HomeMy WebLinkAbout20091827.tiffCOLORADO
CLERK TO THE BOARD
PHONE (970) 336-7215, Ext. 4226
FAX: (970) 352-0242
P. O. BOX 758
GREELEY, COLORADO 80632
August 10, 2009
HOLIDAY MANOR LLC (50% INT) &
1707 61ST AVE STE 101
GREELEY, CO 80634
RE: THE BOARD OF EQUALIZATION, 2009, WELD COUNTY, COLORADO - DENY
PETITIONER'S APPEAL AND AFFIRM ASSESSOR'S VALUE
DESCRIPTION OF PROPERTY: ACCOUNT #: R4925107 PARCEL #: 095908329002 - GR MVOP
UNIT 2 MOUNTAIN VISTA OFFICE PARK LOT 6B CONDOS 8219 W 20 ST 2 GREELEY
806340000
Dear Petitioner:
On August 5, 2009, the Board of County Commissioners of Weld County, Colorado,
convened, and acting as the Board of Equalization, pursuant to Section 39-8-101, C.R.S., et.seq.,
considered your petition of appeal of the County Assessor's valuation of your property described
above, for the year 2009.
The Board of Equalization found that the evidence presented at the hearing clearly
supported the value placed upon your above described property by the County Assessor. Such
evidence indicated the value was reasonable, equitable, and derived according to the
methodologies, percentages, figures and formulas dictated to the Weld County Assessor by law.
The assessment and valuation of the Weld County Assessor was affirmed as follows:
ACTUAL VALUE AS
DETERMINED BY
ASSESSOR
ACTUAL VALUE AS
SET BY BOARD
$309,845 $309,845
2009-1827
AS0073
C l , S :fAj- f'L 7 <<m72_.) (),E7// 1/22,7
HOLIDAY MANOR LLC (50% INT) & - R4925107
Page 2
A denial of a petition, in whole or in part, by the Board of Equalization may be appealed by
selecting one of the following three options; however, said appeal must be filed within 30 days of
the denial:
1. Board of Assessment Appeals: You have the right to appeal the County Board
of Equalization's (CBOE's) decision to the Board of Assessment Appeals (BAA).
Such hearing is the final hearing at which testimony, exhibits, or any other
evidence may be introduced. If the decision of the BAA is further appealed to
the Court of Appeals, only the record created at the BAA hearing shall be the
basis for the Court's decision. No new evidence can be introduced at the Court
of Appeals. (Section 39-8-108(10), C.R.S.)
Appeals to the BAA must be made on forms furnished by the BAA, and such
appeals should be mailed or delivered within thirty (30) days of denial by the
CBOE to:
Board of Assessment Appeals
1313 Sherman Street, Room 315
Denver, CO 80203
Phone: 303-866-5880
Fees: A taxpayer representing himself is not charged for the first two appeals to
the Board of Assessment Appeals; however, a taxpayer being represented by an
agent or an attorney must submit a fee of $101.25 per appeal.
OR
2. District Court: You have the right to appeal the CBOE's decision to the District
Court of the county wherein your property is located. New testimony, exhibits or
any other evidence may be introduced at the District Court hearing. For filing
requirements, please contact your attorney or the Clerk of the District Court.
Further appeal of the District Court's decision is made to the Court of Appeals for
a review of the record. (Section 39-8-108(1), C.R.S.)
OR
3. Binding Arbitration: You have the right to submit your case to arbitration. If
you choose this option the arbitrator's decision is final and your right to appeal
your current valuation ends. (Section 39-8-108.5, C.R.S.)
Selecting the Arbitrator: In order to pursue arbitration, you must notify the
CBOE of your intent. You and the CBOE select an arbitrator from the official list
of qualified people. If you cannot agree on an arbitrator, the District Court of the
county in which the property is located will make the selection.
Arbitration Hearing Procedure: Arbitration hearings are held within sixty days
from the date the arbitrator is selected. Both you and the CBOE are entitled to
participate. The hearings are informal. The arbitrator has the authority to issue
subpoenas for witnesses, books, records, documents and other evidence. He
2009-1827
AS0073
HOLIDAY MANOR LLC (50% INT) & - R4925107
Page 3
also has the power to administer oaths, and all questions of law and fact shall be
determined by him.
The arbitration hearing may be confidential and closed to the public, upon mutual
agreement. The arbitrator's written decision must be delivered to both parties
personally or by registered mail within ten (10) days of the hearing. Such
decision is final and not subject to review.
Fees and Expenses: The arbitrator's fees and expenses are agreed upon by
you and the CBOE. In the case of residential real property, such fees and
expenses cannot exceed $150.00 per case. The arbitrator's fees and expenses,
not including counsel fees, are to be paid as provided in the decision.
If you have questions or need additional information, please do not hesitate to contact me at
(970) 336-7215, Extension 4226.
Very truly yours,
Esther E. Gesick
Deputy Clerk to the Board
cc: Christopher Woodruff, Assessor
CLIFTON NEELEY
8217 W 2OTH ST
GREELEY, CO 80634
2009-1827
AS0073
Weld Count
CHRISTOPHER M. WOODRUFF COUNTY ASSESSOI
BRENDA BONES, DEPUTY ASSESSO
VALUATION REPORT
OF
COMMERCIAL PROPERTY
FOR
County Board of Equalization
HOLIDAY MANOR LLC (50% INT) &
TLW PROPERTIES LLC (25% INT) &
PETITIONER
VS.
WELD COUNTY ASSESSOR'S OFFICE
RESPONDENT
Parcel Number: 0959-08-3-29-002
Schedule Number: R4925107
Log Number: 2208
Date: 8/5/2009
Time: 1:45 PM
Board: CBOE
PREPARED BY
STAN JANTZ
Signature Date
CBOE_COMM_OIC
Pa
6"19(C°9
SALIENT FACTS AND CONCLUSIONS
Purpose of Appraisal To determine Market Value as of 1/1/09 based on an
appraisal date of 6/30/08.
Property Rights Appraised Unencumbered fee simple interest.
Location 8219 W 20 ST UNIT -B
GREELEY
Property Type Condo
1— Office Unit
Year Built 2005
Year Remodeled
Quality Average
Class Wood Frame
Number of Stories 1
Improvement Sq. Ft. 1,672
Basement Unfinished Sq. Ft. 602
Basement Finished Sq. Ft.
Value Indications:
Cost Approach N/A
Market Approach $318,000
Income Approach $286,000
Assessor's Value $309,845
CBOE_COMM_O
P
Subject Photo & Sketch
RI
23W
: Comte 258.00 SF
7M it;
1
Flrst F7.55 SF
60.67,
a
SW
'8W
9
x�a
USA
1,672 SF
r
69
1437
a � GCE 1 ilt rq
$92 lsx t E1.
Sr
L • t020
7!67'
$ Concrete ry
e 179 E43 SF
12W
COST APPROACH SUMMARY
31.58'
Subject
Ua148
1,708 SF
3I.55
z
S
The subject property is a condominium unit. Since the subject property is a condominium by
definition, the land and building are owned by the condominium association. The unit owner owns th
right to use the air space within their unit. The cost approach is not appropriate for this right of use.
For this reason no land value is assigned and no cost approach prepared.
TOTAL VALUE BY THE COST APPROACH
N/A
CBOE_COMM_010
Pag
MARKET APPROACH
COMPARABLE OFFICE SALES
#
ADDRESS
Grantor/Grantee
Date of
Sale
Sale Price
Square
Foot
Price
Per Sq
Ft
Subject
& 1
8219 W 20th St, #B
Greeley
Prothe Properties /
Holiday Manor LLC
8/30/2007
$330,000
1,672
197.37
2
8219 W 20th Street
Unit 1
Greeley
Prothe Properties /
Kaleb Holdings LLC
5/9/2008
$300,000
1,708
175.64
3
4675 20th Street
Greeley
Warkentin Construction /
Lancelot Holding LLC
4/10/2008
$700,000
4,316
162.18
4
4627 20T11 STRD
Greeley
Landmark I LLC /
S E 2 Limited Liability
4/27/2006
$950,000
5,572
170.49
5
7251 20th Street
Greeley
Tom Keberlein /
Haythorn Commercial Properties
2/28/2006
$1,500,000
8,154
183.95
Comparables One and Two are the subject and the adjacent unit in the same building. The adjacen
sale might indicate the subject's value is slightly less than the sale price say $190 per square foot.
MARKET CALCULATIONS
SUBJECT 1,672 SQ. FT. TIMES $190.00 PER SQ. FT. EQUALS $318,000 rounded
Market Sales Map
. r.
Highland Hills'.
Golf Cou,se
CBOE_COMM_01 C
Pat
Comparable Number 1
COMPARABLE SALE
ACCOUNT
PRIMARY OCC: Office
SECONDARY OCC:
THIRD OCC:
R4925107
ADDRESS: 8219 W 20 ST UNIT -2 GREELEY
RECEPT NUMBER: 3501429
GRANTOR: PRO'I'HE PROPERTIES LLC
GRANTEE: HOLIDAY MANOR LLC (50% INT) &
YEAR BUILT: 2005
EFFECTIVE AGE:
LAND SIZE (SF):
BLDG SIZE (SF):
WALL HEIGHT:
STORIES:
BSMNT SIZE:
BSMNT FINISH:
1.672
10
1
602
ZONING:
QUALITY: Average
COMMENTS: BASEMENT UNFINISHED STORAGE.
V
O
$r
7300
250D' • C:oncrelf 25900SF-
_ -1:
NllffkltatrRamp I$ anOPY_e
is oo 5F
Fiat Floorj9157 55 SF
8067'
no
`61jn
36 W
1Jntt•2
1.672 SF
GCE
•
•o
u 33'
!CCE
097
GCE
1150'
sRGCE •
5 7s
tom
..501'
co
3159'
1,708 SF
3:56'
32 70
71 67'
Contgtf
of t7988SF
17W
COUNTY: WELD
PARCEL NUMBER: 095908329002
PERCENT: 100%
PERCENT:
PERCENT:
SALE DATE: 8/30/2007
SALE PRICE: $330,000
ADJ SALE PRICE:
CLASS:
LAND/BLDG RATIO:
LAND VALUE:
IMPS PRICE/SF:
SALE PRICE/SF:
INTEREST RATE:
DOWN PYMT:
LOAN TERM (YRS):
POINTS PAID:
D
$197..36
8
CBOE_COMM _01(
Pac
Comparable Number 2
COMPARABLE SALE
ACCOUNT
PRIMARY OCC: Office
SECONDARY OCC:
THIRD OCC:
R4925007
ADDRESS: 8219 W 20 ST UNIT -A GREELEY
RECEPT NUMBER: 3552880
GRANTOR: PROTHE PROPERTIES LLC
GRANTEE: KALEB HOLDINGS LLC
YEAR BUILT: 2005
EFFECTIVE AGE:
LAND SIZE (SF):
BLDG SIZE (SF): 1.708
WALL HEIGHT: 10
STORIES: I
BSMNT SIZE: 583
BSMNT FINISH:
ZONING:
QUALITY:
Average
COMMENTS: Sale included interior finish.
ovum
8
COWIN! 259.008F
$�.....-YNwMkhar Ramp
tt5Mv
#M
81
Csi
•
74 67"
C ono**
479 6B SF
1207
COUNTY: WELD
PARCEL NUMBER: 095908329001
PERCENT: 100%
PERCENT:
PERCENT:
SALE DATE: 5/9/2008
SALE PRICE: $300,000
ADJ SALE PRICE:
CLASS:
LAND/BLDG RATIO:
LAND VALUE:
IMPS PRICE/SF:
SALE PRICE/SF:
INTEREST RATE:
DOWN PYMT:
LOAN TERM (YRS):
POINTS PAID:
D
$175.64
First Floor3,7 SS cr
+•t
CBOECOMM _010
Pag
Comparable Number 3
COMPARABLE SALE
ACCOUNT
PRIMARY OCC: Office
SECONDARY OCC:
THIRD OCC:
R0852301
ADDRESS: 4675 20 STRD GREELEY
RECEPT NUMBER: 3547759
GRANTOR: WARKENTIN R A CONSTRUCTION
GRANTEE: LANCELOT I1OI.DING
YEAR BUILT: 2000
EFFECTIVE AGE:
LAND SIZE (SF):
BLDG SIZE (SF): 4,316
WALL HEIGHT: 10
STORIES: 1
BSMNT SIZE: 1,062
BSMNT FINISH:
ZONING:
QUALITY:
COMMENTS:
GRE CL
Average
*w.kb. .N. r'1"-
85
b1
• I
30.0'
Canopy
4200 SF
D
1'4 it'
.T
33 2'
anopy
239 0 SF
COUNTY: WELD
PARCEL NUMBER: 095914224001
PERCENT: 100%
PERCENT:
PERCENT:
SALE DATE:
SALE PRICE:
ADJ SALE PRICE:
CLASS:
LAND/BLDG RATIO:
LAND VALUE:
IMPS PRICE/SF:
SALE PRICE/SF:
INTEREST RATE:
DOWN PYMT:
LOAN TERM (YRS):
POINTS PAID:
4/10/2008
$700,000
D
$162.18
to rc
LOWER RANGE SELLING PRICE DUE TO SELLER WITH FINANCAL ISSUES.
BASEMENT UNFINISHED STORAGE.
F1r$tFluor 43160 SF
Basement Storage 1062 0 sr
CBOE_COMM 010
Pag
Comparable Number 4
COMPARABLE SALE
ACCOUNT
PRIMARY OCC: Office
SECONDARY OCC:
THIRD OCC:
R2975204
ADDRESS: 4627 20 STRD UNIT -I GREELEY
RECEPT NUMBER: 3383086
GRANTOR: LANDMARK I LLC
GRANTEE: S E 2 LAND LIMITED LIABILITY
YEAR BUILT: 2004
EFFECTIVE AGE:
LAND SIZE (SF):
BLDG SIZE (SF): 5,572
WALL HEIGHT: 12
STORIES: 1
BSMNT SIZE:
BSMNT FINISH:
ZONING:
QUALITY: Good
Hen h 4.. IV -
34
0
Office Condo
First FIOOr 5572 0'
B1xl 21104
320'
13 3 J. 20
.O�/{ Oft. Z
O L1 27i
0' 9B'«
128
P
Oprn Office
OAkss 1024.4'
74.0"
340
34,0'
Office ;Copy Room ;
05 ii::4n 199.5' MAcn*e.11.
^
170' '
rjprn :o 156' . oo,
ice Cop7 0•• 41 V5..:9:
Office: vititrniree ,n;^,
270'
C>6crs
3420'
270'
^, Fit tpson
110
�: s«.s
— •
1-44' 94. •f
7a d
160' c
lib (Er (b
r? 9 3'
160' 1D
Tenar4 Finish (2004)
COUNTY: WELD
PARCEL NUMBER: 095914235001
PERCENT: 100%
PERCENT:
PERCENT:
SALE DATE: 4/27/2006
SALE PRICE: $950,000
ADJ SALE PRICE:
CLASS: D
LAND/BLDG RATIO:
LAND VALUE:
IMPS PRICE/SF:
SALE PRICE/SF: $170.49
INTEREST RATE:
DOWN PYMT:
LOAN TERM (YRS):
POINTS PAID:
COMMENTS: BUILDING 100% OCCUPIED AT TIME OF PURCHASE.
160'
Otis 762 9'
42 0'
420'
4D
30
t2 f^
30
i.
CBOE_COMM _010
Pag
Comparable Number 5
COMPARABLE SALE
ACCOUNT
PRIMARY OCC: Office
SECONDARY OCC:
THIRD OCC:
ADDRESS:
R1357202
0
t
3
Total First F1oa 8,151 sq Il
Fresh Bunt 1,617 sq tl
16047
tie S0'
}
n
31 OCT
1.03K
140dIS Oka
Fm&s dal
1$I7AN.
>r++4 Nw N"
FnN.h.A
1617 0
IR 13w
3100' » can, l
now R +oew. i$
$Wd.w.f0320Mg 1.
Medical Oka
812062
Class D
PackaO.AI
10'wb
3/1.10 M
72.25'
WW
Asphall 125 p ang
8,
COUNTY: WELD
PARCEL NUMBER: 095908401005
PERCENT: 100%
PERCENT:
PERCENT:
7251 20 ST UNITS - J & K GREELEY
RECEPT NUMBER: 3367057 SALE DATE:
GRANTOR: TOM KEBERLEIN CONSTRUCTION LLC SALE PRICE:
GRANTEE: FIAYTFIORN COMMERCIAL PROP LLC ADJ SALE PRICE:
YEAR BUILT: 2002
EFFECTIVE AGE:
LAND SIZE (SF): 54,144
BLDG SIZE (SF): 8,154
WALL HEIGHT: 10
STORIES: 1
BSMNT SIZE:
BSMNT FINISH:
ZONING: GRE CH
QUALITY: Average
COMMENTS: MULTIPLE TENANT BUILDING.
CLASS:
LAND/BLDG RATIO:
LAND VALUE:
IMPS PRICE/SF:
SALE PRICE/SF:
INTEREST RATE:
DOWN PYMT:
LOAN TERM (YRS):
POINTS PAID:
2/28/2006
$1,500,000
D
6.64
$292,378
$148.10
$183.95
N O'
( t )
�MyJ 1
1M.dkM 0Sc.
Ua1J
FnsM0200S 4V�N.IM0Ar.a
1,611.0 W l i6 I,N2 0 tq t
�ba 3100'
Ivan i
CBOE_COMM_01&
Pag,
INCOME APPROACH
OFFICE LEASE COMPARABLES
Address Start Date End date Square Rate NNN
Feet
# Mtn Vista Business Park
1 7251 W 20th St, Bldg L,
Unit 100, Greeley
# Mtn Vista Business Park
2 7251 W 20th St, Bldg P,
Unit 1, Greeley
# Mtn Vista Business Park
3 7251 W 20th St, Bldg N,
Unit 3, Greeley
# Fox Run Business Park
4 1703 61St Ave
Unit 103, Greeley
02/01/2005
11/01/2006
12/01/2006
01/31/2011
10/31/2011
11/30/2011
3,147 $17.39
1,851 $17.00
1,620 $15.00
10/23/2006 10/31/2009 2,400 $15.00
LEASE COMPARABLE MAP
CAPITALIZATION RATE
After considering the Band of Investment method and the Market Comparison method it has been
determined that the Capitalization rate to be used for the June 30, 2008 appraisal date should be
7.75 percent. The 2008 winter issue of Burbach & Associates was also consulted.
CBOE_COMM_010
Page
Income Capitalization
Potential Gross Income (Net SF 1,672 X $16.00 NNN)
Less Vacancy & Loss 10%
Effective Gross Income
Less Management 5%
Less Reserves 3%
Net Operating Income
Capitalization Rate 7.75%
Income Value
Rounded to
$26,752.00
-- $2,675.20
$24,076.80
$1,203.84
$722.30
$22,150.66
$285,814.92
$286,000
CBOE_COMM_010
Page
FINAL RECONCILIATION
COST APPROACH MARKET APPROACH INCOME APPROACH
N/A
$318,000 $286,000
ASSESSOR'S VALUE
$309,845
CBOE_COMM_010
Page
R4925107
REAL AND PERSONAL PROPERTY
NOTICE OF DETERMINATION
Christopher M. Woodruff
WELD Assessor
1400 N 17th Ave
GREELEY, CO 80631
Date of Notice: 6/24/2009
Telephone: (970) 353-3845
Fax: (970) 304-6433
Office Hours: 8:00 AM - 5:00 PM
TAXYEAR
TAX
U1 SCRIPTION
LOCATION
2009
2149
HOLIDAY MANOR LLC (50% INT) &
1707 61ST AVE STE 101
GREELEY, CO 80634
GR MVOP UNIT 2 MOUNTAIN VISTA
OFFICE PARK LOT 6B CONDOS 8219 W 20
ST 2 GREELEY 806340000
8219W20STB
GREELEY, CO 806340000
ASSESSOR
COMMERCIAL
309,845
ALUATION'
AL vALUE.AFTER
309,845
TOTAL
$309,845
$309,845
The Assessor has carefully studied all available information, giving particular attention to the
specifics included on your protest. The Assessor's determination of value after review is
based on the following:
Property purchased 8-30-07 for $330,000.
If you disagree with the Assessor's decision, you have the right to appeal to the
County Board of Equalization for further consideration, § 39-8-106(1)(a), C.R.S.
The deadline for filing real property appeals is July 15.
The deadline for filing personal property appeals is July 20.
The Assessor establishes property values. The local taxing authorities (county, school
district, city, fire protection, and other special districts) set mill levies. The mill levy
requested by each taxing authority is based on a projected budget and the property tax
revenue required to adequately fund the services it provides to its taxpayers. The local
taxing authorities hold budget hearings in the fall. If you are concemed about mill levies, we
recommend that you attend these budget hearings. Please refer to last year's tax bill or ask
your Assessor for a listing of the local taxing authorities.
Please refer to the reverse side of this notice for additional information.
NEELEY CLIFTON
8217 W 20 STREET
GREELEY CO 80634
2009-1827
APPEAL PROCEDURES
County Board of Equalization Hearings will be held from
July 1 through August 5 at
915 10"' Street, Greeley, CO
To appeal the Assessor's decision, complete the Petition to the County Board of Equalization shown
below, and mail or deliver a copy of both sides of this form to:
WELD COUNTY BOARD OF EQUALIZATION
915 10TH Street, P.O. Box 758
Greeley, Colorado 80632
Telephone (970) 356-4000 Ext, 4225
To preserve your appeal rights, your Petition to the County Board of Equalization must be
postmarked or delivered on or before July 15 for real property and on or before July 20 for
personal property — after such date, your right to appeal is lost. You may be required to prove that
you filed a timely appeal: therefore, we recommend that all correspondence be mailed with proof of
mailing.
You will be notified of the date and time scheduled for your hearing. The County Board of
Equalization must mail a written decision to you within five business days following the date of the
decision. The County Board of Equalization must conclude hearings and render decisions by August
5, 39-8-107(2), C.R.S. If you do not receive a decision from the County Board of Equalization and
you wish to continue your appeal, you must file an appeal with the Board of Assessment Appeals by
September 11.
If you are dissatisfied with the County Board of Equalization's decision and you wish to continue your
appeal, you must appeal within 30 days of the date of the County Board's written decision to ONE of
the following:
Board of Assessment Appeals District Court
1313 Sherman Street, Room 315 9'" Avenue and 9rr Street, P.O. Box C
Denver, CO 80203 Greeley, Colorado 80632
(303) 866-5880 Telephone (970) 356-4000 Ext. 4520
www.dola.colorado.gov/baa
Binding Arbitration
For a list of arbitrators, contact the County Commissioners at the address listed for the County Board
of Equalization.
If the date for filing any report, schedule, claim, tax return, statement, remittance, or other document
falls upon a Saturday, Sunday, or legal holiday, it shall be deemed to have been timely filed if filed on
the next business day, § 39-1-120(3), C.R.S.
PETITION TO COUNTY: BOARD OF EQUALIZATION
What is your estimate of the property's value as of June 30, 2008? (Your opinion of value in
terms of a specific dollar amount is required for real property pursuant to § 39-8-106(1.5), C.R.S.)
S 'c9 OcQ
What is the basis for your estimate of value or your reason for requesting a review? (Please
attach additional sheets as necessary and any supporting documentation, i.e., comparable sales, rent
roll, original installed cost, appraisal, etc.)
1?, r'a r Sa r✓
ATTESTATION
I, the undersigned owner or
contained herein and on any
Signatur
agent' of the property identified above, affirm that the statements
achments hereto are true and complete.
?7o -576-5,2-+10 71 a Z7 -/1":---Q U0 j -
Telephone Number • bate -
•
1 Attach letter of authorization signed by property owner.
L.�
15.OPT-AR
PR 207-08108
NOD 8 2680
May 30, 2009
Weld County Assessor
1/we hereby authorize Clifton Neeley to act as agent in the property valuation appeal
process regarding the property located at
Nick Francis
Holiday Manor, LLC / TLW Properties, LLC
8219 W. 20th Street, B
Greeley, CO 80634
Sincerely,
SA /Iv*
Clifton Neeley
8217 W. 20th Street
Greeley, CO 80634
Office (970) 673-8653
Cell (970) 576-5240
fit ;;Ar
COLORADO
July 27, 2009
HOLIDAY MANOR LLC (50% INT) &
1707 61ST AVE STE 101
GREELEY, CO 80634
Dear Petitioner(s):
CLERK TO THE BOARD
PHONE (970) 356-4000 EXT 4226
FAX: (970) 352-0242
WEBSITE: www.co.weld.co.us
915 10TH STREET
P.O. BOX 758
GREELEY, COLORADO 80632
Parcel No.: 095908329002 Account No.: R4925107
The Weld County Board of Equalization has set a date of August 5, 2009, at or about the hour of
1:45 PM, to hold a hearing on your valuation for assessment. This hearing will be held at the Weld
County Centennial Center, First Floor Hearing Room, 915 10th Street, Greeley, Colorado.
You have a right to attend this hearing and present evidence in support of your petition. The Weld
County Assessor or his designee will be present. The Board will make its decision on the basis of
the record made at the aforementioned hearing, as well as your petition, so it would be in your
interest to have a representative present. If you plan to be represented by an agent or an attorney
at your hearing, prior to the hearing you shall provide, in writing to the Clerk to the Board's Office, an
authorization for the agent or attorney to represent you. If you do not choose to attend this hearing,
a decision will still be made by the Board by the close of business on August 5, 2009, and mailed to
you on or before August 12, 2009.
Because of the volume of cases before the Board of Equalization, all cases shall be limited to 15
minutes. Also due to volume, cases cannot be rescheduled. It is imperative that you provide
evidence to support your position. This may include evidence that similar homes in your area are
valued less than yours or you are being assessed on improvements you do not have. Please note:
The fact that your valuation has increased cannot be your sole basis of appeal. Without
documented evidence as indicated above, the Board will have no choice but to deny your appeal.
If you wish to obtain the data supporting the Assessor's valuation of your property, please submit a
written request directly to the Assessor's Office by fax (970) 304-6433, or if you have questions, call
(970) 353-3845. Upon receipt of your written request, the Assessor will notify you of the estimated
cost of providing such information. Payment must be made prior to the Assessor providing such
information, at which time the Assessor will make the data available within three (3) working days,
subject to any confidentiality requirements.
HOLIDAY MANOR LLC (50% INT) & - R4925107
Page 2
Please advise me if you decide not to keep your appointment as scheduled. If you need any
additional information, please call me at your convenience.
Very truly yours,
BOARD OF EQUALIZATION
Esther E. Gesick
Deputy Clerk to the Board
cc: Christopher Woodruff, Assessor
CLIFTON NEELEY
8217 W 29TH ST
GREELEY, CO 80634
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918 13th Street • Greeley. CO 80631 • (970) 353-0790
APPRAISAL REPORT
The Oliver Office Building
8217 W. 20th Street
Greeley, Colorado
Austin & Austin Appraisal Services
918 13th Street
Greeley, Colorado
Prepared by
Bruce W. Willard, Broker, CCIM, CRB, CRS
Certified General Appraiser
April 1, 2008
918 13th Street • Greeley, CO 80631 • (970) 353-0790
Mr. Tim Brynteson, Esq.
4025 St. Cloud Drive, Ste. 230
Loveland, Colorado 80538
Dear Tim:
October 3, 2008
In fulfillment of our agreement as per the letter dated
September 3, 2008, I am pleased to transmit herewith my
Appraisal, in Summary Report format, for the estimated market
value of the Fee Simple estate in the referenced parcel of real
estate, as of April 1, 2008. The report sets forth my value
conclusion, along with supporting data and a summary of the
reasoning that forms the basis of my opinion. The value opinion
reported is qualified by certain definitions, limiting
conditions, and certifications which are set forth on pages 36
through 40 of this report.
This appraisal has been prepared in accordance with the
Uniform Standards of Professional Appraisal Practice as set out
by the Appraisal Standards Board of the Appraisal Foundation.
The report has been prepared for the exclusive benefit of the
Lester Oliver estate and/or its representatives; it may not be
used or relied upon by any other party. Any party who uses or
relies upon any information in this report, without my written
consent, does so at their own risk.
The property was inspected, and the report prepared by,
Bruce W. Willard. I hope that you will find the details of this
limited appraisal relevant to your decisions, and I would be
happy to answer any questions you might have.
Sincerely,
t
6Lz[L
Bruce W. Willard
enclosure
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TABLE OF CONTENTS
Page
LIST OF EXHIBITS iv
Section
I. PROBLEM ASSIGNMENT 2
A. The Appraisal Issue
B. Identification of Real Estate
C. Legal Interest to be Appraised
D. Value Definition
E. Date of Value
II. PROPERTY ANALYSIS 4
A. Regional and City Data
B. Neighborhood
C. Physical Attributes
D. Legal Constraints
E. Linkages
III. VALUE ANALYSIS 16
A. Highest and Best Use
B. Most Probable Buyer
C. Alternative Uses
D. Cost Approach
E. Sales Comparison Approach
F. Income Approach
IV. APPRAISAL CONCLUSIONS AND LIMITING CONDITIONS 34
A. Correlation
B. Marketing Time
C. Value Conclusion
D. Certification of Independent Appraisal Judgment
E. Statement of Assumptions and Limiting Conditions
Resume of Appraiser
V. ADDENDA 42
iii
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LIST OF EXHIBITS
No. Page
1. Facts, Assumptions and Conclusions 1
2. Aerial Photograph 6
3. Building Sketch 9
4. Building Photographs 10-13
5. Comparable Improved Sales 19
6. Comparable Sales Analysis 21
7. Comparable Sales Location 22
8. Comparable Sales Photographs 23-24
9. Rental Comparables 27
iv
EXHIBIT 1
FACTS, ASSUMPTIONS, AND CONCLUSIONS
Property: A newer office building in far west Greeley,
Colorado.
Type of Estate: Fee Simple estate.
Present Owner: "O" Investment Properties, LLC.
Proposed Owner: The same.
City Description: Greeley, Weld County, Colorado, the county
seat, population is approximately 90,000.
Neighborhood: Far west Greeley in the commercial district along
the W. 20`h Street corridor; Census Tract 14.01.
Improvements: A 4,000 square foot, single story office building
with an unfinished basement.
Legal Constraints: Zoning, building codes and covenants,
conditions and restrictions.
Most Probable Use: Office or personal service.
Alternative Use: Medical office.
Most Probable Buyer: An owner occupant for at least part of the
building, or an investor to benefit from the income stream.
Probable Terms of Sale: Cash, new loan.
Current Contract: None known to the appraiser.
Estimated Market Value: $600,000.
Conditions of the Appraisal: None.
Current Assessed Value: Land
improvements
Total
209,808
490,192
700,000
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I. PROBLEM ASSIGNMENT
A. The Appraisal Issue
1. Purpose
The purpose of this appraisal is to arrive at an estimate of
current market value of the property to assist the client, the
Oliver family, with an estate decision.
2. Scope
In the development of this complete appraisal the following
process was undertaken:
I, Bruce W. Willard, CCIM, CRB, CRS, inspected the subject
property and related recorded documents and conducted
interviews with local agents and owners.
I analyzed the property in relation to current and future
economic conditions. I estimated the Highest and Best Use
of the property "As Is".
I gathered and analyzed information pertaining to sales of
comparable buildings and rents in similar properties in the
area.
I estimated a value for subject "As Is" based on the Sales
Comparison and Income Approaches only. With the consent of
the client, the Cost Approach was omitted as less
indicative.
B. Identification of Real Estate
The property is legally described as:
Lot 38,
Mountain Vista Office Park 1s` Replat,
City of Greeley
Weld County, Colorado.
C. Legal Interest to be Appraised
The property is being appraised as a Fee Simple estate,
subject to easements and rights of way of record, building codes,
covenants, conditions and restrictions and real estate taxes,
which were $17,297.42 in 2007.
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D. Value Definition
The term "market value" as used in this report is defined
as: "The most probable price which a property should bring in a
competitive and open market under all conditions requisite to
fair sale, the Buyer and Seller, each acting prudently,
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 each acting in what he considers his own best
interest.
3. A reasonable time is allowed for exposure in the
open market.
4. Payment is made in terms of cash in U.S. dollars
or in terms of financial arrangements comparable
thereto; and
S. 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.
E. Date of Value
The date of this value estimate is Tuesday, April 1, 2008.
The last day I personally inspected the property was September
30, 2008.
3
II. PROPERTY ANALYSIS
A. Regional and City Data
The property is located in Greeley, Colorado. Greeley,
located 50 miles north of Denver, is the county seat of Weld
County and is the county's largest and principal community, with
a population of about 90,000. Weld County is one of the larger
counties in Colorado, with over 2,500,000 acres of land, and
stretches from Brighton to the Wyoming border. Most of the
remaining population of Weld County, estimated to be over
237,000, resides within a 20 to 30 mile radius of Greeley.
The major economic base in Greeley is agriculture and
related products; however, the area's largest employer is Banner
Health Western Region, followed by Swift & Company, Hensel Phelps
Construction Company and State Farm Insurance Company. Greeley,
like the region and State, has seen a couple of noted swings in
its economy in the recent past. In 1990, the Greeley population
was 60,500, employment was just starting to increase from the
very significant state and local recession of the 1980's and
there were 118 single-family building permits issued, in total.
By 2000 the population of Greeley had risen to just under 80,000,
employment was growing briskly at over 4.0 percent per year and
there were over 600 single-family building permits issued. Then
starting in 2002, or maybe even 2001, the regional economy began
to significantly weaken. The rate of growth of employment fell
to less than 1.0 percent, as many sectors experienced significant
layoffs, and the number and value of construction permits in
Greeley began to decline from a peak of over 700 in 2002. This
employment contraction, for lack of a better description, had
another effect; wages, while not declining, have been "flat" in
the region. According to Martin Shields, an economist and
professor at Colorado State University, "Wage stagnation has been
the state of affairs for Northern Colorado for the past five
years."
Forecasts for the Northern Colorado area for the coming year
are definitely mixed. Employment rates starting showing mild
increases in 2004 and 2005. In 2006 Weld County added 3,185
jobs, representing a 4.2 percent increase, and statewide 2007
figures indicate a healthy 2.4 percent increase, according to the
Rocky Mountain News. However, construction activity has
seriously languished; in 2006 only 315 single-family permits were
issued in Greeley and that fell to 152 in 2007. Tucker Hart
Adams of The Adams Group, Inc., predicts a recession in 2008,
caused by higher prices, flat wages and significantly slowing
construction activity. The 2008 Manpower Employment Outlook
Survey indicates, "Employers are much less optimistic about
hiring activity as compared to one year ago...". Other
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economists, like the University of Colorado's Richard Wobbekind,
believe that Colorado will add 43,300 jobs and 103,800 residents
in 2008 and avoid a recession, even if there is one nationally,
and 2007 employment figures show total employment in the State
grew by 65,700, according to the Department of Labor. Northern
Colorado will be the beneficiary of much of the State's growth,
according to Wobbekind. Still, "The loss of thousands of
Technology and manufacturing jobs meant the loss of high -paying
jobs. Now, much of the growth [in jobs] is in sectors where wage
aren't quite on par, such as services and accommodations..."
according to the Northern Colorado Business Report. According to
the Rocky Scott, president of Centerra, "The northern Colorado
real estate market has generally too much supply in nearly every
category." The Denver Post notes that, "Northern Colorado's
economy has rested on a foundation of strong construction
spending since the early 1990's. That foundation could be
sinking". Finally, credit terms have tightened in the past year,
which may further hamper the already soft construction and
mortgage industry. The Greeley/Evans area led the nation in
residential foreclosures per capita for much of 2006 and early
2007. The one consensus seems to be that the next year will not
see a boom in real estate values in the reyion.
While recent indications are mixed at best, a number of new,
better quality companies have committed to or recently built in
the area, including the Owens-Illinois bottling plant in Windsor,
which is in full operation, an Asurion Customer Care Center in
Evans, a GMAC Financial (Acu-tel) service center in north Greeley
and two ethanol plants, one located north and one south of town.
A new wind turbine blade manufacturing company, Vestas, selected
Windsor over 42 other locations for its new, $60M manufacturing
plant located on former Kodak. It opened in March of 2008, and
will employ at least 600 when fully operational. The northern
Colorado oil and gas industry has flourished in the past two
years, as noted. In the long term, Weld County's population is
expected to triple by the year 2030 and its employment rates are
forecasted to be higher than state and national averages. For
the short term, the economy will depend on local and regional
employment and the ability to attract higher wage paying
employers.
B. Neighborhood
The subject neighborhood is located in far west Greeley,
Census Tract 14.01. It is a mixed -use area defined basically as:
west of 35th Avenue, south of 10`° Street, north of the Highway 34
Bypass, and east of 91st Avenue. The neighborhood is primarily
residential in nature, and has been at the center of the City's
growth for almost 20 years. Along the arterial streets are
commercial districts and some multi -family or town home areas
buffering the single family homes, but the majority of the
properties are nice, more expensive, detached houses. The
5
IWeld County, Colorado
EXHIBIT 2
Page 1 of
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Photography (high Res.)
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095908325004
O INVESTMENT PROPERTIES LLC
8217 W 20 ST #A
GREELEY, CO 80634
Total Taxes: $17,297.42
Amount Due: $0.00
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ILttp://maps2.merrick.com/MerricklMS/ims?ServiceName=weldovr&Form=True&Encode=True 9/29/08
commercial corridors along W. 10th Street and W. 20th Street east
of subject have become, along with the Highway 34 Bypass
corridor, major office and retail shopping districts that service
the west Greeley residential subdivisions. As Greeley has moved
west these corridors have seen their commercial market share grow
and the older central business district's share diminish. There
are no foreseeable reasons for this shift not to continue.
C. Physical Attributes
1. Site
According to the original plat of the, 11.15 acre parcel was
planned to be developed into 20 office building sites. Based on
that plan, the allocated square footage of site for each building
will be about 24,285, or about 5.46 square feet of site for each
square foot of main floor building area. Based on the actual
site, which is 22,085 square feet, the land to building ratio is
5.52. Subject is located in the center of the subdivision and is
fully developed with the current building and site improvements.
Access to the development is via both 20th Street and 83Y° Avenue,
though the 20" Street access in right in/out only, a modest
drawback. Traffic heading east on 20th Street from the
development will have to exit on 83`d then head south to the
intersection with 20th Street.
Electricity, natural gas, sewer and water are available to
the site. Electric utilities are below ground in the area and to
the building. The surrounding City streets are asphalt paved and
publicly maintained; the interior streets and parking areas are
privately maintained. There is concrete curb, gutter and
sidewalk along the streets and within the project. The site is
generally level, with a modest downward slope to the north-
northwest; it appears to be engineered for proper surface
drainage. According to FEMA Flood Insurance Rate Map 080266 0616
C, dated September 28, 1982, subject is in Zone C and does not
lie in a flood plain. No obvious storage of hazardous materials
on the site was noted. Easements were not apparent from the
inspection; front, rear and/or side utility and drainage
easements are typical and not detriments. There is a large,
high-tension power utility line that borders the subdivision to
the west, located in a large easement. This is opined to be a
modest drawback in comparison to competing sites not so
encumbered, but subject is located on the east side of the
development and not directly effected. Site improvements, other
than the building, consist of a proportional share of asphalt -
paved parking lot with marked spaces, walks and irrigated
landscape areas around the building and along surrounding
streets. There is an association fee this property and the
others in the subdivision, which pays for the care of the
landscaping, parking lot and for services for those common areas,
with a current $225 per month fee.
7
2. Improvements
The building improvements consist of a single -story Class D
(wood frame construction) office building with approximately
4,000 gross square feet of gross building area, plus a full,
unfinished basement. The following are some specific design
features of the building:
Foundation - Poured concrete walls on concrete spread
footers.
Structural Frame and Walls - Wood 2" x 4" stud framing with
about a synthetic stone wainscot and synthetic stucco
veneer. The wall height is approximately 11 feet to the
ceiling framing.
Basement - 4,000 square feet with a 7.5 foot ceiling height;
for storage only.
Roof - It appears to be a 6/12 pitch, hip roof of wood
decking over wood trusses, covered with heavy duty asphalt
composition shingles.
Floor - Wood decking over wood framing on the main floor;
slab on grade in the basement, with an engineered foundation
for clay soil expansion.
Interior Walls - Taped and painted drywall.
Ceilings - Taped and painted drywall.
windows - Double -glazed, fixed, aluminum commercial windows.
Doors - The exterior doors are glass in aluminum frames.
The interior doors are upgraded, knotty alder, solid panel.
Trim - Upgraded knotty alder wood.
Floor coverings - Glued down, commercial grade carpet or
ceramic tile.
I-P/AC - Gas fired, forced air with central air conditioning.
Lighting - Generally incandescent, in recessed cans.
Baths - There are two, two -fixture baths, both outfitted for
handicapped use.
8
EXHIBIT 3
SKETCH/AREA TABLE ADDENDUM
State CO Zip 80634
80.0'
Office Office Reception
Suite C
Office
Office
ususci,
Conference
Office
Office Bath Bath Copy/Break Office
Suite B
Office Reception
PI
Foyer
Properly Address 8217 W. 20th Street
City Greeley
Borrower Oliver
Lender/Client Tim Brynteson
Appraiser Name Bruce W. Willard
County Weld
Comments:
AP
Area Na'
GBA1
Suite A
Office
Reception Office
O
O
N
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EXHIBIT 4
PHOTOGRAPH ADDENDUM
Page #12
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Borrower/Client "0" Investment Properties, LLC
Property Address 8217 W. 20th Street
City Greeley County Weld
State
CO
_
Zip Code
80634
Lender Tim Brynteson
Subject Front - Looking NE
Subject Rear - Looking NW
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1
Form LPIC3X5 — "TOTAL for Windows" appraisal software by a la mode, inc. — 1-800-ALAMODE
1
EXHIBIT 4 (COPT . )
PHOTOGRAPH ADDENDUM
[ Page #13i
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Borrower/Client "O" Investment Properties, LLC
Property Address 8217 W. 20th Street
_
City Greeley County Weld
State
CO
Zip Code
80634
Lender Tim Brynteson
•
1
Subject Interior - Reception Area
Subject Interior - Typical Office
l]
1
Form LPIG3X5 — "TOTAL for Windows" appraisal software by a la mode, inc. — 1-800-ALAMODE
1
EXHI BIT 4 ( COPdT . )
PHOTOGRAPH ADDENDUM
[ Page #141
1
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Borrower/Client "O" Investment Properties, LLC
Properjt Address 8217 W. 20th Street
-
-
State
CO
Zip Code
80634
City Greeley County Weld
Lender Tim Brynteson
Subject Interior - Bathroom
Subject Interior - Basement
1 ?.
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Form LPIC3X5 — "TOTAL for Windows" appraisal software by a la mode, inc. —1-800-ALAMUUE
1
EXHIBIT 4 (CONT. )
PHOTOGRAPH ADDENDUM
Page #15
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"O" Investment Properties, Lit
_
-
Borrower/Client
Address 8217 W. 20th Street
Property
Greeley County Weld
State
CO
Zip Code
80634
City
Lender Tim Brynteson
Subject Street Scene - Looking North
W. 20th Street - Looking East
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Form LP1C3X5 — "TOTAL for Windows" appraisal software by a la mode. inc. — 1-800-ALAMODE
The improvements consist of a wood framed, single -story
office building partitioned into three individual units (but not
"condominiumized"). On the date of the inspection, the largest
unit, Suite A, was owner occupied and the other two units were
vacant, for the most part. Amenities include a synthetic stone
and stucco veneer, large, fixed windows, a hip (rather than flat)
roof, tall ceiling heights and upgraded alder trim and doors.
Each of subject's units is serviced by its own furnace and
electric and gas meter, so expenses can be directly bill to the
tenants; more desirable for the owner. There are limited
interior wall supports, so subject can easily be partitioned into
another layout, though the current layout seems reasonable. The
basement has a lower ceiling height and no windows, but is useful
for storage space. The overall economic life of buildings of
this type is typically 45 to 50 years, according to market data
and Marshall & Swift cost services. This means that the useful
productivity of the improvements, if no updating or repairs were
made, would be done at the end of this time period. Subject is
three years old, but is well cared for with only limited, and
less -than -typical, wear and tear. Based on the inspection,
subject's effective age is estimated to be two years or less.
The building plan appears to be well thought out and allow for a
number of different office users or sizes, so no functional
obsolescence will be present, it is opined.
The Americans With Disability Act (ADA) became effective in
1992, and it requires the owners of buildings that house
businesses for the general public to build without or remove any
architectural barriers to all disabled people. It is a far
reaching and still -to -be further defined act. For new
construction of buildings that will house businesses open to the
general public, they must be designed and built without any
architectural barriers. Subject seems to generally conform to
the ADA. There are steps at the front entry but a ramp at the
rear, and doorways and baths appear to be designed for wheelchair
accessibility. There are also handicapped parking spaces in the
parking area. However, the appraiser is not an expert on the
ADA, and this appraisal is not to be construed as a warrant that
the property complies or does not comply with the ADA.
14
3. Personal Property
No personal property was included in this valuation.
4. Assessed Value
The Weld County Assessor gives the property the following
actual values for real estate tax purposes:
Land $ 209,808
Improvements 490,192
TOTAL $ 700000
D. Legal Constraints
1. zoning
The parcel is currently zoned C -L Low Density Commercial, in
the City of Greeley. The current use does not violate the
current zoning.
2. Building Codes
The analysis made for the appraisal is not designed to
reveal any violations of building codes; the appraiser is not a
building inspector and nothing in the report shall be construed
as a warrant on the property meeting code.
E. Linkages
Linkages are the relationships of the site to its immediate
environs, activity centers, and transportation centers. Subject
is located in far west Greeley near the intersection of 20`"
Street and 83rd Avenue. Both 20`" Street and 83rd Avenue will be
arterial streets according to the City's long range planning, and
east of 71s` Avenue 20th is a four land road. 83`d Avenue runs
north past W. 10`h Street and south through Evans, where it
becomes Two Rivers Parkway. In the long term, these will be busy
roads and subject will have good visibility and access via both
of them. In the short term, subject is on the far west edge of
Greeley about one or two miles west of the most recent commercial
developments, Mountain Vista Center and Fox Run Business Park.
While the town is moving toward subject, it could be another two,
three or more years until surrounding developments give subject
the kind of linkages that benefit developments further east.
15
III. VALUE ANALYSIS
After determining the best use of the site as though vacant,
the appraiser has three methods of estimating value: The Cost,
Market, and Income Approach.
The Cost Approach estimates value be adding the unimproved
value of the land to the depreciated replacement cost of the
improvements resulting in a total indication.
The Sales Comparison or Market Data Approach provides an
estimate of value by comparing the subject with similar
properties that have recently sold.
The Income Approach is an investment analysis of the
property, capitalizing the net income from the rental of the
property into a value indication.
A. Highest and Best Use
The idea of Highest and Best Use is inherently necessary in
the analysis and valuation of any real property. For purposes of
this appraisal report, it is defined as:
That reasonable and probable use that
supports the highest present value, as
defined, as of the date of the appraisal.
Alternatively, highest and Best Use is defined as:
The use, from among reasonably probable and
legal alternative uses, found to be
physically possible, appropriately supported,
financially feasible, and that results in the
highest present land value.
The estimation of the Highest and Best, or Most Probable,
Use is premised upon, among other things, the site being vacant
and ready for development, as well as its compatibility with the
environment. The Highest and Best Use is the use that, to the
fullest extent, develops the land's potential.
The standards for estimating Highest and Best Use are: that
the use must be physically possible, legally permissible,
financially feasible, and maximally productive; and these
criteria should generally be considered sequentially. The
Highest and Best Use is first considered as if the site were
vacant; then any present buildings are considered in estimating
the Highest and Best Use as it is currently improved, if so
improved.
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A cursory Highest and Best Use analysis will be addressed
considering the improved property. Highest and Best Use as
vacant shall not be considered. Highest and Best Use as improved
presumes an integrated parcel of land with the existing
improvements. The existing C -L zoning will permit office and
professional uses and retail under 3,000 square feet in size.
Subject has no exposure to either arterial street, so retail uses
seem very unlikely, and it is currently designed as office or
personal service. The cost to remove or highly modify the
present improvements would be expensive in relation to the vacant
site value, and other vacant sites are available and ready to
improve in subject's subdivision. Additionally, the current
improvements blend well with the buildings in the subject area,
which have similar and complimentary uses. Given this property,
the Highest and Best Uses, and the most maximally productive
uses, of the subject site are estimated to be office or personal
service, with medical office possible but less likely.
B. Most Probable Buyer
The most probable buyer is one that realizes that highest
and best use of the property, the one that will pay the most for
it because his use of the property will result in the highest
return.
It is opined that the most probable buyer for this real
estate would be an owner occupant.
C. Alternative Uses
Alternative uses are other possible uses that most likely
would not result in the highest sales price because that use
would require some modification of the current improvements or
site.
The most probable alternative buyer would be an investor who
would buy the property to benefit from the rental income.
D. Cost Approach
The cost approach attempts to estimate the value of the
property by use of the Principal of Substitution; that is, a
prudent buyer will pay no more for a property than what a
substitute of equal utility would cost that buyer to build if
available without undue delay. The approach loses reliability in
direct proportion to the age and obsolescence of the
improvements. As the property has been offered for sale for less
than the replacement cost, with the agreement of the client, this
approach will not be investigated.
17
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E. Sales Comparison Approach
The Sales Comparison or Market Data Approach is predicated
on the principle of substitution, which implies that a prudent
purchaser would not pay more for a property than it would cost to
purchase a reasonably similar substitute. The application of
this approach yields an estimate of value for the property being
appraised by comparing it with similar properties that have
recently sold, or are currently offered for sale in the same or
competing neighborhoods.
1. Previous Sale and Marketing of Subject
According to the Weld County Assessor, the property last
transferred via a Special Warranty Deed dated March 28, 2006,
Reception #3379727, from D2BE Investment, LLC to "O" Investment,
LLC, with a $630,000 consideration noted. There are no current
contracts of options on the property known to the appraiser. The
building has been recently offered for $648,000 and for lease
starting at $10.75 per square foot.
2. Comparable Sales
A search was conducted throughout the Greeley area for sales
of similar properties. Sales are listed on Exhibit 5.
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Sale #1 was an office building in Foxhill, just east of 47`°
Avenue. This building was pretty similar in exterior quality and
the interior was nicely finished and upgraded; it was in
excellent condition. The property was leased at sale time, and
had no exposure to an arterial street and had no basement. Sale
#2 was in Fox Run Business Park. It was a modestly smaller
sized, attached unit that was nearly new and in excellent
condition, It had no arterial exposure but did have a small,
storage basement and was fully leased at sale time. Sale #3 was
also located in Foxhill. This older, good -quality building had
good exposure to 47th Avenue and was similar in size; it was
fully leased at time of contract, and had a partial, unfinished
basement. Sale #4 was a smaller, attached unit in subject's
subdivision. This unit was fully leased at time of sale, and
included a partial, unfinished basement. Exhibit 6 is an
analysis of this sales data.
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EXHIBIT 6
Comparable Sales Analysis
Element
Subject
Sale #1
Sale #2
Sale #13
Sale #14
Sales Price
5950.001)
5504.553
$700.000
$330,000
Prop Rts Conveyed
Fee Simple
Leased Fee
leased Fee
I eased Fee
Leased Fee
('unip;utson
Similar
Similar
interior
Similar
At1)usnnerit
0%
Q^,6
5%
'i'4n
AtlpniCd'
5950.000
S511.4.553
$735.000
$ : {0.000
Financing
( ash to Seller
Cash to Seller
Cash M Seller
Cash to Seller
Cash In Seller
(•+anparistiir
Snndar
Snnilar
Similar
Similar
Adjustment
0°ti,
0%
0%
0%
('+nidipuns of Sale
Marker
Market
Markel
Marker
Market
Comparison
Similar
Similar
Similar
Similar
\diu,iniela
0%
01:.
tl%
(1^!
Adµisted"
$950.000
S5(14•533
$73{,11110
5330.00(1
Dare of sale
April I. 20011
Apr. 27. 20(16
June 20. 2_(107
CONTRACT
Aug. 30. 2007
l'umparisnn
Similar
Similar
Similar
Similar
Adtustment
0%
(1%
0%
0%
Adjusted
5950.000
5504.533
$735.000
$330,000
Sive. in It
4.000
5.629
2.745
4.296
1.980
sit ii Puce
S I M 77
S 113 MI
5171.((9
$166.67
I ++ealin)
Mountain Vista
F•oshdl
Fos Run lW
Foshtll
Mountain Vista
('mpa icon
Superior
Superior
Superior
Similar
•\Jrusiment
<1(1%>
<10%>
<10%>
0%
Basement
4.000:1ft
\onc.'0'1,,
400%0%
960/0%
1.195/0%
l onipaninn
inferior
Similar
Similar
Similar
•\diu<[nient
i%
mi.
0%
0%
Age Condition
3/Excellent
2!l eellent
IAscellent
Si(iuod
2/Excellent
Comparison
Similar
Similar
Interior
Similar
AtJusinlCnl
0'
I And Contribution
22 085 sn. ft X5.5:1
Int Pad Site I
C'i'nipitrison
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Quality or
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-104°49' 32", 40°28' 07"
ss z7
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Scale
2000 ft
I_ Ct°ala7 U:In V,°c1uun Meepinp Skeen 6 0
EsAI11 Dl l /
8217 W. 20th Comparable Sales Location
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Exclusively Distributed byy Undertow Softwnro.l
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EXHIBIT 8
PHOTOGRAPH ADDENDUM
I Page #16I
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Borrower/Client "0" Investment Properties. LLC
Property Address 8217 W. 20th Street
City Greeley County Weld
State
Co
Zip Code
80634
Lender Tim Brynteson
SALE #1
4627 W. 20W Street Road
Greeley
SALE #2
1703 61st Avenue #A
Greeley
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Form LPIC3X5 — "TOTAL for Windows" appraisal software by a la mode, inc. —1-800-ALAMODE
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EXHIBIT 8 (CONT. )
PHOTOGRAPH ADDENDUM
Page 41T1
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Borrower/client "O" Investment Properties, LLG
Property Address 8217 W. 20th Street
City Greeley County Weld
State
co
Zip Code
80634
Lender Tit 11 Bryhtesori
_
SALE #3
4675 W. 20th Street Road
Greeley
SALE #4
8219 W. 20th Street #2
Greeley
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Form LPHC3X5 — "TOTAL for Windows" appraisal software by a la mode, inc. — 1-800-ALAMODE
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Analysis of Sales Data
information was based on data available from agents, owners,
and public records. All of the properties except one were
personally inspected near or before the time of sale; the level
of verification was consistent with the depth of this report.
Property rights conveyed for one of the sales were fee simple,
and the other four were leased properties. Sale #4 had an eight -
year -old lease that had had no cost of living adjustments
enforced, thus the Leased Fee interest was thought to be at less -
than market terms, and there were two years left on the lease.
Financing reflects any concessions made by the Seller, either if
it was liberally owner financed or the Seller paid some fees for
the Buyer's financing. None of the sales involved owner -carry
terms, all were cash to the Seller and with no concessions or
personal property. Conditions of sale reflect the motivations of
the parties involved in the transaction and whether the sales
were at "arms -length". From information obtained, the sales
generally appeared to involve typical motivation, no undue
duress, and were at arm's -length. No time adjustments were
considered. While construction costs have continued to rise
since the date of the earliest sale, lease rates generally have
not. If an adjustment was to be considered, it might be a
negative adjustment. Foxhill and Fox Run are both superior
subdivisions in terms of location and appeal. Basement space,
outside of storage, does not have a value commensurate with main
floor space in office buildings, according to market indications.
Age and condition adjustments were pretty straightforward; sales
were all just a couple of years old. There was not a huge
difference in site sizes allocated, all were pad sites or sites
in associations of similar buildings, with typical amounts of
apportioned site; however, Sale #4 had arterial exposure (47`"
Avenue). Quality included exterior and interior detail, plus two
were inferior attached units. Finally, an adjustment was
considered for size. It is a fact that the sale's price per
square foot of a building differs in relation to size, as does
the building cost per square foot.
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4. Summary
The comparables, after analysis and adjustments for
differences in comparison to subject, indicate a value range of
about $145 to about $160 per square foot for subject. The most
contemporary sale, Sale #3, yields the lowest indication, even
when accounting for the Leased Fee rights, but Sale *4 was in
subject's subdivision. Overall, weight is given equally, and
consideration to the most recent unsuccessful offering of
subject; $150 per square foot for subject is opined to be its
value via physical comparison. The calculations are as follows:
4,000 sq. ft. x $150.00/sq.ft. = $600,000
Rounding, the estimated value of the property by the Sales
Comparison Approach is:
SIX HUNDRED THOUSAND DOLLARS
($600,000.00)
F. Income Approach
This method of valuation entails converting the anticipated
future benefits from ownership of the subject property, i.e., net
income, into an indication of value. This requires estimating
the economic or market rent of the structure, deducting vacancy
losses and expenses, and arriving at a value that an investor
would pay to benefit from that income stream.
1. Potential Gross Income
Subject is currently owner occupied or vacant. For the
general lease area the following are noteworthy:
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EXHIBIT 9
RENTAL COMPARABLES
No
Location
Rentable
Sq. Ft.
Rent/Sqft
Style
Owne1
r
Exp.
1.
4617 20`h St. #A
Greeley
3,310
$14.82
Office
None
2
4627 20`h St.
Rd./Greeley
5,629
$13.50
Office
None
3.
4617 20th St. ##B
Greeley
3,504
$14.25
Office
None
4.
8217 20th St.
Greeley
2,000
$13.00
Asking
Office
None
5
7263 4th St.
Greeley
6,400
$12.63
Office
None
6
5400 11" St.
Greeley
14,810
$9.00
Ottice
Classroom
None
7.
1703 615` Ave.
Greeley
2,745
$15.00
Office
None
8
1931 65th Av.
#D/Greeley
2,800
$14.00
Office
None
1 T = Taxes; I = Insurance; M = Maintenance; U = Utilities;
J = Janitorial; R = Rubbish; W = Water & Sewer
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In general, the range of office rents in Greeley depends on
the condition and location of the property, and other factors.
The rates analyzed ranged from $9.00 per square foot to $15.00
per square foot. The bench mark for west Greeley office leases
is now between about $10.50 and $17.00 per square foot with the
tenant paying utilities and common area maintenance fees, and
downtown and central Greeley, with older buildings, have rates
from $7.00 to $12.00 per square foot with full service leases
most common. The difference in expenses paid by the tenant
between gross and net leases is significant, maybe $4.00 to $5 50
per square foot. According to a survey by Realtec Commercial
Real Estate Services, Inc., a northern Colorado commercial
brokerage, Greeley office and retail lease rates generally run
from $12.00 to $21.00 per square foot, with the higher lease
rates in anchored centers. One noted trend in regards to office
space in Greeley: the sales market has been stronger than the
rental market. With interest rates at historic lows, potential
tenants have been buying rather than leasing, and so lease rates
have been flat for at least three years (this has also been a
result of increasing expenses passed on to the tenants).
Of the above comparables Rental #4 is perhaps the most
indicative. This unit is smaller, in subject's subdivision and
has unfinished basement space. It is offered for $13.00 per
square foot, net lease, with cost of living escalators. Most of
these lease rates were based on the buildings' gross square feet.
Considering that subject has been offered for lease at $12.00 per
square foot, and considering Rental #4, a rate of $11.00 per
gross square foot is estimated to be market rent, not including
the basement space; though a range of $10.50 to $13.00 per square
foot would be reasonable.
2. Pro Forma Income Statement
Potential Gross Income - Based on the comparable data the market
rent of the property is estimated at $3,666.67 per month, net
lease. This equates to $11.00 per square foot for the 4,000
gross square feet of main floor space
$3 666 67 x 12 $44,000
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Vacancy and Collection Loss - Based data from inspection,
property owners and property managers, including Ron Randel of
Wheeler Management Group and Blaine Herdman of Vintage
Corporation, plus data provided by The Group, Inc., and Realtec
Commercial Services, Inc., a vacancy loss of seven percent for
subject is deemed appropriate. Realtec has the overall Greeley
office vacancy rate at 18.2 percent, but that includes the
downtown area and the vacant Hewlett-Packard and State Farm
buildings, which are significant. Considering subject's size and
location, seven percent is deemed more appropriate.
Operating Expenses - Operating expenses can be subdivided into
fixed and variable costs. In forecasting expenses for the
subject property, no expense statements were available for
review.
Fixed Expenses - These are operating expenses that do not
vary with occupancy, they must be paid whether or not the
property is leased.
Real Estate Taxes - $17,297.42. This is a tenant
expense within the CAM fee under the market rent
scenario.
Insurance - Estimated to be $1,800 or about $.45 per
gross square foot for this building based on market
data. This again would be a tenant expense within the
CAM fee.
Variable Expenses - These are operating expenses that
usually vary with the level of occupancy or use.
Management - Typically six to eight percent of rent
received in Greeley; five percent will be used for this
analysis.
Utilities - Gas and electricity are estimated to be
tenant expenses, along with water, sewer and trash, but
utility costs should be near $2.50 per square foot.
Maintenance - This includes the expenses to repair the
mechanical systems and building structure and make
other repairs on the exterior, which are typically the
tenant's responsibility. Considering this newer
building, approximately $50 per month, based on market
data, seems appropriate. This would be a tenant
expense.
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Services - This includes common area services like snow
removal, lawn care, etc. From data provided by
property managers, a common area fee of $225 per month,
a tenant expense, appears reasonable.
Reserves - This allows for the periodic replacement of components
that have a shorter useful life than the building, such as
heating systems, roofing, painting or other such items, and it is
what helps extend the economic life of the building over and
above repairs. A prudent purchaser should allow for a reserve
fund when the replacement of these components is his
responsibility. Considering the amount of short lived items in
the building that are deemed to be the landlord's responsibility
to replace, a $2,000 per year replacement reserve is deemed
appropriate, enough to pay for roofing, heating, and other
structural items on a scheduled basis.
3. Summary - Pro Forma Income Statement, Market Rent
Potential Gross Income $44,000
Less Vacancy and Collection
Losses (07%)$ 3,080
Effective Gross Income $40,920
Less Operating Expenses
Fixed
Variable
Reserves for Replacement
0
2,046
2,000
Total Estimated Operating
Expenses (10%)$ 4,046
Net Operating Income $36,874
The operating expense ratio by this estimate is 10 percent
of effective income. Expense ratios of buildings where the
leases are full service usually run from 35 to 50 percent, and in
buildings with net leases run from five to 25 percent, so this
falls in line with market data, considering subject is a new
building estimated to rent via a net lease. The estimated CAM
fee derived from the tenant expenses above would equate to about
$5.60 per square foot, also in line with market data.
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4.
Direct Capitalization
Direct capitalization is the method used to covert a single
year's estimate of net income into a value indication by the
Income Approach. The estimated stabilized Net Operating Income
(NOI) of the subject property is divided by the Capitalization
Rate, a rate of return demanded by the market, derived from data
on sales of leased properties and investment alternatives.
The comparables in the Sales Comparison approach often offer
insight, but often, annual expense data of the comparables is
difficult to verify, and Seller and Buyers often will not or
could not reveal all of the operating costs, nor is the data a
public record. In this case, data was available for Sales #1, #2
#5, which were sold to investors. Sale #1 sold for a price that
indicated a 7.1 percent rate, after deductions for vacancies and
sinking funds. Sale #2 sold for a price that indicated a 7.0
percent rate, after deductions for vacancies and sinking funds.
Sale #4 sold for a price that indicated a return of 8.0 percent
according to one of the owners but calculations from income
provided indicated less than that. However, the following are
some indicated rates based on data from inspection, the agents or
parties:
INDICATED CAPITALIZATION RATES: LOCAL TENANTS
Property
1610 29th Ave. P1.
910 54th Avenue
5401 W. 10th Street
5754 W. 11th Street
805 16`h Street
7251 W. 20" St. J & K
4627 W. 20th St. Rd.
1703 61s` Avenue
Rate
6.1%
8.9%
6.0%
8.8%
8.4%
6.5%
7.1%
7.0%
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INDICATED CAPITALIZATION RATES: NATIONAL TENANTS
Property
2415 W. 10th St.
4224 CenterPlace Dr.
1926 SW Frontage Rd.
2701 S. 8th Ave.
7263 W. 4th Street
1450 N. 12th Avenue
Rate
8.5%
7.3%
8.5%
7.6%
7.8%
10.0%
The rates run from 6.0 percent to 10 percent. Some of the
national credit rates were for larger properties, which would
demand a higher rate because of the size of the property and thus
the size of the purchase. Apart from the market indicated rate,
the rate must also reflect the competitive rate of return on the
real estate investment in relation to non -real estate
alternatives:
CURRENT MONEY RATES
Type of Rate
Prime Rate
3 -Month T -Bill
U. S. 10 -year Bonds
U. S. 30 -year Bonds
Source: UBS Financial
Interest Rate
6.00
1.47
3.45
4.39
The above rates are for almost risk -free alternatives, in
relation to the maintenance, possible vacancies, and poor
liquidity of real estate. While there is some tax advantages to
owning real estate, the Tax Reform Act of 1986 and the extension
of the depreciable life of commercial property in the 1993 Tax
Bill have negated many of the previous benefits. For those
reasons, a prudent investor would typically demand a higher
return for real estate than even the highest of the above rates.
32
Normally, the rate indicated by the sales comparables would
be given weight. Considering these three sales plus the other
market rates, it is estimated that a 7.5 percent capitalization_
rate for subject represents a market return, especially when
reserves are accounted for. This rate would offset some of the
risk of the investment by being higher than non -real estate or
residential real estate investments, and should be high enough to
entice an investor to assume that risk. The rate also falls in
line with sales and offered Greeley properties of this type.
5. Market Rent Value Indication
Net Operating Income
Capitalization Rate
$36,874
7.5°s
Value
_ $491,653
Rounding, the estimated value of the property by the Income
Approach is:
FOUR HUNDRED NINETY THOUSAND DOLLARS
($490,000.00)
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IV. APPRAISAL CONCLUSIONS AND LIMITING CONDITIONS
A. Correlation
The last step in the appraisal process is to conclude a
final estimate of value for the subject property. This is done
after analyzing the quantity, quality, and reliability of the
data utilized, strengths and weaknesses of the different methods
of valuation, and applicability of each approach to the type of
property being appraised. The final estimate of value
approximates that which an informed, rational investor would pay
for the subject property if it were available for sale on the
open market at the date of the appraisal, given the data used in
this report.
A review of the value indications is as follows:
COST APPROACH n/a
SALES COMPARISON APPROACH $600,000
INCOME APPROACH $490,000
The Sales Comparison Approach must carry significant weight,
as how the market views similar properties is a good indication
of how the market will view the subject. The Income Approach is
important, but perhaps less indicative in the current market, as
most sales seem to be to owner occupants for at least part of the
property. Overall, weight is given to the Sales Comparison
Approach; the correlation yields:
SIX HUNDRED THOUSAND DOLLARS
($600,000.00)
34
B. Marketing Time
This report assumes a reasonable exposure time for the
property. In discussions with Ron Randel of Wheeler Management
Group, and Blaine Herdman of ReMAx Alliance, both experienced
agents in managing and marketing commercial properties, they felt
that even in the current market, if the property was priced near
the appraised price and properly marketed it should sell in one
year or less.
C. Value Conclusion
By definition, no discounting of the final value is required
with an estimated marketing time of one year or less. Therefore,
the market value of the subject property as of April 1, 2008 is
estimated to be:
SIX HUNDRED THOUSAND DOLLARS
($600,000.00)
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D. Certification of Independent Appraisal Judgment
The Appraiser certifies and agrees that:
The statements of fact contained in this report are true and
correct to the best of the appraiser's knowledge.
The reported analyses, opinions, and conclusions are limited
only by the reported assumptions and limiting conditions, and are
the personal, impartial, and unbiased professional analyses,
opinions, and conclusions of the appraiser.
The Appraiser has no present or contemplated future interest
in the property that is the subject of this report, and has no
personal interest with respect to the parties involved.
The Appraiser has no bias with respect to the subject matter
of the appraisal report or the parties involved with this
assignment.
The engagement of the appraiser in this assignment was not
contingent upon developing or reporting predetermined results.
The appraiser's 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.
The "Estimate of Market Value" in the appraisal report is
not based in whole or in part upon the race, color, or national
origin of the prospective owners or occupants of the property
appraised, or upon the race, color or national origin of the
present owners or occupants of the properties in the vicinity of
the property appraised.
The Appraiser has personally inspected the property, both
inside and out, and has made an exterior inspection of all
comparable sales listed in the report.
This appraisal report has been made in conformity with and
is subject to the requirements of the Uniform Standards of
Professional Appraisal Practice (USPAP) adopted by the Appraisal
Standards Board of the Appraisal Foundation.
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All conclusions and opinions concerning the real estate that
are set forth in the appraisal report were prepared by the
Appraiser whose signature appears on the appraisal report, unless
indicated as "Review Appraiser". No change of any item in the
appraisal report shall be made by anyone other than the
Appraiser, and the Appraiser shall have no responsibility for any
such unauthorized change.
Based upon the information contained in this report and upon
my general experience as an appraiser, it is my opinion that the
present Market Value, as defined herein, of the subject property
as of April 1, 2008, is:
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SIX HUNDRED THOUSAND DOLLARS
($600,000.00)
October 3, 2008 l2 {r'i-'I`'-f
Bruce W. Willard, CCIM, CRB, CRS
Certified General Appraiser
License No. CGO1315403
3'/
E. statement of Assumptions and Limiting Conditions
This appraisal report, the letter of transmittal, and the
Certification of value are made expressly subject to the
following assumptions and limiting conditions, and any special
limiting conditions contained in the report, which are
incorporated herein by reference:
(1) The legal description furnished is assumed to be correct. I
assume no responsibility for matter legal in character, nor
do I render any opinion to the title, which is assumed to be
good. All existing liens and encumbrances, if any, have
been disregarded, and the property is appraised as though
free and clear, under responsible ownership and competent
management.
(2) The sketches contained in this report are included to help
the reader visualize the property. I have no formal
boundary survey of the property and assume no responsibility
in connection with such matters.
(3) I believe to be reliable the information which was furnished
by others, but I assume no responsibility in connection with
such matters.
(4) Possession of this report, or a copy thereof, does not carry
with it the right of publication, nor may it be used for any
purpose by anyone but the applicant without the previous
written consent of the appraiser or the applicant and then
only with proper qualification.
(5) I am not required to give testimony or to appear in court by
reason of this appraisal, with reference to the property in
question, unless arrangements have been previously made
therefore.
(6) The distribution of the total valuation in this report
between the land and the improvements applies only under the
existing program of utilization. The separate valuations
for land and buildings must not be used in conjunction with
any other appraisals and are invalid if so used.
(7) It is assumed that there are no hidden or unapparent
conditions of the property, subsoil, or structures that
render it more of less valuable. No responsibility is
assumed for such conditions or for arranging for engineering
studies that may be required to discover them.
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(8) It is assumed that there is full compliance with all
applicable federal, state, and local environmental
regulations and laws unless noncompliance is stated,
defined, and considered in the appraisal report.
(9) It is assumed that all required licenses, certificates of
occupancy, consents, or other legislative or administrative
authority from any local, state, or national government or
private entity or organization have been or can be obtained
or renewed for any use on which the value estimated
contained in this report is based.
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(10) It is assumed that 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
trespass unless noted in the report.
(11) Subsurface rights (mineral and oil) were not considered
in making this appraisal, nor were any costs for notifying
mineral rights owners, as per HB 01-1088, included.
(12) Damage, if any, by termites, dry rot, wet rot, or other
infestations, was reported as a matter of information, and
I do not guarantee the amount or degree of damage, if any.
(13) All furnishings and equipment, except those specifically
indicated and typically considered as a part of the real
estate, have been disregarded by this appraiser in
considering the value of the real property.
(14) The appraiser has inspected, as far as possible, by
observation, the land and the improvements thereon; however,
it was not possible to personally observe conditions beneath
the soil or hidden structural components within the
improvements. Therefore, no representations are made herein
as to these matters, and unless specifically considered in
this report, the value estimate is subject to any such
conditions that could cause a loss in value. Condition of
heating, cooling, ventilating, electrical, and plumbing
equipment is considered to be commensurate with the
conditions of the balance of the improvements unless
otherwise stated.
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(15) Unless otherwise stated in this report, the existence of
hazardous substances, including without limitation asbestos,
polychlorinated biphenyls, petroleum leakages, or
agricultural chemicals, which may or may not be present on
the property, or other environmental conditions, were not
called to the attention of nor did the appraiser become
aware of such during the appraiser's inspection. The
appraiser has no knowledge of the existence of such
materials on or in the property unless otherwise stated.
The appraiser, however, is not qualified to test substances
or conditions. If the presence of such substances, such as
asbestos, urea formaldehyde foam insulation, or other
hazardous substances or environmental conditions, may affect
the value of the property, the value estimated is predicated
on the assumption that there is no such condition on or in
the property or in such proximity thereto that it would
cause a loss in value. No responsibility is assumed for any
such conditions, not for any expertise or engineering
knowledge required to discover them.
(16) Neither all nor part of the contents of this report shall be
conveyed to the public through advertising, public
relations, news, sales or other media, without the written
consent and approval of the author, particularly as to the
value conclusions, the identity of the appraiser, or firm
with which he is connected or any reference to his
professional associations.
(17) No legal description or survey was furnished so the
appraiser utilized the county tax information to ascertain
the physical dimensions and acreage of the property. Should
a survey prove these characteristics inaccurate, it may be
necessary for this appraisal to be adjusted.
(18) This report has been made under the guidelines set forth by
the Uniform Standards of Professional Appraisal Practice.
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F. Resume of Appraiser
3ruce Willard is the chief appraiser for Austin & Austin
Appraisal Services and works full time in real estate marketing,
appraisal, and analysis. He is a licensed Real Estate Broker and
a licensed Certified General Appraiser in the State of Colorado.
Bruce is a Colorado native, an ex -Air Force pilot, with over 2,000
hours of high performance aircraft time, and he holds a B.S. in
Electrical Engineering from the U.S. Air Force Academy.
Bruce is a member of the National Association of REALTORS,
Colorado Association of REALTORS, and the Greeley Board of
REALTORS. He holds the designation of GRI from the Graduate
REALTORS Institute, Certified Real Estate Brokerage Manager (CRB),
Certified Residential Specialist (CRS) and the prestigious
Certified Commercial Investment Member (CCIM) from the National
Association of REALTORS. He is one of less than 4,500 individuals
nationwide to have earned the CCIM designation, and one of less
than 100 to hold each of the CCIM, CRB and CRS designations.
Bruce is a recognized authority on Northern Colorado real
estate. He has been the guest speaker at numerous local and
statewide clubs and organizations, including Rotary clubs, the
Northern Colorado Builder's Association, and the Colorado Chapter
of the Society of Industrial and Office REALTORS in Denver.
Bruce has been appraising since 1987, and currently appraises
for The State Land Board, Guaranty Bank and Trust, New Frontier
Bank, Bank of the West, Community First Bank, 1st National Bank,
Vectra Banks, Colorado East Bank and Trust, Waterfield Mortgage,
Mortgage Services, Inc., Pulte Mortgage, Commercial Federal Bank,
Advantage Bank, FirstState Bank, Bank of Choice, Morgan County
Savings Bank, Advantage Bank, Signature Bank, Fidelity Valuation
Services, Commercial Federal Bank, Liberty Savings Bank, MegaBank,
First Colorado Savings Bank and numerous other parties and
institutions in the Northern Colorado region, including: Greeley,
Loveland, Fort Collins, LaSalle, Evans, Windsor, Eaton, Ault,
Pierce, Kersey, Firestone, Frederick, Longmont, Berthoud,
Johnstown, Milliken, Fort Morgan, Sterling and Gilcrest. Bruce
has appraised properties from single-family residences and vacant
sites to subdivisions, apartment complexes, industrial buildings
and shopping centers.
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V. ADDENDA
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jttrsTIN
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Appraisal Services
918 13th Street • Greeley, CO 80631 • (970) 353-0790
Kenton A. Sick
Bruce W. Willard, CCIM, CRB, CRS
APPRAISAL PROPOSAL
Austin & Austin Appraisal Service
918 13th Street, Greeley, CO 80631
Phone (970) 353-0790/Fax (970) 353-0799
Mr. Tim Brynteson, Esq.
4025 St. Cloud Drive, Ste. 230
Loveland, CO 80538
RE: Appraisals for the Oliver properties, weld County, CO.
September 3, 2008
I shall prepare and submit appraisals, in Summary Report format, for the following
properties, all as of the date April 1, 2008. The appraisals will meet the Appraisal
Foundation Standards of Professional Appraisal Practice, and shall be completed on or
before five weeks from receipt of this accepted proposal.
Property
Type
Report
Cost
3324 Grenache, Evans
Single Family
URAR - 1004
$325
629 Scotch Pine, Severance
Single Family
URAR - 1004
$325
35321 WCR 31, Eaton
Rural SFR
URAR - 1004
$350
8217 W. 20th St., Greeley
Office
Narrative
$1,750
18847 WCR 72, Eaton
Industrial
Narrative
$2,500
Please contact me with any questions. Thank you for your inquiry.
Sincerely,
Bruce W. Willard, CCIM, CRB, CRS
Certified General Appraiser
Accepted:
1 -/0 -or
Client Date
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2ND QTR 2007
Growth Index
The index is bouncing back after a disastrous second
half of 2OO6
450
400
350
3°c)
250e _
•
200- rt..
150'i01"te
4
if
100- 501
. l -IV
1
.r
,L) co 0 (NJ ,0 co
3 3 (3 3 8 8 E 8 8
„ „ N
Source Northern Colorado Business Report
2ND QTR 2007
Total construction value
Trig total value of construction rQcovered snarpl y in April,
but still down 28 percent from A pri 12006.
Mullions of dollars
300_ _
50_
200
150 _
100 _
50
0
co a c1/4,1 '- 1/4O �x� c \ J
OD Ch ON O CD
C, c ON 0" C o
rid C\J
4
0 0 OD
0
0 0 0
Source Northern Colorado Business Report
1ST QTR 2009
Growth Index
The N pril Index kcas higher than pri 120(6.
II
T%
i
450 _
400 r _
350 _
300 _
250 r _
200 r _
r
150
r ♦a it
100 -"
50
1 T 1
alb�t
la
s:
0
C
g0QQ0Q
N fV N {V
Source Northern Colorado Business Report
1ST QTR 2009
Total construction value
Total value of construction recovered very nicely in
March and A pril. It has recovered to 2007 IEvels.
300
250
200
150
1
c fL
rco co
-- c
r . r
T , Qcris
en Ln
Source Northern Colorado Business Report
Gross Domestic Product - GDP
Annualized quarterly change based
on chained 2005 dollars
-2
-4
_6
J
-8
III NiI II Iii WI I ti III IV 1 li Iii N I It
- '
2005 2006 w 2007 2008 '09
rce: Department of Commerce
The Associated Press
New figures show
udden slide of '08
as even steeper
Source — USA Today
Trend Line by Neeley
PDF created with pdfFactory trial version www.pdffactory.corn
4.12%
sin
3RD QTR 2005
Current Market Conditions
Vacancy Pates
Fort Collins
Loveland
3.741,
3
1:
1%
II Industrial
II Retail
D Office
' acanci .'L}
SuH ease sore.
Source Northern Colorado Business Report
3RD QTR 2008
Current Market Conditions
Vacancy Rates
Fort Collins
14,11%
11.0%
I Industrial
■ Retail
a Office
tnis de
sublease space
Source Northern Colorado Business Report
1ST QTR 2009
Current Market Conditions
Vacaiicyr Rates
Greeley
fort
Cole
do -its
9.27%
8.87%'
7.33%
7.25%
6,05%
Source Northern Colorado Business Report
3RD QTR 2005
Lease Rates
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Office Retail ndu5trial
(Class A (Prime) Mise R&D
Ft. Collins }1825 S15422 £iS4 $7410
Loveland S22.S24 £10340 £5-f1.50 $12$i6
Greeley s18-91 512.616 S2S3.O $a-55.50
All tease rates are per
square footannually and
based ON th�e net tease
gates.
FOREGOING INFORMATION .£ NOT GUARANTEE. H! f,F0RNIICI S `ROLI VAUL SO JCS
MO IS NOT SNIP FROM REALT C OOMMEROAk REAL E:TE 2ER': HS IC
Source Northern Colorado Business Report
3RD QTR 2008
i
Lease Rates
le
Office Retail Industrial
(Class A) (grime) Whse R&D
Ft, Collins S18.S23 S2*.$ S5I5*4I5O 51,56510
Loveland $16422 S15$21 $446.7S $8442
Greeley $43.5041Y 512417 $$45o 5455,50
All lease rates are per
square foot annually
and based on triple
net lease rates.
Note: Retail excludes
Foothills Mall, Greeley
Mall and Promenade,
FOREGOING INFORMATION IS NOT GUARANTEED. THE INFORMATION IS FROM VARIOUS SOURCES,
AND IS NOT SOLELY ROM REALTEC COMMERCIAL REAL ESTATE SERVICES INC.
Source Northern Colorado Business Report
LEASE RATES FROM
APPRAISALS
LEASE RATE INTERPOLATION FOR MOUNTAIN VISTA OFFICE PARK
1ST QUARTER 2005
STEP VALUE
-0.416666667
$ 15.00
2nd QUARTER 2005
-0.416666667
$ 14.58
STEP VALUE
STEP VALUE
-0.416666667
$ 14.17
3rd QUARTER 2005
4th QUARTER 2005
STEP VALUE
-0.416666667
$ 13.75
1st QUARTER 2006
STEP VALUE
-0.416666667
$ 13.33
2nd QUARTER 2006
STEP VALUE
-0.416666667
$ 12.92
STEP VALUE
-0.416666667
$ 12.50
3rd QUARTER 2006
STEP VALUE
-0.416666667
$ 12.08
4th QUARTER 2006
1st QUARTER 2007
STEP VALUE
-0.416666667
$ 11.67
2nd QUARTER 2007
STEP VALUE
-0.416666667
$ 11.25
3rd QUARTER 2007
STEP VALUE
-0.416666667
$ 10.83
STEP VALUE
-0.416666667
$ 10.42
4th QUARTER 2007
1st QUARTER 2008
STEP VALUE
-0.416666667
$ 10.00
2nd QUARTER 2008
STEP VALUE
-0.416666667
$ 9.58
-0.416666667
$ 9.17
3rd QUARTER 2008
STEP VALUE
4th QUARTER 2008
STEP VALUE
-0.416666667
$ 8.75
LEASE RATES WEST
GREELEY
LEASE RATE INTERPOLATION WEST GREELEY
STEP VALUE
-0.166666667
$ 15.00
1ST QUARTER 2005
2nd QUARTER 2005
STEP VALUE
-0.166666667
$ 14.83
3rd QUARTER 2005
STEP VALUE
-0.166666667
$ 14.67
4th QUARTER 2005
STEP VALUE
-0.166666667
$ 14.50
1st QUARTER 2006
STEP VALUE
-0.166666667
$ 14.33
2nd QUARTER 2006
-0.166666667
$ 14.17
STEP VALUE
3rd QUARTER 2006
STEP VALUE
-0.166666667
$ 14.00
-0.166666667
$ 13.83
4th QUARTER 2006
STEP VALUE
1st QUARTER 2007
STEP VALUE
-0.166666667
$ 13.67
2nd QUARTER 2007
-0.166666667
$ 13.50
STEP VALUE
3rd QUARTER 2007
STEP VALUE
-0.166666667
$ 13.33
STEP VALUE
-0.166666667
$ 13.17
4th QUARTER 2007
1st QUARTER 2008
STEP VALUE
-0.166666667
$ 13.00
2nd QUARTER 2008
STEP VALUE
-0.166666667
$ 12.83
3rd QUARTER 2008
STEP VALUE
-0.166666667
$ 12.67
4th QUARTER 2008
STEP VALUE
-0.166666667
$ 12.50
VACANCY RATES GREELEY
Quarter
Year
Rate
Interpolated
*
4th Quarter
2003
10.80%
1st
Quarter
2004
13.00%
2nd Quarter
2004
11.90%
3rd Quarter
2004
11.80%
4th Quarter
2004
11.33%
*
1st Quarter
2005
10.87%
Appraiser Used 5%
2nd Quarter
2005
10.40%
3rd
Quarter
2005
20.84%
4th
Quarter
2005
19.70%
1st
Quarter
2006
20.05%
2nd Quarter
2006
20.70%
3rd
Quarter
2006
20.34%
4th Quarter
2006
19.98%
1st
Quarter
2007
19.62%
2nd Quarter
2007
19.26%
Appraiser Used 10%
3rd
Quarter
2007
18.90%
4th
Quarter
2007
18.53%
1st Quarter
2008
18.17%
2nd
Quarter
2008
18.20%
Appraiser Used 7%
3rd
Quarter
2008
16.26%
4th Quarter
2008
17.25%
VACANCY MOUNTAIN
VISTA OFFICE PARK
MOUNTAIN
OFFICE
VISTA
PARK
Property Address/Owner
Building
SF
Occupied
SF
Vacant SF
Vacant
%
8201 W. 20th St.
3942
2365
1577
40.00%
8203 W. 20th St.
3 880
3480
400
10.31%
8205 W. 20th St.
4000
4000
100.00%
8207 W. 20th St.
3616
1808
1808
49.99%
8209 W. 20th St.
3760
3760
100.00%
8213 W. 20th St.
4000
3250
750
18.75%
8215 W. 20th
St.
3930
2874
1056
26.87%
8217 W. 20th St.
4000
2000
2000
50.00%
8219 W. 20th
St. #1
1980
1380
600
30.30%
8219 W. 20th
St. #2
1980
1980
0.00%
8221 W. 20th St.
4052
4052
0.00%
8223 W. 20th
St. #1
2160
2160
0.00%
8223 W. 20th St. #2
2194
2194
100.00%
TOTALS
43,607
24,962
18,645
AVERAGE PERCENT OF SQ.
MOUNTAIN VISTA OFFICE
VACANT
FOR 2008
IN
41.74%
FT.
PARK
CAPITALIZATION RATES
FROM APPRAISALS
CAPITALIZATION RATE INTERPOLATION GRID
1ST QUARTER 2005
STEP VALUE
-0.000692308
8.4000%
2nd QUARTER 2005
-0.000692308
8.3308%
STEP VALUE
3rd QUARTER 2005
STEP VALUE
-0.000692308
8.2615%
STEP VALUE
-0.000692308
8.1923%
4th QUARTER 2005
-0.000692308
8.1231%
STEP VALUE
1st QUARTER 2006
2nd QUARTER 2006
STEP VALUE
-0.000692308
8.0538%
3rd QUARTER 2006
STEP VALUE
-0.000692308
7.9846%
4th QUARTER 2006
STEP VALUE
-0.000692308
7.9154%
1st QUARTER 2007
STEP VALUE
-0.000692308
7.8462%
2nd QUARTER 2007
STEP VALUE
-0.000692308
7.7769%
3rd QUARTER 2007
STEP VALUE
-0.000692308
7.7077%
4th QUARTER 2007
STEP VALUE
-0.000692308
7.6385%
1st QUARTER 2008
STEP VALUE
-0.000692308
7.5692%
2nd QUARTER 2008
-0.000692308
7.5000%
STEP VALUE
3rd QUARTER 2008
STEP VALUE
-0.000692308
7.4308%
STEP VALUE
-0.000692308
7.3615%
4th QUARTER 2008
CHECK OF
REASONABLENESS
Property
Address/Owner
NUMBER
BLT
PER
YEAR
BUILT
YEAR
8203
W. 20th St.
2004
8213
W. 20th
St.
2004
3 - 2004
8221
W. 20th
St.
2004
8217
W. 20th
St.
2005
8219
W. 20th
St.
#1
2005
4 - 2005
8223
W. 20th
St.
2005
8235
W. 20th
St.
2005
8205
W. 20th
St.
2006
8209 W. 20th
St.
2006
3 - 2006
8215
W. 20th
St.
2006
8201 W. 20th
St
2007
2 - 2007
8207 W. 20"'
St.
2007
NONE
2008
0 - 2008
2009
0 - 2009
NONE
VACANT
LOTS
LEFT
7 LOTS
2009
REMAINING
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2009
SPRAGUE ENTERPRISES
CLIFTON NEELEY,
MARKET RESEARCH
ASSOCIATE
["0" INVESTMENT
PROPERTIES, LLC]
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• REVIEW AND CERTIFICATION OF VALUE AS OF JUNE 2008
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TABLE OF CONTENTS
SOURCES UTILIZED 01
TABLE OF CONTENTS 02
SUMMARY OF SALIENT FACTS 05
PURPOSE OF THE REPORT 07
SCOPE OF WORK 07
TAXES REPORTED BY SOURCES & ASSESSORS 08
ASSESSORS ACTUAL VALUATIONS 09
QUALITY RATINGS OF SUBJECTS INVOLVED 10
COST REPLACEMENT REVIEWS 18
EXTERNAL DEPRECIATION 20
TAX MILL LEVIES 20
VACANCY RATES IN THE GREELEY AREA 22
VACANCY IN THE SUBJECT NEIGHBORHOOD 23
LOCATION 23
INCOME APPROACH TO VALUE REVIEWS 24
LEASE RATES 27
LOCATION ADJUSTMENTS 28
EXPENSES APPLIED TO INCOME 28
VACANCY RATES 28
MARKET CONDITIONS ADJUSTMENTS 28
NET INCOME 28
CAPITALIZATION 29
SALES COMPARISON APPROACH REVIEWED 30
LOCATION ADJUSTMENTS 30
MARKET CONDITIONS ADJUSTMENTS 30
DATE OF SALE ADJUSTMENTS 31
QUALITY ADJUSTMENTS 31
INCOME APPROACH CORRELATIONS 34
COST REPLACEMENT CORRELATIONS 35
SALES COMPARISON CORRELATIONS 41
APPRAISER KNEW OF MARKET DECLINE 42
UTILIZING COMPARABLES FROM THE SAME PROJECT 43
SUMMARY: REVIEW #1
VALUE CONCLUSIONS - 8201 W. 20TH STREET 53
SUMMARY: REVIEW #2
VALUE CONCLUSIONS - 8217 W. 20TH STREET 57
SUMMARY: WELD COUNTY APPRAISERS REVIEW
FINAL VALUE CONCLUSIONS - 8217 W. 20114 STREET 61
ASSUMPTIONS AND LIMITING CONDITIONS 62
CERTIFICATION OF VALUE 63
PHOTOS OF SUBJECT PROPERTY 64
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June 12, 2009
Rachel Oliver
8217 W. 20`s Street
Greeley, CO 80634
Dear Mrs. Oliver:
The following report on the tax area, tax appeal and ramifications of the tax assessments
on your property and its valuation is complete and made a part of this report.
This report includes market value as interpreted by the appraiser under the current
definition of market value by the Colorado Board of Real Estate Appraisers.
DEFINITION OF MARKET VALUE: "Market Value" means 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 to the open market;
4. Payment is made in terms of cash in U.S. 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.
We have reviewed the following resources:
Source 1 - A real property appraisal by Appraisal Specialties, Inc. dated June 15, 2007
Source 2 - A real property appraisal by Austin & Austin Appraisal dated April 1, 2008
Source 3 - A real property appraisal utilized for date of sale info - dated March 28, 2005
Source 4 - A Cost Segregation Analysis by T.R.Davis & Assoc. dated Aug. 10, 2005
Source 5 — The author's personal investigation and market research - June 2009
Northern Colorado Business Report 2/07 thru 1/09
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Realtec.com — Economic Indicators 10/06 thru 2/09
Vacancy Rate Study - Clifton Neeley — W. of 47`s Avenue June 2009
Office Sales Study — Clifton Neeley — Jan 2000 thru June 2009
Quality of Construction MVOP - Clifton Neeley —June 2009
Abstract of Assessment — Weld County 2008 - 2007 - 2006 - 2005
The following pages are a summary of the market valuations and tax related conclusions
compiled into one review of the commercial properties located in the Mountain Vista
Office Park Condominium project.
EXTERNAL INFLUENCES AFFECTING VALUE:
In this abstract, we delve deeply into the external market forces which affect value of real
estate. In a market which is increasing or decreasing, these external forces affect real
estate dramatically at times. External forces are considered those forces which are
outside the subject building, land or subdivision, but may be affecting value by virtue of
perception, or actual cost of operation of the real estate. External forces which may
affect valuation are such events as interest rate fluxuation, vacancy and occupancy rates,
tax district and mill levy rates, view, neighboring property influences, and use restrictions
to name a few.
When external influences are discovered to be affecting the subject property the appraiser
must determine if they are also affecting the comparable properties. If not, or if in lesser
or greater proportion, then the appraiser must adjust between the subject and the
comparable in the sales comparison method and then the cost replacement approach to
value must be adjusted for external depreciation, as well. The entire valuation process
will be affected, therefore each approach must be adjusted for these external forces. In
the income approach to valuation, the forces will be reflected in the vacancy rates
utilized, the costs of additional taxes or possibly the lease rates or capitalization rates
used by the appraiser. All of these forces have a direct effect on the net income, therefore
the indicated value.
The influences are adjusted for between comparable sales and the subject in the sales
comparison approach under the headings of location, date of sale, market conditions,
utility, view, etc. These same issues must become adjustments under external
depreciation in the cost approach and are quantified within the income analysis when the
income or expense (in total or individually itemized) is capitalized into a long-term real
estate indication of value for either the item of difference or the real estate value as a
whole.
The land valuation for the purpose of use in the cost replacement approach to value may
also be affected by external forces, and adjustments must be made within the sales
comparison land analysis, as well.
The appraiser must keep a keen eye on these forces and begin adjusting immediately
upon observation, or his value will not be accurate for the date of valuation.
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SUMMARY OF SALIENT FACTS
FINDINGS OF THE REVIEW:
APPRAISAL SOURCE #1 Appraisal Specialties, Inc.
Valuation of 8201 W. 20th Street, Greeley, CO as of June 15, 2007
COST APPROACH: Appraiser did not apply external depreciation which was
available with additional analysis. Appraiser used an assumed vacancy rate, but
was aware of the actual vacancy rate provided by both Northern Colorado
Business Report and by Realtec.
Appraiser's Cost Approach $655,928
CORRECTION BY ANALYSIS OF TAX AREA 2149 AND BY USING THE
ACTUAL VACANCY RATE
Application of External Depreciation ($156,581)
CORRECTED VALUE BY COST APPROACH $499,347
INCOME APPROACH TO MARKET VALUE: The appraiser did not include an
income approach to value within his appraisal report. This may have led to him
being unable to detect external depreciation.
SALES COMPARISON APPROACH: The appraiser utilized only one
comparable from outside the subject subdivision, did not adjust for tax district
mill levy differences between the subject and the one comparable from outside the
subdivision, and did not properly calculate all location, date of sale and market
conditions adjustments.
Appraiser's Sales Comparison Approach $ 647,130
CORRECTIONS BY ADJUSTING FOR DATE OF SALE, TAX AREA
LOCATIONAL ADDITIONAL EXPENSE AND VACANCY GENERATED
MARKET CONDITIONS
Application of Adjustments ($152,530)
CORRECTED VALUE BY SALES COMPARISON $494,600
AS OF JUNE 15, 2007 THE VALUE OF 8201 W 20TH STREET $497,000
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APPRAISAL SOURCE #2 Austin & Austin Appraisal Services
Valuation of 8217 W. 20`h Street, Greeley, CO as of April 01, 2008
COST APPROACH: Appraiser did not apply external depreciation which was
available with additional analysis. Appraiser used an assumed vacancy rate, but
was aware of the actual vacancy rate provided by both Northern Colorado
Business Report and by Realtec.
Appraiser's Cost Approach DID NOT COMPLETE
INCOME APPROACH TO MARKET VALUE: Mr. Willard's approach is
acceptable; because he adjusted the market assumed rental rates in -lieu -of
applying the actual reported vacancy rate. However, he was then unable divide
this market induced external depreciation between date of sale, location and
market conditions. In our opinion he could have avoided mistakes by utilizing the
actual vacancy and the additional expense to use as verification of the location,
external depreciation, market conditions and date of sale adjustments for the cost
and sales comparison approaches.
Appraiser's Income Approach $ 491,653
Application of Tax Area Expenses & Vacancy data .......+$ 20,027
CORRECTED VALUE BY INCOME APPROACH$511,680
SALES COMPARISON APPROACH: The appraiser adjusted for location, but
did not allocate the adjustments between tax area portions and proximity to
central services and traffic pattern portions of the adjustment. He did not adjust
for date of sale or market conditions.
Appraiser's Sales Comparison Approach $ 600,000
CORRECTIONS BY ADJUSTING FOR DATE OF SALE, TAX AREA
LOCATIONAL ADDITIONAL EXPENSE AND VACANCY GENERATED
MARKET CONDITIONS
Application of Adjustments ($ 65,240)
CORRECTED VALUE BY SALES COMPARISON $ 534,760
AS OF APRIL 01, 2008 THE VALUE OF 8217 W 20Th STREET ... $ 527,000
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REVIEW AND VALUE CONCLUSION
MOUNTAIN VISTA OFFICE PARK CONDOMINIUMS
PURPOSE OF THE REPORT
The purpose of this report is to determine the appropriate valuation for the Mountain
Vista Office Park owners for property taxing purposes. The following Mountain Vista
Office Park owners have retained our services to appeal the tax valuations at the Weld
County Assessor's office:
8201 W.20 St.
09590832 7001
Steinbecker Properties,
LLC
8203 W.20 St.
09590832 5007
Conquest Holdings,
LLC
8207 W.20 St.
09590832 5014
Conquest Holdings,
LLC
8213 W.20 St.
09590832 5003
MVS Investments,
LLC
8215 W.20 St.
09590832 6001
GS Properties,
LLC
8217 W.20 St.
09590832 5004
O Investment Properties,
LLC
8219 W.20 St. #B
09590832 9002
Holiday Manor/TLW
LLC
8223 W.20 St., #100
09590832 8001
Greeley City Group,
LLC
8223 W.20 St., #101
09590832 8002
Harris Homes,
INC
8235 W.20 St.
09590832 5011
Hemerson Properties,
LLC
SCOPE OF WORK
The scope of the work to be performed is as follows:
Review any appraisals located which were completed in the previous 1 to 3 years
on the above properties; report the findings of the appraisal and determine if the appraisal
contained inconsistencies or value conclusions that may have resulted in errors to the
final value conclusions of any of the reports.
Complete market research that would support or refute findings within these
reports or the valuations which the Weld County Assessors have concluded.
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Taxes — Weld County Assessors Valuations
Current tax valuations listed within various recent appraisal reports by northern Colorado
independent appraisers are summarized in order to show the opinions and conclusions of
other independent parties and how these conclusions have impacted the valuations
completed by independent appraisers and assessors alike.
The 2006 taxes due and payable in 2007 for vacant commercial land for 8201 W. 20th
Street were as follows:
VACANT LAND
Actual Value Assessed Value X Mil Levy = Tax Burden
$67,627 $19,610
X .082572 = $1,619
IMPROVED TAX COMPARABLES (reported by Sommers appraisal 3/7/07
Address
Year of
Construc
tion
Size (Above
Grade)
Tax Burden
Tax/SF
8203 W. 20th St.
2004
3880
7834
$2.02
8219 W. 20th St.
2005
3998
10399
$2.60
8235 W. 20th St.
2005
9458
16805
$1.78
8217 W. 20th St.
2005
4000
8555
$2.14
8201 W. 20th St.
2004
3992
9980
$2.50
The above Tax per Square foot rates were presented in an appraisal by Harold Sommers,
MAI, SRA dated March 7, 2007 and developed a range of $1.78 to $2.60 per square foot
with an assumed suitable estimated tax burden of $2.50 per square foot.
In an appraisal of 8213 W. 20m Street by Our 2005 Data Source - Dated March 28,
2005, the 2005 source anticipated the Weld County Assessors valuations as follows:
Based on the $560,000 cost of the project, as shown in the Cost Approach (including land
and proposed building) with land being $200,000 and building being $360,000 with
entrepreneurial profit being excluded, the subject taxes were estimated to total
approximately $16,250 (rounded) calculated as follows:
$560,000 actual value x 29% = $162,400 assessed value;
$162,400 assessed value x 0.100042 mill levy = $16,247
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In an appraisal developed for O Investment Properties, LLC by Bruce Willard, CCIM,
CRB, CRS, Certified General Appraiser dated April 1, 2008 the following was cited by
Mr. Willard in the Tax Analysis section:
SUBJECT TAX ASSESSMENTS
Address
Year of
Construc
tion
Actual
Value
Size (Above
Grade)
Land
Valuation
Improvement
Valuation
8217 W. 20th St.
Not
Stated
700,000
4000
209,808
490,192
Mr. Willard points out that the real estate taxes for 2007 were $17,297.42 on page 2 of the report and o
page 17 of the report states that "As the property has been offered for sale for less than the replacemeni
with the agreement of the client, this (the cost) approach will not be investigated. This comment will 1
further investigated during the course of this review and value conclusion.
CURRENT ACTUAL VALUES BY WELD COUNTY ASSESSORS
The 2008 Valuations (taxes payable in 2009) by the Weld County Assessor's Office are
as follows:
Address
Parcel #
Property Owner
ASSESSORS
ACTUAL
VALUE
8207 W.20 St.
09590832 5014
Conquest Holdings,
A
$ 615,285
8203 W.20 St.
09590832 5007
Conquest Holdings,
C
$ 640,200
8213 W.20 St.
09590832 5003
MVS Investments,
B
$ 680,000
8215 W.20 St.
09590832 6001
GS Properties,
C
$ 648,450
8219 W.20 St. #B
09590832 9002
Holiday Manor/TLW
G
$ 309,845
8217 W.20 St.
09590832 5004
O Investment Properties,
F
$ 700,000
8201 W.20 St.
09590832 7001
Steinbecker Properties,
D
$ 689,850
8223 W.20 St., #101
09590832 8002
Harris Homes,
H
$ 274,250
8235 W.20 St.
09590832 5011
Hemerson Properties,
VET
$ 1,324,120
The Weld County Assessor's Office has misplaced the quality of the buildings in
question. The lowest quality buildings appear to be the highest valued buildings
according to the valuations and the higher end buildings are valued the lowest. The
following is a quality rating from a personal inspection of both the interior and exterior of
the buildings.
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QUALITY RATING
8207 W. 20th Street - Interior Quality Rating - A -
The interior walls are taped and painted drywall with 10' ceilings also taped and painted
drywall with good quality recessed can lighting. The trim is stained 4" cherry wood
sculptured trim. The interior doors are Cherry Stained 2 panel doors. There are 16 at an
oversized 8' high. There are 43 panels in windows that are standard commercial
windows plus 3 additional interior windows with cherry trim.
The base cabinets are cherry Merillat (or similar) at 47 total LF, wall cabinets are cherry
Merillat or similar at 32 LF. Countertops are Formica mixed with granite to match.
Countertops included are 52' of granite and 18 linear feet of Formica in 2 kitchens and 2
baths within the complex.
Built -In appliances consist of dishwasher, disposal, stainless steel double sink w/ good
grade faucets, in each of the two kitchens. Floor covering is carpet above -average grade
commercial with pad over 70% and good quality tile over 30%. Central Air conditioning
units consist of two large a/c units.
Exterior — This building is 3,616 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 6/12 pitch hip roof with 6 three foot
dormers including windows. It has a %2 basement for storage that has taped drywall on
the ceiling.
8203 W. 20th Street, Units A B& D - Interior Quality Rating - B -
The interior walls are taped and painted drywall with 10' ceilings also taped and painted
drywall with good quality recessed can lighting. The trim is stained 3" cherry wood
sculptured trim. There are 6 interior doors of Cherry Stained 6 panel doors.
The base cabinets are cherry Merillat (or similar) at 12 total LF, wall cabinets are cherry
Merillat or similar at 12 LF with crown mold. Countertops are Formica. Countertops
included are 12 linear feet of Formica in 1 kitchen. The smaller units of B & D each have
a built-in base cabinet/ wall cabinet area of approximately 6 If each; both wall and base;
both natural cherry.
Built -In appliances consist of stainless steel sink w/ good grade faucet, disposal,
dishwasher and refrigerator.
Central Air conditioning units consist of 4 large a/c units —1 for each unit of the building.
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Exterior — This building is 4,000 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 6/12 pitch hip roof with no dormers.
This building has a full basement and is unfinished.
8203 W. 20t" Street, Unit C - Interior Quality Rating -C - (COMBINED = C)
The interior walls are taped and painted drywall. Ceilings are 10' ceilings also taped and
painted drywall with good quality recessed fluorescent lighting. The trim is 2" stained
oak sculptured trim to match natural flat panel oak doors. The base trim is 4" oak
sculptured. The interior doors are average to good quality, standard 6'8" high oak doors.
There are a total of 11 interior doors including the primary corridor to the additional units
described above. There are a total of 42 window panels of average quality. Air
conditioning is provided by 4 large ac units.
There are no reception counters but there are built-in dividers with wall caps of 8" oak in
the entrance area. There is a 6' oak base cabinet built-in with matching wall cabinets
above and a Formica top near the rear entrance to the unit. There is also an exam room
near the front entrance that has 7' of oak Wall cabinets and 9' of oak Base cabinets with
Formica countertop.
The floor covering is average grade commercial carpeting with pad. The floors are
accented with 12" floor tile covering 20% of the floor area including the bathrooms.
Exterior — This building is 4,000 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 6/12 pitch hip roof with no dormers.
This building has a full basement and is unfinished.
8213 W. 20th Street - Interior Quality Rating - B -
The interior walls are taped and painted drywall with 10' ceilings also taped and painted
drywall with good quality recessed can lighting. The trim is 4" stained knotty Alder
sculptured trim to match natural 2 panel doors knotty Alder doors. The interior doors are
average to good quality, standard 6'8" high doors. There are a total of 18 interior doors.
There are a total of 50 window panels of average quality.
The reception counter is a Formica top desk with natural cherry front and alder trim
mixed with 12" tile covering approximately 12 sq. ft. of area. There is a work area with
wall cabinets and countertop of 11 linear feet each; a work island with doors of natural
alder on each side of the base. The kitchen cabinets are limited in number to an average
sized kitchen. There are no additional built-in cabinets in the offices. The countertops
are Formica. The base cabinets consist of 44 linear feet of good quality natural Alder
wood cabinets. The wall cabinets are matching Alder 42" variable with 18" and 30"
wall cabinets 11 linear feet. Built -In appliances consist of a dishwasher, disposal, and
double stainless steel sink w/ good grade faucets.
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The floor covering is average grade commercial carpeting with no pad. The floors are
accented with 12" floor tile covering 30% of the floor area.
Central Air conditioning units consist of two large a/c units.
Exterior — This building is 4,000 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 5/12 pitch hip roof with no dormers.
This building has a full basement and is unfinished.
8215 W. 20th Street — Interior Quality Rating - C -
The interior walls are taped and painted drywall with suspended ceilings and recessed
fluorescent lighting of average quality. The trim is 4" stained knotty Alder flat trim to
match natural flat panel maple doors. The interior doors are average to good quality,
standard 6'8" high doors. There are a total of 19 interior doors plus two inside wood
entry doors that have glass panels. There are a total of 38 window panels of average
quality with grids and interior trim to match the knotty Alder.
The center area is a laboratory for veterinarian research. The countertops are Formica —
34 If. The base cabinets consist of 34 linear feet of average quality Formica laminated
pressed wood cabinets. The wall cabinets are matching average quality Formica
laminated pressed wood cabinets and contain 70 LF. Built -In appliances; there are none.
Sinks are two deep utility style fiberglass tubs.
The floors throughout the building are VCT tile and the baseboard is rubberized cove
base in the lab area and 4" stained knotty Alder for the remainder. The floors are
accented with 16" floor tile covering in the foyer. Central Air conditioning consists of
three large a/c units.
Exterior — This building is 3,930 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 5/12 pitch hip roof with no dormers.
This building has a full basement and is unfinished.
8219 W. 20th Street, Unit B - Interior Quality Rating -G -
The interior walls are taped and painted drywall. Ceilings are suspended grid system at
9' height with average quality recessed fluorescent lighting. The trim is 2" stained oak
flat trim to match natural flat panel oak doors. The base trim is turned up carpet attached
to the drywall at 4" height. The interior doors are average to good quality, standard 6'8"
high oak doors. There are a total of 8 interior doors. There are a total of 40 window
panels of average quality, 20 for each half of the building housing units A & B; the
interior trim is oak on all Unit B. Air conditioning is provided by 2 large ac units.
The reception counters are Formica top with painted drywall front and back. There are
built-in dividers with wall caps of Formica in center area. In the three offices combined
there is one small kitchen area with 10 linear feet of oak wall cabinets. Kitchen base
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cabinets are 6 linear feet of oak cabinets. The countertops are Formica. Built -In
appliances and fixtures consist of a stainless steel sink w/ good grade faucet and disposal.
The floor covering is average grade commercial carpeting with no pad. The floors are
accented with 12" floor tile covering 5% of the floor area including the bathrooms.
Exterior — This building is a 2,000 sq. ft. condo unit within a 4,000 sq. ft. building and is
of similar exterior construction to the balance of the buildings in Mountain Vista Office
Park. The exception to this lies in the roof and the basement features. This building has
a 5/12 pitch hip roof with no dormers. This building has a full basement and is
unfinished.
8217 W. 20th Street - Interior Quality Rating - F -
The interior walls are taped and painted drywall with 10' ceilings also taped and painted
drywall with good quality recessed can lighting. The trim is 6" stained knotty Alder
sculptured trim to match natural 2 panel knotty Alder doors. The interior doors are
average to good quality, standard 6'8" high doors. There are a total of 15 interior doors.
There are a total of 48 window panels of average quality.
The reception counters are Formica top with painted drywall front and alder trim. There
are three small counters totaling 50 if of countertop area. In the three offices combined
there is one kitchen plus two small wall cabinet areas — total wall cabinets are 35 linear
feet. All are Formica laminate pressed wood cabinets. The kitchen cabinets are limited
in number to an average sized kitchen. Kitchen base cabinets are 24 linear feet. The
countertops are Formica. Built -In appliances consist of a range top, dishwasher, and a
stainless steel bar sink w/ good grade faucet.
The floor covering is average grade commercial carpeting with no pad. The floors are
accented with 12" floor tile covering 30% of the floor area including the corridor and
bathrooms.
Central Air conditioning units consist of one large, one medium and one small a/c unit.
Exterior — This building is 4,000 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 5/12 pitch hip roof with no dormers.
This building has a full basement and is unfinished.
8201 W. 20'" Street — Interior Quality Rating - D -
The interior walls are taped and painted drywall with suspended ceilings and recessed
fluorescent lighting of average quality. The trim is painted 4" pine sculptured trim
to match white painted 2 panel doors. The interior doors are average to good quality,
standard 6'8" high doors with four being sidelight doors with one sidelight adjacent.
There are a total of 11 interior doors plus two inside entry doors. There are a total of 64
window panels of average quality.
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The cabinets are limited in number to an average sized kitchen. There are no additional
built-in cabinets in the offices. The countertops are Formica. The base cabinets consist
of 20 linear feet of good quality Merillat or similar cherry cabinets. The wall cabinets
are matching cherry Merillat or similar 42" variable with 18" and 30" wall cabinets 16
linear feet all include crown mold. Built -In appliances consist of a dishwasher, disposal,
double stainless steel sink w/ good grade faucets, and a drinking fountain outside the
conference room area.
The floor covering is average grade commercial carpeting with no pad. The floors are
accented with 16" floor tile covering 30% of the floor area. Central Air conditioning
consists of three large a/c units.
Exterior — This building is 4,000 sq. ft. and is of similar exterior construction to the
balance of the buildings in Mountain Vista Office Park. The exception to this lies in the
roof and the basement features. This building has a 5/12 pitch hip roof with no dormers.
This building has a full basement and is unfinished.
8223 W. 2001 Street, Unit 101 B - Interior Quality Rating —H — (unfinishedj
The interior of this unit is unfinished — it is framed, wired and plumbed only.
Exterior — This building is a 2,194 sq. ft. condo unit — %2 of the building, and is of similar
exterior construction to the balance of the buildings in Mountain Vista Office Park. The
exception to this lies in the roof and the basement features. This building has a 6/12 pitch
hip roof with no dormers. This building has a full basement and is unfinished.
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Address
A
8207 W.20 St.
B
8203 W.20 St.
C
8203 W.20 St.
FEATURE
MATERIAL
#
MATERIAL
#
MATERIAL
#
FLOORS:
CARPET
CARPET
70%
CARPET
CARPET
80%
PAD
PAD
70%
NO
NO
FLOOR TILE
16"
30%
FLOOR TILE
12"
20%
12"
20%
WALLS
DW
DW
DW
CEILINGS
DW
10'
DW
10'
DW
10'
TYPE
PAINTED
PAINTED
PAINTED
TRIM
BASE
4" CHERRY
3" CHERRY
OAK 4"
CASING
3" CHERRY
3" CHERRY
OAK 2"
TYPE
SCULPTURED
SCULPTURED
SCULPTED
DOORS
MATERIAL
CHERRY
CHERRY
OAK
MATERIAL
CHERRY
CHERRY
OAK
HEIGHT
8'
6'8" STD
6'8" STD
NUMBER
16
6
11
WINDOWS
# OF WINDOW
PANELS
43
21
21
TYPE
ALUM
ALUM
ALUM
GRIDS
GRIDS
GRIDS
GRIDS
WALL
CABINETS
MATERIAL
CHERRY
CHERRY
OAK
LF WALL CABS
MERILLAT
32
MERILLAT
12
STANDARD
13
CROWN MOLD
YES
YES
NO
BASE
CABINETS
MATERIAL
CHERRY
CHERRY
OAK
LF BASE CABS
MERILLAT
47
MERILLAT
12
STANDARD
15
COUNTERTOPS
MATERIAL
GRANITE
FORMICA
FORMICA
LF CTOP -
NATURAL
GRANITE
52
LF CTOP-
LAMINATE
FORMICA
18
FORMICA
24
FORMICA
15
BATHROOMS
NUMBER
2
2
1
KITCHENS
2 FULL
2
1
NO
KITCHENS
APPLIANCES
DW,DSP
2+2
DW, DSP, RF
1+1+1
NO
FIXTURES
SS SINK
1+1
SS SINK
1
NO
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Address
B
8213 W.20 St.
C
8215 W.20 St.
G
8219 W.20 St.
FEATURE
MATERIAL
#
MATERIAL
#
MATERIAL
#
CARPET
CARPET
70%
NO
CARPET
95%
FLOORS:
PAD
NO
NO
NO
FLOOR TILE
VCT TILE
100%
FLOOR TILE
12"
30%
12"
5%
WALLS
DW
DW
DW
WALLS
CEILINGS
DW
10'
DROP
9'
DROP
9'
TYPE
PAINTED
SUSPENDED
SUSPENDED
TRIM
BASE
ALDER 4"
ALDER 4"
40%
CARPET
4"
COVE 4"
30%
CASING
ALDER 3"
ALDER 3"
70%
OAK 2"
TYPE
SCULPTED
FLAT
SCULPTED
MATERIAL
ALDER
MAPLE
OAK
DOORS
MATERIAL
ALDER
MAPLE
OAK
HEIGHT
6'8" STD
6'8" STD
6'8" STD
NUMBER
18
19
8
WINDOWS
# OF WINDOW
PANELS
50
38
20
TYPE
ALUM
ALUM
ALUM
GRIDS
NO
GRIDS
NO
WALL
CABINETS
MATERIAL
ALDER
22
LAMINATE
OAK
LF WALL CABS
UPGRADE
70
STANDARD
6
CROWN MOLD
NO
NO
NO
BASE
CABINETS
BASE CABINETS
MATERIAL
ALDER
44
LAMINATE
OAK
LF BASE CABS
TILE SF
12
34
STANDARD
10
I COUNTERTOPS
MATERIAL
FORMICA
FORMICA
FORMICA
LF CTOP -
NATURAL
TILE SF
12
LF CTOP-
LAMINATE
FORMICA
54
34
12
BATHROOMS
NUMBER
2
1
1
KITCHENS
1
NO
1
KITCHENS
APPLIANCES
DW, DSP
1+1
NO
DSP
1
FIXTURES
SS SINK
1
NO
SS SINK
1
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Address
F
8217 W.20 St.
D
8201 W.20 St.
H
8223 W.20 St.
FEATURE
MATERIAL
#
MATERIAL
#
MATERIAL
#
FLOORS:
CARPET
CARPET
70%
CARPET
70%
unfinished
all
PAD
NO
NO
FLOOR TILE
16"
30%
FLOOR TILE
12"
30%
WALLS
DW
DW
unfinished
all
CEILINGS
DW
10'
DROP
9'
TYPE
PAINTED
SUSPENDED
TRIM
BASE
ALDER 6"
COLONIST
NONE
CASING
ALDER 3"
COLONIST
TYPE
SCULPTED
SCULPTED
DOORS
MATERIAL
ALDER
COLONIST
NONE
MATERIAL
ALDER
COLONIST
HEIGHT
6'8" STD
6'8" STD
WINDOWS
NUMBER
15
11
# OF WINDOW
PANELS
48
64
21
TYPE
ALUM
NO
ALUM
GRIDS
GRIDS
WALL
CABINETS
MATERIAL
LAMINATE
CHERRY
NONE
LF WALL CABS
35
MERILLAT
16
CROWN MOLD
NO
NO
BASE
CABINETS
MATERIAL
LAMINATE
CHERRY
-�
NONE
LF BASE CABS
24
MERILLAT
20
COUNTERTOPS
MATERIAL
FORMICA
FORMICA
NONE
LF CTOP -
NATURAL
50
LF CTOP-
LAMINATE
20
BATHROOMS
NUMBER
2
2
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all
KITCHENS
APPLIANCES
DW, TOP
14-1
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all
FIXTURES
SS BAR SINK
1
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NUMBER 482.00 16 S 7,712 $ 432.00 C 61$ 2,592 I $ 164.00 11 S 1.804
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WALL CABINETS MATERIAL CHERRY/LF $ 351.67 I S 11,253 CHERRY/LF I $ 351.67 1$ 4,220 OAK / LF I S 136.67 $ 1.777 1
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TOTAL QUALITY
NTERIOR
:EATURES SUM $ 100,325 $ 31,229 $ 18,204
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INTERIOR
FEATURES SUM $ 42,702 $ 55,274
1059.4125
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SW311 HSINIJ t/3ati 'ldflb SS321odb'
21O12131N1 JO ISO 43HSIN1J
S.F. TOTAL BUILDING
$ 27.74 $ 100,325.05 $ 100,325.05
-
$ 21.13 $ 31,229.18 $ 49,432.731
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$ 20.79 $ 83,155.59 $ 83,155.59
$ 14.02 $ 55,274.10 $ 55,274.10
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$ 19.33 $ 55,548.35 $ 55,548.35
-
$ 12.42 $ 49,432.73 $ 49,432.73 I
-
$ 10.68 $ 42,701.84 $ 42,701.84
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DOUBLE $ 35,694.42 $ 35,694.42
-
DOUBLE $ 13,728.96 $ 13,728.96
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18207 W.20 St.
8203 W.20 St.
18203 W.20 St.
18213 W.20 St.
18201 W.20 St.
18215 W.20 St.
18203 W. 20 St.
p8217 W.20 St.
18219 W.20 St.
8223 W.20 St.
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COST REPLACEMENT APPROACH TO VALUATION
The following is the methodology of calculating a market value by means of using the
construction cost replacement of the building improvements including land cost,
excavation, permits & fees, utilities, hard and soft costs. This method is the one
approved by the appraisal standards of practice.
LAND VALUE * APPRAISED BY SALES COMPARISON
+ COST TO BUILD (MATERIALS, LABOR, ETC)
- DEPRECIATION
*PHYSICAL
*FUNCTIONAL
*EXTERNAL
= MARKET VALUE BY COST METHOD
Land Valuation for 8213 W. 20`h Street by Our 2005 Data Source
Summary Land Valuation According to Source #3: 6/15/05
Land Valuation for the purpose of the Cost Approach:
Buildable SF X $/Buildable SF = Value
4,000
X $50.00
$200,000
Land Valuation for 8201 W. 20th Street by Appraisal Specialties, Inc.
Summary Land Valuation According to Source #1: 6/15/07
Land Valuation for the purpose of the Cost Approach:
Buildable SF X $/Buildable SF
Value
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ID
ID
IP
IP
ID
ID
ID
ID
ID
4,000 X $55.00 = $220,000
We found no errors in the appraisal by the 2005 source in the land valuation dated
6/15/05, however 18 months into the current recession which began in Greeley during the
1St quarter of 2006, the appraised value of the land for 8201 W. 20th Street by Appraisal
Specialties, Inc. showed an increase in land value by 10% at a time when vacancy had
increased to over 20% in the area, foreclosures were up and comments were made to that
effect in the appraisal. The location and certainly the tax area differences should have
been noted at that time and adjustments made to either the land valuation or for location
within the market approach and cost approach.
Cost Approach From Source 1 (Appraisal Specialties, Inc.) 6/15/2007
(Reconstructed format for comparison purposes)
Construction Cost Estimate
SF or %
Cost/SF
Total
Core and Shell
3922
$60.68
$237,999
Tenant Finish
3922
$33.86
$132,799
Total Cost of Improvements
$370,798
Overhead
$0
A&E/F&F
Subtotal
$370,798
Developer's Profit
+
$39,630
Subtotal
$410,416
Soft Costs
+
4500
Commission
$0
Depreciation
Physical
-
$0
Functional
-
$0
External
-
$0
Site Improvements
+
$21,000
Total Costs
3922
$111
$435,928
LAND
$220,000
Total Costs
$655,928
On page 58 of the appraisal report by Appraisal Specialties, Inc. a note regarding
depreciation appears as follows:
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There appears to be no functional obsolescence. No external factors are thought to
exist that would be a detriment to the subject's value."
External Depreciation Found in the Location and Market Conditions:
The tax comparables utilized by the appraiser and identified as source #1 would not have
indicated a tax expense difference to the appraiser or the reader, because they are in the
same subdivision. However, the land sales comparables would have indicated a
marketable difference if the appraiser had included tax expense differences in his search
and consideration.
The tax districts found within this study which differ from the subject's tax district are as
follows:
COMPARABLES
TAX
AREA
2008
MIL
2007
2006
2005
GENERAL
LOCATION
MIL
MIL
MIL
LEVY
LEVY
LEVY
LEVY
.S�
. 6��t venue-
955 52nd Avenue
_
e -
-
X8 3
73:673-
7:.97
7 arr
81T.3
4
47 Ave to 59 Ave &
10th to 11th Streets
0600
75.261
75.561
79.429
80.941
Pumpkin Ridge — 10"' St.
2116
80.4.50
80.106
83.767
85.560
Summitview Medical Ctr. -
St. Michaels
2081
75.811
76.112
79.977
81.517
SIGNATURE
BANK
BLD
2874
76.740
76.994
80.961
82.560
_
- -- Weld Coun ' Bank
Allias
i,
-
1
AS
AVG
76.5557
76.741
80.59
82.1727
OF ALL COMP AREAS
TAX
%
113%
111%
102%
108%
PERCENT MOUNTAIN
VISTA - HIGHER
Mtn Vista Office Park
2149
86.501
85.209
82.572
88.971
Land sales 2, sale 3, and sale 4 all were in different tax districts than the subject and
would have revealed the difference in expense to the appraiser. If reported in the report;
the cost difference would have flagged the situation to the purchaser and notified the
lender, as well.
However, if the appraiser chose not to adjust the land value for location, he could well
have utilized this information to make location, date of sale, and market condition
adjustments in the market comparison approach to value and should have used the
EEO
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income capitalization methodology to determine the amount of the adjustment due to the
additional expense. The amount of the adjustment would then be utilized within the cost
approach under EXTERNAL DEPRECIATION, as well.
The mechanics of the analysis of the additional expense due to taxes and vacancy will be
discussed later in this report under the income approach. However, do not be misled by
the fact that some appraisers chose not to utilize the full approach to value such as the
cost approach or the income approach within their analysis. The cost of an item is still
valid in authenticating a physical adjustment within the sales comparison approach. The
same holds true for the income approach; the income generation or loss from an
individual source can (and should be) capitalized into a value adjustment. Additional
expenses to the property owner must be similarly analyzed, even if the income approach
to a value indication is not utilized within the report. Utilizing this method keeps the
appraiser from simply making an educated guess as to the amount of adjustment and
should always be considered or used exclusively.
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VACANCY IN THE GREELEY AREA
Considerable discussion of vacancy within the appraisal reports reviewed was devoted to
this topic. Historical vacancy reported within appraisal reports and other sources is
summarized in the chart below.
Quarter
Year
Rate
Interpolated *
4th Quarter
2003
10.80%
1st Quarter
2004
13.00%
2nd Quarter
2004
11.90%
3rd Quarter
2004
11.80%
4th Quarter
2004
11.33%
1st Quarter
2005
10.87%
Appraiser Used
5%
2nd Quarter
2005
10.40%
3rd Quarter
2005
20.84%
4th Quarter
2005
19.70%
1st Quarter
2006
20.05%
2nd Quarter
2006
20.70%
3rd Quarter
2006
20.34%
4th Quarter
2006
19.98%
1st Quarter
2007
19.62%
2nd Quarter
2007
19.26%
Appraiser Used
10%
3rd Quarter
2007
18.90%
4th Quarter
2007
18.53%
1st Quarter
2008
18.17%
2nd Quarter
2008
18.20%
Appraiser Used
7%
3rd Quarter
2008
16.26%
4th Quarter
2008
17.25%
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The Mountain Vista Office Park had a vacancy for the years 2007 and 2008 as follows:
MOUNTAIN VISTA OFFICE PARK
Property
Address/Owner
Building SF
Occupied
SF
Vacant
SF
Vacant
%
8201 W. 20th St.
3942
2365
1577
40.00%
8203 W. 20th St.
3880
3480
400
10.31%
8205 W. 20"' St.
4000
4000
100.00%
8207 W. 20"' St.
3616
1808
1808
49.99%
8209 W. 20"' St.
3760
3760
100.00%
8213 W. 20th St.
4000
3250
750
18.75%
8215 W. 20th St.
3930
2874
1056
26.87%
8217 W. 20th St.
4000
2000
2000
50.00%
8219 W. 20th St. #1
1980
1380
600
30.30%
8219 W. 20th St. #2
1980
1980
0.00%
8221 W. 20th St.
4052
4052
0.00%
8223 W. 20th St. #1
2160
2160
0.00%
8223 W. 20th St. #2
2194
2194
100.00%
TOTALS
43,607
24,962
18,645
AVERAGE PERCENT OF SQ. FT. VACANT
IN MOUNTAIN VISTA OFFICE PARK FOR 2008
41.74%
LOCATION
Mountain Vista Office Park has been hit especially hard with vacancy since 2006. This is
due to it being in a location that is further from central services. Medical offices have
clustered around the Summit View Medical Center in the Mountain View Office Park
which is across the intersection from Summit View to the Northwest. In this park, there
are 10 medical occupants in the 13 buildings. The Signature Bank building to the North
and across the street from Summit View has also filled with medical tenants where 8 of
12 units are medically related, two of which recently moved from Mountain View Office
Park, but none have moved to Mountain Vista Office Park. A few blocks to the east of
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the Signature Bank Building along 65th Avenue from the medical center, there are
additional medical offices.
Yet I mile west of the Summit View Medical Center, there is only one building of 13
buildings that is fully medical and two %x building condos that have medically related
tenants.
It is a well known fact that medical offices tend to cluster near medical facilities and
hospitals. It is also common to see legal related offices cluster around county court
houses and other civic buildings. Yet the appraisers in all cases -including the Weld
County Assessors - chose to not adjust for location. It takes substantial analysis in order
to adjust for location and most appraisers tend to guess at the amount. However,
location can and must be accounted for and appraisers must do the calculations they are
taught in their courses to become an appraiser, certainly to be a Certified General
Appraiser.
Other offices in -lieu -of medical and legal can fill facilities, but where a large portion of a
competing office complex is medical and legal, these facilities tend to drive the rates
higher and deter other potential office users. It is essential that an appraiser adjust
accurately for location, lease rates, tax rate differentials and vacancy due to the additional
expense and loss of income from these sources.
The Mountain Vista Office Park is on the extreme west edge of the city of Greeley. It is
the furthest office park from city and county services and the furthest from medical
centers. While it is anticipated that it will someday become a better location when nearby
subdivisions develop, it is not and was never a location that compares favorably to other
office parks more centrally located to these centers.
INCOME APPROACH TO VALUE REVIEWS
The income approach to market value is precipitated on the fact that a prudent investor
would consider alternative investments before purchasing a long-term real estate
property. The prudent investor would expect a certain return on his investment over a
period of years called the holding period. The net income anticipated from a real
property investment is then capitalized at that rate which is called a capitalization rate.
The capitalization rate is presumed to be derived from either the market sales of similar
properties within the area, or is created (built-up) by comparison to other investments
considering the various risks and management such investments might incur.
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The general formula for calculating market value via the income approach method is as
follows:
INCOME APPROACH
RENTAL INCOME
NET INCOME
MINUS EXPENSE NET INCOME
CAPITALIZATION RATE
MARKET VALUE BY INCOME APPROACH
This approach can (and should be) utilized when placing a value on an intangible
difference between comparables, such as determining functional or external depreciation
for use in the cost replacement approach, as well as when valuing an entire property. It is
also utilized for location and market adjustment amounts for use in the sales comparison
(market) approach.
For example: if a property in a particular location will not rent for as high a lease rate as a
similar property in another location, then the difference between the annual incomes
generated by the properties should be capitalized by the market capitalization rate to
determine the location adjustment.
Income (Appraisal
Approach From Specialties, 6/15/2007
Source 1 Inc.)
Income -
Expense - 8201
W. 20th Street
SF or °/u
RentSF
Income
Expense
Total
Rental Income
Unit A
n/a
n/a
n/a
n/a
n/a
Appraisal Specialties, Inc. did not complete an income approach for the property
appraised at 8201 W. 20th Street June 15, 2007.
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Income Approach from Source 3 (Our 2005 Data Source) 3/28/2005
8213 W. 20th Street Reconstructed to fit the format
Income
Expense
SF or %
Rent/SF
Income
Expense
Total
Rental Income
Unit A
2000
$ 15.00
$30,000
$30,000
Rental Income
Unit B
400
$ 15.00
$6,000
$6,000
Rental Income
Unit C
400
$ 15.00
$6,000
$6,000
Rental Income
Unit D
400
$ 15.00
$6,000
$6,000
Rental Income
Unit E
400
$ 15.00
$6,000
$6,000
Rental Income
Unit F
400
$ 15.00
$6,000
$6,000
Potential Gross Annual Income
$60,000
Vacancy and
Collection Loss
5%
$3,000
-$3,000
Effective Gross Annual Income
$57,000
Operating Expenses
Management
3.00%
$1,710
$1,710
Reserves for
Replacement
4000
$ 0.20
$800
$800
Real Estate
Taxes
0%
$ 16,247
$0
$0
Insurance
0%
$ 0.45
$0
$0
Utilities
0%
$ 2.50
$0
$0
Maintenance
0%
$ 0.20
$0
$0
Total Estimated Operating Expense
$2,510
Net Income
4000
$13.62
$54,490
Capitalization Rate 0.0840
Capitalized Value of Property - 8213 W. 20th Street
$648,690
There were no irregularities found within the income approach by the 2005 source.
His report was generated prior to the beginning of the current recession; therefore the
tax ramifications and additional vacancy had not yet occurred. We do question
Management expense as only property management and feel an additional fee for
accounting should be added.
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Austin & Austin
8217 W. 20th Street
Income Approach
Reconstructed to fit the format
4/1/2008
Income
Expense -
SF or %
Rent/SF
Income
Expense
Total
Rental Income
Unit A
2000
$ 11.00
$22,000
$22,000
Rental Income
Unit B
1200
$ 11.00
$13,200
$13,200
Rental Income
Unit C
800
$ 11.00
$8,800
$8,800
Potential
Annual
Gross
Income
$44,000
Vacancy and
Collection Loss
7%
$3,080
-$3,080
Effective
Annual
Cross
Income
$40,920
Operating
Expenses
Management
5.00%
$2,046
$2,046
Reserves for
Replacement
4000
$ 0.50
$2,000
$2,000
Real Estate
Taxes
0%
$ 17,297
$0
$0
Insurance
4000
$ 0.45
$0
$0
Utilities
4000
$ 2.50
$0
$0
Maintenance
4000
$ -
$0
$0
Total Estimated Operating Expense
$4,046
Net Income
4000
$9.22
$36,874
Capitalization Rate 0.0750
Capitalized Value of Property - 8217 W. 20th Street
$ 491,653
LEASE RATES
Mr. Willard determined that the lease rates reported for offices for Greeley through
Realtec of $12.00 to $21.00 and in the Northern Colorado Business Report of $13.50 to
$17.00 were not supported for the area of Mountain Vista Office Park. He used the lease
rate of $11.00 for this property.
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LOCATION ADJUSTMENTS
As discussed above, this difference, although not a proven discount amount could have
been used to capitalize into a location adjustment for use in the sales comparison
approach. We will discuss a more appropriate method in the final income analysis
section of this report.
EXPENSES APPLIED TO INCOME
Mr. Willard also chose not to show expense for taxes and insurance. This may be
appropriate if the tenant is paying additional rates in the entire market surveyed to cover
these additional expenses. However, it is not appropriate to leave the tax and insurance
portion out of the expense analysis for an owner occupant and it is not appropriate to
leave out expense on the basis of the subject or subdivision being owner occupied. Also,
when the vacancy rate is high, the owner whether an occupant or not must pay these
expenses. The income is not actual income, but market derived, therefore if the income
for the entire building is used; then the expense for the entire building also must be
utilized. We do question Management expense as only property management and feel an
additional fee for accounting should be added.
VACANCY RATES
Although the vacancy rate was 18.2% at the time of the appraisal, Mr. Willard utilized a
rate of 7%. It is our opinion that the 18.2% vacancy should have been used, or an
additional study of the western portion of Greeley been completed and applied. As noted
on the Vacancy Rate grid on page 19 of this report, the vacancy climbed to near 20% in
the 3`d quarter of 2005 and has remained in that state for four years.
MARKET CONDITIONS ADJUSTMENTS
Mr. Willard's approach is acceptable, because he adjusted the rents in -lieu -of applying
the actual reported vacancy rate. As of the date of this report, the subject of the appraisal
completed 4/1/08 by Austin & Austin (Mr. Bruce Willard) was not fully occupied,
therefore the rate that was used to anticipate a 7% vacancy, did not cover all the market
conditions. In our opinion it would have been more precise to have used the actual
vacancy and the additional expense and then to use these as verification of the location,
external depreciation, market conditions and date of sale adjustments for the cost and
sales comparison approaches. We will utilize this method in our cost, income and market
correlations.
NET INCOME
The expenses including taxes, insurance, management, utilities, maintenance and services
all combine to lower the net income. Since the report did not take into consideration that
vacancy not only causes a loss of income, but an additional expense burden to the
property owner who must pay the taxes and insurance regardless of there being no tenant,
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then the expenses were understated. Understated expense leads to overstated net income
and an overstated value indication.
CAPITALIZATION RATES
There were ample comparables used to determine the capitalization rate. There were no
dates of sale reported for the comparables, but it is reasonable to assume these were
transactions within the year of appraisal and/or an adjustment was made.
SALES COMPARISON APPROACH TO MARKET VALUE
BUILDING SALES FROM SOURCE #1 -APPRAISAL SPECIALTIES 6/15/2007
Property
Date of Sale
Sale Price
Land
SF
Price
/Buildable/
SF
Use
Identifying #
Year
Built
Build -
able
SF
1715 61st
Avenue
1/22/2007
$781,700
9283
$144.76
Office
095909430011
2005
5400
8215 W. 20th
Street
8/29/2006
$633,300
15948
$16535
Office
095908326001
2006
3830
8225 W. 20th
St. Bldg E
3/25/2006
$618,500
23813
$152.64
Office
095908325005
2004
4052
8225 W. 20th
St. Bldg F(aka
8217)
3/23/2006
$630,000
22085
$157.50
Office
095908325004
2005
4000
8225 W. 20th
St, Bldg O (aka
8223)
11/30/2005
$640,000
16844
$160.08
Office
095908326002
2005
3998
8225 W. 20th
St, Bldgs H, I,
& J (aka 8205)
Listing
$650,000
20000
$162.50
Per Finish
095908327001
2005
4000
8237 W. 20th St.
Listing
$700,000
43074
$70.00
Veterinary
none
Active
10000
LOCATION ADJUSTMENTS
The appraiser made one location adjustment for comparable #1 and it was in the correct
direction i.e. a minus adjustment, but he did not reveal how much and made only one
minus mark indicating only V2 of the amount of a -H- adjustment, for example. He used a
++ adjustment for a partial basement versus the full basement of the subject property, so
this gives us an indication of the amount of the adjustment for location. We will analyze
this in additional detail in the Sales Comparison Correlation later in this report.
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MARKET CONDITIONS ADJUSTMENTS
The appraiser did not make any adjustment for time or market conditions at the time of
appraisal. He also did not make any adjustments for Conditions of Sale.
DATE OF SALE ADJUSTMENTS
The appraiser did not make any adjustments for date of sale.
QUALITY ADJUSTMENTS
The appraiser made an adjustment as though an allowance between $26.88 per square
foot for interior tenant finish for the subject versus $25.00 or $1.88 per sq. ft. in favor of
the subject for comparables 3, 4, 5, and 6. He made a full adjustment for comparable #1
due to no tenant finish in the amount of $26.88 per sq. ft. Comparable #2 (8215 W. 20th
Street) was adjusted for the difference between $26.88 and the comparable superior
tenant finish in the amount of $41.47 or -$14.59 per sq. foot.
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BUILDING SALES FROM SOURCE #2 - AUSTIN
4/1/2008
Property
Date of
Sale
Sale Price
Land
SF
Price
/Buildable/
SF
Use
Identifying #
Year
Built
Buildable
SF
4627 W.
20th Street
Rd - Fox
Hill
4/27/2006
$950,000
21949
$168.77
Office
none
2004
5629
1703 61st
Avenue#A
- Fox Run
6/20/2007
$504,553
9608
$183.81
Office
none
2006
2745
4675 W.
20th Street
Rd - Fox
Hill
4/10/2007
$700,000
21825
$162.94
Office
none
1999
4296
8219 W.
20th St. #2
- Condo
Mtn. Vista
8/30/2007
$330,000
6688
$166.67
Office
none
2005
1980
LOCATION ADJUSTMENTS
The appraiser made three location adjustments for comparables #1, #2 and #3. The
adjustment was in the correct direction i.e. a minus adjustment, and in the amount of
10%. We will analyze this in additional detail in the Sales Comparison Correlation later
in this report.
MARKET CONDITIONS ADJUSTMENTS
The appraiser did not make any adjustment for time or market conditions at the time of
appraisal. He also did not make any adjustments for Conditions of Sale.
DATE OF SALE ADJUSTMENTS
The appraiser did not make any adjustments for date of sale. Comparable #1 sold two
years earlier, Comparable #2 sold 9 months earlier, Comparable #3 was a contract and
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therefore not a closed transaction, indicating he did not have enough sales to populate the
appraisal as he would have preferred.
QUALITY ADJUSTMENTS
The appraiser made adjustments to comparables #2, 3 and 4 for quality. Comparable #1
was in Foxhill, Comparable #2 was in Fox Run Business Park, Comparable #3 was in
Foxhill and Comparable #4 was in the subject subdivision across the parking lot from the
subject of his report. Comparable #2 and #3 were adjusted by a minus 5% each
indicating the subject was inferior in quality of construction, but the grid indicated
Comparable #2 was inferior. Since the other indicators would tend to support the
description as opposed to the adjustment, our assumption is that his adjustment was
intended to be a positive 5% instead of a minus 5%. He adjusted comparable #4 by a
positive 10% indicating the subject was superior to the comparable.
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BUILDING SALES FROM SOURCE #3 - THE 2005 SOURCE 3/15/2005
Property
Date of
Sale
Sale Price
Price
!Buildable/
SF
Use
Identifying #
Year
Built
Buildable
SF
7251 W. 20th St.,
Bldg I
7/31/2003
$1,900,000
$146.15
Office
3090971/3
13000
7252 W. 20th St.,
Bldg B
11121/2003
$675,000
$168.75
Office
3132069
2003
4000
7252 W. 20th St.,
Bldg N
3/22/2004
$780,000
$141.82
Office
3132069
2004
5500
5623 19th Street
2/25/2004
$1,395,843
$181.00
Medical
3157406
2004
7712
1035 37th Avenue
Ct.
3/8/2002
$765,634
$147.24
2932741
2002
5200
4407 29th Street
4/28/2003
$1,430,000
$139.11
Office
3062241
10280
LOCATION ADJUSTMENTS
The appraiser made no location adjustments to any of the comparables, however, this was
one of the first, or the first building in the subject project and county assessor's data was
unavailable. There were no solid indications of higher expense in this location. He
described all comparables as west Greeley.
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MARKET CONDITIONS ADJUSTMENTS
The appraiser did not make any adjustment for time or market conditions at the time of
appraisal. He also did not make any adjustments for Conditions of Sale.
DATE OF SALE ADJUSTMENTS
The appraiser did not make any adjustments for date of sale.
QUALITY ADJUSTMENTS
The appraiser made no quality of construction adjustments.
After review of this appraisal we have found nothing to disagree with the findings and
analysis of this appraisal.
COMMENTS:
The purpose of this report is to determine the appropriate valuation for the Mountain
Vista Office Park owners for property taxing purposes. In order to do this it was vital to
review any appraisals located which were completed in the previous 1 to 3 years on the
above properties. The findings of the appraisals and determinations of inconsistencies and
value conclusions have been presented in the previous pages of this report. Some of
these errors or misjudgments may have resulted in errors to the final value conclusions of
some of these reports.
We have completed analysis to determine the most appropriate methodology of
correcting the previous value conclusions and they are presented in the following
correlations. Of course, hindsight is easier to deal with than foresight, but it is the
appraiser's job to forecast to a degree and remain within the ethical principles of
appraisal in doing so. This is the primary principle of the income approach; to forecast
to a degree how a prudent investor would view the subject property given the forecasting
that he (the investor) must do to compare future rates of return on his investment dollar.
INCOME APPROACH CORRELATIONS
We assume that the appraisers acted in good faith and exercised due diligence in the
process of data collection and analysis at the time of the reports in question. We have
found only a couple of areas of concern. Assuming all the other data in the Austin
Appraisal is correct; we will look at the income approach that was done on the subject of
that appraisal 8217 W. 20th Street, Greeley, CO 80634, on the following page.
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INCOME APPROACH FROM AUSTIN APPRAISAL
4/1/2008
Gross Annual Income 4,000 $11.00
$44,000
Less Vacancy & Collection 7%
($3,080)
Effective Gross Income
$40,920
Less Operating Expense (not including taxes & insurance)
($4,046)
Net Income
$36,874
Capitalization Rate 7.5%
Net Income divided by capitalization rate = Value Indication
$491,653
Rounded Value Correlation
$491,000
If Mr. Willard had used $15.25 per square foot as his lease rate based on an average of
the tighter range of office rent provided by the Northern Colorado Business report of
$13.50 to $17.00, then his Gross Annual Income would have been larger.
Then, if he had stuck to the confirmed Vacancy Rate of 18.2%, the Effective Gross
Income would have also been affected as you will see in the following breakdown. If he
had then considered that along with vacancy comes additional expense, as well as the loss
of income, he would have added the taxes and insurance, because the owner is stuck with
both regardless of whether or not the owner is occupying the property. So, assuming that
the vacancy rate of 18.2% is correct, then 18.2% of the Taxes and 18.2% of the Insurance
would also be the responsibility of the property owner. We can exclude most of the
utilities, assuming that the owner would keep utility costs to a minimum if vacant;
however we acknowledge that 18.2% of the utility bills would also need to be picked up
as an additional expense by the owner, especially during winter months in this climate.
The income approach to value is therefore as follows:
Gross Annual Income 4,000 $15.25
$61,000
Less Vacancy & Collection 18.2%
($11,102)
Effective Gross Income
$49,898
Less Operating Expense (not including taxes & insurance)
($4,046)
Less Additional Expense (Tax & Ins) T=$17,297 I = $1,800
($3,476)
Less Management/Accounting
($4,000)
Net Income
$38,376
Capitalization Rate 7.5%
Net Income divided by capitalization rate = Value Indication
$511,680
Rounded Value Correlation
$511,700
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• With this approach, there is no reason to eliminate its validity within the final
• reconciliation as Mr. Willard chose to do. Rather, the difference can now be an
indication of Market Conditions; and adjustments to the other approaches are validated
and quantifiable.
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• There was no income approach completed by Appraisal Specialties, Inc.
There were no changes necessary to the our 2005 Data Source Appraisal as it was done
• prior to the effective time period of the appraisal.
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COST REPLACEMENT CORRELATIONS
Cost Approach From Source 1
Reconstructed format for
(Appraisal Specialties, Inc.) 6/15/2007
comparison purposes)
Construction Cost Estimate
SF or %
Cost/SF
Total
Core and Shell
3922
$60.68
$237,999
Tenant Finish
3922
$33.86
$132,799
Total Cost of Improvements
$370,798
Overhead
$0
A&E/F&F
Subtotal
$370,798
Developer's Profit
+
$39,630
Subtotal
$410,416
Soft Costs
+
4500
Commission
$0
Depreciation
Physical
-
$0
Functional
-
$0
External
-
$0
Site Improvements
+
$21,000
Total Costs
3922
$111
$435,928
LAND
$220,000
Total Costs
$655,928
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In 2nd quarter 2007 the vacancy rate was 19.26% in the Greeley area and had been in that
general range for over a year and a half. The appraiser on this property within Mountain
Vista Office Park interviewed many realtors, and made comments throughout the
appraisal report that would lead the reader to believe that he knew the economy was in a
recession. We feel he should have used this vacancy rate to calculate (via the income
capitalization method) an external depreciation amount for use in both the cost approach
and the sales comparison approach under market conditions. Further, we feel that he
should have looked at the Tax Area differences between area 2149 and the comparable
areas he studied to arrive at his conclusions and then applied the capitalization techniques
to arrive at an additional amount of external depreciation which should have been applied
to the cost replacement approach to value.
As of the 2007 date of appraisal, the tax district's mill levy for 2006 taxes, were
available. Tax area 2149 mill levy was 82.572 and comparable #1 mill levy was 79.563
or 4% higher than the comparable. An adjustment should have been made on comparable
#1 to bring the comparable down to the subject level in location by an additional 4%
divided by the capitalization rate, for the tax area, since this is an expense item.
Location was adjusted for on this comparable but no explanation was provided as to the
amount or the reason. We know that the proximity to medical and vacancy by 2007 was
clearly in favor of the comparable location. The rents at the subject subdivision have
decreased from $15.00/sf according to the 2005 source's appraisal to $11.00 according to
Mr. Willard's appraisal in mid 2008. For further confirmation; the subject subdivision
was still 42.76% vacant by end of year 2008. Several offices were advertised at below
$11.00 including 8217 W. 20th Street by Troy Armstrong of H2Oman Realty and 8223
W. 20th Street by Brinkman Real Estate. It is our opinion that the rate actually
decreased to $10.00 or less by mid 2008 when the Willard appraisal was completed.
However, it is also our opinion that the rents at the comparable's location have also
declined to $13.00 per sq. ft. during that period. The difference is then $3.00 per square
foot as opposed to the $4.00 per square foot that the Willard appraisal seemed to indicate.
Since this $3.00 per square foot is a direct reduction in income, it must also be capitalized
in order to determine the locational adjustment amount. From these two items, coupled
with the vacancy rate in mid 2008, we can derive market condition adjustments, location
and date of sale adjustments which will be combined in the cost approach under external
depreciation.
CAPITALIZATION RATE
The capitalization rate determined in 1st Quarter 2005 by the 2005 source was 0.084 and
the capitalization rate determined by Mr. Willard in 1st Quarter 2008 was 0.075. These
capitalization rates were both reported to be extracted from the market. Assuming they
are correct, then the 2007 capitalization rate could be interpolated, even though no
capitalization rate was revealed in the 2007 appraisal. The interpolated capitalization rate
for June 2007 is 0.077769. This capitalization rate is then utilized to capitalize the
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CAPITALIZATION RATE
The capitalization rate determined in 1st Quarter 2005 by the 2005 source was 0.084 and
the capitalization rate determined by Mr. Willard in 1st Quarter 2008 was 0.075. These
capitalization rates were both reported to be extracted from the market. Assuming they
are correct, then the 2007 capitalization rate could be interpolated, even though no
capitalization rate was revealed in the 2007 appraisal. The interpolated capitalization rate
for June 2007 is 0.077769. This capitalization rate is then utilized to capitalize the
income loss and the additional expense in order to determine the amount of external
depreciation applicable to the cost approach and comparable sales approach.
CAPITALIZATION RATE INTERPOLATION GRID
1ST QUARTER 2005
STEP VALUE
-0.000692308
8.4000%
2nd QUARTER 2005
STEP VALUE
-0.000692308
8.3308%
3rd QUARTER 2005
STEP VALUE
-0.000692308
8.2615%
4th QUARTER 2005
STEP VALUE
-0.000692308
8.1923%
1st QUARTER 2006
STEP VALUE
-0.000692308
8.1231%
2nd QUARTER 2006
STEP VALUE
-0.000692308
8.0538%
3rd QUARTER 2006
STEP VALUE
-0.000692308
7.9846%
4th QUARTER 2006
STEP VALUE
-0.000692308
7.9154%
1st QUARTER 2007
STEP VALUE
-0.000692308
7.8462%
2nd QUARTER 2007
STEP VALUE
-0.000692308
7.7769%
3rd QUARTER 2007
STEP VALUE
-0.000692308
7.7077%
4th QUARTER 2007
STEP VALUE
-0.000692308
7.6385%
1st QUARTER 2008
STEP VALUE
-0.000692308
7.5692%
2nd QUARTER 2008
STEP VALUE
-0.000692308
7.5000%
3rd QUARTER 2008
STEP VALUE
-0.000692308
7.4308%
4th QUARTER 2008
STEP VALUE
-0.000692308
7.3615%
The mechanics of the cost approach for the subject property in source 1 are
demonstrated below.
The tax expense, which was determined to be 4% x $9,980 = $399.20 additional expense
per year. We divide this by the capitalization rate - 0.077769 to determine the impact on
the total value of the subject property, which equals $5,133 — external/location
depreciation
The lease rate income decrease which was determined to be $3.00/sf x 3922 sf = $11766
income loss, divided by the capitalization rate - 0.077769 to determine the impact on the
total value of the subject property, which equals $151,448 — external/market depreciation
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With this information, we can now determine the date of sale adjustment portion of the
ExternaUMarket depreciation for use in the sales comparison approach.
Using the grids below, we can see how the market declined to the present day figures.
Comparable #1 which was utilized by our cost approach presented by Appraisal
Specialties, Inc. sold in January of 2007 according to the improved sales comparison grid
on page 63 of the report which was 3 months between the comparable and the subject
report effective date.
The market rate at the time of the comparable sale for the comparable location was
$13.83 per square foot. The market rate for the subject property as of the effective date
was $11.25 per square foot. The difference between the subject property market rate and
the comparable market rate was $2.57 per square foot -applied to subject size. The date of
sale adjustment for use in the sales comparison approach is 3,922 sq. ft. X $2.57 =
$10,080. Therefore, of the $151,448 of market induced external depreciation, $10,080 is
date of sale; the remainder is market conditions so an adjustment of $141,368 must be
made to market conditions in the sales comparison approach to value.
LEASE RATE INTERPOLATION FOR MOUNTAIN VISTA OFFICE PARK
1ST QUARTER 2005
STEP VALUE
-0.416666667
$ 15.00
2nd QUARTER 2005
STEP VALUE
-0.416666667
$ 14.58
3rd QUARTER 2005
STEP VALUE
-0.416666667
$ 14.17
4th QUARTER 2005
STEP VALUE
-0.416666667
$ 13.75
1st QUARTER 2006
STEP VALUE
-0.416666667
$ 13.33
2nd QUARTER 2006
STEP VALUE
-0.416666667
$ 12.92
3rd QUARTER 2006
STEP VALUE
-0.416666667
$ 12.50
4th QUARTER 2006
STEP VALUE
-0.416666667
$ 12.08
1st QUARTER 2007
STEP VALUE
-0.416666667
$ 11.67
2nd QUARTER 2007
STEP VALUE
-0.416666667
$ 11.25
3rd QUARTER 2007
STEP VALUE
-0.416666667
$ 10.83
4th QUARTER 2007
STEP VALUE
-0.416666667
$ 10.42
1st QUARTER 2008
STEP VALUE
-0.416666667
$ 10.00
2nd QUARTER 2008
STEP VALUE
-0.416666667
$ 9.58
3rd QUARTER 2008
STEP VALUE
-0.416666667
$ 9.17
4th QUARTER 2008
STEP VALUE
-0.416666667
$ 8.75
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Mountain Vista Office Park Development Time Line
Currently, there are 7 vacant lots remaining in this project. Construction began in 2004
with 3 buildings constructed. In 2005 the activity reached its peak with 4 buildings
constructed and began a decline in 2006 with 3 buildings and then 2 in 2007 and 0
buildings constructed in 2008.
The grid below depicting the time line would tend to support the downward trend
beginning in 2006 or late 2005.
Property
Address/Owner
YEAR BUILT
NUMBER BLT
PER YEAR
8203 W. 20th St.
2004
8213 W. 20th St.
2004
3 - 2004
8221 W. 20th St.
2004
8217 W. 20th St.
2005
8219 W. 20th St. #1
2005
4 - 2005
8223 W. 20th St.
2005
8235 W. 20th St.
2005
8205 W. 20th St.
2006
8209 W. 20th St.
2006
3 - 2006
8215 W. 20th St.
2006
8201 W. 20th St
2007
2 - 2007
8207 W. 20th St.
2007
NONE
2008
0 - 2008
NONE
2009
0 - 2009
VACANT LOTS LEFT
7 LOTS
REMAINING
2009
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LEASE RATE INTERPOLATION WEST GREELEY
1ST QUARTER 2005
STEP VALUE
-0.166666667
$ 15.00
2nd QUARTER 2005
STEP VALUE
-0.166666667
$ 14.83
3rd QUARTER 2005
STEP VALUE
-0.166666667
$ 14.67
4th QUARTER 2005
STEP VALUE
-0.166666667
$ 14.50
1st QUARTER 2006
STEP VALUE
-0.166666667
$ 14.33
2nd QUARTER 2006
STEP VALUE
-0.166666667
$ 14.17
3rd QUARTER 2006
STEP VALUE
-0.166666667
$ 14.00
4th QUARTER 2006
STEP VALUE
-0.166666667
$ 13.83
1st QUARTER 2007
STEP VALUE
-0.166666667
$ 13.67
2nd QUARTER 2007
STEP VALUE
-0.166666667
$ 13.50
3rd QUARTER 2007
STEP VALUE
-0.166666667
$ 13.33
4th QUARTER 2007
STEP VALUE
-0.166666667
$ 13.17
1st QUARTER 2008
STEP VALUE
-0.166666667
$ 13.00
2nd QUARTER 2008
STEP VALUE
-0.166666667
$ 12.83
3rd QUARTER 2008
STEP VALUE
-0.166666667
$ 12.67
4th QUARTER 2008
STEP VALUE
-0.166666667
$ 12.50
We must then apply external depreciation to the cost approach as follows:
The tax expense, which was determined to be 4% x $9,980 = $399.20 additional expense
per year. We divide this by the capitalization rate - 0.077769 to determine the impact on
the total value of the subject property, which equals $5,133 - external/location
depreciation
The lease rate income decrease which was determined to be $3.00/sf x 3922 sf = $11766
income loss, divided by the capitalization rate - 0.077769 to determine the impact on the
total value of the subject property, which equals $151,448 - external/market depreciation
TOTAL EXTERNAL DEPRECIATION
External/Location and External/Market = $156,581
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COST VALUE CORRELATION TO THE APPRAISAL DATED 6/15/2007
BY APPRAISAL SPECIALTIES, INC.
6/15/2007
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Construction Cost Estimate
SF or %
Cost/SF
Total
Core and Shell
3922
$60.68
$237,999
Tenant Finish
3922
$33.86
$132,799
Total Cost of Improvements
$370,798
Overhead
$0
A&E/F&F
Subtotal
$370,798
Developer's Profit
+
$39,630
Subtotal
$410,416
Soft Costs
+
4500
Commission
$0
Site Improvements
+
$21,000
Total Costs
3922
$111
$435,928
LAND
+
$220,000
Depreciation
-
$0
Physical
-
$0
Functional
-
$0
External
$156,581
-
$156,581
Cost Correlation of
Value
$499,347
There was no cost replacement done by Mr. Willard of Austin & Austin, therefore there
are no corrections or correlations to be made within this report concerning a cost
approach to market value from his report.
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1
SALES COMPARISON CORRELATIONS
Appraiser Knew of Market Decline
The lease rate that was selected by the appraiser as the most appropriate in mid 2007 was
from $10.00 to $16.00 per square foot net, net, net. Based on his comment on page 15
the appraiser stated "tenants who once were buying houses due to extremely low
mortgage rates are now finding it more suitable to rent because of increasing interest
rates. This has also pushed foreclosure rates up to a higher than average level as more
people who took on adjustable rate mortgages are now finding that with the increasing
interest rates, their monthly mortgage payments are beyond their budget." ...." the current
rate of 1.2% is well above the national average and Colorado is among the highest in the
nation with foreclosures. Weld County, where foreclosures are among the highest."
On page 16 is a grid showing Greeley Office Vacancy Rates beginning in September of
2005 of 20.8%; December 2005 of 19.7%; April 2006 of 20.1% and June 2006 of 20.9%.
On page 29 is a grid by quarter and his dismissal of the actual office vacancy rate.....
(20%+-) which began in September of 2005 and had continued thru his effective date of
June 15, 2007. He proceeded to use 10% as the vacancy rate. On page 30 he indicated
downtown office vacancy was 20%, but again dismissed this indicator for the subject
location. On the same page he pointed to 2 additional buildings one 45,000 s.f. vacant
since April of 2003 & then partially owner occupied, with the tenant spaces currently
listed for lease and another building 229,036 s.f. easily divisible into 3,000 to 30,000 s.f.
offices page 31, activity relatively slow even though rates were advertised at $2.95 s.f
He referred to a realtor saying Greeley might be approaching an over -supply and again
dismissed it on the same page. Another realtor indicated the market may be saturated.
Another pointed to high interest rates (p.32) and then ended the page saying "Prices
appear to have softened slightly over the last year as a result of increased supply." (p.33)
"demand .... slower than it was several years ago .... slowing housing ... and the
foreclosure rate that has been publicized nationwide .... but values appear to have
softened over the last year, and the supply of new construction has increased."
However, he dismissed all these warning signs and stated "Given this location advantage
and its visibility, demand for the subject property should remain strong for years to
come."
On page 40 is an analysis of the taxes, however he stated that his tax estimate "of $2.50
per square foot of the main level of the subject property appears to be reasonable" -
or $9,980.00 on 3992 sq. ft. of main floor office space. The actual subject property tax
is currently over $16,000 per year. Of his comparable sales only ONE was outside the
subject subdivision, a small location adjustment, yet it was across the street from a very
large medical building and an outpatient surgery center building, in a park extremely
dominated by medical offices which historically have attempted to congregate around
medical facilities. The subject park is another mile west of this popular medical park.
Had he adjusted for high vacancy as he should have, he would have seen the location
adjustment amount that is obvious to the appraiser.
The location adjustment for comparable #1 was in the correct direction i.e. a minus
adjustment, but he did not reveal how much, and made only one minus mark indicating
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only %z of the amount of a ++ adjustment, for example. He used a ++ adjustment for a
partial basement versus the full basement of the subject property, so this gives us an
indication of the amount of the adjustment for location, it is '/2 the cost of a %2 basement
or approximately $5.50 per sq. ft. at the time of the appraisal. He offset his adjustments
with ++ adjustments for other differences and netted the adjustment for GBA, Location,
Visibility and Basement to a net adjustment of $1.64 per sq. ft. The difficulty we have
with certifying his approach, is that his adjustment of ++ for an additional 1,478 sq. ft. of
GBA indicates that the subject at 3922 sq. ft. is superior to the comparable at 5,400 sq. ft.
of GBA. We must assume this is a mistake and it is the only indicator of value outside
the subject subdivision.
Interestingly, the appraiser was willing to show the amount of his adjustments in all the
report except where location and visibility both fall on his report. These intangible
adjustments require more work, so appraisers many times guess and move on without
doing the required calculations. We suspect this is the case with the location and
visibility adjustments to comparable #1. However, had his adjustment for GBA been a
dollar adjustment and in the correct direction - a minus- then the value indication of this
comparable would be substantially lower.
Utilizing all comparables from the same project is risky from an appraisal standpoint and
has been denounced by the Department of Housing and Urban Development in order to
keep developers and builders from purposely inflating prices in order to create
comparables for appraisers to locate, utilize and submit unwitting fraudulent reports.
The same hold true for commercial appraisers.
All three appraisals which were reviewed for this report presented sales comparison
approaches to value.
There were no changes necessary to the our 2005 Data Source Appraisal as it was done
prior to the effective time period of the appraisal, and we found no indication of missed
adjustments in any of the approaches to value.
ADJUSTMENTS TO - APPRAISAL SPECIALTIES, INC.
We made the adjustments to the Sales Comparison Approach by Appraisal Specialties,
Inc. that were determined necessary in the previous sections of this report, comparable #1
must be adjusted for:
Date of Sale minus $ 10,080
Location (DUE TO ADD'L EXPENSE) minus $ 5,133
Market Conditions minus $ 141,368
Total adjustments to the comparable = minus $ 156,581
Subject GBA = 3922 divided by $156,581 = $ 39.92/sf
The value correlation for sale #1 $170.00 - $39.92 = $131.08
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Comparables 2, 3, 4, & 5 were all within the subject's subdivision and the land sold by
the same developer, therefore the Location adjustment is not to apply to these four
comparable sales. However the Market Conditions and the date of sale in the total
amount of $151,448 do apply; in different proportions due to the date of sale of the
comparables each being different from comparable #1.
Market Conditions value correlation for sales 2, 3, 4, & 5 = minus $141,368
The Date of Sale portion of the $151,448 of market induced adjustments is apportioned
as follows:
Property
Date of Sale
Market Rate
as of date of
sale
Mtn. Vista
Rate as of
date of comp
sale
Difference
Calc'd off
subject sf
171561st Avenue
1/22/2007
$ 13.83
$11.25
$2.57/sf
8215 W. 20th Street
8/29/2006
$ 14.00
$ 12.50
$1.50/sf
8225 W. 20th St. Bldg E
3/25/2006
$ 14.33
$ 1333
$1.00/sf
8225 W. 20th St. Bldg F(aka 8217)
3/23/2006
$ 1433
$ 13.33
$1.00/sf
8225 W. 20th St, Bldg O (aka 8223)
11/30/2005
$ 1450
$ 13.75
$0.75/sf
8225 W. 20th St, Bldgs II, I, & J (aka 8205)
Listing
n/a
n/a
n/a
8237 W. 20th St.
Listing
n/a
n/a
n/a
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Date of Sale Amount
Comparable Property
Subj. GBA
X Difference
=
Date of Sale
Portion
1715 61st Avenue
3922
$237/sf
=
$10,080
8215 W. 20th Street
3922
$1.50/sf
=
$5,883
8225 W. 20th St. Bldg E
3922
$1.00/sf
=
$3,922
8225 W. 20th St. Bldg F(aka 8217)
3922
$1.00/sf
=
$3,922
8225 W. 20th St, Bldg 0 (aka 8223)
3922
$0.75/sf
=
$2,942
Market Conditions Portion
Comparable Property
Subj. GBA
Total Market
Induced
External
Date of Sale
Portion
Market
Conditions
Portion
#1 1715 61st Avenue
3922
$151,448
$10,080
$141,369
#2 8215 W. 20th Street
3922
$151,448
$5,883
$145,565
#3 8225 W. 20th St. Bldg E
3922
$151,448
$3,922
$147,526
#4 8225 W. 20th St. Bldg F(aka 8217)
3922
$151,448
53,922
$147,526
#5 8225 W. 20th St, Bldg 0 (aka 8223)
3922
$151,448
$2,942
$148,507
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We made the adjustments to the Sales Comparison Approach by Appraisal Specialties,
Inc. that were determined necessary in the previous sections of this report, comparable #2
must be adjusted for only Date of Sale and Market Conditions and not location, as
follows:
$151,448 divided by the subject GBA (3922) =
Comp #2 final indication is reduced from $160.00 ( - 38.62) to
Comp #3 final indication is reduced from $160.00 ( - 38.62) to
Comp #4 final indication is reduced from $160.00 ( - 38.62) to
Comp #5 final indication is reduced from $170.00 ( - 38.62) to
Page 43 - Comp #1 was reconciled at
$ 38.62/sf
$122.38/sf
$122.38/sf
$122.38/sf
$132.38/sf
$131.08/sf
The final indication of value was determined by weighting toward comparables #1 & #2
due to most recent dates of sale = a weighting of 4, 3, 2, 2, 1 based on closest date of
sale to subject $126.11/sf
Or — 3,922 s.f. X $126.11
$494,616
Rounded Value Correlation $494,600
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ADJUSTMENTS TO - AUSTIN & AUSTIN - SALES
COMPARISON FROM 2008 APPRAISAL
Property
Date of
Sale
Sale Price
Tax Area
Price
/Buildable/
SF
Year Built
Buildable
SF
4627 W. 20th Street
Rd - Fox Hill
4/27/2006
$950,000
0600
$168.77
2004
5629
1703 61st Avenue #A
- Fox Run
6/20/2007
$504,553
2081
$183.81
2006
2745
4675 W. 20th Street
Rd - Fox Hill
4/10/2007
$700,000
0600
$162.94
1999
4296
8219 W. 20th St. #2 -
Condo Mtn. Vista
8/30/2007
$330,000
2149
$166.67
2005
1980
QUALITY ADJUSTMENTS
The appraiser made adjustments to comparables #2, 3 and 4 for quality. Comparable #1
was in Foxhill, Comparable #2 was in Fox Run Business Park, Comparable #3 was in
Foxhill and Comparable #4 was in the subject subdivision across the parking lot from the
subject of his report. Comparable #2 and #3 were adjusted by a minus 5% each
indicating the subject was superior in quality of construction, but the grid indicated
Comparable #2 was inferior. Since the other indicators would tend to support the
description as opposed to the adjustment, our assumption is that his adjustment was
intended to be a positive 5% instead of a minus 5%. He adjusted comparable #4 by a
positive 10% indicating the subject was superior to the comparable.
LOCATION ADJUSTMENTS
The appraiser adjusted for location by 10% in a plus direction, indicating the comparables
#1, #2, & #3 were superior to the subject, which is what we would also expect, in terms
of locational value to central business services, traffic patterns and other typical
locational features. However, since we cannot dissect Mr. Willard's location adjustment,
we have deemed it necessary to credit back the location adjustment, because it appears
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there would be a potential double adjustment made for location if we ignored his
substantial adjustment for location.
Tax & Mill Levy Correlation
There was no indication that the tax and mill levy differences were adjusted for within
the report, therefore an additional location adjustment must be made for the differences in
expense to this area.
As of the 2008 date of appraisal, the tax district's mill levy for 2007 taxes, were
available. The subject tax area 2149 mill levy was 85.209 and comparables #1 & #3 mill
levies were 75.561 or 12.77% higher than the comparable and comparable #2 mill levy
Property
Date of Sale
Market Rate
as of date of
comp sale
Mtn. Vista
Rate as of
date of comp
sale
Difference
Calc'd off
subject sf
4627 W. 20th Street Rd - Fox Hill
4/27/2006
$ 14.17
$ 12.92
51.25 S.F
1703 61st Avenue #A - Fox Run
6/20/2007
$ 13.50
$ 11.25
$2.25 S.F
4675 W. 20th Street Rd - Fox Hill
4/10/2007
$ 13.50
$ 11.25
$2.25 S.F
8219 W. 20th St. #2 - Condo Mtn. Vista
8/30/2007
S 1333
$ 10.83
$2.50 S.F
was 76.112 or 11.95% higher than the comparab e. An adjustment should have been
made on all the comparables to bring the comparables down to the subject level in
location by an additional 12% divided by the capitalization rate, for the tax area, since
this is an expense item and affects the net income producing capability of the subject in
comparison to the comparables.
The tax expense, which was determined to be 12% X $17,297.42 = $2075.69 additional
expense per year. We divide this by the capitalization rate - 0.075 to determine the
impact on the total value of the subject property, which equals $27,676 —
extelnal/location depreciation.
The lease rate income decrease which was determined to be $3.00/sf x 4000 sf = $12000
income loss, divided by the capitalization rate - 0.075 to determine the impact on the total
value of the subject property, which equals $160,000 — external/market depreciation.
TOTAL EXTERNAL DEPRECIATION
External/Location and External/Market = $187,676
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We made the adjustments to the Sales Comparison Approach by Austin & Austin that
were determined necessary in the previous sections of this report, comparable #1 must be
adjusted for:
COMPARABLE #1
Date of Sale ...( 4,000SF X $1.25/SF ) minus $ 5,000
Location (DUE TO ADD'L TAX EXPENSE) minus $ 27,676
Market Conditions minus $ 155,000
Total adjustments to the comparable = minus $ 187,676
Subject GBA = 4000 divided by $187,676 = $ 46.92/sf
The value indication of sale #1 changes to $160.33 - $46.92 = $ 113.41
Credit for Mr. Willard's location adjustment $ + 16.88
Correlated value indication for Comparable #1 $ 130.92/sf
COMPARABLE #2 WE ADJUSTED AS FOLLOWS:
Date of Sale ...(4,000SF X $2.25/SF ) minus $ 9,000
Location (DUE TO ADD'L TAX EXPENSE) minus $ 27,676
Market Conditions minus $ 151,000
Total adjustments to the comparable = minus $ 187,676
Subject GBA = 4000 divided by $187,676 = $ 46.92/sf
Error Correction on Comp. #2 — Quality - final price $147.05 corrected
Corrected final price adjustment for +5% Quality vs-5% = +10% or $ 161.75
The value indication of sale #1 changes to $161.75 - $46.92 = $ 114.83
Credit for Mr. Willard's location adjustment $ + 18.39
Correlated value indication for Comparable #2 $ 133.22/sf
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COMPARABLE #3 WE ADJUSTED AS FOLLOWS:
Date of Sale ...(4,000SF X $2.25/SF ) minus $ 9,000
Location (DUE TO ADD'L TAX EXPENSE) minus $ 27,676
Market Conditions minus $ 151,000
Total adjustments to the comparable = minus $ 187,676
Subject GBA = 4000 divided by $187,676 = $ 46.92/sf
The value indication of sale #1 changes to $145.43 - $46.92 = $ 98.51
Credit for Mr. Willard's location adjustment $ + 17.11
Correlated value indication for Comparable #3 $ 115.62/sf
COMPARABLE #4 WE ADJUSTED AS FOLLOWS:
Date of Sale ...( 2,000SF X $2.25/SF ) minus $ 4,500
Location (DUE TO ADD'L TAX EXPENSE) minus $ -0-
Market Conditions minus $ 75,500
Total adjustments to the comparable = minus $ 80,000
Subject GBA = 4000 divided by $ 80,000 = $ 20.00/sf
The value indication of sale #1 changes to $158.34 - $20.00 = $ 138.34
Credit for Mr. Willard's location adjustment $ + 16.67
Correlated value indication for Comparable #4 $ 155.01/sf
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Summary
Correlated value indication for Comparable #1 $ 130.92/sf
Correlated value indication for Comparable #2 $ 133.22/sf
Correlated value indication for Comparable #3 $ 115.62/sf
Correlated value indication for Comparable #4 $ 155.01/sf
Weaknesses in the comparable sales presented by the original appraiser:
Comparable #1 date of sale was two years; Comparable #2 was almost 1 year;
Comparable #3 weakness is that it was a contract and not a closed transaction, so it could
not be verified at the time of the original report; Comparable #4 weakness was that it was
reported to have been part of a 1031 Tax Exchange, which makes its market value
questionable. A straight average indicates a final value indication of $ 133.69/sf which
appears reasonable and consistent with other analysis.
Or — 4,000 s.f. X $133.69 $534,760
Rounded Value Indication by Sales Comparison Correlation $534,760
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FINAL VALUE CONCLUSIONS
Review #1 = Appraisal Specialties, Inc. of Ft. Collins, CO valuation review of
property located at 8201 West 20th Street as of March 7, 2007 with a prospective
value date of June 15, 2007.
COST REPLACEMENT INDICATION OF VALUE
Construction Cost Estimate
SF or %
Cost/SF
Total
Core and Shell
3922
$60.68
$237,999
Tenant Finish
3922
$33.86
$132,799
Total Cost of Improvements
$370,798
Overhead
$0
A&E/F&F
Subtotal
$370,798
Developer's Profit
+
$39,630
Subtotal
$410,416
Soft Costs
+
4500
Commission
$0
Site Improvements
+
$21,000
Total Costs
3922
$111
$435,928
LAND
+
$220,000
Depreciation
-
$0
Physical
-
$0
Functional
-
$0
External
$156,581
-
$156,581
Cost Indication of
Value
$499,347
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INCOME APPROACH - 8201 W. 20TH STREET
Income (Appraisal
Approach From Specialties, 6/15/2007
Source 1 Inc.)
Income -
Expense - 8201
W. 20th Street
SF or %
Rent/SF
Income
Expense
Total
Rental Income
Unit A
n/a
n/a
n/a
n/a
n/a
Appraisal Specialties, Inc. did not complete an income approach for the property
appraised at 8201 W. 200i Street June 15, 2007.
SALES COMPARISON APPROACH - 8201 W. 20TH STREET
Comp #1 was reconciled at
Comp #2 final indication is reduced from $160.00 ( - 38.62) to
Comp #3 final indication is reduced from $160.00 ( - 38.62) to
Comp #4 final indication is reduced from $160.00 ( - 38.62) to
Comp #5 final indication is reduced from $170.00 ( - 38.62) to
$131.08/sf
$122.38/sf
$122.38/sf
$122.38/sf
$132.38/sf
The final indication of value was determined by weighting toward comparables #1 & #2
due to most recent dates of sale = a weighting of 4, 3, 2, 2, 1 based on closest date of
sale to subject $126.11/sf
Or — 3,922 s.f. X $126.11 $494,616
Rounded Value Indication $494,600
SUMMARY FOR REVIEW #1 (APPRAISAL SPECIALTIES)
COST INDICATION OF VALUE $499,347
INCOME INDICATION OF VALUE NONE
SALES COMPARISON APPROACH TO VALUE $494,600
AS OF JUNE 15, 2007 THE FINAL VALUE INDICATION OF:
8201 W 20TH STREET $497,000
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Review #2 = AUSTIN & AUSTIN Appraisal Services - valuation review of
property located at 8217 West 20th Street as of April 01, 2008 with a prospective value
date of April 01, 2008.
COST REPLACEMENT INDICATION OF VALUE
Mr. Willard chose not to do the cost replacement approach to value.
However, with the information we have retrieved from cost data sources such as Marshall
Valuation Service, and the appraisals we have reviewed, the cost replacement approach is
as follows:
LAND VALUE:
External adjustments which were found in the location costs of tax area 2149, date of sale
of the comparables and market conditions adjustments must apply to the land in the same
percentages as to the building improvements.
The land valuations were relatively consistent from the sources of appraisals reviewed
and are identified as follows:
Land Valuation for 8213 W. 20th Street by Our 2005 Data Source
Summary Land Valuation According to Source #3: 6/15/05
4,000
X $50.00
= $200,000
Land Valuation for 8201 W. 20th Street by Appraisal Specialties, Inc.
Summary Land Valuation According to Source #I: 6/15/07
4,000
X $55.00
_ $220,000
SUBJECT TAX ASSESSMENTS - 2008
8217 W. 20th St.
Land
$209,808
We have accepted the market sales utilized in the land valuations, however the external
forces which applied to the date of sale, market conditions and location were not
appropriately adjusted for in the land valuation by the appraisers.
Contributory external adjustments applied to the land = $156,581 X 30% = $46,974
Accepted land value as of June 30, 2008 before adjustments $210,000
Less applicable market adjustments $ 46,974
Land Value after adjustments $163,026
Land Value Rounded $163,000
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After we applied the external forces discovered in the review to the land value, the
remainder was applied to the building improvements. The final cost approach to value
for the subject property located at 8217 W. 20th Street, is as follows:
Construction Cost Estimate
SF or %
Cost/SF
Total
Core and Shell
4000
$60.68
$242,720
Tenant Finish
4000
$33.86
$135,440
Total Cost of Improvements
$378,160
Overhead
$0
A&E/F&F
$0
Subtotal
$378,160
Developer's Profit
+
$39,630
Subtotal
$417,790
Soft Costs
+
4500
Commission
$0
Total Costs
4000
$111
$422,290
Depreciation
-
$0
Physical
-
$0
Functional
-
$0
External
$109,606
-
$109,606
Site Improvements
+
$21,000
Depreciated Cost of
Improvements
4000
$111
$333,684
LAND
$163,000
Total Costs
4000
$111
$496,684
Cost Replacement Indication of Value (Rounded) $496,700
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INCOME APPROACH - 8217 W. 20TH STREET
Gross Annual Income 4,000 $15.25
$61,000
Less Vacancy & Collection 18.2%
($11,102)
Effective Gross Income
$49,898
Less Operating Expense (not including taxes & insurance)
($4,046)
Less Additional Expense (Tax & Ins) T=$17,297 I = $1,800
($3,476)
Less Management/Accounting
($4,000)
Net Income
$38,376
Capitalization Rate 7.5%
Net Income divided by capitalization rate = Value Indication
$511,680
Rounded Value Indication
$511,700
SALES COMPARISON APPROACH - 8217 W. 20TH STREET
Final value indication for Comparable #1 $ 130.92/sf
Final value indication for Comparable #2 $ 133.22/sf
Final value indication for Comparable #3 $ 115.62/sf
Final value indication for Comparable #4 $ 155.01/sf
Weaknesses in the comparable sales originally presented by the appraiser:
Comparable #1 date of sale was two years; Comparable #2 was almost 1 year;
Comparable #3 weakness is that it was a contract and not a closed transaction, so it could
not be verified at the time of the original report; Comparable #4 weakness was that it was
reported to have been part of a 1031 Tax Exchange, which makes its market value
questionable. A straight average of our final value conclusions indicates a value of:
$ 133.69/s.f., which appears reasonable and consistent with other analysis.
Or — 4,000 s.f. X $133.69 $534,760
Rounded Final Value by Sales Comparison Approach $534,760
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Weld County Assessors Valuation of the subject property -
8217 W. 20th St.:
The Weld County Assessor's Office did not do an appraisal of the subject property
(they are required to do a sales comparison analysis in mass appraisal form)
SALE #1: The Assessors used the original sale of the subject dated 3/23/2006
8217 W. 20th Street $630,000
Then they adjusted it upward for finish work they incorrectly assumed $ 40,000
They then adjusted upward (incorrectly) for market conditions $ 30,000
Totaling $700,000
SALE #2: Prothe to Klausner&Prothe 8219A W. 2e St. 5/9/08 $300,000
They used a sale half the size of the subject which would generate a higher price per
square foot by 10%, but did not adjust it for size -$ 30,000
They did not adjust it for quality of interior finish (Cherry & Granite) -$ 25,000
They did not adjust it for market conditions for 2008 to 2008 —ok-
They did not use any comparable sales outside the subject subdivision ...poor practice
Then they doubled the sale price due to size, in order to arrive at a valuation:
The Weld County Assessors valuation by this comparable $600,000
They did not disqualify the sale due to it being a sale from a partner to himself and
another partner — this is not an arm's length transaction — cannot be used in appraisal
practice.
SALE #3: Prothe to Holiday Manor/TLW 8219B W. 20th St. 8/30/07 . $330,000
They used a sale half the size of the subject which would tend to generate a higher price
per square foot by 10% or more, but did not adjust it for size -$ 30,000
They did not adjust if for date of sale even though sale #2 sold 10% less-$ 30,000
They did not adjust it for quality + $ 14,000
They did not use any comparable sales outside the subject subdivision ...poor practice
Then they doubled the sale price due to size, in order to arrive at a valuation:
The Weld County Assessors valuation by this comparable $660,000
They did not disqualify the sale due to it being an IRS CODE 1031 tax exchange
transaction — this is a poor practice, because it is only equity being exchanged and the
overall value is considered neither significant nor is it analyzed by an independent
appraisal unless challenged.
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CORRECTIONS TO WELD COUNTY ASSESSORS VALUATION:
SALE #1: sale of subject dated 3/23/2006...($630,000) $700,000
LESS incorrect assumption — 40,000
LESS incorrect market conditions adjustment (+ to -) -145,000
LESS date of sale (outside the valuation period)$13.33-$9.38 = $ 3.95/sf - 15,000
correlated Indication by sale of subject = $500,000
SALE #2: 8219A W. 20th St. 5/9/08 ($300,000) $300,000
Half the size of the subject did not adjust for size +10% -$ 30,000
LESS quality of interior finish Cherry & Granite -$ 25,000
they did not adjust for market conditions for 2008 to 2008 —ok-
LESS date of sale - for 2008 to 2008 -ok-
Correlated Indication by sale of subject = $245,000
DOUBLED FOR EQUALITY TO SUBJECT SIZE = $490,000
SALE #3: 8219B W. 20th St. 8/30/07 ($330,000) $330,000
Half the size of the subject did not adjust for size +10% -$ 33,000
PAIRED SALE market conditions adjustment(SALE #2) -$ 30,000
they did not adjust for market conditions for 2007 to 2008 -ok-
LESS date of sale - for 2007 to 2008 —ok-
Correlated Indication by sale of subject = $267,000
DOUBLED FOR EQUALITY TO SUBJECT SIZE = $534,000
WELD COUNTY SALES INDICATORS - FINAL CORRELATION
SALE #1: sale of subject dated 3/23/2006....($630,000) = $500,000
SALE #2: 8219A W. 20th St. 5/9/08 ($300,000) = $490,000
SALE #3: 8219B W. 20th St. 8/30/07 ($330,000) = $534,000
VALUE INDICATION RECONCILED BY STRAIGHT AVERAGE $508,000
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SUMMARY
We have reviewed the values, adjustments, calculations and assumptions of four
independent appraisers that have been completed within the subject subdivision over the
past 4 years. We have also reviewed one complete cost analysis, and the economic
conditions, vacancy rates, lease rates, capitalization rates, and conclusions drawn by these
appraisers.
We have corrected mistakes that were discovered and analyzed the timeline of market
decline based on this data. We have also completed our own research of the subject
subdivision. We have reviewed the data provided by the Weld County Assessor's Office
and have corrected their mistakes and value conclusions.
The following is a recap of the findings which are pertinent to the value period covering
the years of 2007 and 2008 for the subject property:
Adjustments to the subject that were missed by appraisers:
Value of Commercial Office Real Estate in the Greeley/Weld County area reached
its peak in the summer of 2005. Sales in 2006 did not reflect the decrease, because it
was too early to determine the timing and extent of the faltering economy. The tax
area of 2149 location should have been adjusted for beginning with the 2006
valuations for tax due in 2007. Market conditions could easily be detected in 2007
and the results should have been outlined in 2007 appraisals. By 2008 there was no
excuse for overvaluation.
Tax Area 2149 mill levy for 2008 being 12% higher than other tax areas caused expense
to be higher for the location resulting in a missed location adjustment of - $27,676
Considering the subject is 4,000 square feet GBA = $7.00/SF
This is a valuation error of = 4.00%
Vacancy for the city of Greeley & Market Induced External Depreciation - $ 80,000
Considering the subject is 4,000 square feet GBA = $20.00/SF
This is a valuation error of = 13.00%
Total adjustments missed by appraisers in 2008 valuations - 107 676
Amount per square foot of missed adjustments (4,000 s.f. GBA).. = $27.00 / SF
This proves to be a reduction in overall valuation of = 17.00%
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ADDITIONAL ERRORS:
Weld County Assessors adjusting for presumed construction $40,000
Weld County Assessors adjusting for presumed market increases $30,000
Use of sales which were not arm's length transactions $60,000
Ignoring a possible paired sale $30,000
Source #1 ignored tax area's 2007 expense differential for the subject 1.33%
Use of a vacancy rate which was rumored instead of researched 13%
Failed to research and adjust for market induced external depreciation (obsolescence) in
the cost approach, and did not adjust the sales comparison approach, leading to a
valuation mistake of $158,000
Source #2 ignored tax area's expense differential for Mountain Vista Office Park4%
Use of a vacancy rate which was assumed instead of researched 13%
Researched and (indirectly) adjusted for market induced external depreciation
(obsolescence) in the income approach, but did not adjust the sales comparison approach,
leading to a valuation mistake of $73,000.
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SUMMARY
COST REPLACEMENT INDICATION OF VALUE $496,700
INCOME INDICATION OF VALUE $511,700
SALES COMPARISON APPROACH TO VALUE $534,760
WELD COUNTY ASSESSORS VALUATION CORRECTED TO$508,000
AS OF JUNE 30, 2008 THE VALUE OF 8217 W 20T" STREET ... $527,000
******************************* $ 527,000 ******************************
Sincerely,
Clifton Neeley, Associate — Market Research
8217 W. 20th Street, Unit B
Greeley, CO 80634
(970) 576-5240
Sprague Enterprises
Spencer W. Sprague
Certified General Appraiser, CGO1325968
P.O. Box 1481
Evergreen, CO 80439
(303) 670-2375
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ASSUMPTIONS AND LIMITING CONDITIONS
We have made the assumption that the data presented by the appraisers whose
valuations were reviewed were true and accurate to the best of the appraiser's
ability.
We corrected calculations and adjustments of the appraisers within the review and
conclusions only when a particular adjustment did not match reasonableness or
market conditions.
There are no other assumptions or limiting conditions.
Sincerely,
Clifton Neeley, Associate — Market Research
8217 W. 20th Street, Unit B
Greeley, CO 80634
(970) 576-5240
Sprague Enterprises
Spencer W. Sprague
Certified General Appraiser, CGO1325968
P.O. Box 1481
Evergreen, CO 80439
(303) 670-2375
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CERTIFICATION OF VALUE
Clifton Neeley doing business in the areas of insurance adjusting, construction
estimating, and appraisal market research is a tenant in Mountain Vista Office Park, and
as such, has an interest in the valuation of the building he occupies. He has no other
current or prospective interest in the subject property.
Spencer W. Sprague, Sprague Enterprises has no current or prospective interest in the
valuations of the buildings or land located in and known as Mountain Vista Office Park
in Greeley, Colorado.
Sincerely,
Clifton Neeley, Associate — Market Research
8217 W. 20th Street, Unit B
Greeley, CO 80634
(970) 576-5240
Sprague Enterprises
cer W. Sprague
Certified General Appraiser, (.C. 1325968
P.O. Box 1481
Evergreen, CO 80439
(303) 670-2375
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SUBJECT PHOTO
FRONT VIEW OF SUBJECT PROPERTY
8217 W. 20TH STREET
GREELEY, CO 80634
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INTERIOR OF SUBJECT PROPERTY - 8217 W. 20111STREET
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