APPRAISAL REPORT OF VACANT LAND LOCATED AT THE … · Tucson, Arizona 85701 RE: Appraisal of vacant land, located at the Northwest corner of Elm Street and 7th Avenue, Tucson, Pima

3320 N. Country Club Rd, Ste 230 ♦ Tucson, Arizona 85716 ♦ Ph: 520-545-0000 ♦ www.axiaappraisers.com

APPRAISAL REPORT

OF

VACANT LAND

LOCATED AT THE

NWC OF ELM STREET AND 7TH AVENUE, TUCSON, PIMA COUNTY, ARIZONA 85705

PREPARED FOR THE

CITY OF TUCSON

PREPARED BY

JAMES S. BRADLEY, MAI, AI-GRS, CCIM & ANDRES A. RUBAL

EFFECTIVE DATE OF THE APPRAISAL: FEBRUARY 22, 2018

DATE OF REPORT: MARCH 12, 2018

AXIA FILE NO.: 22046-181 COT APPRAISAL INDEX # 18008.01

3320 N. Country Club Rd. Ste 230 ♦ Tucson, Arizona 85716 ♦ Ph: 520-545-0000 ♦ www.axiaappraisers.com

AXIA File No. 22046-181 COT Appraisal Index # 18008.01 March 12, 2018 Mr. James A. Rossi; Administrator Real Estate Division, City of Tucson 201 N. Stone Avenue, 6th Floor Tucson, Arizona 85701 RE: Appraisal of vacant land, located at the Northwest corner of Elm Street and 7th Avenue,

Tucson, Pima County, Arizona, 85705. Dear Mr. Rossi: In accordance with your request, we have inspected and appraised the above-identified property, which is the subject of the attached report. The purpose of this appraisal is to develop an opinion of the market value of the subject property. The intended use of this report is to assist the City in establishing the basis for a potential sale of city owned land. The effective date of the appraisal is February 22, 2018, the most recent date of our inspection. The ownership and legal description of this property are set forth in the following report. We have performed no services, as appraisers or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. This report has been prepared for the City of Tucson, and is not intended to be used, transferred, or relied upon by any person other than the client. The intended users of this appraisal include the client; the City of Tucson. It is noted that this report, upon acceptance by the client, will become public information. AXIA Real Estate Appraisers and the signatory of this report assume no responsibility to any party, other than the client and other intended users, who uses or relies on any information in this report. This report has been prepared in conformance the Uniform Standards of Professional Appraisal Practice (USPAP 2018-2019) promulgated by the Appraisal Standards Board of the Appraisal Foundation, Arizona Revised Statutes, and the appraisal guidelines of the City of Tucson. All information pertinent to the analyses and conclusions is presented in a summarized format. Excluded valuation approaches, if any, are explained and supported. Any additional information is contained within our file and is available to the client.

22046-181 Page 2 March 12, 2018 The Scope of Work for this report includes completing an appraisal inspection of the subject, analyzing Pima County and the Tucson area for trends that impact real estate values, and searching the local market for comparable data. For this analysis we have completed one of the three approaches to market value: the Sales Comparison Approach. The market value conclusion resulting from the implementation of this methodology is considered sufficient to provide credible assignment results. Additional details regarding the scope of work can be found within the scope of work section of this report. Based upon the data and discussions contained within this report and supported by information contained in the file, our market value opinion of the subject follows: MARKET VALUE OPINION OF THE SUBJECT PROPERTY, AS IS, AS OF FEBRUARY 22, 2018 ...........................................................................................$136,000 The exposure time, as premised upon the above value conclusion, is estimated to be less than 12 months. We hereby certify that Andres A. Rubal inspected the subject; that our fee was not contingent upon the value opinion contained herein; and that we have no interest, present or prospective, in the property appraised. Furthermore, we certify that, to the best of our knowledge and belief, all statements, and opinions contained in this report are correct, subject to the assumptions, conditions, special limiting conditions, and certification that are made as part of this report. Respectfully submitted, JAMES S. BRADLEY, MAI, AI-GRS, CCIM ANDRES A. RUBAL President, AXIA Real Estate Appraisers Certified General Real Estate Appraiser, Certified General Real Estate Appraiser, Arizona Certificate #31801 Arizona Certificate #30432

22046-181 AXIA Real Estate Appraisers Page 1

TABLE OF CONTENTS

Page Table of Contents ................................................................................................................................ 1 INTRODUCTION Intended User and Intended Use ......................................................................................................... 2 Interest Appraised ............................................................................................................................... 2 Effective date of the appraisal ............................................................................................................. 2 Market Value Definitions ..................................................................................................................... 3 Property History/Ownership ................................................................................................................ 3 Scope of the Appraisal and Valuation Methodology .......................................................................... 4 DESCRIPTIONS Neighborhood/Area Overview ............................................................................................................ 5 Site Description ............................................................................................................................ 19 Property Tax Data ........................................................................................................................ 23 Highest and Best Use .................................................................................................................. 30 VALUATION Sales Comparison Approach ....................................................................................................... 33 Estimated Exposure Period ................................................................................................................ 47 Appraisers’ Certification .................................................................................................................... 48 Appraisers’ Qualifications ................................................................................................................. 50 ADDENDA


INTRODUCTION This appraisal is being written in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP). All information pertinent to the value conclusions contained herein is presented in summarized format within this report. One of the three traditional approaches to value have been considered and developed, the Sales Comparison Approach. This report is considered to contain sufficient detail that the client and intended users of the report should understand it, and that they should deem the data, analysis and conclusions contained herein to be credible. Any additional information, if necessary, is contained within the file and is available to the client. Here follows a summary of our analysis. Property Identification The subject property is located at the northwest corner of Elm Street and 7th Avenue in Tucson, Arizona. The subject is located in the central area of the Tucson city limits. The site has a physical address of 25 & 31 East Elm Street and 1705 N. 7th Avenue, Tucson, Pima County, Arizona 85705. Per the legal descriptions drawn by the City of Tucson Engineering Division, including a ROW to be vacated along Elm Street, the gross square footage is 40,744 (38,494+2,249.5) square feet or 0.93 acres. However, a flowage easement via the Bronx Wash (inclusive of a drainage easement) runs along the northern and western boundaries of the subject property, resulting in a net useable area of 29,771 square feet or 0.68 acres (40,744 SF less 10,973 SF flowage easement). Purpose, Intended Use, and Intended User The purpose of this appraisal is to develop an opinion of the market value of the subject property. The intended use of this report is to assist the City in establishing the basis for a potential sale of city owned land. The intended users of this appraisal include the client; the City of Tucson. It is noted that this report, upon acceptance by the client, will become public information. AXIA Real Estate Appraisers and the signatory of this report assume no responsibility to any party, other than the client and other intended users, who uses or relies on any information in this report. Interest Appraised As the subject reflects vacant land, the interest appraised is that interest arising from fee simple ownership. Fee simple ownership can be defined as “Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat”1. Effective date of the appraisal The effective date of the appraisal is February 22, 2018, the most recent date of our inspection.

1 The Dictionary of Real Estate Appraisal, 6th Edition, published by the Appraisal Institute


Market Value Definition

Market value means the most probable price, which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

(1) Buyer and seller are typically motivated; (2) Both parties are well-informed or well-advised, and acting in what they

consider their own best interests; (3) A reasonable time is allowed for exposure in the open market; (4) Payment is made in terms of cash in U.S. Dollars or in terms of financial

arrangements comparable thereto; and (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.2

Property History/Ownership The subject property currently represents five parcels of City of Tucson owned land and a right-of-way area. The parcels were acquired by the superintendent of streets in 1971 per Docket and Page 4016/490 or were acquired on October 5, 1978, per Docket 5876 at Page 977 in the Pima County Recorder’s Office. The City of Tucson is interested in selling the property but no price has been established the appraisal will be the basis for list price.

2 FIRREA.


SCOPE OF THE APPRAISAL AND VALUATION METHODOLOGY

This is an appraisal presented in a summarized format. The scope of the appraisal includes inspection of the subject property and the neighborhood as well as information specific to subject property. General market and regulatory information was accessed from government publications and websites as well as econometrics publications including Costar Analytics. Information was also obtained through conversations with brokers, appraisers, and locally active market participants. One of the three traditional approaches to value have been considered and developed. The property reflects vacant land. Therefore, the Sales Comparison Approach is fully developed. As we are evaluating vacant land, the Cost Approach and Income Approach to value are not considered applicable and are not developed in this report. This methodology is considered sufficient to develop credible assignment results.


AREA OVERVIEW The purpose of this section of the report is to identify and analyze the social, economic, governmental, and environmental forces that can influence property values in the vicinity of the subject. The primary area of influence is the neighborhood, defined as a group of complimentary land uses; a residential neighborhood may contain residential uses along with ancillary commercial uses that provide services for the residents. A district, on the other hand, has one predominate land use such as apartments, commercial, industrial, or agricultural. ARIZONA Arizona is in the southwestern area of the United States within the Sunbelt Region and ranks sixth in the nation in terms of size with 113,417 square miles. The state can be divided into three geographical areas, each with its own distinct topography and climate. The northeastern portion of the state is a high plateau, which tends to be cool and dry. Most of this area is within the boundaries of the Navajo Nation, the largest Native American reservation in the United States. The mountainous region, extending diagonally across the state from northwest to southeast, offers cool summertime temperatures and winter sports opportunities, attracting visitors to this area year-round. The remaining half of the state, south and west of the mountainous region, consists of desert valleys divided by low desert mountain ranges and is home to most of the state's population; about 80 percent of the state population resides in the Tucson and Phoenix metropolitan areas. Between 1980 and 1990, Arizona was the third fastest growing state, with a population increase of almost 35 percent. According to the 2000 census, approximately 5,130,000 people resided in the State, up from 3,665,000 in 1990, reflecting an increase of about 40 percent, or a 4.0 percent annual rate. Per the Arizona Department of Administration Office of Employment & Population Statistics, by July 1, 2015, Arizona’s population had reached nearly 6.8 million. The state also ranked third in job growth for the same period with a gain of 47 percent, twice the national average. Employment is fairly diversified with professional and business services accounting for 14 percent of total non-farm employment, followed by government with 13 percent, retail with 12 percent, health care with 10 percent, construction with 8 percent, and manufacturing with 6 percent. During 2008, job growth in the State was greatly reduced, with a rise in unemployment through 2011. However, by December 2017, Arizona’s unemployment rate had declined to 4.5% per data from the Bureau of Labor Statistics. Since bottoming out in 2011, residential and commercial real estate markets throughout Arizona have strengthened to varying degrees. In some communities, the rebound is now robust.


STATE MAP

Subject


METROPOLITAN TUCSON Tucson is the economic center of southeastern Arizona. While the Tucson area enjoyed economic growth with the rise of the housing boom in the middle of the decade, the overall economy began to decline in late 2007, with a significant decline beginning in late 2008. Since that time the local economy has generally mirrored the larger national economic downturn. Beginning in 2012 and continuing into 2016, some initial signs of strengthening in the local economy have become evident, including strengthening of the residential and retail sectors, with what is now a pronounced decline in the for sale housing inventory, and some strengthening in sales prices. Nevertheless, the recovery process will likely continue to be slower than for those following previous economic downturns. The population of Pima County, which approximates the metropolitan area, increased from 666,954 in July 1990 to 758,050 in 1995, to 843,746 in 2000, to 980,263 in 2010, according to the latest U.S. Census data. This reflects compounded annual growth rates of 1.6 percent from 2000 to 2010. The Pima Association of Governments (PAG), projects that the population of the County will grow by 1.6 to 2.1 percent annually over the next 20 years. The northwest and southeast quadrants of the metropolitan area, where ample land is available, are expected to be the focal points for most of the growth. Data from the Arizona Department of Economic Security indicates that unemployment rates are trending downward in the state. As of December 2017, unemployment in Arizona was 4.5%, down from 8.7% at the end of 2011, while the Pima County unemployment was also 4.5%, as of December 2017. The long-term outlook for Tucson is positive. Population and employment, though currently down for the first time in nearly a decade, are projected to continue to increase at rates in excess of the nation as a whole as the market recovers over the next one to two years. The cyclical nature of the economy reflected in the population, employment, and development segments is now stabilized from the peak of the previous cycle. Overall, the Tucson Metropolitan area is considered to be in the growth stage of its life cycle and, even with the problems currently shown by the residential and commercial markets, should have a positive long-term impact upon properties in the area. Since the end of the Great Recession, economic growth and job creation in Tucson have noticeably lagged behind that experienced in metro Phoenix. However, several positive recent announcements may portend coming improvements in this regard. These include 1) Caterpillar’s announcement of locating a regional headquarters in Tucson (600 new jobs); 2) HomeGoods opening of a new 800,000-square foot distribution center near South Alvernon Way (900 jobs), 3) Comcast’s establishment of new customer-support call center due north of Tucson Mall near Oracle and River Roads (1,100 jobs), 4) extension of the A-10 deployment at Davis-Monthan Air Force Base; and 5) establishment of Tucson Roadrunners, a minor league hockey affiliate of the Phoenix Coyotes and associated 3.7 million dollar upgrade to the Tucson Community Center.


General market trends are considered to have a long term positive influence on the subject property. Additional details are contained in a detailed Metro Tucson Overview, which is retained in our files and available for review by the client at their request.


SUBJECT


NEIGHBORHOOD DATA

A neighborhood is an area of complimentary land uses and typically includes a mix of single and multi-family properties with ancillary commercial uses. A district is an area of homogeneous uses such as industrial or apartments. The subject is in the near northwest portion of Tucson immediately northwest of the central business district and northwest of the University of Arizona. The following discussion summarizes those factors that influence values within the neighborhood.

Boundaries General neighborhood boundaries include Rillito Creek to the north, Broadway Boulevard to the south, Campbell Avenue to the east, and Silverbell Road and the Santa Cruz River to the west. The map above depicts the neighborhood boundaries.

Subject


Transportation Access to the neighborhood is available from all portions of the Tucson area. Major north/south roadways include Flowing Wells (La Canada Drive) and Oracle Roads, and First and Campbell Avenues. These roadways connect the neighborhood with the CBD to the south and residential neighborhoods to the north. Major east/west arterials include Ruthrauff, Wetmore, Prince, Fort Lowell and Grant Roads and Speedway Boulevard. These roadways connect the neighborhood with Interstate 10 and residential neighborhoods to the west and the “mid-town” and residential districts to the east. These arterials are four-and six-lane roadways that have typically developed into commercial districts with residential and some industrial uses on interior streets. Interstate 10, a limited-access six-lane federal highway, is along the western boundary of the neighborhood with five interchanges serving the neighborhood. This highway provides access to Phoenix and California to the west and New Mexico and the eastern seaboard to the east. I-10 has been recently expanded, with improved interchanges at major intersections. Transportation in the neighborhood is being significantly affected by Regional Transportation Authority’s (RTA’s) Grant Road Improvement Plan. According to the RTA’s web site, the project involves widening of Grant Road between Oracle and Swan Roads, a distance of about five miles. Grant Road is being widened to six lanes including comprehensive streetscape and adjacent property redevelopment. This is one of the largest of the RTA projects and was approved by voters May 2006 and began late 2006, with the recommended alignment approved January 2009 by the Mayor and City Council. The plan guides future (re)development and right-of-way acquisitions began in 2009. The following illustration exhibits the project timeline below. As noted Phase 1 construction is completed, with construction of Phase 2 having begun in March 2017 and continuing through 2018.

Except for the completed Phase 1 section, much of Grant Road is currently contained in a cross section of 80 to 90 feet (as a four-lane arterial, planned for widening to six lanes). A cross section for a typical six-lane arterial is about 120 feet with 150 feet at roadway intersections. Therefore, depending on the alignment of the roadway some properties along Grant Road will be affected by the process of eminent domain.

Phase 2 construction expected 2017 thru 2018.

Phase 1 completed


Phase 2 of the Grant Road Improvement Plan extends from North Castro Avenue to North Fremont Avenue. Improvements include travel lanes, new and wider sidewalks, more signalized crosswalks, improved bicycle lanes, and enhanced landscaping are to improve both pedestrian and bicyclist use as well as Grant Road aesthetics. A median and managed access to businesses will improve safety, and new local access lanes will provide a safer and easier way to get to and from residences and businesses in congested areas. Construction of Phase 2 began in March 2017 and is expected to continue through 2018. Additional information about the RTA’s Grant Road Improvement Plan is available on the RTA’s web site http://www.grantroad.info. Overall, access to and from the neighborhood from other areas of the Metropolitan Tucson area is considered to be good. Although there is limited public transportation available in the area, there are various Sun Tran bus routes within the neighborhood. Population A summary of selected neighborhood demographic characteristics, based on 2010 US Census for the most closely corresponding zip codes (85705 and 85719), is shown in the following table. Relative to Tucson and Pima County, the neighborhood is significantly above the norm in percentage of renters, lower in median age, and similar in average household size. This is largely attributable to influence of the University of Arizona and nearby supporting student housing.

According to information provided by the Pima Association of Governments’ Population Handbook, population increases within the subject neighborhood are projected to grow at rates well below those projected for Pima County and the City of Tucson, reflecting the built-up nature of the area:

Median # of Average %

Area Population Age Households HH Size Rental

Neighborhood* 101,510 28.9 42,135 2.21 62.3%

City of Tucson 520,116 33.0 205,390 2.43 48.1%

Pima County 980,263 37.7 388,660 2.46 35.9%

Demographic Summary

*As represented by Zip Codes 85705, 85719

SOURCE: 2010 U.S. Census Bureau


Land Use Patterns The neighborhood is within and governed by the City of Tucson, which enforces the zoning ordinances in the area. Land uses within the neighborhood include residential (single- and multi-family as well as mobile homes), commercial, and industrial. About 40 percent of the industrially zoned land, situated in the northwest portion of the neighborhood, is vacant. Conversely, a substantial percentage of the commercially zoned land has been developed, particularly along the arterial roadways. Residential The residential inventory in the subject area consists primarily of older mobile home parks and conventional single-family subdivisions. The Metropolitan Tucson area contains 69,143 units in apartment complexes with 40 or more units according to the 4th Quarter 2017 Apartment Insights’ Statistic/Trends Summary. Of this total, 8,398 units, or 12.1 percent of the metro inventory, are within the statistical district which best describes the subject neighborhood, the Flowing Wells submarket. Vacancy for this submarket was reported as 5.0 percent, with an average of 5.8 percent for the last four quarters. This is slightly lower than the Metropolitan Tucson area as a whole with a vacancy rate of 6.5 percent and an average of 6.9 percent for the last four quarters. Please refer to the following table depicting apartment vacancy in the Tucson area.

Census Tract 2005 2010 2015 2020 2025 2030 203514.00 5,437 5,601 5,761 5,914 6,055 6,180 6,284 15.00 5,262 5,425 5,585 5,738 5,880 6,005 6,111 26.01 6,893 7,155 7,412 7,662 7,896 8,108 8,294 26.02 5,543 5,760 5,973 6,180 6,375 6,551 6,707 27.01 6,075 6,485 6,894 7,296 7,684 8,052 8,394 45.04 5,191 5,264 5,334 5,396 5,447 5,483 5,501 45.05 3,791 3,888 3,982 4,072 4,153 4,222 4,278 45.06 4,675 4,742 4,805 4,862 4,909 4,942 4,959 45.07 6,845 7,061 7,272 7,475 7,662 7,828 7,969 45.08 4,543 4,655 4,764 4,867 4,959 5,038 5,101 45.09 7,613 7,766 7,916 8,055 8,177 8,276 8,348 Totals 61,868 63,802 65,698 67,517 69,197 70,685 71,946

% Annual Change N/A 0.6% 0.6% 0.6% 0.5% 0.4% 0.4%

Tucson 405,390 445,299 474,467 508,521 540,307 565,736 589,899 % Annual Change N/A 2.0% 1.3% 1.4% 1.3% 0.9% 0.9%

Pima County 666,880 758,575 854,329 943,795 1,031,323 1,119,342 1,206,244 % Annual Change N/A 2.7% 2.5% 2.1% 1.9% 1.7% 1.6%

Source: Pima County Association of Governments

Year

Neighborhood Population Trends


# of Total Vacancy Last Last# Submarket Projects Units Share Rate 4 Q's Qtr.1 Marana / Avra Valley 1 80 0.1% N/A N/A N/A2 Oro Valley / Catalina 11 2,279 3.3% 8.1% 7.8% 7.1%3 Northwest Tucson 39 8,455 12.2% 5.7% 5.5% 5.5%4 Catalina Foothills 24 5,652 8.2% 4.9% 5.1% 4.8%5 Northeast Tucson 9 1,987 2.9% 4.7% 5.2% 5.2%6 East Tucson 41 8,237 11.9% 6.6% 6.0% 6.0%7 North Central Tucson 69 8,132 11.8% 6.0% 6.8% 6.7%8 Flowing Wells 63 8,398 12.1% 5.0% 5.8% 5.8%9 Tucson Mountain Foothills 18 3,393 4.9% 6.8% 6.4% 6.5%10 University 33 3,150 4.6% 5.4% 6.8% 5.5%11 South Central Tucson 43 6,102 8.8% 7.8% 8.3% 8.6%

12 Pantano / Lakeside 27 5,371 7.8% 7.7% 7.8% 8.2%13 South Tucson / Airport 38 5,156 7.5% 6.9% 7.1% 8.0%14 Southwest Tucson 16 2,415 3.5% 6.7% 8.0% 6.7%15 Southeast Tucson 1 336 0.5% 8.6% 10.6% 10.1%

Total 433 69,143 100.0% 6.5% 6.9% 6.5%

Note: Based on conventional 40+ unit stabilized projects

Source: 4th Quarter 2017 Apartment Insights Statistic/Trends Summary

Tucson Apartment Market Summary4th Qtr. 2017

Commercial There is significant commercial development within the area, with the majority of this development along major arterials such as Grant Road and First and Campbell Avenues and, most notably, Oracle Road. Although there are some office uses within the neighborhood, dominant uses are retail and commercial. Most of the commercial uses are located in the eastern half of the neighborhood. One of the two premier shopping venues in Tucson, Tucson Mall, is within the neighborhood. This property is anchored by Dillard’s, J.C. Penney, and Sears, and has well over 200 smaller tenants. At 1.3 million square feet, the Tucson Mall is Tucson’s largest as well as newest mall. It is noted that the 82,360-square foot space that was previously occupied by Mervyn’s, was vacated due to its Chapter 7 bankruptcy filing. Forever 21, a national women’s fashion retailer, leased this entire space and is open. The mall is surrounded by other major shopping venues, such as Tucson Place (one of Tucson’s few “power centers”, anchored by Wal-Mart and Best Buy), the Auto Mall, and numerous major national retailers and several neighborhood shopping centers. The area surrounding Tucson Mall reflects the single highest concentration of retail establishments in Tucson, with the possible exception of the recently redeveloped Park Mall and its surrounding area.


A community center was constructed in 2007 just south of Tucson Mall, anchored by Home Depot, PetSmart, also with Walgreen’s and Jareds. The second phase was completed in 2013 at the immediate corner of Wetmore and Oracle Roads, with Nordstrom Rack and Total Wine as major tenants. Other second phase tenants include Jimmy Johns, National Vision, Select Comfort, Panera and Five Guys. According to CoStar’s 4th Quarter 2017 Tucson Retail Market report, the Central West submarket, of which the subject is a part, had a vacancy rate of 6.0 percent (calculated based on total physical space rather than space made available only for lease). This is similar to the average of 6.0 percent for metro Tucson overall. The Central West submarkets contain 762 buildings with approximately 7 million square feet of gross building area, reflecting about 13.4% of the total retail inventory in the metropolitan area. Please refer to the following table.

# of Total Vacancy Last# Submarket Buildings GLA Share Rate Qtr.1 Central East 1,164 8,499,624 16.2% 7.5% 7.7%

2 Central West 762 7,017,869 13.4% 6.0% 5.6%3 Downtown Tucson 316 1,837,003 3.5% 5.5% 5.5%4 East Tucson 776 9,870,831 18.8% 5.7% 5.8%5 Foothills 287 5,123,547 9.8% 4.6% 4.7%6 North / Oro Valley 181 2,520,357 4.8% 6.2% 6.6%7 Northeast Tucson 25 353,098 0.7% 10.1% 10.0%8 Northwest Tucson 273 4,134,069 7.9% 5.0% 4.9%9 South Tucson 981 6,515,232 12.4% 5.5% 7.4%10 South / SW Outlying 136 1,686,675 3.2% 6.8% 7.0%11 Southeast Tucson 118 1,566,515 3.0% 8.3% 6.7%12 Southwest Tucson 174 2,535,778 4.8% 5.1% 4.8%13 West Tucson 133 867,605 1.7% 5.5% 5.7%

Total 5,326 52,528,203 100.0% 6.0% 6.2%

4th Qtr. 2017

Note: Rate based on total physical space

Source: CoStar Group, Inc., 4th Q 2017 Tucson Retail Market Report

Tucson Retail Market Summary

This district has consistently posted lower-than-average shopping center vacancy rates during the last several years and has been the location of considerable new retail development, which has not yet been fully absorbed. The Macy’s store in Tucson Mall was demolished following their merger with Robinson May and new multi-tenant space has been constructed. Additional retailers that have opened over the past few years include an REI sporting goods store and Cheesecake Factory restaurant. Two other restaurants opened but have since closed including Toby Keith Bar & Grill and Brio Italian Restaurant. The Toby Keith Bar & Grill has since been converted to additional retail space occupied by the Container Store.


Office

Most offices are more centrally located to the south and east of the neighborhood within the Mid-Town District and the CBD although there are several small pockets of office districts and several individual buildings. Office vacancy rates had been decreasing over the past several years with a recent rise in vacancy due to a regional market correction. According to CoStar’s 4th Quarter 2017 Tucson Office Market report, the West Tucson submarket, of which the subject is a part, had vacancy of 8.5 percent (calculated based on total physical space rather than space made available only for lease). This is lower than the average of 9.4 percent for metro Tucson overall, and also lower than the submarket’s previous quarter at 8.9%. The West Tucson submarket contains 224 buildings with over 1.5 million square feet of gross building area, reflecting approximately 6 percent of the total office space in the metropolitan area. Please refer to the following table.

# of Total Vacancy Last# Submarket Buildings RBA Share Rate Qtr.1 Central Tucson 1,103 9,760,035 37.6% 12.7% 12.5%

2 Downtown Tucson 323 5,293,542 20.4% 4.0% 5.9%3 East Tucson 130 1,254,860 4.8% 14.9% 15.5%4 Foothills 94 1,352,659 5.2% 7.8% 6.9%5 Green Valley/South Tucson 48 359,077 1.4% 12.5% 13.1%6 North Tucson/Oro Valley 331 3,599,213 13.9% 10.3% 10.2%7 Northwest Tucson 51 485,938 1.9% 8.9% 9.2%8 Southeast Tucson 36 519,402 2.0% 5.6% 8.6%9 Southwest Tucson 178 1,774,170 6.8% 4.3% 5.4%

10 West Tucson 224 1,546,388 6.0% 8.5% 8.9%Total 2,518 25,945,284 100.0% 9.4% 9.8%

Note: Rate based on total physical space

Tucson Office Market Vacancy Summary4th Qtr. 2017

Source: CoStar Group, Inc., 4th Q 2017 Tucson Office Market Report

Industrial Industrial uses are prominent in the western portion of the neighborhood, particularly along Interstate 10. The area north of Prince Road and west of Romero Road is exclusively industrial and includes mini-storage facilities, several industrial parks, numerous free-standing industrial buildings, and vacant industrially zoned land. A second concentration of industrial development is bordered by Glenn Street and Grant Road on the north and south, and Fairview Avenue and Interstate 10 on the east and west.


According to CoStar’s 4th Quarter 2017 Tucson Industrial Market report, the Northwest Tucson/Oro Valley submarket, of which the subject is a part, had vacancy of 3.1 percent (calculated based on total physical space rather than space made available only for lease). This is lower than the average of 6.8 percent for metro Tucson overall and lower than the submarket’s previous quarter, which had a vacancy of 3.8 percent. The Northwest Tucson/Oro Valley submarket contains a total of 740 buildings with about 9.75 million square feet of gross building area, reflecting approximately 23.2 percent of the total industrial space in the metropolitan area, most of which is located proximate to Interstate 10. Please refer to the following table.

# of Total Vacancy Last# Submarket Buildings RBA Share Rate Qtr.1 Downtown Tucson 419 4,187,609 9.9% 1.2% 3.0%2 Northeast Tucson 236 2,690,861 6.4% 10.0% 10.6%

3 NW Tucson/Oro Valley 740 9,752,142 23.2% 3.1% 3.8%4 Palo Verde 535 6,636,905 15.8% 5.7% 5.4%5 Park/Ajo 259 3,779,236 9.0% 9.4% 10.2%6 Pima/Green Valley 12 187,683 0.4% 0.6% 0.0%7 Southeast Tucson 96 5,855,459 13.9% 4.3% 9.2%8 SW Tucson/Airport 254 9,031,075 21.4% 14.1% 16.0%

Total 2,551 42,120,970 100.0% 6.8% 8.3%

Note: Rate based on total physical space and does not include self-storage space

Source: CoStar Group, Inc., 4th Q 2017 Tucson Industrial Market Report

Tucson Industrial Market Vacancy Summary4th Qtr. 2017

The subject neighborhood is well established and desirable for industrial uses. Industrial uses in the western portion of the neighborhood benefit from proximity to Interstate 10. Future industrial development is anticipated to be generally restricted to the proximity of Interstate 10 due to the continued availability of industrially zoned land in this area. Government and Public Uses The neighborhood is largely within the City limits of Tucson and is provided with all city services including police and fire protection and sanitary garbage removal. All utilities are available to the neighborhood, including water service by the City of Tucson and the Flowing Wells Irrigation District, sewer service from Pima County Waste Water Management, natural gas from Southwest Gas Corporation, electrical service by Tucson Electric Power Company and telephone service via Century Link. Children in the area attend schools in the Flowing Wells and Amphitheater School District.


Life Cycle According to the Appraisal of Real Estate, 14th Edition, published by the Appraisal Institute, there are four stages in the life of a neighborhood: 1) Growth – a period when a neighborhood gains public favor and acceptance; 2) Stability – a period of equilibrium without marked gains or losses; 3) Decline – a period of diminishing demand; and 4) Revitalization – a period of renewal, redevelopment, modernization, and increasing demand. The original settlement of Tucson began expanding concentrically as the city grew and the community remained as a small village until the 1940’s when major developments began to occur. The neighborhood began to develop early in Tucson’s history with development beginning about 1950. The neighborhood is well established, both residentially and commercially, and is growing at a moderate pace. The southerly portion of the area is largely developed and in the mature stage of its life cycle, while areas to the northwest continue to grow and are in the growth phase. Summary The neighborhood contains a mix of commercial, residential, and industrial uses. Commercial uses are largely in the eastern section of the neighborhood, and tend to be concentrated within two miles (generally to the south and east) of Tucson Mall, or along Oracle and Grant Roads. Additional commercial development has occurred over the past several years in the eastern section of the neighborhood, particularly just south of the Tucson Mall. Surrounding uses in proximity to the subject are primarily residential with commercial uses along arterials. Overall, the neighborhood is in the stabilization to growth portion of its life cycle, with limited to moderate future development expected upon recovery of current economic conditions. The trends in the neighborhood are considered to have a long-term positive impact on the subject.

SUBJECT


SITE DESCRIPTION Location The subject property is located at the northwest corner of Elm Street

and 7th Avenue in Tucson, Arizona. The subject is located on the central area of the Tucson city limits. The site has a physical address of 25 & 31 East Elm Street and 1705 N. 7th Avenue, Tucson, Pima County, Arizona 85705.

*Drawing is an approximation. Site Size Per the legal descriptions drawn by the City of Tucson Engineering

Division, including a ROW to be vacated along Elm Street, the gross square footage is 40,744 (38,494+2,249.5) square feet or 0.93 acres. However, a flowage easement via the Bronx Wash (inclusive of a drainage easement) runs along the northern and western boundaries of the subject property, resulting in a net useable area of 29,771 square feet or 0.68 acres (40,744 SF less 10,973 SF flowage easement).

SUBJECT

Bronx Wash


Including ROW Area of 2,249.5


Topography The subject property has generally level topography. Frontage/Access The subject has frontage along Elm Street and 7th Avenue. Both

reflect interior roadways with two lanes. Overall, the subject site has average visibility and access from Elm Street and 7th Avenue.

Traffic Counts None available along subject’s roadways. Census Tract The property is situated within census tract 13.02. Easements Per discussion with Gena Cox of the City of Tucson Real Estate

Division, there is a 10,973-square foot flowage easement. This area is impacted by the Bronx Wash. Additionally, a water easement will be reserved off of Elm Street and TEP and telecommunications are located along the power poles within the flowage easement. Thus, the utilities easements are considered standard and not as a detriment to the utility of the site. However, the flowage easement reflects a large wash and is not useable area and we will analyze the net useable area within this analysis.

Utilities All municipal utilities are in place to the site in adequate quantity

and quality. Electricity is provided by Tucson Electric Power, natural gas by Southwest Gas, water and sewer by the City of Tucson, and telephone service by Cox.

Environmental An environmental assessment of the property was not provided for

this assignment. During our physical inspection of the property, no apparent items of environmental concern were noted. If this remains an area of concern for the client, a Phase I Environmental Survey by a qualified environmental specialist is recommended. This report assumes that no environmental concerns are present that would prevent the site from being put to its highest and best use.

Flood Condition According to the Federal Emergency Management Agency Flood

Insurance Rate Map Panel Numbers 04019C2276L, dated June 16, 2011, the net useable portion of the site is located in Zone X. Zone X is an area determined to be outside of the 0.2% (500 year) annual chance flood plain. The remaining area is located within the Bronx Wash (flowage easement area of 10,973 SF).


Seismic Zone The subject property is located within Seismic Zone 2A, an area of low to moderate risk.

Adjacent Land Uses North: Industrial property followed by Lester Street and then a multi-family

facility identified as The Stone Avenue Standard and a self-storage facility.

East: 7th Avenue followed by single-family residences. South: Elm Street followed by single-family residences. West: Commercial and industrial properties along Stone Avenue. Zoning The majority of the subject site and all of the net useable area is

zoned R-2, Residence Zone, in accordance with the City of Tucson Land Use Code. This zone provides for medium density, single-family and multi-family development, together with schools, parks, and other public services necessary for a satisfactory urban residential environment. This designation has a maximum density of 15 units per acre.

SUBJECT


University Area Plan And Greater Infill District: The subject is located within the University Area Plan and Infill

Incentive District. The Greater Infill District permits flexible development standards which permits height increases up to 60’ and more lenient parking and landscaping standards. The University Area Plan is generally delineated by Broadway Boulevard to the south, Country Club Road to the east, Grant Road to the north, and Stone Avenue and Toole Avenue to the southwest. The plan has been established for an area surrounding but not including the main campus of the University of Arizona. The subject is located on the northwestern portion of the area plan and does not appear to be heavily influenced by either the University Area Plan nor the Greater Infill District.

Taxes The subject is identified by parcel numbers 115-07-0190, 0200,

0210, 0220 and 0230. The full cash value for 2017 was in the amount of $177,980. The full cash value for 2018 increases to $190,601. The 2017 limited cash value was in the amount of $177,980 and increases to $186,878 in 2018.

SUBJECT


Assessed AssessedAPN 2018 FCV 2018 LCV 2017 FCV 2017 LCV 2017 Taxes

115-07-0190 $38,875 $38,220 $36,400 $36,400 $0.00115-07-0200 $37,000 $36,125 $34,405 $34,405 $0.00115-07-0210 $37,733 $36,943 $35,184 $35,184 $0.00115-07-0220 $37,586 $36,779 $35,028 $35,028 $0.00115-17-0230 $39,407 $38,811 $36,963 $36,963 $0.00

Totals: $190,601 $186,878 $177,980 $177,980 $0

Real Estate Tax Summary

The subject is exempt from taxes as it reflects a City of Tucson owned property.

Summary: The larger parcel, as vacant, is zoned to allow for residential uses

under the R-2, City of Tucson zoning designation. The site is located at a secondary corner with frontage along Elm Street and 7th Avenue in a mixed-use area. Overall, there are no apparent characteristics that would prevent the subject from being used to its highest and best use.


SUBJECT PHOTOGRAPHS

Top Photo: View of the subject looking northeast. Bottom Photo: View of the subject looking east.


SUBJECT PHOTOGRAPHS

Top Photo: View of Elm Street looking west from subject. Bottom Photo: View of Elm Street looking east from subject.


SUBJECT PHOTOGRAPHS

Top Photo: View of alleyway on the western side of subject. Bottom Photo: View of alleyway which merges with the Bronx Wash, looking south.


SUBJECT PHOTOGRAPHS

Top Photo: View of northwest portion of lot and the Bronx Wash. Bottom Photo: View of northern boundary of net useable area and the flowage easement.


SUBJECT PHOTOGRAPHS

Top Photo: View from flowage easement looking north. Bottom Photo: View of 7th Avenue looking south (subject to right).


HIGHEST AND BEST USE Highest and best use is the basic premise of value and, as such, reflects an appraiser's opinion based upon an analysis of prevailing market occurrences. The subject is comprised of both the site and improvements. As the use of land can be limited by the presence of improvements, highest and best use is typically analyzed individually, for the land as though vacant and the property as improved. According to The Appraisal of Real Estate; Fourteenth Edition, published by the Appraisal Institute, highest and best use is defined as: The reasonably probable and legal use of vacant land or an improved property,

that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value.

The purpose of estimating the highest and best use of the subject site, as though vacant, is to identify the uses that cause the site to have value. The use of the subject site found to be legally permissible, physically possible, appropriately supported, financially feasible, and that results in the highest present land value is considered to be the highest and best use of the site, as if vacant. The purpose of estimating the highest and best use of the property, as improved, is to identify the use of the property that is expected to produce the highest overall return per dollar invested. Highest and Best Use and Market Analysis, and Highest and Best Use and Feasibility Analysis are interrelated. Market and Feasibility Analyses are tools utilized in determining the highest and best use of a specific property. In estimating the highest and best use of land, as if vacant, or a property as improved, there are essentially four stages of analysis: 1) Legally permissible uses - the uses of the subject that are permitted by zoning,

existing leases, and/or deed restrictions; 2) Physically possible uses - the uses of the subject that are physically possible; 3) Financially feasible uses - the uses of the subject that are possible and permissible

and that will produce a net return to the owner of the land; and 4) Maximally productive use - the use of the subject site among the feasible uses that

produces the highest net return to the subject. This use is essentially the Highest and Best Use of the subject.

The previous stages of highest and best use analysis have been applied to the subject property as vacant land.


Legally Permissible The majority of the subject site and all of the net useable area is zoned R-2, Residence Zone, in accordance with the City of Tucson Land Use Code. This zone provides for medium density, single-family and multi-family development, together with schools, parks, and other public services necessary for a satisfactory urban residential environment. This designation has a maximum density of 15 units per acre. The subject is located within the University Area Plan and Infill Incentive District. The Greater Infill District permits flexible development standards which permits height increases up to 60’ and more lenient parking and landscaping standards. The University Area Plan is generally delineated by Broadway Boulevard to the south, Country Club Road to the east, Grant Road to the north, and Stone Avenue and Toole Avenue to the southwest. The plan has been established for an area surrounding but not including the main campus of the University of Arizona. The subject is located on the northwestern portion of the area plan and does not appear to be heavily influenced by either the University Area Plan nor the Greater Infill District. Physically Possible The next constraint imposed upon the possible use of the subject property is predicated by the physical characteristics of the site itself. Per the legal descriptions drawn by the City of Tucson Engineering Division, including a ROW to be vacated along Elm Street, the gross square footage is 40,744 (38,494+2,249.5) square feet or 0.93 acres. However, a flowage easement via the Bronx Wash (inclusive of a drainage easement) runs along the northern and western boundaries of the subject property, resulting in a net useable area of 29,771 square feet or 0.68 acres (40,744 SF less 10,973 SF flowage easement). According to the Federal Emergency Management Agency Flood Insurance Rate Map Panel Numbers 04019C2276L, dated June 16, 2011, the net useable portion of the site is located in Zone X. Zone X is an area determined to be outside of the 0.2% (500 year) annual chance flood plain. The remaining area is located within the Bronx Wash (flowage easement area of 10,973 SF). The parcel shape is irregular but large enough to not hinder development, has frontage along Elm Street and 7th Avenue, with access from Elm Street. All utilities serve the site and has level topography. Overall, there are no physical constraints that would impede the subject from being utilized for its highest and best use. Financially Feasible/Maximally Productive Overall, the legally permissible and physically possible uses are considered to be residential, civic uses or investment.


Given the subject’s interior lot location and residential zoning, multi-family residential uses are the most probable use. Residential development with a density of up to 15 units per acre is permitted. Given a net useable area of 0.68 acres, the site could support 10 units. Thus, a ten-unit multi-family property could be constructed in the form of apartments or duplexes. The use is further supported by the area as north of Lester Street is the Stone Avenue Standard, a large apartment complex that was purchased and renovated by an investor in 2015. Discussion with agents indicates multi-family residential land remains in strong demand, as evidenced by three sales in the Sales Comparison Approach purchased since March 2017 for multi-family development. Strong demand for multi-family residential permitting is anticipated for the Tucson market in the next few years. Therefore, the financially feasible and maximally productive use of the subject site, “as if vacant,” is for near term development of a multi-family development with up to ten units or to purchase as an investment to hold for near-term multi-family development.


SALES COMPARISON APPROACH The Sales Comparison Approach to value considers recent sales and listings of similar vacant comparable properties. This approach has been utilized to develop an opinion of the market value of the subject site. The technique is an application of the economic principle of substitution which affirms that when a property can be replaced, its value tends to be set by the cost of acquisition of an equally desirable substitute property that can be acquired without undue or costly delay. In order to identify sales of similar parcels for comparison to the subject, a search within the subject’s general market area was conducted. Our research for similarly influenced properties revealed three sales of comparable residential uses within the subject’s area. The sales data contained herein are considered to reflect the best available information with which to derive a reliable estimate of value for the subject site, as if vacant. All of the comparable sales utilized were confirmed with at least one party when possible and were all confirmed through public records. The unit of comparison used in the analysis of the subject property is the sales price per square foot of land area. Adjustments to the comparable sales were considered for differences in economic and physical characteristics. A tabulation, location map and data sheets of the comparable sales follow.

Comparable Number: 1* 2 3 4 SubjectSale Date: Mar-17 Mar-17 May-17 Dec-17 N/ALocation: 3820 and 3822 E.

Blacklidge Drive6032 and 6050 E. Bellevue Street

2502-2540 E. Prince Road

355 E. Sahuaro Street

NWc Elm St & 7th Ave

APN: 111-06-0250, 0260 121-07-0100 112-03-289B, 289C & 289D

115-01-151A 115-07-0190, 0220, et. Al.

Zoning: R-3, Tucson R-2, Tucson R-2, Tucson R-2, Tucson R-2, TucsonSales Price $172,500 $168,000 $225,000 $100,000 N/ATerms of Sale: SCB Cash to Seller Cash to Seller Cash to Seller TBDSite Size (SF): 36,000 36,900 43,799 17,715 29,771Site Size (AC): 0.83 0.85 1.01 0.41 0.68Sales Price Per Sq. Ft. $4.79 $4.55 $5.14 $5.64 N/A* Sales price reflects recorded purchase price of $162,500 plus $10,000 in estimated demo expenses.

Comparable Land Sales


COMPARABLE LAND SALES MAP

SUBJECT

3

2

14


COMPARABLE LAND SALE ONE LOCATION: 3820 and 3822 East Blacklidge Drive, Tucson, AZ LEGAL DESCRIPTION: Lincoln Park N150’ Lot 9 Blk 1 and Lincoln Park Lot 9

Exc N150’ Thereof Blk 1, Pima County, AZ TAX CODE NUMBERS: 111-06-0250, 0260 SALE DATE: March 14, 2017 RECORDS: 20170730484 OWNERSHIP HISTORY: No prior transactions within the previous three years. SELLER: Charles Morrison BUYER: Arizona Buying Company, LLC SALES PRICE: *$162,500 actual sales price. Effective sales price includes

approximately $10,000 in demo costs. SALES PRICE PER SQ FT: $4.79 SITE SIZE/CONFIGURATION: 36,000 square feet, or 0.83 acres/Rectangular TERMS: Seller carryback, $30,000 down, seller carry $132,500 at

undisclosed terms MARKETING TIME: 87 days TOPOGRAPHY: Level FRONTAGE: Blacklidge Drive ACCESS & VISIBILITY: Average/Average FLOOD PLAIN: Zone X, area located outside of 100-year flood plain ZONING: R-3 (Residential), Tucson HIGHEST AND BEST USE: Interim use as storage yard for future multi-family

development


COMMENTS: Purchased for interim highest and best use of a storage yard. Area is surrounded by multi-family and single-family development.

CONFIRMED WITH: CoStar Comps, Public Records. Calls to agents were not

returned. CONFIRMED BY: Andres A. Rubal DATE: February 2018


COMPARABLE LAND SALE TWO

LOCATION: 6032 and 6050 East Bellevue Street, Tucson, AZ LEGAL DESCRIPTION: Catalina Heights Lot 8 Blk 1, Pima County, AZ TAX CODE NUMBERS: 121-07-0100 SALE DATE: March 31, 2017 RECORDS: 20170900212 OWNERSHIP HISTORY: No prior transactions in previous three years. SELLER: Morganstone Group, LLC BUYER: Vasquez Construction Company, Inc. SALES PRICE: $168,000 SALES PRICE PER SQ FT: $4.55 SITE SIZE/CONFIGURATION: 36,900 square feet, or 0.85 acres/Rectangular TERMS: Cash MARKETING TIME: 99 days TOPOGRAPHY: Level FRONTAGE: Bellevue Street ACCESS & VISIBILITY: Average/Average FLOOD PLAIN: Zone X, area located outside of 100-year flood plain ZONING: R-2 (Residential), Tucson HIGHEST AND BEST USE: Multi-family development COMMENTS: Purchased for development of a 12-unit apartment


CONFIRMED WITH: Christopher Tsighis (520-275-4861), Listing Broker with Coldwell Banker, TARMLS, Public Records

CONFIRMED BY: Andres Rubal DATE: February 2018


COMPARABLE LAND SALE THREE

LOCATION: 2502-2540 East Prince Road, Tucson, AZ LEGAL DESCRIPTION: Portion of Sec 29, R14E, T13S, Pima County, AZ TAX CODE NUMBERS: 112-03-289B, 289C and 289D SALE DATE: May 31, 2017 RECORDS: 20171510132 OWNERSHIP HISTORY: No prior transactions in previous three years. SELLER: Spectrum Capital Partners, LLC BUYER: Vasquez Construction Company, Inc. SALES PRICE: $225,000 SALES PRICE PER SQ FT: $5.14 SITE SIZE/CONFIGURATION: 43,799 square feet, or 1.01 acres/ Generally Rectangular TERMS: Cash MARKETING TIME: 72 days TOPOGRAPHY: Level FRONTAGE: Prince Road ACCESS & VISIBILITY: Average/Good FLOOD PLAIN: Zone X, area located outside of 100-year flood plain ZONING: R-2 (Residential), Tucson HIGHEST AND BEST USE: Multi-family development COMMENTS: Purchased for development of a 15-unit apartment. There

was a 1,615 SF home on the property that was demolished but broker reported it was a minimal cost. Site is located on south side of Prince Road, east of Tucson Boulevard.


CONFIRMED WITH: Christopher Tsighis (520-275-4861), Listing Broker with Coldwell Banker, TARMLS, Public Records

CONFIRMED BY: Andres Rubal DATE: February 2018


COMPARABLE LAND SALE FOUR LOCATION: 355 E. Sahuaro Street, Tucson, AZ LEGAL DESCRIPTION: Por Section 1, T14S, R13E, Pima County, AZ TAX CODE NUMBERS: 115-01-151A (portion, in process of being split) SALE DATE: December 22, 2017 RECORDS: 20173560645 OWNERSHIP HISTORY: No prior transactions in previous three years SELLER: Daniel and Cheryl Cox BUYER: Colbry, LLC SALES PRICE: $100,000 SALES PRICE PER SQ FT: $5.64 SITE SIZE/CONFIGURATION: 17,715 square feet, or 0.41 acres/ Generally Rectangular TERMS: Cash MARKETING TIME: 492 days TOPOGRAPHY: Level FRONTAGE: Sahuaro Street ACCESS & VISIBILITY: Average/Average FLOOD PLAIN: Zone X, area located outside of 100-year flood plain ZONING: R-2 (Residential), Tucson HIGHEST AND BEST USE: Multi-family residential development


COMMENTS: Purchased for development of multiple residences but agent couldn’t specify particular use or density. Lot was split from commercial property to the north and per a survey, measures 17,715 square feet or 0.41 acres. Per the buyer’s broker, the buyer owned the parcel to the east and purchased for assemblage, paying over market for the property, in her opinion.

CONFIRMED WITH: Samantha Hei (520-577-7433), Buyer Broker with Coldwell

Banker, TARMLS, Public Records CONFIRMED BY: Andres Rubal DATE: February 2018


LAND VALUE ANALYSIS Adjustments to the comparables are necessary for differences in the financial aspects of the sales (property rights transferred, terms of sale, date of sale, sale conditions, etc.) as well as physical aspects (site size, zoning, site utility, etc.). Here follows a discussion of each element of comparison. Property Rights Transferred The subject site is being appraised in its fee simple interest. All of the comparables sold in fee, and therefore no adjustments for property rights transferred are necessary. Adjustments for Terms of Sale Adjustments for terms of sale have been considered in this analysis as the opinion of market value of the subject site assumes a cash equivalent purchase price. Cash equivalent sales imply those transactions which are financed by third party lenders, such as savings and loans, or commercial banks or other transactions that were net cash to the seller. Transactions which are financed by sellers may provide advantages not available from third party lenders, thus these sales are discounted to provide a cash equivalent basis. All of the comparables, except Comparable One, sold for cash or cash equivalent terms, and no adjustment was necessary to these sales. Comparable One sold with seller carryback financing. However, per a paired sales analysis, the financing did not affect the sales price. Adjustments for Condition of Sale Inherent in the definition of market value is that buyer and seller be typically motivated3. We have analyzed the comparable sales with respect to the motivation of both buyer and seller. Often the conditions of sale do impact the final purchase price of the comparable property. An example of this element of comparison is a seller’s or buyer’s motivation to sell or purchase a particular piece of property. A seller in a distressed financial situation might be inclined to sell a property for a price below true market value. Conversely, a purchaser who owns real estate adjacent to a property that was offered for sale might be willing to pay a higher price than the going market value in order to enhance the property’s utility (i.e. for expansion). Analysis of the comparables indicated that all sales reflected arms-length transactions, warranting no adjustment for condition of sale, except Comparable Four. Comparable Four involved assemblage in which the buyer’s broker indicated the buyer paid a slight premium. Therefore, a downward adjustment is applied for this factor.

3 Federal Register, vol. 55, no. 163, August 22, 1990, pages 34228 and 34229; also quoted in the

introduction to the Standards of Professional Appraisal Practice of the Appraisal Institute.


Adjustments for Market Conditions (Time) Market conditions may have changed between the time of the sale of the comparable property and the date of the appraisal. Under such circumstances, the price of the comparable property would require an adjustment to reflect current prices. Changes in pricing may result from various effects such as inflation, deflation, changing demand, and changing supply. The comparable sales range in date of sale from March 2017 through December 2017. The effective date of appraisal is February 2018. Sites for infill multi-family residential housing properties are in good demand with limited available sites. These property types remain in high demand as land is scarce for this use. The sales are considered to reflect similar market conditions as they have all occurred within the past 11 months, with no adjustment warranted for this element of comparison. Transactional Adjustments: 1* 2 3 4

Property Rights 0.0% 0.0% 0.0% 0.0%Fee simple Fee simple Fee simple Fee simple

Adjusted Price/SF $4.79 $4.55 $5.14 $5.64 Terms of Sale 0.0% 0.0% 0.0% 0.0%

Similar Similar Similar SimilarAdjusted Price/SF $4.79 $4.55 $5.14 $5.64 Sale Conditions 0.0% 0.0% 0.0% -10.0%

Arm's length Arm's length Arm's length AssemblageAdjusted Price/SF $4.79 $4.55 $5.14 $5.08Market Conditions 0.0% 0.0% 0.0% 0.0%

Similar Similar Similar SimilarAdjusted Price/SF $4.79 $4.55 $5.14 $5.08 Adjustments for Location Property location is typically analyzed in terms of the relative time-distance relationship between it and all likely destinations and origins and its access, frontage and visibility to vehicular traffic. The subject is located at a secondary corner, with frontage along Elm Street and 7th Avenue. Comparable One is located along Blacklidge Drive, west of Alvernon Way. Overall, this location is considered similar, warranting no adjustment for this factor. Comparable Two is Bellevue Street, north of Speedway Boulevard. Overall, this location is considered similar, warranting no adjustment for this factor. Comparable Three is located along Prince Road, east of Tucson Boulevard which provides superior exposure, warranting a downward adjustment for superior location. Comparable Four reflects a similar location along Sahuaro Road, south of Grant Road, warranting no adjustment for this factor.


Adjustments for Size Adjustments for size were also considered herein. Such an adjustment is based on market evidence, which suggests that larger parcels will typically sell for less on a ‘per unit’ basis than smaller parcels, all else being equal. Justification for this adjustment is often attributed to the notion that larger parcels inherently carry more perceived risk relative to smaller parcels. Alternatively, a size adjustment can also be premised upon the notion that there are more potential buyers able to afford smaller parcels (with a lower overall sales price) than larger parcels with a higher overall package price). Both of these theories are generally supported by market evidence demonstrated by the broader market, and, in the case of this analysis, also supported by a micro-analysis of the available data. Comparable Four is sufficiently smaller than the subject, warranting a downward adjustment for this factor. The remaining comparables are considered similar to the subject warranting no adjustment for this factor. Adjustments for Zoning/Use The subject is zoned for residential uses by the City of Tucson R-2 zoning ordinance with a highest and best use a multi-family development of 10 units. Comparables Two, Three and Four used in this analysis have similar zoning designations and highest and best uses as the subject, warranting no adjustments for this factor. Comparable One is zoned R-3 and permits a higher residential density warranting a downward adjustment for this factor. Adjustments for Shape/Site Utility Adjustments for site utility were also considered in this analysis. Such an adjustment bears in mind physical differences between the subject and the comparables for such items as shape, topography, access and the like. The subject has all utilities available to the site, is located outside the flood hazard zone (net useable area) and has an irregular shape, although large enough to not hinder development. All of the comparables have similar site utility, warranting no adjustment for this factor. Physical Adjustments: 1* 2 3 4

Location 0.0% 0.0% -10.0% 0.0%Similar Similar Superior Similar

Size 0.0% 0.0% 0.0% -10.0%Similar Similar Similar Smaller

Zoning/Use -5.0% 0.0% 0.0% 0.0%Superior Similar Similar Similar

Shape/Site Utility 0.0% 0.0% 0.0% 0.0%Similar Similar Similar Similar

Gross Additional Adjustments 5.0% 0.0% 10.0% 10.0% Net Additional Adjustments -5.0% 0.0% -10.0% -10.0%

Adjusted Price Per Sq. Ft. $4.55 $4.55 $4.62 $4.57


Listings For further support to our value, we researched comparable active listings in the area and came up with the two following listings:

Comparable Number: 1 2Listing Active ActiveLocation: E Monte Vista

Drive1921 E. Greenlee

Road

APN: 110-06-084A 113-05-058AZoning: R-3, Tucson RX-2, TucsonAsking Price $110,000 $100,000Site Size (SF): 21,000 16,005 Site Size (AC): 0.48 0.37 Sales Price Per Sq. Ft. $5.24 $6.25

Comparable Land Listings

The listings indicate asking prices of $5.24/SF and $6.25/SF, requiring downward adjustment for smaller size and sale conditions as they remain active listings, adding further support to our value conclusion. Conclusion Four comparable sales were chosen and analyzed in order to develop an opinion of the market value of the subject site. As shown on the above table, after adjustments, the comparables formed a range in adjusted sales price from $4.55 to $4.62 per square foot. Due to the narrow range, we reconcile at a value from $4.55/SF to $4.60/SF. Multiplying $4.55 and $4.60/SF by the subject’s net useable land area of 29,771, results in a value from $135,458 to $136,947, reconciled at $136,000 or $4.57/SF of net useable land area which equates to $3.34/SF over the gross square footage. This value is considered reasonable and well supported. MARKET VALUE OPINION OF THE SUBJECT PROPERTY, AS IS, AS OF FEBRUARY 22, 2018 ...........................................................................................$136,000


ESTIMATED EXPOSURE PERIOD Exposure time is defined as the period of time required to market a property prior to the date of appraisal (historic). Most residential land properties, if properly priced, have been selling in less than one year. If the subject were marketed at the appraised value prior to the date of value, exposure time should have been less than one year.


APPRAISERS' CERTIFICATION WE HEREBY WARRANT AND CERTIFY THAT, TO THE BEST OF OUR KNOWLEDGE AND BELIEF, The statements of fact contained in this appraisal report, which are used as the basis of our analyses, opinions, and conclusions, are true and correct. We have no responsibility for legal matters, questions of survey, opinion of title, soil or subsoil conditions, engineering, or other technical matters. Any sketches prepared by us and contained in this report are included solely to aid the user of the report in visualizing the property and its location, and are not necessarily to scale. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is our personal, impartial, and unbiased professional analyses, opinions, and conclusions. We have no present or contemplated future interest in the real estate that is the subject of this appraisal report and, further, we have no personal interest or bias with respect to the subject matter of this appraisal report or the parties involved. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. We have performed no services, as appraisers or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. We certify that Andres A. Rubal inspected the subject. James S. Bradley, MAI, AI-GRS, CCIM has completed the requirements under the continuing education program of the Appraisal Institute. Andres A. Rubal, as of the date of this report, has completed the Standards and Ethics Requirement of the Appraisal Institute for Associate Members. Both appraisers reviewed the completed report for content and appraisal theory. Each individual has the appropriate knowledge and experience required to complete the assignment competently. 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 Institute. No one provided significant professional assistance to the signer of this report unless noted. Further, no one other than the undersigned formed the analyses, conclusions, and opinions concerning real estate that are set forth in this appraisal report, unless such participation by another party is indicated by the co-signing of this report by such other party.


APPRAISERS' CERTIFICATION (CONTINUED): Each finding, prediction, assumption, or conclusion contained in this report is our personal opinion and is not an assurance that an event will or will not occur. We assume that there are no conditions that are not apparent relating to the real estate, subsoil conditions, or structures located on the real estate which would affect our analyses, opinions, or conclusions with respect to the real estate. The data gathered in this appraisal process (except data furnished by the client) and the appraisal report itself remain our property. With respect to data provided by the client, we shall not violate the confidential nature of the appraiser-client relationship by improperly disclosing any confidential information furnished to us. We are, however, authorized by the client to disclose all or any portion of this appraisal report and the related appraisal data to appropriate representatives of the Appraisal Institute, if such disclosure is required, to enable us to comply with the bylaws and regulations of said Institute now or hereafter in effect. This appraisal report shall not be quoted or referred to in any report or financial statement of the client or in any documents filed with any governmental agency without our prior written consent. Neither all nor any part of the contents of this report (especially the conclusions as to value, the identity of the appraisers, references to the Appraisal Institute, or references to the MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media, or other public means of communication without our prior written consent and approval. Based upon the data and discussions contained within the attached report, it is our opinion that the market value of the subject property is as follows: MARKET VALUE OPINION OF THE SUBJECT PROPERTY, AS IS, AS OF FEBRUARY 22, 2018 ...........................................................................................$136,000 The exposure time, as premised upon the above value conclusion, is estimated to be less than 12 months. Respectfully submitted, JAMES S. BRADLEY, MAI, AI-GRS, CCIM ANDRES A. RUBAL President, AXIA Real Estate Appraisers Certified General Real Estate Appraiser, Certified General Real Estate Appraiser, Arizona Certificate #31801 Arizona Certificate #30432


QUALIFICATIONS OF JAMES S. BRADLEY, MAI, AI-GRS, CCIM

State of Arizona Certified General Real Estate Appraiser, Certificate #30432 PROFESSIONAL EXPERIENCE 1988 - Present AXIA Real Estate Appraisers, as Principal Appraiser/Consultant, owner

since 1996 (previously known as KB Real Estate Appraisers). 1985 - 1988 Greenberg Chin and Associates, Inc., Real Estate Consultants and

Appraisers, as Associate Consultant/Appraiser under Neil O. Kleinman, MAI

1983 - 1984 Real Estate Broker in Grand Junction, Colorado, working in commercial

sales and property management 1981 - 1983 Real Estate Broker in Cortez, Colorado, in residential and rural sales PROFESSIONAL AFFILIATIONS AND MEMBERSHIPS

Member, #9888 of the Appraisal Institute (MAI). The Institute conducts a voluntary program of continuing education for its designated members. MAI's who meet the minimum standards of this program are awarded periodic educational certification. Mr. Bradley received his designation in 1993.

Mr. Bradley received his AI-GRS designation in August 2016. The AI-GRS (which stands for Appraisal Institute – General Review Specialist), is a designation held by real estate appraisers who are experienced in general appraisal review. Mr. Bradley is the only designated AI-GRS in Southern Arizona.

Member #15817 of the CCIM Institute. Mr. Bradley received his CCIM designation in April 2009.

Member of Chapter 73 International Right of Way Association

Licensed Real Estate Broker, State of Arizona

Big Brothers/Big Sisters of Tucson, Board of Directors (Former Member)

Boys & Girls Clubs of Tucson, Board of Directors (Former Member)

FORMAL EDUCATION Bachelor of Science in Business Administration, University of Arizona, with major in Marketing/Advertising, 1984 Certificate of Achievement in Real Estate, University of Colorado, 1981


Qualifications of James S. Bradley, MAI (continued) PROFESSIONAL EDUCATION All required classes to obtain MAI Designation and in conformance with the Appraisal Institute’s requirements for continuing education. Additionally, all classes and exams necessary to obtain the CCIM Designation. Recognized by the Appraisal Institute as a Litigation Expert. SEMINARS/CLASSES 2016 Reviewing Appraisals in Eminent Domain (IRWA) Easement Valuation (IRWA) Review Theory – General (Appraisal Institute - AI) 2016-2017 7 Hour National USPAP Update Course (AI) Various Continuing Education Classes For Broker’s License Annual Arizona Ag Forum (ASFMRA) 2015 The Inns & Outs of a Certificate of Occupancy 2014 2014-2015 7 Hour National USPAP Update Course (AI) Data Verification Methods (AI) Small Hotel/Motel Valuation (AI) Advance Internet Search Strategies (AI) Numerous Real Estate Continuing Education Classes For Brokers License 2013 Business Practice & Ethics (AI) 2012 2012-2013 7 Hour National USPAP Update Course Litigation Appraising, Specialized Topics & Applications (AI) Fundamentals of Separating Real Property, Personal Property & Intangible Business Assets (AI) The Appraiser as an Expert Witness: Preparation & Testimony (AI) 2011 IRS Valuation Summit (AI) Education Conference, Atlanta, GA Various Topics (IRWA) Principals of Real Estate Law (IRWA) 2010 Update Course – National Uniform Standards of Professional Appraisal Practices Energy Star and the Appraisal Process Federal Agency Update 2010 IRWA Class 700 – Introduction to Property Management IRWA Class 900 – Principals of Real Estate Engineering

2009 Introduction to Valuation For Financial Reporting Energy Star and the Appraiser


QUALIFICATIONS OF ANDRES A. RUBAL

State of Arizona Certified General Real Estate Appraiser, Certificate #31801 EMPLOYMENT HISTORY 2007 - Present AXIA Real Estate Appraisers (previously known as KB Real Estate

Appraisers), as Commercial Real Estate Appraiser and Valuation Analyst, Tucson, Arizona

PROFESSIONAL AFFILIATIONS AND MEMBERSHIPS Licensed Real Estate Broker, State of Arizona FORMAL EDUCATION Bachelor of Arts in Geography, University of Arizona with a minor in Geographic Information Systems (GIS), 2007 PROFESSIONAL EDUCATION 2016 7 Hour Update USPAP Course, Appraisal Institute Housing and Land: Market Perspective, Appraisal Institute 2015 Appraising Convenience Stores, Appraisal Institute 2014 7 Hour Update USPAP Course, Appraisal Institute 2013 Advanced Income Capitalization, Appraisal Institute 2012 7 Hour Update USPAP Course, Appraisal Institute 2011 Condemnation Appraising: Principles and Applications, Appraisal Institute 2010 Advanced Sales Comparison & Cost Approaches, Appraisal Institute General Income Approach Part 2, Appraisal Institute 2009 Online Business Practices and Ethics, Appraisal Institute Online Apartment Appraisal, Concepts & Applications, Appraisal Institute General Appraiser Report Writing and Case Studies, Appraisal Institute General Appraiser Income Approach Part I, Appraisal Institute General Appraiser Sales Comparison Approach, Arizona School of Real Estate and

Business General Appraiser Market Analysis & Highest and Best Use, Appraisal Institute 2008 USPAP 2008 (15 Hr), Arizona School of Business and Real Estate General Appraiser Site Valuation and Cost Approach, Arizona School of Business and

Real Estate


APPRAISAL EXPERIENCE/SCOPE OF PRACTICE Clientele includes private individuals, corporate organizations, financial institutions, and

governmental agencies. Appraisal assignments include industrial properties, improved and vacant land, subdivisions,

detached single-family residences, office and retail buildings, as well as numerous special use properties.

Experience in preparation of reports for conventional lending, SBA, eminent domain work and

consultations. Appraisal assignments have been completed in Pima, Maricopa, Pinal, Cochise, Santa Cruz,

Yuma, Coconino, Graham, Yavapai, Navajo, and Mohave Counties within the State of Arizona.

22046-181 AXIA Real Estate Appraisers. Addenda

ADDENDA

1) Engagement Letter 2) Legal Descriptions 3) Assumptions and Limitations 4) Appraisers’ Certificates


ENGAGEMENT LETTER




LEGAL DESCRIPTIONS










ASSUMPTIONS AND LIMITATIONS


GENERAL ASSUMPTIONS AND LIMITATIONS OF THIS APPRAISAL This appraisal is for no purpose other than property valuation, and the appraisers are neither qualified nor attempting to go beyond that narrow scope. The reader should be aware that there are also inherent limitations to the accuracy of the information and analysis contained in this appraisal. Before making any decision based on the information and analysis contained in this report, it is critically important to read this entire section to understand these limitations. This appraisal is not a survey. It is assumed that the utilization of the land and improvements is within the boundaries of the property lines of the property described and that there is no encroachment or trespass unless otherwise noted. No survey of the property has been made by the appraiser and no responsibility is assumed in connection with such matters. Any maps, plats or drawings reproduced and included in this report are intended only for the purpose of showing spatial relationships. The reliability of the information contained on any such map or drawing is assumed by the appraiser and cannot be guaranteed to be correct. A surveyor should be consulted if there is any concern regarding boundaries, setbacks, encroachments or other survey matters. This appraisal is not a legal opinion. No responsibility is assumed for matters of a legal nature that affect title to the property nor is an opinion of title rendered. The title is assumed to be good and marketable. The value opinion is given without regard to any questions of title, boundaries, encumbrances or encroachments. I are not usually provided an abstract of the property being appraised and, in any event, I neither made a detailed examination of it nor do I give any legal opinion concerning it. It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless noncompliance is stated, defined and considered in the appraisal report. A comprehensive examination of laws and regulations affecting the subject property was not performed for this appraisal. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined and considered in the appraisal report. Information and analysis shown in this report concerning these items is based only on a rudimentary investigation. Any significant question should be addressed to local zoning or land use officials and/or an attorney. It is assumed that all required licenses, consents or other legislative or administrative authority from any local, state or national government or private entity or organization have been or can be obtained or renewed for any use on which the value opinion contained in this report is based. Appropriate government officials and/or an attorney should be consulted if an interested party has any questions or concerns on these items since I have not made a comprehensive examination of laws and regulations affecting the subject property. This appraisal is not an engineering or property inspection report. This appraisal should not be considered a report on the physical items that are a part of this property. Although the appraisal may contain information about the physical items being appraised (including their adequacy and/or condition), it should be clearly understood that this information is only to be used as a general guide for property valuation and not as a complete or detailed physical report. The appraisers are not construction, engineering, environmental or legal experts, and any statement given on these matters in this report should be considered preliminary in nature.


For properties in which the conditions of foundations, roofs, exterior walls, interior walls, floors, heating systems, plumbing, insulation, electrical service and all mechanical and construction items are described, these descriptions are based on a casual inspection only and no detailed inspection was made. For instance, I am not an expert on heating systems and no attempt was made to inspect the interior of a given property’s furnace. Structures are not checked for building code violations, and it is assumed that all buildings meet applicable building codes unless so stated in the report. Some items, such as conditions behind walls, above ceilings, behind locked doors or under the ground, are not exposed to casual view and, therefore, are typically not inspected. The existence of insulation, if any is mentioned, was found by conversation with others and/or circumstantial evidence. Since it is not normally exposed to view, the accuracy of any statements about insulation cannot be guaranteed. It is assumed that there are no hidden or unapparent conditions of the property, sub-soil or structures that would render it more or less valuable. No responsibility is assumed for such conditions or for the engineering that may be required to discover such factors. Since no engineering or percolation tests were made, no liability is assumed for soil conditions. Sub-surface rights (mineral and oil) were not considered in making this appraisal. Unless stated otherwise in the report, wells and septic systems, if any, are assumed to be in good working condition and of sufficient size and capacity for the stated highest and best use of the property. If the client requires a more detailed property inspection, obtaining services of a qualified building inspector is highly recommended. We are not environmental experts, and I do not have the expertise necessary to determine the existence of environmental hazards such as the presence of urea-formaldehyde foam insulation, toxic waste, asbestos or hazardous building materials, or any other environmental hazards on the subject or surrounding properties. If I know of any problems of this nature that I believe would create a significant problem, they are disclosed in this report. However, nondisclosure should not be taken as an indication that such a problem does not exist. An expert in the field should be consulted if any interested party has questions on environmental factors. No chemical or scientific tests were performed by the appraiser on the subject property, and it is assumed that the air, water, ground and general environment associated with the property present no physical or health hazard of any kind unless otherwise noted in the report. It is further assumed that the subject site does not contain any type of dump site and that there are no underground tanks (or any underground source) leaking toxic or hazardous chemicals into the groundwater or the environment unless otherwise noted in the report. The age of any improvements to the subject property mentioned in this report should be considered a rough estimate. I are not sufficiently skilled in the construction trades to be able to reliably estimate the age of improvements by observation. I therefore rely on circumstantial evidence that may come into my possession (such as dates on architectural plans) or conversations with those who might be somewhat familiar with the history of the property such as property owners, on-site personnel or others. Parties interested in knowing the exact age of improvements on the land should contact us to ascertain the source of the data and then make a decision as to whether they wish to pursue additional investigation. Because no detailed construction, engineering, environmental or legal inspection was made and because such knowledge goes beyond the scope of this appraisal, any observed condition or other comments given


in this appraisal report should not be taken as a guarantee that a problem does not exist. Specifically, no guarantee is made as to the adequacy or condition of a given property’s foundation, roof, exterior walls, interior walls, floors, heating system, air conditioning system, plumbing, electrical service, insulation or any other detailed construction matters. If any interested party is concerned about the existence, condition or adequacy of any particular item, I would strongly suggest that a construction expert be hired for a detailed investigation. This appraisal is made under conditions of uncertainty with limited data. As can be seen from limitations presented above, the appraisal is based on an analysis of many sources of data. Every attempt has been made to confirm the data as reliable and factual, however, there are a number of limitations with respect to data including: a lack of certain areas of expertise beyond real estate appraisal methodology and techniques; the inability of the appraiser to view certain portions of the property; and the inherent limitations of relying upon information provided by others such as: income and expense data; comparable sales data; and engineering analyses. This appraisal is an opinion of value based on an analysis of information known to us at the time the appraisal was made. All values shown in the appraisal report are projections based on the analysis as of the date of the appraisal. These values may not be valid in other time periods or as conditions change. I take no responsibility for events, conditions or circumstances affecting the property's market value that take place subsequent to either the date of value contained in this report or the date of the field inspection, whichever occurs first. Opinions and estimates expressed herein represent my best judgment but should not be construed as advice or recommendation to act. Before relying on any statement made in this appraisal report, interested parties should contact us for the exact extent of my data collection on any point that they believe to be important to their decision making. This will enable such interested parties to determine whether they believe the extent of my data gathering process was adequate for their needs. Appraisal report limitations Appraisal reports are technical documents addressed to the specific technical needs of clients. Casual readers should understand that this report does not contain all of the information I have concerning the subject property or the real estate market. While no factors I believe to be significant but unknown to the client have been knowingly withheld, it is always possible that I have information of significance that may be important to others but which, with my limited acquaintance with the property and in light of the limitations of my expertise (as outlined in this document), does not seem to be important to us. Appraisal reports are technical documents, with their reporting formats guided by both the Uniform Standards of Appraisal Practice and specific technical requirements of a given client. Casual readers are cautioned about their limitations and are warned against possible misinterpretation of the information contained in these reports. The liability of AXIA Real Estate Appraisers, its employees and/or agents is limited only to the Client and specifically identified intended users. Further, there is no accountability, obligation or liability to any third party. The appraiser(s) should be contacted with any questions before this report is relied on for decision making. There are no requirements, by reason of this appraisal, to give testimony or appear in court or any pretrial conference or appearance required by subpoena with reference to the property in question, unless sufficient notice is given to allow adequate preparation and additional fees are paid by the client at my regular rates for such appearances and the preparation necessitated thereby.


This report is made for the information and/or guidance of the client and possession of this report, or a copy thereof, does not carry with it a right of publication. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media without the written consent and approval of the appraiser. Nor shall the appraiser, firm or professional organization of which the appraiser is a member be identified without the written consent of the appraiser. It is suggested that those who possess this appraisal report should not give copies to others. Certainly, legal advice should be obtained on potential liability issues before this is done. Anyone who gives out an incomplete or altered copy of the appraisal report (including all attachments) does so at their own risk and assumes complete liability for any harm caused by giving out an incomplete or altered copy. Neither the appraiser nor this company assumes any liability for harm caused by reliance upon an incomplete or altered copy of the appraisal report given out by others. Anyone with a question on whether their copy of an appraisal report is incomplete or altered should contact my office. Values and conclusions for various components of the subject property as contained within this report are valid only when making a summation; they are not to be used independently for any purpose and must be considered invalid if so used. The allocation of the total value in this report between land and improvements applies only under the reported highest and best use of the property. The separate valuations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. In the case of limited partnerships, syndication offerings or stock offerings in real estate, the Client agrees that in case of a lawsuit (brought by lender, partner or part owner in any form of ownership, tenant or any other party), the Client and all parties will completely hold harmless this firm, its employees and/or agents. Americans with Disabilities Act (ADA) The Americans with Disabilities Act (ADA) became effective January 26, 1992. I have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect on the value of the property. Since I have no direct evidence relating to this issue, I did not consider possible noncompliance with the requirements of ADA in valuing of the property. Certificate of Occupancy (COO) Each governmental jurisdiction has varying requirements for an improved property to be occupied. It is outside of the scope of this report to be able to quantitatively understand how the COO regulations apply to each property. Since I have no direct evidence relating to this issue as it concerns the subject, I did not consider possible noncompliance with the requirements of any COO regulations as they would apply to the subject in valuing of the property. Arizona-specific considerations Special consideration must be given to properties located in Arizona with respect to seismicity/subsidence. Seismic activity in Southern Arizona is rare but does occasionally occur. A more common geotechnical manifestation has been the development of subsidence cones caused by pumping of groundwater. A geologist should be consulted if there is any concern regarding these matters.


Due to the historic nature of the American Southwest, properties within Arizona may be impacted by the presence of archaeological features, such as Native American remains or artifacts (specifically the ancient Hohokam and Anasazi settlements). The presence of such features may require mitigation on the part of the property owner or developer and could involve significant costs or time delays. It is an assumption of this report that no such archeological issues impact the subject property, unless otherwise noted in the appraisal report. Should a competent archeologist specifically identify significant archeology and quantify the cost of data recovery, I reserve the right to alter the valuation opinion contained in this report. EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS None noted.


APPRAISER’S CERTIFICATES



Documents

APPRAISAL REPORT OF VACANT LAND LOCATED AT THE … · Tucson, Arizona 85701 RE: Appraisal of vacant land, located at the Northwest corner of Elm Street and 7th Avenue, Tucson, Pima