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1 AN APPRAISAL REVIEW AND CONSULTING ASSIGNMENT NINE MILE HILL SUBDIVISION TEHAMA COUNTY, CALIFORNIA Prepared For Mr. Don McKim Nine Mile Hill Ranch Red Bluff, California, 96080 By Lester M. Fox Fox Appraisals and Consulting 8780 Fox Street Red Bluff, California, 96055

Transcript of AN APPRAISAL REVIEW AND CONSULTING ASSIGNMENT …

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AN APPRAISAL REVIEW AND CONSULTING ASSIGNMENT

NINE MILE HILL SUBDIVISION

TEHAMA COUNTY, CALIFORNIA

Prepared For

Mr. Don McKim Nine Mile Hill Ranch

Red Bluff, California, 96080

By

Lester M. Fox Fox Appraisals and Consulting

8780 Fox Street Red Bluff, California, 96055

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Mr. Don McKim February 25, 2019 Nine Mile Hill Ranch Red Bluff, CA 96080 Dear Mr. McKim: Pursuant to your request, I performed an update of a review of the original appraisal report on the Nine Mile Hill Development Project, prepared by Robin S. Weck, MAI of the subject property located in Tehama County, California on September 26, 2011. My original review was performed on April 15, 2014. I included, as a consulting assignment, supporting documentation including a current proforma and approvals by state and federal agencies. Pursuant to your request, I am updating the supporting data to provide a current snapshot of the market for the subject project. The use of this update assignment is restricted to the client, Nine Mile Hill Ranches, for assistance in equity management. This report is intended to comply with the reporting requirements set forth under Standards Rule 3 of the Uniform Standards of Professional Appraisal Practice for an Appraisal Review. As such it presents a summary of the data, reasoning, and analyses that were used in the appraisal review process to develop the review appraiser’s opinions. The primary data and information is retained in the appraisal file and the original report by Mr. Weck. The discussion contained in this report is specific to the needs of the client and the intended use as stated elsewhere in this report. The subject of the original appraisal report and this review is a large, fully entitled and approved 3,700 unit age restricted, fully amenitized active adult community on 3,320 acres of land located six miles north of the city of Red Bluff in Tehama County and approximately 15 miles south of the City of Redding in Shasta County, California. The project itself is located entirely within Tehama County, California. The review appraiser of record has previous experience with similar properties and is competent to both review the original appraisal and analyze the current market for the subject property and its effect on the status of the project in compliance with the competency provision of USPAP. For your review,

Lester M. Fox Certified Real Estate Appraiser AG011429

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SUMMARY OF SALIENT FACTS AND CONCLUSIONS Client: Nine Mile Hill Ranches Intended User: Nine Mile Hill Ranches Intended Use: Equity Management Owner of Record: NOBY Venture LLC, and Nine Mile Hill

Investment Company, Inc. (NMHIC) Location: Interstate 5 and Hooker Creek Road Tehama County, California Assessor’s Parcels: 007-500-32 Land Area: 3320.00 acres +/- Property Type: Residential and Commercial Development Land Improvements: None Flood Zone: Zone C (Non Flood Hazard Area) Census Tract: 6103.02 Economic Life: N/A Interest Appraised: Fee Simple Zoning: 20 year Development with Specific Plan Highest and Best Use: Residential and Commercial Development Effective Date of Update: February 25, 2019

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SUBJECT PHOTOGRAPHS

Subdivision From Sunset Hills Exit on I-5

Subdivision from Sunset Hills Exit

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APPRAISAL REVIEW ANALYSIS:

The original appraisal is a Self Contained report. The client identified in the report is

ING USA Annuity and Life Insurance Company/ING Commercial Real Estate

Opportunity Fund I, LLC. An appraisal review was performed for Nine Mile Hill

Investment Company and not the original client on 04/21/2014. The purpose of the

review was to analyze the conclusions of the original report and ascertain their

correctness at the time as well as provide additional commentary to support current value

of the project in todays market, rather than a technical review of the original appraisal for

accuracy. However, to comply with the standards set forth in USPAP, a technical review

was also performed. The intended use of that review was to assist the client, Nine Mile

Hill Investment Company, in decisions regarding moving forward with the project.

The original report contains ample data regarding the subject property, The description of

the ownership interest, the physical, legal and economic characteristics of the subject

property and the market area, contained from pages 1 through 21, are complete and

accurate. The appraisal includes a full description of the proposed subdivision and the

market for age restricted, active adult senior housing. Pages 22 through 32 contain an

extensive overview of the active adult senior housing specific market and demographics.

Pages 33 through 48 contain a detailed description of the subject’s immediate market area

of Tehama County and the subject properties physical characteristics. The Highest and

Best Use analysis is contained from Pages 52 through 54 and is adequate and still

relevant. The sales comparison begins on Page 56 and concentrates on Bulk Paper lot

sales in Northern California. Adequate sales which were relevant at the time are included

in the report. The report has an effective date of May 30, 2007. The sales analysis

utilized sales of subdivision lots within non “Active Adult” communities which is felt to

be relevant at the time of the appraisal. These sales were also utilized to determine a

discount rate for the purpose of performing a discounted cash flow analysis. Overall, the

report is accurate in both its descriptions and assumptions. Current information analyzed

include: MLS data for the Lincoln Hills Subdivision in Lincoln California that was a

model for the subject subdivision; a Residential Market Analysis performed on the

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subject property by Robert Charles Lesser & Co, Real Estate Advisors, completed on

February 18, 2014; a report prepared by De Webb in February 2013 titled Baby Boomer

Survey which is a demographic study of potential clients for active adult communities,

whether fully amenitized like the subject or active adult communities that are not fully

amenitized. These reports, plus current cost estimates from the developer, form the basis

for the findings of this review update.

CURRENT STATUS OF PROJECT:

Since the date of the original appraisal, several key changes in the status of the subject

subdivision project have occurred. At the time of the original appraisal, Del Web/Pulte

Homes, a national leader in developing and marketing active adult communities was no

longer involved in the project. The only effect noted from this termination is that the

name of the project and infrastructure items such as street names will change. The

concept and all conditions of the subdivision such as off site improvements, On Site

improvements, CC&Rs and recreational amenities will remain the same, with the

exception of the addition of a 138,000 square foot Assisted Living facility. The subject

property ownership and development team has extensive experience in developing

projects of similar scope to the subject and it is not felt that there will be any negative

effect due to the lack of Del WebbPulte Homes involvement.

The original project engineering firm, McKay and Somps, has assigned all engineering

rights and designs to SHN Engineering of Redding, CA. Engineering status is as follows:

Over 75 % of the engineering work is complete on the wastewater treatment facility and

90% of the engineering is complete on the water storage facility and tanks.

Over 75% of the Engineering is completed for the overall project and over 90% is

completed for Phase I.

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Catholic Health Care West is still committed to building a health care facility on the

project site. The hospital will be the first building constructed on the project.

A 138,0000 square foot Assisted Living Facility with 121 units has been added to the

project.

A lawsuit initiated by the California Oaks Foundation, referred to on Page 84 of the

appraisal, has been satisfactorily settled at the California Supreme Court level and is no

longer an obstacle to the project. This lawsuit is fully mitigated.

The original agreement with the county included a development time period of 20 years.

That agreement has been re-set after the lawsuit mentioned above was successfully

litigated. The re-set date is April 27. 2010 and runs for 20 years, giving ample time to

complete the project.

The subject property owners have continued the application process and have reached

several major milestones as well as furthering the remaining obstacles to development.

The project is now “shovel ready”, meaning that a grading permit to begin infrastructure

work could be issued at any time.

A 404b permit has been issued by the U.S. Army Corps of Engineers allowing all grading

and waterway structuring to proceed.

A 401 permit for water quality and runoff has been issued by the U.S. Army Corps of

Engineers.

A 1602 permit for Lake or Streambed Alteration Agreement has been issued by the

California Department of Fish and Game.

The Tehama County Board of Supervisors has accepted the Project Environmental

Impact Report.

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Owners have provided a current Performa detailing marketing expectations. Highlights

of the 2019 performa include:

Average square footage of 1864 square foot per residential unit with an average sales

price of $650.000 weighted over 7 years. This equates to $348.71 per square foot. Per

square foot sales prices will naturally vary with upgrades. No lot premiums are

considered. While high for the local area, these figures are in line with prices for the

newer homes within the Lincoln Hills development. It is also noted that all homes within

the development will have solar electric and fire sprinkler systems. In addition, there will

be a solar field in the utility area of the project that will provide solar electric to the HOA

amenities which should further stabilize HOA fees for the homeeowners.

138,000 square foot, 121 unit Assisted Living Facility has been added to the project, with

projected Potential Gross Income (Assuming 8% Vacancy) of $6,710,940 with operating

cost of 47.4% and a projected NOI of $3,243,895. At a cap rates of 6.00% to 7.00% this

project would add $54,064,917 to $46,341,357 in value to the overall project. A review

of this proforma revealed competitive rates and realistic operating costs.

COMMENTS ON CURRENT MARKET

The overall real estate market had declined significantly shortly after date of the original

appraisal. However, there has been substantial market stability and recovery since that

time. The economic status of the target market of “Baby Boomers” has remained stable

and the number of Baby Boomers is increasing at a rate of from 7,000 to 10,000 per day.

Very few Fully Amenitized, Age Restricted, Active Adult Community subdivisions have

been developed since the effective date of the appraisal and those subdivision in

existence have mostly sold out. There have been several non-fully amenitized active

adult subdivisions developed in the past couple of years that have performed well in the

market. The demand for these subdivisions has continued and sales have been active.

Re-sales in the Lincoln Hills development referenced in this report have seen substantial

price increases in the past 12 months. At the time of the original report, sales of typical

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non-active adult subdivision lots were still relatively active and increasing. Those non

active adult subdivisions began experiencing a very significantly declining market trend

beginning in early 2008 that continued until 2014. Most subdivisions that did not “finish

out” or at least substantially build out by 2008 became liabilities to the investors and

developers and were either severely discounted when sold or foreclosed on. This was

caused by a nearly complete lack of demand for typical tract housing throughout

California and Nevada, brought on by market conditions wherein foreclosed properties

had driven the market down well below costs of new construction rendering the lots

nearly worthless. There is once again demand for new conventional housing and prices

have rebounded to past the levels of the 2002-2007 “boom” years. It is also noted that

Northern California experienced several major Natural Disasters of wildfires in 2017 and

2018. The Napa Fires in Napa and Sonoma Counties destroyed 8,900 buildings in

October of 2017. The Carr Fire north of Redding destroyed approximately 1,400 homes

in August of 2018 and the Camp Fire essentially devastated the Town of Paradise, in

Butte County, destroying over 14,000 homes in November of 2018. Paradise was

essentially a retirement community and whether or not it will be rebuilt is very debatable

due to the lack of existing infrastructure. All three of these fires occurred in areas that had

poor fire protection and had built up over the past 50+ years in areas that were not

designed for dense housing, lacking the infrastructure to contain wildfires. It is felt that

there will be notable resistance by seniors to rebuild in these areas and a consequential

demand for housing within AAC such as the subject. An interview with a brokerage in

the Lincoln Hills subdivision revealed that a number of Napa and Paradise residents were

seeking homes within that subdivision. It is important to recognize the difference

between active adult communities where demand remained active and is now rising

rapidly in the target subdivisions, and typical tract housing. Sales of subdivisions and/or

subdivision lots such as were used in the original report experienced a virtual standstill

and were severely discounted from 2008 to 2017. The market recovery has allowed them

to cycle through the market and there are very limited new projects available due to the

time and expense of engineering new projects.

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Sales of vacant lots which are comparable to the subject property are not available.

However, demand for the finished product is measurable by utilizing current sales from

the most directly competing subdivision in the region. Primarily, these sales come from

Lincoln Hills in Lincoln, CA, a Pulte Homes/Del Webb project located in Northern

California, north of Sacramento in the small city of Lincoln. This subdivision is an age

restricted, active adult community with virtually the same conceptual goals as the subject.

It is slightly older, having been developed in the late 1990s through 2007 when it sold

out. There are no new lots or homes available as it is 100% built out and was considered

a very successful development, both by homeowners and investors. It was marketed on a

national level by Del Webb/Pulte Homes. A current market survey indicated there were

480 MLS sales, all re-sales, within the Sun City development in 2018. Per a local Realtor

within that development, it is estimated that an additional 20+/- homes were sold by

owners and not listed on the MLS. It is noted that these sales were marketed on a local

level by local realtors and not on a national level, which is how the subject subdivision

would typically be marketed. The available market data was considered to be adequate

for the subject’s market analysis. Median Sales Price of the homes in Lincoln Hills

increased approximately 8% per year from 2013 when the recovery began until 2018

where the median sales price is now $561,695 as of 12/2018, almost no REO activity is

noted due to the economic strength of the typical buyer as most buyers within these

developments either pay cash or have up to 50% down payments. There are currently

only 22 active listings (less than a 1 month supply) with a sales to list price ratio of over

100%. Sales price per square foot sales has increased from an average of $228.00 per

square foot in 2013 to $317.00 per square foot in 2018. The $317.00 per square foot

figure includes the older, inferior quality homes from the earlier stages of development or

it would be notably higher. While there have been approximately 42 re-sales per month

in Lincoln Hills, Sales of new homes when the project was building out reached

approximately 100 sales per month due to availability and national advertising.

The original appraisal also referenced three active adult projects in Southern Oregon.

These subdivisions were all located in and around Klamath Falls, in Southeastern

Oregon. All sold out within the next two years after the appraisal and resale data was not

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obtained for this analysis. However, the location of these subdivisions is notably

different with a high desert climate and long, extremely cold winters. They are

considered more of a destination location, wherein many buyers purchased as vacation

homes and the developer rents these homes on a weekend or weekly basis, rather than

being for primary occupancy.

COMMERCIAL PARCEL:

Commercial land sales have been very limited in Northern California but are recovering

since the downturn. The decline in commercial real estate followed the residential

market by approximately 2 years and is just returning to its previous in the local area. It

has been robust in the Sacramento area for several years. The development of the

commercial lot of the subject property was scheduled to occur between the 2,000 and

2,500th residential build out, but is now scheduled to begin at the start of the project with

some front end discounts to occupants, so that these facilities are available to the early

occupants. Commercial occupants will include a grocery store, a pharmacy, coffee

shops, hair salons and other typical everyday businesses. A number of potential tenants

have given verbal commitments. Original appraisal utilized a figure of $10.00 per square

foot for the value of the commercial land and this figure is still reasonable if not light,

even though sales are extremely limited and somewhat dated. Like the residential portion

of this development, there is felt to be pent up demand in that there is quite a lot of

commercial money available, but businesses have been reluctant to expand in the current

market. With the start up of this development, it is felt that businesses who have

otherwise “held tight” and chosen not to expand, will likely view the subject development

as an opportunity to act with less risk than normal. Current rents for newer strip malls in

the local area are approximately $2.50 per square foot NNN including CAM fees. In the

Lincoln Hills project, they are Approximately $3.00 per square foot as confirmed by the

agency in that project

COMMENTS ON BABY BOOMER SURVEY:

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In 2012, Pulte Group commissioned Ipsos Reid to conduct a study to understand the

Baby Boomer demographic within the United States. The goals of the report

included:

determining the interest level and likelihood of purchasing a new home;

Assessing the importance of certain attributes when moving into a new home;

Exploring perceptions of Active Adult Communities including confirming

/debunking myths associated within AACs.

The report was finalized in January of 2013. Findings included: just over two in five

reported they willingness /likelihood to purchase a new home and increased

compared to a 2010; 43% of those expected to purchase their next home for

retirement within the next four years; Nearly three in ten expect their next home to be

in a different state in which they currently live (Known as Migrators); Community

type preference (rural master plan, suburban, urban, inner-suburban) is evenly

dispersed among Boomers. However, migrators are more likely to prefer a rural

master plan compared to non-migrators; Familiarity with Active Adult Communities

(AACs), and consideration of an AAC has increased significantly compared to 2010;

AACs that offer community amenities, including recreation and social activities, by

far, is the most appealing component of an AAC.

Approximately 28% of the survey respondents who intend to move prefer a rural master

plan community which is age restricted and amenitized. The subject development will be

an age restricted, fully amenitized development that appears to fall within the most

desired categories of the survey and meets the desires and needs of the respondents.

COMM ENTS ON ROBERT CHARLES LESSER RMA:

The Nine Mile Hill Investment Company commissioned Robert Charles Lesser & Co to

perform an independent market analysis of the subject project which was completed

February 18, 2014. This report is specific to the subject development and its goals

included:

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Market Depth: Identify the key source markets for active adult development in

Tehama County and, based on recent housing preferences for the 55+ market,

estimate total AAC home demand from these markets. Given the site’s location

and characteristics evaluate the achievable capture of regional demand for Nine

Mile Hill Ranch, taking into account existing and future inventory.

Positioning: Identify the competitive supply of AACs in the region and project the

achievable base price positioning for new homes active adult homes at NMHR

relative to the competition.

Financial: Estimate average prices NMHR to reflect upgrades and lot premiums

and project annual absorption potential for new homes at the site;

Programming: Define the appropriate development program, including product

types, product mix, amenities etc…

This report is comprehensive in its analysis of both the subject development and its

relationship to competing developments in the Northern California marketplace. It

measures the subject against six other active senior developments, some of which are

amenitized and some of which are not. Most validity in the report, as in the original

appraisal and my own analysis, is given to the Lincoln Hills subdivision in Lincoln,

California. It is most similar in size and quality of housing and by far and away the most

similar in amenities offered. It is 100% sold out of the original new homes and all sales

are re-sales. The report utilizes a 5% discount due to the proven location of Lincoln Hills

and this is felt to be adequate in light of the subject homes being new and modern which

should counter and offset most of the locational difference. The findings in the report are

favorable regarding the subject developments place and pricing in the current market for

AACs. The Average sales price per square foot in the Lincoln Hills development in 2018

was $561,645, or $317 per square foot and the average residential square footage was

1,872 square foot. The lowest sale Price in 2018 was $295,000 for an older attached

condominium unit and $335,000 for an older single family dwelling. The highest sale

price was $1,400,000 for a newer (2006) 3,200 square foot residence with golf course

frontage. The average size of a residence in the subject subdivision is 1,800 square feet

with a projected average sales price of $348.71 per square foot. This indicates an average

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sales price per unit of $650,000. The original projection was an average sales price of

$373,330.

In the original appraiser’s reconciliation of the bulk value of the subject lots on page 68

and 69, he utilizes a percentage of between 30% and 35% of the finished home price.

This is a typical figure and even though there has been such limited development in

recent years, this figure would still be applicable from a developers’ standpoint. Based

on the subject’s estimated average sales price, finished lot values would be indicated

between $195,000 and $227,500. A finished lot value of $200,000 is indicated. While

this figure would be high in light of the overall market where most currently developed

lots were purchased at a severe discount, it is felt to be reasonable for an AAC.

Additionally, the original a

nbppraisal utilized an estimate of $67,910 per lot as an average lot improvement cost.

The most current estimate by the project manager is $71,000 which appears reasonable in

light of the scope of the improvements. This figure had actually decreased when the

market declined, but has risen in the last 5 years as the economy has improved and fuel

prices have risen. Utilizing the above figures and the calculations from the original

appraisal, updated figures are shown in the calculations below.

Individual average retail finished lot value $ 200,000

Less: Average lot improvement cost - 71,000

Average Building Permit Fees - 5,900

Profit calculated at 5% of finished lot value - 10,000

Residual Paper Lot Value $ 113,100

Multiplying this amount by the subject’s 3,700 residential units yields a bulk value of

$418,470,000. The discounted value of the commercial parcels was estimated at

$7,600,000 and that figure is still felt to be relevant. It was based on a value of $10.00

per square foot. The commercial market has returned to strength and it is felt that in

project of this magnitude that the original estimate of $10.00 per square foot would be

recoverable in the market. The original figure of $7,600,000 is utilized. This would

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yield a total bulk value of $426,070,000 rounded to $426,000,000 for the subject

property.

SUMMARY AND OPINIONS:

The 2011 proforma projects a total of 3700 unit sales with sales occurring from 2012 to

2020, a nine year period. This would move back to late 2019/early 2020, but would be

estimated at a seven year period. The development agreement with the county and state

is through 2032.

Due to the lack of available inventory, and due to the wildfires in Northern California

which greatly affected existing conventional senior housing areas, demand is also

expected to be pent up, creating a higher than typical demand for the subject project.

Similar pent up demand was the case in the Lincoln Hills project at its inception. All

homes will be built to 2020 standards and will have solar electrical panels and fire

sprinklers. The project itself will have a solar electrical system for the HOA amenities

which should lead to stability of HOA fees.

Assuming that there is adequate demand, and there appears to be pent up demand in

addition to typical demand as indicated by the Lincoln Hills development, the proforma

data appears reasonable. In the original appraisal, the appraiser utilized a figure that was

approximately 20% less than the values per square foot indicated by the Lincoln

subdivision. The proforma now calls for prices that are higher than the original

projection, but on a par with the re-sales within Lincoln Hills. This is felt to be

reasonable due to the large number of sales in the Lincoln project, coupled with the aging

of the houses which should offset the locational difference.

Based on the above figures, and utilizing the logistics of the original appraisal, it is my

opinion that the Residual paper lot value is now over $110,000. Current figures indicate

a residual value of $113,100. Multiplying the number of lots in the current proforma

(3,700) by $113,100 yields a bulk value of $418,470,000 versus the original figure of

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$144,840,000. Together with a discounted present value of the commercial parcel of

$7,600,000, it is my opinion that he current value of the subject subdivision is estimated

to be $426,000,000. The original appraisal utilized this method as well as a discounted

cash flow method, which he relied on more heavily. It is my opinion that the discounted

cash flow method is less reliable at this time due to a complete lack of arm’s length

transactions of reasonably comparable bulk lots to determine a reasonable discount rate,

and most validity should be placed on the direct sales comparison of bulk lots as noted

above.

In Conclusion, it is felt that there is adequate demand as demonstrated by the re-sales of

finished homes in the Lincoln Hills subdivision for a fully amenitized, age restricted,

active adult community in the regional area of the subject. The logistics and reasonings

stated in the original appraisal are still valid, even though certain indicators have

changed. The indicators for Fully Amenitized, Age restricted, Active Adult Communities

appears to be underserved at this time and value has increased due to pent up demand.

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CERTIFICATION I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analysis, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is my personal, unbiased professional analyses, opinions, and conclusions. I have no present or prospective interest in the property that is the subject of this report, and we have no personal interest or bias with respect to the parties involved. The compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. The analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. The estimate of market value in the appraisal report is not based in whole or in part upon the race, color or national origin of the prospective owners or occupants of the property appraised or upon the color or national origin of the present owners or occupants of the properties in the vicinity of the appraised property. I have made a visual inspection of the subject properties. All contingencies and limiting conditions affecting the analysis, opinions and conclusions are contained within the report, and no one other than assigned appraisers is authorized to change any item in the appraisal. I assume no responsibility for any unauthorized changes. No one provided significant professional assistance. My value conclusion, as well as other opinions expressed herein are not based on a requested minimum value, a specific value, or approval of a loan. I have provided appraisal or other Real Estate services for the subject property within the three years proceeding the date of the appraisal as disclosed elsewhere in this report. As of the date of the report I, Lester M. Fox, am licensed with the State of California Office of Real Estate Appraisers as Certified General Real Estate Appraiser #AG011429, expiring August 8, 2019.

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Lester M. Fox Real Estate Appraiser AG011429

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ASSUMPTIONS AND LIMITING CONDITIONS

1) This is a consulting assignment. 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 the unauthorized use of this report. 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.

2) The property is appraised free and clear of any or all liens and encumbrances

unless otherwise stated in this report.

3) Responsible ownership and/or competent property management are assumed unless otherwise stated in this report.

4) The information furnished by others is believed to be reliable. However, no

warranty is given for its accuracy.

5) 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.

6) It is assumed that there are no hidden 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.

7) It is assumed that there is full compliance with all applicable federal, state, and

local governmental regulations and laws unless otherwise stated in this report.

8) It is assumed that all applicable zoning and use regulations have been complied with, unless nonconformity has been stated, defined and considered in this appraisal report.

9) 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.

10) 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 the accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report.

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11) 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 the report.

12) The appraisers are not qualified to detect hazardous waste and/or toxic materials.

Any comment by the appraisers 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 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 the 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 related comments are the result of the routine observations made during the appraisal process.

13) 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 compliance 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.

14) Any proposed improvements are assumed to be completed in a good

workmanlike manner in accordance with the submitted plans and specifications. It is assumed that the market conditions will not change between the date of the appraisal and the completion of construction.

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 proper written qualification and only in its entirety.

17) Neither all or any pert of the contents of this report (especially any conclusions as

to value, the identity of the appraisers, or the firm which the appraisers are connected) shall be disseminated to the public through advertising, pubic relations, news, sales or other media without written consent and approval of the appraisers.

Page 21: AN APPRAISAL REVIEW AND CONSULTING ASSIGNMENT …

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RESUME

LESTER M. FOX - OWNER FOX APPRAISALS AND CONSULTING

P.O. Box 1187 RED BLUFF, CA

(530) 518-1865 [email protected]

CA CERTIFIED GENERAL APPRAISER, LICENSE #AG011429 CA REAL ESTATE BROKER, LICENSE #01047784

PERSONAL: Tehama County Native Bilingual – English/Spanish EDUCATION: Graduate of Red Bluff High School Real Estate Certificate – Shasta Community College, Redding CA AFFILIATIONS: The Appraisal Institute – Associate Member Foundation of Real Estate Appraisers Tehama Association of Realtors COLLEGE LEVEL COURSES INCLUDE: Real Estate Appraisal Advanced Real Estate Appraisal Business Law Legal Aspects of Real Estate Real Estate Finance Real Estate Economics Tax Aspects of Real Estate Transactions Real Estate Principles Real Estate Practice CONTINUING EDUCATION (Partial List): Uniform Standards of Professional Appraisal Practice – McKissock Schools 2017 Valuation Data Science – George Dell – 2018 Supporting Appraisal Adjustments – Richard Hagar - 2018 IRS Valuation – Appraisal Institute 2010 Condemnation Appraising – Appraisal Institute 2009 Litigation Appraising – Appraisal Institute 2009 General Appraiser’s Market Approach – Appraisal Institute 2008 General Appraiser’s Income Approach - Appraisal Institute 2008 Advanced Income Capitalization – Appraisal Institute 2008 Appraising Small Residential Income Properties – Robert Melfe - 2017 HUD/FHA Single Family Housing Programs – McKissock Schools 2005 Construction Details and Trends – McKissock Schools 2005 Narrative Appraisal Report Writing – McKissock Schools 2003 EMPLOYMENT HISTORY February 1997 - Present: Owner – Fox Appraisals – Certified General Appraiser February 1991 – February 1997: Appraisal Officer – Appraisal Associates, Red Bluff, CA