BID PACKET Sale of Real Estate (Formerly TRDHD District Office)

TRDHD Invitation to Bid

Section I - Information for Bidders The Three Rivers District Health Department (TRDHD) is seeking sealed bids for the sale of real estate located at 510 South Main Street, Owenton, Kentucky 40359. The property is currently owned and deeded to the TRDHD and is being sold as-is.

1. Receipt and Opening of Bids: Completed bids for the REAL ESTATE may be submitted to TRDHD, 1005 HWY 22 East, Owenton, Kentucky 40359, until Monday, March 8, 2021 at 2:00pm EST, at which time and place the bids will be opened and read aloud. All bids must be marked “REAL ESTATE BID – SEALED.” Facsimile/electronic bids will not be considered. Any bid may be withdrawn prior to the above scheduled time for the opening of bids or authorized postponement thereof. Late bids will not be accepted and will be returned unopened to the vendor.

2. Pre-Bid Examination of Real Estate: Interested parties may examine the real estate by appointment. Call Justin Pittman at 502-682-0294.

3. AS-IS: The property is being sold AS-IS. Seller makes no representations or warranties concerning the condition of the property, including but not limited to mechanical systems, foundation, structural, or compliance with code, zoning or building requirements and will make no repairs to the property after execution of the sale. Purchaser understands that Seller does not guarantee or warrant that the property is free of visible or hidden structural defects, termite damage, lead-based paint, contaminated soil, or any other condition that may render the property uninhabitable or otherwise unusable. Seller is in possession of, and relying on Phase I and Phase II Environmental Site Assessments (can be made available) performed by Evergreen Environmental Engineers that any environmental issues have been abated. Purchaser acknowledges responsibility for taking such action as is believed necessary to satisfy acceptance of the property’s condition, and of laws, regulations and ordinances affecting the property, and agrees to accept the property in the condition existing on the date of the contract.

4. Bid Form: Bids must be submitted on the proscribed form provided herein (Section IV). Successful bidder will be entirely responsible for all costs associated with acquiring the real estate including, but not limited to, closing costs, title searches, taxes, lenders fees, points and recording fees. The bid price SHALL NOT include any of these associated costs. All bids must be signed. TRDHD has an unadvertised reserve that will not be divulged. It is the intent of TRDHD to sell the real estate to the highest bidder, however, TRDHD reserves the right to waive any informality, irregularity, or defect in any proposal, and to reject any or all bids should it be in the best interest of TRDHD to do so.

5. Terms of Payment: The successful bidder(s) are responsible to make payment for property purchased within 30 days after notification of award. Payment shall be in the form of cash or certified check. All checks must be made payable to Three Rivers District Health Department. Specific payment instructions will be included with Notice of Award.

6. Sales Tax: TRDHD is a sales tax-exempt organization and is not required to collect sales tax on this transaction. However, this is a sale of tangible property and the transaction may be a taxable event for TRDHD Invitation to Bid

the buyer. It is the buyer’s sole responsibility to determine through the Kentucky Department of Revenue if sales tax is due.

7. Questions: All questions should be directed to Georgia Heise at [email protected] or 502-330- 2670.

Section II – Real Estate Description Owen County Clerk Description: PVA Parcel Number 061.30-042 Book 211, Page 146 Address: 510 South Main Street, Owenton, Kentucky 40359

Lying and being in the City of Owenton, Owen County, Kentucky, on the South side of Kentucky Route #22 at the intersection of US HWY 127.

Being a portion of the same property conveyed to FLD, LLC, from Owen Electric Cooperative, Inc., by Deed dated May 13, 2004, or record in Deed Book 210, Page 230, in the Office of the Owen County Court Clerk.

Other details: The real estate consists of one parcel of land (approximately 1.0340 acres), one main building and two small outbuildings.

Building A – 11,750 square feet structure constructed of concrete. The majority of this structure is finished as office space.

Building B – small storage building constructed of concrete block.

Building C – three walled open wooden structure.

2016 property assessment (Section V – Appraisal) values the real estate (land and three structures) in total at $410,000.

TRDHD Invitation to Bid

Section IV – Bid Form

To: Three Rivers District Health Department

Submitted by:

Business Name: ______

First and Last Name: ______

E-mail: ______

Address: ______

City: ______State: ______Zip: ______

Phone: ______

Federal ID or SSN: ______

The undersigned, having thoroughly reviewed the Information for Bidders and having examined the property locate at 510 South Main Street, Owenton, Kentucky 40359, in its current condition, do hereby propose to purchase the above designated for the sum of:

$______printed ______dollars

______Signature Date

Section V - Appraisal

RESTRICTED APPRAISAL REPORT Professional Office Building 510 S. Main Street Owenton, Kentucky

Three Rivers District Health Department Attention: Justin Pittman 510 S. Main Street Owenton, Kentucky 40359

GALLOWAY APPRAISAL RONNIE L. GALLOWAY, MAI 2525 NELSON MILLER PARKWAY SUITE 101 LOUISVILLE, KENTUCKY 40223 GALLOWAY APPRAISAL Offices Located In: Real Estate Counselors & Appraisers Louisville, KY Lexington, KY

-- Since 1969 --

April 27, 2016

Three Rivers District Health Department Attn.: Justin Pittman 510 S. Main Street Owenton, Kentucky 40359

Re: Professional Office Building 510 S. Main Street Property Valuation Administration (PVA) Parcel Number 061.30-042 Deed Book 211, Page 146 Owenton, Owen County, Kentucky

Dear Mr. Pittman:

As requested, we have personally inspected the site and prepared a Restricted appraisal of the existing office building and 1.034 acre site located at 510 S. Main Street in Owenton, Owen County, Kentucky. The purpose of the appraisal was to conclude an “as is” opinion of market value of the property described herein, based on market conditions on April 5, 2016, the inspection date. This report is intended for use only by Three Rivers District Health Department (Attention: Mr. Justin Pittman) to serve as a benchmark in decisions involving an estimate of market value for internal purposes. This report is not intended for any other use or by others than the client. The scope of work is for a physical site visit and the development of a narrative appraisal using information from owners and public records. Scope is for sales comparison approach supported by an inferred market analysis and Highest and Best Use analysis from neighborhood observations. This restricted appraisal report is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (b) of the Uniform Standards of Professional Appraisal Practice. As such, it does not include discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the opinion of value. Additional supporting documentation concerning the data, reasoning, and analyses is retained in the file.

In preparing this appraisal, we have considered the three approaches to value, and have determined that the Sales Comparison Approach is the most appropriate method of estimating the market value of the subject property.

PRINCIPAL OFFICE 2525 Nelson Miller Parkway  Suite 101  Louisville, Kentucky 40223  (502) 589-4976  FAX (502) 585-3778 The Cost Approach is not applicable to this assignment due to the older age of the improvement on the property. Also, the current economic downturn and market conditions have created economic obsolescence due to rising construction costs outpacing market expectations. Therefore, the cost approach is not performed due to the subjective economic obsolescence factor needed which creates an unreliable approach to value.

The subject property has been an owner-occupied office building in recent years, and has no recent lease history; therefore, the income approach to value has been omitted due to insufficient data.

As a result, the Sales Comparison Approach is the only approach utilized to determine the estimated market value of the subject property.

Taking into consideration all of the pertinent factors which affect value, it is the recommendation of this report that the fee simple market value of the subject property is as follows:

“As Is” as of April 5, 2016, the inspection date * * * FOUR HUNDRED TEN THOUSAND DOLLARS * * * ($410,000)

No personal property, fixtures, or intangible items were included within the value.

Sincerely,

Ronnie L. Galloway, MAI Ronald N. Allen Kentucky Certified General Appraiser #000002

Executive Summary

PROPERTY TYPE: One-story, commercial office building on concrete slab and basement foundation

PROPERTY LOCATION: 510 S. Main Street Owenton, Owen County, Kentucky

LEGAL DESCRIPTION: Deed Book 211, Page 146

OWNER OF RECORD: Three Rivers District Health Department

TAX IDENTIFICATION: PVA Parcel Number 061.30-042

CURRENT ASSESSED VALUE: $350,000 ($75,000- land; $275,000- improvements)(2015)

PROPERTY RIGHTS APPRAISED: Fee Simple

SUBJECT PROPERTY PHYSICAL DATA: Total Land Area: 45,041 square feet (1.034 Acre) Road Frontage: Approximately 155’ on S. Main Street Zoning: C-2, Commercial District Flood Zone: 21187C0140C, (June 2, 2011) Zone X, Outside 500-Year Floodplain Gross Building Area: Approx. 11,750 square feet (above grade)

EFFECTIVE DATE: “As Is”: April 5, 2016

DATE OF REPORT: April 27, 2016

ESTIMATED MARKET VALUE INDICATIONS: Cost Approach: N/A Sales Comparison Approach: $410,000 Income Approach: N/A

MARKET VALUE ESTIMATE:

Fee Simple Market Value $410,000

CERTIFICATION: I certify that, to the best of my knowledge and belief

1. The statements of fact contained in this appraisal report are true and correct.

2. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

3. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and is my personal, impartial and unbiased professional analyses, opinions and conclusions.

4. I 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.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. My engagement in this assignment is not contingent upon developing or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. My analyses, opinions and conclusions are developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

9. 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.

10. We have not performed an appraisal of the subject property within the past three years.

11. Ronald N. Allen performed the following functions on this appraisal report: 1) inspected property, 2) researched all comparables, and 3) wrote the unedited written appraisal.

12. Ronnie L. Galloway did not inspect the subject property but assisted in a review capacity in concluding a value estimate.

13. As of the date of this report, Ronnie L. Galloway has completed the continuing education program of the Appraisal Institute.

14. No one else provided significant professional assistance to the persons signing this report.

It is our opinion and conclusion that the fee simple title market value of the property is:

“As Is” Market Value of the Fee Simple Estate As of the Effective Date of April 5, 2016 * * * FOUR HUNDRED TEN THOUSAND DOLLARS * * * ($410,000)

No personal property, fixtures, or intangible items were included within the value.

Ronnie L. Galloway, MAI Ronald N. Allen Kentucky Certified General Appraiser #000002

ASSUMPTIONS AND LIMITING CONDITIONS

1. As agreed upon with the client prior to the preparation of this appraisal, this is a narrative Appraisal Report which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser’s file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report. 3. The property is appraised free and clear of any or all liens and encumbrances unless otherwise stated in this report. 4. Responsible ownership and competent property management are assumed unless otherwise stated in this report. 5. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. 6. All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. 7. It is assumed that there are no hidden or non-apparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or arranging for engineering studies that may be required to discover them. 8. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report. 9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in this report. 10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 11. Any sketch in this report may show approximate dimensions and is included to assist the reader in visualizing the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.

12. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report. 13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea formaldehyde foam insulation or other potentially hazardous materials may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process. 14. Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities Act. The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property’s value, marketability, or utility. 15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. 16. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with properly written qualification and only in its entirety. 17. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news sales, or other media without prior written consent and approval of the appraiser. Extraordinary Assumptions: None Noted Hypothetical Conditions: None noted

This is a Restricted Appraisal Report which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Restricted Appraisal Report. As such, it does not include discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser’s file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report.

CLIENT: Three Rivers District Health Department Attn.: Justin Pittman 510 S. Main Street Owenton, Kentucky 40359

APPRAISERS: Ronnie L. Galloway, MAI Ronald N. Allen Galloway Appraisal 2525 Nelson Miller Parkway, Suite 101 Louisville, Kentucky 40223

SUBJECT: Professional Office Building 510 S. Main Street Property Valuation Administration (PVA) Parcel Number 061.30-042 Deed Book 211, Page 146 Owenton, Owen County, Kentucky

PURPOSE OF THE APPRAISAL: The purpose of this appraisal is to provide the appraiser’s best estimate of the market value of the subject real property as of the effective date. Market value is defined by the federal financial institutions regulatory agencies as follows:

Market Value means “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 are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

(Source: Office of the Comptroller of the Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions [f].)

INTENDED USE OF REPORT: This appraisal is intended to assist the client with estimating market value for the subject property for internal purposes.

INTENDED USER OF REPORT: This appraisal is intended to assist the client, Three Rivers District Health Department (Attention: Justin Pittman). There are no other known users of this report.

INTEREST VALUED: The property rights appraised for the subject are of the “as is” condition of the fee simple estate.

FEE SIMPLE ESTATE DEFINED: As defined by The Appraisal of Real Estate, Fourteenth Edition, by the Appraisal Institute, the fee simple estate is ‘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.’

EFFECTIVE DATE OF REPORT: April 5, 2016

INSPECTION DATE: April 5, 2016

DATE OF REPORT: April 27, 2016

APPRAISAL DEVELOPMENT AND REPORTING PROCESS: Mr. Justin Pittman of Three Rivers District Health Department has authorized the completion of a Restricted Appraisal Report to provide an “as is” estimate of market value as of April 5, 2016, the date of inspection. The scope of the assignment includes the following:

This Restricted Appraisal Report is a brief recapitulation of the appraiser’s data, analyses, and conclusions. Supporting documentation is listed in the addenda to this report or is retained in the appraiser’s file.

The income approach involves converting anticipated benefits (usually monetary) produced by the subject property into an estimate of value through the process of discounting those benefits to be received in future years to a present worth.

The sales comparison approach is a process of analyzing sales of similar recently sold properties in order to derive an indication of the market value for the subject. The reliability of this technique is dependent upon the availability and accuracy of the comparable sales data, the absence of non-typical conditions in the marketplace and, most importantly, the degree of comparability exhibited by the recent sales employed.

In preparing this appraisal, we have considered the three approaches to value, and have determined that the sales comparison approach to value is the appropriate method of estimating the market value of the subject property.

This approach utilizes data obtained from the local market as well as other sources. In order to provide a sound foundation for the value estimates contained herein, the appraisers have closely examined the following types of direct market evidence.

1. Sales of improved properties which share sufficient similarities to the subject in order to provide a valid conclusion.

2. The effects of such factors as location, size, changes in economic forces over time, age and condition, and supply and demand in order to determine the influence of these factors on the subject.

In addition to the foregoing, the appraisers have examined the data made available by the following offices/individuals:

1) The Owen County Property Valuation Administration office (PVA) provided information as to the current property tax liability for the subject property as well as information relating to the potential for changes in tax rates or assessments. 2) Owenton Planning and Zoning has provided the current zoning of the subject property as well as the regulations applicable to its zoning classification. 3) Demographics relating to the area of the subject were provided by the U.S. Census Bureau (2010 data) with current and future projections of population, income, etc. being provided by STDB (Site To Do Business).

Determination of Physical and Legal Characteristics of Subject Property

 Site visit performed April 5, 2016, with exterior and interior inspection of the building; photos were taken by Ronald N. Allen as of the effective date. Interview of the listing real estate agent for pertinent details;  Confirmation of site area and tax status through the Owen County PVA records;  Study of street and aerial maps of subject site using the Owen County GIS mapping and Google Earth;  Research of flood zone status by accessing the FEMA flood map pertaining to the subject area;  Research and analysis of all other legal and physical documentation regarding the subject.

Type and Extent of the Data Researched and Analysis Applied

 Research of the most recent comparable commercial property sales in the market area, obtained from the Boone and Kenton County PVA offices, Loopnet, Kentucky Commercial Real Estate Alliance, Costar, and the appraiser’s files;  Verification of and information on these sales, obtained from the Boone and Kenton County PVA records, deeds, and, where possible, from interviews with parties associated with the transactions;  Inferred market analysis and Highest and Best Use analysis from neighborhood observations;  Application of the sales comparison approach to value;  Omission of the cost approach due to the age of the building, periodic renovations and the resulting subjectivity in determining physical depreciation;  Omission of the income approach due to the subject’s history as an owner-occupied property and insufficient market data for office buildings that are income producing properties;  Arrival at a final value conclusion.

It should be noted that the following items were not available to the appraisers.

1. Site survey – The site area is estimated from data provided by the Owen County PVA office. 2. Title report 3. Building plans- The building was physically measured by the appraiser on the date of the inspection. These measurements were reconciled with the subject’s property card on file in the Owen County PVA office. 4. ADA compliance 5. Environmental report

These items are desired in providing the market value estimate within the report for this property type; however, the lack of such items does not appear to affect the value state herein.

The scope of work as described above is to the level of detail that is expected by the client for the intended use of the appraisal.

COMPETENCY PROVISION: The Appraisal Standards Board (ASB) adopted the Uniform Standards of Professional Appraisal Practice (USPAP) on January 30, 1989. USPAP requires that “Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively:

1. disclose the lack of knowledge and/or experience to the client before accepting the assignment and 2. take all steps necessary or appropriate to complete the assignment competently; and 3. describe the lack of knowledge and/or experience and the steps taken to complete the assignment competently in the report.”

Prior to accepting the assignment, we concluded that Galloway Appraisal has the necessary appraisal experience and knowledge to competently complete the appraisal. During the completion of the assignment, we have discovered no areas requiring appraisal expertise in which we consider our experience lacking.

HISTORY (Uniform Standards of Professional Appraisal Practice (USPAP) Standards Rule 1-5): The subject property is currently under the ownership of Three Rivers District Health Department. The last transfer of the property took place on August 2, 2004 by and between FLD, LLC, a Kentucky limited liability company, grantor, and Three Rivers District Health Department, grantee by warranty deed. The deed is recorded Deed Book 211, Page 146, on file in the Owen County Clerk’s office. The consideration was not disclosed on the deed.

The subject property is improved with a professional office building built in 1946. There was at least one addition built at a later date, and there have been some updating and renovations since construction. Currently, the building is owner-occupied as a professional office building. To the best of the appraiser’s knowledge, the property is not listed for sale.

As of the date of inspection, there appear to be no options, sales contracts, or other factors pending that might have an affect on the value of the subject property, to the best of the appraiser’s knowledge.

LEGAL DESCRIPTION: According to the Owen County PVA office, the subject property is known as PVA Parcel Number 061.30-042.

AD VALOREM TAX RATES AND ANALYSIS: Assessments for the purpose of real property taxation are set under the authority of the Owen County PVA office, and are regulated by Kentucky state law which requires all properties to be assessed at 100% of their fair market value.

The current assessment is shown in the chart below:

Parcel 061.30-042 Land $75,000 Improvements $275,000 Total $350,000

10 According to the Owen County PVA office, the 2016 tax rate for properties within the city limits of Owenton is $1.393 per $100 of assessed value. The estimated tax going forward, based upon current tax rates and the estimated market value of $410,000, is approximately $5,711.

DESCRIPTION OF REAL ESTATE APPRAISED:

Neighborhood Description: As defined in The Appraisal of Real Estate, Fourteenth Edition, published by the Appraisal Institute, a neighborhood is “a group of complementary land uses”. The subject property’s neighborhood is affected by social, economic, governmental, and environmental forces. These forces influence the use and value of properties in the vicinity of the subject, which, in turn, directly affect the use and value of the subject property. In order to analyze the effect of these forces, the appraiser identifies the area within which these forces influence use and value in the same way as the subject, and this area is commonly called a neighborhood.

The subject property is located on the south side of S. Main Street (aka Kentucky Highway 227) about 175 feet east of U. S. Highway 127, on the northeast corner of Jay Street, within the city limits of Owenton, Kentucky. The appraisers consider the subject neighborhood as being those properties that front on or have direct access to Main Street or other major commercial corridors within Owenton and Owen County. The properties within the subject neighborhood are primarily commercially and residentially oriented and are properties that are well maintained. S. Main Street is a three-lane (center turn lane), asphalt surfaced that is well maintained. Traffic volume within the immediate area is low to moderate (6,500 to 8,500 daily) and the subject property is well located within the neighborhood.

Commercial development within the subject neighborhood has been stable during the past several decades. A general inspection of this neighborhood indicates that most properties are well maintained and most are attractive and well suited for this neighborhood.

Owen County is in the Outer Bluegrass region of Kentucky. The elevation in the county ranges from 425 to 1,000 feet above sea level. It was formed in 1819 from Franklin, Gallatin, Scott, and Pendleton counties. The county seat is Owenton.

In 2010 the county population was 10,841 in a land area of 351.10 square miles, an average of 30.9 people per square mile. Owen County was named for Abraham Owen, a Kentucky legislator who was killed in the War of 1812.

According to the U.S. Census Bureau, the county has a total area of 354 square miles (920 km2), of which 351 square miles (910 km2) is land and 3.1 square miles (8.0 km2) (0.9%) is water.

Owenton is a home rule-class city in and the county seat of Owen County, Kentucky, United States. The population was 1,327 at the 2000 census. It is located at the junction of U.S. Route 127 and Kentucky Route 22, about 50 miles northeast of Louisville and about 40 miles south southwest of Cincinnati, Ohio.

Owenton is geographically located at 38°32′12″N 84°50′22″W38.53667°N 84.83944°W (38.536614, -84.839363). According to the United States Census Bureau, the city has a total area of 2.2 square miles (5.7 km2), of which 2.2 square miles (5.7 km2) is land and 0.04 square miles (0.10 km2) (0.89%) is water.

12 DeLorme Street Atlas USA® 2015

Data use subject to license. TN Scale 1 : 8,800 0 200 400 600 800 1000 ft © DeLorme. DeLorme Street Atlas USA® 2015. MN (5.5°W) m 0 80 160 240 320 400 www.delorme.com 1" = 733.3 ft Data Zoom 14-5

Owenton Owen County

Total Population 2009 2010 2011 2012 2013 Labor Market Area 487,620 490,606 494,112 497,592 502,086 Owen County 11,380 10,830 10,833 10,787 10,662 Owenton 1,461 1,509 1,523 1,532 1,521 Source: U.S. Department of Commerce, Bureau of the Census, Annual Estimates.

Population by Selected Age Groups, 2013 Owen County Labor Market Area

Number Percent Number Percent Under 16 2,213 20.8 112,800 22.5 16-24 1,096 10.3 56,415 11.2 25-44 2,513 23.6 133,478 26.6 45-64 3,134 29.4 136,692 27.2 65-84 1,546 14.5 55,814 11.1 85 and older 160 1.5 6,887 1.4 Median Age 41.9 37.2 Source: U.S. Department of Commerce, Bureau of the Census.

Personal Income 2009 2014 Pct. Change Owen County $26,907 $32,486 20.7 % Kentucky $32,251 $37,396 16.0 % U.S. $39,376 $46,049 16.9 % Labor Market Area Range $23,140- $38,718 $26,959- $46,137 Source: U.S. Department of Commerce, Bureau of Economic Analysis.

Households 2013 2013 Median Household

Number of Households Persons Per Household Income Owen County 4,601 2.34 $42,134 Source: U.S. Department of Commerce, Bureau of the Census.

Business & Industry Summary of Recent Locations and Expansions, 2013-Present Reported Companies Jobs Investment Manufacturing Location 0 0 $0 Manufacturing Expansion 2 20 $783,000 Service & Technology Location 0 0 $0 Service & Technology Expansion 0 0 $0 Source: Kentucky Cabinet for Economic Development (4/6/2016).

Employment by Major Industry by Place of Work, 2013 Owen County Labor Market Area

Employment Percent Employment Percent All Industries 1,677 100.0 222,702 100.0 Agriculture, Forestry, Fishing and Hunting 0 0.0 N/A N/A Mining N/A N/A N/A N/A Construction 23 1.4 5,956 2.7 Manufacturing 0 0.0 32,995 14.8 Trade, Transportation, and Utilities 243 14.5 45,260 20.3 Information 11 0.7 2,117 1.0 Financial Activities 0 0.0 10,671 4.8 Services 472 28.1 74,858 33.6 Public Administration 166 9.9 21,312 9.6 Other N/A N/A N/A N/A Source: U.S. Department of Labor, Bureau of Labor Statistics.

Top 20 by Employment (Manufacturing & Service & Technology Firms Only)

Year

Firm Product(s)/Service(s) Emp. Established Owenton Natural gas meters and gas regulators, gas Itron 411 1978 fittings Source: Kentucky Cabinet for Economic Development (4/6/2016).

Site Data:

Location The subject property is located along the south side of Main Street about 170 feet east of the corner of Main and U.S. Highway 127 within the city limits of Owenton.

Size According to the Owen County PVA records, the subject site area contains approximately 1.034 acres or 45,041 square feet.

Shape/Topo The site is irregular in shape (resembling a backwards letter ‘L’), and on grade with S. Main Street and surrounding streets, at the street frontage. The lot remains level for approximately 150 feet (running south along the western boundary), then falls off gradually a few feet and levels off for another 150 feet or so, then gradually falls down a few more feet, leveling off to the southern boundary of the site.

Drainage A physical inspection of the site has indicated no problems associated with surface water drainage.

Flood Zone According to the FIRM flood map, the subject does not appear to be located within a designated flood zone. Refer to Flood Panel Map Number 21187C0140C, (June 2, 2011), included within the addenda. The subject property is situated in Zone X which is an area located outside the 100 year floodplain.

Utilities Electric power, city water, city sewers, and cable & telephone access is provided to the site.

Accessibility & Exposure The subject property is accessed via Main Street. There is no on-street parking available, but the subject has a small front parking area and a rear parking lot that is accessed via driveway on the north side of the site off of Main Street.

Easements and Encumbrances No title report was made available for review by the appraisers and, therefore, it is assumed for the purpose of this report, there are no easements or encumbrances recorded against the property which would negatively affect the market value of the site.

Site Improvements The site is improved with concrete sidewalk and curbs, and with the asphalt parking lot in the front and in the rear of the site.

Environmental Statement: At the time of the inspection, there were no indications of contamination from toxic wastes or materials. As appraisers, we are not qualified to judge the presence, absence, or extent of contamination from toxic wastes or materials. The value as reported herein is done so explicitly under the assumption that neither the site nor the improvements thereon are contaminated with any substance or material, which would have a negative impact on property values. Should there be any questions as to this issue, we recommend that a firm having expertise in this area be hired to perform an environmental audit.

Zoning: The subject property is zoned under the recommendations of the City of Owenton Planning Commission. According to records on file in that office, the subject property is currently zoned as C-2, Commercial District.

Description of Improvements: The subject property is currently improved with a one story, wood frame structure with brick siding that was built in 1946 (with a later addition and unspecified updates and renovations). There is a main entry at the front (north) of the building facing Main Street, and another entry on the north side. The building contains approximately 11,750 square feet of gross building area. The roof is a flat roof with tar and gravel covering, and the building is built on a concrete slab foundation except for a small basement area (about 10 feet by 16 feet).

No roof inspection was made.

The interior is broken into a front lobby, a central hallway that runs the length of the building with branch hallways running perpendicular to the main hallway, numerous offices and work spaces (storage spaces and closets throughout), a conference room, and a small breakroom with a kitchenette, a room for communications equipment, and four restrooms. Interior finish is generally painted drywall walls with acoustical tiled ceilings, painted wood trim, and carpeted flooring with

tile floors and walls in restrooms. Lighting fixtures are predominantly ceiling mounted, recessed fluorescent fixtures.

Exterior amenities include brick exterior walls, a flat roof with 12 to 16 foot eave heights, metal gutters and downspouts, small storefront glass wall areas in the front at the main entry and along the northern exposure at the secondary entry, and security lighting. There is no sprinkler system. There is a small loading dock area along the northern wall at the back of the building, and an old loading dock area at the rear that is not in use. (The building used to house an electric contracting company).

HVAC consists of electric fired, forced air furnaces and central air conditioning. There is a diesel generator that serves as a backup to electrical power in case of power failure.

On the south side of the building, there is some chain wire fencing, and there is a steel framed communications tower that is leased to an outside entity ($2,000 per year).

There are some windows, mostly single pane, wood framed with some glass block windows along the north wall near the entry on that side.

Overall, the building appeared to be in average condition. The effective age of the building is estimated at 20 years with a remaining economic life of about 25 years.

Front view

Front entry

Northern elevation and driveway to rear parking lot

20 Rear of building

Southern elevation

Lobby and reception

Main hallway

Breakroom/ classroom

Interior view

Street/neighborhood view

HIGHEST AND BEST USE: Highest and best use is defined as “that reasonable and probable use that will support the highest present value, as defined, as of the effective date of the appraisal, or alternatively, that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in the highest land value.

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

Implied within this definition is recognition of the contribution of that specific use to community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraisers' judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact to be found.

In appraisal practice, the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value), another appropriate term to reflect highest and best use would be most probable use. In the context of investment value, an alternative term would be most profitable use.”1

1 Byrl N. Boyce, Ph.D., Real Estate Appraisal Terminology, Ballinger Publishing Company, Cambridge, MA, 1975, pp. 107-108.

Highest and Best Use "As Vacant"

Legal Permissibility

This criterion considers restrictions imposed on the subject property by controls such as zoning, building codes, historical district controls, environmental regulations, long-term leases, deed restrictions and private covenants. The subject site is currently zoned C-2, Commercial District which permits a number of specifically permitted office and commercial uses.

Physical Possibility

This criterion considers the size, shape, area and terrain as they affect the development potential of the site. Other factors such as the ratio of frontage and depth, availability of public utilities, topography and subsoil are also considered. The subject’s site acreage of approximately 1.034 acres has public utilities such as electric, sanitary sewers, and water.

Furthermore, the site has exposure along S. Main Street in Owenton. The size, shape, topography, location in a highly-developed commercial area and exposure to traffic along Main Street are such that the most likely use of the site is commercial or office use.

Financial Feasibility

This criterion considers those uses that are likely to produce a return greater than the combined income needed to satisfy the value of the real estate and a reasonable return. Financially feasible uses must account for the physical and legal constraints already discussed. By analyzing the subject’s surrounding uses, these indicate that the subject’s feasible use would be dictated by the principal of conformity, which emphasizes that a property’s value tends to be maximized when it is in reasonable conformance with its surroundings.

Due to the large number of supportive commercial office and retail uses, coupled with the demand for commercial office/retail properties with proximity to the S. Main Street corridor, demand for commercial office/retail use is demonstrated.

Maximum Profitability

This criterion isolates the use which provides the highest rate of return or value from all financially feasible uses and identifies the highest and best use. Considering the historic demand for commercial office/retail tracts within the subject’s market area, and the land values indicated for similarly-zoned properties, it appears that commercial office/retail use would maximize the profitability of the subject’s site as evidenced by the continued demand for commercial units in the neighborhood. The subject’s current use as a commercial office site meets the criteria for the Highest and Best Use “As Vacant”.

Highest and Best Use “As Improved”: The subject site’s current use as a single-tenant, professional office facility does not appear to violate any of the covenants governing commercial zoning regulations (assuming approval by the Planning and Zoning Commission).

The subject site is improved with a one-story, professional office building. The value estimates included in this report support the conclusion that the improvements do add significant value over and above the value of the land. Therefore, the existing improvements and the current use (commercial office) of the subject property meet the criteria for the Highest and Best Use “As Improved”.

SUMMARY OF ANALYSIS AND VALUATION: An appraisal is an unbiased estimate of the nature, quality, value, or utility of an interest in, or aspect of, specific real estate and related personal property. The most frequent appraisal assignment involves the estimation of market value. The valuation process is an orderly procedure in which the problem presented by the assignment is defined, the work planned, and appropriate data acquired and analyzed to provide a final estimation of value. Crucial in the procedure is the consideration of the highest and best use potential of the land and the property as improved. The appraiser considers three approaches to value that parallel the actions of participants in the real estate market. The ultimate goal of the valuation process is a well-supported value conclusion that reflects the factors that influence the value of the property being appraised. The appraiser studies a property from three different viewpoints, which correspond to the following traditional approaches to value:

 Cost Approach...the current cost of reproducing or replacing the improvements, minus the loss in value from all forms of depreciation, plus site value;

 Sales Comparison Approach...the value indicated by recent sales of comparable properties in the market; and the

 Income Capitalization Approach...the value of the earning power of the property based on the capitalization of its income.

One or more of the approaches may not be appropriate for a particular property, or may be less reliable due to the nature of the property, the needs of the client, or the data available. The appraiser forms a value conclusion based on the market research, analysis performed, and the application of the various approaches.

Sales Comparison Approach: Valuation principle of substitution is fundamental to the Sales Comparison Approach. It is that approach in appraisal analysis which is based on the proposition that an informed purchaser will pay no more for property than the cost of acquiring an existing property with the same utility. The approach also involves the valuation principles of anticipation, contribution, and increasing and decreasing returns.

The appraiser searched for sales of similar commercial properties within Owen County, but finding none, we expanded our search area to include all of the northern Kentucky counties of Boone, Kenton, Campbell, Grant, Pendleton, and Harrison as well as counties to the south as far away as Carroll and Gallatin. The following market data is considered the best available. Each was investigated, analyzed, and compared to the subject.

Four comparable improved sales located in the subject property's market area were utilized. All comparable sales are commercial office facilities.

These comparable sales are as follows:

Location Sale Date Sale Price Bldg. Size (S. F.) Price/S.F. 2643 Crescent Springs Pike 12/2015 $340,000 6,960 $48.85 Covington, Kentucky 7309 US Highway 42 1/2014 $395,770 8,544 $46.32 Florence, Kentucky 1038 Brentwood Court 5/2015 $518,075 17,200 $30.12 Lexington, Kentucky 974 River Bend Road 5/2015 $500,000 12,000 $41.67 Frankfort, Kentucky

The comparable sales exhibit a price range per square foot of $30.12 to $48.85 (unadjusted). These sales took place since January, 2014. The sales appeared to be arm’s length market transactions, with cash to seller, or market financing terms. Each offers similar utility and provides market data for reasonable comparison.

These sales are described in detail as follows:

IMPROVED COMPARABLE SALE #1

Property Identification

Property Type Commercial Office Address 2643 Crescent Springs, Covington, KY Parcel ID 014-30-00-050.00

Sale Data

Seller RNK Environmental, Inc. Buyer TLK Holdings, LLC Sale Date 12/23/2015 Property Rights Fee Simple Estate Conditions of Sale Normal Financing Conventional Market Conditions Average Sale Price $340,000

Land Data

Land Size 1.02 Acres Zoning Office District Utilities All Dimensions Meets and Bounds Front Feet Ample Shape Basically Rectangular

General Physical Data

Building Type 2.0 story, Wood frame building (brick and vinyl sided) Gross Building Area 6,960 SF Year Constructed 1970 Condition Average/Effective age, 20 years

Indicators

Sale Price/Gross SF $48.85

This is the sale of a Class “B” professional office building. The sale was verified by the appraiser via Assessor’s records. The building is considered similar to the subject in terms of quality of finish, and was similar in terms of condition at the time of sale. The property is located on a commercial corridor within the city limits of Covington.

30 31

IMPROVED COMPARABLE SALE #2

Property Type Commercial Office Address 7309 US 42, Florence, Kentucky Parcel ID 061-19-24-003.00

Sale Data

Seller Richard M. & Jennifer Peace Buyer John K. King Sale Date 1/27/2014 Property Rights Fee Simple Estate Conditions of Sale Normal Financing Conventional Market Conditions Average Sale Price $395,770

Land Data

Land Size 1.03 Acres Zoning Commercial Office District Utilities All Dimensions Meets and Bounds Front Feet Ample Shape Basically Rectangular

General Physical Data

Building Type 2.0 Story, Masonry Building Gross Building Area 8,544 SF Year Constructed 1990 Condition Average/Effective age, 15 years

Indicators

Sale Price/Gross SF $46.32

This is the sale of a professional office building located on a busy, commercial and commuter corridor in Florence, Kentucky. The property was in average condition at the time of the purchase. The sale was verified by the appraiser via Assessor’s records. The building is considered similar to the subject in terms of quality of finish.

IMPROVED COMPARABLE SALE #3

Property Identification

Property Type Commercial Office Address 1038 Brentwood Court, Lexington, Kentucky Parcel ID 14376881

Sale Data

Seller Lexington Framing Supplies, Inc. Buyer Locksol, LLC Sale Date 5/1/2015 Property Rights Fee Simple Estate Conditions of Sale Normal Financing Conventional Market Conditions Average Sale Price $518,075

Land Data

Land Size 1.47 Acre Zoning Light Industrial District Utilities All Dimensions Meets and Bounds Front Feet Ample Shape Basically Rectangular

General Physical Data

Building Type 1.0 Story, Masonry Building Gross Building Area 17,200 SF Year Constructed 1977 Condition Average/Effective age, 20 years

Indicators

Sale Price/Gross SF $30.12

This is the sale of a professional office building located on a busy, commercial/industrial and commuter corridor in Lexington, Kentucky. The property was in average condition at the time of the purchase. The sale was verified by the appraiser via Assessor’s records. The building is considered similar to the subject in terms of quality of finish.

IMPROVED COMPARABLE SALE #3

Property Identification

Property Type Commercial Office Address 974 River Bend Road, Frankfort, Kentucky Parcel ID 048-00-00-030.01

Sale Data

Seller EG Properties, Inc. Buyer Franklin County Sale Date 5/28/2015 Property Rights Fee Simple Estate Conditions of Sale Normal Financing Conventional Market Conditions Average Sale Price $500,000

Land Data

Land Size 0.78 Acre Zoning Commercial District Utilities All Dimensions Meets and Bounds Front Feet Ample Shape Basically Rectangular

General Physical Data

Building Type 120 Story, Masonry Building Gross Building Area 12,000 SF Year Constructed 2006 Condition Average/Effective age, 5 years

Indicators

Sale Price/Gross SF $41.67

This is the sale of a professional office building located on a busy, commercial/office and commuter corridor in Frankfort, Kentucky. The property was in average to good condition at the time of the purchase. The sale was verified by the appraiser via Assessor’s records. The building is considered similar to the subject in terms of quality of construction and finish, but superior in terms of age/condition.

Comparable Sales Map

Explanation of Adjustment Grid

In this sales comparison, four comparable sales have been used to compare the subject property on a gross building area to sale price comparison. Non-physical factors such as property rights conveyed, financing terms, conditions of sale and time/market conditions are considered first in our comparison. All sales involve the transfer of fee simple interests at market rates and are all considered arm’s length.

Time: An adjustment is needed in consideration of the sale date of each of the comparables and the need to bring them into current market conditions. No sales were adjusted for time due to the current fair to poor economic conditions within the time frame of their transfer.

Other adjustments considered are for physical differences between the subject and these comparable sales.

Location: All sales were given a 10% negative adjustment for location. All are located on busy, commercial corridors within much larger population centers than the subject.

Building Size: The gross building area of the sales ranges from 6,960 square feet to 17,200 square feet. The subject has a total area of 11,750 square feet. The market typically recognizes a lower price per square foot for larger properties reflecting the volume savings due to lower per unit construction costs, as well as limiting the number of market participants. However, for commercial office properties considered comparable to the subject, this volume savings was considered small and therefore, a 1% per 500 square foot difference in size was used to calculate the adjustment for differences in size.

Design/Appeal: The subject is a one story professional office building. Sales One, Two, and Four were given small positive adjustments because they are each two stories in height.

Age/Condition: The appraisers have made condition adjustments by comparing the effective age of the comparable sales with that of the subject property. For example, the total economic life of these properties is estimated at 45 years. The effective age of the subject property is 20 years with 44.44% depreciation (45 divided by 20 = 44.44%). Comparable sale #2 has an estimated effective age of 15 year and depreciation of approximately 33.33% (15 divided by 45 = 33.33%) a difference of 11.11%; reflecting a negative adjustment. The remaining adjustments for age and condition were calculated in this manner.

Corner Influence: No adjustments were required.

Zoning: Sales One, Two and Three were adjusted positively for having slightly inferior zoning classifications. The subject is zoned Commercial. These sales were zoned office or light industrial.

Quality of Construction/Utility: No adjustments were required.

Land-to-Building Ratio: The subject has a land-to-building ratio of 3.83:1. This is average for small office buildings in the market area. Sale four has a lower ratio (2.83:1), and was given a positive adjustment of 3%. Sale One was given a negative adjustment of 3%.

After all adjustments have been completed, the range of value from the comparable sales is from $27.15 to $42.71 per square foot. All sales were given weight due in the valuation due to similarities in location, age/condition, and size.

Based on these sales, the market value within this range is estimated at $35.00 per square foot. When this value is multiplied by the subject's 11,750 square feet gross building area, the resulting market value estimate “AS IS” via this method is $411,250, rounded to $410,000.

39 SALES COMPARISON APPROACH 11,750 Square Foot Office Building on 1.034 acres 510 S. Main Street, Owenton, Kentucky Statistics Subject Sale 1 Sale 2 Sale 3 Sale 4 Address 510 S. Main Street 2643 Crescent Springs 7309 US 42 1038 Brentwood Ct 974 River Bend Rd City/State Owenton, KY Covington, KY Florence, KY Lexington, KY Frankfort, KY Sale Date N/A Dec-15 Jan-14 May-15 May-15 Size-square feet 11,750 6,960 8,544 17,200 12,000 Land Area (Acres) 1.034 1.020 1.03 1.47 0.78 Sale Price N/A $340,000 $395,770 $518,075 $500,000 Cash Equiv. Amt. N/A $340,000 $395,770 $518,075 $500,000 Price per sf N/A $48.85 $46.32 $30.12 $41.67 Eff.Age/Condition 20.00 20.00 15.00 20.00 5.00 Physical Depreciation 44.44% 44.44% 33.33% 44.44% 11.11% Interest Appraised Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Conditions of Sale N/A Typical Typical Typical Typical Adj.Price per square foot N/A $48.85 $46.32 $30.12 $41.67 Adjustments Property Rights Conveyed N/A Similar Similar Similar Similar % Adjustment N/A 0.00% 0.00% 0.00% 0.00% Adjusted price N/A $48.85 $46.32 $30.12 $41.67 Financing N/A Similar Similar Similar Similar % Adjustment N/A 0.00% 0.00% 0.00% 0.00% Conditions of Sale N/A Similar Similar Similar Similar % Adjustment N/A 0.00% 0.00% 0.00% 0.00% Adjusted price N/A $48.85 $46.32 $30.12 $41.67 Time/Market % Adjustment N/A 0.00% 0.00% 0.00% 0.00% Time adj. Price per package N/A $48.85 $46.32 $30.12 $41.67 Location Owenton Suburbs Superior Superior Superior Superior % Adjustment N/A -10.00% -10.00% -10.00% -10.00% Size 11,750 6,960 8,544 17,200 12,000 % Adjustment N/A -9.58% -6.41% 10.90% 0.50% Design/Appeal One Story Brick Two Story Two Story One Story Two Story % Adjustment N/A 5.00% 5.00% 0.00% 5.00% Age/Condition Eff 20 Yrs/Average Similar Superior Similar Superior % Adjustment N/A 0.00% -11.11% 0.00% -33.33% Corner Influence None Similar Similar Similar Similar % Adjustment N/A 0.00% 0.00% 0.00% 0.00% Zoning C-2, Commercial Inferior Inferior Inferior Similar % Adjustment N/A 5.00% 5.00% 10.00% 0.00% Quality of Construction Average Similar Similar Similar Similar % Adjustment N/A 0.00% 0.00% 0.00% 0.00% Land to Building Ratio 3.83:1 6.38:1 5.25:1 3.72:1 2.83:1 % Adjustment N/A -3.00% 0.00% 0.00% 3.00% Net Adjustments N/A -12.58% -17.52% 10.90% -34.83% Adjusted price $42.71 $38.21 $33.40 $27.15 Subject eff. Age = 20 years Adjustment for size = 1% per 500 square feet difference High $42.71 Market Conditions (Effective Date) 4/5/2016 Low $27.15 Subject Size 11,750 Mean $35.37 Appreciation Rate 0.00 Reconciled Value 11,750 at a value of $35.00 per S. F. $411,250 Say $410,000

RECONCILIATION: The Sales Comparison Approach was given all weight in the final estimation of value.

APPROACH VALUE INDICATION Cost Approach N/A Sales Comparison $410,000 Income N/A

The cost approach is based on the proposition that a knowledgeable buyer would pay no more for a particular property than the cost of producing an alternate property with the same utility. This approach is very applicable when the property being appraised involves improvements which are relatively new or proposed for construction and have experienced a minimal degree of depreciation. Due to the older age of the subject improvements (built in 1946), and the fact that current economic conditions limit the effectiveness of the cost approach, the cost approach was not performed within this appraisal report.

The Sales Comparison Approach was given weight due to the confirmed sales of similar properties in the market area. These sales provide direct market evidence of property transactions between buyers and sellers in the market area.

The direct capitalization method was omitted because the subject has no lease history, and continues to operate as an owner-occupied property. We found insufficient market data for professional office rents and occupancy rates; thus the income approach was not utilized.

As a result, the estimated “as is” market value of the subject property, of the fee simple estate, as of April 5, 2016 is equal to $410,000.

“AS IS” MARKET VALUE ESTIMATE of the FEE SIMPLE ESTATE $410,000 * * * FOUR HUNDRED TEN THOUSAND DOLLARS * * *

No personal property, fixtures, or intangible items were included within the value.

EXPOSURE/MARKETING TIME: The comparable sales indicate that the exposure time (i.e. the length of time the subject property would have been exposed for sale in the market had it sold at the market value concluded in this analysis as of the date of the valuation) would have been three to twelve months.

The estimated marketing time (i.e., the amount of time it would probably take to sell the subject property if exposed to the market beginning on the date of this valuation) is estimated to be six to eighteen months.

ADDENDA

Engagement

Property Card

Deed