Overlook appraisal comes in low at $8,250,000

Thu, 09/16/2021 - 2:30pm

When the purchase of a portion of the Overlook property on the Great Salt Pond, owned by Steve Filippi, was approved by voters at the May 2021 Financial Town Meeting, it was with a couple of caveats. One was that the property be successfully subdivided into two lots; the other was that an appraisal must be conducted and be “acceptable to the Town Council.” The agreed upon purchase price for the larger of the two resulting lots was $10.5
million, with the Block Island Land Trust contributing $4 million, the Block Island Conservancy and The Nature Conservancy pledging $2 million and the taxpayers of the town covering the balance of $4.5 million.
When the purchase was proposed, it was presented as a place where a harbors facility could be built with a dock, restroom and shower facilities, and housing for Harbors Department employees on the second floor. The facilities would cost an additional $2.5 million.
There were many townspeople and two of the five Town Council members against the purchase. Opponents said it was rushed, it was expensive, it was not
a priority, the location was problematic.
Proponents, mainly from the conservation groups, lauded it as an opportunity to acquire “the last” commercial property along the shore of the Great Salt Pond. For them, it was also an opportunity to prevent a large-scale development project that could lead to water-quality problems in the pond.
The vote at the May 3 FTM was 115 for the purchase and 81 against. It supposedly set the clock ticking on a 30-day window to close the deal.
Over 130 days later, the matter still hasn’t settled. The approval of the subdivision is getting closer. Favorable advisories were obtained by the Planning Board, giving the go-ahead for the Zoning Board to vote on the subdivision. Zoning was ready to do that at its meeting on August 25, but after some members of the board had to recuse themselves and one member was absent, there was no quorum.
As for the appraisal: That has been completed by George Valentine of Newport Appraisal Group, LLC, with an “effective date” of July 15. Some on the island were surprised at the low valuation of $8,250,000 in comparison to the negotiated purchase price of $10.5 million. But The Times found the valuation appears to be flawed in such a way as to undervalue the property.
Valentine, in keeping with appraisal practices, has considered three methods – sales comparison, cost approach, and income capitalization approach. Having rejected the two latter methods, a sales comparison approach was selected.
Valentine selected four properties for his sales comparison. One is Champlin’s Marina, which was sold in December, 2020, and three properties in Old Harbor, two that were sold in June 2021, and one that was sold in 2014. The June sales were for the Old Harbor Takeout property on Water Street by the ferry terminals, and for the old automotive mechanic’s garage on Chapel Street. Each was sold for $600,000 according to town documents on the Block
Island Land Trust’s web page. The fourth property was sold in 2014 to the Ocean View Foundation and is located on Water Street close to Ballard’s.
The Block Island Times reached out to Valentine as to why more recent sales such as the post office building or the Block Island Beach House (formerly The Surf) or Gables II weren’t used – all three sales of commercial properties in Old Harbor. No response was received by press time.
But that is not what throws the appraisal out of whack so much as an error in the sales price of Champlin’s Marina, which is stated at $19 million instead of $25 million. (The Block Island Times made the same error in reporting the sale back in January by relying on the certificate filed with the Land Trust, which declared a value of $19 million for real property.)
The calculation of an appropriate market value per square foot for the land begins with the sales price as a starting point and then the value of buildings is subtracted. Then various other adjustments are made in an attempt to “make all things equal.” For instance, the 2014 land sale was adjusted upward for inflation, and the Old Harbor Takeout property was adjusted downwards for its “superior” location.
Once all the adjustments are made, the per-square-foot values are further weighted until an average price is arrived at. If one plugs the $25 million into the beginning of the calculations and follows through with all the same numbers and assumptions, the valuation comes out higher, at $9,313,861.
The Town Council went into closed session to discuss the appraisal on Monday, Sept. 13 and also met with members of the Land Trust the same evening, also in closed session. The Land Trust has contracted and received its own appraisal for the property, but is not making that document available to the public at this time.
No motions or votes were made during the closed sessions, according to Town Clerk Fiona Fitzpatrick.