Vail Daily editorial: ‘Psst Avon, we’ve got a bridge to sell you’
Let’s tackle an arcane topic. Let’s talk property appraisals.
The town of Avon and the owners of the Skier Building, which the town intends to purchase, each had appraisals done on the building.
The town’s appraiser did a pretty thorough job, looking at the building in all three means of determining its value on the market.
Here in summary is how it works, according to the website Mortgage 101:
1. The cost approach. “Estimate what it would cost to replace or reproduce the improvements as of the date of the appraisal, less the physical deterioration, the functional obsolescence and the economic obsolescence. The remainder is added to the land value.”
2. The comparison approach. Compare “benchmark properties of similar size quality and location that have been recently sold” to the subject property.
3. The income approach, for commercial properties. “This approach provides an objective estimate of what a prudent investor would pay based upon the net income the property produces.”
4. “Then, after thorough analysis of all general and specific data gathered from the market, a final estimate or opinion of value is correlated.”
The building’s owners, not surprisingly, used only the one method most advantageous to their position as sellers, the “replacement cost.” They loaded in such extras as a $75,000 statue, architectural fees and their profit in a sale. Really, it was little more than a statement of worth to them rather than a true appraisal. The document was a “limited appraisal report.” Think “cheese food” or “cherry flavoring.”
Why would they do this? Well, to drive up the perception of value as much as possible as a negotiation tactic. Of course.
Never mind that the building has sat empty for 11 years because it never could sell, and no one other than the town is looking to buy it now.
The mayor hails the owner’s appraisal as independent, implying that it must also have been objective and comprehensive for the town to take it so seriously.
Let’s be kind here. That’s not what professionals in the business of appraisals or evaluating appraisals say.
Even lay people can recognize this for what it really is — part of the dance to get the best price possible if the buyers fall for it.
They did. They’ll overspend for the property by at least a million dollars and pay what the lone objective appraisal found to be worth $3.2 million if the building’s underground parking were included. It’s not.
Appraisals aside, how much is a building without parking worth on the market, really?
The town alone can break its own rules and use town property next door to the Skier Building for parking, then wave a wand and declare that they have enough in the area required for the building. They wouldn’t do that for another buyer of the property.
They’ll also break their own rules requiring the ground floor to be all retail. A government-owned building can set aside only 10 percent for such private use.
So the building would not really be used for what the town has long intended, would it?
On the selling price alone, Avon’s voters should just say no in the mail-in referendum, which ends Jan. 20.
And the new council needs to remove its blinders so that the town can properly think this through, while truly engaging the public. It’s not too late, but they’ll need to let go of a certain amount of ego and buyer’s fever before that becomes remorse for everyone.
Stewardship, after all, takes in a bit more than blithe comments about not needing to raise taxes. The council has a genuine obligation to be smart with the public’s dollars it does spend.