0 2017

Appraisal Report Prepared For Iowa Natural Heritage Foundation

Property Owned By Thomas and Phyllis Jenness

Property Identification: 55.01-acre tract in SW ¼ 26-92-40 Cherokee County, Iowa

Inspection Date: August 16, 2017 Effective Date: August 16, 2017

Vander Werff & Associates, Inc. 215 Main Street, P.O. Box 529 Sanborn, Iowa 0

APPRAISAL REPORT

AGRICULTURAL REAL ESTATE “AS IS” “MARKET VALUE”

APPRAISAL PREPARED IN COMPLIANCE WITH THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE 2016/2017 EDITION AND FIRREA

APPRAISAL PREPARED FOR

MR. ROSS BAXTER IOWA NATURAL HERITAGE FOUNDATION 505 5TH AVENUE, SUITE 444 DES MOINES, IOWA 50309

REAL ESTATE APPRAISED OWNED BY THOMAS AND PHYLLIS JENNESS

PROPERTY IDENTIFICATION:

55.01-ACRE TRACT IN SW ¼ 26-92-40 CHEROKEE COUNTY, IOWA

PREPARED BY

GREG TRITLE CERTIFIED GENERAL REAL PROPERTY APPRAISER LICENSED IN IOWA, MINNESOTA, AND SOUTH DAKOTA LICENSE #CG02732

VANDER WERFF AND ASSOCIATES, INC. 215 MAIN SANBORN, IOWA 51248

INSPECTION DATE: AUGUST 16, 2017 EFFECTIVE DATE: AUGUST 16, 2017

REPORT DATE: AUGUST 29, 2017 1

TABLE OF CONTENTS

APPRAISAL REPORT AGRICULTURAL REAL ESTATE

IOWA NATURAL HERITAGE FOUNDATION

PROPERTY LOCATION

CHEROKEE COUNTY, IOWA

Photograph Views ...... 3 Transmittal Letter ...... 9 Vander Werff and Associates, Inc. Privacy Policy ...... 12 Assumptions and Limiting Conditions...... 13 Certification ...... 15 Agricultural Appraisal Report ...... 16 Summary of Salient Facts and Scope of Work ...... 17 Intended Appraisal Use and User...... 20 Assessor’s Parcel Numbers and Tax Data ...... 21 Environmental Supplement and FEMA Flood Map Information ...... 21 Interest Being Appraised ...... 21 Zoning Ordinance Data ...... 22 History of Ownership...... 22 Competency Provision ...... 22 “Market Value” Definition ...... 23 Discussion of Appraisal Approaches ...... 24 Corn Suitability Rating ...... 25 Highest and Best Use ...... 25 General Nature of the Area Being Appraised ...... 26 General Description of Cherokee, Iowa ...... 30 General Description of Immediate Neighborhood ...... 32 Current Market Conditions ...... 32 Discussion Concerning Exposure Time ...... 32 Personal Property ...... 33 Direct Sales Comparison Approach ...... 34 Discussion Concerning Direct Sales Comparison Approach ...... 47 2

Discussion Concerning Income Approach ...... 50 Discussion Concerning Cost Approach ...... 50 Final Recommended "Market Value" ...... 51 Discussion Concerning Marketing Time ...... 51 Addendum: Engagement Letter Legal Documents Maps

3

Photograph Views

Old Highway 3-west elevation

Land-south elevation

South field-south elevation

4

Photograph Views

Little Sioux River-south elevation

Land-south elevation

North field-west elevation

5

Photograph Views

South non-cropland north elevation

Pond-south elevation

Barn-south elevation

6

Photograph Views

Land-west elevation

Sumner Street-west elevation

Land-north elevation

7

Photograph Views

Land-north elevation

Frame shed-east elevation

Barn-east elevation

8

Photograph Views

Lean-to east elevation

Barn interior

Owned access lot off Park Street- west elevation

9

Transmittal Letter Appraisals – Auctions – Real Estate

215 Main Street, P.O. Box 529 Sanborn, Iowa 51248 Phone: 712-729-3264 Fax: 712- 729-5676

August 29, 2017

Mr. Ross Baxter Iowa Natural Heritage Foundation 505 5th Avenue, Suite 444 Des Moines, Iowa 50309

RE: Appraisal of Real Estate owned by Thomas and Phyllis Jenness

Dear Mr. Baxter:

At your request an appraisal has been completed on the agricultural real estate owned by the above named and located on the east side of Cherokee, Iowa. The property has been inspected and appraised for purposes of determining my opinion of the “as is” "Market Value" as of the date of inspection, August 16, 2017. This appraisal has been prepared in compliance with the 2016/2017 Uniform Standards of Professional Appraisal Practice (USPAP) and in compliance with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). This appraisal report is being prepared in conjunction with the Gramm-Leach Bliley Privacy Act. This Act became effective July 1, 2001.

Property Identification (not to be utilized on legal documents):

55.01 acres located in the SW ¼ Section 26, Township 92 North, Range 40 West of the 5th P.M., Cherokee County, Iowa. Please see aerial map following this transmittal letter for delineation of property borders. The property is further identified as assessor parcel ID #’s:

• 0726376001

• 0726328006

• 0726355026 The subject property comprises 55.01 acres, more or less. After an investigation of the available information pertinent to the value of the subject property, my opinion of the “as is” “Market Value” as of the date of inspection, August 16, 2017 is: $233,800 or $4,250 per acre (Two Hundred Thirty-three Thousand Eight Hundred Dollars)

This valuation is NOT a guarantee of the “sales price”. The valuation developed herein is “Market Values” as defined within this report. The “real estate/business” market is NOT a 10

“perfect” market. The actual sales price for the subject property may be higher or lower than the reported valuation.

The property interest being appraised is “fee simple” interest. The value is considered to be in “as is” condition. In addition, the value is considered to be in “as clean” condition. The valuation does not take into account any environmental hazards or potential cleanup costs from these. Clean up costs must be deducted from the “as clean” valuation in order to determine current valuation on this property, if applicable. No warranties or assumptions concerning any mechanical condition of the property are provided herein. Your attention is invited to the data and discussion contained within this report from which, in part, this conclusion was derived.

Thank you for the opportunity to prepare this appraisal for you.

Respectfully submitted,

Certified General Real Property Appraiser Licensed in Iowa, Minnesota, and South Dakota License #CG02732

GT:an 11

12

Vander Werff and Associates, Inc. Privacy Policy

The implementation of the Gramm-Leach-Bliley Act, effective July, 2001 requires all financial service companies (including appraisers) to notify their clients of their (the company’s) policies to protect your non-public information.

If you have questions you can contact us at 712-729-3264 ______Vander Werff and Associates, Inc. understands our clients’ concerns about the privacy of their information collected. Our company is dedicated to protecting the confidentiality and security of nonpublic personal information we collect about our customers in accordance with applicable laws and regulations. This notice refers to the Company by using terms “us”, “we” and/or “our”. This notice describes our privacy policy and describes how we treat non-public personal information about our clients that we receive from them. Why We Collect and How We Use Information We collect and use information for business purposes with respect to our Real Estate Appraisal Services and other business relations involving our customers. We gather this Information to evaluate our clients’ requests for property appraisals and to process your appraisal according to the Uniform Standards of Professional Appraisal Practice as well as particular requirements an appraisal underwriter may require. How We Collect Information Most information collected by us is provided by you, your lender, your attorney or CPA. We receive copies of purchase agreements, copies of income and expense information, copies of building costs and other pertinent information. We also obtain information from Courthouse records, multiple listing services and other appraisers (comparable sales data). How We Protect Information We require our appraisers and staff to protect the confidentiality of the information we receive from you. We also maintain physical, electronic and procedural safeguards designed to protect information. When you, your lender, or your attorney orders an appraisal on your behalf, we hold this request in the strictest of confidences. We will not divulge to unrelated parties whether we are or whether we are not completing an appraisal for you. Once the appraisal document has been completed, we will not, unless requested by you, your lender/your attorney (see intended user section of appraisal report) divulge the results of this report to anyone, other than the intended user. To Whom Information May Be Disclosed 1. The intended users of the appraisal report 2. Peer review groups as may be required to continue our professional designations 3. Law enforcement, regulatory, governmental agencies, courts or parties therein pursuant to a subpoena or court order 4. Information necessary to compile “comparable sales data” to be utilized in future appraisal assignments. 5. A review appraiser, performing a review of your appraisal

Notification of Your Right to Opt Out of Certain Disclosure As we have indicated in this Privacy Policy Notice we collect certain nonpublic information about you, which we may disclose to certain non-affiliated third parties for purposes other than those expressly permitted by the Gramm- Leach-Bliley Act and the federal and state implementation of that Act. If you prefer we do not disclose this non- public information to non-affiliated third parties, you may opt out of those disclosures, other than those disclosures expressly permitted by the Gramm-Leach-Bliley Act. If you wish to opt out of such disclosures, you may call us at 712-729-3264 or write us at Box 529, Sanborn, Iowa 51248. 13

Assumptions and Limiting Conditions

1. No responsibility is assumed for the legal description provided or for matters pertaining to legal title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. Where applicable, building sizes determined utilizing assessor’s worksheets. 3. Comparable sales were considered wholly on the basis of the information as it was furnished to me. 4. The appraiser made no survey of the property and assumes there are no encroachments involved. 5. Information furnished by others is believed to be accurate and reliable, but no responsibility is assumed for its accuracy. 6. Responsible ownership and competent property management are assumed. 7. It is assumed that all required licenses, certificates of occupancy, consents and 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. 8. The appraiser makes no guarantees or warranties as to whether or not the property conforms to all city/county building codes and/or fire codes. If the property does not conform to the current city/county building codes and/or fire codes, the value of the property could change. 9. To the best of the undersigned’s knowledge, the presence of Radon has not been detected on this property or, if Radon has been detected, it has been determined that the levels of Radon are considered safe according to the standards established by the Environmental Protection Agency. 10. The undersigned does not, however, make any guarantees or warranties that the property has been tested for the presence of Radon, or, if tested, that the tests were conducted pursuant to the EPA approved procedures. 11. No examination of ground water contamination from any sources including, but not limited to, water, run off, or buried dump sites has been made by this appraiser, and no responsibility is assumed for any future liability which might arise out of any such contamination. 12. Neither all nor any part of the contents of this report, or copy thereof, shall be used for any purpose by anyone but the client without the previous written consent of the appraiser and/or of the client, nor shall it be conveyed by anyone, including the client, to the public through advertising, public relations, news, sales, or other media, without the written consent and approval of the author, particularly as to valuation conclusions, the identity of the appraiser, or a firm with which he is connected, or any reference to any professional society or institute or any initiated designation conferred upon the appraiser. 13. In addition to all other disclaimers and conditions contained in this appraisal, this appraisal specifically excludes any representation or considerations regarding the possible environmental impact of activities which have taken place on the subject real estate, and any possible liabilities or responsibilities imposed upon the owner or operator of said real estate by federal and state environmental laws. 14. In the normal course of my data collection, I researched the EPA website, the Department of Natural Resources website, as well as the National Properties website and Landfills website. Information I’ve gathered from these websites, regarding the subject property and environs is included within this appraisal to assist the intended user of this report. This appraiser is NOT an expert in the field of environmental matters, furthermore this appraiser cautions the intended user the only way to determine the possible effect of any environmental issue regarding the subject property is through a comprehensive environmental audit. This appraisal is being prepared with an extra-ordinary assumption: the site and building improvements are “clean” and there are no environmental issues which would adversely impact the market value of this property. 15. The inspection of this property was made for basis of comparative analysis. 16. My inspection encompassed a NON-INTRUSIVE visual inspection of readily accessible areas ONLY. 17. No warranty is provided as to the continued functional operation of mechanical systems, structural integrity is NOT warranted by my inspection but is limited to my visual inspection as described above. This appraiser recommends the user of this appraisal to employ the services of a professional contractor for any in depth analysis of heating/cooling systems, electrical systems, structural components and related items. 18. Hazardous Substances. Hazardous substances, if present within a facility, can introduce an actual or potential liability that will adversely affect the marketability and value of the equipment. Such liability may be in the form of immediate recognition of existing hazardous conditions. Future liability could stem from the release of currently non-hazardous contaminants, such as asbestos fibers or toxic vapors from urea formaldehyde foam insulation, through aging or building renovations. In the development of our opinion of value, no consideration has been given to such liability or its impact on value. 19. Sale or Purchase. All opinions of value are presented as Vander Werff & Associates, Inc.’s considered opinion based on the facts and data appearing in the report. We assume no responsibility for changes in value and market condition or the inability of the owner to locate a purchaser at the reported value. 14

20. Court Testimony. Testimony or attendance in court by reason of this valuation shall not be required unless arrangements for such services have previously been made. 21. Structural Deficiencies. The appraiser found no obvious evidence of structural deficiencies unless otherwise stated. However, no responsibility for structural soundness or conformity to city, county, or state building and safety codes can be assumed without an independent structural engineering report. 22. Operating Equipment. The appraiser has assumed all the equipment to be in normal operating condition unless otherwise noted. Operating individual pieces of equipment to test their status was beyond the scope of this investigation. 23. Confidentiality/Advertising. This report and supporting notes are confidential. Neither all nor any part of the contents of this valuation shall be copied or disclosed to any party or conveyed to the public orally or in writing through advertising, public relations, news, sales or in any other manner without the prior written consent and approval of both Vander Werff & Associates, Inc. and its client. 24. Title to Equipment (if applicable): No investigation of legal title was made, and we render no opinion as to the ownership of the equipment or the condition of the title. We assume: a. The title to the equipment is marketable. b. Unless otherwise noted within this report, the equipment is free and clear of all liens, encumbrances, and restrictions. c. The equipment does not exist in violation of any applicable codes, ordinances, statues, or other governmental regulations. d. The equipment is under responsible ownership and competent management. e. Any equipment which is included in the appraised valuation, unless otherwise noted within this report, is owned and not leased. If it is found out any equipment included in the appraised valuation is leased, this would likely have a negative impact on the property’s market value.

This appraisal report has been made with the following general limiting conditions:

1. Any allocation of the total value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate values allocated to the land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. 2. Possession of this report or a copy thereof does not carry with it the right of publication. 3. The Americans with Disabilities Act (ADA) became effective January 26, 1992. The appraiser has not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a compliance survey of the property and a detailed analysis of the requirements of the ADA would reveal that the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative impact upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the value of the property. 4. The forecasts, projections or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions. No responsibility is assumed for any resulting changes in market value or marketing conditions resulting from change in future economic conditions.

August 16, 2017 X Did Did Not Date of Inspection Inspect Property

Certified General Real Property Appraiser Licensed in Iowa, Minnesota, and South Dakota License #CG02732

Vander Werff and Associates, Inc., P.O. Box 529, Sanborn, IA 51248 (712)729-3264 15

Certification

I certify that to the best of my knowledge and belief: ---the statements of fact contained in this report are true and correct. ---the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. --- X I have no or the specified present or prospective interest in property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved. ---I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. ---my engagement in this assignment was not contingent upon developing or reporting predetermined results. ---my 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. ---my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. --- X I have or have not made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.) ---no one provided significant real property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.) ---The appraisal assignment was not based on a requested minimum valuation, a specific valuation or the approval of a loan. --- I have X or have not previously appraised this property in the preceding three years (in complying with 2016/2017 USPAP). If this property was previously appraised by myself within the past three year period, additional discussion will occur in the Summary of Salient Facts and Scope of Work ---The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. ---The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

I certify that I have sufficient knowledge and experience to complete the appraisal assignment represented by this appraisal. Additionally, neither I nor Vander Werff & Associates, Inc., have been sued by any regulatory agencies or financial institutions for fraud or negligence involving appraisal reports.

This appraisal conforms to the 2016/2017 Uniform Standards of Professional Appraisal Practices (“USPAP”) adopted by the appraisal Standards Board of The Appraisal Foundation, effective January 1, 2016.

August 16, 2017 X Did Did Not Date of Inspection Inspect Property

Certified General Real Property Appraiser Licensed in Iowa, Minnesota, and South Dakota License #CG02732

Vander Werff and Associates, Inc., P.O. Box 529, Sanborn, IA 51248 (712)729-3264 16

Agricultural Appraisal Report

Appraisal Prepared For Mr. Ross Baxter, Iowa Natural Heritage Foundation, 505 5th Avenue, Suite 444, Des Moines, Iowa 50309 Appraisal Name Thomas and Phyllis Jenness State IA

Identification of Property 55.01-acre tract in SW ¼ 26-92-40 County Cherokee Client: Mr. Ross Baxter, Iowa Natural Heritage Foundation Intended User: Iowa Natural Heritage Foundation

LOCATION: east side of Cherokee, Iowa, near old Zoning Data: Zoned A-1 Agricultural. Highway 3 bridge over Little Sioux River. Current use is considered conforming.

STREET: Curbed Guttered FUNCTIONAL UTILITY: Below average Cement x Asphalt: Gravel Other: CONDITION: Barn and frame building UTILITIES: Interior: Fair to average Sewer: No Exterior: Fair to average Electricity: Yes Overall: Fair to average Water: Yes Quality: Avg Building Class: D Gas: No OWNERSHIP HISTORY According to Cherokee Assessor the titleholder is Thomas and Phyllis Jenness. No transfers in past 3 years PROPERTY SUMMARY: Size: 55.01 acres. South side abuts old Highway 3. North side abuts Sumner Street with direct access. Interior crossing over northern low area to provide access to north crop field, south non-crop area, and south crop field. REAL ESTATE TAX DATA: 30.37 non-crop acres are gently to moderately sloped Assessed Value Land: $108,924 with pond on north side. Some wooded areas, some Assessed Value Building: $2,822 open areas used for hay. .08 acres access is drive lot Total Assessed Value: $111,746 to Park Street. 24.64 crop acres in 2 gently sloped Real Estate Taxes: $1,102 irregular shaped fields. 100% Little Sioux River flood plain. No building allowed. Average CSR1- 74.9. FEMA FLOOD ZONE: Average CSR2- 86.4. Map #1900630005B Date: 1/2/1981 Zone: 100 year flood zone and floodway Older 28’x44’ barn with 10’x44’ lean-to and 10’x16’ older frame shed located in northwest non-crop RECOMMENDED MARKET VALUE: area. $233,800 or $4,250 per acre

Vander Werff & Associates, Inc. 2014 17

Summary of Salient Facts and Scope of Work

Authorization for services was received by Vander Werff and Associates, Inc., of Sanborn, Iowa, from Mr. Ross Baxter, Iowa Natural Heritage Foundation, 505 5th Avenue, Suite 444, Des Moines, Iowa 50309. In written communication to this appraisal firm Mr. Baxter requested an appraisal on agricultural real estate owned by Thomas and Phyllis Jenness. The purpose for the appraisal is to determine the “as is” "Market Value" as of the date of inspection, August 16, 2017. It indicated the appraisal will be utilized to assist Iowa Natural Heritage Foundation in potential purchasing decision on the subject property.

The client for the report is Mr. Ross Baxter, Iowa Natural Heritage Foundation, 505 5th Avenue, Suite 444, Des Moines, Iowa. The intended user is Iowa Natural Heritage Foundation.

The indicated contact person is Thomas Jenness.

Prior to making my inspection of this property, Vander Werff and Associates, Inc. completed courthouse work. This courthouse work included research at the County Assessor’s office, Recorders office, Treasurer’s office, Auditor’s office, and Zoning officer. Information compiled included building sizes, overall size of the farm, history of past purchase information, copies of deeds and/or contracts, real estate taxes, mill levies, and other pertinent information concerning the subject property.

During the appraisal process the appraiser gathered, analyzed, and verified sales data information from the county assessor’s office, as well as many brokers and realtors who regularly market farm real estate within the subject’s marketplace. Soil characteristics were analyzed with the assistance of AgriData Mapping Services, Inc., which is a widely used digital soil analysis program within the appraisal and finance industry.

In accordance with the 2016/2017 USPAP edition the requirement of work history over a three year period must be disclosed prior to acceptance of the assignment (or if discovered after acceptance during the research in the assignment). I have not completed any services, including appraisal services, on the subject property in the past 3 years.

During the appraisal process the appraiser contacted Thomas Jenness who provided useful information regarding the subject’s use history and utility.

The inspection of the subject property occurred on August 16, 2017.

When making my inspection of this property I took general notes concerning it and photographs. I observed the property’s site and its environs, and received all necessary information for the preparation of this appraisal report. Adequate time was allowed for a complete inspection. 18

General Description of Subject Property

The subject property comprises 55.01 acres, more or less. This is located on the east side of the city of Cherokee, immediately north of Old Highway 3, and immediately east of the Little Sioux River. The tract is noted to have high utility power lines along the south side with partial perimeter fencing noted. Some internal fencing is noted between non-crop and cropland areas. The Little Sioux River is noted to cross the far southeastern corner of the farm. In this area the Little Sioux River is 100 to 150 feet wide. The close proximity to the river results in the subject considered 100 percent in a flood plain.

The subject’s south side abuts Old Highway 3. Per information supplied by Thomas Jenness, the southern field is accessed via a driveway off Old Highway 3. This is a concrete road. The north side of the subject abuts Sumner Street, a city concrete street. Perimeter fencing is noted along the street. This provides access to the property. Per information supplied by Thomas Jenness, additional access is available along the west side of the property, east of city owned property. Mr. Jenness indicated he sold property between Saratoga Avenue and the subject to the city in approximately 1990 and retained an easement for access through the city owned property. An additional access point is a small platted lot that is included in the subject. This is located along the northwest side. This platted lot extends from the subject’s area (near the barn) to Park Avenue, an additional city street.

Of the 55.01 acres, 24.64 acres are considered to have cropland utility. 30.37 acres are interior non-crop acres that are utilized for pasture and recreational land. The lot providing access to Park Street is an additional 1.46 acres. This lot is considered to have similar value to the non- cropland.

The subject’s non-cropland is gently to moderately sloped and noted to have some over wash areas. There is a pond in the north side, which is part of an old oxbow formation. This pond is also utilized as an outlet for some city storm water. Thomas Jenness indicates there is an 8- inch tile, which regulates the level of this pond, transferring water to lower lying subject areas to the east. The area to the north is gently sloped and is utilized for pasture and/or hay production. The area to the south is gently to moderately slope with more over wash areas noted. Some hardwood trees are noted. The land would be considered to have pasture and/or recreational utility.

The 24.64 crop acres are farmed as two fields - 19.52 and 5.12 acres respectively. The 5.12 acres is the lowest lying field. This is on the south side of the farm. It is irregular in shape. On the date of inspection this field had growing corn. Per information supplied by Thomas Jenness the southern field experiences a higher level of flooding than the northern field. The northern field is slightly elevated as compared to the southern field. This is the larger field of 19.52 acres. This land is also gently sloped, planted straight, and was planted to corn on the date of inspection. Cropland soil types include Kennebec, Omadi, Judson, Fluvaquents-Omadi, Colo, and Spillville series. These soils have silt clay loam, clay loam, and complex subsoils with topographies ranging from zero to five percent. Land CSR1 ratings range from 25 to 80 with an overall average of 74.9. Land CSR2 ratings range from 13 to 93 with an overall average of 86.4. The cropland appears clean and in a good state of productivity.

The subject includes two improvements. There is a 28-foot by 44-foot frame constructed barn. This appears to have been constructed about 1900. The barn has experienced some rehabilitation with new concrete footing on the west side and some interior support work 19 completed on the hay mow. The barn has metal sides and metal roof. The barn has partial concrete interior floor and a 10-foot by 44-foot lean-to with dirt floor on the south side. The barn appears in overall average condition. Given the age, condition, and function it would be considered generally functionally obsolete and is considered salvage only.

A detached structure is a 10-foot by 16-foot older frame shed. This has wood sides and tin roof. It appears in fair condition. Given the size and function it is considered salvage value only.

Per information supplied by Thomas Jenness the subject has city water, which supplies water to a stock tank located north of the barn. Mr. Jenness indicates there is no onsite well or septic tank.

During the appraisal process the appraiser contacted city officials regarding the subject’s zoning and potential utility. It was indicated the subject is zoned A-1 Agricultural. It was further indicated given the flood plain designation for the entire subject property no building improvements can be constructed on site. 20

Subsequent to inspecting the subject property this appraiser determined appropriate appraisal methodology and techniques to utilize in developing the subject property’s valuation.

I analyzed the needs and expectations of the client and intended user, and any supplemental standards set forth.

I analyzed the land and improvement characteristics. I analyzed the land physical, legal, and economic characteristics, and the availability and reliability of market information including comparable sale data, income and expense data, and cost data.

I analyzed the improvements physical, legal, and economic characteristics. I analyzed the availability and reliability of market generated information including comparable sale data, income and expense data, capitalization data, and cost data including RCN and depreciation analysis.

After my inspection of the subject property and based on its physical and legal characteristics, and the market it is located in, I have concluded that utilization of the Direct Sales Comparison Approach alone should be utilized. The Cost Approach was considered. The subject’s improvements are considered salvage only and as such, the Cost Approach was determined not applicable. The Income Approach was considered. Given the high level of non-cropland contained within the subject it is the opinion of the appraiser completion of the Income Approach could produce a misleading value estimate and was therefore determined not applicable.

In determining the subject property’s valuation by the Direct Sales Comparison Approach, this appraiser utilized Vander Werff and Associates, Inc. database of land sales from the subject property’s marketplace dated 2013 through 2017. The sales that most resembled the subject were utilized within this report.

After an investigation of the available information pertinent to the value of the subject property, my opinion of the “as is” “Market Value” as of the date of inspection, August 16, 2017 is: $233,800 or $4,250 per acre (Two Hundred Thirty-three Thousand Eight Hundred Dollars) This valuation is NOT a guarantee of the “sales price”. The valuation developed herein is “Market Values” as defined within this report. The “real estate/business” market is NOT a “perfect” market. The actual sales price for the subject property may be higher or lower than the reported valuation.

This appraisal has been completed in compliance with the Uniform Standards of Professional Appraisal Practice. The appraisal has been prepared in compliance with Reporting Standards Rule 2-2a and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

Intended Appraisal Use and User

The client for this appraisal assignment is Mr. Ross Baxter, Iowa Natural Heritage Foundation, 505 5th Avenue, Suite 444, Des Moines, Iowa. The intended user of this appraisal report is Iowa Natural Heritage Foundation. The purpose for this appraisal is to 21 determine the subject property’s “as is” "Market Value" as of the date of inspection, August 16, 2017. The appraisal will be utilized to assist Iowa Natural Heritage Foundation in potential purchasing decision on the subject property. The appraisal will provide a supported opinion of the market valuation for the subject property conjunction with the appraisal policies and procedures of the 2016/2017 Edition of USPAP; and the Financial Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

Use and users other than the above stated are specifically prohibited.

Assessor’s Parcel Numbers and Tax Data

The assessor parcel numbers for the subject property are 0726376001, 0726328006, and 0726355026.

The subject property has a current assessed value of $111,746. A breakdown of this would indicate the land is assessed at $108,924 with improvements assessed at $2,822.

The real estate taxes are $1,102 per year net.

Vander Werff and Associates, Inc. has completed no research regarding any liens, mortgages or other encumbrances which may or may not be on the subject property. The subject property is being appraised as “fee simple” with no consideration given to any potential liens, mortgages or other encumbrances which may be on the subject property.

Environmental Supplement and FEMA Flood Map Information

The subject property appears generally clean. The subject includes two older improvements. Nothing hazardous was noted in or around the improved area. Nothing unusual was noted in the unimproved areas. The subject is located on the east side of the city of Cherokee. It has city water. Electric service is nearby. The Little Sioux River is noted to run across the southeast corner of the farm, which results in the subject being 100 percent in a flood plain.

To investigate the flood zone for the subject property, I consulted FEMA Flood Zone Management. The subject property is located in FEMA map 1900630005B with an effective date of January 2, 1981. The flood map indicates the subject is within a 100 year flood zone and the floodway.

During the appraisal process, the Iowa DNR and EPA websites were analyzed to verify no hazardous activities are registered on site. The subject is not located on any registered landfill.

The subject property appears clean, however no warranties are provided. Should environmental hazards arise this certainly could have a detrimental effect on the subject property’s overall valuation.

Interest Being Appraised

The property interest being appraised is “fee simple”. 22

Zoning Ordinance Data

According to the Cherokee city zoning office the subject property is zoned A-1 Agricultural. Typically this would allow for multiple uses including construction of building improvements. It was indicated the subject’s flood plain location eliminates the possibility of construction of any building improvements on site. The existing barn and shed are considered grandfathered under the current zoning regulations.

The subject property’s use is considered conforming.

History of Ownership

According to the Cherokee County Assessor’s Office, the titleholder to the subject property is Thomas and Phyllis Jenness. It was indicated there have been no transfers of the subject property in the past 3 years.

Competency Provision

Greg Tritle is a Certified General Real Property Appraiser licensed in the State of Iowa, Minnesota, and South Dakota. He is competent in the appraisal of farms, residential properties, rural acreages, and commercial property. Mr. Tritle has completed well over 2,500 farm and commercial appraisals since beginning his association with Vander Werff and Associates, Inc. in 2001. Mr. Tritle has worked as an Associate Appraiser from 2001 to January 30, 2006, at which time he received his Certified General Real Property Appraiser’s License. Mr. Tritle’s experience includes a wide range of agricultural and commercial experience, as well as residential experience. This experience includes appraisals of warehouse facilities, offices, retail buildings, residential subdivisions, condominium complex developments, and commercial dairy facilities with sizes up to 11,000 head. Mr. Tritle’s experience includes appraisal of commercial poultry facilities including turkey, broiler, and layer facilities. Appraisal assignments include hog finisher units, farrowing units, gestation units, as well as specialized hog production facilities. Beef cattle feed lot experience includes appraisal of many cattle feed lots up to 30,000 head in size. Many appraisals have been completed on vacant land, as well as typically improved farmsteads. In addition, Mr. Tritle has extensive experience in residential appraisal work throughout northwest Iowa. In conjunction with the appraisal work with Vander Werff and Associates, Inc. Mr. Tritle has utilized Vander Werff and Associates, Inc. database for commercial and agricultural properties. This database includes expense ratios, gross income multipliers, rental information, replacement cost new information, comparable sale data information, as well as other specific information for specific types of commercial, agricultural, and residential properties. Vander Werff and Associates, Inc. business database includes capitalization rates of various businesses, sold annual net revenue, A&R multipliers, annual owners cash flow, OCF multipliers, monthly net revenue multipliers, expense ratios, gross income multipliers, as well as other data necessary for the completion of business appraisals. Mr. Tritle is licensed in the State of Iowa and is a contract appraiser for Vander Werff and Associates, Inc. Geographically Vander Werff and Associates, Inc. primarily serves Iowa, Minnesota, South Dakota, and Nebraska. However, appraisal have been completed in Wyoming, Kansas, Missouri, North Dakota, Wisconsin, and other Midwestern States. Please 23 see Greg Tritle’s resume included within this appraisal report. Mr. Tritle’s resume has further information regarding this appraiser’s qualifications.

“Market Value” Definition

The purpose of this appraisal is to arrive at “Market Value” as below defined. “Market Value” as defined by the 2016/2017 USPAP page U-3 and U-4, lines 92 through 105 is as follows.

“Market Value”: A type of value stated as an opinion that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Comment: forming an opinion of “Market Value” is the purpose of many real property appraisal assignments, particularly when the client’s intended use includes more than one intended user. The conditions included in market value definitions establish market perspectives for development of the opinion. These conditions may vary from definition to definition but generally fall into three categories:

1. The relationship, knowledge, and motivation of the parties (i.e., seller and buyer); 2. The terms of sale (e.g., cash, cash equivalent, or other terms); and 3. The conditions of sale (e.g., exposure in a competitive market for a reasonable time prior to sale). After interviewing the client for this appraisal assignment I have concluded the current economic definition of “Market Value”, agreed upon by agencies that regulate federal financial institutions in the United States of America as per 2016/2017 edition of the Uniform Standards of Professional Appraisal Practice (page AO-150), is the “Market Value” to be established in this appraisal. The definition of this “Market Value” is:

“Market Value” is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of good 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 period of 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 normal consideration for the property sold unaffected by special or creative financing or sales concessions granted to anyone associated with the sale, or other special or creative terms, services, fees, costs, or credits involved in transaction.

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Discussion of Appraisal Approaches

In this appraisal, the following information will be provided. There will be a discussion of approaches to value, including the Direct Sales Comparison Approach, Cost Approach, and Income Approach. The General Nature of the Area Being Appraised, Highest and Best Use, Physical and Legal Characteristics, and History of Ownership will then be discussed. This will be followed by a description of the Current Marketing Conditions and a General Description of the farm or acreage being appraised.

The appraisal report then follows. Attachments to this appraisal will include a discussion of the Direct Sales Comparison Approach, a final correlation of value and comments, as well as pertinent photographs, aerial photos, soil maps, county maps, and other pertinent information.

The three approaches to the appraisal process are the Cost, Income, and Direct Sales Comparison Approaches.

The Direct Sales Comparison Approach

The Direct Sales Comparison Approach to value is based on the principle of substitution. That is, the value of the property tends to be set by the price that would be paid to acquire a substitute property with similar utility and similar desirability within a reasonable amount of time. The principle of substitution implies the reliability of the Direct Sales Comparison Approach is diminished if substitute properties are not available in the market. The Direct Sales Comparison Approach is applicable to all types of property interest when there are sufficient, recent and reliable transactions to indicate value patterns or trends in the market. For property- types that are bought or sold regularly, this approach often provides a very reliable indication of "Market Value" and is the most direct and systematic approach to value estimation.

Vander Werff and Associates, Inc. typically utilizes three to five comparable sales in determining the subject property’s "Market Value" by the Direct Sales Comparison Approach. The sales utilized are selected because they have exhibited the greatest degree of comparability to that of the subject property. The sales are selected from Vander Werff and Associates, Inc. extensive comparable sales database, updated regularly compared with and researched with other appraisers, commercial property brokers and others. Adjustments of individual items of comparison are made between the subject and sale property. A plus adjustment indicates the subject property is more valuable than the sale property in that particular area. A negative adjustment indicates the subject property is less valuable than the sale property on the particular item being considered. No adjustment indicates the subject and sale properties have a similar value when considering that particular item. Adjustments can be made on a dollar basis, per square foot basis, percentage basis, dollar per productivity point basis, per acre basis and may include square footage, year built, quality/condition, location, functional utility, fixtures, unattached equipment, support buildings, site contributory value, as well as other factors which could affect or influence the subject and/or sale property. When deriving a “going concern” valuation, a typical unit of comparison is gross income.

The comparable sales utilized herein have been verified by Vander Werff and Associates, Inc.

25

Corn Suitability Rating

CSR1 and CSR2 ratings are available for soils in Iowa. The following paragraph is a general description of the CSR rating, applicable to both CSR1 and CSR2.

Corn Suitability Ratings provide a relative ranking of all soils mapped in the state of Iowa based on their potential to be utilized for intensive crop production. The CSR is an index that can be used to rate one soil’s potential yield production against another over a period of time. The CSR index accounts for climatological conditions as well as intensity and frequency of row crop management systems for each soil unit. Ratings range from 100 to soils that have no physical limitations, occur on minimal slopes, and can be continuously row cropped, to as low as 5 for soils with severe limitations for row crops. The CSR assumes (1) adequate management, (2) natural weather conditions (that is, no irrigation), (3) artificial drainage, where required, (4) soils lower on the landscape are not affected by frequent floods and (5) no land leveling or terracing. The CSR for a given field can be modified by sandy spots, rock outcroppings, field boundaries, etc.*

*According to the information in a report released by the Soil Conservation Service of the U.S. Department of Agriculture prepared by Gerald A. Miller, Extension Agronomist.

Highest and Best Use

Highest and best use of a property is defined as that reasonable and probable use that will support the highest present value, as defined, as of the effective date of the appraisal. Alternatively, it is “that use, from among reasonable, probable, and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in highest land value.” To estimate the highest and best use of a site, the appraiser utilized four tests. The projected use must meet all four of these tests: 1.) Legally permitted. 2.) Physically possible. 3.) Economically feasible. 4.) Most profitable. Each potential use of a property is considered by the appraiser in terms of these four tests. If a proposed use fails to meet any of the tests, it is discarded and another use is reviewed. The highest and best use meets all four tests.

The determination of highest and best use results from the appraiser’s judgment and analytical skill – that is that the use determined from analysis represents an opinion, not a fact. In appraisal practice, highest and best use is the premise upon which value is based. In the context of most probable selling price (market value), another term for highest and best use would be “most probable use.” In the context of investment value, an alternative term would be “most profitable use”.

“The definition immediately above applies specifically to the highest and best use of the land. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in its highest and best use exceeds the total value of the property in its existing use.”

In determining the highest and best use for the subject property I considered the four standard principles. 1. Legally Permissible 26

2. Physically Possible 3. Economically Feasible 4. Most Profitable When analyzing the subject property as vacant it is noted permitted uses include land available for agricultural production or rural building site. Surrounding land use patterns support the physical possibility and economic feasibility of both improved and unimproved uses. Further analysis of land use patterns indicate the majority of the land in the area is unimproved. Therefore, when analyzed as vacant the highest and best use of the subject is considered land available for agricultural or recreational use.

General Nature of the Area Being Appraised

Cherokee County is located in Northwest Iowa. The county comprises 577 square miles.

Cherokee County is one of the strongest agricultural and industrial regions in Northwest Iowa. This county is one that continues to expand its frontiers as it maintains its place in the future of Iowa’s economy and culture. The Cherokee Area Economic Development Corporation is a partnership dedicated to improving the quality of life and business opportunities throughout Cherokee County.

As of the 2010 US Census, there were 12,072 people residing in the county of which 39 percent was considered urban and 61 percent rural. The 2000 US Census indicated 13,035 residents.

Adjacent counties include O’Brien County to the north, Buena Vista County to the east, Ida County to the south, Woodbury County to the southwest and Plymouth County to the west.

Sioux City, Iowa is located 61 miles southwest of Cherokee, the county seat of Cherokee County and Sioux Falls, South Dakota is 100 miles northwest. Omaha, Nebraska is located 108 miles southwest. Primghar is 24 miles northeast, Storm Lake is 28 miles, Fort Dodge is 96 miles and Ida Grove is 30 miles from Cherokee. The Iowa Great Lakes Region is located 60 miles northeast of Cherokee. Meriden is 6 miles, Larrabee is 8 miles, Aurelia is 8 miles southeast, Quimby is 11 miles southwest, Cleghorn is 12 miles northwest, Calumet is 14 miles, Sutherland is 16 miles northeast and Washta is 17 miles southwest. Paullina is 18 miles.

Major highways in the county include U.S. Highway 59, Iowa Highway 3, Iowa Highway 7, Iowa Highway 31 and Iowa Highway 143.

Cherokee County is divided into sixteen townships: Afton, Amherst, Cedar, Cherokee, Diamond, Grand Meadow, Liberty, Marcus, Pilot, Pitcher, Rock, Sheridan, Silver, Spring, Tilden and Willow.

Communities in Cherokee County include Aurelia, Cherokee (county seat), Cleghorn, Larrabee, Marcus, Meriden, Quimby and Washta.

Aurelia:

Aurelia is home to 1,036 residents. Aurelia is located 60 miles northeast of Sioux City and 65 miles southwest of the Iowa Great Lakes region. It has affordable housing, low taxes and state- of-the-art utilities. There are three churches in the community. The Aurelia Community School 27

District serves a rural area of 132 square miles with a K-12 enrollment of 311 students. A total staff of 49 individuals including 28 teachers and three administrators, as well as support staff, provide services to the students.

Cherokee:

Cherokee is the county seat of Cherokee County located in Northwest Iowa in the beautiful Little Sioux River Valley. The community is located at the intersection of U.S. Highway 59 and Highway 3. As of the 2010 US Census, Cherokee’s population was 5,932. The Cherokee Area Economic Development Corporation is a partnership dedicated to improving the quality of life and business opportunities throughout Cherokee County. Public schools in Cherokee include Washington High School, Little Sioux success Center, Early Childhood Learning Center, Cherokee Middle School and Roosevelt Elementary School. Cherokee Regional Hospital, formerly known as Sioux Valley Memorial Hospital, is a 25-bed Critical Access hospital located in Cherokee. Serving the seven-county area since 1916, Cherokee Regional Hospital has modern facilities, state-of-the-art technology and a highly-trained staff that are necessary to provide excellent healthcare services. Cherokee is the home of the Sanford Museum and Planetarium which has exhibits and activities on a variety of subjects. There are 17 churches in the community.

Cleghorn:

Cleghorn with a population of 240, is located on the main line of the Illinois Central Railroad. Two manufacturing businesses are located in the community, providing the main source of employment – Wetherell Manufacturing and Taylor Refrigeration. A bank, elevator, motorcycle sales and repair shop and the Breading Company all make Larrabee a good economic community. Students in Cleghorn attend the Marcus-Meriden-Cleghorn School District. There are two churches in the community.

Larrabee:

Larrabee has a population of approximately 132 people. The community had a $4 million feed mill added to its existing elevator in 2000. The facility is capable of producing 120,000 ton of feed per year. The community is part of the Cherokee Community School District. High speed internet is available in the community, thereby offering e-education advantages. The Cherokee County Conservation Board operates several county parks near Martin’s Access which offers camping, fishing, picnic spots, foot and horse trails. Nature Reserve is dedicated to preserving Iowa’s native prairie grasses, only a few miles from Larrabee. Larrabee is home to one church, the United Methodist Church.

Marcus:

Marcus has been named an official “Main Street Community” by the Governor of Iowa, one of only 47 among all the cities and towns throughout the State of Iowa. The population of Marcus, according to the 2010 census, was 1,117 citizens. It is located in western Cherokee County on Highway 143, just one mile north of Highway 3. The main line of the Canadian National Railroad skirts the north edge and just 1.5 miles east is a 92 million gallon ethanol plant, Little Sioux Corn Processors LP. There is also a 15 million gallon biodiesel plant, Soy Energy, under construction just outside of the community. Marcus-Meriden-Cleghorn School District serves the community. It ranks very high scholastically among all schools in Iowa. There are five 28 churches, a public library, city parks, golf course and a heated swimming pool. Two medical clinics are located in the business district. There are five churches in the community.

Meriden:

Meriden has a population of 159. Meriden has one church in the community – Meriden Evangelical Free Church.

Quimby:

Quimby has a population of approximately 319 people. Quimby is home to Simonsen Industries, Inc., a rendering plant and are developing a line of fertilizer spreaders. The Quilt Shop offers area crafters supplies and there is a Central Bank branch here, too. The community is part of the River Valley School District. The public library offers library services to the school. The 3,500 yard/9-hole/par 36 golf course and clubhouse is a beautiful attraction for the town. Quimby has four churches.

Washta:

Washta has a population of approximately 248 people. Washta has the distinction of being named the coldest spot in Iowa. The local economy of Washta is agriculturally based with residents commuting to surrounding cities for their jobs. Washta’s major resources include sand, gravel and the fertile farmland of the Little Sioux River Valley. Some businesses in the community include Western Iowa Co-op, CarGo Express Convenience Store, Central Bank and River Valley School bus barn. Washta is part of the River Valley School District and hosts PK- thru 4th grade classes. Little Sioux River and the Ranney Knob Park lies on the north side of the community. Residents have raised money to construct a fire station/city hall and a multi- purpose community center. Washta has two churches.

Cherokee County had a median household income of $44,635 in 2006-2010 and has grown by 27 percent since 2000. The income growth rate is higher than the state average rate of 21.52 percent and is higher than the national average rate of 19.17 percent.

Industries providing employment in the county include educational, health and social services (22.2%), manufacturing (17.3%), retail trade (12.7%), agriculture, forestry, fishing and hunting and mining (10.1%). The total labor force in 2004 was 6,566 with an unemployment rate that year of 4.8 percent. The unemployment rate in the county in October of 2009 was 3.9 percent.

The average size of a farm in the county is 401 acres. The average value of agricultural products sold per farm was $184,780. The average total farm production expenses per farm were $146,330. 81.06 percent of farm land was utilized for crops. The percentage of farms operated by a family or individual was 86.02 percent and the average age of the principal farm operator was 53 years. 131,673 acres of corn was harvested and 126,624 acres of soybeans.

Cherokee County had a median house value of $77,500 in 2006-2010 and has grown by 35.25 percent since 2000. The house value growth rate is lower than the state average rate of 49.58 percent and is lower than the national average rate of 50.42 percent. In 2007, 16 new single- family homes were constructed at an average cost of $180,400. In 2008, 7 new single-family homes were built at an average cost of $115,900 and in 2009, 8 new homes were built at an average cost of $275,900. The median average monthly rental is $336. 29

Sioux Gateway/Col. Bud Day Field is located 63 miles from Cherokee in Sioux City, Iowa. Fort Dodge Regional Airport and Joe Foss Field in Sioux Falls, South Dakota are the nearest airports certified for carrier operations. Other public-use airports nearest to Cherokee include the Cherokee Municipal Airport, three miles from Cherokee, Paullina Municipal Airport and Primghar Municipal Airport.

School districts in the county include Aurelia Community School District, Cherokee Community School District, Marcus-Meriden-Cleghorn Community School District, and River Valley School District. Colleges and universities with over 2000 students nearest to Cherokee include Buena Vista University in Storm Lake; Western Iowa Tech Community College in Sioux City; University of South Dakota in Vermillion, South Dakota; Iowa Central Community College in Ft. Dodge; Iowa Western Community College in Council Bluffs; Metropolitan Community College in Omaha, Nebraska and Wayne State College in Wayne, Nebraska.

Cherokee Regional Hospital, formerly known as Sioux Valley Memorial Hospital, is a 25-bed Critical Access hospital located in Cherokee. Serving the seven-county area since 1916, Cherokee Regional Hospital has modern facilities, state-of-the-art technology and a highly- trained staff that are necessary to provide excellent healthcare services. Other hospitals/medical centers near Cherokee include Baum-Harmon Memorial Hospital in Primghar, Buena Vista Regional medical Center in Storm Lake and Horn Memorial Hospital in Ida Grove. The Cherokee Mental health Institute provides active inpatient treatment to adults, adolescents and children who are in need of acute psychiatric service. It is operated under the authority of the Iowa Department of Human Services. CMHI is one of 11-programs at the “Cherokee Regional Resource Center”, a 208-acre campus. It has a catchment area of 41 counties in northwest Iowa for adults and 55 counties for children and adolescents.

Cherokee, the county seat of Cherokee County, is the home of the Sanford Museum and Planetarium which has exhibits and activities on a variety of subjects including: archaeology, art, astronomy, geology, history, natural history and paleontology. Cherokee is the smallest town in the world to have its own symphony orchestra, the Cherokee Symphony. This 60- member orchestra has been referred to as the best kept secret in Northwest Iowa. City events include the annual jazz festival in January, the Cherokee County Fair and the Cherokee Rodeo. Cherokee is also the home of the Cherokee Mental Health Institute, under the Iowa department of Human Services. The nearby Cherokee Sewer Sit is a well-preserved prehistoric Indian bison processing site which helped to redefine the Archaic period in the Midwest and the Phipps Site is a National Historic Landmark 1000-year old Plains farming village that may have been fortified.

Lakes and reservoirs in the county include Larson Lake and Leos Pond. Rivers and creeks include Fiddle Creek, Rock Creek, Silver Creek, Gere Creek, Little Maple River, Perry Creek, Mill Creek, Maple Creek and Coonley Creek.

Parks in the county include Macs Preserve, Little Sioux Greenbelt, Martin Area County Park, Stieneke Area County Park, Steele Prairie State Preserve, Barnes Area County Park, Harold Clark Habitat Area and Johnson Hienel Access Area.

Cherokee County gets 28 inches of rain per year. Snowfall is 31 inches. The July high is around 85 degrees. The January low is 5.

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General Description of Cherokee, Iowa

Cherokee is the county seat of Cherokee County located in Northwest Iowa in the beautiful Little Sioux River Valley. The community is located at the intersection of U.S. Highway 59 and Highway 3.

Sioux City, Iowa is located 61 miles southwest of Cherokee and Sioux Falls, South Dakota is 100 miles northwest. Omaha, Nebraska is located 108 miles southwest. Primghar is 24 miles northeast, Storm Lake is 28 miles, Fort Dodge is 96 miles and Ida Grove is 30 miles from Cherokee. The Iowa Great Lakes Region is located 60 miles northeast of Cherokee. Meriden is 6 miles, Larrabee is 8 miles, Aurelia is 8 miles southeast, Quimby is 11 miles southwest, Cleghorn is 12 miles northwest, Calumet is 14 miles, Sutherland is 16 miles northeast and Washta is 17 miles southwest. Paullina is 18 miles.

The population of the community, according to the 2010 US Census, was 5,932 with 2,316 households and 1,339 families residing in the city of which 59 percent was urban and 11 percent rural. This is up from 5,369 in 2000.

The estimated median household income in 2011 was $33,792. It was $31,240 in 2000. The estimated per capita income in 2011 was $24,028. Unemployment in July of 2013 was 3.9 percent.

Cherokee County is one of the strongest agricultural and industrial regions in Northwest Iowa. This county is one that continues to expand its frontiers as it maintains its place in the future of Iowa’s economy and culture. The Cherokee Area Economic Development Corporation is a partnership dedicated to improving the quality of life and business opportunities throughout Cherokee County.

The Cherokee Area Economic Development Corporation’s mission is to retain and attract business, agriculture and residents to Cherokee County.

The estimated median house or condo value in 2011 was $70,195. It was $54,500 in 2000. The mean price of all housing units was $77,480. In 2009, 5 new homes were constructed at an average cost of $196,400. In 2010, 2 new homes were built at an average cost of $305,000 and in 2012, 4 new homes were constructed at an average cost of $365,500. There was no new construction of single family homes in 2008 and 2011. The median gross monthly rental in 2011 was $457.

Electricity is provided by Mid-American Energy. Gas service is provided by Alliant Energy. Telephone service can be obtained through Qwest or Iowa Telecom. Internet service can be obtained through Iowa Telecom, Evertek, Qwest, C-M-L Telephone or Northwest Internet Service. Cable television is provided by Mediacom.

The City of Cherokee has a mayor/council form of government with a city manager and five council members. The city is divided into three wards, with one council member elected from each ward and two elected at-large. The mayor is elected by the voters for a term of four years and the council is elected for staggered four-year terms.

The Cherokee Police Department consists of eight sworn officers, a civilian administrative assistant, 13 reserve law enforcement officers and a police K-9 that is trained in narcotics 31 detection. All law enforcement officers are trained by standards set by the Iowa Law Enforcement Academy. Additional training is received through attendance at specialized schools, seminars and in-service training. The department provides and participates in various community prevention programs, as well as additional services to the community.

The Cherokee Fire Department consists of 25 volunteer firemen, two paid driver/dispatchers and a chief. The department is manned five days a week, with split shifts. Equipment consists of four pumpers, one aerial truck, one tanker and an equipment van.

Sioux Gateway/Col. Bud Day Field is located 63 miles from Cherokee in Sioux City, Iowa. Fort Dodge Regional Airport and Joe Foss Field in Sioux Falls, South Dakota are the nearest airports certified for carrier operations. Other public-use airports nearest to Cherokee include the Cherokee Municipal Airport, three miles from Cherokee, Paullina Municipal Airport and Primghar Municipal Airport.

Public schools in Cherokee include Washington High School, Little Sioux success Center, Early Childhood Learning Center, Cherokee Middle School and Roosevelt Elementary School. Colleges and universities with over 2000 students nearest to Cherokee include Buena Vista University in Storm Lake; Western Iowa Tech Community College in Sioux City; University of South Dakota in Vermillion, South Dakota; Iowa Central Community College in Ft. Dodge; Iowa Western Community College in Council Bluffs; Metropolitan Community College in Omaha, Nebraska and Wayne State College in Wayne, Nebraska.

Cherokee Regional Hospital, formerly known as Sioux Valley Memorial Hospital, is a 25-bed Critical Access hospital located in Cherokee. Serving the seven-county area since 1916, Cherokee Regional Hospital has modern facilities, state-of-the-art technology and a highly- trained staff that are necessary to provide excellent healthcare services. Other hospitals/medical centers near Cherokee include Baum-Harmon Memorial Hospital in Primghar, Buena Vista Regional medical Center in Storm Lake and Horn Memorial Hospital in Ida Grove. The Cherokee Mental health Institute provides active inpatient treatment to adults, adolescents and children who are in need of acute psychiatric service. It is operated under the authority of the Iowa Department of Human Services. CMHI is one of 11-programs at the “Cherokee Regional Resource Center”, a 208-acre campus. It has a catchment area of 41 counties in northwest Iowa for adults and 55 counties for children and adolescents.

Churches in the community include St. Paul’s United Methodist Church, First Church of Christ, Memorial Presbyterian Church, Bethlehem Lutheran Church, Calvary Chapel of Cherokee, Crossroads Christian Church, Trinity Lutheran Church, First Baptist Church, Grace Baptist Church and Kingdom Hall – Jehovah’s Witness.

Cherokee is the home of the Sanford Museum and Planetarium which has exhibits and activities on a variety of subjects including: archaeology, art, astronomy, geology, history, natural history and paleontology. Cherokee is the smallest town in the world to have its own symphony orchestra, the Cherokee Symphony. This 60-member orchestra has been referred to as the best kept secret in Northwest Iowa. City events include the annual jazz festival in January, the Cherokee County Fair and the Cherokee Rodeo. Cherokee is also the home of the Cherokee Mental Health Institute, under the Iowa department of Human Services. The nearby Cherokee Sewer Sit is a well-preserved prehistoric Indian bison processing site which helped to redefine the Archaic period in the Midwest and the Phipps Site is a National Historic Landmark 1000-year old Plains farming village that may have been fortified. 32

The City of Cherokee has a very active Recreation Department. Programs offered throughout the year include Hershey Track Meet, youth outdoor soccer, adult softball leagues, women’s/co- ed volleyball leagues, Bacon Aquatic Center, junior basketball, men’s basketball league, youth tennis camp, Red Cross swimming lessons, River’s Edge Disc Golf Course and the fishing derby.

The Cherokee Parks Department plans, acquires, develops and maintains high-quality parks to beautify and enhance the City of Cherokee. The crown jewel of the city park system is beautiful Koser Spring Lake Park, located along Highway 59 South. This park has 40 camping spaces with electrical, water and sewer hookups, shower and restroom facilities, asphalt paved walking/jogging trail, modern playground equipment, paddle boats, fishing and many shelter facilities including the enclosed, air conditioned, Spring Lake Yacht Club. Directly across the highway is Wescott Park, which contains ball diamonds, concession stand and restroom facilities.

Cherokee gets 28 inches of rain per year. Snowfall is 31 inches. The number of days with any measurable precipitation is 91. On average, there are 211 sunny days per year. The July high is around 85 degrees. The January low is 5.

General Description of Immediate Neighborhood

The immediate neighborhood of the subject property is Cherokee County, Iowa. The roads in this neighborhood are gravel, asphalt, and concrete, with section lines forming most roadways. There is public electricity, rural water, and well water. Most of the land here is row crop agricultural. Crops raised included corn, soybeans, and alfalfa. There are some wildlife pasture areas particularly close to several rivers and streams. There are overhead electric utility lines. There are many rural residential properties with some farmer owned or occupied acreage sites with livestock, grain, and equipment storage facilities. There are good support facilities within Cherokee County and surrounding counties for the production of grain and livestock. The building sites by and large are mostly well kept and cared for. The cropland is clean and well cared for.

Current Market Conditions

Market conditions for farmland in Cherokee County, Iowa appear typical as compared to many counties in northwest Iowa. The farmland market appeared to primarily experience peak levels in late 2012 and early 2013, with some subsequent softening due to lower corn and soybean prices. As of late, the farmland market appears to have stabilized below peak levels previously experienced.

Discussion Concerning Exposure Time

This appraiser’s analysis of past successful public auctions and their respective marketing times would indicate that typical marketing time for unimproved land is 45 days or less. Supported by this analysis, the estimated exposure time for the subject’s unimproved land is 45 days or less. 33

Personal Property

The definition of personal property, as provided by USPAP 2016/2017 edition is “identifiable, portable and tangible objects that are considered by the general public to be “personal”, i.e., furnishings, artwork, antiques, gems, jewelry, collectibles, machinery and equipment. All property that is not classified as real estate”.

The appraised valuation is for real estate only and contains no personal property. 34

Direct Sales Comparison Approach

Subject Size: 55.01 acres

Unit of Comparison: Dollar per CSR1 Point Tillable Sale Data for Comparable Farmland Properties Subject Property Sale #1 Sale #2 Sale #3 Sale #4 Date 8/17 4/16 2/13 11/14 3/17 Identity of Subject 34-94-38 2 and 11-93-39 25 and 36-93-40 9, 10, 15, 16-92-40 Property Sales Price N/A $897,000 $805,000 $267,120 $1,651,157 Total Acres 55.01 acres 299 acres 180 acres 89.04 acres 389.52 acres Price Per Acre N/A $3,000 $4,472 $3,000 $4,239 Price Per N/A $4,985 $6,078 $5,466 $6,593 Tillable Acre Price Per Non- N/A $1,645 $2,006 $1,804 $2,176 Crop Acre CSR 74.9 49.5 68 57 69.1

CSR Adj. Crop $7,543 $6,695 $7,183 $7,146 Acre Value Cropland 24.64 acres $185,859 $164,964 $176,989 $176,077 Contribution Non-Crop Acre $1,645 $2,006 $1,804 $2,176 Value Non-Crop 30.37 acres $49,959 $60,922 $54,787 $66,085 Contribution

Total Value $235,818 $225,886 $231,776 $242,162 Value Per Acre $4,287 $4,106 $4,213 $4,402 Location = = = = Land Undulations = = = = Time = = = = Miscellaneous = Some CRP Some WRP No flood cropland (+) (+) (-) Adj. Value Per =$4,287 >$4,106 >$4,213 <$4,402 Acre Recommended Market Value:

$4,250 per acre x 55.01 acres = $233,792

Say: $233,800

Vander Werff & Associates, Inc. 2014 www.vw72.com 35

Comparable Sale #1

Sale #: 16 943834 & 933803 Date: 4/16 County: Clay & BV Township: Peterson & Brooke Total Price: $897,000 Seller: Croston Buyer: Donahoo Per Acre: $3,000 Legal: SW ¼ 34-94-38 and N ½ NW ¼, NW ¼ NE ¼ 3-93-38 except tract Location: half mile east of Peterson Road Name: South River Road Road Type: Gravel Terms of Sale: x Deed Contract - Terms: Book/Page #: 2016-1879 and 161869 Total Acres: 299 Tillable Ac.: 126.23 Pasture: 162.77 Other: 10 (including roads/ditches/etc.) SOIL TYPES: Name Name Name Sparta Dickinson Spillville Terril Moneta Colo Wadena Storden Galva Everly Ely Sac Tillable Acres: 126.23 / 42.2% Avg CSR1: 49.5 Avg CSR2: 67.5 Contributory Value Per Tillable Acre: $4,985 $ Per CSR1: $100.70 $ Per CSR2: $73.85 Total Contributory Value Cropland: $629,257

Non-Crop # of acres: 162.77 Utility: Pasture and river timber. Little Sioux River through. Partially flood prone Contributory Value Per Non-Crop Acre: $1,645 Total Contributory Value Non-cropland: $267,743

Buildings Dwelling: Sq Ft.: Basement: Year Built Replacement Cost New: % Contributory: Contributory Value:

Kind Size Year Built/Condition RCN % Cont. Value

Building Per Acre Contributory Value: Total Building Cont. Value:

CAP RATE INFORMATION INCOME -Tillable Acres: 126.23 Cash Rent Per Acre: $180 Total: $22,721 Non-Crop Acres 162.77 Cash Rent Per Acre: $40 Total: $6,511 Building Income Gross Income: $29,230

EXPENSES - RE Taxes $3,190 Insurance Liab/bldg: $150 Building Upkeep Other Expenses: Total Expenses: $3,340

NET INCOME $25,890 Cap Rate: 2.89%

Other Conditions: Lay of Land: Gentle and moderate slopes # of Fields: 2 Creeks, Waterways, Etc.: Little Sioux River, farmed and non-farmed waterway Highly Erodible Land (HEL) Yes x No Contoured Yes x No Terraces Yes x No Inspected By Greg Tritle Other Comments 30%-40% flood prone including approximately 30 crop acres, 60 to 70 pasture acres Verified By: John Hjelm, The Acre Company, Spencer, Iowa. Vander Werff and Associates, Inc. - 2016 36

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Comparable Sale #2

Sale #: 13 933911, 02 Date: 2/13 County: Cherokee Township: Spring Total Price: $805,000 Seller: Bau Breeze Buyer: Huseman Per Acre: $4,472 Legal: N ½ W ¼ 11-93-39 and Tr in SW ¼ 2-93-39 Location: NE Cherokee County Road Name: Sleepy Hollow Road Road Type: Gravel Terms of Sale: x Deed Contract - Terms: Book/Page #: 2013-0740 Total Acres: 180 Tillable Acres: 110 Pasture: 68 Other: 2 (including roads/buildings/site ditches/etc.) SOIL TYPES: Name Name Omadi Colo Spillville Terril Fluvaquents

Tillable Acres: 110/ 61.1% Average CSR1 Tillable Acres: 68 Value Per CSR1 Point Tillable: $89.38 Contributory Value Tillable - P/A: $6,078 Total: $668,580

Non-Crop # of acres: 68 Utility: Lowland and upland pasture/timber Contributory Value Non-Crop P/A $2,006 Total Non-crop $136,420

Buildings Dwelling-Kind Sq Ft.: Basement: Year Built Replacement Cost New: % Contributory: Contributory Value:

Kind Size Year Built/Condition RCN % Cont. Value

Building Per Acre Contributory Value: Total Building Cont. Value:

CAP RATE INFORMATION INCOME -Tillable Acres: Cash Rent Per Acre: Total: Non-Crop Acres Cash Rent Per Acre: Total: Building Income Gross Income:

EXPENSES - RE Taxes Insurance Liab/bldg: Building Upkeep Other Expenses: Total Expenses:

NET INCOME Cap Rate:

Other Conditions: Lay of Land: Gentle sloped cropland. Non-crop gentle to moderate slopes # of Fields: 2 Creeks, Waterways, Ditches: Little Sioux River along west side Highly Erodible Land (HEL) Yes x No Contoured Yes x No Terraces Yes x No Inspected By Greg Tritle Other Comments Cropland nearly all flood plain. 29 crop acres in CRP through 2019 at $143 per acre Verified By: Public records. Midwest Land Mgmt. Vander Werff and Associates, Inc. 39

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Comparable Sale #3

Sale #: 14 934025 and 36 Date: 12/14 County: Cherokee Township: Cedar Total Price: $267,120 Seller: Barnes Buyer: Schuiteman Per Acre: $3,000 Legal: Tract in Section 25 and 36-93-40 Location: 5 miles north of Cherokee, Iowa Road Name: Barnes Road Road Type: Gravel Terms of Sale: x Deed Contract - Terms: Book/Page #: 2014-2200 Total Acres: 89.04 Tillable Acres: 30.22 Pasture: 56.5 Other: 2.32 (including roads/buildings/site ditches/etc.) SOIL TYPES: Name Name Terril Steinauer-Hawick Turlin Estherville Omadi Allendorf Storden-Hawick Fluvaquents-Omadi Tillable Acres: 30.22/ 33.9% Average CSR1 Tillable Acres: 57 Value Per CSR1 Point Tillable: $95.90 Contributory Value Tillable - P/A: $5,466 Total: $165,212

Non-Crop # of acres: 56.5 Utility: Pasture/timber, upland and lowland, Little Sioux River nearby and through 9 of 56.5 acres subject to EWRP easement. Contributory Value Non-Crop P/A $1,804 Total Non-crop $101,908

Buildings Dwelling-Kind Sq Ft.: Basement: Year Built Replacement Cost New: % Contributory: Contributory Value:

Kind Size Year Built/Condition RCN % Cont. Value

Building Per Acre Contributory Value: Total Building Cont. Value:

CAP RATE INFORMATION INCOME -Tillable Acres: Cash Rent Per Acre: Total: Non-Crop Acres Cash Rent Per Acre: Total: Building Income Gross Income:

EXPENSES - RE Taxes Insurance Liab/bldg: Building Upkeep Other Expenses: Total Expenses:

NET INCOME Cap Rate:

Other Conditions: Lay of Land: Gently to moderately sloped # of Fields: 3 Creeks, Waterways, Ditches: Little Sioux River along and through property. Highly Erodible Land (HEL) Yes x No Contoured Yes x No Terraces Yes x No Inspected By Greg Tritle 11/14 Other Comments 20% Little Sioux River flood plain in lowland timber only. No flood plain cropland. Verified By: McGuire Auction Company, Holstein, Iowa Vander Werff and Associates, Inc. 42

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Comparable Sale #4

Sale #: 17 924009, 10, 15, 16 Date: 3/17 County: Cherokee Township: Cherokee Total Price: $1,651,157 Seller: Phipps Buyer: Stowater Per Acre: $4,239 Legal: Parcel B in Section 9, 10, 15, and 16, all in 92-40 Location: 1 north of Cherokee Road Name: Road Type: Terms of Sale: x Deed Contract - Terms: Book/Page #: 2017-0384 Total Acres: 389.52 Tillable Ac.: 181.92 Pasture: 207.6 Other: 0 (including roads/ditches/etc.) SOIL TYPES: Name Name Name Spillville Dickman Kennebec Omadi Galva Steinauer Allendorf Terril Tillable Acres: 181.92 / 46.7% Avg CSR1: 69.1 Avg CSR2: 86.8 Contributory Value Per Tillable Acre: $6,593 $ Per CSR1: $95.41 $ Per CSR2: $75.96 Total Contributory Value Cropland:

Non-Crop # of acres: 207.6 Utility: River pasture and timber, both upland and lowland. Mill Creek through. Contributory Value Per Non-Crop Acre: $2,176 Total Contributory Value Non-cropland: $451,758

Buildings Dwelling: Sq Ft.: Basement: Year Built Replacement Cost New: % Contributory: Contributory Value:

Kind Size Year Built/Condition RCN % Cont. Value

Building Per Acre Contributory Value: Total Building Cont. Value:

CAP RATE INFORMATION INCOME -Tillable Acres: Cash Rent Per Acre: Total: Non-Crop Acres Cash Rent Per Acre: Total: Building Income Gross Income:

EXPENSES - RE Taxes Insurance Liab/bldg: Building Upkeep Other Expenses: Total Expenses:

NET INCOME Cap Rate:

Other Conditions: Lay of Land: Gently to moderately sloped # of Fields: 10 Creeks, Waterways, Etc.: Mill Creek through Highly Erodible Land (HEL) Yes x No Contoured Yes x No Terraces Yes x No Inspected By Greg Tritle Other Comments Property is approximately 25% Zone A flood plain Verified By: Public records. Vander Werff and Associates, Inc. - 2016 45

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Discussion Concerning Direct Sales Comparison Approach

Please see grid entitled Direct Sales Comparison Approach Farmland Properties

In determining the "Market Value" of the subject property by the Direct Sales Comparison Approach this appraiser utilized Vander Werff and Associates, Inc. database of farmland sales from the subject property’s marketplace dated 2013 through 2017. The sales that most resembled the subject property were selected and utilized within the report. The sales selected were determined to have similar market influences to the subject property’s location.

Adjustment factors considered by this appraiser include those basic elements of comparison as described in “THE APPRAISAL OF REAL ESTATE, 13TH EDITION” as distributed by The Appraisal Institute. The 10 basic elements of comparison that should be considered by an appraiser within the Direct Sales Comparison Approach include:

• Real property rights conveyed • Financing terms • Conditions of sale • Expenditures made immediately after purchase • Market conditions (time) • Location • Physical characteristics – e.g. size, construction quality, condition • Economic characteristics – e.g. expense ratios, lease provisions, management, tenant mix • Use (zoning) • Non-realty components of value Ultimately, adjustments are indicated in the area of land mix and land productivity rating on the subject property’s cropland. The Direct Sales Comparison Approach grid completes a head-to- head analysis of the subject property versus the comparable sales completing adjustments for differences in land CSR rating on the tillable land and further adjusting for differences in land mix (ie. number of cropland versus number of non-cropland acres). This results in a productivity and land mix adjusted value for the subject property versus the comparable sales.

Further adjustments were considered in the areas of location, land undulations, and time. The subject and comparable sales would be considered to have similar influences in these areas with no adjustments recommended.

Additional differences noted include the fact a portion of comparable sale #2’s cropland is in CRP. The subject is considered superior to sale #2 in this area.

A portion of sale #3’s non-cropland was enrolled in WRP. The subject is considered superior to sale #3 in this area.

Sales #1, #2, and #3 were all considered to have some floodplain cropland. Sale #4 has no flood plain cropland. The subject is considered inferior to sale #4 in this area. 48

Qualitative notations are made for these differences within the Direct Sales Comparison Approach grid.

CSR1 and CSR2 ratings are available for the subject property. The CSR2 ratings were introduced in January 2014. The market appears to be currently reacting slightly stronger to differences in CSR1 than CSR2. As such, within the Direct Sales Comparison Approach the subject and comparable sales are all analyzed utilizing the CSR1 rating.

All sales sold on terms similar to cash.

COMPARABLE SALE #1 was dated April 2016. This 299-acre farm located in Peterson and Brooke Townships, Clay and Buena Vista Counties, Iowa sold for $897,000 or $3,000 per acre. The farm contained 126.23 tillable acres for 42.2 percent tillable. Cropland soil types include Sparta, Terril, Wadena, Galva, Ely, Dickinson, Moneta, Storden, Everly, Sac, Spillville, and Colo series. The average CSR1 on the tillable land was 49.5. The farm included 162.77 acres of pasture and river timber noted to have the Little Sioux River through with some flood potential. The land was gently to moderately sloped. The cropland was farmed as two fields. The farm was 30 to 40 percent flood prone including approximately 25 percent of the cropland about 40 percent of the non-cropland. The contributory value per tillable acre was $4,985 with value per non-crop acre of $1,645. When analyzing the subject property versus comparable sale #1, differences are noted in the following areas. Subsequent to a CSR adjustment the indicated crop acre of the subject property compared to sale #1 is $7,543 per acre. This results in total contributory value of the subject’s 24.64 crop acres of $185,859. The indicated non-crop acre contributory value for sale #1 is $1,645 per acre. This results in total contributory value of the subject’s 30.37 non-crop acres of $49,959. The total land mix and productivity adjusted value of the subject property when compared to sale #1 is $235,818 or $4,287 per acre. No further adjustments were recommended. The indicated value of the subject property when compared to sale #1 is equal to $4,287 per acre.

COMPARABLE SALE #2 was dated February 2013. This 180-acre farm located in Spring Township, Cherokee County, Iowa sold for $805,000 or $4,472 per acre. The farm contained 110 tillable acres for 61.1 percent tillable. Soil types on the tillable land included Omadi, Colo, Spillville, Terril, and Fluvaquents series. The average CSR1 on the tillable land was 68. The farm also included 68 acres of lowland and upland pasture and timber. The majority of the farm was in a flood plain. The cropland was gently sloped with gentle to moderately sloped non- cropland. The cropland was farmed as two fields. Approximately 27 percent of the cropland was enrolled in CRP through 2019 with payment of $143 per acre at time of sale. The contributory value per tillable acre was $6,078 with value per non-crop acre of $2,006. When analyzing the subject property versus comparable sale #1, differences are noted in the following areas. Subsequent to a CSR adjustment the indicated crop acre of the subject property compared to sale #2 is $6,695 per acre. This results in total contributory value of the subject’s 24.64 crop acres of $164,964. The indicated non-crop acre contributory value for sale #1 is $2,006 per acre. This results in total contributory value of the subject’s 30.37 non-crop acres of $60,922. The total land mix and productivity adjusted value of the subject property when compared to sale #2 is $225,886 or $4,106 per acre. The subject is considered superior to sale #2 in the area of CRP cropland. No further adjustments were recommended. The indicated value of the subject property when compared to sale #2 is greater than $4,106 per acre.

COMPARABLE SALE #3 was dated November 2014. This 89.04-acre farm located in Cedar Township, Cherokee County, Iowa sold for $257,120 or $3,000 per acre. The farm contained 30.22 tillable acres for 33.9 percent tillable. Soil types on the tillable land included Terril, Turlin, Estherville, Omadi, Allendorf, Storden-Hawick, Fluvaquents-Omadi, and Steinauer-Hawick 49 series. The average CSR1 on the tillable land was 57. The farm also included 56.5 non-crop acres that were upland and lowland pasture/timber with the Little Sioux River noted to run along the west side. Approximately 9.5 non-crop acres were subject to a permanent EWRP easement. The land was gently to moderately sloped and farmed as three fields. It experienced some upland cropland not subject to flooding and a lowland field subject to flooding. The contributory value per tillable acre was $5,466 with value per non-crop acre of $1,804. When analyzing the subject property versus comparable sale #3, differences are noted in the following areas. Subsequent to a CSR adjustment the indicated crop acre of the subject property compared to sale #3 is $7,183 per acre. This results in total contributory value of the subject’s 24.64 crop acres of $176,989. The indicated non-crop acre contributory value for sale #3 is $1,804 per acre. This results in total contributory value of the subject’s 30.37 non-crop acres of $54,787. The total land mix and productivity adjusted value of the subject property when compared to sale #3 is $231,776 or $4,213 per acre. The subject is considered superior to sale #3 in the area of WRP land. No further adjustments were recommended. The indicated value of the subject property when compared to sale #3 is greater than $4,213 per acre.

COMPARABLE SALE #4 was dated March 2017. This 389.52-acre farm located in Cherokee Township, Cherokee County, Iowa sold for $1,651,157 or $4,239 per acre. The farm contained 181.92 tillable acres for 46.7 percent tillable. Soil types on the tillable land included Spillville, Kennebec, Galva, Allendorf, Terril, Dickman, Omadi, and Steinauer series. The average CSR1 on the tillable land was 69.1. The farm also included 207.6 acres of river pasture and upland and lowland timber with the Mill Creek noted to run through the property. The property was approximately 25 percent in a Zone A flood plain. The flood plain appeared to comprise non- crop acres only. The cropland was farmed as 10 irregular shaped fields, which were mostly gently sloped. Some of the upland timber was moderately sloped to steep. The contributory value per tillable acre was $6,593 with value per non-crop acre of $2,176. When analyzing the subject property versus comparable sale #4, differences are noted in the following areas. Subsequent to a CSR adjustment the indicated crop acre of the subject property compared to sale #4 is $7,146 per acre. This results in total contributory value of the subject’s 24.64 crop acres of $176,077. The indicated non-crop acre contributory value for sale #4 is $2,176 per acre. This results in total contributory value of the subject’s 30.37 non-crop acres of $66,085. The total land mix and productivity adjusted value of the subject property when compared to sale #4 is $242,162 or $4,402 per acre. The subject is inferior to sale #4 in the area of flood plain cropland. No further adjustments were recommended. The indicated value of the subject property when compared to sale #4 is less than $4,402 per acre.

Direct Sales Comparison Approach Final Reconciliation to Value

When analyzing the subject property versus the comparable sales, all appear supportive of the subject property’s "Market Value". The range of value illustrated is from $4,106 to $4,402 per acre. The midpoint is $4,254 per acre. In the final analysis, a value near the midpoint is recommended as all sales are considered supportive "Market Value" indicators for this type of farm in this area.

The recommended "Market Value" of the subject property by the Direct Sales Comparison Approach is $4,250 per acre. This multiplied by the subject’s size of 55.01 acres equals $233,792.

The final recommended "Market Value" for the subject property by the Direct Sales Comparison Approach is $233,792; say $233,800. 50

Discussion Concerning Income Approach

The Income Approach was considered in the preparation of the appraisal report. Given the high level of non-cropland contained within the subject it is the opinion of the appraiser completion of the Income Approach could produce a misleading value estimate and was therefore determined not applicable.

Discussion Concerning Cost Approach

This appraiser considered completion of the Cost Approach in determining the value of the subject property. The subject property has improvements that are considered salvage value only, and as such, the Cost Approach was determined not applicable.

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Final Recommended "Market Value"

My opinion of the “as is” “Market Value” for the subject property as of the date of inspection, August 16, 2017 is $233,800.

In determining the "Market Value" for the subject property the Direct Sales Comparison Approach alone was utilized.

Typically farms similar to the subject property are bought and sold on a competitive basis with other competing properties that may be available for sale utilizing the principle of substitution. This is the Direct Sales Comparison Approach.

My opinion of the “as is” “Market Value” for the subject property as of the date of inspection, August 16, 2017 is $233,800 or $4,250 per acre.

Discussion Concerning Marketing Time

Based on this appraiser’s analysis of typical marketing times required on past sales and this appraiser’s analysis of current and anticipated economic conditions in the near future the recommended marketing time is 45 days or less.

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Appraisals - Auctions - Real Estate 215 Main Street Phone: 712-729-3264 P.O. Box 529 Fax: 712-729-5676 Sanborn, Iowa 51248

E-mail: [email protected] Website: www.vanderwerffandassociates.com

QUALIFICATIONS OF APPRAISER

GREG TRITLE

EDUCATION (Not Appraisal Related):

Spirit Lake High School, Spirit Lake, Iowa - 1980 Iowa State University – 1984 Bachelor of Science – Agribusiness (Emphasis in Finance)

EDUCATION (Appraisal Related):

ASFMRA: Yellow Book: Uniform Appraisal Standards for Federal Land Acquisition ASFMRA: Appraisal of Conservation Easements

The Columbia Institute Practice of Condemnation Appraisal, utilizing Yellow Book

Lincoln Graduate Center Appraisal Training National USPAP Course Appraisal of Residential Property Principles of Real Estate Appraisal Financial Analysis of Income Property Direct Capitalization of Income Property Yield Capitalization of Income Property

PRACTICAL EXPERIENCE:

Assistant County Supervisor Farmers Home Administration, Sibley, Iowa – 1985 to 1987 Residential Appraisal Training & Certification Farm Appraisal Training & Certification

Senior Loan Review Analyst, Commerce Bancshares, Inc. – 1987 to1990

General Manager – All-Care Animal Referral Hospital & Cancer Center Fountain Valley, California – 1990 to 1993

Self-employed Land Improvement Contractor & farmer – 1993 to 2001

Interned under Rich Vander Werff, MSA, CAI, Certified General Real Property Appraiser, and John Wedebrand, Certified General Real Property Appraiser September 2001 through January 2006

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Certified General Real Property Appraiser, State of Iowa as of January 30, 2006 to present

As of January 2017 over 32,000 hours of on the job appraisal experience Has completed over 800 residential appraisals 2001-2017

Has completed over 1,400 farm or farm related appraisals 2001-2017 Includes highly improved livestock acreages and unimproved farmland

Has completed over 1,200 commercial related appraisals 2001-2017 Includes commercial hog units, cattle units, dairy units, poultry units Hog units up to 1,000,000 head Dairy facilities up to 11,000 head Feedlots up to 30,000 head Poultry units up to 8 million head

Associate Member of ASFMRA REPRESENTATIVE SAMPLING OF APPRAISALS COMPLETED FOR INDIVIDUALS, CORPORATION, LENDERS AND ATTORNEYS

AgriVenture Credit Company, Omaha, Nebraska - agricultural American State Bank, Granville, IA - residential, agricultural, and commercial-ag appraisals American State Bank, LeMars, IA - residential, agricultural and commercial-ag appraisals American State Bank, Sioux Center, IA - residential, agricultural, and commercial-ag appraisals Bank of America - St. Louis, Missouri – farm real estate and commercial-ag appraisals Bank Midwest, Okoboji, IA – commercial-ag appraisals Central Bank, Spirit Lake, Sioux City, Storm Lake and Cherokee, IA – commercial-ag appraisals Central Trust and Savings, Cherokee, IA - farm real estate and commercial-ag appraisals Cherokee Credit Union, Cherokee, IA - farm real estate appraisals and commercial-ag appraisals Cherokee State Bank, Cherokee, IA - farm real estate appraisals and commercial-ag appraisals Citizens 1st National, Storm Lake, IA - residential, agricultural, and commercial-ag appraisals Citizens State Bank, Sheldon, IA - residential, agricultural, and commercial-ag appraisals Community State Bank, Spencer, IA - farm real estate appraisals and commercial-ag appraisals Commercial Trust and Savings Bank, Storm Lake, IA - farm real estate, and commercial-ag appraisals Dennis Cmelik, Cmelik Law Office, Hartley, IA - real estate appraisals Emmet County State Bank - farm real estate appraisals, and commercial-ag appraisals FSA (formerly FmHA) - farm and residential appraisals Farmers Trust and Savings, Spencer, IA - farm real estate and commercial-ag appraisals First Bank and Trust, Spirit Lake, IA - residential appraisals First National Bank of LeMars, IA - farm real estate and commercial-ag appraisals First National Bank, Sioux Center, IA - residential, commercial-ag, and agricultural appraisals First National Bank, Sioux Falls, SD - large dairy farm appraisals First Trust and Savings, Aurelia, Cleghorn, and Marcus, IA - residential, agricultural, and commercial-ag appraisals Home State Bank, Royal, IA - farm real estate appraisals and commercial-ag appraisals 54

Home Federal Bank, Hartford, SD - large dairy farm appraisals Iowa Department of Natural Resources - Yellow Book compliant appraisals for Federal Land Acquisitions Iowa State Bank - Hull, Sheldon, Orange City, Alton and Ireton, IA - agricultural, residential, and commercial-ag appraisals Iowa Trust and Savings Bank, Emmetsburg, IA - agricultural and commercial-ag appraisals Heritage Bank, NA, Aurelia, IA - farm real estate appraisals Jeff Queck, Attorney, Sanborn, IA - agricultural and commercial-ag appraisals Lakeshore Mortgage, Spirit Lake, IA - residential appraisals Laurens State Bank, Laurens, IA - farm real estate appraisals and commercial-ag appraisals Liberty Bank, Arnolds Park, IA - residential and commercial-ag appraisals Liberty National Bank, Sioux City, IA – commercial-ag appraisals North Star Bank, Estherville, IA - farm real estate appraisals and commercial-ag appraisals Northwest Federal Savings, Spencer, IA - farm real estate appraisals and commercial-ag appraisals Northwestern State Bank, Orange City, IA - commercial, agricultural, and residential appraisals People's Bank and Trust, Rock Valley and Sioux Center, IA - residential, agricultural, and commercial-ag appraisals Pocahontas State Bank, Pocahontas, IA - farm real estate appraisals and commercial-ag appraisals Premier Bank, Rock Valley, IA - farm real estate, and commercial-ag appraisals Primebank, Le Mars and Sioux Center, IA – commercial-ag appraisals Rabo Bank, St. Louis, MO - farm, improved farm and large dairy farm appraisals Roger Bindner, Attorney, Klay, Veldhuizen, Bindner, De Jong, and Pals Law Firm, Orange City, IA - agricultural, commercial-ag, and residential appraisals Sanborn Savings Bank, Sanborn, IA - commercial-ag, agricultural, and residential appraisals Savings Bank, Primghar and Hartley IA - residential, agricultural, and commercial-ag appraisals Security State Bank, Sheldon, IA - commercial-ag, agricultural, and residential appraisals Tom Whorley, Attorney, Paul Wolff, Attorney, Jack DeHoogh, Attorney, Keith Thompson, Attorney Whorley, DeHoogh, & Thompson Law Firm, Sheldon, IA - agricultural, commercial-ag, and residential appraisals USDA-NRCS, Des Moines, IA - Yellow Book compliant Federal Acquisition appraisals for Wetland Reserve Program U.S. Bank National Association, Rochester, MN, and Omaha, NE - farm real estate and commercial-ag appraisals United Community Bank, Hartley, Ocheyedan, Milford, and Okoboji, IA - farm real estate, commercial-ag, and residential appraisals Valley Bank & Trust, Cherokee, IA - farm real estate appraisals and commercial-ag appraisals William Klinker and Ron Shea, Attorneys, Smith, Grigg, Shea, Klinker, Law Firm, Primghar, IA – agricultural, residential and commercial-ag appraisals Zion’s Ag Finance, Ames, IA - farm appraisals

(Updated February 2017)

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