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Armory Appraisal dated 08/10/05
A Complete Appraisal in a Summary Appraisal Report of the National Guard Armory Property at 1840 U.S. Highway 93 South Kalispell, Flathead County, MT 59901 for Ms. Susan Moyer, Director City of Kalispell - Department of Community Development P.O. Box 1997 Kalispell, MT 59903-1997 as of August 10, 2005 by Kraig P. Kosena, MAI Kembel, Kosena & Company, Inc. 124 West Pine Street, Suite A P.O. Box 16653 Missoula, MT 59808-6653 KEMBEL, KOSENA & COMPANY, INC. E INTRODUCTION: Letter of Transmittal Summary of Salient Facts and Conclusions ........................ 1 Assumptions and Limiting Conditions ............................ 4 DESCRIPTION, ANALYSIS, and CONCLUSION: Record Owner and Brief Property History ......................... 7 Location of the Property ....................................... 7 Legal Description ............................................ 7 Definition of an Appraisal ...................................... 8 Intended User of the Appraisal Report ............................ 8 Intended Use of the Appraisal Report ............................ 8 Extent of the Appraisal Process ................................. 8 Purpose of Appraisal and Definition of Market Value ................. 10 Date of Valuation ............................................ 10 Exposure Period............................................11 Marketing Period............................................11 Property Rights Appraised ..................................... 12 Regional, City, and Neighborhood Data and Analysis ................ 12 Property Description ......................................... 12 Site......................................................12 Site Improvements .......................................... 13 Structural Improvements ..................................... 13 Taxes and Assessments ...................................... 14 Table No. 1 - Tabulation of Subject Property Taxes and Assessments .. 14 Highest and Best Use........................................15 Of the Land as Though Vacant ................................ 15 Of the Property as Improved .................................. 18 Property Valuation ........................................... 20 Cost Approach .............................................. 21 Site Valuation .............................................. 22 Table No. 2 - Tabulation of Land Sales ......................... 23 Correlation and Conclusion of Site Valuation ..................... 26 Table No. 3 - Land Sales Adjustment Grid ...................... 26 Table of Contents continued on next page KEMBEL, KOSENA & COMPANY, INC. Estimate of Replacement Cost ................................. 27 Table No. 4 - Tabulation of Replacement Cost Estimate by MVS ..... 27 Entrepreneurial Incentive ..................................... 27 Accrued Depreciation ........................................ 28 Summary of the Cost Approach ................................ 29 Certification................................................ 30 ADDENDA: General Area Map Subject Property Location and Neighborhood Map Subject Property Site Map Subject Property Floor Plan Sketch Subject Property Photographs Land Sales Location Map Land Sales Photographs Appraiser's Qualifications KEMBEL, KOSENA & COMPANY, INC. KEMBEL, KOSENA & COMPANY, INC. EMBEL, KosENA & COMPANY, INC.. ------------------------------ ............... ....... .:I ---..................------------------------------- REAL ESTATE APPRAISERS & CONSULTANTS September 28, 2005 Ms. Susan Moyer, Director City of Kalispell - Department of Community Development P.O. Box 1997 Kalispell, MT 59903-1997 Re: The appraisal of the National Guard Armory property at 1840 U.S. Highway 93 South, Kalispell, Flathead County, Montana. Dear Susan: In accordance with your request for a complete appraisal in a summary appraisal report setting forth the market value of the property under study, I am submitting the following report containing 31 pages plus Addenda. The property under study is described legally on page 7 of this report. The property rights appraised are the unencumbered fee simple estate and the writer assumes no responsibility for the marketability of the title. To the best of my knowledge, this report is in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP). An environmental assessment of the property has not been provided and it is assumed there are no environmental concerns related to the subject. The project appraiser is not qualified to detect hazardous materials or toxic waste. Any environmental risk discovered at a later date may or may not require a revised estimate of value, which may or may not simply be a reduction of the value by the estimated cost -to -cure of the environmental condition. Properties known to have environmental risk may carry a stigma in the marketplace which may or may not affect the value. POST OFFICE BOX 16653 $ 124 WEST PINE STREET, SUITE A 4- MISSOULA, MT 59808-6653 TELEPHONE 406-549-6151 *FACSIMILE 406-542-7054 Ms. Susan Moyer September 28, 2005 Page 2 By reason of my investigations, studies, and analyses, an opinion has been formed that the market value of the subject property, as of August 10, 2005, assuming a reasonable marketing period of approximately one to two years, is as follows: One Million Two Hundred Sixteen Thousand Dollars ($1,216,000) Your attention is invited to the data and discussions that follow and which are the foundations of this conclusion. The information that is retained in my office files, which was used in conjunction with this summary appraisal report, can be provided to you for an additional fee. I, the undersigned project appraiser, Kraig P. Kosena, hold the MAI designation and am current in the Continuing Education Program of the Appraisal Institute. My member number is 10,933. Further, I am licensed by the State of Montana as a Certified General Appraiser. My license number is 225, expires March 31, 2006, and has never been suspended, revoked, canceled, or restricted. I appreciate the opportunity to be of service to you. Please contact me if you have any questions or if I can be of further service. Respectfully submitted, Kembel, Kosena & Company, Inc. Kraig P. Kosena, MAI, Project Appraiser Montana Certified General Appraiser No. 225 KEMBEL, KOSENA & COMPANY, INC. Record Owner Location of Property Property Rights Appraised Historical Use Present Use Highest and Best Use As Though Vacant As Improved Date of Value Date of Inspection Date of Report Exposure Period Marketing Period Site State of Montana. 1840 U.S. Highway 93 South, Kalispell, Flathead County, Montana. Unencumbered fee simple estate. Special-purpose - military armory. Special-purpose - military armory. Commercial development in conformance with zoning and existing neighborhood developments. Special-purpose - as improved as a military armory. August 10, 2005. August 10, 2005. September 28, 2005. The estimated reasonable exposure period of the subject property is approximately one to two years. Similar to the estimate of exposure period - approximately one to two years. Land area is ± 150,000 sf, or ± 3.444 acres. The property is zoned P-1 Public District. To the east the property fronts on the west side of U.S. Highway 93 South. To the north and south, the property abuts private property. To the west, the property abuts the small, City of Kalispell airport. The topography is level and at -grade. All utilities are available and to the E KEMSEL, KOSENA & COMPANY, INC. site. Site Improvements ± 50,000 sf of asphalt pavement for on -site parking and ± 30,000 sf of typical commercial landscaping including mature lawn and numerous trees and shrubs. Structural Improvements The primary structure is a one-story, class c (masonry) special-purpose building that was built c. 1960 to house the local National Guard Unit. Gross building area (GBA) is ± 13,215 sf. The central portion of the building is the drill floor which is basically a gymnasium type of environment and the wall heights are 24'. Surrounding the drill floor on three and one-half sides are numerous small rooms designed and built for military occupancy including a kitchen facility, numerous offices, restrooms, etc. Wall heights on the perimeter portion of the building are 9'. The building appears to be of about average quality construction and appears to be in about fair to average condition for its age and use. Furthermore, the improvements are considered to be reasonably functional for the intended use as a military armory but minimally functional for alternative uses. A secondary building is a three -bay garage/shop type building that measures 36' x 74' (± 2,664 sf). This building is also class c construction. For the purposes of this report, we were not allowed interior access to this building but it was stated that it was minimally - finished garage -type space with a poured concrete slab floor. oil KEMBEL, KOSENA & COMPANY, INC. The condition of this secondary building also appeared to be fair to average. Other structural improvements include a couple of very small shed -type structures of little to no consequence or contributory value. Site Value Estimate - $7.25/sf. Market Value Estimate by the Cost Approach - $1,216,000. Market Value Estimate by the Sales Comparison Approach - not applicable. Market Value Estimate by the Income Capitalization Approach - not applicable. Final Conclusion of Market Value - $1,216,000. KEMBEL, KOSENA & COMPANY, INC. This is to certify that the appraiser, in submitting these statements and opinion of value, acted in accordance with and was bound by the following principles, limiting conditions, and assumptions: This is a complete appraisal in a summary appraisal report which is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the USPAP. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for the unauthorized use of this report. No responsibility is assumed for matters that are legal in nature nor is any opinion rendered on title of land appraised. Unless otherwise noted, the property has been appraised as though free and clear of all encumbrances. All maps, areas, and other data furnished to the project appraiser have been assumed to be correct. No survey of the property has been made by the project appraiser. Neither the employment to make this appraisal nor the compensation is contingent upon the amount of valuation reported. The project appraiser has made a personal inspection of the property that is the subject matter of this report. To the best of my knowledge and belief, the statements of fact contained in this appraisal report upon which the analysis, opinions, and conclusions expressed herein are based are true and correct. Furthermore, no important facts have knowingly been withheld or overlooked. 0 KEMBEL, KOSENA & COMPANY, INC. There shall be no obligation to give testimony or attendance in court by reason of this appraisal with reference to the property in question unless arrangements have been made previously. This appraisal report has been made in conformity with and is subject to the requirements of the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Institute and conforms to the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. Disclosure of the contents of this appraisal report is governed by the bylaws and regulations of the Appraisal Institute. The liability of the appraisal firm of Kembel, Kosena & Company, Inc. and its employees is limited to the client and to the fee collected. Further, there is no accountability, obligation, or liability to any third party. If this report is placed in the hands of anyone other than the client, the client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The appraiser assumes no responsibility for any cost incurred to discover or correct any deficiencies of any type present in the property: physically, financially, or legally. The project appraiser has inspected as far as possible, by observation, the land. However, it was not possible to personally observe conditions beneath the soil. The appraisal is based on there being no hidden, unapparent, or apparent conditions of the property site, subsoil, or toxic materials which would render it more or less valuable. No responsibility is assumed for any such conditions or for any expertise or engineering to discover them. It is assumed that the property which is the subject of this report will be under prudent and competent ownership and management: neither inefficient nor super efficient. Unless otherwise stated in this report, the project appraiser signing this report has no knowledge concerning the presence or absence of toxic materials on the subject's site. If such are present the value of the property may be adversely affected and re -appraisal at additional cost 5 KEMBEL, KOSENA & COMPANY, INC. maybe necessary to estimate the effects of such. The appraisal is based on the premise that, there is full compliance with all applicable federal, state, and local environmental regulations, and laws unless otherwise stated in the report. Further, that all applicable zoning, building, building codes, use regulations, and restrictions of all types have been complied -with unless otherwise stated in the report. Further, it is assumed that all required licenses, consents, permits, or other legislative or administrative authority, local, state, federal, and/or private entity or organization have been or can be obtained or renewed for any use considered in the value estimate. Neither all nor any part of the contents of this report (especially the conclusion as to the value, the identity of the appraiser, or the firm with which he is connected) or any reference to the MAI designation and/or the Appraisal Institute shall be disseminated to the public through advertising media, sales media, news media, public relations media, or any other public means of communication without the prior written consent and approval of the appraiser. 6 KEMBEL, KOSENA & COMPANY, INC. KEMBEL, K03ENA & COMPANY, INC. According to the Flathead County Clerk and Recorder's Office and the State of Montana (Department of Revenue), the subject property is owned by the State of Montana. The property has been in this ownership since April 1955. Regarding the history of the subject property, according to the records of the State of Montana Department of Revenue, the existing improvements were built c. 1960. To the best of my knowledge, the property is and always has operated as the Kalispell home of local National Guard unit. Prior to 1955 1 have no knowledge of the property but believe it safe to assume that the site was vacant and unimproved. The subject property is located in the southern portion of the City of Kalispell along the western side of U.S. Highway 93 South. The actual subject property street address is 1840 U.S. Highway 93 South, Kalispell, Flathead County, Montana. The location of the subject property is illustrated by a General Area Map and a Subject Property Location and Neighborhood Map, both can be found in the Addenda of this report as exhibit items. Legal Description Based on the information obtained for the purposes of this report, the legal description of the subject property is as follows: Commencing at a point 880' more or less S.89°50'E. of the northwest corner of Section 20, Township 28 North, Range 21 West to the west property line of U.S. Highway No. 93; thence S.33°01'E. along property line 600' to the true point of beginning; thence continuing along the west property line of U.S. Highway No. 93 500' S.33°01'E.; thence 300' S.56°59'W.; thence 500' N.33°01'W.; thence 300' N.56°59'E. to the point of beginning, containing 3.44 acres more or less. Per the State of Montana Department of Revenue, the subject property site involves a gross land area of ± 150,000 sf, or ± 3.444 acres. A Subject Property Site Map is also h KEMEEL, KOSENA & COMPANY, INC. included in the Addenda of this report. As recognized by the 121h Edition of the Appraisal Institute's The Appraisal of Real Estate, the following definition of an appraisal is hereby presented to aid the reader in understanding exactly what is meant by the term: appraisal: the act or process of developing an opinion of value. MAT .-• •.. -_ It is my understanding that the intended user of this product is my client, the City of Kalispell. • - •' • Y • •. - - .' • The intended use of this appraisal report is to assist my client in establishing the current market value of the subject property for a possible acquisition of the subject property. The extent or scope of this appraisal first involved the physical inspection of the subject property. The subject property was inspected on August 10, 2005 by my research assistant, Thomas A. Faulkner. Other initial investigation included a review of the State of Montana and Flathead County records, zoning and designated flood hazard boundary inquiries with the City of Kalispell/Flathead County Office of Planning and Grants, and easement research with the Flathead County Surveyor's Office. The preliminary data search was followed by the actual valuation of the property. For the purposes of this report, recognizing the type of property under study and that a complete appraisal was requested, I have determined that the cost and sales comparison approaches are most applicable for the following reasons. Under the cost approach, I first investigated land sales in the market that were felt to be comparable to the subject's site with similar development potential. Second, I 0 KEMBEL, KOSENA & COMPANY, INC. investigated construction costs, based primarily on several cost comparables and the published information in the Marshall and Swift Cost Manual. This source is recognized locally, regionally, and nationally as a reliable indicator of current construction costs for commercial improvements. Third, once the estimated replacement cost was established, I considered all forms of depreciation, i.e., physical deterioration, functional obsolescence, and external obsolescence. Overall, given the actual and estimated effective age of the subject property primary improvement, the cost approach is felt to be meaningful in this assignment resulting in a reasonable and reliable indication of current market value. Within the context of the sales comparison approach, I typically concentrate my research looking for recent sales of similar properties in the local market, i.e., Kalispell in this case. The sale properties were analyzed and compared to the subject property, differences were recognized, and adjustments were made (to the extent that the available data would allow). The units of comparison that are usually employed in this approach are the overall dollars per square foot (overall $/sf) and the building only dollars per square foot (building only $/sf). In this case, the subject property is a special purpose development and I was unable to locate any sales in the local market that were felt to offer any degree of comparability to the subject property improvements. Therefore, it is my opinion that the application of the sales comparison approach is not applicable in this assignment. The income capitalization approach is most reliable for income -producing properties when there is good subject property historical information and good supporting information in the local market to substantiate income, expenses, and ultimately the overall capitalization rate that is applied to the estimate of net operating income (NOI). In this case, the subject property primary improvement has always been owner - occupied and I would submit that most similar properties in the local market are also owner -occupied. Therefore, it is my opinion that the application of the income capitalization approach is not applicable in this assignment. This summary appraisal report sets forth only summarizations of the appraiser's analyses and conclusions. Supporting documentation is retained in the appraiser's files and can be made available upon request at an additional fee. 9 KEMBEL, KOSENA & COMPANY, INC. The purpose of this appraisal is to estimate the current market value of the subject property. Market value, as defined by the Appraisal Standards Board of The Appraisal Foundation for the purposes of the USPAP and used in this report, is: 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: Uniform Standards of Professional Appraisal Practice, 2005 Edition. Date of Valuation All values are related in time to the last date of inspection of the property, August 10, 2005. 10 KEMBEL, KOSENA & COMPANY, INC. Exposure time is always presumed to precede the effective date of the appraisal. Exposure period is defined as follows: exposure period: 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; a retrospective opinion based on analysis of past events assuming a competitive and open market. The typical method of estimating exposure periods is to investigate exposure periods of comparable sales. The logic being that if the sales are current and comparable, the exposure period expectation for the subject property should be within the range indicated by the comparable sales, if the subject property was made available for sale and priced reasonably and competitively. In this case, based on my sales research, which included not only those sales detailed in the sales comparison approach but also numerous broker and agent interviews, recognizing the special-purpose nature of the space and the strength of the local market, I have concluded that a reasonable exposure period for the subject property would be approximately one to two years assuming that the property would be actively marketed at a reasonable and competitive price. Unlike exposure period, the marketing period estimate is prospective in nature. Marketing period is defined as: marketing period: an opinion of the amount of time it might take to sell a real or personal property interest at the calculated market value during the period immediately after the effective date of an appraisal. As I have no evidence to the contrary, my estimate of marketing time closely resembles the estimated exposure period, or approximately one to two years. if KEMBEL, KOSENA & COMPANY, INC. The property rights being appraised are the unencumbered fee simple estate. According to the 12th Edition of the Appraisal Institute's The Appraisal of Real Estate: fee simple estate: 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. No responsibility for the marketability of the title of the subject property in this report is assumed. • r • - • ••1111111 lill••• • This section of the report has been intentionally omitted due to the summary nature of this report as well as the client's familiarity with the region, city, and neighborhood. The following description of the subject property is based on my on -site property inspection and my research of the records of Flathead County and the State of Montana Department of Revenue. Again, given the summary nature of this report as well as the client's familiarity with the property, the following description is intentionally brief. Site: Land area is ± 150,000 sf, or ± 3.444 acres. The property is zoned P-1 Public District. To the east the property fronts on the west side of U.S. Highway 93 South. To the north and south, the property abuts private property. To the west, the property abuts the small, City of Kalispell airport. The topography is level and at -grade. All utilities are available and to the site. W KEMBEL, KOSENA a COMPANY, INC. For the purposes of this report, the soils have not been independently studied nor do I make any representation as to their suitability. However, based on existing developments in the area, it appears that the soils in the area offer adequate load - bearing qualities for most types of development. There do not appear to be any drainage problems associated with the site. According to Community -Panel Number 300025 0005 C with a map revision date of September 30, 1992, the subject property site is located in the designated flood hazard area. More specifically, the site is within an area designated as Zone X which is generally regarded as the 100-year flood hazard area. On the issue of soil degradation, an Environmental Site Assessment Report has not been performed. It is assumed there are no environmental concerns related to the subject. The project appraiser is not qualified to detect hazardous materials or toxic waste. Any environmental risk discovered at a later date may or may not require a revised estimate of value, which may or may not simply be a reduction of the value by the estimated cost -to -cure of the environmental condition. Properties known to have environmental risk may carry a stigma in the marketplace, which may or may not affect the value. For more specific environmental site information, it is recommended that, at a minimum, a phase one audit be completed by a qualified soils engineer. No atypical easements were noted. Site Improvements: The term site improvements generally refers to such things as landscaping, asphalt paved parking areas, fencing, etc. In the subject's case, the site improvements are pretty typical for this type of development and include ± 50,000 sf of asphalt pavement for on -site parking and ± 30,000 sf of typical commercial landscaping including mature lawn and numerous trees and shrubs. Structural Improvements: The primary structure is a one-story, class c (masonry) special-purpose building that was built c. 1960 to house the local National Guard Unit. Gross building area (GBA) is ± 13,215 sf. The central portion of the building is the drill floor which is basically a gymnasium type of environment and the wall heights are 24'. Surrounding the drill floor on three and one-half sides are numerous small rooms designed and built for military occupancy including a kitchen facility, numerous offices, restrooms, etc. Wall heights on the perimeter portion of the building are 9'. 13 KEMBEL, KOSENA & COMPANY, INC. The building appears to be of about average quality construction and appears to be in about fair to average condition for its age and use. Furthermore, the improvements are considered to be reasonably functional for the intended use as a military armory but minimally functional for alternative uses. A secondary building is a three -bay garage/shop type building that measures 36' x 74' (± 2,664 sf). This building is also class c construction. For the purposes of this report, we were not allowed interior access to this building but it was stated that it was minimally -finished garage -type space with a poured concrete slab floor. The condition of this secondary building also appeared to be fair to average. Other structural improvements include a couple of very small shed -type structures of little to no consequence or contributory value. Numerous interior and exterior photographs are included in the Addenda of this report to give the reader a representation of the previous discussions. Taxes and Assessments The subject property parcel number is E031050. The following tabulation details the subject property parcel number, assessed value, and current property taxes. TABLE r I - TABULATION OF SUBJECT PROPERTY TAXES AND ASSESSMENTS PARCEL GEO CODE ADDRESS LAND IMPROVEMENTS ASSESSED 2004 NO. AREA VALUE PROPERTY (SF) TAXES E031050 3966-20-2-07-09 1840 U.S. Highway 93 S. 150,000 military armory $1,582,200 $1,481.43 Due to the ownership of the subject property, it is exempt from most property taxes. Were the property privately owned and responsible for a full tax burden, the property taxes would likely be over $30,000 annually. 14 KEMBEL, KOSENA & COMPANY, INC. The following definition of highest and best use is taken from the 12`" Edition of the Appraisal Institute's The Appraisal of Real Estate: highest and best use: the reasonably probable and legal use of vacant land or an unimproved property that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value. Implied in this definition is the recognition of the contribution of that specific use to community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraiser's judgement and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact to be found. In appraisal practice, the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value), another appropriate term to reflect highest and best use would be most "probable use." In the context of investment value, an alternative term would be most "profitable use." Highest and Best Use of the Land as Though Vacant: In considering the highest and best use of the subject property, as though vacant and available to be developed to its highest and best use, I gave consideration to any and all uses to which the property is capable of being adapted, or developed, if vacant and unimproved. The five categories of use recognized are residential, commercial, industrial, agricultural, and special-purpose. The residential classification typically includes single family residences, duplexes, and four-plexes. Commercial developments generally include such things as office buildings, retail centers, restaurants, hotels, motels, and multi -family housing developments. The industrial classification includes such uses as manufacturing parks, warehouses, etc. 15 KEMBEL, KOSENA & COMPANY, INC. Agricultural land uses include cropland, pastureland, timberland, and orchards. The special-purpose use refers to properties with unique design, or construction, which restricts their utility to the intended use for which they were built and generally includes such things as schools, churches, parks, museums, airports, etc. Consideration must be given to these uses, recognizing the limitations imposed by the four generally -accepted criteria for highest and best use. These are physically possible, legally permissible, financially feasible, and maximally productive. To elaborate on these, physically possible recognizes such factors as size, shape, area, terrain, and utilities available. Legally permissible involves restrictions such as homeowners associations, zoning regulations, building codes, historic district controls, and environmental regulations. Financially feasible relates to all uses that are expected to produce a positive return. Maximally productive relates to those uses which satisfy the other three criteria and produce the highest price or value consistent with the return expected by investors in the area. The property is located within the corporate boundaries of the City of Kalispell. Therefore, it is governed by a City of Kalispell zoning ordinance and as such I would submit that it makes most sense to consider the legal permissibility criteria first. Legally Permissible: This criteria relates to zoning designations or other governmental restrictions for the site, but also recognizes any declaration of covenants, conditions, or restrictions. Conservation easements would be included here as legally limiting the potential development of a property. Currently, the subject property is governed by a City of Kalispell zoning ordinance, P-1 Public District. However, for the purposes of this report I have had to assume a change of zoning to a reasonable alternative with some economic value. After reviewing local zoning maps, I concluded that the most likely alternative zoning would be B-2 General Business District, the adjacent commercial zoning to the north, south, and east. Therefore, for the purposes of this report, I am assuming a change of zoning to the B-2 General Business District zoning. To the best of my knowledge, there are no other legal 16 KEMBEL, KOSENA & COMPANY, INC. considerations that would limit the potential of the site, i.e., covenants, deed restrictions, easements (including conservation easements), etc. After thorough review, it appears that the B-2 zoning ordinance is rather broad -reaching and permits most residential and commercial land uses. Following is the Intent section of the ordinance: A business district to provide areas for those retail sales and service functions and businesses whose operations are typically characterized by outdoor display, storage and/or sale of merchandise, by major repair of motor vehicles, and by outdoor commercial amusement and recreation activities. This district would also serve the general needs of the tourist and traveler. This district depends on the proximity to major streets and arterials. This district should be located in business corridors or in islands. The district has the following development standards: 1. Minimum lot area: 2. Minimum lot width: 3. Minimum yards: 4. Maximum building height: 5. Permitted lot coverage (%) 6. Off-street parking: 7. Maximum fence heights: 7,000 sf; 70'; front - 20', side - 5', rear - 10', side corner - 15'; 40'; not applicable; refer to Sections 27.26 and 27.26; and front - 0', side - 6.5', rear - 6.5. Physically Possible: The physical features of a site which may affect the potential use(s) include, but are not limited to, location, frontage, size, shape, access, availability of utilities, easements, soils and subsoils, topography, and designated flood hazard considerations. The subject property involves a land area of just under 3.5 acres. The property is located in the southern portion of the City of Kalispell along the west side of U.S. Highway 93 South at the southwest quadrant of the intersection of U.S. Highway 93 South and East 18th Street. Land uses in the immediate area are almost entirely commercial. 17 KEMBEL, KOSENA & COMPANY, INC. Overall, the property is felt to have good physical attributes for many, but not all, types of development. Those uses that are felt to be culled out at this point include potential developments with large land requirements. Financially Feasible and Maximally Productive: Financial feasibility relates to the investment in the land producing a positive return to the investor, or developer. A positive return to the investment suggests a financially feasible use of the property. This may be a cash return or a return as measured by the utility of the land to the owner. The highest, or maximum, return on the investment indicates the maximum productivity of the property. This factor is more difficult to measure, as different investors may have differing return requirements. In the case of vacant land, this may be measured by the highest price the land will bring when exposed to the open market. Conclusion: Recognizing the subject's site size, the location in south Kalispell, the topography, the assumed zoning, the current local and national economy, and especially the demand for property in the area, it is my opinion that the highest and best use of the property as if vacant would be for a commercial development in conformance with other developments in the area. Highest and Best Use of the Propertyas Improved: The highest and best use of property, as improved, is defined in The Dictionary of Real Estate, 3rd Edition, as: highest and best use, as improved: the use that should be made of a property as it exists. An existing property should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. Generally, the only time that the highest and best use of a property as improved will differ from that use for which the property is currently being used, is when the existing improvements no longer contribute to the overall value of the property. In this case, the structural improvements are still in fair to average condition for their age and certainly contribute some interim value to the whole property. However, with the demand for commercial property in this area of Kalispell, the existing improvements are becoming more obsolete daily as land value increases to a point where it does not W. KEMBEL, KOSENA & COMPANY, INC. make economic sense to improve the site with a special purpose use such as a military armory which is not at all location dependant. With this in mind, I have concluded that the highest and best use of the subject property as improved is, in fact, as improved with the special-purpose building which was built to house a local military armory. However, for the aforementioned reasons, mainly increasing land values in the area, this use is considered an interim use. 19 KEMBEL, KOSENA & COMPANY, INC. The appraisal process is a systematic process in which the problem is defined, the work necessary to solve the problem is planned, and the data involved is acquired, classified, analyzed, and interpreted into an estimate of value. There are three traditional, or generally -accepted, techniques used in estimating the market value of real property. These are generally referred to as the cost approach, the income capitalization approach, and the sales comparison approach. The cost approach is an estimation of the value of the land, as if vacant and available to be developed to its highest and best use, by market comparisons to which the depreciated, or contributory, value of the improvements is added. The sales comparison approach is a technique that produces an indication of value by a direct comparison of similar property types, that have recently sold, to the subject property; appropriate adjustments for differences are made when and where necessary. The income capitalization approach produces a value indication by capitalizing the net income, or earning power, of the property by a rate reflected by market transactions or behaviors. The three approaches to value do not necessarily apply to all types of property. A decision must be made whether a particular approach is applicable in each instance. The key to this decision is whether or not the approach is practical as a yardstick of market performance, or merely a theoretical application. These observations are particularly pertinent in the appraisal of properties in transition to a higher and better use, as well as special use properties where value -in -use is more applicable than market value. In recognizing the type of property under consideration in this appraisal assignment, a special purpose development is an area of Kalispell with heavy demand for large commercial tracts, I have concluded that just the cost approach is pertinent to the process and would likely result in a reasonably reliable indicator of value for the subject property. 20 KEMBEL, KOSENA & COMPANY, INC. As taken from the 12" Edition of the Appraisal Institute's The Appraisal of Real Estate, cost approach: a set of procedures through which a value indication is derived for the fee simple interest in a property by estimating the current cost to construct a reproduction of, or replacement for, the existing structure plus any profit or incentive; deducting depreciation from the total cost; and adding the estimated land value. Other adjustments may then be made to the indicated fee simple value of the subject property to reflect the value of the property interest being appraised. I will now proceed with the first step of the cost approach, arriving at the estimated value of the site (as though vacant) based on my investigation of market transactions. This process involves the comparison, and adjustment for differences, of sales of similar properties. There are several ways to analyze and adjust sales. The most common and preferred method is a matched -pairs analysis, comparing one sale to another to isolate a specific adjustment factor. The two sales compared should be similar in all regards with the exception of the factor for which an adjustment is to be derived. When the sales are not truly comparable, but only similar, this analysis is often much less reliable. The more dissimilar the features between the properties, the less accurate or meaningful is the analysis. With widely varying factors or properties, this comparative analysis is used to show general trends. A bracketing procedure or technique may then be used to derive an overall conclusion of value. Contemporary appraisal texts have just recently begun to recognize bracketing as a valuation technique. Overall, I am of the opinion that the bracketing technique recognizes the imperfect data found in the marketplace. The 12th Edition of the Appraisal Institute's The Appraisal of Real Estate defines bracketing as: bracketing: a process in which an appraiser determines a probable range of values for a property by applying qualitative techniques of comparative analysis to a group of comparable sales. The array of comparables may be divided into two groups - those superior to the subject and those inferior to th e subject. The adjusted sale prices reflected by these two groups limit the probable range of values for the subject and identify a bracket in which the final value opinion will fall. The most comparable sales will typically fall near the middle of the range. 21 KEMBEL, KOSENA & COMPANY, INC. Because of the many variables involved in comparing sale properties to the subject property, the importance of the appraiser's judgement and opinion becomes obvious. In other words, the sales themselves do not alone directly indicate a value for the subject property, but these sales, once totally analyzed and correlated with experience and judgement, do help your appraiser in his final value estimate. Site Valuation: Land sales with similar amenities located within the immediate neighborhood of the subject property allow for the best comparison and value conclusion. In comparison to the subject property, factors considered include property rights, terms of the sale, location, size, frontage, shape, zoning, topography, etc. The unit of comparison used in this analysis is based upon a price paid as dollars per square foot. To determine this indication, the sales price (or estimated contributory value of the land) is divided by the total size of the land (in square feet). sales price size in square feet = dollars per square foot sale indication ($/sf) Regarding the sales themselves and the adjustment process, it has been my experience that all sales differ somewhat from each other. To the extent possible, the differences should be recognized and adjusted for based on the data available. However, in the market it is often difficult, and sometimes impossible, to accurately isolate a given factor. In short, one very seldom finds sale properties which are identical in all respects but one, and thus is able to prove conclusively the value, or lack of, for any one factor due to a difference in sale price. Often, there are positive and negative factors which offset each other. Nevertheless, the differences in values are real and an attempt, based on as much fact as can be found, will be made to determine the value of these factors. Then, the appraiser may call upon his/her experience to make more subjective judgements. The following generalities are cited to acquaint the reader with a background for my reasoning and judgement to follow: 1. value increases per unit of comparison as the size of the parcel decreases; 2. value tends to decrease as distance from an urban center increases (an exception to this generalization might be certain recreational properties); 3. value tends to decrease as the topography becomes steeper, more rocky, more barren, more arid, etc.; KEMBEL, KOSENA & COMPANY, INC. 4. value tends to decrease as access becomes more difficult; 5. value tends to increase with amenities such as creek or lake frontage, or a good view; and 6. value tends to increase when zoning allows greater density and/or a more optimum use of the land. Obviously, the inverse may be said of each of these statements. Following is a tabulation of land sales used in estimating a value for the site or underlying land. As can be seen, the sales are arranged chronologically on the tabulation with the most recent sale being LS No. 1. TABLE NO.2 - TABULATION OF LAND SALES SALE LOCATION GRANTOR RECORDING ZONING SALE SALE SITE SALE NO. GRANTEE DATA DATE PRICE SIZE INDICATION LS 1. Hwy. 93 S. Murcon Dev., Inc. NA - Pending B-2 Pending $323,000 35,719 $9.04 Undisclosed LS 2. Hwy. 93 S. City of Kalispell NA - Pending B-2 Pending $459,520 129,809 $3.54 Whitefish CU LS 3. Hwy. 93 S. Murcon Dev., Inc. 200522713520 B-2 8/05 $490,000 44,432 $11.03 Glacier MT Dev., LLC WD LS 4. Hwy. 93 S. Murcon Dev., Inc. 200522315390 B-2 8/05 $470,000 49,223 $9.55 DSH/Kalispell, LLC WD LS 5. Hwy. 93 S. Mooss, LLP 200418316418 B-2 7/04 $129,600 15,000 $8.64 Witt Family Trust WD LS 6. Hwy. 93 S. City of Kalispell 200135515310 B-2 12/01 $900,000 322,954 $2.79 Murcon Dev., Inc. WD LOW INDICATOR $323,000 15,000 $2.79 HIGH INDICATOR $900,000 322,954 $11.03 MATHEMATICAL MEAN $462,020 99,523 $7.43 MATHEMATICAL MEDIAN $611,500 168,977 $6.91 A Land Sales Location Map along with color photographs of each of these land sales are included in the Addenda of this report. Once the most comparable sales have been identified, the elements of comparison are considered. The 12th Edition of The Appraisal of Real Estate defines elements of comparison as: 23 KEMBEL, KOSENA & COMPANY, INC. elements of comparison: the characteristics or attributes of properties and transactions that help explain the variance of prices paid for real estate; including real property rights conveyed, financing terms, conditions of sale, market conditions, expenditures made immediately after purchase, location, physical characteristics, and other characteristics such as economic characteristics, use, and non -realty components of value. The sales presented suggest a value range from a low of ± $2.79/sf up to ± $11.03/sf, with a mathematical mean (average) of ± $7.43/sf and a median indication of ± $6.91/sf. Given the summary nature of this report, I will not go into a lengthy analysis of each of the land sales with regard to how they relate and compare to the subject property. Rather, following is a brief summary of each of the land sales and how I feel the sales relate, individually, to the subject property site. Land Sale No. 1: This pending land sale involves a smaller commercial site located just south of the subject property along the same side of U.S. Highway 93 South. This property involves a gross land area of ± 35,719 sf and is currently under contract to sell for $323,000, or ± $9.04/sf. Worth noting, the sales in this development involve some rather large utility and roadway easements resulting in net useable land areas significantly smaller than the aforementioned gross land area. In this case, this sale property involved a net land area of ± 26,572 sf. Using this figure, the sale indication is ± $12.16/sf. Comparison comment: Very similar location. This sale property is much smaller than the subject property, therefore, the sale indication is considered slightly high. Land Sale No. 2: This pending sale involves a slightly smaller parcel located further south on U.S. Highway 93 South. Because this sale property has been under contract since January of 2002 and was the product of a bid process, I am hesitant to place much emphasis on the sale or its resultant sale indication. Land Sale No. 3: This very recent land sale involved a vacant lot in the same development as Land Sale No. 1. Like the subject property, this sale property fronts on the west side of U.S. Highway 93 in the southern portion of the City of Kalispell. This property sold for $490,000 and involved ± 44,432 sf (gross) of vacant, B-2 zoned land. This sale indicates ± $11.03/sf. Using the net land area after deducting for the easements, this sale involves a site area of ± 40,075 sf which suggests a value of 92 KEMBEL, KOSENA & COMPANY, INC. Correlation and Conclusion of Site Valuation: Suffice it to say, the land sales presented here were deemed to be the best comparables in the local market for the purpose of estimating site value for the subject property underlying land. Having identified and analyzed what I feel are the best sales in the local market for the purposes of this analysis, we must now reconcile the data into an indication of value for the subject property. The following tabulation/adjustment grid attempts to recognize and quantify those specific adjustments that are felt to pertain when we compare each of the sale properties to the subject property. TABLE NO.'3 - LAND SALES ADJUSTMENT GRID ELEMENT LS No. 1 LS No. 2 LS No. 3 LS No. 4 LS No. 5 LS No. 6 $323,000 $459,520 $490,000 $470,000 $129,600 $900,000 SALE PRICE GROSS SIZE (SF) 35,719 129,809 44,432 49,223 15,000 322,954 UNADJUSTED $/SF (GROSS) $9.04 $3.54 $11.03 $9.55 $8.64 $2.79 NET SIZE (SF) 26,572 129,809 40,075 38,768 15,000 322,954 UNADJUSTED $/SF (NET) $12.16 $3.54 $12.23 $12.12 $8.64 $2.79 REAL PROPERTY RIGHTS CONVEYED 0.00 0.00 0.00 0.00 0.00 0.00 FINANCING TERMS 0.00 0.00 0.00 0.00 0.00 0.00 CONDITIONS OF SALE 0.00 (++) 0.00 0.00 0.00 0.00 MARKET CONDITIONS (_) (+) (_) (_) (+) ( +++ ) EXPENDITURES AFTER PURCHASE 0.00 0.00 0.00 0.00 0.00 0.00 LOCATION PHYSICAL- CHARACTERISTICS (---) (_) (---) (---) (-----) (++ ) ECONOMIC_ CHARACTERISTICS 0.00 0.00 0.00 0.00 0.00 0.00 USE/ZONING (_) (_) (_) (_) (++) (_) NON -REALTY COMPONENTS OF VALUE 0.00 0.00 0.00 0.00 0.00 0.00 Downward Upward Downward Downward Downward Upward ADJUSTMENT < $12.16 > $3.54 < $12.23 < $12.12 < $8.64 > $2.79 ADJUSTED SALE INDICATION After analyzing each of these land sales as they relate and compare to the subject property, taking into account such things as date of sale, location, size, zoning, utility, etc., I have concluded that the information is very supportive of a value conclusion of $7.25/sf for the subject property site. This $/sf conclusion, when applied to the subject property land area results in an indication of land value of: ± 150,000 sf at $7.25/sf = $1,087,500. 26 KEMBEL, KOSENA a COMPANY, INC. $12.22/sf. Comparison comment: Very similar location. This sale property is much smaller than the subject property, therefore, the sale indication is considered slightly high. Land Sale No. 4: This very recent land sale also involved a vacant lot in the same development as Land Sale Nos. 1 and 3. Again, like the subject property, this sale property fronts on the west side of U.S. Highway 93 in the southern portion of the City of Kalispell. This property sold for $470,000 and involved ± 49,223 sf (gross) of vacant, B- 2 zoned land. This sale indicates ± $9.55/sf. Using the net land area after deducting for the easements, this sale involves a site area of ± 38,768 sf which suggests a value of $12.12/sf. Comparison comment: Very similar location. Again, this sale property is much smaller than the subject property, therefore, the sale indication is considered slightly high. Land Sale No. 5: This July 2004 sale involved a very small parcel located south of the subject property and on the other side of U.S. Highway 93 South. This property actually involved a sales price of $152,500 but an existing building was estimated to contribute $22,900 to the sale, resulting in a land value allocation of $129,600. The site size was just ± 15,000 sf which indicates $8.64/sf. Comparison comment: Because of the very small size which was felt to have a negative impact on the utility of the site, this sale indication is considered low for the subject property site. Land Sale No. 6: This December 2001 sale was a 7.414 acre site that has now been re - platted and divided into seven smaller commercial lots. Land Sales Nos. 1, 3, and 4 are resales of several of these smaller lots. This property sold for $900,000 which provides a sale indication of ± $2.79/sf. Comparison comment: Because this sale is now nearly five years old and involved a much larger site, this sale is given minimal consideration in this analysis. However, it is presented here to demonstrate demand for commercial properties in this portion of Kalispell over the past few years and also the size/price relationship. 25 KEMBEL, KOSENA & COMPANY, INC. Estimate of Replacement Cost: Given the special purpose nature of the subject property improvements, the replacement cost estimate for the existing structural and site improvements is based on the information published in the Marshall Valuation Service Cost Manual. Marshall Valuation Service Cost Manual Analysis: The Marshall Valuation Service Cost Manual is recognized locally, regionally, and nationally as a reliable indicator of current costs for commercial improvements similar to those of the subject property. Based on my inspection of the subject property, I have utilized the following sections, pages, and quality ratings for the various structural and site improvements. Included as the last number to the right are the reconciled replacement cost estimates after recognizing all applicable adjustments, area multipliers, wall height multipliers, current cost multipliers, local multipliers, etc. Taking into account the many variables, I have employed some rounding. TABLE NO.4 - TABULATION OF MVS REPLACEMENT COST ANALYSIS MARSHALL VALUATION PER UNIT COMPONENT SERVICE COST AREA COST SECTION PAGE RATING INDICATION INDICATION Asphalt Paving 66 2 Average $1.50 50,000 $75,000 Landscaping 66 8 Average $3.00 30,000 $90,000 Armory 14 22 Average $80.00 13,215 $1,057,200 Garage 17 12 Average $25.00 2,664 $66,600 TOTAL INDICATED REPLACEMENT COST $1,288,800 Entrepreneurial Incentive: The 12th Edition of the Appraisal Institute's The Appraisal of Real Estate defines this term as: entrepreneurial incentive: a market -derived figure that represents the amount an entrepreneur expects to receive for his or her contribution to a project and risk. As a special purpose improvement which would typically be owner -occupied, I have concluded that an adjustment for entrepreneurial profit is not appropriate in this assignment. KEMBEL, KOSENA & COMPANY, INC. Accrued Depreciation: Accrued depreciation means the loss in value which a property has sustained since its construction. Depreciation is defined in the Appraisal Institute's The Appraisal of Real Estate, 121h Edition, as: depreciation: the difference between the market value of an improvement and its reproduction or replacement cost at the time of appraisal. The depreciated cost of the improvement can be considered an indication of the improvement's contribution to the property's market value. This depreciation is catalogued into three classifications, which are physical deterioration, functional obsolescence, and external obsolescence. Physical deterioration means the loss in value from erosion or the physical decaying, if any, in the structural facility. Functional obsolescence refers to the loss in value created by functional inutility within the structure. This can generally be related to the loss brought about by poor planning, change in architectural styles, or by a change in use. External obsolescence would be that loss in the property brought about from changes outside the property. There are numerous techniques for estimating accrued depreciation including the age - life, the modified age -life, the extended life theory, and based on actual market extraction. Suffice it to say, in most all cases, when the data is available (including land values so this component can be deducted from the sale) the market extraction method is preferred. In this case, given that there were virtually no improved sales for use in the sales comparison approach, I have determined that deducing an accurate market -derived indication of accrued depreciation would be impossible. Having said this, in an attempt to estimate the accrued depreciation of the subject property, I have elected to use the age -life method. This method takes into consideration all facets of depreciation. In using this method, I must first estimate the effective age of the structural improvements. The effective age of an improvement is its age as compared with other m KEMBEL, KOSENA & COMPANY, INC. properties performing similar functions. It is the actual age less the age which has been taken off by facelifting, structural reconstruction, removal of functional inadequacies, modernizing, etc. It is an age which reflects a true remaining life for the improvement, taking into account the typical life expectancy of similar improvements. Overall, depreciation is a matter of judgement, taking all factors into consideration. If new, the typical life expectancy of structural improvements similar to those of the subject property would be around 50 years. In estimating the effective age of this property, I am recognizing that the majority of the subject property was built c. 1960. Regarding the effective age, the other factor to consider is the maintenance and upkeep of the property. After considering the building's actual age, the maintenance and upkeep efforts, the utility offered, the current condition, and the current economic climate in western Montana, I have concluded with an overall effective age of ± 60 years. Recognizing these estimates of life expectancy and effective age for the structural improvements, I have concluded that an accrued depreciation allowance of 90% would be reasonable. This conclusion, when applied to the replacement cost estimate, results in an indication of accrued depreciation of $1,159,920. Summary of the Cost Approach: Recognizing my estimate of site value, the estimated cost to replace the improvements, and accrued depreciation, the following is my conclusion of market value for the subject property using the cost approach: Estimated Value of the Land Estimated Value of the Improvements Replacement Cost Accrued Depreciation $1,288,800 ($1,159,920) Depreciated Value of the Improvements Final Indication of Value by Cost Approach $1,087,500 $128,880 $1,216,380 Rounded to $1,216000 29 KEMBEL, KOSENA a COMPANY, INC. Certification: 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; 1 have no present or prospective interest in the property that is the subject of this report and have no personal interest or bias with respect to the parties involved; 1 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 developing 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 the appraisal. my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice; 1 have made a personal inspection of the property that is the subject of this report; and Thomas A. Faulkner, research assistant, provided significant real property appraisal assistance, mainly in the form of market research, to the person signing this certification; 30 KEMBEL, KOSENA & COMPANY, INC. By reason of my investigations, studies, and analyses, an opinion has been formed that the market value of the subject property as of August 10, 2005, assuming a reasonable marketing period of approximately one to two years, is as follows: One Million Two Hundred Sixteen Thousand Dollars ($1,216,000) Kraig two ena, MAI, Project Appraiser Montana Certified General Appraiser No. 225 31 KEMBEL, KOSENA & COMPANY, INC. KEMBEL, KOSENA & COMPANY, INC. M7 eJD' Four Mile Dr 1 , Ever r en Dr 2E 93 N • I.v, � ill �� ',�f 'I 1� �'�_`� ' j -�' ' _ II III Three JifQ Dr Three 1 �Mife dT if Drr J\ �at ead 2 W ,�tg St t s� �r t t'tgt �1 _ 93c 1 —t r%� ts9 Fh� SUBJECT PROPERTY o s Lake Rd ! = - NATIONAL GUARD ARMORY AT �t f 1.4 U.S. HIGHWAY 93 SOUTH 1Nifson Ht r--- uriny�idDr N Rd Twin sores Or MICIIOSOR[�, Streets Plus GENERAL AREA MAP Copyright £ 1988-1996, Microsoft Corporation and/or its suppliers. All rights reserved, KEMHEL, KOSENA & COMPANY, INC. r roncord Ln St E �l--- }� tS} W 0 s W 13 r``- Q'� Ir o t �� 2}1 A} 1 S} � n �4 1 S E 1_4thk�) SUBJECT PROPERTY ! i NATIONAL GUARD ARMORY AT 1840 U.S. HIGHWAY 93 SOUTH 18fh S# t� E. Ste Ln T[KellY� d J 93 9 es pr Twin All es mi 0.1 0.2 0.3 0.4 0.5 M IGPO - rs r1lus SUBJECT PROPERTY LOCATION AND NEIGHBORHOOD MAP Copyright U 1988-1996, Microsoft Corporation and/or its suppliers. All rights rrs—ed. Page t KEMBEL, KOSENA & COMPANY, INC. i-iameaci County ------ Roads Parcels Lakes County SCALE 1 : 3,215 200 0 200 400 600 FEET http://mg.co.flathead.mt.us/Flathead.mwf Wednesday, August 24, 2005 9:08 AM KALISPELL SOUTH ARMORY ;FIRE EVACUATION -PL," ALTERNATE SFC WALLACE PAYNE PRIMARY ROUTE MVAD 284 SF X = Fire �Exdn8ouisherLnoabon | Rnn Hose Fire Hnov Location | | MVAD 337 SF ! | / � ! FAC OFFICE 420 SF KITCHEN DISPATCH SUPPLY 190 SF (495TH REM) 03 SF Fire TRAINING Fire noo ljose A SUPPLY DRILL 639TH 1139 SF FLOOR 240 SF A CDR WATER 1SG OFFICE 181 SF TRAINING 399 SF WATER STAFF ORDERLY 302 SF LA LATERINE COPY AF. 01 488 SF 338 SF 12 AUGUST 2003| Subject Property Photographs Photo No. 1 Description: Street scene facing southeasterly along U.S. Highway 93 South. Date Taken: 8/10/05 Photo No. 2 Description: Street scene facing northwesterly along U.S. Highway 93 South. Date Taken: 8/10/05 KEMBEL, KOSENA & COMPANY, INC. Subiect Property Photographs Photo No. 3 Description: Front view of the main armory building. Date Taken: 8/10/05 Photo No. 4 Description: Rear view of the main armory building. Date Taken: 8/10/05 KEMHEL, KOSENA & COMPANY, INC. Subject Property Photographs Photo No. 5 Description: Front view of the detached garage - type building. Date Taken: 8/10/05 Photo No. 6 Description: View of the small shed buildings. Date Taken: 8/10/05 KEMBEL, KoSENA & COMPANY, INC. Subject Property Photographs Photo No. 7 Description: View of the unimproved storage yard area. Date Taken: 8/10/05 Photo No. 8 Description: View of the asphalt -paved on -site parking area. Date Taken: 8/10/05 KEMSEL, KoSENA & COMPANY, INC. Subject Property Photographs MO•t- Description: Interior view of the drill floor area. Date Taken: 8/10/05 Photo No. 10 Description: Interior view of the drill floor area. Date Taken: 8/10/05 KEMBEL, KosSNA & COMPANY, INC. Subject Property Photographs Photo No. 11 Description: Interior view of the training room. Date Taken: 8/10/05 Photo No. 12 Description: Interior view of the locker room. Date Taken: 8/10/05 KSMBEL, KOSENA & COMPANY, INC. Subiect Property Photographs Photo No. 13 Description: Interior view of the kitchen area. Date Taken: 8/10/05 Photo No, 14 Description: Interior view of the kitchen area. Date Taken: 8/10/05 KEMBEL, KOS IKNA & COMPANY! INC. Subiect Property Photographs Photo No. 15 Description: Interior view of a typical office. Date Taken: 8/10/05 Photo No. 16 Description: Interior view of a typical office. Date Taken: 8/10/05 KEMBIELs KOSENA & COMPANY, INC. Subject Property Photographs Photo No. 17 Description: Interior view of a typical office. Date Taken: 8/10/05 Photo No. 18 Description: Interior view of a typical office. Date Taken: 8/10/05 KEMBEL, KOBENA & COMPANY, INC. r y lr St lS 1` 4 jUth St_ \� O 4 s m th_St - � S � w` E jltly s \ t t j 2h 1 �. r j s q 3ih 5� St �St V 7 -3I SUBJECT PROPERTY ? 8t j� elgai+ Or LAND SALE NO 2 �ry Stag Ln j a 4 LAN© SALE NO 5 T4K rdrSAI) 5NOS- 1,a,4. Noa' '�Bo I} br 9 ti 93 S +, S L1f 0 mi 0.1 0.2 0.3 0.4 0.5 ............ Streets Plus LAND SALES LOCATION MAP Copyright C 1988-1996, Microsoft Corporation andlor its suppliers. All ruts reserved. Page 1 KEMBEL, KOaENA & COMPANY, INC. Land Sales Photographs LS No. 1 Description: Highway 93 South. Date Taken: 8/19/05. LS No. 2 Description: Highway 93 South. Date Taken: 8/19/05. KEMBEL, KosENA & COMPANY, INC. Land Sales Photographs WEZDWI Description: Highway 93 South. Date Taken: 8/19/05. LS No. 4 Description: Highway 93 South. Date Taken: 8/19/05. KEMSEL, KosENA & COMPANY, INC. Land Sales Photographs LS No. 5 Description: Highway 93 South. Date Taken: 8/19/05. LS No. 6 Description: Highway 93 South. Date Taken: 8r1 9/05. KEMBEL} KOSENA & COMPANY, INC. Appraiser's Qualifications - Thomas A. Faulkner Business Experience: In 1996 1 became a licensed real estate agent in the state of Pennsylvania, working for Colleen Christy Better Homes & Gardens/GMAC Real Estate, both listing and selling residential real estate, land, and recreational property. In September 2000, 1 moved to Missoula, Montana, selling and listing real estate for Clark Fork Real Estate Better Homes & Gardens Real Estate until April 2002, when I moved my license to The Dwelling Place Real Estate, also in Missoula. After moving to Stevensville, I transferred my license to Coldwell Banker Western States Associates in Hamilton in early 2005. Beginning in October 2002, 1 began work as an independent contractor for Kembel, Kosena & Company, Inc., mainly assisting in research for commercial real estate appraisals. As of January 1, 2003, my employment status changed to that of an employee of the corporation as a Research Assistant. Prior to the above noted work in the real estate industry, I held various positions after my honorable discharge from the United States Navy in December 1989. Education; The following is a summary of real estate appraisal related educational offerings that I have attended. 2000 — Completed licensing course (Connote -Morton Real Estate School) and passed state examination for real estate agent for Montana. 1998 — Completed first phase of GRI designation. 1997 — Completed Buyer's Agency Course (ABR) to become an accredited buyer's agent. 1996 — Received Certificate of Completion from Realtors Institute in Pittsburgh, Pennsylvania. In addition, I have completed various courses for continuing education as required by the states of Pennsylvania and Montana. Certifications: Montana Certified Real Estate Sales Person (RBS 11878) KEMBEL, KosF-NA & COMPANY, INC. Community Involvement: Volunteer, Salvation Army, Warren, Pennsylvania Member, Tidioute Business Association Volunteer, Tidioute Library Fund Committee Volunteer, Warren County Board of Realtor Community Service Committees KEMBEL, KOSENA & COMPANY? INC. Appraiser's Qualifications - Kraig P. Kosena MAI Business Experience: Since June 1996 1 have been operating my own full -service appraisal and consulting firm known as Kembel, Kosena & Company, Inc. in Missoula, Montana. From January 1989 to May 1996 1 was employed by R.D. Kembel & Associates, Inc., a full -service real estate appraisal and consulting firm also in Missoula, as an Associate Appraiser. My appraisal work included mainly commercial, agricultural, subdivision, conservation easement, and right-of-way appraisals. In January 1987 1 enlisted in the United States Navy and received an honorable discharge in December 1988. From May until December 1986 1 worked as an Associate Appraiser for R.D. Kembel & Associates, Inc. Clients: The following is a partial, representative client list. Chevron, Inc. US Bank (formerly First Bank) Modern Pioneers' Life Insurance Company First National Park Bank Farmers State Bank Northern Energy University of Montana Montana State University Montana Department of Transportation Federal Deposit Insurance Corporation Pacific First Bank First Interstate Bank, N.A. First Security Bank of Bozeman Western Federal Savings & Loan Wells Fargo Bank (formerly Norwest Bank) Pioneer Federal Savings & Loan Farm Credit Services Five Valleys Land Trust Minuteman Aviation, Inc. Missoula County Fee appraising for various other banks, attorneys, and private parties. KEMBEL, KOSENA & COMPANY, INC. Education: The following is a summary of real estate appraisal related educational offerings that I have attended. Graduate of the University of Montana Appraisal Institute (AI) Seminar- Rates, Ratios & Reasonableness Real Estate Fundamentals - University of Montana Al Course 101 -An Introduction to Appraising Real Property Al Course SPP - Standards of Professional Practice Al Course 1BA - Capitalization Theory and Techniques, Part A Al Course 1 BB - Capitalization Theory and Techniques, Part B Al Course 540 - Report Writing & Valuation Analysis Al Course 550 - Advanced Applications Al Seminar - Non -Residential Demonstration Appraisal Report Writing AI Seminar - Subdivision Analysis AI Comprehensive Exam Al Seminar - Timberland Valuation Al Seminar - Eminent Domain and Condemnation Appraising Al Seminar - Small Hotel/Motel Valuation AI Seminal - Sales Comparison Valuation of Small Mixed -Use Properties Al Seminar - Litigation Skills for the Appraiser Al Seminar - Partial Interest Valuation - Divided Al Seminar - Partial Interest Valuation - Undivided AI Seminar - Case Studies in Commercial Highest and Best Use Al Seminar - Regression Analysis in Appraisal: Concepts and Applications Al Seminar - Appraisal Review Al Seminar - Uniform Standards for Federal Land Acquisitions (Yellow Book) A] Course 800 - Separating Real and Personal Property from Intangible Business Assets Al Seminar - Evaluating Commercial Construction Al Course 700 - The Appraiser as an Expert Witness Al Seminar - The Professional's Guide to the Uniform Residential Appraisal Report Certifications: Member of the Appraisal Institute (MAI No. 10,933) Montana Certified General Real Estate Appraiser (Certification No. 225) KEMSEL, KOSENA & COMPANY, INC. Community Involvement: Volunteer, Hugh O'Brian Youth Leadership Foundation President, Missoula Exchange Club (2001-2002) Member, Board of Directors, Missoula Exchange Club Banquet Committee Volunteer, Rocky Mountain Elk Foundation Guest Speaker, University of Montana Business School Court Experience. I have qualified in State and Federal Court as an expert witness in the matter of real estate valuation. Other: Former Education Chairman, Montana Chapter of the Appraisal Institute President, Montana Chapter of the Appraisal Institute Member, Board of Directors, Montana Chapter of the Appraisal Institute Member, Montana Board of Real Estate Appraisers (Governor appointment) KEMBEL, KoBENA & COMPANY, INC.