14-Parcel Grp 4 Appraisal.pdf

APPRAISAL REPORT OF

A 2.39 USABLE ACRE

MULTI-FAMILY SITE

LOCATED AT

THE SOUTHWEST CORNER OF

NORTH 22nd STREET & EAST 140th AVENUE

TAMPA, HILLSBOROUGH COUNTY, FLORIDA 33613

Order #: 224209683

Project No. 2024-090-M

Job No.: 24-0165

Prepared for:

Mr. John Muller Director

Hillsborough County Facilities Management & Real Estate Services

P.O Box 1110 Tampa, Florida 33602

Requested By:

Mr. John Menard, MAI Real Estate Appraiser

Prepared by:

Ron Sparks, MAI, MBA, MRICS President

Justin Rote Director

Vantix Realty 5550 West Executive Drive

Suite 300 Tampa, Florida 33609

Appraisal/Valuation | Property Tax Advisory | Distressed Property | Expert Witness | Receivership

Tampa | Orlando | Ft. Myers

June 19, 2024

Prepared for:

Mr. John Muller Director Hillsborough County Facilities Management & Real Estate Services P.O Box 1110 Tampa, Florida 33602

Requested By:

Mr. John Menard, MAI Real Estate Appraiser

Re: A 2.39 usable acre multi-family site and is located at the southwest corner of North 22nd Street & East 140th Avenue, Tampa, Hillsborough County, Florida 33613

Dear Mr. Menard:

At your request, we have developed an appraisal of the above-referenced subject property and prepared the following appraisal report. We inspected the subject and its environs on June 6, 2024.

The purpose of this appraisal is to provide a current opinion of market value of market value of the fee simple interest in the subject. The intended use of this appraisal is to assist in the possible offing of the property to developers for affordable housing. This report is not intended for any other use. The intended users of this report are representatives of Hillsborough County. Use of this report by others is not intended.

The scope of work included the market research and analyses necessary to reach a final value estimate using the sales comparison approach to value. Market value, fee simple interest, functional utility, and other real estate terms are defined within the following appraisal report.

This appraisal was developed and is reported in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation and the Code of Professional Ethics, the Supplemental Standards of Professional Appraisal Practice of the Appraisal Institute, and client appraisal requirements. This appraisal report is qualified by the General Assumptions, the General Limiting Conditions, and the Special Assumptions included in the addenda of this report.

Mr. Menard

June 19, 2024 Page 2

Thank you for engaging us to complete this assignment. If you have any questions concerning the following appraisal report, or if we can be of any further assistance to you, please feel free to contact us at any time.

Respectfully submitted, VANTIX REALTY - VALUATION AND ADVISORY SERVICES

Ron Sparks, MAI, MBA, MRICS Justin Rote President Director State-Certified General Real Estate Appraiser RZ2286

State-Certified General Real Estate Appraiser RZ3628

Phone: 813.425.1391 Phone: 813.425.1388 Email: ron.sparks@vantix-realty.com Email: justin.rote@vantix-realty.com

Vantix Realty

CERTIFICATION OF VALUE

We certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions as well as the Extraordinary Assumptions, and are our personal, unbiased professional analyses, opinions, and conclusions.

3. We have no present or prospective interest in the property that is the subject of this report, and we have no personal interest or bias with respect to the parties involved.

4. We have performed services, as an appraiser but in no other capacity, regarding the property that is the subject of this report within the past three-year period immediately preceding acceptance of this assignment.

5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

9. Ron Sparks, MAI, MRICS and Justin Rote made a personal inspection of the property that is the subject of this report.

10. No one provided significant real property appraisal assistance to the person signing this certification, except where noted in this report.

11. The reported analyses, opinions and conclusions were developed, and this report has been prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

13. As of the date of this report, Ron Sparks, MAI has completed the requirements of the continuing education program of the Appraisal Institute.

Based upon our inspection of the subject property and its environs together with our market research, analyses, and professional judgment we conclude that the “As-Is” market value of the fee simple interest in the subject under prevailing market conditions, June 6, 2024, is:

ONE MILLION THIRTY THOUSAND DOLLARS

($1,030,000)

Ron Sparks, MAI, MBA, MRICS President State-Certified General Real Estate Appraiser RZ2286

Justin Rote

Director

State-Certified General Real Estate Appraiser RZ3628

110 TABLE OF CONTENTS

CERTIFICATION OF VALUE

115 GENERAL ASSUMPTIONS AND SPECIAL CONDITIONS

120 SUMMARY OF SALIENT FACTS AND CONCLUSIONS

130 TYPE OF APPRAISAL AND REPORT FORMAT

140 APPRAISAL PURPOSE, INTENDED USE, AND INTENDED USER OF THE APPRAISAL

150 DEFINITION OF MARKET VALUE AND OTHER TERMS

160 PROPERTY RIGHTS (INTEREST) APPRAISED

175 SCOPE OF APPRAISAL ANALYSIS

180 APPRAISAL PROBLEM

200 IDENTIFICATION OF PROPERTY AND LEGAL DESCRIPTION

220 DESCRIPTION OF AREA AND NEIGHBORHOOD

230 DESCRIPTION OF THE PROPERTY

240 ZONING, LAND USE, CONCURRENCY

250 ASSESSED VALUE AND TAXES

260 HISTORY OF THE PROPERTY (LAST 5 YEARS)

270 EXPOSURE TIME ANALYSIS

280 PUBLIC AND PRIVATE RESTRICTIONS

300 HIGHEST AND BEST USE ANALYSIS

305 APPROACHES TO VALUE USED AND EXCLUDED

310 LAND VALUATION

335 SALES COMPARISON APPROACH

340 COLLECTION OF COMPARABLE SALES

345 COMPARABLE LAND SALES ADJUSTMENT GRID

350 ANALYSIS OF COMPARABLE LAND SALES AND EXPLANATION OF ADJUSTMENTS

355 INDICATED VALUE BY THE SALES COMPARISON APPROACH

360 INCOME APPROACH

390 RECONCILIATION OF VALUE INDICATIONS AND FINAL VALUE ESTIMATE

ADDENDUM

• LENGTHY LEGAL DESCRIPTION

• COMPARABLE LAND SALES MAP & WRITE-UPS

• COMPARABLE IMPROVED SALES MAP & WRITE-UPS – NOT APPLICABLE TO THIS

ASSIGNMENT

• COMPARABLE RENTALS MAP & WRITE-UPS – NOT APPLICABLE TO THIS ASSIGNMENT

• CONTRACTOR’S OR SPECIALIST ESTIMATE – NOT APPLICABLE TO THIS ASSIGNMENT

• ENGINEERING/LAND PLANNING ANALYSIS – NOT APPLICABLE TO THIS ASSIGNMENT

• PROPERTY CARD/COPY OF LAST INSTRUMENT OF CONVEYANCE

• PROPERTY OWNER CONTACT LETTER - NOT APPLICABLE TO THIS ASSIGNMENT

• APPRAISER QUALIFICATIONS

115 GENERAL ASSUMPTIONS AND SPECIAL CONDITIONS

1. The legal descriptions used in this report are assumed to be correct.

2. Sketches of the property contained in this report were created to assist the reader in visualizing the property and were based on the Hillsborough County Property Appraiser Records.

3. No responsibility is assumed for matters of a legal nature affecting title to the property nor is an opinion of title hereby rendered. The subject's title is assumed to be good and merchantable, unless otherwise stated herein.

4. Information furnished by others is assumed to be true, correct and reliable. A reasonable effort has been made to verify such information; however, the appraiser assumes no responsibility for its accuracy.

5. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless so specified within the report. The property is appraised as though under responsible ownership and competent management.

6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that would render it more or less valuable. No responsibility is assumed for such conditions or for engineering services that may be required to discover them.

7. It is assumed that there is no encroachment or trespass unless noted within the report.

8. The appraiser will not be required to give testimony or appear in court because of having made this appraisal, with reference to the subject property, unless arrangements have been previously made therefore.

9. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to who it is addressed without the written consent of the appraiser, and in any event only with properly written qualification, or as specifically amended by contract. This report is intended to be used in its entirety.

10. The distribution of the total valuation in this report between land and improvements (if applicable) applies only under the reported highest and best use of the property.

11. No environmental analysis was performed in conjunction with this appraisal assignment.

Although no environmental contamination was apparent to us, we are not experts in this field.

The client is encouraged to retain the services of a qualified environmental analyst if this issue is of concern. The appraiser hereby reserves the right to alter, amend, revise or rescind any of the value opinions herein based upon any additional environmental impact studies, research or investigations that may be performed.

12. Acceptance of and/or use of this appraisal report constitutes acknowledgement by the client of all General Assumptions and Special Conditions contained herein.

13. Payment for the preparation of this appraisal report is based on all charges due the appraiser in connection therewith, and, in no way is contingent upon the value conclusions herein.

14. This appraisal is made subject to any additional restrictions, ordinances or protective covenants which the appraiser, after due diligence and normal, standard research, may not be aware of, which would affect the subject property. Furthermore, the appraisal is subject to any and all easements, setbacks, flood elevations or restrictions, if any, that have been or might be imposed by any local, state or federal agency, and which may not be of record.

15. This report is based on information obtained from several sources including the current owner of the property, local real estate brokers, Hillsborough County planning and zoning personnel, as well as others as noted within the text of this appraisal. Such information is assumed to be reliable and accurate, but we do not warrant such beyond our reasonable attempt to verify said data.

16. This report is written in conformance with reporting requirements for an Appraisal Report, according to Uniform Standards of Professional Appraisal Practice (USPAP) and the Florida Department of Transportation's Supplement Standards.

Extraordinary Assumption(s)

Within this report, we have relied upon a land planning report prepared by an independent land planner, Susan Swift with Boggs Engineering, LLC, for information regarding site utility and assistance in developing a highest and best use analysis for the subject property. This report was prepared during the course of a previous May 2022 appraisal of the subject (which included two additional parcels). We assume the information in this report is accurate. This assumption impacts our assignment results.

We have relied upon the land planning report provided by Susan Swift with Boggs Engineering, LLC for our site size estimates (during a previous 2022 appraisal of the subject). We have utilized the size estimates (and rounding) and density allowances stated directly in this land planning report. We assume this information to be true and correct as its use might have affected the assignment results. Should subsequent information be provided to us that substantially deviates from these estimates, we reserve the right to review our analysis and conclusions. This assumption impacts our assignment results.

Hypothetical Condition(s)

None

120 SUMMARY OF SALIENT FACTS AND CONCLUSIONS

Property Type: Vacant Multi-Family Land

Owner Name: Hillsborough County

Location: Southwest corner of North 22nd Street & East

140th Avenue, Tampa, Hillsborough County, Florida 33613

Extent of Inspection: The extent of our inspection entailed walking the site and making visual observations.

Property Rights Appraised: Fee Simple

Site Data:

Size: 2.39± acres Frontage/Access: North 22nd Street East 140th Avenue North 21st Street Topography: Level and below road grade Utilities: All reported to be available Zoning: UCA-MS (University Community Area – Main

Street) Land Use: R-20 (Residential-20)

Occupancy: Vacant Land

Highest & Best Use:

Of Land as though Vacant: Multi-Family Oriented Use.

Estimated Exposure Time: 12 months

Estimated Marketing Period: 12 months

Report Format: Appraisal Report

Purpose of the Appraisal: The purpose of this appraisal is to provide a current opinion of market value of market value of the fee simple interest in the subject.

Intended Use of the Appraisal: The intended use of this appraisal is to assist in the possible offing of the property to developers for affordable housing. This report is not intended for any other use.

Intended Users of the Appraisal: The intended users of this report are representatives of Hillsborough County. Use of this report by others is not intended.

Client: Hillsborough County

130 TYPE OF APPRAISAL AND REPORT FORMAT

Pursuant to the terms of our contract, this appraisal is written in conformance with the requirements for an Appraisal Report, according to the 2020-20211 Uniform Standards of Professional Appraisal Practice (USPAP) and the FDOT Supplemental Standards of Appraisal.

140 APPRAISAL PURPOSE, INTENDED USE, AND INTENDED USER OF THE

APPRAISAL

The purpose of this appraisal is to provide a current opinion of market value of the fee simple interest of the subject property. The intended use of this appraisal is to assist in the possible offing of the property to developers for affordable housing. This report is not intended for any other use. This report is not intended for any other use. The intended users of this report are representatives of Hillsborough County. Use of this report by others is not intended.

150 DEFINITION OF MARKET VALUE AND OTHER TERMS

Market Value – The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider their own best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24,1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994.)2

1 On February 19, 2021, The Appraisal Foundation’s Appraisal Standards Board (ASB) announced that the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP) would be extended by one year. The 2020-2021 USPAP will now be effective until December 31, 2022.

2 The Dictionary of Real Estate Appraisal, Seventh Edition (Chicago: Appraisal Institute, 2022), page 118

Fee Simple Interest – Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.3

Functional Utility – The ability of a property or building to be useful and to perform the function for which it is intended according to current market tastes and standards; the efficiency of a building’s use in terms of architectural style, design and layout, traffic patterns, and the size and type of rooms.4

The Dictionary of Real Estate Appraisal, Seventh Edition (Chicago: Appraisal Institute, 2022), page 73.

4 The Dictionary of Real Estate Appraisal, Seventh Edition (Chicago: Appraisal Institute, 2022), page 79.

160 PROPERTY RIGHTS (INTEREST) APPRAISED

The interest appraised is the Fee Simple Estate. Fee Simple Estate is defined as “Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat”.5 This interest considers all easements and restrictions of record.

175 SCOPE OF APPRAISAL ANALYSIS

In the course of our research for the valuation of this property, and in compliance with the competency provision of the USPAP, we performed the following tasks:

• Inspected the subject property.

• Researched the competitive market for comparable land sales in the subject MSA from 2021 to present.

• Discussed the real estate market with local market participants active in the Hillsborough County market area.

• Confirmed all comparable data with a party to the transaction (a broker, buyer, or seller).

• Analyzed all available data and applied the Sales Comparison Approach to value.

5 The Dictionary of Real Estate Appraisal, Sixth Edition, 2015, Page 90.

180 APPRAISAL PROBLEM

The valuation process began when we identified the appraisal problem and ended when the report was delivered. The valuation process was accomplished through six specific steps.

The first step in the valuation process is the definition of the appraisal problem. This step includes: identification of the real estate; identification of the property rights to be valued; use of the appraisal; definition of value; date of the value estimate; description of the scope of the appraisal; and other limiting conditions.

Scope of Work: This appraisal includes the market research and analyses necessary to reach a final value estimate using the sales comparison approach to value. We inspected the subject, its environs, and market area. The depth of research was representative of the current real estate market and economic environment. Our judgment was used in the absence of available market data and when additional research to generate such data was not feasible in relation to its importance to the appraisal problem. This appraisal report is a record of our research, analyses, opinions, and conclusions.

The second step in the valuation process is the preliminary research, data collection, data evaluation, and data selection. This step includes: General data concerning the market area – social, economic, governmental, and environmental considerations;

competitive supply and demand data concerning listings, sales, and market conditions;

and data specific to the subject site, improvements, and sales history.

The third step in the valuation process is the highest and best use analysis of the land as though vacant and of the property as improved. The highest and best use identifies that use which is legally permissible, physically possible, financially feasible, and maximally productive.

The fourth step in the valuation process is analyses using the sales comparison approach to value. The sales comparison approach is the only applicable approach to valuing vacant land.

The fifth step in the valuation process is the reconciliation of value indications, resulting in the final value estimate.

The sixth step and final step in the valuation process is the completion and delivery of the report.

200 IDENTIFICATION OF PROPERTY AND LEGAL DESCRIPTION

The subject is a 2.39-acre site located on the southwest corner of North 22nd Street and East 140th Avenue. The subject site is comprised of folio #s 035656-0000, 035657- 0000, 035658-0000, 035659-0000, 035661-0000, and 035662-0000.

The legal description that we relied upon is included in the addenda of this report (see tax records/acquiring deed).

220 DESCRIPTION OF AREA AND NEIGHBORHOOD

A neighborhood is “a group of complementary land uses: a congruous grouping of inhabitants, buildings, or business enterprises.”6 The neighborhood is in the stability stage of its life cycle. Most of the recent growth has involved redevelopment of older properties.

Neighborhood overview – The subject is in the unincorporated Hillsborough County and is considered a suburban location. The city of Tampa is situated in southwest Hillsborough County, about 8 miles northeast of the Tampa Central Business District.

Access throughout the neighborhood is considered good. Fowler Avenue, Fletcher Avenue, Bruce B. Downs Boulevard, and Interstate 275 provide primary access into and around the subject’s neighborhood, while Bearss Avenue provides access to the subject and the surrounding residential developments. Bearss Avenue is a secondary, four-lane east/west arterial that is heavily used as an alternative to Fletcher and Fowler Avenue. Fowler Avenue, is one of Tampa’s most heavily traveled thoroughfares. It runs from Interstate 275 to Interstate 75 in northeastern Hillsborough County. Fowler and Fletcher Avenues are major east/west thoroughfares running through the neighborhood, which connect Interstate 275 with eastern Tampa. The primary land uses include fast food restaurants and retail stores and shopping centers.

The subject property is located in an area commonly known as “Suitcase City”. This name references the transient nature and the number of rental properties in the area.

Suitcase City is generally considered to be the area north of Busch Boulevard, south of Bearss Avenue, west of 30th Street and east of Interstate 275.

Land use, development trends, and linkages – The neighborhood is residential in nature, with single-family homes, duplexes and small apartment buildings. There are numerous public services and community buildings in the immediate area including a library, the Junior Achievement Center, a large park and a community center.

Designated as a collector street, 22nd Street is two lanes and connects to both Fletcher and Bearss Avenues. The neighborhood is in close proximity to the USF Campus, at the corner of Fletcher Avenue and 30th Street.

The subject falls within a Qualified Opportunity Zone which are not regulatory but do various incentives for development and redevelopment, as described on the Hillsborough County website:

“Opportunity Zones provide a tax incentive for investors to re-invest their unrealized capital gains into dedicated Opportunity Funds. Opportunity Funds can be used on commercial and industrial real estate, housing, infrastructure, and existing or start-up businesses. For real estate projects to qualify for Opportunity Fund financing, the investment must result in the property being “substantially improved.”

6 The Dictionary of Real Estate Appraisal, Seventh Edition (Chicago: Appraisal Institute, 2022), page 130.

Investments are eligible to obtain:

▪ A temporary tax deferral for capital gains invested in an Opportunity Fund.

▪ A step-up in basis for capital gains reinvested in an Opportunity Fund.

▪ A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund if the investment is held for at least 10 years.

Properties and investments in Opportunity Zones may also qualify for other state and local economic development programs.”

Area Demographics – We have estimated the subject neighborhood to consist of a five-mile ring surrounding the subject.

In the identified area, the current year population is 265,093. In 2020, the Census count in the area was 263,442. The rate of change since 2020 was 0.19% annually. The five-year projection for the population in the area is 264,393 representing a change of - 0.05% annually from 2023 to 2028.

The household count in this area has changed from 104,179 in 2020 to 105,329 in the current year, a change of 0.34% annually. The five-year projection of households is 105,319, a change of 0.00% annually from the current year total. Average household size is currently 2.40, compared to 2.41 in the year 2020. The number of families in the current year is 56,414 in the specified area.

Current median household income is $51,062 in the area, compared to $72,603 for all U.S. households. Median household income is projected to be $58,308 in five years, compared to $82,410 for all U.S. households. Current average household income is $78,223 in this area, compared to $107,008 for all U.S. households. Average household income is projected to be $90,709 in five years, compared to $122,048 for all U.S. households. Current per capita income is $31,253 in the area, compared to the U.S. per capita income of $41,310. The per capita income is projected to be $36,301 in five years, compared to $47,525 for all U.S. households.

SOURCE: STDB.com

Conclusion – The subject property is located in an established neighborhood dominated by commercial and residential uses. The future development trends in the area should be mainly new development and redevelopment of existing properties. The immediate area appears to be stable with future growth potential.

TAMPA MULTI-FAMILY MARKET OVERVIEW

Tampa's multifamily vacancy reached a decade high in the second quarter of 2024 at nearly 9%, a rise of roughly 150 basis points over the previous year. Supply and demand have been significantly out of balance over the past 24 months, causing a steady rise in vacancy. The construction pipeline remains elevated, with 15,000 units under development, and as such, vacancy is likely to remain above 8% for years to come. The imbalance has also negatively impacted asking rents, with submarkets across the region recording negative to limited rent growth.

Roughly 9,100 units delivered in Tampa over the trailing 12-month period, while the market absorbed only 3,900 units. Tampa's imbalance between supply and demand is still less stark than in the nearby Orlando market, where delivered units outpace renter demand at a rate of more than two-to-one, causing vacancy to increase 300 basis points.

The bulk of vacancy increases have occurred in 3 Star properties, up 200 basis points year over year to 8.9%, due in large part to limited renter demand. That quality subset only recorded 460 units of absorption over the trailing 12-month period, as 2,500 units delivered. In comparison, 4 & 5 Star properties have captured a significant portion of Tampa's renter demand, with 3,700 units of absorption. However, vacancies for higher-end 4 & 5 Star properties continue to hover around decade highs, sitting at 11.7% as of the second quarter of 2024.

The Tampa multifamily market has maintained a development pipeline north of 16,000 units for five consecutive quarters. Roughly 15,000 units are currently underway, predominantly in Tampa's suburban submarkets. Pasco County is the most active submarket for new construction, with 4,500 units. The county has recorded one of the largest vacancy increases in the region, up 500 basis points year over year to 14%.

Vacancies have increased over 450 basis points year over year there on the delivery of 2,500 units.

As more units have come on line over the past year, the leverage landlords once had to increase asking rents has evaporated. Multifamily average monthly asking rent declined for much of 2023, declining -1.6% year over year to $1,770/month. Luxury 4 & 5 Star properties are leading the market in asking rent contraction, down -2.2% from this time last year to $2,070/month, while 1 & 2 Star operators continue to push rates up 1.3% year over year to $1,280/month.

The trend of limited asking rent growth is forecast to continue over at least the next six to nine months, as the market continues to work through the pipeline of 15,000 units.

Asking rent growth is expected to return to prepandemic levels, around 5%, by mid- 2024, around the same time supply and demand is anticipated to be closer to equilibrium.

While Tampa was one of the most heavily transacted in Florida in 2023, those levels are well below previous years volumes. In comparison, Tampa recorded nearly $4.5 billion in total sales volume in 2021, when fundamentals were at their strongest and capital flowed more easily. Since then, fundamentals have waned and volatility in interest rates has largely kept institutional capital on the sidelines. Overall, multifamily deals have become more difficult to pencil as buyers are underwriting lower rent growth assumptions while battling significantly higher debt cost.

Rent

The pace of rent growth has decelerated considerably in Tampa, declining to an annual change of -1.6% as of the second quarter of 2024. Current asking rent growth levels are a complete turn around from the record highs north of 20% in late 2021 through early 2022. Since then, thousands of units have flooded the market, greatly increasing the competition for renters and reducing landlords' leverage to push asking rents.

Asking rent growth is forecast to be minimal through mid- 2024, in large part due to the pipeline of 15,000 units set to come on line. However, renter demand is expected to be closer to the rate of deliveries in 2024 and 2025, and as such, asking rent growth is forecast to return to roughly 4% to 5% around that time.

The bulk of new development has been concentrated in 4 & 5 Star properties, and the influx of new units has had an adverse impact on asking rents. Landlords of 4 & 5 Star buildings have pulled back asking rents by -2.2% over the past year.

Vacancy

Tampa's multifamily vacancy has been on a steady uphill climb since its near-historic low rate of just 4.1% in mid- 2021. Since then, thousands of units have come on line and vacancy now averages 9.5% as of the second quarter of 2024. That represents a 100-basis-point increase from this time last year.

Like many markets in Florida and across the country, supply and demand are out of balance here. Roughly 9,100 units delivered in the Tampa area over the past year while the market absorbed only 3,900 units. Renter demand improved in 2023 but is was still well below the rate of new deliveries. That gap between units being completed and those being occupied is expected to narrow markedly during 2024.

The bulk of demand has been for higher tier 4 & 5 Star communities over the past year, with that quality subset recording 3,700 units of absorption. New construction completions still outpace the rate of demand, fueling a vacancy increase of roughly 50 basis points in 4 & 5 Star properties, now at 11.7%.

In comparison, 3 Star properties have seen very limited renter demand over the past year, absorbing just 460 units while 2,500 units came on line. That resulted in vacancy within that subset rising by 200 basis points year over year to 8.9%.

Roughly 15,000 units are under construction here, which is forecast to put some upward pressure on vacancy. Vacancy is forecast to hold steady in the upper 8% range for the next several years as supply and demand will likely be more in balance.

Submarket Data

The subject is in the North Tampa Submarket in the following charts.

Multifamily fundamentals continue to be strained in the North Tampa Submarket, the region's largest multifamily area with just under 35,000 units. Limited renter demand coupled with significant construction completions over the past year has pushed the submarket's vacancy rate up over 300 basis points to 9.9%.

North Tampa recorded a steep increase in vacancy to start 2024 with the delivery of roughly 730 units, a quarterly completion record. In addition, renter demand has been minimal at best, with the submarket only recording 240 units of absorption over the past year. In fact, six of the past eight quarters have had negative absorption as more tenants have vacated their units than moved in.

As vacancy increased, the leverage landlords once had to increase asking rents has eroded. As of the second quarter of 2024, asking rents have declined -2.5% year over year. This is especially troubling as North Tampa was already one of the region's least expensive multifamily submarkets with a monthly average asking rent of $1,520. In comparison, the overall market has an average rate of $1,780/month.

Future supply side pressure from new construction will likely be limited, as only 290 units are under construction. As such, North Tampa's vacancy rate is forecast to decline over the coming years but will likely remain well above the 10-year average of 6.2%. In turn, asking rent growth will likely remain flat through the remainder of the year, potentially returning to positive territory, albeit slower than pre-pandemic norms, by early 2025.

Overall, the North Tampa submarket has experienced low to moderate growth in increasing rental rates. The area has seen continued growth in rents with limited growth in inventory.

Conclusion

The subject’s immediate area is located in a desirable and stable/growing neighborhood.

The subject’s central location insures continued demand. The subject neighborhood is expected to remain stable and in demand into the foreseeable future. Property values should increase nominally over the long-term.

230 DESCRIPTION OF THE PROPERTY

Location

The subject site is located on the southwest corner of North 22nd Street and East 140th Avenue. The subject has good access and visibility from these roadways. The subject site also has frontage along North 21st Street. North 22nd Street which is designated as a collector road and a “Main Street” by the County’s Plan and Land Development Code.

This is discussed in more detail later in this report. It is a two-lane roadway with sidewalks and bicycle lanes on both sides. East 140th Avenue and North 21st Street are local roadways.

Site Description, Shape, and Functional Utility

The subject site is located on the southwest corner of North 22nd Street and East 140th Avenue. The total subject site contains a total of approximately 2.39 acres or 104,543 square feet. The site is mostly rectangular in shape and has average functional utility.

Soil and Subsoil

During our inspection, no soil or subsoil problems were apparent. This opinion is based solely on a visual inspection of the surface of the site. We assume no responsibility for hidden or unapparent conditions beyond our expertise and professional qualifications (please see General Assumptions, Item 6).

Drainage and Topography

During our inspection the site was wet from rainfall. The drainage appeared to be adequate. The site was relatively level and slightly below existing road grade.

Flood Zone

The subject site is located in flood zone X, an area of minimal flood risk according to the Federal Emergency Management Agency’s (FEMA) Flood Insurance Rate Map (FIRM), Community-Panel Number 12057C 0210H, map revised: August 28, 2008. The Flood Insurance Rate Map is for flood insurance purposes only; it does not delineate all areas which may flood. A copy of this map is included in this section.

Utilities and Government Services

All necessary utilities and government services are available to support the existing site.

Building Type: None

SUBJECT PROPERTY PHOTOGRAPHS

SUBJECT SITE VIEWING SOUTH (FROM NORTH OF EAST 140th AVENUE)

SUBJECT SITE VIEWING SOUTHWEST (FROM NORTH OF EAST 140th AVENUE)

SUBJECT SITE VIEWING WEST (FROM NORTH 22nd STREET)

SUBJECT SITE VIEWING NORTH (FROM NORTH 22nd STREET)

VIEW NORTH ALONG NORTH 22nd STREET

VIEW SOUTH ALONG NORTH 22nd STREET

VIEW WEST ALONG EAST 140th AVENUE

VIEW EAST ALONG EAST 140th AVENUE

AERIAL MAP

Source: Hillsborough County Property Appraiser

FLOOD INSURANCE RATE MAP

Source: MapWise

240 ZONING, LAND USE, CONCURRENCY

Zoning

Zoning is “the public regulation of the character and extent of real estate use through police power; accomplished by establishing districts or areas with uniform restrictions relating to improvements; structural height, area, and bulk; density of population, and other aspects of the use and development of private property.”7

The subject site is currently zoned UCA-MS (University Community Area – Main Street) by Hillsborough County. The uses permitted in the CA-MS district are the same as those permitted in the Residential, Multi-family Conventional (RMC-20) and the Commercial General (CG) zoning districts except for certain limitations to the types of residential units that can be built. Specifically, only multi-family units with conventional construction are permitted; single family and duplexes are prohibited in UCA-MS. It should be noted that the County defines multi-family as three or more units and therefore, three or more townhomes or flats would comply with the code definition.

Future Land Use

The subject site has future land use designation of R-20 (Residential-20) by Hillsborough County. Typical uses within this future land use district include residential, neighborhood commercial, office uses, multi-purpose projects, and mixed-use developments. Non-residential uses shall meet established locational criteria for specific land use.

Concurrency

The availability of utilities and government services must be concurrent with the impacts of development. A complete analysis of concurrency as it relates to the subject is beyond our expertise. We assume no responsibility for any concurrency issues, or the civil engineering, urban planning, or legal knowledge required to identify and quantify them. We assume that the subject meets concurrency requirements.

7 The Dictionary of Real Estate Appraisal, p. 399.

250 ASSESSED VALUE AND TAXES

According to the Hillsborough County Property Appraiser the subject identified, assessed, and taxed as follows:

Property tax bills are issued in November of each year, at which time a 4% discount is allowed. The discount decreases by 1% per month until April 1st of the following year, which is the final due date, after which a penalty is added. There do not appear to be any delinquent property taxes.

260 HISTORY OF THE PROPERTY (LAST 3 YEARS)

The subject is currently under the ownership of Hillsborough County. The subject parcels were acquired from 2011-2013. The subject is not currently being marketed for sale or lease. There have been no arm’s length sales in the past three years.

Parcel ID # 2023 Assessment 2023 Taxes*

035656-0000 $25,964 $0

035657-0000 $24,421 $0

035658-0000 $26,350 $0

035659-0000 $27,126 $0

035661-0000 $26,636 $0

035662-0000 $26,979 $0

Total: $157,476 $0.00

Source: Hillsborough County Tax Collector

SUBJECT TAX INFORMATION

*The subject has a governmental property tax exemption.

270 EXPOSURE TIME ANALYSIS

Exposure time is defined as “the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. Exposure time is always presumed to occur prior to the effective date of the appraisal.”8

Our estimated exposure time for the subject property is based on the time required to market and sell a variety of residential, commercial and industrial properties in the subject’s market area. Information in this regard was obtained through our verification of sales data, collection of general market data for analysis of neighborhood trends, and in conversations with area real estate brokers. Most of the market participants we spoke with acknowledged an exposure time for property similar to the subject in the 12-month range, assuming the property was actively marketed and priced correctly. Thus, it is our opinion that if the subject property were on the market today, an exposure time of approximately 12-months would be considered reasonable to secure a buyer, at the value concluded herein.

280 PUBLIC AND PRIVATE RESTRICTIONS

Public Restrictions: None known beyond zoning and land use regulations.

Private Restrictions: None known

8 The Dictionary of Real Estate Appraisal, Seventh Edition (Chicago: Appraisal Institute, 2022), page 68.

300 HIGHEST AND BEST USE ANALYSIS

The highest and best use is the reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.9

Whether the subject property is vacant or improved as of the date of valuation, it is necessary to estimate the highest and best use of the property “as though vacant”, in either case, and “as improved”, if such is the case. In the case of the subject property, the dual analysis procedure is required since the property is currently improved. The following is an in depth analysis of these criteria and how they bear upon the highest and best use of the subject property “as though vacant” and “as improved”.

Highest and Best Use of Land as though Vacant

We evaluated the subject site based upon those land uses that are legally permissible, physically possible, financially feasible, and maximally productive.

Legally Permissible – The subject site is currently zoned UCA-MS (University Community Area – Main Street) by Hillsborough County. The uses permitted in the CA-MS district are the same as those permitted in the Residential, Multi-family Conventional (RMC-20) and the Commercial General (CG) zoning districts except for certain limitations to the types of residential units that can be built. Specifically, only multi-family units with conventional construction are permitted; single family and duplexes are prohibited in UCA-MS. It should be noted that the County defines multi-family as three or more units and therefore, three or more townhomes or flats would comply with the code definition. Additionally the subject site is located within the Residential-20 future land use district which allows for a maximum density of 20 units per acre. The subject can legally be developed with a variety of multi-family oriented use.

Physically Possible – Physically possible uses are based upon, “the size, shape, area, terrain, and accessibility of a parcel of land and the risk of natural disasters such as floods or earthquakes which affect the uses under which it can be developed. The utility of a parcel may also depend on its frontage and depth. Irregularly shaped parcels can cost more to develop and, after development, may have less utility than regularly shaped parcels of the same size. Ease of access enhances the utility of a site.”10 The following physical considerations affect the subject:

▪ The subject site located on the southwest side of North 22nd Street and East 140th

Avenue. The subject has good access and visibility from these roadways. The parcels south of East 140th Avenue also have frontage along North 21st Street.

9 The Dictionary of Real Estate Appraisal, Seventh Edition (Chicago: Appraisal Institute, 2022), page 88.

The Appraisal of Real Estate, p. 304.

▪ The subject site located on the southwest corner of North 22nd Street and East 140th Avenue. The subject site contains 2.39 acres or 104,543 square feet. The site is mostly rectangular in shape and has average functional utility.

▪ The site’s topography is relatively level and are slightly below road grade.

▪ The subject site is located in flood zone “X”, an area of minimal flood risk.

▪ Surrounding land uses near the subject are primarily residential and community-oriented uses.

▪ The subject site could legally and physically be developed with a multi-family oriented use.

Financially Feasible – “Financially feasible uses produce an income of return, equal to or greater than the amount needed to satisfy operating expenses, financial obligations, and capital amortization. All uses that are expected to produce a positive return are regarded as financially feasible. If the uses are not income-producing, the analysis will determine which are likely to create a value or result in a profit equal to or greater than the amount needed to develop and market the property under those uses. Analyses of supply and demand and of location are needed to identify those uses that are financially feasible and, ultimately, the use that is maximally productive.”11 The following financial considerations affect the subject:

The financial feasibility of a building is based on the amount of rent which can be generated, less operating expenses required to generate that income; if a residual amount existing, then the land is being put to a productive use. The neighborhood is residential in nature, with single-family homes, duplexes and small apartment buildings.

There are numerous public services and community buildings in the immediate area including a library, the Junior Achievement Center, a large park and a community center. Designated as a collector street, 22nd Street is two lanes and connects to both Fletcher and Bearss Avenues. The neighborhood is in close proximity to the USF Campus, at the corner of Fletcher Avenue and 30th Street. Additionally, the subject falls within a Qualified Opportunity Zone which are not regulatory but do various incentives for development and redevelopment. Based on the subject’s neighborhood characteristics and current multi-family market, it appears a multi-family oriented use is considered to be financially feasible.

Maximally Productive – The final test of highest and best use of the site as though vacant is that the use be maximally productive, yielding the highest return to the land.

The following considerations affect the maximally productive use of the subject:

As previously noted, we have relied upon a land planning report prepared by independent land planner, Susan Swift with Boggs Engineering, LLC (during the course of a previous 2022 appraisal of the subject), for information regarding site

The Appraisal of Real Estate, p. 305.

utility/maximum productivity for assistance in developing a highest and best use analysis for the subject property. The following development potential discussion was derived from this report:

All six subject parcels are zoned University Community Area – Main Street (UCA-MS) which is a special district governed by Sections 3.13.00-3.13.06 of the Land Development Code (LDC). The uses allowed in the UCA-MS district are the same as those permitted in the Residential, Multi-family Conventional (RMC-20) and the Commercial General (CG) zoning districts except for certain limitations to the types of residential units that can be built. Specifically, only multi-family units with conventional construction are permitted; single family and duplexes are prohibited in UCA-MS. It should be noted that the County defines multi-family as three or more units and therefore, three or more townhomes or flats would comply with the code definition.

The UCA-MS district outlines different regulations based on the street type. As noted in the table above, 22nd Street is identified as a Main Street and the other surrounding streets are designated as Neighborhood Streets. Buildings located on 22nd Street must be at least two stories high because it is a designated Main Street. Development within this district must comply with the County Land Development Code (LDC) except as otherwise codified. The UCA-MS district has some unique dimensional regulations:

▪ Height: 50 ft maximum; two-story minimum is required on 22nd Street

▪ Setbacks: Front = 10 ft minimum/20 ft maximum; Side = 5 ft; Rear = 10 ft

▪ Parking: parking ratios in the LDC are maximums not minimums, and they can be reduced by 50%

▪ Density: 20 u/a

▪ FAR: .35 or .75 under certain conditions

The highest yield and most efficient use of land would be to develop the subject site as rather than as eight individual parcels/lots. Albeit, 3-7 multi-family units could be built on each of the six lots/parcels – but parking, open space, access and stormwater management would be more efficient if designed and constructed as combined parcels.

The entitlements for the subject site allow for multi-family residential, office or commercial uses – or a mixture of uses. The subject site can accommodate 47 multi-family units (20 u/a on 2.39 acres). Assuming there is demand for non-residential uses at this location, a second option would include ground floor retail on the 22nd Street frontage and multi-family units above and on the rest of the site. The entitlements support such uses, and the existing bus stop would assist in reducing parking pressures. With more than 400 ft of Main Street frontage, several storefronts could be constructed. With that said, these are not the commercial high-traffic nodes that exist at the Bearss/22nd Street and Fletcher/22nd Street intersections. This section of 22nd Street has numerous community activities and is pedestrian-oriented.

The subject site could yield a maximum of 47 multi-family units, which is the type of housing that the County’s Comprehensive Plan envisions for this area. Commercial uses are permissible on the first floor of the 22nd Street frontage if designed to protect surrounding residences and provide safe vehicle access.

Among the legally permissible, physically possible, and financially feasible uses, based upon our market research and judgment, the maximally productive use of…