HomeMy WebLinkAbout20230391 177 S Broadway Stewarts Demo & Construction Submission Letter 2024 10 17
September 27, 2024
Tamie Ehinger, Chair
Design Review Board
City of Saratoga Springs
474 Broadway
Saratoga Springs, NY 12866
Re: 28 Lincoln Avenue, Demolition Review
Chairperson Ehinger and Members of the Design Review Board:
For the last thirty nine years, I have owned and operated The Appraisal Company in Saratoga Springs,
New York, providing real estate valuation services to purchasers and lenders. I have provided appraisals
of a variety of real estate, including single family residential, multi-family residential, commercial, mixed-
use, industrial and vacant lands. Our appraisal often assists lenders in determining the fair market value
of a property upon which to base their lending decisions, as well as real estate investors/purchasers, on
an income-based approach. The income-based approach is the industry-standard method of
determining the fair market value of a property based upon its net operating income (NOI) and whether
the NOI demonstrates a reasonable risk for an investor or a lender advancing the funds for purchase.
It is my understanding that Tom Roohan of Roohan Realty recently provided a letter in connection with
Stewart’s application for demolition of 28 Lincoln Avenue (the “Property”) which determined that
average sale of real estate in Saratoga Springs for income producing property is 10.5x the gross rent
which would result in a purchase price of $567,000. With the income produced on the property and a
purchase price of $567,000, the NOI referred to in the Stewart’s supplement submission is $6,610 which
represents, in my experience, an undesirable rental property investment because the exposure for
vacancy loss each year reduces the NOI to an estimated 1.2%.
Additionally, the real estate value would necessarily be further depressed due to its existing non-
conforming status in both use and area. Any desire to redevelop the property other than for its existing
use on the existing foundation would require variance applications from the City Zoning Board of
Appeals, for which I served as Chair for over ten years. The non-conformance is exacerbated in this
circumstance due to the lack of on-site parking for the residential units and the inability to cure that
condition. Properties designated as having historic or architectural significance must be marketed with
that disclosure to potential buyers, as well as the inability to bring the property into conformance with
on-site parking due to its designation. The designation has historically added significant time to the
market compared to non-designated parcels. Examples include 38 Beekman Street in the historic
district, designated on July 19, 2023, which has been on the market for 115 days at $400,000 and 75+
days on the market at a reducing list price of $375,000.
A review of recent similarly situated multi-family transactions in the City of Saratoga Springs, including
on-site parking, has an average purchase price of $700,000. When set against the current valuation of
$567,000 for the Property, it is self-evident that the Property is already falling below the highest best
use valuation within this market.
Furthermore, 65 Phila Street, also located in the historic district, received private loans and public
funding, and it did not incur carry cost expenses such as taxes during the pendency of its renovation. It is
hard to imagine that without these significant benefits, which are not common in the real estate
investment marketplace, 65 Phila Street would not be considered below the market in Saratoga Springs
from a valuation perspective based on the income approach.
In my professional opinion with more than 39 years of real estate valuation in the City of Saratoga
Springs, there is a high degree of likelihood that the Property would remain on the market for an
extended period of time at a value below the current market rate for similarly situated properties as a
result of (1) the determination of significance and all the implications it carries under the UDO; (2) the
non-compliance both in use and area under the UDO; (3) the lack of any private funding, grant subsidies,
or exemptions from real estate carry costs; and (4) the unavailability of state or federal historic tax
credits due to the Property’s lack of qualification as eligible under the government programs to support
historic preservation.
________________________________
William A. Moore
NY State Certified General Appraiser