After considering how much Independence Township’s new hall is worth, township officials still say they got a good deal.
A building appraisal reported a cost of about $4 million to construct the hall. A market-value appraisal, which would have indicated a much lower value in today’s market, was not necessary, said township Supervisor Dave Wagner.
“We’re not leasing it out, we’re purchasing it. It’s an entire different situation,? he said. ‘As far as the board’s concern that ($4 million) is the price it would cost us to duplicate that building and we’re only paying $2.7 million ? we have been very responsible on how we have spent the taxpayer’s money.?
Commercial property is usually appraised based on revenue stream, while residents are appraised based on market value, what houses in the neighborhood are selling for, said Henry Hogan, licensed realtor with Max Broock.
‘If you’re talking about a commercial building and the owner is occupying it then you would use the market value,? said Hogan. “You would use comps, other buildings like that that are owned as compared to a lease situation.?
Trustee Dan Kelly said one of the things people need to understand is the building was never ‘on the market,? to be sold.
‘What I hear out in the community and the comments are, ‘well, this building would be worth a lot less on the market.? Maybe it would have and I don’t know that, but that’s not the point,? he said. ‘The only other way we’re going to get a building where we want it and the size we want it is to build it ourselves.?
Kelly also explained the township wanted a building to be in the ‘township square,? between I-75 and Maybee Road, on the Sashabaw Corridor. A market analysis would be unfair because they can’t go to Pontiac or Waterford to buy a building, they must stay within the township.
‘I’m not saying that the replacement appraisal is the perfect appraisal, but I don’t think that a market appraisal is the perfect appraisal either because it will take into consideration a whole lot of properties in a general area, none of which we’re eligible to buy,? he said. ‘No matter what appraisal you choose, it’s not going to be perfect.?
Kelly noted he would have done a market appraisal as well and had both available to the board.
Trustee-elect David Lohmeier said a better question would have been to ask the appraiser what the best type of study to do would have been. He said he would have liked to see the three most common appraisal types done, including replacement, income approach, and market value approach.
All the information should have been presented by the appraiser to the board, he said.
‘The purpose of due diligence is to make sure you thoroughly understand and are making an informed decision. The tool that is stated in the purchase agreement is they have the right to have an appraisal,? said Lohmeier.
‘I think it was appropriate that they have an appraisal done. What they requested from the appraiser was very narrow and I don’t think it was comprehensive enough to make a reasonable decision based upon what you got. I think limiting it to just the cost analysis narrowed the scope of the study way too much.?