RockSpringCluB-Hendricks Appraisal.pdf

ZONING 10. Fences and dividing walls 11. Farm produce stand for produce grown on premises 12. Private storage shed 13. Greenhouses Bulk Requirements: Minimum Lot Size .. 80,000 Square Feet Minimum Lot area per un 80,000 Square Feet Minimum Lot Width . Minimum Front Yard Minimum Side Yard . Minimum Rear Yard ... Maximum Building Coverage Maximum Lot Coverage . PNAMAwWN > Commentary & Analysis: As discussed throughout this appraisal, the subject property involves a private country club and golf course known as Rock Spring Club. The facility ceased operations in December 2018 by the current ownership - Montclair Golf Club, another private country club facility located in West Orange and Verona. Based on the analysis of highest and best use included on the following pages, | have concluded that the highest and best use of the subject property is for single family residential subdivision and development in accordance with R-1 zoning. Therefore, based on the subject's combined area of 139.9755 acres, with a deduction of 5.00 acres for Cable Lake as well as an allocation of ten (10%) for roadways, detention areas, areas, setbacks, etc., the total land area potentially available for development would be approximately 5,276,800 square feet. In view of the minimum lot size requirement of 80,000 square feet, it is my opinion that the property could be subdivided into sixty-six (66) residential building lots. The appraiser notes that in accordance with the highest and best use conclusion and determination as discussed on the following pages, single family residential subdivision and development of the property is the highest and best use. However, it has also been noted that the typical developer of a large parcel such as the subject would undoubtedly pursue a change in zoning that would permit multi-family (condominium- townhouse-rental apartment and/or mixed-use) development at a substantially greater density. This type of use is not a legally permitted use under current zoning. Furthermore, a change in zoning which would allow greater density and multi-family development of the property cannot be reasonably assumed, anticipated or projected. 54 REAL ESTATE ~ - APPRAISALS a 5 RESEARCH

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HIGHEST AND BEST USE The analysis of highest and best use is at the heart of an appraisal of the market value of real property, but the concept has not always been well understood by practitioners and has long been a source of debate in the professional literature. The essential components of the analysis of highest and best use are contained in the following definition of the term: The reasonably probable use of property that results in the highest value. This simple definition will serve as a point of departure for examining the concept in the rest of this chapter. To be reasonably probable, a use must meet certain conditions: physically possible (or it is reasonably probable to render it so). legally permissible (or it is reasonably probable to render it so). financially feasible. Those uses that meet the three criteria of reasonably probable uses as noted above, are then tested for economic productivity, and the reasonably probable use which results in the highest value is therefore, the highest and best use. Conceptually, the criteria of highest and best use are self-explanatory. For example, physically possible uses are land uses that are not unworkable due to some limiting physical characteristic of the land such as inadequate site size, odd shape, irregular topography, or poor soil quality. For example, a steeply sloped site tends to limit the use of the land to only a few possible alternatives. In contrast, a level plot of land with good drainage, soil with adequate bearing capacity, and other physical characteristics to the construction of improvements would likely allow a developer to build many different sorts of facilities. Based on similar lagic, fegaily permissible uses would conform to the land’s current zoning classification and local building codes along with any other relevant regulatory or contractual restrictions on land use. The test of financial feasibility narrows the number of legally permissible and physically possible uses down further through analysis of the economic characteristics of the potential alternative uses. The remaining options are candidates for the test of maximum productivity, which is the final—and deciding—criteria for the highest and best use of both the land as though vacant and the property as improved. The concept of highest and best use relates to what is done physically Source: The Appraisal of Real

teria for the highest and best use of both the land as though vacant and the property as improved. The concept of highest and best use relates to what is done physically Source: The Appraisal of Real Estate - Fourteenth (14th) Edition - 2013 Published by the Appraisal Institute. Continued . .. = 382 | i | REAL ESTATE APPRAISALS L | & RESEARCH

HIGHEST AND BEST USE Highest and best use is defined as the reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. Source: The Appraisal of Real Estate - Tenth (10th) Edition - 1992. Published by The Appraisal institute. The definition applies specifically to the highest and best use of the land. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in the highest and best use exceeds the total value of the property in its existing use. Implied within these definitions is recognition of the contribution of that specific use of community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is the determination of highest and best use results from the appraisers’ judgment and analytical skill, i.e., that the use determined from analysis represents an opinion not a fact to be found. In appraisal practice the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value) another appropriate term to reflect highest and best use would be most probable use. In the context of investment value an alternative term would be most profitable use. Highest and Best Use has also been defined in the Dictionary of Real Estate Appraisal as follows: 1, The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (IVS) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform

the price that it would be willing to bid. (IVS) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Source: The Dictionary of Real Estate Appraisal - Sixth (6th) Edition - 2015 Published by the Appraisal Institute. - 57 - REAL ESTATE | | APPRAISALB a & RESEARCH Continued...

HIGHEST AND BEST USE Highest and best use of land or a site as though vacant assumes that a parcel of land is vacant or can be made vacant by demolishing any improvements. With this assumption uses that create value can be identified, and the appraiser can begin to select comparable properties and estimate land value. Land as though vacant is a fundamental concept of valuation theory and the basis of the Cost Approach. Highest and best use is the logical, legal, and most probable use that will produce the highest net return to the investor over a sustained period of time. It is also the available use or program of probable future utilization that produces the highest present land value. Source: Controversies in Real Property Valuation - 1982 Published by The American institute of Real Estate Appraisers. In determining the highest and best use of a property, the parcel is viewed as if vacant and ready to be developed to its’ highest and best use. If the property is currently improved, a determination as to whether or not the present use represents the highest and best use is made. The highest and best use of a vacant parcel is usually determined by that use which results in the highest return on the land or the highest land value, after all deductions for the cost of development are made. The deductions include the cost of labor, capital and coordination. As discussed herein, the highest and best use of an improved property requires an analysis of four (4) basic elements. It must be determined if the use is Legally Permissible, Physically Possible, Financially Feasible, and Maximally Productive on the site. In the analysis of determining the legally permissible uses of a property, external factors such as zoning regulations, restrictions, municipal building codes and requirements, as well as environmental regulations must all be considered. The site is also analyzed to determine if it would be physically possible to develop. Careful consideration is given to the size, shape, dimensions, topography, and utility of the parcel. The property is further evaluated to determine if the use found to be legally permissible and physically possible on the site would also correspond to the most profitable use. The most profitable use is generally regarded as that use which produces or yields the highest net return. In some instances, a use which would

e site would also correspond to the most profitable use. The most profitable use is generally regarded as that use which produces or yields the highest net return. In some instances, a use which would usually tesult in a high net return in one market area, would not be the most profitable use in another due to external factors such as supply and demand. 58 REAL ESTATE sa ~ APPRAISALS | G RESEARCH Continued . ..

HIGHEST AND BEST USE The maximally productive use of a property is that use which will result in a sustained rate of return commensurate with the requirements of the market for which the property is situated. For improved properties, a land residual technique is utilized whereby the resulting highest residual land value usually reflects the highest and best use. Source: The Appraisal of Real Estate - Tenth (10th) Edition - 1992 Published by The Appraisal institute. In some instances a property may be improved with a legal, non-conforming use. Typically, non-conforming uses were lawfully created or established, however, over time, changes in zoning, land use or other factors may have rendered the property as a legal, pre-existing non-conforming use. This type of use may or may not represent the highest and best use of the property. In some instances, a greater return may be achieved by a non-conforming use as compared with a legal, conforming use. In this appraisal, while | have given consideration to the former use as a private country club, | have also considered the potential for a continuation of the use as a golf course in a conversion to a public course. However, after reviewing the valuations indicated as a golf course, it is readily apparent that residential subdivision and development under the R-1 zone is the highest and best use. Discussion & Conclusion As discussed throughout this appraisal, the subject property involves a private golf and country club known as Rock Spring which was originally founded in 1925. The facility was merged with Montclair Golf Club in 2016 and in December 2018, Rock Spring Club ceased operations. Again, this appraisal assignment is specifically limited to only the Rock Spring Club portion of the Montclair Golf Club. The appraiser has reviewed the current zoning for the property (as discussed on the preceding pages) and has determined that the entire site, after deducting for the area of Cable Lake and allocation for roadways, detention areas, and setbacks (approximately 10%) could be subdivided into sixty-six (66) individual conforming residential single family building lots. Based on the analysis presented herein, it is my opinion that as vacant, residential single family subdivision and development of the property as discussed above, is the highest and best use as vacant land. The foregoing would be

ed herein, it is my opinion that as vacant, residential single family subdivision and development of the property as discussed above, is the highest and best use as vacant land. The foregoing would be legally permitted, physically possible, financially feasible and would, in my opinion, represent a maximally productive use of the property which also supports the highest value. 59 f rT ] REAL ESTATE 7 ~ B APPRAISALS 6 RESEARCH Continued .. .