Summary Appraisal Report
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Appraisal Report of the Benchmark Fair Market Rental Values for the State of Hawaii County of Kauai Airports As of July 1, 2016 County of Kauai Airports APPRAISAL REPORT TABLE OF CONTENTS Page TRANSMITTAL LETTER TABLE OF CONTENTS 1 I. CERTIFICATION 3 II. LIMITING CONDITIONS AND ASSUMPTIONS 5 III. ASSIGNMENT AND SUMMARY 8 Purpose of Appraisal 8 Function of Report 8 Interest Appraised 9 Intended Use and User of the Report 9 Scope of Work 9 Definitions 10 Airport Rental Categories 11 Rental Conclusions 12 IV. ECONOMIC ANALYSIS (State and County of Kauai) 16 V. BENCHMARK PROPERTY TYPES FOR ALL HAWAII STATE AIRPORTS 19 A. Spaces and Areas in Buildings 19 B. Industrial Lands 20 C. Parking Stalls 20 D. Aircraft Storage (Tie Downs) 21 VI. ASSUMPTIONS FOR ALL HAWAII STATE AIRPORTS 22 A. Utilities 22 B. Special Conditions - Buildings 22 C. Special Conditions - Lands 22 VII. VALUATION METHODOLOGY FOR ALL HAWAII STATE AIRPORTS 24 A. Building Spaces and Areas within the Airport or Adjacent to the Airport 26 1. Retail Rental Market Considerations 27 2. Office Rental Market Considerations 27 3. Industrial Rental Market Considerations 28 4. Calculation of Benchmark Rental Values for Retail, Office, and Industrial Spaces at Small Airports 28 5. Calculation of Rental Values for T-Hangars 29 Hastings, Conboy & Associates, Ltd. Page 1 County of Kauai Airports APPRAISAL REPORT B. Undeveloped Lands 29 1. General 29 (a) Valuation of Improved Unpaved Industrial Land 30 (b) Calculation of Paving Cost Recovery 31 (c) Valuation of Unimproved Industrial Land 32 2. Estimating Fee Simple Land Value 32 3. Prevailing Rates of Return on Land 33 4. Final Value Adjustments by Use 34 5. Concluded Land Values for Secondary and Tertiary Airports 34 VIII. MARKET ANALYSIS – Island of Kauai 35 IX. MARKET RENTS – County of Kauai Automobile Parking & Tie Downs 38 A. Rental Rates for Automobile Parking Stalls 38 B. Rental Rates for Aircraft Storage (Tie-Downs) 43 X. MARKET RENTS – Lihue Airport 45 A. Airport Description 45 B. Environs 45 C. Rental Analysis 45 Retail Space Rents 48 Office Space Rents 49 Industrial Space Rents 50 Conclusion of Rents within Terminal Building 51 Conclusion of Rents within Commuter Terminal Building 52 Industrial Land Rents 52 Ramp Area Rents 56 Rental Rates for T-Hangars 56 Rental Rates for Automobile Parking 57 Rental Rates for Aircraft Storage (Tie-Down) Areas 58 Conclusions 58 Subject Photos 58 XI. MARKET RENTS – Port Allen Airfield 65 A. Airport Description 65 B. Environs 65 C. Rental Analysis 65 Industrial Land Rents 65 Rental Rates for Aircraft Storage (Tie-Down) Areas 65 Conclusions 66 Professional Qualifications Hastings, Conboy & Associates, Ltd. Page 2 County of Kauai Airports APPRAISAL REPORT I. CERTIFICATION The undersigned hereby certify that, to the best of the appraisers’ 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 the appraisers’ personal, impartial and unbiased professional analyses, opinions, and conclusions. -- The appraisers have no present or prospective interest in the properties that are the subject of this report, and have no personal interest with respect to the parties involved. -- The appraisers have no bias with respect to the properties that are the subject of this report or to the parties involved with this assignment. -- The appraisers have not performed services, as appraisers or in any other capacity, regarding the properties that are the subject of this report within the three-year period immediately preceding acceptance of this assignment. -- Engagement in this assignment was not contingent upon developing or reporting predetermined results. -- 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. -- The analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. -- Alan J. Conboy, MAI, SRA and Andrew B. Conboy have made an inspection of the properties that are the subject of this report. -- Nobody provided real property appraisal assistance to the persons signing this certification. -- As of the date of this report Alan J. Conboy, MAI, SRA has completed the continuing education program for Designated Members of the Appraisal Institute. -- As of the date of this report, Andrew B. Conboy has completed the Standards and Ethics Education Requirement of the Appraisal Institute for Associate Members. Hastings, Conboy & Associates, Ltd. Page 3 County of Kauai Airports APPRAISAL REPORT II. LIMITING CONDITIONS AND ASSUMPTIONS The conduct of any appraisal is necessarily guided by, and its results influenced by, the terms of the assignment and the assumptions which form the basis of the study. The following conditions and assumptions embodied in this report constitute the framework of the appraisers’ analysis and conclusions. Special limiting Conditions and Assumptions -- In accordance with an agreement between the appraisers and the client prior to the preparation of this appraisal, we have prepared an Appraisal Report. This Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP) for an Appraisal Report. As such, it presents a discussion of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers’ opinions of value. The depth of discussion contained in this report is specific to the needs of the client and for the intended use as stated herein. The appraisers are not responsible for unauthorized use of this report. -- The valuation is based on assumptions that have been formulated based on information and descriptions provided by the Department of Transportation, Airport Division. These assumptions are significant to the valuation or are key factors upon which the valuation depends. -- The analysis presumes the properties will continue to be professionally and prudently managed and maintained. It is assumed that current market and economic conditions will remain relatively stable or improve over the ensuing long-term period following the date of appraisal. -- The legality of the traditional gathering rights of native Hawaiians that could be exercised on the properties, or other native Hawaiian rights that could impact the properties, was not considered in this report. This report assumes that the “traditional gathering rights” or any other rights of “native Hawaiians” would not be exercised on the property or properties that are the subject of this report and on any comparable properties that are included in this report. If native Hawaiian rights exist on the property and not the comparable properties, it could have a negative effect on the value of the property. General Limiting Conditions and Assumptions -- This appraisal is based upon the present condition of the national economy and the present purchasing power of the dollar. Fuel and energy available are assumed to remain at the levels of July 2016. Hastings, Conboy & Associates, Ltd. Page 5 County of Kauai Airports APPRAISAL REPORT -- This report expresses the opinion of the signers on July 1, 2016, as to an effective date of value of July 1, 2016; in no way has it been contingent upon the reporting of specified values or findings. -- The appraisers have extensive experience in the valuation of vacant and improved income-generating properties and consider themselves competent to estimate the value of the specified real property interest in the subject properties. -- It is assumed that the subject properties are free and clear of any and all encumbrances other than those referred to herein, and no responsibility is assumed for matters of a legal nature. This report is not to be construed as rendering any opinion of title, which is assumed good and marketable. Responsible ownership and competent management of the subject properties are assumed, unless otherwise stated within the report. -- Any maps or plot plans reproduced and included in this report are intended only for the purpose of showing spatial relationships. These maps do not necessarily represent measured surveys or measured maps, and the appraisers are not responsible for the possible existence of any topographic or surveying errors within such maps. No engineering tests were furnished, and therefore no liability is assumed for the soil conditions, bearing capacity of the subsoil or building engineering matters relating to the subject properties. -- Information provided by informed local sources such as governmental agencies, financial institutions, realtors, buyers, sellers and others, was interpreted in the manner in which it was supplied and, whenever possible or practical, was checked and verified by secondary means. However, no responsibility is assumed for any possible misinformation contained in these sources of information. -- The presence of hazardous wastes or toxic materials such as asbestos, urea- formaldehyde foam insulation or other potentially