Appraisal Report of the Benchmark Fair Market Rental Values for the State of Hawaii County of Hawaii Airports
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Appraisal Report of the Benchmark Fair Market Rental Values for the State of Hawaii County of Hawaii Airports As of July 1, 2016 County of Hawaii Airports APPRAISAL REPORT TABLE OF CONTENTS Page TRANSMITTAL LETTER TABLE OF CONTENTS 1 I. CERTIFICATION 4 II. LIMITING CONDITIONS AND ASSUMPTIONS 6 III. ASSIGNMENT AND SUMMARY 9 Purpose of Appraisal 10 Function of Report 10 Interest Appraised 10 Intended Use and User of the Report 10 Scope of Work 10 Definitions 11 Airport Rental Categories 12 Rental Conclusions 13 IV. ECONOMIC ANALYSIS (State and County of Hawaii) 20 V. BENCHMARK PROPERTY TYPES FOR ALL HAWAII STATE AIRPORTS 23 A. Spaces and Areas in Buildings 23 B. Undeveloped Lands 24 C. Parking Stalls 24 D. Aircraft Storage (Tie Downs) 25 VI. ASSUMPTIONS FOR ALL HAWAII STATE AIRPORTS 26 A. Utilities 26 B. Special Conditions - Buildings 26 C. Special Conditions - Lands 26 VII. VALUATION METHODOLOGY FOR ALL HAWAII STATE AIRPORTS 28 A. Building Spaces and Areas within the Airport or Adjacent to the Airport 30 1. Retail Rental Market Considerations 31 2. Office Rental Market Considerations 31 3. Industrial Rental Market Considerations 32 4. Calculation of Benchmark Rental Values for Retail, Office, and Industrial Spaces at Small Airports 32 5. Calculation of Rental Values for T-Hangars 33 Hastings, Conboy & Associates, Ltd. Page 1 County of Hawaii Airports APPRAISAL REPORT B. Undeveloped Lands 33 1. General 33 (a) Valuation of Improved Unpaved Industrial Land 34 (b) Calculation of Paving Cost Recovery 35 (c) Valuation of Unimproved Industrial Land 36 2. Estimating Fee Simple Land Value 36 3. Prevailing Rates of Return on Land 37 4. Final Value Adjustments by Use 38 5. Concluded Land Values for Secondary and Tertiary Airports 38 VIII. MARKET ANALYSIS – Island of Hawaii 39 IX. MARKET RENTS – Hawaii County Automobile Parking & Tie Downs 43 A. Rental Rates for Automobile Parking Stalls 43 B. Rental Rates for Aircraft Storage (Tie-Downs) 48 X. MARKET RENTS – Kona International Airport 50 A. Airport Description 50 B. Environs 50 C. Rental Analysis 53 Retail Space Rents 53 Office Space Rents 54 Industrial Space Rents 55 Conclusion of Rents within Terminal Building 56 Conclusion of Rents within Air Taxi Building 57 Industrial Land Rents 57 Ramp Area Rents 61 Rental Rates for T-Hangars 62 Rental Rates for Automobile Parking 63 Rental Rates for Aircraft Storage (Tie-Down) Areas 63 Conclusions 63 Subject Photos 66 XI. MARKET RENTS – Hilo International Airport 70 A. Airport Description 70 B. Environs 70 C. Rental Analysis 73 Retail Space Rents 73 Office Space Rents 74 Industrial Space Rents 75 Conclusion of Rents within Terminal Building 76 Conclusion of Rents within Air Taxi Building 77 Industrial Land Rents 77 Ramp Area Rents 80 Hastings, Conboy & Associates, Ltd. Page 2 County of Hawaii Airports APPRAISAL REPORT Rental Rates for T-Hangars 80 Rental Rates for Automobile Parking 81 Rental Rates for Aircraft Storage (Tie-Down) Areas 81 Conclusions 82 Subject Photos 85 XII. MARKET RENTS – Waimea-Kohala Airport 92 A. Airport Description 92 B. Environs 92 C. Rental Analysis 95 Industrial Land Rents 95 Ramp Area Rents 95 Rental Rates for Automobile Parking 95 Rental Rates for Aircraft Storage (Tie-Down) Areas 95 Conclusions 96 Subject Photos 98 XIII. MARKET RENTS – Upolu Airport 99 A. Airport Description 99 B. Environs 99 C. Rental Analysis 102 Industrial Land Rents 102 Ramp Area Rents 102 Rental Rates for Aircraft Storage (Tie-Down) Areas 102 Conclusions 102 Professional Qualifications Hastings, Conboy & Associates, Ltd. Page 3 County of Hawaii Airports APPRAISAL REPORT I. CERTIFICATION The undersigned hereby certify that, to the best of the appraisers’ knowledge and belief: -- The statements of fact contained in this report are true and correct. -- The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are the appraisers’ personal, impartial and unbiased professional analyses, opinions, and conclusions. -- The appraisers have no present or prospective interest in the properties that are the subject of this report, and have no personal interest with respect to the parties involved. -- The appraisers have no bias with respect to the properties that are the subject of this report or to the parties involved with this assignment. -- The appraisers have not performed services, as appraisers or in any other capacity, regarding the properties that are the subject of this report within the three-year period immediately preceding acceptance of this assignment. -- Engagement in this assignment was not contingent upon developing or reporting predetermined results. -- Compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. -- The analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. -- Alan J. Conboy, MAI, SRA and Andrew B. Conboy have made an inspection of the properties that are the subject of this report. -- Nobody provided real property appraisal assistance to the persons signing this certification. -- As of the date of this report Alan J. Conboy, MAI, SRA has completed the continuing education program for Designated Members of the Appraisal Institute. -- As of the date of this report, Andrew B. Conboy has completed the Standards and Ethics Education Requirement of the Appraisal Institute for Associate Members. Hastings, Conboy & Associates, Ltd. Page 4 County of Hawaii Airports APPRAISAL REPORT II. LIMITING CONDITIONS AND ASSUMPTIONS The conduct of any appraisal is necessarily guided by, and its results influenced by, the terms of the assignment and the assumptions which form the basis of the study. The following conditions and assumptions embodied in this report constitute the framework of the appraisers’ analysis and conclusions. Special limiting Conditions and Assumptions -- In accordance with an agreement between the appraisers and the client prior to the preparation of this appraisal, we have prepared an Appraisal Report. This Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP) for an Appraisal Report. As such, it presents a discussion of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers’ opinions of value. The depth of discussion contained in this report is specific to the needs of the client and for the intended use as stated herein. The appraisers are not responsible for unauthorized use of this report. -- The valuation is based on assumptions that have been formulated based on information and descriptions provided by the Department of Transportation, Airport Division. These assumptions are significant to the valuation or are key factors upon which the valuation depends. -- The analysis presumes the properties will continue to be professionally and prudently managed and maintained. It is assumed that current market and economic conditions will remain relatively stable or improve over the ensuing long-term period following the date of appraisal. -- The legality of the traditional gathering rights of native Hawaiians that could be exercised on the properties, or other native Hawaiian rights that could impact the properties, was not considered in this report. This report assumes that the “traditional gathering rights” or any other rights of “native Hawaiians” would not be exercised on the property or properties that are the subject of this report and on any comparable properties that are included in this report. If native Hawaiian rights exist on the property and not the comparable properties, it could have a negative effect on the value of the property. General Limiting Conditions and Assumptions -- This appraisal is based upon the present condition of the national economy and the present purchasing power of the dollar. Fuel and energy available are assumed to remain at the levels of July 2016. Hastings, Conboy & Associates, Ltd. Page 6 County of Hawaii Airports APPRAISAL REPORT -- This report expresses the opinion of the signers on July 1, 2016, as to an effective date of value of July 1, 2016; in no way has it been contingent upon the reporting of specified values or findings. -- The appraisers have extensive experience in the valuation of vacant and improved income-generating properties and consider themselves competent to estimate the value of the specified real property interest in the subject properties. -- It is assumed that the subject properties are free and clear of any and all encumbrances other than those referred to herein, and no responsibility is assumed for matters of a legal nature. This report is not to be construed as rendering any opinion of title, which is assumed good and marketable. Responsible ownership and competent management of the subject properties are assumed, unless otherwise stated within the report. -- Any maps or plot plans reproduced and included in this report are intended only for the purpose of showing spatial relationships. These maps do not necessarily represent measured surveys or measured maps, and the appraisers are not responsible for the possible existence of any topographic or surveying errors within such maps. No engineering tests were furnished, and therefore no liability is assumed for the soil conditions, bearing capacity of the subsoil or building engineering matters relating to the subject properties. -- Information provided by informed local sources such as governmental agencies, financial institutions, realtors, buyers, sellers and others, was interpreted in the manner in which it was supplied and, whenever possible or practical, was checked and verified by secondary means.