Tax Appeal saves $49,000 in property taxes on 17 acres
The 17 acres are two mostly developed outlots for additional phases of a
single family subdivision. Its a lovely development - the nicest of the five
developments being appealed for this builder. This subdivision has a park
and homes selling in the low $300s in this 3rd ring suburb.
Its getting to the pretty development that's the problem. You have to drive
through an older subdivision of split levels homes that has not aged well.
If Massachusetts Senator Scott Brown parked his pick up truck on the front
lawn it wouldn't look out of place.
There have been sales activity in the community and I chose not to protest
the valuation of the lots at $78,000 for the Pay 2009 property taxes. If
your finished lots are worth $78,000 the land for future phases is not worth
$175,000 an acre! The assessor agreed with my analysis.
This property tax appeal resulted in a settlement of 66% reduction for Pay
2009 and and 64% reduction for Pay 2010. Which means an actual reduction in
taxes over the 2 years of nearly $49,000 for these 17 acres of residential
land.
Tuesday, January 26, 2010
Monday, January 18, 2010
Selling Townhomes at Target
Selling Townhomes at Target
Say you're a toy buyer at Target and its last spring and you're buying for
Christmas 2009. Tiger Woods, recovered from his knee injury, is back on the
PGA Tour and doing well. So you order Tiger Woods action dolls. Lots of
Tiger Woods action dolls. After all, everyone loves Tiger Woods. But you
didn't anticipate, could not have anticipated, that some women loved Tiger
too much. And then loved the opportunity for their own fame more than they
loved Tiger.
So the Christmas shoppers come and you just kick yourself for buying
millions of those Tiger Woods dolls and passing up the Sarah Palin action
figures-like the one featured in the Doonesbury comic strip. Having to plan
so far ahead but commit your money now-you didn't see Sarah Palin's
popularity after she lost the election.
So Target is stuck with all these Tiger Woods dolls taking up shelf space
that you could have used for the Sarah Palin dolls. So your only choice is
to lower the price of the Tiger Woods dolls below your cost and lose money
on every Tiger doll. Aggravating the situation is the moms who bought the
Tiger dolls before the scandal hit. Not wanting Johnny and Janey to play
with Tiger now, the moms donate the nearly new or even unopened Tiger Woods
dolls to Goodwill or sell them on Craig's list. So not only does Target have
the price pressure of having way too many Tiger dolls that are no longer
popular, they face further price pressure from the resale market of new or
nearly new dolls.
While the Target toy buyer sees the Tiger Woods doll as a commodity, to
little Johnny his Tiger Woods doll represents play and and a world of
possibilities for when Johnny grows up. To Janey the Tiger Woods doll is a
boyfriend to Barbie (but don't tell Ken). These children form emotional
attachments to the Tiger Woods dolls. The same can be said of those who
purchase and live in townhomes. Home ownership has many many benefits to
both individuals and our communities. And declining prices opens up these
opportunities to more people. But remove the homeowners shoes and put on the
townhome builders and the whole perspective changes.
Multi-story townhomes are a commodity like the Tiger Woods doll. There are
only typically 1 to 3 floor plans offered in a neighborhood. And competing
neighborhoods in the same city have the similar floor plans . And competing
neighborhoods in different cities often have the same exact floor plan and
you're competing only on location.
You can't just swap the clothes and change the Tiger Woods doll into Sarah
Palin. The combination of city approvals and the physical configuration of
the finished townhome building pads lock the builder into a particular unit
with little flexibility to respond to market changes. And you must compete
with the townhome foreclosures, sometimes on new or nearly new units that
may be identical to yours and may even be in the same neighborhood you're
building in.
This uniformity of townhomes makes them even more sensitive to price
competition because its difficult to distinguish themselves other ways.
While some townhome buyers are making a choice for a maintenance free
lifestyle, many buyers of non-rambler townhomes are buying on price. Its
what they can afford today until they can move up to a single family home.
To sell townhomes you have to have a significant difference in price between
the townhomes and single family homes in the same market. Which is why
townhomes did well at the peak of the single family home prices. But that
was then.
I recently spoke to a builder that is buying single family lots in Otsego
for $35,000 and then selling new single family homes for $160,000. While its
healthy for Otsego to see the inventory absorption of the single family
lots-how does this impact the existing townhomes and town home lots? And
townhome land?
While townhomes are moving in some communities most builders will tell you
they're not making a profit. Just clearing their inventory like Target
dumping the Tiger Woods dolls. And if builders are buying lots or land its
likely for single family-like the builder in Otsego.
Everything is related. The lower price of the single family homes puts
downward pressure on the townhome values. The lowered townhome values puts
downward pressure on the townhome lots. What few finished townhome pads are
selling, primarily foreclosures or bankruptcy settlements, are selling way
below the infrastructure cost to develop the townhome lots.
There is zero profit in developing townhome lots today because the
infrastructure costs exceed the value of the finished lot without accounting
for profit or the value of the land. So raw Townhome land today is worth
about as much as a Tiger Woods action figure.
Say you're a toy buyer at Target and its last spring and you're buying for
Christmas 2009. Tiger Woods, recovered from his knee injury, is back on the
PGA Tour and doing well. So you order Tiger Woods action dolls. Lots of
Tiger Woods action dolls. After all, everyone loves Tiger Woods. But you
didn't anticipate, could not have anticipated, that some women loved Tiger
too much. And then loved the opportunity for their own fame more than they
loved Tiger.
So the Christmas shoppers come and you just kick yourself for buying
millions of those Tiger Woods dolls and passing up the Sarah Palin action
figures-like the one featured in the Doonesbury comic strip. Having to plan
so far ahead but commit your money now-you didn't see Sarah Palin's
popularity after she lost the election.
So Target is stuck with all these Tiger Woods dolls taking up shelf space
that you could have used for the Sarah Palin dolls. So your only choice is
to lower the price of the Tiger Woods dolls below your cost and lose money
on every Tiger doll. Aggravating the situation is the moms who bought the
Tiger dolls before the scandal hit. Not wanting Johnny and Janey to play
with Tiger now, the moms donate the nearly new or even unopened Tiger Woods
dolls to Goodwill or sell them on Craig's list. So not only does Target have
the price pressure of having way too many Tiger dolls that are no longer
popular, they face further price pressure from the resale market of new or
nearly new dolls.
While the Target toy buyer sees the Tiger Woods doll as a commodity, to
little Johnny his Tiger Woods doll represents play and and a world of
possibilities for when Johnny grows up. To Janey the Tiger Woods doll is a
boyfriend to Barbie (but don't tell Ken). These children form emotional
attachments to the Tiger Woods dolls. The same can be said of those who
purchase and live in townhomes. Home ownership has many many benefits to
both individuals and our communities. And declining prices opens up these
opportunities to more people. But remove the homeowners shoes and put on the
townhome builders and the whole perspective changes.
Multi-story townhomes are a commodity like the Tiger Woods doll. There are
only typically 1 to 3 floor plans offered in a neighborhood. And competing
neighborhoods in the same city have the similar floor plans . And competing
neighborhoods in different cities often have the same exact floor plan and
you're competing only on location.
You can't just swap the clothes and change the Tiger Woods doll into Sarah
Palin. The combination of city approvals and the physical configuration of
the finished townhome building pads lock the builder into a particular unit
with little flexibility to respond to market changes. And you must compete
with the townhome foreclosures, sometimes on new or nearly new units that
may be identical to yours and may even be in the same neighborhood you're
building in.
This uniformity of townhomes makes them even more sensitive to price
competition because its difficult to distinguish themselves other ways.
While some townhome buyers are making a choice for a maintenance free
lifestyle, many buyers of non-rambler townhomes are buying on price. Its
what they can afford today until they can move up to a single family home.
To sell townhomes you have to have a significant difference in price between
the townhomes and single family homes in the same market. Which is why
townhomes did well at the peak of the single family home prices. But that
was then.
I recently spoke to a builder that is buying single family lots in Otsego
for $35,000 and then selling new single family homes for $160,000. While its
healthy for Otsego to see the inventory absorption of the single family
lots-how does this impact the existing townhomes and town home lots? And
townhome land?
While townhomes are moving in some communities most builders will tell you
they're not making a profit. Just clearing their inventory like Target
dumping the Tiger Woods dolls. And if builders are buying lots or land its
likely for single family-like the builder in Otsego.
Everything is related. The lower price of the single family homes puts
downward pressure on the townhome values. The lowered townhome values puts
downward pressure on the townhome lots. What few finished townhome pads are
selling, primarily foreclosures or bankruptcy settlements, are selling way
below the infrastructure cost to develop the townhome lots.
There is zero profit in developing townhome lots today because the
infrastructure costs exceed the value of the finished lot without accounting
for profit or the value of the land. So raw Townhome land today is worth
about as much as a Tiger Woods action figure.
Tuesday, January 12, 2010
Tax Appeals and Development Land
Tax Appeals and Development Land
There is a basic land development principal that was not taught in any of my
formal education for my real estate brokers license or my appraisal license.
And I seriously doubt that assessors are taught this fact in their
schooling.
I learned this fact from years of working with Civil Engineers: "Shi_ flows
down hill".
Sewer lines don't go on forever--they operate on gravity. Sewer lines are
built to a certain capacity and then a new line needs to be constructed. Or
sometimes adjacent land is at a different elevation than then sewer line and
a lift station is needed. A lift station is essentially an elevator for
poop.
The physical ability to develop land is one of 4 main factors that
determines the value of a particular parcel. The other 3 are politics, the
local market, and the availability of financing. These factors came into
play in a recent tax appeal case I settled.
I had already settled nine cases in this particular county with reductions
ranging from 24-59%. The assessor brings up one of these settlements that
was in the adjacent city to the subject property and proposed the same
settlement amount.
I responded if the property was the same in character I would recommend the
taxpayer accept the offer. Two of the four characteristics, market
conditions and financing, were very similar. The land that was previously
settled is awaiting recovery in the housing and financial markets to
complete the subdivision but physically and politically ready to go.
Neither the political nor the physical piece are obvious on the subject
property. You can drive by the property and it looks nearly as development
ready as the one in the next town. So its easy to understand how assessors
overvalue land.
The political piece: the property that was previously settled had a
preliminary plat approved for over a hundred lots. The subject property,
while adjacent to development, has not yet been annexed into the City and
isn't scheduled to develop until 2020 in the comprehensive plan.
The physical piece: to serve the subject property with sewer requires a lift
station at an estimated cost of $1,000,000.
Once I introduced these facts into the negotiation the taxpayer got an
additional 25% reduction from the assessors first offer for an overall
reduction of 36%.
There is still time to appeal your 2010 property tax assessment. For a free
evaluation email me your property ID and the property location along with
your phone number to heresthedirt@visi.com
There is a basic land development principal that was not taught in any of my
formal education for my real estate brokers license or my appraisal license.
And I seriously doubt that assessors are taught this fact in their
schooling.
I learned this fact from years of working with Civil Engineers: "Shi_ flows
down hill".
Sewer lines don't go on forever--they operate on gravity. Sewer lines are
built to a certain capacity and then a new line needs to be constructed. Or
sometimes adjacent land is at a different elevation than then sewer line and
a lift station is needed. A lift station is essentially an elevator for
poop.
The physical ability to develop land is one of 4 main factors that
determines the value of a particular parcel. The other 3 are politics, the
local market, and the availability of financing. These factors came into
play in a recent tax appeal case I settled.
I had already settled nine cases in this particular county with reductions
ranging from 24-59%. The assessor brings up one of these settlements that
was in the adjacent city to the subject property and proposed the same
settlement amount.
I responded if the property was the same in character I would recommend the
taxpayer accept the offer. Two of the four characteristics, market
conditions and financing, were very similar. The land that was previously
settled is awaiting recovery in the housing and financial markets to
complete the subdivision but physically and politically ready to go.
Neither the political nor the physical piece are obvious on the subject
property. You can drive by the property and it looks nearly as development
ready as the one in the next town. So its easy to understand how assessors
overvalue land.
The political piece: the property that was previously settled had a
preliminary plat approved for over a hundred lots. The subject property,
while adjacent to development, has not yet been annexed into the City and
isn't scheduled to develop until 2020 in the comprehensive plan.
The physical piece: to serve the subject property with sewer requires a lift
station at an estimated cost of $1,000,000.
Once I introduced these facts into the negotiation the taxpayer got an
additional 25% reduction from the assessors first offer for an overall
reduction of 36%.
There is still time to appeal your 2010 property tax assessment. For a free
evaluation email me your property ID and the property location along with
your phone number to heresthedirt@visi.com
Tuesday, January 5, 2010
How the FDIC Hurts Community Banks
How the FDIC Hurts Community Banks
In 2006 Developer Dan approaches Elm Street Bank for a $2 million loan for a
subdivision. Its this great idea that had never been done before: the
subdivision has a central courtyard with pigs and a compost pile. He calls
it "The Pig Farm". Elm Street Bank has capital of $5 million so their
lending limit for any one loan is 20% of that, or $1 million. So the Elm
Street banker calls his buddies at The Neighborhood Bank and The Community
Bank and asked them to participate in the loan. After all, Developer Dan is
this great guy and land values never go down! So the Neighborhood Bank and
the Community Bank each chip in ½ million dollar loans for The Pig Farm with
this caveat: a "first out agreement". If the loan goes south and the land is
sold at a loss, these 2 participating banks get paid first, then Elm Street
Bank gets the rest.
Elm Street was so excited about The Pig Farm concept. When Developer Dan
bought 4 more parcels of land in different locations Elm Street Bank signed
on and went to various other community banks. During this time Minnesota led
the nation at new bank creation so there was no shortage of banks to
participate in The Pig Farm loans. And with the "first out agreements" these
loans were perceived as very low risk. And land values never went down.
How to appraise a concept that had never been done? Elm Street Bank just
called his buddy Mike at "Magic Appraisal Services", and, like Magic, the
appraisals supported the development loans.
Fast forward to 2009 and The Pig Farms, all 5 of them, were a tremendous
flop and Elm Street Bank foreclosed. FDIC comes in the middle of the night
and shuts down Elm Street Bank. Elm Street's loan portfolio was such a mess
that the FDIC had to pay SuperSaver Bank $15 million to buy Elm Street Bank
which included an escrow account to fund a "90% loss share agreement" on bad
loans.
So The Pig Farms were liquidated with a pig roast that just breaks my
vegetarian heart-those piggies are my favorite at The State Fair. So from a
$2 million loan, they were each liquidated at $800,000, or a loss of $1.2
million. Under the "first out agreement" SuperSaver, assuming Elm Street
Bank's position, would absorb the first million loss for a 100% loss and The
Community Bank and The Neighborhood Bank would each absorb $100,000 on their
$500,000 loans and receive $400,000 or 80% each, recognizing a 20% loss.
"Hold on", said the FDIC. When SuperSaver took over Elm Street Bank all
prior agreements for letters of credit and "first out agreements". The $1.2
million loan loss will be shared equally: $300,000 each to The Neighborhood
Bank and The Community Bank. SuperSaver's share of the loss is $600,000. But
as part of the deal to entice SuperSaver to buy Elm Street the FDIC will
participate 90% in the SuperSaver's share of this loss. So instead of
recognizing a $600,000 loss on each Pig Farm loan, SuperSaver's loss is only
$60,000. And since SuperSaver was paid $15 million to buy Elm Street Bank
they don't care about the $60,000 loss.
The FDIC cares about preserving the integrity of the banking system and
protecting the assets of Joe Voter's deposits. Protecting the healthier
community banks is not their first priority.
Meanwhile, back in Tax Appeal land, the assessor typically tosses out these
deeply discounted sales, like The Pig Farm, because they are "forced sales".
However, with the swirling mess encompassing Community Banks most are either
unwilling or unable to do new land loans, even though some projects make
sense. These "first loss participating agreements", aided by Magic Appraisal
Services, were large contributors to our current real estate economy by
creating the excess supply, often with questionable projects like The Pig
Farm. So when county assessors and fee appraisers take a 2006 land sale and
adjust downward for today-I don't buy it. Adjusting old sales from this era
ignores that fact the today's financial world has completely changed for
land development.
In 2006 Developer Dan approaches Elm Street Bank for a $2 million loan for a
subdivision. Its this great idea that had never been done before: the
subdivision has a central courtyard with pigs and a compost pile. He calls
it "The Pig Farm". Elm Street Bank has capital of $5 million so their
lending limit for any one loan is 20% of that, or $1 million. So the Elm
Street banker calls his buddies at The Neighborhood Bank and The Community
Bank and asked them to participate in the loan. After all, Developer Dan is
this great guy and land values never go down! So the Neighborhood Bank and
the Community Bank each chip in ½ million dollar loans for The Pig Farm with
this caveat: a "first out agreement". If the loan goes south and the land is
sold at a loss, these 2 participating banks get paid first, then Elm Street
Bank gets the rest.
Elm Street was so excited about The Pig Farm concept. When Developer Dan
bought 4 more parcels of land in different locations Elm Street Bank signed
on and went to various other community banks. During this time Minnesota led
the nation at new bank creation so there was no shortage of banks to
participate in The Pig Farm loans. And with the "first out agreements" these
loans were perceived as very low risk. And land values never went down.
How to appraise a concept that had never been done? Elm Street Bank just
called his buddy Mike at "Magic Appraisal Services", and, like Magic, the
appraisals supported the development loans.
Fast forward to 2009 and The Pig Farms, all 5 of them, were a tremendous
flop and Elm Street Bank foreclosed. FDIC comes in the middle of the night
and shuts down Elm Street Bank. Elm Street's loan portfolio was such a mess
that the FDIC had to pay SuperSaver Bank $15 million to buy Elm Street Bank
which included an escrow account to fund a "90% loss share agreement" on bad
loans.
So The Pig Farms were liquidated with a pig roast that just breaks my
vegetarian heart-those piggies are my favorite at The State Fair. So from a
$2 million loan, they were each liquidated at $800,000, or a loss of $1.2
million. Under the "first out agreement" SuperSaver, assuming Elm Street
Bank's position, would absorb the first million loss for a 100% loss and The
Community Bank and The Neighborhood Bank would each absorb $100,000 on their
$500,000 loans and receive $400,000 or 80% each, recognizing a 20% loss.
"Hold on", said the FDIC. When SuperSaver took over Elm Street Bank all
prior agreements for letters of credit and "first out agreements". The $1.2
million loan loss will be shared equally: $300,000 each to The Neighborhood
Bank and The Community Bank. SuperSaver's share of the loss is $600,000. But
as part of the deal to entice SuperSaver to buy Elm Street the FDIC will
participate 90% in the SuperSaver's share of this loss. So instead of
recognizing a $600,000 loss on each Pig Farm loan, SuperSaver's loss is only
$60,000. And since SuperSaver was paid $15 million to buy Elm Street Bank
they don't care about the $60,000 loss.
The FDIC cares about preserving the integrity of the banking system and
protecting the assets of Joe Voter's deposits. Protecting the healthier
community banks is not their first priority.
Meanwhile, back in Tax Appeal land, the assessor typically tosses out these
deeply discounted sales, like The Pig Farm, because they are "forced sales".
However, with the swirling mess encompassing Community Banks most are either
unwilling or unable to do new land loans, even though some projects make
sense. These "first loss participating agreements", aided by Magic Appraisal
Services, were large contributors to our current real estate economy by
creating the excess supply, often with questionable projects like The Pig
Farm. So when county assessors and fee appraisers take a 2006 land sale and
adjust downward for today-I don't buy it. Adjusting old sales from this era
ignores that fact the today's financial world has completely changed for
land development.
Tuesday, December 29, 2009
How to Be Happy in this Economy
December 28th, 2008
How to Be Happy in this Economy
Economics is the study of choice.
A Professor studied sets of 4 college students completing a group
assignment. In some groups he planted an actor with a negative attitude. The
assignment scores for the group with the actor were lower than the others,
proving that one bad apple can spoil the whole bunch. Do you have any bad
apples in your life? Choosing avoidance is not always practical. So how do
you insulate your self from a negative environment and choose to be happy?
Think of yourself in a boat and our current Minnesota real estate market is
a lake you need to cross. You are in this economy, and since its global,
choosing a different lake may not work this time. So you are on this lake,
but if the water (the bad apples of the world) comes into your boat, you
sink. How can you choose to be in the economy without letting it sink you?
The answer is in my new favorite opera, Thais by Massenet.
Thais is a high priced courtesan in Greece. This Christian Monk is convinced
Thais is the source of sin in the town and sets out to rescue her from her
lifestyle choices. The Monk gets a private audience with Thais and she tries
to seduce him (he is a very hunky monk). He runs out and says he'll meet her
in the morning. Thais, who is in high demand, rarely has time alone for
contemplation. So left alone, she realizes that once her beauty fades she
has nothing. So she agrees to burn her home and all her stuff and go with
the Hunky Monk. After an exhausting desert trek, he dumps her at the convent
and goes back to his monk buddies. After three months of praying, fasting
and whipping himself, he realizes he made a huge mistake. This total
contemplative life doesn't work: he is in love with Thais. So he goes back
to the convent to declare his love for her. Meanwhile, she has totally taken
to the nun thing. As the Hunky Monk declares his earthly love for Thais and
tries to persuade her to leave the convent with him, Thais sees a vision of
God in heaven and dies.
Great story-what does it have to do with Minnesota real estate? What I took
from this story is that you can't be at peace in extremes-being totally in
the world all the time, like Thais, or in alone in the desert all the time,
like the monk. To be happy you need both the world and contemplation.
The answer to making the right choices and thriving in our current economy
is found in the most famous music from Thais: a beautiful violin solo called
"Meditation".
Meditation teaches you how to be in the world without the world being in
you. How to avoid taking on water that sinks your ship.
The ultimate purpose of Meditation is to achieve bliss. But there are many
other benefits:
* Reduces your health care costs. Meditation has been proven to lower blood
pressure and improve digestion. And headaches melt away like ice cream in
July.
*Meditation helps to turn down your emotional reactions and increase your
powers of concentration and efficiency.
*Meditation helps see past the negative news and recognize the opportunities
in our economy.
*Meditation does not eliminate all of life's problem, but it allows us to
view them from a the right perspective, not get overwhelmed by them.
Even my cat meditates with me-and Brewster used to be an irritating hyper
kitty but now he's calm and happy. The simple method I study works with all
religions and you don't need to sit like a pretzel. But you do need a
teacher/coach. My teacher offers FREE meditation classes in Eagan,
Minneapolis and Maple Grove. Let me know if you want his contact info.
Economics is the study of choice. Meditation helps you make better choices.
Choose to be happy in 2009.
How to Be Happy in this Economy
Economics is the study of choice.
A Professor studied sets of 4 college students completing a group
assignment. In some groups he planted an actor with a negative attitude. The
assignment scores for the group with the actor were lower than the others,
proving that one bad apple can spoil the whole bunch. Do you have any bad
apples in your life? Choosing avoidance is not always practical. So how do
you insulate your self from a negative environment and choose to be happy?
Think of yourself in a boat and our current Minnesota real estate market is
a lake you need to cross. You are in this economy, and since its global,
choosing a different lake may not work this time. So you are on this lake,
but if the water (the bad apples of the world) comes into your boat, you
sink. How can you choose to be in the economy without letting it sink you?
The answer is in my new favorite opera, Thais by Massenet.
Thais is a high priced courtesan in Greece. This Christian Monk is convinced
Thais is the source of sin in the town and sets out to rescue her from her
lifestyle choices. The Monk gets a private audience with Thais and she tries
to seduce him (he is a very hunky monk). He runs out and says he'll meet her
in the morning. Thais, who is in high demand, rarely has time alone for
contemplation. So left alone, she realizes that once her beauty fades she
has nothing. So she agrees to burn her home and all her stuff and go with
the Hunky Monk. After an exhausting desert trek, he dumps her at the convent
and goes back to his monk buddies. After three months of praying, fasting
and whipping himself, he realizes he made a huge mistake. This total
contemplative life doesn't work: he is in love with Thais. So he goes back
to the convent to declare his love for her. Meanwhile, she has totally taken
to the nun thing. As the Hunky Monk declares his earthly love for Thais and
tries to persuade her to leave the convent with him, Thais sees a vision of
God in heaven and dies.
Great story-what does it have to do with Minnesota real estate? What I took
from this story is that you can't be at peace in extremes-being totally in
the world all the time, like Thais, or in alone in the desert all the time,
like the monk. To be happy you need both the world and contemplation.
The answer to making the right choices and thriving in our current economy
is found in the most famous music from Thais: a beautiful violin solo called
"Meditation".
Meditation teaches you how to be in the world without the world being in
you. How to avoid taking on water that sinks your ship.
The ultimate purpose of Meditation is to achieve bliss. But there are many
other benefits:
* Reduces your health care costs. Meditation has been proven to lower blood
pressure and improve digestion. And headaches melt away like ice cream in
July.
*Meditation helps to turn down your emotional reactions and increase your
powers of concentration and efficiency.
*Meditation helps see past the negative news and recognize the opportunities
in our economy.
*Meditation does not eliminate all of life's problem, but it allows us to
view them from a the right perspective, not get overwhelmed by them.
Even my cat meditates with me-and Brewster used to be an irritating hyper
kitty but now he's calm and happy. The simple method I study works with all
religions and you don't need to sit like a pretzel. But you do need a
teacher/coach. My teacher offers FREE meditation classes in Eagan,
Minneapolis and Maple Grove. Let me know if you want his contact info.
Economics is the study of choice. Meditation helps you make better choices.
Choose to be happy in 2009.
New I-94 Interchange NOT a "Stones Throw" away
November 5th, 2007
New I-94 Interchange NOT a "Stones Throw" away
You may recall in February that Beard Group, who are proposing "Stone's
Throw", a 634 acre mixed use development in Hassan Township, led the way to
lobby for a new TIF district and interchange at I-94 and Brockton Lane
between Maple Grove and Rogers. While the State Legislature turned it down,
the Cities of Dayton and Rogers, Hassan Township and The Beard Group funded
a transportation study for the interchange.
The study was not all favorable to the new interchange, as it found a new
ramp would likely INCREASE traffic on I-94 with more short local trips.
Back in February the Beard Group said they have secured $2 million in
funding for the intersection IF a new Tax Increment Financing (TIF) district
is approved by the Minnesota Legislature
Eight months later, when asked to put even more money towards moving forward
with the interchange, the Beard Group representative said "To be honest with
you, as the developer we put $350,000 into this so far. Our lenders cut off
our spending of any kind of studies but transportation. We're in bad shape
here. The reality is we're in a situation where we may not be able to go
forward with this project. We've been working on this for two years. We
can't get our plat approved or assurance to actually do all the
abstractions."
The Stones Throw project has never made sense to me. It was been advertised
and promoted like the plat was a done deal, including a series of articles
by the developer in Real Estate Journal with the theme "this is the right
way to get a major development approved." 183 acres are being promoted by
their commercial real estate broker as Commercial land, like someone would
built a "HassonDale" at that location. Even IF they were successful at
getting the new interchange built, what realtors would build stores in
"HassonDale" that aren't already in nearby Maple Grove, including the newest
shopping center by the new Hospital, less than 2 miles from Stones Throw. To
the west of the site new strip centers sit vacant in Rogers for small
stores, and for Big Boxes Rogers already has Target, Kohls, Cub, Best Buy
and Cabelas.
What about residential? The idea of Stones Throw calls for 1,361 units of
life cycle housing, consisting of starter homes to high end custom homes. As
far as schools, Stones Throw is just a couple miles from both Maple Grove
and Rogers High School. Problem is, most of Stones Throw is in the Buffalo
School District. While Buffalo schools are well regarded, its a long drive
for Johnny's hockey practice-about 1/2 hour each way. However, at the right
price housing could work there. Not Maple Grove prices, St. Michael/Otsego
prices.
When the Beard Group said " we're in bad shape here" he was probably
thinking of his debt service. Because they have already closed on 365 acres
of the land to the tune of $31 million dollars. At the aggregate number of
$85,000 an acre for a corn field that seems high but not stupid high-even
the site had an approved plat. And some of it was commercial in the comp
plan, but its all Residential. But you need to look beyond the aggregate
numbers to each of the 4 parcel purchases.
Parcel #1 as 21.07 acres closed in July 2006 for $1,700,000 or $80,600/acre.
This is in the Hassan Comp plan as residential, 2001-2005 sewer phasing. A
nearby parcel sold for around $75,000 an acre in 2006 that has been platted
and has houses on it now.
Parcel #2 is 253 acres in the 2016-2020 phasing plan for $16 million or
$64,000/acre closed in April of 2006.
Parcel #3 is 38 acres in th e 2001-2005 phasing plan that sold for $5
million in April of 2006.
Parcel #4 closed in April of 2006 was nearly $8 million for 52 acres for
$153,144. Here's where it really gets stupid. No frontage on I-94,
residential land use-and most of this phasing plan 2016-2020! Without an
approved plat I would need to appraise this AS IS. And the highest
comparable sale I'm aware of in the area is 35 acres purchased in 2005 in
St. Michael for $38,000/acre that is 2012+ in the phasing plan. I don't
understand how this land appraised!
New I-94 Interchange NOT a "Stones Throw" away
You may recall in February that Beard Group, who are proposing "Stone's
Throw", a 634 acre mixed use development in Hassan Township, led the way to
lobby for a new TIF district and interchange at I-94 and Brockton Lane
between Maple Grove and Rogers. While the State Legislature turned it down,
the Cities of Dayton and Rogers, Hassan Township and The Beard Group funded
a transportation study for the interchange.
The study was not all favorable to the new interchange, as it found a new
ramp would likely INCREASE traffic on I-94 with more short local trips.
Back in February the Beard Group said they have secured $2 million in
funding for the intersection IF a new Tax Increment Financing (TIF) district
is approved by the Minnesota Legislature
Eight months later, when asked to put even more money towards moving forward
with the interchange, the Beard Group representative said "To be honest with
you, as the developer we put $350,000 into this so far. Our lenders cut off
our spending of any kind of studies but transportation. We're in bad shape
here. The reality is we're in a situation where we may not be able to go
forward with this project. We've been working on this for two years. We
can't get our plat approved or assurance to actually do all the
abstractions."
The Stones Throw project has never made sense to me. It was been advertised
and promoted like the plat was a done deal, including a series of articles
by the developer in Real Estate Journal with the theme "this is the right
way to get a major development approved." 183 acres are being promoted by
their commercial real estate broker as Commercial land, like someone would
built a "HassonDale" at that location. Even IF they were successful at
getting the new interchange built, what realtors would build stores in
"HassonDale" that aren't already in nearby Maple Grove, including the newest
shopping center by the new Hospital, less than 2 miles from Stones Throw. To
the west of the site new strip centers sit vacant in Rogers for small
stores, and for Big Boxes Rogers already has Target, Kohls, Cub, Best Buy
and Cabelas.
What about residential? The idea of Stones Throw calls for 1,361 units of
life cycle housing, consisting of starter homes to high end custom homes. As
far as schools, Stones Throw is just a couple miles from both Maple Grove
and Rogers High School. Problem is, most of Stones Throw is in the Buffalo
School District. While Buffalo schools are well regarded, its a long drive
for Johnny's hockey practice-about 1/2 hour each way. However, at the right
price housing could work there. Not Maple Grove prices, St. Michael/Otsego
prices.
When the Beard Group said " we're in bad shape here" he was probably
thinking of his debt service. Because they have already closed on 365 acres
of the land to the tune of $31 million dollars. At the aggregate number of
$85,000 an acre for a corn field that seems high but not stupid high-even
the site had an approved plat. And some of it was commercial in the comp
plan, but its all Residential. But you need to look beyond the aggregate
numbers to each of the 4 parcel purchases.
Parcel #1 as 21.07 acres closed in July 2006 for $1,700,000 or $80,600/acre.
This is in the Hassan Comp plan as residential, 2001-2005 sewer phasing. A
nearby parcel sold for around $75,000 an acre in 2006 that has been platted
and has houses on it now.
Parcel #2 is 253 acres in the 2016-2020 phasing plan for $16 million or
$64,000/acre closed in April of 2006.
Parcel #3 is 38 acres in th e 2001-2005 phasing plan that sold for $5
million in April of 2006.
Parcel #4 closed in April of 2006 was nearly $8 million for 52 acres for
$153,144. Here's where it really gets stupid. No frontage on I-94,
residential land use-and most of this phasing plan 2016-2020! Without an
approved plat I would need to appraise this AS IS. And the highest
comparable sale I'm aware of in the area is 35 acres purchased in 2005 in
St. Michael for $38,000/acre that is 2012+ in the phasing plan. I don't
understand how this land appraised!
Opposing Forces in Water Quality
October 25th, 2007
Opposing Forces in Water Quality
Water Quality is one of the most complex issues facing not only developers
but our society as a whole. Some examples:
1) Farmers versus Developers
While many farming practices are a known source of water pollution the
strong farming lobbies have resulted in little regulation on farmers so more
is put on developers.
2) The Minnesota Pollution Control Agency (MPCA) versus the Minnesota DNR
Shallow water lakes, defined as 15' deep or less, have a lower standard to
meet for water clarity than deeper water lakes, as defined by the MPCA.
However, the DNR imposes much stricter development standards on
Environmental Lakes, which tend to be shallow water, versus recreational
lakes, which tend to be deeper water. Yet both agencies must be satisfied.
3) Biological Functions versus Recreation. Clarity in Shallow water is
unhealthy for the lakes. While many homeowners on Shallow water lakes seek
clairity, fish and motor boats, these are unhealthy and unnatural for
shallow lakes. A weed kill, much like natural forest fires, are essential
for the health of shallow lakes, fish don't thrive well, and motor boats
stir up the weeds that are needed to keep the lake functioning properly in
the whole system.
4) Flood Control versus Clean Water. Shingle Creek, for example, was
designed 100 years ago for flood control and functions well in that role, as
do ditches for agriculture to move water away and prevent flooding. Now the
MPCA is proposing standards to make Shingle Creek las clear as an
undisturbed stream in northern Minnesota. How would this impact its role in
flood control?
5) Aesthetics versus Function. In constructed storm water ponds many
neighbors want fountains. Yet fountains disturb the sentiment that the ponds
are designed to settle.
6) Snow Removal versus Healthy Waters. It was common practice to put a
sand/salt mix on the roads in winter weather. Then it was determined that
the sand clogged the stormwater ponds when it washed off the roads. But then
the salt rusted the cars. So phosphorus, which has been banned from
fertilizer (though its still legal to buy it-you just can't use it on your
lawn) was added to the salt which works its way into the lakes anyway.
7) Cost versus Benefit. The estimated cost to clean up just the lakes in the
Shingle Creek Water Shed is $40 to $50 million dollars. With all of the
other needs, such as transportation and education, is the benefit worth the
costs? Should all water be treated equally in clean up efforts?
Confused? Join the crowd.
Opposing Forces in Water Quality
Water Quality is one of the most complex issues facing not only developers
but our society as a whole. Some examples:
1) Farmers versus Developers
While many farming practices are a known source of water pollution the
strong farming lobbies have resulted in little regulation on farmers so more
is put on developers.
2) The Minnesota Pollution Control Agency (MPCA) versus the Minnesota DNR
Shallow water lakes, defined as 15' deep or less, have a lower standard to
meet for water clarity than deeper water lakes, as defined by the MPCA.
However, the DNR imposes much stricter development standards on
Environmental Lakes, which tend to be shallow water, versus recreational
lakes, which tend to be deeper water. Yet both agencies must be satisfied.
3) Biological Functions versus Recreation. Clarity in Shallow water is
unhealthy for the lakes. While many homeowners on Shallow water lakes seek
clairity, fish and motor boats, these are unhealthy and unnatural for
shallow lakes. A weed kill, much like natural forest fires, are essential
for the health of shallow lakes, fish don't thrive well, and motor boats
stir up the weeds that are needed to keep the lake functioning properly in
the whole system.
4) Flood Control versus Clean Water. Shingle Creek, for example, was
designed 100 years ago for flood control and functions well in that role, as
do ditches for agriculture to move water away and prevent flooding. Now the
MPCA is proposing standards to make Shingle Creek las clear as an
undisturbed stream in northern Minnesota. How would this impact its role in
flood control?
5) Aesthetics versus Function. In constructed storm water ponds many
neighbors want fountains. Yet fountains disturb the sentiment that the ponds
are designed to settle.
6) Snow Removal versus Healthy Waters. It was common practice to put a
sand/salt mix on the roads in winter weather. Then it was determined that
the sand clogged the stormwater ponds when it washed off the roads. But then
the salt rusted the cars. So phosphorus, which has been banned from
fertilizer (though its still legal to buy it-you just can't use it on your
lawn) was added to the salt which works its way into the lakes anyway.
7) Cost versus Benefit. The estimated cost to clean up just the lakes in the
Shingle Creek Water Shed is $40 to $50 million dollars. With all of the
other needs, such as transportation and education, is the benefit worth the
costs? Should all water be treated equally in clean up efforts?
Confused? Join the crowd.
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