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Special Benefit Study 21668 vii TABLE OF CONTENTS ITEM PAGE NO. LETTER OF TRANSMITTAL ........................................................................................ i-vi TABLE OF CONTENTS ................................................................................................ vii MAP OF MINNESOTA RIVER SEGMENT WHERE NAVIGABLE CHANNEL IS MAINTAINED .................................................................................................. viii CLIENT .......................................................................................................................... 1 PURPOSE OF SPECIAL BENEFIT STUDY ...................................................................... 1 INTENDED USE OF SPECIAL BENEFIT STUDY ............................................................. 2 SCOPE OF WORK......................................................................................................... 2 OVERVIEW OF MISSISSIPPI RIVER SYSTEM ................................................................. 6 SUBJECT PROPERTIES ................................................................................................ 43 VALUE CONTRIBUTION ANALYSIS........................................................................... 84 SUMMARY OF BENEFIT VALUE CONCLUSTIONS .................................................... 97 ADDENDA EXHIBIT 1 –NARRATIVE OF MINNEAPOLIS GRAIN INDUSTRY ......................... 99 EXHIBIT 2 – GRAIN ELEVATOR SALES .............................................................. 111 EXHIBIT 3 – U.S. ARMY CORP OF ENGINEERS COMMODITY CLASSIFICATION LIST.................................................................... 122 EXHIBIT 4 – DETAILED SUMMARY OF MINNESOTA RIVER BARGE FREIGHT ........................................................................................ 125 APPRAISING QUALIFICATIONS OF CLAY M. DODD ....................................... 128 PATCHIN MESSNER DODD & BRUMM Valuation Counselors 21668 viii Confluence with Mississippi River Mile 14.7(R) Minnesota River N MINNESOTA RIVER SEGMENT WHERE NAVIGABLE CHANNEL IS MAINTAINED PATCHIN MESSNER DODD & BRUMM Valuation Counselors 21668 1 CLIENT The client for this assignment is identified as the Lower Minnesota River Watershed District (hereafter the LMRWD). PURPOSE OF SPECIAL BENEFIT STUDY As background, the LMRWD is responsible for maintaining a navigable channel within a segment of the Minnesota River. That segment extends from the confluence of the Minnesota and Mississippi Rivers, to a point 14.7 miles (river miles) upstream on the Minnesota River. The segment in question is depicted on the map on the previous page. Note: the depiction on the previous page is an approximation, and is presented for illustration purposes only. The navigable channel within this 14.7-mile stretch of river is required to be nine feet deep by 100 feet wide. This allows loaded river barges to traverse the channel, thereby connecting the area to the Mississippi River transportation system. It is understood that the LMRWD’s related activities include dredging the channel as needed, and stockpiling/ disposing of the dredged material. The purpose of this Special Benefit Study (hereafter the study) is essentially three-fold, as listed below. • Identify those properties along the Minnesota River which are most likely to derive a special benefit from the LMRWD’s efforts to maintain the navigable river channel. • Determine whether or not the identified properties do in fact derive such special benefit. • If the identified properties are determined to derive a special benefit from the navigable channel, then make a preliminary determination as to the likely extent to which the properties are benefited. In other words, to what extent, on relative basis, does the navigable channel enhance the market values of the properties. PATCHIN MESSNER DODD & BRUMM Valuation Counselors 21668 2 INTENDED USE OF SPECIAL BENEFIT STUDY This study is made to assist the client in determining its policy regarding how it levies taxes on properties within its jurisdiction, particularly as it pertains to recovering the costs associated with maintaining the navigable river channel. SCOPE OF WORK The assignment did not involve the appraisal of any property. As such, no standards of the Uniform Standards of Professional Appraisal Practice (USPAP) are applicable. However, the assignment was performed in adherence to USPAP’s Ethics Rule, Record Keeping Rule and Competency Rule. The assignment did involve making a determination as to whether the market values of certain properties are enhanced by the navigable channel and, if so, to what extent. Appraisals could be performed where the values of the individual properties are appraised under two scenarios; first by recognizing the navigable river channel exists, and second by assuming the navigable river channel does exist. The difference would isolate the special benefit (increase in market value) to the properties. In the case, the study involved making a more generalized determination as to whether or not identified properties benefit from the navigable channel and, if so, to what extent. The conclusions reached are preliminary in nature. The current assessed value of each property is used as an approximation of the market value. The following were also examined as part of the work process. 1) Planning and Zoning data 2) Property tax and assessment data 3) Physical data regarding the subject properties, as reported by the applicable assessor’s office 4) Aerial photographs of the individual properties 5) Statistics pertaining to river barge tonnages on the Mississippi River system in general and the Minnesota River in particular PATCHIN MESSNER DODD & BRUMM Valuation Counselors 21668 3 SCOPE OF WORK 6) Information pertaining to the U.S. river barge industry, as obtained from various sources cited herein 7) Information pertaining to the subject river terminals, as found in various directories, including Minnesota Department of Transportation’s (MnDot) Minnesota’s River Terminals directory; Sosland’s 2017 Grain & Milling Annual directory; and the Minnesota Grain & Feed’s directory. 8) Research of recent developments along the Mississippi River system 9) Research of barge activity and trends on the Missouri River 10) Sales of river terminal facilities, including river grain elevators 11) Examination of a recently negotiated lease of fleeting rights, between Upper River Services and the City of Bloomington 12) Interviews with various individuals, as cited herein An attempt was made to contact a representative of each property that has an active river dock. Some level of contact was made with individuals representing five of the six properties. The author was able to tour Properties A, D, E and F. Representatives of those companies were present during these on-site visits, and provided useful insights into the operations of their properties. The discussions and contacts with the property owners are summarized in latter sections of this report. Beyond the onsite visits noted above, the author traversed the public rights of way abutting all of the properties. PATCHIN MESSNER DODD & BRUMM Valuation Counselors 21668 4 OVERVIEW OF MISSISSIPPI RIVER SYSTEM The navigable channel on the lower 14.7 miles of the Minnesota River allows that segment of the river to connect with the wider Mississippi River transport system. The map on the following page depicts the navigable Mississippi River transport system. As the map shows, the navigable Mississippi River system includes that portion of the Mississippi River that begins in Minneapolis, Minnesota and extends to the Gulf of Mexico at New Orleans. The system also includes the navigable parts of the major tributaries that flow into the Mississippi River. Such tributaries include the Illinois Waterway, the Ohio River, the Arkansas River and the White River. The navigational system spreads out from these major tributaries as well. For example, the Tennessee and Cumberland Rivers connect with the Ohio River, which in turn flows to the Mississippi River. It is not the intent to provide a comprehensive discussion of the entire Mississippi River navigation system. Suffice it to say here that the system connects a substantial part of the continental United States with river barge transport. Major cities and river ports include Minneapolis-St. Paul, Chicago, St. Louis, Cincinnati, Pittsburg, Memphis and New Orleans, to name just a few. For navigational purposes, the Mississippi River is divided into two parts: the Upper Mississippi and the Lower Mississippi. The Upper Mississippi is generally considered to be that segment of the river that lies north of Cairo, Illinois, which is located at the confluence of Mississippi and Ohio Rivers. In turn, the Lower Mississippi is that segment that lies south (or downriver) from Cairo. There is a substantial change in elevation throughout the course of the Upper Mississippi River. Therefore, to provide for safe and effective river transportation, the U.S. Army Corps of Engineers (USACE) maintains 27 lock and dams on the Upper Mississippi River; the most northerly of which is located just north of Hastings, Minnesota (Lock No. 2) and the most southerly being at Cairo, Illinois (southern tip). USACE also maintains locks and dams on other rivers in the system, including eight on the Illinois Waterway and 21 on the Ohio River. PATCHIN MESSNER DODD & BRUMM Valuation Counselors 21668 5 OVERVIEW OF MISSISSIPPI RIVER SYSTEM N N Lower River Minnesota PATCHIN MESSNER DODD & BRUMM Valuation Counselors
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