
Jul.95
Jun-95
Nov.93
Jan-93
lease
Type
Nel
Nel
Net
Gross
Net
Net
leased
Area (Sf)
25,050
4,500
1,780
5,340
3.000
3,220
Term
YrslMo
2010
5/0
5/0
5/0
5/0
3/0
Shown below is a summary of restaurant leases researched:
SUMMARY OF COMMERCIAL lEASES (Restaurant)
Supermarket Space
The supermarket leases researched range in rent/SF annually from $5,50
to $12,50, Most of the lease rents are .-
SUPfRMARKET RENT SUMMAIlY
between $5,50 and $8.50 per SF. Lease
comparable no, 1116 ($8.50/SF) is most
similar in leased area to the subject
supermarket space, The closest in
proximity to the subject is lease
comparable no, 9999, the Giant store at
Silver Spring Commons in Cumberland
County (Rent shown reflects the original
negotiated rent. It is not known if that rent
rate has changed since lease
commencement), Silver Spring Commons is a substantially larger center than
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534
535
392
111
ID#
551
location
435 Bridge 5t, New
Cumberland 80r, Cumberland
Co
4700 Carlisle Pk, Hampden
Twp, Cumberland Co
391
Commence
Date
Aug-94
May.93
Lease
Type
Nel
Net
leased
Area (Sf)
2,734
2,400
514.00
512.00
510.00
5B,OO
56,00
54,00
51,00
50,00
Term
YrslMo
5/0
5/0
Rent!
SFlYr
(Avg.)
$17,00
$8.00
$10.08
$10,00
$12.00
$9,00
Rent!
SFlYr
(Avg.)
$7,83
$10.00
1 I
3 4
S 6 7 8 9
valuation group
It''.r.ed Propenie\
hirsh
INCOME AI'PROACH (CONTINUED) 6(,
.~
the subject, and attracts customers from a greater distance due to the
favorable highway routes and variety of businesses represented,
Most of the properties researched are newer (and larger) improvements in
newer centers, Parking at the subject is minimal in comparison to that at
recently constructed strip and common shopping centers, and the
accessibility is less favorable due to the traffic backups cited previously,
Based on the leases researched and the preceding analysis, we think the
contract rent for the subject space occupied by Weis Markets is below,market,
and that the subject space could command a net rent of $7,OO/SF annually,
Shopping Center Retail Space MIXED.USE RETAil RENT SUMMARY
Mixed,use retail and shopping center "'.00
112,00
store leases researched show a range of 110.00
rents from $4.45/SF to $17,OO/SF 18.00
annually, most of them net (the subject ::::
drug store space is leased on a gross 12.00 n ,- ~, -
10,00
basis, with a contingent rent of 2,5% of
net retail sales in excess of $1,999,200
annually), The majority range between $8
and $10/SF, All are in Cumberland,
Dauphin and York counties. Most of the
lease comparable spaces are smaller than
the subject space occupied by Eckerd 120,00
Drug. Smaller space tends to rent for a m.oo
higher unit rate than larger space, The 110,00
lease comparables located on Carlisle Pike
enjoy high viSibility and accessibility,
although the volume of traffic can impede
accessibility at times,
As stated previously, parking at the
subject is minimal in comparison to that at recently constructed strip and
common shopping centers, and the accessibility is less favorable due to the
traffic backups cited previously,
Based on our analysis of the leases researched, we think the subject drug
store space contract rent is below, market. and that the subject could
command a net rent of $8.00/SF annually.
2 J .
S 6 7
LeNd Proptrtit"
- ---,
SHOPPINGaNTERSTORES RENT
SUMMARY
11,00
10,00
2
3
.
5
6
lei~d Propertie,
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Restaurant Space
The subject space occupied by J,C, Dunphy's is newer space leased at a
rent of $11.29/SF, net, except for building insurance, exterior maintenance,
and snow removal. Only two restaurant leases were available. Lease
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valuation group
INCOME API'ROACH (CONTINUED) 67
- ..'---
RlSTAURANT R(NT SUMMARV
115.00 lIII
'10.00 ' _ _. _, _, _. ____ _u
:::" m_,,-=J
I 2
lUK'd PrOPfrtll"
Potential Gross Income
Potential gross incomes for the subject component uses are estimated as
shown at right. POTENTIAL GROSS INCOME (PGIl
l....
comparable no. 551 ($7,83/SF net), is
located in an older building in a less
desirable location than the subject
restaurant space, Lease comparable no,
391 ($10,OO/SF net) is in a favorable
location, but is a converted convenience
store, and was leased with rent
concessions, The subject space is larger
than that of both of the two lease comparables' space, providing greater
seating capacity, but larger spaces typically command lower unit rates than
those of smaller spaces,
Based on our research and analysis of available information, we think that
the subject restaurant rent is within a market range, Consequently, we
estimate a net rent rate of $l1,OO/SF for the subject restaurant.
The subject office
building space could
experience occupancy
rates similar to the
market rates as shown
in the Landmark West
Shore Office Market
Analysis, Vacancy is the inverse of occupancy, Thus, the class B+ occupancy
rate, 93%, is a 7% vacancy rate; and the class B occupancy rate of 94% is a
6% vacancy rate, Although the American Office Center is of higher quality than
Plaza 21, based on the absorption of office space in the market, vacancy rates
for both Plaza 21 and American Office Center are interpolated at 7% of PGI.
No studies were available in the subject market that calculate vacancy
rates for all types of leased commercial properties, We conducted a survey of
retail space in 1997 (a copy of which is contained in the addenda) that
showed West Shore retail occupancy at malls and shopping centers between
0% and 100%, with most in the range of from 75% to 95%. In the case of the
service station, fast,food restaurant, and shopping center space, we think the
subject properties could lease to single tenants for terms of from three to five
years or more, with rent at flat or slightly graduated rates, on a triple, net
Estimated Vacancy
Rate
h-.j
~I
~
U
L
~
I
U...
Plolla 21 Office Bldg
American OWn' Cenler
Service Station
Fast Food Rt>stauranl
SlriplSupt"rmarkel
StripIDruH Slorr
Strip/RPsIJuro1nl
TOlal
Ate.
53,415
32.300
1.854
2.685
35.038
14,000
4,430
143.722
G8"
63,010
46.638
1.854
2.68S
35.897
14,000
5.597
169,681
Eean.
Ront
$14.00
$15.00
$ 15.00 Nfl
$15.00 NeI
$7.00 NeI
$8.00 Ne'
$11.00 Ne'
PCI
$747.810
$484.500
527.810
$40.275
$245.266
$112.000
$4B.730
$1.706.391
Type
Gross
Gross
hirsh
valuation group
~
INCOME ApPROAnl (CONTINUED) 611
basis. The subject spaces currently are 100% occupied, Based on our
analysis, we estimate minimal vacancy, at 2% of PGI,
Expenses
In the case of the subject
office building space, we have
estimated expenses both on
information obtained in prior
appraisals and on discussions with knowledgeable real estate professionals,
For both subject office buildings, due to the building ages, expenses are
expected to be higher than for newer buildings constructed with energy
conservation features, Total expenses for Plaza 21 are estimated at
approximately $5,15/SF, while for American Office Center they are estimated
at approximately $4,50/SF, These expenses include insurance, maintenance
and repairs, security, utilities, janitorial (common areas), refuse disposal,
snow removal, leasing fees (which would vary from year to year, and not apply
in some years), management fees, and structural reserve, Real estate tax is
loaded into the overall capitalization rate.
As stated previously, the other properties could rent on a triple,net basis,
Thus, expenses would include management, leasing fee, legal and accounting,
and structural reserve, Real estate taxes would be paid by the lessee. Minimal
leasing fees are
estimated, as the TOTAL EXPENSES
properties are leased
for long terms,
Management is
estimated at 5% of
EGI, leasing fee at 1% 51ripeenle,
of EGI, legal and Tolal
accounting at 1.5% of
EGI, and structural reserve at $O,12/SF.
Total Expenses are shown in the box above.
Effective Gross Income
Effective Gross Income is
potential gross income less
vacancy, as shown at right.
".
,
-.
EFFECTIVE GROSS INCOME (EGI)
UR ~I
PI.ua 21 Office Bldg S747.810
American Office Center $484.500
Service Slalion S27.810
F..t Food R..lauranl S40.275
5lriplSupe,market S245.266
5lripIDrug 510re S 112,000
SlripIRestaurant $48.'130
TOlal SI.706.39\
VICAnCY
7"1.
7"1.
2"1.
2"1.
2"1.
2"1.
2"1.
UR
Plaza 21 Office Bldg
American Office Cenler
Service Stalion
Fast Food Reslaurant
'..,4
...
....
""
IN
.
Rot.
S5.15 /SF
S4.50 /SF
7.5"1. IlGI
7.5"1. IlGI
7.5"1. IlGI
EGI
S695.463
S450.585
S27,254
S39.470
S397.B76
Rot.
SO.12 /SF
SO.12 /SF
SO.12 /SF
hirsh
EGI
S695,463
S450.5B5
S27.254
$39.470
S240.361
S\09.760
S47,755
S1.610.648
E_
S324,3OO
S209.7S9
$2.267
S3.2B2
S36,5OO
S576,108
valuation group
INCOME API'ROACH (CONTINUED) (,'I
Net Operating Income
Net operating income is
effective gross income less
expenses; so, for the subject it
will be as shown at right.
NET OPERATING INCOME
u~ EGI
Plaza 21 Offire BidS 5695..63
AmPriroln OfficI' Cpnlpf '''50.585
St>rvict" SIJlion S27.254
Fau Food Re"auranl 539..70
Slrip Cente, 5397.876
Total
bpenlel
ISJ2..3ool
($l09.759)
(52.2671
(53,2B2)
(536.500)
NOI
5371.163
$l.0.826
$l..987
SJ6.188
5361,376
51.034,540
DIRECT CAPITALIZATION BY
BAND OF INVESTMENT
METHOD
___-A
The SUbject income and expense operations, due to office lease rates
within market range, and due to anticipated single,tenant long, term leases in
the service station, fast.food restaurant and strip center properties, could be
considered stabilized, The band of investment capitalization technique is
being performed to determine the value of the subject property as stabilized.
In order to convert net operating income into an indication of value which is
reflective of market conditions, a capitalization rate must be used (Ro) which
also is reflective of the market. This capitalization rate blends the rate
necessary to service a typical mortgage (RM) with the rate required to attract
equity investment (RE) at similar levels of risk, This blending method, known
as the band of investment, combines these two components as a weighted
average to form the overall rate of capitalization (Ro) by which net operating
income will be capitalized,
The first component to be developed in the band of investment technique
is the mortgage component (RM), Despite recent tight credit policies for real.
estate projects, a wide variety of lending sources remain, For projects like the
subject, the typical sources would be commercial banks or possibly insurance
companies, We will focus on those sources,
A synopsis of current
money rates extracted from
the Wall Street Journal
December 27, 1996, and
reporting money rates for Prime Rat.
December 26, 1996, is as
shown in the box below, federa] Fund.
MONEY RATES
II oIl1ecom1Mr 2" ''''
6/94 12/94 6/95 12/95 6/96 12/96
7.25 B.SO 9.00 8.S0 8.50 8.25
-'
4.06 S.S6 6.06 S.38 S.19 5.00
...
The prime rate fluctuated Discount Ral.
dramatically in the 1980's. In 3D-V,Treasury
mid.1981 it reached an all.
Soutee: Th. Wall Slree! /ooma/
time high of 21.1/2% and
remained high for many months. It decreased equally dramatically in 1982,
3.50 4.75 5.25 S.2S
5.00 S.OO
7.39 8.14 6.60 5.98 6.66 6.5B
...
lo!l
11II
hirsh
valuation group
INCOME ApPROACH (CONTINUED) 70
.,
with moderate fluctuations since. As noted previously, the prime rate fell
below 10% on January 2, 1991, to a low of 6%, but rose in early 1994 for the
first time in three years, to 6,25%, and to the present level of 8.25% after
reaching a high of 9,00% earlier in 1995, An increase in the prime rate has a
direct upward effect on mortgage interest rates, The other rates are more
indicative of low,risk investment alternatives to real estate; and the discount
rate is simply a barometer of bank borrowing from the Federal Reserve
System,
Inquiries
with mortgage
brokers and
bank real estate
lending officers,
as well as a '~
review of !!
national market
indicatorsS,
5
indicate a range 4
of from 7,50% t.. 7 . 11 to IS 17 to 2t " .. 27 " 51 .. .. " 51
Months
to 9,0% for real--H"'~'_"." .....,__._...__~
estate loans, with amortization of from 20 to 25 years, for terms of up to 20
years, as the range of available financing for the subject property, For
commercial.property loans the average contract interest rate is 8.43%, with
debt.service coverage ratios between 1.30 and 1.50, However, insurance
companies finance a significant amount of income, producing real estate
development and acquisition, In a survey of mortgage commitments on
commercial properties for the second quarter, 1996, the average commercial
loan contract interest rate was 8.43% for a term of eight years, nine months,
and a debt coverage ratio of 1.50, (The range of debt coverage ratios in the
survey for all property loans was from 1.32 to 1.51)6. In many cases the rate
is tied to the prime rate, which currently is 8.25% at most major banks. Loan,
to.value ratios range between 66.4%
and 74,1%, depending on the degree
of speculation involved in the project.
Since the risk for this type of
property most likely would be higher
than for other properties, but the
borrower would be strong, it is
'MONi, iAns-u"" '.m., ,:....:: Primo Rioi' . '.
MmI Rfant 40 Montht : ___ Frd. Funck R.Jtt ;
Source:ThrWMIStrttl}ourNl . --.-DhcountR.1tt i
-+- Jo.Y, T'PA Bond~
~ ,'_1'. "-> ui .T'~ . . -. . '~ .--,'. -.--~+-:~:;"~--~-~-.-'~-;~--~-'.-'.-~--'-I.~
~
~
-,
-,
-~
,
,
.~
-I
....
FINANCING TERMS
....
loan-to-Value Ratio ....................,............ 65'%.
Interest Rate...................................,......8.25'to
Amortization...................................... 20 years
Term.........................,............,.... 5-10-10 years
1M
~
, Valua/ion Insights and Pmptctivts, Appraisallnslitute, Chicago: Summer, 1996, 46.
6/nvtslmtnl Bulltlin, American Council of Life Insurance, Washington, DC: Sept. 9, t996,4.
III
u
hirsh
valuation group
INCOME APl'ROActt (CONTINUED) 71
~
anticipated that terms near the middle.to,lower end of this range would be
likely,
Therefore, we have concluded that for the subject property the typical
borrower could expect financing terms as shown in the box at right.
With such terms an annual mortgage constant based on monthly payments
of 0,1060453 is indicated. This constant (RM) then is multiplied by the loan.to,
value ratio (,104139 x ,65%) to produce the mortgage component of the
overall rate of 0,06769.
The equity component of the overall rate represents the requirement both
of return on and return of the cash investment in the property. This rate
usually is estimated by consideration of a number of factors, including
individual investor requirements, measurement of risk in the subject property,
and return available from substitute investments, Due to growth expectations
or competition for quality properties some types of property may even show
zero or negative equity dividend rates, In the case of the subject property, risk
is considered to be similar. to, lower than for other real estate investments, but
certainly more than the low risk of government. backed securities or
commercial paper,
The treasury bond rate currently is at 6,58%, which should indicate a
similar adjustment in equity dividend rate for the SUbject property, Conversely,
the risk potential is significantly higher in real estate, which would indicate a
higher equity dividend rate, National real estate investment criteria for the
first quarter 1995 indicate a range of equity dividend rates between 6,25%
and 13,00%, and an average of between 8,17% and 9,73%,7 The subject
property investment, as a mixed,use site with two office buildings, a strip
shopping center, a fast.food restaurant, and a service station, is expected to
entail a somewhat higher investor risk than the average investment. Therefore,
an equity dividend rate (RE) near the top of the range is indicated for the
subject. We have estimated the appropriate equity dividend rate for the
subject to be 9,75%, This rate, multiplied by the equity portion of the
investment, is 0,034125 (.0975 x .35).
The overall rate (Ro) then is calculated by the following formula:
{R..,{~) }+{RE{I-(~)]} = Ro
...~
-
....
...
...
Thus, (0.104139 x .65) + (0.0975 x .35) = Ro
0.06769 + 0.034125 = .1018, rounded to 10.2%
I
...
I
..,
hirsh
valuation group
.-.
-,
INCOME ApPROACH (CONTINUED) 73
~
SUMMARY OF DIRECT CAPITALIZATION, BAND OF INVESTMENT
Plaza 21 Olfice Building
POTENTIAL GROSS INCOME (PGI)
Gross Building Area 63.010 SF
Net Leasable Area 53.415 SF S 14.00 $ 747.810
Total Potential Grosllncome
Vacancy@ 7% of PGI
EFFECTIVE GROSS INCOME (EGIl
EXPENSES
Total Expenses/SF $5,15
NET OPERATING INCOME (NOll
Capitalization (Direct Capitalization Method)
Where:
R" - Mortsase Constant
UV - Loan-ta-Value Rarlo
Rr - Equity Dividend Rale
I-(UV) - Equily
Ro - Overall Rare
$ 747,810
$ (52,34n
$ 695,463
($324,300)
$ 371,163
-
..,
..,
,
..,
I
, .
""
".i
{RM X(;)}+{RE X[I-(;)]}= Ro
,-".
<-,
( 0,104139 x 0.65 ) + ( 0.0975 x 0.35 ) - Ro
0,06769 + 0,0341 0,101815
rounded to:
10,2%
Net/I/come = Value
CapilalizalionRale
10,2%
Tax load: 1,3% $371,163
11,5% 11.5% - $3,237,065
"'1
-.
.....
o.J
...
...
...
I
..
I
J
I
..
hirsh
valuation group
INCOME ApPROACH (CONTINUED) 701
~
SUMMARY OF DIRECT CAPITALIZATION, BAND OF INVESTMENT
American Office Cenler
POTENTIAL GROSS INCOME (PGI)
Gross Building Area 46.638 SF
Nelleasable Area 32.300 SF S 15.00 $ 484.500
Total Potential Gross Income
Vacancy @ 7% of PGI
EFFECTIVE GROSS INCOME (EGI)
EXPENSES
Total Expenses/SF $4.50
NET OPERATING INCOME (NOll
Capitalization (Direct Capitalization Method)
Where:
R /of - Mortgage Constant
UV - Loan-to-Value Ratio
Rr - Equity Dividend Rare
I-(LNJ - Equity
R 0 - Overall Rate
$ 484,500
$ (33.915)
$ 450,585
($209,759)
$ 240,826
~
---,
'.' {RM x (~)}+{Rc x [1-(~)]} = Ro
( 0,104139 x 0.65 + (0,0975 x 0,35 Ro
0.06769 + 0.0341 0,101815
rounded 10:
10,2%
, , Netlncome
, Value
~ Capila/izationRate
I 10.2%
.,J Tax load: 1.3% $240,826
11,5% 11.5% - $2,100,343
...
,
...
...
""
I
I
III
I
..
hirsh
valuation group
~ INCOME ApPROACH (CONTINUED) 75
SUMMARY OF DIRECT CAPITALIZATION, BAND OF INVESTMENT
..., Exxon Service Stalion
POTENTIAL GROSS INCOME (PGI)
Gross 8uildlng Area 1.854 SF S 15.00 $ 27,810
.., Total Potential Gross Income $ 27,810
Vacancy @ 2% of PGI $ (556)
" EFFECTIVE GROSS INCOME (EGI) $ 27,254
EXPENSES
Management @ S,O% of EGI $1,363
" Leasing Fee @ 1,0% of EGI $273
Legal & Accounting @ 1.5% of EGI $409
Structu ral Reserve @ $ 0,12 ISF of GBA $222
..., Total Expenses/SF ($2,267)
, NET OPERATING INCOME (NOI) $ 24,987
Capitalization (Dlred Capitalization Method)
., Where:
, R" - Mortgage Conslanl
...
UV - Loan-to-Va/ue Ralio
,., R I - Equity Dividend Rate
I-(UV) - Equity
R 0 - Overall Rale
{RM X(~)}+{RE X[I-U)]}= Ro
( 0,104139 x 0.65 + ( 0,0975 x 0.35 ) - Ro
0.06769 + 0.0341 0.101815
rounded to:
..; 10,2%
Netl1lcome Value
... Capitalizatio1lRate
10,2%
Tax load: 1.3% $24,987
~ 11.5% 11.5% $217,630
-
....
..,j
...
.
hirsh
valuation group
--,
-. INCOME ApPROACH (CONTINUED) 76
SUMMARY OF DIRECT CAPITALIZATION, BAND OF INVESTMENT
Wendy's
POTENTIAL GROSS INCOME (PGI)
Gross 8uildlng Area 2,685 SF S 15.00 $ 40.275
..., Total Potential Grosllncome S 40,275
Vacancy @ 2% of PGI $ (8061
- EFFECTIVE GROSS INCOME (EGII S 39,470
EXPENSES
Management @ 5.0% of EGI $1.973
-, leasing Fee @ 1,0% of EGI $395
legal & Accountlng@ 1,5% of EGI $592
Structural Reserve @ $ 0,12 /SF of GBA $322
~ Total Expenses/SF ($3,2821
,
" NET OPERATING INCOME (NOll $ 36,1 B7
Capitalization (Direct Capitalization Method)
-, Where:
R" - Mortgage Conslan!
UV - Loan-lo-Va/ue Ratio
-, R, - Equily Dividend Rate
" I-(L/V) - Equi!y
R 0 - Overall Rare
.
. {RM X(~)}+{RE X[I-(~)]}=Ro
-'
-- ( 0.104139 x 0.6S ) + ( 0.0975 x 0.35 Ro
0,06769 + 0.0341 0.101815
rounded 10:
~ 10,2%
Nellncome = Value
- CapilalizalionRale
10,2%
Tax load: 1.3% $36,187
... 5315,176
11.5% 11,5%
...
...
...
..J
I
..
hirsh
valuation group
....
...
INCOME ApPROACH (CONTINUED) 79
-
Mortgage -
- S
- S
- S
(DSCR x Mlg. Constant)
1.3 x 0.104139
0.1353807
NOI I
1,034,539 I (
1,034,539 I
7,641,702
-
""\
Cash Throw Off -
- S
- S
- S
. (Mlg. Constant x Mortgage)
- ( 0.104139 x S 7,641,702 )
S 795,799
NOI
1,034,539
1,034,539
238.740
-\
Equity Value - Cash Throw Off I Equity Dividend Rate
- S 238,740 I 0,0975
- S 2.448.613
-.
I
~,
,
Market Value - Mortgage Value + Equity Value
- S 7,641,702 + S 2.448,613
- S 10.090,315
, I
..,
,
Indicated Value - $ 10,090,315
..
,,~
Therefore, the market value of the property by DSCR analysis of the income
approach is $10,090,315, rounded to:
.. TEN MILLION ONE HUNDRED THOUSAND ($10,100,000) DOLLARS..
SUMMARY OF THE INCOME APPROACH
...
'....
The values indicated by the income approach are as follows:
Direct Capitalization (Mortgage-Equity Band of Investment) , $9,000,000
Direct Capitalization (Debt Service Coverage Ratio)............ $10,100,000
Direct capitalization by band of investment provides a reliable value
indication when a history of income and expenses supports the conclusion
that income and when expenses and vacancy are stabilized, Although
operating history for the subject property is not available, comparable lease
data is available with which to estimate lease,rates for the subject properties,
The office building rents are within market range, and they have a substantial
operating history, and are fully occupied, The other properties most probably
would be leased to single tenants on long,term (three,to.five years or more)
triple. net lease for market.rate flat rents or for slightly graduated rents based
on inflation, and therefore would be considered stabilized, The debt service
coverage ratio provides a lender's perspective of the income and supports the
value estimate by direct capitalization, band of investment.
....
....
,.j
...
...
,
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valuation group
~
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....
..,
COST ApPROACH
..,
.
In order to estimate the value of the subject property by the Cost Approach,
the following steps must be completed:
1. Estimate the value of the site as though vacant and available to
be developed to its highest and best use.
2. Estimate the direct (hard) and indirect (soft) costs of the
improvements as of the
effective appraisal date.
3. Estimate an appropriate
entrepreneurial incentive
(profit) from analysis of the
market.
4. Add estimated direct costs,
indirect costs, and the entrepreneurial incentive (profit) to
arrive at the total cost of the improvements.
5. Estimate the amount of accrued depreciation in the structure
and, if necessary, allocate it among the three major categories:
physical deterioration, functional obsolescence, and external
obsolescence.
6. Deduct the estimated depreciation from the total cost of the
improvements to derive an estimate of their depreciated cost.
7. Estimate the contributory value of any site improvements that
have not already been considered. (Site improvements are often
appraised at their contributory value, i.e., directly on a
depreciated-cost basis.)
8. Add the site value to the total depreciated cost of all the
improvements to arrive at the indicated value of the property.
9. Adjust the indicated value of the property for any personal
property (e.g., fixtures, furniture, and equipment) that may be
included in the cost estimate and, if necessary, adjust this
value, which reflects the value of the fee simple interest, for the
property interest being appraised to arrive at the indicated
value of the specified interest in the property.9
Cost Approach: Estimating
value by adding
depreciated construction
and site improve-ment
costs to land value.
-
;
,..,
"j
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. .
.-/
,.4
..,..
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,
....
.,,,
...
-
..
· 77r~ Appraisal of R~aI EsIQ1~. 11th edition. (Appraisallnslitule. Chicago: 1996).340.
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valuation group
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VALUE CONCLUSION
....
.,
Value Estimate by the Sales Comparison Approach: ............. $9,000,000
Value Estimate by the Income Approach: .............................. $9,000,000
Value Estimate by the Cost Approach: ...............................................N/A
Highest and best use of the sUbject property as improved, is as currently
used, as a mixed.use office and commercial center.
All of the applicable approaches to value have been considered in estimating
and justifying a final value conclusion of the subject property both before and
after the take.
The subject properties have been compared in the sales comparison and
income approaches to other market.area office and commercial facilities.
Sales of similar properties were researched to derive an estimated market
value by the sales comparison approach. Sufficient data was available from the
shopping center sales to develop unit rates-gross income multiplier and overall
rates-that reflect income. production characteristics of the sale properties. The
unit rate developed in most cases was sale price per square foot of building
including land, which reflects the differences in site size, improvement size,
land-to. building ratio, construction type and quality and other physical
characteristics of the sales. The unit rate developed normally is considered a
reliable indicator of value for a properties like the subject, as is the case for the
subject. However, because the improvements are income. producing, the income
approach is considered a more valid indicator, without the development in the
sales comparison approach of sufficient income.production.reflective unit rates.
The income approach was developed by calculating a net operating income
based on estimated gross income and expenses, and capitalizing that income
based on the band of investment direct capitalization method to estimate value.
The subject office rents are within market range, and the operations are
stabilized. The other subject uses, if available for lease, could, because of the
layout and design of the improvements, be leased to single tenants on long-term
triple. net leases for a market rent, and thus are considered stabilized. The debt
service coverage ratio method, primarily a lender's view of value, also was used.
~
...
-
...
lOi
728PACFAAMH
I
.
hirsh
valuation group
VALUE CONClUSION (CONTINUED) 114
~
Data obtained in researching market rent, vacancy, and expenses, is
considered reliable in most cases. The value estimate by direct capitalization,
band of investment, as stabilized, is considered reliable; and the income
approach therefore is a valid and reliable indicator of value for the subject
property. Thus it is given slightly greater weight than the sales comparison
approach in a final estimate of value for the SUbject. However, in the subject's
case, the values concluded by both approaches are the same, lending support
for both conclusions.
The cost approach was not developed. We were not furnished with building
plans, specifications, or construction cost estimates from a qualified
professional, rendering difficult an accurate estimate of reproduction cost new
(RCN). The cost approach is most reliable as applied to new or recently
constructed improvements. The subject improvements are up to 29 years old,
rendering unreliable estimates of accrued depreciation. For those reasons, an
estimate of value by the cost approach would be speculative and unreliable.
In summary, we consider the income approach to be more reliable as an
indicator of value for the subject, with support from the sales comparison
approach value conclusion, which is the same as for the income approach.
Thus, the value is best represented by a reconciliation of the value estimates in
the sales comparison approach and the income approach, with greater weight
given to the income approach.
After analyzing all the facts and circumstances pertinent to arriving at a
value conclusion for the subject property, it is our opinion that the market value
of the fee simple interest in the subject property, appraised at its highest and
best use as improved, as a mixed.use office and commercial center, as of
January 1, 1997. was:
. .. NINE MILLION ($9,000,000) DOLLARS.. .
.~
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CERTI FICA liON
-
Laurence A. Hirsh, CRE, MAl, and Hirsh Valuation Group certify that, except as otherwise
noted In this appraisal report:
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
qualifying conditions and are our personal, 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 an action or event resulting from the
analyses, opinions, or conclusions In, or the use of, this report. This appraisal
assignment was not based on a requested minimum valuation, a specific
valuation, or the approval of a loan.
5. Our analyses, opinions and conclusions were developed and this report has been
prepared in conformity with the requirements of the Code of Professional Ethics
and Standards of Professional Practice of The Appraisal Institute, and the use of
this report is subject to the requirements of the Institute relating to review by its
duly authorized representatives.
6. As of the date of this report, I, Laurence A. Hirsh, have completed the requirements
under the continuing education program of the Appraisal Institute.
7. Our contractual arrangement with the client does not authorize the out.of.context
quoting from or partial reprinting of this appraisal report. nor does it permit all or
any part of this appraisal report to be disseminated to the general public by the
use of media for public communication without our written consent.
8. I have made a personal inspection of the appraised property.
9. No one provided significant professional appraisal assistance to the appraisers signing
this report.
10. The Americans with Disabilities Act (ADA) became effective January 26, 1992. The
appraisers have not made a specific compliance survey and analysis of the
property to determine whether or not it is in conformity with the various detailed
requirements of the ADA. It is possible that a compliance survey of the property,
together with a detailed analysis of the requirements of the ADA, could reveal that
the property is not in compliance with one or more of the requirements of the Act.
If so, this fact could have a negative effect upon the value of the property. Since
the appraisers have no direct evidence relating to this issue. possible
noncompliance with the requirements of ADA in estimating the value of the
property has not been considered.
....
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May 22. 1998
...
728PACF MMH
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valuation group
Alan M. Harris certifies that, except as otherwise noted in this appraisal report:
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
qualifying conditions and are our personal, professional analyses, opinions and
conclusions.
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.
Our compensation is not contingent upon an action or event resulting from the
analyses, opinions. or conclusions in, or the use of, this report. This appraisal
assignment was not based on a requested minimum valuation, a specific valuation,
or the approval of a loan.
Our analyses, opinions and conclusions were developed and this report has been
prepared in conformity with the requirements of the Code of Professional Ethics
and Standards of Professional Practice of The Appraisal Institute, and the use of
this report is subject to the requirements of the Institute relating to review by its
duly authorized representatives.
Our contractual arrangement with the client does not authorize the out.of.context
quoting from or partial reprinting of this appraisal report. nor does it permit all or
any part of this appraisal report to be disseminated to the general public by the
use of media for public communication without our written consent.
I have made a personal inspection of the appraised property.
No one provided significant professional appraisal assistance to the appraisers
signing this report.
The Americans with Disabilities Act (ADA) became effective January 26, 1992. The
appraisers have not made a specific compliance survey and analysis of the
property to determine whether or not it Is in conformity with the various detailed
requirements of the ADA. It is possible that a compliance survey of the property,
together with a detailed analysis of the requirements of the ADA, could reveal that
the property is not in compliance with one or more of the requirements of the Act.
If so, this fact could have a negative effect upon the value of the property. Since the
appraisers have no direct evidence relating to this issue, possible noncompliance
with the requirements of ADA in estimating the value of the property has not been
considered.
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CERTIFICATION
May 22,1998
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valuation group
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STATEMENT OF LIMITING CONDITIONS
.....
This appraisal is to be used in whole and not in part. No part of it shall be used
in conjunction with any other appraisal.
Neither all nor any part of the contents of this report shall be conveyed to the
public through advertising, public relations, news, sales, or other media, without
the written consent and approval of the authors, particularly as to valuation
conclusions, the identity of the appraisers or firm, with which we are connected,
or any other reference to the Appraisal Institute or to the MAl designation.
Possession of this report, or a copy thereof. does not carry with it the right of
publication. Nor may it be used for any purposes by any but the client, without
the previous written consent of the appraisers or the client; and in any event,
only with proper qualification.
No responsibility is assumed by the appraisers for matters which are of legal
nature, nor is any opinion on the title rendered. Good title is assumed.
This property has been appraised as though free of liens and encumbrances,
except as herein described.
It has been assumed that the property will be efficiently managed and properly
maintained.
The appraisers herein. by reason of this report, are not required to give
testimony in Court with reference to the property appraised, unless
arrangements have been previously made.
Unless otherwise noted, it is assumed there are no encroachments, zoning
violations or restrictions existing that would affect the subject property.
The current (as of the date of appraisal) purchasing power of the dollar is the
basis for the value estimates; no extreme fluctuations in economic cycles are
anticipated.
The exhibits in this report are included to assist the reader in visualizing the
property. The appraisers have made no survey of the property and assume no
responsibility in connection with such matters.
Information, estimates and opinions contained in this report, obtained from
sources outside of this office. are considered reliable, however, no liability for
them can be assumed by the appraisers.
The value estimate is subject to these and to any other assumptions set forth in
the body of this report.
Unless otherwise noted in the body of this report. this appraisal assumes that
the subject property does not fall within the areas where mandatory flood
insurance is effective.
It is assumed that there are no hidden or unapparent conditions of the property,
subsoil. or structures, which would render it more or less valuable. No
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CRE. MAl. SGA is the
presidenl of Golf Property
" Analysts and a member of the
following organizations:
Memberships
. Counselors of Real Estate
(CRE)
. Appraisal Institute (MAl)
. Society of Golf Appraisers
,j (SGA)
. National Golf Foundation
. Golf Course Superintendents
Associalion
. Natl. Golf Course Owners
, j Associalion
. National Club Association
"j . Urban land Institute
. Mortgage Bankers Assn.
. Golf Digest "100 Grealest
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LAURENCE A. HIRSH, CRE, MAl, SGA
~
Appraisal and Consulllng Experience hes Involved most types of
real estate, Including commercial, industrial, single and multi-family
resldenllal and many special purpose properties. Major areas of
concentrallon have been retail, office, distribullon and lodging
properties with a specialty In the valuation and analysis of golf
course properties. Addlllonal experience has been developed In
the area of recreallonal properties. development consulting analysis
and appraisal review. Geographic areas served Include PA, NJ,
DE, NY, IL, IN, MI, OH. KY, TN, TX, NH, CT, MD, VA, SC, VT, I/N,
NV, WI, MN, MA & FL. Clients Include financial Institutions, law
firms, accounting firms, Individuals and corporations. Has been
president of Hirsh Valuation Group or its predecessors since 1980
and employed In the real estate appraisal profession since 1978.
Finalist for Central Pennsylvania "Entrepreneur of the Year" award
for 1992 In Real Estate Category. Additional real estate Investment
and development experience Is ouUined below.
. Centre Square OffIce Building. 15,000 SF office
building, Lemoyne, Pennsylvania
. Prospect Plaza Shopping Center. 18,000 SF strip
Shopping center in York, Pennsylvania
. Chenry Lane II. Historic Rehab of 7,000 SF
office/retail project In York, Pennsylvania
. Blue Mountain Place. 5.25 acres, development plan &
land flip
. Prospect Common OffIce Center. 10,000 SF office
near Columbia, Pennsylvania
. Oakvlew OffIce Campus. three-building 36,000 SF
office in suburban Harrisburg, Pennsylvania
. Northwood OffIce Center 4,000:1: SF office
condominium In suburban Harrisburg, Pennsylvania
Certified In the followng states:
PA. FL, GA, SC, NY, MD. VA. OH
Qualified as expert witness in Pennsylvania, New Jersey,
Massachusetts, Florida, Virginia and New York.
EDUCA TlON .
Pennsylvania State University. B.A. 1978
Appral..lln.lllule Cours. of study has lneluded all course. required for the MAl
designation as well as the foJlowng seminars:
HOleUMotel Valuation Rales. RatiOS & Reasonableness
USPAP and Standards Upd. Investmenll Discounted Cash Flow Analysis
Utigalion Valuation Easemenl Valuation
Appraisal Regs. Technology In Appraising
hirsh
valuation group
LAURENCE A. HIRSH, CRE, MAl, SGA. QUALIFICATIONS. (continued)
Continuing Education '.
-.
Buying or Leasing a Golf Facility (PGA of Amerlca)
(Crlttendan)
Golf Course Daslgn & Construction (PGA of Amerlca)
Insllluta for Intematlonal Research
Course Naws)
Eminent Domain (ALl/ABA)
(PBI)
Golf Course Real Estata Development
Golf Course Davelopmant & Financing.
Forum on Public Golf (Golf
.Wlnnlng RE Tax Assessment Cases"
"Leisure Time In the year 2005" - (Tha Counselors of Real Estate)
Publications
Golf Market Today, 2.9S, "Seven Ways 10 Add value to Your Golf Course"
The Appraisal Journal, 4-94. "Private Equity Count/y Club CommunlUes -Issues & Answem"
Carolina Business. 4.94, "What Are Golf Courses Worth?"
New England Real Estate Journal, 3-25.94, "Golf Course Values Depend on I.GP."
San Diego Business Journal, 4-94, "Wall Street hits ace with golf Investments"
Golf Course News, March. 1994, "Tis Ihe Season for Tax Tips"
Club Director. November, 1993. "What Is Your Club Worth and Why Should You Know?"
Park/Grounds Management, Nov., 1993. "Consider a Golf Coursa as a Revenue Ploducer"
Public Management. June, 1993. "Par For The Course"
American City & County, Aprll, 1993. "Golf Courses Offer Cash Flow Altematlves"
Pennsylvania Township News, January, 1993. "Well Planned Golf Course Can Be Excellent
Revenue Opportunity for Townships"
The Appraisal Journal, January:91. Golf Courses: Valuation & Evaluation
Editorial Review Board for Golf Courses & Country Clubs: A Guide to Appralsal,Market Analysis.
Development and Financing
LECTURERflEACHER .
,~
. Golf Coursa Superintendents Assn. of America, 2-25-95, 2-96, Topic: Golf Course
Economics
. New England Golf Course Owners Association. July 13. 1994, Topic: Property Valuation
and Assessments
. Pennsylvania Golf Course Owners Association. April 21. 1994, Topic: Real Estate Taxes
. Crlttenden Conferences on Golf Development, mulllple slles and dates
. University of Florida. Rho Epsilon, April 4, 1991. Topic: Golf Course Appraisal &
Analysis
. Natl. Assn. State Tax Court Judges Conference. Harvard Law School, 9.26-91, Topic:
Golf Courses
. PGA of America, "Golf Course Design & Construction, 1-92, 1.93.
. Georgia Section PGA of America, Buying or Leasing a Golf Course, Atlanta. GA,
November, 1993
. Golf Coursa News, Public Gof Forum. Charleston, SC. 11.93. Orlando. FL. 11-9S.
Chicago. IL, 10-96
. University of Wisconsin. Real Estate Club, February 6. 1992.
. Financial Seminars, Inc., speaker at "Financing Golf Developments", AprlI9-10. 1992
. Golf Development Inslllute, Golf Course Renovation & Expansion. 12.93, 10-94, 5-95
. National Golf Course Owners Assn., Seminar on Family Business, 1.96
. Pennsylvania Assessors Association - Golf Course Valuation. 5.93, 5-97
. New Jersey Association of Assessors. Golf Course Valuation Seminar. 3-10-97
0.,,,
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GEOGRAPHICAL AREAS
SERVED .
...
Connecticut:
Fairfield and New london Counti~
Florld.1:
8rowart! Counly
Coollla:
Houston County
Kentucky:
Letcher and Madison Counties
MMylond:
Frederick and Montgol'T'lPry Counlips
Michigan:
leelanau County
New Jmer.
Bergen. Ocean and SUSsell Counties
New York:
Westchester County
North Carolina:
Cra~n. Edgecombe. GrE"f"np,
lenoir. Martin. Pin. Wolke and
Wayne Counties
Ohio:
Athens County
Pennsylvillll.J:
Adams, AIIl'1!i1.nv. Cumbo,land.
Dauphin. lancaster.lebanon.
Wes'mo,.land. Schuylkill and Yolk
Counties
Vllllnla:
City of Bristol, Isle of WigtU County,
W.uhin&!on County
WIsconsin:
Daf'IEI County. City of Milwaukl'P
!Of
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ALAN M. HARRIS
EXPERlENCE . .
HI..h Valuation Group (February, 1993. 10 Present); Harri.burg. PA: Anociale
real e.lalO appral.er/research analy.t of regional appral.al company
Aldridge & Southerland, Realto.. 10clober, 1990, 10 S.plember. 1992);
Greenville. NC: Real eslale .ales agenl/company markeling con.ullanl
Mac Harris School of Roal Eslale Uuly, 1992, 10 December, 1992); Greenville.
NC: Owner/directorronslruclor, privale real eslale school
J. L. Harris & Sons, Inc. Uuly, 1977. 10 July, 1990); Greenville. NC:
Ownerlbrokerage manager or real eslale sales and managemenl. and
construction company
North Carolina Association of Reallors (March, 1989, 10 December. 1991);
Green.boro. NC: Federal Congrenional Di.lrict CoordinalorlLeglslalive
LiailOn
Greenville1PiII Association of Reallors (March. 1978. 10 December, 1992),
Greenville, NC: Varlou. offices, inciuding Presidenl, Vice Presidenl. and
Direclor. Reallor of lhe Year. 1990.
Easlern Carolina Cenler for Real Eslate Sludles (April, 1988, 10 July, 19901;
Greenville. NC: Owner/direclorron'lructor. privale real eslale .chool
Pill Community College (March. 1979.10 March. 1988); Greenville. NC: Slate
certificcJ real estate instructor
Commonwealth of Kenlucky , Departmenl of Public Informalion IDecember,
1976,10 June, 1977); Frankfort. KY: News. fealure and .peech wriler
Transylvania Universily (April, 1974.10 October. 1977); Lexington. KY; Director
of Universily Publicalion.
United Slales Air Force (Active Duly: July, 1969,10 April. 1973)
EDVeA T/ON
Transylvania University. 8.A.. Polilical Science
Universily of North Carolina al Chapel Hili. M.A. Candldale. Graduale School of
Journali.m
Graduale of Realtors In.lilule (GRIl, North Carolina Reallors In.lilule
Appralsallnslilule (formerly American In.titute of Real Estale Appraisers)
Courses:
Real E.tale Appraisal Principles ItA 11. Chapel Hill, NC. 7/80
8a.1e Valualion Procedures 11A21. Chapel Hill. NC. 7/80
Capilalilation Theory and Techniques 1181.182,1831. Chapel Hill, NC. 7.8/82
Ca.e Studies in Real E.lale Valualion (2.11. Chapel Hill. NC, 7/84
Valualion Analy.is and Report WrilingI2.21. Chapel Hill. NC. 7/84
L1CENSE/CERT/FICA T/ON
Certified Broker/Appraiser. Commonweallh or Penn.ylvania 18A.()()18SO-LI
Real Estale Associale 8roker, Commonweallh of Penn.ylvania IAB-OSl771-LI
Real Eslale Broker. Slale of North Carolina (8-46494)
hirsh
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ALAN M. HARRIS. QUAUFICA TIONS,
(cunlinucd)
PllO/'ERTl' Tl'I'ES AI'I'RAlSEI)
l'AllTIAI IISI Of CIIEN IS SlRVW
Airport
Ambulalory surgery laclllly
Amusement/theme park
Apartmenllaclllly
Buslnessllnduslrial park
Commercial developmenlland
Commercial relaU facUlly
Gas-line rlght-of.way
Golf facillly, prlvale
Golf faclllly. seml.privale
Golf faclllly, public
HoleVconventlon cenler faclllly
InduslrlaVdlstrlbutlon warehouse facility
InduslriaVmanufacturlng faclllly
Mlni-slorage facillly
Mobile-home park
Office facility
Regional shopping mall
Resldenlial developmenl land
Residential subdivision
Slrlp shopping cenler
Banks and Mortgage Companies:
Dauphin Deposll Bank
Fulton Bank
Lebanon Valley National Bank
Hersey Trusl Company
Meridian Bank
The Bank of New York
Pennsylvania National Bank
S & T Bank
Toyo Trusl & Banking Co., ltd.
UnlBank
Businesses. Induslrial Corporations and Govemmenl:
Brownlng.Ferris. Inc.
Counly of Cumberland, PA
Counly of Lancasler, PA
Counly of Weslchesler, NY
County of York. PA
Foxwoods Resort Casino
George D. Zamlas. Developer
GollSoulh
Hershey Enlertalnmenl & Resort Co.
Hurd,an Golf Course Design, Inc.
Laird Enlerprlses
Lancaster General Hospllal
National Fairways. Inc.
Palm.Aire Assoclales GP
Pike-Lelcher Land Co.
Scantlcon Inlernational, Inc.
Summit Engineering, Inc.
REI'ORT n'I'ES I'REI'ARW
Appraisals for:
Acquisllion
Condemnation
Disposition
Estate sell/ement
Financing
Tax appeal
Consulting
Markel Analysis
Markel Feasibillly
Markel Positioning
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Claritas Inc.
~Sales (800)234-5973
II
(MSA 3240) Harrisburg et al, PA
,..
Family Household Trend Report
II
....U .
n1verse
1980
Census
I ;______________
Population, . . .
-Households, . . ,
Families. . , . . ,
Housing Units.
_.Grp Qrt, Pop.,
Household Size
555158
201169
148230
216301
16834
2.68
Income
1979
(Census)
---------
Aggregate ($MM)
-'Per Capita".,
Avg. Household
'Median Hhold.,
.. . Avg. Family HH
Med, Family HH
Avg, HH Wealth
Med. HH Wealth
4098
7383
20196
17849
23056
20732
1990
Census
587986
226353
157924
241489
19303
2.51
1989
(Census)
8612
14647
37~87
31673
43822
37957
% Chg
80-90
5.9
12.5
6.5
11,6
14,7
-6.1
% Chg
79-89
110.1
98.4
85,6
77.4
90.1
83,1
1996
(Est, )
617165
240695
165834
258864
20531
2.48
1996
(Est,)
11859
19216
48511
40182
56976
47868
140699
75976
3l-0CT-96
Support (800)234-5629
% Chg
90-96
5.0
6.3
5,0
7.2
6.4
-1.3
% Chg
89-96
37.7
31.2
29.4
26.9
30.0
26.1
(Weight: 100.0%)
2001
(proj. )
637792
250683
170899
269610
20633
2,46
2001
(Proj.)
15184
23808
59586
47600
69693
56900
164316
89339
% Chg
96-01
3.3
4.1
3.1
4.2
0.5
-0.7
% Chg
96-01
28.0
23.9
22,8
18.5
22.3
18.9
16.8
17.6
--------------- Family Households -----------------
Family Household Income 1990 Census 1996 Estimate 2001 Proj.
------------------------- ---------------- ---------------- ----------------
Total. . . . . . . . . . . . . . , . , . . .
Less than $5,000..,..
$5,000 to $9,999.,...
$10,000 to $14,999.....
$15,000 to $19,999,.,..
$20,000 to $24,999.....
_. $25,000 to $29,999.....
$30,000 to $34,999.,.,.
$35,000 to $39,999.,...
$40,000 to $44,999.....
,....
$45,000 to $49,999.,...
$50,000 to $59,999..".
$60;000 to $74,999.....
~ $75,000 to $99,999.,..,
$100,000 to $124,999,..,.
. $125,000 to $149,999.....
_ $150,000 to $249,999.,...
$250,000 to $499,999.....
,$500,000 or More.........
157924
3043
4763
7594
10673
12882
14485
16179
14916
13953
12055
17681
14748
9002'
2882
1051
1355
533
129
1.9%
3,0%
4.8%
6.8%
8.2%
9.2%
10.2%
9.4%
8.8%
7,6%
11.2%
9.3%
5.7%
1.8%
0.7%
0.9%
0.3%
0,1%
165834
2842
3789
4947
6927
9476
10374
11748
11424
13597
12543
23512
23845
18461
6687
2546
2031
804
281
1.7%
2,3%
3.0%
4.2%
5,7%
6.3%
7.1%
6.9%
8.2%
7.6%
14.2%
14.4%
11,1%
4.0%
1.5%
1.2%
0.5%
0.2%
170899
2798
3350
3978
4977
6754
8214
9286
9129
9975
10388
23507
28685
26689
13666
4631
3326
1104
442
1.6%
2.0%
2.3%
2.9%
4.0%
4,8%
5.4%
5.3%
5.8%
6.1%
13.8%
16.8%
15.6%
8.0%
2.7%
1.9%
0.6%
0.3%
======================================================c=======================
- NOTE: When the median household wealth for an area is less than $25,000
it will be listed on this report as $24,999,
... Data on income are expressed in "current" dollars for each year.
Decennial Census data reflects prior year income.
1996 estimates and 2001 projections produced by Claritas Inc.
Copyright 1996 Claritas Inc. Arlington, VA
..- DEFLmsa . list
Claritas Inc. 31-0CT-96
Sales (800)234-5973 support (800)234-5629
(Page 1 of 2)
(MSA 3240) Harrisburg et al, PA
(Weight: 100.0%)
1990 Demographic OVerview Report
population 587986 Housing Units 241489 Median Age 34.8
... Households 226267 Group Quarters 19329 Median HH Inc 31637
Families 158943 Avg, HH Size 2.51 Median Value 75013
Vehicles 384726
Income in 1989 Household Family Non-Family
----------------------- --------------- --------------- ---------------
Less than $5,000.., 8161 3,6% 3431 2,2% 5083 7,6%
$5,000 to $9,999". 16857 7.5% 5138 3.2% 12096 18,0%
$10,000 to $12,499,. , 9226 4,1% 3867 2.4% 5610 8.3%
$12,500 to $14,999,.. 8777 3.9% 4276 2.7% 4647 6.9%
-, $15,000 to $17,499". 10259 4.5% 5508 3,5% 4988 7.4%
$17,500 to $19,999,. , 9934 4.4% 5769 3.6% 4332 6.4%
$20,000 to $22,499" . 11548 5.1% 6891 4.3% 4868 7,2%
$22,500 to $24,999.. . 9922 4.4% 6469 4.1% 3523 5.2%
$25,000 to $27,499. . . 11203 5.0% 7551 4.8% 3588 5.3%
$27,500 to $29,999... 9649 4.3% 6937 4.4% 2628 3,9%
$30,000 to $32,499. . , 11600 5.1% 8652 5,4% 2809 4,2%
$32,500 to $34,999. , , 9329 4,1% 7456 4,7% 1858 2.8%
$35,000 to $37.499... 9984 4.4% 7878 5.0% 1877 2.8%
$37,500 to $39,999,.. 8110 3.6% 6777 4.3% 1247 1,9%
$40,000 to $42,499, . . 9113 4.0% 7771 4.9% 1396 2.1%
$42,500 to $44,999.., 7222 3.2% 6130 3,9% 983 1,5%
$45,000 to $47,499,., 7293 3.2% 6108 3.8% 1009 1.5%
$47,500 to $49,999, , . 6380 2.8% 5650 3.6% 613 0,9%
$50,000 to $54.999. , . 11201 5.0% 9879 6.2% 1127 l.n
$55,000 to $59,999, . . 8166 3,6% 7580 4,8% 569 0.8%
$60,000 to $74,999... 16057 7.1% 14460 9,1% 1250 1.9%
$75,000 to $99,999.. . 9687 4.3% 8894 5.6% 618 0,9%
. . $100,000 to $124,999... 3141 1.4% .2818 1.8% 250 0,4%
$125,000 to $149,999.., 1179 0,5% 1044 o.n 125 0.2%
. $150,000 or More..,..,. 2269 1.0% 2009 1.3% 230 0.3%
-- Aggregate Income ($Mil) 8475 6867 1529
Median Income.....,.". 31637 37388 18214
Average Income.,....... 37459 43206 22716
Persons Persons
._. Educational Attainment 25 Yrs & Over Employment Status 16 Yrs & Over
----------------------- --------------- ----------------------- ---------------
. Less than 9th Grade.."
9th - 12th Grade,No Dip
- High School Graduate".
Some College, No Degree
, Associate Degree...,..,
- Bachelor's Degree......
Graduate/Prof. Degree"
32031
58020
158821
49058
21336
46550
23606
8.2%
14.9%
40,8%
12.6%
5.5%
12.0%
6.1%
In Labor Force,......"
Civilian. . . . . . . . . . . . . .
Employed, . . , . , , . . . . . .
Male............... .
312667
310597
298729
159755
138974
11868
153369
67.1%
66.6%
64,1%
34.3%
29.8%
2.5%
32.9%
Female. . . . . . . . . . . . . .
Unemployed.,...".,..
Not in Labor Force.....
...
aaaaaaa.aaaa.aa.aa...aa.........aa.....aa...............__...................:c
Source: 1990 CensuS of the population and Housing, Summary Tape File 3
Copyright 1996 Claritas Inc. Arlington, VA
...
DEFLmsa.list
Claritas Inc.
Sales (800)234-5973
31-0cr-96
(800)234-5629
(Page 2 of 2)
(Weight: 100,0%)
Employed
Persons 16+
support
(MSA 3240) Harrisburg et al, PA
Employed
Persons 16+
Industry
Occupation
----------------------- --------------- ----------------------- ---------------
_~griculture/Forest/Fish
Mining. . . . . . . . . . . . . . . . .
construction.,. ....".,
Manufacture-Nondurable.
-Manufacture-Durable.."
Transportation. ,..,..,.
Communication/Pub. Util
'Wholesales Trade.."...
Retail Trade... .......,
Finance/Ins/Real Estate
.llusiness & Repair Serv.
Personal Services"....
Entertain/Recreation...
Professional & Related.
. Health Services.,.....
. Educational Services,.
Other Professional...,
Public Administration,.
5963
533
17245
24901
24505
16027
7035
13524
47154
21859
12272
7374
3695
65577
26108
22003
17466
31065
2.0% Managerial/Prof. Spec..
0,2% Exec/Admin/Managerial,
5,8% Prof. Speciality.",.,
8.3% Tech,/Sales/Admin. Sup.
8.2% Technician and Related
5.4% Sales.................
2.4% Administration Support
4.5% Service occupation.....
15.8% Private Household...,.
7.3% Protective service....
4.1% Other Service....,..,.
2.5% Farming/Forestry/Fish..
1.2% preciSion/craft/Repair,
22.0% operator/Fab./Laborer.,
8.7% Mach.Op/Assem,/Inspect
7.4% Trans. & Material Move
5.8% Laborers....,..."...,
10,4%
74097 24.8%
34683 11,6%
39414 13.2%
98399 32.9%
11803 4.0%
29523 9.9%
57073' 19.1%
36787 12.3%
711 0,2%
4183 1.4%
31893 10.7%
5264 1.8%
32209 10.8%
51973 17.4%
20090 6.7%
13815 4.6%
18068 6.0%
Transportation to Work Workers 16+ Travel Time to Work Workers 16+
.----------------------- --------------- ----------------------- .--------------
Drive Alone..,. ...,.,..
'Carpooled. . , . . . . , . , , . . .
public Transportation..
All Other...." . . . , . . . .
222095
42610
5757
25786
75,0% Less than 10 Minutes...
14.4% 10 to 19 Minutes,..".,
1.9% 20 to 29 Minutes.......
8,7% 30 Minutes or More.....
,
Occupied
Units In Structure Housing Units Year Structure Built
----------------------- --------------- -----------------------
"l-Detached..... ,...,.,.
.1-Attached. . . . , . , . . , . . .
2......... ... .. ... .....
"3 or 4.................
5 to 9.................
10 To 19.......,.,.",.
.20 to 49.. . . . . , . . . . , . , .
50 or More... II ........
Other. . . . . . . . . . . . . . . . . .
....
.Year Hhlder Moved In
127725 56.4% 1989 To March 1990....,
34941 15.4% 1985 To 1988.......... .
9673 4,3% 1980 To 1984.......,.. .
11230 5,0% 1970 To 1979.......... .
10164 4,5% 1960 To 1969......,... .
8883 3.9% 1950 To 1959....,..... ,
4084 1.8% 1940 To 1949.......... .
4254 1.9% 1939 or before.....,."
15399 6.8% Median Year Built"...,
.
Occupied
Housing Units Vehicles Available:
-----------------------
--------------- -----------------------
'-1989 To March 1990.,...
1985 To 1988..."......
1980 To 1984... .,..,..,
-1970 To 1979...,.......
1960 To 1969... ...,....
'1959 or Before. ....,...
37417 16.5% None...................
60950 26,9% 1........,............,
30182 13.3% 2......................
44450 19.6% 3...............,..,...
25432 11.2% 4......................
27922 12.3% 5 or More..............
58356
108806
63117
65969
19.7%
36.7%
21.3%
22.3%
Occupied
Housing Units
3967
17580
14511
45914
31839
32609
19516
60417
1960
1. 8%
7.8%
6.4%
20.3%
14.1%
14.4%
8.6%
26.7%
Occupied
Housing Units
22127
75465
91070
27685
7391
2615
9.8%
33.3%
40.2%
12.2%
3.3%
1.2%
-
a=_a~aaaa==DDaaDaaaD=====a=====aa==Daaaa=a===a===a==a===a__eaaaaaaaaaa____=====
,Source: 1990 Census of the population and Housing, Summary Tape File 3
Copyright 1996 Claritas Inc. Arlington, VA
...
(27-391)
(27-391)
)
Part 16
C-G Commercial General District
5391. Purpose. The purpose of the C-G Commercial General District is
to provide reasonable standards for the development of commercial uses in
areas where such uses already exist and where the development of commercial
uses is feasible. These commercial uses would include shopping centers.
The standards of this district are designed to minimize traffic congestion
on the streecs, provide for the public convenience, and fulfill the other
broad purposes of this ordinance. (Ordinance 378-80, March 18, 1980,
Article XVI, 51601)
5392. Procedural Requirements. All applications for permits,
pursuant to this part, shall be submitted to the Zoning Officer who shall
have the option of submitting such applications to the Planning Commission
or to the Township Commissioners for recommendations prior to issuing a
permit. All applications for building permits shall be reviewed by the
Plan Review Board. (Ordinance 378-80, March 18, 1980, Article XVI, 51602)
5393. Permitted Uses. A building may be erected or used and a lot
may be used or occupied for any af the following purposes and no other.
All such uses shall be in conformity with Part 19 (General Regulations).
1. Apartment buildings.
2. Tourist homes and motels.
3. Commercial uses serving the community, including but not limited
to such uses as retail drug stores, food sales, wearing apparel shops, auto
and home appliance sales and service, restaurants and tea rooms, jewelry
and gift shops, department stores, dry goods and notion stores, furniture
sales, banks and lending institutions, barber and beauty shops, studios,
paint, paperhanging and glass shops.
4. Office buildings professional offices and services and personal
services.
5. Newspaper and job printing establishments.
6. Theaters, assembly halls, places of amusement, and commercial
recreation establishments including skating rinks, swimming pools, golf
driving ranges, and outdoor movies.
7. Public garages for storage, repair, and servicing of motor
vehicles when in a completely enclosed structure; public and private
. ::~ off-street parking lots. .
8. Gasoline filling stations for servicing but not major repairing of
motor vehicles subject to Part 19 hereof.
9. Public and semi-public uses such as churches, libraries, schools,
recreational facilities, and municip..l buildings of all types,
-433-
(27-393, cont'rt)
(27-393, cont'd)
10. Post office, central telephone exchanges and transformer
substations.
11. Undertaking parlors and funeral homes.
12, Laundry, dry cleaning or dyeing, tailoring, dressmaking,
shoemaking and repair shops when primarily service or service and sales
shops and not manufacturing plants.
13. Wholesale businesses when incident to a permitted use, but not
including wholesale stonge warehouses.
14, Signs - subject to regulations of Part 20, the following signs
are permitted: .
._,
a.
Any signs permitted in any residential zone.
Business or identification signs not exceeding three hundred
(300) square feet in total area per business premises;
advertising signs in total square footage not exceeding four
times the lineal front footage of the premises on which
located.
b.
-.
-.
Service and real. estate signs not exceeding sixteen (16)
feet in total area per business premises.
15. Residential Use - For dwellings in existence at the time of the
adoption of this ordinance any residential use may be continued. However,
beyond this date no one-family, two-family, or three-family dwelling shall
be constructed in a C-G Zone. This restriction shall not apply to any
dwelling u.lit for occupancy by a caretaker or owner if such unit is
constructed as part of a commercial building and clearly incidental.to the
permitted use, or to conversion apartments.
16. Conversion apartments meeting the requirements of the Building
Code, and the off-street parking requirements of Part 21 of this ordinance.
The Building Official may grant building permits when these requirements
are satisfied without hearing by the Zoning Hearing Board.
17. Dance or music studios.
18, Dog kennels and veterinary
19. Accessory uses on the same
any of the above permitted uses.
20, Public utility facilities.
(Ordinance 378-80, March 18, 1980, Article ~II, S1603)
c.
hospitals.
lot with and
customarily incidental to
.' S394. Conditional Uses. The folloWing conditional use and no others
may be allow~d or denied by the Township Board of Commissioners, pursuant
to the express standards and criteria set forth in Article XXIV, Section
2405 and Article XXIII of this ordinance. [Part 24, Section 615, and Part
23 of this ordinance]
1. Mobile home parks
(Ordinance 378-80. March 18, 1980, Article XVI, S1604)
.~
-
-434-
..
)
(27-395)
(27-395)
)
1395. Rescrictions on Permitted Uses.
1. No internal combustion engine or other machine shall be used
unlese objectionable noise and vibration are eliminated in a manner
satisfactory to the Building Official.
2. All shops and stores shall be so enclosed within a bUilding that
no processing or repairing operations will be visible from the front street
or from either the front or side street in the case of a corner lot.
3. Any use adjacent to a residential zone boundary line at the side
or rear, which conducts any part of its business in any side or rear yard
so adjacent, shall erect as a protective screen to a height of not less
than six (6) feet, a solid painted board fence, masonry wall, or permanent
evergreen hedge paralleling the said side or rear zone boundary line.
(Ordinance 378-80, March 18, 1980, Article XVI, 51605)
1396. BuildinR HeiRht Limit. No building shall be erected to a
height in excess of forty (40) feet; provided, however, that the height
limit may be increased one (1) foot for each additional foot that the width
of each yard exceeds the minimum required. Each and every yard shall
exceed the minimum by the number of feet proposed to be added to the
maximum height of forty (40) feet. (Ordinance 378-80, March 18, 1980,
Article XVI, 51606)
)
5397. Lot Area and Width ReRulations.
1. The lot area shall be not less than ten thousand (10,000) square
feet and lot width shall be not less than one hundred (100) feet at the
building line.
2. For permitted res~J~ntial uses and conversion apartments, the lot
area shall be not less than the following:
One (1) dwelling unit
Two (2) dwelling unLts
Three (3) dwelling units
Four (4) dwelling units
For each additional dwelling unit
(Ordinance 37B-80, March 18, 1980, Article XVI,
4,000 sq. ft.
7,000 sq. ft.
9,000 sq. ft.
12,000 sq. ft.
1,000 sq. ft.
11607)
5398. Lot CoveraRe. nle principal and accessory buildings on any lot
shall not cover more than forty percent (40%) of the area of the lot,
'<, (Ordinance 378-80, March 18, 19ao, Article XVI, 51608)
5399. Open Space. Not less than ten percent (10%) of the lot area
shall be covered with a vegetative material. (Ordinance 378-80, Harch 18,
1980, Article XVI, 11609)
-435-
..
COMPARABLE SALE
22.May.98
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Protect:
Address: Prospect & Haines
Muntcloalltv: Sprlngeltsbury Township
Countv: York
~PA
Tax Parcel: 46-005'()288
Grantor: Sun Oil co do 5un Refining
Grantee: Hartman Family Realty
Consideration: $398,000.00
Sale Date: 01103/95
Flnanclne:
Deed Ref: 1037.707
Conditions:
land SF: 47,480.00
land Descriotlon:
Zontne:
Utilities:
Bulldine SF: 2,668.00
Imorovements:
Am
Income Data:
Gross Income: $0.00
Exoenses: $0.00
NOI: $0.00
GIM: #Div/O!
% OAR: 0.00%
Confirmed:
Comments:
Subtvoe: 30
llo Code:
land AC: 0.00
land to Buildlne Ratio: 17.80
SlSF land: $8.38
SlAC land: #Div/Ol
SlSF Buildtne: $149.18
~
: t COMPARABLE SALE
III 22.May.98
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SubtvDe: S9
Prolect: Food lion. Manchester
Address: along the west side of North George Street Extended (Rte 181) opposite Chester Square
Shopping Cenler, 1/4 mile south of Manchester 80rough
MunlclDalltv: East Manchester Twp
Countv: York
~PA
Tax Parcel: 26-M1-126G
Grantor: Wagman Construction, inc
Grantee: Wagman Investors limited Partnership
Consideration: $2,800,000.00
Sale Date: 07131/96
ZID Code:
Financln2:
Deed Ref: 1268-6488
Conditions: $500,000 in limited partner equity and remainder mortgage
Land SF: 0.00
land AC: 5.66
Land DescrlDtion: slightly Irregular in shape wilh additional frontage along access street forming the north
property line; visibility excellent for bolh north and southbound traffic; access good
except for exiting due to road topography somewhat blocking visibility nf traffic
heading south from Manchester.
Zonin2: C-Commerclal District
Utilities: all public avalable in adequate capacity
Buildln2 SF: 38,600.00
ImDrovements: one story masonry and brick neighborhood shopping center; anchor tenant is Food lion
supermarket of 29000 SF. Secondary anchor 15 a drug store of 7200 SF and two small
strip stores of 1200 SF each are adjacent the drug store. Floor plan and mechanical
systems are standard. Macadam parking lot is estimaled at 150000 SF with appropriate
lighting.
A&!tl 1995
Land to 8uildin2 Ratio: 0.00
Income Data:
Gross Income: $0.00
EXDenses: $0.00
NOI: $0.00
GIM: #Div/OI
% OAR: 0.00%
S1SF Land: #Div/Ol
$lAC land: $494,699.65
S1SF Buildin2: $72.S4
Confirmed: data from Dan Wagner, 2/97
COMPARABLE SALE
...
,
22.May-9B
ill 5657
hm;C
Prolect: Shiloh Shopping Cenler
Address: 2323 Carlisle Road
Munlcloalltv: West Manchester Twp
Countv: York
Suhtvnel 59
..
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lln Codel
-
Tax Parcel: 51-11-47,49
Grantor: Shiloh Partners
Grantee: John l. & Helen Y. Shick; An Jen Huang, Kun Yao Huang & An Sin Huang
ConsIderation: $2,200,000.00
Sale Date: 09/00/93
._"
-
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....
FlnanclnR:
',.
Deed Ref: 725.27
CondItions:
land SF: 11 0,648.00
land AC: 2.54
Land Descrlntlon:
ZonlnR: commercial
-
Utilities:
BulldinR SF: 25,681.00
Imnrovements: one story brick and concrete block bldg with 21242 SF, constructed In 1986 and
utilized as a strip center with various tenanls. One story masonry bldg, builtin 1986
with 4439 SF, currenlly used as a convenience store and pizza shOll. Overall the
buildings are In good condition, and have a total of 25681 SF
....
A8lll 1986
land to BulldlnR Ratio: 4.31
'I
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Income Data:
Gross Income: $0.00
Exoenses: $0.00
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mMi #Dlv/Ol
% OAR: 0.00%
S1SF land: $19.88
SIACland: $866,141.73
SISF BuildinR: $85.67
, 4
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Confirmed: per Rick lobianco, sale was verified by parlncr of the grantor, Dennis Goodwin
Comments:
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. .'~'~
EAST PENNSBORO AREA
SCHOOL DISTRICT,
Appellant,
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
v.
CUMBERLAND COUNTY BOARD
OF ASSESSMENT and
PROSPERITY DEVELOPMENT
CORPORATION,
Appellees
CIVIL ACTION - LAW
NO. 97-2769 CIVIL TERM
ORDER OF COURT
AND NOW, this 2::-~:t~ day of May, 1997, due to a scheduling
conflict, the hearing previously scheduled for September 4, 1997,
is RESCHEDULED to Thursday, October 2, 1997, at 1:30 p.m. in
Courtroom No.5, Cumberland County Courthouse, Carlisle,
Pennsylvania.
BY THE COURT,
Richard C. Snelbaker, Esq.
44 West Main Streat
Mechanicsburg, PA 17055
Attorney for Appellant
Michael J. Pykosh, Esq.
355 North 21st Street
Camp Hill, PA 17011
Attorney for Appellee OWner
Stephen D. Tiley, Esq.
5 South Hanover Street
Carlisle, PA 17013
Attorney for Appellee Board
Horace A. Johnson, Esq.
Cumberland County Courthouse
1 Courthouse Square
Carlisle, PA 17013
Attorney for Cumberland County
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