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11-13-23 Work Session Agenda and Materials Page 1 of 2 CITY COUNCIL WORK SESSION AGENDA November 13, 2023, at 7:00 p.m. City Hall Council Chambers, 201 First Avenue East The public can participate in person in the council chambers or via videoconferencing. Register to join the video conference at: https://us02web.zoom.us/webinar/register/WN_u6ynRrqjTFKOVhKySrOJ9A. Please see the bottom of the agenda for instructions to watch the meeting live. A. CALL TO ORDER B. DISCUSSION 1. Energy Efficiency and Conservation Block Grant Program 2. Heritage Park Easement Request C. PUBLIC COMMENT Persons wishing to address the council are asked to do so at this time. Public comment can be provided in person, verbally during the online meeting, or via email to publiccomment@kalispell.com D. CITY MANAGER, COUNCIL, AND MAYOR REPORTS E. ADJOURNMENT UPCOMING SCHEDULE / FOR YOUR INFORMATION City Offices Closed – November 10, 2023 – Veterans Day Observed Next Regular Meeting – November 20, 2023, at 7:00 p.m. – Council Chambers City Offices Closed – November 23 and 24, 2023 – Thanksgiving Holiday Next Work Session – November 27, 2023, at 7:00 p.m. – Council Chambers To provide public comment live, remotely, please register for the video conference through zoom and use the raise hand feature to indicate you would like to provide public comment. See the top of the agenda for the zoom link. Watch City Council sessions live or later on Charter Cable Channel 190 or online at https://www.kalispell.com/480/Meeting-Videos. The City does not discriminate on the basis of disability in its programs, services, activities, and employment practices. Auxiliary aids are available. For questions about disability accommodations please contact the City Clerk at 406-758-7756. Kalispell City Council Agenda, November 13, 2023 Page 2 of 2 ADMINISTRATIVE CODE Adopted July 1, 1991 Section 2-20 Manner of Addressing Council a. Each person not a Council member shall address the Council, at the time designated in the agenda or as directed by the Council, by stepping to the podium or microphone, giving that person's name and address in an audible tone of voice for the record, and unless further time is granted by the Council, shall limit the address to the Council to three minutes. b. All remarks shall be addressed to the Council as a body and not to any member of the Council or Staff. c. No person, other than the Council and the person having the floor, shall be permitted to enter into any discussion either directly or through a member of the Council, without the permission of the Presiding Officer. d. No question shall be asked of individuals except through the Presiding Officer. PRINCIPLES FOR CIVIL DIALOGUE Adopted by Resolution 5180 on February 5, 2007 ◼ We provide a safe environment where individual perspectives are respected, heard, and acknowledged. ◼ We are responsible for respectful and courteous dialogue and participation. ◼ We respect diverse opinions as a means to find solutions based on common ground. ◼ We encourage and value broad community participation. ◼ We encourage creative approaches to engage in public participation. ◼ We value informed decision-making and take personal responsibility to educate and be educated. ◼ We believe that respectful public dialogue fosters healthy community relationships, understanding, and problem solving. ◼ We acknowledge, consider and respect the natural tensions created by collaboration, change, and transition. ◼ We follow the rules & guidelines established for each meeting. City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 Telephone (406) 758-7700 Fax - (406) 758-7758 MEMORANDUM To: Honorable Mayor Johnson and City Council From: Doug Russell, City Manager Re: Energy Efficiency and Conservation Block Grant Program Meeting Date: November 13, 2023 BACKGROUND: The Federal Government has established the Energy Efficiency Block Grant Program to assist local governments in implementing strategies to reduce energy use, to reduce fossil fuel emissions, and to improve energy efficiency. As part of this program the City of Kalispell is allocated $75,940.00. To access these funds, the City of Kalispell needs to submit an application for approval. Upon approval, we would purchase and install the equipment and submit a request for reimbursement. The intent of this program is to streamline the efforts and limit reporting requirements. One aspect of the program is the requirement to submit an Energy Efficiency and Conservation Strategy (EECS). Since we do not currently have a strategy to meet this requirement, we need to select energy conservation goals for our strategy. The goals provided in their template are as follows: i. Carbon Neutrality by 2050 or sooner ii. Reduce energy use by 50% by 2050 or sooner iii. 100% carbon-free energy use by 2050 or sooner iv. 80% EV adoption by 2050 or sooner v. Pay prevailing wages for all construction and maintenance projects by 2025 (must also include an option of 1-4 or 6 as well) vi. Other As we have engaged in energy savings efforts through LED light retrofits and energy audits at our facilities it seems that the goal of reducing energy use by 50% by 2050 or sooner is the logical fit into our current efforts. In respect to equipment that would be acquired, the topic is up for discussion. However, we would recommend submitting an application to the program for the acquisition of solar powered lights that would be installed at the parking lot at City Hall. An estimate for this is $30,314. The remaining $46,000 could be used for solar powered Pedestrian Crosswalk Warning systems at $11,000 per site or solar powered Driver Feedback systems at $13,000 per site. Images of these three systems are included with this memo. Potential locations for the Driver Feedback devices include: 1. Oregon St (b/t Hwy 93 N and Whitefish Stage Road) 2. Airport Road by Rankin Elementary 3. 2nd St W by Petersen Elementary 4. 4 Mile Drive and Kidsports Complex 5. West Wyoming near Russell School (b/t 7th Ave WN and Hwy 93 N) 6. Appleway Drive from Meridian to Hwy 2 Potential locations for the Pedestrian Crosswalk devices include: 1. 4th Ave W and 5th Street W (Elrod Elementary) 2. Meridian and Parkway Drive (KMS) 3. Woodland Ave – Crosswalk in Front of Conrad Mansion 4. Whitefish Stage – two locations near Edgerton Elementary FISCAL IMPACTS: If approved as an eligible purchase through the program, the Kalispell’s distribution could almost cover the costs of the parking lot lighting, two driver feedback locations, and two pedestrian crosswalk locations (or a mixture of the devices). Additional installations would require distributions from Traffic Signs and Signals which is funded through our Street Maintenance funds. RECOMMENDATION: It is recommended that the City Council receive the staff report and provide guidance on the Energy Efficiency goal as required by the program (Part 1.b of the attached template), potential equipment to submit with an application, and installation locations. ATTACHMENTS: Energy Efficiency and Conservation Strategy for Local Governments. Images of proposed equipment (parking lot lights, driver feedback devices, and crosswalk devices). 1 EECBG Program: Energy Efficiency and Conservation Strategy Template for Local Governments Local governments must submit a proposed Energy Efficiency and Conservation Strategy (EECS) to the Department of Energy (DOE) to meet the statutory requirements for the Energy Efficiency and Conservation Block Grant (EECBG) Program. The proposed EECS must include the information contained in Part A of this template. Local governments may use this streamlined EECS Template to meet the requirement, but the template is not required. If a local government chooses to submit an EECS using an alternative format, the information outlined in Part A must be included in the submission. Local governments have the option of submitting their EECS at the time of application or no later than 1 year after the effective date of the award. If the latter option is chosen, the EECS should be a comprehensive strategy that covers, at a minimum, all items detailed in this template. DOE will provide informational resources and technical assistance to support the development of comprehensive strategies. Local governments that do not submit an EECS with their application must submit an EECBG Program Activity File with their application and select Activity 1 (Energy Efficiency and Conservation Strategy). NOTE: All text fields are limited to 2000 characters. Part A: Grantee: Date: (mm/dd/yyyy) UEI Number Program Contact Email: 1) Local governments must include within their proposed strategy a description of their goals for increased energy efficiency and conservation in the jurisdiction. Does your local government have existing energy efficiency and conservation or related goals? a. Yes i. What goals do you have? (check all that apply) 1. GHG reduction goal a. Specific goal (e.g., 80% GHG reduced from 1990 levels) b. By what year? (e.g., 2050) 2. Energy use reduction goal a. Specific goal b. By what year? 3. Clean energy use goal a. Specific goal b. By what year? 4. EV adoption goal a. Specific goal b. By what year? 5. Job creation goal a. Specific goal 2 b. By what year? 6. Job quality goal a. Specify goal b. By what year? 7. Other a. Specific goal b. By what year? b. No, our local government does not have an existing goal, but we are selecting the following goal as part of our strategy. If you select option 5, you must also select from options 1-4 or option 6 (may select more than one option). i. Carbon neutrality by 2050 or sooner ii. Reduce energy use by 50% by 2050 or sooner iii. 100% carbon-free energy use by 2050 or sooner iv. 80% EV adoption by 2050 or sooner v. Pay prevailing wages for all construction and maintenance projects by 2025 vi. Other 2) Does your local government have an existing plan or strategy document (e.g., climate action plan, energy conservation plan, comprehensive energy plan, etc.) to reduce energy use, increase energy efficiency, reduce emissions, or train workers for high-quality energy efficiency jobs? a. Yes i. Please attach/submit/link your plan ii. Do you intend to update your plan in the next two years? 1. Yes a. Are you planning to use any of your EECBG Program funds to update your plan? i. Yes ii. No b. What updates do you intend to make to your plan? b. No i. Please briefly describe your strategy to achieve your goals listed in Question 1 3) Are you planning to use a blueprint (see Section 4.5 of the EECBG Program Formula Grant Application Instructions document for more details)? a. Yes i. Which one(s)? 1. Energy Planning 2. Energy Efficiency a. Energy Efficiency: Building Audits and Retrofits, including grid interactivity and electrification b. Energy Savings Performance Contracts for Efficiency & Electrification in Municipal Buildings c. Building Efficiency & Electrification Campaign 3 d. Building Performance Standards for Existing Buildings and Stretch Codes for New Construction 3. Renewables a. Solar (and battery storage) Power Purchase Agreement (PPA) b. Community Solar c. Solarize Campaign d. Renewable Resource Planning for Communities 4. Transportation a. Electric Vehicles for Municipal Fleets b. EV Charging Infrastructure for the Community 5. Unlocking Sustainable Financing Solutions for Energy Projects and Programs 6. Workforce Development ii. How does this blueprint help you meet your strategy/goals? b. No i. What category of work do you plan to apply your EECBG Program funds to? (check all that apply) 1. Strategy development a. Developing goals b. Developing measures to track progress c. Providing annual reporting on goals 2. Technical consultant services to assist in strategy development 3. Building energy audits a. Residential b. Commercial c. Industrial d. Municipal 4. Financial programs a. Loan programs b. Performance contracting programs c. Rebates/grants d. Incentives e. Other 5. Energy efficiency retrofits a. Residential b. Commercial c. Industrial d. Municipal 6. Energy efficiency and conservation programs for buildings and facilities a. Residential b. Commercial c. Industrial 4 d. Municipal 7. Transportation Programs a. Electric vehicle planning i. Municipal ii. Communitywide b. Purchasing of electric vehicles c. Installation of electric vehicle chargers i. Municipal ii. Communitywide d. Use of flex time by employers e. Satellite work centers f. Zoning guidelines or requirements that promote energy efficient development g. Infrastructure, such as bike lanes and pathways and pedestrian walkways h. Synchronization of traffic signals i. Public transit system improvement investments j. Other 8. Building codes and inspections a. Updating building codes b. Improving enforcement/compliance with building codes c. Building performance standards d. Other 9. Energy distribution technologies for energy efficiency a. Distributed resources b. District heating and cooling systems c. Other 10. Material conservation programs a. Source reduction b. Recycling c. Composting d. Sustainable procurement e. Other 11. Reduction and capture of methane and other greenhouse gases generated a. Landfills b. Wastewater treatment facilities c. Other 12. Traffic signals and street lighting upgrades 13. Renewable energy on government buildings a. Solar b. Wind c. Fuel cells d. Biomass 5 14. Programs for financing, purchasing, and installing energy efficiency, renewable energy, and zero-emission transportation (and associated infrastructure) 15. Other (requires approval of Secretary) ii. How will your use of funds help your unit of government meet its strategy/goals? iii. Provide a brief description of your project(s)? 4) Local governments must coordinate and share information with the State in which the eligible local government is located regarding activities carried out using the grant to maximize the energy efficiency and conservation benefits under the EECBG Program. Have you coordinated and shared your planned activities with your State? a. Yes i. Please describe how you plan to coordinate with your State 5) Local governments must take into account any plans for the use of funds by adjacent eligible local governments that receive grants under the EECBG Program. Have you taken into account how adjacent eligible units of local governments plan to use their funds? a. Yes Part B. 1. Do you plan to collaborate with other eligible units of government? a. Yes, we are going to form a team and apply through a joint application i. List the names of the units of government 1. Which unit of government is serving as the lead applicant? ii. Please describe what your team plans to work on together b. Yes, we are going to informally collaborate i. List the names of the units of government ii. Please describe your planned collaboration c. We are not yet sure if we are going to collaborate with others d. No 2. Are you planning to partner with other organizations including utilities, energy industry and financial companies, community-based organizations, labor unions, and other non-profit organizations for your project? a. Yes i. Please list your partners b. No 3. Have you engaged local stakeholders (such as utilities, energy industry and financial companies, community-based organizations, labor unions, and other non-profit organizations) in the development of your plan and/or how you intend to use your EECBG Program allocation? a. Yes b. No 4. Will this EECBG Program funding help you to access additional sources of funding? a. Yes i. What kind? (Check all that apply) 1. Local government 6 2. State government 3. Federal government 4. Philanthropic 5. Private sector 6. Other b. No i. Would you like assistance in identifying other sources of funding? 1. Yes 2. No 5. Do you anticipate needing support for your project development/implementation? a. Yes i. What kind? (check all that apply) 1. Policy, planning and program design 2. Retrofits 3. Engineering and modeling 4. Stakeholder engagement 5. Program administration and implementation support 6. Outreach, education and advertising 7. Other b. No 6. Do you anticipate the project(s) you use this funding for will continue after the EECBG Program funding period? a. Yes i. Describe how the project(s) have been designed to ensure that it sustains benefits beyond the EECBG Program funding period b. No i. What would help you to continue? (check all that apply) 1. Local sustainable financing 2. Public and local political support 3. Staff capacity 4. Other 7. How do you intend for your project(s) to benefit disadvantaged communities? 1 (check all that apply) a. Benefits include (but are not limited to) measurable direct or indirect investments or positive project outcomes that achieve or contribute to the following in disadvantaged communities: i. A decrease in energy burden2 ii. A decrease in environmental exposure and burdens iii. An increase in access to low-cost capital iv. An increase in job quality (including paying prevailing wages for construction and maintenance projects by 2025) 1 Justice40 Initiative | Department of Energy 2 The Initiative for Energy Justice https://iejusa.org/glossary-and-appendix/#glossary_of_terms 7 v. An increase in clean energy enterprise creation and contracting (e.g., minority- owned or disadvantaged business enterprises) vi. An increase in clean energy jobs, job pipeline, and job training for individuals from disadvantaged communities vii. An increase in parity in clean energy technology access and adoption viii. An increase in energy democracy ix. Other 1. Please explain 8. How will your strategy support the goal that 40% of the overall benefits of certain federal investments flow to disadvantaged communities, in line with the Justice40 initiative? Image of solar powered parking lot light Image of Pedestrian Crossing Signal Image of Driver Feedback Signal Development Services Department 201 1st Avenue East Kalispell, MT 59901 Phone: (406) 758-7940 Fax: (406) 758-7739 www.kalispell.com/planning REPORT TO: Doug Russell, City Manager FROM: PJ Sorensen, Senior Planner SUBJECT: Jeremy Peterson – Heritage Park Easement Request MEETING DATE: November 13, 2023 (work session) BACKGROUND: David and Sharon Young own property at 375 College Avenue adjacent to Heritage Park, which is a city owned park. There is a trailer and old storage building on their property, but it is essentially vacant and without immediate access to either a street or city services. Jeremy Peterson became interested in developing the property and has entered into a contract with the Youngs to purchase it. He has also reached out to the city regarding access. As shown below, the property is about a half-block off of College Avenue, although there is an extension of the public street that brings College Avenue a bit closer. However, there is a portion of Heritage Park that separates the property from the street and the property does not have any legal access to the street. After discussions with city staff, it was determined that a non-exclusive access and utility service easement through a portion of Heritage Park would provide the appropriate connection to allow the property to develop. Mr. Peterson anticipates building a single-family home, which would be a permitted use under the R-3 (Residential) zoning of the property. The image below was prepared as part of the appraisal of the property and shows the area where the proposed easement would be located. The appraisal established the value as $32,000. It should be noted that the appraisal was prepared as a boundary line adjustment and fee simple purchase of the property, but the sales price would be the same under either scenario. As part of the building permit review, design details including, but not limited to, width of the driveway, paving standards, fire access and protection, storm drainage, and utility connections will be reviewed. It should be noted that the buy-sell contingency agreement currently provides for a lease back to the current owner for storage, but that use would not be compliant with subdivision and zoning regulations. Any agreement between the city and Mr. Peterson may include a provision that such a use or any other use not in compliance would not be allowed. If the Council wishes to move forward with the proposed sale of the easement, Mr. Peterson would be responsible for preparing the easement document and any necessary surveying, as well as any other costs associated with the sale of the easement and development of the site. RECOMMENDATION: It is recommended that the Kalispell City Council receive the report and direct staff as necessary. FISCAL EFFECTS: There are no anticipated fiscal impacts at this time. ALTERNATIVES: Deny the request. ATTACHMENTS: Appraisal of property c: Aimee Brunckhorst, Kalispell City Clerk 1 A NARRATIVE APPRAISAL REPORT OF College Ave. Access OWNED BY City of Kalispell LOCATED AT 375 College Ave Kalispell, MT 59901 FOR THE PURPOSE OF Forming an Opinion of the As-Is Market Value DATE OF REPORT October 19, 2023 CLIENT Jeremy Peterson 2135 Wintercrest DR Kalispell, MT 59901 APPRAISAL COMPLETED BY James Williamson 586 Stoneridge DR Kalispell, MT 59901 M: 406-270-2121 Email: james@sage-appraisal.com 2 October 19, 2023 File #2023-210 Jeremy Peterson 2135 Wintercrest DR Kalispell, MT 59901 Re: City of Kalispell Real Estate 375 College Ave Kalispell, MT 59901 File #2023-210 Dear Jeremy Peterson: Please find attached a Narrative Appraisal Report of the College Ave. Access located at 375 College Ave, Kalispell, MT 59901. The subject property is further identified as Flathead County Assessor’s Parcel Number 0977004. I have inspected the site and improvements to form an opinion of the As-Is Market Value. The supporting data, analyses, and conclusions used to form an opinion of the market values of the subject property are contained in the accompanying report and addenda. This appraisal is intended to conform to OCC Interagency Appraisal and Evaluation Guidelines, FIRREA Guidelines, and adhere to the Uniform Standards of Professional Appraisal Practice (USPAP). The client and intended users include representatives of Jeremy Peterson and their duly appointed committees. The intended use of this appraisal is purchase and sale decisions. The purpose of this appraisal report is to form an opinion of the As-Is Market Value as of October 19, 2023. 3 Based upon an analysis of the market data and subject to the assumptions and limiting conditions contained within this report, I have formed the following value opinion: Conclusion Property Rights Appraised Fee simple Effective Date of Appraisal October 19, 2023 Market Value Opinion $32,000 The market value opinions have been predicated upon an exposure time of three to twelve months, based upon available market data. The marketing period has also been estimated at three to twelve months. Extraordinary Assumptions/Hypothetical Conditions: The acceptance of this appraisal assignment and the completion of the appraisal report submitted herewith, is not contingent upon any extraordinary assumptions or hypothetical conditions. Best Regards, James Williamson Montana Certified General Appraiser REA-RAR-LIC-15327 Certification of Value 4 CERTIFICATION OF VALUE I certify that, 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 are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.  I have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved.  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.  I have no bias with respect to the property that is the subject of this report, or to the parties involved with this assignment.  My engagement in this assignment was not contingent upon developing or reporting predetermined results.  My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.  My analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Practice.  I have made a personal inspection of the property that is the subject of this report.  No one provided significant real property appraisal assistance to the person signing this certification.  The reported analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute.  As of the date of this report, I am current on all continuing education required by the state of Montana. James Williamson Montana Certified General Appraiser REA-RAR-LIC-15327 Table of Contents 5 College Ave. Access Sage Appraisal + Strategy TABLE OF CONTENTS CERTIFICATION OF VALUE .................................................................................................................................................. 4 TABLE OF CONTENTS ......................................................................................................................................................... 5 ASSUMPTIONS AND LIMITING CONDITIONS ...................................................................................................................... 6 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS .................................................................................................... 8 SUBJECT COUNTY PLAT MAP ......................................................................................................................................... 9 INTRODUCTION ................................................................................................................................................................ 12 SITE DESCRIPTION AND ANALYSIS ................................................................................................................................... 15 HIGHEST AND BEST USE ................................................................................................................................................... 17 HIGHEST AND BEST USE AS THOUGH VACANT ............................................................................................................ 17 LAND VALUATION ............................................................................................................................................................ 19 TRANSACTIONAL ADJUSTMENTS ................................................................................................................................. 31 PHYSICAL CHARACTERISTICS ADJUSTMENTS ............................................................................................................... 32 EXPOSURE TIME AND MARKETING PERIOD ..................................................................................................................... 40 ADDENDA ......................................................................................................................................................................... 41 DEFINITIONS ................................................................................................................................................................ 42 ENGAGEMENT LETTER ................................................................................................................................................. 47 QUALIFICATIONS OF APPRAISER ................................................................................................................................. 49 Assumptions and Limiting Conditions 6 College Ave. Access Sage Appraisal + Strategy ASSUMPTIONS AND LIMITING CONDITIONS The acceptance of this appraisal assignment and market study, and the completion of the appraisal report submitted herewith are contingent upon the following general assumptions and limiting conditions: 1) No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. It is further assumed the subject property has legal access unless otherwise noted. 2) The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated in this report. 3) Responsible ownership and competent property management are assumed, unless otherwise stated. 4) The information furnished by others is believed to be reliable; however, no warranty is given for its accuracy. 5) All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. 6) It is assumed there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them. 7) It is assumed there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated. 8) It is assumed all applicable zoning and use regulations and restrictions have been complied with, unless a non-conformity has been stated, defined, and considered. 9) It is assumed that all required licenses, certificates of occupancy or legislative or administrative authority from any local, state, or national governmental or private entity organization have been or can be obtained or renewed for any use on which the value opinions contained in this report are based. 10) Any sketch may show approximate dimensions, and is included to assist the reader in visualizing the property. Maps and exhibits found are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated. Assumptions and Limiting Conditions 7 College Ave. Access Sage Appraisal + Strategy 11) It is assumed the utilization of the land and improvements is within the boundaries or property lines of the property described, and that there is no encroachment or trespasses unless otherwise stated. 12) The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility or presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde, foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser’s value opinions are predicated on the assumption there is no such material on or in the property that would cause a loss in value, unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process. 13) The Americans with Disabilities Act (ADA) became effective January 26, 1992. I have not made a specific compliance survey and analysis of this property to determine whether it is in conformity with various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative effect upon the value of the property. Therefore, it is assumed that the property complies with all ADA requirements. 14) Any proposed improvements are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications. 15) The distribution of any or the total valuation of this report between land and improvements applies under the stated program of utilization. The separate value conclusions for land and buildings must not be used in conjunction with any other appraisal, and are invalid if so used. 16) Possession of this report or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed, without the written consent of the appraiser, and in any event, only with the properly written qualification and only in its entirety. 17) Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraisers are connected) shall be disseminated to the public through advertising, public relations, news sales, or other media without prior written consent and approval of the appraiser. Summary of Important Facts and Conclusions 8 College Ave. Access Sage Appraisal + Strategy SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS SUBJECT PROPERTY SUMMARY The subject is a proposed 2,020 SF parcel of land that would be utilized for access when adjoined to the .49-acre parcel of land located at 375 College Ave. The proposed land acquisition is shown in the image below. The parcel of land is not large enough to be considered a lot and the highest and best use of this parcel is for access to the neighboring property as shown in the image. Industry standards for appraising easement parcels is to estimate the impact of value to the selling party or the receiving party. For this report the value will be appraised based on the value received by the purchaser as the impacts to the selling party are minimal. The real estate market does typically show a higher value for accessible property as opposed to land that is “landlocked.” The methodology for valuing an easement with this perspective often uses a “before and after” appraisal that considers the value of the property without the access. Then, an “after” appraisal determines the property value with the access in place. The land value for 375 College Ave will be estimated with a before and after valuation to determine the value of the subject property. Extraordinary Assumptions/Hypothetical Conditions: The acceptance of this appraisal assignment and the completion of the appraisal report submitted herewith, is contingent upon the extraordinary assumptions the access area is not encumbered by additional easements or restrictions. Summary of Important Facts and Conclusions 9 College Ave. Access Sage Appraisal + Strategy Subject County Plat Map Summary of Important Facts and Conclusions 10 College Ave. Access Sage Appraisal + Strategy AERIAL PHOTOGRAPH Property Address 375 College Ave, Kalispell, MT Property Location East of downtown on College Ave Property Owner City of Kalispell Assessor’s Parcel Number 0977004 Census Tract Number 30-029-0012.02 Purpose of Appraisal To form an opinion of the As-Is Market Value Intended Use of Appraisal Purchase and sale decisions Intended Users Jeremy Peterson & City of Kalispell Date of Valuation October 19, 2023 Property Inspection Date October 19, 2023 Date of Report October 19, 2023 Property Rights Appraised Fee simple Summary of Important Facts and Conclusions 11 College Ave. Access Sage Appraisal + Strategy Land Size 2,020 Sq Ft Improvement Data None Zoning R-3 Personal Property None HIGHEST AND BEST USE As Vacant Land Residential As Improved Residential Likely Buyer Owner/User VALUE OPINION MARKET VALUE OPINION PROPERTY RIGHTS APPRAISED EFFECTIVE DATE OF VALUE MARKET VALUE OPINION As-Is Market Value Fee simple October 19, 2023 $32,000 Current Use Vacant Land Use Reflected in the Appraisal Vacant Land Exposure Time The opinion of market value has been predicated on an exposure time of three to twelve months. Marketing Period If the subject were marketed for sale as of the date of the value opinion, the marketing period would be three to twelve months assuming competent marketing with pricing commensurate with the opinions of market value. Extraordinary Assumptions/Hypothetical Conditions: The acceptance of this appraisal assignment and the completion of the appraisal report submitted herewith is contingent upon the extraordinary assumptions the access area is not encumbered by additional easements or restrictions. Introduction 12 College Ave. Access Sage Appraisal + Strategy INTRODUCTION Identification of the Property The subject property consists of land located at 375 College Ave, Kalispell, MT 59901. The property is further identified as Flathead County Assessor’s Parcel Number 0977004. The site is a 2,020 Sq Ft lot. The site and improvements are more thoroughly described in the “Site Description and Analysis” and the “Improvements Description and Analysis” sections contained in this report. Legal Description Legal description not available for the proposed property. Census Tract Number 30-029-0012.02 Purpose of Appraisal To form an opinion of the As-Is Market Value of the subject property as of the effective date of the appraisal. Intended Use of the Appraisal Purchase and sale decisions Intended Users of the Appraisal Jeremy Peterson & City of Kalispell Effective Date of Valuation October 19, 2023. This is the date the property was inspected and the date the photographs were taken. Date of Appraisal Report The date of this appraisal report is October 19, 2023. The comparable sales and market data were verified prior to the date of this report. USPAP Competency Provision This appraisal report is being prepared with the intention of complying with the most recent version of the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Foundation. I have the knowledge and the experience to complete this appraisal assignment. I have appraised numerous properties with similar uses in NW Montana and I am qualified to appraise the subject property. Please see my qualifications contained in the Addenda of this report for additional information. Introduction 13 College Ave. Access Sage Appraisal + Strategy Current Ownership/Ownership History According to information obtained from Flathead County public records the subject property is currently under the ownership of the City of Kalispell. There were no other sales or listings of the subject property that have occurred during the last three years. Scope of Appraisal This is a Narrative Appraisal Report which is intended to comply with reporting requirements set forth under Standards Rule 2-2 (a) of the Uniform Standards of Professional Appraisal Practice (USPAP). As part of this appraisal, the appraiser has made a number of independent investigations and analyses. The investigations undertaken, and the major data sources used follow. Area/City and Neighborhood Analysis Data pertaining to the market area and the neighborhood was provided by publications such as the Daily Interlake and the Flathead Beacon, and information from the local Chamber of Commerce and the Economic Development Authority of Western Montana. Information regarding population was supplied by the State of Montana and Flathead County. Information about visitor volume, data pertaining to the labor force, employment and unemployment was supplied by the State of Montana. Information pertaining to taxable sales was provided by the Montana Department of Revenue. Data pertaining to residential construction building permits was collected from the governing jurisdictions. Additional neighborhood data was based upon a physical inspection of the area. Site Description and Analysis On October 19, 2023, James Williamson physically inspected the subject property and the surrounding area. Photographs of the property were also taken as of this date. Information concerning utilities was collected by a physical inspection as well as contacting the individual utility companies, when necessary. The City of Kalispell Planning and Development Department was contacted to obtain zoning information on the property. Information pertaining to dimensions, shape, and area was taken from the Flathead County Assessor’s Map. The description of analysis of topography, drainage, soil conditions, and surrounding land uses was based upon a physical inspection. Improvements Description and Analysis Data pertaining to construction details and specifications were obtained by physical inspection of the subject improvements and interviews with the owner. Details regarding building size were taken from on-site measurements. Applied Methods of Valuation All three methods of valuation, 1) cost approach, 2) the income approach and, 3) sales comparison approach were considered in the valuation of the subject property. Please see the section entitled “Method of Valuation,” contained later in the report, for a full description of the complete process for each approach. Depending on market conditions and property type one or more approaches Introduction 14 College Ave. Access Sage Appraisal + Strategy may be omitted. The omission of one or more approaches does not affect the reliability of the value conclusions. For this assignment: Cost Approach: Not utilized for land valuations. Income Approach: Not utilized for land valuations. Sales Comparison Approach: Will be utilized. Market Data Collection and Verification Data pertaining to land sales was collected from sources including the local MLS, Title Agencies, and discussions with brokers, owners, and developers. Information on land sales, listings, or offers was verified with the parties involved in the transaction, including the grantor, grantee, broker, or other knowledgeable parties, when possible. Verification of each sale is listed separately on each land sale abstract. Cost information was considered from the Marshall Valuation Service, published by Marshall & Swift Publication Company. Comparable rental data was based upon a physical inspection of properties in the neighborhood and from sources including the local MLS, property managers, and brokers in the area. The rental data was verified with the owner, property manager, or tenants of the property, when possible. Verification of the data is contained on rental comparable abstracts later in the report. Vacancy rate and collection loss information was based upon the surveyed properties and from information published through realty offices informed about the Flathead Valley. Information pertaining to expenses and overall capitalization rates, was also provided from rental properties, surveys of sales/leasing agents, or improved sales contained within this report. Improved sales data was collected through various sources including County records, MLS, First American Title, or from brokers, owners, and developers. The information was verified with parties involved in the transaction including the grantor, grantee, broker, or other knowledgeable parties, when possible. Verification of each sale is listed separately on each improved sale abstract contained later in the report. Site Description and Analysis 15 College Ave. Access Sage Appraisal + Strategy SITE DESCRIPTION AND ANALYSIS Location The property has a street address of 375 College Ave, Kalispell, MT 59901. The subject may be further identified as Flathead County Assessor’s Parcel Number 0977004. The property is in Census Tract Number 30-029-0012.02. Dimensions, Shape, and Area The subject has a rectangular shape and contains a land area of approximately 2,020 Sq Ft. The reader is referred to the assessor’s parcel map and the aerial photograph on the following pages for a visual description of the subject site. Topography and Drainage The subject parcel is generally at grade with the adjoining streets and properties. The site is typical of other sites in the area, and there are no adverse site conditions noted at the time of inspection. According to the Federal Emergency Management Agency (FEMA) flood insurance rate map, the property is categorized as being in Flood Zone X, Map 300269C1810J, Eff 11/4/15. Flood Zone X is depicted on the FEMA website as being in an area of minimal flood hazard. The Flood Disaster Protection Act of 1973, and the National Flood Insurance Reform Act of 1994, have made the purchase of flood insurance mandatory for federally backed mortgages on structures located in special flood hazard areas. Because the subject is not within an area identified as a 100- year flood zone, flood insurance is not required. Waterfront Amenity None View Amenity Urban Adjacent Property Owners Public Street Improvements and Accessibility The subject is located on 375 College Ave which is a two-lane road that extends in a roughly north/south direction. There are minimal off-site improvements on the street. Site Description and Analysis 16 College Ave. Access Sage Appraisal + Strategy Utilities Public utility services are available to the site. They are provided by the following agencies: UTILITY AGENCY Electricity Flathead Electric Co-Op Water City of Kalispell Sanitation City of Kalispell Telephone CenturyLink Natural Gas Northern Energy Solid Waste Disposal Flathead County Nuisances, Hazards, and Surrounding Land Uses The subject site is located within a neighborhood that has a predominantly residential use. None of the surrounding properties appear to be suspect relative to toxic or hazardous materials. The value opinions are predicated upon the assumption there are no such environmental conditions on or in the property that would cause a loss in value. No responsibility is assumed for any such environmental conditions, or for any expertise or engineering knowledge required to discover them. Easements and Encroachments Typical road and utility easements are assumed to exist. No adverse encroachments were noted. Unless otherwise noted, it is assumed the subject property has legal access. Zoning The subject property is zoned R-3 under the jurisdiction of the City of Kalispell. This is a residential zoning district. Land Use There is no additional zoning or land use overlay district relating to the subject property. CC&R’s None. HOA None Highest and Best Use 17 College Ave. Access Sage Appraisal + Strategy HIGHEST AND BEST USE Highest and Best (HBU) Highest and best use is defined as follows: “The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.” Source: The Dictionary of Real Estate Appraisal Sixth Edition (Chicago: Appraisal Institute, 2010), Page 109. The highest and best use of a property is an economic study focusing on the four criteria. The determination of a property’s highest and best use is the basis that provides the valuation framework upon which comparable market data is selected. Such data for improved properties may include cost, income and expense data, and improved sales pertaining to the property’s concluded best use. Highest and best use of the property as though vacant, is considered separately from the highest and best use of the property as improved. The site is valued as though vacant, and available for development to its highest and best use even if the property’s existing improvements do not represent the highest and best use of the site. Highest and best use of the land as though vacant indicates only how the land should be used if it were vacant. Highest and Best Use as Though Vacant Highest and best use of land or site as though vacant is defined as: “Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements.” Source: The Dictionary of Real Estate Appraisal, Fifth Edition, (Chicago: Appraisal Institute, 2010), Page 94. Legally Permissible The subject property is zoned R-3, under the jurisdiction of the City of Kalispell. This zoning designation allows for largely residential improvements. The parcel is zoned consistent with the nature of the immediate area, which has a variety of residential (single family and multi-family). A complete list of permitted uses is included in the “Site Description and Analysis” section of the report. Highest and Best Use 18 College Ave. Access Sage Appraisal + Strategy Physically Possible This analysis determines which legally permissible use is physically possible on the subject property. The physical characteristics of the site that affect its possible use include but are not limited to its location, street frontage, size, shape, street access, availability of utilities, easements, encroachments, soils and subsoils, and topography. Based on a physical inspection of the subject property, the site appears to be in an area that has stable soil and subsoils, which provide suitable support for typical commercial structures. The soil and subsoil conditions are assumed to be typical of the area, and do not present limitations or problems regarding development. The property is not located within a designated flood hazard area and there are no environmental hazards assumed to exist near the subject. There are no apparent adverse conditions that would restrict development of the property. Size of the parcel can be a limiting factor in the highest and best use of a property, and may preclude many legally permissible uses. In summary, the site appears adequate for development of any legally permissible use, where size of the parcel is not a factor. Financially Feasible This HBU analysis determines which of the legally permissible and physically possible uses are financially feasible. The subject neighborhood is characterized by multi-family and single-family residential properties. The subject property is well located within relatively easy walking distance to amenities in Kalispell. In summary, the financially feasible use of the subject site would include only residential uses. Maximally Productive Finally, the maximally productive use of the site determines which one of the financially feasible uses will result in the highest present value. The maximally productive use of the site as though vacant is for a residential use. Conclusion In conclusion, the highest and best use of the site as though vacant would be for access to the neighboring properties due to the size of the site no improvements would be placed on the property. Land Valuation 19 College Ave. Access Sage Appraisal + Strategy LAND VALUATION The sales comparison approach is the most common technique for valuing vacant land. It is used to form an opinion of the market value of the subject site as though vacant. To apply this method, sales of similar parcels of land are analyzed, compared, and adjusted to provide a value indication. The sales are then adjusted for dissimilarities between them and the subject. Elements considered include property rights, legal encumbrances, financing terms, conditions of sale (motivation), market conditions (sale date), location, physical characteristics, available utilities, zoning, and highest and best use. The sales used in the valuation are the most comparable to the subject as of the date of valuation. In the price/unit method, the data is analyzed, and an appropriate unit of comparison is selected (price/square foot, acre, front foot, dwelling unit, etc.). • Transactional adjustments are applied to the comparables for: property rights, financing, conditions of sale, expenditures immediately after purchase, and market conditions. • The comparables are analyzed to determine market sensitivity to various physical characteristics. • They are then arrayed in a table which brackets the unit market value of the subject. • The range of values is reconciled to a unit market value. • The unit of value is then multiplied by the size of the subject property to provide an indication of market value. For this assignment, the appropriate unit of comparison is $/SF. Sales of vacant land are summarized below, followed by a map and complete abstracts. LAND SALES SUMMARY Comparable Sales Summary ID Address Sale Date SF Zoning Sale Price $/SF 1 54 Sunset DR, Kalispell 10/16/23 21,344 R-2 $139,000 $7 2 418 Maple DR, Kalispell 01/31/23 17,860 R-1 $175,000 $10 3 NHN 8th Ave W, Kalispell 09/16/22 6,970 R-4 $155,000 $22 4 7 Muskrat DR, Kalispell 06/21/23 9,148 R-4 $125,000 $14 5 1331 7th ST W, Kalispell 07/14/23 3,049 R-4 $90,000 $30 Land Valuation 20 College Ave. Access Sage Appraisal + Strategy Land Sales Map Subject Land Valuation 21 College Ave. Access Sage Appraisal + Strategy COMPARABLE LAND SALE #1 Land Valuation 22 College Ave. Access Sage Appraisal + Strategy Land Valuation 23 College Ave. Access Sage Appraisal + Strategy COMPARABLE LAND SALE #2 Land Valuation 24 College Ave. Access Sage Appraisal + Strategy Land Valuation 25 College Ave. Access Sage Appraisal + Strategy COMPARABLE LAND SALE #3 Land Valuation 26 College Ave. Access Sage Appraisal + Strategy Land Valuation 27 College Ave. Access Sage Appraisal + Strategy COMPARABLE LAND SALE #4 Land Valuation 28 College Ave. Access Sage Appraisal + Strategy Land Valuation 29 College Ave. Access Sage Appraisal + Strategy COMPARABLE LAND SALE #5 Land Valuation 30 College Ave. Access Sage Appraisal + Strategy Land Valuation 31 College Ave. Access Sage Appraisal + Strategy TRANSACTIONAL ADJUSTMENTS The first step in the sales comparison analysis is to analyze and make transactional adjustments to each comparable sale. Those transactional adjustments are: property rights, financing, sale conditions, expenditures immediately after purchase, and market conditions (time). A brief description of the transactional adjustments is explained below. It is noted that these adjustments are typically made in the order presented below: 1) Property Rights: The comparables are adjusted for impacts that leased fee, fee simple or leasehold impacts to the sale price. No adjustments are needed as all the sales are fee simple estate. 2) Financing: The comparables are then adjusted for impacts that unusual or non-market financing has on the transaction. Agents for the sales confirmed that all the sales were cash transactions. No adjustments are needed. 3) Condition of Sale: The comparables are then adjusted for non-market sale conditions that affected the sale price. Sale #1 is adjusted downward 8% for the listing status to account for seller concessions and buyer negotiations. 4) Expenditures Immediately After Purchase: The comparables are then adjusted for the impact that any additional investment (i.e. curing deferred maintenance) required to make a property salable. No adjustments are needed. 5) Market Conditions: The comparables are then adjusted for changes to market conditions that have occurred between the sale date of each comparable and the effective date of the appraisal. No adjustments are needed. Sale Price After Transactional Adjustments The next step in the analysis is to arrive at an adjusted sale price which factors non-market influences for: property rights, financing, conditions of sale, expenditures immediately after purchase, and market conditions. The adjustments in the table below reflect the adjustments discussed on the prior pages and in the attached sale abstracts. The adjustments are cascading. Sale Price After Transactional Adjustments Sale # Address Sale Price Prop Rights Financing Sale Cond. Expend Time Adj SP 1 54 Sunset DR $139,000 $0 $0 ($11,120) $0 $64 $127,944 2 418 Maple DR $175,000 $0 $0 $0 $0 $7,577 $182,577 3 NHN 8th Ave W $155,000 $0 $0 $0 $0 $10,234 $165,234 4 7 Muskrat DR $125,000 $0 $0 $0 $0 $2,488 $127,488 5 1331 7th ST W $90,000 $0 $0 $0 $0 $1,448 $91,448 Land Valuation 32 College Ave. Access Sage Appraisal + Strategy PHYSICAL CHARACTERISTICS ADJUSTMENTS The physical characteristic adjustments are made to the unit of comparison, in this case the adjustments will be made to each comparables $/Acre. A paired sales analysis of the characteristics shown below is analyzed for the comparable properties to determine the most desirable characteristic and the applicable adjustment. A brief description of the physical characteristic’s adjustments is explained below: 1) Economy of Scale: Market participants typically pay more per unit for smaller properties over larger properties. To adjust the unit of comparison the smaller properties are adjusted downward, and the larger properties are adjusted upward. 1) Zoning: Zoning is an important aspect for prospective buyers. The zoning regulations limit properties use. Zoning adjustments are based on paired sales analysis to determine which zoning designation is more desirable than others. 2) Location: Property location has a substantial impact on the marketability of a property. Location aspects such as neighboring properties, access roads, and aspect are all considered in the location adjustment. 3) Property Access: Market participants typically pay more for properties with direct access to the property. Additional sales were considered to determine the adjustment for access to the property. This adjustment will be updated for the property value after acquiring the additional parcel for access. 4) Flood Zone: Properties within a flood zone are typically harder to develop and are less desirable than properties located outside of a flood zone. Properties with flood zone areas are adjusted upward. The following table highlights the characteristics of the comparables and the adjustment grid for the property characteristics. Land Valuation 33 College Ave. Access Sage Appraisal + Strategy Physical Characteristics Adjustments Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Item 375 College Ave 54 Sunset DR 418 Maple DR NHN 8th Ave W 7 Muskrat DR 1331 7th ST W Sq. Ft. 21,344 21,344 17,860 6,970 9,148 3,049 Sq. Ft. Adjustments $2.50 $0.00 ($0.49) ($5.16) ($3.33) ($15.00) Zoning R-3 R-2 R-1 R-4 R-4 R-4 Zoning Adjustments % $0.30 $0.51 $0 $0 $0 Location East Evergreen Evergreen Downtown South Downtown Location Adjustments % $0.90 $1.53 ($2.37) $1.12 ($3.00) Access Limited Street Street Street Street Street Access Adjustments % ($0.60) ($1.02) ($2.37) ($1.39) ($3.00) Flood Zone No Yes No No No No Flood Zone Adjustments % $0.60 $0 $0 $0 $0 Sale Price $127,944 $182,577 $165,234 $127,488 $91,448 Adj. $/SF $5.99 $10.22 $23.71 $13.94 $29.99 Total Adjustments $1.20 $0.53 -$9.90 -$3.61 -$21.00 Final Adjusted $/SF $7.19 $10.75 $13.81 $10.33 $8.99 Final Adjusted Sales Price $153,423.55 $192,065.62 $96,262.37 $94,475.19 $27,418.41 Land Valuation 34 College Ave. Access Sage Appraisal + Strategy Summary The table below lists each of the units of comparison that were analyzed. If the overall analysis indicates the comparable is inferior to the subject property there will be a (+), a (0) if the comparable is similar to the subject, or a (-) if the comparable is superior to the subject. Summary of Results of Sales Comparison Analysis Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Item 54 Sunset DR 418 Maple DR NHN 8th Ave W 7 Muskrat DR 1331 7th ST W Economy of Scale 0 - - - - Zoning + + 0 0 0 Location + + - + - Access - - - - - Flood Zone + 0 0 0 0 Conclusion The comparables adjusted unit value after all transactional and physical characteristic adjustments have been considered is shown in the table below. Adjusted Unit Value Summary Sale # Address Adj. Unit Value Net Adjustment 1 54 Sunset DR $7 20% 2 418 Maple DR $11 5% 3 NHN 8th Ave W $14 -42% 4 7 Muskrat DR $10 -26% 5 1331 7th ST W $9 -70% Land Valuation 35 College Ave. Access Sage Appraisal + Strategy Reconciliation The comparables are each weighted with the most similar properties given the greatest weight to the least similar properties with the smallest weight. The total weight of all the comparables is 100%, the sum of all the weights is considered the unit value for the subject property. The weight given to each comparable is multiplied by that comparables unit value. The contributory value of all the comparables is then combined to determine the unit value of the subject property. A summary of the sales comparison reconciliation is shown in the table below. Weighted Reconciliation with Access Sale # Address Unit Value Weight Contributory Value 1 54 Sunset DR $7.19 25% $1.80 2 418 Maple DR $10.75 25% $2.69 3 NHN 8th Ave W $13.81 15% $2.07 4 7 Muskrat DR $10.33 20% $2.07 5 1331 7th ST W $8.99 15% $1.35 6 NHN Woodland Ave $2.05 0% $0.00 Total 100% $9.97 Property Access Adjustments Market research of similar properties indicate that properties with limited access are less desirable than properties with direct street access. In the search for comparable properties with limited access due to location, topography, and shape were researched to determine the adjustment amount necessary for the additional access. The following sale was utilized in a paired sales analysis to determine the appropriate adjustment for direct and indirect access. Land Valuation 36 College Ave. Access Sage Appraisal + Strategy LIMITED ACCESS SALE Land Valuation 37 College Ave. Access Sage Appraisal + Strategy Land Valuation 38 College Ave. Access Sage Appraisal + Strategy Market Value Opinion The property was adjusted for the indirect access based on the paired sales analysis, the same comparables were then utilized to determine the value of the property with direct street access. The adjustments for the property with the direct access are shown in the table below. Physical Characteristics Adjustments Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Item 375 College Ave 54 Sunset DR 418 Maple DR NHN 8th Ave W 7 Muskrat DR 1331 7th ST W Economy of Scale 21,344 21,344 17,860 6,970 9,148 3,049 Economy of Scale Adjustments $2.50 $0.00 ($0.49) ($5.16) ($3.33) ($15.00) Zoning R-3 R-2 R-1 R-4 R-4 R-4 Zoning Adjustments % $0.30 $0.51 $0 $0 $0 Location East Evergreen Evergreen Downtown South Downtown Location Adjustments % $0.90 $1.53 ($2.37) $1.12 ($3.00) Access Street Street Street Street Street Street Access Adjustments % $0.00 $0.00 $0.00 $0.00 $0.00 Flood Zone No Yes No No No No Flood Zone Adjustments % $0.60 $0 $0 $0 $0 Sale Price $127,944 $182,577 $165,234 $127,488 $91,448 Adj. $/SF $5.99 $10.22 $23.71 $13.94 $29.99 Total Adjustments $1.80 $1.56 -$7.53 -$2.22 -$18.00 Final Adjusted $/SF $7.79 $11.78 $16.18 $11.72 $11.99 Final Adjusted Sales Price $166,208.84 $210,318.13 $112,787.29 $107,226.95 $36,562.96 The reconciled unit value with direct access is shown in the table below. Weighted Reconciliation With Access Sale # Address Unit Value Weight Contributory Value 1 54 Sunset DR $7.79 25% $1.95 2 418 Maple DR $11.78 25% $2.94 3 NHN 8th Ave W $16.18 15% $2.43 4 7 Muskrat DR $11.72 20% $2.34 5 1331 7th ST W $11.99 15% $1.80 6 NHN Woodland Ave $2.05 0% $0.00 Total 100% $11.46 Land Valuation 39 College Ave. Access Sage Appraisal + Strategy The property has been appraised with direct access and without direct access. When these values are applied to the subject site the value increase for the effected property is shown in the table below. Market Value Opinion Unit Market Value x # Units Unit = Market Value $9.97 Limited Access 21,344 SF = $212,804 $11.46 Direct Access 21,344 SF = $244,607 Value Difference $31,803 Rounded $32,000 The access area being acquired is 2,020 SF with a value of $32,000 this equates to $15.85/SF. Based on the unit value of the comparable properties and the economy of scale of these properties this is a reasonable value for the access lot. Exposure Time and Marketing Period 40 College Ave. Access Sage Appraisal + Strategy EXPOSURE TIME AND MARKETING PERIOD Within the preceding sales comparison approach, the marketing periods of the individual comparable sales were illustrated. The marketing period for the sales ranged from less than three months (Sale 4) to over eighteen months (Sale 1). Exposure time is the length of time that the property would have been exposed on the market to achieve the opinion of market value. The exposure time is based upon comparable sales within this report, as well as discussions with real estate brokers and developers. The most reasonable indication of suitable exposure time is three to twelve months. The marketing period of the subject property has been estimated at three to twelve months. The marketing period is the length of time that the property would need to be put on the market to achieve the opinion of market value of the subject property. The marketing period has been based upon comparable sales, and takes into consideration the future supply and similar property types in the subject’s market area. It also assumes prudent marketing and an asking price (list price) similar to the market value opinion. Definitions 41 College Ave. Access Sage Appraisal + Strategy ADDENDA Definitions 42 College Ave. Access Sage Appraisal + Strategy Definitions Definitions 43 College Ave. Access Sage Appraisal + Strategy Definition of Extraordinary Assumption “An assumption, directly related to a specific assignment, as of the effective date of the appraisal assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), Page 83. Definition of Hypothetical Condition 1. “A condition that is presumed to be true when it is known to be false. 2. A condition directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purposes of analysis.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), Page 113. Definition of Market Value 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 the consummation of a sale as of a specified date and the 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 acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and 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. Source: 12 C.F.R. Part 34.42(g); date 1 January 2005. Definition of As-Is Market Value “The estimate of the market value of real property in its current physical condition, use and zoning as of the appraisal date.” Definitions 44 College Ave. Access Sage Appraisal + Strategy Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), Page 13. Definition of Fee Simple Ownership “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.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 90. Definition of Exposure Time “The time a property remains on the market. 2. The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 83. Definition of External Obsolescence “A type of depreciation; a diminution in value caused by negative external influences and generally incurable on the part of the owner, landlord, or tenant. The external influence may be either temporary or permanent.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 83. Definition of Final Reconciliation “The last phase in the development of a value opinion in which two or more value indications derived from market data are resolved into a final value opinion, which may be either a final range of value, in relation to a benchmark, or a single point estimate.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 91. Definition of Financial Feasibility “1) One of the four criteria of highest and best use. For a land use to be considered financially feasible, the value of the land use must exceed its cost. 2) The capability of a physically possible and legal use of property to produce a positive return to the land after considering risk and all costs to create and maintain the use.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 92. Definitions 45 College Ave. Access Sage Appraisal + Strategy Definition of Functional Obsolescence “The impairment of functional capacity of improvements according to market tastes and standards.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 97. Definition of Leased Fee Interest “The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 128. Definition of Legal Permissibility “One of the four criteria the highest and best use of a property must meet; a property use that is either currently allowed or most probably allowable under zoning codes, building codes, environmental regulations, and other applicable laws and regulations that govern land use.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 129. Definition of Marketing Time “An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 140. Definition of Maximum Productivity “One of the four criteria the highest and best use of a property must meet. To achieve maximum productivity, a specific land use must yield the highest value of all the physically possible, legally permissible and financially feasible possible uses.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 144. Definition of Physical Deterioration “The wear and tear that begins when a building is completed and placed into service.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 170. Definitions 46 College Ave. Access Sage Appraisal + Strategy Definition of Physical Possibility “One of the criteria that the highest and best use of a property must meet. For a land use to be considered physically possible, the parcel of land must be able to accommodate the construction of any building that would be a candidate for the ideal improvement.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 171. Definition of Reconciliation “A phase of a valuation assignment in which two or more value indications are processed into a value opinion, which may be a range of value, a single point estimate, or a reference to a benchmark value.” Source: The Dictionary of Real Estate Appraisal, Sixth Edition (Chicago: Appraisal Institute, 2015), page 190. Addenda College Ave. Access Sage Appraisal + Strategy ENGAGEMENT LETTER Addenda College Ave. Access Sage Appraisal + Strategy Addenda College Ave. Access Sage Appraisal + Strategy QUALIFICATIONS OF APPRAISER Addenda College Ave. Access Sage Appraisal + Strategy JAMES WILLIAMSON 586 Stoneridge DR, Kalispell, MT 59901 · 406-270-2121 james@sage-appraisal.com MT Appraiser License #15327 Experience includes appraising complex commercial properties in Western Montana. Property types include: office, industrial, retail, medical, mixed use, multi-family, subdivisions, vacant land, agricultural properties, ranches, and luxury lake/river front estates. EXPERIENCE APRIL 2020 – PRESENT APPRAISER, SAGE APPRAISAL + STRATEGY NOVEMBER 2015 – PRESENT REAL ESTATE - DEVELOPMENT & SALES, SAGE APPRAISAL + STRATEGY SEPTEMBER 2012 – NOVEMBER 2015 PRODUCT DEVELOPER, AON (NATIONAL FLOOD SERVICES) EDUCATION APPRAISAL EDUCATION • Basic Appraisal Principals • Basic Appraisal Procedures • 15 HR National USPAP • Residential Market Analysis & Highest Best Use • Residential Appraiser Site Valuation & Cost Approach • Residential Sales Comparison & Income Approach • Residential Report Writing & Case Studies • Statistics, Modeling & Finance • General Appraiser Market Analysis Highest & Best Use • General Appraiser Sales Comparison Approach • Appraisal Subject Matter Electives • Advanced Residential Applications & Case Studies BS – BUSINESS ADMIN / MANAGEMENT, BLACK HILLS STATE UNIVERSITY MAY 2013 MT SUPERVISING BROKER LICENSE #62214 NOVEMBER 2018 Addenda College Ave. Access Sage Appraisal + Strategy