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HomeMy WebLinkAbout01-09-17 CC Mtg - C11. Resolution 4751, Property Purchase of Oak to Fowler177 Page 1 of 3 COMMISSION RESOLUTION NO. 4751 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, AUTHORIZING THE CITY MANAGER TO PURCHASE A TRACT OF LAND NECESSARY FOR THE PURPOSE OF MAKING IMPROVEMENTS TO OAK STREET AND FOWLER LANE. WHEREAS, the City of Bozeman finds it necessary to acquire certain real property to allow it to utilize such property for purposes of improving Oak Street and extending Fowler Lane; and WHEREAS, the real property to be acquired is described in Exhibit "A" attached hereto and by this reference incorporated herein; and WHEREAS, the City agents have offered to purchase said real property by submission of a written offer, and the final written offer was accepted by the owners and the City has been able to obtain the consent of the owners to sell said real property. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, that it authorize the City Manager's execution of the Memorandum of Agreement for the Purchase of the real property described in Exhibit "A," together with all necessary closing documents, and accept the Warranty Deed to transfer ownership of the real property from the William H. and Betty Anne Sippel Trust to the City of Bozeman. PASSED AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 9th day of January, 2017. ____________________________________ CARSON TAYLOR Mayor 178 Resolution 4751, Purchase of Real Property for Construction of Improvements to Oak Street and Fowler Lane Page 2 of 3 ATTEST: ________________________________________ ROBIN CROUGH City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney 179 Resolution 4751, Purchase of Real Property for Construction of Improvements to Oak Street and Fowler Lane Page 3 of 3 Exhibit "A" Legal Description A tract of land in the West half of the West half of the Southwest Quarter (W1/2W1/2SW1/4) of Section Two (2), Township Two (2), South, Range Five (5) East, Montana Principal Meridian, Gallatin County, Montana, and described as follows: Beginning at a point on the West line of Section Two (2), which point bears North 01"36'27" East along said West line a distance of 1324.28 feet from the Section corner common to Section 2, 3, 10 and 11; thence North 01"36'27" East along said West line a distance of 1325.26 feet to the quarter corner common to Sections Two (2) and Three (3); thence North 89"45'11" East along the North line of said Southwest Quarter (SW), a distance of 329.63 feet; thence South 01"35'26" West, a distance of 1325.13 feet; thence South 89"44'00" West, a distance of 330.00 feet to the point of beginning. 180 181 182 183 184 185 186 187 188 Hall – Widdoss & Company, P.C. 1 APPRAISAL REPORT OF PARCEL 7 OAK STREET ACQUISITIONS BOZEMAN, MONTANA FOR TONY BECKEN-GADDO, P.E. DOWL HKM PREPARED BY: NICHOLAS J. HOGAN, MAI HALL - WIDDOSS & COMPANY, P.C. 1001 SW HIGGINS AVE., SUITE 201 MISSOULA, MT 59803 189 Hall – Widdoss & Company, P.C. 2 TABLE OF CONTENTS SUMMARY OF SALIENT FACTS AND CONCLUSIONS ........................................................ 6 RECORD OWNER/SALES HISTORY ......................................................................................... 8 HISTORY OF THE PROPERTY ................................................................................................... 8 LOCATION OF PROPERTY......................................................................................................... 8 LEGAL DESCRIPTION ................................................................................................................ 8 TAXES AND ASSESSMENTS ..................................................................................................... 8 PLAT MAP ..................................................................................................................................... 9 SUBJECT PHOTOGRAPHS ....................................................................................................... 10 HIGHEST AND BEST USE ........................................................................................................ 14 Valuation: ...................................................................................................................................... 18 Adjustment Grid: .......................................................................................................................... 19 VALUE ESTIMATE AND CERTIFICATION ........................................................................... 21 ADDENDA Assumptions & Limiting Conditions Taxes Zoning Map & Regulations Appraiser Qualifications 190 Appraisals and Consultations in Acquisitions/Dispositions, Feasibility Studies, Partial Interests, Condemnation & Litigation, Investment Analysis. 3 April 1, 2016 Tony Becken-Gaddo, P.E. Dowl HKM 2090 Stadium Drive Bozeman, Montana 59715 RE: Parcel 7, Oak Street Acquisitions. Dear Mr. Becken-Gaddo: In response to the contract located in the addenda of the sales catalog, I have prepared an appraisal of the above referenced property. The appraisal references data in this project report/sales catalog and access to that document is completely necessary to understand the analysis and conclusions contained herein. Typically, the purpose of an appraisal for PUE is for estimating the current fair market value, before the imposition of the road easement, its current fair market value after imposition of the road easement, and an estimate of compensation due to the property owner. In the case of the subject property, this is a total acquisition of the site. Therefore, there is no requirement for a before and after analysis. This is simply the value of the entire property as a whole, owned in fee simple. I assume no responsibility for matters that are legal in nature nor do I render an opinion as to title. The subject site contains a gross site area of 10.03 acres located at the southeast corner of Davis Lane and West Oak Street. This is a rectangular shaped tract level and at grade with the surrounding streets and properties. Access is from Oak Street that sets the northerly boundary of the subject property. The property is currently zoned SRR by Gallatin County and is located in flood zone X which is an area of minimal flood hazard. FEMA panel 30031C0804D effective September 2 of 2011 is a non-printed panel. Under general requirements, the appraisal has been prepared in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP). The appraisal of the subject will present my findings and conclusion of the “as is” fee simple market value of the property as of the date of final inspection. Specific reference to the issue of competency is required. It is recognized that Nicholas J. Hogan, MAI has adequate current, practical experience in the appraisal of vacant land and subdivision properties in Western Montana. As such, I believe I am competent to provide this appraisal service. Hall - Widdoss & Company, P.C. Real Estate Appraisers & Consultants 1001 SW Higgins Avenue, Suite 201 Missoula, MT 59803 Ph. (406) 721-3822 Fax (406) 721-7848 Steve.Hall@hall-widdoss.com nickhogan@gmail.com matthall7667@hotmail.com Steven A. Hall, MAI, CCIM MT, ID & WY General Certified Nicholas J. Hogan, MAI MT General Certified Matt S. Hall MT General Certified John Widdoss, MAI, ARA Spearfish, SD 57783 (605) 642-8844 191 Hall – Widdoss & Company, P.C. 4 Based on the request from the client, this appraisal represents a total acquisition of the subject property. There is no requirement for a before and after analysis. This will simply be an analysis of the full acquisition of the property. Given this is a fee acquisition, there is no requirement for a before/after analysis. The map below outlines the impact to the subject property given the proposed roadway. The city believes the remainder property to have some development challenges that my limit the development opportunities. For this reason they believe a complete acquisition is favorable to both parties and the owners are open to a complete acquisition. 192 Hall – Widdoss & Company, P.C. 5 Based upon my investigations, studies and analyses, my opinion of the fee simple market value of the subject site, in its' "as is” condition, considering the assumptions and limiting conditions discussed herein and as of October 20, 2015 to be: SEVEN HUNDRED SIXTY FOUR THOUSAND SIX HUNDRED DOLLARS ($764,600.00) Your attention is invited to the data found within the body of this report as well as the sales catalog which is the foundation of this conclusion. The analysis and conclusions contained herein require the sales catalog for a complete understanding and compliance with USPAP. I wish to thank you for this opportunity; should you find need of this firm's services again, please do not hesitate to contact me. Professionally yours, HALL - WIDDOSS & COMPANY, P.C. NICHOLAS J. HOGAN, MAI MT General Certificate No. REA-REG-LIC-370 Expires 3/31/17 193 Hall – Widdoss & Company, P.C. 6 SUMMARY OF SALIENT FACTS AND CONCLUSIONS RECORD OWNER :William H. and Betty Ann Sippel Trust LOCATION OF PROPERTY :SEC of Davis Lane and West Oak Street, Bozeman, MT. PROPERTY RIGHTS APPRAISED :Fee simple title DATE OF VALUATION :October 20, 2015 DATE OF REPORT :April 1, 2016 PRESENT USE :Vacant land HIGHEST AND BEST USE :Subdivision potential. SUMMARY DESCRIPTION OF PROPERTY: Land Size: :The subject property consists of a 10.03 acre site located just near the intersection of Davis Lane and West Oak Street. Shape/Configuration :Site is rectangular in shape & configuration. Street Improvements :The property has frontage and exposure to West Oak Street. This is a two lane asphalt improved roadway at this location. 194 Hall – Widdoss & Company, P.C. 7 Frontage/Access :Property has access to West Oak Street which sets the northerly boundary of the property. Topography/Terrain :The land is predominately level and at grade with the surrounding streets and properties. Soil Conditions :Not independently investigated nor is an opinion rendered on suitability for development, load bearing qualities or production. I have assumed no soil problems exist. Flood Hazard :The property is located in flood zone X which is an area of minimal flood hazard. FEMA panel 30031C0804D effective September 2 of 2011 is a non-printed panel. Hazardous Substances :None observed. Utilities Water .................................................................................. City of Bozeman Sewer.................................................................................. City of Bozeman Natural Gas ................................................................................ NW Energy Electrical .................................................................................... NW Energy Zoning: :The subject property is zoned SRR by Gallatin County. This zone is intended to provide for the continuation of existing agricultural pursuits, while also allowing for limited residential development. It is also the intent of this zone that new residential development be designed to minimize impacts upon nearby agricultural uses, and that residential development be designed to interface with nearby agricultural operations. Easements/Encroachments: :None noted. Water Rights: :There are no water rights associated with the subject property. Mineral Rights: :An analysis of the mineral rights is outside the scope of this analysis and is not included. Improvements: :There are no structural improvements to the subject property. Use History: :The subject is a vacant property and has not been developed historically. Rental History: :There have been no rental agreements or rental uses of the property. 195 Hall – Widdoss & Company, P.C. 8 RECORD OWNER/SALES HISTORY According to the records of the Gallatin County Clerk and Recorder's Office, the subject ownership is shown as William H. and Betty Anne Sippel Trust. The subject property has been under that ownership for a time period exceeding 3 years. I met the owner’s real estate agent and representative on site at the owner’s request. I did not have the opportunity to interview the property owners for this assignment. I also did not have the opportunity to view the property on site. The owners requested that the physical inspection of the site be done from public roadways. All photographs were taken from and the inspection completed from public roadways. I have made the extraordinary assumption there are no onsite issues that impact value or usability of the subject property. The real estate agent and the owner representative were interviewed relative to onsite issues and noted there is nothing of import. The subject property was listed by a local realtor on November 14, 2014 at a price of $800,000. That was a one year listing that did not result in a sale. The property was not placed on the MLS system but did have a signed listing agreement. There was one “low ball” offer that was not even considered but the agent would not confirm the offer price. There were no other offers or anything of import during this one year agreement. The property was not re-listed after the expiration in November of 2015. HISTORY OF THE PROPERTY The subject property has historically been vacant land. There have been no improvements to the site. LOCATION OF PROPERTY The subject property is located along the south side of Oak Street, immediately south of Davis Lane. The property does not have frontage to Davis Lane, only Oak Street. . LEGAL DESCRIPTION According to information provided the subject property is legally described as: S02, T02 S, R05 E, ACRES 10.03, TR 4 W2W2SW4 TAXES AND ASSESSMENTS The subject property taxes are shown at a total of $1,989.79 for 2014. That is at $198.38 per acre on an annual basis. Total Taxes $ 1,989.79 Size 10.03 Per Acre $ 198.38 196 Hall – Widdoss & Company, P.C. 9 PLAT MAP 197 Hall – Widdoss & Company, P.C. 10 SUBJECT PHOTOGRAPHS ABOVE: View from near the north easterly corner of the subject property looking in an easterly direction. Oak Street is to the right of the photograph and sets the northerly boundary of the subject property. (902) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. BELOW: View from near the same location as the previous photograph. This photograph was taken looking in an easterly direction on Oak Street. (907) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. 198 Hall – Widdoss & Company, P.C. 11 ABOVE: View from near the north easterly corner of the subject property looking in a southerly direction. The subject’s easterly boundary is to the left of the photograph. (923) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. BELOW: View along Oak Street taken from near the north easterly corner of the subject property. This view shows Oak Street to the right of the photograph and the subject property to the left of the photograph. (931) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. 199 Hall – Widdoss & Company, P.C. 12 ABOVE: View from near the center of the tract along Oak Street, looking in a southerly direction. (959) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. BELOW: View from near the north westerly corner of the subject property looking in a southerly direction. The tree line to the right of the photograph is the approximate westerly subject boundary. (037) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. 200 Hall – Widdoss & Company, P.C. 13 ABOVE: View from near the subject’s north westerly corner looking in an easterly direction along Oak Street. Oak Street is to the left of the photograph and the subject property is to the right of the photograph. (040) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. BELOW: View from just north of the intersection of Oak Street and Davis Lane. This photograph was taken looking in a southerly direction. (205) Photograph taken by Nicholas J. Hogan, MAI on October 20, 2015. 201 Hall – Widdoss & Company, P.C. 14 HIGHEST AND BEST USE The following definition of Highest and Best Use is taken from The Appraisal Institute, "The Dictionary of Real Estate Appraisal, Fifth Edition." "The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternately, the probable use of land or improved property - specific with respect to the user and timing of the use - that is adequately supported and results in the highest present value." As taken from this same source, the definitions of highest and best use of land or a site as though vacant and the definition of highest and best use of property as improved are presented for clarity of discussion. AS VACANT: "Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements." AS IMPROVED: "The use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one." Implied is that the determination of Highest and Best Use results from the appraiser’s interpretation of market evidence; e.g. that the use determined from analysis represents an interpretative opinion and not a fact to be found. In appraisal practice, the concept of Highest and Best Use requires the appraiser give consideration to any and all uses to which the property was capable of being adapted. Consideration must be given these uses, recognizing the limitations imposed first by governmental regulations such as zoning ordinances, building codes and health standards and secondly, by the attitudes of the typical investors in real property of this type in the area encompassing the subject property. The land value is based on a premise of the Highest and Best Use of the property as though vacant. There are four tests which are considered in developing an opinion as to the Highest and Best Use of the property. These four tests include an examination of uses that are physically possible, legally permissible, financially feasible and maximally productive. There are five general uses which are considered. These include residential, commercial, industrial, agricultural and recreational. Within the Montana marketplace we have found it more prudent to begin the analysis with legally possible since this helps refine the analysis quite quickly. 202 Hall – Widdoss & Company, P.C. 15 Legally Permissible: The subject property is zoned SRR which is a semi-rural residential zone. This zone is intended to provide for the continuation of existing agricultural pursuits, while also allowing for limited residential development. It is also the intent of this zone that new residential development be designed to minimize impacts upon nearby agricultural uses, and that residential development be designed to interface with nearby agricultural operations. Essentially, several broad use categories can be eliminated as a result of the zoning issue. The intent of the zoning is not to promote heavy industrial use within this zone. A strict agricultural utility of this property would be illogical given the size of the property, the location, and the changings economics of the area. Simply, the use of this property for heavy industrial or agricultural utility is unlikely. The same is true of recreational use given that the property has no attributes that would lead toward specific recreational amenities. Therefore, the consideration of open space or parkland is not requisite or probable. There are no influences that would imply a highest and best use for recreational development. There is no demand or legally permissible commercial use at this location. Therefore a strict commercial use or utility is highly unlikely for this property. The zoning leads toward a residential use. Physically Possible: The subject represents a gross site area that has no deductions for right-of-way easements, etc. with no floodplain areas associated. The subject property is rectangular in shape and has frontage to Oak Street which sets the northerly boundary. Utilities availability has shown no physical limitations for the historical use. Sewer and water are located in close proximity but not to the property boundaries and are not hooked up. Extension and hookup to those services would require annexation into the city of Bozeman. The property does have access to electricity, natural gas, telephone service and private garbage collection. The terrain is generally level and at-grade with the surrounding roadways although it is an observed condition that the property is not table top flat. This is not a significant detail. The site is rectangular in shape and this does not lead to a significant limitation to development. It is consistent with this market. Based on this discussion, the subject property has no physical characteristics that would limit the type of residential uses possible for the site. Financially Feasible/Maximally Productive: The subject property would have an obvious implication for highest and best use correlated to the legal permissible and physically possible expectations. This subject zoning is SRR which is a semi-rural residential zone. That is a county zoning and the majority of the surrounding neighborhood is located within the city. The community plan future land use for the subject is shown as residential. 203 Hall – Widdoss & Company, P.C. 16 The above photograph outlines the city limits of Bozeman. As can be seen the subject and several properties adjacent are located outside of the city limits. The majority of the properties in the subject’s immediate neighborhood are located within city limits. The city of Bozeman capital planning map is shown above. The subject property is located within a residential community plan future land use area. Therefore the long-term expectation of this property is for residential and very likely residential subdivision. 204 Hall – Widdoss & Company, P.C. 17 The photograph above shows the subject is generally surrounded by relatively intense single- family residential subdivisions. There are open pockets of land including the subject, the parcel adjacent to the west as well as parcels located to the south. There are also pockets of open space to the west and northwest of the subject. While there are vacant properties adjacent to the subject, there are dense subdivisions located east, south, and west of the subject property. Given the fact the majority of the property surrounding the subject is located within the city there is little doubt this property will be annexed at some point. With that said there are remaining agricultural and rural residential properties in this neighborhood, including the subject, as well as the sites located directly to the east and west of the subject. There are several sales in the subject’s immediate area that are similar to the subject in terms of redevelopment potential. The highest and best use of the subject is for an interim use until a higher density development occurs. The most likely buyer would come from two likely groups. An end-user who would immediately utilize the property to its highest and best use is a possibility. The other possibility is a speculative buyer who would purchase the property with no intention of immediately using the property under the current highest and best use, or residential development. At the current time it’s unknown which a buyer group is a more likely purchaser of the subject property. 205 Hall – Widdoss & Company, P.C. 18 Valuation: The following outlines the emphasized sales used for the subject value. The adjustment grid is located below. 206 Hall – Widdoss & Company, P.C. 19 Adjustment Grid: Sale No. 12361011 Size 4.03 7.24 36.90 8.65 6.06 7.50 Unit Price $1.72 $1.59 $0.69 $1.90 $1.23 $1.15 Date of Sale Dec-15 Jul-15 Jun-14 Jun-14 Mar-13 Feb-11 Current Date Oct-15 Oct-15 Oct-15 Oct-15 Oct-15 Oct-15 Time Lapse (months) 0 3 16 16 31 56 Adjustments: Property Rights $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Financing Terms $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Conditions of Sale $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Market Conditions $0.00 $0.07 $0.15 $0.43 $0.58 $1.16 Adjusted Base Unit Price $1.72 $1.65 $0.83 $2.33 $1.82 $2.30 Physical Conditions: Access $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Location $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Size ($0.34) $0.00 $0.46 $0.00 $0.00 $0.00 Shape $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Topography $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Utilities $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Zoning $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Adjusted Unit Price $1.38 $1.65 $1.29 $2.33 $1.82 $2.30 The subject property was listed at the time of the inspection for $800,000. That listing is no longer in MLS as of the report date. That list price amounted to $1.83 per sq.ft. Overall, that is generally supported by the analysis in the grid shown above. The six sales produced a range of adjusted indications from a low of $1.29 per sq.ft. to an upper end of $2.33 per square foot. Sale No. 1 is a smaller parcel with a city R – 1 zoning. This indication is shown at $1.72 per sq.ft. and is not emphasized in the final analysis given the size and zoning differences. Sale No. 11 is an older sale that had a significant market conditions adjustment. That produced an indication of $2.30 per sq.ft. Based on the February 2011 sale date, that sale is not emphasized to the same degree as the remainder of the information. Sale No. 3 is located directly west of the subject property. This property will have frontage to Oak Street on the northerly boundary when oak is extended west of Flanders Mill Road. Currently this property has access from Durston Road to Flanders Mill Road. This property has the same zoning as the subject but differs in size from 10.03 acres to 36.9 acres. This property sold for $0.69 per sq.ft. and adjusted to $1.29 per sq.ft. Given the size difference I have not emphasized this sale. 207 Hall – Widdoss & Company, P.C. 20 Sale No. 2 is located directly north of the subject property. This is a recent sale only slightly smaller than the subject. However, it was a bank owned REO. This property produced an adjusted indication of $1.65 per square foot. Sale No. 6, Sale No. 10 and Sale No. 11 are emphasized in the final analysis. Those properties compare slightly better in terms of overall size when compared directly to the subject. Sale No. 6 is located directly south of the subject on Durston Road. Overall, this is a very similar property with a similar frontage, Oak Street versus Durston Road. This property has city R – 3 and R – 4 zoning and adjusted to $2.33 per sq.ft. Sale No. 10 is located directly south of the subject on Durston Road. This 6.06 acre tract was zoned the same as the subject and sold for $1.23 per sq.ft. in March 2013. The adjusted indication is shown at $1.82 per sq.ft. Sale No. 11 is slightly older and has a slightly superior location in proximity to North 19th Avenue. In the final analysis, I looked at Sale No. 6 and Sale No. 10 as the better indications of current market value. There is some potential Sale No. 6 could have been adjusted for size creating a slightly lower indication. However, the difference between 6.06 acres and 10.03 acres is not as significant. The two emphasized sales have a range of $1.82 per sq.ft. to an upper end of $2.33 per sq.ft. The former listing expired at $1.83 per sq.ft. with no sale suggesting something toward the lower end of the range. The subject property was on the market for a year and was exposed to the market (there was one offer albeit low). Therefore, the subject listing price of $1.83 per sq.ft. sets the upper limits of value. Given the expired listing and other information I’ve shown a final conclusion of value at a rate slightly less than the expired listing at $1.83 per sq.ft. My final conclusion is shown at $1.75 per sq.ft. Before Category Subject Size 10.03 SF 436,907 Per SF $1.75 Total $764,587 Rounded to $764,600 208 Hall – Widdoss & Company, P.C. 21 VALUE ESTIMATE AND CERTIFICATION The undersigned does hereby certify that (except as otherwise noted in this appraisal report): 1. I have made a personal, detailed inspection of the subject property. I have inspected the local sales data consulted for a derivation of market value unless otherwise specifically identified as not being personally viewed. I have performed no services as an appraiser, or in any other capacity regarding the property that is the subject of this report within a three year period immediately preceding acceptance of this assignment. 2. I have no present or perspective 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. 3. 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 stipulated result, or the occurrence of a subsequent event. 4. I certify that the appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. Employment of the appraiser was not conditioned upon the appraisal producing a specific value or a value within a given range. 5. I certify that, to the best of my knowledge and belief the statements of fact contained in this report are true and correct. Furthermore, no important facts have been knowingly withheld or overlooked. 6. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is my personal, unbiased professional analyses, opinions, and conclusions. The hypothetical conditions and/or extraordinary assumptions required of this appraisal assignment are specifically noted within the Scope of Work are critical to the analyses and conclusions expressed herein. The reader is directed to fully understand the conditions contained in that section of the report. 7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 8. As of the date of this report, I, Nicholas J. Hogan, MAI, have completed the continuing education program of the Appraisal Institute. 9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 10. No one provided significant professional assistance to the person (s) signing this report. 209 Hall – Widdoss & Company, P.C. 22 11. The report contains necessary discussion concerning a reasonable marketing period for the subject property within the estimated value shown. 12. This report is in compliance with applicable regulations governing appraisal services and appraisal reporting requirements for the State of Montana. Based upon my investigations, studies and analyses, my opinion of the fee simple market value of the subject site, in its' "as is” condition, considering the assumptions and limiting conditions discussed herein and as of October 20, 2015 to be: SEVEN HUNDRED SIXTY FOUR THOUSAND SIX HUNDRED DOLLARS ($764,600.00) NICHOLAS J. HOGAN, MAI MT General Certificate No. REA-REG-LIC-370 Expires 3/31/17 210 Hall – Widdoss & Company, P.C. ADDENDA 211 HALL - WIDDOSS & COMPANY, P.C. ASSUMPTIONS AND LIMITING CONDITIONS By this notice, all persons and firms reviewing, utilizing or relying on this report in any manner bind themselves to accept these assumptions and limiting conditions. Do not use this report if you do not so accept. These conditions are a part of the appraisal report, they are a preface to any certification, definition, fact or analysis, and are intended to establish as a matter of record that the appraiser's function is to provide a present market value indication for the subject property based upon the appraiser's observations as to the subject property and the local and/or regional real estate market. This appraisal report is an economic study to estimate value as defined in it. It is not an engineering, construction, legal or architectural study nor survey and expertise in these areas, among others, is not implied. 1. LIMIT OF LIABILITY: The liability of the firm HALL - WIDDOSS AND COMPANY, P.C. and employees and affiliated independent contractors is limited to the CLIENT ONLY AND TO THE FEE ACTUALLY RECEIVED BY APPRAISER (TOTAL PER APPRAISAL). FURTHER, THERE IS NO ACCOUNTABILITY, OBLIGATION, OR LIABILITY to any third party. If this report is placed in the hands of anyone other than the client, the client shall make such assignment and related discussions. The Appraiser is in no way to be responsible for any costs incurred to discover or correct any deficiencies of any type present in the property; physically, financially, and/or legally. In the case of limited partnerships or syndication offerings or stock offerings in real estate, client agrees that in case of lawsuit (brought by lender, partner, or part owner in any form of ownership, tenant, or any other party), any and all awards, settlements of any type in such suit, regardless of outcome, client will hold Appraiser completely harmless in any such action. 2. COPIES, PUBLICATION, DISTRIBUTION, USE OF REPORT: Possession of this report or any copy thereof does not carry with it the right of publication, nor may it be used for other than its intended use; the physical report(s) remain the property of HALL - WIDDOSS AND COMPANY, P.C. for the use of the client; the fee being for the analytical services only. The Bylaws and Regulations of the Appraisal Institute require each Member and Candidate to control the use and distribution of each appraisal report signed by such Member or Candidate except as hereinafter provided, the client may distribute copies of this appraisal report in its entirety to such third parties as he may select; HOWEVER, selected portions of this appraisal report shall NOT be given to third parties without the prior written consent of the signatories of this appraisal report. Neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations, news, sales or other media for public communication without the prior written consent of the Appraiser. 3. CONFIDENTIALITY: This appraisal is to be used only in its entirety and no part is to be used without the whole report. All conclusions and opinions concerning the analysis as set forth in the report were prepared by the Appraiser(s) whose signature(s) appear on the appraisal report, unless indicated as "Review Appraiser". No change of any item in the report shall be made by anyone other than the Appraiser and/or officer of the firm. The Appraiser and firm shall have no responsibility if any such unauthorized change is made. The Appraiser may not divulge the material (evaluation) contents of this report, analytical findings or conclusions, or give a copy of the report to anyone other than the client or his designee as specified in writing except as may be required by the Appraisal Institute as they may request in confidence for ethics enforcement, or by a court of law or body with the power of subpoena. Sales information obtained during the course of this appraisal assignment is the Appraiser's and it can be used or exchanged without consent of the client. 4. TRADE SECRETS: This appraisal was obtained from HALL - WIDDOSS AND COMPANY, P.C. and/or its individuals or related independent contractors and consists of "trade secrets and commercial or financial information" which is privileged and confidential and exempted from disclosures under 5 U.S.C. 552 (b) (4). Notify the Appraiser(s) signing report or a principal in Hall - Widdoss and Company, P.C. for any request to reproduce this appraisal in whole or in part. 212 HALL - WIDDOSS & COMPANY, P.C. 5. INFORMATION USED: No responsibility is assumed for accuracy of information furnished by work of or work by others, the client, his designee, or public records. We are not liable for such information or the work of possible subcontractors. Be advised that some of the people associated with Hall - Widdoss & Company, P.C. and possibly signing the report are independent contractors. The comparable data relied upon in this report has been confirmed with one or more parties familiar with the transaction or from affidavit or other source thought reasonable; all are considered appropriate for inclusion to the best of our factual judgement and knowledge. An impractical and uneconomic expenditure of time would be required in attempting to furnish unimpeachable verification in all instances, particularly as to engineering and market-related information. It is suggested that the client consider independent verification as a prerequisite to any transaction involving sale, lease, or other significant commitment of funds for subject property. 6. TESTIMONY, CONSULTATION, COMPLETION OF CONTRACT FOR APPRAISAL SERVICE: The contract for appraisal, consultation or analytical service is fulfilled, and the total fee is payable prior to delivery of the report. The Appraiser(s) or those assisting in preparation of the report will not be asked or required to give testimony in court or hearing because of having made the appraisal, in full or in part, nor engage in post appraisal consultation with client or third parties except under separate and special arrangement and at additional fee. If testimony or deposition is required because of any subpoena, the client shall be responsible for any additional time, fees, and charges regardless of issuing party. 7. EXHIBITS: The sketches and maps in this report are included to assist the reader in visualizing the property and are not necessarily to scale. Various photos, if any, are included for the same purpose as of the date of the photos. Site plans are not surveys unless shown from separate surveyor. 8. LEGAL, ENGINEERING, FINANCIAL, STRUCTURAL, OR MECHANICAL NATURE HIDDEN COMPONENTS, SOIL: The Appraiser and/or firm has no responsibility for matters legal in character or nature, nor of any architectural, structural, mechanical, or engineering nature. No opinion is rendered as to the title, which is presumed to be good and merchantable. The property is appraised as if free and clear, unless otherwise stated in particular parts of the report. The legal description is assumed to be correct as used in this report as furnished by the client, his designee, or as derived by the Appraiser. Please note that no advice is given regarding mechanical equipment or structural integrity or adequacy nor soils and potential for settlement, drainage, and such (seek legal assistance), and such. The lender and owner should inspect the property before any disbursement of funds; further it is likely that the lender or owner may wish to require mechanical or structural inspections by qualified and licensed contractor, civil or structural engineer, architect, or other expert. The Appraiser has inspected as far as possible, by observation, the land and the improvements; however, it was not possible to personally observe conditions beneath the soil or hidden structural, or other components. We have not critically inspected mechanical components within the improvements and no representations are made herein as to these matters unless specifically stated and considered in the report. The value estimate considers there being no such conditions that would cause loss of value. The land or the soil of the are being appraised appears firm, however, subsidence in the area is unknown. The Appraiser(s) do not warrant against this condition or occurrence of problems arising from soil conditions. The appraisal is based on there being no hidden, unapparent, or apparent conditions of the property site, subsoil, or structures or toxic materials which would render it more or less valuable. The Appraiser and firm have no responsibility for any such conditions or for any expertise or engineering to discover them. All mechanical components are assumed to be in operable condition and status standard for properties of the subject type. Conditions of heating, cooling, ventilating, electrical and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements unless otherwise stated. No judgement may be made by us to adequacy of insulation, type of insulation, or energy efficiency of the improvements or equipment which is assumed standard for subject age and type. If the Appraiser has not been supplied with a deficiency or hazard inspection, survey or occupancy permit, no responsibility or representation is assumed or made for any costs associated with obtaining same or for 213 HALL - WIDDOSS & COMPANY, P.C. any deficiencies discovered before or after they are obtained. No representation or warranties are made concerning obtaining the above mentioned items. The Appraiser has no responsibility for any costs or consequences arising due to the need, or the lack of need for flood hazard insurance. An Agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 9. LEGALITY OF USE: The appraisal is based on the premise that, there is full compliance with all applicable federal, state and local environmental regulations and laws unless otherwise stated in the report; further, that all applicable zoning, building, use regulations and restrictions of all types have been complied with unless otherwise stated in the report; further, it is assumed that all required licenses, consents, permits, or other legislative or administrative authority, local, state, federal and/or private entity or organization have been or can be obtained or renewed for any use considered in the value estimate. 10. COMPONENT VALUES: 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. 11. AUXILIARY AND RELATED STUDIES: No environmental or impact studies, special market study or analysis, highest and best use analysis study or feasibility study has been requested or made unless otherwise specified in an agreement for services or in the report. 12. DOLLAR VALUES, PURCHASING POWER: The market value estimated, and the costs used, are as of the date of the estimate of value. All dollar amounts are based on the purchasing power and price of dollar as of the date of value estimate. 13. INCLUSIONS: Furnishings and equipment or personal property or business operations except as specifically indicated and typically considered as part of real estate, have been disregarded with only the real estate being considered in the value estimate unless otherwise stated. In some property types, business and real estate interests and values are combined and essentially integrated to comprise the property in total, i.e. Hotels/Motels. 14. PROPOSED IMPROVEMENTS, CONDITIONED VALUE: Improvements proposed, if any, on or off-site, as well as any repairs required are considered, for purposes of this appraisal to be completed in good and workmanlike manner according to information submitted and/or considered by the Appraiser(s). In cases of proposed construction, the appraisal is subject to change upon inspection of property after construction is completed. This estimate of market value is as of the date shown which is indicative of a hypothetical condition or an extraordinary assumption. 15. VALUE CHANGE, DYNAMIC MARKET, INFLUENCES, ALTERATION OF ESTIMATE BY APPRAISER: The estimated market value, which is defined in the report, is subject to change with market changes over time; value is highly related to exposure, time, promotional effort, terms, motivation, and conditions surrounding the offering. The value estimate considers the productivity and relative attractiveness of the property physically and economically in the marketplace. In cases of appraisals involving the capitalization of income benefits, the estimate of market value or investment value or value in use is a reflection of such benefits and Appraiser(s) interpretation of income and yields and other factors derived from general and specific client and market information. Such estimates are as of the date of the estimate of value; they are thus subject to change as the market and value is naturally dynamic. "The Opinion of Market Value" in the appraisal report is not based in whole or in part upon the race, color or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. Appraisal report and value estimate are subject to change if physical or legal entity or financing is different than that envisioned in the report. 214 HALL - WIDDOSS & COMPANY, P.C. 16. MANAGEMENT OF THE PROPERTY: It is assumed that the property which is the subject of this report will be under prudent and competent ownership and management; neither inefficient nor super-efficient. 17. CONTINUOUS EDUCATION: The Appraisal Institute conducts a voluntary and a mandatory program of continuing education for its designated members depending upon date of membership. Those who meet the minimum standards of this program are awarded periodic educational certification. Please refer to the Appraisers Certification for compliance with the Appraisal Institute’s requirements addressing continuing education. 18. FEE: The fee for this appraisal or study is for the service rendered and not for the time spent on the physical report or the physical report itself. Amount of payment of fee for services is not contingent on any result, approval amount or other estimates or statements. 19. AUTHENTIC COPIES: The authentic copies of this report are signed in blue ink and have embossed type seal. Any copy that does not have the above is unauthorized and may have been altered. 20. INSULATION AND TOXIC MATERIALS: Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. 21. REVIEW: Unless otherwise noted herein, any named Review Appraiser from Hall - Widdoss and Company, P.C. has reviewed the report as to general appropriateness of technique and format, and has agreed to accept full responsibility for the contents and conclusions noted therein. 22. CHANGES, MODIFICATIONS: The Appraiser(s) and/or principals of Hall - Widdoss and Company, P.C., reserve the right to alter statements, analyses, conclusions or any value estimate(s) in the appraisal if there becomes known to us facts pertinent to the appraisal process which were unknown to us when the report was finished. 23. AFTER TAX ANALYSIS AND/OR VALUATION: Any "after" tax income or investment analysis and resultant measures of return on investment are intended to reflect only possible and general market considerations, whether as part of estimating value or estimating possible returns on investment at an assumed value or price paid; note that the Appraiser(s) does not claim expertise in tax matters and advises client and any other using the appraisal to seek competent tax advice as the Appraiser(s) is in no way to be considered a tax advisor or investment advisor. 24. ACCEPTANCE OF, AND/OR USE OF, THIS APPRAISAL REPORT BY CLIENT OR ANY THIRD PARTY CONSTITUTES ACCEPTANCE OF THE ABOVE CONDITIONS. APPRAISER LIABILITY EXTEND ONLY TO STATED CLIENT, NOT TO SUBSEQUENT PARTIES OR USERS OF ANY TYPE, AND THE TOTAL LIABILITY OF APPRAISER AND FIRM IS LIMITED TO THE AMOUNT OF FEE RECEIVED BY HALL - WIDDOSS & COMPANY. 215 216 217 218 219 Zoning District #1 Zoning Regulation 9 SECTION 5 SRR: SEMI - RURAL RESIDENTIAL ZONE 5.1 Purpose and Intent This zone is intended to provide for the continuation of existing agricultural pursuits, while also allowing for limited residential development. It is also the intent of this zone that new residential development be designed to minimize impacts upon nearby agricultural uses, and that residential development be designed to interface with nearby agricultural operations. 5.2 Uses Allowed After Securing a Land Use Permit: 1. One Single Family Dwelling Unit per One-Half Acre. 2. One Duplex per Acre. 3. Places of Worship. 4. Family Day Care and Nursery Facilities. 5. Accessory Uses: A. Accessory buildings or structures customarily used in conjunction with permitted uses. B. Home Occupations. 5.3 Uses Allowed After Securing a Conditional Use Permit: 1. One Triplex per Acre. 2. One Fourplex per Acre. 5.4 Property Development Regulations: 1. Lot Dimensions: A. Single family: Minimum lot area: 1/2 acre Minimum lot width: 90 feet B. Duplex, triplex and fourplex: Minimum lot area: 1 acre Minimum lot width: 125 feet C. Places of worship: Minimum lot area: 1 acre Minimum lot width: 125 feet 220 10 Zoning District #1 Zoning Regulation 2. Lot Setbacks (see diagram below for example): A. Single family, duplex, Front yard: 25 feet 1 triplex and fourplex: Rear yard: 12 feet Side yard: 12 feet Corner side yard: 25 feet 1 B. Places of worship: Front yard: 40 feet Rear yard: 25 feet 2 Side yard: 25 feet 2 Corner side yard: 40 feet 1 when adjacent to existing agricultural uses, this setback shall be increased to 40 feet. 2 when adjacent to existing residential uses, this setback shall be increased to 40 feet. C. Eaves, awnings, and similar architectural features may project a maximum of five feet into any front, side, or corner side yard setback, provided that such features shall maintain a minimum distance of five feet to any property line and are not less than eight feet in height above grade. Such appendages shall be supported only at or behind the building setback line. 3. Building Height: The maximum building height allowed in this zone shall be 32 feet. 4. Maximum Lot Coverage: The maximum lot coverage by buildings on any lot in this zone shall be 30%. 5. Subdivisions Adjoining Agricultural Lands: The following shall be considered when subdividing land which adjoins agricultural land: A. Lot designs and configurations will be used which will minimize the exposure of home sites to adjacent agricultural practices. B. The developer shall demonstrate, through site plan design, that the subdivision will not pose a significant impact upon adjoining agricultural lands. 221 Zoning District #1 Zoning Regulation 11 SETBACK DIAGRAM SINGLE FAMILY NOTE: Yards must be measured from property lines. THIS DIAGRAM IS FOR ILLUSTRATIVE PURPOSES ONLY 222 APPRAISER QUALIFICATIONS - NICHOLAS J. HOGAN, MAI APPRAISAL AND RELATED BUSINESS EXPERIENCE: January 1, 1994 to Present: Staff Appraiser for HALL - WIDDOSS & COMPANY, P.C. Work covers appraisals and consultation for all types of property in the same territory noted above. June 1, 1992 to December 31, 1993: Intern and Apprentice for HALL - WIDDOSS & COMPANY, P.C., a Real Estate Appraisal and Consulting business primarily covering the States of Montana and Wyoming. The firm specializes in urban investment property, recreational and development land appraisals. Appraisal work involves land, residential and multi-family properties, as well as research and assistance for various other property types. Work comprises value estimates for loan purposes, estate planning, marketing, condemnation, accounting requirements and various others. EDUCATION: • University of Montana - Bachelor of Science in Business Administration (12/92) APPRAISAL INSTITUTE COURSES AND SEMINARS: COURT TESTIMONY: • R-2, G-2 Appraising the Single Family Residence • Tax Appeal Hearing, Missoula County • 410 Part A & B Standards of Professional Practice • Deposition for Bankruptcy Hearing in U.S. Bankruptcy Court, • 110 Appraisal Principles Western District of Washington • 120 Appraisal Procedures • 310 Basic Income Capitalization • 510 Advanced Income Capitalization • 520 Highest & Best Use/Market Analysis • 530 Advanced Sales Comparison & Cost Approaches • 540 Report Writing & Valuation Analysis • 550 Advanced Applications • American=s With Disabilities Act Seminar PROFESSIONAL AFFILIATIONS: Member Appraisal Institute - MAI No. 12400 Montana General Certificate No. REA-RAG-LIC-370 Wyoming Certified General No. 1090 Idaho Certified General No. CGA-3332 Board Member, Montana Property Tax Reappraisal Advisory Committee (No longer active committee) REPRESENTATIVE CLIENTS: Associates Commercial Corporation 1st Interstate Bank - Missoula First Security Bank - Missoula California Bank and Trust Galena Resort - Reno, Nevada U.S. Bureau of Reclamation 4B=s Restaurants, Inc. Missoula Federal Credit Union US Bank Wells Fargo Bank Montana Department of Transportation Bank of America Glacier Bank Various Individual Clients HALL - WIDDOSS 223 & COMPANY, P.C.