Review of Appraisal for Gateway CinemaTo: Jane Howington and Charlie Harball
From: Wade Elder
Date: 01 /04/12
Re: Review of appraisal for Gateway Cinema Theatre property located at 1275 US Highway 2 West,
Kalispell, MT.
Jane and Charlie;
As requested I have reviewed the appraisal completed by Elliot M. Clark dated 12/19/11 and am summarizing
the information in the summary appraisal report as follows:
Property: This is a 3.126 acre (136,169 Square Feet) site (irregular in shape) with a vacant movie theatre
(22,988 Square Feet) parking lot with 139 parking spaces. The property is located at 1275 US Highway 2 West,
Kalispell, MT.
• The property is located in an area of significant flood hazard and likely allowable uses are relatively
limited.
• The property was listed for sale from 11/10/08—11/07/10 for $1,500,000. When the property was listed
it was identified that the seller may place a deed restriction on the property prohibiting use of the
building as a movie theatre.
• There is an easement agreement for parking that the property owner has access to an additional 250
parking spaces along the mall site. The property owner must pay a 16.6% share of annual parking lot
maintenance for the mall property.
• The building is not considered to contribute value to the property and would most likely be demolished.
• Using the Marshall Valuation Service as a source the estimated demo costs are $103,000.
• The appraiser has arrived at 2 opinions of value based on the following:
o Scenario 1: Hypothetical Condition; that the property is not in the Floodway or Flood Plain.
o Scenario 2: The property is in "as is" condition meaning in the Floodway and Flood Plain.
Scenario 1: Hypothetical Condition; the property is not in the Floodway or Flood Plain.
• $510.000.00 Sales Comparison Approach (136,169 Sq. Ft. @ $4.50 / Sq. Ft.) less building demo costs.
• The appraiser did not use the Cost or Income Approach as the building is an older facility and adds little
value to the property.
® FINAL VALUE: $510.000.00.
Scenario 2: The property as is being in the Floodway and Flood Plain.
® $205,000.00 Sales Comparison Approach; (136,169 Square Feet X $2.25 / Sq. Ft.) less demo expenses.
® $ 10,000.00 Income Approach of Value — 255 spaces @ $13 / space, less expenses & less the cost to
put in 116 additional parking spaces ($1,000 / space) with a 10% CAP Rate.
® The appraiser did not use the Cost Approach as the parking or improvements do not contribute to the
value of the property.
® FINAL VALUE: $205,000.00
The comps seem reasonable that are used in the appraisal. Some are dated going back to 2005 however the
appraiser has made reasonable adjustments for the time frame.
Other Notes:
® The Department of Revenue indicates the 2011 Tax Year value of the land ($756,565) & building
($241,180) value at $997,745.
® $19,970.23 2011 Real Estate Tax Bill
® $37,230.10 2010 Real Estate Tax Bill
® As an interesting side note the new Cinema has a 2011 Tax Year Value of $9,737,667 with the 2011 Real
Estate Tax Bill being $137,170.68.