Site Attributes & Land Regulations

Site Attributes & Land Regulations

Introduction

The value of a property is intrinsically linked to its site attributes and the regulatory environment governing its use. This chapter provides a comprehensive understanding of these critical factors, essential for mastering property valuation. We’ll explore the scientific principles underlying site analysis, detailing how physical characteristics and legal constraints impact property value.

1. Physical Site Attributes

Physical characteristics of a site exert a significant influence on its value, utility, and development potential. These attributes are measurable, observable, and affect the cost and feasibility of various land uses.

1.1 Size and Shape

The dimensions and configuration of a site directly impact its usability and value.

• Measurement: Land area is typically measured in acres (43,560 sq. ft.) for larger parcels and square feet for smaller sites. Frontage, the length of the property abutting a street or other feature, is a critical parameter.

• Impact: Irregular shapes (triangles, odd angles) can limit building design and efficient land use, impacting value negatively for certain applications.

• Size and Unit Value Relationship: Generally, the relationship between size and unit value (price per square foot or acre) follows an inverse relationship.

  • Equation: UV = k / S
    • Where:
      • UV = Unit Value
      • k = Constant (reflecting market conditions and location)
      • S = Size of the Parcel

• Example: A rectangular lot of 10,000 sq. ft. might be ideal for a small commercial building, while a similar lot with a narrow, deep shape might be less desirable.

1.2 Corner Influence

Corner lots offer unique advantages and disadvantages compared to interior lots.

• Advantages: Increased visibility, accessibility from multiple streets, and potentially greater flexibility in building design.

• Disadvantages: Increased traffic noise, reduced privacy, potential for higher sidewalk maintenance costs, and stricter setback requirements.

• Market Specificity: The perceived value of a corner location is market-dependent and varies based on the intended use (e.g., more valuable for a retail store, less so for a residential property).

• Experiment: Conducting a sales comparison analysis of corner lots versus interior lots in a specific area can quantify the “corner influence” premium or discount. Collect data on recent sales, controlling for other variables like size, age, and condition of the properties. Analyze the data using regression analysis to isolate the impact of corner location on sale price.

1.3 Plottage Potential

Plottage refers to the increase in value realized by combining two or more contiguous parcels of land into a single, larger site.

• Principle: The combined site may have a higher and better use or greater development potential than the individual parcels.

• Equation: PV = V_combined - (V_1 + V_2 + ... V_n)

  • Where:
    • PV = Plottage Value
    • V_combined = Value of the assembled parcels
    • V_1, V_2, … V_n = Value of each individual parcel separately

• Example: Combining two half-acre lots into a one-acre lot may allow for the construction of a larger building, increasing its overall value.

• Negative Plottage: Note that in some scenarios, assembling very large parcels can lead to negative economies of scale, resulting in a lower unit value.

1.4 Excess Land and Surplus Land

Understanding the difference between excess and surplus land is crucial for accurate valuation.

• Excess Land: Land that is separable from the main property and has its own independent highest and best use. It can be sold separately.

• Surplus Land: Land that cannot be sold separately and does not have an independent highest and best use. It might contribute to the value of the main property through potential expansion or improved aesthetics.

• Key Distinction: The key difference lies in separability and independent use.

• Example: A large residential property with two standard-sized lots where one lot contains the house, and the second lot is vacant and buildable, represents excess land. An industrial property with a larger than typical land-to-building ratio, where the extra land lacks street access and cannot be developed independently, represents surplus land.

1.5 Topography

The contour, elevation, and natural features of the land significantly affect its usability and development costs.

• Impact: Steep slopes can increase construction costs, while favorable drainage patterns can enhance the suitability of a site.

• Data Sources: Topographic maps from the U.S. Geological Survey (USGS) provide detailed information about land elevations, water features, and other natural characteristics.

• Geodetic Survey Program: The US Geological Survey provides topographic maps, referred to as quadrangles or quads, which provide information useful in land descriptions.

  • Base lines, principal meridians, range lines, and township lines are shown along with topographic and man-made features.

1.6 Geology and Soil Analysis

The composition and characteristics of the soil and subsoil are critical for evaluating a site’s suitability for construction and other uses.

• Importance: Soil bearing capacity, drainage properties, and the presence of subsurface hazards affect construction costs and the potential for structural problems.

• Agronomy: Agronomists and soil scientists measure the agricultural qualities of the soil and its capacity for specific agricultural uses.

• Soil Mechanics: Engineers trained in soil mechanics test for soil consistency and load-bearing capacity.

• Structural Distress: Structural distress in improvements such as cracks in walls or the foundation may be evidence of geotechnical or soils problems.

• USDA Soil Surveys: The US Department of Agriculture conducts soil surveys to create soil maps for farmers and ranchers.

• Soil Triangle: The soil triangle provides a means of classifying soils based on the content of sand, silt, and clay in the soil.

• Soil Profile: The soil profile includes three major horizons

  • A: The surface horizon
  • B: The subsoil
  • C: the substratum
• Example: A site with unstable soil might require costly foundation modifications, reducing its value.

1.7 Floodplain and Wetlands Analysis

Proximity to flood zones and the presence of wetlands pose significant regulatory and environmental considerations.

• Floodplain Maps: Maps published by the Federal Emergency Management Agency (FEMA) identify areas within the 100-year floodplain, indicating the risk of flooding.

• Wetlands Regulations: Wetlands are protected by federal and state regulations, limiting development activities.

• Impact on Value: Properties within flood zones may require flood insurance, impacting their marketability and value.

2. Land Use Regulations

Land use regulations, primarily zoning ordinances, dictate the permissible uses of land within a jurisdiction. These regulations are designed to promote orderly development, protect property values, and ensure public safety.

2.1 Zoning Regulations

Zoning ordinances specify the permitted uses, density, building height, setback requirements, and other development standards for different zoning districts.

• Types of Zoning Districts: Residential, commercial, industrial, agricultural, and mixed-use districts are common zoning classifications.

• Density Regulations: Density regulations, such as Floor Area Ratio (FAR), control the intensity of development on a site.

• Floor Area Ratio (FAR): FAR is the ratio of the total building floor area to the land area of the site.

  • Equation: FAR = Total Building Floor Area / Land Area
    • For example, a 10,000 sq. ft. lot with an FAR of 2.0 allows for a building with 20,000 sq. ft. of total floor area.

• Setback Requirements: Setback requirements specify the minimum distance a building must be set back from property lines.

• Height Restrictions: Height restrictions limit the maximum height of buildings within a zoning district.

• Variance: A variance is an exception to the zoning regulations granted by a local government when strict adherence would cause undue hardship.

• Legal Non-conforming Use: This means that the use legally existed before the enactment of the new ordinance.

• Practical Application: It is important to contact several agencies to confirm zoning and land use restrictions.

2.2 Assessment and Tax Information

Real property taxes are based on ad valorem assessments.

• Assessment and Tax Information Location: Records of the local assessor or tax collector can provide details concerning a property’s assessed value and annual tax burden.

2.3 Subdivision Regulations

Subdivision regulations govern the division of land into smaller parcels for development. These regulations address street layout, lot sizes, utility easements, and other infrastructure requirements.

2.4 Environmental Regulations

Environmental regulations protect natural resources and regulate activities that may impact air, water, and soil quality. These regulations can significantly affect land use and development costs.

Conclusion

Understanding site attributes and land regulations is fundamental to accurate property valuation. By carefully analyzing the physical characteristics of a site and the applicable regulatory constraints, appraisers can determine the highest and best use of the property and estimate its market value effectively. Failure to address these factors properly can lead to inaccurate valuations and poor investment decisions.