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Home My WebLink AboutGVLT Closing Docs Bozeman Pond •P. O. Box 7021 • 25 N. Willson, Suite E • Bozeman, MT 59771 • • 406-587-8404 • Fax 406-582-1136 • www.gvlt.org • info@gvlt.org • Jeff Graff Bozeman TOP Program 1102 East Curtiss St. Bozeman, MT 59715 February 7, 2014 Dear Jeff, Having completed a boundary relocation and sale of land to HAVEN, the Gallatin Valley Land Trust is ready to finalize details and schedule closing for transfer of our property at Bozeman Pond to the City of Bozeman. To that end, I have attached the following: • New plat (E-39-C). In December, GVLT completed a boundary realignment to create a legal tract to sell HAVEN, to realign Pond Row, and to dedicate Pond Row, with guidance from City Planning and Engineering. Based on this new plat, the City will take title to Lot 4A, Lot C1, and new street dedication of Pond Row. • Updated appraisal. We provided a preliminary appraisal to the City in November, which showed the value of the entire 12-acre property at $800,000. In December, we sold 3 acres of land (Lot 3A) to HAVEN for $195, 641. The enclosed updated appraisal shows the value of the remaining property, which the City of Bozeman will take title to, as $603,000. This is comprised of two components: o $559,000 for the value of 8.56 acres in Lot 4A and Lot C1. o $ 44,000 for the value of 0.673 acres in the street dedication added through the new plat. • Updated title commitment for the property. I had previously provided a title commitment for the entire 12-acre parcel; this update shows encumbrances that affect only the acreage the City will own. • Draft Purchase & Sale Agreement. This shows a purchase price of $603,000 and a closing date of March 4. We have contingency release dates for most items on February 21. I have provided it to you in Word format in case the City Legal Department needs to do any redlining. We look forward to your input on this contract. • Draft Warranty Deed. I have provided it to you in Word format in case the City Legal Department needs to do any redlining. At one point Mr. Sullivan indicated that the City would like to draft closing instructions. Please let us know if you’d prefer for GVLT to draft them. We will be using Kris Deason at Security Title as our closing agent, unless the City has other preferences. •P. O. Box 7021 • 25 N. Willson, Suite E • Bozeman, MT 59771 • • 406-587-8404 • Fax 406-582-1136 • www.gvlt.org • info@gvlt.org • We can also provide you with an invoice for our transactional costs when we have confirmation from you on the Purchase & Sale Agreement. Please don’t hesitate to let me know if you’d like to discuss any of this further, or if you have any questions or concerns. Thank you for your assistance with this project. We are excited about the benefits it will create for our community, and grateful for the City’s support. Best wishes, Kelly A. Pohl Associate Director A SUMMARY APPRAISAL REPORT OF: GVLT to City of Bozeman Fowler Rd Bozeman, MT 59715 FILE NO.: C01271411 PREPARED FOR: Ms. Kelly Pohl Gallatin Valley Land Trust (GVLT) 25 North Willson Avenue Ste. E Bozeman, MT 59715 & City of Bozeman 121 N. Rouse Ave. Bozeman, MT 59715 PREPARED ON: January 22, 2014 EFFECTIVE DATE OF VALUATION: January 21, 2014 PREPARED BY: Keith O'Reilly, MAI, MT-400 Bridger Appraisals, Inc. P.O. Box 11145 Bozeman, MT 59719 January 22, 2014 Gallatin Valley Land Trust (GVLT) 25 North Willson Avenue Ste. E Bozeman, MT 59715 Re: GVLT to City of Bozeman Bozeman, MT 59715 Dear Ms. Kelly Pohl, In accordance with your request and authorization, I have viewed the referenced property, also referred to as the appraised or subject property in the following report, and have estimated its current Fee Simple value, “As Is” as of January 21, 2014. My professional opinion is based upon analysis of market data gathered for this purpose and upon the assumptions and limiting conditions stated on pages 6-8 of the following report. This is a Summary Appraisal Report as defined by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2(B). This format provides a summary of the appraisal process, subject and market data and valuation analyses. The information contained in this report is specific to the needs of the client and for the intended use as stated in this report. The appraiser is not responsible for unauthorized use of this report. The opinions stated in the accompanying report are based on my viewing of the appraised property, comparable properties, and analysis of all pertinent data. As a result of my investigation and analysis, it is my opinion that the Current Market Value of the Fee Simple Interest, “As Is”, in the subject property, as of January 21, 2014, is: FIVE HUNDRED FIFTY NINE THOUSAND DOLLARS ($559,000) The following report contains (50) pages plus an addendum that provides the data and analysis to support the stated value estimates. Respectfully submitted, Keith O'Reilly, MAI General Certified Appraiser #400 State of Montana Gallatin Valley Land Trust (GVLT) 25 North Willson Avenue Ste. E Bozeman, MT 59715 Re: GVLT to City of Bozeman February 5, 2014 Bozeman, MT 59715 Dear Ms. Kelly Pohl, In accordance with your request I have reviewed the appraisal work that I completed for you on January 22, 2014. As per your request I have looked at the additional acreage for the difference in street dedication. In my opinion this is just a mathematical computation. The approximate acreage added to the street dedication is (approximately 0.673 acres). The following table shows the calculation for the square footage differences. Sq. Ft Acreage Prior total street dedication (Minor Sub 223) 20,647 0.474 Amended plat total street dedication 49,968 1.147 Difference (total street dedication added through new plat) 29,321 0.673 The reconciled value in the appraisal dated January 22, 2014 was $1.50psf according to the calculation there is now an additional 29,321sf of street dedication which would equate to $43,981.50 rounded to $44,000. This document needs to be attached to the original appraisal for the reader to fully understand its content. If I can be of further assistance please do not hesitate to contact me. Sincerely Keith O’Reilly, MAI MT General Certified Appraiser #400. TABLE OF CONTENTS ITEM: PAGE NO. PHOTOGRAPH OF THE SUBJECT PROPERTY ....................................................................... 5 ASSUMPTIONS AND LIMITING CONDITIONS ...................................................................... 6 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS ................................................. 9 SCOPE OF THE APPRAISAL .................................................................................................... 11 PURPOSE AND INTENDED USE AND USER OF THE APPRAISAL ................................... 12 DEFINITION OF MARKET VALUE ......................................................................................... 12 PROPERTY RIGHTS APPRAISED ............................................................................................ 13 EXPOSURE TIME ....................................................................................................................... 14 VALUATION DATE ................................................................................................................... 14 IDENTIFICATION AND HISTORY OF THE SUBJECT .......................................................... 15 SITE DATA AND ANALYSIS.................................................................................................... 29 ZONING AND GOVERNMENT RESTRICTIONS ................................................................... 33 PHOTOGRAPHS OF THE SUBJECT ......................................................................................... 34 HIGHEST AND BEST USE ........................................................................................................ 35 SALES COMPARISON APPROACH ......................................................................................... 38 FINAL RECONCILIATION ........................................................................................................ 47 CERTIFICATION ........................................................................................................................ 49 ADDENDUM Warranty Deed Resume Current License Bridger Appraisals Inc. © 5 Keith O’Reilly, MAI PHOTOGRAPH OF THE SUBJECT PROPERTY View of the subject property looking south to north. Photo taken on November 11, 2013 by Keith O’Reilly, MAI. Street scene looking south along Fowler Ave. Photo taken on November 11, 2013 by Keith O’Reilly, MAI. Bridger Appraisals Inc. © 6 Keith O’Reilly, MAI ASSUMPTIONS AND LIMITING CONDITIONS This appraisal report, the letter of transmittal, and certification are subject to the following assumptions and limiting conditions; and also, any special qualifying conditions that may be contained elsewhere in the report are incorporated by reference. Assumptions 1. That the legal description, as furnished, is correct; and that the title to the property is good and marketable. All existing liens and encumbrances, if any, have been disregarded. The property is appraised as though free and clear of other burdens, under responsible ownership and competent management. 2. That the land dimensions taken from available maps, plats, and/or surveys are correct. It has been assumed that those boundaries that are apparent are correct. 3. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 4. That no adverse water table or soil conditions exist, and no representation regarding such conditions is made in this report unless specifically stated; and, that the value estimated is predicted on the absence of any such conditions occurring. 5. It is assumed that the subject property conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report. 6. Those opinions, estimates, data and statistics supplied by others in the course of this study, are correct; the assumption has been made that the sources are reliable, but no responsibility has been inferred for their accuracy. Bridger Appraisals Inc. © 7 Keith O’Reilly, MAI 7. This report does not contemplate any court action, nor does it obligate the appraiser to give any testimony or make any appearance in court, before commission, arbitrator or any other individual, body or agency. If court action or appearance later becomes necessary in the interest of the client, the terms of the additional service shall be negotiated at that time. 8. Unless otherwise stated in this report, the appraiser did not observe the existence of hazardous material, which may or may not be present on the property. I have no knowledge of the existence of such materials on or in the property. I am not qualified to detect such substances. The presence of potentially hazardous materials may affect the value of the property. This extends to any leaks from underground fuel storage tanks, and identification of Asbestos containing materials. The value estimate is predicated on the assumption that there is no such material on or in the property. 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. Any such environmental risk discovered at a later date may require a revised estimate of value that may or may not be simply a reduction of the value by the estimated cost to cure the environmental condition. Properties known to have environmental risk may also carry a stigma in the market place that may or may not affect the value. If future soil tests should reveal the existence of any such soil conditions or hazardous waste, I reserve the right to review and adjust this appraisal accordingly. Limiting Conditions: 1. The appraiser is not responsible for any matter legal in character, nor is any opinion rendered as to title, which is assumed to be marketable. 2. The value reflected in the analysis applies only to the program of utilization considered in this report. The use of the value in conjunction with any other appraisal or under other influences invalidates the conclusions developed. 3. This analysis and estimate of value is made for the exclusive use and benefit of the clients to whom it is addressed; and, possession of this report or a copy, does not carry with it the right of publication, nor may it be used for any purpose other than that intended without the previous consent of the appraisers. In any event only the entire report may be used and no part shall be taken or used out of context. Bridger Appraisals Inc. © 8 Keith O’Reilly, MAI 4. Included as an integral part of this report are maps and photographs of the appraised properties and sales. The maps and photographs were prepared and taken by the appraisers, and although they do not purport to represent survey accuracy, they are substantially correct and adequately serve as visual reference to the property. 5. Disclosure of the contents of this report is governed by the By-Laws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions of value, the identity of the appraisers or the firm with which they are connected) shall be disseminated to the public through advertising media, public relations, news media, sales media, or any other public means of communication without the prior written consent and approval of the authors. 6. The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions. 7. The Appraiser’s conclusion of value is based upon the assumption that there are no hidden or unapparent conditions of the property that might impact upon build ability. The appraiser recommends due diligence be conducted through local building departments or municipality to investigate build ability and whether the property is suitable for its intended use. The appraiser makes no representations, guarantees or warranties. Bridger Appraisals Inc. © 9 Keith O’Reilly, MAI SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Client: Kelly Pohl, Gallatin Valley Land Trust (GVLT) Intended User: Gallatin Valley Land Trust (GVLT) and the City of Bozeman Owner of Property: Gallatin Valley Land Trust Inc. Date of Valuation: January 21, 2014 Date of Preparation: January 22, 2014 Rights Appraised: Fee Simple Legal Description: Lot 4A and Lot C1 of the Amended Plat of Tract C of Van Horn Subdivision, Lots 3 and 4 and portions of Pond Row in Minor Sub. 223, located in the SW1/4 of Sect. 11, T2S, R5E, P.M.M., City of Bozeman, Gallatin Co. MT.(Plat Reference: E-39-C) Location of Property: East of Fowler Rd South of Main Street and North of Babcock Street, Bozeman, MT 59715 Improvements: Vacant Land Highest and Best Use: Develop the subject site residentially with improvements that conform to R-3 and R-4 zoning. Primarily multi-family. Present Use: Vacant Land Zoning/Governmental: R-3 and R-4 Site Shape and Size: The site is irregularly shaped. It contains a total of 8.56 acres or 372,874 square feet. Lot 4A--3.430ac Lot C1--5.130ac Environmental: There are no known adverse environmental conditions on the subject site. Please reference Limiting Conditions and Assumptions. Bridger Appraisals Inc. © 10 Keith O’Reilly, MAI Market Status: There has been more real estate activity in the last 12 to 18 months than in the preceding years. The real estate market peaked in 2006 and then began to decline up until about mid 2011. The real estate market has seen significant gains in 2013. The residential market has strengthened considerably. The oversupply of residential building sites has been absorbed, in fact now there is more demand than supply for residential building sites. The overall commercial market has also improved. Commercial rental rates and values have been increasing. Concluded value for each appraisal: Site Value as Vacant: $559,000 Cost Approach: Not Applicable Sales Comparison Approach: $559,000 Income Approach: Not Applicable Concluded Market Value: $559,000 Estimated Exposure Time: 6-12 months Estimated exposure time is based on current sales of properties within the Bozeman area that are similar to the subject. The estimated exposure time is predicated on the final opinion of value. Bridger Appraisals Inc. © 11 Keith O’Reilly, MAI SCOPE OF THE APPRAISAL The scope of work consists of the amount and type of information researched and analyzed in an assignment. In preparing the appraisal, I have personally viewed the subject site and considered pertinent characteristics of the site in comparison to current market standards. I have analyzed the subject neighborhood and competing markets for current sales data. Local commercial real estate agents and brokers were consulted with to confirm sales and lease information. The offices and brokers include Mike McKenna (McKenna Realty), Dick Stefani (Bozeman Broker Group), Steve Olson (NAI Landmark Reality), Chris Pope (NAI Landmark Reality), Mike Elliot (Grub & Ellis), Kasey Hart (NAI Landmark Reality), Lloyd Mandeville (Prudential MT), Tom Starner and Kevin Black (Gene Cook Real Estate). The subject property was originally viewed on November 11, 2013 as part of a larger tract of land. I viewed the property on January 21, 2014 and found the property to be in similar condition as of the original viewing date in November. General and specific data was obtained through personal and telephone interviews with government officials, property managers, developers, and other market participants. I have considered the highest and best use of the property as if vacant and have applied the sales comparison approach valuation methods. The cost approach and income approach are not applicable. The results indicated by this method has been reviewed and reconciled based on the reliability, relevance and reasonableness of the data, and the purpose and intended user of the appraisal. This is a Summary Appraisal Report as defined by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2(B). This format provides a summary of the appraisal process, subject and market data and valuation analyses. The information contained in this report is specific to the needs of the client and for the intended use as stated in this report. Bridger Appraisals Inc. © 12 Keith O’Reilly, MAI PURPOSE AND INTENDED USE AND USER OF THE APPRAISAL The purpose of this appraisal is to estimate a credible opinion of the Current Market Value of the subject property’s Fee Simple Interest, “As Is” as of January 21, 2014 , in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and supplemented by the Appraisal Institute. The intended use of the appraisal is to assist the Client and Intended User, Gallatin Valley Land Trust (GVLT), in the valuation of the subject property for the sale of the land to the City of Bozeman. The City of Bozeman is an additional intended user of this appraisal report. DEFINITION OF MARKET VALUE Market value is defined as 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 and 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: 1. Buyer and seller are typically motivated; 2. Both parties are well informed or well advised, and each acting in what they consider their own best interest; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 1 1Source: Federal Register, vol. 55, August 22, 1990, also quoted in the Uniform Standards of Professional Appraisal Practice. The Dictionary of Real Estate Appraisal, 4th ed. (Chicago; Appraisal Institute, 2002), pp. 177-178. Bridger Appraisals Inc. © 13 Keith O’Reilly, MAI PROPERTY RIGHTS APPRAISED Property rights are ownership interests in real estate and have value. It is important to know what property right(s) or estate(s) are involved in the appraisal, because the estate identifies the rights being valued. The subject property right being appraised is the Fee Simple Interest. Fee Simple: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.2 Leased Fee: An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease.3 2 The Dictionary of Real Estate Appraisal, op. cit., p. 113. 3 The Dictionary of Real Estate Appraisal, op. cit., p. 161. Bridger Appraisals Inc. © 14 Keith O’Reilly, MAI EXPOSURE TIME Exposure time should not be confused with the marketing period. Exposure time precedes the effective date of the appraisal. In other words, how long the subject property would be actively marketed prior to the effective date of the appraisal to bring the estimated opinion of market value determined in the appraisal. Marketing time is the period after the effective date of the appraisal. In other words, how long would it take to sell the subject property, at the appraised market value, after the effective date of the appraisal? Typically, in a stable market the marketing time and exposure time should be relatively similar. Current sales in the Bozeman market have been relied upon to estimate the exposure time of the subject property. Due to the size of the Bozeman market, the best estimate for exposure time is derived from sales of similar type property. Based upon the current market conditions, sales data within the report and current listings, I have estimated the exposure time for the subject property to be 6-12 months. VALUATION DATE The effective date of the appraisal is January 21, 2014. This is the date of valuation and the date that the subject property was personally re-reviewed. The property was originally viewed as part of a larger parcel of land on November 11, 2013. Bridger Appraisals Inc. © 15 Keith O’Reilly, MAI IDENTIFICATION AND HISTORY OF THE SUBJECT The legal description of the subject property is: Lot 4A and Lot C1 of the Amended Plat of Tract C of Van Horn Subdivision, Lots 3 and 4 and portions of Pond Row in Minor Sub. 223, located in the SW1/4 of Sect. 11, T2S, R5E, P.M.M., City of Bozeman, Gallatin Co. MT.(Plat Reference: E-39-C) Sale History: The subject property as described in the legal description recently transferred with other surrounding properties to the Gallatin Valley Land Trust as shown by the Warranty Deed recorded as Document No. 2469674 in the office of the Gallatin County Clerk and Recorder. A copy of the deed showing the transfer of all properties has been included within the Addendum of this report. Current Listing or Contract: The subject property along with additional property was listed for sale since 08-27-12 for an asking price of $895,000. The entire property as listed was recently purchased by the Gallatin Valley Land Trust for a reported $800,000. The subject property is currently being purchased by the City of Bozeman an unknown purchase price. Bridger Appraisals Inc. © 16 Keith O’Reilly, MAI MONTANA REGIONAL AND CITY MAPS SUBJECT T Bridger Appraisals Inc. © 17 Keith O’Reilly, MAI Bridger Appraisals Inc. © 18 Keith O’Reilly, MAI REGIONAL, CITY, AND NEIGHBORHOOD ANALYSIS The purpose of this section is to identify the pertinent social, economic, governmental and environmental factors that affect property value and to analyze their impact on the appraised property’s current market value. This analysis begins with regional information and moves to relevant information about the city and the subject’s neighborhood. A neighborhood is defined as a grouping of similar land uses. From an appraisal viewpoint, this is the area where the subject property competes with other properties and where the most comparable market data is obtained. Bozeman, Montana is located in Gallatin County, in an area more commonly referred to as the Gallatin Valley. Gallatin County is a mountainous area that is located in the southwestern part of the state between Park and Madison Counties, north of the Montana-Wyoming border and Yellowstone National Park. In the past decade, Gallatin County has grown faster than any other county in the State of Montana and according to the 2010 Census 89,513 people called Gallatin County home. Gallatin County covers 2,500 square miles of mountainous lands varying in topography and climate. Additionally, nearly half of all of the land in Gallatin County is under public ownership by the Gallatin National Forest, State of Montana, Bureau of Land Management or the National Park Service. Bozeman, the county seat for Gallatin County, is located approximately 140 miles to the west of Billings, Montana and 65 miles to the north of Yellowstone National Park. Bozeman is the fourth largest city in Montana. In 2007, Gallatin County’s population surpassed that of Flathead County, making it the state’s third largest county. A report by Prospera Business Network that was released February 2010 declared Bozeman as the most expensive place to live in Montana. Social Factors: Social influences that affect value include, but are not limited to, population characteristics such as growth, population density, age distribution, household sizes, employment status, availability of education and the quality of life. Historic and Recent Population Trends - City of Bozeman, Gallatin County and the State of Montana: According to the U.S. Census Bureau, the City of Bozeman's population increased from 27,509 in 2000 to 37,280 as of April 1, 2010-- an increase of 9,771 people. This represents an increase in population of approximately 35.5% over a ten-year period, or an average rate of growth of about 3.55% per year. In contrast, the City of Bozeman’s average growth rate between 1980 and 1990 was about 0.41% per year. In the past decade, Gallatin County and Bozeman have grown faster than any other county or city in the state, according to U.S. Census Bureau data. Bridger Appraisals Inc. © 19 Keith O’Reilly, MAI Gallatin County's population increased from 67,831 in 2000 to 89,513 in 2010 - an increase of 21,682 people. This represents an increase in population of approximately 32% over a ten-year period, or an average growth rate of 3.2% per year. The entire state of Montana grew by 9.7% to 989,415 residents as of April 1, 2010—adding 87,220 people over the last 10 years. Montana continues to be ranked 44th among the 50 states in population. Pop. Est. *Census Census Geography 2011 April 1, 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 April 1, 2000 Gallatin County 91,377 89,513 90,343 89,812 87,300 84,498 80,708 77,439 74,723 72,000 70,196 67,831 34.7% Belgrade 7,549 7,389 8,192 8,169 8,025 7,632 7,329 7,290 7,039 6,742 6,411 5,728 31.8% Bozeman 38,025 37,280 39,282 39,004 37,643 36,668 34,698 33,269 31,545 30,018 28,917 27,509 38.2% Manhattan 1,553 1,520 1,677 1,684 1,603 1,619 1,572 1,580 1,540 1,497 1,486 1,396 11.2% Three Forks 1,909 1,869 1,970 1,980 1,967 1,973 1,949 1,963 1,896 1,829 1,800 1,728 10.5% West Yellowstone 1,298 1,271 1,502 1,510 1,434 1,287 1,264 1,265 1,244 1,218 1,195 1,177 10.3% Balance Gallatin Cty 41,043 40,184 37,720 37,465 36,628 35,319 33,896 32,072 31,459 30,696 30,387 30,293 35.5% % Change 2000 and 2011 Population Estimates* Source: U.S. Census Bureau, Population Estimates Program and Census Information *Taken July 1 of respective year In addition to population growth, the City of Bozeman continues to grow in geographic size. In order to accommodate the increasing population and business growth, new land for residential, commercial and industrial development has been annexed into the City. In 1990, the City was approximately 6,420 acres (10 square miles) in size. By the end of 2009, the City was approximately 12,318.9 acres (19.25 square miles) in size resulting in a 91 percent increase in size over the past 19 years. The recent two years have only seen annexation rates of 0.43 acres in 2009 and 0.00 acres in 2010. The Bozeman DPCD received three annexation applications in 2010; all three remain under review. The City has a reserve of developable land within its current boundaries. The City has not updated the amount of land annexed in 2012 and 2013, but it would appear to be a nominal amount. Bridger Appraisals Inc. © 20 Keith O’Reilly, MAI Bozeman is characterized by a smaller portion of families and an average household size somewhat smaller than Gallatin County as a whole. Bozeman has an average household size of 2.27 people, while the average household size for Gallatin County is 2.49 people. Just over half of Bozeman households are families compared to 63% countywide. Bozeman also exhibits a significantly lower homeownership rate than the county as a whole, primarily due to the student body of Montana State University. In general, the City of Bozeman has a significantly higher educational attainment level than Gallatin County or Montana. Approximately 51.1% of Bozeman residents’ ages 25 and older have a college degree, compared to 39% for Gallatin County and 27.9% for the State of Montana. Bozeman and Gallatin County have transformed over the past decade from a primarily agricultural based community to a tourism related community. The drive to the Bozeman and Gallatin County area has been due to the high quality of life that this area offers. This quality of life is due to low crime rates, the offering of many cultural experiences and abundant outdoor activities. Having many outdoor activities is due to excellent snow skiing developments, world class fly fishing rivers and streams, miles of hiking trails and land for almost any other outdoor recreation that comes to mind. Economic Factors: Historically, Bozeman has been somewhat different than the rest of the State of Montana and the nation as a whole economically speaking. One of the primary reasons of this difference is the fact that there are not a large number of employers who employ a significant amount of the population. For example, other areas of Montana, like Missoula, are very dependent on the lumber industry and when the lumber industry slowed, Missoula felt the impact. In contrast, the primary employer in Bozeman is Montana State University. The economy of Bozeman and Gallatin County is both broad based and diverse, with 5,305 establishments that employ over 42,000 people. Major sectors of the economy include industries in the areas of construction, government, manufacturing, technology, retail service and agriculture which all play significant roles. The largest single employer in the area is Montana State University (MSU) that employs over 3,500 people as permanent faculty/staff and graduate teaching/research assistants. MSU also employs over 2,000 students in part-time jobs. In the Fall of 2013, the enrollment at MSU was 15,294 students which is at an all time high at MSU. The student body of MSU has a significant effect on the local economy. Other significant employers in the county include the State of Montana, Gallatin County, the City of Bozeman, Bozeman Deaconess Hospital, RightNow (Oracle) Technologies Bridger Appraisals Inc. © 21 Keith O’Reilly, MAI and Wal-Mart. As the county’s employment base continues to diversify, the local economic health will be buffered from a downturn in any of the county’s key industries. Bridger Appraisals Inc. © 22 Keith O’Reilly, MAI Economic Development: The North 19th Avenue Corridor has evolved as a significant area of commercial real estate development in Bozeman. In 2007 the following retail stores and restaurants opened along North 19th Avenue: Sportsman’s Warehouse, IHOP, Lowe’s, Bed Bath & Beyond, Staples, REI. Safeway grocery chain (58,000sf) opened in 2011 and Kohls opened the 55,363sf department store at the end of 2010. At the Montana State University campus construction has finished the $10 million football stadium expansion. Other developments to Montana State University that had significant development in Bozeman included a new Molecular Biology Center ($458,000), a Health and Physical Education Center ($4.9 million), the Black Box Theater ($1.2 million), the Marsh Laboratory ($2.0 million), the biology building ($25 million), the Gaines Hall renovation ($28.5 million) and the new USDA Ag Research Building and Teaching Facility ($36.5 million). MSU recently received a $25 million dollar donation to construct a new building for the College of Business that began construction in the summer of 2013. Bridger Appraisals Inc. © 23 Keith O’Reilly, MAI Significant developments to the City of Bozeman over the past five years have included an addition to Fire Station No. 1 ($3.5 million), police station ($400,000), additions to the water/wastewater treatment plants ($32.2 million), additions to city hall ($3.0 million), the completion of the Downtown Parking Garage ($12 million), the construction of the Fire Station No. 3 and Gallatin County 911 Dispatch Center in Bozeman (approximately $7.1 million), a new water reclamation facility ($32 million), renovation of the old City of Bozeman Library into the new City Hall ($2 million), the construction of the Gallatin County Detention Center ($32 million) and both expansions of the landfill building located at the old landfill ($300,000) and of the vehicle maintenance building / Stream Line bus barn . Market Trends for Single Family Houses in the City Limits of Bozeman (Sales Price Range-$150K to $550K) Year # of Units Sold Avg. List Price Avg. Sales Price 2004 390 $253,334 $251,247 2005 453 $290,043 $287,423 2006 355 $326,242 $320,395 2007 311 $321,771 $313,226 2008 292 $311,222 $300,745 2009 284 $281,523 $268,673 2010 311 $276,464 $265,796 2011 336 $271,553 $261,625 2012 499 $296,218 $282,825 2013 thru Nov. 30 443 $299,796 $295,292 The preceding data was supplied by the Southwest Montana MLS. The data shows that the market in Bozeman peaked sometime in late 2005 early 2006. The data is inclusive of single family residences within the City Limits of Bozeman that are on parcels less than one acre and had values between $150,000 and $550,000. The data clearly shows an average decline in value from the peak in 2006 through 2010 of 17%. The sales volume in 2010 was equal to the volume attained in 2007. The other interesting fact is the sales price to list price ration; at the height of the market in 2005 and 2006 sales were closing within about 2% of list price; in 2009 sales closed at approximately 5% of list price and in 2010 sales closed at approximately 4% of list price. 2013 is turning out to be the most active year in real estate since the crash of the market at the end of 2006- beginning of 2007. In fact residential building sites where in oversupply up until 2011, as of 2013 there is actually a pent up demand for residential building sites. Bridger Appraisals Inc. © 24 Keith O’Reilly, MAI Tourism: Yellowstone National Park is a significant generator of visitation to Bozeman. Yellowstone visitation has gradually increased over the years, ranging from 2,752,346 visitors in 2001 to a record number of visitors in 2010 of 3.6 million. Yellowstone was the first U.S. national park, and with 3,472 square miles of land is larger than Rhode Island and Delaware combined. It features an active volcano, more than 300 geysers, approximately 290 waterfalls and the 136 square mile Yellowstone Lake. Through the National Park Service, the park employs around 380 people year-round and 800 during its peak summer season. In addition, approximately 3,700 people work for concessionaires operating such services as lodging, foodservice, retail and transportation. The Big Sky resort area is located approximately 45 miles south of Bozeman. The area averages over 300 inches of annual snowfall, with skiing available November through April. In addition, Big Sky has evolved as more of a year- round destination over the past several years. Big Sky Resort was conceived and built by the late NBC newscaster, Chet Huntley. It first opened for skiing in 1974. In 1976, Michigan-based Boyne USA Resorts purchased the resort and has owned and managed it since then. Under the management of Boyne USA, Big Sky Resort continues to grow. In 1990, the resort invested $18 million in the Shoshone Condominium Hotel and the 46,000-square-foot Yellowstone Conference Center which can accommodate 950 people. In 1995, the Lone Peak Tram was built hoisting skiers to 11,150 feet and giving Big Sky one of the nation’s largest total vertical drops at 4,180 feet. Big Sky completed the single largest development since the resort’s inception in 2000 when the Summit at Big Sky, a luxury hotel condominium complex was constructed. The resort now offers 658 units, including guest rooms, suites, studios and condos. In 2001, Boyne USA announced a 10-year plan which will include $400 million in improvements to the Village and ski terrain at Big Sky. The ski terrain has grown from an original four ski lifts serving 18 runs to 21 lifts servings more than 150 ski runs. During the winter season, the resort offers winter activities such as snow shoeing and gives skiers/snowboards the opportunity to ski/board over 3,812 skiable acres and 150 runs. During the summer season the resort offers many outdoor activities such as mountain biking and horseback riding. Other activities in the Big Sky area include scenic lift rides, hiking, rock climbing, tennis, fly fishing and whitewater rafting. In addition, the scenic 18-hole, par 72 Golf Course at Big Sky was originally designed by Arnold Palmer and has a classic links style, winding along the banks of the West Fork of the Gallatin River. The golf course and entire area are populated with beavers, geese, deer, marmot, rainbow trout and moose. The golf course is also served by the Bunker Bar and Grill and a fully-equipped pro shop. Overall the Big Sky Resort hosts approximately 300,000 skiers per year. Another development near Big Sky is the Yellowstone Club, an exclusive vacation/residential development that has a $300,000 membership fee and a $34,000 annual fee. This development includes private skiing and golfing. In November of 2008, the Yellowstone Club filed for bankruptcy and in July 2010 was purchased by Cross Harbor Bridger Appraisals Inc. © 25 Keith O’Reilly, MAI Capital. Since bankruptcy, the Yellowstone Club has seen declines in property values of 25-30% and a decline in land value of 50%. However, the Yellowstone Club continues to lead the market in gross sale prices. Overall the Yellowstone Club appears to be seeing increasing values in 2013 and there is a considerable amount of residential construction taking place. Additional ski areas in Gallatin County include Moonlight Basin near Big Sky with an adjacent condo development, and Bridger Bowl, 15 miles to the north of Bozeman. Moonlight Basin recently exited bankruptcy proceedings. Also, the region’s excellent fishing and other outdoor activities generate many visitors to the area. Glacier National Park, located near the northwestern corner of the state also generates lodging demand in Bozeman due to Bozeman’s location between Glacier and Yellowstone National Parks. Other attractions in the Bozeman area include the Museum of the Rockies, Emerson Cultural Center, American Computer Museum (“Compuseum”) and the Pioneer Museum. The Bozeman Area Convention & Visitors Bureau has organized a Tournament Committee which brings to Bozeman ten to twelve amateur sporting events per year. These events are usually held at the facilities on the Montana State University campus or at the Special Events Center in Belgrade, located seven miles west Bozeman. The events typically fill numerous area hotel rooms. Governmental Factors: The City of Bozeman is a City Commission/City Manager form of government with an elected Municipal Judge. These three entities form the legislative, executive and judicial branches of government. Five commissioners, elected with no party affiliation, make up the City Commission. They are elected to four year, overlapping terms and are part time officials. Terms are staggered, and elections are held every two years. The candidate who receives the most votes in an election becomes the Mayor the last two years of their term. There are three fire stations, one located on South 19th Avenue, one located on North Rouse Avenue and one on Davis Lane. Both the fire and police protections are considered good. The State of Montana assesses an ad valorem property tax to run public schools and other government agencies. There is also a State levied income tax in Montana but there is no sales tax in the State. Zoning Activity: Gallatin County administers the zoning code for properties outside the city limits, but within the zoning doughnut. In general, planning and zoning regulations in the area are considered stringent. The Gallatin County Comprehensive Plan encourages development near existing cities and discourages those in more remote locations. Bozeman’s Planning Department enforces zoning regulation within the City Limits. In addition, the City adopted a “Big Box” ordinance to limit the size and number of big box retailers. Consequently, low supply and high demand have had a significant impact on real estate values. Bridger Appraisals Inc. © 26 Keith O’Reilly, MAI Subdivision Activity: Subdivision activity stalled in 2008, decreased in 2009 and slightly increased in 2010. In 2010, final plat applications for 136 lots were received (up from 10 in 2009) and preliminary plat applications for 14 lots were received (38 in 2008 and 9 in 2009). Since the beginning of 1996, approximately 6,139 new building lots have been created in the City. In 2010, the Department of Planning and Community Development processed 14 subdivision applications (15 in 2008 and 11 in 2009). Since the beginning of 1996, 659 subdivision applications have been pro- cessed. There has been little planning activity by local developers over the past several years due to poor market conditions, which has caused a pent up demand for residential building sites in 2013. Environmental Factors: Environmental factors consist of both natural and man-made features that can influence property values. These forces include but are not limited to climate, topography, natural barriers and transportation systems. Bozeman’s climate reflects its mountain valley location. Bozeman, Gallatin County and the entire State of Montana truly have four seasons. Summers are pleasant and characterized by warm to hot days, cool nights and an abundance of sunshine. Humid conditions are infrequent. The average high temperatures in the summer are in the upper 80s and the average lows in the winter are in the mid 20s to lower 30s. The average high and low monthly temperatures for December, January, and February are 34 degrees and 15 degrees, 33 degrees and 14 degrees, and 39 degrees and 18 degrees respectively. Springs tend to come late in the Gallatin Valley. One third of the annual precipitation of 19.29 inches falls during May and June. The average annual mean snowfall in Bozeman is 72.1 inches and the average length of the growing season is 107 days. The climate of the county varies according to elevation, but it is generally characterized by relatively cold winters and warm summers. Typical operation costs that affect real estate are the inclusion of snow removal in the wintertime. Due to the fairly temperate summers, cool air conditioning costs are less; however, heating bills can be high due to the cold winter months. Bozeman is located in Southwest Montana and has access going east and west on U.S. Interstate Highway 90. Access to the south towards Yellowstone National Park and Salt Lake City is via U.S. Highway 191. Interstate 90, Bridger Appraisals Inc. © 27 Keith O’Reilly, MAI State of Montana and Gallatin County maintained roads provide access throughout the region and commercial air, truck and rail (commercial service only) transportation are adequate. Gallatin Field near Belgrade (seven miles west of Bozeman) is the second busiest airport in the state and provides adequate service to the region. Conclusion: In general, the outlook for Belgrade, Bozeman and the surrounding communities is good. Bozeman’s economy is diverse and anchored by Montana State University. As far as the labor market, Bozeman has a young and very well educated work force. The quality of life and outdoor activity will continue to be one of the driving factors for population growth in the Gallatin Valley. Gallatin County has a wide variety of excellent outdoor recreational opportunities. There are cultural and additional recreational resources in Bozeman due to the presence of MSU, and the tourism industry in southwestern Montana is poised for continued growth. Current population trends continue in an upward direction and growth has been sustained over the past decade. There are no local employers or industries that are in imminent danger of changing unemployment levels. As well there are no perspective employers moving into the area that are going to create a demand for employees. I anticipate normal to steady growth, and no major change in population that would create a under supply or residential real estate. In general the market overall real estate market in Bozeman has been better in 2013 than it has over the last 6 years. Residential and commercial activity has increased significantly. Residential apartment occupancy is more or less at 100%. Commercial lease rates and property values have been increasing as well. In general the immediate subject neighborhood can more or less be described as the northwest quadrant of Bozeman. Bridger Appraisals Inc. © 28 Keith O’Reilly, MAI TAXES AND ASSESSMENT ANALYSIS The State of Montana, through the Department of Revenue, is responsible for valuing all taxable real and personal property. Department of Revenue field offices accomplish this property valuation. State guidelines are followed to ensure property is appraised in a fair and equitable manner. According to the Department of Revenue, all three approaches to value are considered in the appraisal process. The amount of property tax paid is not determined solely by a property’s value. The property’s value is multiplied by a tax rate, set by the Montana Legislature, to determine its taxable value. The taxable value is then multiplied by the mill levy established by various taxing jurisdictions, city and county government, school districts and others, to provide services in the property’s area. The following calculations are used to determine general property tax: Value x Tax Rate = Taxable Value Taxable Value x Mill Levy = General Property Tax The property tax process begins with an appraisal of the property. State law requires the Department of Revenue to reappraise property periodically. The most recent reappraisal was completed on July 1, 2008. Each year, the Department of Revenue field offices must certify the taxable value of all properties incorporated within the boundaries of each existing tax jurisdiction or school district. This valuation is then submitted to the taxing jurisdictions and the county commissioners. The taxing jurisdictions then set mill levies based on these values and the budget required to provide the necessary services. The levy is calculated by dividing the necessary budget by the taxable value. In addition to local levies, there are statewide mills mandated by the Montana Legislature to provide school equalization and funding for the university system. The subject property is currently tax exempt as shown by the 2013 Gallatin County tax assessment. The property is exempt since it was previously owned by a religious organization as confirmed with the Gallatin County Tax Assessor. The property will be reassessed for the 2014 tax year and maybe subject to additional taxes at that time. The property and additional surrounding property is also subject to the City of Bozeman 2014 tax assessment of $2,173.08. Included within this assessment is a special improvement assessment (SID) for the West Babcock Street. The SID comprises $2,034.70 of the $2,173.08 City of Bozeman assessment. Bridger Appraisals Inc. © 29 Keith O’Reilly, MAI SITE DATA AND ANALYSIS Location: Fowler Rd, Bozeman, MT 59715 Dimensions: See Attached Plat Map Land Area: 8.56 acres, (372,874sf) Shape: The subject property is irregular and separated into two different parcels. Drainage: The soil conditions observed at the subject appear to be typical of the region and adequate to support development. Flood Zone: Census Tract: 7.02. The Subject is not located in flood hazard zone. FEMA Map Number: 30031C0812D. FEMA Map Date: September 2, 2011 Topography: The subject site is more or less level. Frontage: The subject property fronts Fowler Avenue. Visibility: Average Landscaping: Vacant development land. Site Utility: Average Street Access: Good Sewer and Water: Sewer: City - Available Water: City - Available Utilities: Northwestern Energy Curb/Gutter: None Sidewalk: None Streetlights: Public 2013 Real Estate Taxes (County) and 2014 Real Estate Taxes (City): Currently Tax Exempt for County $2,173.08 (IOP) for City Adverse Easements or Encroachments: There no known adverse encumbrances or easements. Please reference Limiting Conditions and Assumptions. Adjacent Uses and Site Comments: The subject property is located just east of Fowler Avenue and north of Main Street. The site also borders City park which is to the south. Bridger Appraisals Inc. © 30 Keith O’Reilly, MAI SUBJECT PLAT MAP Subject Subject Bridger Appraisals Inc. © 31 Keith O’Reilly, MAI Subject Subject Bridger Appraisals Inc. © 32 Keith O’Reilly, MAI FLOOD MAP Conclusion: The subject site has many attributes that make it ideal to develop to its Highest and Best Use. The subject site is relatively flat. Off- site utilities are in place, NorthWestern Energy supplies electricity and natural gas. There is good access via Durston Rd. The land directly south of the subject is public park. Bridger Appraisals Inc. © 33 Keith O’Reilly, MAI ZONING AND GOVERNMENT RESTRICTIONS The subject site is zoned by the City of Bozeman as Residential District R-3 High Density and R-4 Residential District High Density as stated by the Lloyd Mandeville. The property has recently been updated to include the R-4 zoning. The City has not published their updated zoning map. Residential Medium Density District (R3) is to provide for the development of one-to five- house-hold residential structures near service facilities within the City. Residential District (R4) High Density is to provide for high-density residential development through a variety of housing types within the City with associated service functions. This will provide for a variety of compatible housing types to serve the varying needs of the community's residents. Subject Bridger Appraisals Inc. © 34 Keith O’Reilly, MAI PHOTOGRAPHS OF THE SUBJECT View of the subject property looking north. Photo taken on November 11, 2013 by Keith O’Reilly, MAI. View of the subject property looking back south. Photo taken on November 11, 2013 by Keith O’Reilly, MAI. Bridger Appraisals Inc. © 35 Keith O’Reilly, MAI HIGHEST AND BEST USE Highest and Best Use is defined in the fourth edition of The Dictionary of Real Estate Appraisal (Appraisal Institute, Chicago, 2002), as follows: The reasonably probable and legal use of vacant land or an improved property, which 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. Highest and Best Use analysis is a three-step process. The first step involves the Highest and Best Use of a site as though vacant. The determination must be made to leave the site vacant or improve it. If the conclusion is to improve the site, the second step is to determine the ideal improvement. The final step is a comparison between the ideal improvement and the existing improvement. At this point, the determination must be made to maintain the property in its present form or to modify the improvements to more closely conform to the ideal use. Highest and Best Use may be defined as the reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. 4 1. Permissible Use. What uses are permitted by zoning and other legal restrictions? 2. Possible Use. To what use is the site physically adaptable? 3. Feasible Use. Which possible and permissible use will produce any net return to the owner of the site? 4. Maximally Productive. Among the feasible uses which use will produce the highest net return, (i.e., the highest present worth)? 4Boyce, op. cit., p. 135. Bridger Appraisals Inc. © 36 Keith O’Reilly, MAI Conclusion Highest and Best Use As Vacant: The subject site is zoned R-3 and R-4, both of which are typical of multi-family development. All the necessary off site infrastructure appears to be in place, it is likely there would be some future expense to widen Fowler Ave. The site appears to be stable as evidenced by adjacent sites that have been developed. Presently there is a strong demand for multi-family building sites making development in most cases financially feasible and maximally productive. The highest and best use of the subject site as vacant is to further subdivide and develop the subject site residentially with multi-family improvements. Bridger Appraisals Inc. © 37 Keith O’Reilly, MAI THE APPRAISAL PROCESS Typically, real estate can be valued by applying three approaches. Cost Approach: That approach in appraisal analysis that is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the Subject property. It is particularly applicable when the property being appraised involves relatively new improvements that represent the Highest and Best Use of the land or when relatively unique or specialized improvements are located on the site and for which there exist no comparable properties on the market.5 Sales Comparison Approach: Traditionally, an appraisal procedure at which the market value estimate is predicated upon prices paid in actual market transactions and current listings; the former fixing the lower limit of value in a static or advancing market (price wise), and fixing the higher limit of value in a declining market; and the latter fixing the higher limit in any market. It is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probably sales price of the property being appraised. The reliability of this technique is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data, (c) the degree of comparability or extent of adjustment necessary for time differences and (d) the absence of non-typical conditions affecting the sale price.6 Income Approach: That procedure in appraisal analysis that converts anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value estimate. The Income Approach is widely applied in appraising income-producing properties. Anticipated future income and/or reversions are discounted to a present worth figure through the capitalization process.7 In essence, all approaches to value (particularly when the purpose of the appraisal is to establish market value) are market data approaches since the data inputs are presumably market derived. 5Boyce, op. cit., p. 67. 6Boyce, op. cit., p. 245,255. 7Boyce, op. cit., p. 143. Bridger Appraisals Inc. © 38 Keith O’Reilly, MAI SALES COMPARISON APPROACH The Sales Comparison Approach is one of the three traditional approaches to value. It is also referred to as the Market Data or Market Comparison Approach. It is defined as follows: That approach in appraisal analysis which is based on the proposition that an informed purchaser would pay no more for a property than the cost to him acquiring an existing property with the same utility.6 Basic real estate appraisal principles involved in this approach are the principles of substitution, anticipation and contribution. The "principle of substitution" is the underlying premise from the Sales Comparison Approach and its definition is very similar to that of the approach itself. This principle fundamentally states that the value of a property is influenced to a large extent by the prices being paid in the open market for similar properties offering the same utility. It is irrational for somebody to pay an amount of money for a property that is greater than the price at which an equally desirable substitute may be acquired. The market, which is made up of substitute properties, thus represents alternatives for a prospective buyer and tends to set the range of values. The "principle of anticipation" states that prices paid for property is a reflection of the market's expectation of future benefits that accrue from ownership. It follows, then, that if the property is old and nearing the end of its economic life, or for another reason has a dismal future, the present worth of all future benefits would be considerably lower than if the property was new and could generate benefits for a longer period of time. The value of real property, therefore, can be considered the present worth of all future benefits that can be derived from its ownership. The "principle of contribution" is the underlying rationale for the adjustment process in the Direct Sales Comparison Approach. This principle views the sale price of real property as the sum of all value contributing characteristics. The individual characteristics are measured by the effect their presence or absence has on the total sale price. Not only is their mere presence important, but also the quantity and quality in which they exist. There are other appraisal principles involved in Direct Sales Comparison, but the three mentioned are considered most pertinent. 6Boyce, op. cit., p. 255. Bridger Appraisals Inc. © 39 Keith O’Reilly, MAI ID 61 Verification Source Land Buy-Sell Agreement Address 4181 Fallon Avenue.Price $475,000 City Bozeman Price Per Land SF $4.01 State MT Financing Conventional Tax ID RGG54802 Property Rights Fee Simple County Galllatin Days on Market 26 Grantor Cottonwood Condominiums, Inc.Recording Date 07/31/12 Grantee Ridge LLC Recording Number 2422449 Legal Description Acres 2.7 Topography Level Land SF 118,322 Zoning R-O Road Frontage --Flood Zone -- Dimensions --Encumbrance or Easement None Utilities Northwestern Energy Environmental Issues None Access Fallon and Ravalli Streets Price Per Land SF $4.01 Lot 2C of Minor Subdivision No. 365A, located in the SW¼ of Sect 10, T2 S, R5 E, P.M.M., City of Bozeman, Gallatin Co., MT. Comments This property was purchased by the adjacent land owner that has a development anchored by The Ridge Athletic Club. Future plans are to bring the site into the existing PUD and develop with professional office or retail use. Site Land Comparable 1 Transaction Bridger Appraisals Inc. © 40 Keith O’Reilly, MAI ID 361 Verification Source Jayson Basye-Broker Address Lot 1, Block 4 Meadow Creek Subdivision Price $200,000 City Bozeman Price Per Land SF $1.88 State MT Financing Cash to Seller Tax ID RGG56615 Property Rights Fee Simple County Gallatin Days on Market -- Grantor Bozeman I LLC Recording Date 06/28/13 Grantee McIntosh Construction Inc.Recording Number 2454000 Legal Description Acres 2.4 Topography Level Land SF 106,286 Zoning Residential Medium Density (R3) Road Frontage --Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Graf Street Price Per Land SF $1.88 Lot 1, Block 4 Meadow Creek Subdivision Phase 1, City of Bozeman, Gallatin County, MT This was a bank owned property. The purchaser has plans to further subdivide the site into 10 single family home sites. All the necessary infrastructure is in place to develop the site. Comments Site Transaction Land Comparable 2 Bridger Appraisals Inc. © 41 Keith O’Reilly, MAI ID 362 Verification Source Jason Bayse-Broker Address South 27th Avenue Price $750,000 City Bozeman Price Per Land SF $1.66 State MT Financing Cash to Seller Tax ID --Property Rights Fee Simple County Gallatin Days on Market Ukn Grantor Bozeman I Limited Liabiltiy Company Recording Date 09/25/13 Grantee DA Land Company LLC Recording Number 2463731 Legal Description Acres 10.3 Topography Level Land SF 450,138 Zoning Residential Medium Density (R3) Road Frontage --Flood Zone None Dimensions Irregular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access South 27th Street Price Per Land SF $1.66 Lots 8-15, Block 5 and Lots 14-18 Block 9 Meadow Creek Sub Phase 1, City of Bozeman, Gallatin County, MT Transaction Comments Site Land Comparable 3 This was the purchase of land from a bank REO. The subject sites contained 10.33 acres zoned for multi-family: however the purchaser has plans to further subdivide the sites into 47 single family residential sites. Bridger Appraisals Inc. © 42 Keith O’Reilly, MAI ID 343 Verification Source Andy Holloran Address 1710 Vaquero Parkway Price $400,000 City Bozeman Price Per Land SF $3.04 State MT Financing Conventional Tax ID 00RGG65789 Property Rights Fee Simple County Gallatin Days on Market -- Grantor Holyoke V, Inc.Recording Date 09/19/13 Grantee Shining Mountain Lutheran Church Recording Number 2463205 Legal Description Acres 3.0 Topography Level Land SF 131,678 Zoning R-3, Residential Medium Density DistrictRoad Frontage Vaquero Parkway & Davis Lane Flood Zone -- Dimensions Irregular Encumbrance or Easement -- Utilities NorthWestern Energy Environmental Issues -- Access Vaquero Parkway Price Per Land SF $3.04 Lot 9, Block 8 of the Crossing 2 Subdivision, Gallatin County, Montana. Comments Reportedly, an additional lot located at 3334 Monida Street (Lot 8, Block 8) was included in the transaction. According to the seller, the additional lot was gifted to the buyer and no value was allocated to it. The seller estimated the value of the additional lot to be $60,000. The indicated range of value is $2.58psf to $3.04psf Site Transaction Land Comparable 4 Bridger Appraisals Inc. © 43 Keith O’Reilly, MAI ID 69 Verification Source Jason Leap, 556-5074 Address 2050 Baxter Ln.Price $375,000 City Bozeman Price Per Land SF $1.15 State MT Transaction Type Closed Tax ID RGG7441 Financing Cash to Seller County Gallatin Days on Market 332 Grantor Doreen J. Arneson, Trust Recording Date 02/11/11 Grantee Joseph & Bettie C. Stanislao Recording Number 2382198 Legal Description Acres 7.5 Topography Level Land SF 326,700 Zoning No zoning- County Road Frontage Baxter Ln.Flood Zone -- Dimensions Nearly Rectangular Encumbrance or Easement None Utilities NorthWestern Energy Environmental Issues None Access Paved Price Per Land SF $1.15 NE1/4NE1/4 Tract 1, Sect 2, T2S, R5E, M.P.M., Gallatin Co., MT. Land Comparable 5 Transaction Site Comments This property has been for sale for years, although the reported days on the market are 332. There is an older house on the property. The site has not been annexed into the City, so future costs could be incurred. No City services are to the sight. Bridger Appraisals Inc. © 44 Keith O’Reilly, MAI Bridger Appraisals Inc. © 45 Keith O’Reilly, MAI Units of Comparison-Property Valuation: Since the subject property is a vacant tract of land, value is derived from the square footage of the sites. The preceding sales have been analyzed and compared with the subject property. I have considered adjustments in the areas of:  Property Rights Sold  Financing  Conditions of Sale  Economic Trends (time)  Location  Physical Characteristics Site Valuation: The procedure used in estimating site value is direct market comparison, which involves compiling data on recent sales of similar sites that are competitive with the subject property. After the sales are gathered, they are compared to the subject as to time, conditions of sale, location and physical characteristics and adjusted for dissimilarities. The adjusted sale price of the comparables is used to form an indication of the site value for the subject. Land Sales Comparison and Analysis: The selection of the sale comparables involved careful consideration of their geographic location, size, and date of sale. Specifically, those transactions most similar to the subject property in terms of their characteristics and components have been incorporated into this report. The research process involved a search of all relevant sources including public records, certain published periodicals, office files, and discussions with buyers, sellers, and other knowledgeable persons in the marketplace. Obviously, to some extent, the availability and scope of the data often affect the selection of comparable sales. Adjustment Notes The comparable sales that were chosen show the difference in value between turnkey lots and sites that were purchased to be further subdivided. Sales 1 and 4 were both subdivided sites with all the necessary improvements in place and indicated values between $3.00psf and $4.00psf. Sales 2 and 3 were both developed sites, but the purchaser intended to further subdivide the sites. The offsite improvements were more or less completed for these sites, the risk involved was what the City would allow to be developed. These sites had similar zoning compared to the subject. Sale 5 is an older sale and market conditions have improved considerably since the time of this sales. Sale 5 was not annexed into the City and there would be some significant offsite building costs. Sale 5 brackets the lower end of the range at $1.15psf. I have reconciled in the Bridger Appraisals Inc. © 46 Keith O’Reilly, MAI middle of the range at $1.50psf for the subject site. I have reconciled less than Sales 2 and 3 because there were no additional offsite development costs for these two parcels. Land Value Conclusion Based on the above analysis, I have reconciled to a site value of $559,000, as of January 21, 2014, and subject to the Limiting Conditions and Assumptions of this appraisal. Bridger Appraisals Inc. © 47 Keith O’Reilly, MAI FINAL RECONCILIATION The process of reconciliation involves the analysis of each approach to value. The quality of data applied and the significance of each approach relating to market behavior and defensibility of each approach are considered and weighed. Finally, each is considered separately and comparatively with each other. Value Indications Land Value: $559,000 Cost Approach: Not Applicable Sales Comparison Approach: $559,000 Income Approach: Not Applicable Cost Approach The cost approach to value is not applicable to the subject property. Sales Comparison Approach An exhaustive search for comparable properties was conducted. Sales for properties like the subject are difficult to find. The overall market for development properties has really picked up since the start of 2013. In addition to the five comparable properties listed in the report I am also in possession of a back-up offer for $800,000 cash that was signed on September 26, 2013 for the subject property and other property. Additionally, the subject property was recently purchased along with another property for a reported $800,000. The quality and quantity of market data is good and the indication of value is reasonable and reliable. Income Approach The income approach to value is not applicable to the subject property. Bridger Appraisals Inc. © 48 Keith O’Reilly, MAI Value Conclusions The sales comparison approach to value is the only applicable approach to valuing the subject. The quality and quantity of market data is good and the indication of value is reasonable and reliable. Based on the data and analyses developed in this appraisal, I have reconciled to the following value conclusions, as of January 21, 2014, subject to the Limiting Conditions and Assumptions of this appraisal. Reconciled Value Conclusion: Premise: “As Is” Estate: Fee Simple Value Conclusion: $559,000 As a result of my investigation and analysis, it is my opinion that the Current Market Value of the Fee Simple Interest, “As Is”, in the subject property, as of January 21, 2014, is: FIVE HUNDRED FIFTY NINE THOUSAND DOLLARS ($559,000) Bridger Appraisals Inc. © 49 Keith O’Reilly, MAI CERTIFICATION As a result of a request for an appraisal assignment of the property, identified as: GVLT to City of Bozeman Fowler Rd Bozeman, MT 59715 I certify: To the best of my knowledge and belief, the statements of fact contained in this report are true and correct. 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 appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. 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. 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. My analyses, opinions, and conclusions were developed, and this report has been prepared, in accordance with the standards and reporting requirements of and in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute, and the Uniform Standards of Professional Appraisal Practice (USPAP), published and copyrighted by the Appraisal Foundation. Keith O'Reilly, MAI, has made a personal viewing of the property that is the subject of this report. No person, other than the appraiser signing this report, provided significant professional assistance to the persons signing this report. Further, the value reported is based upon cash in U.S. dollars or in terms of similar financial arrangements. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. Bridger Appraisals Inc. © 50 Keith O’Reilly, MAI As of the date of this report, I, Keith O’Reilly, MAI, have completed the continuing education program of the Appraisal Institute. A prior appraisal involving the subject property and additional property was completed in November 2013. The client was aware of this appraisal prior to engagement. Other than the previously mentioned appraisal, I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. As a result of my investigation and analysis, it is my opinion that the Current Market Value of the Fee Simple Interest, “As Is”, in the subject property, as of January 21, 2014, is: FIVE HUNDRED FIFTY NINE THOUSAND DOLLARS ($559,000) Respectfully Submitted, Keith O’Reilly, MAI General Certified Appraiser #400 State of Montana Bridger Appraisals Inc. © Keith O’Reilly, MAI ADDENDUM Bridger Appraisals Inc. © Keith O’Reilly, MAI Bridger Appraisals Inc. © Keith O’Reilly, MAI Bridger Appraisals Inc. © Keith O’Reilly, MAI Keith O’Reilly, MAI State of Montana General Certificate #400 Expires 3-31-2014 Qualifications EDUCATION  Educated in the Bozeman and Billings Public Schools Systems, Bozeman and Billings, MT.  Obtained a B.S. degree in Business Marketing from Montana State University in 1992. APPRAISAL EDUCATION COURSES:  Successfully completed the following courses and seminars from Appraisal Institute:  Completed Ted Whitmer’s Comprehensive Appraisal Work Shop, Dallas Texas APPRAISAL EXPERIENCE: I have specialized in the appraisals of residential and commercial properties located in Gallatin County, Montana since May of 1992. My experience includes an apprenticeship with Henry Neils, MAI & Patrick Nolan, MAI, SRA. Appraising residential properties including single family, 2-4 family, and condominiums, industrial sites and buildings, commercial sites and buildings, and insurable value appraisals. I am a native of Bozeman and have resided in the area for approximately 38 years. I served as a board member for the Montana Board of Real Estate Appraisers from 2001 -2007 and was the Chairman of the Screening Panel Committee for the Board of Appraisers. I have completed work for the following: American Bank, Wells Fargo Home Mortgage, Prudential Relocation, First Interstate Bank, Valley Bank of Belgrade, United States Government General Services Administration, Big Sky Western Bank, Sterling Savings and Loan, First Security Bank of Bozeman, U.S. Bank, American Federal Savings Bank, Wells Fargo Bank, Bozeman Deaconess Hospital, Burlington Northern Santa Fe Railroad. Courses from Appraisal Institute Seminars from Appraisal Institute I 110 Appraisal Principles "The New URAR" I 120 Appraisal Principles "High Tech Appraisal Office" I 210 Appraisal Principles "Fundamental of Relocation" I 410 Appraisal Principles "Understanding Limited Appraisals Residential" I 420 Appraisal Principles "Understanding Limited Appraisals General" 310 Basic Income Capitalization "660-Small Hotel/Motel Valuation" 430 Standards of Professional Standards Part C "620-Mixed Use Valuation Analysis" 510 Advanced Income Capitalization "Appraising Manufactured Housing" 520 Highest & Best Use and Market Analysis "Data Confirmation and Verification Methods" 530 Advanced Sales Comparison and Cost Approaches "Partial Interest Valuation-Undivided" 540 Report Writing and Valuation Analysis "Appraisal Review General" 550 Advanced Application "2004 7hr USPAP Update" Bridger Appraisals Inc. © Keith O’Reilly, MAI Serving Gallatin, Madison and Park Counties 600 South 19th Avenue Bozeman, MT 59718 203 South Main Street Livingston, MT 59047 Phone: 406.522.5500 Phone: 406.222.7647 www.sectitle.com COMMITMENT FOR TITLE INSURANCE SELLER:Gallatin Valley Land Trust BUYER/BORROWER:City of Bozeman OUR ORDER:G132601 INQUIRIES TO:Title Officer:Thomas A. Cahill (tcahill@sectitle.com) Direct Line:(406) 522-5550 Escrow Officer:Kris Deason (kdeason@sectitle.com) Direct Line:(406) 522-5570 COPIES TO:Kelly Pohl (E), Gallatin Valley Land Trust Commitment for Title Insurance Issued By Old Republic National Title Insurance Company Old Republic National Title Insurance Company, a Minnesota corporation ("Company"), for a valuable consideration, commits to issue its policy or policies of title insurance, as identified in Schedule A, in favor of the Proposed Insured named in Schedule A, as owner or mortgagee of the estate or interest in the land described or referred to in Schedule A, upon payment of the premiums and charges and compliance with the Requirements; all subject to the provisions of Schedules A and B and to the Conditions of this Commitment. All liability and obligation under this Commitment shall cease and terminate six (6) months after the Effective Date or when the policy or policies committed for shall issue, whichever first occurs, provided that the failure to issue the policy or policies is not the fault of the Company. The company will provide a sample of the policy form upon request. IN WITNESS WHEREOF, Old Republic National Title Insurance Company has caused its corporate name and seal to be affixed by its duly authorized officers on the date shown in Schedule A. Issued through the Office of:OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 ORT FORM 4308 ALTA Commitment for Title Insurance 06/06 CONDITIONS 1.The term mortgage, when used herein, shall include deed of trust, trust deed, or other security instrument. 2.If the proposed Insured has or acquired actual knowledge of any defect, lien, encumbrance, adverse claim or other matter affecting the estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule B hereof, and shall fail to disclose such knowledge to the Company in writing, the Company shall be relieved from liability for any loss or damage resulting from any act of reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed Insured shall disclose such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse claim or other matter, the Company at its option may amend Schedule B of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurred pursuant to Paragraph 3 of these Conditions and Stipulations. 3.Liability of the Company under this Commitment shall be only to the named proposed Insured and such parties included under the definition of Insured in the form of policy or policies committed for and only for actual loss incurred in reliance hereon in undertaking in good faith (a) to comply with the requirements hereof, or (b) to eliminate exceptions shown in Schedule B, or (c) to acquire or create the estate or interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount stated in Schedule A for the policy or policies committed for and such liability if subject to the insuring provisions and Conditions and Stipulations and the Exclusions from Coverage of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein. 4.This Commitment is a contract to issue one or more title insurance policies and is not an abstract of title or a report of the condition of title. Any action or actions or rights of action that the proposed Insured may have or may bring against the Company arising out of the status of the title to the estate or interest or the status of the mortgage thereon covered by this Commitment must be based on and are subject to the provisions of this Commitment. 5.The policy to be issued contains an arbitration clause. All arbitrable matters when the Amount of Insurance is $2,000,000 or less shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. You may review a copy of the arbitration rules at: http://www.alta.org/. ORT Form 4308 ALTA Commitment for Title Insurance 06/06 SCHEDULE A Commitment No: G132601 Page No. 1 Address Reference: NHN Fowler Avenue, Bozeman, MT 59718 1.Effective Date: November 12, 2013 at 7:30 a.m. Proposed Insured: City of Bozeman 2.Policy or Policies to be issued: Owner’s Coverage ORT 4309 (6-17-06) Standard Extended Amount:$To be determined and approved by the Company Premium:$ Mortgagee’s Coverage Standard Extended Amount:$ ORT 4310 (6-17-06)Premium:$ Endorsements: $ Mortgagee’s Coverage (2nd) Standard Extended Amount:$ ORT 4310 (6-17-06)Premium: Endorsements: $ Inspection Fee:$ Cancellation Fee (If Applicable)$150.00 (minimum) 3.The estate or interest in the land described or referred to in this commitment and covered herein is fee simple and title thereto is at the effective date hereof vested in: Gallatin Valley Land Trust, Inc. 4.The land referred to in this commitment is: Lots 4A and C1 of the Amended Plat of Tract C of Van Horn Subdivision and Lots 3 and 4 and portions of Pond ROW of Minor Subdivision No. 223, City of Bozeman, Gallatin County, Montana, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana. (Plat Reference: E-39-C) Commitment No: G132601 Page No. 2 SCHEDULE B –Section 1 Requirements The following requirements must be met: 1.Pay the agreed amounts for the interest in the land and/or the mortgage to be insured. 2.Pay us the premiums, fees and charges for the policy. 3.Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded. 4.You must tell us in writing the names of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. 5.If any document in the completion of this transaction is to be executed by an attorney-in-fact, the Power of Attorney form must be submitted for review prior to closing. 6.We require the borrower/seller to execute a Seller or Borrower Affidavit and Indemnity. In addition to the above standard requirements, the following requirements also apply to the subject real property. 7.Requirement that a copy of the corporate resolution authorizing the sale of said premises be submitted to this office before final policy can issue. Commitment No: G132601 Page No. 3 SCHEDULE B –Section 2 Exceptions The policy or policies to be issued will contain exceptions to the following unless the same are disposed of to the satisfaction of the Company. 1.Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. 2.Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an inspection of said land or by making inquiry of person in possession thereof. 3.Easements, claims of easement or encumbrances which are not shown by the public records. 4.Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the title including discrepancies, conflicts in boundary lines, shortage in area, or any other facts that would be disclosed by an accurate and complete land survey of the land, and that are not shown in the public records. 5.(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water whether or not the matters excepted under (a), (b), or (c) are shown by the public records. 6.Any lien, or right to a lien, for services, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records. 7.Any right, title or interest in any minerals, mineral rights or related matters including but not limited to metals, stone, oil, gas, coal,and other hydrocarbons, sand, gravel or other common variety materials, whether or not shown by the public record. 8.General and special taxes and assessments for the year 2014 which are a lien but not yet computed or payable. (Note: Parcel Nos RGG33745, RGG41366 and RGG41367 are Exempt for the 2013 taxes) 9.Special Assessments levied by the City of Bozeman for Street Maintenance. The first installment for the year 2013/2014 shows paid in the amount of $60.75. Second installment shows paid in the amount of $60.75. (Includes this and other property) 10.Special Assessments levied by the City of Bozeman for Tree Maintenance. The first installment for the year 2013/2014 shows paid in the amount of $8.44. Second installment shows paid in the amount of $8.44. (Includes this and other property) 11.Special Improvement District for West Babcock Street. The first semi-annual installment for the year 2013/2014 shows paid in the amount of $1,348.21. The second semi-annual installment shows paid in the amount of $1,320.43. (Includes this and other property) 12.Special Assessments levied by the City of Bozeman for Street Maintenance.The first installment for the year 2013/2014 shows paid in the amount of $60.75. Second installment shows paid in the amount of $60.75. (Includes this and other property) 13.Special Assessments levied by the City of Bozeman for Tree Maintenance. The first installment for the year 2013/2014 shows paid in the amount of $8.44. Second installment shows paid in the amount of $8.44. (Includes this and other property) 14.Special Improvement District for West Babcock Street. The first semi-annual installment for the year 2013/2014 shows paid in the amount of $1,027.94. The second semi-annual installment shows paid in the amount of $1,006.76. (Includes this and other property) 15.Special Assessments levied by the City of Bozeman for Street Maintenance. The first installment for the year 2013/2014 shows paid in the amount of $60.75. Second installment shows paid in the amount of $60.75. (Includes this and other property) 16.Special Assessments levied by the City of Bozeman for Tree Maintenance. The first installment for the year 2013/2014 shows paid in the amount of $8.44. Second installment shows paid in the amount of $8.44. (Includes this and other real property) 17.Special Improvement District for West Babcock Street. The first semi-annual installment for the year 2013/2014 shows paid in the amount of $311.93. The second semi-annual installment shows paid in the amount of $305.51. (Includes this and other property) 18.All matters, covenants, conditions, restrictions, easements and any rights, interests or claims which may exist by reason thereof, disclosed by the recorded plat of Van Horn Subdivision., Plat No. E-39; the Amended Plat of Van Horn Subdivision, Plat No. E-39-A,and the Amended Plat of Van Horn Subdivision and Minor Subdivision No. 223, Plat No. E-39-C records of Gallatin County, Montana, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status, or national origin to the extent such covenants, conditions or restrictions violate 42 USC 3604(c). 19.All matters, covenants, conditions, restrictions, easements and any rights, interests or claims which may exist by reason thereof, disclosed by the recorded plat of Minor Subdivision No. 223, records of Gallatin County, Montana, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status, or national origin to the extent such covenants, conditions or restrictions violate 42 USC 3604(c). 20.Terms, conditions, restrictions and all other disclosures contained in the Public Street and Utility Easement, recorded April 6, 2000, Document No. 2010112, records of Gallatin County, Montana. 21.Terms, conditions, restrictions and all other disclosures contained in the Public Street and Utility Easement, recorded April 6, 2000, Document No. 2010113, records of Gallatin County, Montana. 22.Terms, conditions, restrictions and all other disclosures contained in the Public Street and Utility Easement, recorded April 6, 2000, Document No. 2010114, records of Gallatin County, Montana. 23.Possible shed encroachment as disclosed by Certificate of Survey No. 1883 on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana. 24.Terms, conditions, restrictions and all other disclosures contained in the Domestic Use Lease Agreement between The Montana Department of Fish, Wildlife and Parks, an agency of the State of Montana and Edward L. Loterbauer and Leetta L. Loterbauer, recorded June 6, 1997 in Film 173, Page 4331, Document No. 345102, records of Gallatin County, Montana. Assigned to Salie B. O’Malley and Philip S. Cook by Assignment recorded June 6, 1997, in Film 173, Page 4337, Document No. 345103, records of Gallatin County, Montana. Assigned to Paradigm Development, LLC by Assignment of Agreement For Domestic Use Lease Agreement recorded December 19, 2001, Document No. 2056018, records of Gallatin County, Montana. 25.Terms, conditions, restrictions and all other disclosures contained in the Assignment of Trail Easement by the State of Montana, Department of Fish, Wildlife & Parks as the Assignor and The City of Bozeman, as Assignee, recorded May 5, 2000, Document No. 2011830, records of Gallatin County, Montana. 26.Terms, conditions, restrictions and all other disclosures contained in the Grant Deed from the State of Montana, Department of Fish, Wildlife and Parks, as Grantor and Salie B. O’Malley and Philip S. Cook as Grantees, recorded June 6, 1997, in Film 173, Page 4338, records of Gallatin County, Montana. 27.Terms, conditions, restrictions and all other disclosures contained in the Commission Resolution No. 3353 –a resolution providing for the Annexation of a certain contiguous tract of land to the corporate limits of the City of Bozeman dated March 20, 2000 and recorded April 6, 2000, Document No. 2010111, records of Gallatin County, Montana. 28.Terms, conditions, restrictions and all other disclosures contained in the O’Malley/Cook Annexation Agreement, recorded April 6, 2000, Document No. 2010111, records of Gallatin County, Montana. 29.Terms, conditions, restrictions and all other disclosures contained in the Meadow Creek Subdivision Payback Agreement for Sanitary Sewer Improvements, recorded January 5, 2011, Document No. 2293493, records of Gallatin County, Montana. Amendment to Meadow Creek Subdivision Payback Agreement For Sanitary Sewer Improvements recorded January 5, 2011, Document No. 2374743, records of Gallatin County, Montana. 30.Terms, conditions, restrictions and all other disclosures contained in the Temporary 100 Foot Diameter Street Easement Bozeman Interfaith Housing –2 Minor Subdivision, Lot 3, City of Bozeman, Gallatin County, Montana, recorded May 28, 1999 in Film 198, Page 3911, Document No. 392017, records of Gallatin County, Montana. 31.Terms, conditions, restrictions and all other disclosures contained in the Improvements Agreement For Bozeman Interfaith Housing 2 Minor Subdivision, recorded December 17, 1992 in Film 179, Page 3804, records of Gallatin County, Montana. 32.Terms, conditions, restrictions and all other disclosures contained in the Waiver of Right to Protest Creation of Special Improvement Districts, recorded December 17, 1997 in Film 179, Page 3802, Document No. 356055, records of Gallatin County, Montana. 33.MONTANA TRUST INDENTURE to secure an indebtedness and any other amounts and/or obligations secured thereby: Dated: December 6, 2013 Grantor: Gallatin Valley Land Trust, Inc. Trustee: Montana Title and Escrow, Inc. Beneficiary: The Conservation Fund Amount: $720,000.00 Recorded: December 6, 2013, Document No. 2469675, records of Gallatin County, Montana. (Includes this and other property. Substitution of Trustee appointing Security Title Company as Successor Trustee recorded January 13, 2014, Document No. 2472323, records of Gallatin County, Montana. NOTE: Copies of documents creating exceptions herein may be obtained upon request. NOTES: A Realty Transfer Certificate must be submitted before forthcoming instruments of transfer can be placed of record and when property is not served by a public service water supply, a statement concerning transfer or non-transfer of water right must appear thereon. No liability is assumed hereunder until full policy premium is paid. Regulations imposed on the title insurance industry by the Montana State Insurance Commission require that a fee be charged for cancellation. END OF EXCEPTIONS NOTE: The attached county map/plat/survey is for reference purposes only. Security Title Company of Montana assumes no liability for the accuracy thereof. PRIVACY POLICY We Are Committed to Safeguarding Customer Information In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information -particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our underwriters, First American Title Insurance Company and Old Republic National Title Insurance Company, we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability This Privacy Policy governs our use of the information which you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern their use of personal information regardless of its source. First American calls these guidelines its Fair Information Values, a copy of which can be found on their website at www.firstam.com. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: !Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means; !Information about your transactions with us, our affiliated companies, or others; and !Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any non-affiliated party. Therefore, we will not release your information to non-affiliated parties except; (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies, and escrow companies. Furthermore, we may also provide all the information we collect, as described above to companies that perform marketing services on our behalf, on behalf of our affiliated companies, or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American=s Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. Serving Gallatin, Madison and Park Counties 600 South 19th Ave.(59718) Post Office Box 6550 (59771-6550) Bozeman, Montana Phone: 406.522.5500 Fax: 406.522.5501 Web:www.sectitle.com