HomeMy WebLinkAbout03.01 Binder 1 - Appendix B•
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FEES IN LIEU OF DEDICATION OF SCHOOL LAND.
The Owner shall make a cash payment in lieu of dedicating land to the Roaring Fork
School District, calculated in accordance with the Garfield County subdivision
regulations and the requirements of state law. According to the Subdivision Regulations
of Garfield County of 1984 as amended through March 2003, the cash in lieu payment is
equal to the unimproved per acre market value of the land multiplied by the land
dedication standard, multiplied by the number of units in the Subdivision. The Owner
and the BOCC acknowledge and agree that the cash in lieu payment for the Subdivision
is calculated as follows:
Unimproved per acre market value of land, based upon an
appraisal attached hereto and submitted to the BOCC by
Owner as required in the Garfield County subdivision
regulations: $7,400; and
Land dedication standard provided in the Garfield County
subdivision regulations: 50 single-family dwelling units x
0.02 acres plus 0 multi family dwelling units x 0.015 acres
equals 1.0 acres; and
Total amount of cash in lieu payment: $7,400 x 1.0 =
$7,400.
The Owner, therefore, shall pay to the Garfield County Treasurer, at or prior to the time
of recording of the Final Plat, Seven Thousand Four Hundred Dollars ($7,400) as a
payment in lieu of dedication of land to the Roaring Fork School District. Said fee shall
be transferred by the BOCC to the school district in accordance with the provisions of
§30-28-133, C.R.S., as amended, and the Garfield County subdivision regulations.
The Owner agrees that it is obligated to pay the above -stated fee, accepts such obligation,
and waives any claim that Owner is not required to pay the cash in lieu of land dedication
fee. The Owner agrees that Owner will not claim, nor is Owner entitled to claim,
subsequent to recording of the Final Plat, a reimbursement of the fee in lieu of land
dedication to the Roaring Fork School District.
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Property Appraisal
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COMPLETE APPRAISAL
OF REAL PROPERTY
Spring Valley Ranch
Planned 5,949 -Acre
Residential/Golf Course Community
In the Roaring Fork Valley
Garfield County, Colorado
IN A SELF-CONTAINED REPORT
As of September 8, 2005
Prepared For:
L.J. Melody & Company
1225 17th Street, Suite 3030
Denver, Colorado 80202
Prepared By:
Cushman & Wakefield of Colorado, Inc.
Valuation Advisory Services
1050 17th Street, Suite 1400
Denver, Colorado 80265-1050
C&W Job No. 2005-510019194
0111114 AN &
•mss,, WAKEFIELD®
1050 17th Street, Suite 1400
Denver, CO 80265-1050
(303) 813-6493 Tel
(303) 813-6499 fax
September 28, 2005
Mr. Baxter Fain
L.J. Melody & Company
1225 17th Street, Suite 3030
Denver, Colorado 80202
Re: Complete Appraisal of Real Property
Spring Valley Ranch
Planned 5,949 -Acre Residential/Golf Course Community
Garfield County, Colorado
Dear Mr. Fain:
In fulfillment of our agreement as outlined in the Letter of Engagement, Cushman &
Wakefield of Colorado, Inc. is pleased to transmit our self-contained appraisal report estimating
the as -is market value of the fee simple estate in the property referenced above. The property is
approved to be developed into a planned community consisting of 502 residential lots, 2 golf
courses (36 holes), clubhouse, equestrian center, 75 affordable housing units, and a village center
with commercial space. Planned residential use includes 171 golf -frontage lots ranging from
approximately 1 to 3 acres; 134 estate lots ranging from 3 to 12 acres; 91 ranch lots ranging from
18 to 58 acres; 75 cabins/cottages of 2,000 to 4,000 square feet each; 30 duplex/townhome units
on a single parcel; and the original ranch house located on approximately 30 acres. There will
also be an additional 75 affordable housing units in the Village Center. Total residential dwelling
units will be 577. The developer however intends to develop only 370 lots out of the 577 lots with
one 18 -hole golf course and one Par 3 executive course.
The value opinion reported below is qualified by certain assumptions, limiting conditions,
certifications, and definitions, which are set forth in the report. We particularly call your attention
to the following extraordinary assumptions and hypothetical conditions:
Extraordinary Assumptions:
• The Spring Valley Ranch Planned Unit Development has been approved by Garfield
County. A Preliminary Plan has been approved and a Final Plat for Phase I and a
Subdivision Improvement Agreement will be submitted. It is assumed that this Final Plat
and Subdivision Improvement Agreement will be approved prior to construction
commencement.
• It is assumed that the subject will be developed according to the development plans
presented in this appraisal, and that construction will commence no later than November
2005, the expiration of the approved Preliminary Plan.
Hypothetical Conditions: This appraisal employs no hypothetical conditions.
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Mr. Baxter Fain
L.J. Melody & Company
September 28, 2005
Page 2
• This report was prepared for L.J. Melody & Company and is intended only for its specified
use. It may not be distributed to or relied upon by other persons or entities without written
permission of Cushman & Wakefield of Colorado, Inc. The property was inspected by and the
report was prepared by Arod B. Javier. Guy DiRienzo, MAI, reviewed and approved the report.
The appraisal report complies with the Uniform Standards of Professional Appraisal Practice.
Based on our complete appraisal, we have formed an opinion that the market value of the
fee simple estate, as of September 8, 2005, was:
FORTY FOUR MILLION DOLLARS
$44,000,000
The value conclusion presumes an exposure period of 12 to 24 months. The marketing
period under these value conclusions is estimated at 12 to 24 months.
This letter is invalid as an opinion of value if detached from the report, which contains the
text, exhibits, and an Addenda.
Respectfully submitted,
Cushman & Wakefield of Colorado, Inc.
Valuation Advisory Services
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Jc
Arod
B. Javier
Associate Director
Colorado Certified General Appraiser
License No. CG40026961
arodjavier@cushwake.com
(303) 813-6493 Office Direct
(303) 813-6499 Fax
Guy DiRienzo, MAI
Managing Director
Colorado Certified General Appraiser
License No. CG40004774
guy_dirienzo@cushwake.com
303 813 6443 Office Direct
(303) 813-6499 Fax
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Property Name:
Location:
General Overview:
Assessor's Parcels, Size
Parcel No.
2187-211-00-137
2187-161-00-138
2187-262-00-135
2187-154-00-136
2187-142-00-114
Total Land Area:
Zoning:
and Ownership:
Size (Acres)
3,280.00
1,231.00
1,204.00
193.65
40.00
5,948.65 acres
Spring Valley Ranch (formerly known as
Chenoa and Aspen Springs Ranch)
Approximately 5 miles east of Glenwood
Springs, and 4 miles northeast of State
Highway 82, north of the intersection of
County Roads 114 and 115, in the Roaring
Fork Valley, Garfield County, Colorado
The property is approved to be developed into
a planned community consisting of 502
residential Tots, 2 golf courses (36 holes),
clubhouse, equestrian center, 75 affordable
housing units, and a village center with
commercial space. Planned residential use
includes 171 golf -frontage lots ranging from
approximately 1 to 3 acres; 134 estate lots
ranging from 3 to 12 acres; 91 ranch lots
ranging from 18 to 58 acres; 75
cabins/cottages of 2,000 to 4,000 square feet
each; 30 duplex/townhome units on a single
parcel; and the original ranch house located
on approximately 30 acres. There will also be
an additional 75 affordable housing units in •
the Village Center. Total residential dwelling
units will be 577. The developer however
intends to develop only 370 Tots out of the 577
lots with one 18 -hole golf course and one Par
3 executive course.
Owner
Spring Valley Development, Inc.
Spring Valley Development, Inc.
Spring Valley Holding USA, Ltd.
Spring Valley Holding USA, Ltd.
Atlantic Gulf Communities Corp.
A PUD was approved in 1984 allowing 2,750
residential dwelling units, 300 resort hotel
rooms, 36 holes of golf, 150,000 square feet
of commercial space, and 3,270 acres of
open space. A PUD Amendment was
approved in August 2000 for 502 residential
dwelling units, 75 affordable housing units, 36
holes of golf, an equestrian center, 20,000
square feet of commercial space, and 3,916
acres of open space.
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Summary of Salient Facts and Conclusions
Highest and Best Use:
Interest Appraised:
Date of Value:
Date of Inspection:
Value Indicators:
Sales Comparison Approach:
Subdivision Development Method:
Value Conclusion:
Per Acre:
A Preliminary Plan for the planned community
described above (in General Overview) has
also been recently approved by the Garfield
County Planning and Zoning Board. It is
assumed that the Final Plat will be approved.
Residential subdivision and golf course
community as described above.
Fee Simple Estate
September 8, 2005
September 8, 2005
$45,200,000
$42,500,000
$44,000,000
$7,397
Exposure Time Implicit
In Market Value Estimates: 12 to 24months
• Estimated Marketing Time: 12 to 24 months
Extraordinary Assumptions and Hypothetical Conditions
Extraordinary Assumptions
An extraordinary assumption is defined by the USPAP (2005 Edition, The Appraisal Foundation)
as "an assumption, directly related to a specific assignment, which, if found to be false, could
alter the appraiser's opinions or conclusions. Extraordinary assumptions presume as fact
otherwise uncertain information about physical, legal or economic characteristics of the subject
property; or about conditions external to the property, such as market conditions or trends; or
about the integrity of data used in an analysis."
• The Spring Valley Ranch Planned Unit Development has been approved by Garfield
County. A Preliminary Plan has been approved and a Final Plat for Phase I and a
Subdivision Improvement Agreement will be submitted. It is assumed that this Final Plat
and Subdivision Improvement Agreement will be approved prior to construction
commencement.
• It is assumed that the subject will be developed according to the development plans
presented in this appraisal, and that construction will commence no later than November
2005, the expiration of the approved Preliminary Plan.
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Summary of Salient Facts and Conclusions
Hypothetical Conditions
A hypothetical condition is defined by the USPAP (2005 Edition, The Appraisal Foundation) as
"that which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical
conditions assume conditions contrary to known facts about physical, legal, or economic
characteristics of the subject property; or about conditions external to the property, such as
market conditions or trends; or about the integrity of data used in an analysis."
This appraisal employs no hypothetical conditions.
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TABLE OF CONTENTS
Page
INTRODUCTION 1
Identification of Property 1
Property Ownership and Recent History 1
Purpose and Intended Use of the Appraisal 2
Extent of the Appraisal Process 2
Dates of Value, Property Inspection, and Report Transmittal 3
Property Rights Appraised 3
Definitions of Value, Interest Appraised and Other Terms 3
REGIONAL ANALYSIS 5
LOCAL MARKET AREA ANALYSIS 19
PROPERTY DESCRIPTION 24
REAL PROPERTY TAXES AND ASSESSMENTS 31
ZONING, DISTRICTS AND LAND USE RESTRICTIONS 33
RESIDENTIAL MARKET ANALYSIS 34
GOLF MARKET ANALYSIS 42
• HIGHEST AND BEST USE 53
VALUATION PROCESS 55
SALES COMPARISON APPROACH 57
SUBDIVISION DEVELOPMENT METHOD 63
RECONCILIATION AND FINAL VALUE ESTIMATE 75
MARKETING PERIOD 76
ASSUMPTIONS AND LIMITING CONDITIONS 77
SPECIAL ASSUMPTIONS AND LIMITING CONDITIONS 80
CERTIFICATION OF APPRAISAL 81
ADDENDA 82
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VALUATION SERVICESijI1CUS WAKEFIELD.
INTRODUCTION
Identification of Property
The subject of this appraisal consists of a 5,948.65 -acre planned residential and golf course
development known as the Spring Valley Ranch, located approximately 5 miles east of Glenwood
Springs, and 4 miles northeast of State Highway 82, north of the intersection of County Roads 114
and 115, in the Roaring Fork Valley, Garfield County, Colorado. The property has previously been
known as Chenoa and Aspen Springs Ranch.
The property is approved to be developed into a planned community consisting of 502
residential Tots, 2 golf courses (36 holes), clubhouse, equestrian center, 75 affordable housing
units, and a village center with commercial space. Planned residential use includes 171 golf -
frontage lots ranging from approximately 1 to 3 acres; 134 estate lots ranging from 3 to 12 acres;
91 ranch lots ranging from 18 to 58 acres; 75 cabins/cottages of 2,000 to 4,000 square feet each;
30 duplex/townhome units on a single parcel; and the original ranch house located on
approximately 30 acres. There will also be an additional 75 affordable housing units in the Village
Center. Total residential dwelling units will be 577. The developer however intends to develop
only 370 lots out of the 577 lots with one 18 -hole golf course and one Par 3 executive course.
The Garfield County Assessor's Parcel Numbers are 2187-211-00-137, 2187-161-00-138,
2187-262-00-135, 2187-154-00-136, and 2187-142-00-114. The legal description is presented
in the Addenda.
Property Ownership and Recent History
Current ownership is summarized as follows:
Parcel No. Size (Acres) Owner
2187-211-00-137 3,280.00 Spring Valley Development, Inc.
2187-161-00-138 1,231.00 Spring Valley Development, Inc.
2187-262-00-135 1,204.00 Spring Valley Holding USA, Ltd.
2187-154-00-136 193.65 Spring Valley Holding USA, Ltd.
2187-142-00-114 40.00 Atlantic Gulf Communities Corp.
5,948.65
Aspen Springs Ranch, Inc. acquired 4,511 acres (Parcels 2187-211-00-137 and 2187-
161-00-138) from Spring Valley Holding USA, Ltd. on September 3, 1998, for $17,000,000
($3,769 per acre) via General Warranty Deed (Book 1087, Page 195). The ownership name
was subsequently changed from Aspen Springs Ranch, Inc. to Spring Valley Development, Inc.
An Exchange Agreement, dated July 1998, exists between Spring Valley Development,
Inc. and Spring Valley Holding USA, Ltd., which has retained an ownership interest in the
1,397.65 acres (Parcels 2187-262-00-135 and 2187-154-00-136) in exchange for 22 golf -
frontage lots, 22 estate lots, and 4 ranch lots, for a total of 48 lots. These parcels, however,
recently transferred for $9,000,000, which equates to $6,439.38 per acre.
Atlantic Gulf Communities Corp. acquired the 40 acres (Parcel 2187-142-00-114) from
Wayne Rudd on October 4, 1999, for $680,000 ($17,000 per acre) via Warranty Deed (Book
VALUATION SERVICES 1 00i CSHMA
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Introduction
• 1153, Page 511). Atlantic Gulf Communities Corp. and Spring Valley Development, Inc. are
related entities.
In 1984, a Planned Unit Development was approved allowing 2,750 residential dwelling
units, 300 resort hotel rooms, 36 holes of golf (2 golf courses), 150,000 square feet of
commercial space, and 3,270 acres of open space. On August 15, 2000, a PUD Amendment
was approved allowing 502 residential dwelling units, 75 affordable housing units, 36 holes of
golf, an equestrian center, 20,000 square feet of commercial space, and 3,916 acres of open
space. A Preliminary Plan has been approved by the Garfield County Planning and Zoning
Board. It is assumed the Final Plat and Subdivision Improvement Agreement will be approved.
The entire subject site at 5,948.65 acres is currently under contract for a total of
$25,000,000 or $4,202 per acre. The seller had earlier foreclosed on the project, formerly
known as Chenoa. The property is being sold by a motivated seller, a lender who foreclosed on
the project a few years ago. The asking price has been maintained over the years, and the
current contract price is considered to be well below market, hence, the difference in our value
conclusion and the current contract price.
Purpose and Intended Use of the Appraisal
The purpose of this appraisal is to estimate the market value of the fee simple estate. It is
our understanding the appraisal will be used by the Client for internal purposes.
Extent of the Appraisal Process
• In the process of preparing this appraisal, we:
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• Inspected the subject site accompanied by a representative of the owner;
• Reviewed detailed descriptive data, development plan, marketing materials, lot
prices, membership program, and the developer's proforma revenue and expenses;
• Analyzed regional and local market area characteristics and trends, reviewed
assessment and property tax data, and researched market trends;
• Determined the highest and best use;
Conducted market inquiries into recent sales of large ranches and planned
communities, made appropriate adjustments to the sales prices per acre in
comparison to the subject, concluded an adjusted price per acre and applied that to
the subject (Sales Comparison Approach);
• Conducted market research of lot prices, membership rates, development costs,
operating expenses, and other income and expenses among competing and
comparable developments;
• Projected revenues, development costs, operating expenses, and net cash flows
over a typical holding period.
VALUATION SERVICES
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Introduction
• Discounted cash flows to a net present value.
• Reconciled the approaches and concluded the market value.
Dates of Value, Property Inspection, and Report Transmittal
Date of Inspection:
Date of Value:
Date Report Transmitted:
September 8, 2005
September 8, 2005
September 28, 2005
Property Rights Appraised
We have appraised the fee simple interest in the subject property.
Definitions of Value, Interest Appraised and Other Terms
The following definitions of pertinent terms are taken from The Dictionary of Real Estate
Appraisal, Fourth Edition (2002), published by the Appraisal Institute, as well as other sources.
Market Value
Market value is one of the central concepts of the appraisal practice. Market value is
differentiated from other types of value in that it is created by the collective patterns
of the market. A current economic definition agreed upon by agencies that regulate
federal financial institutions in the United States of America follows, taken from
Advisory Opinion -22 of USPAP of The Appraisal Foundation:
The most probable price which a property should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and seller, each acting
prudently and knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in what they consider
their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in US dollars or in terms of financial
arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold unaffected
by special or creative financing or sales concessions granted by anyone
associated with the sale.
Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject only to
the limitations imposed by the governmental powers of taxation, eminent domain,
police power, and escheat.
VALUATION SERVICES 3
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Introduction
Leased Fee Interest
An ownership interest held by a landlord with the rights of use and occupancy
conveyed by lease to others. The rights of the lessor (the leased fee owner) and the
lessee are specified by contract terms contained within the lease.
Leasehold Interest
The interest held by the lessee (the tenant or renter) through a lease transferring the
rights of use and occupancy for a stated term under certain conditions.
Market Rent
The most probable rent that a property should bring in a competitive and open
market reflecting all conditions and restrictions of the specified lease agreement
including term, rental adjustment and revaluation, permitted uses, use restrictions,
and expense obligations; the lessee and lessor each acting prudently and
knowledgeably, and assuming consummation of a lease contract as of a specified
date and the passing of the leasehold from lessor to lessee under conditions
whereby:
1. Lessee and lessor are typically motivated.
2. Both parties are well informed or well advised, and acting in what they
consider their best interests.
3. A reasonable time is allowed for exposure in the open market.
4. The rent payment is made in terms of cash in United States dollars, and is
expressed as an amount per time period consistent with the payment
schedule of the lease contract.
5. The rental amount represents the normal consideration for the property
lease unaffected by special fees or concessions granted by anyone
associated with the transaction.
Cash Equivalence
A price expressed in terms of cash, as distinguished from a price expressed totally
or partly in terms of the face amounts of notes or other securities that cannot be sold
at their face amounts. Calculating the cash -equivalent price requires an appraiser
to compare transactions involving atypical financing to transactions involving
comparable properties financed at typical market terms.
Value As Is
The value of specific ownership rights of an identified parcel of real estate as of the
effective date of the appraisal; relates to what physically exists and excludes all
assumptions concerning hypothetical conditions.
VALUATION SERVICES 4 ,HII%CUSHMAN&
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REGIONAL ANALYSIS
A variety of factors and forces within a given region influence the short and Tong -term value
of real estate. Regional analysis serves to identify those forces affecting property value and the
role they play within the region. The four primary forces influencing real property value include
environmental characteristics, governmental forces, social factors and economic trends. These
forces determine supply and demand for real property and in turn affect market value.
The subject is located in Garfield County, but is influenced by economic conditions in
Garfield, Eagle and Pitkin Counties. The three counties intersect just south of the subject,
between the Towns of Carbondale and Basalt. We have included an analysis of each regional
area. We focused our analysis on Garfield County and the City of Glenwood Springs.
GLENWOOD SPRINGS/GARFIELD COUNTY
The subject is located near Glenwood Springs, the county seat of Garfield County. Garfield
County is located in west -central Colorado and extends from the Continental Divide, along the
Colorado River Valley, to the Colorado -Utah border. The county measures over 100 miles east to
west and covers an area of nearly 3,000 square miles. A majority of the county consists of rugged
mountainous terrain, with elevations ranging from 5,000 to 10,000 feet. Approximately 68 percent
is federally owned. Of the remaining privately owned land, most is concentrated in the river
valleys, along the 1-70 or Highway 82 corridors. Federal ownership does not preclude all
activities, and much of the federal land is used extensively. Both the Bureau of Land
Management and the National Forest Service implement a practice of multiple use for public lands
in addition to the protection of their natural resources. Public and commercial timbering, livestock
grazing, oil and gas exploration, and recreation are the primary activities allowed on these lands.
Glenwood Springs is in the eastern portion of Garfield County, approximately 150 miles west
of Denver and 90 miles east of Grand Junction. The elevation of Glenwood Springs is
approximately 5,750 feet above sea level. Glenwood was founded in 1885 as a resort and health
spa, and still retains that influence. Located at the confluence of the Colorado and Roaring Fork
Rivers, the area features a hot springs pool that serves as the main attraction for the city. The
area has a relatively mild alpine climate with very low humidity during the summer months.
Average precipitation is 16.5 inches, and the average annual snowfall is 67 inches.
Transportation
Access to the region is restricted by mountainous terrain and adverse winter weather
conditions. However, access is considered good compared to other mountainous areas of the
state, due to Interstate 70. 1-70 bisects the region east to west and serves as the primary access
route to the major population centers of Grand Junction and Denver. 1-70 bisects the city and
serves as the primary east -west freeway that intersects with Interstate 15 in Utah to the west and
Interstate 25 in Denver to the east. U.S. Highway 82 leads from Glenwood Springs to Aspen, a
world famous ski resort, approximately 40 miles southeast.
VALUATION SERVICES
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Regional Analysis
In 1992, 1-70 was completed to interstate standards through Glenwood Canyon, just east of
Glenwood Springs, and considered a significant improvement in accessibility. Construction
through this canyon had been ongoing for 10 years and was marked by long construction -related
traffic delays. Even with completion of the freeway, access from the east can be difficult because
of the mountainous location. The roadway passes through the Eisenhower Tunnel and over Vail
Pass to the east. These high altitude roadways can make access difficult during adverse winter
weather conditions. Even so, the 1-70 Glenwood Canyon highway construction was considered a
major achievement in highway construction technology and completed the east -west connection
for 1-70.
With the exception of a small municipal airport, air travel to the Glenwood Springs is not very
convenient, but there are several options available within 90 miles. Airports in the region offering
commercial service include Walker Field in Grand Junction (90 miles west), the Garfield County
Airport near Rifle (25 miles west), the Aspen Airport (40 miles southeast), and the Eagle County
Airport (25 miles east).
Amtrak provides daily rail passenger service to the region with a stop in Glenwood Springs.
Bus service within the Roaring Fork Valley is provided 14 times daily from Aspen to Glenwood
Springs by RFTA. A shuttle is available to the Sunlight Mountain Resort, 10 miles south.
Population
Over the last three decades, net migration has been the primary source of population
growth. Both Glenwood Springs and Garfield County experienced dramatic growth from 1970 to
1990. Growth was strong in Garfield County during the 1990s, as Colorado emerged from a
recession lasting from the mid-1980s to the early -1990s. In Glenwood Springs, growth has
slowed dramatically since 1995. Growth is expected to moderate somewhat through following
five years. The following chart based on Census Demographic Data and Equifax National
Decision Systems (ENDS) tracks population growth in Glenwood Springs and Garfield County
between 1980 and 2000.
Year
Glenwood Springs
Compounded
Annual
Increase
Garfield County
Compounded
Annual
Increase
1980
3,194
---
22,514
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1990
6,571
7.5%
29,974
2.9%
1995
7,521
2.7%
35,722
3.6%
2000
7,736
0.6%
43,791
4.2%
2003 (Est.)
8,093
1.5%
48,341
3.3%
2008 (Proj.)
8,663
1.4%
55,452
2.8%
Source: State of Colorado, US Census and Claritas Inc.
VALUATION SERVICES 6 CUSHMA
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Regional Analysis
As shown by the most current data available, Glenwood Springs comprises approximately
17% of the population in Garfield County. The percentage has been decreasing, as
unincorporated areas of the County have been outpacing the growth of Glenwood Springs. The
decrease is the result of a surge in residential development just outside of Glenwood Springs,
particularly toward the west, along Interstate 70 toward Rifle, and along Highway 82, in the
Roaring Fork Valley toward Aspen.
Glenwood Springs is the most -populated community in Garfield County. Unincorporated
areas account for a majority of Garfield County's population. Rifle and Carbondale are the next -
most populated towns with 2003 estimated populations of 7,377 and 5,871 respectively. Much of
the unincorporated population lives near Glenwood Springs.
Economic Base
Agriculture and mining were the dominant economic activities in the early 1900s. In the
1950s, tourism became an important part of the county's economy. Proximity to ski areas, the Hot
Springs Pool, and excellent big game hunting and fishing attracted many residents and visitors to
the area. During the 1970s and early 1980s, the region experienced a surge in oil shale
exploration in central Garfield County at Parachute. The oil shale activity was short-lived and
today the County has returned to primarily an agricultural and service -related (tourism) economy.
Since most of the area's population and activity is concentrated along the river valleys, the
majority of the county remains rural in nature. Tourism (services) and retail trade, are the major
employment sectors in this economy. According to a recent State survey, the major employment
sectors were nearly equally divided between Construction, Retail Trade, Services, and
Government and totaled nearly 85 percent of all jobs. Because of extensive residential
construction during the past several years, construction employment has also remained high. The
unemployment rate as of December 2004 was 5.1 percent compared with the national average of
5.4 percent. A summary of the breakdown for wage and salary employment for Garfield County
from 1999 and 2003 is shown on the following chart.
Compounded Annual
Employment Sector 1999 2003 % Change
Agri., Forestry, Fish & Mining 534 565 1.4%
Construction 2,875 2,991 1.0%
Manufacturing 475 407 -3.8%
Trans., Comm., Util. 555 513 -1.9%
Wholesale Trade 654 606 -1.9%
Retail Trade 4,457 4,586 0.7%
Fin., RE, Ins. 988 949 -1.0%
Services 4,474 5,671 6.1%
Government 3,149 3,767 4.6%
Total 18,161 20,055 2.5%
Source: State of Colorado Dept. of Labor and Employment
VALUATION SERVICES 7
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Regional Analysis
The labor force has been growing at a slow pace since 1999. The Services and Government
sectors experienced the largest growth from 1999 to 2003. Services grew in large part to
increases in health care while a 5.6 percent annual rate of growth in Local government contributed
to the overall increase in the Government sector. Overall, employment grew by an average
annual rate of 2.5 percent between 1999 and 2003.
Retail sales are another indicator of the economic health of an area. We have researched
historical retail sales data for Glenwood Springs and Garfield County, shown as follows.
Year
Garfield
County
(000,000)
Glenwood
Springs
(000,000)
2000
$1.158.6
$660.1
2003
$1,246.6
$660.5
Avg. Annual Growth
2.5%
0.02%
Source: State of Colorado Dept. of Revenue
Since 2000, Glenwood Springs' retail sales have remained relatively flat, while Garfield
County has increased slightly. This is partly due to the development of neighborhood shopping
centers in other communities in the region, such as New Castle, Carbondale and Basalt, thus
limiting Glenwood Springs' historical role as the regional shopping area.
Tourism
Garfield County is on the western edge of some of the most popular mountain tourist areas in
the State, including Glenwood Springs, extending south 40 miles to Aspen (Pitkin County) and
east 50 miles to Beaver Creek and 60 miles to Vail (both Eagle County). During the winter
months, the only land route to Aspen is through Glenwood Springs. With the continuing increase
in skier visits, the local economy is impacted positively by tourism nearly year-round.
Glenwood Springs is renowned mainly for its Hot Springs Pool, the world's largest. Statistics
show that this is ranked as one of Colorado's top ten most popular attractions. The City also
boasts a small ski area, Sunlight, which is less than 10 miles and generally has between 70,000 —
100,000 skier -visit days annually. By way of comparison, Vail has over 1.5 million skier -visit days
per year. Other tourist attractions include rafting, golf, various winter sports, hunting and fishing.
Residential Building Permits
Construction levels are another indicator of an economy's strength. The following chart
shows residential construction permits for the past seven years.
1997
1998
1999
2000
2001
2002
2003
Garfield County
185
Glenwood Springs 34
314
42
635
91
193
141
161
57
156
74
118
34
Source: State of Colorado Dept. of Commerce & City of Glenwood Springs Community Development Dept.
VALUATION SERVICES 8
0014 CUSHMAN &
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Regional Analysis
The height of construction activity was in 1999, as 635 building permits were issued in
Garfield County. Of these, 70 were multifamily and the remainder was single family. Since 1999,
the overall number of permits for both Garfield County and Glenwood Springs has decreased.
In 2004, the Glenwood Springs Post Independent reported 1,903 real estate transactions
including residential, commercial and land in Garfield County. This figure represents an increase
of 1.6 percent from the 1,873 real estate transactions occurring in 2003. While not a significant
increase, the dollar value of these transactions went from $433 million in 2003 to $573 million in
2004, a 33 percent increase. The increase in dollar value is attributed to increased activity in the
high-end residential market.
Services and Government
There is a full complement of services provided by Glenwood Springs including an adequate
number of churches, parks, a hospital, nursing homes, museums, and other various community
programs. The Glenwood Springs area is served by a variety of utilities: The Rocky Mountain
Gas Company provides natural gas; Qwest supplies local telephone service; and the City of
Glenwood Springs provides water, sewer and electrical service. Utility services in the subjects
immediate area are adequate and have ample capacity to accommodate developments such as
the subject property. Other public services, including full-time police and fire protection, trash
service, street repairs, and snow plowing services are provided by Glenwood Springs.
Summary — Garfield County/Glenwood Springs Area
In summary, the outlook for the Garfield County/Glenwood Springs is generally positive,
with moderate growth increases forecast for population and employment. Colorado's economy
continues to grow, but at a slowing rate. Garfield County and Glenwood Springs are directly
impacted by the growth in the State, and are expected to exhibit slowing growth as well.
During the past several years, the real estate market has been relatively flat. According to
local area real estate professionals, the outlook for the real estate market looks positive and the
increases seen in dollar values noted above may also signal a stronger increase in activity.
Glenwood Springs and Garfield County have directly benefited from its location in the Roaring
Fork Valley and the continued growth of tourism, including the ski industry, and the City's
reputation as a regional, affordable retail hub. The continuation of a healthy business climate, as
well as its economic stability, should ensure a favorable environment for real estate
development and investment for the foreseeable future.
VALUATION SERVICES
9 A CUSHMAN &
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Regional Analysis
• ASPEN/PITKIN COUNTY
Aspen is located in Pitkin County in the mountainous region of west -central Colorado, 200
miles southwest of the Denver metropolitan area. Aspen is the county seat and centrally located
within Pitkin County. Aspen is approximately 40 miles southeast of Glenwood Springs. Pitkin
County borders Garfield County.
A majority of Pitkin County is located within the White River National Forest, with the
populated regions in the Roaring Fork River Valley. Aspen, with an elevation of 7,908 feet above
sea level, is set in a flat valley floor surrounded by mountains on three sides. Four ski areas
(Aspen Mountain, Aspen Highlands, Buttermilk and Snowmass) are located within the County in
the Aspen area and provide the major economic base for the area.
•
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Economic Base
The Aspen/Pitkin County economy is primarily based on tourism/recreation. Aspen is
internationally known as a ski resort set in an historic Victorian mining town. The ski areas
account for 1.35 million skier visits annually. As with most Colorado ski resorts, Aspen is
attempting to increase its status as a year-round resort. The County's largest private seasonal
employer is the Aspen Skiing Corporation, with employment of over 2,300 during the ski season.
Ski area employment drops to approximately 760 during the summer.
Employment varies significantly during the year. According to the Colorado Department of
Labor and Employment, the County's labor force in January 2004 was 10,781 with an
unemployment rate of 2.6 percent. In contrast, the County's labor force decreased to 9,472 in
June 2004 with an unemployment rate of 5.0 percent. 2nd Quarter figures for 2004 indicate that the
Services sector, which includes jobs in tourism, lodging, restaurants and related businesses
comprised approximately 37 percent of employment and Retail Trade accounted for
approximately 10 percent.
Lodging occupancy rates also provide an indication of the seasonal economic trends.
Average occupancy typically peaks at approximately 85 percent in March, declines to 35 percent
in May, increases to 85 percent again in August and decreases to the lowest point in November at
approximately 20 percent.
Pitkin County's top ten employers are as follows:
Employer Summer Employees Winter Employees
Aspen Skiing Company 760 2,320
Pitkin County 1,100 1,182
St. Regis Hotel 350 375
Aspen Valley Hospital 305 305
Little Nell Hotel 240 280
City Market 200 200
Hotel Jerome 170 170
Clark's Market 150 150
Aspen School District 24 140
Coates, Reid and Waldron 60 120
VALUATION SERVICES 10
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Regional Analysis
Ski Areas
The four local ski areas are all relatively close to Aspen. Aspen Mountain is located on the
south side of Aspen and is the oldest local ski area. Snowmass is the largest of the four (in size
and number of ski visits) and is located approximately 10 miles northwest of Aspen. Both
Buttermilk and Aspen Highlands are located just west of Aspen. Information pertaining to the four
local ski areas is summarized as follows.
Ski Area Characteristics
Aspen
Highlands
Aspen
Mountain
Snowmass
Buttermilk
Opening Date
1958
1946
1967
1958
Base Elevation
8,040
7,945
8,104
7,870
Summit Elevation
11,675
11,212
12,510
9,900
Vertical Rise
3,635
3,267
4,406
2,030
Number of Lifts
4
8
21
9
Skiable Terrain (acres)
790
673
3,100
430
Total # of Trails
130
76
87
42
Opening Date (varies)
Dec. 10
Nov. 25
Nov. 25
Dec. 11
Closing Date (varies)
Apr. 4
Apr. 10
Apr. 10
Apr. 3
Source: Colorado Ski Country USA
Historical skier visits to the four local ski areas are summarized as follows:
Historical Skier Visits
1999/2000
2000/2001
2001/2002
2002/2003
2003/2004
Skier Visit Days (in
millions)
1,324
1,349
1,268
1,313
1,323
Percentage Change
-7.4%
+1.9%
-6.0%
+3.6%
+0.8%
ource: Colorado Ski Country USA
Skier visits decreased substantially in the 1999/2000 season from previous years due to
higher ticket prices and low snowfall rate. The small gain in the 2000/2001 season, was offset the
following season due primarily to the events of 9/11 and the resulting effects on the economy and
travel industry. Skier visits have shown moderate gains since the 2001/2002 season and
Colorado Ski Country USA reports an 8.10 percent increase for the 1St period of the 2004/2005
season compared to the same period last year. The increase for the current ski season is
attributed to favorable ski conditions and positive trends in the economy.
VALUATION SERVICES
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t . WAKEFIELD,
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Regional Analysis
An increase in clothing sales, restaurant/bar sales and general retail sales indicates that
many tourists are traveling to Aspen for various reasons aside from skiing. For example, during
the 1998/1999 season, skier visits decreased 8.3 percent while retail sales increased 7.0 percent
and 12 -month lodging average occupancy remained stable at 62 percent.
Other Recreation
Besides four ski areas, Pitkin County has a wide assortment of recreational activities. Aspen
has over 27 public parks, including four baseball fields, an indoor swimming pool, two tennis
courts and an ice skating rink. Also, there are two 18 -hole public golf courses, one in Aspen and
the other in Snowmass Village. The Maroon Creek Club, a private 18 -hole course, was
constructed in 1996 on the western edge of Aspen. Other area recreational activities include
mountain biking, hiking, camping, white -water rafting, four -wheeling, hunting, fishing, and cross-
country skiing.
In addition, there are several festivals and cultural centers and events that attract visitors
year-round. Shopping and restaurant/bars are abundant and becoming more popular. Aspen's
downtown is a destination area with numerous shops, galleries, restaurants and bars.
The towns of Basalt and Carbondale, down the Roaring Fork Valley to the northwest, are
becoming areas offering cultural and recreational activities, in addition to Aspen and Snowmass.
Commercial development has increased, and several golf courses have been constructed in the
past several years. Due to the limited land availability in Aspen, and the extremely high prices for
land, services, commercial space, residences, etc., the communities down valley have benefited.
Population
Aspen showed strong population growth during the late 1980s. In the 1990s, population
has steadily increased at a moderate rate. Growth rates in Aspen and the County have been
similar. The following chart tracks population in Pitkin County and Aspen from 1980 to 2003.
Year
Aspen
Annual
% Change
Pitkin
County
Annual
% Change
1980
3,678-
10,338
-
1990
5,049
3.2%
12,661
2.0%
2000
5,914
1.6%
14,872
1.6%
2003 (Est.)
6,079
0.9%
15,655
1.7%
Source: State of Colorado and US Census
Though the permanent resident population is approximately 6,000 in Aspen, the greater
Aspen area population peaks at approximately 30,000 due to tourists.
Aspen and Pitkin County have implemented, as part of the Aspen Area Community Plan,
maximum growth for Aspen at 2.0 percent, including free-market and affordable housing
construction. Also, a population cap of approximately 30,000 people has been set for the 'Aspen
Metro Area'. The plan is continually being revised and may be changed in the future.
VALUATION SERVICES 12 :01114 CUSHMAN&
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Regional Analysis
In Aspen and Pitkin County, the Affordable Housing Office has implemented a plan for
providing housing at rental rates and sales prices that are affordable to persons or families of low,
moderate and middle income. New development must provide affordable housing units,
depending on a variety of factors.
During the peak of the ski season, the population in the greater Aspen area (including
Snowmass Village) can swell to 30,000. Aspen has accommodations for 10,000 in over 80 lodges
and condominium complexes. A 257 -room Ritz-Carlton hotel was completed in the early 1990s in
Aspen, and is now the St. Regis Hotel. In 1997, The Ritz-Carlton chain terminated its contract
after a dispute with the owner. The hotel is now the St. Regis, owned by Starwood Hotels and
Resorts Worldwide, Inc. The Ritz-Carlton Hotel Co. is now offering time-shares in the new Ritz-
Carlton Club being constructed at the base of the Aspen Highlands ski area.
Retail Sales
Retail sales tax revenues indicate the strength of both the retail market as well as the overall
economy. The following chart illustrates historical retail sales trends for Aspen and Pitkin County
from 2000 to 2003.
RETAIL SALES (000)
Year
Aspen
Annual % Change
Pitkin County
Annual % Change
2000
$547,981
---
$853,461
---
2001
$525,166
-4.2%
$837,256
-1.9%
2002
$520,554
-0.8%
$844,747
+0.9%
2003
$522,984
+0.5%
$802,517
-5.0%
Source: Colorado Department of Revenue.
In 1995, retail sales for Pitkin County totaled $686,316. This figure grew to $853,461 by
2000. Sales in Pitkin County decreased 1.9 percent in 2001 and by 5.0 percent in 2003.
Aspen experienced a decline in retail sales 2001 and 2002, however, saw a slight gain of 0.5
percent in 2003. Retail sales for Colorado as a whole have been showing moderate gains since
2000. Based on current economic trends, it is expected that retail sales in both Aspen and
Pitkin will experience stable to fair growth in the short term.
Transportation
Aspen is accessible by air or highway. The Aspen/Pitkin County Airport (Sardy Field) is
two miles northwest of the city limits. The airfield has one runway and typically accommodates
smaller aircraft, including many privately owned jets. Express airlines provide access to
Denver. These flights are generally in 50 or 84 -passenger jets.
Aspen is located 3% to 4 hours from Denver by highway. The route covers Interstate 70
from Denver to Glenwood Springs, then Highway 82 approximately 40 miles to Aspen. During
the summer months, an alternate (easterly) route is Highway 82 over Independence Pass,
connecting with Highway 24, extending through Leadville. This route is closed in the winter.
VALUATION SERVICES 13 iplllikCUSHMAN&
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Regional Analysis
In 1992, a major reconstruction/widening project began on Highway 82 from Glenwood
Springs to the Aspen area. The project involves widening various sections of the roadway from
two to four lanes. The final phase involves widening 3.4 miles of roadway through Snowmass
Canyon. This area of highway is two lanes and has historically been an area of many traffic
accidents. Construction is expected to be complete in fall 2005.
Summary — Pitkin County/Aspen Area
Tourism is the economic base of the County, primarily due to the four local ski areas. Aspen
has become an internationally known ski resort, with many business executives and entertainers
owning residences in the vicinity. As a result of its limited supply (i.e. limited land resources and
anti -growth measures) and demand for residential real estate, the cost of living in the area has
increased dramatically in the past 20 years. Although there is a desire for affordable housing in
Aspen and the County, a significant amount of new development consists of high-priced, single
family housing. In order to satisfy affordable housing demands, the City and County implemented
requirements for affordable housing projects.
There are several single-family homes and townhomes currently under construction. In
general, 33 residences per year are allowed in the Aspen area. Commercial construction has
been extremely limited, as Aspen and Pitkin County have implemented severe growth limitations.
Only 35,000 square feet per year are allowed and developers must compete for the right to build.
Points are awarded for certain design characteristics, and provisions for parking and affordable
housing. Recent development has been smaller retail buildings and alteration/renovation of
existing structures. There are several incentives for redeveloping historically designated
properties. The largest new development has been the base of Aspen Highlands and the Maroon
Creek golf course and clubhouse.
We foresee growth in population commensurate with or slightly lower than the 2 percent
growth cap implemented by the County and City. Tourism will continue to be the primary industry,
with skiing and lodging being dominant. We are just beginning to observe the trend in
diversification to other retailing segments. Summer activities, such as golfing, hiking, shopping,
fishing, etc., are beginning to become more popular and more summer activities are available.
There are two public golf courses (Aspen and Snowmass) and extensive tourist attractions
associated with the surrounding mountains. The City is also becoming a popular area for cultural
activity.
We believe Aspen and Pitkin County's economy will continue to grow at levels experienced
in recent years. Commercial construction will be limited, and residential construction is foreseen
to maximize the allowable units. Growth in outlying communities is also projected to continue, as
areas such as Basalt and Snowmass continue providing housing and accommodations. Many of
those living in outlying communities work in or visit Aspen regularly. The City of Aspen will remain
the focal point of economic and cultural activity down the valley.
VALUATION SERVICFS 14 .014 CUSHMAN&
W) WAKEFIELD,.
Regional Analysis
EAGLE COUNTYNAIL VALLEY
The Vail Valley extends approximately 17 miles east/west from East Vail to Edwards along I-
70 in the valleys of Gore Creek and the Eagle River. The narrowness of the valleys and the need
for 1-70 access has caused the linear development of the Valley communities. The Vail Valley
region is entirely within Eagle County. It includes most of the population and economic activity of
the county, except for the Town of Eagle, which is supported economically by the county
government and local agriculture. The Town of Eagle has benefited from the economic conditions
of the Vail Valley and is becoming a tourist -oriented community as well.
Primary automobile access to the Vail Valley is by 1-70, an east/west freeway that bisects
Colorado and Eagle County, making the region a two to three hour drive from Denver. U.S.
Highway 24 (north/south) connects with 1-70 one mile east of Eagle -Vail and provides access from
Minturn, Leadville, and regions farther south. State Highway 131 (north/south) extends north from
1-70 at Wolcott, thirteen miles west of Eagle -Vail, providing access from Steamboat Springs and
other areas of north central Colorado.
There are several 1-70 interchanges providing access to the towns in the region. There are
three exits accessing Vail, East Vail and West Vail, an exit to Avon, and an exit to Edwards. The
Avon exit is the primary exit to the Beaver Creek ski resort. The Vail/Eagle County Airport, located
25 miles west of Avon near the Town of Gypsum, offers direct daily service from various cities.
National trucking lines, freight and passenger rail, and bus service provide additional ground
transportation to the area. A number of companies provide shuttle van and limousine service
to/from Denver. Vail provides municipal bus service and the Avon/Beaver Creek bus system
serves the Town of Avon and the Beaver Creek ski area. Public transportation between the
communities of the Vail Valley is considered to be good.
Population
Eagle County is sparsely populated since nearly 80 percent of its land is publicly owned.
The table below shows historical population statistics for Eagle County.
Year
Eagle
County
Annual
% Change
1980
13,320
---
1990
21,928
5.1%
2000
41,659
6.6%
2003 (Est.)
45,850
3.2%
Source: State of Colorado and US Census
VALUATION SERVICES 15 ,•1114 U HMAND
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Regional Analysis
The Town of Avon is among the highest growth areas in the region. The towns of Eagle,
Gypsum, and unincorporated areas have also exhibited strong growth in the 1990s. Avon grew
substantially in the late 1990's. In mid-1998, the population in Avon was 2,921. In the 2000
census Avon had a population of 5,561 surpassing Vail's population of 4,531 to become the
largest town in Eagle County. Vail is completely built -out, with limited available land. From 1994
to 2000, Vail's population has remained relatively stable, between 4,354 and 4,531. In contrast,
the Avon population has increased substantially as population growth has spread toward the west
from Vail.
Economy and Employment
Eagle County's economy is most strongly affected by winter tourism and recreational activities
at the Vail and Beaver Creek ski areas. Also important are the summer tourism near the ski areas
and elsewhere. The historical growth of the Vail and Beaver Creek ski areas has fueled growth of
the area's construction, retail trade, services, government, and real estate sectors of the local
economy. It has been estimated that approximately 80 percent of all jobs in Eagle County are
either directly or indirectly related to tourism.
The economic base is different from other parts of the state, being much more dependant on
retail sales and services and less dependent on manufacturing and government. The county's
largest employer is Vail Associates, Inc., owners of Vail and Beaver Creek ski areas, with a peak
winter employment of over 4,000 (900 year-round employees).
The largest employment sector is Services, which comprises nearly half of all workers in
Eagle County. This category includes jobs in tourism, lodging, restaurants, health care and
related businesses. The next largest sectors are Construction and Retail Trade, comprising
approximately one quarter of all jobs. Construction jobs outnumber retail due to the new
construction occurring in the area. Other important sectors are government and finance/real
estate comprising approximately 17 percent of all jobs. The smallest sectors involve industrial and
raw materials employment, including agriculture/forestry, mining/oil, manufacturing,
transportation/utilities, and wholesale trade. These sectors each represent less than 3.0 percent
of all jobs. Job growth has mostly occurred in the larger categories in recent years.
Eagle County's economy is very seasonal. This is illustrated by fluctuations in the labor force.
For example, the county's total labor force increases by approximately 25 percent during the peak
of ski season compared to late summer. Unemployment also decreases.
The county experienced steady employment growth since 1991. In 2000, employment levels
stabilized with current employment at 36,135. Since 2000, the unemployment rate has fluctuated
between 2.3 to 5.0 percent with a current unemployment rate of 4.4 percent. The average annual
increase in employment since 1999 has been 2.2 percent.
Real estate prices continue escalating in the majority of instances, with higher quality, upper -
end residential units experiencing strong sales activity. Development has been extensive where
land is available, with the most notable new construction being several major projects in Beaver
Creek and several very high-end redevelopment projects in central Vail in the same period.
VALUATION SERVICES
16M=• WAKEF ELD
Regional Analysis
In recent years, Colorado's ski resort communities, including those of the Vail Valley, have
made efforts to increase non -ski tourism. With skier visits increasing at a slower rate, summer
recreation appears to hold the greatest hope for economic expansion. A primary target is the
group conference market, held at facilities such as the Westin in Vail and the Hyatt Regency in
Beaver Creek. Recent growth in hotel occupancy and retail sales during the summer season,
indicate success in diversifying area tourism. There are at least six golf courses in the County.
Other non -ski tourist attractions for Eagle County include hunting, fishing, mountain biking, hiking,
rafting, summer festivals and other events. Continued growth in the summer and shoulder
seasons is anticipated in the foreseeable future.
Ski Industry
As previously noted, the ski industry is the largest contributor to Eagle County's economy.
Consequently, changes in the ski market directly impact construction activity and real estate
values in the area. During the 2003-2004 season, Colorado's 26 mountain resorts reported
slightly more than 11.2 million visits, according to data compiled by Colorado Ski Country USA.
Information relating to skier visits in Colorado, Vail, Beaver Creek, and Arrowhead is presented
on the following chart.
Skier Visits
Season Colorado Vail Beaver Creek
1995-1996 11,387,058 1,652,247 554,443
1996-1997 11, 844, 523 1,686,790 644,451
1997-1998 11, 979, 719 1,597,932 668,520
1998-1999 11, 389, 561 1,334,939 614,549
1999-2000 10,892,263 1,371,702 586,004
2000-2001 11, 666, 672 1,645,402 676,528
2001-2002 11,128,131 1,536,024 657,956
2002-2003 11,605,777 1,610,961 718,353
2003-2004 11, 254, 231 1,555,513 768,542
Vail continues to dominate the state's ski industry with approximately 14 percent share of the
market. Since the 1999-2000 season, skier visits have recorded a compounded average annual
increase of 3.1 percent. The 2002-2003 season was the highest since 1996-1997. Beaver Creek
increased its skier visits by a compounded average annual increase of 7.0 percent since the
1999-2000 season. Beaver Creek experienced the highest number of visitors in its history during
the past season and increased its share of the market. The overall increase in skier visits is
attributable to early season snowfall. The strong increases in the Vail and Beaver Creek areas
are also due to the combined ski pass.
VALU:\PION SERVICES 17
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Regional Analysis
Statewide, skier visit growth is expected to be slow to moderate during the coming decade.
In the 2004-2005 season, visits are expected to be strong, due to favorable conditions early in the
season and positive economic trends. Vail and Beaver Creek are forecast to continue capturing
approximately 14 and 6 percent, respectively, of the state's total skier visits. Stable growth in the
ski industry is expected to result in economic stability in the Vail Valley in the foreseeable future.
Summary — Eagle CountyNail Valley
The Vail Valley is composed of several tourism -oriented communities along 1-70, stretching
from East Vail, past the major ski areas of Vail and Beaver Creek, to the community of Edwards.
Avon, is in the central part of the Vail Valley, adjacent to Beaver Creek. Access to the Valley is
good due to its proximity to 1-70 and the availability of national airline service to the Vail/Eagle
County Airport.
Eagle County's economy is centered on the tourism and recreational activities of the Vail
and Beaver Creek areas. Vail Associates, the operator of these ski areas, is the County's major
employer. The historical growth of the ski industry has fueled growth of the area's construction,
retail trade, services, government, and real estate sectors of the local economy. In recent
years, the Vail Valley has also made efforts to increase non -ski tourism, to increase economic
growth as ski industry growth slows. The County's population growth during the past several
years has remained strong, fueled by growth in the Colorado economy, increases in the ski
industry, and construction in the Avon and Beaver Creek areas. We would expect continued
moderate to strong economic and population growth in the foreseeable future.
VALUATION SERVICES 18 i,1I,CUSHMAN&
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LOCAL MARKET AREA ANALYSIS
General Overview
The local market area consists of the Roaring Fork Valley, between Glenwood Springs on
the northwest and Aspen on the southeast. The Roaring Fork River flows through the Valley.
Cities and towns in the Roaring Fork Valley include Basalt, Carbondale, Snowmass, Snowmass
Village, as well as Aspen and Glenwood Springs. Mountain ranges extend along the Valley,
including the Elk Mountain Range between Glenwood Canyon east of Glenwood Springs, and
Independence Pass east of Aspen. Maroon and North Maroon Peaks, forming the Maroon Bells,
and Capitol Peak, all exceed 14,000 feet, and are located just south of Aspen. Mount Sopris is
the predominant mountain peak visible from the Valley floor, located on the south side of the
Valley. Though 12,952 feet in height, this Peak emanates from the Valley floor and appears to be
the largest in the region. Wilderness Areas and National Forests line the valley, including the
White River National Forest and the Snowmass Wilderness area.
In the past, it was the skiing that attracted tourists and residents to the area. Due to the
Roaring Fork Valley and the hiking, biking, fishing, golf, summer festivals, art shows, sporting
events and other non -winter activities, the area has become a major winter and summer
destination for the entire country.
The area is also well known for being a "playground" and second home location for the rich
and famous. Many celebrities, business executives and others reside or have second homes in
the area, primarily in and near Aspen. This is one of the reasons that the prices of residential
properties are among the highest in the nation.
Access
Primary access to the local market area is by State Highway 82 and the Pitkin County
Airport. State Highway 82 extends from Interstate 70 in Glenwood Springs on the northwest,
through the towns of Basalt and Carbondale, and becomes Main Street in Aspen. The highway
has four lanes from Glenwood Springs to Basalt. There are left -turn lanes and traffic signals at
major intersections. Highway 82 has two lanes through a steep valley area between Basalt and
the road to Snowmass Village. The winding road though this portion is currently undergoing major
reconstruction which includes straightening the road and creating three to four lanes. This section
of road represents the final phase for the Highway 82 project and is expected to be complete in
Fall 2005.
State Highway 133 extends south from Highway 82 through the Town of Carbondale and to
southern parts of Colorado. There are several County roads emanating from Highway 82,
including Woody Creek Road, Sopris Creek Road, Upper Cattle Creek Road, and County Roads
100, 114, 115, and others. These County roads access small rural communities and residential
subdivisions in the Valley.
Access to the subject is via County Road 114 that emanates from Hwy 82 and extends
north. CR 114 is asphalt -paved for approximately 3 miles, just past Colorado Mountain College,
and then becomes a gravel road until intersecting County Road 115 at the southern boundary of
the subject site. CR 115 extends west through the subject site, while 114 extends to the east.
VALUATION SERVICES 19 01III4CUSHMAN&
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Local Market Area Analysis
The Aspen/Pitkin County Airport is the primary airport for Aspen and the Valley. This airport
accommodates commercial flights from regional and national airlines. The Glenwood Airport is
located in the northern part of the Valley, on the south side of Glenwood Springs. Roaring Fork
Transit Agency (RFTA) provides public bus transportation in the valley.
Land Use
Land use in the Roaring Fork Valley includes residential subdivisions, commercial
properties, golf courses, ski areas, light industrial and service uses, and hotels. Commercial
properties are concentrated in the cities and towns, with convenience stores, restaurants, small
strip retail centers, and other commercial uses at larger intersections and dispersed along
Highway 82. Glenwood Springs offers major hotels, including national chains and the historic
Hotel Colorado. There are also major banks, grocery stores, national discount retailers (including
Wal-Mart), fast-food restaurants, national -chain restaurants, and a regional shopping mall. Other
uses include residential and municipal uses. All major services are provided in Glenwood Springs,
including automotive, etc.
Aspen is a resort community and ski town, with Aspen Mountain Ski Area directly accessed
from the Town of Aspen. Land use includes various municipal, commercial, hotel and residential
uses. Larger land uses include a City Market grocery store and major hotels such as the St.
Regis and Hotel Jerome. The commercial centers are primarily multi -tenant, with retail on the first
floor and office and multiple residences on upper floors. A majority of these commercial centers
are two to three stories built in the late -1800s to early -1900s, and renovated or restored during the
past three decades. Stores are varied and include local news shops to high-end art galleries.
Restaurants are primarily locally operated. Office space is occupied primarily by local service
providers such as real estate and insurance agents. There are virtually no vacant land parcels
and there are severe limitations to new development. The result is some of the highest rental
rates in the nation of over $100 per square foot for prime first floor retail space, and sales prices
reaching over $600 per square foot. Light industrial and service use near Aspen is concentrated
near the Pitkin County Airport, including the Aspen Airport Business Center.
The Town of Carbondale is the 3`d largest town in the Roaring Fork Valley, with a 2000
population of 5,196. Land use in Carbondale consists of several, smaller, good quality
neighborhood strip centers, locally -operated restaurants, some national -chain fast food
restaurants, convenience stores and service stations, offices, multi -family and single family
residential, and a limited number of hotels and light industrial uses. Carbondale is primarily a
residential community with the commercial use concentrated in a one -mile stretch along Highway
133 south of Highway 82. There are large residential subdivisions in Carbondale that have been
developed during the past several years. The result is strong population growth in Carbondale.
The change in population in Carbondale since 1990 has been 73 percent, which is higher than
Aspen, Glenwood Springs, Garfield County and most other municipalities.
VALUATION SERVICES ?0
ionik CUSHMAN &
ino WAKEFIELD.
Local Market Area Analysis
Roaring Fork Valley Golf Courses
There are eight golf courses in the Roaring Fork Valley, of which five are public and three
are private. The courses are summarized as follows:
• Glenwood Springs Golf Course is a 9 -hole, regulation public course that opened in 1952 in
Glenwood Springs.
• Ranch at Roaring Fork is a 9 -hole, par -3 public course that opened in 1973 in Carbondale.
• Aspen Golf Course is an 18 -hole, regulation public course that opened in 1979 in Aspen.
This is Aspen's public golf course.
• River Valley Ranch is an 18 -hole, regulation public course that opened in 1997 just south of
Carbondale. This course is surrounded by a major residential community described
subsequently.
• Snowmass Golf Course is an 18 -hole, regulation public course that opened in 1979 in
Snowmass Village. The course was designed by Arnold Palmer. The Snowmass Lodge
and Clubhouse includes a hotel with pools, fitness center, lounge, and other amenities.
• Maroon Creek Club is an 18 -hole, regulation, private course that opened in 1995 on the
west side of Aspen. The course was designed by Tom Fazio and the membership list
includes numerous celebrities and business executives. There is an attached health club
with indoor tennis courts, large health club, outdoor recreational pool, Olympic -sized pool,
lounge, restaurant, large clubhouse, and various other amenities.
• Aspen Glen is an 18 -hole, regulation, private course that opened in 1997 on the south side
of Highway 82, just west of Carbondale. The clubhouse is a log lodge design with large
great room, lounge and patio. The course was designed by Jack Nicklaus and Jack
Nicklaus II. This course is surrounded by a major residential community described
subsequently.
• Roaring Fork Club is an 18 -hole, regulation, private course that opened in 1999 on the
south side of Highway 82, just east of Basalt. This course was designed by Jack Nicklaus.
This course is also surrounded by a major residential community described subsequently.
Residential Communities
Several major golf course and residential communities have been completed, are under
development or are planned in the Roaring Fork Valley, summarized as follows:
• Aspen Glen is a 938 -acre, gated, residential/golf course community with 450 single-family
lots, of which 360 have been sold. Product includes single family, duplexes, townhomes,
cottages, condominiums, administrative office building and a golf clubhouse. Total planned
dwelling units is 634. Construction commenced in 1995 and lot sales commenced in 1996.
There is an 18 -hole Jack Nicklaus golf course. The community has 4.5 miles of frontage
along the Roaring Fork River, and is located along the south side of Highway 82, just west
of Carbondale.
VALUATION SERVICES 21 01III4CUSHMAN&
on" WAKEFIELD,
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Local Market Area Analysis
• River Valley Ranch is a residential/golf course community with approximately 600 single-
family lots, of which approximately 470 have been sold since lot sales began in 1996. There
is a public golf course with clubhouse. The community is located just south of Carbondale.
• Roaring Fork Club is a 60 -lot community just east of Basalt, surrounding an 18 -hole private
golf course.
• Maroon Creek Club includes several townhome and single family lots along the course.
This is primarily a private golf club with a limited number of residential sites that have been
improved by separate developers.
• BairChase Club is a planned residential community with a golf course on 280 acres on the
south side of Highway 82 across from County Road 110. An 18 -hole private golf course, 48
single family lots, 48 cabins, and 120 multifamily units are planned.
• High Aspen Ranch is a residential ranching community on 1,140 acres north of Highway 82
along County Road 115, just to the west of the subject property.
• There are numerous residential subdivisions in the Roaring Fork Valley that have been
developed during the past 30 years, including Aspen Highlands, Castle Creek, Pines @
Owl Creek, Missouri Heights, Ranch at Roaring Fork and Elk Springs subdivisions. These
communities typically include limited amenities other than views or river frontage, and are
smaller developments with less than 50 lots.
• Surrounding Use
The subject site is located east of Glenwood Springs, northeast of Highway 82, and south
of 1-70. The south rim of Glenwood Canyon and 1-70 (extending through the canyon) is
approximately two miles north. Between the subject site and the south rim of Glenwood Canyon
is vacant, undeveloped White River Forest and Bureau of Land Management land. The natural
terrain is sloping with creeks, valleys, meadows and forest.
•
East of the subject site is privately owned vacant land with sloping terrain. There are
several single-family residences and farm homes along CR 115. Consolidated Reservoir and
Missouri Heights are located further east. High Aspen Ranch residential subdivision is located
east of the subject near County Road 103. Some houses are under construction. Amenities
recently constructed include a 3,400 square -foot clubhouse and outdoor swimming pool.
West of the subject is White River Forest and BLM land that includes large forest and
meadows, steep terrain and valleys. The City of Glenwood Springs is further west and can be
viewed from portions of the subject site.
South is the Red Canyon Ranch and the Rivendell Sod Farm. The most significant
development along CR 114 is the Colorado Mountain College, Spring Valley Campus. This 2 -
year college has a current enrollment of approximately 700, and offers associate degrees in
various fields such as photography, nursing, veterinarian, and general studies. Portions of the
campus have recently been built, as expansion is under way. In proximity to the college is the
Auburn Ridge Apartments and Pinon Pines Apartments, primarily for student housing.
VALUATION SERVICES
CUSHMAN &
��N WAKEFIELD:
Local Market Area Analysis
The Elk Springs subdivision is located southwest of the college, on the west side of CR
114, and includes approximately 150 residential lots ranging in size from approximately 2 to 5
acres. This subdivision was started in 1990.
At the intersection of Highway 82 and CR 114 are several commercial and light industrial
properties, including a neighborhood retail center built in the 1970s, and automotive service and
general contractor centers. These properties are in fair to average condition and must be
passed to access the subject site.
Summary — Local Market Area
Due to its location in the Roaring Fork Valley, the subject site is considered to be well
located for a destination residential/golf course community. Even so, the subject is located
approximately 4 miles north from Highway 82 on County Road 114 and is set back quite a
distance from the highway. Some older, fair- to average -quality retail and service properties at the
intersection of Highway 82 and CR 114 must be passed to access the subject site.
The majority of new development in the area is residential, catering to the higher -priced
homebuyer. In order to draw demand from these high-priced homebuyers, a majority of the most
recent planned and existing major residential communities also include private golf courses. The
residential/golf course communities are located in the Roaring Fork Valley, between Aspen and
Glenwood Springs, where large parcels of vacant land are available. There are residential
subdivisions under development near the subject, including High Aspen Ranch and Elk Springs.
Access is good, as Highway 82 traverses the Valley and directly accesses the cities, towns,
various county roads and commercial and service uses along the highway. Services throughout
the area are good, with Glenwood Springs providing major shopping, dining, banking and other
provisions. Carbondale also provides various services and is located in mid -valley.
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23
10134 CUSHMAN &
ono WAKEFIELD.
PROPERTY DESCRIPTION
• Existing Site Description
The subject is a 5,948.65 -acre± parcel in the Spring Valley basin area consisting of
grasslands on the valley floor, sagebrush and meadows on a mid-level areas, and forests and
meadows on upper elevations. The elevation generally rises from approximately 6,800 to 9,400
feet above sea level. The lower -level grasslands of approximately 600 acres has historically
been ranch and agricultural operations. The mid-level plateau rises above the valley floor by
approximately 400 feet and consists of 2,200 acres of undeveloped, raw land. The upper level
is an alpine plateau with large aspen groves, pines and meadows. There are excellent views of
the Roaring Fork Valley and Mount Sopris to the south.
The parcel is irregular in shape with dimensions of approximately 3.5 miles east to west
and 3.5 miles north to south. There are three out -parcels that are not included as part of the
subject and are separately -owned. Two out -parcels are located along the south side of County
Road 115. There is an access easement to a third out -parcel of approximately 40 acres located
toward the northeast portion of the subject site. Other access easements exist, which consist of
primarily public access to White River National Forest.
The subject parcel is generally facing south and southwest along a mountainside,
allowing for good sun exposure throughout the site. The parcel forms an arc along the Elk
Mountain Range. Terrain consists of flat land on the lowest level, and rolling terrain to steep
hillside on mid and upper levels. There are creeks and valleys throughout the parcel, as well as
several small lakes and ponds. The most significant creek is Landis Creek, which flows from the
northeast portion to the southwest. Owners of the subject have senior rights to this water.
There are approximately 75 acres of wetlands primarily in the flat grassland in the valley floor.
Undevelopable areas include the wetlands, geologically unusable areas, steep slopes, ridges,
stream corridors and wildlife zones. We were informed of no hazardous substances or landfills
and assume there are none.
There is frontage on County Road 115 that extends through the site in the southwest
portion. There is also frontage on County Road 114, which intersects with 115 at the southern-
most point of the subject site. Access to the site is via multiple points along CR 115 and one
point off CR 114. Both roads are currently gravel and well maintained by the County.
Improvements consist of a ranch house built in the 1920's containing approximately
1,336 square feet. The ranch house is located toward the southwest portion of the site and
includes drives, fencing, sheds, barn and various other minor improvements. There are two
small cabins toward the northern boundary of the subject parcel. One cabin is constructed of
concrete block and the other is log. Both are in good condition and habitable. There is also a
two story residential dwelling located on the 40 acre out -parcel in the northeast portion of the
subject site bordering the White River National Forest. This dwelling was built in 1994 of low to
average quality materials and consists of approximately 1,216 square feet. This dwelling has
not been inspected. Other improvements consist of fencing in various locations, and a partially
constructed reservoir (Hopkins Reservoir) toward the northeast part of the site. This reservoir
was built between 1910 and 1915 with a basin and berm.
VALUATION SERVICES 24
10 WAKEF ELD
Property Description
Currently, electricity and gas are located south of the subject along CR 114, and lines
need to be extended to the subject site. The Xcel Energy regional transmission line traverses
the site in a northwest/southeast alignment creating a 75 -foot -wide easement, and the Holy
Cross electric line extends through the lower valley.
Historically, beginning in the 1870's, the subject was homesteaded by the John William
Hopkins family. There are several, small deteriorating Log cabins which are dispersed
throughout the site that were part of the original homesteads.
Overall, the subject property site is considered to reflect attractive and desirable
locational and physical characteristics, and to provide for land uses consistent with the highest
and best use considerations discussed herein. Detrimental characteristics would include a
location that is set back a distance from Highway 82, relatively high elevations of portions, Targe
areas of sagebrush, and lack of existing utilities, which require extension/construction. The mid-
level area of approximately 2,200 acres is meadows and sagebrush, but is conducive to
development. The terrain is gently sloping and allows for golf course construction that uses the
natural terrain and existing meadows for fairways. The aspen groves, pines, ponds, streams
and other natural features in the upper elevations are existing amenities that can be utilized in
development. The elevations provide for excellent views to the south and southwest.
Planned Development
The subject's planned development is with Spring Valley Ranch, a residential/golf course
community with equestrian center and village center. Common areas will consist of parks, trails,
open space and paved streets. The residential portion will be low-density, with three primary
development areas (golf course fronting sites, larger estate lots and large ranch lots). The other
residential uses include cabins, townhomes and affordable housing as approved by the county
zoning. The golf course portion is approved with two, private, 18 -hole, regulation golf courses
with a clubhouse and outdoor swimming pool. The developer, however, intends to develop one
golf course and one par 3 executive golf course. The equestrian center will be located in the
lower valley area and will include stables and barn. The Village Center will be located at the
intersection of County Roads 114 and 115 and will consist of commercial retail and office space,
post office, day care and fire station.
Much of the existing terrain will be preserved. Residential lots will include designated
building envelopes, with the remainder of the lot remaining undeveloped, natural terrain. There
will be large areas of open space utilizing existing steep slopes, ponds, forest, streams,
meadows and other natural features. The subject's land uses are detailed as follows:
Utilities/Infrastructure
Utilities available to the subject will include electricity, natural gas, sewer, water,
telephone, and cable television. The upper portion of the subject site will not include sewer
service. Electricity, gas, telephone and cable lines require extension up from CR 114. Water
service will be provided by a Central Water Distribution System, which will include several
centralized, high-volume wells that will pump water to all residences and buildings in the
development.
VALUATION SERVICES
25
A CUSHMAN &
•Alp WAKEFIELD,
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Property Description
Sewer service to the mid and lower portions will include a sanitary sewer system
connecting to the Spring Valley Sanitation District Wastewater Treatment Facility south of the
subject near CR 114. This facility exists, but is currently being expanded to accommodate the
subject and other subdivisions in the area. The subject will be annexed into the Spring Valley
Sanitation District.
Each ranch lot (upper portion of subject) will have an Individual Sewage Disposal
System (ISDS), which will include a small sewage treatment mechanism on site, as well as a
leach field. Homeowners will be required to purchase the system.
Utilities on-site will be underground. The existing regional transmission lines and Holy
Cross electric line extending through the subject parcel are above ground. The Xcel regional
line was relocated recently in order to develop with subject with limited impact of this line. The
underground utility lines will primarily run along street routes and will cross some lots due to
curvature of the street in certain areas.
In regards to streets and road improvements, County Road 114 will be asphalt -paved
from the Colorado Mountain College to the intersection with County Road 115. The existing
paved road from Highway 82 will be resurfaced. CR 115 will be paved from its intersection with
CR 114 to the far west entrance to the estate lots. Streets within the subdivision will all be
asphalt -paved. Roads will consist of main entrance roads, collectors, minor access roads,
ranch lot roads and some shared driveways and cul-de-sacs. Road width will range from 24 to
36 feet, and will include gravel shoulders. Some roads will have pedestrian/bike trails
alongside, as well as streetlights. Other road improvements consist of traffic control lights and
signs, guardrails, road retaining walls, painting and striping, drainage systems, etc.
Other common area improvements will consist of a fire station in the Village Center at
CR 114, the gatehouse and guard booth, signage, a sales office building, fencing in certain
areas, water detention basins, and improvement of the Hopkins Reservoir. This reservoir will be
trenched to four times its current depth, and fill will be used in other parts of the subject
development. The dam/berm will be reconstructed, and water flow to the 7 -acre reservoir will
be improved, so that it retains a high water level. The sales office will be constructed of good
quality log and stone, and will be approximately 5,000 square feet, as per the original plan. The
sales office will be located at the main entrance to the development. The gatehouse will be
approximately 1,000 square feet and will house security, fire monitoring and access control. A
trailhead cabin to the National Forest is also planned.
VALUATION SERVICES 26
IA CUSHMAN &
Mt. WAKEFIELD,
Property Description
Fire Protection
The subject developers are required to construct a fire station, which will be located in
the Village Center. The subject will likely be annexed into the Glenwood Springs Rural Fire
Protection District, which will operate and manage the fire station, emergency medical services,
and other operations. A portion of the Metro District funds may be used for the fire station.
Residential Golf Lots
The subject is approved for 146 golf lots ranging in size from approximately 1 to 3 acres.
All these sites will front one of the two golf courses planned. Lots will front fairways, greens and
the driving range. These lots will be located in the central and southern portion of the subject
parcel. Each lot will have standard zone district set backs.
Residential Estate Lots
Planned are 134 estate Tots ranging from approximately 3 to 12 acres, located primarily
in the central and western portion of the subject parcel. The average size is approximately 5.25
acres each. Many of these lots will overlook the golf courses and the valley floor. Each lot will
include a building envelope of approximately 1 to 1.8 acres.
It should, however be noted that the developer intends only to develop a combined 260
lots residential golf and estate lots and one 18 -hole golf course and one Par 3 Executive golf
course.
Residential Ranch Lots
Planned are 91 ranch lots ranging from approximately 18 to 58 acres. The ranch lots
average 32 acres in size, and are mostly located in the upper, northern portion of the subject
parcel. Each lot will have a building envelope of approximately 1 to 3 acres, which can be
improved with a house, fencing, yard, etc. Driveways will have a maximum 10 percent grade.
The remainder of the lot must remain unimproved. These ranch lots face primarily southwest,
with some affording views to the west and other directions. Some Tots include steep sloping
terrain while others include gently sloping terrain.
A majority of the lots offer views of the subject's planned golf courses, Mount Sopris and
the Roaring Fork Valley. Some offer views to the west, where Glenwood Springs can be seen.
Many front BLM and National Forest land. Elevation of the ranch lots ranges from 6,800 to
9,400 feet.
Mountain Cottages/Cabins
The subject is approved for 75 cottages/cabins on approximately 120 acres northwest of
the golf courses to be known as the Mountain Cottages. The average density is approximately
one unit for every 1.6 acres. The developer however intends to develop only 20 cabin lots. We
have assumed the remaining 50 cottages/cabins contained in four lots will be sold to a
developer or can be developed as residential estate lots.
The Enclave Duplexes/Townhomes
The subject is approved for 30 duplex/townhome units on one parcel containing
approximately 15 acres, northwest of the driving range and clubhouse. Density is at two units
per acre. Some will front the golf course. The developer does not intend to develop this site.
VALUATION SERVICES
27
$mo .WAKEF END
Property Description
• We have assumed these two Tots will be sold to a developer or can be developed as residential
estate lots.
•
•
Affordable Housing Units
It is typically required by zoning to provide affordable housing units in this region. A total
of 75, for sale affordable housing units are approved on a site in the Village Center, located near
the entrance to the subject development. Development will include multifamily units of average
quality, with one -bedroom units ranging from 800 to 850 square feet and two-bedroom units
ranging from 1,100 to 1,200 square feet. There will also be 16 lots of 12,000 to 15,000 square
feet, developed with average -quality, single-family residences ranging from 1,800 to 2,200
square feet.
Golf Courses
Two, 18 -hole, par -72, regulation golf courses are approved in the central, mid-level part
of the subject. The courses will be described as the North and South courses. Much of the
existing terrain, rock outcroppings and vegetation will be used. Irrigation for the golf courses will
be provided by the Central Water Distribution System and from a diversion of Landis Creek.
The South course will be designed by Greg Norman and will be a 7,600 -yard course with
2 par -3 holes, 2 par -5 holes and 14 par -4 holes. The design and construction of this course will
be of the highest quality. There will be multiple tee locations, bunkers, and water features.
Concrete golf cart paths will access all holes. Restrooms will be located at certain locations.
The North course will be locally designed but will be of good quality. Plans are for a
7,200 -yard course with 2 par -3 holes, 2 par -5 holes and 14 par -4 holes. There will also be
multiple tees, bunkers, and water features.
The developer, however, only intends to build one 18 -hole regulation course and one par
3 executive golf course.
Also included will be a full-size driving range with netting, tees, etc. A practice putting
green will be located near the clubhouse. Approximately 4.5 acres are designated for
maintenance facilities, which will include a wood -frame maintenance building with multiple drive-
in docks and offices. There will also be yard areas for storage of vehicles, grass clippings, etc.
Clubhouse
The clubhouse will be located toward the center of the two golf courses, in the
south/central part of the subject development, on an elevated site allowing for views of the golf
courses. The clubhouse will serve three basic functions:
• Operation center for golfing activity, including pro shop and cart storage;
• Social center for dining and activities for residents and visitors with a kitchen;
• Administrative center and reception area for the residents, members and visitors.
VALUATION SERVICES 28
i�
l'i WAK F ELD
Property Description
The clubhouse will be of excellent -quality construction. Framing will be wood beam with
log and stone exterior facade. There will be large patios and decks, and multiple levels. The
size is planned to be approximately 35,000 square feet. Layout will consist of a reception area,
lounge, pro shop, administrative offices, large fitness center, men's and women's locker rooms,
massage and spa, children's recreation area, bar, and restaurant, with kitchen and dining area.
The pro shop will feature a sales counter for golf, tennis and Nordic skiing elements.
Equestrian Center
The equestrian center will be located adjacent the valley floor meadows and adjacent
the Village Center, toward the southern boundary of the subject. Buildings will consists of a 26 -
stall stable, expandable to 100 stalls, a 6,000 square -foot hay barn, 2,400 square -foot
equipment shed, meeting rooms, tack rooms, two 20,000 square -foot outdoor riding arenas, 40 -
foot lunge ring, fenced grazing area, and 50 -space parking lot. The center will be operated by
qualified professionals.
Village Center
The planned Village Center will be located at the intersection of County Roads 114 and
115, and will consist of approximately 20,000 square feet of commercial retail and office space,
restaurants, convenience store, post office, and day care, on an estimated 25 -acres site. The
Village Center sites will likely be sold to separate developers/owners that will construct their own
stores in accordance with the subject development's guidelines. It is likely that the Village
Center will not experience development until much of the subject is completed and a large
number of homeowners are in the area.
The Village Center will also be the location of the fire station and a recreational
vehicle/boat storage lot. The Metro District offices will also be located just west of the Village
Center.
Trails/Parks/Landscaping/Open Space
Pedestrian/bike paths will be located throughout the subject development, totaling
approximately 30 miles. Equestrian trails will extend around the valley floor meadow, along
Landis Creek, and along the eastern edge of the subject, up through the ranch lots. Two parks
will be located in the estate lot area and will have restrooms, gazebos, ball fields, pond and
picnic tables. The 600 acres in the valley floor will remain as agricultural and ranch operations
and will not be improved.
Summary — Property Description
The subject is in a planning stage and complete details of the clubhouse, golf courses,
roads, etc. are not yet available. We have described these components typical of other resort
subdivisions we have appraised. Plans are to proceed with obtaining detailed construction
plans for the golf courses, including types of grass, hole length, layout, etc. The clubhouse,
sales office, infrastructure, and various other improvements require architectural drawings, final
construction cost bids, engineering, soils studies, etc.
VALUATION SERVICES
?9
ill %CUSHMAN&
al!? WAKEFIELD,
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Property Description
Overall, we observed no detrimental conditions or severe limitations to the planned
development. The parcel is physically capable of being developed with the residential/golf
course community that is planned. The timing of the development may differ from that projected
by the developer, depending on market conditions and obtaining the funds necessary for
development.
VALUATION SERVICES 30
'i!��i
REAL PROPERTY TAXES AND ASSESSMENTS
The property is subject to the taxing jurisdiction of Garfield County. There are five assessor
parcel identification numbers. A summary of the parcel numbers and their ownership is as follows:
Parcel No. Size (Acres)
2187-211-00-137 3,280.00
2187-161-00-138 1,231.00
2187-262-00-135 1,204.00
2187-154-00-136 193.65
2187-142-00-114 40.00
Total Land Area: 5,948.65 acres
Owner
Spring Valley Development, Inc.
Spring Valley Development, Inc.
Spring Valley Holding USA, Ltd.
Spring Valley Holding USA, Ltd.
Atlantic Gulf Communities Corp.
Atlantic Gulf Communities Corp. and Spring Valley Development, Inc. are related entities,
and are the owners of the subject development. Spring Valley Holding USA, Ltd., which has
retained an ownership interest in the 1,397.65 acres (Parcels 2187-262-00-135 and 2187-154-00-
136) in exchange for 22 golf -frontage lots, 22 estate lots, and 4 ranch lots, for a total of 48 lots.
These Tots will be conveyed to Spring Valley Holding USA, Ltd. as these lots are developed. In
exchange, the retained parcel will be conveyed to Spring Valley Development, Inc. and will
become a part of the subject property.
The assessor's office
information presented below
Parcel No.
2187-211-00-137
2187-161-00-138
2187-262-00-135
2187-154-00-136
2187-142-00-114
Total Values
is currently re -appraising every
represent estimated 2005 values.
Land Improvement
Value Value
$136,640
$ 25,570
$ 21,020
$ 4,020
$ 85,000
$272,250
$123,500
$ 5,070
$ 0
$ 0
$122,180
$250,750
parcel in Garfield County. The
Total Value
by County
$260,140
$ 30,640
$ 21,020
$ 4,020
$207,180
$523,000
Parcel 2187-211-00-137 includes a majority of the subject's land area and also includes
an existing 1,336 square foot ranch house built in 1928, several small cabins and contiguous
improvements. Parcel 138 is the next largest parcel and includes a small cabin built in 1950.
Parcel 114 consists of 40 acres and includes a two-story, 1,216 square foot residential dwelling
built in 1994. Overall, the current assessment is low due to agricultural classification, and
appears reasonable.
Upon approval of the PUD and commencement of construction, the subject will be re-
assessed as residential and golf course improvements. Properties in Colorado are assessed
based on their condition as of January 1 of each year. The subject will continue to be assessed
as vacant land in 2006 and then be partially assessed as a residential development in 2007.
VALUATION SERVICES
31 ,•111114 CUSHMAN &
4 ) WAKEFIELD.
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Real Property Taxes and Assessments
The subject will be assessed based on the amount of completion as of January 1 of
each year. Once the subdivision is recorded, taxes should be assessed on a per -lot basis, and
the assessed value and taxes should increase significantly. Future real estate taxes are
projected to be included in the General and Administrative expenses in the Subdivision
Development Method. Because of the current market, the developer's real estate taxes should
be kept relatively low as its inventory in finished lots will be minimal over the holding period.
VALUATION SERVICES 32
qt. WA EF END,
ZONING, DISTRICTS AND LAND USE RESTRICTIONS
Planned Unit Development
A PUD was approved in 1984 allowing 2,750 residential dwelling units, 300 resort hotel
rooms, 36 holes of golf, 150,000 square feet of commercial space, and 3,270 acres of open
space. This PUD was amended and the Garfield County Board of County Commissioners
granted PUD amendment approval on August 15, 2000. The PUD Amendment allows 502
residential dwelling units, 75 affordable housing units, 36 holes of golf, an equestrian center,
20,000 square feet of commercial space, and 3,916 acres of open space.
The PUD includes a planned community consisting of 502 residential lots, 2 golf courses
(36 holes), clubhouse, equestrian center, 75 affordable housing units, and a village center with
commercial space. Planned residential use includes 171 golf -frontage Tots ranging from
approximately 1 to 3 acres; 134 estate lots ranging from 3 to 12 acres; 91 ranch Tots ranging
from 18 to 58 acres; 75 cabins/cottages of 2,000 to 4,000 square feet each; 30
duplex/townhome units on a single parcel; and the original ranch house located on
approximately 30 acres. There will also be an additional 75 affordable housing units in the
Village Center. Total residential dwelling units will be 577. Open space totals approximately
1,720 acres. The affordable housing units are a required aspect in order to obtain zoning
approval.
Alternative Plans
It is legally permissible to develop the subject with ranch lots of 35+ acres. Zoning and
PUD approval is not required if the subject is divided into 35+ acre parcels. The maximum
number of 35 -acre lots would be 168.
Districts
The subject is located in the Spring Valley Water and Sanitation District. Funding
landowners have contributed to build and expand the plant. The subject landowners were
required to fund $2,577,540 in late -2000. Sewer service to the mid and lower portions will by
provided by the Spring Valley Sanitation District Wastewater Treatment Facility. The subject will
be annexed into the Spring Valley Sanitation District.
Fire protection and emergency medical services will be provided by the Glenwood
Springs Rural Fire Protection District. The subject landowners have funded $130,000 to date
for fire protection services. The subject will be annexed into the district subsequent to
generating $500,000 per year from mill levy revenues into the district.
Two Metropolitan Districts are to be created within the subject development, of which
one is a control district for administrative offices, vehicle maintenance facilities, and yard
storage while the other will cover the subject boundaries and be a financing district. Private
roads and utilities within the subject development will be maintained and operated by a
Homeowners Association and the Metropolitan District.
Conclusion — Zoning and Land Use Restrictions
We know of no deed restrictions, private or public, that further limit the subject property's
use. We cannot guarantee that no such restrictions exist. Deed restrictions are a legal matter
and only a title examination by an attorney or title company can usually uncover such restrictive
covenants. Thus, we recommend a title search to determine if any such restrictions do exist.
VALUATION SIRVICLS 33
il,. WAKEFIELD..
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RESIDENTIAL MARKET ANALYSIS
Introduction
The subject property is a master planned upscale single-family residential community with a
private golf club. We have examined the upscale residential land market in the Roaring Fork
Valley and in the Vail Valley area, along the Interstate 70 corridor. The analysis of the competitive
communities here is to provide broader market support for the analysis of the Spring Valley Ranch
lot sales.
Because residents include both permanent residents and seasonal residents, we have not
relied on permanent resident growth in projecting the demand for residential lots. We relied on
historical trends among similar residential developments, as well as current and projected future
market conditions.
Supply and Demand Characteristics
The subject is located near Glenwood Springs, and is impacted by supply and demand
characteristics in the Roaring Fork and Vail Valley areas. The chart on the following page
summarizes residential developments that the subject would likely compete with, followed by a
location map. Included are existing subdivisions with lots that are for sale, as well as a planned
subdivision that could be developed in the near term. There are other planned developments,
though there are few major planned developments in the Roaring Fork Valley, due to a lack of
available sites and growth limitations imposed by the Counties.
We surveyed six other residential communities to support the subject's lot pricing and
absorption rates. Because the subject is part of a golf -oriented resort, we have concentrated on
those developments that have both golf and residential lots. High Aspen Ranch and Elk Springs
do not have golf facilities, while the remainder include 18 -hole golf courses. The High Aspen
Ranch and Elk Springs subdivisions are located in proximity to the subject. River Valley Ranch
has a public golf course, while the others have private golf courses.
The comparables are considered competitive to the subject, however there are differences
in location, amenities, lot sizes and view -exposure in comparison to the subject's identified
characteristics. The comparables consist of finished lot sales, sold by developers to individuals or
to homebuilders for the construction of homes to be sold to the end users.
Our survey exhibits the addition of 4,648 lots, of which 2,269 have been sold and 2,379
remain to be sold. Within the immediate area of the subject, there are 2,347 lots, of which 1,935
lots have been sold and 412 lots available for sale. There are lots in various other subdivisions
that add to the amount of supply, though these other subdivisions do not include the amenities of
the subject and are not large developments. The subject will add another 370 residential lots.
This will be a significant addition to the supply of lots in the region.
VALUATION SERVICES 34 1114CUSHMAN&
onf• WAKEFIELD,
Residential Market Analysis
The subject will include two private golf courses (one 18 hole regulation course and one par
3 executive course), clubhouse, swimming pool, equestrian center and various amenities that are
superior to many of the competitive properties. The South Golf Course is assumed to be
designed by Greg Norman, a respectable golf course architect and a well-known name in golf.
The subject lots will have excellent views of the golf courses, the valley and Mt. Sopris. Residents
will have year-round close access to recreational activities (golf, tennis, pool, fitness, clubhouse,
equestrian). Besides the private course aspect, the winter -summer recreation is yet another
marketing item. The subject is approximately 35 miles from the Aspen ski areas, and
approximately 50 miles from the Vail ski area.
The detrimental characteristics of the subject include a location that is set back a distance
from Highway 82, relatively high elevations of portions, and large areas of sagebrush. Some of
the comparables also include high elevations, but a majority are located in lower portions of the
Roaring Fork Valley. The comparables in the Roaring Fork Valley generally have superior
locations, in closer proximity to Highway 82. Due to location, the comparables have superior
access and exposure. Many front the highway and have frontage on the Roaring Fork River.
Overall, we believe the subject will generate demand characteristics that are generally
similar to or superior to a majority of the comparables. Cordillera is considered a superior
project. The subject has the golf courses and amenities, but the location may be a slight
hindrance to lot sales activity.
The subject and the comparables are located in one of the highest -priced residential
areas in the nation. The area is highly oriented toward seasonal residents, though there are
local residents such as local business professionals that are able to acquire high-priced
residential product that the subject will offer. Factors impacting demand for the subject lots is
summarized as follows:
Favorable Demand Characteristics
• The subject will include good -quality infrastructure, paved roads, utilities, numerous
amenities, private golf course, a major clubhouse, and various other aspects that are in
demand among second -home buyers, retirees and business professionals.
• The subject has a variety of offerings, including golf -fronting lots, larger off -golf lots, and
large ranch lots. There are few competing projects with large ranch lots in a golf
community. The variety of product will appeal to a larger market.
• The subject has good view amenities and other natural features, such as creeks, rock
outcroppings, forests and ponds. There are also planned riding and pedestrian paths,
as well as access to adjoining public lands.
• The subject is located in one of the highest demand areas in the country for second -
home buyers.
• Residential buyers have moved down -valley, due to the high prices and lack of available
product in the Aspen area. The northwest portion of the Roaring Fork Valley has
experienced development activity and good demand.
VALUATION S1=RVICES 35
Co WAKEF ELD
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Residential Market Analysis
• There has been a trend away from living in proximity to ski areas, such as Aspen and
Vail, among the seasonal buyers. These types of buyers now demand summer activities
as well, such as golf, fishing, horseback riding, tennis and other recreational activities.
• There are few planned developments in the Roaring Fork Valley, and no other plans that
are on the scale of the subject.
Unfavorable Demand Characteristics
• The subject is set back several miles from Highway 82. Older, fair quality commercial
properties must be passed at the intersection of Hwy 82 and CR 114.
Competing Projects
Aspen Glen is a gated residential/golf course community located along Highway 82, just
west of Carbondale. The subdivision is visible from the highway, and runs approximately 4.5
miles along both sides of the Roaring Fork River. Aspen Glen has a log -style clubhouse with
great room and restaurant, and an 18 -hole Nicklaus/Nicklaus 11 golf course with eight riverfront
holes. The development includes 968 acres, of which 500 are open space. The plan consists
of 450 residential home sites and a total of 634 dwelling units. Product includes single-family
lots, duplex lots, townhouses, condominiums, cottages, and speculative single-family homes.
The lot sales began in April 1995, with 360 sold. In 1999, 67 lots were sold for an average
price of $300,000, and in 2000, 104 lots were sold for an average price of $380,000. In 2001, a
reported 22 lots have been sold at an average price of $250,000 to $275,000.
At Aspen Glen, golf memberships are included in the price of the Tots, which has an
upward impact on the price of the lots. Memberships have been transferred at a fee of $50,000,
and some non-resident memberships were sold to the public at $100,000.
Cordillera is a large residential/golf course (private) community located approximately 7.5
miles west of Beaver Creek, 17 miles west of Vail, and approximately 35 miles northeast of the
subject. This development has an excellent location on both sides of 1-70, near the Beaver
Creek ski resort in the Vail Valley area. This development includes four primary components —
The Divide (2,000 acres), the Ranch (1,100 acres), the Summit and the Valley Club (366 acres).
The Ranch includes an 18 -hole, Hale Irwin -designed golf course (Mountain Course) built in
1994 and lots ranging in size from 1 to 37 acres; the Divide includes lots ranging in size from 2
to 13 acres with no golf course; the Summit is the most recent development with an 18 -hole,
Jack Nicklaus -designed golf course (Summit Course) that opened in 2001 and lots ranging in
size from 1 to 37 acres; the Cordillera Valley Club includes an 18 -hole, Tom Fazio -designed golf
course (Valley Course) built in 1997 and lots ranging in size from 0.3 to 1.6 acres. There is also
a 9 -hole Short Course built in 1997 by Dave Pelz. There is also a 20 -lot component known as
the Territories, with 35 -acre ranch sites.
The Cordillera community currently includes the major, award-winning Lodge and Spa at
Cordillera, which includes a 56 -room lodge, full-service spa, restaurants, bars, lounge, pools
and various other amenities. There is also the Trailhead, a 10 -acre recreational area with ball
fields and tennis courts; the Nordic Center; an equestrian center and the Summit Club, a 10,000
square -foot recreational retreat. There are four restaurants (Restaurant Picasso, Grouse on the
VALUATION SERVICES 36
oF Lno WAEED
Residential Market Analysis
Green, Chaparral and the Timber Hearth Grille). There is also the Wine Cellar, featuring private
dining facilities for up to 14 guests.
The lot sales began in 1988 under a different management. A total of 50 lots were sold
between 1988 and 1992. In 1993, under new management and ownership, lot sales increased
dramatically, as 70 lots were sold in 1993 alone. In 1994, the first golf course opened and an
average of 135 Tots per year were sold between 1994 and 1997. In 1998, few lots were sold
due to lack of new product. In 1999, 178 lots were sold due to the opening of the Summit
section. In 2000, lot sales activity continued at the previous pace.
The average Tots price in varies due to differing lot sizes and timing of sales. The overall
average lot price increased from $376,296 in 1994 to $744,147 in 1997. In 1999, the average
lot price was approximately $500,000.
At Cordillera, golf memberships are $170,000 and can only be purchased with real estate.
Memberships allow use of all courses and facilities.
River Valley Ranch is a residential/golf course community with a public golf course. The
development is located along Highway 133, just south of Carbondale. The subdivision includes
a log -style clubhouse and an 18 -hole golf course. The development plan consists of 600
residential home sites. The lot sales began in October 1996. Approximately 470 lots have been
sold. The lots are relatively small, and range from 0.2 to 1.8 acres. Lot prices predominantly
range from $250,000 to $400,000.
High Aspen Ranch is a new community on 1,140 acres north of Highway 82 along
County Road 115, just east of Spring Valley Ranch. Plans call for 29 ranch sites of
approximately 35 acres each, as well as a clubhouse with pool, tennis and equestrian center.
The 3,400 square -foot clubhouse includes a fitness center, billiard room, kitchen and large deck.
There is also an outdoor swimming pool and hot tub, two tennis courts, 10 -stall barn, and arena.
The site features ponds, creeks, and equestrian trails. There is no golf course and this
development lacks the amenities of Cordillera or the subject.
Recent 35 -acre ranch site sales range in price from $465,000 to $640,000.
Elk Springs is a residential community with few amenities. The development is located
south of Spring Valley Ranch, along CR 115. Sales have been under way since 1990. Prices
for the 1.6 to 4.7 -acre lots range from $140,000 to $340,000.
The most competitive developments are considered to be Aspen Glen and Cordillera.
Both these developments include private golf courses, clubhouses and various amenities.
Aspen Glen is considered to have a similar -quality golf course, inferior amenities and a superior
location. Cordillera is superior in golf courses, amenities and location.
Other developments include Bachelor Gulch (105 large ranch lots near Beaver Creek),
Mountain Star (117 ski-in/ski-out lots near Beaver Creek), Maroon Creek Golf Club (smaller
townhome and single family lots adjoining a private golf course in Aspen), Roaring Fork Club
(48 cabins/cottages and 12 lodge units adjoining a private golf course in Basalt), and numerous
smaller developments throughout the region.
VALUATION SERVICES 37
;i Li1WAKFED
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Residential Market Analysis
Promontory is the recreational master planned, gated community development in Park
City being developed by Pivotal Group, with golf as a key amenity. It is a 6,500 -acre
development with approximately 1,600 home sites to be built along five planned private golf
courses. It will have 40 miles of scenic trials, an equestrian center, tennis, swimming, access to
skiing, numerous cabins and lodges and other activities. A 20,000 square foot Ranch
Clubhouse is currently open, and includes spa, pool, tennis, cafe, ice skating and fitness center.
A Golf Clubhouse is planned for late 2006 or early 2007 and is expected to be about 20,000
square feet as well. There will also be an Outfitters Cabin for outdoor pursuits and a 5,000
square foot Kid's Cabin for children's activities.
There have been 375 sales of lots at Promontory to date, equal to absorption of 125 lots
per year. There are several different sub -neighborhoods with different view corridors and golf
views. Some lots have distant views of the Park City ski resort, about 15 minutes away.
The first phase of cabins consisted of a planned village of 27 cabins close to a
clubhouse. The cabins, which range in size from 3,300 to 4,500 square feet, are being sold in a
two-step process. The buyer first purchases the lot, and then has up to two years to build one
of the three cabin types. The cabins are on 1/4 to 1/3 -acre lots that are priced from $275,000 to
$612,500. The improvement prices range from $835,000 for the smallest cabin type to
$1,000,000 for the largest cabin. All 27 cabins sold in the first half of 2004. The second cabin
release of 25 cabins started in early June 2005. At this point, seven cabins have been pre -sold
to members at prices from $1,390,000 to $2,100,000, including lot price. Non-members have
not yet had the opportunity to purchase any second -phase cabins, but reportedly 10 buyers are
in hand. Lot prices in this phase range from $450,000 to $850,000. Total unit prices for the
second cabin phase ranges from $421 to $467 per square foot.
The first golf course, designed by Pete Dye, opened in September 2002. The second
course to be constructed is designed by Jack Nicklaus and is scheduled to open in 2006, or as
dictated by demand. The membership capacity has been limited to 390 per course. As each
course reaches capacity, additional courses will come on line.
Golf membership at Promontory is $125,000, up from $110,000 a year ago. The
memberships are 100% refundable, and transfers with the lot. It is currently the club's policy that
no annual dues are charged to the members until 2005. Home construction has been limited so
far. Expected dues will be $5,400 per year.
The membership is structured initially as non -equity, but the members are entitled to vote to
convert the facility to equity in the future. According to the membership literature, the members
are entitled to vote in 2010, whereby accepting members will be charged a fee equal to 30% of
the Membership fee deposit.
Tuhaye Ranch, Utah - Tuhaye comprises a 1,500 -acre site overlooking Timpanogos
Mountain, the Jordanelle Reservoir, and the Deer Valley Ski Area (Wasatch Mountains). The
site is at an elevation of approximately 7,000 feet and is characterized by rugged terrain
comprising several ridges and valleys, varied and interesting home lots, spectacular views,
water features, and an ideal golf course landscape. Construction of the Tuhaye Ranch
development began in July 2001.
VALUATION SERVICFIS 38 CUSHMAN&
tfj' WAKEFIELD.
Residential Market Analysis
Once build -out is complete the project will consist of 270 home sites and 275 cluster
home lots. The initial phase of the project (Phase 1) consists of 55 home sites ranging in size
from 1.0 to 2.0 acres and 61 cluster home lots. Pricing for Tuhaye has been in the range of
$300,000 to $700,000 for the home sites and $215,000 for the cluster home lots. Since August
2004, 17 home sites have been sold. Currently, 27 home sites are under contract and 12 are
reserved.
Tuhaye is located just south of the subject property on the south side of Highway 248,
approximately three miles east of 1-40, in Wasatch County, Utah. Highway 248 is a three and
four lane highway in excellent condition, with four lanes at the entrance to the property. The site
has direct access to Highway 248, which leads straight into downtown Park City, approximately
eight miles away. Drive time to Park City Ski Area, The Canyons Ski Area, Deer Valley Ski
Area, and downtown Park City is approximately ten minutes.
Tuhaye Ranch is conceived as a private, year round, high quality single-family master
planned community with high design values and high-level amenities. Upon complete build -out,
the development will offer an 18 -hole championship golf course (Mark O'Meara design), a 9 -
hole par -3 golf course, golf clubhouse, fitness pavilion, dining facility, kid's cabin and access to
skiing. It is anticipated by the developer that year round amenities will be more attractive to
some buyers than the pure ski -in ski -out amenity offered at the majority of the previously
completed high-end developments in the area.
The Club at Black Rock, Idaho — The Club at Black Rock is a 650 -acre Jim Engh-
designed golf course community with about 365 planned residential lots and cabin sites located
about 14 miles south of Coeur d' Alene. The project overlooks Lake Coeur d'Alene, which is a
significant asset to this project in terms of lot view premiums and as a recreational amenity. The
31,000 square foot clubhouse opened in May 2004, while the golf course opened in July 2003.
This project started pre -sales in May 2001 and as of June 2005 has sold about 250 lots
and cabins, which equates to 63 units per year. Lot prices in the most recent and final release
(i.e. 45 lots) range in sales prices from $400,000 to $2,000,000, with an average of about
$700,000 to $800,000 per lot. Most lots in this release are one to three acres in size. View
premiums are for golf frontage and/or lake views.
There are also 2,360 square foot cabins that are being sold. Developer prices most
recently range from about $1,100,000 to $1,500,000, or $466 to $635 per square foot. Twenty-
eight cabins have already sold with one remaining. The cabins have been well received and
have been generally sold out by completion. At some point in the near future, the developer
expects to build 36 chalets, which will be smaller and less expensive than the cabins.
Non -equity golf memberships (deposits) are currently priced at $125,000, which is up
from the $100,000 required a year ago. Of the 425 golf memberships allotted, about 250 have
been sold to date. Dues are $6,000 per year. There are no social or sport memberships.
Amenities within this project include the aforementioned Jim Engh-designed golf course,
a planned 30,000 square foot clubhouse, a health and fitness center, pool, tennis courts,
walking trails, and a full-service marina on Lake Coeur d' Alene.
VALUATION SERVICES 39
01114 CUSHMAN &
Cfr WAKEFIELD,
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Residential Market Analysis
Iron Horse at Whitefish, Montana — Iron Horse at Whitefish is an upscale golf course
community in northwest Montana near the Big Mountain Ski Area. Discovery Land Company is
the developer. Total build -out is estimated at about 332 Tots and cabins. Iron Horse has a high-
end Fazio Championship 18 -hole golf course, with membership sales beginning in 1998. As of
June 2004, approximately 275 golf memberships have been sold to date out of 387 available.
Membership prices started at $50,000 and are now $125,000, with golf dues at $7,000/year.
Lot prices initially started at $225,000 and increased to $1.25 million. Most lots are
around or under two acres in size. This development provides good views of the surrounding
mountains and lake. Other amenities include a fish camp, fish lodge, pool and tennis and a
wide variety of outdoor pursuits, including jet skiing, boating and available boat slips on nearby
Whitefish Lake. The Big Mountain Ski Area is a few miles away. This project consists of
roughly 280 lots and 52 cabins. Of this, approximately 255 lots and 36 cabins have been sold.
The 25 remaining Tots, mostly one to two acres in size, have an estimated average price of
about $750,000. The next phase of cabins is about to be constructed. About 40 re -sales of lots
have slowed the developer's sell-out, with the low end of re -sales starting at $250,000 for a 1/2 -
acre lot.
Cabins are proximate to the golf course but only have views of Whitefish Lake, not the
course itself. Thirty-six cabins have been sold to date, ranging in size from 3,500 to 4,000
square feet. Generally, these were sold at prices around $1.5 million, or approximately $375
per square foot. Another six, slightly larger cabins, recently broke ground on a spec basis, and
will be priced at $1.8 to $2.2 million, or $475 to $510 per square foot.
Summary and Trends — Residential Market Analysis
Based on analysis of the competitive developments, there does not appear to be a Targe
supply of residential Tots that would compete with the subject. The competitive projects surveyed
have sold a majority of their lots. There are several planned developments in the three -county
area (Garfield, Pitkin and Eagle), but it is not known whether these will commence and the exact
number of lots cannot be estimated. The largest are quite a distance from the subject, and
located west of Glenwood Springs, near the towns of New Castle and Silt. In the Roaring Fork
Valley, there are severe limits to development and it is difficult to obtain zoning approvals. Due to
this, it is unlikely there will be a large supply of major new residential/golf course developments in
the next five years. There are smaller planned developments, such as the BairChase Club. The
subject will likely be competing with the existing communities, with little competition from future
developments to be created.
There has been of strong trend of second -home ownership primarily driven by the "Baby
Boomer" generation, which is anticipated to remain strong through 2020 according to the
National Association of Realtors. Because the growth in skier visits has been relatively slow in
some areas, the ski resorts have developed other activities in order to maintain visitors. In the
1990s, many ski resorts have begun strongly marketing themselves as year-round resorts, with
recreational activities for all four seasons. These can include mountain biking, hiking, golf,
tennis, fishing, cross-country skiing, ice skating, etc. The AspenNail area is anticipated to
experience near-term growth. Over the long-term, the prospect for net appreciation in real
estate remains positive due to inherent characteristics of the area including mild four -season
weather, excellent resort amenities and proximity to the Aspen and Vail ski areas
VALUATION SERVICES 40 '0+I'1CUSHMAio
Wfr
Comparable Upscale Residential Community/Membership Summary
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GOLF MARKET ANALYSIS
Introduction
The subject property is planned for an 18 -hole, Greg Norman Signature Design golf course
and a second golf course designed locally. Amenities will include a 35,000 square foot clubhouse,
driving range, golf cart storage, swimming pool and other related features. A summary of the
subject developer's golf plan is as follows:
National Golf Market Analysis Overview
For the last four years, the golf industry has continued to suffer from golf course
oversupply. The majority of markets throughout the United States are oversupplied and demand
has been relatively flat for over four years. Golf player retention and player growth continue to
be the challenges for the business of golf. Over the last century, the golf market has
experienced three boom periods; the 1920's, the 1970's and the 1990's. In the 1990's the
majority of golf course development was connected to residential developments and the two
sectors that experienced very significant increases in supply were the premium daily fee and the
premium private courses.
Despite the oversupply of golf courses many developers continue to add courses as a
means to sell homes. However, new golf course construction slowed considerably in 2003-04
from the previous four years. In 2004 the National Golf Foundation (NGF) reported that 150.5
new courses opened, which reflects a decrease from 171 new courses in 2003 and 220 new
courses in 2002. Weather conditions have also contributed to the poor performance of golf
rounds as well. In 2003, many markets experienced a very wet Spring, which negatively
impacted the number of rounds played. On a positive note, the national economy began to
improve in 2004 in many MSA's throughout the nation. Consumer spending has increased and
national employment conditions improved in 2004. Many operators have reported increases in
rounds and investment activity has increased moderately in the top performing markets of
California, Arizona, and Nevada.
The source of our national golf course market data is the National Golf Foundation
(NGF). The NGF publishes annual reports on the supply and demand conditions for selected
markets throughout the United States, with the most recent being February 2005. The NGF also
divides the national market into nine-submarkets. The most populated golf state is Florida with
1,080 golf courses followed by California. In addition, the East North Central Market has the
highest golf participation rate of the nine submarkets. (over 22.6 percent).
In the 1990-2000 decade, most of the golf club sales and investment activity was
attributed to sales to owner operators or club membership upon sellout of the residential
component of the overall project. Also, there were numerous sales of clubs due to financial
distress related to failed residential lot sales and financial institution sales after foreclosure from
the failed residential projects. There still remains a significant presence of private golf clubs
located primarily in gated residential communities.
VALUATION SERVICES -I2 414CUSHMAN&
MO WAKEFIELD,
Golf Market Analysis
Golf club financing is typically available from golf oriented lenders with strict guidelines
including Textron Financial Corp., Pacific Life Insurance, CitiCapital, Bank One, GMAC, GE
Capital, Wells Fargo and to a some extent, regional and local commercial banks. These banks
include First Union National Bank and First National Bank of America. Bank of America had
been a major lender in the 1990's but closed its financing unit in the fall of 2000. As a result of
the current lack of golf club lenders, it will likely be harder to obtain financing for all but the best
performing properties. Financing for new projects will likely be even more difficult in the near
term.
The character of the overall golf club market is responding to the following factors:
1. Demographics are growing for golfing population with 78 million "baby boomers" moving
into prime golfing age;
2. Number of golfers is growing (women and youth);
3. Golf course owners and managers are becoming more sophisticated and courses are
becoming more profit oriented;
4. Economics and realistic operation projections have reentered the scene as requirements
for investment.
Golf Course (Facility) Inventory 1990 - 2004
The demand for new golf courses has been relatively flat over the past four years.
Supply conditions have increased moderately, despite the lack of demand. Over the past five
years there have been an average of 245 courses added annually on average. Historically, the
NGF reports that over the last two decades the average was 125 courses (facilities) per year. In
2004, 150.5 courses (facilities) were added which is the lowest the last five years; in the year
2000, 400 courses were added; 2001 284 courses were added; 2002, 220 courses were added,
and 2003, 171 courses. The "U.S. Golf Facilities By State" on the table below, identifies the
types of courses and total number of courses in each area at year-end 2003.
VALUATION SERVICES 43 iII4CUS FELD
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Golf Market Analysis
State/Regional Total Facility Supply — 2003
REGULATION
EXECUTIVE
PAR -3
HOLES
STATE AND REGION
Only' All
Onty All
Only Ali
9
18
27
36
45
or more
Total
Facilities
Connec1u•.ut
157 159
9 11
10 10
51
115
8
3
1
178
Maine
123 124
5 5
3 4
68
60
3
1
0
132
Massachusetts
322 326
19 20
25 28
135
217
11
7
0
370
New Hampshire
69 92
5 6
12 14
45
57
5
2
0
109
Rhode Island
52 52
1 1
5 5
21
37
0
0
0
58
Vermont
56 56
4 4
4 4
19
42
2
1
0
64
New England
799 809
43 47
59 65
339
528
29
14
1
911
New Jersey
255 259
16 17
14 19
51
208
17
13
1
290
Now York
702 719
58 66
34 44
230
516
31
22
6
811
Pennsylvania
629 639
32 36
31 37
161
488
32
18
3
702
Middle Atlantic
1,586 1.617
106 119
79 100
442
1.212
86
53
10
1,803
Illinois
591 606
40 46
31 40
222
407
27
16
5
677
Indiana
309 411
22 29
22 31
108
314
24
9
2
457
Michigan
775 800
27 40
25 41
187
558
66
32
11
854
Ohio
680 698
37 48
26 35
166
528
46
18
4
762
Wisconsin
424 434
28 33
29 36
169
271
33
15
4
492
East North Central
2.869 2.949
154 196
133 183
852
2,078
196
90
26
3,242
Iowa
311 377
15 16
7 12
274
114
0
2
0
399
Kansas
239 241
11 11
4 6
150
101
4
1
0
256
Minnesota
385 410
45 63
21 30
190
247
29
8
3
477
Missouri
309 315
10 12
12 16
128
190
13
5
1
337
Nebraska
198 200
10 13
10 11
131
82
8
0
0
221
North Dakota
97 98
8 8
2 3
88
19
1
0
0
108
South Dakota
108 110
6 7
1 3
84
29
3
1
0
117
West North Central
1,707 1,751
105 130
57 81
1,045
782
67
17
4
1,915
Delaware
30 31
5 6
2 2
4
29
3
1
1
38
District of Columbia
3 4
1 2
0 1
2
2
0
1
0
5
Florida
853 889
131 153
59 75
116
769
76
88
31
1,080
Georgia
377 385
10 12
9 15
74
290
27
1
6
404
Maryland
170 173
10 12
9 10
28
143
9
10
2
192
North Carolina
519 524
10 11
19 23
70
433
21
22
7
553
South Carolina
338 342
6 7
14 17
53
255
28
16
10
362
Virginia
306 312
8 10
13 17
74
227
17
9
6
333
West Virginia
110 113
4 5
5 7
54
62
1
3
2
122
South Atlantic
2,706 2,773
185 218
130 167
475
2,210
182
157
65
3,089
Alabama
233 244
4 5
6 16
62
164
13
0
6
254
Kentucky
261 265
7 8
10 13
91
183
5
2
1
282
Mississippi
161 162
3 3
2 3
63
99
3
2
0
167
Tennessee
270 273
7 9
10 11
75
199
10
5
1
290
East South Central
925 944
21 25
28 43
291
645
31
18
8
993
Arkansas
163 168
5 9
9 11
76
95
5
3
3
182
Louisiana
156 157
5 5
3 4
60
98
3
3
1
165
Oklahoma
195 195
6 6
7 7
81
113
3
11
0
208
Texas
784 793
12 14
42 51
271
482
48
39
13
848
West South Central
1,298 1,313
28 34
61 73
488
788
59
56
12
1,403
Arizona
235 246
49 58
11 15
43
219
16
27
2
307
Colorado
195 207
13 15
9 20
50
152
20
5
2
229
Idaho
93 94
6 7
4 4
40
62
2
0
0
104
Montana
83 86
4 •i
5 8
51
37
5
2
0
95
Nevada
88 90
4 4
3 5
12
69
7
6
3
97
New Mexico
70 76
0 2
2 6
22
•12
12
2
0
78
Utah
93 94
6 8
3 4
26
72
4
2
0
104
Wyoming
50 50
3 3
0 0
28
22
3
0
0
53
Mountain
907 943
85 101
37 62
272
675
69
44
7
1.067
Alaska
13 13
2 2
5 5
12
7
0
1
0
20
California
702 728
112 128
70 86
226
571
54
56
6
913
Hawaii
70 72
2 3
1 2
9
51
3
8
.1
75
Oregon
150 154
24 27
10 12
74
100
4
9
1
188
Washington
232 240
25 27
15 21
100
162
14
3
1
780
Pacific
1.167 1,207
165 187
101 126
421
891
75
77
12
1,476
U. S. Totals
13.964 14.306
892 1,057
685 900
4,625
9.809
794
526
145
15,899
'ONLY' refers to facilities which have one or more courses in the featured lengtr r.Atagory only. ALL /eters o fauhhos that have one or
morn courxes of Offering len jth categoric:: hut al least ore course in the featured category
GOLF FACILITIES IN THE U.S.. 2004 EDITION 6
VALUATION SERVICES
44
ON CUSHMAN &
gp WAKEFIELD=
Golf Market Analysis
The table below presents the number of facilities and courses by type for each year from
1990-2003, the most recent available data. It is important to note that the NGF has changed its
methodology and the categorization methods over the last four years. In the year 2000, the NGF
tracked the par -three and executive courses and included these courses in the total supply
number. Most importantly in the year 2000, the NGF changed from tracking each individual golf
course to tracking facilities. A facility is defined as a complex containing at lease one golf
course. It is important to note that the actual supply of golf courses did not decrease, the
methodology changed. In addition, in 2001, the category was only public and private, not daily
fee, municipal, and private. From 2002 to 2003 the net number of golf courses increased by 72
facilities.
TYPES OF GOLF COURSES 1990 — 2003
Type 1992 1994 1996 1998 2000 2001* 2002*
2003*
Annual
Compound
Growth
2002-2003
Daily Fee 7,080 7,732 8,416 9,012 9,637 N/A 9,113
9,156
0.47%
Municipal 2,308 2,415 2,541 2,645 2,698 N/A 2,388
2,390
0.08%
Private 4,987 4,792 4,746 4,708 4,773 N/A 4,326
4,353
0.62%
Total 14,375 14,939 15,703 16,365 17,108 15,772 15,827
15,899
0.45%
* Methodology change/ 2001 changes to the number of facilities not individual courses.
Source: National Golf Foundation
Over the past three years, growth rates varied depending upon the type of course
(facility). From 2002 to 2003, Private courses (facility) experienced the greatest growth (0.62
percent per year). Conversely, municipal courses have experienced the slowest growth over the
past two years.
During the late 1980's, approximately 60% of all golf course development in the U.S.
was a part of a residential development. This percentage has declined over the past 10 years to
approximately 40% in 2003. The fact that golf course development has continued to be active
despite the decline of the surrounding real estate "subsidy" is considered to be evidence of the
golf market's overall strength.
While there has been overall growth in the number of courses, the characteristics of
supply have also changed slightly. The nation's golf supply has become more oriented toward
the public golfer. In 1987, 61 percent of the nation's supply was either daily fee or municipal
courses. By 2000, this figure has increased to 72 percent and to 72.6 percent in 2002. In 2003,
the total number of new courses that were public was 74 percent. As of 2003, there were 1,029
golf facilities either in the planning stages or under construction. In the state of Illinois there
were five golf facilities under construction and 17 golf facilities in the planning or proposed
stage.
VALUATION SERVICES 45
mt. WA EF ELD
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Golf Market Analysis
The National Golf Association (NGF) recently announced its forecast for course
development in 2005. The data show that the number of new courses being built has decreased
every year since 2000. In 2004, there were 150.5 course openings and 62.5 verified closures (in
18 -hole equivalents), for a net gain of 88 courses, representing a net increase of approximately
one-half of one percent. The 2005 forecast is for 150-160 18 -hole equivalent course openings.
In contrast, nearly 400 18 -hole equivalents opened in 2000.
Including the 2004 openings, the total number of U.S. golf facilities stands at 16,057,
thus breaking the 16,000 mark for the first time. Adjusting for 9 -hole and 18 -hole -plus facilities,
there were 14,988 18 -hole equivalents at year's end.
Of the new courses, 102.5 are open to the public and 48 are private. Real estate -related
courses accounted for 59 percent of new development in 2004. Real estate has consistently
driven 40 to 60 percent of new course development and is expected to continue to do so.
However, the overall number of new real estate -related courses is lower than in the 1990s.
"While many industry observers are expecting the real estate market to cool down due to rising
interest rates and extraordinary price increases over the past several years, new real estate
developments will continue to be built and some developers will continue to add golf as an
amenity," adds Beditz.
NGF also tracks the development pipeline of courses that are in planning or under
construction. As of December 31, 2004, there were 320 18 -hole equivalents under construction;
410 that have begun the in -planning phase; and another 261 that have been proposed (pre-
planning stage).
Golf Participation
According to data from the National Golf Foundation (NGF), the number of golfers has
increased substantially since 1986 (6.3 million) while the participation levels have ranged tightly
from about 10 to 12 percent.
VALUATION SERVICES 46
%IIIA CUSHMAN &
4 p WAKEFIELD,
Golf Market Analysis
The following table illustrates the performance of the golf industry in the U.S. over the past 18
years, from 1986 to 2003.
NATIONAL GOLF TRENDS
Year
No. of Golfers*
(thousands)
Participation
Rate
Average
Rounds
Total
Rounds
(millions)
1986
19,897
10.2%
20.2
401.9
1987
21,316
10.7%
19.6
431.0
1988
22,951
11.4%
21.1
484.4
1989
24,191
12.0%
19.4
469.0
1990
27,761
13.5%
18.1
501.6
1991
24,796
11.9%
19.3
478.6
1992
24,775
11.9%
20.4
505.4
1993
24,563
11.6%
20.3
498.6
1994
24,338
11.4%
19.1
464.8
1995
25,012
11.6%
19.6
490.2
1996
24,737
11.3%
19.3
477.4
1997
26,474
12.0%
20.7
547.2
1998
26,427
11.9%
20.0
528.5
1999
26,446
11.7%
21.3
564.1
2000
25,400
12.1%
22.0
587.4
2001
25,800
12.3%
20.0
552.0
2002
26,200
12.6%
25.0
502.4
2003
27,400
12.9%
37.0
477.0
Net Change
7,503 (31.7%)
2.7 (points)
83%
75.1
(18.6%)
CAGR**
1.77%
N/A
N/A
2.14%
* Age 18 and above
** Compound Annual Growth Rate
Source: National Golf Foundation - Trends in the Golf Industry 2004
The total number of golfers in the U.S. has been relatively consistent from 1997 through
2001, ranging from 26,200 to 25,800 in 2001. The total number of rounds in 2003 however,
indicated an increase of 5.5% from 2002. The difference is reflected in the number of rounds per
golfer since the actual participation rate has been around 12.3% to 12.9% over the past five
years.
VALUA"I'ION SERVICES 47
10011% CUSH MAN &
on,. WAKEFIELD,,
•
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Golf Market Analysis
According to the NGF data, the growth rate of overall spending on fees and equipment in
2003, golf participation in the Midwestern region for golfers over age 18 represents
approximately 16% of the total population. Male golfers in this region account for about 80% of
the total and have a median age of nearly 47.2 years old. The total estimated rounds for the
region are 113.1 million, with approximately 80% played at public facilities.
Rounds played finished in positive territory in 2004 for the first time in three years, as
reported today by the National Golf Foundation and the National Golf Course Owners
Association. While the gains were slight (0.7 percent nationally), they represent a welcome relief
to the declines of the prior two years.
Private club rounds were flat for the year while public courses had slight increases.
Premium public courses had the best showing with nearly a two percent gain, followed by value
public with about a one percent increase.
The Florida hurricanes left the Gulf Coast region in the lurch (down nearly five percent)
but an otherwise strong season enabled the Central/South Florida region to finish the year up
about one percent. The Mid Atlantic region posted the highest gain for the year (nine percent)
primarily because the region's rounds were down 13 percent in 2003 due to record levels of
precipitation.
The report is based on information reported by a panel of nearly 2,600 golf facilities
across the U.S. Response rates to monthly surveys vary from 60 to 70 percent.
In summary, golf continues its popularity in the United States and there is little indication
that this popularity will experience a decline. The demographics of the U.S. population indicate
that public access golf facilities will be in strong demand for at least the next 20 years, while the
national and regional economies will determine the economic success of high end daily play and
private membership clubs.
Golfer Demographics
In order to give an overall perspective of the United States golf market, we have highlighted
some relevant information obtained from the National Golf Foundation. This information is
divided into two classifications: core golfers are those aged 18 and older who played at least 18
rounds of golf in the previous year; occasional golfers are those aged 18 or older who played
between one and seven rounds of golf in the previous year. This information is summarized as
follows:
• The mean age of the core golfer is 43 years versus 37 years for the
occasional golfer.
• The largest proportion of core golfers was among those aged 30 to 39 (25.3
percent), and the highest participation rate was among those aged 30 to 39
(6.7 percent).
VALUATION SERVICES 48 '�Ii1cus FELD
Golf Market Analysis
• The golf population is significantly wealthier than the average U.S.
population, with a mean household income of $53,000.
• 43.7 percent of golfers are college graduates and 41.3 percent are from
professional or managerial households.
• Private club course golfers comprise 20.3 percent of the golfing population,
and also have the highest income, with 35.7 percent having incomes of
$75,000 and over.
• 21.1 percent of the male core golfers have played more than 30 years with
18.9 percent having played Tess than four years.
• The national average per capita golf supply is 19,284 residents per 18 holes
of golf.
• Of the new facilities being developed and proposed across the nation, over
60 percent are daily fee courses. It is noted that 22 percent of the new
facilities are private.
• Older age groups are more likely to play golf and be frequent players with
golfers over the age of 60 comprising 20.3 percent of the golf population, yet
accounting for 32.6 percent of the total rounds of golf played. There is
significant potential for golf, particularly for public facilities. Access to public
golf facilities in the U.S. has reached a critical situation. In order to
accommodate a modest 2 percent growth rate in golf participants, 300 new
public golf courses must be built each year for the next decade. An overview
of the last seven years indicates that new public course development has
lagged demand.
• An important trend in planning new facilities is the emergence of the 9 -hole
round of golf. Often businessmen and executives cannot find time to play 18
holes. In order to continue their game, many are now discovering that a 9 -
hole round is enjoyable. If this trend continues, 27 -hole golf courses may
become the most efficient and flexible type of facility, being able to
accommodate both the full 18 -hole and the 9 -hole players as well.
Additionally, a 9 -hole facility can accommodate the beginning golfer, as well
as many women and junior golfers, as they are often restricted either by time,
expense or lack of golfing experience and a 9 -hole round is ideal for this type
of player.
VALUATION SERVICES 49 ACUSHMAN&
Mt, WAKEFIELD,
•
•
•
Golf Market Analysis
As indicated in the brief summary above, the demand for low cost public golf courses in
this country is continuing to increase, while the supply side has opted for higher priced, more
exclusive type courses. Thus, average green fees continue to increase, particularly in
metropolitan areas with above average growth. This trend has been continuing for a number of
years and as a result, more and more people who wish to play golf are being forced to consider
alternative forms of recreation. The demand for golf will likely be much greater than ever
anticipated, during the next 20 to 30 years, as the baby boom generation works its way into the
age in which most golfers play their greatest number of rounds. However, it should again be
noted that there is a strong correlation between golf play demand and the economic stability of
the community, its residents and the price the play those rounds.
r Demographics
Conclusion
Overall, the national golf market continues to suffer from oversupply and relatively flat
demand. The western markets of California, Arizona, and Nevada have experienced improved
conditions over the last two years. The period from 1990 to 2003 experienced continuous
growth in the golf industry despite the recessionary economy the early 1990's. On a positive
note, the improving economy and the decrease in new courses developed (a low of 150.5 in
2004) are combining to bring slow improvement to the golf course market. Over the past two
years, golf course development has shifted toward public daily fee use as opposed to private
country club development, a trend that can be expected to continue due to the most recent
federal tax laws, which reduces the deductibility of private country club memberships.
All the figures presented are indicators of trends in the golf industry on a national basis.
Consequently, local market conditions may differ from these national trends significantly. Some
markets have experienced growth at even higher rates while others may have exhibited no
growth or possibly some decline.
Local Area Golf Market Analysis
In Colorado, the golf participation rate is higher than the nation as a whole. There is also
a higher percentage of private golfers. The golf participation rate is 12.9 percent in Colorado,
compared to 11.7 percent nationally. The number of female golfers is higher at 22.9 percent
compared to 19.4 percent nationally. Private golfers compose 16.6 percent of golf participants
in Colorado, compared to 15.4 percent in the U.S., as a whole. There are approximately 240
golf courses in Colorado. A summary of the 21 golf courses in the three -county (Garfield, Pitkin
VALUATION SERVICES 50 411114 WAKEFIELD.
Core (8-25 Rd.) Golfer
Avid (25+ Rd.) Golfer
Total Golf HsHlds over $250K
347,407
146,980
US Participation Rate (Over $250K)
26%
11%
PROPENSITY TO OWN
VACATION HOME
Qualified Households
143,372
Preferences/Purchase Propensity
29%
Conclusion
Overall, the national golf market continues to suffer from oversupply and relatively flat
demand. The western markets of California, Arizona, and Nevada have experienced improved
conditions over the last two years. The period from 1990 to 2003 experienced continuous
growth in the golf industry despite the recessionary economy the early 1990's. On a positive
note, the improving economy and the decrease in new courses developed (a low of 150.5 in
2004) are combining to bring slow improvement to the golf course market. Over the past two
years, golf course development has shifted toward public daily fee use as opposed to private
country club development, a trend that can be expected to continue due to the most recent
federal tax laws, which reduces the deductibility of private country club memberships.
All the figures presented are indicators of trends in the golf industry on a national basis.
Consequently, local market conditions may differ from these national trends significantly. Some
markets have experienced growth at even higher rates while others may have exhibited no
growth or possibly some decline.
Local Area Golf Market Analysis
In Colorado, the golf participation rate is higher than the nation as a whole. There is also
a higher percentage of private golfers. The golf participation rate is 12.9 percent in Colorado,
compared to 11.7 percent nationally. The number of female golfers is higher at 22.9 percent
compared to 19.4 percent nationally. Private golfers compose 16.6 percent of golf participants
in Colorado, compared to 15.4 percent in the U.S., as a whole. There are approximately 240
golf courses in Colorado. A summary of the 21 golf courses in the three -county (Garfield, Pitkin
VALUATION SERVICES 50 411114 WAKEFIELD.
Golf Market Analysis
and Eagle) market area is summarized in the Addenda, as well as a summary of proposed golf
courses and those under construction.
There are seventeen 18 -hole courses and four 9 -hole courses, for a total of 342 holes of
golf. Of this, four are private courses (Aspen Glen, Maroon Creek Club, Roaring Fork Club and
Cordillera). Golf courses under construction and planned total seventeen 18 -hole courses and
one 9 -hole course, for a total of 315 holes of golf.
It is likely that not all of the planned courses will commence. The demand for courses
will likely not be sufficient to justify this number of new golf courses.
Comparable Private Courses
A summary of competing courses in presented in the Valuation section of this report.
Aspen Glen
This is an 18 -hole private course with large, log -style clubhouse, located in the Aspen
Glen development just west of Carbondale, along the Roaring Fork River. This course has five
riverfront holes, and was designed by Jack Nicklaus and Jack Nicklaus II. The course was
completed in 1997. The 25,000 square -foot clubhouse includes a pro shop, grill, full restaurant,
pool, fitness center, tennis courts and conference space. There is a 16 -acre practice center.
Membership is non -equity and included with the purchase of a lot at Aspen Glen. There
are currently approximately 510 members, with a total member limit of 620. Golf and lot
membership sales began in 1995, and have resulted in 510 golf membership sales (equal to 46
per year). Membership price is "valued" at $50,000 for transfer purposes. Some memberships
were marketed to non-residents at $100,000.
Annual dues are $7,200. The guest fee is $120 with a member and $245 without a
member. Cart fees are approximately $25. The estimated number of rounds played at Aspen
Glen is over 10,000.
Roaring Fork Club
This club is located approximately 15 miles down valley from Aspen. It includes an 18 -
hole Nicklaus Signature course built next to the Roaring Fork River. The development includes
on 48 fishing cabins with time-shares in the cabins. Fishing will be either on the river or in
stocked ponds. The clubhouse is 33,000 square feet.
Memberships for real estate owners are now $150,000, and started at $59,000. National
memberships are $125,000 for non -property owners in the valley. There have been 428
memberships sold out of 500 total. The annual absorption rate equates to 54 per year. Golf
dues are $600 per month, or $7,200 per year. Guests pay $175 (accompanied) or $225 per
round (unaccompanied). The clubhouse is approximately 10,000 square feet. The estimated
number of rounds is approximately 10,000.
VALUATION SERVICES 51 1014 CUSHMAN&
i . WAKEFIELD,.
•
•
•
Golf Market Analysis
Maroon Creek Club
This 18 -hole private course designed by Tom Fazio is located in Aspen. Golf holes
extend up through the Maroon Valley. This is a non -equity course with a major golf clubhouse
and fitness center. There are four indoor tennis courts, Olympic -size pool, recreational pool,
large restaurant and lounge, pro shop, and full-size health club. This high-quality club with an
excellent location commands the highest rates for golf membership and dues.
A membership is provided with each homesite at Maroon Creek. Non-resident
memberships are also available. A total of 450 memberships are planned, of which
approximately 375 have been sold. Sales began in 1993, and the average number of
memberships sold per year is approximately 50. The current membership fee is $200,000, with
annual dues of $11,800. Green fees are $135 accompanied and $250 unaccompanied. Golf
cart fees are $17. Total rounds at Maroon Creek is estimated at 8,500.
Cordillera
This development includes four private courses, including one designed by Jack
Nicklaus (Summit Course), another designed by Tom Fazio (Valley Course) and another
designed by Hale Irwin (Mountain Course). There is a fourth 9 -hole Short Course.
Memberships are available to residents only, and include access to all courses. A total of 1,185
memberships are planned, of which approximately 850 have been sold. Memberships are
currently $175,000, with annual dues of $8,300. Guest fees are $100 with a member and $195
without a member.
Summary — Local Market Golf
A large number of courses are planned, and an oversupply may be created if all are
developed. There are currently four private clubs in the region, all of which are experiencing
good demand and membership base. All have raised membership fees since they started
selling memberships.
Of the four private golf clubs surveyed, nearly all appear to be successful ventures. A
large number of memberships have been sold, with others available. Some private clubs limit
their memberships, and do not wish to sell too many in each year. Memberships rates range
from $100,000 to $200,000, with annual dues of $7,200 to $11,800. The clubs generate
additional revenues from guests, golf cart rental, professional lessons, pro shop and other
revenue generators.
Spring Valley Ranch will be typical of high-end golf clubs in terms of exclusivity, layout,
designer, clubhouse design and size, and amenities. The subject will include one high-end golf
course and one executive course, and will generate demand from avid golfers that play 25
rounds per year or more. The subject's physical characteristics result in good design using the
natural terrain. The ability to offer the use of the golf courses to members is a factor that is
superior to some of the competing private clubs.
In terms of the number of memberships, we believe that the sale of a lot within the
subject's residential development will generate the sale of a golf membership.
VALUATION SERVICES 0111I1CUSHMAN&
Pf• WAKEFIELD,
HIGHEST AND BEST USE
According to the Dictionary of Real Estate Appraisal, Third Edition (1993), a publication of
the Appraisal Institute, the highest and best use is defined as:
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, financially feasibility, and maximum profitability.
Physically Possible
The first test is what is physically possible. As discussed in the "Property Description", the
site's size, soil, utilities, shape and topography do not physically limit its use to any great extent.
The tract is Targe enough to accommodate almost all possible uses as allowed in the zone class,
including a residential/golf course development. In regard to soil and topography, the developers
and golf course developers have laid out and designed the subject parcel so that high-end
residential homes and a private golf club are competitive with other high-end subdivisions and
championship golf facilities in the western United States. The terrain is gently sloping and allows
for golf course construction that uses the natural terrain and existing meadows for fairways. The
aspen groves, pines, ponds, streams and other natural features in the upper elevations are
existing amenities that can be utilized in development. The elevations provide for excellent views
to the south and southwest.
Legally Permissible
The existing, amended PUD allows 502 residential dwelling units, 75 affordable housing
units, 36 holes of golf, an equestrian center, 20,000 square feet of commercial space, and 3,916
acres of open space. The PUD currently being applied for includes a planned community
consisting of 502 residential Tots, 2 golf courses (36 holes), clubhouse, equestrian center, 75
affordable housing units, and a village center with commercial space. Total residential dwelling
units will be 577. Open space totals approximately 1,720 acres.
It is legally permissible to develop the subject with ranch Tots of 35+ acres. Zoning and
PUD approval is not required if the subject is divided into 35+ acre parcels. The maximum
number of 35 -acre Tots would be 168. Certain development costs would be required, such as
providing access to all the Tots.
Financially Feasible and Maximally Productive
As analyzed in the Residential and Golf Market Analyses, there is currently sufficient
demand to support financially feasible development of a residential/golf course development as
planned. There are also limitations to supply in this region.
Though market conditions have decreased from the strong levels experienced in the
previous years, there appears to be continued demand to generate sales activity of residential
Tots and golf memberships that would create sufficient revenues to offset costs and expenses,
and create a return on the investment. As will be exhibited in this appraisal, we are projecting
that the subject will create a sufficient return to the developer in order to support the planned
development, therefore, the planned development is financially feasible.
VALUATION SERVICES
53
v. WAK F ELD
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•
•
Highest and Best Use
In the course of our investigation, we considered the single most likely use that reflects
the highest and best use of the subject site as vacant is to be the planned development of an
upscale ski and golf resort to the maximum density, catering to the second homeowner. While
the real estate market is cyclical in nature, we believe the near-term future for such a project is
steady to strong growth.
We conclude that the residential subdivision as described herein, represents the highest
and best use of the subject site as vacant and as improved (proposed). This conclusion is
based upon the above as well as the following:
1) With respect to physical characteristics of the subject, it is found that there are no
apparent physical factors such as topography, ingress and egress, soil conditions,
flooding or other adverse conditions that would preclude the proposed land use. On-
site utility services can be provided and should be considered to service the subject
adequately.
2) The housing market in general had been very strong in the recent past despite the
economic hardships that had faced the national economy. In our opinion, the housing
market will continue to strengthen coinciding with the resurgence in the local and
national economies. However, as always, the sustained health of the housing market
will depend on strong job growth, which is beginning to show signs of strength.
3) The success of comparable private golf club communities throughout the region, as
well as local developments indicates that the subject development project is feasible
and extremely marketable.
4) The subject property, with its golf amenity package as well as its exclusive private
residential community setting has differentiated itself from the competition and these
amenities will provide a significant positive effect on the subject, particularly on lot
pricing and absorption.
5) With respect to alternative highest and best uses, the utilization category selected for
the subject reflects the highest land value based upon current available market data
and economic conditions.
VALUATION SERVICES 54 4114 CU
SH AND
VALUATION PROCESS
Depending upon the specific appraisal assignment and/or the value being sought, any
one of several methods may be used to value land that is vacant or considered to be unimproved
or vacant. Appraisers typically use two approaches in valuing raw land with development
potential: 1) the Sales Comparison Approach; 2) Land Residual Approach; 3) Allocation and
Extraction methods; 4) Ground Rent Capitalization; and 5) Subdivision (or Land) Development
Method. The type of property and the quantity and quality of data affect the applicability of each
approach in a specific appraisal situation.
Sales Comparison Approach
The first method is the Sales Comparison Approach, which is the process of analyzing
sales of reasonably similar, recently sold sites in order to derive an indication of the most
reasonable and probable market value of the land being appraised;
The Sales Comparison Approach involves researching comparable tracts (raw, partly
developed, or fully developed) with similar location, appeal and development potential to the
subject property. We analyzed four bulk resort -oriented land sales that are considered
comparable to the subject. Adjustments are applied to the units of comparison from an analysis
of comparable sales, and the adjusted unit of comparison is then used to derive a total value.
The reliability of this approach is dependent upon (a) the availability of comparable sales data;
(b) the verification of the sales data; (c) the degree of comparability; (d) the absence of non-
typical conditions affecting the sales price.
Land Residual Approach
The second method is the Land Residual Approach which is a valuation technique based
upon the premise that income can be divided between land and improvements and that the
residual income to the land can then be capitalized into a value.
Allocation and Extraction Methods
The Allocation and Extraction Methods, which are two techniques that permit the
distribution of the total value or sales price of a property between land and building.
Ground Rent Capitalization
The Ground Rent Capitalization Method where ground rents can be capitalized at an
appropriate rate to indicate the market value of a site.
Subdivision (or Land) Development Method
The last method is the Subdivision (or Land) Development Method, the value of individual
lots and/or bulk parcels is established. The costs of developing and holding the proposed Tots are
deducted from revenues generated by projected sale of the lots to yield a series of net cash flows.
The net cash flows are then discounted to present value through the financial discounting
process.
Summary
The Sales Comparison Approach is the most appropriate in this instance, as the subject
consists of a Targe, raw development site with zoning entitlements. We found four comparable
sales of bulk land with resort development potential, all of which had or subsequently acquired
entitlements for resort community development.
VALUATION SERVICES 55
i0014 CUSHMAN &
Co WAKEFIELD,
•
•
•
Valuation Process
The subject property has entitlements however no construction has yet commenced on
any infrastructure. The developer has had several years to develop a detailed pro forma
regarding estimated revenues, costs and expenses for the subject development. We have
generally relied on the developer's cost and expense projections because of the complexity of the
subject project. Market assumptions regarding ski resort and real estate revenues were analyzed
vis-a-vis the market. However, at this stage, the project is still risky, in Tight of the amount of the
required infrastructure, development expertise in regards to ski resort development, golf course
development, and a mixed-use resort community There are too many assumptions that must go
into a Subdivision Development Method, therefore, we are only giving this method secondary
support.
-56-
SALES COMPARISON APPROACH •
Methodology
In the Sales Comparison Approach, we estimated value by comparing the subject
property with similar, recently sold properties in the surrounding or competing area. Inherent in
this approach is the principle of substitution, which holds that when a property is replaceable in
the market, its value tends to be set at the cost of acquiring an equally desirable substitute
property, assuming that no costly delay is encountered in making the substitution.
By analyzing sales that qualify as arms -length transactions between willing and
knowledgeable buyers and sellers, we can identify value and price trends. The basic steps of
this approach are:
1. Research recent, relevant property sales and current offerings throughout the competitive
area;
2. Select and analyze properties that are similar to the property appraised, considering
changes in economic conditions that may have occurred between the sale date and the date
of value, and other physical, functional, or locational factors;
3. Identify sales that include favorable financing and calculate the cash equivalent price;
4. Reduce the sale prices to a common unit of comparison such as price per square foot;
5. Make appropriate comparative adjustments to the prices of the comparable properties to
relate them to the property being appraised; and
6. Interpret the adjusted sales data and draw a logical value conclusion.
The most widely used and market-oriented unit of comparison for properties such as the subject
is the sales price per acre of land area (for bulk sites). All comparable sales were analyzed on
this basis.
Land Valuation
We used the Sales Comparison Approach to estimate land value of the subject's site.
In this method, we analyzed prices buyers are paying for similar sites in the subject's area. Our
value estimate was derived from prices of recently sold, comparable sites. In making
comparisons, we adjusted the sales prices for differences between the subject and the
comparable properties. Unless otherwise stated, sales are assumed to be arms -length
transactions. A land sales summary is provided on the following page. We also included
information about a nearby listing however we have not analyzed that property. Detailed sales
sheets of the five bulk sales are located in the Addenda.
The major elements of comparison utilized to value the subject site include the property
rights conveyed, the financial terms incorporated into the transaction, the conditions or
motivations surrounding the sale, changes in market conditions since the sale, the location of
the real estate, its utility and the physical characteristics of the property.
VALUATION SERVICES 57
Ali CUSHMAN &
$1?" WAKEFIELD:
•
•
Proposed Use
Sales Price
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Sales Comparison Approach
Analysis
The sales have been compared to the subject for various elements, which are listed as follows:
X Property Rights Conveyed
X Conditions of Sale
X Financing Terms
X Market Conditions
X Location
X Zoning/Density
X Utilities
X Topography
X Size
X Utility
Property Rights Conveyed
All of the sales involved the conveyance of the fee simple interest, and thus no
adjustments are considered necessary for this attribute.
Conditions of Sale
The land sales were generally reported to be typical arms -length transactions with no
unusual motivations, and thus no adjustments are required. However, Sale No. 4 had a
motivated seller and required an upward adjustment. Sale No. 2 had conditions of sale (to
remain confidential) that require significant upward adjustment.
Financing Terms
All of the land sales included in our analysis were reported to be cash or cash
equivalent sales with no impact on sale price due to unusual financing terms. Therefore, no
adjustments are required for this factor.
Market Conditions
The sales occurred between 2002 and 2005. During this time period, resort real estate
prices have escalated significantly. Upward adjustments are required for changes in market
conditions.
Location
The subject's locational characteristics were previously summarized. The sale
comparables are all located in the western U.S. in resort areas. Adjustments are made for
neighborhood (and nearby town/city) influences, highway and airport access.
VALUATION SERVICES 59
CUSHMAN &
t• WAKEFIELD,.
•
•
Sales Comparison Approach
Zoning
The subject is zoned for density permitted through the master plan approval process.
The sales varied in terms of zoning and permitted density. Zoning is considered to have a
significant effect on the value of raw land. All of the comparable sales had entitlements in place
except for Sale No. 2, hence this sale was adjusted upwards.
Utilities
The subject has adequate water to serve its development and on-site utilities will be
required. All of the comparables had generally similar situations with regards to availability of
utilities, and no adjustments are required.
Topography
The subject site has varied mountain topography from flat lakefront and meadows to
steep slopes of 50 percent or more. Overall, there are large areas of topography suitable for
development. The sales are mostly comparable in terms of topography with varied mountainous
terrain, and thus no adjustment for terrain has been applied.
Size
Typically, with all other factors equal, a smaller parcel will sell for more on a per acre
basis than a larger parcel. The sales data presented previously generally confirm this concept.
Also, a property with more developable units will sell for less on a per-unit basis, all things being
equal, as a longer sell-out is required.
Utility
Sale No. 2 was reported to have steep terrains that would require significant
development costs. This sale was adjusted upwards for utility.
Valuation Conclusion
Analysis on Per -Acre Basis
Because of the difficulty in analyzing such disparate properties, we have utilized overall net
adjustments to analyze the comparables. A summary of the net adjustments is as follows.
Comp. No.
Name
Price/Acre
Overall Net Adjustment
Significantly Downward
1
Confidential
$19,394
2
Confidential
$6,165
Slightly Upward
3
Confidential
$5,096
Substantially Upward
4
Battle Mountain
$5,041
Substantially Upward
Overall, the sales give an adjusted indication in the vicinity of $5,000 per acre to $8,800 per
acre, with a tighter range of $7,500 to $8,500 per acre. This range is applied to the subject's
estimated acreage of 5,949 acres.
VALUATION SERVICES 60
, WAKEFIELD.
Sales Comparison Approach
5,949 acres x
Rounded to
5,949 acres x
Rounded to
Estimated Land Value on Per Acre Basis
$7,500 per acre
$8,500 per acre
$44,614,875
$44,600,000
$50,563,525
$50,600,000
The two indications of value using the per -acre analysis range from $44,600,000 to
$50,600,000. We have concluded a land value for the subject of $7,600 per acre or
$45,200,000 using the per -acre analysis method.
VALUATION SERVICES 61
oak s WAKE ELD
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Sales Comparison Approach
LAND SALE ADJUSTMENT GRID
Economic Adjustments (Cumulative)
Property Charactenstic Adjustments (Additive)
Property Financing 8
Adjusted
5/Acre
Rights Conditions Exp. After Marker
Public
5/Unit
No. Sale Date
Conveyed of Sale Purchase Conditions
Subtotal
Location Size Utilities Utility** Other
(Buildable) Overall
1 519,394
Fee Simple/Mkt
Arms -Length
None Inferior
519,666
Superior
Smaller
Similar
Similar
Similar
58,849 Superior
5/05
0.0%
0.0%
0.0% I 1.4%
1.4%
-30.0%
-25.0%
0.0%
0.0%
0.0%
-550%
2 56,165
Fee Simple/Mkt
Arms -Length
None
Inferior
S6,985
Supenor
Similar
Similar
Inferior
Infenor
57,684 Inferior
12/04
0.0%
10.0%
0.0%
3.0%
13.3%
-10.0%
0.0%
0.0%
10.0%
10.0%
10.0%
3 55,096
Fee Simple/Mkt.
Arms -Length
None
Inferior
55,356
Superior
Similar
Similar
Similar
Similar
55,088 Superior
6/04
0.0%
0.0%
0.0%
5.1%
5.1%
-5.0%
0.0%
0.0%
0.0%
0.0%
-5.0%
4 55,041
Fee Simple/Mkt
Arrns-Length
None
Inferior
56,878
Similar
Smaller
Similar
Similar
Inferior
57,222 Infenor
6/02
0.0%
20.0%
0.0%
13.7%
36 4%
0.0%
•5.0%
0.0%
0.0%
10.0%
5.0%
SUMMARY
Price Range
Low
High
Average
Unad usted
Adjusted
S/Acre
55,041
56.165
55.434
5/Acre
S5.088
57,684
56.665
Net Adjustment Range (Additive Property Characteristics)
Low 5.0%
High 10.0%
Average 3.3%
TYPE YOUR CONCLUSION per acre
S7.600
CONCLUSION
S/Und S/SqFt Land
Indicated Value
Land Size
indicated Value
Rounded to nearest S50.000
Per unit or square foot
S7.600 SO 17
x 5.949 259.123.194
545.209.740 545,209,740
545,200,000 S45,200,000
57.598 S0 17
*Market Conditions Adjustment
Compound annual change in market conditions 4.00%
Date of Value (for adjustment calculations). 9/8/2005
"Utility includes shape, access, frontage and visibility.
VALUATION SERVICES 62�:II1CuWAKEFIELD,
s
SUBDIVISION DEVELOPMENT METHOD
Methodology
A subdivision has been defined as "a tract of land which has been divided into blocks or
plots with suitable streets, roadways, open areas, and other appropriate facilities for development
as residential, commercial or industrial sites," quoted from The Dictionary of Real Estate
Appraisal, Second Edition.
The first step with respect to the subject lots involves the estimation of the retail value of the
subdivided lots by a comparison with market transactions of other similar lots in the market. The
market value estimate of the lots is predicated upon the analysis of prices paid in actual market
transactions and current listings. It is a process of analyzing recent sales and current listings of
similar properties in order to derive an indication of the most probable sales price of the lots. The
reliability of this technique is dependent upon (a) the availability of comparable sales data, (b) the
verification of the sales data, (c) the degree of comparability or extent of adjustment necessary for
time differences, and (d) the absence of non -typical conditions affecting the sales price.
The second step involves an analysis of absorption. Since the lots in the subject
subdivision will be sold over a period of time, an absorption study is needed to indicate the time
required to market (sell out) the product.
The third step involves an analysis of development costs, which includes infrastructure
construction, golf course construction, etc. These must be deducted from revenues over time.
The fourth step is an analysis of selling and holding costs. Taxes, administrative costs, and
marketing and selling costs are all appropriate deductions from the revenue.
The final step involves a discounted cash flow analysis. This involves making estimates of
net proceeds for every period of the project over the required sell-out and applying an appropriate
discount rate in order to obtain an indicated total net present value (market value) of the
undeveloped land "as is".
This entire process involves sales comparison, cost analysis and capitalizing income into a
value estimate. The process is also often referred to as the Subdivision Development Method.
We begin the process by analyzing retail lot sales.
Retail Lot Analysis
We refer the reader to the Residential Market Analysis section, where competitive
developments were analyzed. Adjustment parameters include location, views, size, and amenities.
We must also project retail prices for each of the three major types of subject lots — golf -fronting
lots generally ranging from 1 to 3 acres; larger estate lots generally ranging from 3 to 12 acres;
and ranch lots ranging from 18 to 58 acres.
The developer's 151 release pricing for the subject lots is shown on the preceding page. The
developer has golf fronting and larger estate lots priced at a pre -development price of $700,000.
Pricing increases to $1,000,000 upon completion of infrastructures and amenities.
VALUATION SERVICES 63 ;ICU EFELD
•
•
•
Subdivision Development Method
The developer has ranch lots priced at a pre -development price of $1,400,000 to
$650,000 in the planned first release. Pricing increases to $1,900,000 upon completion of
infrastructures and amenities. The cabin lots are priced at $400,000.
Avg. # of Number of Years to Lots Sold Starting Ending
Lots T • es: Acres/Lot Lots Sell -Out Per Year Price Price
Estate Lots 5 260 6 43.3 $700 $1,000
Ranchettes 35 90 6 15.0 $1,400 $1,900
Cabin Lots 1 20 6 3.3 $400 $400
Comparable Lot Prices
The chart on the following page summarizes golf course lot prices among comparable
developments. There are three private clubs and one public -course development selling single-
family residential lots. The Maroon Creek Club is generally not comparable, as lot prices are
among the highest in the nation at this exclusive club located in Aspen. Golf fronting lots in
Aspen Glen and River Valley Ranch range from $200,000 to $430,000 per lot, on average. In
Cordillera, a higher end residential subdivision, the highest priced golf course fronting lots range
from $525,000 to $3,000,000. These sites front the new Nicklaus Summit course.
Based on the subject developer's asking lot prices and the comparable project lot prices,
we believe a price for golf -course fronting lots from $500,000 to $550,000 is reasonable. The
subject developer's average lot price is $700,000 subsequent to installation of utilities. In this
appraisal, we have concluded an average market price of $500,000 for golf -course fronting lots.
There are few developments offering large estate lots similar to the subject. Cordillera
has estate lots at prices up to $950,000. Off -course lots range from $170,000 to $525,000. We
have concluded an average market price of $600,000 for estate lots.
In regards to ranch sites, there are several developments offering large ranch sites. The
subject's ranch sites will offer good views of the golf courses, valley and Mt. Sopris. There are
other developments in the Roaring Fork Valley offering ranch -size sites, but these development
lack the amenities of the subject. High Aspen Ranch sold 35 -acre lots from $465,000 to
$640,000. Cordillera offers 35 -acre ranch parcels at $1.00 per square foot or $1.5 million.
Based on this analysis, we have concluded an average market price of $800,000 for the
subject's ranch lots.
VALUATION SERVICES 64 01II14CUSHMAN&
sem=') WAKEFIELD,
Subdivision Development Method
Lot Price Appreciation
Lot price appreciation has varied and been positive in previous years among the
comparable developments. Lot appreciation has been zero to over 50 percent. The
appreciation in lot prices among the comparables is difficult to gauge, due to changes in the
type of lots being sold. A typical inflation rate would be 3.0 percent, although in resort
valuations 3.5 or 4.0 percent is utilized, with possible higher levels in the initial years.
Due to current market conditions, we believe the lot prices projected above will remain
stable through the next two years, and begin increasing in subsequent years. As the subject is
developed and the golf courses, clubhouse, etc. are completed, the lot prices will be increased.
In subsequent years, lot prices are projected to increase at inflationary levels. We have
projected the appreciation in average market lot prices as follows:
Average Price Average Price Average Price
Year Golf Lot Estate Lot Ranch Lot
1 $500,000 $600,000 $800,000
2 $650,000 $750,000 $900,000
3 $750,000 $850,000 $1,100,000
4 forwards Inflationary increases (4%)
Forecast Absorption of Lots
This is an analysis of the anticipated absorption or "sell-off' rate at which the proposed
lots can be sold for successfully in the marketplace. The anticipated absorption rate for the
subject subdivision can be estimated from the sales activity of other comparable subdivisions in
the market as well as the sales activity of the subject.
As detailed in the Residential Market Analysis, the sales of residential Tots in comparable
developments have ranged from 33 to 112 per year, with an average of 61. Aspen Glen and
Cordillera reported an average of 46 lots per year since it started. River Valley Ranch reported
absorption of 50 lots per year. The best absorption comparables are these three developments.
National comparables utilized in this analysis reported absorption rates between 17 (Tuhaye
Ranch, inferior) and 94 Tots per year, which equates to an average of 55 Tots per year.
The subject developer is projecting an average of approximately 43 estate and golf site
sales per year, and 15 ranch lot sales per year and 3 cabin lots per year within six years. This
equates to 62 lot sales per year. This is higher compared to the comparables.
Considering absorption rates at competing projects, the developer's projected sell-off,
the existing supply of Tots in the market, and current market conditions, we have made the
following absorption projections:
VALUATION SERVICES 65
$. p WAK F ELD
•
•
•
Subdivision Development Method
C&W Projected Lot Absorption Rates
Year Golf Lots Estate Lots Ranch Lots Cabin Lots Duplex Lots Total
1 0 0 0 0 0 0
2 10 15 5 0 0 30
3 20 25 20 0 0 65
4 25 30 20 10 0 85
5 20 25 20 10 1 76
6 20 20 10 0 0 50
7 10 20 10 0 0 40
8 5 19 6 0 0 30
110 154 91 20 1 376
Our projected absorption of residential lots is at a slower pace, on average than the
developer's projections due to a longer time frame of eight years. We have also projected a
larger percentage of lot sales will occur starting year 3.
Affordable Housing
A total of 75 affordable housing units will be required. It is common for developers of
such major projects to utilize a separate builder for the affordable housing units. In this
appraisal, we have assumed that any revenues will be offset by expenses. We have assumed a
separate builder will construct the affordable housing units.
Village Center
The Village Center sites are assumed to be sold to commercial developers subsequent
to completion of much of the remainder of the development, and establishment of residential
housing in the area. The amount of land that can be sold and the price per square foot is highly
speculative at this time. The subject developer has not projected revenues or expenses for the
Village Center. We have not done so. The potential to create income from the Village Center in
the future is accounted for in our selection of a discount rate.
Golf Revenues
We have tied golf membership sales to lot sales, and thus to our lot sale projections. For
every 2 -lot sales at the subject, at least one more membership is projected to be sold to a non-
resident.
We have also projected that membership fees would start at $75,000 for the first two years,
increasing to $125,000 and $150,000 in the third and fourth years. This ties in with the opening of
the course itself and the clubhouse as well as other amenities. Subsequent to this, we project an
inflationary increase in membership fees. Based on this analysis, we have made the following
projections of golf membership sales:
In addition, the membership fees and dues are forecast as follows:
VALUATION SERVICES 66 iI]I CU HMANEa
Subdivision Development Method
Year Membership Fee Annual Dues
1-2 $ 75,000 $6,000
3 $125,000 $7,000
4 $150,000 $7,500
5 Inflationary growth Inflationary growth
Social Membership Pricing/Sales Rate
Social memberships are projected to be sold upon completion of majority of the
amenities, including the clubhouse. These are utilized to provide dues revenue and additional
initiation fees as well as increase food and beverage sales. Social memberships at Cordillera
are $10,000, plus $2,600 per year annual dues. A buyer that acquires a resale home can be
charged $15,000 for social membership. At Maroon Creek Club, social memberships are
$15,000 for tennis and another $2,500 for the fitness.
Considering social membership rates at other clubs, we have projected a social
membership fee of $15,000, growing at inflationary levels. Annual social dues are forecast at
$3,000, growing at inflationary levels.
Guest Fees/Cart Fees
The number of rounds for the more comparable northern -climate courses generally
ranges from 10,000 to 20,000 per year. The subject would be expected to have a stabilized
number at the low end of this range, due to climate. The number of rounds at Aspen Glen and
Roaring Fork is approximately 10,000 per year, while Maroon Creek Club is 8,500. Given an
average of 20 rounds per member and 376 members, a total of 7,520 rounds per year for
members would be typical upon reaching maximum membership for each course. Another
3,760 guest rounds per course would be anticipated, as many members would invite more than
one guest at multiple times per year. In our analysis, we have projected 20 rounds per member
per year based on the total number of members that have joined. Guest rounds are projected at
half the total member rounds. We have projected the following guest fees and cart rental fees
based on typical rates at comparable clubs:
Per 18 -holes
Forecast Average Revenue/Round
Cart Fees
Guests of Members
$ 20.00
$150.00
Pro Shop and Food/Beverage Revenue
Pro shop and food/beverage revenue is highly speculative at this point, and we have
projected that expenses will offset revenues. It is also common for an owner to bring in an
outside operator for restaurant operations. The pro shop and restaurant are typically amenities
and are not often considered a generator of net income.
VALUATION SERVICES 67
,A4 CUSHMAN &
qp WAKEFIELD,
•
•
•
Subdivision Development Method
Conclusion — Revenues
The subject will generate revenues from residential lot sales, golf memberships, social
memberships and various minor sources, such as golf cart rental. Application of rates and
absorption levels is presented in the charts toward the end of the subdivision development
method.
Development Costs
The level of construction for the subject is very extensive, and detailed analysis of all
development cost items is not conducted herein.
Development costs incurred to date include land acquisition, certain legal fees,
engineering design, surveys, preliminary plan creation and consulting, product design,
overhead, wastewater treatment plant fees, fire district fees, and golf course design fees. Total
costs incurred through year-end 2000 were $10,952,967, excluding land acquisition and land
closing costs. Costs incurred in 2001 have been relatively nominal.
Total remaining development costs (including golf course construction) projected by the
developer were $228,235,000, or $38,367 per acre. The golf course construction costs are
projected at an average of $15,000,000 for the 18 -hole regulation course, or $833,333 per hole.
This is higher than comparable golf courses throughout the nation, which typically cost up to
$500,000 per hole, and typically ranges from $200,000 to $300,000 per hole. The higher costs
of the subject are due to location, quality and name brand design. Maroon Creek Club, Aspen
Glen and Cordillera golf course construction costs were indicated to be well above $500,000.
Given the quality of the subject's infrastructure and golf courses, total development costs
of $38,367 per acre are supported by comparable costs of similar -quality developments.
However, our conversations with Mr. Mike Gamba indicated an increase (about 25%) in raw
material costs in the past months. Therefore we have increased the development cost by
approximately 10 percent. The development cost estimate already includes a 5 percent
contingency, hence the lower increase. We have also inflated our cost projections.
Operating/Holding Expenses
During the absorption period, there will be necessary holding and selling costs
associated with lot sales and operating the golf courses, clubhouse, equestrian center, etc.
These are projected as follows:
Cost of Sales/Closing Costs
The cost of commissions and closing costs must be subtracted from lot sales revenue.
In resort subdivisions, budgeted cost of sales ranges from 3.5 to 7.5 percent, with closing costs
of 0.5 to 2.0 percent, for a total ranging from 4.0 to 8.5 percent. In the developer's pro forma,
they have estimated in-house and outside commissions at a total of 8 percent, including closing
costs.
VALUATION SERVICES
68 41114 CUSHMAN &
sst• WAKEFIELD,
Subdivision Development Method
In our analysis, we have projected overall sales commissions at 6.0 percent and closing
costs at 1.0 percent, which equates to a total sales commissions and closing costs of 7.0
percent. This allows for some marketing costs and co-op brokerage with the local Glenwood
Springs realtor community.
Administrative/Taxes/Overhead/Miscellaneous
Administrative and overhead costs will include the cost of running the sales office,
construction management, legal and accounting costs, general administrative costs, including
personnel and office costs, insurance, travel, phones, real estate taxes, homeowners
association (HOA), and other miscellaneous costs. We have utilized an operating cost of 3.0
percent of annual gross revenue, which is more in line with other competitive resort projects.
The real estate taxes in the subject development are expected to be minor in
comparison to other costs for the subject development. The developer will be responsible for
real estate taxes for the units held in inventory. Future phases will likely be assessed as
forestland until improved with homes, and therefore negligible. For this purpose, we have
included any future real estate taxes associated with the resort land to be included with the
above expense item.
Contingency
We have included a 5.0 percent contingency on all development costs and expenses.
Golf Course Maintenance/Operations
These expenses include payroll, which includes the golf course superintendent and
assistant and the maintenance crew, as well as all other costs (fertilizer, water, etc.) to maintain
the course in very good shape. Comparable clubs had a mean of approximately $24,000 per
hole based on a 24 -course expense data survey, with a high of $30,500 per hole for a private
club. Golf operations will comprise payroll and related costs for strictly the golf operations,
including golf pro and pro shop operations. Expenses of $20,000 per hole are typical. Total golf
course maintenance and operations are projected at $1,000,000 in year 3; $2,000,000 in years
4, 5, and 6; $1,500,000 in year 7, and $500,000 in year 8 as the operations become profitable.
Expense Growth
Unless otherwise noted, expenses are forecast to increase at the forecast inflation rate of
3.0 percent.
VALUATION SERVICES 69
4 ) WA EF ELD
Subdivision Development Method
iDiscounted Cash -Flow Analysis
•
•
The final step in the subdivision valuation analysis of the subject involves a discounted
cash flow analysis. This technique requires calculating estimates of net proceeds after
construction and holding costs by period (annually for this analysis) over the development
sellout period and applying an appropriate discount rate in order to obtain an indicated total net
present value contribution to the land. This capitalization process (Subdivision Development
Method) may be applied to estimate the present value of the development.
Investors in subdivision development typically make a forecast of net cash flows over
the required absorption period, which varies based upon the number of lots in the subdivision.
The projections are then utilized to determine a purchase price that will justify the degree of risk
inherent in the proposed investment through the application of an appropriate present worth
factor. This present worth factor (discount rate) is essentially the yield rate (IRR) reflecting a
typical investor's or developer's requirements for cost of capital, or the competitive rate of return
for an investment of similar risk and cash flow. Effectively, the discount rate is the annual rate
of return before debt or tax required to attract investment capital to the project.
Present Value Analysis
By deducting costs and expenses from gross revenues, we arrive at a series of annual
cash flows or net revenues. By applying the financial discounting process, net revenues can be
expressed in terms of present value. The present value of the net revenues equals the market
value of the property, as estimated by discounted cash flow analysis. The discounted cash flow
model attempts to reflect the most likely actions of buyers and sellers of properties with similar
development potential to the subject. Our computer model simulates the revenue and cost
projections of the subject property over the projected absorption period.
Discount Rate (Internal Rate of Return)
In selecting an appropriate discount rate, consideration must be given not only to
available yields on alternative investments, but to the property's location, quality, market
conditions and perceptions of future market recovery.
Cushman & Wakefield Inc., surveys real estate investors to determine their investment
objectives. The formal publication of the survey included yield expectations for improved
properties, yet are not necessarily applicable to land valuation. The majority of the surveyed
investors require yields ranging from 9.0 to 12.5 percent for improved properties, depending on
the risk of the individual investment. Land development risk is much higher than for improved
properties. In addition, we utilized data from the PricewaterhouseCoopers, Korpacz Real Estate
Investor Survey for the second quarter of 2005. Listed below in the following table are the
results of their IRR survey, which includes developer's profit.
VALUATION SERVICES 70 ,JiI CUSHMAN&
���� WAKEFIELD,
Subdivision Development Method
Discount Rates
Including Developer's Profit
2"d Quarter 2005
2nd Quarter 2005 4th Quarter 2004
Free & Clear
Range 11.0%-25.0% 11.0%-25.0%
Average 18.05% 18.05%
Change -0
Subject to Financing
Range N/A N/A
Average N/A N/A
Change --- ---
Source: PricewaterhouseCoopers, Korpacz Real Estate Investor Survey, 2n° Quarter 2005
The Korpacz Real Estate Investor Survey for Second Quarter 2005 indicates that land
development unleveraged IRRs range from 11.0 to 25.0 percent, with an average of about
18.05 percent. (Note: These IRRs include developer's profit.)
Risk for development projects such as the subject includes three components:
1) Planning and zoning risk, including zoning approvals, entitlements and plat
approval;
2) Construction risk, including engineering and infrastructure costs, and the potential
for cost overruns and unforeseen site problems such as soils or environmental
issues; and,
3) Marketing risk, also known as sell-out risk, based on how market conditions may
change upon completion of the project and the marketability of the developer's
improved product.
Although the subject has entitlements, there remains risk in terms of plat and other
approvals.
The subject has the full range of other risk factors, which are construction risk and
marketing risk, since the project has not yet begun construction. Resort development is
generally the riskiest type of development, because it relies on discretionary income. The
longer-term projects generally have more risk, since future market conditions are more difficult
to determine.
The high end of the Korpacz study was 25 percent, although we have seen IRRs for resort
development over 40 percent, in some cases. Therefore, we have concluded that a 20.0 to 25.0
percent IRR reflects the risk inherent in the subject property at this stage. However, because of
the continuous compression of rates, we have concluded at the lower end of the range.
Therefore, we selected an IRR of 20.0 percent.
VALUATION SERVICES 71 ACUSHMAN&
���„� WAKEFIELD,
•
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69 69
•
•
•
•
Subdivision Development Method
As shown in the cash-flow models presented on the preceding page, the value of the
subject from the discounted cash flow analysis is $42,459,662, rounded to $42,500,000. The as
is" market value indication produced by the Subdivision Development Method is as follows:
Market Value Conclusion
$42,500,000
VALUATION SERVICES 74 illl.hCUSHMAN&
Mr, WAKEFIELD
RECONCILIATION AND FINAL VALUE ESTIMATE
The appraisal of the as -is market value of the subject property produced the following value
indications.
Value Indications
Sales Comparison Approach $45,200,000
Subdivision Development Method $42,500,000
The appropriate approaches for valuing a planned residential subdivision like the
subject are the Sales Comparison Approach and the Residential Subdivision Development
Method. In the Sales Comparison Approach, we analyzed bulk land sales of Targe land parcels.
Although the subject has some unique characteristics, it remains a large tract of resort
development land with entitlements. The Sales Comparison Approach is the most appropriate in
this instance, as the subject consists of a large, raw development site with zoning entitlements.
Although our assumptions are reasonable, there are just too many assumptions that must go into
a Subdivision Development Method at this stage, therefore, we are only giving this method
secondary support.
Based on our complete appraisal, we have formed an opinion that the market value of the
fee simple estate, as of September 8, 2005, was:
FORTY FOUR MILLION DOLLARS
$44,000,000
VALUATION SERVICES 75
onlii CUSHMAN &
$ ) WAKEFIELD«
•
•
•
MARKETING PERIOD
Several factors were considered in estimating a reasonable marketing period and exposure
time for the subject. These include current market conditions, specific property characteristics.
The subject has undergone a tremendous amount of planning, coordination, legal work, marketing
and infrastructure. This is a large, private golf course community. Basically, a developer would be
able to step into the project and likely take it to completion, assuming zoning approvals were
obtained.
According to the Golf Financing and Investment Survey, the average marketing period for a
golf course is approximately nine months, with a range from two to twenty months.
The value indication reflects appropriate profit levels for each aspect of the development.
The value estimate presumes the property has been exposed to the market for 12 to 24 months.
VALUAATION SERVICES
7 % 4111% CUSHMAN &
�
WAKEFIELD.
ASSUMPTIONS AND LIMITING CONDITIONS
"Report" means the appraisal or consulting report and conclusions stated therein, to which
these Assumptions and Limiting Conditions are annexed.
"Property" means the subject of the Report.
"C&W' means Cushman & Wakefield, Inc. or its subsidiary that issued the Report.
"Appraiser(s)" means the employee(s) of C&W who prepared and signed the Report.
The Report has been made subject to the following assumptions and limiting conditions:
1. No opinion is intended to be expressed and no responsibility is assumed for the legal
description or for any matters that are legal in nature or require legal expertise or
specialized knowledge beyond that of a real estate appraiser. Title to the Property is
assumed to be good and marketable and the Property is assumed to be free and clear of
all liens unless otherwise stated. No survey of the Property was undertaken.
2. The information contained in the Report or upon which the Report is based has been
gathered from sources the Appraiser assumes to be reliable and accurate. The owner of
the Property may have provided some of such information. Neither the Appraiser nor
C&W shall be responsible for the accuracy or completeness of such information,
including the correctness of estimates, opinions, dimensions, sketches, exhibits and
factual matters. Any authorized user of the Report is obligated to bring to the attention
of C&W any inaccuracies or errors that it believes are contained in the Report.
3. The opinions are only as of the date stated in the Report. Changes since that date in
external and market factors or in the Property itself can significantly affect the
conclusions.
4. The Report is to be used in whole and not in part. No part of the Report shall be used in
conjunction with any other analyses. Publication of the Report or any portion thereof
without the prior written consent of C&W is prohibited. Reference to the Appraisal
Institute or to the MAI designation is prohibited. Except as may be otherwise stated in
the letter of engagement, the Report may not be used by any person(s) other than the
party(ies) to whom it is addressed or for purposes other than that for which it was
prepared. No part of the Report shall be conveyed to the public through advertising, or
used in any sales, promotion, offering or SEC material without C&W s prior written
consent.
Any authorized user(s) of this Report who provides a copy to, or permits reliance thereon
by, any person or entity not authorized by C&W in writing to use or rely thereon, hereby
agrees to indemnify and hold C&W, its affiliates and their respective shareholders,
directors, officers and employees, harmless from and against all damages, expenses,
claims and costs, including attorneys' fees, incurred in investigating and defending any
claim arising from or in any way connected to the use of, or reliance upon, the Report by
any such unauthorized person(s) or entity(ies).
VALUATION SERVICES 77 i,A114 uK WAKEFIELD.
•
•
•
Assumptions and Limiting Conditions
5. Except as may be otherwise stated in the letter of engagement, the Appraiser shall not
be required to give testimony in any court or administrative proceeding relating to the
Property or the Appraisal.
6. The Report assumes (a) responsible ownership and competent management of the
Property; (b) there are no hidden or unapparent conditions of the Property, subsoil or
structures that render the Property more or Tess valuable (no responsibility is assumed
for such conditions or for arranging for engineering studies that may be required to
discover them); (c) full compliance with all applicable federal, state and local zoning and
environmental regulations and laws, unless noncompliance is stated, defined and
considered in the Report; and (d) all required licenses, certificates of occupancy and
other governmental consents have been or can be obtained and renewed for any use on
which the value opinion contained in the Report is based.
7. The physical condition of the improvements considered by the Report is based on visual
inspection by the Appraiser or other person identified in the Report. C&W assumes no
responsibility for the soundness of structural members or for the condition of mechanical
equipment, plumbing or electrical components.
8. The forecasted potential gross income referred to in the Report may be based on lease
summaries provided by the owner or third parties. The Report assumes no responsibility
for the authenticity or completeness of lease information provided by others. C&W
recommends that legal advice be obtained regarding the interpretation of lease
provisions and the contractual rights of parties.
9. The forecasts of income and expenses are not predictions of the future. Rather, they
are the Appraiser's best opinions of current market thinking on future income and
expenses. The Appraiser and C&W make no warranty or representation that these
forecasts will materialize. The real estate market is constantly fluctuating and changing.
It is not the Appraiser's task to predict or in any way warrant the conditions of a future
real estate market; the Appraiser can only reflect what the investment community, as of
the date of the Report, envisages for the future in terms of rental rates, expenses, and
supply and demand.
10. Unless otherwise stated in the Report, the existence of potentially hazardous or toxic
materials that may have been used in the construction or maintenance of the
improvements or may be located at or about the Property was not considered in arriving
at the opinion of value. These materials (such as formaldehyde foam insulation,
asbestos insulation and other potentially hazardous materials) may adversely affect the
value of the Property. The Appraisers are not qualified to detect such substances. C&W
recommends that an environmental expert be employed to determine the impact of
these matters on the opinion of value.
11. Unless otherwise stated in the Report, compliance with the requirements of the
Americans with Disabilities Act of 1990 (ADA) has not been considered in arriving at the
opinion of value. Failure to comply with the requirements of the ADA may adversely
affect the value of the Property. C&W recommends that an expert in this field be
employed.
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Assumptions and Limiting Conditions
12. If the Report is submitted to a lender or investor with the prior approval of C&W, such
party should consider this Report as only one factor together with its independent
investment considerations and underwriting criteria, in its overall investment decision.
Such lender or investor is specifically cautioned to understand all Extraordinary
Assumptions and Hypothetical Conditions and the Assumptions and Limiting Conditions
incorporated in this Report.
13. In the event of a claim against C&W or its affiliates or their respective officers or
employees or the Appraisers in connection with or in any way relating to this Report or
this engagement, the maximum damages recoverable shall be the amount of the monies
actually collected by C&W or its affiliates for this Report and under no circumstances
shall any claim for consequential damages be made.
14. If the Report is referred to or included in any offering material or prospectus, the Report
shall be deemed referred to or included for informational purposes only and C&W, its
employees and the Appraiser have no liability to such recipients. C&W disclaims any
and all liability to any party other than the party that retained C&W to prepare the Report.
15. At the Client's request, we have provided an insurable value estimate. The estimate is
based on figures derived from a national cost estimating service and is developed
consistent with industry practices. However, actual local and regional construction costs
may vary significantly from our estimate and individual insurance policies and
underwriters have varied specifications, exclusions, and non -insurable items. As such,
we strongly recommend that the Client obtain estimates from professionals experienced
in establishing insurance coverage for replacing any structure. This analysis should not
be relied upon to determine insurance coverage. Furthermore, we make no warranties
regarding the accuracy of this estimate.
16. By use of this Report each party that uses this Report agrees to be bound by all of the
Assumptions and Limiting Conditions, Hypothetical Conditions and Extraordinary
Assumptions stated herein.
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SPECIAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal is made subject to the following extraordinary assumptions and limiting
conditions:
•
The Spring Valley Ranch Planned Unit Development has been approved by Garfield
County. A Preliminary Plan has been approved and a Final Plat for Phase I and a
Subdivision Improvement Agreement will be submitted. It is assumed that this Final Plat
and Subdivision Improvement Agreement will be approved prior to construction
commencement.
• It is assumed that the subject will be developed according to the development plans
presented in this appraisal, and that construction will commence no later than November
2005, the expiration of the approved Preliminary Plan.
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CERTIFICATION OF APPRAISAL
We certify that, to the best of our knowledge and belief:
1. Arod B. Javier, inspected the subject property and prepared the report. Guy DiRienzo,
MAI, reviewed and approved the report but did not inspect the property.
2. No one provided significant professional assistance in the preparation of this report.
3. The statements of fact contained in this report are true and correct.
4. The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, and are our personal, unbiased professional
analyses, opinions, and conclusions.
5. We have no present or prospective interest in the property that is the subject of this
report, and we have no personal interest or bias with respect to the parties involved.
6. The appraisal assignment was not based on a requested minimum valuation, a specific
valuation, or the approval of a loan. Our compensation is not contingent upon the
reporting of a predetermined value or direction in value that favors the cause of the
client, the amount of the value estimate, the attainment of a stipulated result, or the
occurrence of a subsequent event.
7 Our analyses, opinions and conclusions were developed, and this report has been
prepared, in conformity with the Uniform Standards of Professional Appraisal Practice of
the Appraisal Foundation and the Code of Professional Ethics and the Standards of
Professional Practice of the Appraisal Institute.
8. The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
9. Guy DiRienzo, MAI, and Arod B. Javier, are currently Certified General Appraisers, in
accordance with Colorado State law, which implemented appraiser licensing and
certification requirements, effective June 1, 1992.
10. As of the date of this report, Guy DiRienzo, MAI, and Arod B. Javier, have completed the
requirements of the continuing education program of the Appraisal Institute.
Arod B. Javier
Associate Director
Colorado Certified General Appraiser
License No. CG40026961
Guy DiRienzo, MAI
Managing Director
Colorado Certified General Appraiser
License No. CG40004774
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ADDENDA
Subject Photographs
Engagement Letter
Legal Descriptions
Developer's Construction Cost Estimates
Developer's Proforma
Appraiser's Qualifications
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