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APPRAISAL TECHNOLOGY, LLC
220 South River Drive ❖ Tempe, Arizona 85281 ❖ (480) 446-9600 ❖ Fax: (480) 446-9615
AN APPRAISAL REPORT OF THE SINGLE TENANT COMMERCIAL RETAIL/OFFICE
PROPERTY LOCATED AT 1 SOUTH 24TH STREET IN PHOENIX, MARICOPA
COUNTY, ARIZONA.
PREPARED FOR
CITY OF PHOENIX
251 WEST WASHINGTON STREET
PHOENIX, ARIZONA 85003
ATTENTION
MS. MARLA TANNENBAUM
FINANCE DEPARTMENT, REAL ESTATE DIVISION
A.T. I. FILE NO.: SZZ65991O
PROPERTY NUMBER: PM1646
PROPERTY OWNER: CITY OF PHOENIX
DATE OF REPORT
JANUARY 28, 2021
EFFECTIVE DATE OF APPRAISAL
JANUARY 11, 2021
DATE OF INSPECTION
JANUARY 11, 2021
PREPARED BY
JEFF WINDLE, MAI
CERTIFIED GENERAL REAL ESTATE APPRAISER CERTIFICATE NO. 30808
ZACH SINAY, MAI, R/W-AC
CERTIFIED GENERAL REAL ESTATE APPRAISER CERTIFICATE NO. 31199
January 28, 2021
A.T.I. File No.: SZZ65991O
TO: City of Phoenix
251 West Washington Street
Phoenix, Arizona 85003
ATTN: Ms. Marla Tannenbaum
Finance Department, Real Estate Division
RE: An Appraisal Report of the single tenant commercial retail/office property located at 1
South 24th Street in Phoenix, Maricopa County, Arizona.
Dear Ms. Tannenbaum:
As you requested, we have appraised the "As Is" Market Value of the aforementioned property. The
value estimate is supported by market analysis which is communicated through an Appraisal Report
format plus exhibits, which describes and identifies methods of approach and valuation.
The purpose of the appraisal is to estimate the "As Is" Market Value as of the effective date of the
appraisal or January 11, 2021.
The subject of this appraisal report is a single tenant commercial retail/office property totaling 5,461
square feet of building area. As of the effective date of the appraisal, the property was vacant. The
building was formerly built-out as a bank but has sustained fire damage several years ago and the
interior was entirely gutted with only some interior skeletal support structures remaining. The existing
electrical and HVAC capability is unknown and although there are wires and duct work throughout
the property, it is likely that all of this would need to be removed for any future use.
The intended users of this report are City of Phoenix, and their affiliates. The intended use of the
appraisal report is for disposition decisions to be made by the client. This report is not intended for
any other use or any other users.
The subject is currently vacant with no lease in place thus, the Fee Simple Estate will be considered
in this 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.
APPRAISAL TECHNOLOGY, LLC
220 South River Drive ❖ Tempe, Arizona 85281 ❖ (480) 446-9600 ❖ Fax: (480) 446-9615
Appraisal Technology, LLC 2
This report was prepared under the Appraisal Report option of Standards Rule 2-2(a) of the most
recent edition of the Uniform Standards of Professional Appraisal Practice (USPAP). This type of
report has a moderate level of detail. It summarizes the information analyzed, the appraisal
methods employed, and the reasoning that supports the analyses, opinion, and conclusions. The
following appraisal meets or exceeds the requirements for an Appraisal Report as defined by
(USPAP) 2020-2021.
An environmental study has not been provided. The appraisers have not identified any toxic waste
and/or possible hazardous contaminant on the site; however, it does not mean that such materials do
not exist. The appraisers are without the expertise to identify and/or detect such substances. Because
of the liability generated if toxic wastes and/or contaminants are found on the site, it is strongly
recommended that a specialist in the detection of toxic waste be retained to investigate for possible
contamination.
This appraisal assignment was drafted to adhere to the standards and practices of the Appraisal
Institute, plus the guidelines and recommendations set forth in the Uniform Standards of Professional
Appraisal Practice (USPAP) by the Appraisal Foundation, the Federal Aviation Administration
(FAA), and the Advisory circular AC No:150/5100 and its reference to requirements as to the
Uniform Act and City of Phoenix 2020 appraisal standards.
Based on the information found in our investigation, the appraisers are of the opinion that the "As Is"
Market Value of the subject property, as of the effective date of the appraisal or January 11, 2021, is:
FOUR HUNDRED EIGHTY THOUSAND DOLLARS
($480,000.00)
Respectfully submitted,
Jeff Windle, MAI
Certified General Real Estate Appraiser No. 30808
480.285.3864
Zach Sinay, MAI, R/W-AC
Certified General Real Estate Appraiser No. 31199
480.285.3868
Appraisal Technology, LLC 3
TABLE OF CONTENTS
FACTS AND CONCLUSIONS ................................................................................................... 4
SCOPE OF WORK....................................................................................................................... 6
AREA MAP ................................................................................................................................. 16
REGIONAL AND CITY DATA ................................................................................................ 17
NEIGHBORHOOD DATA ANALYSIS ................................................................................... 41
SITE DATA ANALYSIS ............................................................................................................ 51
SUBJECT PHOTOGRAPHS .................................................................................................... 62
IMPROVEMENT DESCRIPTION .......................................................................................... 72
HIGHEST AND BEST USE ...................................................................................................... 75
VALUATION PROCESS ........................................................................................................... 84
SALES COMPARISON APPROACH ..................................................................................... 86
INCOME APPROACH ............................................................................................................ 103
RECONCILIATION ................................................................................................................ 116
CERTIFICATION .................................................................................................................... 118
ADDENDA
Zoning Ordinance ...........................................................................................................EXHIBIT 1
Potential Rehabilitation/Renovation Costs .....................................................................EXHIBIT 2
Deed of Conservation Easement .....................................................................................EXHIBIT 3
Contingent and Limiting Conditions ..............................................................................EXHIBIT 4
Appraisal Technology, LLC 4
FACTS AND CONCLUSIONS
TYPE OF PROPERTY: Single tenant commercial retail/office property
LOCATION: The subject is located at 1 South 24th Street in
Phoenix, Maricopa County, Arizona.
REPORT PURPOSE: The purpose of this appraisal is to estimate the
"As Is" Market Value of the subject as of the
effective date of the appraisal.
TAX PARCEL NUMBER (S): 121-62-041A
SITE AREA: According to information provided by the client,
the subject site totals 1.552 acres or 67,617 square
feet.
ZONING: Approximately 50% of the site is zoned C-3,
General Commercial and 50% is zoned A-1, Light
Industrial; City of Phoenix
FLOOD ZONE: The location is within an area denoted as being in
an "X" Flood Hazard Area, as found on Federal
Emergency Management Agency Flood
Insurance Rate Map number 04013C2210L based
on the October 16, 2013 flood data.
IMPROVEMENTS:
Property Type: Retail/Office
Property Use: Single tenant commercial retail/office property
formerly built-out as a bank
Size: 5,461 square feet
Year Built: 1968
Condition: Poor (The property previously sustained fire
damage that has since been cleaned up and the
property is essentially in shell condition, although
there are some remains of interior walls,
electrical, and ductwork. All of this would likely
need to be removed for new tenant improvements)
Appraisal Technology, LLC 5
Property Rights: Fee Simple Estate; The client indicated that the
property does include a Deed of Conservation
Easement encumbering the property. This
easement is used to protect property significant
in Arizona history and culture for the education
of the general public. The easement covers all
improvements, fixtures and buildings on the site
and does not allow any physical changes to the
Structures, Facades or Fixtures without the
advance approval from the City Historic
Preservation Office. Although this easement
does state that any new construction would
require Phoenix approval, it was indicated to the
appraiser that the City of Phoenix would not be
opposed to new development on the
undeveloped eastern portion of the site. It is an
Extraordinary Assumption that this Deed of
Conservation Easement does encumber the
property and new development on some
undeveloped portions of the site (likely the
eastern portion of the site) would be allowed.
Occupancy: 0%
Land to Building Ratio: 12.38:1
PARKING:
Open Spaces: 54 spaces
Covered Spaces: 8 spaces
Total Spaces: 62 spaces
Parking Ratio: 11.35/1,000 square feet of building area.
HIGHEST & BEST USE: As Vacant: Hold for Commercial Development
As Improved: Existing use.
INSPECTION DATE:
January 11, 2021
EFFECTIVE DATE OF APPRAISAL:
January 11, 2021
VALUE CONCLUSIONS:
Sales Comparison Approach $480,000
Income Approach $455,000
"As Is" Market Value
$480,000
Appraisal Technology, LLC 6
SCOPE OF WORK
The practice of appraisal can be considered to be less of a science dictated by strict rules and more
of an art, in which rules guide the appraisers toward a trustworthy, responsible and credible
valuation. The Uniform Standards of Professional Appraisal Practice (USPAP) provides
guidelines for this process to be undertaken through the Scope of Work Rule, to which all appraisal
professionals must adhere.
The USPAP 2020-2021 SCOPE OF WORK RULE states:
For each appraisal and appraisal review assignment, an appraiser must:
1. identify the problem to be solved;
2. determine and perform the scope of work necessary to develop credible assignment results;
3. and disclose the scope of work in the report.
An appraiser must properly identify the problem to be solved in order to determine the appropriate
scope of work. The appraiser must be prepared to demonstrate that the scope of work is sufficient
to produce credible assignment results. (The Appraisal Foundation, USPAP 2020-2021 edition, Pg. 12)
Comment: Scope of work includes, but is not limited to:
▪ the extent to which the property is identified;
▪ the extent to which tangible property is inspected;
▪ the type and extent of data researched; and
▪ the type and extent of analyses applied to arrive at opinions or conclusions.
Appraisers have broad flexibility and significant responsibility in determining the appropriate scope
of work for an appraisal and appraisal review assignment.
Credible assignment results require support by relevant evidence and logic. The credibility of
assignment results is always measured in the context of the intended use.
For this individual assignment, the appraisers shall address the three aspects of the Scope of Work
Rule; Problem Identification, Scope of Work Acceptability and Disclosure Obligations.
PROBLEM IDENTIFICATION (PURPOSE):
An appraiser must gather and analyze information about those assignment elements that are
necessary to properly identify the appraisal or appraisal review problem to be solved. (The Appraisal
Foundation, USPAP 2020-2021 edition, Pg. 12)
The purpose of the appraisal is to estimate the "As Is" Market Value of subject property as of January
11, 2021.
Appraisal Technology, LLC 7
INTENDED USE/USERS:
The use of this appraisal report is for disposition decisions to be made by the client. The intended
users of this report are City of Phoenix and their affiliates. This report is not intended for any other
use or any other users.
The value reported is based upon cash terms or its equivalent. This appraisal assignment was drafted
to adhere to the standards and practices of the Appraisal Institute, plus the guidelines and recommen-
dations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), City of
Phoenix 2020 Appraisal Standards, by the Appraisal Foundation, the Federal Aviation
Administration (FAA), and the Advisory circular AC No:150/5100 and its reference to requirements
as to the Uniform Act and City of Phoenix 2020 Appraisal Standards.
EFFECTIVE DATE OF APPRAISAL:
January 11, 2021
DATE OF INSPECTION:
January 11, 2021
INTEREST VALUED:
The subject property is currently vacant with no leases in place and thus, the Fee Simple Estate is
considered in this report. The Fee Simple Estate is defined as follows:
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.
Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute,
2015).
In the estimate of value, typically four interdependent factors must be considered as follows:
• Utility - the ability of a product to satisfy a human want, need or desire.
• Scarcity - the present or anticipated supply of an item relative to the demand for it.
• Desire - a purchaser's wish for an item to satisfy human needs (e.g., shelter, clothing,
food, companionship) or individual wants beyond the essentials to support life.
• Effective Purchasing Power - the ability of an individual or group to participate in a
market, i.e., to acquire goods and services with cash or its equivalent.
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.
Appraisal Technology, LLC 8
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. (Title
12, Code of Federal Regulations, Part 34, Subpart C – Appraisals)
VALUE “AS IS” DEFINITION:
The estimate of the market value of real property in its current physical condition, use, and zoning
as of the appraisal date. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed.
(Chicago: Appraisal Institute, 2015).
EXTRAORDINARY ASSUMPTION:
An assignment-specific assumption as of the effective date regarding uncertain information used in
an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.
Comment: Uncertain information might include physical, legal, or economic characteristics of the
subject property, or conditions external to the property, such as market conditions or trends; or the
integrity of data used in an analysis. (The Appraisal Foundation, USPAP 2020-2021 edition)
It is an Extraordinary Assumption that there have been no past events that may cause a Rule B
calculation triggering a recalculation of the subject’s Limited Property Value. If a recalculation
occurs, an increase or decrease in the subject's Limited Property Value may follow, resulting in
what could be a significant change in the subject’s taxes and potentially change the conclusions
within this report.
It is an Extraordinary Assumption that the subject has no tax liability.
A title report was not provided. However, the client indicated that the property does include a Deed
of Conservation Easement encumbering the property. This easement is used to protect property
significant in Arizona history and culture for the education of the general public. The easement
covers all improvements, fixtures and buildings on the site and does not allow any physical changes
to the Structures, Facades or Fixtures without the advance approval from the City Historic
Preservation Office. Although this easement does state that any new construction would require
Phoenix approval, it was indicated to the appraiser that the City of Phoenix would not be opposed
to new development on the undeveloped eastern portion of the site. It is an Extraordinary
Appraisal Technology, LLC 9
Assumption that this Deed of Conservation Easement does encumber the property and new
development on some undeveloped portions of the site (likely the eastern portion of the site) would
be allowed.
In addition to the Deed of Conservation Easement, the client indicated that the site is also
encumbered by a Limited Avigation Easement and Restrictive Covenant (Easement). Although
the actual easement document encumbering the site was not provided, a sample avigation easement
indicated that the Grantor grants to Grantee an easement for use of airspace for airport operations,
which easement shall include the right of flight of aircraft within the defined airspace, together
with its attendant noise, vibrations, fumes, dust, fuel and lubricant particles, and all other effects
that may be caused by the operation of aircraft in connection with airport operations at the airport.
It is an Extraordinary Assumption that the Limited Avigation Easement exists and encumbers the
property.
The sample Restrictive Covenant document supplied to the appraiser states that the subject
“Structures and their respective Facades, as well as the remainder of the Property, must at all times
be maintained in a good and sound state of repair in accordance with the Secretary of Interior
Standards for the Treatment of Historic Properties (the "Standards") so as to prevent the
deterioration of the Property or any portion thereof, to prevent visual obstruction of the Property
from public viewpoints such as adjacent streets; and prevent the intrusion of new improvements,
walls, fences, statues, landscaping or fixtures which substantially modify the public view of the
Property and its associated streetscape and open space, and are deemed to be not in accordance
with the Standards.” It is an Extraordinary Assumption that this Restrictive Covenant (Easement)
also exists encumbering the property.
HYPOTHETICAL CONDITION:
A condition, directly related to a specific assignment, which is contrary to what is known by the
appraiser to exist on the effective date of the assignment results, but is used for the purpose of
analysis.
Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic
characteristics of the subject property; or about conditions external to the property, such as market
conditions or trends; or about the integrity of data used in an analysis. (The Appraisal Foundation,
USPAP 2020-2021 edition)
No Hypothetical Conditions were used in this report.
SCOPE OF WORK ACCEPTABILITY:
The scope of work must include the research and analyses that are necessary to develop credible
assignment results.
An appraiser must not allow assignment conditions to limit the scope of work to such a degree that
the assignment results are not credible in the context of the intended use.
An appraiser must not allow the intended use of an assignment or a client’s objectives to cause
the assignment results to be biased. (USPAP 2020-2021 edition, Pg. 12)
Appraisal Technology, LLC 10
The client has requested that the appraisers estimate the "As Is" Market Value of the subject
property. In order to credibly perform this task, the appraisers have followed these general
guidelines:
- determination of problem and applicable Hypothetical Conditions or Extraordinary
Assumptions
- research on the subject property, including but not limited to: ownership history,
applicable liens and easements, physical characteristics (i.e. size, topography), relevant
subject data (i.e. leases and financial statements for income producing properties)
- selection of, research on and collection of market data for the subject neighborhood
- site inspection
- analysis and synthesis of Highest and Best Use of the subject property
- selection of valuation methodology, subsequent research as is applicable, including
market participant and market expert research (i.e. Sales Comparison Approach, Cost
Approach, Income Approach, sales or rent comparable properties)
- analysis and conclusion of valuation methodology(ies)
- reconciliation of valuation methodology results
- conclusion of probable estimated market value
DISCLOSURE OBLIGATIONS:
The report must contain sufficient information to allow the client and other intended users to
understand the scope of work performed. The information disclosed must be appropriate for the
intended use of the assignment results. (The Appraisal Foundation, USPAP 2020-2021 edition)
Comment: Proper disclosure is required because clients and other intended users rely on the
assignment results. Sufficient information includes disclosure of research and analyses performed
and might also include disclosure of research and analyses not performed.
The appraiser has broad flexibility and significant responsibility in the level of detail and manner
of disclosing the scope of work in the appraisal report or appraisal review report. The appraiser
may, but is not required to, consolidate the disclosure in a specific section or sections of the report,
or use a particular label, heading or subheading. An appraiser may choose to disclose the scope of
work as necessary throughout the report.
AREA ANALYSIS DATA SOURCES:
As part of this appraisal assignment, the appraisers made a number of independent investigations
and analyses. Data retained in office files, which are updated regularly, was relied on. Affidavits
of Property Value were checked to verify information. Maps, aerials and zoning obtained from
Maricopa County and the City of Phoenix were checked and also information provided by the
client.
The Arizona State and Phoenix Metro area data was taken from many sources including without
limitation Arizona State University, Arizona State Department of Economic Security and the U.S.
Census Bureau.
Appraisal Technology, LLC 11
All market data was confirmed from one or more of the following sources as indicated on the
individual sales: Maricopa County Assessor's Office (www.mcassessor.maricopa.gov), Affidavit
of Property Value, Real Quest (www.realquest.com), CoStar (www.costar.com), FLEXMLS Data
Systems (www.flexmls.com), owners or their representatives, and/or Real Estate Brokers and/or
Agents.
NEIGHBORHOOD AND ANALYSIS:
The neighborhood was observed and the contents of this report express our opinions of what was
found and observed.
SITE DESCRIPTION AND ANALYSIS:
The site description and analysis was based on our personal physical inspection, information
obtained from the client, and from information obtained from the City of Phoenix and Maricopa
County Engineering, Planning and Zoning Departments.
IMPROVEMENT DESCRIPTION AND ANALYSIS:
The subject was personally inspected by Jeff Windle, MAI and Zach Sinay, MAI, R/W-AC and
the conclusions are our own. The improvement description and analysis was based on our personal
physical inspection, information obtained from the client, and from information obtained from the
Maricopa County and/or the City of Phoenix, Engineering, Planning and Zoning Departments. It
should be noted that no other individual provided significant real property appraisal assistance to
the person signing this certification.
DATA SOURCES:
The appraisers utilized a Level 2 Building Conditions Assessment Report provided by the client
as well as a property assessment report created by Swan Architects for the City of Phoenix Historic
Preservation Office. The information included in this report was utilized in this report and is
considered to be accurate.
Site Data Size Information provided by the owner
Improved Data
Building Area Information provided by the owner
No. of Buildings Inspection
Parking Spaces Inspection
Year Built County Assessor
Economic Data Deferred Maintenance N/A
Building Costs N/A
Income Data N/A
Appraisal Technology, LLC 12
Expense Data N/A
Other Flood Zone FEMA
Zoning City of Phoenix
LEGAL DESCRIPTION:
Based upon information provided by the Maricopa County Assessor’s Office, the subject property
is legally defined as follows:
OWNERSHIP:
The owner of record as provided by Maricopa County is:
City of Phoenix
HISTORY:
The subject was purchased by the current ownership for $1,550,000 via warranty deed in
December of 2000 as shown in Docket #200-994998. The subject building was involved in a fire
several years ago that did significant damage to the interior of the property. The appraiser was
supplied with a probable cost to repair the various portions of the project including site, exterior,
and interior. A detailed document showing these costs can be found within the addenda of this
report. A summary of the probable costs is below.
Appraisal Technology, LLC 13
The appraisers are unaware of any transactions over the previous three years and the property has not
been reported as being listed for sale previously.
SCOPE OF VALUATION METHODOLOGY:
The valuation process is an orderly program in which data used to estimate value of the subject
property is acquired, classified, analyzed, and presented. The first step in the process is to define the
appraisal problem, i.e., identify the real estate, the effective date of the appraisal, the property rights
being appraised, and the type of value sought. Once this has been accomplished, the appraisers collect
and analyze the factors that affect the fair market value of the subject property. These factors are
addressed in the area and neighborhood analysis, the site and improvement analysis, and the highest
and best use analysis. They are then applied to the subject property in the discussion of the three
approaches to value.
The Cost, Sales Comparison and Income Approaches are widely accepted methods of estimating
value of an income producing property. Each approach is described briefly here and discussed in
detail in the analysis of each.
To apply the Cost Approach, the depreciated replacement cost of the improvements is added to the
value of the land as though vacant, derived through sales comparison, to arrive at a value estimate for
the subject property. This approach is most reliable when the improvements are new or nearly new
and represent the highest and best use of the site. Due to the age of the subject improvements and
difficulty in estimating depreciation, as well as the fact that investors are currently placing little weight
on this approach for improvements similar to the subject, the Cost Approach to Value is eliminated.
The Sales Comparison Approach is an approach through which an appraiser derives a value indication
by comparing the property being appraised to similar properties that have been sold recently, applying
appropriate units of comparison and making adjustments, based on the elements of comparison, to
the sale prices of the comparable sales. The Sales Comparison Approach will be utilized in valuation
of the subject property.
The Income Approach can be analyzed by one of two methods: 1) Direct Capitalization or 2)
Discounted Cash Flow.
The Direct Capitalization method involves estimating the gross rental income that a property will
produce in a year, then subtracting losses due to vacancy and collections and subtracting normal
operating expenses for the year to arrive at the annual net operating income to the property. The net
operating income is capitalized into a value by applying a rate similar to those found in sales of similar
properties in the competing marketplace.
Capitalization is a simple process whereby NOI is divided by an expected rate of return to the
investment to indicate the amount an investor would likely be willing to spend to receive that return.
This method is generally utilized when a property is stabilized or close to stabilization.
The Discounted Cash Flow (DCF) method uses the discounting procedure to convert future benefits
to present value on the premise of a required level of profit or rate of return on an invested capital.
The method is profit or yield oriented; it simulates the typical investor's investment assumptions by
formulas that calculate the present value of expected benefits according to a requirement for profit or
Appraisal Technology, LLC 14
yield. This analysis is based upon the concept that the investor is willing to pay as much for the
property as the present value of its expected income over the holding period, plus the present value
of net revenue from the sale of the property at the end of the investment. Revenue from the sale of the
property is known as the reversion. The income stream and reversion are discounted to a present value
at a rate representing respective perceived risks of each segment of the investment. This method is
generally utilized when a property is in its lease-up period or if the property is experiencing a large
vacancy.
Due to the fact that the subject is capable of producing income, the Direct Capitalization Method will
be utilized within the Income Approach.
Following the approaches to value, the indications of value are correlated into a single value estimate
within the reconciliation section.
MARKETING TIME:
1. The time it takes an interest in real property to sell on the market sub-sequent to the date of an
appraisal.
2. An opinion of the amount of time it might take to sell a real or personal property interest at
the concluded market value level during the period immediately after the effective date of an
appraisal. Marketing time differs from exposure time, which is always presumed to precede
the effective date of an appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of
the Appraisal Foundation and Statement on Appraisal Standards No. 6, “Reasonable
Exposure Time in Real Property and Personal Property Market Value Opinions” address the
determination of reasonable exposure and marketing time.) Appraisal Institute, The
Dictionary of Real Estate Appraisal, 6th ed. (Chicago Appraisal Institute, 2015).
Based on market evidence, if the subject is placed on the market for sale at the appraised market value,
with an intensive marketing program, the property should be sold and closed within six to twelve
months. If a property is priced considerably above market it will stay on the market for a considerably
longer period of time than if it is priced at market levels. This can be shown within the market by
examining the comparable sales’ time on the market given their respective sale prices.
EXPOSURE TIME:
An opinion, based on supporting market data, of the length of time that the property interest being
appraised would have been offered on the market prior to the hypothetical consummation of a sale
at market value on the effective date of the appraisal. (The Appraisal Foundation, USPAP 2020-2021
edition)
The appraiser researched the subject’s market area for similar type properties that were exposed with
an intense marketing program and considered to be marketed within a reasonable exposure time.
Based on market evidence, properties similar to that of the subject, and within the subject’s
neighborhood sold and closed within six to twelve months.
Appraisal Technology, LLC 15
HAZARDOUS WASTES:
An environmental study has not been provided to the appraisers. If toxic waste and/or contaminants
are detected on the subject property, the value estimate appearing in this report is null and void. If
a re-appraisal is required, it will be made at an additional charge and upon receipt of any additional
information requested (i.e., what the toxic waste and/or contaminate is and the cost of removal) by
the appraisers. No other nuisances or hazards were recognized during our on-site inspection of the
subject property.
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REGIONAL AND CITY DATA
LOCATION:
The State of Arizona is located within the southwestern region of the United States. The July 2019
population estimate puts the population of Arizona at 7,187,990. Maricopa County is located in the
south central part of the State of Arizona. Maricopa County consists of numerous cities, towns and
communities that are inter-connected through transportation corridors, economic affiliations, and
physical/location characteristics.
The cities, towns, and communities that make up the Phoenix Metropolitan area include: Apache
Junction, Avondale, Buckeye, Carefree, Chandler, El Mirage, Fountain Hills, Gila Bend, Gilbert,
Glendale, Goodyear, Guadalupe, Litchfield Park, Mesa, New River, Paradise Valley, Peoria,
Phoenix, Scottsdale, Sun City/Sun City West, Surprise, Tempe, Tolleson, Wickenburg, and
Youngtown.
The subject property is located in the central portion of the Metropolitan Phoenix area, Maricopa
County, Arizona. The subject property is considered part of the greater Metropolitan Phoenix area
and will be examined within the following regional data analysis.
The appraisers have identified basic regional factors that may have an impact on the value of the
subject property which includes: location, population, employment, income characteristics, cost of
living, education, quality of life, and real estate trends. This section will focus and analyze these
recognized basic regional factors as they influence or affect real estate value.
SOCIAL FORCES:
Social forces primarily have to do with population and demographic trends. The demographics of
the population indicate the potential basic demand for real estate services. Arizona has experienced
rapid population growth continuously for the last seven years, largely due to the extended period
of strong economic growth. The state added over 94,000 residents last year which translated into
a growth at 1.3%. Continued job and population growth have contributed to personal income gains
of 3.1 % in 2020.
Appraisal Technology, LLC 18
Arizona Office of Economic Opportunity
ECONOMIC FORCES:
The Metropolitan Phoenix Area (Maricopa County) represents 69% of the Arizona Labor Market.
The Maricopa County MSA had a civilian labor force of 3.58 million at the end of November
2020. The current unemployment rate in Arizona is 7.8% (November 2020). Due to the COVID-
19 pandemic, Maricopa County like the rest of the US has seen a significant increase over the past
few months. However, in June 2020 many areas of the workforce have started to re-open and it is
expected that the unemployment rate will start to see a decrease.
1-Jul-19 1-Jul-18 1-Jul-2010 Number Percent
Population Est. Population Est. Population est. Change Change
Apache Junction 41,388 40,611 35,840 5,548 15.48%
Avondale 84,595 82,605 76,238 8,357 10.96%
Buckeye 81,624 76,145 50,876 30,748 60.44%
Carefree 3,771 3,722 3,363 408 12.13%
Cave Creek 5,834 5,760 5,015 819 16.33%
Chandler 266,804 262,322 236,123 30,681 12.99%
El Mirage 34,359 34,292 31,797 2,562 8.06%
Fountain Hills 24,225 24,029 22,489 1,736 7.72%
Gila Bend 2,019 2,014 1,922 97 5.05%
Gilbert 259,386 253,036 208,453 50,933 24.43%
Glendale 243,262 241,844 226,721 16,541 7.30%
Goodyear 88,870 84,659 65,275 23,595 36.15%
Guadalupe 6,373 6,342 5,523 850 15.39%
Litchfield Park 6,811 6,689 5,476 1,335 24.38%
Mesa 497,439 488,925 439,041 58,398 13.30%
Paradise Valley 14,134 14,011 12,820 1,314 10.25%
Peoria 180,161 176,118 154,058 26,103 16.94%
Phoenix 1,617,344 1,597,738 1,449,242 168,102 11.60%
Queen Creek 46,958 49,261 25,998 20,960 80.62%
Scottsdale 247,944 245,417 217,365 30,579 14.07%
Surprise 136,194 132,852 117,688 18,506 15.72%
Tempe 188,616 185,301 161,974 26,642 16.45%
Tolleson 7,085 7,017 6,573 512 7.79%
Wickenburg 6,988 7,506 6,353 635 10.00%
Youngtown 6,599 6,590 6,154 445 7.23%
Unincorporated 310,805 306,580 284,016 26,789 9.43%
METRO PHOENIX 4,409,588 4,341,386 3,856,393 553,195 14.34%
POPULATION COUNTS OF THE CITIES WITHIN METROPOLITAN PHOENIX
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It is important to be aware that as of early March 2020, the World Health Organization declared the
COVID-19 respiratory illness a pandemic. It is currently not yet clear to what extent, if any, market
conditions may be impacted. There are complicating factors including volatility in the stock market
and changes in mortgage interest rates. These factors have not yet resulted in measurable market
condition changes for less liquid assets such as real estate.
The following is based on an article published by George W. Hammond, Ph.D., director and
research professor, EBRC.
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There is still a huge amount of uncertainty about the future of the outbreak and the economic
impacts associated with it. The baseline forecast assumes that the current surge in the spread of
the coronavirus is contained quickly and that there is no major resurgence in the fall. The forecast
assumes that the current executive order affecting activity at bars, indoor gyms, indoor movie
theaters, and other activities, expires in August.
Keep in mind that the projections may be subject to large revisions in the future as new information
impacts the outlook.
Overall, Arizona is on pace to recover to pre-pandemic levels of economic activity in 2021,
probably well before the nation as a whole. The long-run outlook for the state is strong. Once the
pandemic is over, the state will once again consistently generate robust job, outlook, and
population gains. Whether or not the state makes significant progress in closing the income gap
with the U.S. will depend in large part on investments in education, as well as other drivers of
innovation.
Arizona Recent Developments
Nonfarm employment in the state bounced back during May and June, with over-the-month gains
of 62,900 and 73,800, respectively. Overall, that implies that Arizona has replaced 46.4% of the
jobs lost from February to April. That was better than the 33.9% replacement rate for the nation
through June.
Keep in mind that the nonfarm payroll employment data reflect the number of jobs on payrolls of
establishments during the pay period including the 12th of the month. These data result from a
survey of establishments and exclude agricultural workers and the self-employed.
The household survey, which generates the state unemployment rate estimate, includes
agricultural workers and the self-employed, as well as other groups excluded from the
establishment survey. These data did not paint such a rosy picture in June. The seasonally-adjusted
unemployment rate bounced up to 10.0%, but remained below the national rate at 11.1%.
Across Arizona’s metropolitan areas, Sierra Vista-Douglas and Prescott have fared the best, with
nonfarm jobs down just 1.4% and 1.5% from February to June. Tucson jobs were down 3.4%,
while Phoenix jobs were down 5.7%. Yuma, Lake Havasu-Kingman, and Flagstaff were hit harder,
with jobs down 7.1%, 9.0%, and 17.2%, respectively.
Arizona Short-Run Outlook
The short-term outlook for the state remains uncertain and dependent on the progress of the
outbreak and scientific progress in generating effective therapeutics and a vaccine. The baseline
forecast assumes that the current surge in the outbreak is contained quickly and that there is no
major resurgence in the fall/winter. Under those assumptions, the state continues to recover
gradually, with job, income, population, and sales growth continuing.
The state outlook also depends on the performance of the U.S. and global economies. The July
2020 forecast from IHS Markit underpins the state projections.
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The July U.S. forecast calls for real GDP to fall 35.5% (annualized rate) in the second quarter.
The recovery begins in the third quarter, but even so, real GDP falls by 6.1% in 2020. Growth is
positive in 2021 and 2022 at 3.7% and 3.6%, respectively.
Consumer spending remains the epicenter of the downturn, with a drop of 5.8% this year, but
business fixed investment, residential investment, and net exports decline significantly as well.
Only government spending, excluding transfers, rises (slightly) in 2020.
U.S. nonfarm payroll jobs are forecast to fall 5.3% this year, then rebound in 2021 and 2022. The
U.S. unemployment rate hits 8.6% on average in 2020 before falling to 6.3% in 2021 and 5.3% in
2022.
The Federal Reserve is expected to keep interest rates near zero through 2026. Even so, high
unemployment keeps inflation low.
Fiscal policy includes the actions to date, but no new major legislation was assumed in the July
forecast.
These assumptions generate a continued gradual recovery in Arizona through the second half of
2020 and into 2021. The forecast calls for employment to return to its first quarter 2020 level by
the second quarter of 2021. On an annual average basis, state job growth is forecast to hit 4.3%
in 2021 (the rebound year) and then gradually decelerate to 1.8% by 2026.
Thanks in part to a massive infusion of funds through the CARES Act, Arizona personal income is
forecast to rise by 3.1% this year. From March through August 8, unemployment insurance alone
has injected $8.7 billion into the Arizona economy. That translated into 2.6% of Arizona’s total
personal income last year. Income growth is forecast to slow to 2.8% next year, as the fiscal
stimulus is replaced by organic income gains.
Arizona Long-Run Outlook
The Arizona long-run projections rely on the IHS Markit 30-year forecast generated in March
2020. These projections do not include any assumptions about the possible long-run impacts of
the pandemic on the U.S. economy. At this point, possible long-term impacts are speculative at
best. It is safe to say, however, that the more prevalent the virus becomes and the longer it takes
to develop therapeutics and a vaccine, the larger and more extensive the long-term impact will be.
The 30-year forecasts call for job, income, and sales growth in Arizona to gradually decelerate,
reflecting slowing population gains due to the aging of the baby boom generation. Even so,
Arizona continues to far outpace growth at the national level. As Exhibit 1 shows, state job gains
rebound strongly from the COVID-19 recession, then decelerate to just over 1.0% per year by
2050.
Demographics will weigh on growth during the next 30 years, as natural increase shrinks as a
source of population gains. Both births and deaths are expected to rise during the forecast, but
deaths increase at a faster pace. This means that net migration will be an increasingly important
source of population gains. Indeed, by 2050, net migration is forecast to be responsible for all
state population increase.
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During the next 30 years, Arizona population is forecast to rise by 2.81 million, hitting 10.1 million
by 2050. The state also adds 1.58 million jobs and $343 billion in real personal income during the
forecast period.
Arizona’s per capita personal income gap with the U.S. is expected to decline from -18.4% in 2019
to -13.0% by 2050. That would put the state’s income gap back to levels last seen in the 2000s.
Arizona’s job-population ratio rises during the next 30 years, reaching 44.1% by 2050. While
Arizona makes progress during the forecast, the rate remains well below the nation, reflecting the
state’s demographic mix.
Risks to the Outlook
The risks to the short-run outlook primarily revolve around the progress of the outbreak. Exhibit
2 shows the three scenarios for Arizona nonfarm jobs.
The pessimistic scenario assumes a somewhat slower, more prolonged recovery. Employment
begins to recover in the third quarter of 2020 (just as in the baseline), but does not reach the
previous peak until the third quarter of 2022.
Employment recovers faster under the optimistic scenario, with jobs reaching their prior peak by
the first quarter of 2021.
While it is difficult to foresee the long-run impacts of the pandemic on Arizona while we are in the
middle of the crisis, we do know that the factors that drive long-run economic performance in our
per capita standard of living will be innovation, physical capital, and public infrastructure.
Innovation is the main driver and it depends in part on investments in human capital, primarily
education. Failure to invest in human capital accumulation will make it very difficult for the state
to eliminate the income gap with the nation.
Similarly, the state needs to invest in public infrastructure, like highways and roads, water and
sewer, telecommunications, airports, and border ports of entry, to ensure that the state is
competitive around the U.S. and globally.
The state’s tax and regulatory structure also needs to be competitive so that investment in private
physical capital, like office buildings, machinery, and equipment, is not deterred from locating in
the state. Water resources and other environmental concerns will also have an important influence
on growth in coming decades.
The economic base of Phoenix is diversified and includes manufacturing as well as professional
and industrial employment. Phoenix also has professional employment opportunities as well as a
great many industrial parks which house heavy, medium and light industrial activities. Tourism
is also an important income producing industry. Transportation to and from other portions within
the state and the nation is good. Transportation plays an important role in the Metropolitan area.
Shown next is a chart of the top 10 Phoenix Metropolitan major employers.
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Top Ten Employers of Arizona
Banner Health 45,894
State of Arizona 37,040
Wal-Mart Stores, Inc. 33,619
Fry’s Food Stores 20,165
Wells Fargo & Co. 16,700
University of Arizona 15,967
Amazon.com Inc. 15,000
Arizona State University 14,889
City of Phoenix 14,821
Maricopa County 13,595
Phoenix Business Journal Book of Lists 2019-2020
GOVERNMENTAL FORCES:
The State of Arizona has placed emphasis on economic development within the State through the
Commerce Department. The regional government, through joint efforts of the communities within
Maricopa County, has also taken a strong favorable stance toward continued economic
development.
Phoenix and its surrounding city governments are considered progressive in their thinking,
showing a commitment to strong neighborhood design concepts by improving the educational
system, creating more parks and recreational facilities, building new freeway systems and
developing major shopping areas for the individual neighborhoods that make up the Metro area.
The entire government structure is described as well-run and dynamic.
TRANSPORTATION:
The State, as well as Phoenix, has an excellent transportation system because of Metropolitan
Phoenix's primary ideal central location, the area is a natural regional transportation axis for the
rest of the southwest. Linkages within the Metropolitan area are also considered good.
Accessibility to other locations in this area is very important as people have the option of living in
one city and working in another. The Arizona Department of Transportation has several major
freeways in place and/or planned for the Metropolitan Phoenix area. (The following information
is provided by the Arizona Department of Transportation).
The Pima Freeway system traverses east and west along the Beardsley Road alignment from I-17
(Black Canyon Freeway) to the Pima Road in North Scottsdale.
The Agua Fria Freeway (extension) runs east and west from the Black Canyon Freeway (I-17)
westward to 83rd Avenue and north and south from Beardsley Road to the Papago Freeway (I-10).
The Piestewa Parkway (extension) runs southward from the Pima Freeway at 32nd Street and
feeds traffic from the northern portion of the Valley to Central Phoenix.
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The Superstition Freeway is a major freeway that serves the East Valley, especially the cities of
Mesa, Tempe, Chandler, Gilbert and Apache Junction. This freeway system runs east and west
from the Hohokam Expressway through the entire length of the eastern portion of Metro Phoenix
area.
State Route 202 is a partial beltway looping around the eastern areas of the Phoenix metropolitan
area in central Arizona. It connects the eastern end of the city of Phoenix, in addition to the towns
of Tempe, Mesa, Chandler and Gilbert, and is a vital route in the metropolitan area freeway system.
Loop 202 currently has two designated sections along its route; the Red Mountain Freeway and
the Santan Freeway. A third section has recently been completed and is known as the South
Mountain Freeway, which bypasses much of Central Phoenix and runs from the eastern Interstate
10 (I-10) near 59th Avenue to the western portion of Interstate 10 at Pecos Road.
The Gateway Freeway (SR 24) was completed and opened in May of 2014. The initial phase is a
one-mile stretch beginning at Loop 202 (Santan Freeway) near the Phoenix-Mesa Gateway Airport
and ending at Ellsworth Road. Additional phases of this project, east of Ellsworth Road, are
suspended until the North-South Corridor Study in Pinal County advances.
The Price Freeway (Loop 101) is currently completed from the Superstition Freeway north to
Pima Freeway (Loop 101). In addition, recently completed is the portion which transverses from
the Superstition Freeway southward to the Santan Freeway (Loop 202).
The Bob Stump Memorial Parkway (Loop 303) is the outer loop of the west side of Phoenix. The
road begins at Interstate 10 in the far west valley then loops north to U.S. 60 at Surprise, then east
to Interstate 17.
Black Canyon Freeway (Interstate 17) mainly runs in a north/south direction connecting Interstate
10, Grand Avenue (US 60), Pima Freeway (Loop 101), Bob Stump Memorial Parkway (Loop 303)
and the Morristown New River Highway (SR 74).
The Grand Avenue (US 60) freeway construction opened several new intersections from 43rd
Avenue to the Loop 101.
Interstates 10 and 17, U.S. Highways 60, 70, 80 and 89 together with State Highways 51, 87 and
93, go through and connect in the City of Phoenix to all areas in the west and mid-western United
States. In addition, construction of 249 miles of freeway has been planned for Metro Phoenix.
This will further enhance transportation in the communities within the Valley area.
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OTHER FORMS OF TRANSPORTATION:
Phoenix Sky Harbor International airport serves more than 120,000 passengers with more than
1,200 flights per day. Sky Harbor is one of the most convenient airports in the United States. It
ranked No. 13 among U.S. airports in passenger boarding in 2018 and is served by 20
competitively priced carriers. The airport is located in the middle of Greater Phoenix, less than 10
minutes from downtown, and within 20 miles of almost all of our towns and cities.
Phoenix-Mesa Gateway Airport is located about 30 miles southeast of Phoenix Sky Harbor.
Gateway Airport offers commercial flights to more than 35 destinations.
Convenient transportation to Sky Harbor airport comes by way of the PHX Sky Train. This
driverless train transports Valley Metro Light Rail passengers to the airport from the 44th
Street/Washington Street Station. The PHX Sky Train will travel between Terminal 4, east
economy parking and 44th Street/Washington St., where it connects passengers to the Metro Light
Rail System.
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Light Rail
The Valley's light rail system offers riders a speedy 26-mile ride linking Phoenix to the neighboring
communities of Tempe and Mesa, and includes stops at attractions such as Phoenix Art Museum,
the Heard Museum, Chase Fields, Talking Stick Resort Arena and Tempe’s Mill Avenue District.
There are 28 stations along the line and they are adorned with 6.2 million worth of public art. The
art work at each station reflects the character of the community where it is locations. Station
platforms can accommodate the boarding of 600 passengers onto a three-car train within 30
seconds between the cities of Phoenix, Tempe, Mesa and Glendale and is an integral part of a
comprehensive Valley-wide transit system.
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METRO opened for passenger operation in December 2008.
Currently, more than 50,000 riders rely on light rail each day and has shown to generate economic
prosperity for historically underserved communities in metro Phoenix.
Light rail makes the unique offerings of South Phoenix more accessible to others, attracting new
customers, businesses and jobs to the area. In 2016, the Phoenix City Council approved advancing
the opening date of the extension from 2034 to 2023. The advancement is funded
through Transportation 2050, a 35-year, multi-modal transportation plan approved by Phoenix
voters, and is expected to open for operations in 2024.
- Public meetings in September 2019 provided information about design, artwork and
construction as well as provided an opportunity to meet the construction contractor, Kiewit.
- Relocation of third party utilities began in downtown Phoenix in October 2019 in
preparation for hosting the Super Bowl in 2023. Pre-construction work will also begin in
Fall 2019 along Central Avenue.
- Business assistance will kick off in Fall 2019 to introduce programs offered by Valley
Metro and its project partners.
- Coordination and collaboration with project area community groups, residents and
businesses continues.
The South Central Extension/Downtown Hub will connect with the current light rail system in
downtown Phoenix and operate south to Baseline Road. The project also includes a hub in
downtown Phoenix along with new stations as well as public art.
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The Northwest Extension of the light rail system will extend west along Dunlap Avenue from 19th
Avenue, north on 25th Avenue and across Interstate 17 with a terminus near the former Metrocenter
mall.
Within a portion of the former Metrocenter mall parking lot, the new terminus station of the
Northwest Extension of the Valley Metro Light Rail will be constructed. This station will be an
elevated platform and a rendering of its design and construction can be seen in the maps presented
previously. The addition of this light rail station is considered to be somewhat of a benefit to the
area and could help spur redevelopment upon its completion.
A map of the Northwest Extension is located below.
Freight rail transportation from transcontinental origins from and to the Metro area is provided by
the Union Pacific Railway (Southern Arizona), Arizona Eastern (Claypool-Globe), Arizona &
California (Parker, Arizona –westward), and the BNSF Railway Company (Northern Arizona).
Greyhound and seven other charter bus services serve the city as well. Public transportation is
provided by the Phoenix Transit System, and Dial-A-Ride. Other transportation is provided by
interstate and intrastate truck lines, household good carriers, United Parcel Service, Purolator
Courier Service and Air Couriers International.
In recent years the communities within the Metropolitan area have become more aware of the
environment as has the nation as a whole. Enactment of environmental legislation with respect to
new development is seriously being taken into consideration by creating new environmental
zoning codes to protect the outlying mountainous areas of the Valley.
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RESIDENTIAL MARKET:
The following housing statistics are provided by
ARMLS as of October 2020
Local Multiple Listing Service (ARMLS) had
115,629 active listings as of October 2020 across
the Greater Phoenix area including listings under
contract and seeking backup offers. This represents
a decrease of 4.3% compared to the previous year.
Active single family home listings between
180,000 to $199,999 was down 37.4% compared to
the previous year due to poor supply. The mid-
range home listings from $300,000 to $399,999 was
up 12% compared to the previous year.
ARMLS had 86,181 sold listings as of September
2020 across the Greater Phoenix area. This
represents an increase of 2.0% from the previous
year.
Sold single family home listings $1800,000
$199,999 was down 40.07% compared to the
previous year due to poor supply. The mid-range
home listings from $400,000 to $499,999 had an
increase of 26.4% compared to the previous year.
The median single family home list price for the
Phoenix Metropolitan Area was $325,000 year to
date and increase of 9.22% compared to this time
last year. The average sale price was $387,337, an
increase of 13.5% compared to the previous year.
The average days on market was 50 days down
16.67% from the previous year.
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Following are the summary statistics for single family residential sales activity within Maricopa
County.
Following are multiple charts relating to single family residential activity in the Phoenix
Metropolitan Area.
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OFFICE MARKET:
The existing inventory for Metropolitan Phoenix consists of just over 192 million square feet. The
East Valley market area encompasses the largest submarket, consisting of just over 44 million
square feet. The Metropolitan Phoenix Office Market showed a vacancy rate in the 3rd Quarter
2020 of 15.0%. The Metropolitan Phoenix Office Market had a year to date (YTD) absorption of
1,401,841 square feet. The average rental rate ranged from $18.30 per square foot (Airport Area) to
$27.74 per square foot (Scottsdale). The overall average rental rate was $23.86 per square foot on
a full service basis.
Shown next is a chart of the Office Market as of the 3rd Quarter 2020 as compiled by CoStar Realty
Information, Inc.
Vacancy
Market Inventory SF Vac %
12 Mo Net
Absorp SF
12 Mo
Delivered
SF
Under
Const SF
Market
Rent/SF
Airport Area 10,121,416 14.3% 230,490 50,336 $17.75
South Tempe/Ahwatukee 8,101,349 12.8% -16,066 39,757 117,394 $18.84
Airport Area 18,222,765 13.6% 214,424 90,093 117,394 $18.30
Midtown 13,215,287 18.7% -253,373 -19,373 $23.82
Downtown 11,293,831 12.7% 254,478 291,668 227,113 $31.24
Central Corridor 24,509,118 15.7% 1,105 272,295 227,113 $27.53
44th Street Corridor 4,136,460 13.4% -108,861 0 $26.48
Camelback Corridor 9,658,416 16.2% -26,449 32,998 $34.27
Midtown/Central Phoenix 6,155,808 6.7% 21,425 0 $19.07
East Phoenix 19,950,684 36.2% (113,885) 32,998 0 $26.61
Chandler 12,868,117 10.8% 1,129,172 552,540 485,000 $27.03
Mesa Downtown 1,525,856 9.4% -33,748 0 $18.67
Mesa East 4,544,968 5.6% 24,070 8,000 240,000 $22.52
Superstition Corridor 6,640,506 10.9% -163,924 4,500 0 $22.80
Tempe 15,985,419 9.5% 488,192 914,692 380,125 $30.67
Gateway Airport/Loop 202 2,916,104 10.0% 34,607 118,647 77,913 $23.84
East Valley 44,480,970 9.4% 1,478,369 1,598,379 1,183,038 $24.26
Arrowhead 4,413,498 11.4% 7,464 51,794 128,000 $23.23
North I-17 765,870 18.5% -24,391 0 $18.78
Deer Valley/Airport 14,189,865 15.0% -597,961 192,000 144,000 $20.53
Northwest Phoenix 10,877,380 17.4% 198,990 4,532 $19.31
Northwest Phoenix 30,246,613 15.6% (415,898) 248,326 272,000 $20.46
N Phoenix/Cave Creek 148,013 2.0% 0 0 $22.00
Paradise Valley 5,034,984 11.1% 226,250 300,000 35,430 $24.22
Piestewa Peak Corridor 3,464,699 14.0% -13,575 -10,000 $23.41
Paradise Valley 8,647,696 9.0% 212,675 290,000 35,430 $23.21
Central Scottsdale 8,977,608 11.7% -57,549 0 402,000 $28.39
N Scottsdale/Carefree 1,951,850 12.3% -14,520 0 $21.87
Scottsdale Airpark 13,339,814 13.4% -108,582 63,963 785,000 $29.22
Scottsdale South 7,750,339 10.3% 35,636 65,000 244,998 $31.46
Scottsdale 32,019,611 11.9% (145,015) 128,963 1,431,998 $27.74
Glendale 3,782,762 8.7% 152,526 195,500 16,000 $23.25
Loop 303/Surprise 2,629,222 10.6% 12,254 52,052 $22.19
Southwest Phoenix 5,010,008 4.9% 33,956 29,686 $22.67
West I-10 2,514,403 10.6% -28,670 50,000 7,056 $23.19
West Phoenix 13,936,395 8.7% 170,066 327,238 23,056 $22.83
Totals 192,013,852 15.0% 1,401,841 2,988,292 3,290,029 $23.86
Existing Inventory
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Shown next is a historical sales activity of office buildings from 1Q 2018 through 3Q 2020 in the
Metro Phoenix area.
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RETAIL MARKET:
The existing inventory for Metropolitan Phoenix consists of over 229 million square feet. The East
Valley market area encompasses the largest submarket, consisting of just over 77 million square
feet. The Metropolitan Phoenix Retail Market showed a vacancy rate in the 3rd Quarter 2020 of
6.0%. In the 3rd quarter 2020, the Metropolitan Phoenix Retail Market had a year to date (YTD)
absorption of 268,969 square feet. The average rental rate ranged from $13.52 per square foot
(Maricopa County retail) to $23.07 per square foot (Northwest Scottsdale Retail). The overall
average rental rate was $17.53 per square foot. All rents are based on a triple net lease basis.
Shown next is a chart of the Retail Market as of the 3rd Quarter 2020 as compiled by CoStar Realty
Information, Inc.
Vacancy
Market Inventory SF Vac %
12 Mo Net
Absorb SF
12 Mo
Delivered
Under Const
SF
Quoted
Rates
Airport Area Retail 3,919,278 4.5% 111 -3,457 5,000 $16.19
South Phoenix Retail 1,802,009 3.5% 18,224 3,733 $11.75
Airport Area Ret 3,886,384 3.7% 14,337 0 5,000 $16.77
Downtown Phoenix Retail 7,831,500 7.5% -72,950 41,993 $17.93
Downtown Phoenix Retail 7,831,500 7.5% (72,950) 41,993 0 $17.93
Chandler Retail 17,140,548 7.0% -88,657 78,123 0 $20.40
Gilbert Retail 16,446,965 5.8% 149,376 167,483 295,863 $17.34
Queen Creek Retail 1,899,491 5.4% 39,268 29,499 18,561 $18.73
Red Mountain/Mesa Retail 30,885,697 10.9% 83,149 230,802 28,250 $12.83
Tempe Retail 8,324,636 7.3% -72,865 47,938 21,130 $19.50
Gateway Airport Retail 2,937,536 6.7% 68,274 127,235 19,039 $16.87
East Valley Retail 77,634,873 7.2% 178,545 681,080 382,843 $17.61
W Outlying Maricopa Retail 825,938 1.1% 14,190 2,703 0 $13.52
Maricopa County Retail 825,938 1.1% 14,190 0 0 $13.52
East Phoenix Retail 8,901,909 7.1% 15,784 -41,092 $14.95
Glendale Retail 11,421,143 6.9% 89,105 37,070 89,000 $16.50
N Phoenix/I-17 Corridor Retail 16,352,442 14.5% -562,722 2,465 7,750 $11.77
Sun City Retail 3,776,926 8.6% -19,502 2,760 10,000 $10.91
North Phoenix Retail 40,452,420 9.3% (477,335) 1,203 106,750 $13.53
Carefree Retail 1,872,120 8.5% 17,117 0 $16.70
Fountain Hills Retail 780,987 11.2% -10,519 0 $13.81
N Scottsdale Retail 15,541,293 6.4% -225,712 -74,319 15,545 $20.87
North Scottsdale Retail 15,557,010 6.1% -154,382 10,542 15,545 $23.07
Anthem Retail 2,669,328 4.0% 55,633 63,501 $13.43
Central Peoria/Arrowhead Retail 10,335,576 6.0% 54,157 51,734 213,367 $18.94
Deer Valley Retail 2,146,120 3.1% 15,949 7,000 $18.18
Surprise/N Peoria Retail 5,680,850 4.6% 19,312 18,905 6,350 $16.41
Northwest Phoenix Retail 20,831,874 4.4% 145,051 141,140 219,717 $16.74
Central Scottsdale Retail 16,363,439 4.9% 364,362 223,547 37,087 $24.67
S Scottsdale Retail 3,515,792 8.0% -100,119 -108,905 7,000 $16.23
Scottsdale Retail 19,879,231 6.5% 264,243 114,642 44,087 $20.45
Ahwatukee Foothills Retail 3,233,320 10.2% -43,920 13,500 $18.21
Laveen Retail 1,622,861 4.9% 97,138 98,837 $20.84
S Mountain Retail 1,591,947 5.2% -15,618 600 $22.90
South Mountain Retail 6,448,128 6.8% 37,600 112,937 0 $20.65
Goodyear Retail 3,665,068 6.0% 13,136 0 34,708 $17.44
Loop101/I-10 Retail 3,105,709 3.3% 91,022 88,087 7,000 $17.57
N Goodyear/Litchfield Retail 5,390,057 3.0% 280,388 219,943 13,150 $21.42
N Buckeye Retail 74,568 2.3% 4,879 6,600 124,070 $26.53
S Buckeye Retail 1,592,286 4.0% 26,078 39,034 8,400 $17.87
Tolleson Retail 2,798,239 5.1% 53,376 16,402 $10.23
West Phoenix/Maryvale Retail 8,171,500 6.3% -42,964 0 $12.52
West Phoenix Retail 24,797,427 4.3% 425,915 370,066 187,328 $17.66
Apache Junction Retail 2,112,030 8.4% 19,758 1,040 5,000 $14.18
Outlying Pinal County Retail 8,943,581 10.8% -126,003 25,366 19,480 $15.58
Pinal County Retail 11,055,611 9.6% (106,245) 26,406 24,480 $14.88
Totals 229,200,396 6.0% 268,969 1,500,009 985,750 $17.53
Existing Inventory
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Shown next is a historical sales activity of retail buildings from 1Q 2018 through 3Q 2020 in the
Metro Phoenix area.
INDUSTRIAL MARKET:
The existing inventory for Metropolitan Phoenix consists of over 349 million square feet. The
Southwest Market encompasses the largest Market, with a total of over 103 million square feet.
The overall vacancy rate for Metro Phoenix is 5.80%. The Metropolitan Phoenix Industrial Market,
as of the 3rd Quarter 2020 had a year to date (YTD) absorption of 9,708,010 square feet. The
average rental rate ranged from $5.85 per square foot (Southwest) to $12.26 per square foot
(Northeast Industrial). The overall average market rental rate was $7.38 per square foot. All rents
are typically Modified Gross. Shown next is a chart of the Industrial Market as of the 3rd Quarter
2020 as compiled by CoStar Realty Information, Inc.
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Vacancy
Market Inventory SF Vac %
12 Mo Net
Absorp SF
12 Mo
Delivered
SF
Under Const
SF
Market
Rent/SF
North Airport 13,548,344 4.8% 91,298 0 471,400 $9.78
S Airport N of Roeser 15,486,290 5.7% 201,441 0 $10.00
S Airport S of Roeser 4,529,998 4.1% 17,099 0 $9.25
SC N of Salt River 16,082,722 6.9% -296,807 -46,771 94,146 $8.63
SC S of Salt River 2,678,309 8.6% -188,391 17,100 $7.48
Airport Area 52,325,663 6.0% (175,360) -29,671 565,546 $9.03
Central Phoenix 4,595,145 3.7% 25,766 350 $9.80
Scottsdale Airpark 6,828,930 7.7% -95,730 26,000 $13.81
Scottsdale/Salt River 5,429,705 3.1% -9,047 37,812 $13.18
Northeast Industrial 16,853,780 4.8% (79,011) 64,162 0 $12.26
Deer Valley/Pinnacle Peak 17,892,224 5.7% 347,365 212,692 181,600 $9.77
Glendale 14,042,969 9.6% 2,955,748 3,154,494 4,654,321 $5.94
Grand Avenue 13,395,483 2.8% -19,849 -51,808 $5.46
North Black Canyon 4,590,859 5.3% 96,200 0 $11.29
W Phx N of Thomas Rd 8,166,887 4.5% -112,946 -2,520 $6.90
W Phx S of Thomas Rd 7,081,871 2.7% 39,851 6,000 $7.27
Northwest Phoenix 65,170,293 5.1% 3,306,369 3,318,858 4,835,921 $7.77
Chandler/Airport 4,667,454 18.8% 227,422 852,456 452,850 $9.03
Chandler 22,447,195 7.4% 199,758 261,000 $9.91
Chandler/N Gilbert 23,235,327 11.3% 293,722 1,286,825 727,015 $9.04
Falcon Fld/Apache Jct 5,664,389 7.8% 310,474 169,165 $9.29
Mesa 7,755,013 3.1% 24,418 -6,000 $7.33
Tempe East 6,759,835 4.0% -32,918 -14,838 $9.64
Tempe Northwest 11,203,797 4.5% 80,205 -10,700 $11.67
Tempe Southwest 21,534,859 7.7% 488,718 67,337 $8.82
Southeast Industrial 103,267,869 8.1% 1,591,799 2,605,245 1,179,865 $9.34
Goodyear 15,937,108 16.9% 686,191 2,246,071 3,189,162 $5.84
SW N of Buckeye Rd 34,233,734 6.9% -69,538 393,469 104,444 $5.56
SW S of Buckeye Rd 19,199,374 6.0% 1,613,038 405,630 168,312 $6.50
Tolleson 42,596,440 13.2% 2,834,522 3,305,390 $5.50
Southwest Industrial 111,966,656 10.7% 5,064,213 6,350,560 3,461,918 $5.85
Totals 349,584,261 5.80% 9,708,010 12,309,154 10,043,250 $7.38
Existing Inventory
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Shown next is a historical sales activity of industrial buildings from 1Q 2018 through 3Q 2020 in
the Metro Phoenix area.
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SUMMARY AND CONCLUSION:
There is still a huge amount of uncertainty about the future of the COVID-19 outbreak and the
economic impacts associated with it. The baseline forecast assumes that the current surge in the
spread of the coronavirus is contained quickly and that there is no major resurgence in the fall. As
a result, the Arizona economy continues to ascend from the low point reached in April.
Based on the May employment release for the state, I have significantly revised the estimated
impacts. For leisure and hospitality and retail trade, the impact is less severe than expected in May.
The drop in the second quarter is still huge, just not quite as bad as expected in the May
projections.
The forecast calls for the current downturn to be a short, sharp shock that is restricted to the second
quarter. Growth rates are rapid initially before gains begin to slow in 2021. The state is forecast to
regain pre-outbreak employment levels by early 2022. Keep in mind that the projections may be
subject to large revisions in the future as new information impacts the outlook. (Arizona Economic and Business Research Center)
The Phoenix Market is continuing to show signs of growth. As shown, single family detached and
attached homes have started to increase. Building permits and sales activity continue to increase
and values are on the rise. It is expected that the second half of 2020 will continue in a similar
fashion. The housing market is improving, with total housing sales in the Phoenix area totaling
86,181 (MLS) as of October 2020.
The office market vacancy for the 3rd Quarter 2020 has increased to 15.0% compared to the 2nd
Quarter of 2020 at 14.6%. Quoted rental rates decreased to $23.86 compared to the previous
quarter at $25.67 per square foot in the 2nd Quarter 2020.
The retail market vacancy for the 3rd Quarter 2020 has decreased to 6.0% compared to the 2nd
Quarter of 2020 at 6.1%. Rental rates have slightly decreased to $17.53 per square foot in the 3rd
Quarter 2020 from $19.19 per square foot in the 2nd Quarter 2020.
In the 3rd Quarter 2020 the industrial market vacancy has seen an increased in vacancy to 5.80%
compared to 5.78% in the 2nd Quarter 2020. Quoted rental rates has decreased to $7.38 compared
to the previous quarter at $7.97 per square foot in the 2nd Quarter 2020.
The State of Arizona and regional governmental agencies have a forward looking, progressive
attitude toward more mutual and joint efforts at economic development in the Metropolitan area.
However, even in the midst of such economic turnaround the cost of living in Phoenix can still be
viewed as a bright spot. Though Phoenix residents have seen an increase in the price of day-to-
today expenses, the area remains one of the more affordable places to live and work in comparison
to the rest of the United States. It is in part because of our cost of living that we continue to see
individuals and businesses choose Phoenix as a relocation destination.
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It is important to be aware that as of early March 2020, the World Health Organization declared the
COVID-19 respiratory illness a pandemic. It is currently not yet clear to what extent, if any, market
conditions may be impacted. There are complicating factors including volatility in the stock market
and changes in mortgage interest rates. These factors have not yet resulted in measurable market
condition changes for less liquid assets such as real estate.
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NEIGHBORHOOD DATA ANALYSIS
This section involves an analysis of the environmental, economic, social and governmental forces
within the subject neighborhood.
An area of influence is commonly called a "neighborhood", is defined as a group of complementary
land uses; a congruous grouping of inhabitants, buildings, or business enterprises or can be A
developed residential super pad within a master planned community usually having a
distinguishing name and entrance. (Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed.
(Chicago: Appraisal Institute, 2015).
The neighborhood analysis is the objective analysis of observable and/or quantifiable data
indicating discernible patterns of urban growth, structure, and change that may detract from or
enhance property values; focuses on four sets of considerations that influence value: social,
economic, governmental, and environmental factors. Appraisal Institute, The Dictionary of Real Estate
Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015).
Neighborhood boundaries identify the physical limits of a neighborhood, which may be delineated
by natural, man-made, or geopolitical features. Appraisal Institute, The Dictionary of Real Estate Appraisal,
6th ed. (Chicago: Appraisal Institute, 2015).
The subject neighborhood is described as that area beyond which a change in land use would not
affect the subject property site, is an area bounded on the North by Loop 202 Freeway, on the South
by Interstate-10, on the West by Interstate-10 and on the East by 143 Freeway in Phoenix, Maricopa
County, Arizona.
Refer to the Neighborhood Map on the preceding page illustrating the subject in relation to the
boundaries of the neighborhood.
LAND USE:
Overall, the subject is located in an area that consists mainly of residential uses along the secondary
streets and commercial uses along the major roadways.
Single Family Residential
The appraisers researched the subject zip code (85034) to determine single family residential
supply and demand factors. According to Arizona Multiple Listing Service the current single
family median sales price is up by 276.82% compared to the same time period last year. The
median list price for homes in the subject’s zip code was up 20.0% from the previous year’s median
list price. Absorption rates for single family homes are up 21.07%.
Following are the summary statistics for single family residential sales activity within the subject’s
zip code.
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Following are multiple charts relating to single family residential activity in the subject’s zip
code including:
- Number of listings
- Listing Prices
- Absorption Rate, in Months
- Sold to List Ratio
- Days on Market
- Price Volume
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Industrial
The following historical data from CoStar represents the industrial market including rental rates and
vacancy rates.
The 3.0-mile radius surrounding the subject property had an industrial inventory of approximately
26.8 million square feet. Of this area approximately 1.3 million square feet was vacant equating to a
vacancy rate of 4.8%. Over the past ten years, vacancy rates ranged from the current rate of 4.8% to
13.0%. Over the past year, vacancy rates have been trending downward.
The current quarter showed average asking rental rates of $8.89 per square foot. Over the past five
years, average asking rental rates ranged between $6.86 per square foot to the current rate of $8.89
per square foot. Average asking rental rates have been trending upward over the past year.
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Retail
The following historical data from CoStar represents the retail market including rental rates and
vacancy rates.
The 3.0-mile radius surrounding the subject property had a retail inventory of approximately 6.0
million square feet. Of this area approximately 380,000 square feet was vacant equating to a vacancy
rate of 6.3%. Over the past five years, vacancy rates ranged from 3.8% to 11.1%. Over the past year,
vacancy rates have been trending downward.
The current quarter showed average asking rental rates of $18.24 per square foot. Over the past five
years, average asking rental rates ranged between $15.74 per square foot to the current rate of $18.24
per square foot. Average asking rental rates have been trending upward over the past year.
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Office
The following historical data from CoStar represents the office market including rental rates and
vacancy rates.
The 3.0-mile radius surrounding the subject property had an office inventory of approximately 23.1
million square feet. Of this area approximately 2.8 million square feet was vacant equating to a
vacancy rate of 12.0%. Over the past ten years, vacancy rates ranged from 10.7% to 13.4%. Over
the past year, vacancy rates have been trending upward.
The current quarter showed gross asking rental rates of $27.91 per square foot. Over the past five
years, gross asking rental rates ranged between $23.26 per square foot to $28.20 per square foot.
Gross asking rental rates have been trending upward over the past year.
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DEMOGRAPHICS:
Source: Costar
DIRECTION AND DISTANCE TO EMPLOYMENT CENTERS:
Employment centers and other community support services, such as medical facilities, churches,
schools and parks are available within the neighborhood or in the neighboring cities which surround
the subject neighborhood.
COMMUNITY SERVICES AND FACILITIES:
Within the community there are adequate grade schools, middle schools and high schools, colleg-
es/universities and trade schools that can provide public school education for the neighborhood.
Additionally, there are adequate medical facilities nearby.
UTILITIES:
The subject neighborhood is located within the city limits of Phoenix. Water and sewer is provided
by the City of Phoenix; Electricity is provided by Arizona Public Service (APS); Natural gas is
provided by Southwest Gas; Telephone service is provided by CenturyLink. These services are
adequate and are available at reasonable rates. The cost of obtaining these services is similar to
competing neighborhoods in the Phoenix metropolitan area.
GOVERNMENTAL FORCES:
The governmental forces maintaining accord in the neighborhood and influencing development in
the area have been Phoenix zoning regulations. Police and fire protection is provided by the City of
Phoenix.
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TRANSPORTATION:
The main arterials for the area are Interstate-10 to the south and west, Van Buren Street to the north
and 24th Street to the west. It is noted that the City of Phoenix Light Rail runs along Washington
Street and Jefferson Street adjacent to the subject site.
CONCLUSION:
The subject neighborhood is in a stable stage of development and located within an area of Phoenix
that contains an adequate amount of retail centers, schools, medical facilities, and other goods and
services that will promote the marketability of the subject neighborhood.
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SITE DATA ANALYSIS
LOCATION:
The subject property is located at 1 South 24th Street in Phoenix, Arizona.
SITE DIMENSIONS AND SHAPE:
The subject site is rectangular in shape considered to be functionally adequate for most types of
development. As per information supplied for this assignment the site is 1.552 acres or 67,617 square
feet. The site has 294 feet of frontage along 24th Street, approximately 230 feet of frontage along
Jefferson Street and Washington Street.
IMPROVEMENTS:
The subject of this appraisal report is a single tenant commercial retail/office building totaling 5,461
square feet of building area. As of the effective date of the appraisal, the property was vacant. The
building was formerly built-out as a bank but has sustained fire damage several years ago and the
interior was entirely gutted with only some interior skeletal support structures remaining. The existing
electrical and HVAC capability is unknown and although there are wires and duct work throughout
the property, it is likely that all of this would need to be removed for any future use. The
improvements will be described in more detail within the Improvement Data section of the
appraisal.
SURROUNDING USES:
North: Commercial
South: Commercial
East: Commercial
West: Commercial
NUISANCES OR HAZARDS:
An environmental study has not been provided to the appraisers. The appraisers are without the
expertise to identify and/or detect such substances, upon physical inspection of the site, there are no
known hazards that would affect the development of the property. Because of the liability generated
if toxic wastes and/or contaminants are found on the site, it is strongly recommended that a specialist
in the detection of toxic waste be retained to check for possible contamination.
If a toxic waste and/or contaminant is detected, the value estimate appearing in this report is null and
void. If a re-appraisal is required, it will be made at an additional charge and upon receipt of any
additional information requested (i.e., what the toxic waste and/or contaminant is and the cost of
removal) by the appraisers.
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TRANSPORTATION IMPROVEMENTS:
The subject property has visibility and access from 24th Street and Jefferson Street and visibility
from Washington Street. It is noted that the subject site is located adjacent to an unnamed alleyway
located east of the site. Roadway improvements adjacent to the subject site are as follows:
Street: 24th Street
Road Surface: Paved
Lanes: Four lanes
Curbs/Gutters: Yes
Sidewalks: Yes
Street Lights: Yes
Speed Limit: 35 mph
Traffic Count: 15,867 vpd
Street: Washington Street
Road Surface: Paved
Lanes: 4 lanes (one way westbound)
Curbs/Gutters: Yes
Sidewalks: Yes
Street Lights: Yes
Speed Limit: 35 mph
Traffic Count: 8,346 vpd
Street: Jefferson Street
Road Surface: Paved
Lanes: 4 lanes (one way eastbound)
Curbs/Gutters: Yes
Sidewalks: Yes
Street Lights: Yes
Speed Limit: 35 mph
Traffic Count: 6,135 vpd
Valley Metro Light Rail
The subject is well positioned between both eastbound and westbound tracks of the Valley Metro
Light Rail network. Adjacent to the north of the site along Washington Street is a westbound train
station and adjacent to the south of the site along Jefferson is an eastbound train station.
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Light rail makes the unique offerings of South Phoenix more accessible to others, attracting new
customers, businesses and jobs to the area. In 2016, the Phoenix City Council approved advancing
the opening date of the extension from 2034 to 2023. The advancement is funded
through Transportation 2050, a 35-year, multi-modal transportation plan approved by Phoenix
voters, and is expected to open for operations in 2024.
TOPOGRAPHY, DRAINAGE AND SOIL CONDITIONS:
Elevations are level and at grade with adjoining property. A soils study has not been provided.
The load bearing capacity of the top soil and sub-soils is unknown, but is assumed to be sufficient
to support existing improvements.
FLOOD ZONE:
The location is within an area denoted as being in an "X" Flood Hazard Area, as found on Federal
Emergency Management Agency Flood Insurance Rate Map number 04013C2210L based on the
October 16, 2013 flood data. The "X" designation indicates:
Areas of 500-year flood; areas of 100-year flood with average depths of less than 1 foot or
with drainage areas less than 1 square mile; and areas projected by levees from 100-year flood.
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UTILITIES:
All utilities including electrical, water and telephone services are available to the site.
Sewer - City of Phoenix
Water - City of Phoenix
Electric - Arizona Public Service (APS)
Gas - Southwest Gas
Telephone - CenturyLink
EASEMENTS:
A title report was not provided. Although we were not provided with a Title Report on the subject
property, the client indicated that there is (or will be upon sale) a Deed of Conservation Easement
encumbering the property. This easement is used to protect property significant in Arizona history
and culture for the education of the general public. The easement covers all improvements, fixtures
and buildings on the site. Although the property is eligible for listing on the National Register of
Historic Places and Phoenix Historic Property Register, it is not currently listed on either of these
registers. No physical changes to the Structures, Facades or Fixtures, may be made without the
advance approval from the City Historic Preservation Office including but not limited to: changes
to the roof, foundation work, exterior surfaces, windows, or doors; any removal of mature
vegetation; any demolition work or new construction; any construction or alteration of patios,
decks or porches; any construction or alteration of features such as fencing, walls, statuary, paving
and grading; any new stucco or re-stuccoing work; or any masonry work, such as tuckpointing,
paint removal, pressure water cleaning, chemical cleaning or application of sealants. This Deed of
Conservation Easement encumbers the exterior of the existing historical improvements, but does
not restrict the interior build-out. Although it does indicate that any new construction would require
Phoenix approval, it was indicated to the appraiser that the City of Phoenix would not be opposed
to new development on the undeveloped eastern portion of the site.
In addition to the Deed of Conservation Easement, the client indicated that the site is also
encumbered by a Limited Avigation Easement and Restrictive Covenant (Easement). Although
the actual easement document encumbering the site was not provided, a sample avigation easement
indicated that the Grantor grants to Grantee an easement for use of airspace for airport operations,
which easement shall include the right of flight of aircraft within the defined airspace, together
with its attendant noise, vibrations, fumes, dust, fuel and lubricant particles, and all other effects
that may be caused by the operation of aircraft in connection with airport operations at the airport.
Based upon a review of the available property information, there does not appear to be any
significant easements, encroachments, or restrictions other than those previously mentioned. Our
valuation is based on the fact that the subject has a clear and marketable title.
ZONING:
The purpose of zoning is to provide for orderly growth and harmonious development. Zoning is
intended to provide a common ground of understanding and a sound and equitable working
relationship between public and private interests to the end that both independent and mutual
objectives can be achieved.
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Approximately 50% of the subject site is zoned C-3, General Commercial and the other 50% of
the site is zoned A-1, Light Industrial according the Phoenix Planning and Zoning Department.
The C-3 Commercial General District, is a district designed to provide for the intensive commercial
uses necessary to the proper development of the community.
The A-1, Light Industrial District, is a district of industrial uses designed to serve the needs of the
community for industrial activity not offensive to nearby commercial and residential uses.
The subject is located within the Interim Transit-Oriented Zoning Overlay District Two (TOD-2).
The primary purpose of the Transit-Oriented District Two (TOD-2) is to encourage an appropriate
mixture and density of activity around transit stations to increase ridership along the Central
Phoenix/East Valley (CP/EV) Light Rail Corridor and promote alternative modes of transportation to
the automobile. The secondary purpose of the TOD-2 is to decrease auto-dependency, and mitigate
the effects of congestion and pollution. These regulations seek to achieve this type of development
by providing a pedestrian, bicycle, and transit supportive environment development integrating auto
uses with a complementary mix of land uses, where streets have a high level of connectivity and the
blocks are small, all within a comfortable walking and bicycling distance from light rail stations.
Transit-oriented development often occurs as infill and reuse within areas of existing development.
The regulations within this ordinance vary in some cases from other ordinances, such as the Urban
Residential (UR) District, related to infill development in the City, because of the additional need to
support transit ridership. The Transit-Oriented District prohibits uses that do not support transit
ridership.
The specific objectives of this district are to:
- Encourage people to walk, ride a bicycle, or use transit;
- Encourage outdoor pedestrian activities within public rights-of-way;
- Allow for a mix of uses designed to attract pedestrians;
- Achieve a compact pattern of development more conducive to walking and bicycling;
- Provide a high level of amenities that create a comfortable environment for pedestrians,
bicyclists, and other users;
- Maintain an adequate level of parking and access for automobiles and integrate this use safely
with pedestrians, bicyclists, and other users;
- Encourage uses that allow round-the-clock activity around transit stations;
- Provide sufficient density of employees, residents, and recreational users to support transit; and
- Generate a relatively high percentage of trips serviceable by transit.
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Walkable Urban (WU) Code
As part of the Reinvent PHX project, a new urban and transit-oriented zoning code, the Walkable
Urban (WU) Code, was adopted by City Council on July 1, 2015 (Ordinance G-6047). The code
regulates development in proximity to light rail stations and is envisioned to replace existing zoning
for properties within the Interim Transit-Oriented Zoning Overlay Districts (TOD-1 and 2, Sections
662 & 663 of the Zoning Ordinance).
The primary purpose of this chapter is to implement the vision and policies of the Transit Oriented
District (TOD) Policy Plans for Gateway, Eastlake-Garfield, Midtown, Uptown and Solano;
encourage an appropriate mixture and density of activity around transit stations; to increase transit
ridership in general and along the Central Phoenix/East Valley Light Rail Corridor in particular; and
to promote multiple modes of transportation. The secondary purpose of the Code is to improve
pedestrian safety from crime, to avoid or mitigate nuisances, to promote the public health, to decrease
automobile-dependence, and to mitigate the effects of congestion and pollution. These regulations
seek to achieve these purposes by providing the following:
1. An increase of population and employment through infill development within transit oriented
districts.
2. A walkable, bikeable, and transit supportive development environment.
3. The integration of auto-oriented and industrial uses with a complementary mix of land uses.
4. A high level of connectivity of pedestrian and vehicular routes, which entails small block sizes.
5. Comfortable, safe, and economically productive districts surrounding light rail stations, providing
for walking and bicycling between and within the transect districts.
6. The protection of property value.
The subject improvements adhere to this zoning code. Although the subject zoning is currently
consistent with its surroundings it is possible that a more intense commercial zoning could be
approved with an appropriate development plan submittal.
We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use
attorney should be engaged if a determination of compliance is required. The zoning ordinance is
located within the addenda.
TAX AND ASSESSMENT DATA:
Presently, the subject property is identified as assessor's tax parcel number: 121-62-041A. The subject
property is located in Maricopa County and valued by the county assessor for taxing purposes.
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The Maricopa County Assessor's Office assesses the subject. Full Cash Value (FCV) has no
relationship to market value as defined in this report. Full cash value is set by State law and is for
tax assessment purposes only. It does not consider the future potential use of the property and is
not always current with market transactions. Limited Property Value (LPV) is set by the State of
Arizona and, by statute, cannot exceed full cash value.
In the State of Arizona, a sale of the subject does not trigger a reassessment.
Proposition 117 passed in 2012 by a majority of Arizona voters, Proposition 117 works as a
mechanism to control the large valuation swings that did so much damage to, not only property
owners, but to government budgets, during the recession.
Proposition 117 acts as a mandatory cap on valuation increases to the LPV, upon which both
primary and secondary tax rates will now be based. So even though FCV may rise dramatically
(as it is not limited and is based on market conditions), Proposition 117 caps increases in the LPV
to 5% annually. It should be noted, this cap does not apply to new construction, additions, or
deletions to your property.
Proposition 117 does not change statutory formulas used for calculating the amount of money
which can be collected by taxing jurisdictions. Proposition 117 provides a stable and dependable
value for LPVs, and, in theory, a stable tax base for taxing jurisdictions dependent on property
taxes. Proposition 117 went into effect for Tax Year 2015.
Following is the assessed tax for the subject property.
Based on the current assessments and the appraisers value conclusion, it appears that the assessor
has overestimated the property value which may impact future tax liability. The subject property
is currently owned by an entity of the state and is currently exempt from any tax liability.
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CONCLUSION:
In conclusion, the physical and functional characteristics of the site are considered to have adequate
visibility and access from three roadways. The site is located in an area predominantly made up of
commercial and industrial land uses with some small multi-family and single family development
along the secondary streets. The site is at grade with the adjoining properties with no evidence of
drainage problems or soil contamination. All city utilities/services and electricity are available to the
site.
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SUBJECT PHOTOGRAPHS
Photos as of January 11, 2021
Typical exterior of the subject
Typical exterior of the subjects
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Looking south across western property line of the subject site
Typical exterior of the subject improvements
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Subject covered parking canopy
Subject drive through for former bank improvements
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Looking east along Jefferson Street, subject on the left
Looking west along Jefferson Street, subject on the right
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Looking south along 24th Street, subject on the left
Typical interior of the subject
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IMPROVEMENT DESCRIPTION
Property Type: Commercial retail/office property. The subject property was formerly
occupied by First National Bank of Arizona is a single story,
midcentury modern building that has an irregular or angular shaped
plan.
Property Use: Single tenant commercial retail/office property formerly built-out as a
bank but several years ago the interior build-out was destroyed by fire
and has since been nearly gutted leaving the interior mostly in shell
condition
Size: 5,461 square feet
Year Built: 1968
Foundation: Reinforced concrete footings. Concrete Floor. Sub-grade is compacted
ABC fill
Exterior Walls: Brick construction
Ceiling Height: Approximately 8 to 10 feet high
Windows: Glass in anodized aluminum frames, nearly all of the glass panes were
broken. Clerestory windows are located between the underside of the
parasols and the low sloping roof on three sides.
Roof Structure: According to the assessment report supplied to the appraiser: The most
noticeable deficiency is the stability of the fire damaged roof framing.
Approximately one- third of the 2 x 12 wood roof joists, sheathing,
and the supporting wood plates appear damaged and/or charred by fire
and/or smoke. Additionally, there are several approximately 5-foot
square openings in the roof sheathing located south of the fire
damaged area probably created by fire fighters.
The public entrance consists of seven, tall, cast-in-place concrete,
hexagonal parasols that abut each other to form a dramatic structural
massing and roof covering. The building’s interior space is
highlighted by the underside of the cast-in-place concrete parasols
that form a dramatic coffered concrete ceiling in the entrance lobby.
Floors: Concrete
Floor Covering: Porcelain tile that is in poor condition exists in the lobby, all other floor
coverings have been removed exposing the concrete floor slab.
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Partitions: The partitions are currently unfinished with exposed wall studs.
Ceilings: The ceilings are exposed with no covering.
Insulation: Standard fiberglass batt, as required
Exterior Doors: A combination of hollow metal doors and glass entry doors in poor
condition
Plumbing: The plumbing appears to be adequate and is assumed to be operable.
Heating & Cooling: The subject includes a 4-pipe chilled and heating water system. The
appraisers were unable to test this system and are unaware if it is
functional. According to the Building Conditions Assessment Report,
it is recommended that the current heating and cooling system should
be replaced with a new split system.
Electrical: According to the Building Conditions Assessment Report, the
electrical service manufactured by Bulldog Electric is no longer
serviceable and should be replaced. Also, many of the existing panels
have been damaged by fire and/or water and are no longer serviceable.
Lighting: Most of the light fixtures have been removed except for those located
below the parasols.
Fire Sprinklers: No
Condition: Poor; Shell Condition
Functional Utility: Good
Economic Life: The subject improvements were completed in 1968. The actual age of
the subject improvements is 53 years, while the effective age is
estimated to be 40 years. The economic life for improvements such as
the subject is approximately 50 years; therefore, the remaining
economic life for the subject improvements is 10 years.
Parking: Open Spaces: 54 spaces
Covered Spaces: 8 spaces
Total Spaces: 62 spaces
Parking Ratio: 11.35/1,000 square feet of building area
Landscaping: There are a variety of ground covers, shrubs, and mature trees that
cover the perimeter of the building envelopes and irrigated by an
automatic sprinkler system.
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Comments: Most original and latter partitions and finishes have been removed
from the administrative/office space due to damage from fire. The
building is in poor condition and the lack of interior build-out allows
for flexibility for future tenant improvements. Although portions of
the property are in poor condition and there is visible fire damage
within areas of the ceiling, there are other portions of the property that
are in good condition and would not require significant work such as
some of the exterior walls and the concrete parasols.
The project layout is commensurate with other existing properties
located within the Metropolitan Phoenix Area.
The appraiser was supplied with a probable cost to repair the various portions of the project
including site, exterior, and interior. A detailed document showing these costs can be found within
the addenda of this report. A summary of the probable costs is below.
It is noted that all of this cost is not required for the property to be functional or useable for some
users and if this rehabilitation schedule was followed, the property would be in good to excellent
condition upon completion.
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HIGHEST AND BEST USE
Highest and best use is a market driven concept that focuses on market forces as each relates to the
subject site identifying the most profitable and competitive use to which the property can be put.
Following is the definition of highest and best use as used in this report:
1. The reasonably probable use of property that results in the highest value. The four criteria
that the highest and best use must meet are legal permissibility, physical possibility,
financial feasibility, and maximum productivity.
2. The use of an asset that maximizes its potential and that is possible, legally permissible,
and financially feasible. The highest and best use may be for continuation of an asset’s
existing use or for some alternative use. This is determined by the use that a market
participant would have in mind for the asset when formulating the price that is would be
willing to bid. (IVS)
3. The highest and most profitable use for which the property is adaptable and needed or
likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal
Land Acquisitions) Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed.
(Chicago: Appraisal Institute, 2015).
Highest and Best Use as a Vacant Site
The purpose of determining the use of the site as vacant is to identify its potential. The goal of the
analysis is to ascertain the optimum use of the land as vacant, and what variety or type of improve-
ment, if any, is warranted given present market conditions.
In growth areas and neighborhoods in transition or where a change in the near term is expected, an
interim use could be utilized. An interim use may be the existing use, a proposed development, an
assemblage or to hold as a speculative investment.
Highest and best use implies contribution of that specific use (ideal improvements) to the community
environment or to community development goals in addition to wealth maximization of individual
property owners. Also implied, is that the determination of highest and best use results from the
appraisers’ judgment and analytical skill, i.e., the use determined from analysis represents an opinion,
not fact to be found. In appraisal practice, the concept of highest and best use represents the premise
upon which value is based.
The highest and best use conclusion may be identical to the one permitted by either zoning ordinances
or private restrictions. In some instances, land has a more valuable use than that permitted by law.
When there is a strong possibility that a change in the legal use would be permitted, then it could
properly be considered as a factor affecting value. Conversely, zoning could legally permit a use
more intense than the site could reasonably be expected to perform. In such cases, if zoning will not
permit a less intense use, then it is necessary to determine whether or not the zoning could be changed
and the effect of this factor upon the ultimate utilization of the property.
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Although synergetic use and compatibility are general considerations for developers, city and county
planners and the basis of more intense land use studies, they do not usually indicate the Highest and
Best Use of a property.
The Highest and Best Use is considered after analyzing market conditions relating to the positive and
negative attributes of the subject site, significant limitations to the future use and current relationship
to other uses in the immediate neighborhood. Specifically, the use must be reasonable within the
following areas:
• Legally Permissible: A property use that is either currently allowed or most probably
allowable under zoning codes, building codes, environmental regulations, and other
applicable laws and regulations that govern land use.
• Physically Possible: For a land use to be considered physically possible, the parcel of land
must be able to accommodate the construction of any building that would be a candidate
for the ideal improvement.
• Financially Feasible: The value of the land use must exceed its cost (economic feasibility
is a condition that exists when prospective earning power is sufficient to pay a requisite
rate of return on the completion cost (including indirect costs). In other words, the
estimated value at completion equals or exceeds the estimated cost. In reference to a service
or property where revenue is not a fundamental consideration, economic feasibility is based
on a broad comparison of cost and benefits.)
• Maximally Productive: To achieve maximum productivity, a specific land use must yield
the highest value of all the physically possible, legally permissible, and financially feasible
possible uses.
Each of these areas will be discussed in more detail in the following section of our analysis of Highest
and Best Use.
To test highest and best use for the land as vacant, the appraisers analyze all logical, feasible
alternatives with legal permissibility and physical possibilities considered first.
LEGALLY PERMISSIBLE:
Legal permissibility is indicated by land use regulations and current zoning code of the controlling
governmental agency.
The purpose of zoning is to provide for orderly growth and harmonious development. Zoning is
intended to provide a common ground of understanding and a sound and equitable working
relationship between public and private interests to the end that both independent and mutual
objectives can be achieved.
Approximately 50% of the site is zoned C-3, General Commercial and 50% is zoned A-1, Light
Industrial; City of Phoenix.
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The C-3 Commercial General District, is a district designed to provide for the intensive
commercial uses necessary to the proper development of the community.
The A-1, Light Industrial District, is a district of industrial uses designed to serve the needs of the
community for industrial activity not offensive to nearby commercial and residential uses.
The subject is located within the Interim Transit-Oriented Zoning Overlay District Two (TOD-2).
The primary purpose of the Transit-Oriented District Two (TOD-2) is to encourage an appropriate
mixture and density of activity around transit stations to increase ridership along the Central
Phoenix/East Valley (CP/EV) Light Rail Corridor and promote alternative modes of transportation to
the automobile. The secondary purpose of the TOD-2 is to decrease auto-dependency, and mitigate
the effects of congestion and pollution. These regulations seek to achieve this type of development
by providing a pedestrian, bicycle, and transit supportive environment development integrating auto
uses with a complementary mix of land uses, where streets have a high level of connectivity and the
blocks are small, all within a comfortable walking and bicycling distance from light rail stations.
Transit-oriented development often occurs as infill and reuse within areas of existing development.
The regulations within this ordinance vary in some cases from other ordinances, such as the Urban
Residential (UR) District, related to infill development in the City, because of the additional need
to support transit ridership. The Transit-Oriented District prohibits uses that do not support transit
ridership.
The specific objectives of this district are to:
- Encourage people to walk, ride a bicycle, or use transit;
- Encourage outdoor pedestrian activities within public rights-of-way;
- Allow for a mix of uses designed to attract pedestrians;
- Achieve a compact pattern of development more conducive to walking and bicycling;
- Provide a high level of amenities that create a comfortable environment for pedestrians,
bicyclists, and other users;
- Maintain an adequate level of parking and access for automobiles and integrate this use safely
with pedestrians, bicyclists, and other users;
- Encourage uses that allow round-the-clock activity around transit stations;
- Provide sufficient density of employees, residents, and recreational users to support transit; and
- Generate a relatively high percentage of trips serviceable by transit.
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Walkable Urban (WU) Code
As part of the Reinvent PHX project, a new urban and transit-oriented zoning code, the Walkable
Urban (WU) Code, was adopted by City Council on July 1, 2015 (Ordinance G-6047). The
Walkable Urban (WU) Code is Chapter 13 of the City of Phoenix Zoning Ordinance. The code
regulates development in proximity to light rail stations and is envisioned to replace existing
zoning for properties within the Interim Transit-Oriented Zoning Overlay Districts (TOD-1 and 2,
Sections 662 & 663 of the Zoning Ordinance).
The primary purpose of this chapter is to implement the vision and policies of the Transit Oriented
District (TOD) Policy Plans for Gateway, Eastlake-Garfield, Midtown, Uptown and Solano;
encourage an appropriate mixture and density of activity around transit stations; to increase transit
ridership in general and along the Central Phoenix/East Valley Light Rail Corridor in particular;
and to promote multiple modes of transportation. The secondary purpose of the Code is to improve
pedestrian safety from crime, to avoid or mitigate nuisances, to promote the public health, to
decrease automobile-dependence, and to mitigate the effects of congestion and pollution. These
regulations seek to achieve these purposes by providing the following:
1. An increase of population and employment through infill development within transit oriented
districts.
2. A walkable, bikeable, and transit supportive development environment.
3. The integration of auto-oriented and industrial uses with a complementary mix of land uses.
4. A high level of connectivity of pedestrian and vehicular routes, which entails small block sizes.
5. Comfortable, safe, and economically productive districts surrounding light rail stations,
providing for walking and bicycling between and within the transect districts.
6. The protection of property value.
The subject property is located within an area seeing little new development. However, its
proximity to Downtown Phoenix, Sky Harbor International Airport, and Valley Metro Light Rail
are desirable attributes. It is noted that the A-1 zoning district allows all uses within RE-24, R-3,
R-4, R-5, C-l, C-2 and C-3 districts and therefore it is determined that this zoning district does not
significantly limit its development potential. However, marketability of the site would likely be
more desirable if it had zoning continuity. Based on the subject property’s location, it is the
appraisers opinion that there is a high likelihood that the A-1 zoned portion of the site could be
changed to C-2.
In conclusion, the subject site has a legally permissible use for commercial and industrial
development. However due to the subject’s location and reasonable potential for a zoning change for
the industrial zoned portion of the site, a commercial use is considered the most likely legally
permissible use of the site.
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PHYSICALLY POSSIBLE:
Physical possibility is shown by indicating the capabilities and adaptability of the site for the
proposed improvement (project) together with the availability of utilities and community services,
modifications that may be required and limitations caused by physical characteristics of the site.
The subject site is rectangular in shape considered to be functionally adequate for most types of
development. As per information supplied for this assignment along with the Maricopa County
Assessor’s map the site is 1.552 acres or 67,617 square feet. The site has 294 feet of frontage along
24th Street, approximately 230 feet of frontage along Jefferson Street and Washington Street.
The appraisers relied on Maricopa County Assessor information for the appraisal and on the physical
inspection of the subject property.
A title report was not provided. However, the client indicated that the property does include a Deed
of Conservation Easement encumbering the property. This easement is used to protect property
significant in Arizona history and culture for the education of the general public. The easement
covers all improvements, fixtures and buildings on the site. The Restrictive Covenant (Easement)
is also associated with the existing building improvements and due to the fact that this portion of
the Highest and Best Use, is assuming the site as vacant with no improvements, these two
easements would not be relevant and are not considered. The client also indicated that the site is
encumbered by a Limited Avigation Easement and Restrictive Covenant (Easement). The Limited
Avigation Easement does not necessarily impact development on the site, but does essentially
release the airport operations from liability associated with noise, vibrations, fumes, dust, fuel and
lubricant particles that may be caused by the operation of aircraft in the vicinity. It is an
Extraordinary Assumption that these three Easements/Restrictions exist encumbering the property.
Other than these restrictions, there are no indicated development limitations observed from our
inspection with exception to development limitations imposed by the planning department and
zoning code of the City of Phoenix with respect to lot/building ratios and property line set-backs.
It is the appraiser’s opinion that the Avigation Easement does not have a significant impact on the
subject property. In conclusion, commercial development are both legally permissible and
physically possible on the subject site.
FINANCIAL FEASIBILITY:
At this point of the Highest and Best Use analysis, the appraisers can conclude that the subject,
from legal, physical and appropriate considerations, commercial development is both physical and
possible on the site. This conclusion statement considers the type of uses that are deemed to be the
most reasonable and prudent uses for the subject, as of the effective date of the appraisal. Now at
this point, one must divert the analysis with regards to the economic feasibility that may affect the
subject site.
To do this task, a market study was conducted. For the purposes of this appraisal report, Market
Study is defined as follows: Market Study, an analysis of the market conditions of supply, demand,
and pricing for a specific property type in a specific area. Appraisal Institute, The Dictionary of
Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)
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As indicated, the subject is currently zoned for commercial and industrial development. Therefore,
the appraisers have searched the market to determine if these types of uses are currently feasible
in the marketplace.
The following data is based off a survey from CoStar for a three-mile radius surrounding the subject
property.
Retail
The following historical data from CoStar represents the retail market including rental rates and
vacancy rates.
The 3.0-mile radius surrounding the subject property had a retail inventory of approximately 6.0
million square feet. Of this area approximately 380,000 square feet was vacant equating to a vacancy
rate of 6.3%. Over the past five years, vacancy rates ranged from 3.8% to 11.1%. Over the past year,
vacancy rates have been trending downward.
The current quarter showed average asking rental rates of $18.24 per square foot. Over the past
five years, average asking rental rates ranged between $15.74 per square foot to the current rate of
$18.24 per square foot. Average asking rental rates have been trending upward over the past year.
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Office
The following historical data from CoStar represents the office market including rental rates and
vacancy rates.
The 3.0-mile radius surrounding the subject property had an office inventory of approximately 23.1
million square feet. Of this area approximately 2.8 million square feet was vacant equating to a
vacancy rate of 12.0%. Over the past ten years, vacancy rates ranged from 10.7% to 13.4%. Over
the past year, vacancy rates have been trending upward.
The current quarter showed gross asking rental rates of $27.91 per square foot. Over the past five
years, gross asking rental rates ranged between $23.26 per square foot to $28.20 per square foot.
Gross asking rental rates have been trending upward over the past year.
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Office and retail uses are the most likely uses at the subject location, however neither of these uses
are seen as financially feasible at this moment in time due to uncertainties in the market.
From the preceding analysis, it is concluded that hold for future commercial uses is the most
financially feasible use of the subject site as vacant.
MAXIMALLY PRODUCTIVE:
Of the uses that pass the test of financial feasibility, the use that yields the highest return, usually
over the long term and consistent with the risk involved, is considered the highest and best use of
the property. The ideal type and size improvement that would attain the highest possible rental
income would be considered the most maximally productive use of the property.
From the preceding analysis, it is evident the commercial use that is physically possible and legally
permissible is not currently financially feasible or maximally productive at this time.
CONCLUSION:
Based on an evaluation of the four criteria in determining a property's Highest and Best Use as
Vacant, it has been concluded that the Highest and Best Use as Vacant of the subject would be to
hold for future commercial development.
HIGHEST AND BEST USE AS IMPROVED: There are two reasons for analyzing the property as improved. The two reasons are (1) to identify the uses of the property that can be expected to produce the highest overall return for each dollar of invested capital, and (2) to estimate the highest and best use to help identify comparable properties. The first reason is to consider whether or not the existing use will continue to provide maximum benefits and/or can the rate of return be increased by converting to a different use. Like a vacant site,
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the highest and best use of a site as improved must meet the four criteria, i.e.; is the use (1) Physically Possible, (2) Legally Permissible, (3) Financially Feasible, and (4) Maximally Productive.
As discussed previously, it is an Extraordinary Assumption that the subject improvements are
encumbered by a Deed of Conservation Easement and Restrictive Covenant (Easement). The Deed
of Conservation Easement is used to protect property significant in Arizona history and culture for
the education of the general public and prohibits the razing or demolition of the existing
improvements. Due to the existence of this Conservation Easement, demolition of the
improvements to allow for new development is not legally permissible. The Restrictive Covenant
(Easement) document supplied to the appraiser states that the subject “Structures and their
respective Facades, as well as the remainder of the Property, must at all times be maintained in a
good and sound state of repair in accordance with the Secretary of Interior Standards for the
Treatment of Historic Properties (the "Standards") so as to prevent the deterioration of the Property
or any portion thereof, to prevent visual obstruction of the Property from public viewpoints such
as adjacent streets; and prevent the intrusion of new improvements, walls, fences, statues,
landscaping or fixtures which substantially modify the public view of the Property and its
associated streetscape and open space, and are deemed to be not in accordance with the Standards.”
This restriction potentially limits what can be done on the site and to various portions of the
exterior of the existing property.
It is concluded that rehabilitating and/or remodeling the interior of the building is the Highest and
Best Use (As Improved).
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VALUATION PROCESS
The principles and concepts of real estate appraisal are basic to the valuation process. The principles
of real estate are based on anticipation, change, supply and demand, competition, substitution,
opportunity cost, balance, contribution, conformity and externalities.
The valuation process is:
A systematic set of procedures an appraiser follows to provide answers to a client’s questions about
real property value. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago:
Appraisal Institute, 2015)
The first step in the procedure is to define the appraisal problem: i.e., identify the real estate, the
effective date of the appraisal, the property rights being appraised, and definition of value sought. The
next step is an overview of the character and scope of the assignment. Once accomplished, factors
that affect market value are collected and analyzed. These factors are addressed in the regional, city
and neighborhood analysis, the site and improvement analysis, the highest and best use analysis, and
in the application of the three approaches to value (the Cost, Sales Comparison and Income
Approaches) which follows.
COST APPROACH - A set of procedures through which a value indication is derived for the fee
simple estate by estimating the current cost to construct a reproduction of (or replacement for) the
existing structure, including an entrepreneurial incentive or profit; deducting depreciations from
the total cost; and adding the estimated land value. Adjustments may then be made to the indicated
value of the fee simple estate in the subject property to reflect the value of the property interest
being appraised. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago:
Appraisal Institute, 2015)
One of the approaches to value commonly applied in Market Value estimates and many other
valuation situations. A comparative approach to the value of property or another asset that
considers, as a substitute for the purchase of a given property, the possibility of constructing
another property that is an equivalent to the original or one that could furnish equal utility with no
undue cost resulting from delay. The Valuer’s estimate is based on the reproduction or replacement
cost of the subject property or asset, less total (accrued) depreciation. The Cost Approach
establishes the value of a real property by estimating the cost of acquiring land and building a new
property with equal utility or adapting an old property to the same use with no undue cost due to
delay. An estimate of entrepreneurial incentive or developer’s profit/loss is commonly added to
land and construction costs. For older properties, the Cost Approach develops an estimate of
depreciation including items of physical deterioration and functional obsolescence.
SALES COMPARISON APPROACH - The process of deriving a value indication for the subject
property by comparing sales of similar properties to the property being appraised, identifying
appropriate unites of comparison, and making adjustments to the sale prices (or unite prices, as
appropriated) of the comparable properties based on relevant, market-derived elements of
comparison. The Sales Comparison Approach may be used to value improved properties, vacant
land, or land being considered as through vacant when an adequate supply of comparable sales
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is available. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago:
Appraisal Institute, 2015)
A Comparative analysis is the process by which a value indication is derived in the Sales Comparison
Approach. Comparative analysis may employ quantitative or qualitative techniques, either separately
or in combination. The process by which a rental value indication is derived in a rental comparison
analysis. Comparative analysis may employ quantitative or qualitative techniques, either separately
or in combination. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago:
Appraisal Institute, 2015)
INCOME APPROACH – A set of procedures through which an appraiser derives a value
indication for an income-producing property by converting its anticipated benefits (cash flows and
reversion) into property value. This conversion can be accomplished in two ways. One year’s
income expectancy can be capitalized at a market-derived capitalization rate or at a capitalization
rate that reflects a specified income pattern, return on investment, and change in the value of the
investment. Alternatively, the annual cash flows for the holding period and the reversion can be
discounted at a specified yield rate.
A comparative approach to value that considers income and expense data relating to the property
being valued and estimates value through a capitalization process. Capitalization relates income
(usually net income) and a defined value type by converting an income amount into a value
estimate. This process may consider direct relationships (whereby an overall capitalization rate or
all risks yield is applied to a single year’s income), yield or discount rates (reflecting measures of
return on investment) applied to a series of incomes over a projected period, or both. The Income
Approach reflects the principles of substitution and anticipation.
Typically, three approaches to value are considered, the Cost Approach, the Sales Comparison
Approach and the Income Approach. Due to the fact that investors place little weight on the Cost
Approach to Value, that approach will be eliminated. The Sales Comparison Approach to Value is
presented, followed by the Income Approach to Value. The two values will then be reconciled into a
final Market Value of the subject.
Although the property is currently in shell condition, the appraisers will value the improvements as if
they were built-out with an average finish. Following this valuation, the cost to rehabilitate the
property to an average finish will be deducted to reach an As Is Market Value.
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SALES COMPARISON APPROACH
In the Sales Comparison Approach, market value is estimated by comparing the subject property to
similar properties that have sold recently or for which offers to purchase have been made. A major
premise of the Sales Comparison Approach is that the market value of a property is directly related
to the prices of comparable, competitive properties.
There are five basic steps in the Sales Comparison Approach:
1. Research the market to locate sales of properties similar to the subject.
2. Confirm and verify the sales price, terms of sale, physical characteristics, income
characteristics and that the sale represents an arm’s length transaction.
3. Identify relevant elements of comparison and analyze each sale for each property.
4. Compare the subject property to the comparable sales and adjust each for relevant
differences to establish comparability.
5. Reconcile the various indications of value into a market value estimate for the subject
property.
Public records of Maricopa County, Arizona have been searched for recent sales of comparable
properties in the market. Additionally, real estate brokers believed to be knowledgeable in the market
have been consulted regarding their knowledge of market transactions. Sales have been confirmed
with the seller, buyer, real estate broker or other persons knowledgeable about each transaction and
verified by Affidavit of Property Value, which is a sworn statement as to the validity of the
transaction.
The subject property can be classified as a single tenant commercial retail/office property in Phoenix.
The subject property can additionally be described as follows:
• Located at 1 South 24th Street in Phoenix, Maricopa County, Arizona.
• The subject of this appraisal report is a single tenant commercial retail/office property totaling
5,461 square feet of building area. As of the effective date of the appraisal, the property was
vacant. The building was formerly built-out as a bank but has sustained fire damage several
years ago and the interior was entirely gutted with only some interior skeletal support structures
remaining. The existing electrical system is unusable and the HVAC capability is unknown,
however these items will be part of the cost to repair the property to an average finish.
• The subject site is rectangular in shape and contains 1.552 acres or 67,617 square feet.
These characteristics that describe the subject property as of the date of valuation were also the criteria
the appraisers utilized to search for similar properties. As a result of this market-wide search, the
appraisers discovered similar properties that were sold and are considered indicators of value.
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SALE NO. 1
LOCATION
2109 East McDowell Road, Phoenix, AZ
GRANTOR Z & P Enterprises, LLC
GRANTEE 2109 McDowell, LLC
RECORDING DATE 12/9/2020
SALE DATE October 2020 was the reported sale date within the Affidavit of
Property Value.
DAYS ON MARKET N/Av
PARCEL NO. 116-06-059F
DOCUMENT NO. 2020-1215008
SALE PRICE $1,600,000
SALE PRICE/SF $117.65
TERMS Cash Equivalent
PROPERTY RIGHTS Fee Simple
CONDITION OF SALE Typical
CONFIRMED BY Seller, 602.321.6544
DATA SOURCES Sworn Affidavit of Property Value signed by grantor and
grantee, and CoStar
SALES HISTORY None in the last three years
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SITE DATA
Land Size/SF 48,180
Arterial Frontage Major
Location/Access Interior
Surroundings Average
Topography Level
Utilities Electric/Water/Sewer
Off-sites Curbs/Gutters/Sidewalks/Streetlights
Zoning C-2; Intermediate Commercial
Present Use Retail
Highest and Best Use As Improved
IMPROVEMENT DATA
Building Area/SF 13,600
Year Built 1985
Condition Average
Land to Building Ratio 3.54:1
Parking Ratio/1,000 SF 5.15
Traffic Count (vpd) 27,591
Occupancy 0%
Capitalization Rate N/Av
COMMENTS
The property was purchased as an owner/user. The interior of
the building is mostly an open unimproved area with
approximately 10-15% of the building being built-out with
good usable office. The site is irregular in shape with frontage
along McDowell Road. It is noted that the sale data was
confirmed by the seller and the seller requested that we do not
disclose his name.
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SALE NO. 2
LOCATION
2225 East McDowell Road, Phoenix, AZ
GRANTOR Marill Moore Studios, LLC
GRANTEE Noble Rex, LLC
RECORDING DATE 6/17/2020
SALE DATE June 2020 was the reported sale date within the Affidavit of
Property Value.
DAYS ON MARKET 196
PARCEL NO. 116-05-141A
DOCUMENT NO. 2020-0531026
SALE PRICE $1,400,000
SALE PRICE/SF $200.00
TERMS Cash Equivalent
PROPERTY RIGHTS Fee Simple
CONDITION OF SALE Typical
CONFIRMED BY Luis Solis, Seller Broker 602.327.9319
DATA SOURCES Sworn Affidavit of Property Value signed by grantor and
grantee, and CoStar
SALES HISTORY None in the last three years
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SITE DATA
Land Size/SF 30,000
Arterial Frontage Major
Location/Access Interior
Surroundings Average
Topography Level
Utilities Electric/Water/Sewer
Off-sites Curbs/Gutters/Sidewalks/Streetlights
Zoning C-2; Intermediate Commercial
Present Use Retail
Highest and Best Use As Improved
IMPROVEMENT DATA
Building Area/SF 7,000
Year Built 1958
Condition Good
Land to Building Ratio 4.29:1
Parking Ratio/1,000 SF 3.57
Traffic Count (vpd) 27,591
Occupancy 0%
Capitalization Rate N/Av
COMMENTS
The property was purchased as an owner/user and was in good
condition at purchase. The building will be used for the buyer’s
bakery business and includes approximately 30% of the
property being built-out with good office space and the
remainder being in shell condition. The site is rectangular in
shape with frontage along McDowell Road.
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SALE NO. 3
LOCATION
1153 East Jefferson Street, Phoenix, AZ
GRANTOR CP Holdings-Jefferson Street, LLC
GRANTEE First Institutional Baptist Church
RECORDING DATE 11/27/2019
SALE DATE September 2019 was the reported sale date within the Affidavit
of Property Value.
DAYS ON MARKET N/Av
PARCEL NO. 116-44-066A
DOCUMENT NO. 2019-0964367
SALE PRICE $725,000
SALE PRICE/SF $184.10
TERMS Cash Equivalent
PROPERTY RIGHTS Fee Simple
CONDITION OF SALE Typical
CONFIRMED BY
Repeated attempts to contact the buyer, seller, and/or broker
were unsuccessful; the vital sales data was confirmed through
a signed affidavit of property value and CoStar.
DATA SOURCES Sworn Affidavit of Property Value signed by grantor and
grantee, and CoStar
SALES HISTORY None in the last three years
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SITE DATA Land Size/SF 19,000
Arterial Frontage Major
Location/Access Corner
Surroundings Average
Topography Level
Utilities Electric/Water/Sewer
Off-sites Curbs/Gutters/Sidewalks/Streetlights
Zoning C-3; General Commercial
Present Use Retail
Highest and Best Use As Improved
IMPROVEMENT DATA
Building Area/SF 3,938
Year Built 1982
Condition Average
Land to Building Ratio 4.82:1
Parking Ratio/1,000 SF 8.89
Traffic Count (vpd) 11,514
Occupancy 0%
Capitalization Rate N/Av
COMMENTS
The property was purchased by an owner/user. The site is
rectangular in shape with frontage along Jefferson Street and
12th Street.
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SALE NO. 4
LOCATION
428 North 24th Street, Phoenix, AZ
GRANTOR UMOM New Day Centers, Inc.
GRANTEE Child Crisis Arizona
RECORDING DATE 3/7/2019
SALE DATE March 2019 was the reported sale date within the Affidavit of
Property Value.
DAYS ON MARKET 84
PARCEL NO. 116-02-035A
DOCUMENT NO. 2019-0157380
SALE PRICE $365,000
SALE PRICE/SF $73.22
TERMS Cash Equivalent
PROPERTY RIGHTS Fee Simple
CONDITION OF SALE Assemblage
CONFIRMED BY Broker, Chuck Gibson (602) 682-6035
DATA SOURCES Sworn Affidavit of Property Value signed by grantor and
grantee, and CoStar
SALES HISTORY None in the last three years
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SITE DATA Land Size/SF 24,481
Arterial Frontage Major
Location/Access Corner
Surroundings Poor
Topography Level
Utilities Electric/Water/Sewer
Off-sites Curbs/Gutters/Sidewalks/Streetlights
Zoning C-3; General Commercial
Present Use Retail/Office
Highest and Best Use As Improved
IMPROVEMENT DATA
Building Area/SF 4,985 (Confirmed by Broker)
Year Built 1967
Condition Average
Land to Building Ratio 4.91:1
Parking Ratio/1,000 SF 5.82
Traffic Count (vpd) 22,066
Occupancy 0%
Capitalization Rate N/Av
COMMENTS
The property was purchased as an owner/user and is entirely
built-out with office space. The site is rectangular in shape with
frontage along 24th Street and Taylor Street. The broker
reported that the owner of the adjacent property purchased this
comparable, however it was properly marketed and sold at a
market price. It is noted that the broker confirmed the building
size.
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SUMMARY OF IMPROVED SALES
Sale Data SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Sales Price $1,600,000 $1,400,000 $725,000 $365,000
Price/SF $117.65 $200.00 $184.10 $73.22
Property Rights Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple
Financing Cash Equivalent Cash Equivalent Cash Equivalent Cash Equivalent Cash Equivalent
Sale Conditions Typical Typical Typical Typical Typical
Closing Date Current 12/9/2020 6/17/2020 11/27/2019 3/7/2019
Sale Date Current 10/20 6/20 9/19 3/19
Land/SF 67,617 48,180 30,000 19,000 24,481
Arterial Frontage Major Major Major Major Major
Location/Access Corner Interior Interior Corner Corner
Surroundings Poor Average Average Average Poor
Topography Level Level Level Level Level
Utilities E/W/S* E/W/S E/W/S E/W/S E/W/S
Off-Sites All Available All Available All Available All Available All Available
Building Size 5,461 13,600 7,000 3,938 4,985
Year Built 1968 1985 1958 1982 1967
Condition Average** Average Average Average Average
Land to Building
Ratio 12.38:1 3.54:1 4.29:1 4.82:1 4.91:1
Parking Ratio/1,000
SF 11.35 5.15 3.57 8.89 5.82
Traffic Count (vpd) 30,348 27,591 27,591 11,514 22,066
Occupancy 0% 0% 0% 0% 0%
OAR N/Av N/Av N/Av N/Av N/Av
Zoning
C-3 (General
Commercial/A-1
(Light Industrial)
C-2 (Intermediate
Commercial)
C-2 (Intermediate
Commercial)
C-3 (General
Commercial)
C-3 (General
Commercial)
*E=Electric, W=Water & S=Sewer
**This condition is assuming the property has a typical interior office build-out.
SALES DATA:
A search was made to obtain comparable market data. Because no two properties are ever exactly the
same, adjustments are considered to reflect the differences so that a valid estimate of value can be
made. The unit of measure considered in this report is price per square foot of building area. This
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unit of measure is commonly used in the market and is accepted as a method of assisting in the
determination value.
The appraisers are of the opinion that the accumulated sales data accurately reflects the present market
and its interrelated economic forces. Unfortunately, there is disparity within the data in relation to the
most likely common denominator, (price per square foot). This disparity can be attributed to:
(1) Varying locations of the respective sale properties.
(2) Inconsistencies relative to the overall plot size of the sale properties in relation
to the subject.
(3) Physical characteristics and fill requirements.
(4) Real Estate reflects an imperfect market.
The comparative sales analysis focuses on the legal, physical, location and economic characteristics
of similar properties as compared to the subject property. Other considerations are real property rights
conveyed, financing terms, conditions of sale, date of sale, physical and income characteristics, all of
which can account for variations in price.
Adjustments to a property may be made either in terms of a percentage or dollars per square foot.
There is no “proper” method of adjustment to strictly adhere to since adjustments depend on how the
relationship between the two properties is perceived by the market. A market value estimate is not
determined by a set of precise calculations. Appraisal has an art aspect in that appraisers use their
judgment to analyze and interpret quantitative data.
PROPERTY RIGHTS CONVEYED:
The investigation revealed the Fee Simple Estate was the property rights conveyed in all of the
comparable sales. All of the comparable sales are similar with respect to property rights.
FINANCING:
All of the comparable sales sold for cash or the equivalence of cash and no adjustments are warranted.
CONDITIONS OF SALE:
All sales were reported to be arm’s length market transactions and no adjustments are warranted.
MARKET CONDITIONS:
All of the comparable sales were transacted from March 2019 to October 2020 and are considered to
be representative of market conditions, as of the effective date of the appraisal, and no adjustment is
made.
LOCATION:
Location adjustments typically reflect an increase or decrease in value attributable to accessibility,
competitive environment, arterial exposure, freeway influence, and surrounding development. These
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location attributes may determine the degree of demand a property could have which in turn define
occupancy levels and rental rate structures.
The subject has a good location between Washington Street and Jefferson Street, along the east side
of 24th Street with good proximity to the light rail, Sky Harbor Airport, and Downtown Phoenix.
The subject property has frontage along three major roadways with a total combined traffic count of
approximately 30,348 vehicles per day. Comparables one, two, and four had generally similar
frontage and/or traffic count as compared to the subject and no adjustment is made. Comparable two
had inferior frontage and traffic count compared to the subject and will be adjusted upward.
The subject property has multiple points of access from multiple roadways. Comparables three and
four each had corner sites similar to the subject, while Comparables one and two had interior sites
with interior access. Each of these sales are adjusted upward slightly.
The subject site has good light rail frontage, a desirable attribute. Comparable three was similar to the
subject and no adjustment was made. Comparables one, two, and four are not located near light rail
and are adjusted upward for this inferior attribute.
Comparables one, two, and three are each located within areas of superior surrounding development
and/or are closer to areas seeing regentrification. Each will be adjusted downward for this attribute.
Comparable four is similar to the subject and no adjustment is made.
Adjustments for the comparable sales based on their location characteristics including frontage,
access, light rail proximity, and surroundings follows.
Location
Factors SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Arterial Frontage Major Similar Similar Inferior Similar
Adjustment 0% 0% +10% 0%
Access Corner Inferior Inferior Similar Similar
Adjustment +3% +3% 0% 0%
Light Rail Yes Inferior Inferior Inferior Inferior
Adjustment +3% +3% +3% +3%
Surroundings Average Superior Superior Superior Similar
Adjustment -20% -20% -25% 0%
Quantitative
Adjustment -14% -14% -12% +3%
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PHYSICAL CHARACTERISTICS:
There are perceived physical differences in terms of building size, age and condition, office build-out,
land-to-building ratios, and parking ratios.
As indicated the subject property is a 5,461 square foot building that essentially in shell condition and
would require significant exterior repairs as well. The improvements have a very high land to building
ratio that would allow for future additions to the existing structure (assuming approval from the City
of Phoenix) and/or new development within the vacant eastern portion of the site. This high land to
building ratio results in the property being significantly over parked compared to other office
buildings in the area.
Generally larger properties sell for lower price per unit due to economies of scale and the fact that
there are fewer buyers for higher valued properties. Comparable one was considerably larger than the
subject and will be adjusted upward slightly. Comparables two, three, and four were each generally
similar in size and no adjustment was made.
The subject has good exterior brick construction and the mid-century modern architecture is
considered a desirable attribute. Comparables one, two, and four were each inferior to the subject’s
construction materials and design and each is adjusted upward.
The subject is currently entirely in shell condition requiring significant work. For the purpose of this
appraisal report, the appraisers will assume that the property has been improved to a usable condition
to achieve a certificate of occupancy. It is not expected that the interior office build-out and exterior
rehabilitation of the property would be any more than an average build-out. Comparables one and two
included portions of their buildings having little interior build-out and assuming the subject property
is 100% built out to an average condition, these two comparables are considered to be slightly inferior
to the subject and warrant an upward adjustment. Comparables three and four each were entirely built-
out with office improvements, however it’s assumed that the subject build-out would be in a newer
condition and therefore each of these comparables are also slightly inferior to the subject warranting
an upward adjustment for condition.
The subject property has a land to building ratio of 12.38:1, which is significantly higher than typical
office or retail properties in the area. The appraisers attempted to locate similar buildings to the subject
with larger site areas and the comparables utilized were considered the best data available. Each of
the comparable sales had inferior land to building ratios as compared to the subject and each was
adjusted upward. Additionally, each of the comparables had inferior parking ratios, which is largely
due to the lower land to building ratios. Each of the buildings had adequate available parking and no
adjustment was made.
Adjustments for the comparable sales based on their physical characteristics including size, building
construction, age and condition, land to building ratio, and parking ratio.
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Physical
Characteristics SUBJECT SALE 1 SALE 2 SALE 3 SALE 4
Size 5,461 Larger Similar Similar Similar
Adjustment +5% 0% 0% 0%
Building Construction Good Inferior Inferior Similar Inferior
Adjustment +10% +10% 0% +10%
Age & Condition Average Inferior Inferior Inferior Inferior
Adjustment +30% +10% +5% +25%
Land to Building Ratio 12.38 Inferior Inferior Inferior Inferior
Adjustment +10% +10% +10% +10%
Parking Ratio/1,000 SF 11.35 Similar Similar Similar Similar
Adjustment 0% 0% 0% 0%
Quantitative
Adjustment +55% +30% +15% +45%
ZONING:
Zoning is similar for all comparable properties when compared with the subject. No directional
adjustments are made for zoning.
In conclusion, the values indicated in the summary of improved properties show a range in price per
square foot from $73.22 per square foot to $200.00 per square foot before adjustments. It is believed
the indicated value range is reflective of the utility, wants, and needs of buyers in the marketplace.
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IMPROVED SALES ADJUSTMENT CHART:
Elements of Comparison SALE 1 SALE 2 SALE 3 SALE 4
Price/SF $117.65 $200.00 $184.10 $73.22
Property Rights 0.00% 0.00% 0.00% 0.00%
Adjusted Price $117.65 $200.00 $184.10 $73.22
Financing 0.00% 0.00% 0.00% 0.00%
Adjusted Price $117.65 $200.00 $184.10 $73.22
Condition of Sale 0.00% 0.00% 0.00% 0.00%
Adjusted Price $117.65 $200.00 $184.10 $73.22
Market Conditions 0.00% 0.00% 0.00% 0.00%
Adjusted Price $117.65 $200.00 $184.10 $73.22
Location Factors -9% -9% -12% +8%
Physical Characteristics +55% +30% +15% +45%
Zoning 0% 0% 0% 0%
Overall Adjustment +46% +21% +3% +53%
Final Indicated Value $171.77 $242.00 $189.62 $112.03
CONCLUSION OF VALUE ASSUMING AVERAGE INTERIOR BUILD-OUT:
After adjustments were made, the sales have a range of $112.03 to $242.00 per square foot with an
indicated average of $178.86 per square foot. The indicated unit sales prices of the comparable sales
reflect market conditions for single tenant commercial retail/office buildings within the area.
The appraisers have placed additional weight on sales three and four which was considered the most
comparable to the subject. Thus, assuming the interior and exterior of the property has been
rehabilitated to an average condition, the appraisers will conclude near the middle of the range or
$175.00 per square foot.
This would indicate the following value conclusion.
5,461 SF x $175.00 per square foot = $955,675
AS IS MARKET VALUE:
The appraiser was supplied with a cost estimate provided by the client indicating that interior and
exterior building rehabilitation would total upwards of $730,000, not including any site work. The
exterior building rehabilitation and interior selective demolition costs appear to be reasonable. The
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Interior building renovation cost estimate however appears to be a superior finish than what the
‘average’ finish the appraisers valued. The interior renovation cost utilized was $100.00 per square
foot equating to $553,400 for the property. According to the December 2020 Marshall and Swift
Valuation Services, an average interior office build-out finish for a Class C Office Building is $54.00
per square foot. The appraisers will utilize an interior cost of $54.00 per square foot as reported in
Marshall and Swift and the cost supplied to the appraiser for the exterior building rehabilitation and
interior selective demolition. The exterior site work costs were not considered as the site was
generally similar to the rent and sale comparables surveyed.
Following is an estimate to bring the property to an average condition that was estimated in the
previous value conclusion.
Average interior office finish [$54.00/SF x 5,461 SF] = $294,894
Additional demolition = $ 4,000
Exterior Building Rehabilitation = $175,244
Total = $474,138
This cost will be deducted from the value concluded to previously to estimate the As Is Market
Value.
Sales Approach assuming average renovation = $955,675
Renovation cost = ($474,138)
As Is Market Value = $481,537
ROUNDED = $480,000
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INCOME APPROACH
The Income Approach can be analyzed by one of two methods: 1) Direct Capitalization or 2)
Discounted Cash Flow.
The Direct Capitalization method is - A method used to convert an estimate of a single year’s income
expectancy into an indication of value in one direct step, either by dividing the net income estimate
by an appropriate capitalization rate or by multiplying the income estimate by an appropriate
factor. Direct capitalization employs capitalization rates and multipliers extracted or developed
from market date. Only one year’s income is used. Yield and value changes are implied, but no
explicitly identified. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago:
Appraisal Institute, 2015)
The Discounted Cash Flow (DCF) Analysis is - The procedure in which a discount rate is applied
to a set of projected income streams and a reversion. The analyst specifies the quantity, variability,
timing, and duration of the income streams and the quantity and timing of the reversion, and
discounts each to its present value at a specified yield rate. Appraisal Institute, The Dictionary of
Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)
As reported, the subject property is single tenant commercial retail/office building. Due to the fact
that the subject is capable of producing income, the appraisers will utilize the Direct Capitalization
method in order to value the subject within the Income Approach.
In the subject's case, the income stream would be in the form of net operating income produced
through the collection of rents, deducting the appropriate vacancy and credit loss, adding other income
if any, then deducting appropriate expenses. The first step in the process is to estimate potential gross
income. The process begins with the examination of the existing effective lease rates of similar
properties located within the sub-market. Rental rates and terms from comparable properties were
collected to support the estimate of market rent for the subject property.
Following is a rental survey indicating current contract and/or market rents of similar property
located within the submarket. The rental survey was conducted by interviewing the leasing agents
of comparable rental properties. This survey will be followed by an analysis and adjustments for
the elements of comparison discussed previously. Then, operating expenses together with vacancy
and credit losses are estimated from market experience to obtain the net operating income. The
resulting net operating income is then capitalized to convert the future income stream into a present
value indication.
On the following pages are brief descriptions or summaries of comparable rental properties
followed by a synopsis of each rental comparable and location map.
Although the property is currently in shell condition, the appraisers will estimate a market rental rate
as if they were built-out with an average finish. Following this valuation, the cost to rehabilitate the
property to an average finish will be deducted to reach an As Is Market Value.
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RENTAL NO. 1
ADDRESS 3130 East Roosevelt Street, Phoenix, AZ
BUILDING TYPE Office BUILDING SIZE (SF) 9,000 YEAR BUILT 1969
LEASING ACTIVITY
Suite Size (SF) 2,000-2,600
Lease Date Mar-17 & Jun-17
Lease Rate $10.00
LEASE TYPE NNN VACANCY 0% TENANT Office CONDITION Average LEASING COMPANY Lions Foundation of Arizona
602.244.9758
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RENTAL NO. 2
ADDRESS 1150 E. Jefferson Street, Phoenix, AZ
BUILDING TYPE Office
BUILDING SIZE (SF) 4,550
YEAR BUILT 1985
LEASING ACTIVITY
Suite Size (SF) 4,550
Lease Date Feb-18
Lease Rate $11.50
LEASE TYPE NNN
VACANCY 0%
TENANT Office
CONDITION Average
LEASING COMPANY West USA Realty
(480) 785-6761
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RENTAL NO. 3
ADDRESS 2738 East Washington Street, Phoenix, AZ
BUILDING TYPE Office
BUILDING SIZE (SF) 8,621
YEAR BUILT 1967
LEASING ACTIVITY
Suite Size (SF) 8,621
Lease Date May-17
Lease Rate $8.80
LEASE TYPE Triple Net converted from Gross
VACANCY 0%
TENANT Office
CONDITION Average
LEASING COMPANY RH Land & Investments
480.939.4800
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RENTAL NO. 4
ADDRESS 1145 East Washington Street, Phoenix, AZ
BUILDING TYPE Office
BUILDING SIZE (SF) 10,194
YEAR BUILT 1949
LEASING ACTIVITY
Suite Size (SF) 2,000-4,000
Lease Date Apr-19 & Aug-19
Lease Rate $15.00
LEASE TYPE NNN
VACANCY 20%
TENANT Office
CONDITION Average
LEASING COMPANY Berry Realty, Inc.
602.252.5171
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RENTAL NO. 5
ADDRESS 1142 E. Jefferson Street, Phoenix, AZ
BUILDING TYPE Office
BUILDING SIZE (SF) 7,666
YEAR BUILT 1985
LEASING ACTIVITY
Suite Size (SF) 7,666
Lease Date Nov-19
Lease Rate $14.00
LEASE TYPE NNN
VACANCY 0%
TENANT Office
CONDITION Average
LEASING COMPANY Lee & Associates
(602) 956-7777
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RENTAL MAP
Rental Summary
Rent Address Suite Sizes Rental
Rates Rent Type
Year
Built Vacancy
1 3130 East Roosevelt Street, Phoenix, AZ 2,000-2,600 $10.00 NNN 1969 0%
2 1150 E. Jefferson Street, Phoenix, AZ 4,550 $11.50 NNN 1985 0%
3 2738 East Washington Street, Phoenix, AZ 8,621 $8.80 NNN* 1967 0%
4 1145 East Washington Street, Phoenix, AZ 2,000-4,000 $15.00 NNN 1949 20%
5 1142 E. Jefferson Street, Phoenix, AZ 7,666 $14.00 NNN 1985 0%
Subject 5,461 NNN 1968 100%
*Triple Net converted from Gross
RENT CONCLUSIONS:
The subject is currently vacant and in damaged condition that could not be occupied without
requiring significant improvements, however similar to the Sales Comparison Approach, within
this portion of the valuation the property is assumed to have an average interior build-out.
The rent comparables surveyed have a wide range mainly due to the sizes of the buildings and
more importantly the quality of the build-out and location.
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The comparables surveyed range between $8.80 per square foot to $15.00 per square foot with
Comparables two, four, and five having locations closer to Downtown Phoenix. However, the
subject property is considered to have new interior build-out and the subject has a high land to
building ratio at a major intersection. It is concluded that the market rental rate for the subject,
assuming renovated to an average condition, would fall near the upper end of the range or $15.00
per square foot on NNN lease terms.
Therefore, the subject Potential Gross Income is estimated to be:
5,461 square feet x $15.00 per square foot = $81,915
VACANCY/CREDIT LOSS:
In order to determine a stabilized vacancy rate for the subject, we researched the immediate area
for vacancy rates of similar properties.
The 3.0-mile radius surrounding the subject property had a retail inventory of approximately 6.0
million square feet. Of this area approximately 380,000 square feet was vacant equating to a vacancy
rate of 6.3%. Over the past five years, vacancy rates ranged from 3.8% to 11.1%. Over the past year,
vacancy rates have been trending downward.
The 3.0-mile radius surrounding the subject property had an office inventory of approximately 23.1
million square feet. Of this area approximately 2.8 million square feet was vacant equating to a
vacancy rate of 12.0%. Over the past ten years, vacancy rates ranged from 10.7% to 13.4%. Over
the past year, vacancy rates have been trending upward.
Single tenant owner/user properties are generally 100% occupied or 100% vacant. Although the
subject property is currently vacant and has been for some time, if it were improved to a usable
condition, the appraisers conclude that a vacancy rate of 10% is reasonable for the property over a
typical holding period.
OTHER INCOME:
There are no other projected income sources for the property.
EXPENSES:
Expenses are viewed on the basis of what is expected during a holding period. As indicated the
comparable rents are leased on triple net leases similar to the subject where the tenant is responsible
for the operating expenses for the property. Therefore, we will only include any non-reimbursable
expenses attributed to the landlord. These expenses include off-site management, cost of vacancy,
and reserves.
Off-Site Management:
Management fees for properties like the subject typically cover off-site management expenses for
managing the investment and are the paid for by the property owner. The appraiser interviewed local
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property management companies to get an indication of what property management firms would
charge for the management and accounting of a property like the subject.
Property management/brokerage firms such as CB Commercial will manage NNN properties like the
subject for 2% to 5% of gross collected revenues depending on the financial and physical condition
of the property. The property manager is responsible for collecting the rent, lease management,
municipality interfacing, and paying the operating expenses in a timely manner.
We will conclude to an off-site management of 3% of the effective gross rental income.
Cost to Vacancy:
If the property became vacant, the landlord would incur the costs associated with taxes, insurance,
and maintenance/utilities to keep the property in a proper condition during vacant periods,
estimated at $2.50 per square foot or $13,652 annually. Based on a 10% vacancy, this expense is
estimated to be $1,365 annually.
$13,652 x 0.10 = $1,365
Reserves for Replacements:
A replacement allowance provides for the periodic replacement of building components that wear out
more rapidly than the building itself and must be replaced periodically during the building's economic
life. These components may include roof covering, heating/cooling compressors, driveways, parking
areas and exterior paint.
The annual allowance for each item is usually the anticipated cost of replacement prorated over the
anticipated remaining economic life of that item provided it does not exceed the remaining economic
life of the structure. Proration may be based on a simple average or provided for by the use of a
sinking fund.
Generally, prudent investors and property management companies estimate between $0.10 and $0.20
per square foot. The appraiser will conclude at a reasonable amount for Reserves and Replacements
at $0.12 per square foot or $655 annually.
Shown next is the Stabilized Operating Statement.
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Stabilized Operating Statement
Potential Gross Income $ 81,915
Vacancy & Collection Loss 10.00% $ 8,192
Effective Gross Income $ 73,723
Expenses
Management Fee 3.00% $ 2,212
Cost of Vacancy $ 1,365
Reserves for Replacement $0.12 /SF $ 655
Total $ 4,232
Net Operating Income $ 69,491
NET OPERATING INCOME:
The Net Operating Income (N.O.I.) is the anticipated net income remaining after all operating
expenses are deducted from the Effective Gross Potential Rental Income, but before mortgage debt
service and book depreciation are deducted. The estimated N.O.I. is utilized in Direct Capitalization
Approach to estimate a value for the subject property based on its projected ability to produce revenue.
In the conversion of Net Operating Income, before debt service, there are several methods of obtaining
an overall rate (OAR) to be utilized in the capitalization process. The capitalization process involves
a discounting process with the rate reflecting the purchaser's requirements in respect to yield and
market rate interest on the debt while the property is being held.
DIRECT CAPITALIZATION METHOD:
The Direct Capitalization Method is the conversion of the Net Operating Income (N.O.I.) into an
indication of "Present Value" by dividing the N.O.I. by the market derived overall rate (O.A.R.). The
O.A.R. demonstrates the direct relationship of the N.O.I. to the selling price of the comparable
properties, which have been sold in the open market. The market derived O.A.R. reflects the interest
or dividend that the property will produce and the anticipated capital appreciation or depreciation over
the investment holding period.
In essence, the O.A.R. obtained from the market is a fraction of the total investment that must be
collected each year, on an average to service the debt (principal and interest payments) yield and
required benefits (cash flow and/or equity build-up) and compensate the depreciation or appreciation.
Each of the sale comparables utilized in the Sales Comparison Approach were vacant at the time of
purchase or were purchased by owner/users and were not purchased based on a future income stream.
Following are recent sales of similar free standing office and/or retail buildings that reported
capitalization rates. Many of the buildings within the following capitalization rate chart were in
superior condition compared to the subject.
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Single tenant office buildings within the Phoenix market that were older in age and condition reported
capitalization rates ranging between 7.00% and 8.71%.
The differences in O.A.R. (overall rate) rates may be attributed to variations in occupancy, age and
condition of the parks, economic upside, sales motivation, cash flow potential, and other factors which
make each sale and/or property unique. It is believed that economic life of the comparable properties
is similar to that of the subject.
The rates published by RealtyRates.com Investor Survey for the 4th Quarter 2020 for office
properties, surveyed O.A.R.s range from 4.21% to 12.56% with an average of 8.84%.
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Conclusion
The estimated income is based on a market lease rate on market lease terms assuming the property
has been renovated to an average condition. The subject is located at the corner of three major
roadways with good proximity to the Valley Metro Light Rail. However, the subject is located
within an area that is seeing little to no new growth and it is concluded that an overall rate near
7.50% is appropriate. This rate falls near the upper end of the actual Metropolitan Phoenix
capitalization rate comparables surveyed.
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Applying the overall rate of 0.0750 to the estimated NOI of $69,491 leads to an indicated value
via the Direct Capitalization Method (assuming average renovation) as shown below.
NOI $69,491 = $926,547
OAR 0.0750
AS IS MARKET VALUE:
The appraiser was supplied with a cost estimate provided by the client indicating that interior and
exterior building rehabilitation would total upwards of $730,000, not including any site work. The
exterior building rehabilitation and interior selective demolition costs appear to be reasonable. The
Interior building renovation however appears to be a superior finish than what is being valued
previously. The interior renovation cost utilized was $100.00 per square foot equating to $553,400
for the property. According to the December 2020 Marshall and Swift Valuation Services, an average
interior office build-out finish for a Class C Office Building is $54.00 per square foot. The appraisers
will utilize an interior cost of $54.00 per square foot as reported in Marshall and Swift and the cost
supplied to the appraiser for the exterior building rehabilitation and interior selective demolition. The
exterior site work costs were not considered as the site was generally similar to the rent and sale
comparables surveyed.
Following is an estimate to bring the property to an average condition that was estimated in the
previous value conclusion.
Average interior office finish [$54.00/SF x 5,461 SF] = $294,894
Additional demolition = $ 4,000
Exterior Building Rehabilitation = $175,244
Total = $474,138
This cost will be deducted from the value concluded to previously to estimate the As Is Market
Value.
Income Approach conclusion assuming average renovation = $926,547
Renovation cost = ($474,138)
As Is Market Value = $452,409
ROUNDED = $455,000
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RECONCILIATION
The Final Reconciliation is the process of coordinating and integrating related facts to form a unified
conclusion. Final Reconciliation is defined as: The last phase in the development of a value opinion
in which two or more value indications derived from market data are resolved into a final value
opinion, which may be either a range of value, in relation to a benchmark, or a single point
estimate. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal
Institute, 2015)
The orderly connection of interdependent elements is a prerequisite of proper reconciliation. This
requires a re-examination of specific data, procedures, and techniques within the framework of
approaches used to derive preliminary estimates. The approach utilized to conclude to a value
estimate considered appraisal techniques which encompassed: (1) reviewed to make sure that the data
is authentic and reflects pertinent market activity and (2) the analytical techniques used and the logic
followed are valid, realistic, and consistent. In addition, all mathematical calculations have been
checked by someone other than the appraisers in an attempt to eliminate errors.
Two approaches to value have been employed in the analysis. The data together with the line of
reasoning followed for each approach is clearly set forth.
Sales Comparison Approach $480,000
Income Approach $455,000
The reconciliation considers and evaluates alternate value indication to arrive at a final value estimate.
Each value indication is weighted according to relative significance, applicability, and defensibility
and relies most heavily on the approach that is most appropriate to the purpose of the appraisal.
In an appraisal report, the final value estimate may be stated as a single figure or as a range of values.
Or an appraiser may choose to show the range and then cite the final value as a single figure within
the range. Traditionally, a point estimate is a value indication reported as a single dollar amount.
In estimating market value, a point estimate is typically regarded as the most probable number,
not the only possible number. Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed.
(Chicago: Appraisal Institute, 2015)
The Cost Approach to Value is not typically considered a reliable indication of value for this type of
property due to the nature and time frame of construction of the subject improvements. More
relevancy is placed on the Cost Approach when the cost of the new or proposed improvements are
known and have taken place within a relatively stable period of market conditions whereas in older
improved properties and drastically changing market conditions, the estimate of accrued depreciation
becomes increasingly subjective. The Cost Approach was not utilized in the estimation of market
value.
The Sales Comparison Approach was based upon sales of similar buildings considered comparable
to the subject. These sales, after adjustments for the various elements of comparison, were analyzed
from which an indication of value was derived. Sales were selected that were considered the most
representative properties that could be located in the market. This approach is considered a good
indication of value and a reflection of the motivations of market participants and was utilized.
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The Income Approach to Value is believed to be another good indication of value for this type of
income producing property. All of the data used in the Income Approach to Value was derived
from market trends and is believed to reflect market thinking. The Income Approach to Value
included the estimate of economic rents taken from the market in which the subject is located as
compared to contract rent. Deductions were then made for vacancy and expenses. The resulting
net operating income (NOI) was capitalized by an appropriate method into an indication of value.
The Sales Comparison was considered to be the most appropriate indicator of value and most
weight was given to this approach.
Based on the information found in our investigation, the appraisers are of the opinion that the "As Is"
Market Value of the subject property, as of the effective date of the appraisal or January 11, 2021, is:
FOUR HUNDRED EIGHTY THOUSAND DOLLARS
($480,000.00)
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CERTIFICATION
We certify that, to the best of our knowledge and belief:
The statements of fact contained in this report are true and correct. The reported analyses, opinions,
and conclusions are limited only by the reported assumptions and limiting conditions and are our
personal, impartial and unbiased professional analyses, opinions, and conclusions.
We have no present or prospective interest in the property that is the subject of this report and no
personal interest with respect to 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. 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.
As of the date of this report, Jeff Windle, MAI and Zach Sinay, MAI, R/W-AC have completed the
continuing education program for Designed Members of the Appraisal Institute. Jeff Windle and Zach
Sinay have made a personal inspection of the property that is the subject of this report. It should be
noted that Jeff Sinay provided significant real property appraisal assistance to the person signing
this certification. This included participation in the following:
• Inspection of the subject property
• Data collection and verification
• Report writing
• Value conclusions
• Packaging
Jeff Windle and Zach Sinay possess the knowledge and experience to thoroughly complete this
appraisal assignment. Please refer to the Qualifications of the Appraiser(s) included in the following
pages for additional information regarding professional education and pertinent experience of the
aforementioned appraiser.
We have performed no appraisal services regarding the property that is the subject of this report within
the three-year period immediately preceding acceptance of this assignment.
Under federal mandate, state licensing and/or certification of appraiser is required on or before August
15, 1991. Permission is hereby granted by the client for the appraisers to furnish the appropriate
governmental authority or their authorized designated representative(s) any and all materials
requested for oversight review.
This appraisal assignment was drafted to adhere to the standards and practices of the Appraisal
Institute, plus the guidelines and recommendations set forth in the Uniform Standards of Professional
Appraisal Practice (USPAP) by the Appraisal Foundation, the Federal Aviation Administration
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(FAA), and the Advisory circular AC No:150/5100 and its reference to requirements as to the
Uniform Act.
Respectfully submitted,
Jeff Windle, MAI
Certified General Real Estate Appraiser No. 30808
480.285.3864
Zach Sinay, MAI, R/W-AC
Certified General Real Estate Appraiser No. 31199
480.285.3868
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UNIFORM ACT CERTIFICATE OF APPRAISER
Property No.: PM1646 APN: 121-62-041A
I hereby certify:
That I have personally inspected the property herein appraised and that I have also made a personal field inspection
of the comparable sales relied upon in making said appraisal. The subject and the comparable sales relied upon in
making said appraisal were as represented in said appraisal or in the data book or report which supplements said
appraisal.
That I have afforded the owner or owner’s designated representative the opportunity to accompany me on the property
inspection, which was held on January 11, 2021.
That to the best of my knowledge and belief the statements contained in the appraisal herein set forth are true, and the
information upon which the opinions expressed therein are based is correct; subject to the limiting conditions therein
set forth.
That I understand that such appraisal may be used in connection with the acquisition of property for a project utilizing
Federal fund assistance.
That such appraisal has been made in conformity with the appropriate laws, regulations, and policies and procedures
applicable to appraisal of property for such purposes; and that to the best of my knowledge no portion of the value
assigned to such property consists of items which are non-compensable under the established law.
That my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with
the Uniform Standards of Professional Appraisal Practice (USPAP) and the Uniform Act (49 CFR Part 24).
That any increase or decrease in the market value of the real property before the date of valuation caused by the project
for which the property is to be acquired, or by the likelihood that the property would be acquired for the project, other
than that due to physical deterioration within the reasonable control of the owner, was disregarded in this appraisal.
That neither my employment nor my compensation for making this appraisal and report are in any way contingent
upon the values reported herein.
That I have no direct or indirect, present or contemplated future personal interest in such property or in any benefit
from the acquisition of such property appraised.
That I have not revealed the findings and results of such appraisal to anyone other than the proper officials of the
acquiring agency and I will not do so until so authorized by said officials, or until I am required to do so by due process
of law, or until I am released from this obligation by having publicly testified as to such findings.
It should be noted that Zach Sinay, MAI, R/W-AC provided significant real property appraisal assistance to the person
signing this certification.
That my opinion of the market value of the property as of January 11, 2021, is $480,000, based on my independent
appraisal and the exercise of my professional judgment.
DATE: January 28, 2021
APPRAISER: Jeff Windle, MAI
Certified General Real Estate Appraiser
Arizona Certificate Number CGA - 30808
DATE: January 28, 2021
APPRAISER: Zach Sinay, MAI, R/W-AC
Certified General Real Estate Appraiser
Arizona Certificate Number CGA - 31199
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QUALIFICATIONS OF JEFF W. WINDLE, MAI Certified General Real Estate Appraiser No. 30808
FORMAL EDUCATION:
Graduated, Arizona State University, 1985, Bachelor of Science, College of Business, Finance
Department. Class work included:
REA 331: Real Estate Finance, A.S.U. Tempe, AZ
REA 251: Real Estate Theory, A.S.U. Tempe, AZ
FIN 361: Capital Budgeting & Cashflow Analysis, A.S.U. Tempe, AZ
QBA 221: Statistical Analysis, A.S.U. Tempe, AZ
QBA 222: Quantitative Information Systems, A.S.U. Tempe, AZ
PROFESSIONAL EDUCATION:
Arizona School of Real Estate: Leasehold Interests, AZ Water Laws
Appraisal Institute: Dynamic of Office Building Valuation
Arizona School of Real Estate: Fundamentals of R E Exchange, Fed.Fair Housing & the ADA
Appraisal Institute: Course 11510 Advanced Income Capitalization
Appraisal Institute: Course 11520 Highest & Best Use and Market Analysis
Appraisal Institute: Course 11540 Report Writing and Valuation Analysis
Appraisal Institute: Course I410 Standards of Prof. Practice, Part A (USPAP)
Appraisal Institute: Course 11530 Advanced Sales Comparison & Cost
Approaches
Appraisal Institute: Course 11550 Advanced Applications
Appraisal Institute: Condemnation Appraising Principles & Applications (9/09)
Appraisal Institute: USPAP current
Appraisal Institute: Course 833 Fundamentals of Separating Real Property,
Personal Property and Intangible Business Assets
PROFESSIONAL AFFILIATIONS:
MAI designated member of the Appraisal Institute. "The Appraisal Institute conducts a voluntary
program of continuing education for its designated members. MAIs and SRAs who meet the
minimum standards of this program are awarded periodic educational certification. I
am certified under this program."
COURT TESTIMONY:
Qualified as an expert witness in the Superior Court of Maricopa County and the U.S. Bankruptcy
Court, State Land Department Board of Appeals.
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EXPERIENCE:
Commercial Real Estate Loan Administrator: Greyhound Financial Corp., 8/85 - 4/87
Commercial Real Estate Loan Officer: First Interstate Bank of Arizona, 4/87 - 12/89
Commercial Real Estate Loan Officer: Wells Fargo Realty Advisors, 12/89 - 9/90
Practicing Partner: Appraisal Technology, Inc., 9/90 - present
SCOPE OF WORK:
Assignments have included valuation and/or evaluation of:
Residential: Single and Multi-Family; Individual and Subdivisions
Commercial: Shopping Centers; Retail; Office and Restaurant
Industrial: Warehouse; Manufacturing; Distribution and Automotive
Special Purposes: Manufactured Home Communities; Medical Facilities; Recreational
Vehicle Facilities; Hotel/Motel/ Resort; Schools; etc.
Vacant: All types, including Agricultural Land.
Miscellaneous: Absorption and Highest and Best Use Studies; Partial Interest
Valuation; Consultation and Allocation of Purchase Price.
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QUALIFICATIONS OF ERIC ZACHARY SINAY
Certified General Real Estate Appraiser No. 31199
FORMAL EDUCATION:
Graduated from Arizona State University, May 1998, Bachelor of Science.
PROFESSIONAL EDUCATION:
Arizona School of Real Estate, Real Estate Valuation 101, Scottsdale, AZ, 1999
Arizona School of Real Estate, Real Estate Valuation 102, Scottsdale, AZ, 1999
Arizona School of Real Estate, Real Estate Valuation 103, Scottsdale, AZ, 2001
Arizona School of Real Estate, Real Estate Valuation 104, Part B, Scottsdale, AZ, 2001
Arizona School of Real Estate, Real Estate Valuation 104, Part A, Scottsdale, AZ, 2002
International Right of Way Association, Environmental Issues C-600, Tempe AZ, 2004
International Right of Way Association, The Appraisal of Partial Acquisitions C-401, San Diego, CA, 2004
International Right of Way Association, The Principles of Real Estate Law C-800, Las Vegas, NV, 2004
International Right of Way Association, The Principles of Real Estate Engineering C-900, Las Vegas, NV,
2004
McKissock, Construction Details & Trends, Continuing Online Education Course, 2008
McKissock, Cost Approach, Continuing Online Education Course, 2008
McKissock, Income Approach, Continuing Online Education Course, 2008
International Right of Way Association, Introduction to the Income Capitalization Approach, C-402, 2009
International Right of Way Association, Ethics and the Right of Way Profession C-103, 2009
McKissock, How to Analyze and Value Income Properties, 2009
McKissock, Land and Site Valuation, 2009
McKissock, Introduction to Expert Witness Testimony, 2009
International Right of Way Association, Easement Valuation C-403, 2009
McKissock, Evolution of Finance & The Mortgage Market, 2011
McKissock, Nuts and Bolts of Green Building, 2011
McKissock, Foundations in Sustainability: Greening the Real Estate and Appraisal Industry, 2011
Appraisal Institute, Business Practices and Ethics, 2013
Appraisal Institute, Advanced Income Capitalization, 2013
Appraisal Institute, General Appraiser Report Writing and Case Studies, 2013
Appraisal Institute, Quantitative Analysis, 2013
Appraisal Institute, Advanced Market Analysis and Highest and Best Use, 2013
Appraisal Institute, Advanced Concepts & Case Studies, 2014
McKissock, Appraisal of Self Storage Facilities 2018
McKissock, Appraisal of Land Subject to Ground Lease, 2018
McKissock, Essential Elements of Disclosures and Disclaimers, 2020
7-Hour Uniform Standards of Professional Appraisal Practice (USPAP) – Current
PROFESSIONAL AFFILIATIONS:
Appraisal Institute - MAI designated member. "The Appraisal Institute conducts a voluntary program of
continuing education for its designated members. MAIs and SRAs who meet the minimum standards of
this program are awarded periodic educational certification. I am certified under this program."
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International Right of Way Association, "The Right of Way (R/W) Certification is granted to IRWA
members who have achieved professional status through experience, education and examination in a single
right of way discipline.” I have been awarded the Right of Way Appraisal Certification (R/W-AC).
EXPERIENCE:
Independent Contract Appraiser, Appraisal Technology, Inc., April 1999-Present
SCOPE OF WORK:
Assignments have included the valuation of:
Residential: Single and multiple family properties.
Commercial: Retail shopping centers, offices, restaurants and hotels.
Industrial: Warehouse, manufacturing, distribution, automotive and self-storage.
Vacant Land: All types.
Right-of-Way: Total & partial acquisition
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Section 624. Commercial C-3 District--General Commercial.
A. Purpose. *15
The C-3 Commercial General District, is a district designed to provide for the intensive commercial
uses necessary to the proper development of the community.
B. Applicability. For all projects for which unexpired preliminary or final Development Services
Department site plan approval has been obtained prior to February 19, 2003, these standards shall not
apply. *15
C. District Restrictions. *15
Any lighting shall be placed so as to reflect the light away from adjacent residential districts. No
noise, odor or vibration shall be emitted so that it exceeds the general level of noise, odor or vibration
emitted by uses outside the site. Such comparison shall be made at the boundary of the site.
D. Permitted Uses. *15
All uses permitted in R1-6 if zoned commercial prior to January 5, 1994, and non-single-family
residential uses permitted in the R-3, R-4, R-5, C-l and C-2 districts, and in addition the following,
including the storage of all raw materials and finished products in connection herewith: *8 *10
1. Acoustical Material, Storage and Wholesale
2. Adult bookstore, adult novelty store, adult theatre, adult live entertainment, erotic dance or
performance studio, subject to the following conditions or limitations: *6 *9
a. None of the above listed uses may be located within one thousand (1,000) feet of the same type
use or any of the other uses listed above. This distance shall be measured from the exterior walls of
the buildings or portions thereof in which the businesses are conducted or proposed to be conducted.
b. None of the above listed uses may be located within five hundred (500) feet of a preschool,
kindergarten, elementary or secondary school or any of the following use districts: RE-43, RE-35,
RE-24, R1-18, R1-14, R1-10, R1-8, R1-6, R-2, R-3, R-3A, R-4, R-4A, R-5, S-1, PAD-1 through
PAD-15. This distance shall be measured from the exterior walls of the building or portion thereof in
which the adult business is conducted or proposed to be conducted. *5
c. These provisions shall not be construed as permitting any use or act which is otherwise prohibited
or made punishable by law.
d. Neither the Zoning Administrator nor the Board of Adjustment shall have the jurisdiction to
grant variances from these provisions.
e. Not withstanding any other provision of this ordinance, an adult bookstore, adult novelty store,
adult theatre, adult live entertainment establishment, or erotic dance or performance studio which is
a nonconforming use or which does not conform to the separation standards set forth in this section
shall not be converted to another of the above listed adult uses. An adult bookstore, adult novelty
store, adult theatre, adult live entertainment establishment, or erotic dance or performance studio
which is a nonconforming use or which does not conform to the separation standards set forth in this
section shall not be expanded beyond the floor area devoted to such adult use on the effective date of
this ordinance. *6 *9
3. Ammunition, commercial loading of small arms subject to the following limitations: +3
a. The quantities, arrangement, and distance requirements for the storage of propellant powder,
primers, and percussion caps shall be in accordance with the Fire Code. +3
b. A permit to load ammunition shall be obtained from the Fire Department. *3
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c. A use permit shall be obtained subject to the provisions of Section 307.
d. In addition to the requirements of subsections 1-3 above, the loading of specialty or custom
ammunition shall be subject to obtaining a use permit pursuant to the provisions of Section 307. +3
4. Amusement park or other outdoor recreation facility; and subject to a use permit, temporary
outdoor exhibition or production as provided in Section 637A.4; and, as an accessory use, subject to
a use permit, power driven miniature vehicle track, where miniature vehicles do not exceed five
horsepower engine.
5. Artificial Limbs, Manufacturing
6. Asbestos Products, Wholesale and Storage
7. Auctioneers' Auditorium, other than livestock
8. Automobile, Body and Fender Shops
9. Automobile Radiator Shops
10. Automobile Rental and Leasing
11. Bank Vault Storage
12. Battery Repair
13. Belting, Repairing
14. Beverages, Bottling
15. Blacksmiths
16. Bleach Blending
17. Boats, Custom Fabrication
18. Boilers, Retail Sales
19. Bottled or containerized fuel, storage, distribution, and retail sales subject to the following
limitations: *2
a. One container of a size not to exceed two thousand (2,000) gallons water capacity or an aggregate
total of twelve, 20 lb. (4.8 gallon propane) containers in racks that are mounted or anchored to the
ground or building. * 11 * 12
b. The container shall be mounted horizontally, or in the case of a rack of 20 lb. (4.8 gallon propane)
containers, the rack may be mounted vertically. *11 *12
c. The container shall be screened from view of adjacent public rights-of-way with a two-sided,
four (4) foot high masonry block wall. The bottom two (2) feet of the wall shall be ventilated in
accordance with the Fire Code. The wall shall be architecturally compatible with the buildings on the
site.
d. The container shall not be located closer than one hundred (100) feet to a residential property
line nor four hundred (400) feet to a school property line. *12
e. Review by the Fire Department and compliance with all pertinent requirements of the Phoenix
Fire Code, the National Fire Protection Standard No. 58 as required by the Fire Department, and other
codes and regulations. *11
f. Signage shall be limited to product identification on each 20 lb. (4.8 gallon propane) container
and to six (6) square feet of identification signs on the storage rack. Signage on the container and
screen wall shall be limited to that required by the Fire Code. *2 *11 *12
20. Bottles, Wholesale
21. Butter and Cheese, Manufacturing
22. Cabinet Makers
23. Camper Sales
24. Candy, Manufacturing
25. Canvas Goods, Fabrication
26. Carbide Sales and Distribution
27. Carbonic Gas Sales and Storage
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28. Carbonic Ice Bulk Sales and Distribution
29. Carpenters' Shops
30. Carpets and Rugs, Wholesale, Warehouse and Manufacturing
31. Car Wash
32. Cigars, Manufacturing, Machine Rolled
33. Cleaning Compounds Storage
34. Clothing Manufacturing
35. Cold Storage, No Slaughtering
36. Concrete, Retail Sales upon compliance with the following conditions:
a. The securing of a use permit from the Zoning Administrator or the Board of Adjustment. In no
event shall either issue a use permit for more than two batch mixers.
b. Any mobile or stationary batch-mixer on site shall not exceed one cubic yard capacity.
37. Corsets and Brassieres, Manufacturing
38. Commercial Radio or Television Tower or Transmitting Station
39. Dairy Products Manufacturing
40. Dance Halls, subject to a use permit
41. Department Stores Warehouse
42. Desks, Manufacturing
43. Disinfectants, Storage and Wholesale
44. Drive-in Restaurant
45. Drive-in Theatre
46. Electrical Appliances, Wholesale
47. Electrical Contractors' Shops
48. Equipment, Rentals
49. Excelsior, Storage and Distribution, Bulk
50. Express Companies, Warehouses and Garage
51. Firewood, Storage
52. Fish, Wholesale
53. Floor Refinishing, Contractors' Shop
54. Food Processing, Wholesale
55. Food Products, Warehouse
56. Freight Depot
57. Freight Forwarders' Warehouses
58. Frozen Foods, Processing
59. Fruit and Vegetable Market, Wholesale
60. Furnaces, Cleaning and Repairing Shop
61. Furniture, Wholesale and Storage
62. Golf or Baseball Driving Range
63. Grocers, Wholesale and Warehouse
64. Hardware, Wholesale
65. Horseshoeing
66. Ice Cream, Manufacturing
67. Imported Goods, Warehouse
68. Ink, Compounding, Packaging, Storage
69. Insecticides, Storage and Distribution
70. Linoleum Storage
71. Lubricating Compounds, Storage
72. Lumber, Cabinet Shop
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73. Lumber
74. Lumber, Used and Wholesale
75. Machine Shops
76. Machine Tools, Storage
77. Machinery Rentals, other than industrial
78. Matches, Wholesale and Storage
79. Mattresses, Manufacturing
80. Meat, Storage and Wholesale
81. Meat and Fish Wholesale Market
82. Mexican Food Preparation, Wholesale
83. Milk Bottling Plant
84. Mining Machinery Supplies, Display and Retail Sales
85. Mobile Home Sales
86. Mobile vendors subject to the following conditions or limitations: +13
a. Mobile vendors or mobile food vendors shall not locate a mobile vending unit or mobile food
vending unit less than one thousand three hundred twenty feet (1,320'), measured in a straight line
from another mobile vending unit or mobile food vending unit on the same side of the street. The
measurement shall be made from a line drawn around the mobile vending unit or mobile food vending
unit with the line being at all points ten feet from the nearest point of the mobile vending unit or
mobile food vending unit. +13 *17
b. Notwithstanding the provisions of subsection a above, no more than two mobile vendors, mobile
food vendors or a combination of the two shall be permitted on the corner lots at any intersection. +13
*17
c. Mobile vendors and mobile food vendors shall operate only upon surfaces that comply with the
dustproofing and paving requirements for parking and maneuvering areas as set forth in Section
702.A.2.d. of the Zoning Ordinance. +13 *17
d. Mobile vendors and mobile food vendors shall not be located so as to obstruct parking spaces
required by this ordinance for the operation of any other use on the site. +13 *17
e. Mobile vendors and mobile food vendors must maintain on the site a minimum of three parking
spaces designated for their use. +13 *17
f. The use of signs by mobile vendors and mobile food vendors shall be governed by the sign
regulations contained in Section 705 of the Zoning Ordinance. +13 *17
g. Any mobile vendor and/or mobile food vendor located on a vacant lot shall be considered a use
and be subject to all of the district regulations relating to users, except that the perimeter landscaping
requirements of Section 624.E.4.d of the Zoning Ordinance shall not apply. +13 *15 *17
h. Notwithstanding the provisions of the subsection below (subsection i), a mobile vending unit or
mobile food vending unit located on a lot which has another use shall also be considered a use if the
mobile vending unit OR mobile food vending unit is located within or under any permanent structure.
Such use shall comply with all of the regulations for a use in the district, except that the perimeter
landscaping requirements of Section 624.E.4.d of the Zoning Ordinance shall not apply. For the
purpose of this section, "permanent structure" shall mean a structure that is built or constructed such
as an edifice, building, walls, benches, shade structure or any piece of work artificially built up or
composed of parts joined together in some definite manner, and permanently attached to the ground.
+13 *15 *17
i. If a mobile vendor or mobile food vendor is located on a lot which has another use, the mobile
vendor or mobile food vendor shall be considered an accessory use. +13 *17
j. No mobile vending unit or mobile food vending unit shall: +13 *17
1. Be placed within fifteen feet of any street right-of-way. +13
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2. Be placed within one hundred feet of the intersection of an on- or off-ramp of a freeway and the
street to which the ramp exists. +13
k. Exemptions. These provisions shall not apply to mobile vendors or mobile food vendors or their
respective vending units (1) located in a swap meet licensed pursuant to chapter 10 of the Phoenix
City Code; (2) used exclusively for the sale of seasonal items such as Christmas trees or pumpkins
that are sold prior to holidays or traditional observances such as Christmas or Halloween; (3) regulated
as a temporary use pursuant to Section 708.D. of the Zoning Ordinance; or (4) regulated pursuant to
Section 637.A.4 (Promotional events at shopping centers). +13 *17
l. Neither the Zoning Administrator nor the Board of Adjustment shall have the jurisdiction to grant
variances from the provisions of subsections (a), (b), (c), (d), (e), and (j)(1) and (2) above. +13
m. Any parcel upon which a mobile vendor or mobile food vendor use has been legally established
shall be considered to be a mobile vendor or mobile food vendor site for purposes of applying
subsections a and b above. In the event that the mobile vendor or mobile food vendor use ceases on
the site for a period of one hundred eighty consecutive days and is not legally reestablished by the
end of one-hundred-eighty-day period, the site shall no longer be considered a mobile vendor or
mobile food vendor site for the purpose of applying subsections a and b above. +13 *17
87. Monument Works, no outdoor sandblasting
88. Motor Freight Company Garages
89. Movers, Warehouses
90. Neighborhood Collection Center, subject to the following limitations:
a. A use permit shall be secured.
b. All loose materials shall be stored within an enclosed container or building.
c. The use shall be operated so as not to emit matter causing unpleasant odors that are perceptible
by the average person at or beyond any lot line of the lot containing the use.
d. If the permitted use is for a location where processing as defined will be in an open environment
and not in an enclosed building or container:
(1) The use shall be located no closer than seventy-five (75) feet to a public street.
(2) The use shall be located no closer than one hundred fifty (150) feet to a residential zoning
district.
(3) The use shall be screened by a six (6) foot high solid masonry wall.
(4) Any storage shall be no higher than six (6) feet plus one (1) foot in height for every additional
three (3) feet of setback from a property line.
e. No bay door shall face a residential zoning district if the use is located within one hundred fifty
(150) feet of such a district.
f. The average noise level, measured at the property line, shall not exceed 55 dB (ldn) or ambient
noise level in the immediate area whichever is greater when measured on an "A-weighted" sound
level meter.
g. Other restrictions regarding hours of operation and outdoor activities as the hearing body shall
deem appropriate. +1
91. Oil Burners, Service and Repair
92. Office Furniture, Storage and Warehouse
93. Paper Products, Wholesale and Storage
94. Pattern Shop
95. Perfumes, Compounding, Packaging, Storage
96. Pet Care Facility, subject to the following limitations: +14 *15
a. Animal housing units shall be constructed so as not to allow for direct, unaccompanied access
by animals to the outside areas of the buildings. +14
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b. Animals must be accompanied by a facility employee at all times when outside of the building.
All walks and exercise periods must take place on facility grounds. +14 *15
c. When located adjacent to a residential district, every building and every outdoor dog exercise
run shall be set back at least fifty feet from any lot line abutting such residential district. +14
d. A solid masonry wall or fence seven feet in height shall be constructed along the property line
in both the rear and side yards. +14
e. Solid waste shall be removed from outdoor exercise areas five hours at a minimum during periods
when these areas are in use. +14
f. The average noise level, measured at the property line, shall not exceed fifty-five dB (ldn) when
measured on an "A-weighted" sound level meter and according to the procedures of the environmental
protection agency. +14
97. Pharmaceutical Products, Compounding, Packaging, Storage *15
98. Plant Nursery *15
99. Plating Works, Precious Metals *15
100. Plumbers' Shops *15
101. Plumbing Fixtures and Supplies, Wholesale and Storage *15
102. Pony Rides *15
103. Potato Chip Manufacturing *15
104. Printers' Equipment and Supplies, Wholesale *15
105. Private Clubs and Lodges Qualifying by Law as a Non-Profit Entity *15
106. Produce (Garden) Wholesale *15
107. Produce, Warehouse *15
108. Quick Freeze Plant *15
109. Radio Equipment, Assembling *15
110. Refrigerators, Wholesale, Storage *15
111. Restaurant Equipment Service and Repair Shop *15
112. Roofing Material, Storage and Sales *15
113. School, Trade *15
114. Self-Service Storage Warehouses *15
a. All storage shall be within a closed building except that boats, trailers and motor vehicles may
be placed in outdoor storage areas which are separate from the buildings and screened from view from
adjacent streets and property by walls, fences or landscaping. Outdoor storage areas shall not exceed
ten percent (10%) of the gross site area and shall not count toward meeting parking requirements.
115. Sheet Metal Work, Custom Fabrication *15
116. Sheltered Workshops *15
117. Shirt Factory *15
118. Shooting Gallery *15
119. Sign Shops, Any Type *15
120. Skating Rinks *15
121. Soaps, Compounding, Packaging, Storage *15
122. Soda Water Manufacturing *15
123. Stoves and Ranges, Wholesale Storage *15
124. Termite Control Contractor Shops *15
125. Terrazzo Contractor Shops *15
126. Tire Repairing and Recapping *15
127. Toiletries, Compounding, Packaging, Storage *15
128. Toys, Fabrication *15
129. Trailer Rental *15
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130. Trailer Sales *15
131. Transfer Business *15
132. Travel Trailer Sales *15
133. Truck Freight Movers *15
134. Used and New Car Sales *15
135. Vegetable Market, Wholesale *15
136. Wallboard, Wholesale and Storage *15
137. Wine Bottling *15
138. Wholesale Produce Storage or Market, Commercial *15
139. Woodworking, Equipment, Wholesale *15
No use shall be considered an accessory use which is listed as a permitted or accessory use in any of
the following districts: A-1, A-2, S-1.
E. Yard, Height and Area Requirements.
To protect surrounding neighborhoods and preserve the public welfare, standards are herein
established for yard, height and area requirements to provide an appropriate transition between
commercial uses and adjoining neighborhoods. In recognition of the goals contained in the General
Plan for uses and intensities within core areas, greater heights and intensities are herein encouraged.
1. Any multiple family residential use shall conform to the yard, height, area and density
requirements set forth in Section 615 except as provided herein: *8
a. Where dwelling units do not occupy the ground floor, a front yard shall be maintained as provided
in Section 701.D.3 for property defined in Section 624.E.3. *8 *15
b. A request to exceed the yard, height, area or density requirements of Section 615 up to, but not
to exceed those of Section 618, may be granted by the City Council, after a recommendation is
received from the Planning Commission and in accordance with Section 506, upon finding that such
increase is not detrimental to adjacent property or the public welfare in general and that:
(1) The property is within an area of a village core designated on approved plans for such
development, or
(2) The property is adjacent to high density residential development of similar intensity and
character.
Requests to amend a previously approved application shall follow the amendment procedure set forth
in Section 506.
c. A site plan approved in accordance with Section 507 of this ordinance is required for all uses
approved pursuant to Section 624.E.l.b. *15
d. Neither the Zoning Administrator nor the Board of Adjustment shall have jurisdiction to vary
the provisions of Section 624.E.1. *15
e. Any residential use within the downtown redevelopment area, as defined in City Council
Resolution No. 15143, shall conform to the yard, height, area, and density requirements set forth in
Section 618. *15
2. Any single-family residential use shall conform to the following requirements: +8
a. Such development shall be permitted only if the property is designated as residential on the
General Plan Map. If this standard is satisfied, the remainder of this section shall apply. +8
b. The applicant shall submit in writing to the Zoning Administrator a declaration of the
development option (standard subdivision, average lot subdivision, conventional, or planned
residential development) and density proposed for the residential use. +8 *15
c. The Zoning Administrator shall determine the residential zoning district to which the proposed
single-family development is equivalent. The use shall satisfy the development standards contained
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in Sections 609 through 613 for the development option and density of the equivalent zoning district.
*8
d. Upon completion of development of a single-family residential use in accordance with this
section, the Planning Commission shall initiate an application for rezoning the site to the residential
zoning district appropriate for the site. +8
3. The following yard, height and area requirements shall apply to: 1) all structures located in a
core area as defined in the General Plan except that for purposes of this provision, the Central City
Village Core shall be defined as the area bounded by 7th Avenue, 7th Street, Roosevelt Street and
Madison Street; 2) structures located on property which abuts Central Avenue between Camelback
Road on the north and Harrison Street on the south; and 3) structures that have received rezoning
approval prior to June 15, 1988, and are subject to a City Council stipulated site plan in accordance
with Section 506.B and with exceptions as provided for residential uses in Section 624.E.1. *7 *8 *15
a. A front yard is required as provided in Section 701.D.3.
b. Side yards are required as provided in Section 701.D.3.
c. Pumps dispensing liquid fuel at automobile service stations shall maintain such setbacks as
required in Section 622.D (No. 141), Section 701.A.7, and as required by the City of Phoenix Fire
Code. *2 *15
e. Where a district boundary abuts a residential district (RE-43 through R1-6 and any PAD) there
shall be provided the following:
(1) No building or structure shall be placed within thirty (30) feet of the residential district.
(2) A six (6) foot solid fence or wall shall be erected on said district boundary or the fence or wall
shall be erected adjacent to a landscaped area which shall be installed with an appropriate watering
system and be maintained between the wall and the district boundary.
f. Where a district is located on a street in which more than fifty percent (50%) of the lineal frontage
of both sides of the street for the block in which the district is located is zoned residential (RE-43
through R1-6 and any PAD) there shall be provided the following:
(1) Any open use, visible from the abutting street, shall be screened with a six (6) foot solid fence
or wall.
(2) Landscaping and setbacks shall be as provided by Sections 701.D.3 and 703.B of this ordinance.
g. A maximum building height of four (4) stories not to exceed fifty-six (56) feet shall be permitted.
*15
4. For any other non-residential uses permitted in this district, except as provided in Sections
624.E.3 and 624.E.5, the following requirements shall apply: *8 *15
a. A maximum building height of two (2) stories not to exceed thirty (30) feet shall be permitted.
b. Request to exceed the above height limits may be granted by the City Council for developments
up to four (4) stories not to exceed fifty-six (56) feet upon recommendation from the Planning
Commission or the Zoning Hearing Officer finding that such additional height is not detrimental to
adjacent property or the public welfare in general.
c. (1) Canal Right-of-Way Setbacks: An average twenty (20) foot setback shall be provided for
sites containing structures not exceeding two (2) stories or thirty (30) feet in height with a minimum
fifteen (15) foot setback permitted for up to fifty percent (50%) of the structure (including
projections). An average thirty (30) foot setback shall be provided for sites containing any structure
exceeding two (2) stories or thirty (30) feet in height with a minimum twenty (20) foot setback
permitted for up to fifty percent (50%) of the structure (including projections). Landscaping equal to
the required average setback times the canal frontage (exclusive of necessary driveways or canal right-
of-way access ways) shall be provided adjacent to the canal right-of-way property line and shall not
be less than fifteen (15) feet in depth except as provided in (2) below, *10 *15
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(2) If landscaping is placed in the canal right-of-way adjacent to the development, the landscape
setback may be reduced by an amount equal to the depth of the right-of-way landscaping. If the canal
bank right-of-way is too narrow to accommodate the full landscape setback, that setback requirement
may be reduced provided that a minimum ten (10) foot wide landscape setback is placed adjacent to
the canal bank right-of-way line. If no landscaping is provided on the canal bank right-of-way due to
physical constraints, then a minimum fifteen (15) foot wide landscape setback shall be provided on
site adjacent to the canal bank right-of-way. +10
d. Except as provided in Section 622.E.4.f. the following building setbacks (excluding canal right-
of-way setbacks) shall apply: *15 *18
TABLE INSET:
BUILDING SETBACKS
Adjacent to Streets
For structures not exceeding two stories
or 30'
Average 25'
Minimum 20' permitted for up to 50% of structure, including projections
For structures exceeding two stories or
30'
Average 30'
Not adjacent to Streets
When Adjacent Zoning is:
Maximum building
height
S-1, S-2, RE-43 to R-3
(*)
R-3A, R-4, R-5, R-4A
(*)
CP, Ind. Pk., PSC, RSC, MUA, DC, GC,
RH, UR
C-1, C-2, C-3 A-1, A-2, CP, Ind. Pk.,
P-1, P-2
1 story (or 15')
25'
10'
10'
0'
2 story (or 30')
50'
15'
10'
0'
3 story (or 42')
100'
30'
10'
0'
4 story (or 56')
150'
45'
10'
0'
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(*) An additional one foot setback shall be provided for every one foot of height above 30 feet. *15
*18
e. Landscaping requirements/materials, except as provided in 624.E.4.f: *15
TABLE INSET:
Streetscape
Landscaped Setback
Average 25' for structures not exceeding two stories or 30', minimum 20' permitted for up to 50% of the frontage. Average 30', for structures exceeding two stories or 30'
minimum 20' for up to 50% of the frontage.
Plant Type
Minimum Planting Size
Trees*
Min. 2-inch caliper (50% of required trees) Min. 3-inch caliper or multi-trunk tree (25% of required trees)
Min. 4-inch caliper or multi-trunk tree (25% of required trees)
Shrubs
Min. five (5) 5-gallon shrubs per tree
Parking Lot Area
Interior surface area (exclusive of perimeter
landscaping and all required setbacks)
Min. 10%
Landscaped planters
At ends of each row of parking & approximately every 110'
Landscaped planters**, single row of parking
Min. 120 sq. ft.***
Landscaped planters**, double row of parking
Min. 240 sq. ft.***
Additional parking lot landscaping
As needed to meet 10% minimum requirement, evenly distributed throughout the
entire parking lot. Min. interior dimension 5' (length and width).
Additional parking lot landscaping
As needed to meet 10% minimum requirement, evenly distributed throughout the
entire parking lot. Min. interior dimension 5' (length and width).
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Plant Type
Minimum Planting Size
Trees
Min. 2-inch caliper (60% of required trees)
Min. 1-inch caliper (40% of required trees)
Shrubs
Min. five (5) 5-gallon shrubs per tree
Perimeter Property Lines (not adjacent to a street)
Property lines not adjacent to a street
Min. 10-foot landscaped setback
Property lines not adjacent to a street, but adjacent to property zoned C-1 C-2, C-3, A-1, A-2, Commerce
Park
None
Plant Type
Minimum Planting Size
Trees*
Min. 2-inch caliper (60% of required trees)
Min. 1-inch caliper (40% of required trees)
Shrubs
Min. five (5) 5-gallon shrubs per tree
Adjacent to a Building
Building facades within 100' of the public right-of-way or adjacent to public entries to the building (excluding
alleys)**** *18
Min. 25% of the exterior wall length shall be treated with either a landscaped planter a
min. five (5) feet in width or an arcade or equivalent feature.
Plant Type
Minimum Planting Size
Trees*
Min. 2-inch caliper (60% of required trees)
Min. 1-inch caliper (40% of required trees)
Shrubs
Min. five (5) 5-gallon shrubs per tree
* 20 feet on center or equivalent groupings.
** Measured from inside face of curb to inside face of curb.
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*** Not to exceed the length of a standard City of Phoenix parking stall. Modifications to the square
footage may be approved by Development Services Department if the overall intent of the standard
is being met. *18
**** Or as approved by the Development Services Department. *18
f. For new commercial and office development on parcels of five acres or less which are not located
in commercial developments with shared access and parking that are adjacent to pre-existing
structures that have less than a 25-foot front building setback: *19
(1) The twenty-five (25) foot minimum building and landscaped setback adjacent to a street for
buildings less than two (2) stories or thirty (30) feet in height shall be reduced to the minimum setback
established by the average frontage of existing buildings on a block not to exceed three hundred feet
on any side of the subject property. The reduced building setback shall not conflict with visibility
requirements. *18 *19
(2) A minimum of five (5) feet landscaping, canopy/shade structure, or combination thereof shall
be provided adjacent to the street frontage. *19
(3) At least one (1) identifiable public entrance directly accessible within fifty (50) feet adjacent to
the street frontage shall be provided. *19
(4) A minimum of 50% of the area of the front building facade shall be composed of windows,
shadow boxes, artwork or comparable architectural feature. The area to be counted toward the 50%
shall begin no higher than 12 feet above finished floor. This computation will exclude entrances to
parking and loading areas. *19
(5) The Zoning Administrator or Board of Adjustment may issue a use permit in accordance with
the provisions of Section 307 to modify: *19
(a) The requirements for structure setback and number or location of public entrances directly
adjacent to the street frontage may be modified by up to fifty percent (50%) when: *19
1. The modification furthers the intent of this section through the provision of alternative design
features that enhance the urban character of the pre-existing structures on the subject block, or *19
2. Due to a small or irregular lot size or configuration, reasonable compliance with the standards
of this Section is precluded or impractical. *19
(b) The requirements involving the area of the building facade that must be composed of windows,
shadow boxes, artwork, or other architectural features, and the location of said features, may be
modified by up to twenty-five percent (25%) when: *19
1. The modification furthers the intent of this Section through the provision of alternative design
features that enhance the urban character of the pre-existing structures on the subject block, or *19
2. Due to a small or irregular lot size or configuration, reasonable compliance with the standards
of this Section is precluded or impractical. *19
g. Accessory Uses: No accessory uses except for site ingress and egress, and public transportation
related pedestrian amenities shall be provided within any required perimeter landscaped setback. *15
Surface and above grade public utilities may be permitted within the required perimeter landscaped
setback subject to a use permit as approved by the Zoning Administrator or Board of Adjustment.
h. Lot Coverage: Lot coverage shall not exceed 50 percent (50%) of the net lot area exclusive of
the first six (6) feet of roof overhang, open carports, covered patios or covered walkways. *15
i. Site Access: Access to a site containing any structure exceeding two (2) stories or (30) feet in
height shall only be from an arterial or collector street as defined on the street classification map. *12
*15
j. Site Plans: A site plan approved in accordance with Section 507 is required for sites containing
any structure exceeding two (2) stories or thirty (30) feet in height. *15
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k. Neither the Board of Adjustment nor the Zoning Administrator shall have the jurisdiction to vary
the height provision of this Section. *15
l. The Zoning Administrator or Board of Adjustment may issue a use permit to modify lot coverage,
landscape or structure setback requirements up to twenty-five percent (25%) of the established
setback for one (1) and two (2) story structures when: *15
(1) The proposed structure or use would occupy a lot which had been developed and used prior to
June 15, 1988, and
(2) Due to the lot size or configuration, reasonable compliance with the standards of this Section is
precluded, and
(3) It is demonstrated that the proposed structure and use furthers the intent of this Section through
the provisions of alternative measures such as enhanced landscaping, screening walls, etc. which
exceed the minimum standards as contained herein.
m. Walls and Screening: Outdoor storage shall be screened with a solid wall/fence or combination
wall/fence and landscaping. Such storage shall be no higher than twelve (12) feet. +15
5. Any Large Scale Commercial Retail development shall conform to the following requirements:
+15
a. Applicability: For all Large Scale Commercial Retail development for which unexpired
preliminary or final Development Services Department site plan approval has been obtained prior to
February 19, 2003, these standards shall not apply. +15
Building Setbacks
From all property lines
Minimum 60-feet
Building Height
Within 60 feet of property lines
Max. 35 feet
Greater than 60 feet
See Section 624.E.4.d
Landscape Streetscape
Setback
Average 30-foot setback, minimum 25-foot setback permitted for up to 50% of the frontage.****
+18
Plant Type
Minimum Planting Size
Trees*
Min. 2-inch caliper (50% of required trees) Min. 3-inch caliper or multi-trunk tree (25% of required trees)
Min. 4-inch caliper or multi-trunk tree (25% of required trees)
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Shrubs
Min. five (5) 5-gallon shrubs per tree
Parking Lot Area
Interior surface area (exclusive of
perimeter landscaping and all setbacks)
Min. 10%
Landscaped planters
At ends of each row of parking and approx. every 110'
Landscaped planters**, single row of
parking
Min. 150 sq. ft.***
Landscaped planters**, double row of
parking
Min. 300 sq. ft.***
Landscaping adjacent to pedestrian
walkways
See b.(1) and b.(2) below
Additional parking lot landscaping*
As needed to meet 10% minimum requirement, addl. landscaping to be evenly distributed throughout the entire parking area. Min. interior dimension five (5) feet (length and width). Min. rate of one (1) for every six 6 parking spaces, evenly distributed throughout the entire parking
area. *19
Plant Type
Minimum Planting Size
Trees
Min. one 2-inch caliper per planter**** +18
Shrubs
Min. five (5) 5-gallon shrubs per planter
Perimeter Property Lines (not adjacent to a street)
Property lines adjacent to an existing residential use or residential zoning
district
Min. 15-foot landscaped setback
All other perimeter property lines
Min. 10-foot landscaped setback
Property lines not adjacent to a street, but adjacent to property zoned C-2, C-3, A-1,
A-2, Commerce Park
None
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Adjacent to a Building
Buildings that face a public street
See c.(1) and c.(2) below
20 feet on center or equivalent groupings.
** Measured from inside face of curb to inside face of curb. *18
*** Not to exceed the length of a standard City of Phoenix parking stall. Modifications to the square
footage may be approved by Development Service Department if the overall intent of the standard is
being met.
**** Or as approved by the Development Services Department.
**** Standard is required for entire center in which large scale commercial retail development is
located. +18
b. For landscaping adjacent to pedestrian walkways in parking lot, provide either: +15
(1) Minimum 15-foot wide combination sidewalk/landscaped planter along the walkway as
approved by Development Services Department. Where planters are adjacent to head-in parking, they
shall be a minimum 7.5 feet wide. At installation, the landscape palette shall contain a mixed maturity
consisting of 60% trees with minimum 2-inch caliper, 40% with minimum 1 inch caliper, or +15
(2) An equivalent shade structure as approved by the Development Services Department. +15
c. Buildings that face a public street shall provide either: +15
(1) A minimum 15-foot combination sidewalk/landscaped planter at grade level adjacent to the
building. The sum total of the landscaping shall be a minimum one-third ( 1/3) the length of the
building facade and a minimum five (5) foot wide. Landscaping shall include minimum 2-inch caliper
size trees placed 20 feet on center or in equivalent groupings with 5-gallon shrubs per tree, or +15
(2) An arcade or equivalent feature, as approved by the Development Services Department. +15
d. Access: +15
(1) The development shall have direct site access as follows: +15
(a) To a freeway frontage road, or +15
(b) To one arterial road, or +15
(c) To a collector road. +15
(2) Except in a Village Core, access from a minor collector street where single-family residential
zoning or uses are located within one-quarter (1/4) mile of the subject property shall be subject to a
use permit in accordance with the provisions of Section 307. +15
(3) No access is permitted from a local street. +15
e. Loading standards: +15
(1) Hours of operation for developments within 300 feet of a residential district: +15
(a) Loading permitted between the hours of 6:00 a.m. and 10:00 p.m. Any expansion of the above
mentioned hours are subject to obtaining a use permit in accordance with Section 307. +15
(2) Provide designated tractor-trailer stacking area that is not any closer than 60 feet to a
residentially zoned property. +15 *16
(3) Loading areas/docks shall not be closer than 60 feet to a residentially zoned district. +15
(4) Loading docks closer than 100 feet to a residential zoning district shall be screened with a solid
masonry wall at a height determined by the Development Services Department to completely screen
loading areas and delivery vehicles. +15 *16
f. Standards for permanent outdoor garden sales (garden/outdoor living center): +16 *19
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(1) Permanent outdoor sales areas are limited to a maximum of 35,000 gross square feet. +16 *19
(2) The Zoning Administrator or Board of Adjustment may issue a use permit in accordance with
the provisions of Section 307 to increase the outdoor sales area from 35,000 gross square feet to a
maximum area of 50,000 gross square feet when: +16 *19
(A) It is demonstrated that the proposed modification is not detrimental to adjacent property or the
public welfare in general, or +16 *19
(B) Due to a small or irregular lot size or configuration, reasonable compliance with the standards
of this section is precluded or impractical. +16 *19
(3) Products sold outdoors shall be screened by a minimum eight (8) foot high solid masonry wall
or screened so as not to be visible from property line or street. Wall shall have a decorative finish that
is complimentary to the primary building walls for all required screening. +16 *19
(4) Decorative screen material(s) may be used only in garden centers but shall not exceed 50% of
the screened area. Decorative screening may include one or more of the following: wire, fabric, screen
material, landscaping and/or alternative materials, as approved by the Development Services
Department. +16 *19
(5) Chain link fencing is not permitted. +16 *19
g. Temporary outdoor display and sales: *16 *19
(1) Designate the area reserved for outdoor display and sales at front of building on site plan and
delineate decoratively on the property. *16 *19
(2) Temporary outside display and sales areas are subject to the following standards: *16 *19
(A) Maximum 500 square feet of display area; *16 *19
(B) No display and/or sales is permitted within 25 linear feet of either side of the building
entrance(s)/exit(s); *16 *19
(C) The Zoning Administrator or Board of Adjustment may issue a use permit in accordance with
the provisions of Section 307 to modify the allowable square footage and/or proximity of the display
area to the building entrances/exits by fifty percent (50%) when it is clearly demonstrated that the
proposed modification is not detrimental to adjacent property and the public welfare in general. *16
*19
h. Temporary outdoor storage containers: +16 *19
(1) Designate an area for screened temporary storage containers at rear or sides of property, if
provided. +16 *19
(2) Temporary storage container area shall be screened by a minimum eight (8) foot high solid
masonry wall or screened so as not to be visible from property line or street. +16 *19
(3) A use permit must be obtained in accordance with the provisions of Section 307 in order to
install/place temporary storage container(s). +16 *19
F. Outdoor Storage, Push Carts. +15
1. Push carts made available for use by the public may be stored in temporary cart corrals located
within the parking area of the retail center during normal business hours. Push carts must be stored
inside the building or in an outdoor enclosure that is fully screened so as not to be visible from the
property line or street after normal business hours or when not being used on a daily basis. +15
Date of Addition/Revision/Deletion - Section 624
+1 Addition on 11-28-1990 by Ordinance No. G-3378
+2 Addition on 7-3-1991 by Ordinance No. G-3447
*2 Revision on 7-3-1991 by Ordinance No. G-3447
+3 Addition on 9-18-1991 by Ordinance No. G-3461
*4 Revision on 12-18-1991 by Ordinance No. G-3483
*5 Revision on 1-22-1992 by Ordinance No. G-3494
*6 Revision on 11-18-1992 by Ordinance No. G-3604
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+6 Addition on 11-18-1992 by Ordinance No. G-3604
*7 Revision on 2-17-1993 by Ordinance No. G-3621
+8 Addition on 1-5-1994 by Ordinance No. G-3720
*8 Revision on 1-5-1994 by Ordinance No. G-3720
*9 Revision on 2-2-1994 by Ordinance No. G-3731
+10 Addition on 7-2-1997 by Ordinance No. G-4041
*10 Revision on 7-2-1997 by Ordinance No. G-4041
*11 Revision on 11-19-1997 by Ordinance No. G-4058
*12 Revision on 7-1-1998 by Ordinance No. G-4109
+13 Addition on 10-4-2000 by Ordinance No. G-4298 eff. 2-1-2001
+14 Addition on 6-27-2001 by Ordinance No. G-4366, eff. 7-27-2001
+15 Addition on 2-19-2003 by Ordinance No. G-4498, eff. 2-19-2003
+16 Addition on 6-4-2003 by Ordinance No. G-4515, eff. 6-4-2003
*16 Revision on 6-4-2003 by Ordinance G-4515, eff. 6-4-2003
*17 Revision on 6-25-2003 by Ordinance No. G-4526, eff. 7-25-2003
+18 Addition on 7-2-2003 by Ordinance No. G-4532, eff. 7-2-2003
*18 Revision on 7-2-2003 by Ordinance No. G-4532, eff. 7-2-2003
*19 Revision on 12-17-2003 by Ordinance No. G-4566, eff. 12-17-2003
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Section 627. A-1 Light Industrial District.
A. Purpose. *12
The A-l, Light Industrial District, is a district of Industrial uses designed to serve the needs of the
community for industrial activity not offensive to nearby commercial and residential uses.
B. Applicability. +12
For all projects for which unexpired preliminary or final Development Services Department site plan
approval has been obtained prior to February 19, 2003, these standards shall not apply.
C. District Restrictions. *12
Unless otherwise specifically provided in this Section, the following restrictions apply to this district:
1. Residential use is permitted subject to a use permit; except that one dwelling unit, which may be
a mobile home, may be maintained as an accessory use to an industrial or agricultural use for housing
a watchman or caretaker employed on the premises.
2. No use shall be considered an accessory use which is listed as a permitted or accessory use in
the A-2 or S-2 districts.
D. Permitted Uses. *12
1. Residential uses subject to a use permit. The use permit requirement shall not apply to shelters
and dormitories intended to provide temporary shelter if such uses are located on a lot or parcel which
is at least thirteen hundred twenty (1,320) feet from a residential district. *3
2. All other uses permitted in RE-24, R-3, R-4, R-5, C-l, C-2 and C-3 districts and, in addition, the
following:
3. Agricultural Implements Repair and Service
4. Agricultural Tillage, Contractors
5. Air Conditioning Equipment, Fabrication
6. Aircraft Fabrication and Assembly
7. Aircraft Sales and Repair
8. Aircraft Storage, Including Hangar Facilities
9. Ammunition, commercial loading of small arms subject to the following limitations +2
a. The quantities, arrangement, and distance requirements for the storage of
propellant powder, primers, and percussion caps shall be in accordance with the
Fire Code. +2
b. A permit to load ammunition shall be obtained from the Fire Department. +2
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c. In
addition to the requirements of subsections 1 and 2 above, the loading of
specialty or custom ammunition shall be subject to obtaining a use permit
pursuant to the provision of Section 307. +2
10. Animal Boarding, Breeding and Hospitals
11. Auctioneers
12. Automobiles: Parts and Supplies (used); Salvage; Storage-Dead (warehouse)
13. Belting, Manufacturing
14. Boat, Manufacturing
15. Boilers, Repairing
16. Boxes, Sales and Manufacturing
17. Breweries
18 Brick Storage
19. Brooms, Mtg.
20. Brushes, Manufacturing
21. Building Contractors: Equipment and Material; Storage
22. Building Materials, Wholesale and Storage
23. Bus Line Depots with repair and light maintenance, including washing facilities +6
24. Bus Line Shops, Garage Repair
25. Butane Distributors (subject to approval by Fire Prevention Supervisor)
26. Button Manufacturing, Metal, Plastics
27. Candle, Manufacturing
28. Canvas, Manufacturing
29. Carbonic Ice, Manufacturing
30. Caskets, Manufacturing
31. Cat, Dog and Large Animal Hospital
32. Cement Products, Manufacturing (pipe, blocks, etc.)
33. Cement Storage
34. Cesspool Builders and Service: Equipment Yard
35. Chocolate and Coca Products, Manufacturing
36. Cigarette Manufacturing
37. Circuses and Carnivals
38. Coffee Roasting
39. Concrete Contractors, Storage Yards
40. Concrete Products, Manufacturing
41. Concrete Products, Storage
42. Contractors Equipment and Supplies, Storage
43. Cranes, Storage Yard
44. Crematorium +4
45. Crockery, Manufacturing
46. Crop Dusting Equipment Yards
47. Day Labor Hiring and Transportation Centers +3
48. Decoration, Workshop and Equipment Yard
49. Diesel Engines Service, Equipment and Supplies (not manufacturing)
50. Display Designers and Builders' Shops
51. Distillers, Distribution, Warehouse
52. Doors, Metal, Manufacturing
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53. Doors, Sash and Trim, Wood, Manufacturing
54. Drilling Company Equipment Yards
55. Drugs, Manufacturing
56. Electric Light and Power Companies, Storage
57. Electric Plating
58. Electrical Appliances, Manufacturing
59. Excelsior Manufacturing
60. Exterminating and Fumigating Warehouse
61. Farm Implements and Machinery Assembly
62. Feed and Seed, Wholesale and Storage
63. Fences, Metal Fabrication, Mfg;
64. Fences, Metal, Wholesale and Storage
65. Fertilizers, Processed, Storage Only
66. Flour and Grain Storage and Elevators
67. Freight Yards
68. Fruit and Vegetable Juice, Processing
69. Fruits and Vegetables, Processing
70. Fuel Distributing Station, Gasoline (bulk plant)
71. Furniture Manufacturing, Metal, Wood
72. Garment Factory
73. Gasoline, Bulk Storage Tanks
74. Grain Elevator
75. Hay and Straw, Sales, Storage (subject to approval by Fire Prevention Supervisor)
76. Heating and Ventilating Equip., Storage
77. Hotel Equipment, Assembly and Custom Fabrication
78. House Movers, Equipment Storage Yards
79. House Wreckers' Yards
80. Ice, Manufacturing
81. Insulation, Contractors' Equipment Yards
82. Insulation Materials, Storage and Wholesale
83. Iron, Custom Decorative Wrought Iron Shops
84. Jobbers, Bulk Materials, (sand, gravel, cotton seed, etc.)
85. Landscape Contractors
86. Large Animal, Dog and Cat Hospitals
87. Livestock Supplies, Storage and Wholesale
88. Machinery Used, Storage
89. Massage Establishments as a Primary Use +3
90. Meat Packing and Smoking (no slaughtering except rabbits and poultry)
91. Microwave antennae; commercial radio, television or telephone microwave relay facility;
commercial radio or television tower or broadcast antennae; two-way mobile communication
antennae; and wireless communication monopoles and related facilities. No use shall exceed a
height of one hundred (100) feet as measured above the natural grade at the base of the
communication facility, unless in accordance with the provisions of Section 622.D.167.g., or
fifteen (15) feet above the height of a building if roof mounted, whichever is greater, and shall
be setback a minimum of three hundred (300) feet from an arterial street as identified on the
street classification map or a property line that abuts land zoned RE-43, RE-35, RE-24, R1-18,
R1-14, R1-10, R1-8, R1-6, R-2, R-3, S-1 or PAD 1 through PAD 13 or used for single family
residential dwellings. *7 *10 *12
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92. Millwork (woodworking) Manufacturing
93. Mining Machinery, Wholesale Storage
94. Motor Freight Co., Warehouses
95. Motor Repairing and Rewinding, Transformers, Generators, Heavy Duty
96. Neighborhood Collection Center, subject to the following limitations:
a. All loose materials shall be stored within an enclosed container or building.
b. No bay door shall face a residential zoning district if the use is located within one
hundred fifty (150) feet of such a district. +1
97. Notions, Manufacturing and Wholesale
98. Office Furniture, Manufacturing
99. Oil, Fuel, Bulk Storage (subject to approval by Fire Prevention Supervisor)
100. Ornamental Metal Work, Custom Hand, Fabrication
101. Paint and Varnish, Bulk Storage, Warehouse
102. Paving Contractors' Equipment Storage
103. Paving Materials Storage Yard
104. Petroleum Products, Packaging and Storage
105. Pickled Products, Manufacturing
106. Pipe, Concrete, Manufacturing
107. Pipe, Concrete, Storage
108. Pipe, Metal, Storage
109. Pipe, Used, Storage and Sales
110. Pipe, Fittings, Storage and Wholesale
111. Planing Mills
112. Plaster, Wholesale and Storage
113. Plasterers, Contractors' Yards
114. Plastic and Plastic Products Manufacturing
115. Plating and Polishing Shops
116. Poultry Slaughtering
117. Poultry Supplies Wholesale and Storage
118. Produce Packing Plants
119. Public Utility Plants
120. Pumps, Repairing and Rental
121. Rabbit Slaughtering
122. Recycling Center, subject to the following limitations:
a. Processing may include baling of recyclable materials but not basic processing or
compounding to reform the materials into a usable state and shall not include
shredding of automobile metals or other uses of similar intensity.
b. All loose materials shall be stored within an enclosed container or building.
c. No bay door shall face a residential zoning district if the use is located within one
hundred fifty (150) feet of such a district. +1
123. Religious Missions, including charity dining halls and similar activities either enclosed or
open +3
124. Road Building Equipment, Storage Yard
125. Salvation Army Welfare Activities +3
126. Scaffolds, Equipment Storage
127. Scales, Commercial Weighing
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128. Screens, Doors and Windows, Manufacturing
129. Septic Tanks, Contractors, Construction
130. Sewer Pipe, Manufacturing, Concrete
131. Sewer Pipe, Storage
132. Soaps, Detergent Bleach Manufacturing
133. Spraying Supplies, Equipment Yard
134. Storage Warehouse
135. Storage Yards, Bulk Material
136. Storage Yards, Equipment
137. Tattoo Shops *3
138. Tile Manufacturing Decorative
139. Tile Manufacturing, Structural
140. Tools and Hardware, Manufacturing
141. Trailers, Assembly and Manufacturing
142. Water Based or Water Emulsion Type Paint Only, Manufacturing
143. Welding, Equipment and Supplies storage
144. Welding Shop
145. Well Drilling, Equipment Yard
146. Wood Products, Manufacturing Bulk
147. Wrecking Contractors' Yards
E. District Regulations. *12
Any use established or conducted within this district shall comply with the following standards:
1. Smoke, gas and odor emissions shall comply with Regulation III of the Maricopa County
Air Pollution Control rules and regulations.
2. The disposal of all waste materials shall comply with Title 9, Chapter 8, Articles 18 and
4 of the Hazardous Waste Regulations as by the Arizona Health Department.
3. The average noise level, measured at the property line, shall not exceed 55 dB (1 dn)
when measured on an "A-weighted" sound level meter and according to the procedures
of the Environmental Protection Agency.
4. Explosive or hazardous processes: Certification shall be provided by the Phoenix Fire
Department Prevention Bureau that all manufacturing, storage and waste processes on
the site shall meet safety and environmental standards as administered by the Bureau.
5. All direct sources of illumination, luminaries, shall be shielded so as not to be visible
from adjacent residentially zoned property.
F. Site Standards. *12
Except as provided in 627.F.3, the following standards shall apply. *12
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1. No individual site shall be sold or leased in the Industrial District if such site is not of
sufficient size so that it may be developed in accordance with the requirements of this
Section.
2. The use of any lot in this district shall comply with the following standards:
a. Building Height: Fifty-six (56) foot maximum height; up to eighty (80) feet
allowable with use permit with a specific plan of development. Requests to
exceed this limit for a warehouse up to a maximum height of one hundred ten
(110) feet may be granted by the City Council upon recommendation from the
Planning Commission in accordance with the standards and procedures of Section
506 and upon a finding that such additional height is not detrimental to adjacent
property or the public welfare in general. *5
b. Yard Requirements:
(1) Section 701.D.3 shall apply to yards on an arterial or collector street,
adjacent to a canal right-of-way, and when any yard on a public street is
on a block where either side or the street contains residential zoning. If
landscaping is placed in the canal right-of-way adjacent to the
development, the landscape setback may be reduced by an amount equal
to the depth of the right-of-way landscaping. If the canal bank right-of-
way is too narrow to accommodate the full landscape setback
requirement, that landscape setback requirement may be reduced
provided that a minimum ten (10) foot wide landscape setback is placed
adjacent to the canal bank right-of-way line. If no landscaping is provided
on the canal bank right-of-way due to physical constraints, then a
minimum fifteen (15) foot wide landscape setback shall be provided on
site adjacent to the canal bank right-of-way. *8 *9
(2) For side and rear yards there shall be thirty (30) foot setback where
adjacent to a residential district for closed buildings and one hundred fifty
(150) feet for open buildings or uses.
(3) Except for vehicle parking areas, no outdoor uses, outdoor storage, or
open buildings shall be located within seventy-five (75) feet of a public
street
c. Screening.
(1) Parking or Loading and Unloading Areas where within one hundred fifty
(150) feet of a residence district:
(a) For employee and customer parking a four (4) to six (6) foot wall
or landscaped berm is required. The wall may be three (3) feet
high if the parking area is located in a yard as specified in Section
627.D.2.b(l).
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(b) In areas used for truck parking, loading, or unloading, an eight
(8) foot high wall is required.
(2) Open Storage or Use.
(a) Any outside storage or use within one hundred (100) feet of a
residential district or any public street shall be screened by a six
(6) foot high solid fence or wall.
(b) Height of Open Storage.
(i) Open storage shall be no higher than six (6) feet plus one
(1) foot in height for every additional three (3) feet of
setback from a property line.
(ii) lf the storage area is within one hundred fifty (150) feet
of a public street, screening in the addition to the required
six (6) foot high solid fence or wall shall include fifteen
(15) gallon trees spaced no more than twenty-five (25) feet
apart and with an adequate watering system.
3. Any Large Scale Commercial Retail Use shall conform to the following requirements:
+12
a. Applicability: For all Large Scale Commercial Retail Uses for which unexpired
preliminary or final Development Services Department site plan approval has
been obtained prior to February 19, 2003, these standards shall not apply. +12
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Building Setbacks
From all property lines Minimum 60 feet
Building Height
Within 60 feet of property lines Max. 35 feet
Greater than 60 feet See Section 624.E.4.d
Landscape
Streetscape
Setback Average 30-foot setback, minimum 25-foot
setback permitted for up to 50% of the frontage.
Plant Type Minimum Planting Size
Trees* Min. 2-inch caliper (50% of required trees)
Min. 3-inch caliper or multi-trunk tree (25% of
required trees)
Min. 4-inch caliper or multi-trunk tree (25% of
required trees)
Shrubs Min. five (5) 5-gallon shrubs per tree
Parking Lot Area
Interior surface area (exclusive of perimeter
landscaping and all setbacks)
Min. 10%
Landscaped planters At ends of each row of parking & approx. every
110'
Landscaped planters**, single row of parking Min. 150 sq. ft.***
Landscaped planters**, double row of parking Min. 300 sq. ft.***
Landscaping adjacent to pedestrian walkways See b.(1) and b.(2) below
Additional parking lot landscaping* Min. interior dimension five (5) feet (length and
width). Min. rate of one (1) for every six 6 parking
spaces, evenly distributed throughout the entire
parking area.
Plant Type Minimum Planting Size
Trees Min. one 2-inch caliper per planter
Shrubs Min. five (5) 5-gallon shrubs per planter
Perimeter Property Lines (not adjacent to a street)
Property lines adjacent to an existing residential
use or residential zoning district
Min. 15-foot landscaped setback
All other perimeter property lines Min. 10-foot landscaped setback
Property lines not adjacent to a street, but adjacent
to property zoned C-2, C-3, A-1, A-2, Commerce
Park
None
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Adjacent to a Building
Buildings that face a public street See c.(1) and c.(2) below
* 20 feet on center or equivalent groupings.
** Not to exceed the length of a standard City of Phoenix parking stall.
*** Measured from inside face of curb to inside face of curb.
b. For landscaping adjacent to pedestrian walkways in parking lot, provide either:
+12
(1) Minimum 15-foot wide combination sidewalk/landscaped planter along
the walkway as approved by Development Services Department. Where
planters are adjacent to head-in parking, they shall be a minimum 7.5 feet
wide. At installation, the landscape palette shall contain a mixed maturity
consisting of 60% trees with minimum 2-inch caliper, 40% with
minimum 1 inch caliper, or +12
(2) An
equivalent shade structure as approved by the Development Services
Department. +12
c. Buildings that face a public street shall provide either: +12
(1) A minimum 15-foot combination sidewalk/landscaped planter at grade
level adjacent to the building. The sum total of the landscaping shall be a
minimum one-third ( 1/3) the length of the building facade and a
minimum five (5) foot wide. Landscaping shall include minimum 2-inch
caliper size trees placed 20 feet on center or in equivalent groupings with
5-gallon shrubs per tree, or +12
(2) An arcade or equivalent feature, as approved by the Development
Services Department. +12
d. Access: +12
(1) The development shall have direct site access as follows: +12
(a) To a freeway frontage road, or +12
(b) To one arterial road, or +12
(c) To a collector road. +12
(2) Except in a Village Core, access from a minor collector street where
single-family residential zoning or uses are located within one-quarter
(1/4) mile of the subject property shall be subject to a use permit in
accordance with the provisions of Section 307. +12
(3) No access is permitted from a local street. +12
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e. Loading Standards: +12
(1) Hours of operation for developments within 300 feet of a residential
district: +12
(a) Loading permitted between the hours of 6:00 a.m. and 10:00 p.m.
+12
(2) Provide designated tractor-trailer stacking area that is not any closer than
60 feet to a residentially zoned property. +12 *13
(3) Loading areas/docks shall not be closer than 60 feet to a residentially
zoned district. +12
(4) Loading docks closer than 100 feet to a residential zoning district shall
be screened with a solid masonry wall at a height determined by the
Development Services Department to completely screen loading areas
and delivery vehicles. + 12 *13
f. Standards for Permitted Outdoor Sales: +12 CAUTION: SEE EDITOR'S NOTE
IN NEXT SUBSECTION BELOW
(1) Outdoor sales area is limited to 10% of gross square footage of the
building. +12
(2) Outdoor sales area shall be screened by a minimum eight (8) foot high
solid masonry wall or screened so as not to be visible from property line
or street. Wall shall have a decorative finish that is complimentary to the
primary building walls for all required screening. +12
(3) Mesh fabric screen material may be used only in garden centers but shall
not exceed 50% of the screened area. Chain link fencing is not permitted.
+12
(4) Alternative decorative screening utilizing combinations of similar
building materials, wire or fabric screen material and/or landscaping. +12
Editor's note: The inclusion of subsection 627F.3.f below follows the requirements of Ordinance
No. G-4515. This leaves the ordinance with two subsection f's. It was the intent that the new
subsection f (below) was to replace the old subsection f (above). The City is aware of this error, and
will correct it in a subsequent ordinance.
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f. Standards for permanent outdoor garden sales (garden/outdoor living center): +13
(1) Permanent outdoor sales areas are limited to a maximum of 35,000 gross
square feet. +13
(2) The Zoning Administrator or Board Of Adjustment may issue a use
permit in accordance with the provisions of Section 307 to increase the
outdoor sales area from 35,000 gross square feet to a maximum area of
50,000 gross square feet when: +13
(A) It is demonstrated that the proposed modification is not
detrimental to adjacent property or the public welfare in general,
or +13
(B) Due to a small or irregular lot size or configuration, reasonable
compliance with the standards of this section is precluded or
impractical. +13
(3) Products sold outdoors shall be screened by a minimum eight (8) foot
high solid masonry wall or screened so as not to be visible from property
line or street. Wall shall have a decorative finish that is complimentary
to the primary building walls for all required screening. +13
(4) Decorative screen material(s) may be used only in garden centers but
shall not exceed 50% of the screened area. Decorative screening may
include one or more of the following: wire, fabric, screen material,
landscaping and/or alternative materials, as approved by the
Development Services Department. +13
(5) Chain link fencing is not permitted. +13
g. Temporary Outdoor Display and Sales. +12 *13 CAUTION: SEE EDITOR'S
NOTE IN NEXT SUBSECTION BELOW
(1) If provided, designate an area for screened temporary storage containers
at rear or sides of property. +12
(2) Temporary storage container area shall be screened by a minimum eight
(8) foot high solid masonry wall or screened so as not to be visible from
property line or street. Temporary storage container(s) must obtain a use
permit under the provisions for Section 307. +12
(3) Temporary outside display and sales areas are subject to the following
standards: +12
a. Maximum 500 square feet of display area; +12
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b. No display is permitted within 25 linear feet of either side of the
building entrance(s)/exit(s); +12
(c) The zoning administrator or board of adjustment may issue a use
permit in accordance with the provisions of section 307 to modify
the allowable square footage and/or proximity of the display area
to the building entrances/exits by fifty percent (50%) when it is
clearly demonstrated that the proposed modification is not
detrimental to adjacent property and the public welfare in general.
Editor's note: The inclusion of subsection 624F.3.g below follows the requirements of Ordinance
No. G-4515. This leaves the ordinance with two subsection g's. It was the intent that the new
subsection g (below) was to replace the old subsection g (above). The City is aware of this error, and
will correct it in a subsequent ordinance.
g. Temporary outdoor display and sales: *13
(5) Designate the area reserved for outdoor display and sales at front of
building on site plan and delineate decoratively on the property. *13
(6) Temporary outside display and sales areas are subject to the following
standards: *13
(A) Maximum 500 square feet of display area; *13
(B) No display and/or sales is permitted within 25 linear feet of either
side of the building entrance(s)/exit(s); *13
(C) The Zoning Administrator or Board Of Adjustment may issue a
use permit in accordance with the provisions of Section 307 to
modify the allowable square footage and/or proximity of the
display area to the building entrances/exits by fifty percent
(50%) when it is clearly demonstrated that the proposed
modification is not detrimental to adjacent property and the
public welfare in general. *13
h. Special requirements. +12
(1) Provide permanent internal posting of designated rezoning stipulations
in a viewable area for employees and management. Posting to be in
place prior to obtaining Certificate of Occupancy and shall be
maintained by the property owner or operator of the business. +12
G. Outdoor Storage, Push Carts. +12
1. Push carts made available for use by the public may be stored in temporary cart corrals
located within the parking area of the retail center during normal business hours. Push
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carts must be stored inside the building or in an outdoor enclosure that is fully screened
so as not to be visible from the property line or street after normal business hours or
when not being used on a long term basis. +12
H. Temporary Outdoor Storage Containers: +13
(1) Designate an area for screened temporary storage containers at rear or
sides of property, if provided. +13
(2) Temporary storage container area shall be screened by a minimum eight
(8) foot high solid masonry wall or screened so as not to be visible from
property line or street. +13
(3) A use permit must be obtained in accordance with the provisions OF
Section 307 in order to install/place temporary storage container(s). +13
Date of Addition/Revision/Deletion - Section 627
+1 Addition on 11-28-1990 by Ordinance No. G-3378
+2 Addition on 9-18-1991 by Ordinance No. G-3461
+3 Addition on 12-18-1991 by Ordinance No. G-3483
*3 Revision on 12-18-1991 by Ordinance No. G-3483
+4 Addition on 6-2-1993 by Ordinance No. G-3647
*5 Revision on 5-18-1994 by Ordinance No. G-3757
+6 Addition on 3-20-1996 by Ordinance No. G-3916
*7 Revision on 7-2-1997 by Ordinance No. G-4039
*8 Revision on 7-2-1997 by Ordinance No. G-4041
*9 Revision on 7-1-1998 by Ordinance No. G-4109
*10 Revision on 1-20-1999 by Ordinance No. G-4154
+11 Addition on 10-4-2000 by Ordinance No. G-4298, eff. 2-1-2001
+12 Addition on 2-19-2003 by Ordinance No. G-4498, eff. 2-19-2003
*12 Revision on 2-19-2003 by Ordinance No. G-4498, eff. 2-19-2003
+13 Addition on 6-4-2003 by Ordinance No. G-4515, eff. 6-4-2003
*13 Revision on 6-4-2003 by Ordinance No. G-4515, eff. 6-4-2003
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WHEN RECORDED RETURN TO:
City of Phoenix
Historic Preservation Office
200 West Washington Street, 3rd Floor Phoenix,
Arizona 85003
EXEMPT UNDER A.R.S. 11-1134(A)(2)
DEED OF CONSERVATION EASEMENT
THIS DEED OF CONSERVATION EASEMENT (the “Easement”) is made and
executed effective as of the _______ day of ______________, 20____ (the “Effective Date”), by
the CITY OF PHOENIX, a municipal corporation, organized and existing under the laws of the
State of Arizona (the "City"), whose address is 200 West Washington Street, Phoenix, Arizona
85003-1611 and ____________________________ ("Purchaser").
A. The City is authorized under Arizona's Uniform Conservation Act, Arizona Revised
Statutes, Sections 33-271 through 276, inclusive (collectively, as and if amended, the "Act") to create
conservation easements to protect property significant in Arizona history and culture for the education of the
general public.
B. The City's responsibilities as a municipality include the protection of the public
interest in preserving architecturally and historically significant structures within the City of Phoenix.
C. The City acquired and improved the real property located at
_____________________________________, Phoenix, Maricopa County, Arizona, which is more particularly
described in Exhibit "A" attached hereto and made a part hereof (the "Property"); or purposes of this Agreement,
unless otherwise indicated, the term Property will include all improvements, fixtures and buildings thereon as
of the date of this Agreement (the "Structure").
D. The Property is eligible for listing on the National Register of Historic Places and
Phoenix Historic Property Register, and the City recognized its historic significance and provided for its ongoing
protection by recording a Declaration of Restrictive Covenants as document no. in the Official
Records of Maricopa County, Arizona.
E. The City and Purchaser entered into a Residential Resale Real Property Purchase
Contract and Escrow Instructions as of the _______ day of ______________, 20 ____,City Contract No.
__________ (the "Purchase Agreement") pursuant to which Purchaser agreed to acquire the Property subject to
the terms and conditions of the Purchase Agreement, and Purchaser further agreed to enter into this Agreement
to provide for the ongoing protection of the condition and historic value of the Structures.
F. By this Agreement Purchaser will grant an easement in gross to City to assure the
preservation, maintenance and repair of the exterior surface of the Structures (collectively, the "Facades")
and any associated fences, walls (stabilized or otherwise), or other fixtures and improvements on the site
(collectively the "Fixtures") for the purpose of conserving and preserving the historical or architectural
value and significance of the Property.
2
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, including the covenants contained in the Purchase Agreement and in this Easement, the Parties agree as follows.
1. Creation and Term of Easement: Purchaser, on behalf of itself and its
representatives, lessees, successors and assigns (collectively "Grantor") hereby grants to City a "conservation
easement" as defined under the Act, which is an easement in gross, in and to the Facades and the Fixtures, for
the purpose of conserving and preserving the Facades and any associated fences, walls, or fixtures on the site
and accomplishing the other objectives set forth herein, for a term of __________ years from the Effective
Date (the ”Term”). City will be the "holder" of Easement within the meaning of the Act, and hereby accepts
the Easement.
2. Grantor Covenants: Grantor expressly covenants and agrees with City as follows:
2.1 Documentation of the Exterior Condition of the Facades and Fixtures. For
the purposes of this Easement, the City of Phoenix Aviation Department will depict the exterior condition of
the Facades in an original set of photographs (collectively, the "Photographs") filed in the office of the City
of Phoenix Historic Preservation Officer, or designated successor. The exterior condition and appearance of
the Facades as depicted in the Photographs (collectively, the "Present Facades and Fixtures") will be deemed
to describe their external nature as of the date thereof.
2.2 Maintenance of the Facades and Fixtures. Grantor must at all
times maintain the Structure and its Present Facades and Fixtures in a good and sound state of repair
in accordance with Secretary of the Interior’s Standards for Rehabilitation and Guidelines for
Rehabilitating Historic Buildings (the "Standards") so as to prevent the deterioration of the Facades
and Fixtures or any portion thereof; to prevent visual obstruction of the Facades and Fixtures from
public viewpoints such as adjacent streets; and prevent the intrusion of new improvements, walls,
fences, statues, landscaping or fixtures which substantially modify the public view of the Property
and its associated streetscape and open space, and are deemed to be not in accordance with the
Standards delineated above. Grantor must request and obtain advance approval from the City
Historic Preservation Office prior to implementing any physical changes to Structure, the Facades,
or the Fixtures. This provision does not apply to routine maintenance, landscaping other than
hardscape improvements, or installation of sprinkler systems. Subject to the casualty provisions
of Paragraph 4 below, this obligation to maintain will require replacement, repair and
reconstruction according to the Standards within a reasonable time whenever necessary to have
the external nature of the Structure at all times appear to be the same as the Present Facades and
Fixtures.
2.3 Maintenance of the Structural Elements. Grantor must maintain and
repair the Structure as is required to ensure the structural soundness and the safety of the Structure, the
Facades and the Fixtures.
2.4 Inspection. City will have the right to conduct periodic inspections to
observe the exterior condition of the Structure, the Facades, and the Fixtures and to enter the Property
for that purpose. This inspection will be made at a time mutually agreed upon by Grantor and City. City
may not enter the Structure without the permission of the Property Owner.
2.5 Conveyance and Assignment. City may convey, transfer and
3
assign this Easement to a similar local, state or national organization whose purposes, inter alia, are to
promote historic preservation, and which is a "qualified organization" under Section 170(h)(3) of the
Internal Revenue Code of 1986, as amended, provided that any conveyance or assignment requires that
the conservation purposes for which this Façade Conservation Easement was created will continue to
be carried out.
2.6 Insurance. Grantor, at its sole cost and expense, must at all times keep the
Structure insured at its replacement cost value on an "all risk" basis to ensure complete restoration of the
Facades in the event of loss or physical damage.
2.7 Visual Access. Grantor must not substantially obstruct the opportunity
of the general public to view the exterior architectural and archaeological features of the Property from
adjacent publicly accessible areas such as public streets and sidewalks. Grantor must obtain advance
approval from the City Historic Preservation Office for any proposed changes to the Site which would
obstruct or modify the general public view of the exterior architectural or archeological features of the
Property from adjacent publicly accessible areas. Perimeter fencing as approved and permitted by the City
of Phoenix Planning and Development Department and Historic Preservation Officer will not be
considered an obstruction of visual access for purposes of this Paragraph 2.7.
2.8. Compliance with Applicable Laws. In performing its obligations
under this Agreement, including the obligation to construct, repair, reconstruct, and maintain the
Structure, Grantor must obtain any required permits and comply with all applicable laws and
regulations.
3. Easement and Covenants Run With the Land;
Successors Bound Thereby. The covenants, conditions, restrictions, burdens and benefits
herein set forth will run with the land and burden the Property and any present or future owner of
the Property during the term hereof, and will extend and inure in favor and to the benefit of City
and Grantor. Each Grantor will remain bound to perform the covenants contained herein unless
and until Grantor conveys the Property to a successor, and by accepting a conveyance of title to
the Property each Grantor successor agrees to assume, perform and be bound by such covenants.
4. Application of Insurance Proceeds. Subject to the insurance proceeds
requirements of any recorded Deed of Trust or Mortgage applicable to the Property, in the event of damage
or destruction of any of the Structures resulting from casualty, Grantor agrees to apply all available
insurance proceeds and donations to the repair and reconstruction of each of the damaged Structures and
the Facades and Fixtures on the Property. In the event City determines, in its reasonable discretion, after
reviewing all bona fide cost estimates in light of all available insurance proceeds and other monies
available for such repair and reconstruction, that the damage to the Structures or is of such magnitude and
extent that repair and reconstruction of the damage would not be possible or practical, then the Property
Owner may elect not to repair or reconstruct the damaged Structures, Facades or Fixtures on the Property.
Notwithstanding the foregoing, in the event City notifies Grantor in writing that City has determined that
repair and reconstruction of the damaged Structures, Facades or Fixtures on the Property is impossible or
impractical and that the damaged Structures, Facades and Fixtures present an imminent hazard to public
safety, Grantor will at its sole cost and expense raze the damaged Structures, Facades and Fixtures on the
Property and remove all debris, slabs, and any other portions and parts of the damaged structure or
associated fences, walls or fixtures on the Property within the time period required by City to protect the
health, safety and welfare of the public, unless Grantor has commenced and is diligently pursuing repair or
reconstruction of the damaged Structures, Facades or Fixtures on the Property. Upon razing of the damaged
portion of the Structures. Facades and Fixtures on the Property City must release
4
any interest it has in the insurance proceeds for the damaged Structures Facades and Fixtures.
Nothing in this paragraph is intended to supersede or impair the rights to insurance proceeds of a
lienholder pursuant to a recorded Deed of Trust of Mortgage applicable to the Property.
5. Indemnification. Grantor covenants and agrees to pay, protect, indemnify, hold
harmless and defend City at the Grantor's sole cost and expense from any and all liabilities, claims, costs,
attorneys' fees, judgments or expenses asserted against City, its mayor, city council members,
employees, agents or independent contractors, resulting from actions or claims of any nature arising out
of the conveyance, possession, administration or exercise of rights under this Easement, except in such
matters arising solely from the intentional misconduct or gross negligence of City, its mayor, city
council members, employees and agents.
5.1. Survival of Indemnification. The obligations of the Grantor under this
indemnification provision will survive termination of this Agreement.
5.2. Explanation of Indemnification. For purposes of explanation of Paragraph
5 only, and without in any manner limiting the extent of the foregoing indemnification, Grantor and City
agree that the purpose of Paragraph 5 is to require the Grantor to bear the expense of any claim made by any
third party against City, which arises because City has an interest in the Property as a result of this Façade
Conservation Easement. Grantor will have no obligation to City for any claims which may be asserted against
City as a direct result of City's intentional misconduct or gross negligence.
6. Default/Remedy. In the event Grantor (a) fails to perform any obligation of Grantor
set forth herein or in the Purchase Agreement, or otherwise comply with any stipulation or restriction set
forth herein, or (b) any representation or warranty of Grantor set forth herein, is determined by City to have
been untrue when made, in addition to any remedies now or hereafter provided by law and in equity, City or
its designee, following prior written notice to Grantor, may (i) institute suit(s) to enjoin such violation by ex
parte, temporary, preliminary or permanent injunction, including prohibitory and or mandatory injunctive
relief, and to require the restoration of the Property to the condition and appearance required under this
Agreement, or (ii) enter upon the Property, correct any such violation, and hold Grantor responsible for the
cost thereof. In the event Grantor violates any of its obligations under this Agreement, Grantor must
reimburse City for any and all costs and expenses incurred in connection therewith, including all court costs
and attorneys' fees. If and when City incurs any expense as a result of Grantor's breach or nonperformance of
this Agreement, including cost to restore the Property or correct violations, City is hereby authorized to file
and record a Notice and Claim of Lien against the Property to secure the repayment by Grantor of all such
costs incurred by City.
7. Waiver of Remedy. The exercise by City or its designee of any remedy hereunder
will not have the effect of waiving or limiting any other remedy and the failure to exercise any remedy
will not have the effect or waiving or limiting the use of any other remedy or the use of such remedy at
any other time.
8. Waiver of Claims for Diminution in Value of Property Under Proposition 207. By
executing this Agreement Grantor hereby voluntarily waives its rights to make any claim for any diminution in
value of the Property pursuant to A.R.S. § 12-1134 that may directly or indirectly occur as a result of this
Agreement. Grantor understands that this Waiver will run with the Property and be binding upon subsequent
landowners and successors in interest. Grantor acknowledges that this Agreement and Waiver of Claims are
granted voluntarily and without duress and based on consideration as set forth herein and in the Purchase
Agreement.
5
9. Effect and Interpretation. The following provisions will govern the
effectiveness and duration of this Agreement:
9.1 Interpretation. Any rule of strict construction designed to limit the
breadth of restriction on alienation or use of property will not apply in the construction or interpretation
of this Agreement, and this Agreement must be interpreted broadly to effect the transfer of rights and
restrictions on use herein contained.
9.2 Invalidity of the Act. This Agreement is made pursuant to the Act as the
same now exists or may hereafter be amended, but the invalidity of such Act or any part thereof, or the
passage of any subsequent amendment thereto, will not affect the validity and enforceability of this
Agreement according to its terms, it being the intent of City to bind Grantor, its successors, heirs and
assigns, as applicable, whether this Agreement be enforceable by reason of any statute, common law or
private agreement either in existence now or at any time subsequent thereto.
9.3 Violation of Law. Nothing contained herein may be interpreted to
authorize or permit Grantor to violate any ordinance or regulation relating to building materials, construction
methods or use, and Grantor agrees to comply with all applicable laws, including, without limitation, all
building codes, zoning laws and all other laws related to the maintenance and demolition of historic property.
In the event of any conflict between any such laws and the terms hereof, Grantor promptly must notify City of
such conflict and must cooperate with City and the appropriate authorities to accommodate the purposes of
both this Agreement and such ordinance or regulation.
9.4 Amendments and Modifications. For purposes of furthering the
preservation of the Facades, the Structure and the Fixtures and the other purposes of this Agreement, and to
meet changing conditions, Grantor and City are free to amend jointly the terms of this Agreement in writing
without notice to any party; provided, however, that no such amendment may limit the Term or interfere
with the conservation purposes of this Agreement. Such amendment will become effective upon recording
the same among the land records of Maricopa County, Arizona, in the Office of the County Recorder.
9.5 Recitals. The above Recitals are incorporated herein by this
reference.
9.6 Time of the Essence. Time is of the essence in the performance of
each and every term and condition of this Agreement by Grantor.
9.7 Gender. The pronouns "he", "his" and "himself" appearing herein will
be construed to be the singular or plural, masculine, feminine, or neuter gender as the context requires.
[signature pages to follow]
6
This Agreement is hereby executed by the Parties as of the Effective Date.
CITY
:
CITY OF PHOENIX, a municipal corporation
ED ZUERCHER, City Manager
By:________________________
Michelle Dodds
Historic Preservation Officer
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing Conservation Agreement dated , 20____,
executed by the City of Phoenix and , and consisting of seven
(7) pages, plus an Exhibit A Legal Description, was acknowledged before me this day of
20____ by Michelle Dodds, Historic Preservation Officer of the City of Phoenix, a municipal
corporation, on behalf of the City of Phoenix.
Notary Public
My Commission Expires:
GRANTOR:
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing Conservation Agreement dated ,
20_____, executed by the City of Phoenix and , and consisting
of seven (7) pages, plus an Exhibit A Legal Description, was acknowledged before me this day
of , 20___ by .
Notary Public
My Commission Expires:
ATTEST:
_________________________ City
Clerk
APPROVED AS TO FORM:
_________________________
Acting City Attorney
CONTINGENT AND LIMITING CONDITIONS
1. LIMITS OF LIABILITY: The liability of Appraisal Technology, LLC, and/or Independent
Contractor(s) is limited to the client only and to the fee actually received by them. Further, there
is no accountability, obligation, or liability to any third party. If this report is placed in the hands of
anyone other than the client, the client shall make such party aware of all limiting conditions and
assumptions of the assignment and related discussions. The appraiser is in no way to be responsible
for any costs incurred to discover or correct any deficiencies of any type present in the property;
physically, financially, and/or legally. In the case of limited partnerships or syndication offering or
stock offerings in real estate, the client agrees that in case of lawsuit (brought by lender, partner or
part-owner in any form of ownership, tenant, or any other party), any and all awards, settlements of
any type in such suit, regardless of outcome, the client will hold the appraiser completely harmless
in any such action.
2. COPIES, PUBLICATION, DISTRIBUTION, USE OF REPORT: Possession of this report
or any copy thereof does not carry with it the right of publication. It is a privileged communication.
It may not be used for other than its intended use; the physical report(s) remain the property of the
appraiser for the use of the client, the fee being for the analytical services only.
All valuations in the report are applicable only under the stated program of Highest and Best Use
and are not necessarily applicable under other programs of use. The valuation of a component part
of the property is applicable only as a part of the whole property. The distribution of the total
valuation in this report between land and improvements applies only under the existing or proposed
program of utilization. The separate valuations for land and building must not be used in conjunction
with any other appraisal and are invalid if so used.
The Bylaws and Regulations of the Appraisal Institute requires each Member and Candidate to
control the use and distribution of each appraisal report signed by such Member or Candidate; except
as here-in-after provided, the client may distribute copies of this appraisal report in its entirety to
such third parties as he may select; however, selected portions of this appraisal report shall not be
given to third parties without the prior written consent of the signatories of the report. Neither all nor
any part of this appraisal report shall be disseminated to the general public by the use of advertising
media, public relations, news, sales or other media for public communication without the prior
written consent of the appraiser(s), particularly as to valuation conclusions, the identity of the
appraiser(s), the firm, or any reference to the Appraisal Institute, the M.A.I., or SRA designations.
(See last item in following list for client agreement/consent).
3. CONFIDENTIALITY AND TRADE SECRETS: This appraisal is to be used only in its
entirety and no part is to be used without the whole report. All conclusions and opinions concerning
the analysis as set forth in the report were prepared by the Appraiser(s) whose signature(s) appear
on the appraisal report, unless indicated as "Review Appraiser". No change of any item in the report
shall be made by anyone other than the appraiser. The appraiser and firm shall have no responsibility
if any such unauthorized change is made. The appraiser may not divulge the material (evaluation)
contents of the report, analytical findings or conclusions, or give a copy of the report to anyone other
than the client or his designee as specified in writing except as may be required by the Appraisal
Institute as they may request in confidence for ethics enforcement, or by a court of law or body with
the power of subpoena.
This appraisal was prepared by the appraisers signing this report and/or related independent
contractor(s) and consists of "trade secrets and commercial or financial information" which is
privileged and confidential and exempted from disclosure under 5 U.S.C. 552 (b) (4). Notify the
appraiser(s) signing this report, Appraisal Technology, LLC of any request to reproduce this
appraisal in whole or in part.
4. INDEPENDENT CONTRACTORS: Be advised that the people associated with Appraisal
Technology, LLC are independent contractors.
5. INFORMATION AND DATA: The comparable data relied upon in this report has been con-
firmed with one or more parties familiar with the transaction or from affidavit or other source thought
reliable; all are considered appropriate for inclusion to the best of our factual judgment and
knowledge. An impractical and uneconomic expenditure of time would be required in attempting to
furnish unimpeachable verification in all instances, particularly as to engineering and market-related
information. It is suggested that the client consider independent verification as a prerequisite to any
transaction involving sale, lease, or other significant commitment of funds or property.
6. TESTIMONY, CONSULTATION, COMPLETION OF INVOICE FOR APPRAISAL
SERVICES: When the invoice for appraisal, consultation or analytical service is fulfilled, the
total fee is payable upon completion. The appraiser(s) or those assisting in preparation of the report
will not be asked or required to give testimony in court or hearing because of having made the
appraisal (unless arrangements have previously been made). Any post appraisal consultation with
the client or third parties will be at an additional fee. If testimony or deposition is required because
of any subpoena, the client shall be responsible for any additional time, fees, and charges regardless
of issuing party.
7. STATEMENT OF POLICY: The following statement represents official policy of Appraisal
Institute with respect to neighborhood analysis and the appraisal of residential real estate:
a. It is improper to base a conclusion or opinion of value upon the premise that the racial,
ethnic or religious homogeneity of the inhabitants of an area or of a property is
necessary for maximum value.
b. Racial, religious and ethnic factors are deemed unreliable predictors of value trends or
price variance.
c. It is improper to base a conclusion or opinion of value, or a conclusion with respect to
neighborhood trends, upon stereotyped or biased presumptions relating to race, color, religion,
sex or national origin or upon unsupported presumptions relating to the effective age or
remaining life of the property or the life expectancy of the neighborhood in which it is located.
8. MANAGEMENT OF THE PROPERTY: The appraisers have no control over management;
however, the appraisers consider the management of this investment of prime importance.
Reasonable and prudent (not exceptional) management practices and expertise is assumed
(anticipated) in the appraisal.
Should the present/prospective owner be unable and/or unwilling to take those actions required by
reasonable and prudent management practices (see appraiser's observations at time of inspection
following the purpose of appraisal) to meet financial goals and/or reasonable expectations, we
recommend a careful reconsideration of the investment risk.
9. APPRAISAL IS NOT A LEGAL OPINION: No responsibility is assumed for matters of legal
nature affecting title to the property nor is an opinion of title rendered. The title is assumed to be
good and marketable. The value estimated is given without regard to any questions of title,
boundaries, encumbrances, or encroachments.
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.
It is assumed that all applicable zoning and use of regulations and restrictions have been complied
with, unless a non-conformity has been stated, defined, and considered in the appraisal report.
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 estimate contained in this report is based.
If the Appraiser has not been supplied with a termite inspection, survey or occupancy permit(s), no
responsibility or representation is assumed or made for any costs associated with obtaining same or
for any deficiencies discovered before or after they are obtained. No representation or warranties
are made concerning obtaining the above mentioned items.
It is assumed that adequate municipal services including disposal are available and will continue to
be.
Virtually all land in Arizona is affected by pending or potential litigation by Indian Tribes claiming
superior water rights for their reservations. The amounts claimed and the effects on other water users
are largely undetermined; but the claims could result in some curtailment of water usage or ground
water pumping on private land. The State's New Ground Water 99Management Act may also restrict
future ground water pumping in various parts of Arizona. Given this uncertainty, neither the
appraiser(s) nor any of his representatives can make warranties concerning rights to or adequacy of
the water supply with respect to the property being appraised, although, the sale of premises include
such water rights as are appurtenant thereto.
10. FEDERAL AND STATE REGULATIONS: Further, the value reported is based upon cash,
or its equivalent, and was drafted to adhere to the standards and practices of the Appraisal Institute,
plus the guidelines and recommendations set forth in the Uniform Standards of Professional
Appraisal Practice (USPAP) by the Appraisal Foundation and in accordance with appraisal standard
required by Title XI of Federal Financial Institutions Reform, Recovery and Enforcement Act of
1989 (FIRREA) and the Office of the Comptroller of the Currency (OCC).
Under federal mandate, state licensing and/or certification of appraiser is required on or before
August 1, 1991. Permission is hereby granted by the client for the appraiser to furnish the appropriate
governmental authority or their authorized designated representative(s) any and all materials
requested for oversight review.
11. CHANGES, MODIFICATIONS, FEE: The appraiser(s) reserves the right to alter statements,
analysis, conclusion or value estimate contained in the appraisal if a fact(s) pertinent to the appraisal
process unknown prior to the completion of the appraisal is/are discovered.
The fee for this appraisal or study is for the service rendered and not for the time spent on the physical
report or the physical report itself.
Compensation is not contingent upon the reporting of a predetermined value or direction in value
that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated
result, or the occurrence of a subsequent event.
The writing of this report to meet the requirements of the Competitive Equality Banking Act of 1987
("CEBA") and in adherence with the standards and practices of the Appraisal Institute, plus the
guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal
Practice (USPAP) by the Appraisal Foundation involves an interpretation of the phase "totally self-
contained".
Because no report regardless of length or the extent of documentation is "totally self-contained", the
appraiser has tried to furnish sufficient documentation, analysis and detail to meet a "reasonableness
criteria". Should the client reviewing this report require additional information, analysis,
documentation, etc., it will be supplied in an expeditious manner at no charge to the client, following
receipt of a written critique (within 2 months of the date of this letter), in the form of a new report.
12. 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 noted with the report.
The legal description is assumed to be correct as used in this report as furnished by the client, his
designee, or when not supplied, as derived by the appraiser. The appraiser(s) assume no
responsibility for such a survey, or for encroachments or overlapping that might be revealed thereby.
The sketches and maps in this report are included to assist the reader in visualizing the property and
are not necessarily to scale. Photos, if any, are included for the same purpose. Site plans are not
surveys unless shown from a separate surveyor.
13. APPRAISAL IS NOT AN ENGINEERING 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, or legal experts, and any opinion given on these matters in this report should be considered
preliminary in nature.
The observed condition of the foundation, roof, exterior walls, interior walls, floors, heating and/or
cooling system, plumbing, insulation, electrical service, and all mechanical and construction is based
on a casual inspection only and no detailed inspection was made. For instance, we are not experts
on heating and/or cooling systems and no attempt was made to inspect the interior of the heating
and/or cooling equipment. The structures were not checked for building code violations and it is
assumed that all buildings meet the building codes unless so stated in the report.
Items such as conditions behind walls, above ceiling, behind locked doors, or under the ground are
not exposed to casual view and, therefore, were not inspected. The existence of insulation (if any is
mentioned) was found by conversation with others and/or circumstantial evidence.
Since it is not 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
which would render it more or less valuable. No responsibility is assumed for such conditions or the
engineering which 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/or
energy related) were not considered in making this appraisal.
Because no detailed inspection was made, and because such knowledge goes beyond the scope of
this appraisal, any observed condition 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 the 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, we strongly suggest that a construction expert be hired for a detailed investigation.
Although a walk-through inspection has been performed, an appraiser is not an expert in the field of
building inspection and/or engineering. An expert in the field of engineering/seismic hazards
detection should be consulted if an analysis of seismic safety and seismic structural integrity is
desired.
The appraisers are not seismologists. The appraisal should not be relied upon as to whether a seismic
problem exists, or does not actually exist on the property. The appraisers assume no responsibility
for the possible effect on the subject property of seismic activity and/or earthquakes.
14. PROPOSED IMPROVEMENT, CONDITIONED VALUE: Improvements proposed, if
any, on or off-site, as well as any repairs required are considered, for purposes of this appraisal, to
be completed in a good and workmanlike manner according to information submitted and/or consi-
dered by the appraiser(s). In cases of proposed construction, the appraisal is subject to change upon
inspection of the property after construction is completed. This estimate of value is as of the date
shown, as proposed, as if completed and operating at levels shown and projected unless otherwise
set forth.
15. INSULATION AND TOXIC MATERIALS: The existence of potentially hazardous
materials used in the construction or maintenance of the structure, such as urea formaldehyde
foam insulation, and/or the existence of toxic waste on or in the ground, which may or may not
be present has not been considered (unless otherwise set forth). The appraiser(s) is not qualified
to detect such substances. The client should retain an expert in this field. If such is present, the
value of the property may be adversely affected; therefore, if a toxic waste and/or contaminant
is detected, the value indicated in this report is Null and Void. A re-appraisal at an additional
cost may be necessary to estimate the effects of hazardous materials.
16. AUXILIARY AND RELATED STUDIES: No environmental or impact studies, special
market study or analysis, highest and best use analysis study or feasibility study has been requested
or made unless otherwise specified in an invoice for services or in the report.
17. APPRAISAL IS MADE UNDER CONDITIONS OF UNCERTAINTY: Information
(including projections of income and expenses) provided by informed local sources, such as
government agencies, financial institutions, Realtors, buyers, sellers, property owners, bookkeepers,
accountants, attorneys, and others is assumed to be true, correct, and reliable. No responsibility for
the accuracy of such information is assumed by the appraiser.
The comparable sales data relied upon in the appraisal is believed to be from reliable sources.
Though all the comparable sales were examined, it was not possible to inspect them all in detail.
The value conclusions are subject to the accuracy of said data.
Engineering analyses of the subject property were neither provided or used nor made as a part of this
appraisal contract. Any representation as to the suitability of the property for uses suggested in this
analysis is therefore based only on a rudimentary investigation by the appraiser and the value
conclusions are subject to said limitations.
All values shown in the appraisal report are projections based on our analysis as of the date of the
appraisal. These values may not be valid in other time periods or as conditions change. Since the
projected mathematical models are based on estimates and assumptions which are inherently subject
to uncertainty and variation depending upon evolving events, we do not represent them as results
that will actually be achieved.
This appraisal is an estimate of value based on an analysis of information known to us at the time
the appraisal was made. The appraisers do not assume any responsibility for incorrect analysis
because of incorrect or incomplete information. If new information of significance comes to light
and/or becomes known, the value given in this report is subject to change without notice.
18. AMERICANS WITH DISABILITIES ACT: The Americans with Disabilities Act ("ADA")
became effective January 26, 1992. The appraiser(s) have not made an analysis of this property to
determine whether or not it is in conformity with the ADA requirements. It is possible that a
compliance survey of the property, together with a detailed analysis of the ADA requirements could
reveal that the property is not in compliance for one or all requirements. If so, this fact could have a
negative effect upon the value of the property. The appraiser(s) have no direct evidence relating to
this issue and did not consider possible non-compliance with the requirement of the ADA in
estimating the value of the property.
19. INSURABLE VALUE: At the Client's request (if applicable), the appraiser(s) have provided
an insurable value estimate. The estimate is based on figures derived from a national cost estimating
service and is developed consistent with industry practices. However, actual local and regional
construction costs may vary significantly from our estimate and individual insurance policies and
underwriters have varied specifications, exclusions, and non-insurable items. As such, we strongly
recommend that the Client obtain estimates from professionals experienced in establishing insurance
coverage for replacing any structure. The appraiser(s) make no warranties regarding the accuracy of
this estimate. Insurable Value is directly related to the portion of the real estate that is covered under
the asset’s insurance policy. The appraiser(s) have based this opinion on the building’s replacement
cost new (RCN) which has no direct correlation with its actual market value. The appraiser(s)
developed an opinion of RCN using the Calculator Cost Method developed by Marshall & Swift.
The RCN is the total construction cost of a new building with the same specifications and utility as
the building being appraised, but built using modern technology, materials, standards and design.
For insurance purposes, RCN includes all direct costs necessary to construct the building
improvements. Items that are not considered include land value, individual site improvements or
accrued depreciation. To develop an opinion of insurable value, exclusions for below-grade
improvements, some site work/improvements, foundations and architectural fees must be deducted
from RCN.
20. ACCEPTANCE OF, AND/OR USE OF, THIS APPRAISAL REPORT BY CLIENT OR
ANY THIRD PARTY CONSTITUTES ACCEPTANCE OF THE FOREGOING CONDIT-
IONS. APPRAISER(S) LIABILITY EXTENDS ONLY TO STATED CLIENT, NOT SUB-
SEQUENT PARTIES OR USERS AND IS LIMITED TO THE AMOUNT OF THE FEE
RECEIVED BY THE APPRAISER(S).