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HomeMy WebLinkAbout1.06 AppraisalHIGH COUNTRY APPRAISAL ASSOCI,ATES Real Estate Appraisers and Consultants Appraisal Of CERISE RANCH 17072 Colorado Highway 82 Part of Sections 29, 32, and 33, Township 7 South, Range 87 West of the Sixth P.M. Garfield County and Eagle County, Colorado Made For Vectra Bank Colorado N.A. 8000 East Belleview Avenue Englewood, Colorado 80111 As Of August 18, 2000 & July 1, 2001 16 N. Fourth Street -- P.O. Box 7 -- Carbondale, CO 81623 -- (303) 963-1480 HIGH COUNTRY APPRAISAL ASSOCIATES, Real Estate Appraisers and Consultants August 30, 2000 Vectra Bank Colorado N.A. 8000 East Belleview Avenue Englewood, Colorado 80111 Attention: Dawn Thompson -Dunn, Vice President - Commercial Lending Re: Appraisal of Cerise Ranch 17072 Colorado Highway 82, Garfield County & Eagle County, Colorado Dear Ms. Thompson -Dunn: In response toyour engagement letter of July 13, 2000, we have made a complete appraisal of the market value of the fee simple estate interest in the development parcel commonly known as the Cerise Ranch. We have estimated the property's as -is value as of August 18, 2000, and its prospective value assuming completion of infrastructure improvements associated with a proposed subdivision of the property. The effective date of our prospective valuation is July 1, 2001, the anticipated completion date for the subdivision improvements. The subject property is located on the north side of Colorado Highway 82 in the middle portion of western Colorado's Roaring Fork Valley. It now consists of a 296.378 -acre parcel of largely vacant agricultural land with conditional preliminary plat approval for subdivision into 67 single-family lots and 13 accessory dwelling units. Our prospective value estimate assumes completion of infrastructure associated with those approvals in compliance with descriptions presented in the following appraisal report. Our appraisal considers the value of real property only; personal property, business value, trade fixtures, and intangible assets are not part of the subject property. It is our understanding that this appraisal will be used as evidence of value for loan underwriting purposes. It has been made in conformance with Section 12 CFR Part 34 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the current version of the Uniform Standards of Professional Appraisal Practice (USPAP) promulgated by the Appraisal Standards Board of the Appraisal Foundation, Vectra Bank Colorado, N.A.'s Appraisal Standards 1 and 11 and applicable sections of Standard 111, andyour engagement letter dated July 13, 2000. We have personally inspected the subject property, collected and analyzed all factual data, and made conclusions of its as -is and prospective market value. The following self-contained appraisal report sets forth the identification of the property, the assumptions and limiting conditions, pertinent facts about the area and the subject property, comparable data, the results of our investigation and analyses, and the reasoning leading to our conclusions of value. 16 N. Fourth Street — P.O. Box 7 — Carbondale, CO 81623 — (970) 963-1480 — FAX (970) 963-1068 Vectra Bank Colorado August 30, 2000 Page ii Our value conclusions are subject to the attached general and specific underlying assumptions and limiting conditions (pages 1-3) and the certifications of both appraisers (pages 74-75). Based upon the facts, data, and analyses presented in the following appraisal report, we have concluded that the as -is value of the fee simple estate interest in the subject property as of August 18, 2000, is: FOUR MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($4,750,000) Based upon the facts, data, and analyses presented in the following appraisal report,_ and assuming completion of all subdivision improvements in conformance with descriptions contained herein, we have concluded that the prospective market value of the fee simple estate interest in the subject property as of the projected completion date of July 1, 2001, and based on appraisal analysis made as of the date of this report, will be: NINE MILLION DOLLARS ($9,000,000) Considering the characteristics of the local real estate market and the subject property, we have concluded that a marketing period of six to twelve months is appropriate for both of our value estimates. This conclusion assumes offering of the property at prices consistent with our conclusions of value. Respectfully submitted, Leslie T. Gray Certified General Appraiser Colorado License No. CG13I 525; Expires December 31, 2002 William K. Gray, MAI Certified General Appraiser Colorado License No. CG01313605; Expires December 31, 2000 Table of Contents General Underlying Assumptions and Limiting Conditions 1 Specific Underlying Assumptions and Limiting Conditions 3 Summary of Facts and Conclusions 4 Subject Photographs 5 Identification of the Property 9 Objective of the Appraisal 9 Purpose and Use of the Appraisal 10 Scope of the Appraisal 10 Competency 11 Area Data 13 Neighborhood Description 20 Property Description - As Is 22 Property Description - Proposed 29 Owner of Record and Property History 35 Assessment and Taxes 36 Zoning 37 Highest and Best Use 38 Appraisal Process 40 Estimate of As -Is Value 41 Sales Comparison Approach 41 Development Method 51 Estimate of Prospective Value 68 Estimate of Marketing Time 70 Reconciliation and Final Value Estimates 70 Certification 73 Addenda 75 Qualifications 76 Legal Description 79 Comparable Sale Photographs 80 Vectra Bank Hazardous Waste Supplement 93 Vectra Bank ADA Supplement 95 iii General Underlying Assumptions and Limiting Conditions This appraisal report has been made subject to the following assumptions and limiting conditions: I. It is assumed that the legal description as obtained from public records, or provided by others, is correct. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report. 2. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. 3. Responsible ownership and competent property management are assumed unless otherwise stated in this report. 4. The property is appraised free and clear of any or all detrimental liens, encumbrances, easements, encroachments, or environmental violations/hazards unless otherwise stated in this report. 5. It is assumed that all applicable zoning and use regulations and restrictions have been complied with unless a nonconformity has been stated, defined, and considered in this appraisal report. 6. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state, or national governmental, or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 7. All engineering is assumed to be correct; the author(s) have made no engineering survey of the property. The plot plans, sketches, and exhibits in this report are included only to assist the reader in visualizing the property. 8. The integrity of the site is assumed to be adequate to support any described improvements. It is assumed that there are no toxic or otherwise hazardous materials within the site or the improvements that would reduce utility, development potential, marketability, or value. All improvements are assumed to be structurally sound unless otherwise noted. 9. Possession of this report or a copy thereof does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the previous written consent of the appraiser, or the client, and then only with proper qualification. 10. Disclosure of the contents of this report is governed by the By -Laws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or any reference to the Appraisal Institute or the MAI designation) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the author(s). All appraisals are subject to review by the Appraisal Institute upon request. 11. The author(s) herein, by reason of this appraisal, are not required to give future consultation, testimony, or be in attendance in Court with reference to the property in question unless arrangements have been made prior to the preparation of this report. Cense Ranch Page 1 August 30, 2000 General Underlying Assumptions and Limiting Conditions (cont'd) 12. Unless otherwise stated, personal property and/or intangible assets are not included in the value estimate set forth in this appraisal report. 13. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate valuations for land and buildings must not be used in conjunction with any other appraisal, and are invalid if so used. 14. Many types of appraisal analysis require the formulation of financial projections. The achievement of any such projections will be affected by fluctuating economic conditions and is dependent upon the occurrence of other future events that cannot be assured. As a result, actual events may well vary from projections, and such variations may be material. 15. Except as discussed in this report, the author(s) take no responsibility for, and reach no final conclusions regarding, indirect costs of a project based on political processes, including planning and other government functions, whereby changes in standards of construction, density, etc. can occur; indirect charges for highways, education, or other items that can be charged to a project; or various moratoria that can delay a project. Governmental processes can change suddenly and substantially affect costs and values, and users of this report are cautioned to make their own inquiry and apply their own judgement regarding these matters, as applicable. 16. The author(s) profess no expertise in law, macroeconomics, or any field of specialization other than real estate appraisal, and base all considerations of the future (such as inflation rates, vacancy factors, absorption rates, etc.) upon reasonable analysis of data and opinions of others, to derive usable opinions only for the purpose of customary appraisal analyses. The author(s) assume no responsibility for predicting actual events. 17. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the subject property and that there is no encroachment or trespass unless otherwise stated in this report. 18. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea -formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of routine observations made during the appraisal process. 19. Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey having been conducted to determine if the property complies with the requirements of the Americans With Disabilities Act (ADA). The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property's value, marketability, or utility. Cerise Ranch Page 2 August 30, 2000 General Underlying Assumptions and Limiting Conditions (cont'd) 20. The value estimate set forth herein relies in part upon data provided by the client, client's representatives, owner, owner's representatives, professional consultants, and/or other available sources. It is the responsibility of the client to carefully read the appraisal report, and advise the author(s) of any errors or omissions of which the client is aware, prior to utilizing the report or making it available to any third party. Specific Underlying Assumptions and Limiting Conditions Our estimate of prospective value assumes completion of proposed infrastructure improvements associated with the Cerise Ranch subdivision as described in this appraisal report. In describing the proposed subdivision improvements we have relied on information presented in the Cerise Ranch Preliminary Plan prepared by The Land Studio and dated February 3, 2000: the Preliminary Plat of Cerise Ranch prepared by High Country Engineering; Inc.; and verbal representations made by principals in and agents of Wintergreen Homes, the prospective developer. Our appraisal of prospective value assumes that all proposed improvements will comply with all applicable zoning codes and specific conditions of approval for Cerise Ranch. 2. Our estimates of value are made contingent upon any state of facts that would be revealed by a professional environmental assessment of the subject property. Cerise Ranch Page 3 August 30, 2000 Property Description: Summary of Facts and Conclusions Cerise Ranch 17072 Colorado Highway 82 P10 Sect. 29, 32 & 33, Twnshp. 7 S., Range 87 W. of the 6th P.M. Garfield County and Eagle County, Colorado Parcel Numbers: Part of Garfield County APN 2391-294-00-184 Eagle County APN 2391-331-00-003 Property Interest: Fee simple estate Type of Value: Market value as is and prospective market value Date of Inspection: July 24, 2000; August 18, 2000 Land Area: 296.378 acres Improvements: Miscellaneous agricultural buildings; not consistent with highest and best use of property Owner of Record: Mumbert Cerise Family Company Zoning: 290± acres - A/R/RD, Garfield Co. 6± acres - Resource, Eagle County 1999 Taxes: $1,474.50; paid in full Highest and Best Use: As If Vacant: 67 -lot single-family subdivision with 13 ADU's as approved As Improved: 67 -lot single-family subdivision with 13 ADU's Appraisal Process: This is a complete appraisal. As -is value has been estimated using the sales comparison approach and development method. Prospective value have been estimated using the development method. Value Estimates: As Is Prospective Value Valuation Date: August 18, 2000 July 1, 2001 Sales Comparison Approach: $4,750,000 Not Applicable Development Method: $4,275,000 to $4,355,000 $8,955,000 to $9,030,000 Value Conclusion: $4,750,000 $9,000,000 Marketing Time: 6 to 12 months Cerise Ranch Page 4 August 30, 2000 Subject Photographs Looking Northwest at Front of Subject Property From Highway 82 Cerise Ranch Looking Northeast at Front of Subject Property From Highway 82 Page 5 August 30, 2000 Subject Photographs Looking West at Subject Property From Adjoining Dakota Subdivision Looking at Eastern Portion of Subject Property From Northwestern Part of Lot Cerise Ranch Page 6 August 30, 2000 Subject Photographs Looking South at Western Portion of Subject Property Looking Northeast at Western Portion of Site and Existing Improvements From Highway Cerise Ranch Page 7 August 30, 2000 Subject Photographs Looking East Along Proposed Site of Eastern Lots Cerise Ranch Looking West Along Highway 82; Subject at Right Page 8 August 30, 2000 Identification of the Property The subject property is located in the middle portion of west -central Colorado's Roaring Fork Valley about 1.7 miles west of the community of El Jebel and five miles east of the town of Carbondale. It is situated on the north side of Colorado Highway 82 about one mile east of its intersection with Garfield County Road 100. The property includes most of the existing Cerise Ranch except for an approximately II -acre parcel at the western end of the ranch and a 4.6 -acre parcel surrounding and including most of the existing building improvements. The portion of the ranch included in the subject property has a land area of 296.378 acres. The exact location of the 4.6 -acre exclusion has not been determined; some of the existing building improvements may be located on the subject site. Approvals are in place for subdivision of the subject property into a 67 -lot residential subdivision; 13 lots will be permitted accessory dwelling units (ADU's). Our estimate of prospective value assumes completion of all proposed subdivision improvements including, but not limited to, streets, drainage, utilities, landscaping, and required off-site improvements. Our appraisal considers only the value of real property: personal property, trade fixtures, equipment. and business value are not included in the subject property. The subject property is legally described as a parcel of land located in a portion of Government Lots I. 3, 14 and 15 of Section 33, and in a portion of Government Lots 2, 8, 20 and 21 of Section 32, and the Southwest 1/4 of the Southeast 1/4 of Section 29, all in Township 7 South, Range 87 West of the Sixth Principal Meridian, Garfield and Eagle County, Colorado. A detailed metes and bounds description of the property is presented in the Addenda on page 79. Excluded from this parcel is a 4.6 -acre site located around the existing building improvements, identified as Lot 68 on the approved preliminary plat for Cerise Ranch. The property is further identified as part of Garfield County Assessor's Parcel Number (APN) 2391-294-00-184 and all of Eagle County APN 2391-331-00-003. The property has a designated street address of 17072 Highway 82 and is commonly known as the Cerise Ranch. Finished lots within the completed project will be legally described as Lots 1-67, Cerise Ranch, Garfield County, Colorado. Objective of the Appraisal The objective of this appraisal is to estimate the market value of the fee simple estate interest in the subject property as is. and its prospective value assuming subdivision and completion of infrastructure improvements as described in this report. The Dictionary of Real Estate Appraisal, Third Edition, defines the fee simple estate as "absolute ownership unencumbered by any other interest or estate subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat". Market value is defined as "the most probable price that 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: buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market: Cerise Ranch Page 9 August 30, 2000 Objective of the Appraisal (cont'd) 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." Exposure time, as referenced in the above market value definition, is estimated at oneyear based upon the characteristics of the subject property and local market conditions. Purpose and Use of the Appraisal This appraisal is to be used as evidence of value for loan underwriting purposes. Scope of the Appraisal We have made a complete appraisal of the market value of the subject property. The scope of this assignment includes a physical inspection and photographing of the subject property. Land area is reported from the preliminary, plat for Cerise Ranch prepared by High Country Engineering, with an adjustment made for the proposed 4.6 -acre exclusion. It is our understanding that most or all of the existing buildings on the Cerise Ranch are excluded from the subject property, and we have not inspected any of these structures. Our property descriptions are based upon our inspections of the property, the aforementioned plat, information contained within the Preliminary Plan Application for Cerise Ranch dated February 3, 2000, and verbal representations made by various agents involved in the current development proposal. The scope of this appraisal includes ascertaining the characteristics of the area and neighborhood; an investigation of applicable zoning; an analysis of the local market for single-family residential property; and development of a conclusion of highest and best use. The property's existing and proposed condition are and will be consistent with its highest and best use. Our estimate of as -is value represents the appraisal of a vacant parcel with vested property rights for a 67 -lot subdivision; the prospective valuation considers a subdivided and improved property. We have estimated as -is value using the sales comparison approach and development method; the cost approach and income approach are not applicable to the valuation of vacant land. Prospective value has been estimated using only the development method; the cost approach and income approach are not applicable to this property type. The sales comparison approach has not been considered in estimating prospective value due to the lack of comparable sale data involving improved residential subdivisions. All appropriate valuation techniques have been considered, and this represents a complete appraisal. Comparable sale data is collected from sources that include, but are not limited to. Realtors®. buyers. sellers, attorneys. and the applicable Multiple Listing Service (MLS). All market data has been confirmed with a party to the transaction, a Realtor® or attorney involved in the sale. Multiple Listing Service published (or electronically transmitted) data, and/or an appraiser who is believed to constitute a reliable source. The geographic area included in our investigation of comparable sale information includes the middle Roaring Fork River Valley between Basalt and Cerise Ranch Page 10 August 30, 2000 Scope of the Appraisal (cont'd) Carbondale: this is considered adequate based upon the quality and quantity of available market data within this area. All comparable sales have been inspected and photographed. This is a self-contained appraisal report intended to present all data and analyses pertinent to the appraisal. Competency The appraisers satisfy the competency provision of the Uniform Standards of Professional Appraisal Practice with respect to the subject property by virtue of education and experience as set forth in the appraisers' qualifications in this report. The provision is further satisfied by extensive specific experience with comparable properties in the Roaring Fork Valley. Cerise Ranch Page 11 August 30, 2000 gou2d esu83 CC) CD 000Z '0£ 3sn6ny 1 CD a) 0 To Meeker Roan Parachute - 81 1 C1•1 s Anvil Rulison Battlement Mesa JTo Grand Junction \. Horse Mountain 330 Molina Mesa Lakes 65 Points Rifle Falls State Park Rifle Gap State `'8 \ Park Rifle . Rale Gap :''4 Rc,ac�c�r Mrs c Gap Rcsenoir WHITE RIVER NATIONAL FOREST Harvey Gap - State Park New Castle The Flat Tops 114 87 90 Battlement Mesa Elk Mountain Ctec1 Colibran ,Vega Slate Park \Rest�oit GRAND MESA hies° G1 6 "(1 Crog Crtsj Grand Mesa NATIONAL Leon- LAt / l0ta,o C 01oGlenwood 97 ` Springs Hightower Mountain Chalk, Mountain FOREST Sunlight Peal Crt,l 116 Co.• .rt COLORADO MOUNTAIN COLLEGE 133 L O U SWIJ U ¢.w U Sunlight Furk • Ski Area Carbondale, , ''-, Basalt _ GARFIELD CO. — MESA2CO. PITKIN CO. Dotsero 140 147 ..1=le /Gypsum Basalt ebel Mountain ( Haystack l Mountain GO� J et'cj. WHITE • u p U Hausman` U' z Mountain \ ai0 _ \tE.1 z UV Afz U Electric Mountain Ragged Mountain To Paonia 133j n 133 Mount Sopris RIVER • Redstone `tr4 Snowmass Snowmass Village Snomnass Ski Area Eagle Tb' • e –.(c)tztQb7 Fr)ingpan 157 Wolcott 131 To Vail, Denver RtuSi--tet •' Reser oit Meredith k 'er\ Woody Creek Larkspur Mountain Buttermilk Aspen Ski Area -.Aspen Aspen\ Hiightands Mtn. Skr Cly Ski 'Area Area NATIONAL • FOREST\ 4 Marble �., Chair 7. cMountain on Mountain 0.r, VThis map is intended to show% only selected roadr. L construction."--" ' Some roads may be under co �o • s \Maroon % )ecus Treasury s 82 To Twin takes, Leadville LIS:WEST DIRECT. F.-. Area Data Introduction. The subject property is located in the middle portion of western Colorado's Roaring Fork River valley. This area includes the towns of Basalt and Carbondale, defining the eastern and western ends of the area, respectively; the community of El Jebel; and portions of unincorporated Pitkin, Eagle, and Garfield counties. The valley's economy is driven by the Aspen/Snowmass resort area located 17 miles southeast of Basalt. Annual tourist visits to the area and a strong second -home market attract considerable capital to the valley. A very strong real estate market exists in this area, supported by increasing population, employment, and income, and physical and governmental constraints on the supply of developable land. Transportation. Colorado Highway 82 is the primary highway artery serving the Roaring Fork Valley, and providesyear-round access between Glenwood Springs. 12 miles northwest of Carbondale, and Aspen. It connects to U.S. Highway 24 and the upper Arkansas River valley to the east between May and November; Independence Pass is closed during the winter months. Interstate 70, the major east -west highway in Colorado, passes through Glenwood Springs. The closest major cities are Denver (170 miles east) and Grand Junction (100 miles west). Colorado Highway 133 intersects Highway 82 near Carbondale and provides access to the North Fork valley of the Gunnison River and the city of Delta to the south. Local bus service is available between Aspen and Glenwood Springs. Intercity bus service (Greyhound) and rail passenger service (Amtrak) is available in Glenwood Springs. Regularly scheduled airline service (United Express, Northwest, America West Express) is available at the Aspen/Pitkin County Airport, 15 miles southeast of Basalt. Population and Income. Population in the Roaring Fork Valley is increasing at moderate to rapid rates; the mid -valley is demonstrating the highest growth rates. Pertinent population and household data is presented in the following table: Roaring Fork Valley Demographic Data Population 1990 Population 1999 % Change Population 2004 % Change Aspen/Snowmass Village 10,202 10,515 3.1% 10,294 -2.1% Mid -valley Area 12,563 17,906 42.5% 20,857 16.5% Glenwood Springs Area 9,626 12,667 31.6% 14,634 15.5% Totals 32,391 41,088 26.9% 45,785 11.4% Households 1990 Households 1999 % Change Households 2004 % Change Aspen/Snowmass Village 4,879 5,172 6.0% 5,135 -0.7% Mid -valley Area 4,601 6,686 45.3% 7,853 17.5% Glenwood Springs Area 3,798 5,098 34.2% 5,960 16.9% Area Total 13,278 16,956 27.7% 18,948 11.7% Source: CACI, January 2000. Based on data for 81601, 81623, 81621, 81654, and 81611 zip codes Household income levels in this area are relatively high and increasing at a rapid pace. Claritas, Inc., of Arlington, Virginia. reports that average household income in Basalt increased from $40,461 in 1989 to $63,696 in 1996. Cerise Ranch Page 13 August 30, 2000 Area Data (cont'd) a 57.4% increase. Median household income in Pitkin County increased from $40,262 in 1989 to $57,S71 in 1996, a 43% increase. Average and median income data for this area is presented in the following table: Income Data - 1999 Aspen/Snowmass Village Mid -Valley Area Glenwood Springs Area Per Capita Income Average Household Income Median Household Income $42,400 $85,807 $52,355 $24,828 $66,169 $50,752 $24,692 $60,585 $45,701 Source: CACI, January 2000. Based on data for 81601, 81623, 81621, 81654, and 81611 zip codes Economy. The Aspen/Snowmass area, an internationally recognized destination resort, fuels the economy of the entire Roaring Fork Valley. While full-time population in the area is relatively small. annual tourist visits of approximately 1,000,000 (Aspen Chamber Resort Association) substantially increase the area's effective population. The typical visitor to this area has well above average income, resulting in economic activity comparable to that of a much larger ciy. The following chart shows the breakdown of estimated 1999 employment in the Roaring Fork Valley by employee occupation: Cerise Ranch Roaring Fork Valley Employment % of Employment ® Agricultural, Forestry, Fishing ▪ Transportation/Utilities ® Finance/Insurance/Real Estate ® Mining/Unclassified II Construction • Wholesale Trade • Services Source: CACI, January 2000 Total 1997 Payroll -$338,760,000 11 Manufacturing Retail Trade ■ Public Page 14 August 30, 2000 Area Data (cont'd) Services and retail trade account for approximately 66% of the area employment; around IS% is attributable to construction and F.I.R.E. activities. We believe that the contribution of construction trades is underestimated. According to the Sonoran Institute ("A Portrait of the Roaring Fork Valley", October 1996), over 80% of all new jobs created valley -wide over the past 25years have been in service (principally recreation and tourist related services), retail trade, and real estate and finance. Employment has increased rapidly throughout the valley. and unemployment rates for the past severalyears have been well below 5%. A substantial portion of economic growth in the valley is occurring in the mid -valley area. This growth is reflected in retail sales patterns over the past severalyears; retail sales figures for Basalt and Carbondale are reflected in the following chart: $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 Mid -Valley Retail Sales 1992 1993 1994 1995 1996 1997 1998 1999 ® Carbondale ® Basalt Taxable sales volume in Basalt increased from $17,864,800 in 1992 to $77,976,600 in 1999, a 336% increase over sevenyears. Carbondale reports a 144% increase in retail sales between 1992 and 1999; 1999 sales were $61,166,667. Smaller increases in retail sales were reported in other Roaring Fork Valley communities; Aspen's retail sales volume increased 47.8% during the same period. This study indicates that the mid -valley is experiencing the bulk of new commercial activity in the area. although the majority of retail sales still occur in the Aspen/Snowmass Village area. Valley Growth Patterns. Development in the area is linear, primarily occurring along the valley floor between Aspen and Glenwood Springs. Growth patterns are impacted by physical and governmental constraints on the supply of developable land. A substantial portion of the valley lies within the White River National Forest and/or Bureau of Land Management lands. Steep slopes and other geologic hazards further reduce developable land. In addition, both Pitkin County and the City of Aspen have extremely restrictive land use codes designed to lower the rate of urban growth. Commercial and industrial land in the upper -valley is nearly fully developed, and no material additions to supply are likely within the foreseeable future. Residential land values in the upper valley greatly exceed the local population's purchasing power, forcing residents to find affordable housing down valley. Cerise Ranch Page 15 August 30, 2000 Summary of New and Proposed Single -Family Development in the Mid -Valley: 1995 - 2000 Year Identification Total Lots Lots Sold Price Range Comments Existing 1997 - 2000 Willits (Sopris Meadows) 1998 Southside PUD 1995 - 2000 Dakota & Eagle Dakota 2000 Aspen Equestrian Estates 1999 - 2000 Sopris Mesa 1996 - 2000 River Valley Ranch 1997 - 2000 Aspen Glen 2000 2000 Coryell Ranch Midland Point Total Proposed 2000 Southside PUD Phase II 2000 2001 2000 St. Finnbar Farm Cerise Ranch (Subject) Ranch Creek PUD Total Proposed 157 49 $110,000 - $120,000 As of August 2000 55 32 $91,500 - $139,000 Original Pricing 23 23 $95,000 - $153,000 Original Pricing 47 1 $350,000 - $495,000 Current Offerings 24 18 $115,000 - $200,000 Original Sales 142 115 $165,000 - $499,000 Current Offerings 320 Estimated 315 Estimated $150,000 - $700,000 29 15 $394,000 - $1,760,000 36 36 $112,000 - $300,000 810 23 604 0 Phased development. 65 lots offered to date. Average absorption -of 1.5 lots/month. Average subdivision just east of El Jebel. Amenities include soccer field, biking trails, playground, parks. Near highway Located south of Highway 82 and downtown Basalt. Most recent re -sale in this project was at a price of $159,500. Park and playing field. Close to schools. Single family & duplex lots. Rapid absorption Near Highway 82 west of Basalt. No significant amenities. Ineffectively marketed in first three years. Average absorption over last two years 1.1 lots/month Equestrian -oriented subdivision now under construction. Considered to be speculative offering in this location. Amenities will include equestrian privileges, pool, park, tennis courts, putting green, clubhouse Missouri Heights project. Small acreage parcels. No significant amenities. 1.1 lots/month absorption. Un -sold lots listed at $185,000 - $200,000. Excellent views 673 -unit residential PUD in Carbondale. Golf course oriented project with many amenities. Figures in table are for single-family lots released to date. Average absorption of around 2.5 single-family lots/month Gated subdivision with Nicklaus golf course. Rapid early absorption fueled by speculative purchasers. Many amenities, views, river. Lot prices include golf membership Partially completed. Large lots. Some with river frontage. Includes invitational membership to Aspen Glen 0.25 - 0.90 acre lots. Average views. Close to Crystal River. Open space, man-made lake. Rapid absorption $160,000+ Second phase of Southside PUD to be offered later this year 13 0 $375,000 - $695,000 67 0 $155,000 - $475,000 21 0 $125,000 - $290,000 124 0 Recent offering of acreage tracts with river exposure on County Road 100. Lots range in size from three to 13 acres. River influence. Below average views Recently approved subdivision of 300 -acre ranch on Highway 82. Extensive open space. Average views Adjacent to Ranch at Roaring Fork. Smaller lots with wide range of appeal. Amenities include par -3 golf course, tennis courts, trails, equestrian facilities. Excellent views Notes: Current estimated values are based upon recent sales of units within the same project Where no re -sales have occurred, original pricing is reported. Most residential units have reflected annual appreciation rates of 12% to 24% since early 1998. Cerise Ranch Page 16 August 30, 2000 Area Data (cont'd) The mid -valley is the closest location with appropriate topography, land -use policies. and market conditions adequate to support overflow growth from the Aspen/Snowmass resort. This area has experienced substantial growth in all market segments over the past IOyears, and the rate of growth is increasing. The mid -valley has some appeal as a "gold medal" fly-fishing destination during the summer months, and also serves as a secondary staging area for visitors to Aspen and Snowmass Village. A Jack Nicklaus -designed golf course just east of Basalt opened in 1999, providing another draw to the mid -valley; this project has already had a substantial impact through development of new second -home units purchased at unprecedented price levels. Residential Real Estate Trends. The mid -valley residential market is extremely strong, characterized by an excess of demand over supply. A summary description of major single-family projects developed over the past fiveyears and known proposed projects is presented in the table on the facing page. There has been steady to rapid development of new single-family lots and homes in this area over the past several years. Most of these lots and housing units have been readily absorbed at rates ranging from 0.5 to 2.0 lots per month per project. Initial absorption rates are usually much higher, reflecting a significant amount of speculative activity. This was particularly true of the first offerings in the two golf -course oriented projects, Aspen Glen and River Valley Ranch. A number of those lots have been placed back on the market, slowing developer sales. Single-family lots have been selling at a wide range of prices. The lowest priced lots are located in the Willits project; recently completed sites are under contract at prices ranging from approximately $115,000 to $130,000. Single- family sites in the Southside PUD sold at comparable price levels during 1998 and 1999, but a recent re -sale reflected a price of $159,500; the developer reports that Tots in Phase II will be priced above $160,000. The upper end of the market for Tots up to one acre in size is established by sites in River Valley Ranch, and Aspen Glen. These projects have been developed on exceptional ranch property with excellent views, river frontage, and substantial amenities. Golf memberships are included with the purchase of Aspen Glen lots. Smaller lots in these projects have been selling at prices generally ranging from around $145,000 to $175,000; exceptional sites with atypical privacy, views, or river frontage have been sold at prices in excess of $700.000. Large -acreage sites in this area have sold at prices in excess of $1,000,000. Value levels have increased at moderate to rapid rates over the past fiveyears. We have documented annual appreciation rates of 15% to 30% for Tots competing in the lower price categories. Some of the higher appreciation rates were reflected in initial re -sales of developer -priced lots. There is evidence to indicate that the original pricing in these projects was below market rates, a condition that would overstate appreciation in the first re -sales. Based upon our observations of the local market, we believe that actual value increases due to general market conditions has been in the neighborhood of 15% to 20% over the past twoyears. Steady to rapid new development of single-family sites is likely to occur in the mid -valley into the foreseeable future. A material portion of new development now proposed and under construction is targeting the upper end of the value range. This includes Aspen Equestrian Estates. St. Finnbar Farm. Aspen Glen, and Coryell Ranch. There is clearly Cerise Ranch Page 17 August 30, 2000 Area Data (cont'd) a market for sites at the higher price levels, but the most active projects are those at the low end of the value range. While a significant number of new lots will be created in the next several years, at this time there is limited competition at the lower price levels. Community Resources. Neighborhood shopping is available in Basalt, El Jebel and Carbondale, and regional facilities are located in Aspen and Glenwood Springs. The public schools in the mid -valley area are part of the Roaring Fork School District; private school opportunities are available in Aspen and Carbondale. Colorado Mountain College, a junior college located northwest of Carbondale, offers a wide variety of adult education programs, and has attendance centers in Basalt and Carbondale. Good hospital facilities are available in Aspen and Glenwood Springs and a 20,000 - square -foot medical clinic was recently opened in Basalt. Police protection is provided by municipal and county forces as applicable, and fire protection by volunteer departments headquartered in Basalt and Carbondale. Climate, environment and abundant recreational opportunities are major elements in the area's economy. Winter sports facilities include the four Aspen ski areas, excellent nordic skiing opportunities that include groomed trail systems in the Aspen and Carbondale areas, and the Hot Springs Pool in Glenwood Springs. The area is surrounded by the White River National Forest, which offers exceptional scenic beauty, and hiking, camping, hunting and off-road biking opportunities. The area's rivers, such as the Frying Pan and Crystal. are noted for excellent fishing. These environmental and recreational attributes are the primary reason for the strength of the area's tourism -oriented economy. Summary. The mid -valley is the fastest growing portion of the Roaring Fork River valley: it is experiencing substantial residential, commercial, and light industrial development. Economic indicators are strongly positive, including population, household formation, employment, income, and retail sales: these conditions are likely to continue into the foreseeable future. The valley's economy is based primarily on tourism, and the bulk of activity is related to service, retail trade. F.I.R.E., and construction activities. The limited supply of developable land in the Aspen/Snowmass resort complex, the major economic center for this area, has diverted excess demand for residential. commercial, and industrial development to the mid -valley area. Increasing real estate value levels have been experienced in most market segments, although the rate of increase in commercial values and rents moderated between late 1995 and early 1999. The local economy is best characterized as cyclical, with periods of stable or slightly decreasing value levels, but value levels have moved consistently upward over the long term. The local residential market is extremely strong and has exhibited rapid construction and absorption of new housing units, low vacancy rates, and rapidly increasing value levels, particularly over the past twoyears. Although the amount of approved and proposed new development may bring greater balance to this market, delays attributable to obtaining approvals and an under -supplied construction labor market typically slow the rate of development of new product. The residential market is anticipated to remain strong into the foreseeable future. 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The subject neighborhood is defined as those portions of unincorporated Garfield County located on the floor of the Roaring Fork River valley between Carbondale on the west and the hamlet of El Jebel on the east. The neighborhood is bounded on the north by the Missouri Heights area, as physically delineated by an escarpment, and on the south by primarily public and undeveloped lands, also delineated by a steep escarpment. The southern boundary of the valley is also defined by the former Denver & Rio Grande Western Railroad right-of-way. Access. The neighborhood generally lies on either side of Colorado Highway 82, which passes through from east to west. Highway 82 is a restricted access four -lane highway through the neighborhood. The only other significant public roads serving the valley floor are Garfield County Road 100, which extends from the eastern edge of Carbondale to the approximate mid -point of the neighborhood before rising to the Missouri Heights area to the north, Valley Road, an Eagle County road that runs east -west south of Highway 82 and just west of El Jebel, and the Highway 82 frontage road, which parallels Highway 82 on the south from County Road 100 on the west to Valley Road on the east. Land Use. The bulk of land area within the neighborhood is devoted to agricultural uses including cattle ranches and equestrian operations. In terms of number, single family residences on lots of one-half to ten acres are most prevalent. The only large:existing residential project within the neighborhood is the Ranch at Roaring Fork. a mixed-use planned unit development (PUD) located in the western half of the neighborhood south of Highway 82. Several major developments considered to be in the El Jebel area. including the Dakota, Blue Lake and Summit Vista subdivisions, form the eastern boundary of the neighborhood. There is limited commercial and industrial development in the neighborhood including a veterinary hospital, the Catherine Store and gasoline station. a nightclub, a mini -warehouse and light industrial project now under construction, and a log -home construction site. Other uses include a Waldorf school, the former distribution site for Mid -Continent Resources (being re -developed as a mini-warehouse/light industrial complex). a gravel pit, and a nursery. Development Trends. Land use has been in transition from agricultural to residential uses for 30 to 40years, with the bulk of existing homes having been constructed since 1970. The Ranch at Roaring Fork was originally developed in the early 1970's and is nearly fully built-up at this time. Outside of that project, new single-family residential development has occurred at a slow pace over the past severalyears. Several single-family residential projects have been proposed and/or approved within the neighborhood over the pastyear including Aspen Equestrian Estates (formerly Preshana; 47 lots approved and now under construction): St. Finnbar Farm (13 lots approved and in the early stages of development); the Ranch Creek PUD (located adjacent to the Ranch at Roaring Fork: 21 approved lots); and the Cerise Ranch (subject property; current proposal for 68 -lot subdivision). Mark Bean of the Garfield County Building and Planning Department reports that there are currently two smaller proposed projects located along County Road 100 with a total of 14 lots. The Blue Creek Ranch, located at the southeast corner of County Road 100 and Highway 82, is currently under contract: the listing broker reported that the prospective buyer plans to do a five to 10 -lot subdivision. These projects alone would add between 154 and 159 lots over the next one to twoyears. Considering high demand for all forms of housing and a decreasing supply of developable land in up -valley locations, it is likely that additional low- to Cense Ranch Page 20 August 30, 2000 Neighborhood Description (cont'd) medium-density residential development will occur within the foreseeable future. Garfield County's Master Plan for this area recommends development density of one unit per six to nine acres. The potential exists for additional commercial and/or light industrial development in the neighborhood. although there is strong public pressure against these uses in the Highway 82 corridor between El Jebel and Carbondale. As previously noted, such uses are currently under development along County Road 100 in the southwest portion of the neighborhood. Utilities. Public utility services available within the neighborhood include electricity, natural gas, telephone, and cable television. Existing homes and businesses are served by domestic wells and septic systems, except for the Ranch at Roaring Fork, which has its own water and sewer facilities; Aspen Equestrian Estates, St. Finnbar Farm, and the Ranch Creek PUD will connect to the Ranch at Roaring Fork sewer plant. The Mid-Valley Metropolitan Water District's water and sewer lines currently serve the El Jebel area and extend to the Dakotas project just east of the subject neighborhood and the subject property. In 1999, Garfield County denied the District's application to extend its service area from the Garfield County line (just east of The Dakotas) to the Ranch at Roaring Fork. The lack of public water and sewer service in the neighborhood has substantially reduced the rate and density of growth and, based upon the County's denial of the expanded district boundaries, this condition is expected to continue into the foreseeable future. Most development properties in the neighborhood have adequate water rights to support domestic wells and/or community water systems at the master-planned density. High groundwater levels and the proximity of the Roaring Fork River make the use of septic systems inappropriate for higher density development, but engineered septic systems and/or community waste-treatment plants will provide adequate waste disposal resources for the anticipated development density. Real Estate Trends. Residential land values within the subject neighborhood range from low-end single -family lots ($115,000+) to large estate-type ranches worth several million dollars. Low end residential projects in the neighborhood include the Dakotas (single -family and duplex development); Blue Lake (single -family); portions of the Ranch at Roaring Fork (mixed-use residential); and Summit Vista (single -family and one apartment complex). While these projects are nearly fully developed, single -family lot values generally range from $115,000 to $155.000. The more desirable portions of the Ranch at Roaring Fork and small acreage sites scattered throughout the neighborhood make up the middle of the market. The upper end of the value range for single -family lots is represented by Aspen Equestrian Estates (current listings at $350,000 - $495,000) and St. Finnbar Farm ($375,000 - $695,000); the highest residential land values apply to large acreage development sites and/or estate-type parcels. Excellent demand has been demonstrated for residential sites at the low end to middle of the value range, as well as for larger acreage parcels. There is little demonstrated demand for subdivided lots at the upper end of the price range; offerings of lots in Aspen Equestrian Estates appear to be highly speculative in nature. Residential value levels have increased at moderate to rapid rates over the past several years in the mid-valley area including the subject neighborhood. Recent re-sales of lots in the Willits and Southside projects. which have slightly superior up-valley locations, have reflected monthly appreciation rates of 1.6% to 2.7% per.month, or 19% to 32% Cerise Ranch Page 21 August 30, 2000 Neighborhood Description (cont'd) peryear. A current listing of a previously -acquired lot in the Dakotas Subdivision at $159,900 is 33.3% higher than the September 1998 sale price. If sold today at full price, it would reflect monthly appreciation of around L5%, or 18% per year. Re -sales of improved residential properties are also reflecting high appreciation rates, generally between I% and 2% per month. Linkages. The subject neighborhood is convenient to most area resources. It has immediate access to Highway 82 and is approximately 30 to 45 minutes from Aspen and Snowmass Village, the valley's primary employment centers. Shopping and entertainment resources are located in Carbondale, El Jebel, and downtown Basalt, all within six miles of the neighborhood. Public schools serving the neighborhood are located in Basalt and Carbondale; bus service is available. There are medical facilities located two miles east of the neighborhood in El Jebel; acute care is available in Aspen and Glenwood Springs. Colorado Mountain College offers classes in Basalt and Carbondale. Numerous recreational opportunities exist within 25 miles of the neighborhood. Conclusion. The subject property is located in a neighborhood characterized by a relatively slow transition from historical agricultural uses to single-family and multi -family residential development. This area represents a potential expansion area for housing in the valley since most areas closer to Aspen are nearing their full build -out. Several new projects within this neighborhood have been approved and/or proposed over the past 12 months, including the subject's 67 -lot subdivision, and the rate of growth is likely to increase over the next several years. New development will likely reflect low to moderate density. The neighborhood has average linkages to employment centers, schools, public transportation, shopping, entertainment and other community resources. Views in this area range from average to good. The best views apply to sites located north of Highway 82 where Mt. Sopris is visible; views of Mt. Sopris in most of the neighborhood are obstructed by a ridge located south of the Roaring Fork River. Most of the neighborhood benefits from good solar exposure. Overall market appeal is considered average, although sites with Roaring Fork River frontage exhibit good market appeal; proximity to busy Highway 82 is a negative factor. Property values have increased at moderate to rapid rates over the past several years and we anticipate that this pattern will continue into the foreseeable future. Property Description - As Is Location and Access. Cerise Ranch is located at the eastern end of the subject neighborhood on the north side of Highway 82 approximately one mile east of Garfield County Road 100 and 1.7 miles west of El Jebel Road. It is approximately five miles east of Carbondale and six miles west of Basalt. Driving distance to Aspen is approximately 23 miles; Glenwood Springs is 17 miles northwest. Most of the site is located in Garfield County; approximately 6.2 acres located at the extreme eastern end of the property is in Eagle County. Access to the property is from a gravel driveway located approximately 1,100 feet east of the western property line: this is the only permitted access point. Adjacent land uses to the north include undeveloped land and single-family homes on Missouri Heights. accessed from El Jebel Road and Upper Cattle Creek Road to the east and County Road 100 to the west. The Dakotas Cerise Ranch Page 22 August 30, 2000 ti Cense Ranch U m V SECTION 29 L iqy dZ .0)1'99 rs.0a,o S Nno� .cl Nn0.7 "9 t 37.b 3 1 yft kl ,,,, , , 1 FF II �a�•a .rC:to1 .1 .'..Or..to w II 3 ar 1 -li. 1 I O1 1 r R a Y ; >! h 2 .LO Drft ,N , SECTION SIV 1/4 NW 1/4 ti k'11%.4 90[1 ° 11 'I EYF II u ' /a V i„ i? _ V R Site Plan - As Is Page 23 August 30, 2000 Property Description - As Is (cont'd) residential (duplex; single-family) project is located immediately east. Older single-family residential uses and the Alpine Animal Hospital are located to the south across Highway 82 and its frontage road. Agricultural land and low-density single-family development exists to the west. The subject site has an average location. It is within easy driving distance to most area resources. Solar exposure is excellent. Its primary views are to the east and west along the valley floor. The high peaks of the Elk Mountains are obstructed by the ridge forming the southern boundary of the neighborhood, although Mt. Sopris is partially visible from the northern portions of the site. Views to the north are obstructed by an escarpment marking the rear one-third of the site. Overall, views are considered average. Highway noise and access are the major negative influences to the site. Traffic levels on Highway 82 are very high and increasing at a rapid rate. The speed limit in this location is 65 m.p.h. and, since the site rises above road grade. traffic noise is evident on all portions of the property. Access to the highway is very difficult during peak traffic periods (6 a.m. to 9 a.m.; 4 p.m. to 6 p.m.) and involves above-average hazard. It is likely that any large scale development will be required to make improvements to Highway 82 including acceleration and deceleration lanes. Residential projects with similar noise levels and access have been readily marketable in the past, but with some price moderation. Physical Characteristics. The subject site is irregular in shape and contains approximately 296.378 acres. It has 4,679.82 feet (0.886 miles) of frontage on the north side of Highway 82. The depth of the western portion of the site is approximately 3,155 feet, while average depth at the east end of the property is 2,400 feet. The Site Plan presented on the facing page, a reproduction of a July 14. 1998 survey, shows the outside boundaries of the lot and the location of the existing building improvements. An approximately 4.6 -acre exclusion around the existing residence and most of the agricultural outbuildings will be retained by the current property owner; the colored dot on the Site Plan indicates the approximate location of this excluded area. Topography is extremely varied and substantially reduces the useable area of the property. Elevations range from around 6,350 feet along the highway to about 7,070 feet at the northwest corner of the site. The front portion of the site is generally level back to Blue Creek. Thisyear-round stream crosses the site from east to west approximately 800 to 900 feet north of the highway before curving to the south and exiting the property around 150 feet east of the western boundary. The middle portion of the site slopes very gently upward to the base of an escarpment affecting the northern (rear) portion of the site. The escarpment area is characterized by moderate to steep slopes and deep ravines and is not useable. From a topographical standpoint, we have estimated that approximately 175 to 200 acres of the site is useable. The southern portions of the property within the valley floor include irrigated pasture (85.6 acres according to the Garfield County assessor) and crop lands. There is substantial riparian vegetation located along Blue Creek and numerous irrigation ditches, around a pond located near the southeast corner of the lot, and in numerous identified wetlands. Several mature cottonwood trees are located along an existing irrigation ditch just south of the base of the escarpment and around the existing homestead and agricultural buildings. Vegetation on the escarpment includes Cerise Ranch Page 24 August 30, 2000 Cense Ranch Map of Existing Conditions Page 25 August 30, 2000 Property Description - As Is (cont'd) pinyon/juniper forests, sage, and riparian vegetation along a spring -fed stream running through the ravine directly north of the ranch improvements. We have been provided with a soils report covering the developable portions of the property prepared by CTL/Thompson, Inc., dated January 27, 2000. Soils are generally typical of the area and include sand, gravel. and clays. The clays were judged to be moderately to highly compressible; expansive clays were encountered in some locations. These conditions will require the use of engineered foundations on some of the proposed residential lots at Cerise Ranch. Paved areas will also require special design features where clays exist at the planned subgrade elevations. Groundwater was encountered at depths ranging from six to 25 feet in test borings located in the primary areas of proposed development. These borings were made during the winter; groundwater levels can be expected to rise during the spring. The soils report concluded that basements will not be feasible at the lower elevations; some of the higher lots may support basements if under -drains and waterproofing are incorporated. Geologic Conditions. We have reviewed a February 3, 2000 Revised Geologic Hazard Evaluation prepared by CTL/Thompson. Several potential geologic hazards were identified, none of which will preclude the proposed development of Cerise Ranch. However, they will increase costs to the project developer and/or prospective purchasers of the finished lots. A summary of these conditions is presented in the following list: • Rockfall Hazard • Subsidence Exists along slopes at the rear of the site with some impact to adjacent developable areas. Could likely be mitigated using either a trench or a mechanically -stabilized earth berm. Southeast portion of the site around the existing pond; affects proposed Lots 24 & 27 and associated access drive. No mitigation, but conversion to residential usage is likely to reduce groundwater circulation and potential for additional ground subsidence. • Debris/Mud Flows Affects areas around alluvial fans at the base of ravines. Site grading should provide adequate mitigation for this hazard. • Landslides/Unstable Slopes The northwestern portion of the property includes areas of landslides and potentially unstable slopes. The rear portions of the site have potential wildfire hazard. In addition, the site has been identified as critical winter habitat for mule deer and elk. These conditions are typical of many developable parcels in this area. Wildfire hazard is typically mitigated using buffer zones and restrictions on roofing materials; wildlife issues are typically addressed through restrictions on dogs and wildlife -friendly fencing. Flood Hazard and Wetlands. The subject property lies outside of the identified flood plain of the Roaring Fork River according to Federal Emergency Management Agency (FEMA) flood map 080205 1880 (effective date January 3, 1986). However. a substantial portion of the property's useable area lies within the flood plain of Blue Creek and/or identified wetlands. The location of these features is identified on the Map of Existing Conditions presented on the facing page. According to High Country Engineering (HCE), consultants for the proposed subdivision. 57.96 acres of the Cerise Ranch Page 26 August 30, 2000 Property Description - As Is (cont'd) site are within the identified 100 year flood plain: the total area included in wetlands was reported at 26.01 acres. Some of the wetlands are within the flood plain; total land area impacted by flood plain and wetlands has been calculated at 74.07 acres from information provided by HCE. This reduces the effective useable area of the site to around 100 to 125 acres. Site Improvements. The only existing site improvements include gravel and dirt drives, numerous irrigation ditches and laterals, and several thousand feet of fencing. Most of these improvements have little utility for future residential development. Utilities. Public utility services available to the property include electricity, telephone, cable television, and natural gas. Public water and sewer service are not available and this condition is likely to continue into the foreseeable future. The property has excellent water rights adequate to support the proposed subdivision, including permits from the Basalt Water Conservation District for a proposed community water system. Existing irrigation water is reported to be adequate to support the proposed water features in the completed subdivision. Individual septic systems represent the only feasible means of providing waste disposal. Public Transportation. Bus service to up -valley and down -valley locations is provided by RFTA. The closest bus stop is located approximately one mile west at the intersection of Garfield County Road 100 and Highway 82. Easements and Encumbrances. We have not been provided with a title report on the subject property. The preliminary plat for Cerise Ranch identifies utility easements along the property's Highway 82 frontage. Most of these easements are within the 75 -foot setback requirement, and there is no appreciable reduction in useable land area. We are not aware of any adverse easements or encumbrances impacting the property, and this appraisal assumes there are none. Environmental Hazards. The appraisers have not been advised of the existence of any hazardous substances on or in the subject property. nor was any evidence thereof noted during our inspections of the property (the appraisers have no expertise in the detection or identification of such substances). Richard Cerise reported that there is an above -ground diesel fuel tank and an underground gasoline fuel storage tank located in the complex of existing residential and agricultural improvements. No evidence of spillage was observed during our inspection. While the exact location of the 4.6 -acre exclusion was not known as of the date of this appraisal, we believe that these tanks are within the boundaries of that exclusion, and therefore not located on the subject property; our appraisal assumes this to be the case. The known history of the property, which has been used for agricultural purposes since the early I900's, indicates an above average potential for the presence of hazardous materials. Vectra Bank's Hazardous Waste Supplement is presented in the Addenda on page 93. This appraisal is made contingent upon any state of facts that would be revealed by a professional environmental assessment of the subject property. Summary. The Cerise Ranch represents one of the larger agricultural parcels in the mid -valley area at approximately 296 acres. However, topography. flood hazard, and identified wetlands substantially reduce useable area. estimated to be within the range of 100 to I2S acres. The property has an average location approximately 23 miles from Aspen and 17 miles from Glenwood Springs. Access is available from a single access point at the location of an existing driveway; it is Cerise Ranch Page 27 August 30, 2000 Cerise Ranch Preliminary Plat of Proposed Cerise Ranch Subdivision Page 28 August 30, 2000 Property Description - As Is (cont'd) adequate. but somewhat hazardous given existing and probable traffic levels at this location. Future development of the site will likely require highway improvements to be made at the developer's expense. All of the developable portions of the site are materially impacted by highway noise. Views are average. The lack of public water and sewer service will substantially reduce development density relative to the El Jebel area, immediately to the east, which is served by the Mid - Valley Metropolitan Water District. The property has excellent water rights more than adequate to provide domestic and irrigation water for future residential development. A community waste treatment facility would not be feasible based upon the Master -Planned density for this area; engineered septic systems likely to be required will add to the costs of construction for potential lot buyers. There are no known adverse easements or encumbrances. No other negative conditions are noted. Overall market appeal is considered average. Property Description - Proposed Overview. Our appraisal of prospective value assumes subdivision of the Cerise Ranch and completion of all infrastructure improvements associated with the proposed project. The current proposal, now seeking preliminary approval from the Garfield County Board of County Commissioners, involves a 68 -lot subdivision with sites ranging in size from approximately two to 40 acres. Proposed Lot 68 will be a 4.6 -acre parcel surrounding the existing ranch house and related agricultural buildings; this parcel is not part of the subject property. Our appraisal of prospective value therefore considers a 67 -lot single-family residential subdivision and related improvements. Project Description. The Preliminary Plat Map presented on the facing page shows the general layout of the proposed project. Cerise Ranch Drive, which will enter the property at the location of the existing driveway, will provide access to the proposed project. This street will run north for approximately 1.800 feet to a cul-de-sac serving lots in the northwest corner of the project. Cerise Ranch Drive will include a roundabout. to be located around 950 feet north of the highway, providing connections to Sunflower Loop and Larkspur Road. Sunflower Loop will run west from the roundabout, looping to the north around the Cerise out -parcel (Lot 68) and reconnecting to Cerise Ranch Drive about 500 feet north of the roundabout. This street will serve proposed lots in the western portion of the project. Larkspur Road will run east from the Cerise Ranch Drive roundabout, accessing the central and eastern portions of the property; its length will be around 4,200 feet. Bluestem Court will extend south from a proposed roundabout near the southeastern property line and serve four proposed lots in the southeast portion of the property. This street will have a length of approximately 1.300 feet. All streets will have asphalt paving and will comply with County standards (24 -foot width). A variance for excessive road grade (12% and 13%) will be required on the northern portions of Sunflower Loop and Cerise Ranch Drive. Approvals now in place will require the developer to install acceleration and deceleration lanes on Highway 82. Most of the area between Highway 82 and Larkspur Road will be dedicated as common open space in order to preserve and protect lands within the flood plain and identified wetlands. Substantial portions of proposed Lots 1-27 and 57-66 will lie within these open space areas; this will substantially reduce the effective size of those lots. Proposed Cerise Ranch Page 29 August 30, 2000 Property Description - Proposed (cont'd) amenities in the common area will include a 10 -acre lake and a series of smaller ponds to be located near the front of the property, and several thousand feet of paved walking and bike paths that will generally follow the course of existing and proposed water features. There will also be several thousand feet of fencing around the proposed common areas. Equestrian facilities will be a permitted use of the common areas outside of identified wetlands, but the developer will not make any equestrian -related building or site improvements. All proposed utility lines will be underground. Public electricity, telephone, natural gas, and cable television service will be provided to each lot, extended from lines located along the property's highway frontage. A community water system will be constructed; this system will be fed by wells, with water pumped to a 300,000 -gallon storage tank to be constructed north of the north end of Cerise Ranch Drive. Sewage disposal will be provided by individual septic systems. Each lot will require, at a minimum, an engineered Individual Sewage Treatment System (ISTS) and subsurface drain field meeting the minimum requirements of ANSVNSF 40; each system will be sized by an engineer and/or manufacturer as appropriate for the proposed home. Description of Proposed Lots. Most of the proposed homesites will be located in the central portion of the property north of Blue Creek and its associated flood plain and wetlands, west of the Eagle County line, and south of the escarpment covering the northern portion of Cerise Ranch. One lot will be situated at the northwest corner of the highway and the proposed access drive (Cerise Ranch Drive); four will be situated along the highway at the southeast corner of the project; and the one 40 -acre homesite will encompass most of the northwestern portion of the property. The proposed development is intended to be constructed in two phases. Phase I will include 28 lots to be located at the western end of the project (Lots 1-6 and 46-67). Phase II will include the remaining 39 lots situated at the eastern end of the project. The demarcation line between the two phases will be around 450 feet east of Cerise Ranch Drive. At the request of the client, we have valued the property assuming completion of infrastructure associated with both phases. For descriptive purposes, we have grouped the proposed lots based on their physical and locational attributes as well as overall market appeal. A summary description of each lot by grouping is presented in the following tables and paragraphs. Proposed Lots at Cerise Ranch - Group 1 Lot Size Access Use Pro -Forma Price Comments 24 4.219 acres Bluestem Ct. 1 -family $235,000 Building envelope (BE) 500' from highway. Includes small pond & wetlands 25 4.296 acres Bluestem Ct. 1 -family w/ ADU $220,000 BE 300' from highway. Surrounded by wetlands and flood plain 26 5.162 acres Bluestem Ct. 1 -family $210,000 Fronts on highway. 2/3 of lot is wetlands 27 2.233 acres Bluestem Ct. 1 -family $215.000 Fronts on highway adjacent to power line and Dakotas. Small area of wetlands 66 2.058 acres Cerise Ranch Dr. 1 -family $170,000 Fronts on highway. Small area of wetlands Group 1. This grouping will include five lots along Highway 82. Lots 24-27 will be in the southeastern corner of the project adjacent to a power line and the Dakota Meadows townhouses; Lot 66 will be situated at the northwest corner of proposed Cerise Ranch Drive and the highway. Lots 24-27 are located in the area with an identified potential for Cerise Ranch Page 30 August 30, 2000 Proposed Lots at Cerise Ranch - Group 2 Lot Size Access Use Pro -Forma Price Comments 1 3.804 acres Cerise Ranch Dr. 1-family$170,000 On roundabout. Most of lot within identified flood zone 2 2.860 acres Larkspur Road 1 -family $170,000 South side of Larkspur Road. Most of lot within flood plain and/or wetlands 3 3.129 acres Larkspur Road 1 -family $170,000 Same 4 3.402 acres Larkspur Road 1 -family $170,000 Same 5 3.739 acres Larkspur Road 1 -family $170,000 Same 6 3.519 acres Larkspur Road 1 -family $190,000 Same 7 4.141 acres Larkspur Road 1 -family w/ADU$190,000 Same 8 4.766 acres Larkspur Road 1 -family w/ ADU $190,000 Same 9 4.963 acres Larkspur Road 1 -family w/ ADU$190,000 Same 10 4.677 acres Larkspur Road 1 -family w/ ADU $190,000 Same 11 4.401 acres Larkspur Road 1 -family w/ ADU$190,000 Same 12 4.256 acres Larkspur Road 1 -family $190,000 Same 13 4.265 acres Larkspur Road 1-family$190,000 Same 14 4.418 acres Larkspur Road 1 -family w/ ADU$190,000 Same 15 4.621 acres Larkspur Road 1 -family w/ ADU $190,000 Same 16 4.713 acres Larkspur Road 1 -family w/ ADU $190,000 Same 17 4.562 acres Larkspur Road 1 -family w/ ADU $195,000 Same 18 2.981 acres Larkspur Road 1 -family $200,000 Same 19 2.685 acres Larkspur Road 1 -family $220,000 Same 20 3.054 acres Larkspur Road 1 -family $220,000 Same 21 2.634 acres Larkspur Road 1 -family $220,000 Same 22 2.702 acres Larkspur Road 1 -family $220,000 Same 23 2.182 acres Bluestem Ct. 1 -family $225,000 On roundabout 57 2.065 acres Sunflower Loop 1 -family $180,000 Generally level. Southem portion in open space area ' 58 2.077 acres Sunflower Loop 1 -family $165,000 South side of Sunflower Loop. Most in open space 59 2.311 acres Sunflower Loop 1 -family $160,000 Sane 60 2.259 acres Sunflower Loop 1 -family $155,000 Same 61 2.031 acres Sunflower Loop 1 -family $155,000 Same 62 2.018 acres Sunflower Loop 1-family$170,000 Same 63 2.372 acres Sunflower Loop 1 -family $170,000 Same 64 2.066 acres Sunflower Loop 1 -family $165,000 Same 65 2.072 acres Sunflower Loop 1 -family $175,000 On roundabout Cerise Ranch Page 31 August 30, 2000 Property Description - Proposed (cont'd) ground subsidence; a pond situated on Lot 24 and associated wetlands located on all four of these sites result in part from this condition. It is reasonable to assume that homes constructed on these lots will require engineered foundations at a higher than normal cost. Lots 26 and 27 will be most directly impacted by their proximity to the highway, but the other two lots will also be subject to considerable traffic noise. The developer plans to plant numerous trees along the highway, but this will not provide any appreciable buffer for several years. This grouping of four lots also has the most remote access; they will require an approximate!), one mile drive from the project entrance. Preliminary approvals allow a single family residence and one ADU on Lot 25. Lot 66 will also be negatively impacted by the highway; the building envelope will be just north of the project entrance. The southern portion of the site will be affected by a landscape easement associated with a series of lakes and ponds to be constructed between Blue Creek and the highway. This water influence should be a positive value influence. Group 2. Group 2 will include 32lots to be located south of Larkspur Road and Sunflower Loop. Most of these lots (1-5, 8-17, 57-64) will be elongate in shape and extend south to the highway. Lots 6 and 7 will be triangular in shape. Lots 18-23 and 65 will also be elongate, but will be separated from the highway by lots in Group 1. While all of these lots will have gross areas in excess of two acres, the impact of common areas and other easements will reduce their effective size to around 0.4 to 1.25 acres. Building envelopes for lots in Group 2 will be located between 800 to 1.400 feet north of the highway; noise in these areas will be considerable, but less than Group I lots. All of the homesites in this grouping will border the extensive open space areas and Lots 1-23 will overlook the proposed lake. While common area restrictions will limit usage of most of the land area in each site, they should have a net positive influence by providing a buffer from future development, and by offering the opportunity for wildlife viewing. Cense Ranch Page 32 August 30, 2000 Property Description - Proposed (cont'd) Proposed Lots at Cerise Ranch - Group 3 Lot Size Access Use Pro -Forma Price Comments 34 7.965 acres Larkspur Road 1 -family $240,000 On roundabout. Around 20% useable 35 4.089 acres Larkspur Road 1 -family $230.000 40% useable 36 4.256 acres Larkspur Road 1 -family w/ ADU $230,000 50% useable 37 4.186 acres Larkspur Road 1 -family $235,000 same 38 4.152 acres Larkspur Road 1 -family $235,000 35% useable 39 4.186 acres Larkspur Road 1 -family $235,000 25% useable 40 3.095 acres Larkspur Road 1 -family $235,000 30% useable 41 3.527 acres Larkspur Road 1 -family $235,000 50% to 60% useable 42 3.666 acres Larkspur Road 1 -family $240,000 60% to 65% useable 43 3.566 acres Larkspur Road 1 -family $240,000 65% to 70% useable 44 5.447 acres Larkspur Road 1 -family $240,000 25% to 30% useable 45 5.270 acres Larkspur Road 1 -family $240,000 15% to 20% useable 46 2.568 acres Larkspur Road 1 -family $240,000 35% to 40% useable 47 2.102 acres Larkspur Road 1 -family $225,000 50% useable 48 2.013 acres Larkspur Road 1 -family $205,000 55% to 60% useable 49 2.622 acres Larkspur Road 1 -family $230,000 80% useable Group 3. This grouping of 16 lots will be located north of Larkspur Road between the two roundabouts. This will represent the rear row of lots in the central portion of the project. Lots in this area will be characterized by moderate to steep slopes that substantially reduce useable land area. The reported useable areas in the table were estimated based upon the 40% slope line on the preliminary plat: steep slopes below that line may further reduce useable area. In addition. many of these lots will be subject to debris and mud flow hazards that will require mitigation by individual lot owners. This row of Tots will be relatively removed from the highway (1,100 to 1,500 feet) but will still experience considerable traffic noise. Since lots to the south (Group 2) will be located at a lower elevation. they will not provide significant buffering. It may be possible to retain some of the existing cottonwood trees in this area, and some lots may benefit from this. Views are not materially superior in this grouping. but these Tots should experience above average market appeal based upon their proximity to the slopes and the effective open space they create. Cerise Ranch Page 33 August 30, 2000 Property Description - Proposed (cont'd) Proposed Lots at Cerise Ranch - Group 4 Lot Size Access Use Pro -Forma Price Comments 28 2.019 acres Bluestem Court 1 -family $235,000 SE comer Bluestem Ct. & Larkspur Rd. Abuts power line behind Dakotas 29 2.033 acres Larkspur Road 1 -family $230,000 North of Dakota Subdivision and power line 30 2.471 acres Larkspur Road 1 -family $240,000 Irregular-shaped lot north of Dakotas and power line. Moderate slopes 31 3.471 acres Larkspur Road 1 -family $250,000 Moderate to steep slopes; 30% useable due to slopes 32 9.443 acres Larkspur Road 1 -family $250,000 10% to 15% useable 33 9.925 acres Larkspur Road 1 -family $250,000 10% to 15% useable Group 4. Six Tots located at the east end of Larkspur Road and north of the Dakota project will make up Group 4. This area is also characterized by moderate to steep slopes that reduce effective land area; this is particularly true of lots located north of Larkspur Road. These lots will have some of the better views in the project, but will be adversely impacted by a nearby overhead power line and the adjacent Dakota Subdivision. Building envelopes in this area will be approximately 1,200 to 1,400 feet from the highway, but because of the elevation gain, traffic noise will be high. These lots should command below average to average market appeal. Proposed Lots at Cerise Ranch - Group 5 Lot Size Access Use Pro -Forma Price Comments 50 3.401 acres Cerise Ranch Dr. 1 -family $245,000 Homesite immediately east of ranch improvements. 45% to 50% useable 51 2.834 acres Cerise Ranch Dr. 1 -family $255,000 At north end of Cerise Ranch Dr. 45% to 50% useable 52 40.748 acres Cerise Ranch Dr. 1 -family w/ADU $475,000 Includes most of NW porton of project. Steep access. Good views. Sloping 53 5.249 acres Sunflower Loop 1 -family w/ADU $295,000 NW comer Sunflower Lp. & Cerise Ranch Dr. Sloping. Access easement 54 3.448 acres Sunflower Loop 1 -family $270,000 15% to 20% useable. Access easement for Lot 52 55 2.004 acres Sunflower Loop 1 -family $245,000 60% useable. Borders western property line 56 2.004 acres Sunflower Loop 1 -family $230,000 100% useable 67 2.550 acres Sunflower Loop 1 -family $270,000 Inside of Sunflower Loop adjacent to ranch parcel exclusion. 100% useable Group 5. The final grouping includes the remaining eight lots proposed for the northwestern portion of the project. These sites will be located west, north, and east of the excluded 4.6 -acre lot. Most of Lots 50-54 will be materially impacted by moderate to severe slopes. Lots 55 and 67 will have gentle to moderate slopes. while Lot 56 will be generally level. The proximity of the ranch house and related agricultural improvements may have a detrimental impact depending on the level of clean-up. These lots will have above average privacy and some will have above average views. Lot 52, the largest proposed lot at just over 40 acres, will command appeal from a different market segment. This parcel will have good privacy and the best views, including a partially -obstructed view of the top of Mt. Sopris. A proposed access easement benefitting Lot 52 will reduce the appeal of Lots 53 and 54. These Tots will command above-average market appeal. Estimated Date of Completion. Based upon discussions with Jeff Spanel of Wintergreen Homes, the prospective purchaser and developer of Cerise Ranch, work on infrastructure will commence within the next two months and continue Cerise Ranch Page 34 August 30, 2000 Property Description - Proposed (cont'd) through the winter. Site work occurring during the winter months is always subject to delays. In addition, Mr. Spanel reports that asphalt required to complete the proposed paving will not be available until next spring. The anticipated completion date was reported to be lune of 2001. Although the developer plans to install subdivision improvements in two phases, Mr. Spanel indicated that all of the infrastructure could be completed within that same time frame. We have concluded that the proposed improvements considered in our estimate of prospective value could be completed by July 1. 2001; this represents the effective date of our prospective valuation. Summary. Cerise Ranch will be a medium -density single-family development with lots exhibiting below average to good market appeal. Gross lot areas will range from approximately two to 40 acres, but effective lot sizes will generally range from around 0.4 to 2.5 acres due to open space restrictions, various easements, wetlands, and steep terrain. All of the proposed lots will be moderately to severely impacted by highway noise; there is a demonstrated market for similar lots in this area. Other negative conditions include an adjacent overhead power line affecting lots in the eastern and southeastern portion of the project and various geologic conditions including subsidence, debris and mud flows, rockfall hazard. and potentially unstable slopes. Views will be average. with some lots in the eastern and northwestern portions of the project having slightly better vistas. Utility services will be slightly below average due to the lack of a sewer system. The extensive common areas and proposed water features and paths will enhance overall appeal. Restrictions designed to mitigate the project's impact on wildlife (one dog per lot) and potential wildfire hazard are typical of this area and should not adversely impact appeal or value. Attached accessory dwelling units will be permitted on 13 of the subject lots: buyers have paid small price premiums for this use in similar projects. Owner of Record and Property History The subject property has been owned and operated as an agricultural operation by the Cerise family since 1916. Title was last transferred subject to a July 12, 1982, quitclaim deed when Mumbert and Laurine Cerise transferred title to the Mumbert Cerise Family Company, the current owner of record. The deed was recorded August 18, 1982, in book 606 at page 569 of the Garfield County records. This was not an arm's-length sale and there was no document fee. It included lands outside of the subject property. The subject property is now under contract for sale to Wintergreen Homes LLC, contingent upon obtaining preliminary plat approval from Garfield County for the currently proposed project described in the previous section. The transfer will be established by two separate contracts. The first, originally dated January 23, 1997, involves 204.318 acres located east of the existing driveway. The stated purchase price was $3,000,000 based upon the originally estimated size of 200 acres and a price of $15,000 per acre. This contract has been amended and extended four times. The most recent amendment (October 27. 1998) extends the closing date to 30 days after obtaining approvals, but no later than September 21, 2000. The original price has been amended for the actual acreage of this parcel (204.318 acres)plus a 3% pro -rated price increase. If the sale closes on September 21, 2000, the total consideration will be $3,156,713. The seller Cense Ranch Page 35 August 30, 2000 Owner of Record and Property History (cont'd) will finance $2,500,000 at 8.5% with semi-annual payments and a 3 -year balloon. The note will include a provision for partial releases at $15,000 per acre and subject to a 30 -acre minimum. The second contract involves the western portion of the Cerise Ranch less the 4.6 -acre exclusion (Lot 68 in the proposed subdivision). This agreement is dated May 21, 1998. The original price was $1,548,000, which was based upon an estimated acreage of 86 acres and a price of $18,000 per acre. The actual area of this portion of the property has been estimated at 92.06 acres. This contract was amended on November 10, 1998 to extend closing to no later than September 21, 2000, or 30 days after obtaining preliminary approvals. The purchase price is also to be increased under the same terms as the first contract. Considering the actual size and a full 3% increase, the estimated sale price as of September 21, 2000, will be $1,706,792. The seller will provide financing of $1,290,000 under the same terms as the first contract, except for a 4 -year balloon and releases at a rate of $18,000 per acre. The total purchase price for the subject property, if the sale closes on September 21, will be $4,863.505, or $16,410 per acre. The existing ranch has been used for a variety of agricultural purposes since at least 1916. Wintergreen Homes, the prospective buyer, submitted an application to Garfield County during 1999 for a residential development with approximately 400 units. 'This plan was contingent upon the extension of water and sewer lines to serve the subject property, and was effectively denied when Garfield County voted to reject the expansion. The development proposal considered in this appraisal was approved by the Garfield County Board of County Commissioners on August 7, 2000. Assessment and Taxes A summary of current assessments for the subject property is presented in the following table: Assessment Summary - Cerise Ranch Actual Value Assessed Value Identification Land Improvements Total land Improvements Total Garfield Co. 2391-294-00-184 $35,830 $109,600 $145,430 $10,390 $12,840 $23,230 Eagle Co. 2391-331-00-003 $130 $0 $130 $40 $0 $40 Source: Garfield and Eagle County Assessors, July 2000 The relatively low assessment is attributable to the site's classification as an agricultural property. Most of the site is located in Garfield County tax district II, which had a 1999 levy rate for taxes payable in 2000, of $63.372 per $1,000 in assessed valuation. Total taxes payable thisyear are $1,472.14 and are paid in full. These taxes apply to all of the subject property, the 4.6 -acre exclusion with all or most of the existing improvements, and an approximately II -acre parcel located immediately west of the subject property and excluded from the sale. Taxes applicable to the Garfield County portion of the subject property would be around $650. Thisyear's tax expense for the Eagle County portion of the property was $2.36: this amount is paid in full. The applicable levy rate for Eagle County taxing district 7 is $58.948 per $1.000 in assessed valuation: Cerise Ranch Page 36 August 30, 2000 Assessments and Taxes (cont'd) Since taxes are paid in arrears in Colorado, nextyear's tax expense should remain essentially unchanged. Once the property is platted, the individual lots will be assessed separately. Leslie T. Gray has interviewed a representative of the Garfield County assessor in order to estimate probable tax expense for a typical lot at Cerise Ranch following completion of infrastructure. Finished vacant lots will Qualify for a subdivider's discount, which considers the probable absorption period for a project of this size. Under this formula, the full value assessment for each lot is based upon its current market value divided by the estimated absorption period for the entire project, multiplied by an appropriate present worth factor. Considering our estimates of average lot value presented in the Development Method section of this report, we have assumed an average market value for assessment purposes of $150,000 per lot (assessments in Garfield County are typically below full market value). The assessor indicated that a fiveyear absorption period would apply to a project of this size in the Carbondale area. Dividing the average lot value by five results in a figure of $30,000. The assessor reported that the appropriate present worth factor is 3.790787, which results in a full value assessment of $113,724, rounded to $115,000. Vacant Tots in Colorado are assessed at 29% of full value, indicating an average assessment per lot of $33,3S0. Assuming a levy rate of $64 per $1,000 in assessed valuation, average tax expense per lot has been estimated at approximately $2,135. This figure would apply for taxes payable in 2002 or 2003. Phasing of the project would substantially reduce the tax expense attributable to unsold lots. Zoning The Garfield County portion of the subject property is zoned A/R/RD, AgriculturaVResidentiaVRural Density. A summary of permitted uses and area and bulk requirements is presented in the following table: Garfield County A/R/RD, AgriculturaUResidentiaURural Density Zoning Regulations Permitted Uses Agricultural including farms, garden, greenhouse, nursery, orchard, ranch, small animal farm for production of poultry, fish, fur -bearing or other small animals and customary accessory uses including buildings for shelter or enclosure of persons, animals, or property employed in any of the above uses; retail establishment for sale of goods processed from raw materials produced on the lot; guiding and outfitting; park; single-family dwelling and customary accessory uses; accessory dwelling unit approved as a part of a subdivision Conditional Uses Aircraft landing strip; church; community buildings; day nursery and school; group homes for the elderly; boarding or rooming houses; studio for conduct of arts and crafts; home occupation; water impoundments Special Uses Airport utility; feedlot as principal use; crematorium; agriculture -related business; resorts; kennel; riding stable; veterinary clinic; shooting range facility; two-family dwelling; camper park; ski lift and trails; broadcasting studio; communication facility; storage; storage of heavy equipment; golf course driving range; golf practice range and accessory facilities; commercial recreation facility/park; public gatherings; storage of oil and gas drilling equipment; site for extraction, processing, storage or material handling of natural resources; utility lines; utility substations; recreational support facilities; guest house; accessory dwelling units for any lot not created after July 1995 Minimum Lot Size 2 acres Maximum Lot Coverage 15% Setback Requirements Front: Arterial: greater of 75 feet from street centerline or 50 feet from lot line. Local: greater of 50 feet from street centerline of 25 feet from lot line(variance) Side: Greater of 10 feet or / the height of principal building Rear: 25 feet Max. Building Height 25 feet Cerise Ranch Page 37 August 30, 2000 Zoning (cont'd) The existing agricultural use of the property conforms with the current Garfield County zoning. The Eagle County portion of the property is zoned Resource, a district intended to maintain the rural character of Eagle County and to protect and enhance the appropriate use of natural resources and agricultural uses. This district permits single-family homes on sites of 35 acres or more and a variety of agricultural and public uses. Portions of Cerise Ranch located in Eagle County are undeveloped, and will remain so following subdivision of the Garfield County portion of the property. The proposed Cerise Ranch subdivision considered in our estimate of prospective value received preliminary plat approval during the preparation of our appraisal (August 7, 2000). The property now has vested rights associated with that development; these rights have a term of oneyear, but may be extended for an additionalyear. Our estimate of prospective value assumes completion of the proposed project in full conformance with all approvals and conditions. Highest and Best Use Highest and best use, as defined by the Dictionary of Real Estate Appraisers, is "the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability." It is implied in this definition that the determination of highest and best use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. A discussion of the highest and best use of the subject site as if vacant and as improved is presented in the following paragraphs. Zoning. Subdivision of the property for single-family development represents the highest permitted use of the site in Garfield County's A/R/RD zone district. Zoning would permit approximately 145 units (290 acres/2-acre minimum lot size) on the Garfield County portion of the site. However, the County Master Plan recommends a development density of one lot per six to nine acres for this section of the valley, or 32 to 48 lots for the subject property. Subdivision at an appreciably higher density would likely encounter significant public opposition; a well organized campaign to deny the previous application for 400 units was a significant factor in the County's decision to deny the expansion of water and sewer lines through this part of the valley. Vested property rights now exist for subdivision of the Garfield County portion of the property into 68 single family homes (including Lot 68) and 14 accessory dwelling units, for a total of 82 units. This reflects an average density of one unit per 3.6 acres (294 acres/82 units). Considering the physical characteristics of the site, the master -planned density, and the current political climate, these approvals are judged to be consistent with the maximum allowable development density for the Garfield County portion of the property, and therefore enhance property value. The Resource zoning for the Eagle County section of the ranch permits extremely low density residential development. However, steep slopes in this area effectively eliminate any development potential. This portion of the property will be deeded to the proposed Homeowner's Association as common open space. Cense Ranch Page 38 August 30, 2000 Highest and Best Use (cont'd) Physical & Locational Characteristics. At almost 300 acres, the Cerise Ranch represents one of the largest development parcels in the mid -valley area. However, steep slopes, flood plain, and identified wetlands reduce effective land area to an estimated 100 to 125 acres. Soils conditions will support single-family residential development, although engineered foundations may be required in some areas and basements will be feasible only in the higher portions of the site. Some geologic conditions exist that will increase development costs, but most are typical of the area and have been effectively mitigated in comparable projects. The site has average views. Access is adequate, although subdivision of the property will require improvements to Highway 82 to accommodate increased traffic flow to and from the site; these improvements will be at the developer's expense. The subject property has a convenient mid -valley location in a neighborhood in transition from historical agricultural uses to single-family and two-family homes. Most residential development in this area competes at the low end of the value range. Aspen Equestrian Estates is trying to compete at the upper end of the market by providing significant project amenities, but this venture appears highly speculative in nature at this time. Considerable highway noise negatively impacts Cerise Ranch's residential appeal; sites and homes with similar noise have been readily marketable at the lower price levels. The lack of public sewer service in this portion of the neighborhood will moderate development density into the foreseeable future. Market Conditions. The market for vacant and improved residential property is strong. Value levels for vacant land have increased at very rapid rates over the past twoyears (I% to 2% per month). New single-family lots have been readily absorbed over the past several years. With a substantial amount of new inventory likely to be added each year and very rapid increases in construction costs, we anticipate that land value increases will moderate within the near future. With hard costs of construction now exceeding $150 per square foot, a modest home of 2,000 square feet would cost between $300,000 and $350,000, turnkey. Adding land value, total development costs at a minimum range from $450,000 to $500,000. A very limited segment of the local population earns income adequate to support housing costs of this magnitude. This explains in part the slowing of lot sales in the mid -valley, and some evidence to support our conclusion that price increases will moderate. Demand for second homes in the mid -valley area is increasing and represents a primary source of new lot buyers, although the impact of this demand is impossible to quantify from local demographic data. The Roaring Fork Valley commands considerable appeal from a national market, and strong demand is likely to continue from outside the area as long as the national economy continues to perform strongly. The low end of the market in this area is defined by the Willits project located approximately two miles east of the subject property; the most recent sales in this neighborhood have reflected prices of around $110,000 to $130,000. There is little inventory of vacant sites at prices up to $150,000. The middle of the range is defined by Tots selling for $150.000 to $250,000; there are numerous Tots available for sale within this price category. Large acreage parcels and sites in Aspen Equestrian Estates are available at prices well in excess of $250.000. There are also a large number of lots listed in this price category; absorption of such property is steady. Cerise Ranch Page 39 August 30, 2000 Highest and Best Use (cont'd) Known additions to supply in the mid -valley area include 23 lots in the second phase of Southside PUD, likely to be available later thisyear. The developer intends to develop most of these sites with spec homes, and only a limited number of Tots will be available at prices beginning at around $160,000. Additional phases of Willits single-family Tots will also be available over the next severalyears, probably in groupings of 15 to 20 lots as absorption warrants. The subject's 68 lots will be offered in two phases; the first phase of 32 lots should be available in early 2001. The developer intends to offer lots at prices ranging upward of $155,000. The Ranch Creek PUD, located within the boundaries of the Ranch at Roaring Fork, will add 21 lots to be available within the next three to four months. This project will exhibit a wide range of pricing from around $120,000 to in excess of $250,000. The 47 single-family Tots at Aspen Equestrian Estates will be available for development within the next few months; the developer intends to construct "spec" homes on several of these lots. Current offerings of land only range upward from $350.000; one lot has sold for $430,000. A 13 - lot subdivision of St. Finnbar Ranch, located 1.5 miles west of the subject property adjacent to Aspen Equestrian Estates, is also underway. Lots within this project are priced from $375.000 to $695.000. These are larger parcels with some river influence and will likely command the highest single-family land prices in this portion of the valley. Secondary competition will be provided by new offerings of lots in River Valley Ranch, a golf -course oriented project in Carbondale with lot prices starting at $165,000, and in smaller projects proposed along County Road 100. It is also likely that additional projects will be proposed in the area during the probable absorption period for Cerise Ranch. Conclusion of Highest and Best Use As If Vacant. Considering this analysis and the preliminary plat approvals now in place, we have concluded that the highest and best use of the subject site as vacant would be immediate subdivision into 67 single-family lots with ADU's on 13 of those sites. Demonstrated absorption patterns for single- family lots in this area indicated that the optimal return would be realized through phased development. Probable market participants for the vacant site include local and regional investors and developers. Conclusion of Highest and Best Use As Improved. The proposed infrastructure improvements considered in our estimate of prospective value will be consistent with the highest and best use of the property as if vacant, and will represent the highest and best use of the property as improved. Probable market participants for the completed sites will include individuals interested in constructing primary and secondary residences and local and regional home builders. Appraisal Process The objective of this appraisal is to (I) estimate the as -is value of the fee simple estate interest in the subject property and (2) estimate the prospective value of the fee simple estate interest in the property assuming installation of infrastructure and as of the projected completion date of July 1, 2001. The sales comparison approach will be used to estimate as -is value. This approach is based upon comparison of the subject property with competitive properties that have recently sold. Adjustments to the sales are made to reflect physical. locational. and regulatory differences, resulting in an indicated value for the subject property. The cost Cense Ranch Page 40 August 30, 2000 Appraisal Process (cont'd) approach and income approach are not applicable to the appraisal of vacant land and will not be used to estimate as -is value. The development method will be used to estimate as -is value and prospective value. This valuation technique is a variation of the income approach applicable to development properties where the sale of completed Tots or partial -interest units represents the highest and best use of the property. The sales comparison approach will be used to estimate the prospective retail value of the finished residential lots. An analysis of absorption will be made to estimate the timing of future sales revenues. Appropriate construction costs, marketing expense, holding costs, and an allocation for profit will be deducted to arrive at an estimate of future net project income. This income stream will be discounted to arrive at an indication of as -is and prospective value. The cost approach and income approach are not applicable to our prospective valuation. The sales comparison approach has not been considered due to the lack of comparable sale data within the market area. A reconciliation process will be used to conclude final estimates of value. This process considers the quantity and quality of data used in each approach, the applicability of each approach to the property being appraised, and the emphasis placed on each type of analysis by potential investors in this property type. Estimate of As -Is Value The subject's as -is value will be estimated using the sales comparison approach and development method. Sales Comparison Approach The sales comparison approach provides an estimate of value through comparison of the subject property to similar properties that have recently sold. The major steps in this process are outlined as follows: I. Research the market for information on sales, listings, and offers involving properties with similar characteristics. 2. Veriy the accuracy of information with a person involved in the transaction. 3. Select appropriate unit(s) of comparison and develop a comparative analysis. 4. Compare the comparable properties with the subject property using the selected unit(s) of comparison and making dollar and/or percentage adjustments to each sale price to arrive at a value indication. S. Reconcile all value indications in Step 4 to arrive at a single value indication or range of values for the subject property. For residential development land in this area, the unit of comparison is typically price per acre. For vacant land, the elements of comparison typically include conditions of sale, financing, market conditions, location, size, density, shape, utility service, zoning, and topography. There are few sales of vacant sites with development approvals in place. This is not an indication of market softness, but reflects the fact that owners typically develop approved sites themselves. There has been one recent sale of an Cerise Ranch Page 41 August 30, 2000 1,d ``. I .1 ! '1 t I, i. I I hl :117l0, 1: c I f . .'vC k..,...•••'-'--,, C rrrk r / -1111' r ,1 it • 4- C:11 I i. kit (':Irl nnll:li(7• Sj.ttrop 1.1 itt: 7e vT. IU �► ,f ��I " �P-� I iC to • 1'd r- n .cp,dnp 1'urk i e, o 1 1 t7 le.. • 1 1 �1' _I < .� 1!.•..rn.uir /14', ••••: 1 1 c r -'i'\ :: '� I I I ' I 71 , 77 • EA 4 IAA UE F i• 6271 • I•:1.11•I„0I+ -1 cHsI i C‘,...,,,„ \! M A pf !TRE. NURSERY I %...7 (• 1, . II . • I (>/ _ ]Igate: Aesa 1 ' ...• 1 • • 1' 1 •' • , s= 11 :1 /../4•1 /.,,Ar1 •r, f,r St l,.hu 1 G.:c. • 1 1/ I n ' 13 t`, I I Cs'a,A.-1--I -• --- - -- 1 to n I 72 I W 5O1c11' 7., • } PS `, - - I I I 12952Mount A SO1295]RI' - ---- ----Sopns-- I 1 I = ode I 11 JANEWAY CG I75 1 75 'ISM _ 1078916269 - — I'..: 4. .11,11.1.d„yl J. -I., 2 1 rri 11 17 1+ 17: 'I'h 7r. 1.. 0 1. o _ �4.J 45,24„,.,7 Cerise Ranch `1 -+J ' L.k t. 11 ' ;11 ,•.\c• �� 'Thomas +% . Luke.% • 10 I 1 I H1gh Iea 1----I-'- 'f - Park I i asy6 1 I I�' to )r 1 i � MoU'ntain ei i Kelly . Luke // 1 I I ,] BASALT '- ,� , ........._...„, 8::'-',6"5:riQ-11;. '' 1 4:1:Scn.11.471 1..1/1","Ihi 1_....:___T° v_...... S.mngl ./ 1 • I 7 • ' Saco i o a •\V in(lu y 15 \: :m,7.r L \```Corr _ —y Snowmnnn 'I•/: f \ t, -§- ,"0 • I•• I• • ti ..„.•••••,,, •• drPk i I ; ¢.1 16 `• 7 0 , I I • - I'„1 r /; '1 •f I' 11 ! I ti "ir / 71 i2'• • it II /i' I ,. `�t 47 •"t - ,_'1 I _ U. . .- — I II - 1 0 Comparable Ranch Sale Location Map Page 42 August 30, 2000 As -Is Valuation - Sales Comparison Approach (cont'd) acreage property within the subject neighborhood with development approvals in place that has recently sold. In addition, we have considered other recent sales of developable sites without approvals. Pertinent data on those transactions considered most comparable to the subject property are presented in the following paragraphs. A comparable sale location map is presented on the facing page. Adjustment grids are presented on following facing pages. Comparable sale photographs are presented in the Addenda beginning on page 80. Comparable Ranch Sale 1 - Gerbaz Ranch Identification: 1265 County Road 100, Garfield County, Colorado Parcel Numbers: 2393-354-00-006; 2393-362-00-015; and 2393-363-00-009 Grantor: Dennis Gerbaz, Trustee of Nile Gerbaz Charitable Trust Grantee: 100 Road Cattle Company, LLC; see text Sale Date: 9-29-99; 12-30-99; 4-20-00 Book/Page: 1152/741; 1166/920; 1183/436 Sale Price: $3,334,900 Financing: Cash to seller Cash Equivalent Price: $3,184,900 (land only) Verified With: Dennis Gerbaz; Chris McMorris By: W.K. Gray Date: March 2000 Land Area: 173.16 acres Zoning: ARRD; Garfield County Highest & Best Use: Single-family development Approved Density: Unit Price: Units: N/A $18,393/acre (land only) Utilities: G, E, T This is the sale of the Dennis and Nile Gerbaz Ranch, located approximately 1.2 miles east of Carbondale and four miles southwest of the subject property. This 173.16 -acre ranch sold in three separate transactions between September 1999 and April 2000. The westernmost portion, containing approximately 42.36 acres and improvements with an estimated value of $150,000, sold to the 100 Road Cattle Company, LLC, on September 29, 1999, for $767,000. The purchaser is related to the seller and leased -back the site to Dennis Gerbaz for the remainder of his life. This is not an arm's-length sale, but is consistent with prices paid for the remainder of the ranch; the entire sale was structured based upon a High Country Appraisal Associates appraisal. Farley S. Kilby, the adjoining landowner to the north, purchased the northern portion of the ranch containing 40.61 acres on December 30, 1999, for $791,900. The remainder of the ranch, containing 90.19 acres, sold to Roaring Fork Preserve, LLC, on April 20, 2000, for $1776,000. The purchaser now has sketch plan approvals for a nine -lot subdivision and is offering this parcel for $5,400,000. Terms in all three transactions were cash to the seller. The cash -equivalent price for the land only is estimated at $3,184.900, or $18,393 per acre. The sale property is located on the north side of Garfield County Road 100. It includes approximately 102 acres of irrigated land and has limited Roaring Fork River frontage. Topography is level. Views are average; the high peaks are obstructed by a ridge to the south. Available utility services include natural gas, electricity, and telephone. The property includes good water rights. Improvements included an 18 -year-old, 1,536 -square -foot ranch house with partial basement, a detached garage, and miscellaneous ranch buildings; their contributory value was estimated based upon our appraisal of the property. Cense Ranch Page 43 August 30, 2000 yauea esua3 0 w ,n CD 000Z '0£ Isn6ny Identification Sale Price Size Unit Price Conditions of Sale Comparable Land Sale Adjustment Grid - As -Is Valuation Subject Sale 1 Sale 2 Cerise Ranch Unit Price After Adjustment for Conditions of Sale $4,863,505 296.378 acres $16,410 Favorable Seller Financing ($121) $16,289 Sale Date Valuation Date = August 18, 2000 Time Adjustment__ Time -Adjusted Unit Price Location Views Size Dennis & Nile Gerbaz Ranch $3,334,900 173.16 acres $19,259 Cattle Creek Ranch $7,125,000 Sale 3 Preshana $3,750,000 719.325 acres $9,905 $150,000 in Improvements ($866) $18,393 Under Contract 0% $16,289 Mid-Valley/Highway 82 Zoning Average 296.378 acres Approvals/67 lots September 1999 to April 2000 6% $19,497 East of Carbondale/Off Highway -10% Average 0% 173.16 acres Downward -10% A/R/RD 15% Topography Varied/Wetlands/Flood Plain 100 to 125 useable acres Utilities Water Rights Net Rating of Sale Approximate Indicated Value Gas, electricity, telephone, cable television Good; 43% irrigated Equal $16,262 Level/River Frontage/Flood Plain -15% Gas, electricity, telephone 0% Good; 59% irrigated -20% $15,597 - $1,950,000 Improvements ($2,7i) $7,194 August 20, 2000 0% $7,194 Cattle Creek 40% Slightly Superior -5% 719.325 acres 40% A/R/RD 25% Varied/Creeks 0% Electricity/Telephone 10% 30% irrigated 0% 110% $15,108 47.719 acres $78,585 Seller Financing/Improvements ($26,457) $52,128 June 25, 1999 14% $59,426 C.R. 100/Highway 82 0% Comparable 0% 47.719 acres -35% Approvals/47 lots -10% Level -15% G, S, E, T, C Superior -10% Good 0% -70% $17,828 As -Is Valuation - Sales Comparison Approach (cont'd) In recognition that values have been increasing over the time span represented by the sales considered in this analysis, we have adjusted each sale for changing market conditions since the sale date. There have been no recent re- sales of property of this type over the past fewyears. Based upon our market observations, we have concluded that general value levels for developable land have increased at an average rate of I% per month over the past twoyears. Sale 1 occurred over an approximately seven month period between September 1999 to April 2000. We have made a 6% upward adjustment for changing market conditions,yielding an adjusted unit price of $19,497 per acre. Compared to the subject, the sale property has a slightly superior location. It is slightly further from Aspen, but closer to Carbondale and away from the negative impacts of Highway 82. Views are comparable without adjustment. We have made a downward adjustment for size differences; smaller parcels typically command higher unit prices. Upward adjustment is made for the value of approvals now in place at Cerise Ranch. This adjustment considers the direct costs of obtaining approvals and the investment of time. The sale property has superior topography and river frontage. Utility service is comparable without adjustment. A higher percentage of the sale property is irrigated; no adjustment is made since adequate water rights exist on both properties to support appropriate residential development. Moderate net downward adjustments apply to this sale; the indicated as -is value for Cerise Ranch is $15.597 per acre. Comparable Ranch Sale 2 - Cattle Creek Ranch Identification: 8076 County Road 113, Garfield County, Colorado Parcel Numbers: 2391-081-00-202; 2391-082-00-203; 2391-053-00-208; and 2391-071-00-147 Grantor: J. Winston Williams; Angela Williams; Cattle Creek, Ltd. Grantee: Aspen Blue Sky Holdings, LLC Sale Date: August 29, 2000 Financing: Cash to seller Verified With: Contract; broker Land Area: 719.325 acres Book/Page: Not Available Sale Price: $7,125,000 Cash Equivalent Price: $5,175,000 (land only) By: W.K. Gray Date: August 2000 Zoning: ARRD; Garfield County Utilities: Electricity, telephone Highest & Best Use: Single-family development Approved Density: Unit Price: Units: N/A $7,194/acre (land only) Cattle Creek Ranch is located on County Road 113 (Cattle Creek Road) approximately seven to 8.5 miles northeast of its intersection with Highway 82. It sold on August 29, 2000, for $7,125,000, cash; recording information was not available as of the date of this appraisal. The property includes substantial building and site improvements. There is a four-year-old, 5,551 -square -foot high-quality residence, a guest house, a 10 -stall stable, a 2,400 -square -foot barn converted to a recreation building, and miscellaneous sheds. There are also miscellaneous site improvements constructed around 1980 in conjunction with approvals for a 131 -lot planned unit development; these approvals were subsequently abandoned by the property owner, and the related site improvements (other than internal roadbeds) make no value contribution. We recently appraised the property in conjunction with the sale. and estimated the depreciated value of site and building improvements at $1,950,000. The effective price for the land only is estimated at $5175.000, or $7.194 per acre. Cense Ranch Page 45 August 30, 2000 As -Is Valuation - Sales Comparison Approach (cont'd) This property is located around the intersection of Cattle Creek Road and Red Canyon Road (C.R. 115) at the western edge of the Missouri Heights neighborhood, approximately four miles northwest of Cerise Ranch: It consists of three separate but adjoining parcels with a total land area of just over 719 acres. The property includes varied topography including generally level irrigated meadows, and gentle to moderate slopes. Elevations range from approximately 7,100 to 7,530 feet. The southern portion of the ranch, containing around 300 acres, lies in a natural bowl and has excellent views of Mt. Sopris and the Elk Mountains to the south. The remainder of the site experiences average views. Good water rights are included with the property. There are no immediate plans to develop the property. This is a contemporary sale requiring no adjustment for changing market conditions. The subject's location is considered substantially superior based upon its access and proximity to schools, shopping, and services; Cerise Ranch also holds superior development potential. Approximately 42% of Cattle Creek Ranch has superior views. Substantial upward adjustments are indicated for size differences and development approvals at Cerise Ranch. The sale's topography and useable land area is considered slightly superior. Cerise Ranch has access to natural gas. Substantial net upward adjustments apply to this transaction; the indicated as -is value for Cerise Ranch is $15,108 per acre. Comparable Ranch Sale 3 - Preshana Identification: 3275 County Road 100, Garfield County, Colorado Parcel Number: 2391-312-00-023 Grantor: Henry and Lana Trettin Grantee: Aspen Equestrian Estates, LLC Sale Date: June 25, 1999 Book/Page: 1141/429 Sale Price: $3,750,000 Financing: Cash; $1,000,000 seller carry Cash Equivalent Price: $2,487,500 (land only) Verified With: Appraisal By: Leslie T. Gray Date: May 1999 Land Area: 47.719 acres (developable) Zoning: Approvals for 47 -lot subdivision Utilities: G, E, T, C, S Highest & Best Use: Single-family development Approved Density: Lots: 47 Tots Unit Price: $52,926/lot $52,128/acre Preshana Farms, located approximately one mile west of the subject near the intersection of Highway 82 and Garfield County Road 100, sold on lune 25, 1999, for $3,750,000. Purchase terms included $2,750,000 in cash ($2,000,000 loan by Alpine Bank), with the balance financed by the seller interest free. We appraised this property in conjunction with the sale; details of the transaction were verified with a representative of the buyer and a broker familiar with the transaction. The sale property consists of a 57.889 -acre site approved for a 47 -lot subdivision. It is adversely impacted by its proximity to the highway and Tacks views of Mt. Sopris and other high peaks. Topography is generally level. Blue Creek forms the southern boundary of the property. The property includes good water rights. Improvements included three residential structures that have been or will be removed prior to final development, and numerous equestrian improvements consisting of a hay barn (also to be removed), an approximately 42,000 -square -foot arena/barn structure Cense Ranch Page 46 August 30, 2000 As -Is Valuation - Sales Comparison Approach (cont'd) that will be retained as a common amenity, and extensive fencing and related site improvements. Work is now in progress on infrastructure for the proposed subdivision; it is being marketed under the name Aspen Equestrian Estates. Initial lot offerings are at prices ranging from $350.000 to $495,000; they are considered highly speculative. The sale was made contingent upon the availability of adequate sewer service and was made in anticipation of an extension of the Mid Valley Sanitation District to this area. This expansion was turned down a few weeks prior to closing. Development is proceeding under an agreement that permits use of the Ranch at Roaring Fork's waste treatment facilities. Water will be provided by a community system; all other utility services were available to the site but required significant costs. This sale first requires adjustment for favorable financing. The seller carried $1,000,000 for twoyears with repayment made via the transfer of finished Tots with a value of $1,000,000. In effect, the seller is loaning $1,000,000 for twoyears, interest free. The present value of $1,000.000 in twoyears at the then current market return rate of 8.5% was approximately $850,000. In the event that the sale of the transferred lotsyields a shortfall of income to the seller. the balance will be paid by the buyer once 75% of the remaining finished lots in the completed project are sold. The interest rate on that shortfall will be 2% above Norwest Bank prime. Considering these financing terms, we have made a $150,000 downward adjustment ($1,000,000 - $850,000) to arrive at a cash -equivalent price of $3,600,000. The purchase also included an extensive inventory of personal property (vehicles, horse trailers, equestrian equipment, office equipment, furniture and appliances, and supplies). The allocated purchase price attributable to the personal property was $62,500. After considering financing terms and personal property included in the sale, the adjusted price is estimated at $3,537,500 ($3,750,000 - $150,000 - $62,500). Further adjustment is required for the separately -marketable equestrian center parcel, the site of all of the retainable building components. In our appraisal of Preshana, we estimated that the equestrian center had a value of $1,050,000. Deducting this amount from the adjusted sale priceyields an allocated price for the development component of Preshana of $2,487,500 ($3,537,500 - $1,050,000). Based upon the approved density of 47 single-family sites and net area of 47.719 acres, this sale reflected a unit price of $52.926 per lot and $52,128 per acre. We have made a 14% upward adjustment for changing market conditions since the June 1999 closing date,yielding an adjusted unit price of $59,426 per acre. Preshana has a comparable location and views. A substantial downward adjustment is made for size differences. Downward adjustment is required for the sale's higher approved development density and its level topography. Downward adjustment is indicated for the sale's access to sewer service at the Ranch at Roaring Fork. Substantial downward adjustments apply to this sale; the indicated value for Cerise Ranch is $17,828 per acre. Cense Ranch Page 47 August 30, 2000 Comparable Land Sale Adjustment Grid - As -Is Valuation Sale 4 Sale 5 Subject Identification Cerise Ranch Coryell Ranch Douglas Cerise Ranch Sale Price $4,863,505 $6,000,000 $1,847,803 Size 296.378 acres 256.97 acres 161.92 acres Unit Price $16,410 $23,349. $11,412 Conditions of Sale Favorable Seller Financing ($121) $100,000 in Improvements ($389) $100,000 Improvements ($618) Unit Price After Adjustment for Conditions of Sale $16,289 $22,960 $10,794 Sale Date Valuation Date = August 18, 2000 Time Adjustment Under Contract 0% November 6, 1998 21% June 25, 1998 26% Time -Adjusted Unit Price $16,289 $27,782 $13,600 i Location Mid-Valley/Highway 82 West of Carbondale/Off Highway -10% Missouri Heights 15% Views Average Superior -10% Excellent -15% Size 296.378 acres 256.97 acres -5% 161.92 acres -10% Zoning Approvals/67 lots A/R/RD A/R/RD 10% 15% Topography Varied/Wetlands/Flood Plain Level/River Frontage/Flood Plain Rolling 100 to 125 useable acres -20% 0% Utilities Gas, electricity, telephone, Gas, sewer, electricity, telephone Electricity/Telephone cable television -10% 10% Water Rights Good; 43% irrigated Good; 60% irrigated 70% irrigated 0% 0% Net Rating of Sale Equal -45% 15% Approximate Indicated Value $16,262 $15,280 $15,640 Cerise Ranch Page 48 August 30, 2000 As -Is Valuation - Sales Comparison Approach (cont'd) Comparable Ranch Sale 4 - Coryell Ranch Identification: County Road 109, Garfield County, Colorado Parcel Number: 2393-291-00-024 (subsequently deleted) Grantor: Glenwood Land Company, LLC Grantee: Coryell Ranch Company, LLC Sale Date: November 6, 1998 Book/Page: 1097/387 Sale Price: $6,000,000 Financing: Cash Cash Equivalent Price: $5,900,000 (land only) Verified With: Tom Hartert, seller's attorney By: W. K. Gray Date: 1998 Land Area: 256.97 acres Zoning: A/R/RD, Garfield County Utilities: G, W, S, E, T Highest & Best Use: Single-family development Approved Density: Unit Price: Lots: None $22,960/acre The Coryell Ranch is located on Garfield County Road 109 approximately two miles west of Carbondale and seven miles west of the subject property. It sold for $6,000,000, cash, on November 6, 1999. The property included modest older improvements, including a home and miscellaneous agricultural buildings; we have estimated the contributory value of the improvements at $100,000, resulting in a price for the land only of $5,900,000, or $22,960 per acre. The sale property is generally level and includes extensive Roaring Fork River and Crystal River frontage and associated wetlands. It offers average to good view amenity, and included about 155 irrigated acres. The ranch is located within the sanitation district created to serve the Aspen Glen development and thus had substantial development potential. The buyer (related to Aspen Glen; located northwest across the Roaring Fork River) purchased the property to control its use and subsequent developed the Coryell Ranch and Midland Point single-family residential projects with a total of 65 lots. Lots at Midland Point sold at prices ranging from around $110,000 to $300.000. Coryell Ranch sites, which include invitational memberships (tied to individual, not lot) to Aspen Glen, have been marketed at prices ranging from approximately $400,000 to $1,760,000. This sale first requires a 21% upward adjustment for value trends since the sale date; the resulting adjusted unit price is $27,782 per acre. Coryell Ranch has a superior location away from Highway 82. Its views are also superior. A small downward adjustment is made for size differences. Vested development rights at Cerise Ranch indicate upward adjustment. The sale's river frontage commands a substantial premium, and downward adjustment is appropriate in comparison to the subject. The sale's access to Aspen Glen's sanitation district requires downward adjustment. Substantial net downward adjustments apply to this sale, indicating an as -is value for Cerise Ranch of $15,280 per acre. Cerise Ranch Page 49 August 30, 2000 As -Is Valuation - Sales Comparison Approach (cont'd) Comparable Land Sale 5 - Douglas Cerise Ranch Identification: 1900 County Road 103, Garfield County, Colorado Parcel Number: 2391-134-00-392 Grantor: Douglas Cerise Ranch Company Grantee: George Shifrin Sale Date: June 25, 1998 Book/Page: 1075/675 Sale Price: $1,847,803.12 Financing: Cash to the seller Cash Equivalent Price: $1,800,000 (see text) Verified With: Cassie Cerise, seller By: W. K. Gray Date: 1999 Land Area: 161.92 acres Zoning: A/R/RD, Garfield County Highest & Best Use: Single-family development Approved Density: Unit Price: Lots: None $11,117/acre Utilities: Electricity, telephone The Douglas Cerise Ranch is located approximately four miles northwest of the subject property in the Missouri Heights area. A I62 -acre portion of this property sold in June 1998 for $1,847,803.12; terms were cash to the seller. The sale involved no commission. We have estimated the effective price to the seller at approximately $1,900.0000. The property included an older residence in fair condition, a small barn/apartment in average condition, and miscellaneous agricultural improvements. We have estimated the contributory value of the improvements at $100,000, leaving $1,800,000 of the sale price for the land. The sale property is located east of County Road 103 and at the north end of County Road 105 in unincorporated Garfield County. The property consists of rolling land with excellent views to the south toward the Elk Mountains. It has good water rights and no river or stream frontage. Available utilities are limited to electricity and telephone lines: additional utility services are not likely in this area. The property is zoned A/R/RD. In comparing this sale to the subject, we have first made a 26% upward adjustment for value trends between the sale date and the as -is valuation date of August 18. 2000. The unit price. adjusted for changing market conditions, is $13,600 per acre. The subject property has a more convenient location, but this is offset by the sale's substantially superior views. Downward adjustment is made for size differences. Upward adjustments are made for the subject's vested property rights and superior utility service. Overall. the subject property is considered superior to Sale 5; net upward adjustments indicate a value for the subject property of $15,640 per acre. Pending Sale of Cerise Ranch. The pending sale of the subject property will reflect a price of $4.863,505 if it closes on September 21, 2000; the price will be slightly lower if closing occurs prior to that date. This reflects a unit price of $16,383 per acre. The seller will finance $3,790,000 at 8.5% with semi-annual payments of interest only; $2,500,000 in principal will be due in threeyears, with the balance due in fouryears. We have calculated a cash - equivalent sale price of $4,827,500 based upon a 9% market interest rate. The cash -equivalent unit price is $16.289 per acre. Analysis and Conclusion of As-ls Value by the Sales Comparison Approach. Our analysis of these five sales indicates a range of as -is value for Cerise Ranch from $15.108 to $17,828 per acre. Four of the five sales indicated a value Cerise Ranch Page 50 August 30, 2000 As -Is Valuation - Sales Comparison Approach (cont'd) between $15,108 and $15,640 per acre. The pending contract on the subject property will involve a cash -equivalent unit price of $16,289 per acre. The quality of available data is considered average. Two sales (Sale 1; Sale 3) are located within the subject neighborhood, two are situated to the north on Missouri Heights and in Cattle Creek, and the fifth sale is located just west of Carbondale. Four of the sales have immediate development potential (two have been developed and one has sketch plan approval); Sale 2 has a remote location and future low density development potential. All of the sales required substantial adjustment, although the magnitude of adjustments made to Sales 1, 4, and 5 are smaller. The quantity and quality of sale data does not allow quantification of adjustments through analysis of paired sales, and many of our adjustments are relatively subjective in nature. This condition is typical of the area. With the exception of Sale 3, the remaining four sales provide strong support for a value conclusion of around $15.500 per acre. Sale 3 (Preshana; Aspen Equestrian Estates) indicated the highest value rate for Cerise Ranch at $17,828 per acre. Although most comparably located, this sale is weakened by substantial physical differences that required very Targe adjustments. and we have placed less emphasis on this sale. The price paid in this transaction is also generally considered to be above market. Based upon this analysis, we have concluded that Cerise Ranch has an as -is value of $16.000 per acre. Applied to total land area of 296.378 acres, total as -is value as estimated by the sales comparison approach is $4,742.048 ($16,000/acre x 296.378 acres), called $4,750,000. Development Method The development method is a technique used to estimate property value where the sale of finished lots or partial - interest condominium or townhouse units represents the highest and best use of the property. This method incorporates elements of the sales comparison approach and income approach. As applied to the subject property, the first step involves estimating the anticipated retail value of the approved lots as of the projected completion date for the infrastructure of July 1, 2001. The total estimated retail value of all 67 lots represents the potential gross income applicable to the project. Net as -is value to a single property owner is derived by estimating the probable absorption rate of the proposed Tots, then deducting estimated development costs, marketing expense, holding costs, and an allocation for profit required to attract investment capital. The resulting net sales income for each future period is then discounted to arrive at an estimate of as -is value as of August 18. 2000. The methods used to estimate the as -is value of the subject property are presented in the following paragraphs. Potential Gross Sales Revenue. The sales comparison approach will be used to estimate the prospective retail value of the 67 lots as of their projected completion date of July 1, 2001. Price per developable lot is used as the unit of comparison. Cense Ranch Page 51 August 30, 2000 llu, 1 ,'• _ (( 1'111111 1 + - . I1 I . i I'� 1 II :1)1' ` • 1 • Cr,. 6 IG . 1 - ••-•-•..'rCn, k i 1 Kiggin i 1.11„1y, Ite,l H,ll SOPRIS J•1�1�1ti• _ r 1 v ,1/4‘J• • 3Igate', Aesa . V.. V l.. . • it • y — —r— ��— —— + I ', • _ N • `- 1:,1„ .\,.. Mg, +1 11 S,h• rll Cry, 1.11 /14 10 I =1J Ir� 5�y�4 R 33 ]. 31 Fork 36 l 71 I 1 Co' I o I1 7 f \�: s� 1::TD='F(/i.`,i (/ :11, ` ,1116- - 1, Zt�-, 1 1 { 1' i •Cprirr,, !.'urk //^ 16- I -- I , I \ I -v.,-tLL1• I I -Ic- I - 1 7.: '. I I 71 , I ' ,77 I . I 1 (�:11'I(I:111'• 4- 8M UE * 6?: 7 ER4 111 4 - •6 O 1 11 .•R I'l,lul° ;. r. SI holm ` �1—l.q S' 7 I 2 1 1- — + ,.• pc .+i 1 1,41/4..11 uk,• I � - 'V i•//% a I i'.1"--) l 17 ( N 1 I r Jll 1 •. I ,-5.,, A1•' 11:1 \+\ 9 f0 1/ i 16 I) 1 1♦ 1.1 �A t; - .14.1/ @M'�� 1 - - - - I- - -• ��Thurrrua +% \ P'rk Ccr6. - I I - - - - - i Lukes ... • ` I I IM 1 17 1 16 ; As -Is Valuation - Development Method (cont'd) Presentation of Comparable Data. A summary of recent sales activity in single-family subdivisions considered most comparable to Cerise Ranch is presented in the following table: Comparable Single -Family Lot Sales Sale Identification Date Recording Sale Price Size Adjusted Price* 1 Dakota/Eagle Dakota Subdivisions Lot 7, Block 1, Eagle Dakota Subdivision Dakota 5-23-00 #731569 $153,000 41,076 s.f. $172,890 Partners -Robert C. Bindseil Eagle Co. Lot 9, Block 1, Eagle Dakota Subdivision 1-14-00 #721009 $129,900 37,419 s.f. $153,282 Dakota Partners -'Robert & Glenda Smith Eagle Co. 2 Southside PUD Lot 3, Block 6 Mallory Harling --)Brad Hazen 6-19-00 #444310 $159,500 7,350 s.f. $178,640 Pitkin Co. 3 Willits (Sopris Meadows PUD) 430 Meadow Court; Lot 70 7-21-00 #735399 $115,500 6,527 s.f. $128,205 Georgiaco, LLC -'Philip Eastley Eagle Co. 517 Lake Court; Lot 80 Georgiaco, LLC -Michael F. Flynn 4 Sopris Mesa 7-19-00 #735318 $103,000 6,289 s.f. $114,330 Eagle Co. 0861 Green Meadow Dr.; Lot 4 6-15-00 #732722 $165,000 2.53 acres $184,800 Fender Lane Developers -Charles W. Trippe Eagle Co. 0700 Green Meadow Dr.; Lot 21 5-1-00 #729037 $195,000 4.08 acres $222,300 Fender Lane Developers -*Israel Shapira Eagle Co. 0019 Sopris Mesa Place; Lot 9 5-1-00 #728811 $130,000 3.41 acres $148,200 Fender Lane Developers-'Keith/Susan Appenzeller Eagle Co. 5 River Valley Ranch 66 Crystal Canyon Dr.; Lot 9, Block J, Phase I 8-4-00 Not Avail. $200,000 28,746 s.f. $222,000 Weming-'Hunter 989 Cedar Creek; Lot 4, Block 0, Phase III 7-12-00 1197/302 $241,500 43,565 s.f. $270,480 Crystal River LP -*Gerd A. Payerl Garfield Co. 3910 Crystal Bridge Dr.; Lot 14, Block D, Phase V 6-23-00 1194/301 $175,000 17,340 s.f. $196,000 Crystal River LP -+James F. Sorensen Garfield Co. Adjusted to July 1, 2001 based upon 1%/month anticipated appreciation Project I: Dakota/Eagle Dakota Subdivisions. This project is located immediately east of Cerise Ranch straddling the Eagle and Garfield County lines. It consists of 23 single-family sites, with one having a pre-existing residence. Lots in this project are approximately 1,000 feet north of Highway 82; they experience highway noise, but there is some buffering from an associated townhouse project located between the single-family lots and the highway. Views are average. Topography includes gentle to moderate slopes upward to the north. All public utilities were extended to each lot, including water and sewer; this project marks the western end of the existing Mid Valley Water and Sanitation District's service area. The project includes some common areas along Blue Creek, but has no amenities. All 22 vacant sites sold between May 1995 and May 2000 at prices ranging from $95,000 to $153,000. The two most recent sales were at $129,900 and $153,000, indicating substantial appreciation since the original offering. Both of these Cerise Ranch Page 53 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) lots are located in the eastern portion of the project. The higher price paid for Lot 7 appears to be attributable to its slightly larger size and superior privacy at the end of a cul-de-sac. Both are typical in terms of views and topography. There have been no re -sales in this project: a current offering of Lot 4, Block 1 at $159.900 would reflect appreciation of 33% (1.4°/✓mo.) since September 1998 were it to sell today at full price. Lots in the two Dakota subdivisions are considered highly comparable to the proposed Cerise Ranch sites. They have a nearly identical location and views, and are also similarly impacted by Highway 82. Lots in this project are smaller in terms of gross lot area. but their effective area is considered highly comparable once the impact of common area restrictions at Cerise Ranch are considered. Extensive common areas at Cerise Ranch should command superior appeal, but this is partially offset by the superior utility service available at Dakota. The prospective valuation date for Cerise Ranch is July 1, 2001. It is therefore necessary to adjust for changing market conditions between the sale date and the prospective valuation date. Recent resales of single family lots in the mid -valley have demonstrated rapid appreciation, with monthly increases of 1.6% to 2.7% experienced in the Southside PUD and Willits projects. These subdivisions compete at the low end of the price range where demand is highest; it is reasonable to conclude that lower appreciation rates will apply in the higher price categories. In addition, many real estate agents are reporting that lot sales have slowed over the past few months. Rapid increases in construction costs throughout the Roaring Fork Valley are reducing the affordability of single-family homes to local residents: a basic home of approximately 2,000 square feet now costs around $350,000, turnkey. These conditions suggest that future value increases will moderate, and we have concluded that an adjustment of I% per month is appropriate for probable value increases through the prospective valuation date. This rate has been applied to all of the comparable lot sales considered in this analysis, with the results presented in the preceding table. For the two Dakota sales, the adjusted prices through the valuation date of July 1. 2001 are $172,890 and $153,282. Project 2: Southside PUD. This project is located approximately four miles southeast of Cerise Ranch, south of Highway 82 and downtown Basalt and close to the new Basalt High School. The project is located near a light- industriaVbusiness park, but this condition has had no apparent adverse influence on value levels. The first phase of development, completed in early 1998. included 18 single-family lots, nine duplex lots, and five lots permitting mixed residential and neighborhood commercial development. Initial sales of single-family lots were at prices ranging from $91,500 to $110,500. All 28 lots released for sale (the developer retained four lots) sold in approximately 14 months, indicating average absorption of two units per month. The second phase of Southside will be available in the fall of 2000: the developer reports that lots will be offered at prices in excess of $160,000. Amenities include two parks. Lot 3, Block 6 is located on the east side of Branding Way across from one of the parks. It is regular in shape. level at street grade, and has all public utilities. Views are average, and highway noise is minimal. This lot originally sold on July 1, 1998, for $96,000. It re -sold on November 24, 1999, for $135,000, reflecting appreciation of 40.6% over 17 months or 2.4% per month. The most recent sale on June 19, 2000. at $159.500 reflected appreciation of 18.1% over Cerise Ranch Page 54 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) seven months, or 2.6% per month. Terms of the sale were cash. The lot had not been listed for sale and there was no commission involved in this transaction. Details of the sale were verified with the seller by Leslie T. Gray. We have made a 12% upward adjustment to this sale for projected value trends through the prospective valuation date; the resulting price is $178,640. This lot has a substantially superior location close to Aspen. downtown Basalt, and public schools. The negative influence of the highway on Cerise Ranch Tots also requires a downward adjustment. Southside has superior utility service. Substantial upward adjustment is indicated for size and density differences. Project 3: Willits. Willits, legally known as Sopris Meadows PUD, is a Targe mixed-use project located just southeast of El Jebel along Highway 82 and Willits Lane. This project has average views and will have common facilities including a soccer field, playground. and an extensive paved trail system. This approximately 140 -acre project will include 155 single-family lots and around 350 multi -family units when complete; additional housing units are likely to be developed in the commercial portion of the property. All public utilities are available to the Willits lots, but sale prices do not include tap fees, now around $6,300 per lot. Single-family lots in Willits generally range in size from 6.000 to 10.000 square feet. The first sales of these lots occurred during January 1998 at prices ranging from $80.000 to $89,900. The latest sales and contracts involve lots located in the east -central portion of the project between East Valley Road and Highway 82. The two most recent sales were at prices of $103,000 (Lot 80) and $115,500 (Lot 70), and are indicative of general price increases of around 10% peryear since 1998. Lot 80 is an average sized parcel located along Highway 82; Lot 70 is located one row removed from the highway and is also typical in size and shape. There are 24 lots currently offered for sale by the developer at prices ranging from $111.500 to $128,000, and one listing of a previously acquired site at $135.000. Three of the developer offerings are reportedly under contract at prices in excess of $120,000; the listing agent also reports a recent sale of Lot 84 at $126,000. Willits represents the low end of the market for single family lots in the mid -valley area, resulting from its relatively high density and smaller lot sizes. The influence of the highway has also had a dampening effect on values. Comparing this project to the subject, it has a slightly superior location closer to Aspen and existing shopping and entertainment facilities in El Jebel. Views are comparable; Mt. Sopris is obstructed by a ridge located south of Willits. Their exposure to the highway is similar to or slightly superior to Cerise Ranch lots, and Willits has comparable amenities. Substantial upward adjustment is required for the larger size of the proposed Cerise Ranch lots. Overall, net upward adjustments apply, and lots at Cerise Ranch will command moderately to substantially higher prices than Willits lots. Project 4: Sopris Mesa. This 24 -lot subdivision is located approximately two miles north of Cerise Ranch on Missouri Heights in Eagle County. Access is via El Jebel Road and Fender Lane, both of which are paved. Lots in Sopris Mesa range in size from around 2.5 to seven acres. All streets within the project are paved; utility services include electricity. telephone, and a community water system. There are no common areas, but the adjacent Central Ranch has a conservation easement on lands bordering Sopris Mesa, and the project is effectively protected from future development. This area has above average privacy and good to excellent views toward the western end of the Elk 'Mountain Range. Cerise Ranch Page 55 August 30, 2000 Estimate of As-Is Value - Development Method (cont'd) Eighteen of the 24 lots sold between February 1999 and June 2000 at prices ranging from $115,000 to $200,000. The lowest prices applied to lots located closest to Fender Lane where privacy and views are less desirable; there is also a major power line crossing this portion of the project. Lot 9, which sold for $130,000 on May I. 2000, is located in this portion of the project. Lots in the northeastern portion of the project commanded the highest prices based upon their superior privacy and views; these lots also benefit from the adjacent undeveloped portion of the Central Ranch. Two of the most recent sales (Lots 4 and 21) are located in this area. Lot 4 sold to an end user for $165.000. Lots 21, 22, and 23 were purchased by a local speculative builder at prices ranging from $165,000 to $195,000. The recorded document fee for these transactions reflects the fact that a broker participating in the deal accepted a reduced commission; however, the effective prices to the seller were $170,000, $190,000, and $195,000. The remaining six lots at Sopris Mesa are currently offered at prices ranging from $185,000 to $200.000. In our judgement, the locational characteristics of Sopris Mesa are moderately superior to Cerise Ranch. Sopris Mesa is more remote, requiring an approximately five minute drive from El Jebel over a steep and winding road. Missouri Heights is prone to winds and colder temperatures, but offers excellent views and privacy. It lacks the significant negative impact of the highway. Gross lot sizes on Sopris Mesa are comparable to those at the proposed Cerise Ranch. but effective areas are larger. The open space characteristics of both projects are comparable. but the availability of irrigation water, proposed water features. and trails at Cerise Ranch should improve appeal relative to Sopris Mesa. which is located in predominantly dry lands. Overall, Sopris Mesa is considered slightly superior to Cerise Ranch, and the subject project can be expected to command lower lot values. Project 5: River Valley Ranch. River Valley Ranch is a large golf-course-oriented residential community located in the southwestern portion of the town of Carbondale approximately six miles southwest of the subject. This project includes single -family homesites, patio homesites, townhouse and condominium units, and an "affordable" housing area. River Valley Ranch has exceptional views of Mt. Sopris and the Elk Mountains and is bisected by the Crystal River. Most of the homesites have frontage on the links-style golf course and some have river views. This project includes substantial park areas along the river. playing fields, and an extensive paved and gravel trail system. There is also a fitness center with an outdoor heated pool, spa, locker and exercise facilities, and five Har-Tru clay tennis courts. Membership to this facility is mandatory and requires an initial monthly fee of $120 per household. Membership in the golf course is not included with the lots. The Aspen MLS reports 17 sales of single -family sites during 2000 at prices ranging from $147,250 to $365,000. Most activity is in the $170.000 to $200.000 range. Typical lots in River Valley Ranch range in size from 15,000 to 20,000 square feet. The lowest prices were commanded by smaller Tots ranging in size from around 8.000 to 12.000 square feet. while the higher prices apply to lots of one acre or more. Lot 9, Block J, Phase 1 is a relatively large lot of 28,746 square feet located on the 17`h fairway near the Crystal River. It sold for $200,000 on August 4. 2000; the listing broker reported that the seller was somewhat motivated and felt that this was a favorable price for a lot of this size. Lot 4. Block Q Phase 111 sold for $241,500 on July 12. 2000. This is a relatively large parcel of one acre located at the Cerise Ranch Page 56 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) end of a cul-de-sac between the third and fourth holes with good views of Mt. Sopris. Lot 14, Block D, Phase V is located near the tee box for the sixth hole and has good views of Mt. Sopris; it sold for $175,000 on lune 23, 2000. This is an average -sized lot and the sale price is indicative of the bulk of sales activity at River Valley Ranch. There are currently 57 listings of River Valley Ranch lots at prices ranging from $165,000 to $499,000. Seven lots were reported to be under contract, all at prices below $200,000. River Valley Ranch is clearly superior to the proposed Cerise Ranch. While further from Aspen, it is more convenient to shopping, schools, and other community resources. It is being developed on exceptional ranch property with excellent views and substantial river amenity. This project does not have the negative highway influence of Cerise Ranch and its amenity package is substantially superior. The golf course has broad market appeal; while the primary market consists of golfing enthusiasts, golf courses provide attractive landscaped open space appealing to a larger population. It is estimated that approximately 50% of homes nationwide with golf course frontage are occupied by non -golfers. River Valley Ranch has superior utility services. The only upward adjustment is based upon the larger size and lower density of the Cerise Ranch lots, although this adjustment is moderated by substantial reductions in useable area on most of the subject lots. Considering this analysis, it is reasonable to conclude that the upper range of value for the finished lots at Cerise Ranch (excepting Lot 52) will be within the range of prices now commanded by typical lots at River Valley Ranch, or $175,000 to $200,000. Analysis and Conclusion of Prospective Retail Value of Finished Lots. An overview of the qualitative characteristics of the subject property and the five comparable projects selected for comparison to Cerise Ranch is presented in the following table. The reported price range is after adjustment for projected market trends through July I. 2001. Comparison of Residential Projects Attribute Price Range Location Highway Views Utilities Lot Size Amenities Cerise Ranch Not Applicable Average Below Average Average Below Average Above Average Average Overall Rating Not Applicable Dakota/Eagle Dakota $153,282 - $172,890 Comparable Comparable Comparable Slightly Superior Slightly Inferior Slightly Inferior Comparable Southside $178,640 Superior Superior Comparable Slightly Superior Inferior Comparable Comparable Willits Sopris Mesa $114K - $128K Slightly Superior Comparable Comparable Slightly Superior Inferior Slightly Superior Inferior $185K - $222K Comparable Superior Superior Slightly Inferior Comparable Slightly Inferior Superior River Valley Ranch $196,000 - $270,480 Comparable Superior Superior Slightly Superior Inferior Substantially Superior Superior Group I. This grouping of lots includes the five proposed sites most adversely impacted by the highway. Four of these lots (Lots 24 - 27)may also be affected by subsidence. Lot 24 includes a protected pond that is likely to have a positive influence on value. The lots range in size from 2.058 to 5.162 acres, but effective areas will be substantially smaller. Cerise Ranch Page 57 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) In estimating prospective value levels for these sites, we have placed most emphasis on recent sales activity in the Dakota and Willits projects that are most similarly affected by the highway. The Dakota sites are comparable in terms of their effective size, but are further from the highway and benefit from some buffering by an adjacent townhouse project. These lots also have superior utility service. Net downward adjustments apply to sales in the Dakotas, and Group I lots can be expected to command prices below the low end of the adjusted price range for the Dakotas, or less than $153,000. Adjusted prices for sales at Willits through the prospective valuation date range from $114,330 to $128,205. Overall, net upward adjustments apply to lot sales at Willits due to the substantially larger size of the proposed Cerise Ranch lots. This is tempered by the fact that all of the Willits sites are further removed from the highway than the Group 1 sites. We have concluded that the proposed sites in Group I will command prices ranging from $135,000 to $150,000; the average lot price has been estimated at $145,000. The total retail value of the five Group 1 sites is estimated at $725,000 (5 lots x $145,000/lot). Group 2. This grouping of 32 sites includes lots in the "front row" of the project immediately north of the proposed common areas. Most will be extremely irregular in shape. Gross areas will range from around two to 4.7 acres, although effective lot sizes will range from about 0.4 to I.2S acres. These lots will be at least 1,000 feet from the highway, but will still experience considerable highway noise. Their appeal will be positively impacted by the adjacent common areas and water features. Lots in this grouping will have similar to slightly superior appeal to the best Tots in the Dakotas; the adjusted prices of the two most recent sales in that project were approximately $153,000 and $173,000. They should command similar appeal to Southside lots; their inferior location and highway influence is offset by their substantially larger size. The price of the most recent sale at Southside, adjusted for changing market conditions through July 2001, was $178,640. The range of adjusted prices for lots in Sopris Mesa was from $148,200 to $222,300. That project is considered superior overall. Group 2 lots will be clearly inferior to sites at River Valley Ranch, where the range of adjusted sale prices is from $196,000 to just over $270,000. We have concluded that Group 2 lots will command prices ranging from $160,000 to $180,000, primarily based on effective size differences. Average lot value has been estimated at $175,000. The total estimated value of Group 2 Tots is calculated at $5,600,000 (32 lots x $175,000/lot). Group 3. These lots will be located north of the Group 2 lots in the eastern portion of the property. These 16 Tots will be slightly above the Group 2 lots at the base of the escarpment forming the northern portion of the project. They will range in size from two to eight acres, but their effective areas will be much smaller Cerise Ranch Page 58 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) due to the influence of steep slopes. Some lots will also be subject to rockfall and debris flow hazard. The greatest potential for basement area resides in these sites based upon their slightly higher elevation. Lots in this grouping should command a price premium over the Group 2 sites based upon their slightly superior privacy at the rear of the project, the potential for basement area, and greater distance from the highway. We have concluded that a price premium of around 10% will apply. Lots in this grouping should sell at prices ranging from around $175,000 to $200,000; the average lot value has been estimated at $190,000. Total retail value for lots in Group 3 has been estimated at $3,040,000 (16 lots x $190,000/lot). Group 4. These six lots will be situated in the northeastern corner of the project on the slopes north of the Dakota subdivisions. They will range in size from two to 10 acres, but most of the sites will be severely impacted by steep slopes that will substantially reduce effective land area. Privacy will be above average, but appeal will be reduced by an adjacent power line. The value characteristics of sites in this group will lie between the Group 2 and 3 sites. While they will have many of the positive characteristics of the Group 3 sites, overall appeal and value will be reduced by the adjacent power line and their location behind the Dakotas. We have therefore concluded that sites in this portion of Cerise Ranch will command prices ranging from $160,000 to $180,000; average lot value has been estimated at $170,000. The total prospective retail value of Group 4 lots has been estimated at $1,020,000. Group 5. These eight Tots will be situated in the northwest corner of the project above the existing ranch improvements on excluded Lot 68. Seven lots will be of average size ranging from approximately two to S.2 acres; the eighth lot will include most of the northwest corner of the project with a gross land area of almost 41 acres. These sites will have above average privacy and buffering from the highway. Several lots experience substantial losses in useable area due to slopes and/or an access easement benefitting Lot 52, the large acreage parcel. Based upon the appeal of these sites relative to the other four groupings, we have concluded that seven of these lots will command prices ranging from approximately $175,000 to $200,000; the average price has been estimated at $190,000. Total prospective retail value attributable to these sites is estimated at $1,330,000 (7 lots x $190,000/lot). The atypically large size of Lot 52 requires consideration of additional sale data. The following sales were considered in estimating the prospective value of this site: Cense Ranch Page 59 August 30, 2000 , 11 "I •`•a `• r L '-� • •, I ii 7 Ce. • l'..n..•L.l.drJ He/. 111)1 I. 81...'i ,. I'.nnl I C rt I ',„ _ is '...( 1) I 14 • r^ : , _I�� �� ,�-'—�..'1•C . k • .l' I ...!•'-•- ,t1,• ' • ' I f• •1 e. ...I i? , • I ,x r -IC, r` ,1.•• UJ I .I SOPR IS . Ua1,6erindll. Mulford l'aril,Tttrialt.• o DIgate: /,•n/x \` /less 1..,h,•, I� 7 1,: 1� I 25 1• 1 I tr•' I 1 / w 33 33 » Fork36p» 1 4....apt\r�1 •t' I . 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I4 71 4 'ISM--'�� ^1••� 1 ..t. ---!..„- 1 47 •_ii•- ..._ u- t --.-_ _- — - ii- _ _ 10789 r I I I Comparable Large Acreage Land Sale Location Map (.)j jle Luke Prying/5011t0 Hasslt. r Saco • c Snowmasv .67,I C} I C I Ir am^: 1n 55, Cerise Ranch Page 60 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) Large Acreage Lot Sales Sale Identification Date Recording Sale Price Size Adjusted Price* 1 Lot 45, Sopris Mountain Ranch 6-29-00 #444666 $455,000 49.55 acres $509,600 Heller Wamer Villa—Keysha Bailey & Joseph Deery Pitkin Co. 2 Lot 4, Barnes Exemption, Garfield County 4-26-00 1184/525 $282,500 14.36 acres $322,050 Peak Development–'Rocky Mountain Mansions, LLC Garfield Co. 3 Lot 1, Ten Peaks Mesa 3-24-00 #726023 $470,000 37.93 acres $540,500 Mark Kwiecienski—'Richard & Virginia Gaiti Eagle Co. 4 Lot 11, Spring Park Meadow 1-14-00 #720778 $425,000 40 acres $501,500 HLEM Investments—Ferdinand Belz III Eagle Co. • Adjusted to July 1, 2001 based upon 1%/month anticipated appreciation Sale I is a Sopris Mountain Ranch lot located up West Sopris Creek approximately eight miles from Highway 82 and six miles southeast of Cerise Ranch. It is located in the eastern portion of the project at the end of the main access road and has exceptional privacy. It has moderate to steep slopes, is heavily treed, and has a seasonal stream running through it. Views are to the east and north and below average for this project. The only public utilities are electricity and telephone. Compared to Lot 52 at Cerise Ranch, this lot is located in a superior neighborhood with a sub -alpine setting. It is more remote, but has excellent privacy. The subject's negative highway influence requires downward adjustment. The sale property has inferior utility services. Net downward adjustments apply to this sale, which was verified with Noel Hallisey, the listing agent. Sale 2 is located at the top of the Missouri Heights escarpment just northeast of Cerise Ranch. This site has sloping topography and excellent views of the Elk Mountains to the south. Access is via Harmony Road, a gravel access drive leading from Fender Lane. Utilities include telephone and electricity; the site has no irrigation. The site has been re -listed for sale at a price of $395,000. Compared to the subject, this site is more remote but has superior privacy, has substantially superior views, is smaller, has no negative highway influence, and has slightly inferior utility services. This lot is considered comparable to or slightly inferior to Lot 52 at Cerise Ranch. Details of this sale were verified with Tony Scheer, the listing broker. Sale 3 is located in the northern portion of Missouri Heights in the project known as Ten Peaks Mesa. It is approximately nine miles north of El Jebel via El Jebel Road and Upper Cattle Creek Road and is accessed from a long gravel driveway. It contains 37.93 acres of gently sloping land covered with oak brush. The site has excellent privacy and panoramic views of the Elk Mountains. Utilities include electricity, natural gas, community water, and telephone. This lot is considered substantially superior to Lot 52 based upon its superior privacy and views and the lack of negative highway influence. Details of this transaction were verified with Mark Kwiecienski, the seller and listing broker. Cerise Ranch Page 61 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) Sale 4 is the January 2000 sale of a Spring Park Meadows lot at a price of $425,000. Spring Park Meadows is located four miles north of El Jebel via El Jebel Road and Upper Cattle Creek Road. The sale lot is located in the southern portion of the project sloping moderately upward from south to north. It has excellent views, good privacy (there is a security gate at the project entrance), and utility service including electricity, telephone, and a community water system. While more remote, this site commands substantially superior appeal based upon its views, privacy, and lack of highway noise. Michael Gerbaz, the listing broker, verified the details of this sale. These transactions are indicative of sales activity for large acreage parcels in the mid -valley area. Most are located in more remote areas north and south of the Roaring Fork Valley, but all are reasonably convenient. None of these sales involved lots with irrigation rights; Lot 52 will also have very limited irrigation capacity from its domestic water system. All of the sale properties have superior privacy and rural settings; none are adversely impacted by the highway. Sale I has comparable to slightly superior views; the remaining three lots have substantially superior views. Utility services range from inferior to comparable. All of the lots except for Sale 2 are of comparable size. Considering the characteristics of Lot 52, and particularly the impact of severe highway noise, we have concluded that this parcel will command a value from the lower end of the range exhibited by comparable large - acreage lot sales. In our judgement, Lot 52 will have a prospective market value as of July 1, 2001 of $350,000. Accessory Dwelling Units (ADU's). Thirteen of the subject lots will include the right to build an ADU. There is limited market data regarding the enhancement value of this right. Lots in Willits with the right to build an ADU have been selling at prices up to around $5,000 higher than comparable lots without the right to build ADU's. This is an entry level project commanding prices at the low end of the range for single-family sites. Lots in this project are relatively small and development of an ADU would limit the amount of space in the main residence; few ADU's have been constructed as a result. Single-family sites in River Valley Ranch larger than 16,000 square feet include the right to construct an attached ADU of up to 1,200 square feet. A representative of Destination Holdings, the marketing entity for this project, reported that the original pricing included a premium of $10,000 for this right; this has now increased to $15,000. It is difficult to determine how much of this price premium is attributable to the right to build the ADU, since some of the differential is attributable to size differences. We have concluded that a small price premium averaging $5,000 per lot will apply to the 13 lots approved for ADU's. Total sales income applicable to this premium will be $65,000 (13 lots x $5,000/lot). Summary of Prospective Lot Values as of July 1, 2001. A summary of our conclusions of prospective lot values as of the projected completion date is presented in the following table: Cerise Ranch Page 62 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) Summary of Prospective Retail Value of Finished Lots as of July 1, 2001 Identification Estimated Price Range Average Value # of Units Total Retail Value Group 1 $135,000 - $150,000 $145,000 5 $725,000 Group 2 $160,000 - $180,000 $175,000 32 5,600,000 Group 3 $175,000 - $200,000 $190,000 16 3,040,000 Group 4 $160,000 - $180,000 $170,000 6 $1,020,000 Group 5 (except Lot 52) $175,000 - $200,000 $190,000 7 $1,330,000 Lot 52 N/A $350,000 1 $350,000 ADU N/A $5,000 13 $65,000 Totals 67 Lots $12,130,000 Average Price per Lot $181,045 Single-family lot values have increased at rapid rates over the past twoyears, and we have concluded that price increases are likely to continue into the foreseeable future. The rate of increase is likely to decline, however. We have estimated potential gross retail sales volume for pre -sales and Year 1 sales using the indicated average value of $181,045 per lot. Average lot prices are projected to increase at a rate of 1% per month (12%/year) throughout the required absorption period. Absorption. A summary of the absorption characteristics of similar single-family projects is presented in the following table: Absorption History of Competitive Single -Family Projects 1999/2000 Identification Total Sold Marketing Period Absorption/Month Absorption Absorption/Month Willits (Sopris Meadows) 49 32 months 1.5 19 lots 1.0 Southside PUD 28 14 months 2.0 N/A N/A Dakota/Eagle Dakota 22 61 months 0.4 8 lots 0.4 Sopris Mesa 18 18 months 1.0 18 lots 1.0 River Valley Ranch 115 46 months 2.5 43 lots 2.3 With the exception of the two Dakota subdivisions, all of the other single-family projects considered to be directly competitive with Cerise Ranch have exhibited absorption rates of 1.0 to 2.5 lots per month. The Dakotas were ineffectively marketed from 1995 through 1997 when only eight Tots sold. The listing broker was changed in 1998, and 13 lots sold over the next twoyears; the last two sites were sold thisyear. The rapid absorption of Southside lots was fueled in part by speculative purchases and prices that now appear to have been below market. In early 1998 when this project was originally offered, Willits was the only primary competition. Cerise Ranch Page 63 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) and Southside is dearly superior to that project in terms of location and protection from highway noise. It is unlikely that Cerise Ranch will experience sustained absorption comparable to Southside. The relatively rapid absorption of River Valley Ranch sites was also fueled by a large number of purchases by speculative builders and investors. We are also aware of various promotional incentives offered to encourage early development at this project, including price reductions when certain development objectives were met. This project also commands substantially superior market appeal; absorption at Cerise Ranch is likely to be slower. Cerise Ranch will have relatively limited competition for at least the first twoyears. A steady supply of new lots at Willits will be offered for sale through the next severalyears, but these Tots appeal only to the extreme low end of the market and are relatively small. Only a few lots in the next phase of Southside will be released for sale; the developer intends to build spec homes on most of the sites. The Dakota subdivisions are fully absorbed. New Tots in the Ranch Creek PUD will provide some direct competition. While smaller. they offer a superior amenity package and the best lots have attractive creek frontage that will command a very high price premium. River Valley Ranch will also provide direct competition for the next several years. A substantial amount of new development is and will be targeting upper income purchasers, including Aspen Equestrian Estates and St. Finnbar Farm. There is a demonstrated market for high-end lots in the mid -valley involving sites with exceptional views, river frontage, privacy, and/or irrigation water. Aspen Equestrian Estates has none of these characteristics and the current offerings at prices ranging from $350,000 to $500,000 are highly speculative. Additional competition will be provided by lots in Midland Point, a new subdivision developed by the owners of Aspen Glen located south of the Roaring Fork River and competing within the same price range as Cerise Ranch. It is also likely that additional competition will be introduced over the next fewyears, mostly in areas further from Aspen. Considering that the proposed Cerise Ranch will have relatively unique market appeal, we have concluded that a range of absorption characteristics is appropriate to reflect best- and worst-case performance. While infrastructure will not be completed before the middle of nextyear, marketing efforts could begin within the next few months. Competitive projects have experienced material sales activity prior to completion of infrastructure, and Cerise Ranch can also expect "pre -sale" activity. We have based our two absorption projections based upon an initial rate of 1.0 to 1.5 lots per month. These rates will decline in the lateryears to reflect potential future competition and the fact that the last lots sold will be the least desirable. A summary of our best -case and worst-case absorption projections is presented in the following table and result in absorption periods of four to fiveyears. Cense Ranch Projected Absorption for Cerise Ranch Pre -Sales (7/1/01) Year 1 Year 2 Year 3 Year 4 Year 5 Scenario 1 15 lots Scenario 2 20 lots 12 lots 12 lots 12 lots 8lots 8lots 18lots 12 lots 10 lots 7lots Page 64 August 30, 2000 Estimated Development Costs. The costs to complete the planning and approval process and install proposed subdivision improvements must be deducted in order to estimate the as -is value of Cerise Ranch by the development method. We have been provided with preliminary cost estimates by Wintergreen Homes dated July 25, 2000; a summary of these estimates is presented in the following table: Development Cost Estimates for Proposed Cerise Ranch Estimated Cost Cost/Lot Planning & Development Costs $224,000 $3,343 Architect (All Consultants) 115,613 $1,726 Infrastructure 3,458,061 $51,613 Civil Engineering 247,053 $3,687 Permits 3,500 $52 Soils Test 25,000 $373 Surveyor 5,000 $75 Site Supervision 60,000 $896 Quantity Surveyor 5,000 $75 Insurance 22,500 $336 Audit 800 $12 Legal 176,000 $2,627 Miscellaneous 17,500 $261 Real Estate Taxes 13,000 $194 Interest 60,414 $902 Contingency 103,742 $1,548 Totals $4,537,183 $67,719 Source: Wintergreen Homes, August 2000 These costs appear to be reasonable given the characteristics of the proposed development proposal, but are high relative to other development projects in this area. The higher costs are attributable to the size of the site and the requirement for several thousand feet of paved streets and underground utility lines. Other atypical costs include relocation of an existing irrigation ditch, development of a community water system, and the proposed lake and related water features. The reported costs of infrastructure were based upon site-specific estimates prepared by High Country Engineering of Glenwood Springs. Colorado, dated August 11-16, 2000. This firm is very active in the local market and these estimates are considered to be reliable. The developer has added a small contingency over and above the 10% allowance in High Country Engineering's estimates. An adjustment to these costs is required to reflect expenditures already incurred. According to Art Kleinstein of Wintergreen Homes, approximately $500,000 to $600,000 has been spent on planning and engineering studies. soils Cense Ranch Page 65 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) reports, permits, and other items required for the proposed development. We have estimated the remaining costs of development, primarily associated with proposed infrastructure, at $4,000,000. Considering the size of the proposed Cerise Ranch development and our estimates of probable absorption rates. phased development would generate the highest land value. lust over 80% of High Country Engineering's total estimated infrastructure costs apply to the first phase, which includes completion of the western portion of the property and common area improvements. Second -phase improvements will be relatively minor, consisting primarily of extending streets and utilities to the eastern portion of the project and expanding the community water system. We have estimated that 80% of the remaining development costs will be incurred between August 2000 and luly 1, 2001; a $3,200,000 (80% of $4,000,000) deduction will be applied against income attributable to pre -sales activity during that period. The remaining $800,000 will be applied against income in Year 2 in Scenario I and Year 1 in Scenario 2. The actual deduction will be increased 10% peryear, compounded, to reflect anticipated cost increases. Expenses. Deductions from net sales revenue after the costs to complete are required for marketing expense. closing costs, and miscellaneous expense. An adjustment is also required to reflect profit requirements of investors in this type of project. Sales commissions for single-family Tots in the mid -valley area are typically 6% of the sale price. There is an existing listing agreement with Basalt Real y to market the finished lots at Cerise Ranch at a discounted rate of 5%; this is typical of larger projects in this area. Additional marketing expense will be attributable to the preparation of exhibits and brochures; we have estimated total marketing expense at 6% of gross sales revenues. Closing costs are estimated at $1,000 per unit. Miscellaneous expenses are estimated at I% of sales volume; this expense item includes real estate taxes on unsold Tots, which will be minimal due to the delay in imposing improved proper/ assessments. Entrepreneurial profit for development projects typically range from 10% to 25% of direct development costs in the Roaring Fork Valley. Development projects realize profit through the sale of completed units or Tots, and the profit rate is generally expressed as a percentage of future sales revenues. Since our estimates of future sales revenues at Cerise Ranch will exceed estimated development costs, including land, by approximately 50%, a correspondingly lower profit rate is indicated. The level of entrepreneurial risk associated with a development project is ypically greater than the level of risk associated with a completed project; development projects are subject to possible cost overruns and changing market conditions during the construction period. However, the local market for single-family lots has been extremely strong over the past several years, and this pattern is anticipated to continue through the estimated absorption period. The level of perceived risk in this market is considered relatively low. In addition, our estimates of value for the finished Tots at Cerise Ranch were well supported by historical sales in the area. There is an immediate and demonstrated market for single-family sites in this price range. Cerise Ranch Page 66 August 30, 2000 Development Method Calculations: As -Is Value - Scenario 1 Income July 1, 2001 Year 1 Year 2 Year 3 Year 4 Year 5 Number of Lots Sold 15 12 12 12 8 8 Average Price per Lot $181,045 $181,045 $202,770 $227,103 $254,355 $284,878 Total Sale Income Per Period $2,715,675 $2,172,540 $2,433,245 $2,725,234 $2,034,842 $2,279,023 Development Costs = $3,200,000 $0 $968,000 $0 $0 $0 Net Sales Revenues After Costs ($484,325) $2,172,540 $1,465,245 $2,725,234 $2,034,842 $2,279,023 Expenses Marketing Expense - 6% = $162,941 $130,352 $145,995 $163,514 $122,090 $136,741 Closing Costs - $1,000/Unit = 15,000 12,000 12,000 12,000 8,000 8,000 Miscellaneous Expense - 1% = 27,157 21,725 24,332 27,252 20,348 22,790 Entrepreneurial Profit - 13% 353,038 282,430 316,322 354,280 264,529 296,273 Total Expenses = $558,135 $446,508 $498,649 $557,047 $414,968 $463,805 Net Income Per Period = ($1,042,460) $1,726,032 $966,596 $2,168,187 $1,619,873 $1,815,218 Discounting Present Worth Factor at 12%' 0.89632 0.79544 0.70591 0.62646 0.55595 0.49338 Present Worth of Cash Flow ($934,378) $1,372,955 $682,330 $1,358,283 $900,569 $895,592 Indicated Value of by Development Method = $4,275,350 Called: $4,275,000 * Present worth of $1.00 discounted for 11, 23, 35, 47, 59, and 71 months at 12% Development Method Calculations: As -Is Valuation - Scenario 2 Income July 1, 2001 Year 1 Year 2 Year 3 Year 5 Number of Lots Sold 20 18 12 10 7 Average Price per Lot $181,045 $181,045 $202,770 - $227,103 $254,355 Total Sale Income Per Period $3,620,900 $3,258,810 $2,433,245 $2,271,028 $1,780,486 Development Costs = $3,200,000 $880,000 $0 $0 $0 Net Sales Revenues After Costs $420,900 $2,378,810 $2,433,245 $2,271,028 $1,780,486 Expenses Marketing Expense - 6% = $217,254 $195,529 $145,995 $136,262 $106,829 Closing Costs - $1,000/Unit = 20,000 18,000 12,000 10,000 7,000 Miscellaneous Expense - 1% = 36,209 32,588 24,332 22,710 17,805 Entrepreneurial Profit- 13% 470,717 423,645 316,322 295,234 231,463 Total Expenses = $744,180 $669,762 $498,649 $464,206 $363,097 Net Income Per Period = ($323,280) $1,709,048 $1,934,596 $1,806,823 $1,417,389 Discounting Present Worth Factor at 12%' 0.89632 0.79544 0.70591 0.62646 0.55595 Present Worth of Cash Flow ($289,762) $1,359,445 $1,365,651 $1,131,902 $787,997 Indicated Value of by Development Method = $4,355,233 $4,355,000 Present worth of $1.00 discounted for 11, 23, 35, 47, and 59 months at 12% Cense Ranch Page 67 August 30, 2000 Estimate of As -Is Value - Development Method (cont'd) Considering the level of risk associated with a project of this type under current and projected market conditions, we have concluded that a profit rate of 15% to 20% of direct development costs is appropriate for Cerise Ranch. We have used a profit rate of 13% of retail sales volume. Considering the relationship of development costs to prospective retail sales, this reflects an effective profit rate as a percentage of development costs of approximately 18%. Discount Rate. Discounting of future revenues is required to arrive at a present value indication as of August 18, 2000. The discount rate is related to the internal rate of return, or cash on cash interest rate, which represents the return on any given investment. For real estate, the discount rate reflects the impacts of higher risk and relative illiquidity associated with ownership. As of the date of this report, 30 year Treasury bonds were earning 5.67%; the prime rate was reported at 9.50%. An appropriately higher rate would be required to attract investment capital to a real estate investment. Considering the level of risk associated with development of the subject property, we have concluded that a discount rate of 12% is appropriate. Conclusion of As Is Value by the Development Method. Our estimate of the as -is value of the subject property by the development method is presented in the tables on the facing page. The indicated range of value is from 54,275,000 to $4,355,000. Estimate of Prospective Value Our estimate of prospective value for the subject property assumes completion of all infrastructure and has an effective date of July I, 2001, the projected completion date. Only the development method has been considered in estimating prospective value: the cost approach and income approach are not applicable to this -property type. There are no comparable sales involving large assemblages of finished lots in the market area, and the sales comparison approach is omitted based upon this condition. Most of the development method analysis and conclusions presented in our as -is valuation also apply to our estimate of prospective value. The primary change involves elimination of the deductions for first and second phase infrastructure. In addition, since a lower level of risk is associated with a completed development project, we have used a slightly lower profit rate of 12%. All other assumptions and conclusions remain unchanged. Our development method calculations for the prospective valuation are presented on the following page. The indicated range of value is from $8,955,000 to $9,030,000. Cense Ranch Page 68 August 30, 2000 Estimate of Prospective Value (cont'd) Development Method Calculations: Prospective Value - Scenario 1 Income July 1, 2001 Year 1 Year 2 Year 3 Year 4 Year 5 Number of Lots Sold 15 12 12 12 8 8 Average Price per Lot $181,045 $181,045 $202,770 $227,103 $254,355 $284,878 Total Sale Income Per Period $2,715,675 $2,172,540 $2,433,245 $2,725,234 $2,034,842 $2,279,023 Expenses Marketing Expense - 6% = $162,941 $130,352 $145,995 $163,514 $122,090 $136,741 Closing Costs - $1,000/Unit = 15,000 12,000 12,000 12,000 8,000 8,000 Miscellaneous Expense - 1% = 27,157 21,725 24,332 27,252 20,348 22,790 Entrepreneurial Profit - 12% 325,881 260,705 291,989 327,028 244,181 273,483 Total Expenses = $530,978 $424,783 $474,317 $529,794 $394,620 $441,014 Net Income Per Period = $2,184,697 $1,747,757 $1,958,928 $2,195,440 $1,640,222 $1,838,008 Discounting Present Worth Factor at 12%* 1.00000 0.89286 0.79719 0.71178 0.63552 0.56743 Present Worth of Cash Flow $2,184,697 $1,560,503 $1,561,638 $1,562,670 $1,042,394 $1,042,941 Indicated Value of by Development Method = $8,954,842 Called: $8,955,000 Present worth of $1.00 discounted for 0, 1, 2, 3, 4, and 5 years at 11% Development Method Calculations: Prospective Valuation - Scenario 2 Income July 1, 2001 Year 1 Year 2 Year 3 Year 5 Number of Lots Sold 20 18 12 10 7 Average Price per Lot $181,045 $181,045 $202,770 $227,103 $254,355 Total Sale Income Per Period $3,620,900 $3,258,810 $2,433,245 $2,271,028 $1,780,486 Expenses Marketing Expense - 6% = $217,254 $195,529 $145,995 $136,262 $106,829 Closing Costs - $1,000/Unit = 20,000 18,000 12,000 10,000 7,000 Miscellaneous Expense - 1% = 36,209 32,588 24,332 22,710 17,805 Entrepreneurial Profit- 12% 434,508 391,057 291,989 272,523 213,658 Total Expenses = $707,971 $637,174 $474,317 $441,495 $345,292 Net Income Per Period = $2,912,929 $2,621,636 $1,958,928 $1,829,533 $1,435,194 Discounting Present Worth Factor at 12%* 1.00000 0.89286 0.79719 0.71178 0.63552 Present Worth of Cash Flow $2,912,929 $2,340,754 $1,561,638 $1,302,225 $912,094 Indicated Value of by Development Method = $9,029,641 $9,030,000 • Present worth of $1.00 discounted for 0, 1, 2, 3, and 4 years at 12% Cense Ranch Page 69 August 30, 2000 Estimate of Marketing Time We have considered the reported marketing times of the five comparable sales considered in our as -is valuation and the characteristics of the subject property in estimating an appropriate marketing time. Sale 1 (Dennis & Nile Gerbaz Ranch) occurred in three parts. Two of the sales sold to a related party and a neighboring land owner without being publicly listed for sale. The 90 -acre sale was listed on April 18, 2000; it was placed under contract and closed two days later on April 20, 2000. Cattle Creek Ranch (Sale 2) was listed on March 8, 1999 and placed under contract on July 8, 2000 (16 months). The sale closed on August 29, 2000, indicating total marketing time of almost 18 months. This property is larger and has a more remote location; a shorter marketing period can be anticipated for Cerise Ranch, particularly given its vested development rights. The transfer of Preshana (Sale 3) took several years to complete, but the process was slowed by the seller's indecision and various contingencies tied to development approvals and extension of sewer lines. Coryell Ranch (Sale 4) was not publicly offered for sale; the developers of Aspen Glen sought a purchase of the property to protect views from that adjacent project. Sale 5 (Douglas Cerise Ranch) was also not publicly offered for sale. The pending sale of the subject property has been in process since January 1997. The sale was delayed by various contingencies associated with obtaining development approvals. A previous land use submission for 400 units was contingent upon extension of the Mid Valley Sanitation District's water and sewer lines to serve the subject property. After this extension was turned down in 1999, closing was extended for anotheryear to allow for an alternative development proposal. Preliminary approvals were granted during the preparation of this report; the resulting vested property rights have a term of oneyear and may be extended for an additionalyear. Existing development approvals, the property's location within a logical expansion area, and strong market conditions make Cerise Ranch readily marketable. We have concluded that the subject property could be marketed within six to twelve months if offered at a price consistent with our value conclusions. Reconciliation and Final Value Estimates The objective of this appraisal was to (1) estimate the as -is market value of the fee simple estate interest as of August 18, 2000, and (2) estimate the prospective bulk value of the property, as of July 1, 2001, assuming completion of all proposed subdivision improvements. The sales comparison approach and development method were used to estimate as - is value. The cost approach and income approach are not applicable to this type of property. Only the development method was considered in estimating prospective value. The cost approach and income approach are not applicable to this property type; the sales comparison approach was not appropriate due to the lack of comparable sales data. As -Is Valuation Summary. The indicated as -is value for the subject property using the sales comparison approach was $4,750,000. Our analysis relied on five reasonably comparable sales of similar ranch properties with similar development potential. The quality of sales data was considered average; all of the sales required several adjustments for locational and/or physical differences. The quantity and quality of sale data was not adequate to objectively quantiy most Cerise Ranch Page 70 August 30, 2000 Reconciliation and Final Value Estimates (cont'd) of our adjustments. Secondary indicators and subjective judgement provided adequate support for the adjustment process. Our conclusion of value is supported by a pending contract at a price of $4,863,505. Our development method analysis indicated a range of as -is value from $4,275,000 to $4,355,000. We relied on well -supported estimates of the prospective retail value of the finished lots, absorption rates, and typical project expenses. We relied on estimates provided by the developer to estimate probable infrastructure costs. We have reviewed these estimates, which appear reasonable based upon the characteristics of Cerise Ranch, but the reliability of our analysis would be improved by actual bid information. The indicated as -is value from the sales comparison approach is substantially higher than our estimate of value from the development method. This is logical given that most purchasers of single-family development land in the mid -valley are basing their investment analysis on highly speculative lot pricing. Our estimates of prospective retail lot prices were based upon exhibited value levels adjusted for projected value trends through the prospective completion date of July 1, 2001. Since the sales comparison approach more directly reflects the actions of buyers and sellers of this property type. we have placed most weight on the resulting value estimate. Based upon the facts; data, and analyses contained in this report, and placing most emphasis on the sales comparison approach, we have concluded that the as -is market value of the fee simple estate interest in Cerise Ranch subject to the attached contingencies, certification, assumptions and limiting conditions, as of August 18, 2000, is: FOUR MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($4,750,000) Prospective Valuation Summary. The development method indicated a range of prospective value from $8,955,000 to $9,030,000. The prospective valuation assumes that all subdivision improvements have been completed, and there is no adjustment for estimated development costs. Since development costs were the weakest component of our development method analysis of as -is value, this substantially improves the reliability of our prospective value estimate. This valuation technique essentially replicates the investment analysis used by prospective purchasers of a property of this type, and the development method is considered a highly reliable indicator of prospective value. Based upon the facts, data, and analyses contained in this report, and relying solely on the development method, we have concluded that the prospective market value of the fee simple estate interest in Cerise Ranch, assuming completion of proposed subdivision improvements as described in this report and subject to the attached contingencies. certification, assumptions and limiting conditions, as of the projected completion date of July 1, 2001, and based upon appraisal analysis made as of the date of this report, will be: Cerise Ranch NINE MILLION DOLLARS ($9,000,000) Page 71 August 30, 2000 Reconciliation and Final Value Estimates (cont'd) Estimated Marketing Time. Considering demonstrated marketing times for property of this type and the characteristics of the subject property, we concluded that a marketing period of six months is appropriate for both of our value estimates. Cense Ranch Page 72 August 30, 2000 Certification 1 certify that, to the best of my knowledge and belief, ... the statements of fact contained in this report are true and correct. - the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. - I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. - my compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report. The appraisal assignment is not based on a requested minimum valuation, specific valuation, or the approval of a loan. - my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. I have made a personal inspection of the property that is the subject of this report. - no one provided significant professional assistance to the person signing this report. - 1 certify that, to the best of my knowledge and belief, the reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. - 1 certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - As of the date of this appraisal, my state certification has not been revoked, suspended, canceled, or restricted. August 30, 2000 Cense Ranch Leslie T. Gray Certified General Appraiser Colorado License No. CGI315525 License Expires December 31, 200 Page 73 August 30, 2000 Certification certiy that, to the best of my knowledge and belief, ... - the statements of fact contained in this report are true and correct. - the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. - I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. - my compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report. The appraisal assignment is not based on a requested minimum valuation, specific valuation, or the approval of a loan. - my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. - I have made a personal inspection of the property that is the subject of this report. no one provided significant professional assistance to the person signing this report. I certify that, to the best of my knowledge and belief, the reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. - I certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - As of the date of this report, I, William K. Gray, have completed the requirements under the continuing education program of the Appraisal Institute. - As of the date of this report, my state certification has not been revoked, suspended, canceled, or restricted. August 30, 2000 William K. Gray, MAI Certified General Appraiser Colorado License No. CG01313605 License Expires December 31, 2000 Cerise Ranch Page 74 August 30, 2000 Cerise Ranch Addenda Page 75 August 30, 2000 Qualifications of Leslie T. Gray Certified Real Estate Appraiser Education & Professional Advancement Licensed by State of Colorado as a Certified General Appraiser (CG1315525) Affiliate Member, Appraisal Institute University of Colorado, Boulder; B.S. Business, Cum Laude (1975) Highest and Best Use & Market Analysis, Appraisal Institute, 1998 Report Writing and Valuation Analysis, Appraisal Institute, 1994 Standards of Professional Practice, Appraisal Institute, 1991 Course l -A, American Institute of Real Estate Appraisers, 1979 Experience Self -Employed from February, 1985 to present; includes threeyears as appraisal consultant to Arthur Gimmy Company, Inc., San Francisco, California. Partner, High Country Appraisal Associates, Aspen, Colorado, July, 1979 to April, 1984. Appraisal consultant to Alpine Appraisal and Pitkin County Assessor, July, 1978 to July, 1979. Staff Appraiser, Pomeroy Appraisal Associates, Syracuse, New York, September, 1975 to January, 1977. Appraisal experience in a wide range of property types, including single family residential, multi -family residential, hotels/motels, residential care facilities, office buildings, retail, restaurants; neighborhood, community and regional shopping centers; resorts, ski areas, convalescent hospitals, tennis clubs, spas, casinos, ranches, warehouse, business park, truck terminals, manufacturing plants. Court Experience Testified as expert witness on real estate values before Pitkin County District Court (Colorado) Teaching Experience Instructor of real estate courses at Colorado Mountain College, Aspen, Colorado, 1977 to 1979. Clients Bank of America; Rosenberg Real Estate Equity Fund; B.A. Mortgage; Colorado National Bank; Alpine Banks; Norwest Bank; Pitkin County Bank & Trust; First Western Mortgage Corp.; Port of Oakland, CA; State of New York; Syracuse University; City of Auburn, N.Y.; Corning, N.Y., Urban Renewal Agency; City of Half Moon Bay, CA; Esprit; Crested Butte Mountain Resort; Allied Chemical Corporation; Miller Brewing Company; Seagrams Distilleries; Forstmann Fabrics; Federated Department Stores; private owners, attorneys, and developers. Cense Ranch Page 76 August 30, 2000 Qualifications of William K. Gray, MAI Certified Real Estate Appraiser Education & Professional Advancement Licensed by Colorado as a Certified General Appraiser (License CG01313605, exp. 12/31/00) Member, Appraisal Institute - MAI #5936 (Designation awarded 1979) Associate Member, Aspen Board of Realtors Kettering University (a.k.a. General Motors Institute), Flint, Michigan: Bachelor of Mechanical Engineering - 1968 Appraisal Courses Course I -A AIREA 1973 Course I -B AIREA 1974 Course 2 AIREA I97S EDUCARE Educare, Inc. 1976 Course 6 AIREA 1977 Litigation Valuation Appraisal Institute 1992 Course 410 Appraisal Institute 1997 (most recent) Course 420 Appraisal Institute 1997 (most recent) Course 510 Appraisal Institute 1997 Course 520 Appraisal Institute 2000 Continuing education courses and seminars - average 20 hours/year including appraisal courses, 1981 to present Appraisal Institute Ethics panel assignments - 1988 to present Experience Managing Partner, High Country Appraisal Associates, Carbondale, Colorado - 1979 to present - S0% non- residential 1979-1982, 90% non-residential 1982 to present. Self -Employed Appraiser, Carbondale, Colorado - 1978-1979 - 80% residential. Staff Appraiser & Market Analyst, Pomeroy Appraisal Associates, Inc. - Syracuse, New York - 1972--1978 - 80% non-residential. Appraisal experience in a wide range of property types, including single family residential, multi -family residential, hotels/motels, commercial and industrial properties, office buildings, condominiums, ranch and recreational land, and athletic/racQuet club facilities Court Experience Testified as an expert on real estate values before courts and commissions, to include Federal Courts, Colorado District Courts, and New York State Supreme Court Cerise Ranch Page 77 August 30, 2000 Teaching Experience Instructor - Clients Qualifications of William K. Gray, MAI (cont'd) Real Estate Appraisal, Income Property Appraisal, Onondaga Community College, Syracuse, New York State University of New York, Morrisville, New York Colorado Mountain College, Glenwood Springs, Colorado Private owners, attorneys, developers; Alpine Banks of Colorado, Norwest Bank, Boston Safe Deposit & Trust Company, Vectra Bank (Pitkin County Bank & Trust Company), Bank of Colorado - Western Slope, U.S. Bank (Colorado National Bank), The Money Store, Colorado Federal Savings Bank, First Western Mortgage Corporation, Community Banks of Colorado, Zions First National Bank; Counties of Eagle, Garfield and Pitkin; Cities/Towns of Aspen, Basalt, Carbondale, Eagle, Glenwood Springs; U.S. Forest Service, U.S. General Services Administration, U.S. Bureau of Land Management, U.S. Postal Service; Colorado Division of Wildlife; Colorado Intergovernmental Risk Sharing Association (CIRSA). Approved By: Numerous lenders, U.S. General Services Administration, Colorado Department of Transportation. , Cerise Ranch Page 78 August 30, 2000 A PARCEL OF LAND SITUATED IN THE SW1/4SE1/4 SECTION 29, LOTS 2, 7, 8. 20. AND 21 SECTION 32, AND THE SW1/4NW1/4NE1/4 AND LOTS 1, 3, 14, 15, SECTION 33, TOWNSHIP 7 SOUTH, RANGE 87 WEST OF THE SIXTH PRINCIPAL MERIDIAN, COUNTIES OF GARFIELD AND EAGLE, STATE OF COLORADO; SAID PARCEL BEING MORE PARTICULARY DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHWEST CORNER OF SAID SECTION 33, A GARFIELD COUNTY SURVEYOR BRASS CAP IN PLACE, THE POINT OF BEGINNING THENCE S 8914'52" E ALONG THE NORTHERLY LINE OF SAID SECTION 33 A DISTANCE OF 2743.09 FEET TO THE NORTH QUARTER CORNER OF SAID SECTION 33, A REBAR AND CAP ILLEGIBLE FOUND IN PLACE AND REPLACED WITH A 3-1/4" ALUMINUM CAP L.S. #19598; THENCE LEAVING SAID NORTHERLY LINE S 01'41'36" W ALONG THE NORTH—SOUTH CENTERLINE OF SAID SECTION 33 A DISTANCE OF 664.14 FEET TO THE N—N—C 1/64TH CORNER OF SAID SECTION 33, A REBAR AND CAP L.S. #26626 IN PLACE; THENCE 5 89'20'01" E, "ALONG THE NORTHERLY UNE OF SAID SW1/4NW1/4NE1/4 A DISTANCE OF 688.32 FEET TO THE NW—NE 1/64TH CORNER OF SAID SECTION 33, A REBAR AND CAP L.S. #14111 IN PLACE; THENCE LEAVING SAID NORTHERLY LINE S 01'43'07" W ALONG THE EASTERLY LINE OF SAID SW1/4NW1/4NE1/4 A DISTANCE OF 663.71 FEET TO THE C—W—NE 1/64TH CORNER OF SAID SECTION 33 A REBAR AND CAP L.S. #14111 IN PLACE; THENCE N 8917'29" W ALONG THE SOUTHERLY LINE OF SAID SW1/4NW1/4NE1/4 A DISTANCE OF 688.02 FEET TO THE N—C 1/16TH CORNER OF SAID SECTION 33, A REBAR AND CAP L.S. #14111 IN PLACE AND REPLACED WITH A 3-1/4" ALUMINUM CAP L.S. #19598;THENCE N 89'17'29" W ALONG THE NORTHERLY LINE OF LOT 4 OF SAID SECTION 33 A DISTANCE OF 752.39 FEET TO THE NORTHWEST CORNER OF SAID LOT 4, A 3-1/4" ALUMINUM CAP L.S. #19598 SET IN PLACE; THENCE S 02'29'54" W 1146.11 FEET TO A POINT ON THE NORTHERLY RIGHT—OF—WAY OF STATE HIGHWAY NO. 82; THENCE ALONG SAID NORTHERLY RIGHT—OF—WAY ALONG THE ARC OF' A CURVE TO THE LEFT HAVING A RADIUS OF 2964.79 FEET AND A CENTRAL ANGLE OF 07'12'40", A DISTANCE OF 373.14 FEET, (CHORD BEARS N 75'48'46 W 372.89 FEET) TO A 3-1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID NORTHERLY RIGHT—OF—WAY N 80'48'38" W 213.65 FEET TO A 3— 1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID NORTHERLY RIGHT—OF—WAY N 81'30'58" W 1391.80 FEET TO A 3-1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID NORTHERLY RIGHT—OF—WAY N 81'30'58" W 1023.48 FEET TO A 3-1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID NORTHERLY RIGHT—OF—WAY ALONG THE ARC OF A CURVE TO THE LEFT HAVING A RADIUS OF 11359.16, AND A CENTRAL ANGLE OF 02'35'06", A DISTANCE OF 512.48 FEET (CHORD BEARS N 80'13'28" W 512.44 FEET) TO A 3-1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID RIGHT—OF—WAY N 79'35'18" W 872.26 FEET TO A 3-1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID NORTHERLY RIGHT—OF—WAY S 79'16'02" W 53.85 FEET. A 3-1/4" ALUMINUM CAP L.S. #20677 IN PLACE; THENCE CONTINUING ALONG SAID NORTHERLY RIGHT—OF—WAY N 78'55'58" W 228.74 FEET TO A POINT ON THE NORTH—SOUTH CENTERLINE OF SAID SECTION 32. A REBAR AND CAP L.S. #26626 IN PLACE; THENCE LEAVING SAID NORTHERLY RIGHT—OF—WAY N 01'41'14" E ALONG THE NORTH—SOUTH CENTERLINE OF SAID SECTION 32 A DISTANCE OF 1786.40 FEET TO THE NORTH QUARTER CORNER OF SAID SECTION 32, A STONE IN PLACE; THENCE N 03'25'23" E ALONG THE NORTH—SOUTH CENTERLINE OF SECTION 29 A DISTANCE OF 1363.93 FEET TO THE S—C 1/16TH CORNER OF SAID SECTION 29, A REBAR AND CAP L.S. #11204 FOUND IN PLACE AND REPLACED WITH A 3-1/4" ALUMINUM CAP L.S. #19598; THENCE S 89'26'18" E ALONG THE NORTHERLY LINE OF THE SW1/4SE1/4 OF SAID SECTION 29 A DISTANCE OF 1355.74 FEET TO THE SOUTH 1/16TH CORNER OF SECTION 29 AND SECTION 28 A 3-1/4" CAP L.S. #19598 SET IN PLACE (WHENCE A REBAR AND CAP L.S. #11204 BEARS N 26'16'56" E 2.05 FEET); THENCE S 04'43'14" W ALONG THE EASTERLY LINE OF SAID SW1/45E1/4 A DISTANCE OF 1376.63 FEET TO THE EAST 1/16TH CORNER OF SAID SECTION 29 AND SECTION 32, A 3-1/4" ALUMINUM CAP L.S. #26626 IN PLACE; THENCE S 88'58'20" E ALONG THE NORTHERLY LINE OF SAID SECTION 32 A DISTANCE OF 1324.03 FEET TO THE POINT OF BEGINNINQ; SAID PARCEL CONTAINING 300.978 ACRES, MORE OR LESS. Legal Description Before Exclusion of 4.6 -Acre Parcel Around Building Improvements Cerise Ranch Page 79 August 30, 2000 Comparable Sale Photographs Ranch Sale 1: 1262 Garfield County Road 100; Dennis & Nile Gerbaz Ranch Ranch Sale 2: 8076 Garfield County Road 113; Cattle Creek Ranch Cerise Ranch Page 80 August 30, 2000 Comparable Sale Photographs Ranch Sale 3: 3275 Garfield County Road 100; Preshana Ranch Sale 4: Garfield County Road 100; Coryell Ranch Cerise Ranch Page 81 August 30, 2000 Cerise Ranch Comparable Sale Photographs Ranch Sale 5: 1900 Garfield County Road 103; Douglas Cerise Ranch Project 1: Dakota & Eagle Dakota Subdivisions Page 82 August 30, 2000 Comparable Sale Photographs Project 2: Southside PUD Project 3: Willits (Sopris Meadows PUD) Cerise Ranch Page 83 August 30, 2000 Comparable Sale Photographs Project 4: Sopris Mesa Cerise Ranch Project 5: River Valley Ranch Page 84 August 30, 2000 Comparable Sale Photographs Large Acreage Lot Sale 1: Lot 45, Sopris Mountain Ranch Large Acreage Lot Sale 2: Lot 4, Barnes Exemption Cerise Ranch Page 85 August 30, 2000 Comparable Sale Photographs Large Acreage Lot Sale 3: Lot 1, Ten Peaks Mesa iim Cerise Ranch Large Acreage Lot Safe 4: Lot 11, Spring Park Meadows Page 86 August 30, 2000 Vectra Bank Colorado National Association Commercial Property Appraisal Engagement Letter July 13, 2000 High Country Appraisals Attention: Bill Gray PO Box 7 Carbondale, CO 81623 Dear Bill: Please prepare a (X) Complete Self -Contained or ( ) Complete Summary appraisal on the property described as follows: 200 Acres known as "Cerise Ranch" located 17072 Highway 82, Carbondale, CO Property Owner: Richard Cerise For Access, Contact: Jeff Spanel or Art Kleinstein Phone: Jeff - 970-949-4120 or Art - 303-941-4856 The report is to be prepared in accordance with Vectra Bank Colorado, N.A. Appraisal Standards I and II, and applicable sections of Standard III. The report must also conform to 12 CFR Part 34 (FIRREA) and adhere to the current version of the Uniform Standards of Professional Appraisal Practice (USPAP). Adherence to these specific standards should be stated in the Letter of Transmittal of the appraisal assigrment. You shall sign the appraisal report as the primary appraiser and shall personally inspect the subject and each of the comparable properties used in the report. All persons assisting in the collection of data and/or analysis of the appraisal shall be identified. Any person signing the report shall be state licensed or certified as appropriate for the property being appraised. Vectra Bank Colorado reserves the right to convey a copy of the appraisal to other parties. You may be requested to discuss the analysis in the appraisal report with us. The following are included to assist you in making this report: Legal Description Title Insurance Policy (Commitment) Plans and specifications for improvements (not optional for proposed) Operating statements Rent roll and/or leases Cost estimates Environmental audit Other: 273-0001 Rev. 11/97 Page 1 of 9 Cense Ranch Vectra Bank Engagement Letter and Attachments Page 87 August 30, 2000 The real property interest(s) to be appraised (are) marked as follows: Market Value in Fee Simple "As Is" Market Value in Leased Fee "As Is" Prospective Market Value in Fee Simple "At Completion" Prospective Market Value in Leased Fee "At Completion" Prospective Market Value in Leased Fee "At Stabilized Occupancy" Other: If all or partially owner occupied, value as if that portion were vacant. If, in your opinion, a value estimate which is not requested above is applicable, it is your responsibility to contact the officer ordering the appraisal before proceeding. In addition, if the appraisal is conceptually difficult, please contact and discuss issues of concern with the officer ordering the appraisal before completing this assignment. Please put copies of the signed Engagement Letter, Vectra Bank Colorado Appraisal Standards, and the Hazardous Waste and Americans With Disabilities Act Supplements in the addenda of your report. All copies are to contain original signatures and photos. Please send three (3) copies to the attention of the undersigned. Please contact the undersigned if you have questions regarding this engagement. In accordance with our verbal communication, your appraisal fee (inclusive of all expenses) for this assignment will not exceed $6,000. The report is to be delivered to the undersigned by August 28, 2000. Your signature below evidences your acceptance of this assignment. Thank you for your consideration in performing this assignment. Vectra Bank Colorado, N.A. laex7x/iApyod-Qt Dawn Thompson -Dunn Vice President - Commercial Lending 1380 S. Federal Blvd., Denver, cO 80219 Telephone #: 303-486-0940 Fax#: 303-922-7179 CC: Art Kleinstein, Jeff Spanel 273-0001 Rev. 11/97 Cerise Ranch I agree to complete the appraisal in accordance with these terms and instructions. Signature: Date of Signature: k -/y -vim State Certification Number: /3c 60c - Expiration Date: /2 -;/- Page 2 of 9 Vectra Bank Engagement Letter and Attachments Page 88 August 30, 2000 I. Vectra Bank Colorado, N.A. Appraisal Standards Commercial Properties Appraisal Development The attached appraisal engagement letter allows one type of appraisal assignment (complete). Development of this "complete" appraisal is to conform to the current version of the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Standards Board of the Appraisal foundation. The appraiser is expected to know and incorporate these requirements as they apply to the property being appraised. II. Reporting Options The attached appraisal engagement letter specifies the use of one of two reporting options (self-contained or summary). These reporting options are defined in Standards Rule 2-2(a) and 2-2(b) slid Statement 7 of the current version of the USPAP. Compliance with the required elements contained within said standards is required. USPAP requirements given special emphasis and/or additional requirements of VBC are summarized as follows: SELF-CONTAINED REPORT A. Include, in addition to the certification required by the USPAP, statements that (1) the appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan and (2) the appraisers state certification has not been revoked, suspended. canceled, or restricted. B. Include a legal description of the real estate being appraised. C. Summarize all value indications in the Letter of Transmittal, Executive Summary, and final Reconciliation. Ensure that all values requested in the letter of Engagement are itemized. D. Include estimated marketing time in the Letter of Transmittal. E. Indicate any special or specific assumptions or limiting conditions that are unique to the subject property. These assumptions/conditions should be set out separately from the general assumptions/conditions, and should be stated in the letter of transmittal. F. Include applicable state certification and/or registration license numbers and expiration dates in the Letter of Transmittal. G. Have 1 1/2 line spacing in narrative portions of the report. H. Indicate assessed value(s), tax rate, and tax amount for the subject as appraised. If not available (i.e., incomplete or proposed construction, etc.), an estimated tax amount should be indicated and supported. Land and improvement assessments should be shown separately, with additional comments on unusually high or low taxes and tax delinquencies, if applicable, also included. I. Include pertinent zoning information and a copy of the zoning map showing subject location. J. Indicate the community panel number and the effective date of the flood zone data. Include a copy of the flood map if located in a flood hazard area. K. Indicate any existing or potential wetland or other protected area. Please contact the officer ordering the appraisal prior to notifying any governmental agency. L. Contain photographs of (1) the subject property (interior and exterior), street scenes, and any items of major deferred maintenance or unusual characteristics; (2) improved comparable sales; (3) comparable rents. M. Contain sufficient maps and plats to show the location of the subject. Exhibits for the subject must include a site plan and (if applicable), a floor plan. Proposed construction must included reduced copies of pertinent building plans and elevations of the improvements. Include legible dimensions. The site plan should include, at a minimum, placement of building(s), parking areas, curb cuts, and relationship to frontage road(s). Label all maps, plats, and plans with north arrows. Assign page numbers to all exhibits. N. Contain detailed sale and rent comparable data sheets in the body of the report (not in the addenda), and include summary charts for each. The summary charts should include the subject data and itemize all corresponding comparable categories which are adjusted for in the adjustment process. 0. Include, for each land and building sale comparable, the listing price and associated exposure time for that listing price when available. This information should be utilized in determining an appropriate marketing time for the subject. 273-0001 Rev. 11/97 Page 3 of 9 Cense Ranch Vectra Bank Engagement Letter and Attachments Page 89 August 30, 2000 P. Indicate calculations for cash equivalency adjustments. Q. Indicate confirmation and/or source of land sales, improved property sales and rental information. It is not sufficient to state that additional data was considered without including it in the report. R. Contain maps to show locations of comparable land sales, improved building sales, and rental properties, as applicable. Plats are required for all commercial/industrial land sale comparables if the valuation is for land only. Label all maps and plats with north arrows. S. Include adjustment grids and narrative discussion/foundation for adjustments made for land sales and building sales. A narrative discussion of the adjustment process for rent comparables should also be provided. T. Value any portion of the subject which is owner -occupied or under a non -transferable lease as vacant. U. Complete and sign the Hazardous Waste and Americans With Disabilities Act supplements. If contamination and/or disability barriers exist, please contact the officer ordering this appraisal prior to notifying any governmental agency. V. Indicate if the subject is located in an earthquake or liquefaction zone; include map if available. 273-0001 Rev. 11/97 Page 4 of 9 Cense Ranch Vectra Bank Engagement Letter and Attachments Page 90 August 30, 2000 SUMMARY REPORT A. Include, in addition to the certification required by the USPAP, statements that (I) the appraisal assignment was not based on a requested minimum valuation. a specific valuation. or the approval of a loan and (2) the appraisers state registration/certification has not been revoked, suspended, canceled, or restricted. B. Identify and include a summary description of the subject site and improvements(s). Include a legal description. C. Summarize value conclusions(s) in reconciliation section. Ensure that all values requested in the Letter of Engagement are appropriately itemized. D. Include estimated marketing time. E. Indicate any special or specific assumptions or limiting conditions that are unique to the subject property. These assumptions/conditions should be set out separately from the general assumptions and limiting conditions. F. Include applicable state certification and/or registration license numbers and expirations dates. G. Have 1 '/z line spacing in narrative portions of the report. H. Indicate assessed value(s), tax rate, and tax amount for the subject as appraised. I. Summarize pertinent zoning information. I. Indicate the community panel number and the effective date of the flood zone data. K. Indicate any existing or potential wetland or other protected area. Please contact the officer ordering this appraisal prior to notifying any governmental agency if such conditions exist. L. Include subject property photographs. M. Include in the addendum of the appraisal, land sales, building sales and rent comparables data sheets as applicable. N. Include rent and sale comparable summary charts, as applicable, that itemize significant value influencing elements. Also include subject data on these summary charts. 0. Include appropriate adjustment grids which relate to land sales and building sales, with a summary explanation of the adjustment process for the rent comparable. P. Graphically illustrate applicable income approach calculations and provide a brief explanation relating to expenses, overall capitalization rates, discount rates, and/or income multipliers as appropriate. Q. Value any portion of the subject which is owner -occupied or under a non -transferable lease as vacant. R. Complete and sign the Hazardous Waste and Americans With Disabilities Act supplements. If contamination and/or disability barriers exist, please contact the officer ordering this appraisal prior to notifying any governmental agency. S. Indicate if the subject is located in an earthquake or liquefaction zone; include map reference number if available. III. REQUIREMENTS BY PROPERTY TYPE All applicable items noted in this section must be completed and be contained in either the appraisal report or in the appraiser's file based on the reporting option requested (self-contained or summary). Different property types call for different specific appraisal requirements. The following descriptions represent the minimum requirements for appraisals pertaining to the specific property type. A. Existing Income Properties: All appraisals on existing income properties must contain a summary of actual operating statements, together with a supported forecast of the most likely future financial performance of the property. Current and historical revenue, expenses, and vacancies are to be analyzed and indicated. With properties that arc leased, the appraiser must review all actual leases and lease addenda and comment on their quality and affect on value. A summary of all leases must be included in the report. If leases are not 273-0001 Rev. 11/97 Page 5 of 9 Cerise Ranch Vectra Bank Engagement Letter and Attachments Page 91 August 30, 2000 available, the rent roll must be checked with tenants for accuracy (state which tenants were surveyed). The summary must identify all salient features of the lease, including at a minimum: lessor/lessee, lease date, terms/renewals, current rent per square foot, concessions, escalations, services paid by the lessor, and vacant space. The summary should also include, when applicable: beginning rent per square foot, common area maintenance (CAM) charges, purchase options, expense stops, tenant improvement allowance (TIs), percentage rents, assignability, etc. Comparable leased fee sales and/or rent comparables should include these same features, when available, for comparison purposes. Include the following data for all income-producing improved sales, when available: potential gross income (PGI), vacancy and collection loss, effective gross income (EGO, expenses, and net operating income (NOI). All numbers are to be expressed as dollar ($) figures, with vacancy and expense numbers also expressed as percentages (%). State the potential gross income multiplier (PGIM), effective gross income multiplier (EGIM), and over-all capitalization rate (OAR) when available. Clearly indicate whether each number is actual or estimated as it applied at the time of sale. Please indicate the source of any estimated number (appraiser, owner, broker, etc.) Existing income producing properties which have not reached stabilized occupancy require an absorption period estimate and analysis of associated expenses necessary to reach stabilized occupancy. The value is applicable for income producing properties which have high vacancy and generate cash flows which are currently less than the potential cash flows under a stabilized leasing scenario, or are new with a lease -up period. A detailed discounted cash flow analysis which is reflective of the anticipated expenses and costs involved in attaining stabilized occupancy should be included. The effective date(s) of all valuation estimates must be clearly stated. B. Proposed Income Properties: Projects are to be analyzed as instructed for existing income properties (see III, A), as applicable. Any prospective values are to have effective valuation dates which correspond to the estimated date of completion and/or date when stabilized occupancy is attained. The effective date(s) must be clearly stated whenever the final valuation estimate is discussed. C. Discounted Cash Flow Analysis: The discounted cash flow analysis should, at a minimum, account for stabilization expenses such as marketing expenses and leasing commissions, tenant improvement costs typically provided by the lessor, operating expenses not covered by the occupied space, and any rental concessions required to achieve initial occupancy. Each tenant space must be itemized separately. There must be sufficient data and analysis provided so that the spreadsheet could readily be reconstructed by a third party. D. Subdivisions and Condominiums: On projects developed for sale to individual buyers the appraisal report must reflect all appropriate adjustments, deductions and discounts, and the anticipated cash flows to be derived from the disposition of the asset over time. Appropriate deductions and discounts are those that reflect all expenses associated with the disposition of the real property, and the cost of capital and entrepreneurial profit. E. Ground Leases: When the subject property involves a ground lease, the appraisal report must include a summary of all conditions of that lease. IV. ADDITIONAL STANDARDS Nothing contained above shall prevent VBC from requiring additional appraisal standards if deemed appropriate. 273-0001 Rev. 11/97 Page 6 of 9 Cense Ranch Vectra Bank Engagement Letter and Attachments Page 92 August 30, 2000 Vectra Bank Colorado, N.A. Hazardous Waste Supplement A. IDENTIFICATION Owner's Name(s) Humbert Cerise Family Company Property Address or Brief Description 170i82 Colorado Highway 82 Gafiel d County Date of Inspection July 24 . 2000 B. STORAGE TANKS [ ] Yes [x] No Are there any storage tanks on the property? If yes, please provide the following information for each tank. (Use additional pages if necessary.) Tank # 1 Is tank in use? [ ] Yes [ ] No [ ] Unable to determine Tank #2 Tank is: [ ] Above ground Tank is: [ ] Under ground Location: Location: What is/was tank used for? What is/was tank used for? What is the tank size? What is the tank size? C. COLLECTION SITES 1. Are there any open pits or dumps? 2. Are there any drain water evaporation ponds? 3. Are there any holding ponds with chemical waste effluents? If yes, please provide the following information for each pit/pond. Number of pits/ponds Size of each [ ] Yes [ ] No [ ] Unable to determine [ ] Above ground [ ] Under ground [ ] Yes [X] No 1 ] Yes [x] No [ 1 Yes [X] No 4. Is there any evidence of pollutants in the water or around the edges of the ponds? [ J Yes [x] No D. DRUMS/CONTAINERS AND/OR PESTICIDES 1. Are there any drums/containers (e.g. pesticides, oils, fuels, lubricants, paints, etc.? If yes, please provide the following on a separate attachment: a. A rough count by size (number of gallons) and type. b. Number of unlabeled drums. c. Evidence of spills or Teaks. d. Location of drums. 2. Is there any evidence or knowledge that any part of the property is or has been used for a pesticide application or chemical manufacturing business? If yes please explain on a separate sheet. E. ASBESTOS 1. Is there any evidence of asbestos at any of the improvements? 2. If yes, is the asbestos friable (subject to crumbling)? F. MISCELLANEOUS 1. Is there evidence of soil contamination or other noteworthy conditions which has not been previously discussed? If yes, please explain on a separate sheet. Examples of noteworthy conditions include gullies partially filled in or edges of mounds with containers exposed; top soil removed and/or soil does not support the same vegetation as the surrounding area; unexplained one inch (1") or bigger pipeline or any kind of opening with metal rim (a possible indicator of an underground storage tank.) 273-0001 Rev. 11/97 Page 7 of 9 Cense Ranch [ ] Yes [X] No [ ]Yes V]No [ ] Yes V] No [ ] Yes [ ] No [ ]Yes [x]No Vectra Bank Hazardous Waste Supplement Page 93 August 30, 2000 2. Is there evidence of soil contamination or other noteworthy conditions which has not been previously discussed? If yes, please explain on a separate sheet. Examples of noteworthy conditions include gullies partially filled in or edges of mounds with containers exposed; top soil removed and/or soil does not support the same vegetation as the surrounding area; unexplained one inch (1") or bigger pipeline or any kind of opening with metal rim (a possible indicator of an underground storage tank.) 3. Is there any evidence or knowledge of contamination from adjacent or nearby properties (e.g. property is located next to a crop duster operation or dump site)? If yes, please explain on a separate sheet. 4. Has an independent environmental study been performed on the subject property? If yes, have the main results been summarized in the appraisal report? G. APPRAISAL REPORT 1. Have storage and/or disposal site(s) been shown on the plat or site plan? 2. Does the existence, storage and/or disposal of any hazardous materials affect appraised value? If yes, please indicate how the appraised value is affected. [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [x] No [ ] Yes [x] No There are fuel storage tanks on the adjoining out—parcel. Agricultural uses include potentialfor contamination. Appraisal contingent on environmental 3. This report is true and correct to the best of my/our knowledge and belief. Date: August 30. 2000 Date: August 30, 7000 Appraiser survey. (Primary Appraiser) Appraiser By signing the above, the appraiser does not imply or represent that he/she has expertise in the field o environmental contamination. 273-0001 Rev. 11/97 Cense Ranch Page 8 of 9 Vectra Bank Hazardous Waste Supplement Page 94 August 30, 2000 Vectra Bank Colorado, N.A. Americans with Disabilities Act (ADA) Supplement The following questionnaire will help Vectra Bank Colorado determine the subject property's compliance or non- compliance to ADA. Please answer each question, "Yes", "No", or "Not Applicable" based on your inspection of the subject property. If explanation is needed, please attach additional sheets of paper. EXTERIOR BARRIERS 1. Are there cuts to allow access through the curb from the street and/or parking area? [ ] Yes [ ] No [X] NA 2. Are parking spaces for the disabled identified and located in the most convenient access [ ] Yes [ ] No K] -NA point to the facility entrance? 3. Is there an unobstructed wheelchair route from the parking area to the facility entrance? [ ] Yes [ ] No [$ NA 4. Are ramps provided across a portion of stairs that otherwise would be impassable? [ ] Yes [ ] No [fes] NA 5. Are landings at the top and bottom of ramps level and large enough to accommodate [ ] Yes [ ] No [(.] NA passage of a wheelchair or walker (5' x 5')? 6. Is there at least one entrance door accessible to disabled persons? [ ] Yes [ ] No []Cj NA INTERIOR BARRIERS I . Is the space between two doors in a series a minimum of 48" plus the width of any door [ ] Yes [ ] No ['4 NA swinging into the space? 2. If the facility has double doors, is at least one side of the double door a minimum width [ ] Yes [ ] No [is] NA of 32" and does it open at least 90 degrees? 3. Are door handles easy to grasp and can doors be easily opened with one hand? 4. Are there overhanging objects which would obstruct a blind person? 5. Are drinking fountains and restrooms accessible to persons in wheelchairs? 6. If elevators are present, are controls identified by Braille? Signature 273-0001 Rev. 11/97 Page 9 of 9 Cense Ranch []Yes []No[1,1NA [ ]Yes [ ]No [ic]NA [ ] Yes [ ] No [f,j NA [ ] Yes [ ] No [i.s] NA Date ,, u 1-1 2. Z a°15 Vectra Bank ADA Supplement 9S Page 44 August 30, 2000