WEB appraisal is up but market trends may lower price
Lake Oswego's West End Building is worth more than the city paid for it two years ago, according to a recent appraisal.
The $21.32 million appraisal is $1.32 million higher than the price the city paid for the building at 4101 Kruse Way in July 2006. Mueller and Company, Inc. which appraised the property, estimated that rezoning it could net taxpayers an additional $300,000.
But officials are being cautious about the numbers, according to Brant Williams, director of capital projects for the city.
Williams said the appraisal is based partly on sales of comparable properties over the last year and a half - sales that don't reflect the economic downturn seen in recent weeks.
A separate opinion about the worth of the West End Building has been sought from a real estate expert, Williams said. That opinion will weigh economic factors and price corrections in the real estate market into an estimate of the building's value.
When members of the Lake Oswego City Council reviews both figures next month, they will do so as part of a first look at the ongoing data effort surrounding the West End Building since summer.
The city council approved the study process in July, which began with an assessment of city facilities and includes a probe of public opinion and finances. The next city council - four of seven current councilors will end their terms at the end of the year - is expected to use a related report to resolve the building's fate in January.
The latest appraisal of the West End Building underscores how shifts in economic conditions may further complicate the decision.
Though the value of the property has increased over two years, its true worth in a sale will depend on an unpredictable real estate market.
The rise in the value of the West End Building stems from an increase in the amount of land surrounding the building.
Two separate appraisals accounted for between 76,692 and 102,256 square feet of land surrounding the building in 2006. The appraisals were made by two different companies, one hired by Safeco Insurance and the other by the city of Lake Oswego during negotiations on the sale.
The recent appraisal by Mueller and Company found, however, that the West End Building is surrounded by more land than previously thought: 170,775 square feet.
That finding relies on input from city planners, who say previous land measurements omitted wetlands, streams and trees that should have been included.
Mueller and Company agreed, estimating the value of land surrounding the West End Building at $5.12 million. Previous estimates valued the same land at $1.84 million to $2.455 million.
The recent appraisal suggested an architect or civil engineer look more closely at whether the non-contiguous land is truly developable. Their own analysis found that the land can be built on.
The value gained through the added land was tempered by a $2 million deduction for needed maintenance and repair of the building.
An analysis performed by SERA Architects Sept. 12 indicated a need to upgrade safety and accessibility features in the West End Building. There is also exterior water damage to repair and carpet, window insulation, skylights, air system components and acoustic tile need replacing. Some resurfacing of the building's skybridge may also be required, along with asbestos abatement.
In spite of the overall increase in the building's worth, Williams said its sale price, if sold, will hinge on market forces.
Though Mueller and Company looked at the building's value both as a sale property and as a rental property, 'Neither was reflective of how the market has changed in the last few weeks,' said Williams.
Since no comparable properties have sold recently, the appraisal instead noted that the building should spend more than the typical six months on the market. As much as 18 months was suggested.
Williams said the appraisal 'needs to be put in the context of the additional information we're going to receive from our real estate advisor and what kind of timeframe the city is interested in moving on some of the options that are currently available.'
The Lake Oswego City Council meets Nov. 17 at 4 p.m. at the Main Fire Station (Third Street and B Avenue) to discuss the options.
Two open houses are scheduled Nov. 12 from 4:30 p.m. to 7 p.m. and Nov. 20 from 5:30 p.m. to 8 p.m., both at the West End Building. Lake Oswego residents can learn more there.