Sanitary Easement might change my highest and best use for MF

[Nick Elliott]

Good morning,

Im in norther CA and the local sanitary district is requesting an easement along the backside of the property. The property currently has a fourplex on site but is allowed another unit and very close to being allowed  another equaling two additional units. Im currently waiting for a response from the building department to confirm how many units we are allowed (of course im pushing for two) and what needs to happen to develop these.

-If this easement ends up not allowing for additional units to be built, how would I value that damage? 

- do steps to develop need to be taken in order for this loss to be recognized? aka show that we have intentions in building.

- Also, this area is pretty rural so there isnt many comps for multifamily besides a handful of duplexes sold throughout the county in the last year...... two duplexes are listed close buy but have been on the market for an extended period of time. so how should I comp this?

Thank you!

Nick

[Jamie Hora]

The most literal way to value the damage would be to identify the value of the lot per SF, then take the total SF of the sanitary sewer easement, and determine how much that portion of the land is worth. 

However, if you look at alternative ways to develop, that might not be the most practical.  For example, you can still utilize that area as open space/landscaping, just cannot have a permanent structure on it.  So perhaps it doesnt decrease any value of the land.