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STATE OF NEVADA, ) ) ss. COUNTY OF ELKO. ) FEBRUARY 22, 2006

The Elko County Board of Equalization met in a regular session on Wednesday, February 22, 2006, at the hour of 9:00 a.m., in Room 105 of the Elko County Courthouse located at 571 Idaho Street, Elko, Nevada.

There were present: Members: Walter Leberski, Chairman Wes Bowlen Al Plank James Winer Kelly Buckner Also present: Deputy District Attorney Kristin McQueary Elko Co. Assessor Joe Aguirre Chief Appraiser Katrinka Russell Appraiser Janet Iribarne Appraiser Dennis de Arrieta Deputy Clerk Marilyn Tipton

- - - - The Board of Tax Equalization met at this time, pursuant to law, to consider applications for tax exemptions, and to make such reductions, alterations, or eliminations in the tax roll as appears to be justified.

Chairman Leberski called the meeting to order at 9:00 o’clock a.m.

Deputy Clerk, Marilyn Tipton, administered the official oath of office to the Board Members: Walt Leberski, Al Plank, Wes Bowlen, James Winer and Kelly Buckner.

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 1 The Elko County Assessor, Joe Aguirre, and the following Elko County Appraisers: Janet Iribarne, Katrinka Russell, and Dennis de Arrieta were duly sworn in.

TAPE 1A POINT 1.4 APPROVAL OF MINUTES: The Board considered approval of the preceding minutes from the February 15, 2005, meeting of the Board of Equalization. MOTION: Board Member Kelly Buckner moved to approve the minutes for the Board of Equalization meeting held on February 15, 2005 with corrections. Board Member Wes Bowlen seconded the motion. The vote on the motion was as follows: Voting Aye: Chairman Walter Leberski Member Kelly Buckner Member Wes Bowlen Member Al Plank Voting Nay: None Abstaining: Member James Winer ------LEGAL OVERVIEW: Kristin McQueary, Deputy District Attorney, gave a brief overview of the following statutes: NRS 361.227, NRS 361.310 (including 2005 Legislative amendments), NRS 361.340(9), NRS 361.340(10) and NRS 361.345 (including 2005 Legislative amendments). Kristin McQueary submitted a Memorandum dated February 21, 2006 reviewing the latest legislative changes and the Board’s guidelines under NAC 361.361.118, NAC 361.630, NAC 361.631 and NAC 361.643. Kristin McQueary asked that the Board keep in mind that if the State Board of Equalization determined that any case on appeal was inadequate, the case could be remanded back to the County Board to be heard before October 1, 2006. The County Board of Equalization would hold another hearing and a decision must be rendered within thirty days after the remand. Board Member Wes Bowlen noted in the past they have had problems with the Petitioners who had brought in information the day of the hearing and expected the Board to consider that in their decision. He inquired if the Board was obligated to look at the information submitted at the time of the hearing. Kristin McQueary noted that at the State Board hearing the Petitioners could not

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 2 present any evidence which was not presented to the County Board during their hearing. However, there was no prohibition against that at the County level. Kristin McQueary suggested that when they receive information at the meeting the Chairman may call a recess in order that the Board may read the information submitted to them at the time of the hearing. Kristin McQueary stated that they could schedule to hold a separate meeting after this hearing and establish some policies or procedures for the Elko County Board of Equalization. Board Member Wes Bowlen pointed out that there was a deadline date for filing of January 15th and inquired what good that date was, if people could still submit information after that deadline. Kristin McQueary noted that January 15 th was the filing date to appeal. She stated that hopefully the Petitioner had been in contact with the Assessor’s Office within that time frame. If that was the case, then there was information in the file for the Board so they could understand the basis of the Petitioner’s appeal. Kristin McQueary felt that at the time of the hearing most people would tell them the same information that they had put into their appeal statement. Kristin McQueary encouraged them to have another hearing to establish policies and procedures and then they could publish a notice notifying the public of the proper procedure to submit information to the Board. She noted that the State Department of Taxation was working on some changes to the regulations for the County Boards of Equalization. COMMENTS BY THE GENERAL PUBLIC: In accordance with the Open Meeting Law, Chairman Leberski asked for any public comments that members of the audience might have. No public comments were submitted. ACTION TO BE TAKEN ON APPEALS: Chairman Walt Leberski explained the procedure for the hearing under the Nevada Revised Statutes and the Nevada Administrative Code. Katrinka Russell, Chief Appraiser, inquired if they could take the cases out of order. She noted that San Jacinto and LB Elko had settled and no one was present from Sun Communities. Katrinka Russell suggested they address those cases at the end of the meeting. Kristin McQueary commented that a Petitioner had indicated to her that they had another meeting they must attend and suggested they hear that case first. Kristin McQueary believed a lot of the McClaskey issues would be similar on all three cases. She recommended that those cases be heard at the same time but separate decisions should be made for each case so if only one case was appealed to the State all three cases would not have to be transferred.

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 3 TAPE 1A POINT 19.7 REDDEN, ALLEN & JANIS M., ET. AL. Case No. 06-107 Parcel No. 001-562-006 Hearing Date: February 22, 2006

DISCLOSURE: Board Member James Winer disclosed that the Reddens were clients of Coldwell Banker and he was a broker for Coldwell Banker. Board Member James Winer abstained from the discussion and the vote on this case. SUBJECT MATTER: This being the time set for hearing the petition of ALLEN & JANIS M. REDDEN and STEVEN H. & LESLIE J. CARTER for review of assessed valuation on property described as follows: Parcel No. 001-560-006. DOCUMENTS SUBMITTED BY ASSESSOR FOR THE RECORD: I. Information Summary II. Assessor’s Parcel Maps III. Location Description / Picture IV. Capitalization Worksheets V. Cost of Development Spreadsheet VI. Valuation of Comparables VII. Base Lot Method Spreadsheet VIII. Comparative Unit Method Spreadsheet IX. List of Comparables X. Surveyor Parcel Map (Page 1) XI. Surveyor Parcel Map (Page 2) XII. Surveyor Parcel Map (Page 3) XIII. Assessor Proposal XIV. Aerial Photo/Topography Map

APPRAISER, PREVIOUSLY SWORN IN: JANET IRIBARNE Janet Iribarne, Elko County Appraiser, described the property located at 3250 Ruby Vista Drive, Elko, Nevada. The property was located in the NW quarter SE quarter of Section 2, Township 34North, Range 55 East, M.D.B. & M. She noted that it was part of the Highlands Development Unit No. 2 and was in the east end of Elko. The legal description of the subject property was Parcel 2, Parcel Map File No. 536483 for U.S. Bank National Association recorded June

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 4 30, 2005. The property was transferred to Allen & Janis Redden, Steven H. & Leslie J. Carter, Lawrence A. & Robin M. Carter recorded document File No. 542309 dated October 19, 2005. Janet Iribarne stated the Petitioner appealed because the Petitioner paid $15,000 an acre and an adjacent property owner of 8.28 acres paid $15,000 an acre with their escrow closing January 13, 2006. She stated both parcels front on the undeveloped dirt portion of Ruby Vista Drive. Neither parcel has any infrastructure for them to be compared with other parcels in the area. This parcel has steep drop offs on two sides leaving approximately five (5) acres which is usable. Property has been on the market for over a year. TAPE 1A POINT 23.5 SUMMARY: The Assessor’s Office felt the most appropriate way to approach the valuation of this property was to set the property value at $55,000 per acre as was the criteria for properties in this area, Highland Development Units No. 1 and No. 2. This brought the appraised value for the property at $353,100.00. Staff then removed the costs of amenities that the other properties possess. Staff recommended a 40% reduction for obsolescence to include the site preparation, roadway construction and utilities to the subject property.

PETITIONER DULY SWORN: JANIS REDDEN

DOCUMENTS SUBMITTED BY PETITIONER: A. Topographical Survey – Summit Engineering B. Letter dated January 13, 2006 to Joe Aguirre

Janis Redden commented that they had traveled from Gardnerville, Nevada and they had invested in the property on Ruby Vista Drive. She stated they paid $15,000 per acre but the County was basing it at $55,000.00. Janis Redden referred to her letter (Exhibit B) wherein the purchase price of the property was at $96,300.00. However, the County had valued it at $353,100.00 for the entire property. She stated they were petitioning today to reduce the property taxes. Janis Redden informed them that Summit Engineering surveyed the property to determine exactly how much of the property was useable due to the step drop offs. She stated Summit Engineering determined that 4.32 acres were usable. Janis Redden noted that the property did not have any type of services on it and was undeveloped. They were told by

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 5 Summit Engineering that it would cost a minimum of $100,000 to get the road paved and to bring the infrastructure up to the property. Janis Redden believed that the majority of the comparable properties had the utilities, etc. She voiced concerned that two of the comparable properties used by the Assessor’s Office were located off of Twelfth Street which had more traffic. The petitioners felt it would be a long time before there was improvement on their property because of the cost of development. Janis Redden stated they were looking at long term investment. She stated if the taxes remain the same as they were currently it would be about $360.00 per month for the property taxes. Janis Redden asked that the Board consider lowering the base rate for those property taxes. TAPE 1A POINT 28.9 DISCUSSION: Board Member Wes Bowlen inquired why the disparity between $15,000 and $55,000. Janet Iribarne stated that the property was in foreclosure prior to the purchase of the property. She reported that the Assessor’s Office had $55,000 set as the base price on those parcels in Highland Development Units No. 1 and No. 2 since 1996. Janet Iribarne asked that they view Exhibit XI (Survey Parcel Map Page 2) that was prepared by Summit Engineering which indicated that subject property was Parcel B of the Highland Development Unit No. 2. She noted that all parcels in Highland Development were based at $55,000 per acre. Chairman Walter Leberski noted that with regards to $55,000 most of the off site improvements were on the property when those parcels were sold. He commented that on the subject property there were no improvements. Janet Iribarne agreed and asked that they view Exhibit V (Cost of Development Spreadsheet). She reviewed the adjustments for the site prep costs, the utility costs, and the street costs. The typography buildable at 4.32% would bring the property to 42% obsolescence rate. Janet Iribarne reported the cost would then be $31,835 per acre for a total of $204,385.00 for the 6.42 acres. Board Member Wes Bowlen clarified that they would be taxing it at $204,385.00 rather than at $353,100.00. Janet Iribarne had spoken to the Petitioners on the phone and agreed that there were typography issues. However, she disagreed that there was 70% typography. Janet Iribarne explained that they used the cost of development as the method, and took the base cost of $55,000 believing that was fair and equitable with the rest of the properties in the Highlands She then removed all the sit preps, utility costs and the street costs. She noted that brought the amount down to $204,385.00. She

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 6 had reviewed the market and looked at comparable sales. Janet Iribarne stated the medium for those adjusted parcels was $35,783.00. Therefore, the $31,835 would be below current market prices. Board Member Al Plank inquired if the revised acreage buildable reduced the site development calculation dramatically. Janet Iribarne stated that previously it was $94,733.00 and now it was $107,600.00 which was a difference of more than $10,000.00. Board Member Al Plank inquired if the new footprint required more cut and more fill than used in staff’s calculations. Janet Iribarne stated that she had not seen the footprint. When she was given the new information she calculated 50% cut and 50% fill on the unbuildable acreage. Janet Iribarne noted that costs for cut and fill were comparable with 22 cents a cubic foot for excavation and 23 cents per cubic foot for fill. Janet Iribarne stated site prep costs would be $45,626.00 to clear the brush and level it. Board Member Wes Bowlen inquired how staff compared the useable land to the map submitted by Summit. Janet Iribarne had reviewed the topography maps available to her and had estimated 5% was useable and had made adjustments for the 4.32 useable acres according to the Summit Engineering survey map. Janis Redden asked why they did not use the comparable sales on their property and for the property across the street for the base price. She noted the properties had been on the market for a long time. She commented that there was one piece of property further down the road offered at $30,000 and it had not been sold. Janis Redden commented that she was unaware these parcels had been in a foreclosure procedure and the bank had gotten them back. She requested that they look at the market with regards to the value of the property. Janis Redden stated the current sales for those two pieces were $15,000 per acre and felt that should be factored in. She believed that the cost base of $55,000 was the reason the taxes were going up higher. Janet Iribarne commented that there were other sales and she could only use good sales which set the property at $55,000.00. She stated in 2003 a Trustee’s Deed was filed against all those properties. In 2005 some of those properties had been released but the subject property was not. She noted that there were some properties listed at $30,000.00 per acre and the acreage in front was listed at $180,000. She reported that the Winger’s property was sold at $111,000. Janis Redden felt that both of those pieces of property sold recently in that area for $15,000 were available for comparison. Joe Aguirre, Elko County Assessor, commented that the property next to

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 7 this property had sold in January which did not give those property owners time to come to this Board of Equalization. He noted that property sold for the same price as the Reddens’ property. He asked that if the Board decided to give the Petitioners some relief then they also consider the piece of property next to it. Joe Aguirre stated the NAC gave the Board authorization to treat both those properties the same. Joe Aguirre inquired of Kristin McQueary if James Winer could give them more information about this situation as a citizen rather than a Board Member. Kristin McQueary stated James Winer could discuss real estate values in general in that area but nothing specific to this parcel. She requested that he speak from the audience level and cautioned Mr. Winer that there was a fine line to discuss these types of things. Kristin McQueary noted that she did not encourage any of her Board Members to speak from the audience when they have abstained. However, it happens occasionally. Chairman Walter Leberski believed that James Winer was more familiar with what was happening in that area than the rest of the Board. Board Member Al Plank inquired if any other members in that area had submitted a petition upon the valuation. Chairman Walter Leberski believed the problem was only two of those parcels had been sold at a price less than the $55,000. Janet Iribarne reported that she had to put the $55,000 on this property before these properties were sold. She stated the parcel map was filed on June 30, 2005 and one parcel sold in October 2005 and the other in January of 2006. Janet Iribarne commented that she did not have the liberty of using those as comparable sales. Board Member Wes Bowlen inquired if the Assessor’s Office considered these two sales as arm-length sales. Janet Iribarne believed they were not arms- length sales but rather distressed sales from her research. TAPE 1B James Winer was duly sworn in as a citizen. Walt Leberski asked Mr. Winer to give the Board some history, which may be public record, on those two parcels. James Winer stated that the Highlands did go into foreclosure. Several years ago the developer at that time borrowed a lot of money to put in roads, move dirt, etc., and then Elko’s economy went downhill. He stated when the developer could not make the payment U.S. Bank took the property back. Since then, the properties were back on the market at what they felt were aggressive prices because they were not in the land business. James Winer commented

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 8 that those parcels were on the market for some time at prices that were reflective of today that were not selling, and reflective of properties that have sold. He, as a private citizen and a real estate broker, believed in the market and market prices. James Winer felt ready and willing sellers and ready and willing buyers set the market through exposure to the market and negotiations, etc. Janis Redden asked if he would identify this as a depressed sale and received a negative response. Kristin McQueary noted that Mr. Winer had disclosed and abstained because of his company involvement with their sale. Therefore, she preferred that Mr. Winer give just general information and not information specific to their property. James Winer reinstated that he believed in the market. Chairman Walter Leberski inquired if that was the first asking price or if the price had been dropped. James Winer replied to the best of his knowledge that price had been on there for awhile. James Winer did not believe there were a lot of reductions. Janet Iribarne questioned about it being on the market for a while when the map was just filed in June. She inquired if they picked it out or was there map costs included in that price. James Winer explained that parcel was part of a larger parcel that the bank owned. The bank split the parcel to create one large parcel and two smaller parcels. The subject property was one of the two smaller parcels of property in that property division that was sold off. Board Member Al Plank inquired what the medium price for the comps was that the staff used. Janet Iribarne replied $35,783.00. Board Member Al Plank noted that had been reduced to $31,835.00 by staff. Janet Iribarne explained that they were proposing the $31,835.00 per acre to the Board which would allow for the 42% obsolescence for no site prep, streets or utilities. Kelly Buckner noted that James Winer had mentioned there were three parcels derived from the larger parcel. He inquired if the larger parcel was still owned by the bank. Janet Iribarne replied in the affirmative and noted it was originally 262 acres but the bank had split off the 15 acres. Kelly Buckner inquired when the $55,000 value was applied. Janet Iribarne replied in 1996. Kelly Buckner clarified that there had been no other petitioners with regards to that region. Janet Iribarne replied that no one had called or even inquired about the $55,000 value. Kelly Buckner inquired about the comparable sales used in Exhibit VIII (Comparative Unit Method) and if those sales were close to the subject property. Janet Iribarne noted those sales were located throughout the town. She noted that several sales were located on Twelfth Street and the Home Depot sale was used. She stated that those sales were adjusted accordingly and

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 9 commented that the parcels along Twelfth Street were restricted in access to Twelfth Street. Kelly Buckner asked if any of those sales were close to the proximity of this subject property. Janet Iribarne stated there was Wingers which was across the street but she had not included that in comparable sales because the parcel was a lot smaller. She utilized the larger properties which were scattered through town. Al Plank noted that Janet Iribarne had implied earlier that the smaller parcels generally sell for more. Janet Iribarne commented that the smaller parcels usually run into the $100,000 or $80,000 per acre price range. Board Member Wes Bowlen asked if she felt there was a comparison to the Home Depot. Janet Iribarne stated that Home Depot was 12 acres at $65,000 an acre. She had adjusted the sale down to $35,700 which did not deviate from the medium on the subject property. She explained that as a backup she used the base lot method to see if she was in the right range. Kristin McQueary read into record NAC 361.300 as follows: “‘Full cash value’ means the amount at which the property would be appraised if taken in payment of a just debt due from a solvent debtor.” Board Member Wes Bowlen inquired who the debtor was. Kristin McQueary believed this was another factor the Board would have to consider. Kristin McQueary read into the record NAC 361.282 as follows: “ ‘Fair market value’ means the highest price estimated in terms of money which a property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with full knowledge of all the uses to which it is adapted and for which it is capable of being used.” Chairman Walter Leberski asked staff what the amount was per acre after their adjustments. Janet Iribarne replied $31,835.00 per acre. TAPE 1B POINT 14.2 Case No. 06-107 ALLEN & JANIS REDDEN DECISION: Board Member Al Plank moved to approve the Assessor’s valuation of $31,835.00 an acre, a 42% reduction from the $55,000 for tax purposes. Board Member Kelly Buckner seconded the motion.

DISCUSSION: Joe Aguirre stated to continue with the equality in the area he asked for them to make the property which was sold next door be valued at the same amount.

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 10 TAPE 1B POINT 15.5 Case No. 06-107 AMENDED DECISION: Board Member Al Plank amended his motion that the valuation determined by the Assessor’s Office be applied to both properties. Board Member Kelly Buckner seconded the amendment. The motion and amendment carried the following vote: Voting Aye: Chairman Leberski Member Al Plank Member Kelly Buckner Member Wes Bowlen Voting Nay: None Abstaining: Member James Winer Absent: None

Chairman Leberski informed the Petitioners that they had the right to appeal to the State Board of Equalization. Joe Aguirre submitted an appeal form to the Petitioners. ------TAPE 1B POINT 17.4 WALKER, JUDY RAE Case No. 06-105 Parcel No. 006-31A-024 Hearing Date: February 22, 2006

SUBJECT MATTER: This being the time set for hearing the petition of JUDY RAE WALKER For review of assessed valuation on property described as follows: Parcel No. 006- 31A-024. DOCUMENTS SUBMITTED BY ASSESSOR FOR THE RECORD: I. Summary Sheet/Assessor’s Recommendation II. Maps III. Picture IV. Appraisal V. NRS 361.263 VI. Subpoena

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 11 VII. Hackworth Drilling Invoice VIII. Building Permit Inspection

APPRAISER, PREVIOUSLY SWORN IN: DENNIS DE ARRIETA Dennis de Arrieta, Elko County Appraiser, being previously sworn in, noted for the record that the Assessor=s Parcel No was 006-31A-024. The subject property was located off of the Lamoille Highway just past the Hospital on the left heading toward Spring Creek. He reported that the legal description is the SW quarter of the NW quarter of Township 34 N., Range 56 E., in Section 30. Dennis de Arrieta noted the property contains 4.32 acres. The property consists of a manufactured home with a pole barn shed, wood awning hookup and concrete sidewalks. Mrs. Walker purchased the vacant land on August 5, 1988 for $10,000.00. The property was last reappraised in 2003 and the current taxable value of the real property tax roll was $19,294.00 for the land and improvements. TAPE 1B POINT 19.4 PETITIONER DULY SWORN: JUDY RAE WALKER Judy Walker reviewed the location of her property. She did not appeal the land value but wished to appeal the building and structure assessments. Judy Walker voiced concern that she may be assessed in the South Fork area. She noted her legal description of her property was ‘E’ Mountain/Lamoille Highway but her address is 422 Elko Vista Drive Unit 6, Spring Creek, NV 89815. Judy Walker commented upon the quality of the photo dated 08/17/98 taken from a distance. She inquired if the reappraisal package was for Elko County and received an affirmative reply. Judy Walker noted an Amtrol pressure tank was put in at a cost of $480.00 but there was no pump. She stated her water supply was gravity fed from the well to the house. Judy Walker stated there was no separate water hookup on her well so she did not believe there should be an assessment of the $519.00. She stated the electrical hookup only cost her $422.00 but she would accept that valuation. Judy Walker noted there was no separate charge for a septic hookup so the $573.00 should not apply to her. She would accept the valuation on the gas hookup. Judy Walker noted that she was previously assessed at $4,690.00 on her improvements but that was raised to $13,531.000. Judy Walker understood that there was a cap which would apply to her and noted she was a senior citizen. Judy Walker commented that her porch was 140 square feet which cost her $700.00 to build. She was assessed at 240 square feet. Judy Walker commented that the buildings depreciated and they

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 12 were in place since 1998. DOCUMENTS SUBMITTED BY PETITIONER: A Petition B Assessment Notice C Photo dated of 8/17/98 D Basic Cost Structure 2006-07 E Appraisal Information 2004-05 F Estimate Labor & Materials for Shed and Porch

DISCUSSION: Dennis de Arrieta stated the biggest increase was the 10% improvement factor implied by the State. However, everyone received the10% factor. Dennis de Arrieta stated the awning was currently valued at 126 square feet. They did re-measure Judy Walker’s improvements and there was a correction made on the porch.

TAPE 1B POINT 28.6 RECOMMENDATION: The Assessor’s Office recommended lowering the improvement value to $14,284 from $14,780.00. DISCUSSION: Board Member James Winer inquired about Judy Walker’s concern of being accessed on the right property. Dennis de Arrieta stated he was not sure where the reference to South Fork came from because the legal description showed the SW 4 of the NW 4 of Township 34 N., Range 56 E., in Section 30 which was Assessor’s Parcel No. 006-31A-024. He stated Ms. Walker was being properly assessed for her property. Judy Walker pointed out that on the Assessment Notice it stated Lower South Fork. Chairman Walter Leberski believed the mailing addressed was picked up incorrectly but the legal description was correct. Board Member Wes Bowlen commented that he personally was required to create a Post Office address in Wells. He believed it this was common practice with the Postal system that addresses were being created with the new laws imposed. Joe Aguirre explained the improvement factor was developed by the State Department of Taxation and approved by the State Tax Commission. He clarified that the cap was not on the value but on the taxes. He reported that the tax cap on a primary residence was 3% a year. He stated this year the tax cap

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 13 on commercial property was 6.8% up from 5.4% of last year. Joe Aguirre stated the Tax Commission used a formula which considered the cost of living, the population and growth in an area to arrive at the commercial cap. He stated there was another cap imposed upon low income housing. Joe Aguirre stated the factor came from Marshall and Swift. He reported that his office performed over 8,000 appraisals last year with four people so it was a mass appraisal process. Joe Aguirre stated these mathematical factors were to bring a piece of property to current replacement costs according to the statutes. Board Member Wes Bowlen inquired about the 10% rate. Joe Aguirre stated that if they took the 12% implied by the State for the improvement factor and give 1.5% to depreciation it would give them the 10.5% factor. Board Member James Winer inquired about the 3% qualification and the effect to the property value. Joe Aguirre replied there was no longer a correlation between value and taxes. The State had put on a 3% tax cap on all primary residences so the taxes could only raise 3% in one year. Chairman Walter Leberski noted that the tax rate on the next year was not set at this time so that percentage would not come into play yet. Judy Walker inquired how she could qualify for the 3%. Joe Aguirre explained they would be sending out cards asking if it was their primary residence and those would have to be returned to his office. Judy Walker noted even at the 10% rate it still would cost her more than what the actual costs were to build the shed. She reported that it had cost her $2,158.00 to build the shed. Board Member Wes Bowlen explained the Assessor based their replacement costs on Marshall and Swift’s replacement value. Judy Walker inquired about the items on the blanket hookup assessment. Board Member Wes Bowlen explained to her about the assessment for her submersible 1.5 hp pump, the pressure tank, and water/septic hookup costs. Judy Walker stated she realized that her taxes were low but commented that she only received Social Security. Chairman Walter Leberski believed relief would be within the 3% tax cap on her primary residence. TAPE 1 B POINT 45.4 CASE 06-105 JUDY RAE WALKER DECISION: Board Member Wes Bowlen moved that they accept the Assessor’s valuation of $14,284.00 for tax purposes. Board Member James Winer seconded the motion.

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 14 The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member Wes Bowlen Member James Winer Member Al Plank Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None Chairman Leberski informed the Petitioner, that she had the right to appeal their decision to the State Board of Equalization. Joe Aguirre submitted an appeal form to Judy Rae Walker. ------Chairman Walter Leberski called a recess at 10:34 a.m. and reconvened the meeting at 10:40 a.m. Chairman Walter Leberski commented that the next three cases were all related but upon legal recommendation they would make a separate decision upon each property individually for appeal purposes. TAPE 2A Point 0.5 APPRAISER, PREVIOUSLY SWORN IN: KATRINKA RUSSELL Katrina Russell, Elko County Appraiser, being previously sworn in, noted for the record that Assessor=s Case Number 06-101, Case Number 06-102 and Case Number 06-103 were related with the same issues but were individual properties with separate income and separate expenses. Katrinka Russell stated High Desert Inn was unique on its own. The Red Lion and Elko Gold Country were both gaming properties that used the airline charter. Katrinka Russell, Chief Appraiser stated they would have to determine the values separately on each property. She reported that all three properties were in a sale and the offer had been made. She recommended that they review the Red Lion Casino first since it had the most amenities. TAPE 2A POINT 2.2 MCCLASKEY – ELKO RED LION CASINO LLC Case No. 06-103 Parcel No. 001-560-021 Hearing Date: February 22, 2006

SUBJECT MATTER:

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 15 This being the time set for hearing the petition of MCCLASKEY ELKO RED LION CASINO for review of assessed valuation on property described as follows: Parcel No. 001-560-021. DOCUMENTS SUBMITTED BY ASSESSOR FOR THE RECORD: I. Pictures/Legal Description II. Parcel Maps III. Support Documentation IV. Capitalization Worksheets V. Assessor’s Values/Recommendation VI. E-Mail Correspondence VII. E-Mail/Joe Statement VIII. Internet Inquire of Sales IX. Newspaper Article

APPRAISER, PREVIOUSLY SWORN IN: KATRINKA RUSSELL Katrina Russell, Elko County Appraiser, being previously sworn in, noted for the record that the property contained 10.79 acres and was located at 2065 Idaho Street, Elko, Nevada. The subject property is a casino/hotel with 223 rooms available for occupancy. It has a casino floor of almost 57,000 square feet that includes restaurants, bars, a showroom and banquet facilities. Katrinka Russell stated the Assessor’s Office had used the 2005 income, the average expenses allowed for this type of property and a 20% cap rate which seemed to be the average nationwide. Katrinka Russell requested that they review the Capitalization Summary page (Exhibit IVB) which outlined the income with percentages for various types of expenses: actual, reconstructed and average. Katrinka Russell stated that she had treated all three McClaskey properties exactly the same. She took their income, subtracted out average expenses and used the applicable cap rate to derive at a value based on income.

PETITIONER DULY SWORN: JEFF CHAIDEZ

DOCUMENTS SUBMITTED BY PETITIONER: A-1 Assessor’s Value Conclusions A-2 Elko Properties Analysis of Buyers 2004-2005 B Purchase & Sale Agreement

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 16 Jeff Chaidez, representing the McClaskeys, presented new evidence which had just become available on February 15, 2005. He stated they had accepted an offer and contract on all five remaining properties in Elko: the Red Lion Inn Casino, High Desert Inn, Elko Gold Country, Chevron Gas Station and the Thunderbird Motel. Jeff Chaidez stated he was unaware of the accepted offer until Friday and apologized for submitting that information today. Jeff Chaidez commented that they did not ask to be appraised under the income approach. He stated they asked the Assessor’s Office to determine the full cash value, and the market value. They believed that the income approach was an ingredient to determine the value and it was based on one year’s income for the year ending December 31, 2005. Jeff Chaidez stated the buyers of these properties would be more interested in other economic factors when making the decision to purchase these properties other than last year’s income. He noted these were long term assets and the investors’ gain may not be realized for several years. Jeff Chaidez did not dispute the calculation but felt it was only one ingredient in determining the value. He stated that in the past it had been argued that those calculations should be utilized because they were consistent and fair among all taxpayers. Jeff Chaidez believed that market value was the most probable price the property would bring in a competitive and open market, all conditions requisite for sale, ready buyer and seller. Jeff Chaidez stated that these properties had been on the market for over two years by C.B. Ellis in Las Vegas and that market included international exposure. Jeff Chaidez stated the Bank of America, the Trustee for the McClaskeys, had managed a number of these offers and they actually had several offers that had fallen through. Jeff Chaidez submitted Exhibit A-1 and A- 2 which summarized the activity in an open competitive market. He noted that this analysis was not apples to apples because they had sold the Casino Express and the Holiday Inn. He reviewed Exhibit A-2 the Buyers’ analysis for 2004 and 2005 and the individual buyers’ offers. Jeff Chaidez commented that from the ten offers the average offered price was $23,100,000 and the average of the selected, effective offers (taking out the four lowest offers) was $26,333,333 for all the properties. He noted these averages were based upon open market, willing buyer/seller and this was not a distressed sale. Jeff Chaidez stated there were no loans or debt on the properties for over ten years and the only liabilities were the current payables. He commented that Mr. McClaskey passed away three years ago and these properties have had exposure to the market for most of that time.

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 17 Jeff Chaidez proposed values of $5,000,000 for Elko Gold Country; $6,000,000 for the Red Lion; and $4,000,000 for the High Desert Inn. He stated the Assessor’s taxable value for the Holiday Inn was at 2.9 million dollars. He noted the Assessor’s taxable value on the gas station was $525,377.00. Jeff Chaidez had added in the Thunderbird in the documentation because it was included in their total price package but they did not own the Thunderbird. There was a leasehold interest in the Thunderbird which was valued at 1.2 million dollars according to the Assessor’s value. Jeff Chaidez reported that Casino Express sold for 7.5 million dollars. He noted there was a closing statement to verify that if anyone wanted that verification. Jeff Chaidez proposed a value of 27 million dollars for all the properties. He noted that price had been tested in the market. He believed that the history of those properties were in line with the contract that the Bank had accepted last week. He requested the Board to review Exhibit A and Exbibit B, page 2. Jeff Chaidez noted that the purchase price was $13,500,000 for the five properties. He asked for $15,000,000 on the three properties before them today as follows: $5,000,000.00 for Elko Gold Country; $6,000,000.00 for the Red Lion; and $4,000,000.00 for the High Desert Inn. Jeff Chaidez stated he had a copy of the complete sales contract but had been asked to keep the terms of the contract confidential. He asked if they wished to examine that contract. Jeff Chaidez felt that the 13.5 million was a competitive market price and did not believe this was a foreclosure or a distressed sale. Jeff Chaidez noted that the Bank of America was managing these properties for the McClaskey family and had a fiduciary responsibility to the family. Jeff Chaidez believed that the bank would have exposure to the family if they sold these properties at too low of an amount. Jeff Chaidez stated that he had just received this contract yesterday and would have submitted it earlier but the pdf file was not signed. He stated that the Contract was in force and there were people at the properties today doing due diligence. TAPE 2A POINT 16.7 DISCUSSION: Katrinka Russell inquired when the one million dollar deposit was due. Jeff Chaidez replied the one million dollar deposit had been received and would become non refundable after March 30, 2006. Katrinka Russell inquired if it was the plan to lease the casino portion back to the seller under recitals (c) in the contract. Jeff Chaidez stated there was a plan to lease the casino back to the seller just to enable the buyer to buy the properties. He stated that lease could

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 18 be terminated within fifteen days after the buyer gets a gaming license or 180 days, whichever is the longest period of time. Board Member James Winer noted one of the arguments was that market approach was more acceptable than the income approach. He inquired what approach the Assessor’s office was using on other similar assets within the community. Katrinka Russell stated that they did two approaches and this morning came up with another approach. She stated based on the replacement cost approach the value was set at 16 million dollars on the Red Lion Casino. Katrinka Russell noted that on market approach they had a current sale of the Holiday Inn Express which sold for 5 million dollars. She stated that if they take the number of rooms (77 rooms) at the Holiday Inn Express and divide it into 5 million it would be $64,935 per room. Katrinka Russell stated that if they take that as the current cost and multiply it by the number of rooms on the other properties the value for the Red Lion would come in at approximately 14.4. Board Member James Winer commented that there would have to be adjustments for the casino. Jeff Chaidez asked what cap rate the Assessor’s office used for the Holiday Inn Express and Katrinka Russell replied 12%. He inquired what range was the cap rate for the gaming properties. Katrinka Russell replied that she had used 20% this year. Jeff Chaidez inquired why the difference between the cap rates for the Holiday Inn and the Red Lion. Katrinka Russell explained they were different types of properties. Jeff Chaidez believed the gaming properties should be considered differently because of the amount of risk of owning those properties and should have a higher cap. Jeff Chaidez did not believe the number of rooms approach would work on the Red Lion Inn because it would not reflect the risk of operating that gaming industry. Katrinka Russell stated they could concede to that and use the value on the Holiday Inn to compare to the High Desert Inn. Board Member James Winer felt they would have to make adjustments for the restaurant and the casino/hotels. They could not solely use the room cost approach on all these properties. He believed that High Desert did have gaming and did have a restaurant. Katrinka Russell clarified that the restaurant was not open at the High Desert and there were only ten slot machines in the lobby area so it was not considered a gaming property. Board Member James Winer noted that Petitioner’s opinion was they should use the market approach but the Assessor’s Office was using the income approach. He inquired what the Assessor’s Office was using to assess the other similar property in the County and received the reply of “replacement costs”.

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 19 Chairman Walter Leberski commented that the Assessor’s Office had used the replacement costs several years ago but people asked for them to use the income approach instead. He inquired if they were using a combination of income and replacement cost approaches. Katrinka Russell stated they were obligated to treat them all equally. When they do math appraisals, they use replacement costs in order to calculate the value. Board Member Wes Bowlen inquired if the Assessor had the option of either going with market value, replacement costs or the income approach. Katrinka Russell replied that they were required to determine the replacement costs under NRS 361.260. Kristin McQueary reviewed the Assessor’s options for determining the taxable value of real property under NRS 361.227. Board Member Wes Bowlen inquired if they were using the replacement cost approach for the Stockmen’s and other casinos and received an affirmative response from Katrinka Russell. He inquired if the Red Lion was valued at 16 million under the replacement cost approach. Katrinka Russell asked the Board to review Exhibit IV B Capitalization Summary. Katrinka Russell asked that they look at the actual income in 2005 of $33,113,457 with an average expense. She noted Jeff Chaidez had asked that they take off 33% of the revenue if they were taking it off of the expenses for the airline. Katrinka Russell noted that with 85% expenses at a 20% cap rate they had derived at an income approach value of $16,639,512.00. She commented that was not far from the amount derived at using the replacement costs approach. Board Member Wes Bowlen inquired what the replacement costs were on Elko Gold Country. Katrinka Russell stated the current values they had on replacement costs less depreciation was 6.3 million on Gold Country. She noted that could be found on Case No. 06-102, Exhibit IVB. Board Member Wes Bowlen stated they were looking at 27.3 million dollars on all three properties based on replacement cost approach. Katrinka Russell clarified that was based on income, less 33% deducted for the airline charter which changed the total property value to 6.5 million for the Red Lion Casino. Katrinka Russell reminded them that in the previous years they had given the Red Lion a reduction in their value based upon their airline expenses. She stated based on that analysis the Red Lion had higher expenses than the other hotel/casinos. Katrinka Russell stated that for the past three years gross total income had remained stable but the airline charter expenses had gone up dramatically each year. She stated this year the fuel cost was added in. Katrinka Russell stated two years ago when they went to the State Board, the State Board did make it clear that having the

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 20 airline charter was a management decision. This year they did not believe the taxpayers of Elko County should carry the burden of the airline expenses. Katrinka Russell commented that McClaskey had eliminated that program this year. Board Member James Winer inquired what the Holiday Inn Express was assessed at most recently and Katrinka Russell replied 2.9 million dollars. Board Member James Winer noted it was just sold at 5 million dollars. Board Member Al Plank inquired how they reconciled the contract price of 13.5 million for the three properties when in their Exhibit A of recent offers the medium was 26.3 million dollars. Jeff Chaidez noted that Buyer No. 9 was at 13.5 million dollars. Board Member James Winer inquired if appraisers had appraised these properties over the last three years for estate tax purposes and if they were willing to share who performed those appraisals and for what amounts. Jeff Chaidez stated there was an appraisal for estate tax purposes. He believed that Katrinka Russell had copies of those appraisals and he would be happy to introduce them into the record if they requested them. Katrinka Russell stated there was an appraisal performed February 22, 2003 and the appraiser was William G. Kimmel and was put in the evidence in the 03-04 taxes. Jeff Chaidez believed it was 3.5 million for the Red Lion in that appraisal. Katrinka Russell stated that appraisal was submitted three years ago to the Board. Katrinka Russell stated in the appraisal dated February 22, 2003 the value for the Red Lion Inn was 3.5 million, Gold Country Inn and Casino was valued at 8.8 million dollars, High Desert Inn was valued at 2.3 million and the Holiday Inn Express was valued 4.1 million dollars. Board Member James Winer inquired what method that appraiser used. Katrinka Russell felt that Mr. Kimmel had used all three different approaches. Jeff Chaidez stated an appraiser was required to use all three approaches and reconcile between the three methods. Jeff Chaidez stated 14.6 million was the total on the 2003 appraisal for the properties. Chairman Walter Leberski inquired if that appraisal was accepted by IRS. Jeff Chaidez stated that the IRS had accepted the appraisal and the estate was final. Board Member James Winer inquired why the Holiday Inn Express was assessed at 2.9 million but sold on the market for 5 million dollars. Jeff Chaidez commented that Holiday Inn Express was a newer type of property. Board Member James Winer inquired if Jeff Chaidez considered the High Desert as non-gaming. He noted that High Desert had only twelve slot machines. Jeff Chaidez believed the reason it was considered gaming was due

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 21 to the number of rooms and those rooms were tied to the casino. Katrinka Russell inquired if the Bank of America had considered marketing these properties separately. Jeff Chaidez believed that they had engaged industry experts to help and support them in their decision. He stated the Bank of America was accountable to the McClaskey family and they felt they would get the higher price by marketing these properties together. Katrinka Russell noted that the casino airlines and the Holiday Inn Express had gone onto the market at the same time as the other properties. She noted that the Holiday Inn had been sold for 5 million and the Casino Express for 7.5 million dollars yet the remainder of the properties were valued at only a million dollars more at 13.5 million dollars. She questioned whether that was in the best interest of the McClaskey family. Jeff Chaidez noted these properties had been on the market for three years. Katrinka Russell believed that William Kimmel in his appraisal listed the chartered airline as a liability to these properties and that was why the appraisal came in so low. Jeff Chaidez believed it was not listed as a liability but he had included a portion of the expenses of the airlines which reduced its value under the income approach. Katrinka Russell noted that the airline had been sold off. Jeff Chaidez believed that a buyer would look at more than just history. He commented that the State of Nevada believed they had to have a business plan for the future. He felt that the new buyers would have a business model to see how they would generate income lost from the sale of the airlines. TAPE 2B Board Member James Winer believed that the market approach had more bearing. Jeff Chaidez noted that the cost and income approaches were close to each other yet the third method had an extreme difference. He felt that on income properties the appraisers gave more attention to the income approach. Board Member James Winer noted in a community this size it would be difficult to use the market approach because of lack of casino sales in the region. Jeff Chaidez did not know what appraisals the Board had looked at. Jeff Chaidez stated they had exact comps of market activity of a non distressed property over two and one-half years. He reported that not all of their expenses were allowed under the Assessor’s income approach. Jeff Chaidez stated a person who was looking to purchase the property would look at all those expenses, and the number of rooms they had to fill. Board Member James Winer noted that earlier a citizen had given testimony that there should be more value given to the market approach. He pointed out that this sale was not completed nor recorded yet. He noted they

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 22 could view these unrecorded sales in listings of properties but the Board would still have to use historical data to make their final decision. Board Member James Winer noted that Jeff Chaidez’s exhibit listed several offers that were not closed. Jeff Chaidez noted that no one else had submitted offers and the Bank of America had accepted this offer. He stated that the Bank had engaged experts before they had entered into this sale contract. Jeff Chaidez acknowledged that Mr. Winer, as a licensed realtor, and if he knew of anyone interested in paying more for these properties, please give them their names. Kristin McQueary pointed out that would be a conflict of interest for Mr. Winer to obtain business through participation on this Board. She wanted to make sure the record reflected that was Mr. Chaidez’s idea and not Mr. Winer’s. Jeff Chaidez stated that was clear and he was just trying to make a point that if there was a buyer out there who would pay more, please give them their name. Board Member Jeff Winer agreed with the argument of the market value approach. He noted they had heard an earlier a case wherein the property was exposed to the market and sold at a particular price but that was not the value the Board had determined to assess it at. Chairman Walter Leberski noted that Jeff Chaidez had suggested they use an independent appraiser. He inquired if that would be possible. Joe Aguirre stated that luxury was not afforded to them because they had to use tax certified appraisers which was different than a licensed appraiser. Board Member Wes Bowlen noted that there was a deposit of one million dollars down but they had 45 days from February 15th to close. The buyers could still leave without sacrificing the one million dollars. Jeff Chaidez commented that the buyer could leave but the seller could not leave. Board Member Wes Bowlen stated this Board had to make their judgment based on fact and this sale was not a fact at this time. Jeff Chaidez stated any appraiser would look at this accepted offer because there was a price set in the open market. He commented that the Assessor was basing their figures upon one year’s income. Board Member Wes Bowlen noted that the Holiday Inn and Casino Express had been sold for almost more than what they would get for the other properties. Board Member Al Plank stated putting himself in the buyer’s shoes on the Red Lion if he looked at the 2005 to-date and taking the 33% out of the revenue for the casino express, utilizing the subscribed 85% it would show 3 million in net income. He felt at 6 million the rate of return for that price could be very high. He believed it may be a two year payback. Jeff Chaidez stated that the expenses had not been fully calculated through the Assessor’s Office. Board

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 23 Member Al Plank inquired what rate of returns the buyer was expecting on this sale. He noted the biggest disparity between the petitioner and the Assessor’s value was upon the Red Lion Inn Casino. Jeff Chaidez could not answer that question. Board Member James Winer noted the disparity seemed to be on the Red Lion. He inquired why they were so far apart on this subject property. Katrinka Russell believed it may be because there were 223 rooms that had to be occupied. She stated the potential buyer may be concerned with filling those rooms without the Casino Express. Jeff Chaidez agreed with her. David Zornes, CEO for McClaskey holdings, stated he had been here in Elko previously and had helped start the airline program. He stated that the casino actually was not making any money and in the year of 2006 would not cash flow a penny. He stated the revenue from the Casino Express was probably about 2/3 of the entire revenue. David Zornes stated the Red Lion had 80% to 90% of their rooms filled with Casino Express customers in the past. He stated they would have to come up with a whole new program to fill those rooms and that was why it would be tough to sell the casino at a higher price. Board Member Wes Bowlen asked if he felt that under those circumstances this might be a distressed sale. David Zornes replied no, because it did not have to be sold and by the end of the year they should break even with the cash flow. He reported that they had to pay to eliminate the airplane program early. David Zornes commented that the casino could have lost four to five million dollars if they kept running that program through 2006. He stated it was worth getting out of paying for the flights. He noted the equipment on the floor of the Red Lion was antique and believed that to redo the slot floor to make it a competitive casino would cost four million dollars. He stated the rooms had not been remodeled for several years which would cost them over a million dollars to bring the rooms up to a good standard. He stated the buyer was not looking at the same numbers the Appraiser was looking at. Chairman Walter Leberski stated they had heard all three McClaskey cases together but at the suggestion of legal counsel they would make separate decisions for the benefit of going to the State Board. TAPE 2B POINT 19 CASE 06-103 MCCLASKEY ELKO RED LION CASINO DECISION: Board Member James Winer moved that they go with the County

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 24 proposed numbers as submitted $16,639,512 for tax purposes. Board Member Wes Bowlen seconded the motion. Board Member James Winer explained his rationale that McClaskey had decided to keep the airline program going with those numbers. Now, that airline program was gone, that property needed to run for a while on its own without that airline mixed in the valuation. He believed that time would tell if the airline was bogging the property down from making more revenue. He stated that a new owner would be coming in possibly with a new program. Board Member James Winer noted that all this Board had to base their decision was upon historical data. He stated the sale had not transpired and there were some grey areas such as the leasing of the gaming back to the sellers. Board Member James Winer stated he appreciated that the bank had a fiduciary responsibility to the McClaskeys to oversee this property. He noted that the rest of the hotel casinos were being treated equally on the same income approach and they were not all in front of this Board saying they were being treated unfairly. The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member James Winer Member Wes Bowlen Member Al Plank Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None Chairman Leberski informed the Petitioner, that they had the right to appeal. Joe Aguirre submitted an appeal form to Jeff Chaidez on the behalf of the Petitioner. ------

TAPE 2B POINT 22 MCCLASKEY ELKO HOLIDAY INN LLC Case No. 06-101 Parcel No. 001-560-088 Hearing Date: February 22, 2006

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 25 SUBJECT MATTER: This being the time set for hearing the petition of MCCLASKEY ELKO HOLIDAY INN LLC for review of assessed valuation on property described as follows: Parcel No. 001-560-088.

DOCUMENTS SUBMITTED BY ASSESSOR FOR THE RECORD: I. Pictures/Legal Description II. Parcel Maps III. Petition IV. Support Documentation V. Capitalization Worksheets VI. Assessor’s Values/Recommendation VII. Newspaper Article

APPRAISER, PREVIOUSLY SWORN IN: KATRINKA RUSSELL Katrina Russell, Elko County Appraiser, stated the Holiday Inn Limited Liability Company owned the High Desert Inn. In her written summary, she stated the Red Lion and Elko Gold Country were both gaming properties that used the airline charter. They would have to determine the values separately on each property. Katrinka Russell previously reported that all three properties were in a sale procedure. Katrinka Russell submitted a written summary describing the subject property as the High Desert Inn containing 3.49 acres, located at 3015 Idaho Street, Elko, Nevada. The subject property is a hotel with 171 rooms available for occupancy. It features a bar/lounge with exercise facilities. It also features an indoor pool w/a Jacuzzi. There was a restaurant on the premises but it was closed down in 2004. The reason for the appeal was that the Petitioner requested they value this property based on the market value approach. The Assessor’s Office had used the 2005 income, the average expenses allowed for this type of property and a 12% cap rate which seemed to be the average nationwide (3.4927% + 8.5%). Katrinka Russell stated that she had treated all three parcels for McClaskey Properties exactly the same. She took their income, subtracted out average expenses and used the applicable cap rate to arrive at a value based on income.

PETITIONER’S REPRESENTATIVE, PREVIOUSLY SWORN: JEFF CHAIDEZ The Board had heard previous testimony from Jeff Chaidez during Case

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 26 No. 06-101 which applied to this subject property.

DOCUMENTS SUBMITTED BY PETITIONER: A-1 Assessor’s Value Conclusions A-2 Elko Properties Analysis of Buyers 2004-2005 B Purchase and Sale Agreement (first 2 pages & Exhibit A)

TAPE 2B 23.8 CASE 06-101 MCCLASKEY – ELKO HOLIDAY INN LLC DECISION: Board Member James Winer moved that they accept on this asset the County’s recommendation. Board Member James Winer stated that his rationale was the similar to the Red Lion’s because there was the question of the airline program and how the airline affected this asset. Board Member James Winer commented that this asset may have not been affected as much by the airlines because the County’s numbers were closer to the private parties’ numbers. Board Member Wes Bowlen seconded the motion. TAPE 2B POINT 24.6 RECOMMENDATION: Katrinka Russell, Chief Assessor, noted that the Assessor’s Office recommendation was to drop the total taxable value from 6.1 million dollars to $5,932,693.00. Board Member James Winer amended his motion to accept the County’s recommendation of $5,932.693.00 for taxable valuation on this property. Board Member Wes Bowlen seconded the amendment. The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member James Winer Member Wes Bowlen Member Al Plank Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None Chairman Leberski informed the Petitioner, that they had the right to

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 27 appeal. Joe Aguirre submitted an appeal form to Petitioner. ------

Tape 2B Point 25.3 MCCLASKEY ELKO GOLD COUNTRY LLC Case No. 06-102 Parcel No. 001-560-019 Hearing Date: February 22, 2006

SUBJECT MATTER: This being the time set for hearing the petition of MCCLASKEY ELKO GOLD COUNTRY LLC for review of assessed valuation on property described as follows: Parcel No. 001-560-019.

DOCUMENTS SUBMITTED BY ASSESSOR FOR THE RECORD: I. Pictures/Legal Description II. Parcel Maps III. Support Documentation IV. Capitalization Worksheets V. Assessor’s Values/Recommendation VI. Newspaper Article

APPRAISER, PREVIOUSLY SWORN IN: KATRINKA RUSSELL Katrinka Russell, Elko County Appraiser, being previously sworn in, noted for the record that the Assessor=s Parcel No. was 001-560-019. Katrinka Russell described the subject property as the Gold Country Inn & Casino, containing 6.49 acres located at 2050 Idaho Street, Elko, Nevada. The subject property is a 150 room motel and casino with an RV park. It also has a restaurant located on the premises known as JR’s Grill. The Assessor’s Office had used the 2005 income, the average expenses allowed for this type of property and a 20% cap rate which seemed to be the average nationwide. Katrinka Russell previously stated that she had treated all three parcels for McClaskey Properties exactly the same. She took their income, subtracted out average expenses and used the applicable cap rate to arrive at a value based on income.

PETITIONER’S REPRESENTATIVE, PREVIOUSLY SWORN IN: JEFF

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 28 CHAIDEZ

DOCUMENTS SUBMITTED BY PETITIONER: A-1 Assessor’s Value Conclusions A-2 Elko Properties Analysis of Buyers 2004-2005 B Purchase and Sale Agreement (first 2 pages & Exhibit A)

TAPE 2B POINT 25.8

RECOMMENDATION: Katrinka Russell, Chief Appraiser stated for CASE 06-102, Elko Gold Country, there was no recommendation to change the value.

TAPE 2B POINT 23.4 Case No. 06-102 MCCLASKEY ELKO GOLD COUNTRY LLC

DECISION: Board Member James Winer moved that they accept the County Assessor’s recommendation ($6,323,426.00) for tax purposes. Board Member James Winer stated he used the same rationale as on Case No. 06-101. Board Member Al Plank inquired what the number was and what approach they used for that recommendation. Katrinka Russell stated on Exhibit IV b the amount was $6,539,305.00 if they utilized the 30% off of the income. However, the recommendation was based on leaving it the same. Katrinka Russell stated if they treat the Gold Country the same as the Red Lion they would take the total revenue times the average expenses. She noted that their total income was 7.3 million dollars so the income approach came in higher. Katrinka Russell stated they decided to leave that valuation the same at 6.3 million. Board Member Al Plank inquired if there was concern about the consistency between the three properties. Kristin McQueary, Deputy District Attorney, commented that they would use the guidance of the Legislature and the preponderance of the evidence to determine what method best fit the property. She noted that they had explained their rationale for accepting one particular valuation calculation over another. She stated that if that valuation fit the unique characteristics of that property, then their decision was fine. Board Member Al Plank voiced concern

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 29 that they would not be using the same methodology on this subject property. Katrinka Russell commented that the income method would raise the valuation on this property. Joe Aguirre, Elko County Assessor, agreed with Kristin McQueary that the best methodology was used on the subject property. Board Member Al Plank noted that was a different methodology they used because it was a lower number. Joe Aguirre commented that there was a statute that stated they could not raise it.

TAPE 2B POINT 29.7 Board Member Wes Bowlen seconded the motion. The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member James Winer Member Wes Bowlen Member Al Plank Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None Chairman Leberski informed the Petitioner that they had the right to appeal. Joe Aguirre submitted an appeal form to the Petitioner. ------

Chairman Walter Leberski moved to recess for lunch at 11:55 a.m. The Board was reconvened at 1:30 p.m.

TAPE 2B POINT 31.3 Chairman Walter Leberski reconvened the meeting at 1:30 p.m.

Chairman Walter Leberski inquired about a list of the proposed revisions that had been agreed upon by the Assessor=s Office. Joe Aguirre, Elko County Assessor, replied that their new computer program started the log in September and the program could not be interrupted. He stated that they would send the whole log down to the State for approval depicting the increases and decreases.

TAPE 2B POINT 32.4

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 30 SUN COMMUNITIES OPERATION Case No. 06-104 Parcel No. 010-740-0AU Hearing Date: February 22, 2006

SUBJECT MATTER: This being the time set for hearing the petition of SUN COMMUNITIES OPERATION for review of assessed valuation on property described as follows: Parcel No. 010-740-0AU.

DOCUMENTS SUBMITTED BY ASSESSOR FOR THE RECORD: I. Assessor’s Recommendation II. Capitalization Summary III. Income Summary IV. Expense Summary V. Parcel Map VI. Photos VII. Petitioner’s Profit/Loss VIII. Petitioner’s Rent Roll IX. Income Analysis X. Rental Map Rented Spaces XI. Print Screens XII. E-Mail Log XIII. Authorization Letter

APPRAISER, PREVIOUSLY SWORN IN: DENNIS DE ARRIETA Dennis de Arrieta, Elko County Appraiser, being previously sworn in, noted for the record that the Assessor=s Parcel No. was 010-740-0AU. He described the Desert View Village Manufactured Home Park property containing 50 acres located at 3115 Tibbets Blvd in West Wendover, Nevada. The legal description is as follows: Parcel A, File No. 428073, Township 33, Range 70, Section 18. The property is located near the golf course. The property consists of 93 mobile home lots with a live-in manager’s space. There are paved streets with sidewalk, curb and gutter. All utilities are stubbed to each lot. Dennis de Arrieta reported that Sun Communities purchased the property on January 28, 1998, for $1,060,000.00 as vacant ground. The property was last re-appraised in 2001 and is scheduled to be revalued the current year. The

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 31 current taxable value on the real property tax roll is $848,851.00 for land and improvements. Dennis de Arrieta stated that the Petitioner was notified by certified mail of the hearing and had also been in telephonic communication with him. He was informed that Rash & Associates, a tax firm out of Texas, would hear the case. Dennis de Arrieta stated that within the last week he had not received any phone calls or e-mails from them. Kristin McQueary inquired if there was a return receipt for this Case. Chairman Walter Leberski noted that they were petitioning to have the improvements reduced. Dennis de Arrieta stated the Petitioner requested the Assessor’s Office to look at their income and base their value upon the income approach. Marilyn Tipton, Deputy County Clerk, noted that the return receipt was returned on January 31, 2006 signed by D. Gaines.

PETITIONER DULY SWORN: Not represented.

TAPE 2B POINT 36 RECOMMENDATION: The Assessor’s recommendation was to reduce the improvements from $598,709.00 to $461,896.00.

DISCUSSION: Chairman Leberski noted that the Assessor’s recommendation was to reduce the taxes to $461,896.00 and inquired if that was based on income approach. Dennis de Arrieta replied it was and when the Petition was filed the income supported the market value of $480,000.00. Board Member James Winer stated when they did the income approach did they use the numbers they supplied. Dennis de Arrieta stated they used the actual income amounts that Petitioner supplied them. They were going to take the market at 40% but their expenses came in at 44% so they utilized 44%. Board Member James Winer clarified that the Assessor’s Office used their income and their expenses. He inquired what cap rate they used for the valuation. Dennis de Arrieta replied they used their cap rate derived from other counties and went with a base rate of 8.5% then added the Wendover tax rate to that. Board member James Winer inquired if the Petitioner was comfortable with the rate of 11.8%. Dennis de Arrieta noted in their initial e-mail (Exhibit XII d) they wanted a base rate of 10% with the 3.3142% Wendover tax rate added to that for a total of 13.3142% tax rate. Board Member James Winer had reviewed

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 32 their e-mails and inquired if there were support documents on their analysis submitted to the Assessor’s Office. Dennis de Arrieta replied no. Board Member Kelly Buckner inquired if they were just renting space and inquired what occupancy he used in the equation. Dennis de Arrieta replied he had used their numbers. He noted the only comparison was an older park which was only 80% occupied. He reported that this was a newer park so they gave them their actual occupancy. Board Member James Winer inquired what the vacancy was given to the Petitioner. Dennis de Arrieta stated the 40% occupancy was what they determined the market to be but in their actual income, the vacancy was built in. He stated that their actual vacancy was 52%. He stated the $149,892.00 was their income minus the vacancies incurred. Board Member Kelly Buckner inquired if the park was filling up given the area. Dennis de Arrieta stated they had petitioned in the past and last year it was 58% and this year it was 52%. Board Member James Winer inquired if they would use the same cap rate on other parks and received an affirmative response.

TAPE 2B POINT 40.6 CASE 06-104: DECISION: Board Member James Winer moved to accept the Assessor’s valuation of $712,038.73 for land and improvements for tax purposes. Board Member James Winer stated the rationale was that the same tax rate was applied across the board, countywide. He commented that the Petitioner supplied them the income and expense numbers. He noted the Petitioner’s income analysis supported $490,000.00 but there were no support documents to assume they utilized the same income analysis that the County staff was putting forth. Board Member Al Plank seconded the motion. Board Member James Winer noted that the State of Nevada had passed a lot of laws in the last couple of years making the mobile home parks hard to own and manage anymore. He commented that within the last five years the 500 mobile home parks in the State had been reduced to 280 mobile home parks. Board Member James Winer noted the State had changed a lot of the tax laws and liability issues with regards to the mobile home parks. He noted that any repair to mobile homes must be completed by a certified licensed mobile home repairman. Board Member James Winer noted that law only applied to landlord/tenant situations. Joe Aguirre stated they were attempting to change the

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 33 law wherein manufactured housing would be separated from the State Contractor License Division. Joe Aguirre reported that Assemblyman Carpenter, Elko County Commissioner Nannini and a local engineering office would testify. He noted that this showed up when a licensed contractor could not convert a mobile home when they go to attach the foundation to the mobile home. Board Member James Winer noted that Elko had also lost mobile home parks with these regulations imposed. He stated they were also looking at requiring an owner of a mobile home to sell that home through a licensed mobile home dealer. Joe Aguirre stated Commissioners Mike Nannini, John Ellison, Assemblyman Carpenter and Tom Ingersoll County Building Inspector would testify. Board Member James Winer noted there would be an expense to become licensed with the manufactured housing division and the demand may not be there. So, the smaller communities were not being considered in this legislation. Board Member Wes Bowlen inquired if the anticipated increase in Elko was due to construction projects. Joe Aguirre noted there had been an increase of 200 to 300 homes a year for several years but in the upcoming year they anticipated an increase of 600 homes. Joe Aguirre noted that a lot of the people coming here were retired people and people from Las Vegas coming here. TAPE 3A POINT 2.1 The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member James Winer Member Al Plank Member Wes Bowlen Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None ------

Katrinka Russell, Chief Appraiser, reported that there were three more settlement files for them to review as follows:

TAPE 3A POINT 3.13 LB ELKO 1661 5TH STREET LLC Case No. 06-106 Parcel No. 001-640-064

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 34 Hearing Date: February 22, 2006

APPRAISER, PREVIOUSLY SWORN IN: DENNIS DE ARRIETA

Dennis de Arrieta, Elko County Appraiser, described the subject property as The Willows at 1661 Fifth Street. He reported that The Willows were in the foreclosure process. Dennis de Arrieta stated Jim Gregory had taken over the apartments as the property manager. He stated last year the property owners protested their value based upon the income approach and they reduced the valuation based upon their income. He believed things were worse this year but the people exiting the property this year had no records to show income. The Assessor’s Office, in discussing this with Jim Gregory, agreed to carry forward the value established last year. Dennis de Arrieta stated this property would be reassessed next year. Board Member James Winer inquired if the foreclosure was completed. Dennis de Arrieta replied he was unsure if that foreclosure was completed. Katrinka Russell noted that there was a foreclosure sale and their recommendation was to keep the taxes the same as last year. Board Member James Winer commented that the occupancies in the community were at 100% so it was a good time to purchase that asset. He believed the new owners would be able to raise the rent and repair the units because of the housing shortage. TAPE 3A POINT 5.8 RECOMMENDATION: The Assessor’s Office recommended the value be $1,142,672.00 for the subject property.

DISCUSSION: Board Member James Winer inquired how many units there were and Dennis de Arietta replied 48 units. TAPE 3A POINT 7.5 Case No. 06/106 DECISION: Board Member James Winer moved to accept the assessor’s recommendation of $1,139,948.00. Board Member Al Plank seconded the motion. The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member James Winer

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 35 Member Al Plank Member Wes Bowlen Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None ------

TAPE 3A POINT 7.8 PARKWAY ASSOCIATES LTD. Assessor’s Parcel No. 001-660-040 Hearing Date: February 22, 2006

SUBJECT MATTER: Parkway Apartments located at 101 Spruce Road, Elko, Nevada.

APPRAISER, PREVIOUSLY SWORN IN: JANET IRIBARNE Janet Iribarne, Elko County Assessor, being previously sworn in described the subject property. She stated the Assessor’s Office reviewed their income and gave them a slight reduction from $4,330,143.00 property value to $3,792,914.66. Janet Iribarne stated their actual income was $737,761.05. The Assessor’s Office gave them 40% expenses. She reported that their actual expenses were 41.97% which led to a capitalization rate of 11.993%. Janet Iribarne stated they used the 8.5% plus the City of Elko’s tax rate. Board Member Al Plank inquired if they had used the income rate on this property previously. Janet Iribarne replied they had utilized the income approach on this subject property for the last four or five years. TAPE 3A POINT 9 PARCEL NO. 001-660-040 DECISION: Board Member Kelly Buckner moved to accept the Assessor’s Office recommendation for the Parkway Associates LTD (The Parkway Apartments). Board Member Al Plank seconded the motion. The motion carried the following vote: Voting Aye: Chairman Walter Leberski Member Kelly Buckner Member Al Plank

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 36 Member Wes Bowlen Member James Winer Voting Nay: None Abstaining: None Absent: None

------

TAPE 3A POINT 10.6 SAN JACINTO ASSOCIATES Case No.: 06/100 Parcel No. : 009-005-092 & 009-005-093 Hear Date: February 22, 2006

SUBJECT MATTER: This being the time set for hearing the petition of San Jacinto Associates.

SUMMARY: Katrinka Russell, Chief Appraiser stated these apartments were located in Jackpot, Nevada and they requested a review based on income. She stated on the Petition filed the Petitioner had asked for a total of $500,000 for an appraised value. Katrinka Russell stated when they reviewed their income it came up with a total of $464,115.00 total value using an 11.8% cap rate.

TAPE 3A POINT 11.4 RECOMMENDATION: The Assessor’s recommended the current taxable value be revised to $500,000.00 for the total on the subject property.

DISCUSSION: Board Member Wes Bowlen inquired what the value was before reduction. Katrinka Russell stated it was $1,207,494, and they had reduced it to $500,000 using the income rate approach. She explained the Petitioner was charging low income rental rates and the Assessor’s Office came up with a value of $464,115.00 under the income approach. Board Member James Winer inquired if they had ran a cost approach valuation. Katrinka Russell stated by the replacement cost approach it was 1.2

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 37 million dollars. Board Member James Winer inquired about the market approach. Katrinka Russell stated they did not look at market approach. Board Member James Winer inquired if the Assessor’s Office was consistently using income approach on most apartments. Joe Aguirre replied that out of the twenty apartments they dealt with right after 9-11, the Assessor’s Office were currently having to deal with only two or three apartment complexes anymore. Joe Aguirre stated that they use the income approach when they were approached. He explained that his office did not normally have time to appraise each apartment complex individually because they were doing about 8,000 appraisals a year. Katrinka Russell noted that under Assembly Bill 489 any commercial enterprise could request their property value be based upon their income. She stated it would not apply only to apartments or hotels anymore it could be anyone with a business. Joe Aguirre explained there was concern with that legislative bill because they could get different cap rates under that legislation and that would create inequality. He clarified that the cap may be different on two properties located alongside each other. However, one of those properties may be rented so the cap rate would be different even though the houses were both valued the same. Board Member Wes Bowlen inquired if his business in Wells would fall under that rate. Joe Aguirre stated anything that was not an owner-occupied residence would fall under the 6.8% cap this year, unless there were apartment rentals which were rented out below the average rent for that area. Board Member Wes Bowlen inquired if he could request the income approach. Joe Aguirre replied he could make that request. Board Member James Winer noted the income derived from that business did not necessary have a bearing on what it would lease for under a typical scenario. He noted that just because they were making $30,000 per year. However, that property might lease out for $50,000 per year. Assessor, Joe Aguirre, explained they had to address the U.S. Forest Service building constructed in Mountain City for the Forest Service. The Forest Service did not have sufficient manpower to man that station. Therefore, the Forest Service could lease ½ of the building out but because of the location who would they rent it to. Joe Aguirre stated they were given an income reduction because of the location. Board Member James Winer stated it was up to an astute taxpayer to make their analysis as to which approach they wished the Assessor’s Office to use. He noted a few years ago the hoteliers came in and wanted the Assessor’s Office to use the income approach because of Elko’s economy. He did not believe that the Assessor’s Office could advertise that information. Joe Aguirre stated when

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 38 the market dropped in the motel business they had approached the motel association and informed them of the law. He stated that his staff worked with a lot of people that the Board of Equalization never saw because they showed the people their formulas. Board Member James Winer believed that with the rentals were trending up the hoteliers may come back and not want it appraised on the income approach. Board Member Wes Bowlen inquired if they could change the option of the approach. Joe Aguirre noted that the heaviest weight to the Assessor’s Office was the replacement cost approach minus 1.5% depreciation for each year. He stated the Assessor’s Office could entertain the income approach to benefit the taxpayer.

TAPE 3A POINT 21.8 Case No. 06/100 DECISION Board Member James Winer moved that the Board accept the Assessor Office=s adjusted value placed on the property for the 2005- 06 with an assessed valuation of $500,000.00. Board Member Al Plank seconded the motion. The Motion was carried by the following vote: Voting Aye: Chairman Walter Leberski Member James Winer Member Al Plank Member Wes Bowlen Member Kelly Buckner Voting Nay: None Abstaining: None Absent: None ______

TAPE 3A, POINT 23.1 ADJOURNMENT: There being no further business to come before the Board, Chairman Leberski adjourned the meeting at 2:08 p.m.

APPROVED,

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 39 ______WALTER LEBERSKI, Chairman

ATTEST: MARILYN TIPTON, Deputy County Clerk

ELKO COUNTY BOARD OF EQUALIZATION FEBRUARY 22, 2006 PAGE 40

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