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HomeMy WebLinkAbout01.01 Complete Self-Contained Appraisal Report 04.03.2000Nisley & Associates, Inc. COMPLETE SELF-CONTAINED APPRAISAL REPORT ON 90.03 ACRES VACANT LAND ALONG COUNTY ROAD 100 CARBONDALE, COLORADO for ALPINE BANK - SNOWMASS APRIL 3, 2000 By: John W. Nisley, MAI Nisley & Associates, Inc. 519 Grand Avenue P. O. Box 446 Grand Junction, Colorado 81501 JOHN W. NISLEY, MAI deaf 3slale ✓. .ppraiser 519 GRAND AVENUE - POST OFFICE BOX 446 GRANO JUNCTION. COLORADO 815¢2-0446 April 3, 2000 Ms. Sheri Smith Senior Vice President Alpine Bank - Snowmass 15 Kearns Road Snowmass Village, Colorado 81615 Dear Ms. Smith: As requested, I have completed a self-contained appraisal report on approximately 90.03 acres of vacant land located along County Road 100 east of Carbondale, Colorado. The property was inspected on March 31, 2000, and attached hereto is my report containing data gathered during my investigation upon which, in part, my opinion of value is based. Based on the data and assumptions contained in the report, it would be my conclusion that the Market Value for the property in "as is condition would be: ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS (51,800,000.00) In this appraisal, there has been no investigation of any liens which may or may not be in existence. My work has to do only with the estimate of value. Retained in our files are copies of worksheets used in the preparation of this report, which are available for your inspection. It is expressly understood that the scope of my study and report thereon does not include the possible impact of price controls, energy requirements or environmental regulations, licensing requirements or other restrictions concerning the property except where such matters have been brought to my attention and are disclosed in the report. NISLEY & ASSOCIATES, INC. Respectfully submitted, Johi. Nisley, AI Certified General Appraiser Colorado #CG01313453 REAL ESTATE APPRAISALS TELEPHONE (970) 242-8076 FAX'. (970) 245-8155 Nisley & Associates, Inc. SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Property Identification: Date of Value Estimate: Property Rights Appraised: Site Description: Improvements: Zoning: Highest and Best Use: Final Value Conclusion: Estimated Marketing Time: Approx. 90.03 acres vacant land Along County Road 100 Near Carbondale, Colorado March 31, 2000 Fee Simple Estate Rights of Ownership 90.03 acres vacant land None AARD (Garfield County) (Agricultural -Rural -Residential Density) As Proposed - For eventual development into around nine homesites S1,800,000.00 (As Is) One year or less Nisley & Associates, Inc. TABLE OF CONTENTS Page Number Letter of Transmittal Qualifications, Contingent and Limiting Conditions, Certification Summary of Salient Facts and Conclusions Identification of the Property 1 Legal Description 1 Purpose of the Appraisal 1 Property Rights Appraised 2 Date of the Appraisal 2 Date of the Report 2 Function of the Appraisal 2 Employment Certification 3 Personal Property 3 History of the Property 3 Scope of the Appraisal 4 Tax and Assessment Data 5 Area Data 6 Neighborhood Data 12 Site Description 14 Highest and Best Use 16 VALUATION SECTION About the Appraisal Process 18 Sales Comparison Approach 21 Subdivision Analysis Approach 24 Final Value Conclusion 27 Exposure and Marketing Time 28 Nisley & Associates, Inc. JOHN (JACK) W. NISLEY QUALIFICATIONS EDUCATION: University of Denver Bachelor of Science in Business Administration, 1976 - Major Study: Real Est. and Const. Management Jones Real Estate College Broker Studies American Institute of Real Estate Appraisers 1978, Course 1A, Introduction to Real Estate Appraisal 1979, Course 1B, Capitalization Theory and Techniques 1979, Course II, Urban Properties 1980, Income Capitalization Workshop 1980, Course VI, Introduction to Real Estate Investment Analysis 1981, Subdivision Analysis Seminar 1981, Business Valuation Seminar 1982, Standards of Professional Practice 1983, Capitalization Theory & Techniques II 1983, Capitalization Theory & Techniques III 1984, Water and Value 1985, Standards of Professional Practice 1985, Evaluating Commercial Construction 1985, Residential Construction Analysis 1986, R -41B Seminar 1986, Foreclosure Seminar (Grand Junction Board of Realtors) 1987, Ad Valorem Tax and Assessed Values 1987, R -41C and the Appraiser 1987, Uniform Residential Appraisal Report 1988, Standards of Professional Practice Update 1988, Rates, Ratios and Reasonableness 1989, Current Appraisal Issues 1988, Residential Demonstration Report Writing Seminar Grader's Training 1989, Residential Demonstration Report Writing Seminar Grader's Training 1989, Standards of Professional Practice Update 1989, Valuation Methodology Appraisal Institute 1989, Environmental Hazards 1990, Practical Problems Faced by Appraisal Witnesses in Eminent Domain Cases 1990, Residential State Certification Review 1990, General State Certification Review 1991, Appraisal Requirements of the Federal Banking Agencies 1991, The Appraiser as an Expert Witness 1991, Understanding the Style of American Homes 1991, Standards of Professional Practice, Parts A & B 1991, Abbreviated Feasibility and Highest and Best Use Seminar 1991, Abbreviated Subdivision Analysis Seminar Nisley & Associates, Inc. (Resume of John W. Nisley, MAI Continued) 1991, Market Analysis Seminar 1992, Architecture and Development Seminar I992, Reviewing Commercial Appraisals Seminar 1993, Do's and Don't's of Depositions and Expert Witness Testimony 1993, Water Wars 1994, Standards of Professional Appraisal Practice - Part A 1994, Understanding Limited Appraisals and Appraisal Reporting Options: General 1994, Fair Lending and the Appraiser 1995, Residential Demonstration Reports Graders Training Program 1995, EDI and the Appraisal Profession 1996, Data Confirmation and Verification Methods 1997, Lead Based Paint 1997, Rehab Loan Concerns 1997, New Residential Development and Proposed Residential Construction Pitfalls 1997, USPAP Update for State of Colorado 1997, Effective Building Inspections for Colorado Appraisers 1997, Standards of Professional Appraisal Practice - Part C 1998, Conservation Easements and Non -Urban Land Use 1998, Recreation and Resort Issues 1998, Guidance Training 1998, Residential Demo Report Graders Training 1998, Residential Reviews 1998, USPAP, 4 hours update 1999, Rates, Ratios, and Reasonableness 1999, Residential Demonstration Appraisal Report Writing, helped teach 1999, USPAP, 4 hours update MEMBERSHIPS AND LICENSES: Appraisal Institute - MAI Designation, #6925 National Association of Realtors Grand Junction Board of Realtors State of Colorado Certified General Appraiser - License #CG01313453 State of Utah Certified General Appraiser - License #CG00042574 BACKGROUND AND EXPERIENCE: Appraisal Apprentice - Mountain Realty Company - 6/75 to 9/75, 3/76 to 8/76 Fee Appraiser - Nisley & Associates, Inc. - 8/76 to Present Time Licensed Real Estate Broker - Colorado Qualified as Expert Witness in Mesa and Garfield Counties District Courts Nisley & Associates, Inc. (Resume of John W. Nisley, MAI - Con't) Appraisal Institute Committees - Presently serving National Residential Demonstration Appraisal Reports Grading Team; Member of Residential Demonstration Reports Subcom- mittee; Associate Guidance Subcommittee, General Experience Subcommittee Appraisal Institute - Serving on Colorado Chapter Board of Directors, Chair of Membership Retention and Development (Admissions), Colorado Experience Review Panel TYPES OF WORK DONE: Residential - Single Family and Multi -Family Residential and Commercial Subdivisions Commercial - Office, Retail, and Wholesale Properties Industrial Properties Condominiums Farms Vacant Land PURPOSE OF APPRAISALS: Acquisition Tax Planning Bankruptcy Mortgage Foreclosure Insurance AREAS WORKED IN: (Counties) Mesa County Garfield County Pitkin County Larimer County (All in Colorado) Moab, Utah Delta County Moffat County Gunnison County San Miguel County PARTIAL LIST OF CLIENTS: Mesa National Bank First Bank Systems US Bank Grand Valley National Bank Williams, Turner, & Holmes Doug CoIaric Clay Hanlon City of Grand Junction Gunnison County Numerous Private Individuals and Estate Planning Development Condemnation Montrose County Rio Blanco County Ouray County Montezuma County Palisade National Bank Martelle Daniels Cornerstone Private Capital Texaco, Inc. Clay Tipping Carol Multz William Frey City of Montrose Gunnison County Attorney Companies Divorce Sales Exchange Routt County LaPlata County San Juan County Eagle County Greg Kempf School Dist. 51 Norwest Bank Union Oil Company Nisley & Associates, Inc. ASSUMPTIONS AND LIMITING CONDITIONS The certification of the Appraiser appearing in this appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth by the Appraiser in this report. The Appraiser assumes no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor does the Appraiser render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. 2. The sketches and/or maps in this report are included to assist the reader in visualizing the property, and the Appraiser assumes no responsibility for their accuracy. The Appraiser has made no survey of the property. 3. The Appraiser is not required to give testimony or appear in court because of having made this appraisal, with reference to the property in question, unless arrangements have been previously made therefor. 4. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. The Appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. The Appraiser assumes no responsibility for such conditions or for engineering which might be required to discover such factors. 6. Unless otherwise stated in this report, the existence of hazardous substances, including without limitation, asbestos, polychlorinated biphenyls, petroleum leakage or agricultural chemicals, which may or may not be present on the property, or other environmental condi- tions, were not called to the attention of the Appraiser nor did the Appraiser become aware of such during the Appraiser's inspection. The Appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The Appraiser, however, is not qualified to test such substances or conditions. If the presence of substances such as asbestos, urea -formaldehyde foam insulation, or other hazardous substances or environmental condi- tions may affect the value of the property, the value estimate is predicated on the assumption that there is no such condition on or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed for any such conditions, nor for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert if this field, if desired. 7. Information, estimates and opinions furnished to the Appraiser and contained in this report were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished the Appraiser can be assumed by the Appraiser. Nisley & Associates. Inc. 8. On all appraisals, subject to satisfactory completion, repairs, or alterations, the appraisal report and value conclusion are contingent upon completion of the improvements in a work- manlike manner. 9. It is assumed that all improvements, either existing or proposed, meet all local building codes in force at the time of construction or modification, that satisfactory inspections are completed as required, and a Certificate of Occupancy issued (in all jurisdictions where required). 10. The appraiser is not an engineer and accepts no responsibility for structural and/or mechanical defects which would not be reasonably apparent in the scope of an Appraiser's normal inspection of the subject improvements or to a typical prudent purchaser. 11. The liability of Nisley & Associates, Inc. and its employees or Appraisers associated with Nisley & Associates on an Independent Contractor basis status is limited to the client only and to the fee actually received by the appraiser. Further, there is no obligation, accountability or liability to any third party. Any damages incurred by the use of or reliance on this appraisal report by the client is without warranty or liability except for the amount of the fee paid to the Appraiser. 12. The by-laws and regulations of the Appraisal Institute requires each member and candidate to control the use and distribution of each appraisal report signed by such member or candidate. Therefore, except as hereinafter provided, the party for whom this appraisal report was prepared may distribute copies of this report, in its entirety, to such third parties as may be selected by the party for whom this appraisal report was prepared, however, portions of this appraisal report shall not be given to third parties without the prior written consent of the signatories of this appraisal report. Further, neither all nor any part of this appraisal report shall be disseminated to the general public by use of advertising media, public relations media, news media, sales media, or other media for public communication without the prior written consent of the signatories of this appraisal report. 13. THE ACCEPTANCE OF AND/OR USE OF THIS APPRAISAL REPORT BY THE CLI- ENT OR ANY THIRD PARTY CONSTITUTES ACCEPTANCE OF THESE THIRTEEN NUMBERED LIMITED CONDITIONS AND ASSUMPTIONS. Nisley & Associates. Inc. CERTIFICATION The undersigned does hereby certify that, to the best of my knowledge and belief, and except as otherwise noted in this appraisal report: 1. The statements of fact contained in this report are true and correct. 2. The reported analysis, opinions, and conclusions are limited only by the reported assumptions and limited conditions, and are my personal, unbiased professional analysis, opinions, and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. 4. 5. 6. 7. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulation result, or the occurrence of a subsequent event. My analysis, opinions, and conclusions were developed, and this report has been prepared in conformity with the requirements of the Uniform Standards of Professional Appraisal Prac- tice. I have completed the requirements of continuing education of the Appraisal Institute. I have personally inspected the property that is the subject of this appraisal report. No one provided significant professional assistance to the person(s) signing this report. 9. I do not authorize the use of my name, the name of my firm, or my MAI designation for publicity in connection with any effort to market the appraised property. 1 do not authorize any out of context quoting from or partial reprinting of this report for public dissemination. 10. My value conclusion as well as other opinions expressed herein are not based on a requested minimum value, a specific value, or approval of a loan. 11. The confidentiality of the appraiser -client relationship will be protected. 12. Unless otherwise noted in the report, the appraiser is competent to perform the appraisal assignment. Certified al Appraisr Colorado - #CGO1313453 Nisley & Associates, Inc. IDENTIFICATION OF THE PROPERTY The property to be appraised in this report consists of approximately 90.03 acres of vacant land located just east of Carbondale, Colorado. The property will be described in more detail later in this report. It should be noted, however, that the property currently is vacant with the exception of some miscellaneous fencing and cross -fencing. The property fronts County Road 100, which extends east out of Carbondale and is also known as the Coal Road. LEGAL DESCRIPTION The legal description for the property is a fairly lengthy metes and bounds description. The legal description as provided to me is included in the addendum of the report, and this is copied from the Contract to Buy and Sell Real Estate with the parties being Dennis Gerbaz as the sole acting trustee of the Nile Gerbaz Charitable Remainder Unitrust and Dennis Gerbaz as sole acting trustee of the Dennis Gerbaz Charitable Remainder Unitrust as sellers and David S. McMorris and Peter Dunn as buyers. A survey of the property showing the legal description and sizes are also included in the addendum of the report. PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the Market Value of the subject property in "as is" condition. Market Value is defined as follows: "The most probable price which 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, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is consummation of a sale as of a specified date and passing of title from seller to buyer under conditions whereby: Buyer and seller are typically motivated; 1 Nisley & Associates, Inc. Both parties are well informed or well advised and each acting in what he considers his own best interest; A reasonable time is allowed for exposure in the open market; Payment is made in terms of cash in U.S. dollars on in terms of financial arrangements comparable thereto; and The price represents a normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." PROPERTY RIGHTS APPRAISED The property rights appraised in this report are the unencumbered fee simple estate rights of ownership. Fee simple is defined as follows: Fee simple: An absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power, and taxation. DATE OF THE APPRAISAL The date this appraisal applies is as of March 31, 2000. This was the date of inspection by the appraiser and the date to which all opinions of value apply. DATE OF REPORT The date of the report is April 3, 2000. FUNCTION OF THE APPRAISAL The function or use of this appraisal shall be to aid in or support decisions related to encum- bering the subject property for the benefit of the bank. 2 Nisley & Associates, Inc. EMPLOYMENT CERTIFICATION The signatory of this appraisal report is the individual who prepared the appraisal and is not affiliated with Alpine Bank of Snowmass or any of its branches. The amount of the fee charged and the acceptance of this appraisal assignment is not contingent on a required minimum valuation, a specific valuation, or the approval of a loan. This is further stated in the Contingent and Limiting Conditions section of the report. PERSONAL PROPERTY No personal property has been appraised in this report. Although the property consists of some irrigated hay land, the property currently has no growth that could be cut and considered as personal property at the present time. HISTORY OF THE PROPERTY It is my understanding that the property has been in the Gerbaz name for a number of years. Although some internal family transfers have apparently occurred, the property has not changed hands from an arms -length standpoint for at least three years. The property currently has a contract to sell with the sellers being Dennis Gerbaz as sole acting trustee of both the Nile Gerbaz Charitable Re- mainder Unitrust and the Dennis Gerbaz Charitable Remainder Unitrust. The buyers are David S. McMorris and Peter Dunn, and the contract price on the property is $1,776,000, and includes not only the real estate, but all water and ditch rights, as well as oil and gas rights that the seller owns in direct relationship with this property. The date of closing is shown as April 6, 2000. 3 Nisiey & Associates, Inc. SCOPE OF THE APPRAISAL In order to complete this appraisal assignment, it was necessary to complete several steps to obtain data and information regarding the subject property, as well as market data which reflect the motivations and reactions of active buyers and sellers in the local marketplace for this type of prop- erty. The steps in the valuation process include: 1) Defining the appraisal problem, including identification of the property to be appraised, as well as the property rights appraised. This step also includes identifying the effective date of appraisal and the purpose and uses of the appraisal. 2) Preliminary analysis and data selection and collection, including both specific and general information regarding the subject property and comparable market data, primarily from an investigation of public records and deeds, a physical inspection of the subject property, drive-by/exterior inspections of the comparables, and confirmation of the sales. Parameters and extent of data research are detailed in each applicable section of the appraisal report. 3) Highest and Best Use analysis, which usually includes both the study of the site, as though vacant and available to be used at its highest and best use, and a study of the property as improved. 4) Analysis of the applicability of the three approaches to value (the Cost Approach, the Market Data/Sales Comparison Approach, and the Income Approach) to the appraisal prob- lem followed by the valuation analysis using the appropriate techniques. All of these ap- proaches will be used in the valuation of the subject. The extent of the process of collecting, confirming and reporting data includes interviews with realtors in the area, sales and income data available from public records, as well as interviews with property owners and/or tenants, data gathered from the Assessor's and Treasurer's offices, as well as the Clerk and Recorder's office or title company. We have tried to confirm all market data used in the development of these three approaches to value with either buyer, seller or realtor involved in the transaction. This is not always possible, however. A good faith effort has been made by us in collecting, confirming and reporting all available market data. The only limitation regarding market data for the development of a supported indication of value for the property would be the scarcity of this data within the marketplace. There have been no limitations placed on us with regard to the collection, confirmation and reporting of market data available by the client or other parties. 5) Reconciliation of the value indications, correlating the approaches to value in order to arrive at a final value estimate. 6) The last step is communication of the analysis and conclusions, in this case, the form of a written report. 4 Nisley & Associates, Inc. The appraisal report is not intended to be misleading in any manner, and if there are any ques- tions concerning the appraisal report, these questions should be directed to the appraiser in order that the report not be allowed to be misleading. The report is being transmitted in a complete self con- tained appraisal report. TAX AND ASSESSMENT DATA The property is part of a 130 acre tract that is being sold as two tracts. Neither tracts are assessed or taxed separately. 5 Nisley & Associates, Inc. REGIONAL/AREA DATA Glenwood Springs is the county seat for Garfield County and is a famous resort area, located in the scenic Glenwood Canyon at the confluence of the Colorado and Roaring Fork Rivers. It is sur- rounded by mountains and is located on Highway 6 and 24, which has become Interstate Highway 70, and on State Highway 82, which runs south to Aspen. Indians, for many years, enjoyed the healing mineral waters of the springs located here. Isaac Cooper, who arrived in early 1880 along with others, organized the Defiance Town and Land Com- pany, and surveyed the townsite, naming it Defiance. Later, it was renamed Glenwood for Cooper's Iowa birthplace. In October, 1887, the Denver and Rio Grande Railroad was extended to Glenwood Springs. Walter Devereux, with his own money and $250,000 from British investors, built a 500 foot swimming pool at the hot springs, a $100,000 bathhouse, and a six -story, 200 room luxury hotel, The Colorado, which was completed in May of 1893, costing $850,000.00. By the turn of the century, Glenwood Springs had become a famous resort area, as it remains today. It is a trade center of a famous year -around vacation and outdoor sports region, and the center of an area of important mineral resources. Transportation facilities are provided by the Denver and Rio Grande Western Railroad and major bus and truck lines. It has an airport for small craft. The city owns its own water line and power system. Community assets include the Valley View Hospital, which was completed in 1955, and has had an out-patient wing added since. This is an 80 bed hospital serving the entire Roaring Fork Valley. Glenwood Springs is famous for having the world's largest outdoor, naturally -heated mineral pool open year -around, also mineral water baths and vapor cave baths. The City is a turning off point for all traffic going to Aspen. Aspen has developed as a winter sports area, probably the best known of any in the state today, and provides one of the outstanding ski facilities in the nation. A ski area known as Sunlight is located south of Glenwood Springs. The development around Glenwood Springs, together with the Aspen and Snowmass developments, make the area a very important recreational type area on a year -around basis. 6 FarsOn :Eden „Whey Cay 1a Em .,�.,,,a., • South Pass Cly '� .-� l tl ...I.." Y *Agit. 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EtJr7 [n.co G,wu, • � Ntedanalss•Ale�tpa •vy *Yates e •Si • DaNun• . actue spj�y... y'r y'r.....� Ham, I,a� .Mots M°`a • aa+, G„a •B,reyeror wyMn RM+m aDryden s 1999 DeLorme. Street Atlas USA e� ..L..__ :Gascon Cesar. iii Roy •4— _ —_ DialintiO_-. f"° "1wee Elkhart Aag8017 Tue Apr 04 1056 2000 Major Road Scale 1.3,600,000 (at center) Major Highway 50 Miles Glacier =Interstate/Limited Access 100 KM =Interstate/Unlimited Access =Toll Highway Point of Interest County Seat State Capital Large City 4 Park/Reservation City • Sched Service Airport Public Airport • Small Town County Boundary Nisley & Assocates, Inc. Education Facilities - Glenwood Springs Public Schools Elementary 2 Middle School 1 Senior High 1 Private Schools Pre K 3 Elementary (K-5) 1 Elementary (K-8) 1 Trade School 1 Handicapped (0-5 years) 1 Colorado Mountain College Retail Sales: The retail sales activity for the years 1990 through 1998 for Glenwood Springs and Garfield County are shown below: Glenwood Springs Garfield County 1990 $319,635,147 $523,970,532 1991 $321,972,996 $529,540,424 1992 $382,534,155 $593,361,600 1993 $430,521,085 $666,825,000 1994 $445,502,436 $720,592,901 1995 $424,261,111 $726,049,144 1996 $471,604,021 $794,938,938 1997 $521,528,492 $890,255,275 1998 $557,525,295 $960,671,482 Population The Glenwood Springs Area Chamber of Commerce provided the following population statistics: Corp. Limits Garfield Co. 1991 6,634 30,668 1992 6,813 31,455 1993 7,046 32,126 1994 7,268 36,444 1996 7,738 36,835 1997 7,829 37,835 1998 8,202 40,299 7 Nisley & Associates, inc. Recreation and Tourism The vast area of the White River National Forest, which surrounds Glenwood Springs, offers a wide variety of mountain recreations. Big game hunting, trout fishing, skiing, hiking trails, camping, and picnicking opportunities about in this recreational area. The world famous Hot Springs Pool, the world's largest outdoor hot mineral water swimming pool, affords year -around bathing. Sunlight, a ski area just ten miles southwest of Glenwood, began operations in the winter of 1966-67. It features numerous from beginners to experts, 2 double chairlifts, a triple chairlift, to complete the excellent facilities available. Several parks (one baseball and softball), tennis courts, and picnic grounds add to the natural outdoor facilities within Glenwood Springs. There are numerous hotels/motels, with several "bed and breakfast" type facilities in the area. Government The city of Glenwood Springs is governed by a council-manager form of city government. It operates under a home rule charter. Councilmen are elected by people on award basis for four year terms. The council employs a city manager. Glenwood was incorporated in September 1885. The City of Glenwood Springs and Garfield County have existing planning and zoning ordinances. A planning and zoning commission appointed by the City Council resolves matters in this field. A city master plan serves as a guide for future improvements and development. Banks 6 Commercial, 1 Savings and Loans. Streets The City maintains the asphalt paved streets inside the corporate limits. Paving has been paid for by the City, rather than by assessment of the property owners. Snow removal crews operate during the winter months. County streets are maintained by County crews. Utilities Sewage is disposed of by utilizing a primary sewage treatment plant with the City of Glen- wood Springs providing this service. Regular pick-up schedules for trash, ashes, and garbage are maintained by a private operator. The municipal water supply is furnished by two spring -fed mountain springs. The system has a daily maximum capacity of 9,000,000 gallons and has a micro -straining water filtration system with chlorination machinery. Good water pressure is maintained by a system of 14 inch, 12 inch and 6 inch mains. Water supplies for other parts of the County are by well water, typically. 8 Nisley & Associates, Inc. The electric system is owned by the City of Glenwood Springs. Bonds sold for the purpose of purchasing the system have been retired from revenues of the electric system. The entire system has been engineered to provide for future expansion. The total system capacity is 21,000 KWH. Electric: Gas: Telephone Company: Taxes City of Glenwood Springs (Holy Cross Electric, Rural) Rocky Mountain Natural Gas Mountain Bell, AT&T, Private long distance communication systems available Property taxes in Colorado are stated as mill levies. For example, a levy of 30 mills is equal to $30.00 per $1,000 assessed value. Tourism tax was eliminated by voters' approval in late 1996. Sales Tax State 3.00% City 3.25% County 1.00% Accommodations Tax (Motels) 1.50% Health and Medical Services There are approximately sixty physicians, including specialists in: surgery, internal medicine, orthopedics, radiology, pathology, pediatrics, obstetrics and gynecology, ophthalmology, urology, and family practice, numerous dentists, several osteopaths, chiropractors, and optometrists make up the professional medical people you will find in Glenwood Springs. Among its medical facilities are Valley View Hospital, The Glenwood Medical Center, the Health Center, and Glen Valley Nursing Home. Source: Glenwood Springs Chamber of Commerce P. 0. Box 97, Glenwood Springs, Colorado 9 Nisley & Associates Inc. Buiiding Permit Recap - Garfield County (Unincorporated) 1995 1996 1997 1998 Residential 139/64 M . $21,616,653 Commercial 38 $ 3,961,761 Other 125 $ 2,474,235 Total 302 $27,457,281 Residential 176/95 M.H. $33,577,364 Commercial 22 $ 1,788,425 Other 125 $ 3,042,848 Total 323 $38,048,636 Residential 163/86 M.H $35,620,620 Commercial 24 $ 3,093,773 Other 126 $ 3,019,287 Total 313 $41,773,680 Residential 167/81 M.H. $31,648,373 Commercial 36 $ 7,481,631 Other 147 $ 4,614,883 Total 431 $43,744,887 Building Permit Data - City of Glenwood Springs Commercial Properties Year Comm. Valuation # of New Comm. Permits # of Comm. Remodel 1990 $ 2,682,226 5 46 1991 $ 4,252,015 3 75 1992 $ 2,345,511 4 106 1993 $15,638,468 4 97 1994 $ 2,665,456 5 47 1995 $ 6,585,000 2 57 1996 $ 1,174,713 4 47 1997 $12,918,605 13 57 1998 $ 2,301,337 8 50 10 Nisley & Associates. Inc. Building Permit Data - City of Glenwood Springs Residential Properties Year Resid. Valuation No of New No. of New # of S.F. S.F. Units M . Units Remodels 1990 $4,324,440 37 4 98 1991 $2,872,932 33 0 61 1992 $6,152,270 49 59 62 1993 $7,458,679 64 NA 96 1994 $9,086,402 33 40 43 1995 $6,660,686 49 1 73 1996 $7,360,426 34 36 90 1997 $5,845,647 7 27 71 1998 $7,579,534 39 3 64 11 Nisley & Associates, Inc NEIGHBORHOOD DATA As mentioned earlier, the subject is located just outside the town limits of Carbondale, Colorado in eastern Garfield County. The property is located on the north side of County Road 100, and on the eastern boundary of the property, the northern portion of the property appears to include a portion of the Roaring Fork River. According to the buyer, a small portion of the property appears to fall on the north side of the Roaring Fork River, however, that property would not have any access and it appears that it is a very small portion of the total. Carbondale is located approximately 12 miles south and east of Glenwood Springs, and this area has seen substantial growth during the last ten years. Given relatively high pricing in the Aspen area, down valley pressure has been felt as far west as New Castle, Rifle, and Parachute. Because of substantial development requirements along with limitations on development in Pitkin County, much of the development that has occurred has been between Basalt and Glenwood Springs. Developments such as Aspen Glen have been extremely successful along with several other higher density develop- ments in Carbondale. The subject would, more than likely, be a lower density type of development to take advantage of the location along the valley floor. The subject's general location, on the north side of County Road 100, is between Carbondale and the town of Catherine. County Road 100 connects between Catherine and Carbondale, and south of County Road 100 is the location of an old railroad bed that is being proposed for eventual use to provide rail service between Aspen and Carbondale. If this occurs, however, it will, more than likely, be in the distant future. The subject is located about 1-1/2 miles east of Carbondale and just over 1-1/2 miles south and west of Catherine. 12 S tedd 1 _\ M , _, �6 . `F�hY 4 ayyr sf 1999 DeLo mc. Strtet At1au USA flag 14,00 Tue Apr 0410:54 2000 Scale 1:62,500 (at center) 1 Miles 2 KM amkprkm T fn,I f a 1 rva,.. Onw .iM Cron. Local Road State Route Primary State Route Trail Utility/Pipe Railroad 0 Point of Interest Small Town A • At - Airfield Summit Geographic Feature Locale Private Airport Cemetery County Boundary Water Nisley & Assoc+ates, Inc. Zoning in the immediate area is a rural zone, and under Senate Bill 35 in the State of Colo- rado, properties can be split into 35 acre and larger tracts without having to go through subdivision requirements. The subject parcel was part of a larger tract under the same ownership as the sellers of the subject, with the total being slightly over 130 acres. Slightly over 40 acres are being sold that border on the subject's north property line with the subject parcel containing the balance of slightly over 90 acres. Part of the agreement involving the sale of Parcel A, as well as the subject parcel, pertains to the establishment of an easement through the center of the subject property for accessing the northern portion of the property. The location of this easement is shown on the survey of the property included in the appraisal. Utilities in the area typically include Holy Cross providing electric with on-site propane gas, septic systems, and water wells. These utilities are typical and accepted in the market. 13 Nisley & Associates Inc. 1 SITE DESCRIPTION As shown on the boundary plat, the property contains 90.03 acres of land with a rather unusual configuration. The property has around 1,000 feet of frontage along County Road 100, and more than likely, the road easement shown will be reconfigured in a manner that is not just a straight road into the back parcel, but configured in a manner where some other side roads and other lots could have access off of that road. It must be noted that part of the agreement to purchase involves an agreement with an individual who may be a nephew of the seller, and an agreement with this individual involves giving 16 acres of the total to this individual in exchange for other considerations. This would leave about 74 acres of land that could be developed, and this will, more than likely, be completed in a manner to have around 7 ten acre sites with 1 four acre site. This could be accom- plished through a master plan where the overall level of the development does not excess one site per ten acres. There can be a cluster type of housing, and the subject zoning is ARRD, which is an agricultural -rural -residential density. As can be seen from the survey of the property, there are several ditches that cross the property, and these ditches allow for irrigation of various portions. The property generally slopes toward the river which is on the north side of the east side of the subject, and although the plat does not show the location of the river, it appears that the north portion on the east side of the property actually crosses the river onto what is shown as an island in various maps. It appears that the very northern portion of the east side of the property is included in Zone B, which is an area between the limits of the 100 year flood and the 500 year flood, or in certain areas subject to 100 year flooding with average depths of less than one foot, or where the contributing drainage area is less than one square mile, or an area protected by levees from the base flood. This is shown of the Federal Emergency Management Agency Flood Insurance Rate Map with Community 14 Nisley & Associates, Inc. Panel #080205-1880-B. This map was revised on January 3, 1986, and indicates that the balance of the property is in Zone C, which is an area of minimal flooding. Less than one mile east of the subject, as well as north of the subject on the north side of the river, these zones have extended out further, but the elevation on the subject side of the river appears to be slightly higher in this particular location. The subject property is made up of both some open pasture land with some hay grass that can be irrigated, along with a substantial number of trees including some Ponderosa's and many Cotton- woods. These trees provide some levels of privacy for various portions of the property, and although there are some sites visible from the Coal Road, most of the sites would be available for development and this property would be much more private. The property will be fairly easy to develop, and although the ground is not level, the variation in the terrain elevations are not substantial. The photographs included in the appraisal help present the reader with an indication of the topography and landscaping within various portions of the property. Again, electric will be available from Holy Cross, and homes will deal with other utilities including wells for water, septic systems, and propane gas. 15 SUBJECT PROPERTY- VIEWS WEST ALONG COUNTY ROAD 100 FROM CENTER ROAD EASEMENT THROUGH SUBJECT SUBJECT PROPERTY- VIEWS NORTHWEST ALONG COUNTY ROAD 100 FROM CENTER ROAD EASEMENT THROUGH SUBJECT SUBJECT PROPERTY- VIEWS NORTH ALONG COUNTY ROAD 100 FROM CENTER ROAD EASEMENT THROUGH SUBJECT SUBJECT PROPERTY- VIEWS NORTHEAST ALONG COUNTY ROAD 100 FROM CENTER ROAD EASEMENT THROUGH SUBJECT SUBJECT PROPERTY- VIEWS SOUTH ACROSS ONE OF THE CENTER FIELDS SUBJECT PROPERTY- VIEWS SOUTHWEST ACROSS ONE OF THE CENTER FIELDS SUBJECT PROPERTY- VIEWS WEST AND NORTHWEST FROM THE WEST -CENTER FIELD SUBJECT PROPERTY- VIEWS WEST AND NORTH OF EASTERN 'ARM"- PART OF 16 ACRE TRACT SUBJECT PROPERTY- VIEWS NORTH ACROSS NORTHERN PORTION BY RIVER SUBJECT PROPERTY- VIEWS EAST ACROSS THE NORTH-CENTER FIELD a 3-D aopoauaae copyright a 1494 DeLotne far anth, 1R 04096 Source Data: 1998 I-11001 ft scale: 1 : 25.oa0 Detail: 13-1 Datum: 1161891 i I LS Catheritle. • it 'ban,le 6E91 • 4 —7p 10, Lc��•-'1_ r a{1` II Li r# r tom f 1, 3-D Yopaquads Copyright * 1999 DeLorie Yarmouth, 112 04096 Source Data: ISS —1950 ft Scale 1 : 24,000 Detail: I3-1 Datum: 16814 3-D TopoQuad, Copyright 0 1999 DeLorme Yarmouth, !X 44095 Detail 13-1 Datum: W M Nisley & Associates, Inc. HIGHEST AND BEST USE Highest and Best Use is defined as follows: That reasonable and probable use that will support the highest present value, as defined, as of the effective date of the appraisal. Alternatively, that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, ,financially feasible, and which results in highest land value. The definition immediately above applies specifically to the highest and best use of land It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use. Implied within this definition is recognition of the contribution of that specific use to commu- nity environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraiser's judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact to be found In appraisal practice, the concept of highest and best use represents the premise upon which vahre is based. In the context of most probable selling price (market value), another appropriate tern to reflect highest and best use would be most probable use. In the context of investment value, an alternative term would be most profitable use. (Taken from "Real Estate Appraisal Terminology" - The American Institute of Real Estate Appraisers) The first constraint to be analyzed is the legal permissibility of development. The property is zoned ARRD, which will allow, with appropriate development requirements being met, the develop- ment of the property into one unit per 10 acres. This development does allow some cluster type of development so that several lots may be less than 10 acres in size, however, the overall density would not excess a total of 9 lots on the property. Other more stringent development requirements would be seen if the property were to be rezoned to a higher density, and in Garfield County, it would be unknown if a higher density might be able to be obtained. If the property could eventually be annexed into Carbondale, a higher density might be able to be sought, but again, development requirements 16 Nisley & Associates, Inc. would, more than likely, be substantially higher than those under the existing zone, and this would increase the risks of economic feasibility. The second constraint analyzed would be the physical possibility of use, and given the overall size of 90.03 acres, the property would allow a variety of agricultural and residential use. Again, some cluster housing would be allowed legally, and physical constraints would include the possibility of keeping some land area open for pasture use and using the more private, wooded areas for the actual location of improvements. These are all constraints that would be handled by appropriate planning officials, as well as a planner to subdivide the land in the most appropriate manner. The more difficult constraint to analyze is the economic feasibility of development. Under the existing zone, the development of the property into nine homesites would be legally permissible and physically possible. Based on projections of development costs, this use would also be economically feasible, as seen in the valuation section of the report Taking these factors into consideration, this would also produce the maximum level of value under the existing legally permitted use. Therefore, the indicated highest and best use of the property would be as proposed, for the eventual development into around nine homesites. The purchasers will probably wait around one year for the actual development to occur for tax purposes, however, given demand in the area, if the property were to be developed sooner, there would be no negative impact on value. 17 Nisley & Associates, Inc. ABOUT THE APPRAISAL PROCESS Buyers and sellers of real estate usually think of value in three ways, each of which, to some extent, is based upon the principle of substitution. These are: 1. The current cost of reproducing a property, less depreciation from all sources (Cost Ap- proach). In this approach, current land value is determined usually by comparable sales of similar lands and this then is added to the depreciated reproduction cost of the improvements. Accrued depreciation may be one of three kinds, each of which or all of which may apply. a. Deterioration or the physical wearing out of the property. b. Functional Obsolescence or lack of desirability in terms of style, layout, and design as compared to a new property serving the same function. c. Economic or External Obsolescence relating to a loss of value from causes outside the property itself. 2. The value that the property's net earning power will support based upon a capitalization of net income (Income Approach). This approach to value is applicable to income producing properties and may not be practical in the appraisal of properties for which a rental market or a rental value cannot be readily identified. The approach is based on the principle of anticipation and a process of capitalization is used to translate an income projection into a present capital value indication. The various methods of capitalization are based upon various assumptions concerning the quality, durabil- ity, and pattern of the income projection. 3. The third method is an indication of recent sales of comparable properties in the market and other market factors such as listings and offer activities (Sales Comparison Approach). Market Value, when estimated by this approach, often is defined as: "The price which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure." The definition is based on the assumption that both buyer and seller are fully informed about the property and about the state 18 Nisley & Associates, Inc. of the market for the type of property and that the property has been exposed in the open market for a reasonable time. After arriving at an indication of value by each of the approaches, they are then correlated into a final estimate of value. The weight given to each approach will depend upon the amount of data available to support it, the reliability of the approach to the kind of property being appraised, and to many other factors. Basic Principles The basic principles explain and provide dimension for normal real estate market behavior and also provide a basis for evaluation and understanding of unique market situations. The basic prin- ciples which have a high degree of relationship and inner -dependence are: 1) Supply and Demand 2) Change 3) Substitution 4) Highest and Best Use 5) Balance 6) Competition 7) Conformity 8) Anticipation 9) Consistent Use Since these principles are also keys to understanding why, how, and when certain things transpire, these principles are applied so that informed judgments may be reached. 19 Nisley & Associates, Inc. For a vacant land tract, typically the only approach to value utilized would be the Sales Comparison Approach. However, because the property can be developed into a low density type of subdivision, a secondary approach would be through a Subdivision Analysis Approach. In this approach, direct sales comparison is used for the finished product, which would be the developed lots. Absorption of these lots into the market is then estimated based on sales that have occurred, and the timing of the sales and expenses are then estimated. This income stream is then discounted back to a present value in order to estimate an "as is" value for the property. It must be noted that the expenses of development, costs of commissions, holding expenses, and other expenses would also take into consideration a profit margin for the developer. The Subdivision Analysis Approach will also be used in this appraisal in addition to the Sales Comparison Approach for the parcel. 20 Nisley & Associates, Inc. DIRECT SALES COMPARISON APPROACH In applying the Sales Comparison Approach, the procedure is to- 1) find similar properties for which recent sales, and/or rental data are available, 2) ascertain the conditions of sale including the price, motivation, etc., 3) analyze each of the properties' important attributes as compared to the corresponding attributes of the subject property, taking into consideration time, location, physical characteristics, terms of sale, etc., 4) consider the dissimilarities in the characteristics, 5) formulate, in light of comparisons made, an opinion of relative value of the property being appraised. Estimating the degree of comparability between the two properties involves judgment as to the similarities with respect to value factors such as location, construction, age, condition, layout, equipment, etc. The sales of properties deemed most comparable tend to set the range in which the value of the appraised property will fall. Contained on the following pages is a summary of sales that have occurred in the general area of the subject over the last several years. As can be seen, in the area of the subject just east of Carbondale, there have only been three sales in the area of the valley floor since the first part of 1998. We found 25 sales total in the general area, however, few were truly comparable. Sale #2 occurred in February of 1998 on 107 acres that sold for $2,000,000 from Nieslanik to Hite. The property contained around 100 acres of irrigated land and meadow hay with a little over 7 acres in grazing land. According to the flood plain map, however, it appears that there may have been a higher percentage of this land area in the flood plain, and this can create some higher costs of development. This sale occurred at $18,616 per acre overall. Sale #25 is the sale of the property immediately north of the subject from Gerbaz to Kilby. This sale occurred with a closing date of December 30, 1999, with the parcel containing 40.61 acres selling for $791,900 or $19,500 per acre. While this property is adjacent to the subject, its access is 21 239515100140 239334100382 239117400179 239511100054 239536400145 239130200030 239313400392 239318200102 218716100138 239130202002 239130202005 239329100024 239318100359 239129300081 218718102027 218718402025 239120400180 239120400180 239131200023 JOB: MCMORRIS SALE DATE PARTIES GRANTOR / GRANTEE BKPG SITE RECPT # ACRES SALE PRIG PRICE/ SEC/IWN/RNG LAND TYPE ACRE PARCEL # RES. IRR MEADOW GRAZE LAND IIAY COMMENTS 2 3 4 5 1/5/98 2/18/98 2/19/98 3/18/98 WILLIAMS / COLETTI 1089/439 NIESLANIK / HITE 1054/296 PIPE DREAM ENT / GERRINGER 1054215 DEER PARK PROPERTIES / 1058/786 CRYSTAL RIVER RANCH 3/31/98 DEER PARK PROP. / MARTIN 39.119 107.432 35.33 3124.46 5270,000.00 522000,000.00 5275,000.00 57,693,700.00 56,902.02 518,616.43 57,783.75 52462.41 1060/885 53.161 6 7 8 9 5/15/98 SASLOVE / ELROD 1068/367 6/25/98 DOUGLAS 1 SHIFRIN 1075/675 816+98 GW LAND CO / SANDERS RANCH 1062/897 8/27/98 SPRING VALLEY HOLDINGS / 1087/195 ASPEN SPRINGS RANCH 35.481 161.92 266.06 4511 10 11 12 13 14 9/28/98 SHIFRIN / SMrI1I 1091/345 10'6/98 ROONEY / HIRSCH 1092/501 11/6/98 GW LAND CO / CORYELL RANCH 1097/387 11/20/98 MIDLAND / RUDD LW 1100/357 12/7/98 GLASSIER I STIRLING TRUST 1103/213 15 16 17 18 19 1/15/99 RUDD / TAKACS 1109/448 1/15/99 RUDD / MARA 1109/449 4/14/99 CONNOLLYTRUST / HARRIMAN 1134/844 4/19/99 HARRRIMAN / CHIARELLI 1134/846 6/25/99 TRETTIN / ASPN EQUESTRIAN EST 1141/429 35.001 35.001 256.97 48.95 30 35.65 36.95 352 352 57.89 5106,300.00 51,99939 5495,000.00 51,847,800.00 56,890,000.00 51,700,00000 5575,000.00 5349,000.00 56,000,000.00 5435,000.00 5180,000.00 513,951.13 511,411.81 525896.41 5376.86 516,428.10 59,971.14 523,349.03 58,886.62 56,000.00 5180,000.00 5180,000.00 S175,000.00 5300,000.00 55,049.09 54,871.45 54,97159 $8,522.73 53,687,500.00 563,69839 39.119 FARANHYLL RANCH #11 7.432 35.33 GOOD LAND QUAL., NO WATER RIGHTS 9.6 333.47 278139 RES 1- BLT 1967,12'X57' MH BLT 1965 RES 2- BLT 1904, 1332 SF, SEVERAL OUTBLDGS 51161 MH 28'X66', BLT 1969 7 28.481 LOT 3, LOS PINONES RANCH 81.6 14537 132 35.001 80.32 RES. BLT 1915, 1712 SF, OUTBLDGS 105 15.69 RES. BLT 1919, 1836 SF, SEVERAL OUTBLDGS 281 3998 RES. BIT 1928, 1336 SF, SE VERAL OUTBLDGS LOT2, LOS PINONES RANCH 18 7 I7.01 LOT 5, LCS PINONES RANCH 100 8456 72.41 RES. BLT 1930, 1366 SF, SEVERAL OUTBLDGS 48.95 30 HILLSIDE- ONLY 3-4 AC. ON TOP USEABLE NO ACCESS, STEEP HILLSIDE 35.65 RANCH 27, LOOKOUT MTN. RANCHES 36.95 RANCH 25, LOOKOUT MTN. RANCHES 352 352 52.89 RESALE OF SALE # 17 SEVERAL OUTBLDGS, LIVING AREA CONSISTS 20 8/20/99 JOLILAKALLC / TORNARE 21 9/30/99 SMITH / CEDAR RIDGE FARM 22 1Q'1199 BAR LAZY Y / HURWITZ 1147/130 86.948 1153/775 1025 1153/991 158 23 24 25 11/5/99 STIRLING / V H S LP 11/30/99 COX / BACON 1230/99 GERBAZ / KILBY 1159/329 1163/691 1166/928} 191.7 35.01 40.61 5630,000.00 52,650,000.00 5535,000.00 5385,000.00 $169,000.00 5791,900.00 57,245.71 239130100210 525,853.66 239313200298 53,386.08 218736300140 52,008.35 239533100055 54,827.19218719300141 519,500.12 239336200015 46.948 40 OF 3 STUDIO APIS., E MPLOYEE HOUSING 1 102.5 RES. BLT 1990, 2954 SF, SEVERAL OUTBLDGS 158 191.8 SUNLIGHTCOAL MINE - NON PRODUCING 35.01 40.61 ADJACENT TO SUBJECT PROPERTY ;Carnality 00.1ch yaMy Naw Ho.Pta1 McMorns Sales Lomps / 7 sonnge M \ �Alln.tllr ,.poparr Homestead • SALE 21 pock Flats r--- l pir .k C J(aalao{ — SALE 3 SALE N11 SALE 12 11E 11 j Parr .Jarornr Park SAIF 5 pgryt ii 7 lag 13.00 Scale 1 100,000 (at center) TueApr 0409:192c00 2 Miles 2 KM H 'SAEJ:'_ Cirbonduk 1, •�J \� Meta 111193iT Uyr+ai Riw ------ Local Road Major Connector °"'mwm State Route ,TTs Data Nisley & Associates, lnc. limited, and the property has no frontage along any major road. This would create the need for an upward adjustment to consider access to this property, with a downward adjustment to consider the size of the parcel being less than one-half the size of the subject. Sale #19 was on about 58 acres, however, this property also included a number of outbuild- ings with three studio apartments. This was a sale that occurred overall for $3,687,500 which breaks down to $63,698 per acre. Sale #12 is located west of Carbondale just above the Crystal River, and this parcel contains 256.97 acres that sold overall for $6,000,000 in November of 1998. The sales price breaks down to $23,349 per acre, and around 185 acres were irrigated lands and meadow hay. The balance of about 72.41 acres were apparently in steep hillside with very little usable !and. This property was improved with a 1,366 square foot home built in 1930 and contained several outbuildings. Another acreage along the Roaring Fork River included Sale #8 that was located below Cattle Creek. This sale occurred in August of 1998 on 266.06 acres of land that sold for 56,890,000.00. This sale breaks down to $25,896 per acre, and the sale included some outbuildings with a residence built in 1919. This property contained about 145 acres of irrigated land, 105 acres of meadow hay, and about 16 acres in grazing land. None of the other sales included in the appraisal are down near the valley floor, and most of the balance of the tracts would be considered as larger acreage homesites. The last information necessary to include in this approach is the sale of the subject property itself. This property is currently under contract at an overall price of $1,776,000.00. An internal agreement made between the buyers and Mike Gerbaz eliminates 16 acres on the northwest side of the property from the subject ownership after the infra structure and approvals for development occur. This effectively lowers the acreage being purchased to approximately 74.03 and dividing the 22 Nisley & Associates, Inc. sales price of $1,776,000 by 74.03 acres indicates a per acre price being paid of $23,990.00. As can be seen from the other sales in the area including the 40 acre tract just north of the subject, this price would appear to be well in line on a per acre basis and must be heavily weighed in the analysis. If we adjust Sale #25 upward 25% to consider the overall differences of a smaller size, but inferior access and inferior development potential given the amount of the land area in a flood plain, the indicated value for the subject would be around $24,375 per acre. Sale #2 would need to be adjusted upward for time and the flood zone, and this sale would need an adjustment of around 14% for time, using about a 12% annual increase and around a 15% adjustment for the flood plain issue. This would indicate an adjustment of about 29%, indicating a value on a per acre basis at about $24,015.00. Sale #12 would need a downward adjustment for the improvement, but an upward adjustment for the usability, considering that part of that acreage was not usable, Sale #19 would also require some downward adjustments for the substantial outbuildings on that property. Based on the data presented it is my opinion that the contract price on the property is realistic and may even be slightly low. Placing the most emphasis on the subject's own sale, I concluded a value through direct sales comparison at $1,800,000, rounded. Indicated Value by Sales Comparison Approach 51,800,000.00 23 Nisley & Associates, Inc. SUBDIVISION ANALYSIS APPROACH In'this approach to value, the initial step is to obtain information from which to estimate a value for finished lots within the subject property. Given the property's location, we researched some of the areas, not only in Garfield County, but in Eagle and Pitkin Counties, in order to derive support- ing information. We completed limited research in the area, since this was a secondary approach to value. There were a fairly substantial number of sales we obtained information on, as well as obtain- ing information from realtors as to their projection of values for properties such as the subject. The subject purchaser's wife is a realtor in the Local market and felt that overall prices for the 7 ten acre sites would be in the area of $895,000 or $89,500 per acre, with the smaller four acre tract having a value at around $795,000 or $198,750 per acre once the parcel is developed. The 16 acre site would have no value to the current buyer, with this being transferred to the nephew of the seller due to prior agreements. In the addendum of the report is a listing we obtained of sales along the Frying Pan River, primarily in Eagle and Pitkin Counties. As can be seen from about the first 10 sales, sales prices ranged from around $43,000 up to around $350,000.00. Properties with frontage along the river had the highest overall price per acre, with some of the properties off the Frying Pan River, but still having good views, having lower prices per acre. The sales typically ranged in size from around 1 to 4 acres and from around 35 acres up. Sales #1 through #4, #6, and #7 all ranged from a low end of around $37,300 per acre to a high end of around $89,800 per acre, with the larger acreages selling at between $55,000 and $60,000 per acre. As a general indication of value, these sales are somewhat lower overall per acre than those projected for the subject by the realtors involved, however, it must also be noted that the majority of these sales are along the Frying Pan River going from Rudi Reser- voir and into Basalt. A tract at 189 100 Road in Carbondale contained about 4.69 acres of land that 24 DISCOUNTED CASH FLOW ANALYSIS MCMORRIS PROPERTY CARBONDALE, COLORADO J. NISLEY, MAI NISLEY & ASSOC., INC. APRIL 3, 2000 INCOME:9 RETAIL QUARTER 1 2 3 4 6 7 8 INCREASE 0 0% 0.0% 0,0% 1.0% 1.0% 5.0% 5.0% 5.0% 5.0% SALES' BEGINNING LOTS 9 9 9 5 3 1 0 0 0 LARGER LOTS 7 7 7 5 3 1 0 0 0 IARGFRt LOTS SOLD 0 0 2 2 2 1 0 0 0 7 SALES PRICE AVG. 5500Q 5504.400 1500..449 5545<044 5519.450 t535 553 4562.330 5590.447 5619 969 GROSS SALES PROCEEDS 50 50 51,000,000 51,010,000 51.020,100 5535.553 50 50 50 53,565,653 SMALLER LOT 1 1 1 0 0 0 . 0 0 0 SMALLER LOT SOLD 0 0 1 0 0 0 0 0 0 1 SALES PRICE AVG. 5350.400 5350.494 5350-040 5353100 5357.035 5324..887 5393.531 5413.313 5.433.9718 GROSS SALES PROCEEDS 50 50 5350,000 50 50 50 50 50 50 5350,000 16 ACRE LOT 1 1 1 00 0 0 0 0 1 16 ACRE LOT DEEDED 0 0 1 0 SALES PRICE AVG. 10 10 S4 IQ I4 IQ 14 19 10 GROSS SALES PROCEEDS 50 50 50 50 50 50 50 $0 SO 50 END LOTS 9 9 5 3 1 0 0 0 0 9 GROSS INCOME: 14 14 51.350.000 $1.010.440 11.1-12.1.1.012 t535 553 14 .54 .24 53 915 653 EXPENSES: PROFIT- 25% TOTAL�Q 51.211 0.5 COMM.- 65 AVG. 31.05 . 0 10 5.410.590 1313.100 $316.231 5166 021 59 SO GROSS INCOME LESS COMM.: 50 $0 $931500 5696,900 5703,869 5369,531 S0 50 SO 52,70I,8001 LOAN FEES (ALL INC.): 50 5255,000 S0 $0 SO SO $0 SO SO 5255,000 DEVELOPMENT EXPENSES: 50 5215,000 SO 5215,000 S13,000 SOFT COSTS: (TAXES) 50 513,000 TOTAL EXPENSES: NET INCOME: DISCOUNTED VALUE AS IS: DISCOUNTED AT: 12.0% 13.0% 14.0% _50 5483.044 5418.100 5313.100 $316.231 5166.021 _5.4 ,S4 154 51,696.852 4 (5483.000) 8931"500 $26.2a4 5203.869 1369.531 4 52.218.8_ 51,933,000.00 51,911,300.00 51,889,800.00 DISCOUNTED VALUE AS FINISiIED: DISCOUNTED AT: 12.0% 52,388,300.00 13.0% 52,364,300.00 14.0% _ S2,340,700.00 FINAL VALUES RETAIL VALUE: . $3,915,653 VALUE AS FINISHED: $2,388,000 (UNDER ONE OWNERSHIP) "AS IS" VALUE:__ _ _ $1,33 000 Nisiey & Associates, Inc. sold for $600,000 on November 30, 1999, according to the Multiple Listing Service. This would break down to just under $128,000 per acre. The property, however, was improved with a home originally constructed in 1900 and remodelled in 1978 that contained around 2,100 square feet. We completed only limited research in this particular regard for the subject, and this must be construed as a secondary approach to value only. However, based on the limited data we have, it is difficult to estimate values as high as that projected by the realtors, although they are dealing with a future value and future inventory, while we are reviewing data of the past. Based on very limited sales information, it is my opnion that the 10 acre sites within the subject property should be able to achieve a sales price of around $50,000 per acre or $500,000, which should increase after the first several sales occur. For the one smaller acreage site, 1 feel a reasonable value would be around $87,500 per acre or $350,000 based on the data presented. For absorption, the realtor stated that an 18 month sell-out would be realistic, in his opinion, with about six months required for the approvals to be obtained. Given my understanding of the lack of supply, but a strong demand for this type of property in the area, this would appear to be realistic. I have estimated the absorption discounted on a quarterly basis, with sales occurring over a six quarter period. All of the sales would occur between quarters 3 and 6. I also estimated expenses on the project at an average of around 6% for commissions and a 25% developer's profit. 1 also esti- mated development expenses based on information provided to me by the purchasers of the subject, and these expenses totalled about $483,000, as can be seen in the summary of the Discounted Cash Flow Analysis. This included about $255,000 in loan fees, around $215,000 in development ex- penses, and around $13,000 in soft costs and holding expense. These fees would all be paid after some time was allowed for the approvals to be obtained, but prior to the first sale in the third quarter. The income stream presented was then discounted. As can be seen, there were no expenses shown in 25 Nisley & Associates, Inc. the first quarter, with the second quarter experiencing a negative cash flow for the costs of develop- ment. The third through sixth quarters then saw the sale of the properties, with the net income stream that was positive being achieved during those periods. This income stream was then discounted at rates ranging from 12% to 14%, and as can be seen, the discounted value on an "as is" basis through this method ranged from about $1,890,000 to $1,933,000.00. With the potential of the development plan in place, this is probably a conservative figure, particularly if the sales prices of the individual lots are conservative. The risk for development of the subject would be fairly minor, but would still be noted. In my opinion, a 12% discount rate would be reasonable, and this would indicate an "as is" value for the property through this approach at around $1,933,000.00. Indicated Value by Subdivision Analysis Approach $1,933,000.00 26 Nisley & Associates, Inc. FINAL VALUE CONCLUSION Indicated Value by the Sales Comparison Approach Indicated Value by the Subdivision Analysis Approach $1,800,000.00 S1,933,000.00 As indicated in the appraisal, the Sales Comparison Approach must have heavy emphasis placed on it since the property is currently under contract. The Subdivision Analysis Approach is a secondary method that, more than likely, presents a conservative value given reasonably conservative sales prices on the lots that will be developed. The purchaser and his wife, who is a realtor in the market, more than likely, have a much clearer projection of future prices than can be shown by the limited sales information we obtained. Less emphasis is placed on this approach, however, because of the limited amount of data we obtained in the area. Based on the data presented, it is my opinion that the Market Value of the subject property in "as is" condition would be: ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000.00) 27 Nisley & Associates, tnc. EXPOSURE AND MARKETING TIME Exposure time is the concept of the period of time in the past that would be assumed the subject would have been listed prior to the date of valuation in order to sell at the appraised price. This is based on exposure in the open market and the time frame in which other sales have occurred. it would be my opinion that the exposure time of the subject would, more than likely, be in the area of around one year or less. Marketing time is the concept of the future time frame required to sell the property after the date of value at the appraised price. With no significant changes in the market during the last year, it would be my opinion that the marketing period would be the same as the exposure time, at around one year or less. Respectfully submitted John Nisley, AI Certifie General Appraiser Colorado - #CG01313453 28 oe 2ecc. ;=A:. :F. 4$ aANx EN,..) mAa3 _ ie •Bank %,L SLnowmass Vfilag9 ' &r'.+.iy" . , ,. - February 8., 2000 • JvfirrW Neisley, MA[ :,(5.';Box 446 . rgnd Junction, Colorado 81502 '71 ':fear Mr, N:eisley• • ;oi)are hereby engaged by Alpine Bank to prepare a written self-contained appraisal for . • e property situated iii Sections 35 and 36, Township 7 South, Range 88 West of the 6th tmcipal•Meridian in Garfield Couniy, Colorado. The purchasers of the property are - •Peter. and' Gloria Duni and David and Christine McMorris. :.Should you have any questions, please do not hesitate to contact me. Sit 570 923 6973 PAC E.2 ;i".i ••• P.b,Boa 5490 • IS Kearns Road • Snow pass VII!age, Colorado d1t i S • (970) 923-3[100 • FAX (970) 923-64 73 " www.elpineb nk.:orn • ttipineGgalpinebank.corn .P�f• er Sheri Srnith Seiiicir, Vice President Nisley & Associates. Inc. LEGAL DESCRIPTION (Taken from Contract) A parcel of land situated in government Tots 12 and 13 in Section 35, and in government lots 14 and 15 in Section 36, Township 7 South, Range 88 West of the 6`11 P.M., County of Garfield, State of Colorado. Said parcel lying northerly of the northerly right-of-way of Garfield County Road No. 100, and being more particularly described as follows: Beginning at the North right-of-way line of Garfield County Road No. 100 from which the witness corner for the South Quarter Corner of Section 35, a No. 6 rebar found in place bears South 81°49'57" West 1416.62 feet (Record Tie: S. 81°55' W. 1417.05 feet); Thence along said right-of-way South 87028'17" East a distance of 425.14 feet; thence along said right-of-way South 88°35'41" East a distance of 154.64 feet; thence along said right-of-way North 88°45'26" East a distance of 310.37 feet to the true point of beginning; thence North 01°14'34" West a distance of 1206.34 feet to a rebar and cap. PLS #26950; thence North 67°39'44" West a distance of 478.58 feet to a point on an existing fence line being a rebar and cap. PLS #26950; thence along said fence line North 00°40'07" East a distance of 410.00 feet to a rebar and Cap. PLS #26950; thence South 65°12'47" East a distance of 389.37 feet to a rebar and cap. PLS #26950; thence South 78°31147" East a distance of 82.93 feet to a rebar and cap. PLS #26950; thence South 62°09'01" East a distance of 155.56 feet to a rebar and cap. PLS #26950; thence North 66°12'16" East a distance of 185.69 feet to a rebar and cap. PLS #26950; thence South 78°29'52" East a distance of 277.46 feet to a rebar and cap. PLS #26950; thence South 65°19'05" East a distance of 252.12 feet to a rebar and cap. PLS #26950; thence South 89°58'08" East a distance of 420.28 feet to a rebar and cap. PLS #26950; thence North 30°22'30" East a distance of 251.43 feet to a rebar and cap. PLS #26950, thence North 72°44'29" East a distance of 264.93 feet to a rebar and cap. PLS #26950; thence North a distance of 740.00 feet to a rebar and cap. PLS #26950; thence North 89°53'49" East a distance of 600.00 feet to a rebar and cap. PLS #18478 at the Northeast corner of Government Lot 14 in Section 36; thence South 00°16'36" East a distance of 674.92 feet to the Southeast corner of Government Lot 14, also being the Northeast corner of Government Lot 15; thence South 00°16'36" East a distance of 1413.08 feet along the Easterly line of said Government Lot 15, to the Northeast corner of that parcel of land described in Book 763 at page 727; thence the following ten (10) courses along the Northerly and Westerly lines of those parcels of land described in Book 763 at page 727 and in Book 765 at page 933 of the Garfield County records: 1) S. 22°04'22" W. 22.78 feet; 2) S. 02°38'40" W. 115.26 feet; 3) S. 78°59'17" W. 220.50 feet; 4) S. 81°58'57" W. 266.62 feet; 5) N. 81°4711" W. 67.50 feet; 6) N. 84°42'56" W. 88.95 feet; 7) N. 84°42'56" W. 114.68 feet; 8) S. 79°02'17" W. 120.81 feet; 9) N. 87°2T14" W. 227.54 feet; 10)S. 15°25'16" W. 192.83 feet to the Northerly right-of-way of Garfield County Road No. 100; thence along said right-of-way S. 88°45'26" W. a distance of 1028.69 feet to the True Point of Beginning. Said parcel containing 90.03 acres, more or Tess.