TWO COMMERCIAL PROPER'I'IES Block 33 & Block 49 PGP Between SW Bond & Moody Avenues VALUATION INC North Macadam District in Portland, Oregon
Mr. Karl ~inkels~iel Associate Project Coordinator Portland Development Commission 222 NW 5th Avenue Portland, OR 97209
PREPAREDBY John D. lngle Todd S. Liebow, MA1 PGP VALUATIONINC 1 10 SW Yamhill, Suite 200 Portland, Oregon 97204-3024 (503) 226-0983
Portland - Seattle - Sun Diego Sacramento - Vancouver August 14,2006 PGP VALUATION INC
Mr. Karl Dinkelspiel Associate Project Coordinator Portland Development Commission 222 NW 5+hAvenue Portland, OR 97209
RE: TWO COMMERCIAL PROPERTIES Block 33 & Block 49 Acquisitions Between SW Bond & Moody Avenues North Macadam District in Portland, Oregon
Dear Mr. Dinkelspiel:
Per your request, we have appraised the two captioned properties using generally accepted appraisal principles and practices. This is a Complete Appraisal presented in a Summary report format. This type of appraisal report is intended to comply with the report requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Foundation and the Appraisal Institute, Title XI of the Financial Institutions Reforms, Recovery, and Enforcement Act (FIRREA). This report is considered a Complete Appraisal presented in a Summary Report format.
The subject of this report consists of two separate vacant properties (land only) located at the south end of the rapidly developing South Waterfront District and south of the Portland Central Business District. This district is located between the 1-5 Freeway and the Willamette River and is also referred to as North Macadam. This vast area was formerly utilized as heavy industrial land, but is now transitioning into a high density commercial extension of downtown Portland. New streets and infrastructure are being installed and significant development is taking place. A streetcar light-rail system will eventually reach into the area and an aerial tram will provide access to the Oregon Health and Science University (OHSU) campus on Marquam Hill to the west.
1 10 SW Yamhill Street. Suite 200 Portland. OR 97204 503.226.0983 503.273.4273 facsimile
Real Estate Appraisers and Consultants OFFICES IN CALIFORNIA, OREGON 81 WASHINGTON Mr. Karl Dinkelspiel August 14,2006 Portland Development Commission Page 2
A complex series of agreements governs much of the development taking place in the Central District of the North Macadam Urban Renewal Area (NMURA). Parties to this agreement include the Portland Development Commission (PDC), OHSU, and North Macadam Investors (NMI). A portion of the Development Agreement (DA) also outlines obligations in which PDC, OHSU and NMI have agreed to construct various improvements including a 6-story parking garage, a number of affordable housing units, and office and retail space on Block 33. A recent property transaction transferred development rights to OHSU to construct a parking garage on Block 33, with NMI retaining the air rights above the parking garage.
NMI has submitted a proposal to PDC for consideration that would include purchase of Block 33 air rights, as well as the fee simple ownership of Block 49 as "development ready". PGP Valuation Inc has been retained by the client (PDC) to provide a valuation of Block 49 and the air rights above Block 33 in response to the NMI proposal.
Block 33 is several blocks west of the river between SW Macadam and Moody Avenues with SW Curry Street to the north and Gaines Street to the south. This large, rectangular shaped site has 91,976 square feet, according to a March 2004 survey. 'The site is zoned Central Commercial; the base FAR is 6-to-1; and, the maximum height is 250 feet. Under the South Waterfront Central District Phase I Development Agreement, Block 33 was designated for mixed-use development with a large parking garage, ground floor retail, office space and a significant affordable housing component. Development of this property will be phased. Phase I is expected to be a 6-story parking garage with ground floor retail, office and townhome residences on the upper levels. Structural enhancements sufficient to support the planned construction of residential towers above (Phase 2) will be needed significantly adding to the cost of the garage. Phase 2 will also require an increase in development density up to the maximum level of 9-to-1 FAR. This site has several issues affecting its value. We have been asked to estimate the Market Value of the "Air Rights" under a restricted scenario which considers its planned use (parking garage, affordable housing). We also have valued the separate components between the Base Development Rights and the additional Air Rights related to the future hi-rise residential tower development plan. Based upon our investigation and analysis of available information, the market value of the property under the requested scenario is:
BLOCK 33 Market Value Scenario Date of Value Value Value of Air/Development Rights over Base 6:l FAR: April 29, 2006 $1,743,000
O 2006 PGP VALUATION INC Mr. Karl Dinkelspiel August 14, 2006 Portland Development Commission Page 3
Extraordinary assumptions made for valuing Block 33 are: 1. The valuation assumes the property is ready-to-develop and that surrounding streets and utility infrastructure are nearing completion. In addition, we assume the parking garage will be completed by 201 0 based on conversations with PDC staff.
2. As either a market or affordable project, the valuation assumes the base 6:l FAR density and the additional 3:l density rights (up to 9:l maximum) will be available.
3. The analysis further assumes the Portland Development Commission (PDC] will commit to funding the cost of structural enhancement of the Phase I parking garage in order to accommodate future hi-rise housing development (market or affordable).
4. Please note, the known LIDS for this property will total up to $312,206. This has not been deducted from the concluded value recognizing that costs are likely to increase beyond this initial estimate.
5. If ultimate development on the site does not reach the indicated FAR levels above, we assume that development density will be either transferred or sold for use on another nearby site in the district.
BLOCK49 - NORTHMACADAM DISTRICT Block 49 is located approximately 1,000 feet southeast of Block 33 and is a level, square shaped site with an estimated 38,768 square feet of land area, according to Multnomah County records. However, the PDC will be purchasing an approximate 44,000 square foot parcel due to the realignment of SW Lowell Street to the north. The zoning and FAR characteristics are the same as Block 33 including the 50% potential increase above the base FAR and maximum height levels. The immediate property boundaries are SW Lowell, future SW Bond, SW Bancroft and SW Moody. Future development is likely to be a mixed-use high-rise office and parking project.
Two major issues impacting the value of Block 49 include the cost of redeveloping the surrounding streets and infrastructure, I-ID and other special assessments. However, North Macadam Investors are responsible for these costs allowing the Portland Development Commission to acquire a "development ready" site per the pending sales agreement.
Based upon our investigation and analysis of available information, the market value of the property (without adjustment for public infrastructure contribution] under the requested scenario is:
BLOCK 49 Market Value Scenario Date of Value Value "As Is" Fee Simple Market Value Land Only April 29, 2006 $4,490,000 ("Development Ready")
O 2006 PGP VALUATION INC Mr. Karl Dinkelspiel August 14,2006 Portland Development Commission Page 4
Extraordinary assumptions made for valuing Block 49 are:
1. We assume a site size of 44,000 SF, due to the realignment of SW Lowell Street to the north based on discussions with PDC staff.
2. The analysis assumes that Block 49 is development-ready. The North Macadam Investors (NMI) are responsible for most of the cost of making the site development ready. The site development cost budget has been estimated by NMI at $3.7 million in total for Blocks 46 and 49 (subject).
3. We assume that the total site construction budget includes all cost categories necessary for making the site development ready including: elevating the levels of all surrounding streets, remediation of any environmental issues, constructing and realigning new storm drains, completing Moody Avenue from Abernathy to Bancroft Street, re-paving Bancroft Street to Bond Avenue, LID Assessments for the Streetcar & Tram, cost contingencies, an adequate Profit component for contractors and a developer fee.
4. We also assume that the cost for elevating, extending and developing SW Bond Avenue will be paid by the City of Portland.
5. We assume a base development densitylfloor area ratio (FAR] of 264,000 SF or 6-to-1 FAR plus the potential for added bonus densities.
6. Please note, the estimated I-ID assessments are included in the Construction budget (see assumpl~ions7).
The values reported herein are also subject to the typical Assumptions and Limiting Conditions presented on page 14.
O 2006 PGP VALUATION INC Mr. Karl Dinkelspiel August 14,2006 Portland Development Corr~mission Page 5
This report was prepared by the undersigned. If any questions arise concerning this report, please do not hesitate to contact us.
Sincerely,
PGP VALUATION INC.
John D. lngle OR State Certified General Appraiser No. COO0628
Todd S. Liebow, MA1 OR State Certified General Appraiser No. COO0152
O 2006 PGP VALUATION INC Letter of Transmittal
INTRODUCTION PAGE Executive Summary .Block 33 ...... 1 Aerial Map .Block 33 ...... 2 Executive Summary - Block 49 ...... 3 Aerial Map - Block 49 ...... 4 Preliminary Appraisal Information ...... 5 Assumptions and Limiting Conditions ...... 14 Market Area Map ...... 18 South Waterfront District Retail Plan Map...... 19 Market Area Description ...... 20
BLOCK 33 . DESCRIP'TION & VALUATION Site Description...... 26 Highest & Best Use ...... 32 Subject Property Photographs ...... 34 Plat Map ...... 37 Central City Plan District ...... 38 Flood Map ...... 39 Zoning Map ...... 40 FAR Map ...... 41 Maximum Heights Map ...... 42 Valuation ...... 43 Sales Comparison Approach ...... 43 Land Sales Comparable Summation Table ...... 45 Land Sales Location Map ...... 46
BLOCK 49 . DESCRIPTION & VALUATION Site Description...... 53 Highest & Best Use ...... 57 Subject Property Photographs ...... 61 Plat Map ...... 63 Central City Plan Map...... 64 Flood Map ...... 65 Zoning Map ...... 66 FAR Map ...... 67 Maximum Heights Map ...... 68 South Waterfront Height Opportunity Map ...... 69 Valuation ...... 70 Sales Comparison Approach ...... 70 Certification of Appraisal ...... 72
O 2006 PGP VALUATION INC TABLEOF CONTENTS(continued)
ADDENDA Letter of Engagement Comparable Land Sales Parking Easement Agreement - Block 49 Purchase & Sales Agreement - Block 46 & 49 (Subject) Qualifications of PGP VALUATIONINC Qualifications of Appraisers
O 2006 PGP VALUATION INC BLOCK 33 Property: Vacant commercial site.
Site Size: 92,000 SF or 2.1 1 acres.
Site Characteristics: Level, rectangular shaped, large-block site bordered by SW Abernathy Street, Bond Avenue, Lowell Street and Moody Avenue. The site has 200 feet of "direct" frontage on both Abernathy and Lowell and over 350 feet on both Moody and Bond. Moody and Bond Avenues will be the north-south neighborhood arterials through the immediate area.
Block 33 is currently enclosed with security fencing and is used for construction staging for the proposed aerial tram. 'The property is in the rapidly developing planned and approved South Waterfront Central District south of the Portland CBD. Other neighborhood and site characteristics include major public improvements and Oregon Health and Science University's (OHSU) expansion into the area (River Campus Bldg. I), proximity to the Willamette River, good access to major transportation routes, the nearby Portland CBD, the future streetcar extension, and the aerial tram leading to OHSU campus on Marquam Hill.
Zone: CXd, Central Commercial
FAR: 6 to 1 plus bonus potential
Development Capacity: 455,700 SF plus bonus potential
Maximum Height: 250 feet with potential for up to 325 feet
Highest and Best Use- "As Vacant": Future high-density residential/commercial project after it becomes development-ready.
"As Improved" A mixed-use high-rise project.
VALUATION
BLOCK 33 Market Value Scenario Date of Value Value Value of AirIDevelopment Rights over Base 6:l FAR: April 29, 2006 $1,743,000
C060354 O 2006 PGP VALUATION INC 1 O 2006 PGP VALUATION INC BLOCK 49 Property: Vacant commercial site.
Site Size: 44,000 SF or 1.0 1 acres.
Site Characteristics: Level, square shaped, full-block site bordered by SW Lowell Street, Bond Avenue, Bancroft Street and Moody Avenue. The site has 200 feet of "direct" frontage on both Abernathy and Lowell and approximately 193 feet on both Moody and Bond.
Block 49 is currently used as over,l'low parking for the neighboring Old Spaghetti Factory restaurant. See prior page for other immediate area characteristics.
Zone: CXd. Central Commercial
FAR: 6 to 1 plus bonus potenl'ial
Development Capacity: 232,608 SF plus bonus potential
Maximum Height: 250 feet with potential for up to 325 feet
Highest and Best Use- "As Vacant": Future intensive mixed-use office and residential development after it becomes development-ready, and with super-adequate parking to accommodate the adjacent restaurant property.
"As Improved" A mixed-use high-rise project with super adequate parking for the adjacent restaurant property.
VALUATION
BLOCK 49 Market Value Scenario Date of Value Value "As Is" Fee Simple Market Value Land Only April 29,2006 $4,490,000 ("~evelo~mentReady"]
This appraisal is subject to the conditions and comments presented herein. Please refer to the Assumptions and Limiting Conditions section on page 14 regarding these issues.
PGP Valuation Inc File No.: C060354
O 2006 PGP VALUATION INC O 2006 PGP VALUATION INC This report is designed to inform the reader of all factors influencing the property's value in a clear and concise manner. The Executive Summary gives a brief overview of the salient facts of each property and this appraisal. 'This Preliminary Appraisal lnformation section provides both general and USPAP required information. The Description section starts with general neighborhood issues and proceeds to more specific issues directly related to each property. The Highest and Best Use section establishes the premise upon which the property is valued.
The Valuation section focuses on the scenarios requested by the client and also describes the Cost, Income Capitalization and Sales Comparison Approaches. However, the subject sites are vacant land and only the Land Sales Comparison Approach is applicable. This approach will include comparable information, analysis of market data in relation to the subject, and valuation analysis.
The report will proceed in the following order:
The Letter of Transmittal.
Executive Summary of each subject block.
Preliminary Appraisal Information section providing USPAP required and general information.
Descriptions of both the Regional and Subject Market Areas.
Description of Block 33 including a Highest a Best Use Analysis and subjec.t property photos and graphics.
Comparable land sales will be used to value the fee simple market value of Block 33. In addition, because this property will be valued under other scenarios (air rights] other financial modeling will be discussed and presented in order to appropriately determine the requested values.
Description of Block 49 with abbreviated Highest a Best Use Analysis and subject property photos and some graphics (shares a similar highest and best use as Block 33).
Sale comparable analysis and Valuation of Block 49. The site is valued on the same basis as Block 33 (unencumbered development-ready vacant site).
PURPOSE.USE, AND USEROF APPRAISAL The purpose of this appraisal is to determine the "air rights" of Block 33 and the "As Is" Market Value of Block 49 as "development ready". 'The value conclusions also recognize the impact of infrastructure improvements expended to date by the City of Portland and an apportionment attributed to Block 49. This report addresses the value of the real estate only.
C060354 O 2006 PGP VALUATION INC 5 PRELIMINARYAPPRAISAL INFORMATION (continued)
North Macadam Investors (NMI) has submitted a proposal to PDC for consideration that would include purchase of Block 33 air rights, as well as the fee simple ownership of Block 49. PGP Valuation Inc has been retained by the client (PDC) to provide a valuation of Block 49 as "development ready" and the air rights above Block 33 in response to the NMI proposal, and also the intended use of this appraisal.
The intended user is the Portland Development Commission (PDCJ. Reliance on this report by anyone other than the client for a purpose not set forth above is prohibited. The authors' responsibility is limited to the client.
PROPERNRIGHTS APPRAISED The following definitions are cited from the Dictionary of Real Estate Appraisal, Fourth Edition (2002),published by the Appraisal Institute.
Fee Simple Estate is defined as: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
Air Rights are defined as: The right to undisturbed use and control of designated air space above a specific land area within stated elevations. Such rights may be acquired to construct a building above the land or building of another or to protect the light and air of an existing or proposed structure on an adjoining lot. 2
This definition is in compliance with the OCC (Office of the Comptroller of the Currency), FDIC (Federal Deposit Insurance Corporation), FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act), and USPAP (Uniform Standards of Professional Appraisal Practice) as adopted by the Appraisdl Foundation and the Appraisal Institute.
Market Value, as defined by the Uniform Standards of Professional Appraisal Practice, 2005 Edition, is:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
I The Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th Edition (20021, page 113. The Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th Edition (2002). page 9.
C060354 O 2006 PGP VALUATION INC 6 PRELIMINARYAPPRAISAL ~NFORMAT~ON (continued)
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and acting in what they consider their own best interests;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.193
"As Is" Market Value refers to the scenario under which a property is evaluated in the condition observed upon inspection under legal allowed uses without hypothetical conditions, assumptions or qualifications as of the relevant date (Block 49).
"Value of the Air Rights" assumes a base 6:1 Floor Area Ratio (FAR) density and additional 3:1 density rights (up to 9:1 maximum) above the proposed 6-story parking garage. The scenario assumes the garage structure will allow additional construction of either a market or affordable housing project within the air rights (3:1 FAR).
Cash to seller, with or without financing.
This report presents the cash value of the property. This requires that all comparables utilized must be cash transactions or adjusted to "cash" if advantageous seller financing was involved. Thus, the cash equivalency adjustment is applied prior to all other adjustments in keeping with generally accepted principles and practices.
EFFECTIVEDATE OF VALUE The date of value is April 29,2006, which corresponds with the date of inspection.
DATEOF THE REPORT The date of this report is August 14,2006.
The Appraisal Foundation, The Uniform Standards of Professional Appraisal Practice, 2005 e. (United States of America: 2005), p. 210; and Code of Federal Regulations, Part 1608, 7-25-91 revision, p. 2, Section 1608.2 (f).
C060354 O 2006 PGP VALUATION INC 7 PRELIMINARYAPPRAISAL ~NFORMATION (continued)
TAX& LEGALDESCRIPTION Block 33--3516-3604 SW Macadam Avenue, Portland, Oregon and more specifically identified as Tax Lots 100 and 200 of Section lOCA, Township 1 South, Range 1 East, Willamette Meridian, Multnomah County, State of Oregon (1SlElOCA 100 & 200).
Block 49-Township 1 South, Range 1 East, Section IODB, Tax Lot 600, City of Portland, Multnomah County, State of Oregon. 'The Multnomah County Parcel Number is R327930. The Reference Parcel Number is 1S 1 ElODC 101.
The following is a description of the ownership and sales history for the two sites that are the subject of this analysis.
Block 33-Multnomah County records indicate this property is owned by Oregon Health and Science University. 'The previous sales and marketing history is based on discussions with NMI as part of previous property appraisal completed by PGP Valuation Inc.
Previous owners included the Hans Grunbaum Trust and the Marilyn K. Grunbaum Trust that acquired the property prior to July 1994. In August 2002, North Macadam lnvestors LLC (NMI) negotiated a long term absolute net master lease of the entire property. At the time it was improved with one or more buildings and had several tenants on month- to-month lease terms. NMI also had an option to purchase the property on or after August 1, 2012. Based on previous conversations with the owner, the purchase price was stated to be equal to $2.5 million in year 2005 dollars (August 2005) and trended up at the same rate as the rent (not less than 3.0%/year). Assuming a 3.0% compounded annual adjustment, the estimated option price was assumed to be $3.1 million.
Currently, it is our understanding that OHSU has acquired all of NMl's interests in this property and also to sell (or net the value against the purchase price) the air rights above the base development back to NMI. NMI has also proposed to sell the air rights to the Portland Development Commission (PDC).
Block 49-Multnomah County records indicate this property is owned by North Macadam lnvestors LLC (NMI). 'The previous sales and marketing history is based on discussions with NMI as part of previous property appraisal completed by PGP Valuation Inc.
Block 49 was previously owned by OSF International, Inc (Old Spaghetti Factory) and acquired well over 20 years ago. In June 1996, Pacific Northwest Properties Limited Partnership (Pacific) entered into a contract with OSF to buy the property for $1.4 million. 'The initial sale agreement was contingent upon the seller retaining a non- exclusive right to park during certain hours which would be a recorded easement on the property.
An amendment to the transaction was agreed to in July 1997. The City of Portland required OSF to dedicate a wide strip of land where Bond Avenue would eventually be extended south to Bancroft Street. Closing was extended to July 2002. 'The lengthy closing was necessary for OSF to obtain approval for a partition that would benefit their
C060354 O 2006 PGP VALUATION INC 8 PRELIMINARYAPPRAISAL 1NFORMATION (continued) adjacent property and restaurant operations. The agreement also allowed Pacific to record a Memorandum of Purchase and Sale Agreement for the property which notified others of their interest in the property.
A parking agreement (Parking Rights, Covenants Easements, and Equitable Servitude) was also detailed in a separate document in the July 1997 amendment. In summary, concurrent with the eventual closing of the transaction, the buyer would grant to seller a non-exclusive right to use parking spaces on the subject property from 6:00 pm to 1 :00 am on weekdays and from 1 1 :00 am to 1 :00am on weekends and holidays. The 6-page document spells out the buyers and sellers responsibilities and also allows for future development of the site and that the parties would make all reasonable efforts to minimize any temporary parking impacts resulting from such future construction period. The agreement would run with the land as long as the benefiting property (seller - OSF) operated a restaurant. In Section 10 of the agreement, the number of parking spaces was stated at a maximum of 120 spaces. This particular figure (1 20 spaces) was also noted in previous conversations with Mr. Gary Finicle of Williams & Dame.
In January 2002, the parties entered into a 2nd Amendment to the Purchase and Sale Agreement. This amendment established a later closing date of July 1, 2005. Details regarding the desire to relocate an existing 36-inch storm drain line were also noted. Also, as further consideration, the buyer would be required to reimburse seller for property taxes from July 2002 through June 2005 at a total cost of $1 5,000 per year.
Finally, in March 2004, Williams & Dame Development, Inc. (W&D) entered into a Purchase and Sale Agreement with Pacific (Buyer 1). The total stated price was reported to be $3.1 million plus approximately $149,000 for buyer-paid commissions, loan fees, and closing costs ($3,249,000 total acquisition costs). W&D had certain due- diligence periods that passed requiring an additional $315,000 in non-refundable earnest money (refundable only in the event seller cannot deliver property as agreed). 'The Buyer (W&D) and Buyer 1 (Pacific) responsibilities are detailed as well as the incorporation of certain agreements and details of the OSF to Pacific transaction. W&D was also granted the right to speak with OSF to perhaps amend or clarify the parking agreement. W&D would also be responsible for all environmental liabilities, future LIDS, and special assessments, all enl.i.tlement arrangements, and to make the site development ready.
OSF has completed the previously mentioned partition and street dedication and other seller obligations with the transaction closing June 29, 2005. 'The parking issue was resolved with no OSF parking on Block 46. When Block 49 (subject) is completed OSF will have the rights to 50 parking spaces during the evening hours.
North Macadam Investors (NMI) LLC is comprised of Williams and Dame Development Inc. NMI has proposed to sell the fee simple ownership of Block 49 (subject) "as development ready" to the Portland Development Commission. The agreement allocates no costs to the non-residential components of the project to the land deal (including the parking).
Except as discussed, we are not aware of any other transactions for this property within the last three years.
O 2006 PGP VALUATION INC PRELIMINARYAPPRAISAL ~NFORMATION (continued)
ASSESSMENT& TAX INFORMATION Following is the most recent assessment information concerning Block 33, an assemblage of two tax lots:
2005106 ASSESSED VALUE
Real Market Value Assessor's Land Improvement Total Assessed 2005106 Identification Value Value Value Value Taxes R129170 (TL 100) Block 33 $71 7.800 $0 $71 7,800 $356,240 $7,053.62 RI 29238 (TL 200) Block 33 $696,890 $0 $696,890 $356,240 $7,053.62 Total $1,414,690 $0 $1,414,690 $712,480 $14,107.24 Source: Multnomah County Tax Assessor's Office
The 2005/2006 millage rate is $1 9.8002 (taxes/$1,000of assessed value).
Block 49 is comprised of one tax lot located approximately 1,000 feet southeast of Block 33. Following is the most recent assessment information:
2005106 ASSESSED VALUE
Real Market Value Assessor's Land Improvement Total Assessed 2005106 Identification Value Value Value Value Taxes R568130 ITL 102) Block 49 $1,084,950 $0 $1.084.950 $599,070 $1 1,861.72
Source: Multnomah County Tax Assessor's Office
'The 200512006 millage rate is $1 9.8002 (taxes/$1,000 of assessed value).
Measure 50, which passed in the May 20, 1997, special election establishes the maximum assessed value of property in Oregon for the 199711998 tax year as 90% of the property's real market value in the 1995196 tax year. Any increases in assessed value for tax years following 199711998 are limited to 3% per year. Assessed value will be adjusted for new property or property improvements and certain other events. Certain local option taxes are permitted, if approved by voters. Measure 50 retains the existing total property tax rate for all property taxes, including local ~p.~iontaxes but excluding taxes for bonds at $5 per $1,000 of value for schools and $10 per $1,000 of value for non-school government.
The scope of work for this appraisal report includes:
Inspection of the subject property by John D. Ingle, and Todd S. Liebow, MAI.
Reviewed Multnomah County records for subject property physical and taxes.
C060354 O 2006 PGP VALUATION INC PRELIMINARYAPPRAISAL ~NFORMATION (continued)
Reviewed City of Portland Planning information regarding zoning, floor area ratio [FAR], maximum heights, and other issues and how these relate to the development potential of the subject blocks and the comparable sales.
Reviewed previous appraisal reports completed by PGP Valuation Inc. for the subject Blocks 33 and 49.
lnspected the subject neighborhood and market area.
Reviewed and researched numerous documents, maps, surveys, site plans, etc., in order to understand the dynamics and developing nature of the South Waterfront1 North Macadam areas and the interaction with OHSU.
Spoke with professionals knowledgeable with South WaterfrontINorth Macadam market area.
Analyzed highest and best use issues "as vacant."
Gathered land sale comparables within the Portland CBD competitive market area.
lnspected the comparables utilized herein.
= Applied the appropriate valuation methodology to present the valuation scenarios requested by the client.
Performed a Complete Appraisal written in a Summary Report format in accordance with the USPAP, FIRREA, and appraisal policies of the Portland Development Commission.
The report was reviewed by Todd S. Liebow, MAI.
The following sources were contacted to obtain relevant information. Source Information
Mr. Mark B. Williams Subject information (Block 33),sales South Waterfront Project Director information, details regarding pending transaction, Nearby land sales information, Oregon Health & Science University etc. Mr. Gary Finicle, W&D Representative Subject information (Block 49), sales (North Macadam Investors LLC] information, details regarding pending transaction, Nearby land sales information, Karl Dinkelspiel Subject information and valuation scenarios Portland Development Commission for Blocks 33 and 49. Multnomah County Assessor's Office; Tax & assessment data; subject information Metroscan
O 2006 PGP VALUATION INC PRELIMINARYAPPRAISAL ~NFORMATION (continued)
Source Information
City of Portland Planning Department Zoning, FAR, Height, other site characteristics Metro Scan; Costar Comps; PGP Comps; Land Sales and property listing data Broker listings/flyers Multiple brokers and real estate Local area data; lease and sale professionals confirmation
COMPLIANCEAND COMPETENCYPROVISION 'This appraisal has been prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation and the Appraisal Institute's Appraisal Guidelines. The appraisers possess the knowledge and experience to complete this assignment competently, in compliance with the stated regulations.
UNAVA~LAB~L~TYOF ~NFORMATION In general, all information necessary to develop an estimate of value of the subject was available to the appraisers with the exception of a detail breakdown of the site development costs.
PERSONALPROPERTY, FIXTURES, AND ~NTANG~BLEITEMS This appraisal reports the value of the real estate only, exclusive of the value of personal property, trade fixtures, or intangibles.
DEDUCTIONSAND DISCOUNTS This appraisal reports the "as is" market value of the subject's fee simple interest. Except as noted herein, no deductions and discounts were utilized to arrive at the "as is" fee simple market value.
Exposure time is defined within the USPAP, Statement 6, as:
"The estimated length of the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market."
Exposure time is best established upon the experience of recent comparable sales. Discussions with brokers indicate a range of exposure periods. The location and physical characteristics are important factors relative to the exposure period. In addition, the availability of financing is also an important factor. The subject property is well located,
C060354 O 2006 PGP VALUATION INC 12 PRELIMINARYAPPRAISAL ~NFORMAT~ON (continued) in a developing area that benefits from close proximity to a large employment base, neighborhood services, and major transportation routes. The overall investment appeal of the subject property is good. Currently there is strong demand for real estate product in the market, with limited properties available for sale. Based on these factors, an exposure period of up to 12 months is concluded.
Marketing period is very similar to exposure time, but reflects a projected time period to sell the property, rather than a retrospective estimate. As such, a similar time period of up to 12 months is supported for the subject's marketing period.
O 2006 PGP VALUATION INC EXTRAORDINARYASSUMPTIONS 'The valuation of Block 33 and Block 49 are based on the following assumptions. Any modification to the assumptions may require adjustments to the analysis and the value conclusions presented.
Extraordinary assumptions made for valuing Block 33 are: 1. 'The valuation assumes the property is ready-to-develop and that surrounding streets and utility infrastructure are nearing completion. In addition, we assume the parking garage will be completed by 201 0 based on conversations with PDC staff. 2. As either a market or affordable project, the valuation assumes the base 6:l FAR density and the additional 3:l density rights (up to 9:l maximum) will be available. 3. 'The analysis further assumes the Portland Development Commission (PDC) will commit to funding the cost of structural enhancement of the Phase I parking garage in order to accommodate future hi-rise housing development (market or affordable). 4. Please note, the known LIDS for this property will total up to $312,206.This has not been deducted from the concluded value recognizing that costs are likely to increase beyond this initial estimate. 5. If ultimate development on the site does not reach the indicated FAR levels above, we assume that development density will be either transferred or sold for use on another nearby site in the district. Extraordinary assumptions made for valuing Block 49 are: 6. We assume a site size of 44,000 square feet, due to the realignment of SW Lowell Street to the north based on discussions with PDC staff.
7. The analysis assumes that Block 49 is development-ready. North Macadam Investors (NMI] are responsible for most of the cost of making the site development ready. The site development cost budget has been estimated by NMI at $3.7 million in total for Blocks 46 and 49 (subject).
8. We assume that the total site construction budget includes all cost categories necessary for making the site development ready including: elevating the levels of all surrounding streets, remediation of any environmental issues, constructing and realigning new storm drains, completing Moody Avenue from Abernathy to Bancroft Street, re-paving Bancroft Street to Bond Avenue, LID Assessments for the Streetcar 8, Tram, cost contingencies, an adequate Profit component for contractors and a developer fee.
9. We also assume that the cost for elevating, extending and developing SW Bond Avenue w~llbe paid by the City of Portland.
O 2006 PGP VALUATION INC ASSUMPTIONSAND LIMITING CONDITIONS(continued)
10. We assume a base development density/floor area ratio (FAR) of 264,000 SF or 6-to-1 FAR plus the potential for added bonus densities.
11. Please note, the estimated LID assessments are included in the Construction budget (see assumptions 7).
We assume no responsibility for matters legal in character, nor do I render any opinion as to title, which is assumed to be marketable. All existing liens, encumbrances, and assessments have been disregarded, unless otherwise noted, and the property is appraised as though free and clear, under responsible ownership, and competent management.
'The exhibits in this report are included to assist the reader in visualizing the property. I have made no survey of the property and assume no responsibility in connection with such matters.
Unless otherwise noted herein, it is assumed that there are no encroachments, zoning, or restrictive violations existing in the subject property.
The appraisers assume no responsibility for determining if the property requires environmental approval by the appropriate governing agencies, nor if it is in violation thereof, unless otherwise noted herein.
Information presented in this report has been obtained from reliable sources, and it is assumed that the information is accurate.
This report shall be used for its intended purpose only, and by the parties to whom it is addressed. Possession of this report does not include the right of publication.
The appraisers may not be required to give testimony or to appear in court by reason of this appraisal, with reference to the property in ques.l.ion, unless prior arrangements have been made therefore.
'The statements of value and all conclusions shall apply as of the dates shown herein.
The appraisers have no present or contemplated future interest in the property that is not specifically disclosed in this report.
Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales, or other media without the written consent or approval of the author. This applies particularly to value conclusions and to the identity of the appraiser and the firm with which he or she is connected.
O 2006 PGP VALUATION INC ASSUMPTIONSAND LIMITING CONDITIONS(continued)
This report must be used in its entirety. Reliance on any portion of the report independent of others, may lead the reader to erroneous conclusions regarding the property values. No portion of the report stands alone without approval from the authors.
The valuation stated herein assumes professional management and operation of the property throughout the lifetime of the improvements, with an adequate maintenance and repair program.
If this report is placed in the hands of anyone other than the client, the client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The appraisers are in no way responsible for any costs incurred to discover or correct any deficiency in the property. The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable.
The liability of PGP VALUATIONINC and employees is limited to the client only and only up to the amount of the fee actually received for the assignment. Further, there is no accountability, obligation, or liability to any third party. If this report is placed in the hands of anyone other than the client, the client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The appraisers are in no way responsible for any costs incurred to discover or correct any deficiency in the property. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. In the case of limited partnerships or syndication offerings or stock offerings in real estate, the client agrees that in case of lawsuit (brought by lender, partner, or part owner in any form of ownership, tenant, or any other party), any and all awards, settlements, or cost, regardless of outcome; the client will hold PGP VALUATIONINC completely harmless.
The appraisers are not qualified to detect the presence of toxic or hazardous substances or materials which may influence or be associated with the property or any adjacent properties, has made no investigation or analysis as to the presence of such materials, and expressly disclaims any duty to note the presence of such materials. Therefore, irrespective of any degree of fault, PGP VALUATIONINC and its principals, agents, and employees, shall not be liable for costs, expenses, damages, assessments, or penalties, or diminution in value, property damage, or personal injury (including death] resulting from or otherwise attributable to toxic or hazardous substances or materials, including without limitation hazardous waste, asbestos material, formaldehyde, or any smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids, solids, or gasses, waste materials or other irritants, contaminants, or pollutants.
The appraisers assume no responsibility for determining if the subject property complies with the Americans with Disabilities Act (ADA), which prescribes specific building standards which may be applied differently to different buildings, depending on such factors as building age, historical significance, amenability to improvement, and costs of renovation. PGP VALUATIONINC its principals, agents, and employees, shall not be liable for any costs, expenses, assessments, penalties, or diminution in value resulting from non-compliance. Except as otherwise noted herein, this appraisal assumes that
C060354 O 2006 PGP VALUATION INC 16 ASSUMPTIONSAND LIMITING CONDITIONS(continued) the subject complies with all ADA standards appropriate to the subject improvements; if the subject is not in compliance, the eventual renovation costs and/or penalties would negatively impact the present value of the subject. If the necessary renovation costs, time period needed for renovation, and penalties for non-compliance (if any) were known today, appropriate deductions would be made to the value conclusions reported herein.
O 2006 PGP VALUATION INC C060354 O 2006 PGP VALUATION INC 18 DEVELOPMENT INFORhlRTiON BLOCK PHASING SOUTH WATERFRONT DISTRICT RETAIL PLAN \YILIIAMS b DAME DEVELOPMENT. lnc. SOUTH WATERFRONT X PHASE 1 Complolo(2WB-2008) COMMUNITY ASSOCIATION ~ .. GERDING 1 EDLEN DNELOPMENT CO PHASE 2 Complelo (2008-2010) 5F%F%on ionit SWCA RETAIL NOVEMBER 7.2005 .i,, . OBD ARCHITECTS 111ooffmrelod I j? Soulh Wacwhonl Community Mwmb'on deedMiable, "wY,W"~LU.IIII.e<,III ktsubfed to me. (Wdw 2W5) ..I II.bI11.II I,,, ::.*,Mi
O 2006 PGP VALUATION INC The following is a general description of the market area effecting development opportunities for Blocks 33 and 49. The intent is to demonstrate the significant changes that are occurring in the South Waterfront District that will influence future land use patterns and real estate values in the immediate area of the subject blocks.
NORTHMACADAM URA The subject blocks are situated within an area generally described as the North Macadam Urban Renewal Area. This area extends the Portland CBD approximately 1.2 miles south along the west bank of the Willamette River. The area was designated by the City of Portland as an urban renewal area (URA) in 1999, and is approximately 409 acres in size. The lack of sufficient surface roadways and utility services to accommodate the planned city center scale development prompted the Urban Renewal designation. The South Waterfront District Plan area covers 130 acres within the North Macadam URA. Phase I of the South Waterfront District development plan is designated as the Central District which represents 31 acres located in the heart of the South Waterfront Plan Area.
The Waterfront Central District is a key element of the City's development strategy for the whole North Macadam URA. The vision for this area is to create a vital, densely populated, central business district scale development pattern that provides a well balanced number of jobs, homes, and services. At build-out, the Central District Plan anticipates the Central Area Phase I will consist of over 2,500 dwelling units including 250 student and 430 affordable housing units, 400,000 square feet of research and clinical buildings, a 3,500 space parking garage, 150 to 200-room hotel when feasible, a four-acre greenway with initial improvements, and a two-acre neighborhood park including acquisition and initial improvements. An additional 1 .O-million square feet of medical research buildings are also anticipated. Overall, the district is expected to produce $1.9 billion in value at full build-out by 2010.
To implement the Central District Phase I development plan, a detailed Development Agreement was forged between the Portland Development Commission (PDC) and City Bureaus, the Oregon Health and Science University, North Macadam Investors, LLC, River Campus Investors, LLC, and Block 39 LLC. This agreement and its commitment to funding levels has implications for lands within the South Waterfront District and for those projects that have a perceived benefit outside the agreement boundary including the subject property. These projects are currently limited to the aerial tram and the Porl.land Trolley which are discussed in greater detail below along with other infrastructure issues.
Oregon Health and Science University (0HSU)-is currently building over 400,000 square feet of research, administration, class rooms, and clinical buildings within the Central District. Activities are expected to include biomedical engineering, public health, medical informatics, cancer care, imaging, dermatology, orthopedics and ambulatory surgery and a nursing education center. A school of dentistry and or pharmacy and additional research program are expected to follow.
C060354 O 2006 PGP VALUATION INC 2 0 MARKETAREA DESCRIPTION (continued)
With the recent donation by Schnitzer Investment to OHSU of approximately 20 acres of land located north of the district and immediately south of the I-5lMarquam Bridge, new schools of medicine and medical office uses are expected at the most northerly area of the South Waterfront District. 'This area along with the Zidell property (50 gross AC) represents future phases of the project area. The area, lying north of SW Gibbs Street will include mixed office, residential, and limited street level retall and services uses. A detailed development agreement has not been implemented at this time for the development of this area.
Willamette Greenway-A major component of Phase 2 of the South Waterfront District is the Willamette Greenway with pedestrian, habitat, and open-space functions. A new neighborhood park is expected along the Ross Island Bridge alignment between the planned SW Grover and Wood Street alignments. 'The Greenway Implementation Plan was necessary to address the impacts on water quality of the adjoining Willamette River, State Goals concerning Willamette Greenway improvements as well as flooding conditions that have historically persisted in the South Waterfront District. 'This resulted in a strong emphasis on development of a greenway. The plan for implemen.ting the Greenway Improvement has not been finalized. General guidelines state that this project will likely be implemented over the next five to 15-year time period. Lands to be used for greenway purposes are to be acquired by the city though a number of mechanisms, including: fee simple acquisitions; public access and conservation easements; dedications, development extractions and long term leases.
The final design of the greenway will be developed as various projects receive their final project design approvals. The South Waterfront District plan envisions a $33 million project that includes river bank stabilization and wildlife enhancements. A major component of the South Waterfront Greenway program will be the par.l.icipant's continuing maintenance responsibilities. The plan envisions a private partnership or public participation that needs $300,000 to $500,000 annually to maintain the greenway improvements. For dedications of open space the parent property can receive up to 3:l square feet of additional floor space if the dedication meets the criteria of Section 33.510.210~subparagraph 9 of the zoning code, 1:l square feet of additional floor space if the dedication does not meet the open space standards defined in the same zoning section, or a 1:l square foot of additional floor space with an appropriate payment to the South Waterfront Public Open Space Fund, to be administered by Portland Parks and Recreation.
Planned Transportation Systems-Access to the District is currently limited to three primary portals: 1) the Macadam AvenueIBancroft Street intersection, 2) River Parkway and Moody Avenue roadway connections to the north through the River District; and 3) the north bound 1-5 off-ramp connection to Curry or Gibbs Street. To help manage traffic congestion, the South Waterfront District will be served by public transportation, including a Portland Trolley Car connection to the CBD to the north, and an aerial tram service to the main campus of Oregon Health and Science University on the Marquam Hill area, to the west.
Short term public transportation needs will be addressed with the operation of a Street Car and bus service. Phase 3b of the street car is currer~tlyunder construction from the Riverfront District to SW Gibbs Street and Moody Avenue where a stop will be provided
C060354 O 2006 PGP VALUATION INC 2 1 MARKETAREA DESCRIPTION (continued) to allow interface with the aerial tram station several hundred feet to the east on Gibbs Street. This public transit project is partially funded using a local improvement district involving 46 properties, and totaling $2.02 million.
The aerial tram service remains in the design phase, with significant cost increases expected before the project is completed. The aerial tram was estimated at $6.0 to $9.0 million at its inception. The latest cost estimates put the project at $57 million at completion. Currently, the project is under construction with the City Council approving an additional $43 million for the project.
Primary funding mechanisms to be used to install the aerial tram include Tax Increment Financing (TIF) generated by development within the district boundary and a Local lmprovement District (LID) involving 78 properties in the South Waterfront District and the Marquam Hill OHSU campus. 'The balance of the funding will rely on other city monies, state and regional grants, and participation of OHSU.
The public transit improvements are part of an overall transportation strategy that relies heavily on an expectation that approximately 40% of the trips to and from the district will be via public transit. Local trip generation will be minimized with limited parking, and extensive management of various incentive programs to reduce over all auto use and peak hour demands by those who live and work in the South Waterfront District. The OHSU campus will implement an aggressive education and outreach program to minimize traffic impacts on the surface road systems.
In addition to the Phase 1 Central District transportation improvement plan, which includes installation of northlsouth roadway connections and the public transit improvements discussed above, a phased improvement to the Macadam Avenue and the Interstate 5 (1-5) interchange is also needed to accommodate future traffic loads. Originally a planned Macadam Avenue interim safetylcapacity improvement to the 1-5 off-ramp was expected to be constructed in 2005. The interim improvement was dropped in lieu of a more comprehensive interchange improvement. 'The Oregon Department of Transportation (ODOT) has been asked to commit to designating a $30 million Macadam Avenue interchange improvement as part of the state-wide Six-Year Capital lmprovement Plan. This interchange and surface circulation improvement project is expected to be ready for development no sooner than 2009 and will require State and Federal Highway funding.
Completion of the Macadam Avenue interchange will address only the full build out of Phase 1, with a possible residual capacity of 25%. At some point during Phase 2 development, additional trip capacity is needed to meet the area's traffic circulation needs. If funding is not available when needed, there will be a serious deficiency in the capacity of the surface streets serving the South Waterfront District.
Light Rail Access-To complete the projected transportation capacity needs for the South Waterfront District, the extension of the southwest corridor light-rail of the regional Max Transit system has also been evaluated. In particular, the southwest corridor
O 2006 PGP VALUATION INC MARKETAREA DESCRIPTION (continued) alignment is currently crossing the Willamette River to the north of the South Waterfront District in the vicinity of the River District on the west bank and OMS1 on the east Bank.
Given the number of potential transit trips associated with the daily commute from the jobs and residences to be located in the South Waterfront District and its connection with the OHSU/Marquam Hill complex, there is a strong incentive to relocate the crossing further south on the west bank to serve this growing neighborhood. The decision to adjust the Light-Rail river crossing is not expected for several years into the future.
In general, the transportation improvements discussed above are needed to assure continuing "acceptable" levels of service on the surrounding surface streets. However, funding for larger traffic circulation improvements has not been determined at this time.
In addition to the trolley, Moody Avenue, Gibbs Avenue south to Bancroft Street, and the aerial tram improvements to be implemented as part of the Phase I Central Core project; there are several other projects that will be receiving funding through Tax Increment Financing (TIF). These projects include: neighborhood improvements, Phase I street improvements, Bond Street (Lane to Bancroft), a bio swale storm water over flow project, Thomas Street storm water pump if needed, tower relocation (Pacific Power and Light), neighborhood parks, affordable housing, and the OHSU Research Space.
Funding of several of these projects will benefit other properties outside the Central District. The latest available estimates (3/30/05) indicate a total budget of $1 22.3 million for Tier 1 projects including $69.9 million (57.2%) in public funding with the balance ($52.4 million or 42%) attributed to private funding sources. The single largest private funding source ($35.5 million) is a planned local improvement district (I-ID) that will fund the aerial tram and trolley projects that requires participation from lands outside the Central District Boundary.
SUMMARY OF PUBLIC AND PRIVATE FUNDING FOR PHASE 1 PROJECTS SEVENTH AMENDMENT - SOUTH WATERFRONT DEVELOPMENT AGREEMENT Land City State 8 N. Macadam Other TIF SDCs Sales Other Federal Regional LID Investors OHSU Private $30.8m $7.lm $9.1 m $3.6m $5.4m $4.0m $35.5m $7.1 m $8.3m $1.5m
In addition to these projects, $21.1 million has been budgeted for Tier 2 projects as funding becomes available. Tier 2 projects include improvements for the Willamette River greenway, a neighborhood park, strategic property acquisitions, additional neighborhood improvements, and affordable housing programs.
The subject's immediate area is located in the North Macadam Urban Renewal Area and South Waterfront District, a recently annexed area to the Portland CBD. This 130- acre District has historically been a mixture of heavy industrial, manufacturing,
C060354 O 2006 PGP VALUATION INC 2 3 MARKETAREA DESCRIPTION (continued) warehousing, office and specialized retail service uses. The area has good proximity to the Portland CBD and Willamette River frontage, however, has been unable to take advantage of its location due to traffic congestion, toxic soils, flooding and inadequate public service infrastructure.
In 1999, as part of the Portland River Renaissance program, the North Macadam Urban Renewal Plan was adopted to implement the City's expansion of the Central Business District to the South Riverfront District. The immediate area of the subject is designated for a very dense, urban scale development pattern intended to attract a large number of jobs and housing. However, the inadequacies of the existing infrastructure serving the immediate area, including surface transportation roads and lack of public transit, required a combination of funding programs and strict control of the pattern and pace of development. The shared planning and funding process would also help to preserve the viability of a major research employer, the Oregon Health and Science University.
While land appears ample in the immediate neighborhood and the South Waterfront District, most of the sites already have development plans pending or approvals in place. The transportation improvements planned for Phase 1 of the South Waterfront District within the North Macadam Central subarea will benefit the subject blocks and require participation in a planned Local Improvement District (LID) to fund the tram and streetcar extension.
Phase 1 development is well underway for developing the urban pattern sought for the South Waterfront District. Current development in the district includes the four-block OHSU project (Blocks 24, 25, 28 & 29) and the Meriwether Condominium project on Block 30. Neighborhood streets are also taking shape including realignment, widening, surfacing and improved streetscapes. The Discovery Center, a shared marketing venture for the planned residential and commercial, is open with a full-scale model of the District and displays of proposed interior finishes for the condominiums.
Going forward, the John Ross condominium project on Block 35 is currently under construction. A luxury apartment project (The Alexan) on Block 34 has been delayed due to issues regarding a tax abatement. While land appears ample, most of the sites already have a development plan pending or in place.
In summary, the South Waterfront District is in transition to a mix of new high-value real estate development that maximizes available site density. Land values have increased as a result of this new construction and planned infrastructure to accommodate existing and planned growth. Property values in the South Waterfront are anticipated to appreciate as a result of continued strong demand for housing and supporting services.
O 2006 PGP VALUATION INC
'The description of this property assumes that it will be ready to develop and that surrounding streets and utility infrastructure are nearing completion. This assumption is reasonable based on a conversation with Gary Finicle of Williams & Dame - a project manager for several sites in the district. Please refer to the Letter of Transmittal and the Assumption and Limiting Conditions concerning other related issues influencing the value conclusions.
Hazardous WasteIMaterials: We were not provided with an environmental site assessment report and have not conducted any independent investigation regarding this issue. This appraisal assumes that the site is free of all hazardous waste materials. Please refer to the Assumptions and Limiting Conditions section regarding this issue. If questions arise, further research is advised.
Location: Located in the developing North Macadam Central District between SW Macadam and SW Moody Avenues, and west of the Willamette River. A neighborhood park is planned across the street, to the east. Size: 91,976 square feet or 2.1 1 acres.
Shape: Rectangular
Topography: Most of the site is generally level with SW Moody. The extreme west side of the property slopes up 25-30 feet to SW Macadam Avenue. Both SWCurry and SW Gains Streets slope up to SW Macadam.
Abutting Properties- North: SW Curry Street and an older improved light industrial building on a similar sized site.
East: SWMoody Avenue and a mini-storage facility. Porl.ions of this site are currently being demolished to accommodate a future neighborhood park. In the future, the Portland Streetcar tracks will be located in SW Moody.
South: SW Gaines Street and an older improved light industrial property on a similar sized site.
West: SW Macadam Avenue which runs parallel to 1-5. SW Macadam is level, but approximately 25-30 feet above the grade of SW Moody.
O 2006 PGP VALUATION INC SITE DESCRIPTION- BLOCK33 (continued)
Street Improvements- SW Moody Avenue: A 2-lane, 2-way thoroughfare with sidewalks, curbs, streetlights and some on-street parking. SW Moody is currently resurfaced past the subject site. In the future, the Portland Streetcar tracks will be located in SW Moody.
SW Macadam Avenue: A heavy traffic, multi-lane, 1-way north-bound thoroughfare with sidewalks and curbs along its east side and only curbs on the west side. The street has recently been resurfaced and new signals installed to regulate merging traffic onto Interstate 5 North and into the City Center. No on-street parking is allowed along SW Macadam Avenue.
SW Curry Street: A 2-way neighborhood street providing access from Macadam down to Moody. The street has been resurfaced and has new curbs. Additional improvements including street lighting and sidewalks are planned in the near future.
SW Gains Street: Similar to SW Curry Street and has recently been resurfaced.
Utilities: All public utilities are available to this site.
Accessibility: Average general access. Direct access will be via SW Mood Avenue. As noted, a future streetcar is planned along Moody which improves access to downtown and other transportation systems.
Exposure: Good exposure; this site will also have good freeway exposure. There are approximately 460 feet of "direct" frontage on both Moody and Macadam Avenues. The SW Moody side will face a public park.
Easements & Encumbrances: A title report was not available for our review. We are aware that the foundation for the old improvements is still in place including the reinforced concrete buttress structure along the west side (Macadam side) of the site. This may slightly reduce the base usable area, but should not affect the potential gross building area.
Also, there are Local Improvement District (LID) assessments for the OHSU Tram as well as for the Streetcar to Gibbs and Streetcar to Bancroft projects. Two of these LIDSare formed and a third LID (streetcar to Bancroft) is pending. Regarding LID costs, we have been informed that assessments will range from $257,206 to $312,206.
O 2006 PGP VALUATION INC 27 SITE DESCRIPTION- BLOCK33 (continued)
There may be other easements or encumbrances to fund on-going common maintenance in the district, and typical utility easements. Most of these will be typical for the properties in the neigt-~borhood.
We assume that no detrimental easements affect the property.
Zoning/Comprehensive Plan: CXd, Central Commercial with (d) Design overlay and (g) River General Greenway Overlay.
The CX zone is intended to provide for commercial development within Portland's most urban and intense areas. A broad range of uses is allowed to reflect Portland's role as a commercial, cultural, and governmental center. Development is intended to be very intense with high building coverage, large buildings, and buildings placed close together. Also, development is intended to be pedestrian-oriented with an emphasis on safe and attractive streetscape.
There is no minimum lot size in the commercial zones. Density of development is regulated through a Floor Area Ratio (FAR). The FAR works with the height, setback, and building coverage standards to control the overall bulk of development. The subject is within the Central City Plan District and more specifically is subject to the South Waterfront Central District with its own specific zoning requirements designed to achieve the development and use goals.
The zoning code for the South Waterfront District became effective January 20, 2003, and modifies the CX zone to implement the design goals of the district. Retail services are limited to less than 40,000 square feet, without a conditional use permit. The intent is to limit commercial uses to neighborhood-oriented development to reduce the attraction for additional vehicle trips into the area.
Other zoning characteristics are presented below.
FAR: 6 to 1. Base development capacity is (91,976 SF x 6: 1 ) 551,856 SF.
'The FAR west of River Parkway is 6:1; east of River Parkway it is 5.1. Bonus options allow an additional 2:1 FAR plus limited provisions to reach the maximum of 9:1 FAR using Greenway and other bonus densities.
O 2006 PGP VALUATION INC 2 8 SITE DESCRIPTION- BLOCK33 (continued)
As noted, this site is designated as a mixed-use parking garage with retail, office and affordable housing. To fulfill this goal, the entire base 6:1 FAR and all bonus options up to the maximum 9:1 FAR will be necessary. We are not aware that any bonus density transfers have been obtained. In this appraisal, we will estimate value based on both the Base FAR and the Maximum FAR levels.
A summary of the development capacity or density, based on this information. is shown as follows:
DEVELOPMENT CAPACITY I FAR Base FAR @ 6:l: 55 1,856 All Bonus Options (2:l): 183,952 Greenway Transfer (1 :I): 9 1,976 MAXIMUM Development Capacity: 827,784 SF
Maximum Height: 250 feet. If FAR bonuses are utilized, height can reach this level.
Other Zoning Standards: Required Building Lines (on River Parkway) South Waterfront Parking Sector Requirements Parking Access Restricted Streets Limited retail sales and services area
Flood Plain & Wetlands: According to the InterFlood by AlaMode, Inc., panel 41 01 8301 81 E, dated October 19, 2004, this property is located in Zone "X" - outside the 100-year flood plain.
Site 8, Development Comments: The subject site is well located at the west side of the district with good access from SW Moody Avenue. Exposure will be good as well with a public park on the Moody side (east) and exposure to SW Macadam and 1-5 to the west. Streets and all infrastructure services are progressing and will be completed during the Summer of 2006. Future development will have views of the city lights, Mt. Hood, West Hills, and limited views east to the Willamette River.
Based on the documents and conversations with North Macadam Investors (Gary Finicle), the site will be built-out in two phases. The first phase will be a 6- story parking garage (plus basement) with retail, office and townhome condos facing SW Moody and the future public park. The second phase will top the facility with two hi-rise residential towers.
O 2006 PGP VALUATION INC 29 SITE DESCRIPTION- BLOCK33 (continued)
Conceptual drawings of a mixed-use project were provided for PGP review during an earlier assignment. The drawings were completed by Ankrom Moisan Architects and dated June 22, 2004. Several options are outlined. According to Gary Finicle, Option C, which is described below is the most probable development scenario for Block 33.
Phase I, Option C: This first phase is the development of a 6-story parking garage plus a basement level. There will be retail space on the main level totaling 26,800 SF (20,200 SF ground floor + 6,000 SF meuanine) and approximately 27,800 SF of office space on the 3'd floor. Both the basement and 4th Floor are 100% parking. Levels 5 and 6 will accommodate mostly parking, and on the east side will be 26, 1 %-story townhouse condominiums facing SW Moody and the future public park. The condominiums will total an estimated 26,400 SF or 1,015 SF each.
The gross building area (GBA) for the 6-story structure is estimated at 530,900 SF. Parking will total 1,469 spaces.
The building will appear to be 6-stories from the SW Moody perspective and 4-stories from SW Macadam.
Phase I construction will include a "structural enhancement" or super-adequate standards in order to accommodate future Phase 2 development. 'The costs for the structural enhancement have been reported at the $2.0 million level and are expected to be funded by the PDC. Preliminary plans also include PDC acquiring 100 parking spaces in the parking garage to serve the future residential component. The indicated price is approximately $3.0 million. PDC will also acquire an additional 100 parking spaces in the future.
In summary, Phase I includes: 6-story parking garage with 1,469 spaces, 26,200 SF of ground floor retail and meuanine space, 27,800 SF of office on the 3'd floor 26, 1 %-story townhouse condominiums on the 5th and 6th floors overlooking the park.
O 2006 PGP VALUATION INC 3 0 SITE DESCRIPTION- BLOCK33 (continued)
No building size data was provided, however, we have estimated the total above ground GBA at roughly 530,900 SF plus the basement level parking of approximately 90,000 SF. Based on our calculations, the Phase I above ground GBA equates to a 5.77:1 FAR.
Phase II, Option C: Phase II, Option C will begin on the 7th floor with the development of two 14-story residential towers. Each tower may be done in phases as well depending upon future funding. Preliminary drawings show 392 units to be built (1 96 units per tower) and a total GBA of 296,800 SF (148,400 SF per tower). With each floor has 10,600 SF and the indicated efficiency ratio is 82%; the resulting average unit size is 621 SF.
Summary - Option C: Overall, the entire project will be a 6-story parking garage with 1,469 spaces, ground floor retail, 3rdfloor office space, and 418 residences (26 condos + 392 affordable apartments). Total GBA is estimated at 827,700 SF. The overall height of the development from SW Moody is 237 feet. Based on this plan with our estimated above ground GBA, the effective FAR is 8.99:1. We assume the ultimate development will be at or close to this near maximum FAR level (9:l).
This information summarized on the following chart.
DEVELOPMENT CAPACITY I FAR Levels 7-20: 2 Residential Towers 296,800 SF Level 6 - Tnhm-Condos Main floor 17,600 SF Level 6 - Parking 68,000 SF Level 5 - Tnhm-Condos lower floor 8,800 SF Level 5 - Parking 78,000 SF Level 4 - Parking 90.000 SF Level 3 -Office facing Moody 27,800 SF Level 3 - Parking 78,000 SF Level 2 - 2-sty interior retail space + mezzanine 6,000 SF Level 2 -Parking 69,000 SF Level 1 - Interior retail space 20,200 SF Level I - Parking 67,500 SF TOTAL Above Ground GBA 827,700 SF
Projected FAR with this development scheme: 8.99 FAR
Level Basement* - Parking 90,000 SF *Not included for FAR calculation
Although this 9:l FAR development scheme for the subject site is presented, construction start timing for Phase I is unknown. Based on discussions with PDC
O 2006 PGP VALUATION INC 3 1 SITE DESCRIPTION- BLOCK33 (continued)
staff, the parking garage should be completed in 2010. 'Thus, construction should begin within one year and we expect completion on or around January 1, 201 1. Previous conversations with PDC staff (Jane Blackstone) indicate that Phase II timing is 5 years for Tower I and up to 10 years for the Tower II. Timing may also be affected by economic conditions.
Overall, the site rating for Block 33 is good in relation to other locations in the district and also in relation to other sites in the Portland CBD.
HIGHEST AND BEST USE Legal, locational and physical factors affecting the subject property have been discussed in the Description section above. Under an unrestricted scenario, these factors lead to a highest and best conclusion that the subject may be developed with a mixed use parking garage project with retail, office and high density condominium housing. Under the Central District Development Agreement, the subject has most of the same uses except that the two towers will be affordable apartment housing targeted to a population earning between 50 and 100 percent of the median family Income.
Based on the development scheme presented, the full build-out development density is estimated at 827,700 SF, as explained in the Description section. Currently entitled density is 55 1,856 SF.
A full analysis of market factors related to the subject is beyond our scope of work. The analysis assumes that development on the site will be done in phases as described. Demand for parking in the area is expected to be very high in that parking spaces will be limited. Development timing is projected to be 2010 for Phase I and an additional 5 to 10 years out for Phase 11 (2015-2020). Phase I development is also tied to development of the second OHSU building which is scheduled for 2007-08. However, these may be dependent upon the success of other projects already announced and in planning.
The success of the district is partially based on the lengthy and extensive planning conducted to date, as well as the success of development in the Pearl and River Districts north of Burnside Street. The on-going investments by Oregon Health and Science University, North Macadam Investors, and the Portland Development Commission in the South Waterfront District are also major driving forces stimulating demand. Other factors such as job growth, interest rates, economic strength will also drive the project.
Completion of the Meriwether Condominiums on Block 30 and the OHSU River Campus Building on Block 25 will have a direct and positive demand impact upon development of the subject site (Block 33). Furthermore, Block 35 is under construction for the mixed- use John Ross condominiums. The Atwater Place condominiums on Block 34 are also expected to start construction during 2006. 'Thus, while land appears ample, most of the sites already have a development plan pending or in place.
C060354 O 2006 PGP VALUATION INC 32 SITE DESCRIPTION- BLOCK33 (continued)
Based on the property description and analysis above, the highest and best use and maximally productive use of the subject property is to be developed at the known maximum development capacity of 9:l FAR. Current entitlements in place will allow the first phase of development at a density of 6:l (551,856 SF). Future development is most likely to be a multi-level parking garage with retail, office and some residential use in Phase I, and then two high-rise affordable rent residential towers in the more distant future.
O 2006 PGP VALUATION INC
SUBJECTPROPERTY PHOTOGRAPHS - BLOCK 33 (continued)
Street Scene: Looking west on SW Curry; subject at left. (C060354-04) Street Scene: Looking west on SW Gaines; subject at right. (C050423-28)
Street Scene: Looking east on SW Gaines. (C050423-12)
C060354 O 2006 PGP VALUATION INC 35 SUBJECTPROPERTY PHOTOGRAPHS - BLOCK 33 (continued)
Street Scene: Looking north on SW Macadam: subject at right. (C060354-07) Looking southeast over subject site from SW Macadam. (C060354-08)
Street Scene: Looking south on SW Macadam; subject at left. (C60354-06)
C060354 O 2006 PGP VALUATION INC O 2006 PGP VALUATION INC Map 510-1
0' 1650' 3300' -Scale in Feet l-.-l-l-.- District and Central City Pian District Boundary Subdistricts
Subdistrict Boundary ,,,-.-.,-M,,--- Proposad right-of-way
C060354 O 2006 PGP VALUATION INC 3 8 Effective Date October 19,2004
flood zones and flood insurance. contact:
O 2006 PGP VALUATION INC 3 9 O 2006 PGP VALUATION INC FAR MAP- BLOCK33
Area whera Floor Area Ratio (FAR) is determind by Bas Bne - FAR area boundaiy
Map 510-2
0' 1275' 2550' Floor Area Ratios -Scale in Feet Map 2 of 2 IImmImI- Central City Plsn District Ba undary "..--""- ..,,,,, Proposed right-of-way
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060354 O 2006 PGP VALUATION INC 4 1 UO~Q'pBIV4J j.0 &I 6u!uu@ldp nwq
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E dO E 'E-OLC dVW NO vaev SIHL JO As described. Block 33 has several issues affecting its value. 'The Portland Development Commission (PDC) has retained PGP Valuation Inc. to estimate the Market Value of the "Air Rights". As noted earlier, Block 33 will be developed with a 6-story parking garage (plus basement) with retail, office and townhouse condominiums facing SW Moody and a future public park. The second phase will top the facility with two high-rise residential towers. 'The "air rights" pertain to the area above the 6-story mixed-use structure.
Structural enhancements will also be necessary to the &story building to accommodate future residential construction and have been reported in the $2.0 million level and are expected to be funded by the PDC. Preliminary plans also include PDC acquiring 100 parking spaces in the parking garage to serve the future residential component. The indicated price is approximately $3.0 million for the 100 parking spaces. PDC will also acquire an additional 100 parking spaces in the future. The structural enhancements and parking requirements are addressed in this valuation along with separate value components between the Base Development Rights, and additional Air Rights related to the future high-rise residential tower.
The Sales Comparison Approach is used to value the property, as sufficient market data is available to generate a reasonably reliable market value estimate by this method, and this approach most closely resembles the type of analysis utilized by typical market participants when purchasing commercial land. The Cost and Income Capitalization Approaches to value are not utilized in this analysis. The omission of these approaches to value is not detrimental to the reliability of the market value estimate.
SALES COMPARISON APPROACH The Sales Comparison Approach is based on the principle of substitution, which states that no one would pay more for the subject property than the value of similar properties in the market. Purchasers of commercial land typically compare sites based upon a price square foot unit basis. However, commercial zoned land in the Portland CBD typically rely on FAR to deterrr~inemaximum density. Therefore, the comparables are presented on a price per FAR square foot basis.
'The subject is a 91,976 square foot site located at the west edge of the South Waterfront Central District between SW Moody and SW Macadam. It has good access and exposure. The site slopes up steeply to Macadam Avenue on its extreme west side. Older industrial projects are both north and south. The base zoning is Central Commercial with an FAR of 6:l and heights up to 250 feet. The entitled density is 551,856 square feet. As described, this site is scheduled for development at a 9:1 (827,784 SF) density. The additional density levels have not been acquired at this time. However, we are assuming that Air Rights or additional FAR densities for Block 33 can be traded or transferred from other OHSU owned sites in the District in a less complicated manner.
A Commercial Land Sales Tabulation Chart and accompanying Location Map are presented on the following pages. The tabulation chart summarizes the main characteristics of each comparable sale. Complete Land Sale Write-ups are presented in the Addendum. The land sales are briefly discussed further in the paragraphs below. Finally, the overall relation of the comparables and the subject is analyzed and an unencumbered fee simple market value will be concluded.
C060354 O 2006 PGP VALUATION INC 4 3 VALUATION- BLOCK33 (continued)
PGP researched and reviewed numerous commercial land sales within the Portland CBD and surrounding high density commercial areas of close-in Northwest (Pearl 8, River Districts), the West End, the South Auditorium/PSU area, and in close-in Wortheast/Lloyd Center. Generally, unit prices ranged from $75.00 to over $1 90 per square foot and FAR unit prices indicated a range from $10.00 to $37.50 per FAR foot (using the base FAR). The initial land search was subsequently narrowed down to sales of larger sites ranging from 27,000 to 175,547 square feet. In addition, we considered current actively pending transactions of properties directly in the South Waterfront area with very similar zoning and development capacity.
Six transactions have been chosen to compare with the subject property. This includes two pending transactions in the immediate area. The indicated unit price range is $1 5.73 to $20.89 per FAR square foot.
The narrative continues on page 47.
O 2006 PGP VALUATION INC ~ddress: 3732 SW Moody Ave @ Gains Block35, Norh Macarlam - at SW 1325 NW 14th Avenue 310 SW Lincoln Street SEC SW 5th Avenue & 1620 NE Broadway Street st, lock 39 - The ~le~an River Prkwy, Bond & Gaines Montgomery Street CityIState: Portland, OR PortIand, OR Portland, OR Portland, OR Portland, OR Portland, OR County: Multnomah Multnomah Multnomah Multnomah Multnomah Multnomah Legal Description: ISIEIODB,TLs800&900 lSIEIOAC,TL306 1NlE33AA TL 1200 1SlE03CC TL 800 1SlE03CB TL 2600 1NlE26DC TLs 14300,14500 & 14600 l~llowedUse: IMixed Use /Mixed Use /Mixed Use IMixed Use (Residential lcommercial Intended use: Hi-rise multi-family project. Hi-rise multi-family project. Land - Commercial To hold Hotel project acquire for PSU Mixed Use - ApttRetail Multi-residential - Use at Sale: Cross dock terminal. Vacant land Industrial Hotel Surface parking lot. 2 commercial buildings. Gross Site Size (SF): 1.15 1.16 0.92 4.03 0.62 0.76 Gross Site Size (SF): 50,094 50,609 40,000 175,547 27,000 33,106 Net Site Size (AC): 1.15 1.16 0.92 4.03 0.62 0.76 Net Site Size (SF): 50,094 50,609 40,000 175,547 27,000 33,106 Zoning: 17 Central Commercial CXdg, Central Commercial EXd CXd, Central Commercial RX - Central Residential CS Base FAR: 6 5 6 6 6 MAX Height: 250' 325' 100' 150'-225' 125' N A Improvement Capacity (SF): 300,564 303,654 200,000 1,053,282 162,000 198,636 Density: 318 286 N A NA N A 88 Units Shape: Rectangular Square Square Irregular Rectangular Rectangular Effectively Topography: Level Level Level Level Level Level Access: Good Good Average Good Good Good Exposure: Good Good Average Good Average Good Comer: Yes Yes. Full block Yes. Full Block No Yes Yes. Double corner View: Yes. River & Mountains Yes. River & Mountains. No No No No Easements: Standard Standard Standard Standard Standard Standard Utilities: 1 All available - Public /All available - Public (~llavailable - Public 1 All available - Public l~llavailable - Public (All available - Public
Buyer: (~ranmellCrow Residential IBlock 35 Investors l~oytStreet Properties LLC (portland State University Ic~tyof Portland - thru PDC l~i~anaWeilder LLC Seller: Block39 LLC, Wlll~ams&Dames North Macadan Investors LLC Penske Truck Leasing Co City of Portland (PDC) State of Oregon c/o Bob Charles & Laune Tardff; Dan & Transaction Date: 7/1/2005 4/1/2005 10112/2004 3/2/2004 12/20/2002 1111 512002 Transaction Status: Recorded Recorded Recorded Recorded Recorded Recorded Transaction Price: $5,600,000 $6,250,000 $3,500,000 $21,000,000 $2,700,000 $3,025,000 Analysis Price: $5,893,600 $6,409,228 $3,500,000 $19,700,000 $2,700,000 $3,125,000 Rights Transferred: Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Financine: Cash to seller Cash to seller Cash at closine- Cash to seller All Cash All cash Conditions of Sale: Arms length Arms length Arms length Arm's length Arms length Arms length
Price per Gross SF: 1S117.65 1 $126.64 1~87.50 \$I 12.22 1$100.00 )$94.39 Price per Net SF: $1 17.65 Price per FAR: $19.61 Price per Unit: $1 8,533 C060354 O 2006 PGP VALUATION INC 46 VALUATION- BLOCK 33 (continued)
The high end of the range is represented by Comparables 1 and 2 with respective unit prices of $19.61 and $21.1 1 per FAR (floor area ratio) foot. These are both recorded transactions located immediately to the southeast within the Central District of Block 33.
Comparable 1 ($19.61/FAR-SF) is Block 39 located between SW Bond and Moody Avenues at SW Gaines Street, and is immediately south of a planned public park. The site has 50,094 square feet with 6:1 FAR and 250-foot height limits, prior to density and height bonuses. The base sales price is $5.6 million, however, the buyer is responsible for paying tram and trolley LIDSand additional street improvements totaling approximately $293,000. 'The reported total consideration is $5,893,600 or $19.61 per FAR foot ($117.65ISF-gross). 'This site will be developed with "'The Alexan" high-rise luxury apartment project with 31 8 units in 22-stories.
Comparable 2 ($21.1 1/FAR - SF) is Block 35 - the "John Ross" condominiums. This site is located between SW Bond and River Parkway with the main view corridor on its north side, the future public park directly west and views to the Willamette River and beyond. Block 35 is 50,609 square feet and has a 6:1 FAR and 250-foot height limit. The base price is $6.25 million, but has been adjusted to $6,409,228 to account for buyer paid LIDS. Based on the adjusted price, the indicated unit price is $21.1 1 per FAR foot ($126.64lSF-gross).
Both of these comparables are within the approved Central District, the development plans are approved, all utility and infrastructure issues are resolved, and LID issues are resolved as well. Overall, the sales are considered reasonable value indicators in relation to the subject (Block 33).
The low end of the range is represented by Comparables 5 and 6 with unit prices of $16.67 and $15.73 per FAR foot. Both of these sales occurred at the end of 2002. Comparable 5 ($1 6.67IFAR-SF) is a 27,000 square foot parking lot site with a 6:1 FAR and 125 foot maximum height. The site is located at the south end of the Portland CBD near the Portland State University campus, between 4th and 5+h Avenues, and along the Portland Streetcar line.
Comparable 6 ($15.73/FAR-SF) is located between NE Broadway and Weidler in the Lloyd Center district northeast of the CBD. This site sold for a mixed-use, high-end condo project, which recently completed construction. The total site area was 33,106 square feet with a 6:1 FAR.
Overall, both of these are reasonable to slightly low value indicators in relation to the subject site as they have similar base zoning and development characteristics but are located on the fringe of the CBD. Because of current market characteristics, the older sale dates also place additional downward pressure on value in relation to the subject.
Comparables 3 and 4 with unit prices ranging from $17.50 to $18.70 per FAR foot represent the mid portion of the range. Comparable 3 ($17.50/FAR-SF) is a 40,000 square foot site in northwest Portland located adjacent to Interstate 405. Although improved with older industrial buildings, the buyer is holding the site for future redevelopment while the seller-tenant continues to pay rent during the interim. 'The
C060354 O 2006 PGP VALUATION INC 4 7 VALUATION- BLOCK33 (continued) price was $3.5 million and the sale closed in October 2004. The base FAR is 6:l and the maximum height is 100 feet.
Comparable 4 ($18.70/FAR-SF) is the sale of the former DoubleTree Hotel on SW Lincoln and closed in March 2004. The overall site size is slightly over 4.0 acres. The hotel improvements will remain as an interim use until a more dense development project is planned and funding is in place. 'This site was ultimately acquired by Portland State University at a $21 million price. The price was based primarily on the value of the land and included a $1.3 million allocation for hotel furniture, fixtures and equipment. 'Thus, the resulting land only price is $19.7 million. The base FAR is 6:1 and maximum heights range from 150 to 225 feet.
Overall, these two sales are considered to be slightly low value indicators in relation to the subject. The sales are located outside of the South Waterfront in slightly inferior secondary market locations relative to the subject's corner location and superior Macadam and Interstate 5 exposure.
We are also aware of one other site within the South Waterfront District where an unsigned deal is pending at a price of $9.0 million. The site is directly on the waterfront and has a partially approved project in place. The price works out to less than $105 per square foot with the base FAR unit price at close to the $21 level. The estimated effective FAR unit price for this property is estimated at less than $1 9 per FAR foot.
Additional emphasis is placed on two other recent transactions in the subject market area. Block 30 (the Meriwether project) sold in 2003 for $7.5 million or $77.24 per square foot and $15.45 per FAR foot. This sale represented a pre-entitled price and the buyer was responsible for all other planning and entitlement issues. Also, Block 39 (Comparable 1) sold in June 2004 for $2.375 million or $46.13 per foot and $7.69 per FAR foot. This transaction was negotiated two to three years ago with the buyer responsible for all planning and entitlement costs. Neither of these transactions are representative of the current market.
In this analysis, the comparable data is evaluated in relation to the subject characteristics including its higher programmed density level under the Central District Plan. Because of the subject's 9:l FAR planned development, a unit value at the high end of the range is appropriate to apply to the currently entitled base FAR density of 551,856 square feet. Comparable 2 ($21.1 1/FAR-SF) represents the high end of the comparable range with a 6:1 FAR that occurred approximately twelve months ago. Therefore, a unit value slightly above the range or $23.00 is concluded and applied to the base FAR. As noted, this higher unit value considers the subject's excess density level, superior access and exposure characteristics.
Based on this analysis and assuming a complete and ready-to-develop site, the Fee Simple Market Value as of April 29, 2006 is (551,856 FAR-SF x $23.00/SF) $1 2,686,478, rounded to $12,700,000.
O 2006 PGP VALUATION INC VALUATION- BLOCK33 (continued)
The estimated value works out to $23.01 per base FAR and $15.34 per effective FAR (827,784 SF] including the excess density.
To value the Air Rights over the Base 6:l FAR, we w'ill apply an effective FAR unit value of $1 5.00 to the 3:1 development density entitlements. Therefore, as of April 29, 2006, the value of the AirIDevelopment rights (275,928 FAR-SF x $1 5lSF) $4,138,920, rounded to $4,100,000.
This value is not an addition to the previous value conclusion, but is a portion of the Fee Simple Market Value.
To estimate the value of the base 6:l FAR (excluding the additional 3:1 FAR air rights), the value of the air rights component ($4,100,000) is subtracted from the fee simple market value with a 9:1 FAR ($12,700,000).This indicates a value for the base 6:1 FAR of $8,600,000. This equates to $1 5.58 per FAR foot.
The concluded market values, prior to adjustments, are summarized below:
Value Scenario - Market Project Value Market Value at 9:l FAR as though complete and ready-to-develop: $12,700,000 Air Rights Component Value (3.1 FAR; 275,928 SF]: $4,100,000 Market Value of Base 6: 1 FAR (excludes 3: 1 FAR]: $8,600,000
These value conclusions are subject to both extraordinary and typical assumptions and limiting conditions. Please refer to the Letter of Transmittal and the Assumption and Limiting Conditions section of this report concerning these matters.
CONCLUDEDVALUE OF THE AIR RIGHTS The "air rights" for Block 33 will require extraordinary costs to allow the additional density to a maximum 9:1 FAR from the base 6:1 FAR. In particular, the proposed 6-story mixed- use parking garage will require enhanced structural features to allowing the garage to be expanded into the air space (the additional 3:1 FAR). Previous discussions with Oregon Health and Science University indicated that additional structural enhancements to the parking garage were reported in the $2.0 million level. Preliminary plans also include PDC acquiring 100 parking spaces in the parking garage to serve the future residential component. The indicated price is approximately $3.0 million for the 100 parking spaces. PDC will also acquire an additional 100 parking spaces in the future.
O 2006 PGP VALUATION INC VALUATION- BLOCK33 (continued)
In summary, the cost to enhance the base structure allowing expansion into the air space has been estimated at $2.0 million. Therefore, the "as is" value of the air rights is concluded as ($4,100,000 minus $2,000,000):
TWO MILLION ONE HUNDRED THOUSAND DOLLARS
The concluded value of the air rights is equivalent to $7.61 per square foot ($2,100,000 + 275,928 SF) of floor area ratio (FAR). The reasonableness of the value conclusion is checked against other projects with similar air rights noted as follows. However, the value attributed to air rights varies by project and are typically based on a number of development considerations. 'The information provided generally brackets the value conclusion demonstrated for the subject property (Block 33).
Civic Commons Apartments is a proposed 140-unit affordable apartment building to be located immediately north of PGE Park. 'The new Civic Redevelopment project is a joint effort between the Housing Authority of Portland and GerdingIEdlen Development Company, LLC and is comprised of two components including workforce housing (Civic Commons Apartments), and an adjoining 250-unit condominium tower for private ownership with ground-floor retail and a 405-space parking garage. The joint venture is structured and regulated by a Development Agreement. GED purchased the property from the Authority at a price that retired the existing debt, approximately $4.5 million, on the former 138-unit apartment building that was on-site. The Authority's equity in the proposed property, estimated at approximately $1.5 million, was contributed to the development as consideration for a perpetual Condominium and Air Rights Agreement. Based on this agreement, the air rights were equivalent to $13.98 per square foot of gross building area to be built within the air rights ($1,510,000 + 108,000 SF of GBA). However, The "as is" value of the air rights were anticipated to be zero as the attributed value ($1,510,000) would be offset by costs for the required environmental abatement and demolition of the existing 138-unit apartment building. The project will also incur costs of $500,000 to $641,300 to relocate existing tenants. Environmental abatement and demolition costs have not been finalized but will be shared by the apartments, condominium and retail components.
Hollywood Library project is comprised of 47 mixed-income apartment units, an 815 square foot retail space, a 37-space surface parking lot, and a 13,000 square foot library located in the Hollywood District of northeast Portland. The project was developed as a joint public-private partnership between the Multnomah County Library and Sockeye Development, LLC. The upper-level apartments were constructed on a concrete podium with a waterproof membrane, and a plumbing crawl space between the floors above the library with wood-frame construction. The ground-level floor reflects typical commercial-grade construction for the library, neighborhood retail space, residential entry and mechanical systems. The platform costs were estimated by the contractor (Walsh Construction Company) at approximately $330,000 to fully utilize the site as proposed in June of 2000. Based on a 3 percent CPI adjustment, this cost would be equivalent to $394,000 in current dollars and $8.90 per square foot of gross building area ($394,000 + 44,283 SF of GBA). However, Multnomah County also
C060354 O 2006 PGP VALUATION INC 50 VALUATION- BLOCK33 (continued) provided an easement to Dania Furniture for 24-hour access to nine parking spaces located at the southeast corner of the property, and therefore, not available to the housing portion of the project (built above the platform) and additional downward influence on any potential air right value.
The value of the "air rights" for Block 33 is based on the assumption that development could occur following completion of surrounding streets (Summer of 2006) but is projected for completion by 2010. As noted in this report, development timing is projected to be 2010 for Phase I (6-story parking garage, retail and townhouse condominiums), and 5 to 10 (2015-2020) years out for Phase 2 (development within the "air rights"]. Consequently, the concluded "air rights" value must be discounted for the time delay as development is unlikely to occur within one year.
Assuming a land appreciation factor of 5 percent per annum, a four-year holding period, and a discount rate of 10 percent, the "as is" value of the air rights would be $1,743,000, rounded. The discount rate is a function of the time value of money and incorporates the prime rate, currently 7.75 percent, plus a 2.25 percent leading margin for fees and financing costs. Condominium values in the Portland region have also been appreciating at a rate of 6.67 percent per year (avg. sales price) over the past five years. Therefore, a land appreciation factor of 5 percent appears reasonable.
Finally, additional holding costs may accrue to the landowner during the delay in construction including real estate taxes or financing costs that have not been treated in this analysis but are considered appropriate during future negotiations regarding the acquisition of Block 33.
O 2006 PGP VALUATION INC BLOCK 49
O 2006 PGP VALUATION INC Hazardous WasteIMaterials: We were not provided with an environmental site assessment report and have not conducted any independent investigation regarding this issue. This appraisal assumes that the site is free of all hazardous waste materials. Please refer to the Assumptions and Limiting Conditions section regarding this issue. If questions arise, further research is advised.
Location: Block 49 is located south of the rapidly developing South Waterfront Central District between the Willamette River and SW Macadam Avenue.
Size: 44,000 SF or 1.01 acres. The concluded site size is based on discussions with PDC staff and recognizes the realignment of SW Lowell Street to the north will result in a slightly larger area relative to County records (38,768 SF].
Shape: Generally square.
Topography: Level at street grade.
Street Frontage- SW Lowell Street: 200 feet Future SW Bond Avenue: 193 feet SW Bancroft Street: 200 feet SW Moody Avenue: 193 feet
Overall, the subject has approximately 786 feet of street frontage including the future SW Bond Avenue. In making the subject development ready, the seller will be responsible for re-improving Lowell, Bancroft, and Moody. The City of Portland is responsible for SW Bond Avenue.
In this analysis, subject street frontage includes 50% of Lowell (100') and 100% of Moody (193'). Bancroft will undergo repaving only. Thus, there is 293 feet of Block 49 street frontage.
Abutting Properties- North: SW Lowell Street separates the subject from Block 46. East: The future SW Bond Avenue will separate the subject from the Old Spaghetti Factory parking lot and restaurant property, and the Willamette River. South: SW Bancroft Street separates the subject in a renovated building occupied by the South Waterfront Project Marketing Center.
O 2006 PGP VALUATION INC 5 3 SITE DESCRIPTION- BLOCK49 (continued)
West: SW Moody Avenue separates the subject from a large warehouse buildings and Macadam Avenue.
Street Improvements- SW Lowell Street: Partially improved, two-lane, two-way street. Future SW Bond Avenue: Not improved but recently partitioned and dedicated to the City of Portland for the Bond Avenue right-of- way extension. Upon completion, it will be a two-lane, two-way neighborhood arterial. SW Bancroft Street: Improved, two-lane, two-way street. SW Moody Avenue: Partially improved two-lane, two-way neighborhood arterial.
An agreement is in place to improve the surrounding streets. The seller of the subject property (North Macadam Investors - NMI) will be responsible for a large portion of the site development costs.
Utilities: All public utilities are available to the site including water, sewer, electricity, gas, and telephone. Technology connections will be available to the site.
Accessibility: Average general access. Direct access is via the surrounding streets.
Exposure: Average neighborhood exposure with approximately 193 feet of frontage on both Moody and Bond.
Easements & Encumbrances: A title report was not available for our review. However, we are aware that a 36-inch storm drain lies under SW Lowell Street.
The OHSU Tram and Streetcar I-ID assessments total $224,532 and are included in the projected $3.7 million-site development costs.
The potential requirement to dedicate a portion of Block 46 to widen SW Lowell Street does not negatively impact the subject at this time. Any impact from dedication of land should not reduce any FAR density rights for the subject property.
Except as noted, we assume no other detrimental easements or encumbrances will affect the property.
Zoning/Comprehensive Plan: CXd, Central Commercial with (d) Design overlay. A recreational trail is designated both along Moody Drive and the riverfront.
O 2006 PGP VALUATION INC 54 SITE DESCRIPTION- BLOCK49 (continued)
The CX zone is intended to provide for commercial development within Portland's most urban and intense areas. A broad range of uses is allowed to reflect Portland's role as a commercial, cultural, and governmental center. Development is intended to be very intense with high building coverage, large buildings, and buildings placed close together. Also, development is intended to be pedestrian-oriented with an emphasis on safe and attractive streetscape.
There is no minimum lot size in the commercial zones. Density of development is regulated through Floor Area Ratios (FARs). FARs work with the height, setback, and building coverage standards to control the overall bulk of development. The subject is within the Central City Plan District and also benefits from being located in the South Waterfront District with its specific zoning requirements designed to achieve the maximum development and use goals.
The zoning code for the South Waterfront District that became effective January 20, 2003, modifies the CX zone to implement the design goals of the district. Retail sales and services are limited to less than 40,000 square feet, without a conditional use permit. The intent is to limit commercial uses to neighborhood scale development, and not attract additional vehicle trips into the area for community or regional shopping.
Other zoning characteristics are presented below.
FAR: 6 to 1. This equates to development capacity of (44,000 SF x 6) 264,000 SF.
The FAR west of River Parkway is 6:l. Bonus options allow an additional 2:1 FAR with limited provisions to reach a maximum of 9:l FAR using Greenway densities.
Maximum Height: 250 feet. 'The property is within the South Waterfront Height Opportunity Area. If FAR bonuses are utilized, height can reach a maximum of 375 feet in this area.
Other Zoning Standards: Required Building Lines. Active Use Area (encourages ground floor retail). South Waterfront 2 Parking Sector Requirements. Parking Access Restricted Streets. Limited retail sales and services area.
O 2006 PGP VALUATION INC SITE DESCRIPTION- BLOCK49 (continued)
Flood Plain 8 Wetlands: According to the InterFlood by AlaMode, Inc. panel 41 01 830 181 E, dated October 19, 2004, the property is located in Zone X, which is outside the 100-year flood plain but within the 500-year flood area.
Site Development: 'The subject site is located at the south end of the rapidly developing South Waterfront Central District. Streets and all infrastructure services are in place but must be totally upgraded for any new development to take place. The buyer-developer is responsible for most of the cost of making the site development ready. The site development cost budget is $3.7 million for both blocks 46 and 49 (subject).
In order to determine the proportionate costs for each block, we analyzed ratios from two perspectives: street frontage and site size. This approach was necessary as the site development costs provided by North Macadam Investors could not be segregated between Blocks 46 and 49.
Street Frontage Ratio: As noted earlier, the city will be responsible for the completion of SW Bond Avenue. Street frontage under the responsibility of the seller includes 50% of Lowell (1001),100% of Moody (193'). These equate to 293 feet. Total street frontage for both blocks is 953 feet. Therefore, Block 49's proportionate 293-foot share equates to 31% of the total street frontage.
Block Size Ratio: Block 49 is 44,000 SF and results in a ratio of 37% of the total site area (44,000 SF + 119,950 SF) when combined with Block 46.
Because lower costs are expected for Block 49 (due to the limited upgrades on Bancroft Street), we have allocated a 30% proportion for the subject site. When applied to the buyer-developers' $3.7 million development cost estimate, the proporl.ionate share is $1 .l million for Block 49.
Site Rating: Overall, the subject site has many features and characteristics similar to the other sites in the competitive Portland CBD market area. However, we rate this site as slightly below average in relation to other locations within the competitive market area.
The drawbacks for this property include the following:
O 2006 PGP VALUATION INC 56 SITE DESCRIPTION- BLOCK49 (continued)
Its location south of the approved and currently developing district;
LIDS and formal agreements with the city are not finalized; and
There is no formal development plan in place;
HIGHEST AND BEST USE The highest and best use of a property is defined as the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value.4 The highest and best use concept is based upon traditional appraisal theory and reflects the attitudes of typical buyers and sellers who recognize that value is predicated on future benefits. This theory is based upon wealth maximization of the owner, with consideration given to community goals. A use which does not meet the needs of the public will not meet the above highest and best use criteria.
Highest and best use is also a market driven concept that identifies the most profitable and competitive use to which a property can be put. The reasonably probable use of vacant land or an improved property also results in the highest value.
The concept of highest and best use is fundamental to real property value. In this report, the highest and best use of the site is determined "as vacant" and available for development.
SUMMARYOF LEGAL,LOCATIONAL & PHYSICAL ANALYSIS Typically, legal, locational, physical, and market factors affecting the subject property are discussed in this section. Legal (planning & zoning), locational and physical characteristics of the property have been well described. Thus, the important issues are analyzed here.
As noted, the subject site has been rated slightly below average in relation to other locations in the South Waterfront district and to other sites in the Portland CBD. The drawbacks for this property include the following:
location south of the approved and currently developing subsec.l.ion of the South Waterfront District (Central District);
LIDSand formal agreements with the city are not finalized; and
no formal development plan is in place at this time.
4 The Appraisal of Real Estate, 12" Edition. Chicago: Appraisal Institute, 2001. Page 305.
C060354 O 2006 PGP VALUATION INC 57 SITE DESCRIPTION- BLOCK49 (continued)
Block 49 is not "development-ready". North Macadam Investors (NMI) indicated that a budget of $3.7 million would be required to make Blocks 46 and 49 ready for development including raising the level of all surrounding streets, remediation of environmental issues, construction and realignment of a new storm drain, completion of SW Moody Avenue from Abernathy to Bancroft Street, re-paving SW Bancroft Street to Bond Avenue, paying Streetcar and Tram LID Assessments, cost contingencies, contractor profit and developer fees. NMI indicated the cost for elevating, extending and developing SW Bond Avenue will be paid by the City of Portland. Based on the size of each block, the pro rata share attributed to Block 49 is estimated at $1.1 million (30% allocation of $3.7 million) to make the subject site ready for development. However, North Macadam lnvestors are responsible for these costs allowing the Portland Development Commission to acquire a "development ready" site per the pending sales agreement.
In this section, general market conditions influencing the Portland Metropolitan Area and the subject neighborhood are considered. Major factors requiring analysis are the supply and demand conditions which influence the competitive position of the subject.
Vacant Land-The marketability of the subject site is highly dependent on the supply and demand for vacant land in the area. The Metro 2002-2022 Urban Growth Report has been utilized to examine the supply and demand conditions for vacant commercial land.
In general, there are a limited number of vacant, large commercial/mixed-use sites in the overall market area. Short-term supply and demand characteristics are difficult to quantify due to the lack of reliable information regarding buildable sites that are currently available. Estimates on absorption of vacant lands are also difficult to estimate. Development in the overall market area has been active, with multiple land sales demonstrating strong demand for commercial sites.
Given the good locational characteristics of the subject and nearby access to the regional freeway system, the subject competes with commercial and mixed-use properties throughout the Portland metropolitan area. The following tables summarize land inventories taken from the 2002-2022 Urban Growth Report provided by Metro. The chart represents the supply of vacant commercial and mixed-use land in Washington, Clackamas, and Multnomah Counties. LAND SUPPLY ESI'IMATED (NET ACRES AS OF YR-2000) Type Clackamas Multnomah Washington Total Commercial 203 257 1,104 1.564 Mixed Use 423 506 893 1,822
The following charts represent the supply of commercial land in Washington, Clackamas, and Multnomah Counties, based on parcel size, given in both net acres and number of lots.
O 2006 PGP VALUATION INC SITE DESCRIPTION- BLOCK49 (continued)
COMMERCIAL VACANT LAND SUPPLY BY LOT SlZE (NET ACRES) Net Acres Clackamas Multnomah Washington Total Under 1 AC 90 237 257 584
50 to 100 AC 0 0 354 354 Total: 333 630 1,835 2,798
COMMERCIAL VACANT LAND SUPPLY BY LOT SlZE (NUMBER OF LOTS) Net Acres Clackamas Multnomah Washington Total Under 1 AC 322 1.227 903 2,452 1 -5AC 7 7 120 251 448 5-10AC 6 13 37 56 10-25AC 3 4 16 23 25 -50AC 0 0 5 5 50- l00AC 0 0 5 5 Total: 408 1,364 1,217 2,989
In terms of demand, Metro has forecasted the demand for vacant commercial land within this area from 2000 to 2022 based upon projected employment growth. As indicated, demand far exceeds available supply by approximately 2,077 acres.
SUPPLY VS. DEMAND - COMMERCIAL LAND (NET ACRES) Supply (2000-2022) 2,798 AC Demand (2000-2022) 4,875 AC Difference: -2,077 AC
Based upon information provided by the 2002-2022 Urban Growth Report, it appears that demand for commercially zoned vacant land will outpace the supply over the 18- year period. This estimate does not consider zoning changes or additions to the Urban Growth Boundary (UGB). Metro is required by State law to maintain a 20-year supply of vacant land within the UGB. 'Therefore, long term supply and demand conditions are expected to remain in relative equilibrium, with no foreseeable oversupply conditions. Metro has forecasted additional lands to be redeveloped or having the potential for a zone change that would provide additional land inventories to meet projected demand. However, Metro was also aware of the potential zone changes in process for the South Waterfront Area at the time of the 2002-2022 Urban Growth Report.
Conclusion of General Marketability-Based upon available information, as well as discussion with market participants, the market for vacant corr~mercialsites is out of equilibrium. In particular, demand for commercial land is outpacing supply at this time and is likely to continue this trend into the foreseeable future.
Although the Year 2000 statistical support for a land shortage may be inadequate, discussion with market participants indicates a general shortage of "prime" commercial
C060354 O 2006 PGP VALUATION INC 59 SITE DESCRIPTION- BLOCK49 (continued) land in the area. Large acreage sites are limited, with much of the future inventory anticipated to come from outlying areas through zone changes or amendments to the UGB. Therefore, the marketability of the subject as a vacant, commercial site is good given the superior location, access, exposure, and development characteristics.
Regarding market factors related to the subject, significant new condominium development has had great success in the Portland metropolitan area with the highest values in Northwest Portland, Pearl District, and early sales performance in the subject's South Waterfront District. A probable development scenario for the subject would include a mixed-use high-rise condominium with ground floor commercial space; although no specific plans have been formulated for the subject at this time. In addition, development of the subject will ultimately depend on the success of other projects already announced and in planning located several blocks north in the 31- acre Central District of the South Waterfront.
The Meriwether is nearing completion and sold at an average pace of 15.18 units per month and far exceeding sales activity in downtown Portland. New Home Trends indicate an average sales pace of 12.09 units per month in the combined NW Portland, Pearl District, South Waterfront and Macadam markets. Prices in the Meriwether range from $189,000 for a small studio condo to over $1.6 million for a large penthouse unit ($246-$584/SF).Another success in the immediate neighborhood is the John Ross that is currently under construction on Block 35. The project is scheduled for completion in the Summer of 2007, and is currently 76 percent pre-sold with units priced from $249,000 to $3,999,999 ($21 9-$928/SF).
While these examples are more specific to the approved Central District area, the Williams & Dame development team (North Macadam Investors) is a major force helping to shape the direction for the balance of the South Waterfront along with the Portland Development Commission and Oregon Health and Science University. Based on the positive efforts already apparent in the South Waterfront, it is reasonable to assume that similar marketing success could be anticipated with a mixed-use development on the subject Block. Negative factors that may impact future development were described in the Subject Market Area Description. Major transportation and infrastructure issues must be studied and resolved for areas immediately north and south of the Central District.
Based on the property description and this analysis, the highest and best use and maximally productive use of the subject property is to be developed as a high density officelresidential project after it becomes development-ready, and with super- adequate parking to accommodate the adjacent restaurant property. The overall development density is estimated at 264,000 square feet.
O 2006 PGP VALUATION INC
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O 2006 PGP VALUATION INC Map 510-1
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C060354 O 2006 PGP VALUATION INC 64 Effective Date October 19,2004
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C060354 O 2006 PGP VALUATION INC 6 5 O 2006 PGP VALUATION INC FAR MAP- BLOCK49
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C060354 O 2006 PGP VALUATION INC 67 uo6aro 'pue~~od$043 tju!uueld 40 nwlw
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C060354 O 2006 PGP VALUATION INC 69 Block 49 will also be valued using the Sales Comparison Approach. 'This methodology will result in an appropriate value as an unencumbered development ready site. As noted earlier, North Macadam Investors (NMI) are responsible for site development costs for Block 49 allowing the Portland Development Commission to acquire a "development ready" site per the pending sales agreement.
SALES COMPARISON APPROACH The subject's FAR is 6:l and has a base entitled development capacity of 264,000 square feet.
The Commercial Land Sales Tabulation Chart and Location Map on pages 45 and 46 are used in valuing Block 49. As noted, the Complete Land Sale Write-ups are presented in the Addendum. The same type of methodology and analysis is made to value Block 49 as presented earlier for Block 33.
UNENCUMBERED DEVELOPMENT-READY MARKET VALUE Six transactions have been analyzed in relation to the subject site. The sales range from 27,000 to 175,547square feet and include current actively pending transactions of two sites directly in the South Waterfront area. The indicated unit price range is $15.73 to $21.1 1 per FAR square foot. As noted earlier, Block 49 is located at the outer edge of the currently developing Central District of the South Waterfront.
Cornparables 1 and 2 with unit prices of $1 9.61 and $21.1 1 per FAR foot are reflective of the subject's potential future value when transportation and infrastructure issues are resolved, the site is development ready, and a realistic and marketable project is planned. Overall, Sales 1 and 2 are considered high value indicators in relation to the subject recognizing the superior locations in the Central District of the South Waterfront.
The low end of the range is represented by Cornparables 5 and 6 with unit prices of $16.67 and $15.73 per FAR foot. Overall, both of these are good comparables in relation to the subject site as they have similar base zoning and development characteristics and are located on the fringe of the CBD. Because of current market characteristics, the older sale dates make these slightly low value indicators in relation to the subject.
Cornparables 3 and 4 with unit prices ranging from $17.50 to $18.70 per FAR foot represent the mid portion of the range. Overall, these two sales are considered to be reasonable to slightly high value indicators in relation to the subject recognizing the similar secondary locations and 6:l FAR but superior access and exposure characteristics relative to Block 49.
If the subject property was a ready-to-develop site with streets and infrastructure completed and in place according to the seller's intended plan, an unencumbered unit value of $17.00 per square foot of FAR would be appropriate based on the sale comparable data and our analysis. Applying this to the subject's base FAR of 264,000 square feet equates to $4,488,000,rounded to $4,490,000.
O 2006 PGP VALUATION INC VALUATION- BLOCK49 (continued)
FEE SIMPLE MARKET VALUE CONCLUSION Discussions with PDC staff indicated the subject will be "development ready" by November 1, 2006. Construction on streets and other infrastructure are currently in process. Due to the short 7-month construction period, no present value discounts and/or land value appreciation are warranted in this analysis.
BLOCK 49 - FEE SIMPLE MARKET VALUE Market Value Scenario Date of Value Value Unencumbered Development Ready Market Value (LAND ONLY): April 29, 2006 $4,490,000
The estimated value works out to $1 7.00 per base FAR and $1 02.05 per square foot. This value conclusion is subject to both extraordinary and typical assumptions and limiting conditions. Please refer to the Letter of Transmittal and the Assumption and Limiting Conditions section concerning these issues.
O 2006 PGP VALUATION INC We certify that, to the best of our knowledge and belief:
The statements of fact contained in this report are true and correct.
The reported analyses. opinions, and conclusions are limited only by the reported assumptions and limiting conditions. and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions.
We have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved.
We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.
The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
I, John D. Ingle, have made a personal inspection of the subject property that is the subject of this report and have inspected the comparables.
= I, Todd S. Liebow, MAI, have made a personal inspection of the subject property that is the subject of this report; and have inspected the comparables.
= No one provided significant real property appraisal assistance to the persons signing this certification.
The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
As of the date of this report, li. Todd S. Liebow, MAI, have completed the continuing- education program. - of the Appraisal Institute.
Date OR State Certified General Appraiser No. COO0628
Todd S. Liebow, MA1 Date OR State Certified General Appraiser No. COO0152
O 2006 PGP VALUATION INC ADDENDA
O 2006 PGP VALUATION INC Addenda PURCHASE AND SALES AGREEMENT BLOCK 46 AND 49 (SUBJECT)
O 2006 PGP VALUATION INC Addenda PURCHASEAND SALEAGREEMENT
THIS PURCAASEAND SALEAGREEMENT (this "Agreement") is entered into as of March 9,2004 (the "Effective Date") by and between PACIFIC N.W. PROPERTIESLIMITED PARTNERSHIP,an Oregon limited partnership ("Seller")), and WILLIAMS& DAME DEVELOPMEW, INC.. an Oregon corporation ("Buyet').
RECITALS:
A. This Agreement is for the purchase and sale of the Property described on Exhibit A. attached hereto (the "Property"). Buyer acknowledges and agrees to minor changes to the legal description resulting from OSF's final partition with respect to the Property.
B. Seller and OSF International, Inc. WF')are parties to a Purchase and Sale Agreement and Receipt for Earnest Money dated as of June 26,1996, pursuant to which OSF has agreed to sell the Property to Seller, and Seller has agreed to purchase the Propeny from OSF (the "OSF Agreement"). The OSF Agreement has been amended by an Amendment to Purchase and Sale Agreement and Receipt for Earnest Money dated July 1,1997 (the "First Amendment") and Second Amendment to Purchase and Sale Agreement and Receipt for Earnest Money dated January 31.2002 (the "Second ~mendment'). As used herein. "Sale Agreement" means the OSF Agreement, as amended by the First Amendment and the Second Amendment.
C. Seller wishes to acquire the Property from OSF pursuant to the Sale Agreement, and immediately sell the Property to Buyer on and subject to the terms and conditions of this Agreement. Buyer wishes to purchase the Property from Seller on and subject to the'tenns and conditions of this Agreement.
Now, th'erefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. the parties agree as follows:
AGREEMENTS:
1. Purchase and Sale. Subject to the other terms and conditions of this Agreement, Seller agrees to purchase the Property from OSF pursuant to the Sale Agreement and thmupon to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller on the terms and conditions set forth in this Agreement.
2. , Purchase Price. The purchase price for the Property shall be Three Million One Hundred Thousand Dollars ($3,100,000) (the 'Turchax Price"). The Purchase Price shall be paid in ' immediately available funds on the Closing Date (defined in Section 5.1 below).
3. Earnest Money Dewsits.
3.1 Fist Dewsit. Within two (2) business days after the Effective Date, Buyer shall deposit into escrow with Escrow Agent (defined in Section 5.2 below) the amount.of Twenty Thousand Dollars ($20,000) (the "First Deposit"). If the First Deposit is not delivered to Escrow Agent within such time, this Agreem~ntshall automatically be terminated without any further documentation. The First Deposit shall be deposited into an interest-bearing account for the benefit of Buyer. IEBuyer elects within the Review Perid (defined in Section 4.1.2 below) to proceed with acquisition of the Property, the First Deposit shall become non-refimdable unless this transaction fails to close because of a default by Seller. Upon Closing (defined in Section 5.1 below), the First Deposit and interest thereon shall be paid to Seller and applied to the Purchase Price. If Buyer does not elect within the Review Period to proceed with the acquisition of the Property, the First Deposit and any interest thereon will be returned to Buyer, and neither party shall have any further obligation under this Agreement.
3.2 Second Deposit. Within two (2) business days after the expiration of the Review Period if all contingencies set forth in Section 4.1 are satisfied or waived by Buyer, Buyer shall make an additional deposit with Escrow Agent in the amount of Two Hundred Eighty Thousand Dollars ($280,000) (the "Second Deposit"). Upon making such deposit, the FitDeposit and the Second Deposit shall be non-refundable to Buyer unless this transaction fails to close because of a default by Seller. Upon such default, the First Deposit, Second Deposit and all interest thereon shall be released to Buyer. The Second Deposit shall be deposited into an interest-bearing account for the benefit of Buyer. Upon Closing, the Second Deposit and interest thereon shall be paid to Seller and applied to the Purchase Price. As used in the Agreement, "Deposit" shall mean the First Deposit, the Second Deposit and all interest accrued thereon.
4, Buver's Contingencies.
4.1 General Contingencies. The closing, and Buyer's obligation to purchase the Property, are subject to Buyer's satisfaction in its sole and absolute discation (or waiver in its sole and absolute discretion) of the following conditions within the time periods specified below:
4. I .1 Intentionally Omitted.
4.1 -2 Buver's Review Period. Buyer shall have 90 days after the Effective Date (the "Review Period") to satisfy itself concerning all aspects of the Propedy including, without . limitation, the physical condition of the Property, the environmental condition of the Property, Buyer's determination that the Property is physically suitable for Buyer's intended use of the Property, Buyer's determination that its proposed development of the Prom is hancially feasible, and Buyer's negotiation of an amendment to the agreement to be recorded against the Property at the closing of the sale fiom OSF to Seller entitled "Parking Rights, Covenants, Easements And Equitable Servitude" attached as Exhibit B to the First Amendment (the "Parking Agreement"). Buyer shall have the right to extend the Review Period for an additional thirty (30) days by notifying Seller in writing prior to 5:00 p.m. (Pacific Time) on the expiration date of the initial 90-day Review Period of its election to do so and depositing into escrow an additional deposit in the amount of $15,000, which shall be nonrefimdable but credited against the Second Deposit and applicable to the Purchase Price at Closing If Buyer fails to waive or deem satisfied the conditions precedent to its obligation to purchase the Pmmon or before the expiration of the extended Review Period, the $15,000 nonrefkdable payment that Buyer made to extend the Review Period for 30 days shall be immediately released b Seller.
4.1.3 Status of ~itle.'toProperty. Within ten (10) days after the Effective Date, Seller will obtain and deliver to Buyer a preliminary title report with respect to the Property (the 'Title Report"), issued by or through Escrow Agent and setting fonh the status of title to the Property and all exceptions to coverage that would appear in an ALTA Form B extended coverage owner's policy of title insurance, if issued. Copies of all documents relative to the title exceptions will accompany the Title Report. If Buyer determines that the status of title reflected therein is unacceptabie for any reason, Buyer shall so notify Seller in writing within ten (10) days following its receipt of the Title Report and the title exception documents, specifying such objectionabfe matters. Seller shall have a period of ten (10) days following the receipt of such notice from Buyer to cure such objectionable matters within such 10-day period but shall be under no obligation whatsoever to cure such objectionable matters. Seller shall notify Buyer in writing of any title exceptions that Seller agrees to remove within such 10-day period. Buyer may, within five (5) days following the expiration of such 10-day period, either terminate this Agreement, in which event the First Deposit and interest thereon shall be pmmptly returned to Buyer, or, at Buyer's election, maintain this Agreement in effect. If Buyer fails to notify Seller of such election within the prescribed 5day period, Buyer will be deemed to have maintained this Agreement in effect.
4.1.4 [Intentionally Omiued].
4.1.5 Acquisition bv Seller. Closing by Seller of its acquisition of the Property from OSF.
4.1.6 Performance by Seller. Seller's performance of each obligation of Seller under this Agreement.
4.2 Procedure for Acceptance. If Buyer, by the end of the initial or extended Review Period as applicable, notifies Seller of the satisfaction or waiver of the contingencies in Section 4.1, the First Deposit shall become nonrefundable except in the event of Seller's default or inability to convey the Property to Buyer at Closing pursuant to Section 5 beIow. Alternatively, if by the end of the Review Period Buyer has not notified Seller in writing of the satisfaction or waiver of the contingencies in Section 4.1, then this Agreement shall automatically terminate without further notice or action by the parties. Upon termination pursuant to this Section 4.2, the First Deposit and all interest thereon shall be refunded to Buyer. Thereafter, neither party shall have any obligation to the other, exdpt' for Buyer.'s obligation to- pay for its costs incurred during the Review Period and to indemnify Seller from liability therefrom.
5. Closing.
5.1 Closin~Date. This transaction wil be closed immediately upon closing by Seller of its purchase of the Property from OSF ("Closing"), which pursuant to the Second Amendmenl, is scheduIed for June 30,2005. The date this transaction actually closes, as evidenced by the recordation of the Deed (defined in Section 5.4.6 below), is referred to as the "Closing Date."
' 5.2 Manner and Place of Closing. This transaction will be closedby an escrow officer of First American Title Insurance Company ("Escrow Agent') in Portland. Oregon, or at other place as the parties may mutually agree upon in writing. Closing shall take place in the manner and in accordance with the provisions set forth in this Agreement.
5.3 Prorations; Adiustments.
5.3.1 All real property taxes shall be prorated as of the Closing Date based upon the year in which they are payable. Buyer shall be responsible for the payment of all pending and assessed local: improvement districts and special assessments, and Seller shall have no obligations to pay the same.
5.3.2 Seller shall pay the premium for a standard owner's policy of title insurance in favor of Buyer in the amount of the Purchase Price for the Property. Buyer shall pay for any extended coverage or additional endorsements required by Buyer.
5.3.3 Seller and Buyer shall each pay one-half of the escrow and closi'ng fees charged by Escrow Agent. Buyer shall pay the fees associated with the recordation of the Deed.
5.4 Events of Closing. Provided Escrow Agent has received the sums and is in a position to cause the title insurance policy to be issued as described below, this transaction shall be closed on the Closing Date as follows:
5.4.1 Seller shall provide Buyer with a Certificate of Nonforeign Status as provided in Section 7.1.7 below.
5.4.2 Seller shall deliver to Buyer the orighh of all documents, plans, specifications, reports, studies and contracts relating to the Property which are in Seller's possession.
5.4.3 Escrow Agent shall calculate the prorations and charges described in Section 5.3, and the parties shall be charged and credited accordingly.
5.4.4 Buyer shall pay the entire Purchase Price to Seller in cash, adjusted for the. deposits, charges and credits set forth in this Agreement and the offsets, if applicable,desded'- , . ' in Section 6.2.
5.4.5 Any liens or other exceptions to be paid or removed hrntitle by Seller at Closing pursuant to Section 4.1 -3 of this Agreement shall be paid, satisfied and removed from title at Seller's expense.
5.4.6 Seller shall convey the Property to Buyer by a special statutoxy warranty deed subject to such exceptions to title as have been approved by Buyer pursuant to Section 4.1.3 (the "Deed"). Buyer agrees and acknowledges that in any event the Deed and the title policy shall include as exceptions those exceptions referenced in Section 6 of the First Amendment, except to the extent that (i) any or all of such exceptions do not encumber title on the Closing Date or (ii) Buyer is able to effect the removal of any such item from title on or before the Closing Date. 5.4.7 Escrow Agent shall be irrevocably committed to issuing the title insurance policy described in Section 5.5 upon recordation of the closing documents.
5.4.8 Escrow Agent shall record the Deed to Buyer at Buyer's expense.
5.5 Title Insurance. As soon as possible but not more than thirty (30) days after the Closing Date, Escrow Agent shall hrnish Buyer an Owner's policy of title insurance or, if requested by Buyer, an ALTA extended coverage owner's policy of title insurance, in the amount of the Purchase Price for the Property, in the same form as a proforma thereof to be approved by Buyer at Closing, which proforma shall be in the form, and subject to those exceptions, agreed to by Buyer pursuant to this Agreement. Seller shall have no obligation whatsoever to execute any affidavit, indemnity agreement or any other document required by the Title Company to issue an extended title insurance policy. Buyer shall be responsible during the Review Period to confirm (if it wants to obtain an extended title insurance policy) the terms on which Escrow Agent will issue an extended policy subject to conditions that may be satisfied solely by Buyer. It shall not be a condition precedent to Buyer's obligation to purchase the Property that the Title Company be willing to issue an extended title insurance policy.
5.6 Possession. Seller shall deliver possession of the Property to Buyer on the Closing Date. 5.7 Partition: Additional Title Exmtions.
5.7.1 Additional Encumbrances. Buyer acknowledges that the Property may be subject to encumbrances that arise after the expiration of the Review Period and prior to Closing, including, without limitation, easements andlor conditions imposed by the City of Portland andtor Multnornah County as a result of OSF's partitioning of the larger parcel owned by OSF (the "OSF Consolidated Parcel"), which includes the portion of the Property descrii as Parcel II in Exhibit A. Seller agrees to provide Buyer an updated title report within ten (10) business days of Seller's knowledge of OSF's completion of the partition of the OSF Consolidated Parcel. Buyer shdI have ten (1 0) business days kmreceipt of the title report to review any title exceptions that were not shown on the Title Report, including additionjd exceptions to title . arising fi-om the partition of the OSF Consolidated Parcel (~Ilectively,the "Additional Title Exceptions"). If Buyer, in its reasonable discretion, deems any of the Additional Title Exceptions unacceptable, then Buyer shall's0 notify Seller on or before the expiration of the 10- day review period. Upon such notification to Seller, this Agreement shall terminate, the Deposit shall be returned to Buyer, and Buyer and Seller shall have no finther liability to each other I under this Agreement. Buyer's failure to timely notify Seller of its election to terminate the Agreement, shall be deemed Buyer's acceptance of the Additional Title Exceptions.
5.7.2 Customarv Plat Conditions: Develonment Conditions. Notwithstanding the foregoing, Buyer agrees to accept as pamitted exceptions to both the Deed and Buyer's title policy Additional Title Exceptions that are customarily included as partition plat conditions by the City of Portland andlor Multnomah County (''Custo~Plat Conditions") and those being required of or imposed upon properties in the South WatdnVNorth Madam area (the "Development Conditions") so long Q such Customary Plat Conditions andlor Development Conditions do not materially and adversely impact the ability of Buyer to develop the Property for commercial andfor residential use. Likewise, Seller agrees that notwithstanding the Last sentence of Section 4 and Section 6 of the First Amendment, as between Buyer and Seller, if Buyer is deemed to have accepted the Additional Title Exceptions, then Seller shall proceed to purchase the Property from OSF even if the Property is subject to Customary Plat Conditions andtor Development Conditions.
6. Assignment bv Seller of OSF A~reement.
6.1 Seller's and Buvex's Acknowledgement. Seller acknowledges that Buyer will expend substantial time and financial resources in its investigation of and preparation for the purchase and development of the Property, and that if the conditions set forth in Section 4.1 are satisfied or waived md if Seller fails to purchase the Property from OSF as a consequence of Seller's default of the Sale Agreement and convey it to Buyer as required by tbis Agreement, Buyer would suffer substantial monetary and other damages. Buyer acknowledges that Seller's remaining obligations under the Sale Agreement are to: (i) pay the purchase price owing under the Sale Agreement, and (ii) execute escrow instructions, closing statements and other customary closing documents (colIectively, "Sellex's Remaining Sale Agreement Obligations").
6.2 Assinnmenj. If Seller fails to perform Seller's Remaining Sale Agreement Obligations, provided that OSF has executed the Consent to Assignment (as described in Section 6.3 below), Seller agrees to assign to Buyer, without wananty, all of Seller's rights under the Sale Agreement pursuant to the form of assignment attached as Exhibit B. If Buyer acquires the Property directly from OSF pursuant to this section 6.2, Buyer shalt at the closing of its purchase of the Property from OSF: (i) pay to OSF the amounts required pursuant to the Sale Agreement; and (ii) pay to Seller the purchase price set forth in this Agreement reduced by: (a) all amomts paid by Buyer to OSF; and Q)all costs and expenses incurred by Buyer relating to Seller's breach of or failure to perform its obligations under the Sale Agreement or this Agreement. If Seller fails to assign to Buyer its rights under the Sale Agreement in such case, or if OSF did not execute the Consent to Assignment, then SeIler shall promptly reirnbme Buyer for all of its costs and expenses incurred by Buyer in connection with its proposed purchase of the Property, but in no event in an amount greater than $100,000, plus a liquidated damages payment to Buyer
in an amount of $100,000, as kther compensation to Buyer. For the benefit of Seller, Buyer "s' agrees and acknowledges that the maximum payment owing to Buyer for Seller's failure to its fails Remaining J assign rights under the Sale Agreement if it to perform Seller's Sale Agreement Obligations is $200,000.
6.3 OSF Consent. Buyer acknowledges that under the Sale Agreement, OSF's consent is required for any assignment of Seller's interest in the Sale Agreement. It shall be Buyer's obligation to contact OSF and request OSF to execute the Consent to Assignment attached hereto as Exhibit C- Buyer acknowledges that OSF is under no obligation to execute the Consent to Assignment and that Seller shall have no obligation to obtain OSF's consent to any assignment of the Sale Agreement. Buyer acknowledges that its rights under this Agreement depend in part on whether OSF executes the Consent to Assignment, Buyer further 'acknowledges that it will know whether OSF has executed the Consent to Assigmnent prior to the expiration of the Review Period rpd that should Buyer pr0i:eed to release its contingencies to purchase the Property without OSF executing the Consent to Assignment, the same shall be a knowing decision to do the same by Buyer. 6.4 OSF Default.
6.4.1 Should OSF fail to or threaten to fail (including anticipatory repudiation of the Sale Agreement by OSF) to perform its obligations under the Sale Agreement ("OSF Default"), Seller shall have the right in its sole, complete and absolute discretion to determine what, if any, actions to take in connection therewith, including the right to enter into an amendment or modification of the Sale Agreement. Prior to taking any actions as a result of an OSF Default, including pursuing any remedy under the Sale Agreement or law or entering into any agreement with OSF as a result of an OSF Default, Seller shall give Buyer written notice of the same. Seller shall not take any action in connection with the OSF Default until seventy-two (72) hours after Buyer's receipt of Seller's notice of the OSF Default to allow Buyer to purchase Seller's interest in the Sale Agreement. If Seller in its sole but reasonable determination determines that it is necessary to take action in co~ectionwith an OSF Default prior to the seventy-two (72) hour notice period, Seller shall indicate the same in its notice to Buyer and Buyer shall have such time as set forth in Seller's notice to purchase Seller's interest in the Sale Agreement. Should Buyer exercise the right to purchase Seller's interest in the Sale Agreement pursuant to this Section 6.4.1, Closing shall occur within three (3) days of Seller's receipt of Buyer's purchase notice. Buyer's right to purchase Seller's interest in the Sale Agreement is conditioned upon OSF's execution of the Consent to Assignment. If OSF does not execute the Consent to Assignment, then Buyer's sole remedy shall be as set forth in Section 6.4.2. The purchase price for the assignment shall be $1,539,723 and Buyer shall pay the same to Seller in immediately available funds.
6.4.2 Should OSF not execute the Consent to Assignment so that Buyer does not have the right described in Section 6.4.1 or should OSF execute the Consent to Assignment but Buyer determine not to exercise the right described in Section 6.4.1, then Seller shall have no liability whatsoever to Buyer except that if Seller pursues legal action against OSF and is successhl in such action so that OSF does or is compelled to close the sale of the Property to Buyer, then Buyer, subject to Section 6.4.3 below, shall have the right to purchase the Property upon the closing of the sale from Seller to Buyer pursuant to the tams and conditions of this Agreement. .. 6.4.3 Except as the result of a breach of the Sale Agreement by Seller, if OSF is legally excused fiom performing its obligation to sell the Property to Seller (whether by a voluntary agreement between OSF and Seller, the impossibility for OSF to complete the partition of the Property, or as a result of a determination hmor consequence of legal or other action), then this Agreement shall terminate in which case Buyer shall be entitled to the return of the Deposit and Buyer and Seller shall have no tinthex liability to each other under this Agreement. If the OSF Default has not been resolved on or before December 31,2005, then this Agreement shall terminate; In which case, Buyer shall be entitled to a return of the Deposit and Buyer and Seller shall have no firher liability to each other under this Agreement
6.4.4 Buyer acknowledges that it is the express intent of the parties that Seller not incur liability to Buyer should OSF fail to perform or be unable to perform its obligations under the Sale Agreement and therefore Seller be unable to sell the Propetty to Buyer pursuant to the terms of this Agreement, and this Agreement and Seller's obligations and Liability shall be construed consistent with this intent Except as to the express remedies set forth herein relating to an OSF Default, Seller shall have sole and absolute discretion to compromise and settle disputes relating to the Sale Agreement, including the right to amend andfor modify the Sale Agreement and Buyer shall have no rights whatsoevm in connection with any settlement.
7. Reoresentations and Warranties.
7.1 BY Seller. Seller represents and warrants to Buyer as follows:
7.1 .1 is.To Seller's actual knowledge and during the previous year, Seller has not received written notice from any governmental agency alleging current violations of any statutes, codes, ordinances, rules or regulations with respect to the Property.
7.1.2 No Written Notice-of Litistation. To Seller's actual knowledge and during the previous year, Seller has not received written notice of any pending or threatened litigation or administrative action with respect to the Property except for a letter dated December 9, 2003 (the "PDC Letter") from the Portland Development Commission (which Buyer acknowledges that it is aware of) with respect to the possible condemnation of the Property.
7.1.3 Intentionallv Omitted.
7.1.4 Intentionallv Omitted.
7.1.5 No Breach of Ameements. This Agreement and the consummation of the transaction evidenced by this Agreement does not violate any other agreement to which Seller is a party- 7.1.6 author it^ of Seller. This Agreement is a valid and binding obligation of Seller.
7.1.7 Nonforeim Status. Seller warrants that it is not a "foreign person" as defined in Section 1445 of the Internal Revenue Code of 1954, as amended. Seller shall deliver
- to Buyer at closing a Certificate of Nonforeign Stam setting forth Seller's address and United ' States taxpayer identification number and certifying that it is not a foreign person as so defined.
7.1.8 Environmental Issues. Except to the extent contained in environmental reports delivered by Seller to Buyer, to Seller's actual knowledge and during the previous year, Seller has received no written notice of: (i) any environmental condition (including but not limited to hazardous materials, toxic substances, oil or petroleum by-products, urea- formaldehyde, asbestos or asbestos by-products, buried fuel oil tanks, or wetlands) located on the Property, and (ii) any violation or claimed violation of any law, rule, or regulation relating to any such environmental condition.
7.1.9 -. A full and complete wpy of the Sale Agreement is attached hereto as Exhibit D. The Sale Agmment constitutes the entirety of the agreements between Seller and OSF with respect^ to the Property.
7.2 Bv Buyer. Buyer represents and warrants to Seller as follows: 7.2.1 Organization and Authority of Buver. Buyer has been duly organized and is validIy existing under the laws of Oregon. Buyer has the full right and authority to enter into this Agreement and to cofzsummate or cause to be consummated the transaction contemplated by this Agreement.
7.2.2 No Violation. Except as otherwise contemplated by this Agreement, no authorizations or approvals, whether of governmental bodies or otherwise, will be necessary in order for Buyer to enter into this Agreement. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereunder will, to the best of Buyer's knowledge, conflict with or result in the breach of any law, regulation, writ, injunction or decree of any court or governmental instrumentality applicable to Buyer.
7.2.3 Pendin~Actionq. To Buyer's knowledge, there is no action, suit, arbitration, unsatisfied order or judgment, or proceeding pending against Buyer which, if adversely determined, could individually or in the aggregate materially interfere with the consummation of the transaction contemplated by this Agreement.
7.3 Survival of Remesentations and Warranties. The above representations of Seller and Buyer shall be true as of the Effective Date and as of the Closing Date and shall survive for a period of one (1 ) year after Closing.
8. Defaults and Failure to Close.
8.1 Seller's Remedies. THE DEPOSIT IS MADE TO SECURE THE PERFORMANCE BY BUYER OF ITS OBLIGATIONS UNDER THIS AGREEMENT. IN THE EVENT BUYER FAILS, WITHOUT LEGAL EXCUSE, TO CLOSE ITS PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT, SELLER SHALL,AS ITS SOLE AND EXCLUSIVE REMEDY, BE ENTITLED TO RETAIN THE DEPOSIT AND INTEREST ACCRUED THEREON,AS SELLER'S SOLE RIGET TO DAMAGES AND ANY OTEiER RJIMEDY ARISING FROM BUYER'S DEFAULT. TBE PARTIES KAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFli'ICULT OR IMPRACTICAL TO DETERMINE, THEREFORE, BY PLACING THEIR INl[TIALS BELOW, THE PARTLES ACKNOWLEDGE THAT THE DEPOSIT BAS BEEN AGRJIED UPON, AlTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES L Seller /;3a'Bum 8.2 Buver's Remedies. Seller shall not be deemed to be in default under this Agreement until and unless Seller fails to remedy any failure to perform any obligation of Se1l.a hereunder within five (5) business days after written notice &om Buyer notifying Seller of such failure. In the event of Seller's default hereunder, Buy= shall have the remedies described in Section 6, if applicable, or otherwise shall have the right to seek specific performance, seek darnages resulting from such breachandlor any other remedy allowed at law or in equity. 9. Condition of Pro~ertv:Indemnities.
9.1 "AS IS" Sale. Subject to Buyer's ability to terminate this Agreement in accordance with the terms hereof, Buyer understands and agrees that the Property is being sold and conveyed, and Buyer agrees to accept the Property, "as is," "where is" and "with all faults" which may exist, without any representation or warranty by Seller except as expressly set forth in Section 7.1 of this Agreement and the Deed. Buyer expressly acknowledges and agrees that except as expressly provided in Section 7.1 of this Agreement and in the Deed (i) Buyer shall be solely responsible for determining the status and condition of the Property, including, without limitation, existing zoning classifications, building regulations and governmental entitlement and development requirements applicable to the Property; and (ii) Buyer is relying solely upon such inspections, examination, and evaluation of the Property by Buyer in purchasing the Property on an "as is," ''where is" and "with all faults" basis. Buya acknowledges (i) that Seller does not currently own the Property, (ii) that Buyer is a sophisticated investor, knowledgeable and experienced in the financial and business risks attendant to an investment in real property and capable of evaluating the merits and risks of entering into this Agreement and purchasing the Property, (iii) that Buyer has entered into this Agreement with the intention of making and relying upon its own (or its experts') investigation of the physical, environmental, economic and legal condition of the Property, including, without limitation, the compliance of the Property with laws and governmental regulations, and (iv) that Buyer is not retying upon any representations and warranties made by Seller or anyone acting or claiming to act on Sellefs behalf concerning the Property except as specifically set forth in Section 7.1 of this Agreement and the Deed. Buyer further acknowledges that it has not received f?om Seller any accounting, tax, legal, architectural, engineering, property management or other advice with respect to this transaction and is relying upon the advice of its own accounting, tax, legal, architectural, engineering, property management and other advisors. Buyer shall purchase the Property in its "AS IS" condition on the Closing Date and assumes the risk that adverse physical, environmental economic, or other legal conditions may not have been revealed by its investigations. It is the express intent of the parties to transfer to Buyer, as between Seller and Buyer, any liability that may now or in the future. exist under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA'? 42 U.S.C. $960! et seq., the L.. - Resource Conservation and Recovery Act of 1976 ("RCRA") 42 U.S.C.3 6901 etseq., the Oregon Supehnd Law, ORS 465.200, the Oregon Hazardous Waste Law, ORS 466, or other similar environmental laws, for known or unknown en-ental conditions on, under or relating to the Property. Should Buyer purchase or acquire an assignment of Seller's interest in the Sale Agreement pursuant to Section 6.4. t or Section 62, then this "AS IS'pmvision shall equally apply to the sale and assignment of Seller's interest in the Sale Agreement.
9.2 General Indemnities. Buyer shall indemnify, protect, defend and hold harmless Seller and Seller's agents and employees for, hmand against any and all claims, liabilities, damages, costs and expenses (including reasonable attorneys' fees and costs) pertaining to the Property arising out of any events occurring after the Closing which are the responsibility of the Buyer. Seller shall indemnify, protect, defend and hold harmless Buyer and Buyer's agents and employees for, hmand against any and sH claims, liabilities, damages, costs and expenses (including reasonable attome*' feesand costs) pertaining to the Property arising out of any events occurring prior to the Closing. muas saf3pal~oqmmLna -papmurepue payyou aq ~uauraadly%n!yred aw @msapp dna JEW sas~1fioqwDIPS 'mo!P!-QaX a.gmdJo luaupuaw 9.0 I -Xpadard aql u! )saxqu? s,mIlaS JO ~al~asmq uog!smba Q!JO 8ysoi3 aw nodn 1ua8quo:, Wdo~dam 01 padsai q+ dso q+ ~rradAm am 11" pg saa& ~awpm '-dad aw 01 padsa~qpi qua88 sl! JO SO 01 auas JO Aq suo~r~punno3I~JO saldm xqas 01 Jaqap 01 dlale~peunq saalt3~sAna -1lnvjaa SO ue qq~uog~auum q JO uodn luaruaady aps av 01 uo!~e~~fpour lo ~wrrrpuaurrrTIE au! ma01 'p'g uogss 01 ~wnsmd'DA~MOQ 'smu s,laIIag sa8palfiouy312 Allmgpds ~Anq-uopam!p aps s,mAna q plaqqy aq Aem ~uasuo:,qqq~ '~aAna jo pasum nauw ~oudaw Jnqp$uaumaBy SO aqjouo!s~oid Amjo DA~MJO jo 1uauIpuaurtr Am o, JWSUO~JO o~n!maw OJ JOU dvraw panas 'a~oqep-g uogsg 01 ~DaCqns .bado~dam a padsa ~I!Malq aAp&a atp mgu ql[a%~cq! JO SO UIO~qas Xq pa~la3a~suogvqunnnnm p JO sardm ~aAnaOJ sqap01 Xpp!peq w& Jaliag -soo1~m~unu1~103 SO S-0I
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')IJOM qms Xm JO uopaldu103 nodn uo!y!pum lat@uo sl! A1pyue)sqns 03 Xmdo~daw =ow INS mAng pm %upsa) pm uoy3adsu! y3ns moy %m11tl~a1suag 10 amdxa 'tQq!qt3!1 m.&~pue way lallas pm ago Lpmapu! lleqs ~aXn8 1wq~pappad '&dad aW uo 8upsa1 ahimq uuopd pw 'Avado~daya uo sa~pnlsLl!~!q!maj 33npum 'Ndw aw ~dsq01 popad Mapax aq8upp pazuoylne aaqua3e QI pue iarCna A SO pm JqaS wog auampm 01 =you alqmostfa1Jagy '~qaxuoy3aasuj 2-01 previously negotiated the terms of the Parking Agreement and that Seller has no legal right to compel OSF to enter into any amendment or modification of the Parking Agreement. Buyer shall have the right to contact OSF and discuss and negotiate changes to Parking Agreement provided that any agreement concerning parking shall not be binding upon Seller and Buyer agrees that any such agreement between Buyer and OSF shall specifidly acknowledge that such agreement shall only be effective between Buyer and OSF and shall only become effective upon Buyer's acquisition of the Property from Seller. Seller shall have no obligation to contact or request from OSF changes or modifications to the Parking Agreement Buyer agrees and acknowledges that notwithstanding any agreement with OSF as to the amendment or modificat~onof the Parking Agreement, Seller shall convey the Property to Buyer subject to the (existing) Parking Agreement.
1 1. Condemnation. If, prior to the Closing, either a portion or all of the Property is taken by eminent domain, or is the subject of a pending taking which has not been consummated, Seller shall immediately notify Buyer of this event. Buyer acknowledges that absent Meraction, the PDC Letter shall not constitute a "pending taking." Buyer, as its sole remedy, shall then have the option of terminating this Agreement by written notice to Seller delivered within ten (10) days aRer Buyer's receipt of such notice. If Buyer does not exercise its termination right, then the Parties shall proceed to the CIosing pursuant to the terms of this Agreement without modification except as necessitated by eminent domain action, and without any reduction in the Purchase Price. If Buyer terminates pursuant to this Section, then neither Party shall have any rights or responsibilities to the other, and the First Deposit and Second Deposit and all interest thereon shall be promptly returned to Buyer. Any escrow cancellation fees connected with such termination shall be shared fifty percent (50%) by Buyer and fiftypercent (50%)by Seller.
12. General Provisions.
12.1 Time of Essence. A material consideration to Seller's entwing into this transaction is that Buyer will close the purchase of the Property by the Closing Date described above. Except as otherwise specifically provided in this Agreement, time is of the essence of each and every provision of this Agreement. . c 12.2 Assiments and Successo~.Except for assignments to entities affiliated with Buyer, for which no consent of Seller shall be required, Buyer shall have the right to assign this Agreement to third parties only with Seller's prior written consent, which consent shall not be unreasonably w i thhetd or delayed. Notwithstanding any such assignment, Buyer shall remain jointly and severally liable for the full and faithful performance of Buyer's obligations under this Agreement. Buyer recognizes that the right of assignment under the Sale Agreement is restricted and Buyer assumes any liability for any effect on its rights (if any) umler the Sale Agreement as a result of an assignment of its rights under this Agreement. As used in this Agreement, "affrliate" and "entities affiliated with" shall mean an entity controlled by or managed by Buyer.
12.3 Commissions. Seller and Buyer each represent that they have not dealt with any brokers or agents who will be entifled to my commission or other fee with respect to the transaction contemplated by this Agreement except Real Estate hvestment Group, which has been engaged by Buyer and will r&ive a commission to be paid by Buyer pursuant to a separate commission agreement. Each party agrees to indemnify, defend sad hold the other hamless from and with respect to any liability for fees or commissions owing to or claimed to be owing to any other broker or other party by reason of the actions or omissions of such indemnifying party.
12.4 Notices. Notices under this Agreement shall be in writing and shall be sent with a11 applicable postage or delivery charges prepaid, by personal delivery or messenger service, telefax, overnight courier or registered or certified U.S. mail, retum receipt requested. Notices given in accordance with this Section 12.4 shall be deemed given upon the earlier of delivery or refha1 of a party to accept delivery thereoc provided, however, that notices sent by telefax shall be deemed given on the date shown on a telefax transmittal confirmation sheet only if simultaneously transmitted by another means allowed hereunder. Notices shall be sent to the following addresses and facsimile numbers, as applicable:
"SELLERn: Pacific N.W. Properties Limited Partnership 6600 SW 105' Avenue, Suite 175 Beaverton, Oregon 97005 Attention: Tom K. Stem and Paul K. Gram Telephone: (503) 626-3500 Facsimile: (503) 672-021 1
Copy to: Preston Gates & Ellis LLP 222 S.W. Columbia Street, Suite 1400 Portland, OR 97201 Attention: Chiis Gram Telephone: (503) 228-3200 Facsimile: (503) 248-9085
Williams & Dame Development, Inc. The hourBuilding 1325 NW Flanders Portland, OR 97209 Attention: Dike Dame Telephone: (503) 227-6593 Facsimile: (503) 227-7996
Copy to: Ball Janik LLP 101 SW Main Street, Suite 1100 Portland, OR 97204 Attention: Robert S. BallDba Alexander Telephone: (503) 228-2525 Facsimile: (503) 295.1 058
. . Either party may change its address for notices by at least five (5) days' advance written notice to the other.
12.5 Le~alRelationshi~s. This Agreement mates only the relationship of Seller and Buyer and no joint venture, partnersEiip or other joint undertaking is intended hereby, and neither party hereto shall have any rights to make any representations or incur any obligations on behalf of the other. Neilher party has authorized any agent to make any representations, admit any liability or undertake any obligation on its behalf. Neither party is executing this Agreement on behalf of an undisclosed principal, and no third party is intended to be benefited by this Agreement. The parties agree that this Agreement involves only the sale and purchase of real, personal and intangible property, that Buyer is not acquiring any business or ongoing liability of Seller, and except to the Iimited extent assumed by Buyer in writing, Buyer shall have no successor Liability under this Agreement to any employee, agent or other person with whom Seller has contracted or is liable.
12.6 Waiver. Failure of either party at any time to require performance of any provision of this Agreement shall not limit the party's right to enforce the provision. Waiver of any breach of any provision shall not be a waiver of any succdigbreach of the provision or a waiver of the provision itself or any other provision.
12.7 Attomevs' Fees. In the event suit or action is instituted to interpret or enforce the terns of this Agreement, the prevailing party shall be entitled to recover from the other party such sum as the court may adjudge reasonable as attorneys' fees in the preparation of its case at trial, on any appeal, and on any petition for review, in addition to all other sums provided by law.
12.8 Prior Agreements. This Agreement supdesand replaces all written and oral agreements previously made or existing between the parties.
12.9 A~plicableLaw. This Agreaient shall be construed, applied and enforced in accordance with the laws of the State of Oregon.
12.10 Subseouent Modifications. This Agreement and any of its terms may only be changed, waived, discharged or terminated by a written instrument signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.
12.1 1 Lndemnified Parties. Any indemnification contained in this Agreement for the benefit of a party shall extend to such party's employees, attorneys and agents and shall survive closing or the termination of this Agreement as the case may be.
1 2.12 Invaliditv of Provisioq. If any provision of this Agreema or any instrument to be delivered to Buyer at closing pursuant to this Agreement, is declared invalid or is unenforceable for any reason, such provision shall be deleted from such document and shall not invalidate any other provision contained in the document.
12.13 Saturday. Sunday. and Legal Holidav~.If the time for performance of any of the terms, conditions and provisions hereof shall fall on a Saturday, Sunday or legal holiday, then the time of such performance shall be extended to the next business day thereafter.
12.1 4 Exchange. Buyer agrees to cooperate with Seller in effecting a taxdeferred exchange of the Property so long as Buyer incurs no expense or liability in connection with the exchange. PI WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate as of the day and year first above written.
"Seller" Pacific NW Properties LMted Partnership, an Oregon limited partnership
By: -\L &UWP Print Name: Cb,,,\ C C- Its:
"Buyer" Williams & Dame Development, Inc. EXHIBIT A LEGAL DESCRIPTION OF PROPERTY
PARCEL I:
Lots 1 through 8 inclusive, Block 174, and Lots 1,2,3,6,7and 8 of Block 189, CARUTHERS ADDITION TO THE CITY OF PORTLAND, in the City of Portland, County of Multnomah and State of Oregon.
TOGETHER WITH vacated SW Thomas Street lying between said Blocks, vacated by Ordinance No. 1 5301 6, a copy of which was recorded April 8,1983 in Book 1656 at Page 1856.
EXCEPTING from said Block 1 89 that area described in the Deed $0 the City of Portland recorded August 19,1982 in Book 1612 at Page 2137.
ALSO EXCEPTING THEREFROM the reservation of all minerals and all mineral rights of every kind and character as disclosed by Deed recorded May 23,1955,in Book 1723, Page 427.
PARCEL 11:
A tract of Iand in the James Terwiliiger Donation Land Claim and also in the Southeast quarter of Section 10, Township 1 South, Range 1 East of the WilIarnette Meridian, in the City of Portland, County of Multnomah and State of Oregon, described as folIows:
Beginning at a point where the East Iine of the right of way of the Southern Pacific Company intersects the North line of the James Tdliger Donation Land Claim; thence Easterly 15.47 along said North line to the tnxe point of beginning of the herein described bract and the Northeast comer of that tract of Iand described in Deed to the City of Portland recoded May 2, 1969 in Book 675 Page 3 3 8, Deed Records; thence continuing South 88'37'18" East along said North line 200.00 feet to a point; thence South 01'28'00" West 193.00 feet to a point on the North line of SW Bancroft Street; thence North 88'37' 18" West along said North line, 200.00 feet to the East line of the afore-mentioned City of Portland Tract; thence North 01°28'00" East along said East line, 193.00 feet to the true point of beginning. EXHIBIT B
ASSIGNMENT AND ASSUMPTION OF EARNEST MONEY AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF EARNEST MONEY AGREEMENT ("Assignment") is made effective as of ,200, between PACIFIC N.W. PROPERTIES LIMITED PARTNERSHIP, an Oregon limited partnership ('Seller"), md WILLIAMS & DAME DEVELOPMENT, INC., an Oregon corporation ('Buyer"), or its assignee.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agrees as follows:
1. Seller hereby assigns, delivers and conveys to Buyer all of Seller's interest in that certain Purchase and SaIe Agreement and Receipt of Earnest Money dated as of June 26, 1996, between Seller, as purchaser, and OSF International, hc.,as seller, as amended by Amend~nentto Purchase and Sale Agreement and Receipt for Earnest Money dated July 1, 1997 and Second Amendment to Purchase and Sale Agreement and Receipt for Earnest Money dated January 3 1. 2002 (collectively, the "Sale Agreement").
2. Buyer hereby assumes and agrees to perform all of Seller's obligations under the Sale Agreement.
3. The assignment of Seller's interest in the Sale Agreement and the assumption by Buyer of Seller's obligations thereunder are made pursuant to and subject in all respects to the terms set forth in that certain Purchase and Sale Agreement by and between Sellex and Buyer dated February, 2004 (the "Purchase con^"), including, but not limited to, Section 9. I thereof.
4. Seller represents and warrants to and for the benefit of Buyer that (i) the copy of the Sale Agreement attached to this Assignment is true and corn!& snd that the Sde Agreement, in the form attached to hereto, is in fdl force and effect, and unmodified and (ii) to Seller's actual knowledge, Seller is not in default of its obligations unda the Sale Agreement
5. Seller agrees to defend, indemnify and hold harmless Buyer hmand against any loss, cost, damage or expense, including, but not limited to, reasonable attorneys' fees, arising or resulting fiom Seller's failure to perform any obligation of Seller (as buyet) under the Sale Agreement accruing prior to the date hereof. Buyer hereby agrees to defd, indemnifL and hold harmiess Seller from and against any loss, cost, damage or expense, including reasonable attorneys' fees, arising or resulting from Buyer's failure to perfom any obligation of Buyer (as buyer) under the Sale Agreement accruing on or after the date hereof.
6. The provisioq of this Assignment shall .bbinding upon, and shall inure to the benefit of, the successors and &signs of Seller and Buyer, respectively. 7. This Assignment constitutes the Legal, valid and binding obligation of Seller and Buyer, and is enforceable against Seller and Buyer in accordance with its terms, and the parties hereto covenant and agree that they will execute, deliver and acknowledge fiom time to time at the request of the other, and without further consideration, all such further instruments of assignment, assumption m&or distributions of rights and/orobligations as may be required in order to give effect to the transaction described herein.
8. This Assignment may not be canceled, modified or amended except by written instrument executed by both parties hereto.
9. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument.
10. This Assignment shall be governed by and construed in accordance with the laws of the State of Oregon.
IN WITNESS WHEREOF,Seller and Buyer have executed this Assignment as of the date first written above.
PACIFIC N.W. PROPERTIES LMITED WILLIAMS & DAME DEVELOPMENT, INC.,
PARTNERSHIP, an Oregon limited partnership ' an Oregon corporation
BY By: Name: Name:
Title: Title: EXHIBIT C CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT ("Consent") is executed this -day of ,2004 by OSF INTERNATIONAL, INC. ("OSF") for the benefit of PACIFIC N.W. PROPERTIES LIMITED PARTNERSHIP ("Seller") and WILLIAMS & DAME DEVELOPMENT, MC. ("Buyer").
RECITALS A. Seller and OSF are parties to a Purchase and Sale Agreement and Receipt for Earnest Money dated as of June 26,1996, as amended by an Amendment to Purchase and Sale Agreement and Receipt for Earnest Money dated July 1, 1997 (the "First Amendment") and by a Second Amendment to Purchase and Sale Agreement and Receipt for Earnest Money dated January 3 1,2002 (collectively the "SF Agreement*'). Pursuant to the OSF Agreement, Seller has agreed to buy and OSF has agreed to sell certain real property more particularly described in the OSF Agreement (the "Property").
B. Buyer and Seller are parties to that certain Purchase and Sale Agreement dated February. 2004 (the "Buyer-Seller Agreent"), whereby Seller has agreed to sell the Property to Buyer upon Seller's purchase of the Properly hrnOSF. The Buyer-Seller Agreement includes certain provisions that specify, upon the occurrence of certain events, that Seller will assign to Buyer its rights to under the OSF Agreement. However, such assignment requires the consent of OSF.
C. Seller and Buyer have requested OSF's consent to such an assignment (if any) of Seller's interest in the OSF Agreement to Buyer or an entity managed or controlled by Buyer, and OSF desires to grant such consent on the terms and conditions set forth herein.
CONSENT
1. For the benefit of Seller and Buyer, OSF hereby irrevocably consents to the assignment-by Seller to Buyer or to an entity managed or controlled by Buyer of Sellex's interest in the OSF Agreement, Such assignment (if any) shall be evidenced by that certain Assignment and Assumption of Earnest Money Agreement attached hereto as Exhibit A (the ccAssignrnent") .
2. OSF acknowledges that such assignment is not occurring now but will only occur upon the happening of certain events set forth in the Buyer-Sdler Agreement. Upon 'the occurrence of such events and the consummation of such assignmenf Seller and Buyer shalI deliver to OSF a fully-executed copy of the Assignment. Until such time, Seller shall be regarded as holding the buyer's interest in the OSF Agreement and any modification of the agreement entitled "Parking Rights, Covenants, Easements and Equitable Servitude" attached as Exhibit B to the First Amendment) shall not be binding upon Seller.
3. Upon the consummation of such assignment, OSF shalt release Seller from any and all liability arising hmor relating to the OSF Agreement except for such claims arising prior to the effective date of the assignment.
4. As of the effective date of this Consenf OSF agrees to (i) notify Buyer of any default by Seller under the OSF Agreement and (ii) recognize Buyer's enforceable right to acquire the Property from OSF (subject to the terms and conditions of the OSF Agreement) upon the actual assignment of Seller's interest (as buyer) under the OSF Agreement.
5. This Consent may be signed in any number of counterparts, each of which shall be deemed an original and when taken together shall constitute one complete agreement. . . IN WITNESS WHEREOF, OSF, Seller and Buyer have executed this Consent as of the date first written above.
OSF: OSF INTERNATIONAL, INC.
By: Print Name: Its:
Seller PACIFIC NWPROPERTIES LIMITED PARTNERSHIP, an Oregon limited partnership
By: Print Name: Its:
Buyer WILLIAMS & DAME DEVELOPMENT, MC. an Oregon corporation By: Print Name: Its:
PGP VALUATIONINC QUALIFICATIONS
PGP VALUATIONINC was established in 1978 as a partnership, and incorporated in 1993. Our primary goal is to serve our clients in an effective and timely manner by preparing appraisal and feasibility reports which can be relied upon for decision-making purposes by our clients. Our reports utilize current analytical tools and recognized appraisal methods. The members of our firm adhere to the Code of Ethics established by the Appraisal Institute, and strive to maintain a high level of professional integrity. Services are provided throughout the United States with local offices in Portland, Oregon; Sacramento and Sun Diego, California; Seattle and Vancouver, Washington.
PROFESSIONAL SERVICES
Our firm offers a wide range of services in the evaluation of real estate:
Real Estate Appraisals: Valuation estimates on all type of properties including residential, commercial, and industrial.
Market Research: Market analysis and feasibility studies of all property types. Additional services include fiscal and socio- economic impact assessment; benefit-cost analysis; forecasting and modeling; public need assessment, site evaluation; highest and best use analysis; questionnaires and surveys.
Consultation: Analysis of real estate regarding values, site development potential, market standard versus competitive edge amenities, market conditions, et cetera.
Court Testimony: Professional opinions as expert witnesses regarding the valuation of real estate.
Property Tax Analysis: Representation before government agencies regarding ad valorem taxes, including preliminary value consultation, appraisals, Board of Equalization and Tax Court presentations.
IMPORTANT ASSIGNMENTS AND REFERENCES
PGP VALUATIONINC provides appraisals on all property types (multiple family, industrial, retail, office, and special purpose properties), and we serve lenders, government agencies, attorneys, corporations, and investors. Please contact us for references.
PGP VALUATION INC PGP VALUATIONINC
PORTLAND OFFICE SACRAMENTO OFFICE SEATTLE OFFICE 110 SW Yamhill Street, Suite 200 3815 Marconi Avenue, Suite 1 1325 4!h Avenue, Suite 500 Portland, Oregon 97204-3024 Sacramento, California 95821-3866 Seattle, Washington 981 01 -251 7 Telephone: (503)226-0983 Telephone: (91 6) 481-0620 Telephone: (206) 343-7477 FAX: (503) 273-4273 FAX: (916) 481 -0630 FAX: (206) 682-7207 E-Mail: [email protected] E-Mail: [email protected] E-Mail: [email protected]
SAN DIEGO OFFICE VANCOUVER OFFICE 550 Laguna Drive, Suite A 1 12 W. 11th Street, Suite 250 Carlsbad, California 92008-1 698 Vancouver, Washington 98660-3143 Telephone: (760) 720-2525 Telephone: (360) 699-4844 FAX: (760) 730-3372 Longview: (3601 425-31 53 E-Mail: [email protected] Oregon: (503) 285-051 9 FAX: (360) 699-1 904 E-Mail: [email protected]
PROFESSIONAL STAFF
PORTLAND, SEATTLE, SACRAMENTO, OREGON WASHINGTON CALIFORNIA Market Feasibility Commercial Finance John D. lngle Christopher K. Monger, MA1 Cheryl Mandich Commercial Philip L. Steffen, MA1 Commercial Donald R. Palmer, MA1 Matt Albee Timothy E. Wright, MA1 Brian L. Kelley. MA1 John Bryan Christoff C. Voterlaus, MA1 Todd S. Liebow, MA1 Lisa Carter Brandon Bowthorpe Nathaniel V. Bockmann Suzanne Coleman Rob Detling George H. Bushnell, Jr. Joe Creech Steven D. Dunn. MAI, SRA Matthew P. Call Ronan Edmonson Ryan Fletcher Bryan W. Chase Reid C. Erickson Jonathan Fletcher Jason K. Chin Jarnes Gibson Jarnes A. Fogelberg Gerald E. Duce Bella Hopkinson David Gull Sally B. Eddy Prithy Korathu Gabe Hill Terry A. Gardner, MAI, SRA Cheryl L, Lotz R. Todd Larsen A. Brett Gresham Jocelyn Markey John Larson Jeff L. Grose Stan Mastalerz Bruce MacMaster Devin J. Henery Matthew Plewe Bracken Mannion Joel K. Jorgensen Colin F. P. Radford Gavin McPhie Rob K. Klever Michael Rice David Newman Cody F. Knox Renee C. Schaefer Kenny Pratt Luke B. Leahy Brennen Stoknes Marty Shearer Jarnes E. Lingeman Patrick Taylor Jeff Shouse Matt H. Logan Ben Wilcox Scott Shouse Michael J. Mangan Property Tax Consulting Robert Steed Brian A. Meyer John A. Campbell Richard Walcott Roger J. Mitchell W. Grant Norling VANCOUVER, SAN DIEGO, Daniel R. Orman David E. Pietka, MA1 WASHINGTON CALIFORNIA Bronson W. Rueda Commercial Commercial Jeremy A. Snow David W. Groth, MA1 Kenneth R. Harrison, MA1 Karen J. Storm Mark M. Lawwill, MA1 Gary Berntsen Michael B. Thelin Owen Bartels Frank Harrison Thomas A. Tillisch Matt Dodd Bobby Hastings William A. Toelke Dean M. Meyer. MA1 John Holmstrom Eric (Rick)J. Walker, AlCP Steven Redmond Rebecca Horvat Daniel K. Young Taro Schultz Randy King Residential Affiliate Kathryn Skiff Jared Mathews Mark H. Hepner Leslie Waltz Russell McCoy Steven J. Gentzkow, MA1 Steven Waugh Matthew Reynolds Eric Warner Kevin Ritter Lacey Westlake Shoeyb Yousofy Residential D. Josh Fry Mark R. Davis Heidi Sowards PGP VALUATIONINC CLIENTS Portland Office
ATTORNEYS Equity Residential LENDERS Gramor Oregon, Inc. AEGON USA Realty Advisors, Inc. Ater Wynne LLP Guardian Management Corporation Albino Community Bank Ball Janik LLP H. Naito Properties Bank of Astoria Black Helterline LLP Harsch lnvestment Corp. Bank One Corporation Brownstein, Rask, Arenz, et al James Property Investments Bullivant Houser Bailey Bank of America Koll Development Group Bank of the West Carney, Buckley, Kasameyer & Hays Louis Dreyfus Property Group Centennial Bank Copeland, Landye, Bennett & Wolf LLP McMenomins Clackamas County Bank Davis Wright Tremaine Melvin Mark Companies Continental Savings Bank Dunn Carney Allen Higgins &Tongue National Retail Partners Finova Realty Capital Inc. Foster Pepper & Sheffelman. LLP North Pacific Management First Security Bank Garvey, Schubert & Barer Octagon Development Co. GE Capital Corp. Gevurtz Menashe Pacific Realty Associates, L.P. Green Park Financial Lane Powell, ILLP PanPacific Realty Holliday, Fenoglio, Fowler, L.P. Miller, Nash, Weiner, Hager & Carlsen LLP Principal Capital Management Intervest Mortgage lnvestment Preston Gates & Ellis LLP Schnitzer lnvestment Corp. JP Morgan Capital Terrace Perkins Coie LLP The Specht Company Key Bank National Association Stahancyk Gearing Rackner and Kent, PC Three Oaks Development LJ Melody Stoel Rives, LLP TN Development Manufacturers and Traders Trust Company Sussman Shank Caplan Wapnick &Stiles LLP Trammell Crow Company M&T Bank Tonkon Torp LLP Watumull Properties Merchants Bank Williams Fredrickson & Stark LLP West Hills Development Co. Midland Loan Services WinCo Foods Notional Mortgage Co. CONSULTANTS Winkler Development Corp. New York Life lnsurance Co. CIDA, Inc. Norris Beggs & Simpson David Evans & Associates GOVERNMENTIINSTITUTIONAL Oregon Business Bank Geller, Silvis & Associates City of Canby Pacific Continental Bank Shiels Obletz Johnson LLC City of Hillsboro Pacific NW Bank W&H Pacific City of Lake Oswego Prudential Mortgage Capital WRG Design Inc. City of McMinnville St. Helens Community Federal Credit Union City of Milwaukie Seattle Mortgage CORPORATIONS City of Portland Shore Bank Pacific Cascade General City of West Linn Sterling Savings Bank City Center Parking City of Wilsonville U.S. Bank Epson Portland Clackamas County Washington Federal Goodwill Industries Clatskanie School District Washington Mutual Bank IBM Corp. Housing Authority of Portland [HAP) Wells Forgo Bank Intel Corporation Lewis & Clark College West Coast Bank Kaiser Permanente Metro West Coast Mortgage Legacy Health System Multnomah County Louisiana Pacific North Clackamas School District NON-PROFIT McDonald's Corporation Oregon Department of Revenue Affordable Community Environments Nike, Inc. Oregon Department of State Lands Central City Concern Northwest Natural Oregon Health Sciences University Network for Oregon Affordable Housing Portland General Electric Oregon Housing & Community Services [NOAH] Providence Health System Oregon State University Reach Community Development Port of Hood River Standard lnsurance Specialized Housing Inc. Sulzor Pumps (US) Inc. Port of Portland Texaco Marketing Co. Port of St. Helens Tosco Marketing Co. Portland Development Commission OTHER Union Pacific Railroad Portland Public Schools Archdiocese of Portland
- Portland State University ASB Capital Management, Inc. DEVELOPERSIOWNERS State of Oregon Church of the Nazarene The Nature Conservancy Cushman & Wakefield of Oregon Andersen Construction Company The Trust for Public Lands Ernst & Young LLP Archstone-Smith Communities The Waldorf School First American Title lnsurance ASA Properties U.S. Fish & Wildlife GE Capital lnvestment Advisors Bean lnvestment Real Estate U.S. Marshals Service Grubb & Ellis Company Birtcher Properties Washington County KPMG, LLP Brian McCarl & Co. Washington Department of Revenue Moss Adams LLP Burnham Pacific Yamhill County NW General Presbyterian C.E. John Company, Inc. Rubicon International Seventh-Da y Adventist Church Sisters of the Holy Names
PGP VALUATION INC
Qualifications of JOHN D. INGLE Manager I Economic and Market Research I Senior Commercial Appraiser
John lngle was born in San Francisco, California in 1956. He attended high school in the Portland metropolitan area, and undergraduate and graduate school at the University of Oregon in Eugene. He has over twenty-five years of professional experience in community economic development, public policy analysis, and urban land economics.
John has specialized experience in office, industrial, residential, and commercial real estate development, including appraisal, market feasibility and locational analysis in major metropolitan areas throughout the nation. John has also focused on economic revitalization strategies, consultation for low income housing tax credit (LIHTCJ projects, socioeconomic and land use related impact assessment, cost benefit analysis, fiscal impact analysis, demographic and economic modeling and forecasting.
PROFESSIONAL EDUCATION University of Oregon College of Arts & Sciences Department of Political Science Bachelor of Science Degree - 1978 University of Oregon Graduate School Department of Urban and Regional Planning Masters of Urban Planning Degree - 1981
CONTINUING EDUCATION
Course -Date Sponsor National USPAP Update 0912005 Appraisal Institute CClM Site to Do Business 0612005 Appraisal Institute Income Valuation of Small Mixed-Use Properties 0412005 Appraisal Institute Non-USPAP Appraisal Regulatory Compliance 0912004 PGP VALUATIONINC Tax Advantages of Real Estate Investment 0212004 Portland Community College Elements of Small Property Investment 0212004 Portland Community College Tax Deferred Real Estate Exchanging 01 12004 Portland Community College
GUEST SPEAKER Commercial lnvestment Real Estate lnstitute (CCIM) Oregon Chapter No. 40 + 1999 - Present Risk Management Association OregonISW Washington Chapter + 1999
O 2006 PGP VALUATION INC Qualifications of John D. lnqle [continued)
REAL ESTATE EXPERIENCE - - - - Manager 1 Economic & Market Research / Senior Commercial Appraiser + PGP VALUATIONINC Market, Economic, and Planning Consultation Services + John D. lngle & Associates Regional ManagerISenior Economist + THK Associates, Inc.
LICENSE AND CERTlFlCA TlON Certified General Real Estate Appraiser + State of Oregon Certificate No. COO0628
PROFESSIONAL AFFILIATIONS
Current Member - American Planning Association Past Member - Oregon Environmental Council Past Member - National Association of Business Economists
COMMUNITY SERVICES
Planning Chairman (1 998 - Present) Multnomah County Planning Commission (1 991 - Present)
Member - Bosco-Milligan Foundation (2000 - Present) Member - Data Base Subcommittee Oregon Mortgage Bankers Association (199 1 ) Economic Development Subcommittee Central City Plan Task Force (1 987) Guest Instructor Deparl.ment of Real Estate Denver University (1982-1 985) Chairman - Legislative Subcommittee Colorado ChapterIAPA (1985)
COMMUNITY A WARDS Multnomah County Oregon Citizen Involvement Award - 2003
O 2006 PGP VALUATION INC Qualifications of BRIAN L. KELLEY, MA1 Principal
Brian L. Kelley was born and raised in Portland, Oregon. He attended Franklin High School in Portland, where he participated in varsity football, basketball, and baseball. He graduated from the University of Oregon with a degree in Business Finance, minoring in Real Estate. For seven years prior to joining PGP Valuation Inc he was active in real estate sales in the Portland metropolitan area. Brian's appraisal assignments vary from timberland to major income-producing properties. He is manager of the Multifamily Department, which specializes in appraising apartments, manufactured home parks, condominium projects, and single family subdivisions.
PROFESSIONAL EDUCATION University of Oregon + 1978 Bachelor of Science + Business Administration
COLLEGE REAL ESTATE COURSES Introduction to Real Estate Real Estate Law Real Estate Finance Real Estate Taxation Real Estate Management Real Estate Investment Analysis Real Estate Environment Analysis
Course 1 A-1 , Real Estate Appraisal Principles Course 1 A-2, Basic Valuation Procedures Course 1 B-A, Capitalization Theory and Technique - Part A Course 1 B-B, Capitalization Theory and Technique - Part B Course 2-1, Case Studies in Real Estate Valuation Course 2-2, Valuation Analysis and Report Writing
Standards of Professional Practice Update Standards of Professional Practice - Part A Standards of Professional Practice - Part B Standards of Professional Practice - Part C Hotel/Motel Valuation Wetlands Evaluation Issues Americans with Disabilities Act Seminar Anatomy of a Real Estate Deal Developing Tax Credit Financed Low-Income Housing How to Value Income Property 30 Specialized Appraisal Issues
PGP VALUATION INC Qualifications of TODD S. LIEBOW, MA1 Principal
Todd S. Liebow was born in Chicago, Illinois in 1957. He attended Denison University in Ohio and graduated with honors from Lewis and Clark College in Portland with a Bachelor of Arts degree in Philosophy. Todd co-manages the Portland Commercial Office and leads the Retail, Office, and General Commercial Property Team in the Portland office. His appraisal assignments also include other traditional and special use properties, as well as ad valorem property tax appeals.
PROFESSIONAL EDUCA TlON Lewis and Clark College + Portland, Oregon + 1978 Bachelor of Arts Degree + Philosophy Graduated with Honors Denison University + Granville, Ohio Major in Studio Art + Photography
REAL ESTATE EXPERIENCE
. . Principal + PGP VALUATIONINC . . Commercial and Industrial Appraiser +Assessor's Office + Clackamas County, Oregon + 1979-83
LICENSE AND CERTIFICATION Certified General Real Estate Appraiser + State of Oregon Certificate No. COO01 52 Certified Appraiser + State of Washington Certificate No. LIEBOT54330B Registered Appraiser + Oregon Executive Department + Urban/Rural Properties
RECENT SPEAKING ENGAGEMENTS Oregon Mortgage Bankers Association Addressing Detrimental Conditions in the Appraisal of Real Estate Northwest Property Tax Conference Preparing the Expert Witness Oregon Alliance of Senior and Health Services Valuation of Non-Profit Homes for the Elderly Appraisal Institute Valuation of Environmentally Impaired Properties American Bar Association/lnstitute for Professionals in Taxation How to Create an Effective Appeal Team Selection and Evaluation of Attorneys
O 2006 PGP VALUATION INC Qualifications of Brian L. Kellev, MA1 (continued)
Commercial Construction Appraisal of Non-Conforming Properties Elderly Care Facility Appraisal Security Issues and Building Design Seminar Siding and Mold Issues Seminar Real Estate Fraud: The Appraisers Responsibilities and Liabilities Seminar Market Analysis and the Site to do Business hlon USPAP Regulatory Compliance National USPAP 7-Hour Update Business Practices and Ethics
REAL ESTATE EXPERIENCE Real Estate Appraiser + PGP Valuation Inc Associate Real Estate Broker + Steve Meredith Realtors, Inc. Real Estate Sales Associate + Stan Wiley Realtors, Inc.
LICENSE AND CERTIFICATION Certified General Real Estate Appraiser + State of Oregon Certificate No. COO01 41 MAI, Appraisal Institute + Certificate No. 8097
PROFESSIONAL AFFlLlA TlONS Oregon Mortgage Lenders Association Portland Metropolitan Association of Realtors
PGP VALUATION INC Qualifications of Todd S. Liebow. MA1 (continued)
Oregon & Washington Departments of Revenue Common Errors in the Appraisal Process Reviewing Appraisals lnstitute for Professionals in Taxation Valuation of Commercial and Industrial Property-Beyond the Cost Approach
PROFESSIONAL AFFILIA TlONS MA1 + Appraisal lnstitute + Certificate No. 7663 Appraiser + Clackamas County Board of Property Tax Appeals + 1999 to Present Co-Chair + Information and Services Committee + lnstitute for Professionals in Taxation + 199811 999 Subcommittee on Property Taxation + Associated Oregon Industries + 1990 - Present Co-Chairman + TaxationILegislative Committee + Building Owner's and Manager's Association of Portland (BOMA) + 1990-1993 Member + Oregon Tax Research Member + Historic Preservation League of Oregon Member + Bosco Milligan Foundation President + 1983: International Association of Assessing Officers, Portland Metropolitan Chapter Admissions Committee + Appraisal Institute, Greater Oregon Chapter + 1989-93 Chair + Finance Committee + Appraisal Institute, Greater Oregon Chapter + 1998-99 Chair + Portland Subchapter + Appraisal lnstitute + 1993 Member + Ethics and Counseling Panel + Appraisal Insti.l.ute + 1993 - Present Secretary + Greater Oregon Chapter + Appraisal lnstitute + 1997 Treasurer + Greater Oregon Chapter + Appraisal lnstitute + 1998 Vice-President + Greater Oregon Chapter + Appraisal lnstitute + 1999 President + Greater Oregon Chapter + Appraisal lnstitute + 2000
O 2006 PGP VALUATION INC