APPRAISAL ASSIGNMENT (Summary) Report Format Of As of ...

Hall – Widdoss & Company, P.C. 1

APPRAISAL ASSIGNMENT (Summary) Report Format

Of Lot 5, Block 1, State Subdivision - Woody's Point

332 Powerline Rd, Coolin, Bonner County, Idaho, 83821

As of

February 1, 2021

Prepared For

Mr. Sid Anderson Real Estate Lands Program Manager

Idaho Department of Lands 300 N. 6th Street, Suite 103

Boise, ID 83702

Prepared by HALL - WIDDOSS & COMPANY, P.C.

STEVEN A. HALL, MAI, CCIM IDAHO CERTIFIED GENERAL NO. 257


TABLE OF CONTENTS SUMMARY OF SALIENT FACTS AND CONCLUSIONS ........................................................ 6 SCOPE OF WORK ......................................................................................................................... 8 RECORD OWNER ....................................................................................................................... 10 SALES HISTORY ........................................................................................................................ 10 LOCATION OF PROPERTY....................................................................................................... 10 LEGAL DESCRIPTION .............................................................................................................. 10 EXPOSURE TIME ....................................................................................................................... 10 PROPERTY RIGHTS APPRAISED ............................................................................................ 11 PLAT MAP ................................................................................................................................... 12 INVENTORY MAP...................................................................................................................... 13 SUBJECT PHOTOGRAPHS........................................................................................................ 14 PROPERTY DESCRIPTION ....................................................................................................... 19 HIGHEST AND BEST USE ........................................................................................................ 20 THE APPRAISAL PROCESS ...................................................................................................... 22 LAND VALUATION – SALES COMPARISON APPROACH ................................................. 23

Reconciliation of Land Valuation: ............................................................................................ 33 FINAL RECONCILIATION ........................................................................................................ 35 VALUE ESTIMATE AND CERTIFICATION ........................................................................... 36

Appraisals and Consultations in Acquisitions/Dispositions, Feasibility Studies, Partial Interests, Condemnation & Litigation, Investment Analysis.

3

May 17, 2021 Mr. Sid Anderson Real Estate Lands Program Manager Idaho Department of Lands 300 N. 6th Street, Suite 103 Boise, ID

Re: Appraisal Report of Cottage Site (as vacant & unimproved) Lot 5, Block 1, State Subdivision - Woody's Point, located at 332 Powerline Rd, Coolin, Bonner County, Idaho, 83821; Subject to Hypothetical Condition for Site Value; IDL Contract #13-110; Modification #15

Dear Mr. Anderson: This letter of transmittal recognizes Contract #13-110 between the State of Idaho, Department of Lands and the firm of Hall – Widdoss & Company, PC and the Contract Modification #15, dated October 7, 2020. This contract modification includes 17 VAFO appraisals and 7 Land Only appraisals for the five (5) year reappraisal required of the Ground Leases and 3 ULA appraisals (now expanded to 6 ULA appraisals). This appraisal is one of the 6 ULA appraisals which incorporate the “Vacant & Unimproved” cottage site valuation only; no Personal Property to be incorporated. The underlying site is viewed from the perspective of the IDL Contract which states the cottage site is “Vacant and Unimproved” which is not the same as “natural state”. The property being appraised is intended to form the basis of market value for the purpose of establishing a market value for the 2021 VAFO auction. The contract & the subsequent contract modifications require the market value of the cottage site, as though vacant & unimproved (only). Please be advised this report, in conjunction with the Sales Catalog previously submitted & approved, constitutes compliance with the terms of the Appraisal Instructions/Scope of Work, Priest Lake Cottage Sites, specifically with regard to Modification #15. This report must be viewed in context of the Sales Catalog for full compliance with Scope of Work and under general requirements of the 2020/2021 Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Standards Board of the Appraisal Foundation. In addition, the appraisal presented is intended to be in full compliance with all applicable laws & regulations affecting this service & report in which jurisdiction the subject property is located. This report, as a stand-alone document, is missing key (critical) information and analysis upon

Hall-Widdoss & Company, PC. Real Estate Valuations & Consulting

1001 SW Higgins Avenue, Suite 201 Missoula, MT 59803

Telephone (406) 721-3822; Telefax (406) 721-7848 [email protected]

[email protected] [email protected]

Steven A. Hall, MAI, CCIM MT & ID General Certified Nicholas J. Hogan, MAI MT, ID & WY General Certified Matt S. Hall, MAI MT General Certified John Widdoss, MAI, ARA Spearfish, SD (605) 642-8844

mailto:[email protected]




which the value opinion is based. Without the Sales Catalog/Project Report, this summary report would be incomplete. As such, there is connectivity between the individual appraisal and the previously submitted & approved Sales Catalog. This is a single family (single dwelling unit) recreational cabin site located on the east side of Priest Lake. The cottage site, as vacant & unimproved, is described within the body of this report. This cottage site has a specific gross site size, front feet of shoreline, topographic characteristics (weighted as to a scale measuring 1.) slope from road-to-building site; 2.) slope from shore-to-building site as well as a measure of the shoreline qualities and, to a lesser extent, a measure pertaining to lake depth. This is all factored into an overall quality of the lot for purposes of comparison to sale properties which were also reviewed/measured on this same basis. There is no zoning. The subdivision plat filed in Bonner County contains Conditions, Covenants & Restrictions, as more commonly known as CC & R’s. This regulates the individual cottage site to a single-family residential use & it precludes further subdivision of the lot, as set forth in that plat CC & R’s. The Personal Property, if any, is excluded from this valuation. The former lessee has removed all existing improvements although I am not fully sure as to the on-site septic tank. The valuation expressed herein is related only to the land value. Please reference the scope of work section of this report for important information regarding the scope of research and analysis for this appraisal, including property identification & inspection, and an analysis of highest and best use and valuation methodology. Your attention is directed to the Limiting Conditions and Assumptions section of this report. Acceptance of this report constitutes an agreement with these conditions and assumptions. In particular, I note the following: The only Extraordinary Assumption pertaining to this value opinion is the use of the extraordinary assumption allowing for the October 2, 2016 inspection of this site to represent the current condition of the site. It is assumed that what existed 10/02/16 is the same as what existed on this effective date of February 1, 2021. It is the opinion of the appraiser and the client that the prior inspection is acceptable and to assume no changes have occurred to the property over this time frame. I did not personally drive onto this lot for this 2021 VAFO cycle. Based upon my investigations, studies and analyses, it is my opinion the market value of the subject property defined herein as the “vacant & unimproved” cottage site (Land Only) reflecting the Extraordinary Assumption relative to date of report valuation, as of February 1, 2021 is:

Five Hundred Thirty-Six Thousand Dollars

$536,000 Please refer to the sales catalog/project report for the analysis of exposure time. Pursuant to USPAP, it is necessary for this appraisal to consider & analyze exposure time when developing an opinion of market value.


The use of extraordinary assumptions and hypothetical conditions within the report should be viewed within context that their use might have affected the assignment results. Your attention is invited to the data found within the body of this report which, in part, is the foundation of this conclusion. I wish to thank you for this opportunity to be of service. If there are any questions or issues that need attention, please do not hesitate to contact me. Respectfully submitted, Hall - Widdoss & Company, P.C. Steven A. Hall, MAI, CCIM ID Certified General CGA-257 Expires August 11, 2021


SUMMARY OF SALIENT FACTS AND CONCLUSIONS

PROPERTY IDENTIFICATION Site Description

Size 56,628 Sq. Ft. U102101Size (Acres) 1.30 AcresWaterfront - Straight Across 179.33 Front Ft. 180Waterfront - Plat Dimension 268' +\- Front Ft.Average Depth of Lot 497' +\- LFRoad Frontage/Access

Road-to-Building Site 4

Shore-to-Building Site 3

Shoreline 2-3

Lake Depth 2Topography-General Narrative 11

Shape

Vegetative Cover

Utilities

Street Improvements

Zoning/Land Use

Flood Hazard

Easements/Encroachments

332 Powerline Rd Lot 5, Block 1, State Subdivision - Woodys Point

Frontage dimension, based on diagonal south line, is > 179.33'

The site topography consists of a moderate to steeper slope with rock outcroppings creating various access challenges between shore & building site. The road-to-building site is varied from gentle to moderate from Powerline Road to the previous building site location. The building site is on a bench overlooking the lake. From that elevated building site to the lake, the access is steep & challenging. Overall, this is classified as a moderate to steep sloped lot for purposes of use & value.

Moderate slopes from Powerline Road to the elevated building site. The shared driveway with Lot 4 is clearly a moderate slope and this rating is well supported.

Mostly steeper slope up to the building site that is located on an elevated bench; considerable rock outcroppings between shoreline & former building site.Rocky & brush covered. Shoreline has many larger boulders making direct water access challenging without constructing a gangplank to a future dock. There is a shoreline beach shelf area that allows some usable area near the water with the SW corner of lot having some rock stairs & other site clearing that had been done creating some support for a slightly higher shoreline rating.

Lease No. (N/A)

Access is Eastshore Road to Cape Horn Road to Powerline Road (to the end). There is a shared driveway off Powerline Road with this serving Lots 1 to 3 and another driveway serving Lots 4 to 7. I have assumed easements cover the servient and beneficial estates for each of these lots. Further, I assume there is an agreement in-place for the shared repairs & maintenance of the shared driveway

For the 2017 valuation of this lot, it was concluded the slopes from the building site (bench area) to the shoreline had a rating of 3 points. Shoreline quality was rated at 3 and lake depth was rated at 2 points. As stated, it was my conclusion this lot would reflect 11 points, at a minimum. When compared directly to Land Sale #1 (Lot 4, South Shores), this lot is argued as being slightly better. When the buyer of Lot 5, South Shores started construction, they removed a large portion of the tree & brush cover exposing the true slope of the site. This had a steep driveway, shared with the adjacent property, & there is a constant steeper slope from east down to west. There is no beach area to either of these sales and shoreline that was rocky/brushy (no sand). My conclusion was a minimum classification of 11 points (using a mixed rating of 11-12 based on these cited sales) is fully warranted and reflective of market perceptions.

According to Bonner County, the property is not zoned. The subject site is regulated by the Conditions, Covenants & Restrictions (CCRs) recorded as part of the subdivision plat. Specifically, the subject is restricted to single family residential use only. It allows for one dwelling and ancillary improvements including guest house, garage and outbuildings such as storage sheds, boathouse, outhouse, etc.Property is a lake front tract. The shoreline area is subject to seasonal fluctuations in water depth. The building site is not in a flood hazard zone based on information available.

Adequate lake depth with no presentation of dock challenges so this is given a 2 point rating.

Eastshore Rd is a paved, county maintained road. Cape Horn Road & Powerline Road are dirt & gravel roads that are state owned but maintained by the cottage site lessees making them functionally equivalent to private easement roads for valuation purposes. Lessees and/or an association are responsible to maintain, repair and replace any main access roads pursuant to the recorded plat.

Site shape is very irregular - forms somewhat of a pie shape; see plat for better visualization.

There is a shared driveway that extends from the end of Powerline Road through a corner of Lot 4 & through this lot (5) providing access to both of these lots. In addition, Lot 6 shares this driveway for their site's access off Powerline Road. There is overhead power that originates on Lot 8 and extends west & north through Lot 8 - 4. I assume there is an easement over those lots for the mutual benefit of these lots. The previous lessee indicated there is a shared drainfield with an adjacent lot but the inventory map indicates the septic line goes north and east of the building site but ends within the site boundary. The former lessee also stated they have a drainfield for a single bedroom and so needed an off-site drainfield. I have assumed there will be an off-site drainfield provided should Panhandle Health require an off-site drainfield for more bedrooms.

Electrical power & phone to site boundary per SOW. Valuation of lot does not incl. well, septic system, building pad, dock, and shoreline improvement per vacant & unimproved.

Tract has moderate timber cover with deciduous understory; mix of conifers and deciduous trees/bushes.


Improvements: The appraisal is of an Unleased Site (ULA) and there are no lessee improvements to consider (no Personal Property as defined in the sales catalog). The valuation of the cottage site includes utility extensions to the site, driveway access but no specific site or structural improvements. The ULA list was not provided for me to inspect the lot in the Fall of 2020 for this 2021 VAFO auction. I have assumed the former lessee has removed all of the structural improvements (as shown by the 2017 photos). The purpose of this appraisal to establish a market value opinion of the cottage site, as though “Vacant & Unimproved”.

VALUE INDICATIONS Land Value: $536,000 FINAL OPINION OF COTTAGE SITE VALUE $536,000

Effective Date February 1, 2021


SCOPE OF WORK This was defined in the sales catalog/project report and will not be repeated here except for the very specific conditions imposed by the Scope of Work.

1. Client: The client is the Idaho Department of Lands (IDL). 2. Intended user: The intended user is the Idaho Department of Lands (IDL). Although it

is recognized prospective purchasers may be provided a copy of the individual appraisal (of these respective ULA cottage sites), the prospective purchasers are not an intended user of the appraisal.

3. Purpose/Intended use: The Purpose of this appraisal is to provide an opinion of the market value of the site as though “vacant & unimproved”. This appraisal is pursuant to the Contract Modification #15. The intended use recognizes the Idaho Constitution, Article IX, Section 8 that provides "no state lands shall be sold for less than the appraised price." As such, the intended use is to establish the minimum bid amount at the VAFO auction to be held in the Summer of 2021. Where IDL is the owner of the fee simple estate (land), the intended use is to simply establish the minimum bid amount for the property “As Vacant”.

4. Type of value: The type of value identified in Scope of Work is market value. That term has been defined within the sales catalog/project report. Value is based on terms equivalent to cash.

5. Effective Date of Value: The effective date of appraisal is February 1, 2021 per instructions from the client. It was agreed that an extraordinary assumption would be incorporated whereas what as observed by prior inspection of the ULA cottage site is assumed to be the same as what exists as of the effective date of value of February 1, 2021. This assumes that all personal property has been removed from the site so only the vacant cottage site existed as of February 1, 2021. The report date is shown on the letter of transmittal.

6. Subject characteristics: Deals with the extent of the subject property such as my personal observation of the land only. The definition of “Vacant & Unimproved” cottage site is key to this valuation.

7. Assignment conditions: Refers to hypothetical conditions, assumptions & limiting conditions. Please refer to the paragraphs below regarding the hypothetical condition pertaining to the site as “vacant & unimproved”. The site condition reflects an extraordinary assumption that this is a vacant tract of land. I am unsure of the removal of the septic tank but assume it was removed.

8. Prior Services: I / this firm have been involved in the appraisal of the subject cottage site in the Summer of 2013, but this dealt with the vacant & unimproved cottage site only. I have appraised this property in 2017, as well.

(6. continuation) As identified in the Appraisal Instructions/Scope of Work, Priest Lake Cottage Sites, Item II. states “a Summary Appraisal Report, as described in USPAP, shall be used to support each individual lot appraisal. A summary form report shall include photos, addenda, plats, maps, etc. that support the facts and the opinion of market value presented in the appraisal. The appraisal report must be in compliance with the current version of USPAP.” Under USPAP 2020/2021, there are two options for reporting the results of an appraisal assignment. The option selected for this valuation assignment is an Appraisal Report. In historic context, this is further classified as a narrative appraisal report (a summary appraisal report).


All neighborhood plats have been recorded. The rights and obligations associated with the platting, recording CCRs, and forming of neighborhood associations will be assumed to be in-place and operating at time the lots are appraised. Any substantive changes that occur in the future relative to these assumptions will be adjusted accordingly, if needed. For this appraisal, the extent of the subject observation involved a prior viewing of the exterior boundaries of the site to the extent possible as well as a water view (boat view from the lake was conducted in Summer of 2013 but not for this appraisal). The site view and site analysis reflect the State Subdivision plat as recorded in Bonner County and it incorporates the Overlay maps of the recorded State Subdivisions with the 2011 Inventory Surveys provided by JUB Engineers, Inc. It is this latter map that clearly identifies what classifies an IDL Approved Improvement. According to this ULA assignment, it is assumed that all cottage sites have had the former lessees remove these approved improvements. The previous property view did not include an owner interview though the Lessee property disclosure including any additional information the lessee wished to have considered was provided to me as part of this assignment. (7. continuation). Client requested an opinion of the market value for the cottage site as though “Vacant & Unimproved”. No valuation of Personal Property is incorporated, and no personal property currently exists other than extension of utility services (power & phone) and extension of driveway access (private or shared). It is a condition of this appraisal that the underlying site represents a “vacant & unimproved” condition. The only Extraordinary Assumption pertaining to this value opinion is the use of the extraordinary assumption allowing for the October 2, 2016 inspection of this site to represent the current condition of the site. It is assumed that what existed 10/02/16 is the same as what existed on this effective date of February 1, 2021. It is the opinion of the appraiser and the client that the prior inspection is acceptable and to assume no changes have occurred to the property over this time frame. I did not personally drive onto this lot for this 2021 VAFO cycle. There are no other hypothetical conditions or extraordinary assumptions associated with this valuation. Within the sales catalog/project report, I have incorporated definitions for hypothetical conditions and extraordinary assumptions. These definitions are taken from the USPAP 2020/2021 and clearly define what is meant by the terms. I have also included all of the sales information that forms the basis for the opinions expressed herein.


RECORD OWNER The property is found to be under the ownership of the Idaho Department of Lands (State Endowment Lands). The cottage site is currently leased. The Lessee and the Lease # are identified below: Lessee: Unleased Site Lease #: U102101

SALES HISTORY There have been no recent or relevant transfers of ownership for the subject property within the previous three years.

LOCATION OF PROPERTY The property that is defined as the subject property is located on the east side of Priest Lake, Bonners County, Idaho. The specific property address is 332 Powerline Rd, Coolin, ID.

LEGAL DESCRIPTION The cottage site is legally identified through client records as: Lot 5, Block 1, State Subdivision - Woody's Point

EXPOSURE TIME The definition has been included within the sales catalog/project report and will not be shown again here. There is a recognized significant improvement in the recreational market (increasing demand and increasing prices). The sales catalog incorporated a discussion of exposure time for the improved properties with a minimum days-on-market of 17 to a maximum of 342 DOM and a mean of 121 DOM and a median of 86 DOM. For the 2020 sales catalog, the exposure times were only slightly different with a mean of 131 DOM and median of 107 DOM. Based on the 2020 VAFO sales as well as the sales noted above, there is an expectation of relatively high demand and there is virtually a non-existent supply of properties along Priest Lake shoreline so I believe there is reason to believe exposure times will be less than what was shown for this past two years. Marketing time is not relevant to this appraisal assignment given the prospective sale at auction as of a given date (Summer 2021).


PROPERTY RIGHTS APPRAISED The subject property is being valued, on the basis of, a site condition of “vacant & unimproved” for the purposes of establishing a minimum bid for the 2021 VAFO auction (as an Unleased Cottage Site). No personal property is valued in this appraisal. The appraisal reflects the fee simple title to the property pursuant to Scope of Work. It is necessary to understand that fee simple title can have encumbrances that affect some of those rights associated with fee simple estate. In this appraisal, there are commonly accepted easements for utility services such as electrical power, telephone and cable and, in some cases, there are easements for buried services such as community or private sewer. There are also shared driveway easements which I have not found to be economically burdensome to the underlying site value. If there is an easement(s) that impacts use & value, I will provide that discussion & analysis. The appraiser was previously provided a map exhibit with the Notice to Proceed (originally provided in Summer of 2013) showing all approved improvements. If any existing improvements are NOT approved by the IDL and/or are not legally constructed, as required by the building authority having jurisdiction, the appraiser is to note these improvement(s) in the appraisal but is NOT to include these in the valuation of the approved improvements. The former lessee has removed the improvements as shown in the 2017 appraisal.


PLAT MAP


INVENTORY MAP


SUBJECT PHOTOGRAPHS

ABOVE: View from the end of Powerline Road looking westerly on shared driveway Lots 4-6. (247)

ABOVE: Same location but looking southwest along the southern boundary of site. (248)

ABOVE: Same location but showing the land area north of the shared driveway. (249)

ABOVE: View southwest along the north boundary looking from the shared driveway. (250)


ABOVE: View from the former cabin site looking southwest toward the southern end of the property. (251)

ABOVE: View back to the northeast from the former cabin site location. (252)

ABOVE: View of the southwest corner of the site at shoreline. (253)

ABOVE: View to the north from the southwest corner of site. (254)


ABOVE: Same location but looking northeast along south boundary. (255)

ABOVE: Predominant shoreline/beach feature of the site looking north. (256)

ABOVE: View of the rock steps and path from building site down to shoreline/beach area. (257)

ABOVE: Lake water extraction pipes still remaining. (260)


ABOVE: View from the northwest corner of site looking south along shoreline. Former dock piling shown. (261)

ABOVE: Same location but looking southeast toward former building site. (262)

ABOVE: Pump house still exists but unknown if there is pump or pressure tank. (263)

ABOVE: Former cabin site location on this site. (265)


ABOVE: View of lake from rock outcropping SW of former building site. (264)


PROPERTY DESCRIPTION Site Description: This is a single-family recreational cabin site as vacant & unimproved. Site Description

Size 56,628 Sq. Ft. U102101Size (Acres) 1.30 AcresWaterfront - Straight Across 179.33 Front Ft. 180Waterfront - Plat Dimension 268' +\- Front Ft.Average Depth of Lot 497' +\- LFRoad Frontage/Access

Road-to-Building Site 4

Shore-to-Building Site 3

Shoreline 2-3

Lake Depth 2Topography-General Narrative 11

Shape

Vegetative Cover

Utilities

Street Improvements

Zoning/Land Use

Flood Hazard

Easements/Encroachments

332 Powerline Rd Lot 5, Block 1, State Subdivision - Woodys Point

Frontage dimension, based on diagonal south line, is > 179.33'

The site topography consists of a moderate to steeper slope with rock outcroppings creating various access challenges between shore & building site. The road-to-building site is varied from gentle to moderate from Powerline Road to the previous building site location. The building site is on a bench overlooking the lake. From that elevated building site to the lake, the access is steep & challenging. Overall, this is classified as a moderate to steep sloped lot for purposes of use & value.

Moderate slopes from Powerline Road to the elevated building site. The shared driveway with Lot 4 is clearly a moderate slope and this rating is well supported.

Mostly steeper slope up to the building site that is located on an elevated bench; considerable rock outcroppings between shoreline & former building site.Rocky & brush covered. Shoreline has many larger boulders making direct water access challenging without constructing a gangplank to a future dock. There is a shoreline beach shelf area that allows some usable area near the water with the SW corner of lot having some rock stairs & other site clearing that had been done creating some support for a slightly higher shoreline rating.

Lease No. (N/A)

Access is Eastshore Road to Cape Horn Road to Powerline Road (to the end). There is a shared driveway off Powerline Road with this serving Lots 1 to 3 and another driveway serving Lots 4 to 7. I have assumed easements cover the servient and beneficial estates for each of these lots. Further, I assume there is an agreement in-place for the shared repairs & maintenance of the shared driveway

For the 2017 valuation of this lot, it was concluded the slopes from the building site (bench area) to the shoreline had a rating of 3 points. Shoreline quality was rated at 3 and lake depth was rated at 2 points. As stated, it was my conclusion this lot would reflect 11 points, at a minimum. When compared directly to Land Sale #1 (Lot 4, South Shores), this lot is argued as being slightly better. When the buyer of Lot 5, South Shores started construction, they removed a large portion of the tree & brush cover exposing the true slope of the site. This had a steep driveway, shared with the adjacent property, & there is a constant steeper slope from east down to west. There is no beach area to either of these sales and shoreline that was rocky/brushy (no sand). My conclusion was a minimum classification of 11 points (using a mixed rating of 11-12 based on these cited sales) is fully warranted and reflective of market perceptions.

According to Bonner County, the property is not zoned. The subject site is regulated by the Conditions, Covenants & Restrictions (CCRs) recorded as part of the subdivision plat. Specifically, the subject is restricted to single family residential use only. It allows for one dwelling and ancillary improvements including guest house, garage and outbuildings such as storage sheds, boathouse, outhouse, etc.Property is a lake front tract. The shoreline area is subject to seasonal fluctuations in water depth. The building site is not in a flood hazard zone based on information available.

Adequate lake depth with no presentation of dock challenges so this is given a 2 point rating.

Eastshore Rd is a paved, county maintained road. Cape Horn Road & Powerline Road are dirt & gravel roads that are state owned but maintained by the cottage site lessees making them functionally equivalent to private easement roads for valuation purposes. Lessees and/or an association are responsible to maintain, repair and replace any main access roads pursuant to the recorded plat.

Site shape is very irregular - forms somewhat of a pie shape; see plat for better visualization.

There is a shared driveway that extends from the end of Powerline Road through a corner of Lot 4 & through this lot (5) providing access to both of these lots. In addition, Lot 6 shares this driveway for their site's access off Powerline Road. There is overhead power that originates on Lot 8 and extends west & north through Lot 8 - 4. I assume there is an easement over those lots for the mutual benefit of these lots. The previous lessee indicated there is a shared drainfield with an adjacent lot but the inventory map indicates the septic line goes north and east of the building site but ends within the site boundary. The former lessee also stated they have a drainfield for a single bedroom and so needed an off-site drainfield. I have assumed there will be an off-site drainfield provided should Panhandle Health require an off-site drainfield for more bedrooms.

Electrical power & phone to site boundary per SOW. Valuation of lot does not incl. well, septic system, building pad, dock, and shoreline improvement per vacant & unimproved.

Tract has moderate timber cover with deciduous understory; mix of conifers and deciduous trees/bushes.

Improvements: The appraisal is of an Unleased Site (ULA) and there are no lessee improvements to consider (no Personal Property as defined in the sales catalog). The valuation of the cottage site includes utility extensions to the site, driveway access but no specific site or structural improvements.


HIGHEST AND BEST USE The definition of Highest and Best Use has been provided within the sales catalog/project report. The land value is based on a premise of the Highest and Best Use of the property as though vacant and unimproved. There are four tests which are considered in developing an opinion as to the Highest and Best Use of the property. These four tests include an examination of uses that are physically possible, legally permissible, financially feasible and maximally productive. The most current version of USPAP requires additional consideration of 1.) The Timing of that Use; 2.) the Most Likely Use; and 3.) the Most Likely Buyer of the Property. There are five broad categories of land use that are considered within an opinion of highest and best use: these being residential, commercial, industrial, agricultural and recreational. Within the regional market, I have found it more prudent to begin the analysis with legally possible uses since this helps refine the analysis quickly and to the point. Since this appraisal is of the IDL Approved Improvements (Personal Property) and reflects improvements only, this section of the report will be brief as it relates to the underlying site. Legally Permissible: The subject site is not zoned. The recorded IDL subdivision plat has identified Conditions, Covenants & Restrictions as part of the official plat. Specific to the subject site, these CCRs have identified Use Restrictions such as “No Lot shall be occupied and used except for single-family residential purposes by the Owner and its family, or by a single-family tenant, which fits within the rustic character of the Idaho Panhandle National Forests. No more than one (1) Single-Family Dwelling shall be placed on the Property.” Mobile homes are not allowed but manufactured or modular homes on permanent foundation are allowed as long as there is compliance with minimum roof pitch and the improvement meets applicable building codes. There is a 40-foot setback from the high-water mark (lake front) as well as side yard and front yard setbacks of 15 feet and 25 feet, respectively. In addition, there are some regulations pertaining to colors of roofing & siding materials, & exclusion of perimeter fencing. The key points of the CCRs are the regulation of the cottage site to a single-family residential use. This does not specifically address seasonality issues, the primary recreational considerations of the lake front qualities, availability of services including but not limited to schools, medical & hospital services, daily needs shopping, churches & other social services, etc. It simply states the cottage site will be used for single-family residential use and only one single family dwelling. Given the regulatory imposition of these CCRs as fundamental to the allowable land uses (per the recording of the subject subdivision); it is my opinion the only applicable use for this cottage site is a single residential dwelling unit (with ancillary living quarters if the lot size warrants it. Physically Possible: The cottage site under study consists of the physically described property denoted in the Property Description section. There are no known characteristics that would eliminate the legally identified use of the property. There has been a weighted scale provided to this lot which measures it for such topographic characteristics as to slope under two measures; 1.) road-to-building site and 2.) shore-to-building site. Additionally, I have considered the quality & utility of the shoreline (beach) and the lake depth. However, I continue to find inconsistencies in the market as to whether shallow lake depth truly affects the market price of these waterfront parcels. In the past, it was argued that shallow depth required a longer, more costly dock, to gain adequate lake depth for boating. This followed that some impact to market value should be noted for the higher dock cost.


At the same time, the dock value is made a part of the Personal Property, so shallow lake depth is marginalized for the appraisal of the vacant cottage site. Financially Feasible/Maximally Productive: The subject cottage site represents a single lot without benefit of future subdivision. This is intended to be a recreational lake frontage cabin site situated on the east side of Priest Lake. Although there is a potential for year-round living, the primary impetus for sellers and buyers has been the seasonal recreational utility afforded the waterfront sites along the shore of the lake. This is both a financially feasible use of the site, as vacant & unimproved and it is the maximal productivity of the site. Timing of the Use: The subject site is immediately available for its highest and best use pursuant to the Scope of Work and the condition as a “vacant & unimproved” cottage site as a lake frontage tract. Most Likely Use: The most likely use has been addressed under financial feasibility and maximal productivity. Who is the Most Likely Buyer: The most likely buyer is a recreationist who desires the recreational attributes associated with a lake front site on Priest Lake and who has the financial means to invest in such a property? The largest population center having a direct effect on the Priest Lake market is Spokane, WA. In addition, there is Coeur d’Alene, Idaho although this city is situated along the shore of Coeur d’Alene Lake. The Priest Lake market also attracts investor/users from Seattle, WA as well as throughout the Western U.S. Primarily, the seasonal recreational qualities would tend to attract those most able to utilize the property throughout the summer season and that is the most likely buyer. This statement cannot ignore the fact there are owners on Priest Lake that include at least one resident of Florida so geographically, the buyer profile is extensive but “most likely” would more logically apply to the Spokane population and radiate from there in a travel time/distance metric. As Improved: There is no Personal Property to be valued consistent with the purpose of this appraisal to establish a market value opinion to be used in establishing a ground lease rate for this “Vacant & Unimproved” cottage site.


THE APPRAISAL PROCESS The appraisal process was defined in the sales catalog so it will not be discussed again here. The cottage site was previously appraised in the Fall of 2013 and an appraisal in 2017 as a ULA. There are no improvements included in this appraisal, so the cost approach is not an applicable valuation methodology. This appraisal reflects a current valuation of the underlying site value as though “Vacant & Unimproved” as that term has been defined. This is not an income property, so the income approach is neither relevant nor applicable. Although it is recognized the cabin site could be rented out, the primary economic motivation that exists is for owner occupancy and/or use so the income approach has no direct relevance to establishing an opinion of market value. Consistent with market behavior, the sales comparison approach is given full emphasis. This recognizes the adage that a property is worth only what someone is willing to pay for it. The fundamental basis of that statement is clearly aligned with the foundation of the sales comparison approach. These are willing sellers and willing buyers, so the price recognizes the interaction of the parties that results in an indication of market price. When these sales (transactional data) are analyzed & compared to the subject, the adjusted indications form the basis for an opinion of value consistent with the weight given by market participants. When there is adequate market information available; both current and specific to the property being appraised, the credibility is proven.


LAND VALUATION – SALES COMPARISON APPROACH The definition of this approach was included in the sales catalog. The site value was previously provided in the Fall of 2013, and in 2017. This 2021 VAFO appraisal cycle has included this lot for purposes of establishing a minimum bid for this cottage site as a ULA property. The subject’s land value has been developed via the sales comparison approach which is based on the premise that a buyer would pay no more for a specific property than the cost of obtaining a property with the same quality, utility, and perceived benefits of ownership. It is based on the principles of supply and demand, balance, substitution and externalities. The following steps describe the applied process of the Sales Comparison Approach.

• The market in which the subject property competes is investigated; comparable sales, contracts for sale and current offerings are reviewed.

• The most pertinent data is further analyzed and the quality of the transaction is determined.

• The most meaningful unit of value for the subject property is determined; for water front property, this is

determined to be value based on the front footage ($/FF) although some correlation exists with front foot size and overall site size. When a very small sized parcel sells without regard for size, there is a recognition that site value rather than simply front foot value is at-play.

• Each comparable sale is analyzed and where appropriate, adjusted to equate with the subject property.

• The value indication of each comparable sale is analyzed and the data reconciled for a final indication of

value via a sales comparison technique. I have researched and used the following sales as indications of value for the subject cottage site, as though vacant & unimproved. These sales are analyzed using the following adjustment grid. All sales have been researched through numerous sources, inspected and verified by a party to the transaction. The MLS sheets are individually presented in the sales catalog. I have also considered the land residual methodology for the improved sales that have more marginal improvement contributions. Emphasis is to the most recent pure land sales & those improved sales with marginal improvement contributions. This is the tabulation noted on the following page and is a summary of the transactional available for 2020 (through the end of January 2021).


Land Sales for 2020:

Land Sale #

Addresss or Legal Description Date of Sale Sale Price Improvement Value

Land Value FF Size SF Size $/FF

1 Lot 4 South Shores 1/5/2021 $465,000 $0 $465,000 145.0 25,700 $3,2072 Lot 6, Eastshore Road 2/20/2020 $495,000 $0 $495,000 N/A 71,874 N/A3 Lot 7, Eastshore Road 2/20/2020 $445,000 $0 $445,000 N/A 99,317 N/A4 Lot 6 Sandy Shores Ln. 12/8/2020 $569,000 $12,000 $557,000 100.0 13,024 $5,5705 Lot 2, Eastshore Road 2/20/2020 $395,000 $0 $395,000 N/A 26,136 N/A

VAFO Sales6 374 Upper Bear Creek 10/19/2020 $625,000 $0 $625,000 127 26,136 $4,9217 134 E. Cavanaugh Bay Rd 9/24/2020 $680,000 $0 $680,000 101.6 87,556 $6,6938 195 N. Diamond Park Rd 9/23/2020 $593,000 $0 $593,000 150 42,253 $3,9539 500 E. Cavanaugh Bay Rd 10/15/2020 $883,000 $0 $883,000 206.5 57,064 $4,27610 70 Char Lane 9/23/2020 $730,000 $0 $730,000 160 49,658 $4,563

MLS Sales11 Lot 20 Sandpiper Shores 9/4/2020 $175,000 $0 $175,000 26,136 N/A12 RPXX Sherwood Beach Rd 7/31/2020 $3,600,000 $0 $3,600,000 300 1,764,180 $12,00013 Lot 35 N Sandy Shores Ln 6/30/2020 $260,000 $30,000 $230,000 99.57 30,492 $2,31014 Lot 1 Eastshore Road 2/4/2020 $295,000 $0 $295,000 N/A 86,684 N/A

Improved Sales (Marginal Improvement Allocation) 2020:

Sale # Location Date Price Overall $/GLA

Impvt Value Land Value FF SF Size $/FF Impvt Size (SF)

Impvt $/SF

DOM

1 97 S. Granite Bay Rd 1/5/2021 $750,000 $735.29 $187,000 $563,000 55 8,276 $10,236 1,020 $183.33 1585 78 Janet Lane 11/19/2020 $1,200,000 $1,282.05 $75,000 $1,125,000 173 35,284 $6,503 936 $80.1 1206 568 Hagman Rd 11/18/2020 $1,295,000 $1,151.11 $85,000 $1,210,000 155.1 40,946 $7,801 1,125 $75.6 8412 118 Cutthroat Rd 7/29/2020 $705,000 $734.38 $210,000 $495,000 149 66,211 $3,322 960 $218.8 4816 1102 Sherwood Beach Rd 7/2/2020 $780,000 $435.75 $275,000 $505,000 80 8,276 $6,313 1,790 $153.6 2522 432 Arnold Drive 8/27/2019 $1,080,000 $633.43 $200,000 $880,000 120 19,166 $7,333 1,705 $117.30 5523 78 Diamond Park 8/23/2019 $570,000 $781.89 $85,000 $485,000 137.5 14,375 $3,527 729 $116.60 11924 378 Sherwood Beach Loop 8/23/2019 $940,000 $420.96 $220,000 $720,000 180 28,750 $4,000 2,233 $98.52 21829 304 Sundance Loop 2/22/2019 $900,000 $842.70 $120,000 $780,000 99.29 28,314 $7,856 1,068 $112.36 11434 350 Sundance Loop, Nordman 9/28/2018 $750,000 $838.93 $72,000 $678,000 84.5 19,166 $8,024 894 $80.54 8536 292 S. Diamond Park Rd 8/24/2018 $525,000 $576.92 $121,000 $404,000 100 22,869 $4,040 910 $132.97 7937 131 Lower Lakeshore Rd 7/30/2018 $1,020,000 $289.77 $320,000 $700,000 70 25,047 $10,000 3,520 $90.91 3138 75 Whispering Woods Rd 7/25/2018 $649,000 $413.90 $214,000 $435,000 75 13,155 $5,800 1,568 $136.48 1


Land Sales Discussion: I want the reader to understand that Land Sales 2, 3, 5, and 14 are all part of the Cedars at Huckleberry Bay consisting of 8 single family lots. These are referred to as “deeded waterfront lots” but the shoreline/beach area is all common area so these lots cannot have individual or shared docks within the common shoreline. In addition, this common area is open for public use although that is not a well-known fact or feature. Other than the common area frontage & lack of ability to have a dock in front of each cabin site, these lots are similar to lake frontage properties. Their price points are lower as a result. These lots have access to The Moorage which is a marina/dock feature for owners of lots in Huckleberry PUD (community center docks). The common lake shore is quoted as consisting of sandy beach and rocky/brushy beach encompassing 2,075 feet of shoreline. This part of the Huckleberry PUD is unique, and it has taken a number of years to sell these lots. Their pricing has been below deeded lake front lots with the first sale being an unusual shape & it sold for the lowest price. The most recent sales suggest some price appreciation. I do not believe these are good indicators of market value for the subject lots, which have a specified amount of frontage & that frontage is not common area where the public can access it. Adjustments were discussed within the sales catalog and I refer the reader to that analysis as the background for making these adjustments. The opinion of market value has relied on all of the sales as well as the key land sales identified in the sales grid. All of the sales shown here have already been adjusted to reflect the Land Only component of the sale. Land Sale #1: This property is part of the South Shores Addition to Huckleberry PUD. There is community sewer and water. The PUD provides common areas including tennis courts, a community center and miles of trails. The HOA provides snowplowing and road maintenance as well. This lot has a shared driveway access through Lot 3. It is a relatively steep lot with rocky/brushy shoreline. This parcel has been on and off the market since July 2014 with a price originally shown at $495,000 and which was dropped to $465,000 on March 10, 2016 and it has been at this price since that date. The property went under contract on October 7, 2020 and closed January 5, 2021. It is the newest land sale on Priest Lake although there are the pending sales on lots in Cedars at Huckleberry as noted above. This parcel has 145 FF and the sold price of $465,000 indicates $3,207/FF for a lot that is rated 11 points for topography & shoreline qualities. Lot 5 South Shores, this being located due north of this newer sale, sold 9/23/2013 for $450,000 & it contained 125 FF so that sale indicated $3,600/FF. Land Sale #4: This property is located north of Two Mouth Creek Subdivision, in Sandy Shores Addition. This is a vacant tract containing 0.30 acres with 100 feet of frontage. This has a sandy beach with brushy shoreline area. There is a shared dock with Lot 5. The overall topography is a gentle slope that is mostly treed but not representative of dense undergrowth. The property was listed for sale at $549,000 and sold for $569,000. The broker stated there were multiple offers which is why this sold for more than asking price. The shared dock is given a contribution value of $12,000 so the land price is $557,000 or $5,570/FF. Land Sale #13: This lot had been on the market for several years and it was the north end of the subdivision. This had 100 FF of rocky/brushy shoreline. This is a very steep lot with shared stairs to the shoreline. The neighbor was the only interested party. It was listed for $269,500 and sold for $260,000. The building site is situated high above the shoreline and this


caused the low price point. This is part of Huckleberry Bay. I have not relied heavily on this sale except where the comparison is to a similar steep lot. In this case, this has no direct comparison to the lot being appraised. VAFO August 2020 Sales: Land Sale #6: This lot was auctioned in August of 2020 with 3 active bidders, none of whom was the existing lessee. The existing lessee stated they would not be bidding so it was well known that the lot would not including displacement of a current lessee. This was found, through anecdotal information, to represent one bidder who had thought they would be able to acquire the lot for appraised value, only to find 2 other bidders who were strongly motivated to buy. The lot had good level access to the building site, but this had a steep slope down to the rocky/brushy shoreline with a small sandy beach area. The improvements were a tear-down and all bidders recognized that situation. This was appraised as a lot having topography rated 11-12 points. I feel this sale better recognizes 12 points with the road-to-building site given a full 5 points. This was appraised for $397,000 but sold for $625,000 ($3,126/FF vs. $4,921/FF). Land Sale #7: This August 2020 auction sale is 134 E. Cavanaugh Bay Road (Lot 14, Block 1, Cougar Creek). This lot had an old, red Quonset hut cabin with minimal value. It was recognized in the appraisal and in the bidding that the improvements would be demolished. The lot had a topography rating of 14 with the shoreline given a lower rating due to the wet, subby conditions during the Spring. The easterly parts of the lot are crisscrossed by the switchback of E. Cavanaugh Bay Road, but this provides additional on-site storage for boat & trailer, etc. The road just above the cabin has not been used for years so I assume this does not provide the lot north of the sale any access. This was appraised for $457,000 for this 101.6 FF lot which was $4,596/FF. This sold for $680,000 or $6,693/FF. The background story (anecdotal information) indicated that neighbors to either side of this lot agreed to bid against the lessee as neither party got along with this lessee. The neighbors were the successful bidder, and they were not motivated to re-develop the lot but were motivated to remove this lessee. As such, there are some conditions of sale that are considered atypical of the term - market value. This is classified as a high bracket sale because of this motivation but lessee was actively bidding on the lot suggesting it is a reasonable price point. Land Sale #8: This is an August 2020 auction lot with both the existing lessee and others bidding. The existing improvements had a contributory value of $150,000 so these improvements were not significant. The lot was appraised for $465,000 and this lot contained 150 FF, so the appraised value was $3,100/FF. This sold for $593,000 or $3,953/FF. The topography rating was 12-13 with shoreline at 304. In review of the shoreline quality, I looked at this sale with a full 13-point rating. The lessee was an active bidder and financial circumstances were such that they simply could not afford to pay more for the lot. The successful bidder was not typically motivated based on the anecdotal information I obtained by other attendees at the auction. The successful bidder did not want this for personal use but wanted to remove the existing cabin because they thought it was unsightly (eyesore). The improvements were within the 40-foot setback and the price paid is thought to be influenced by atypical motivations. I will not emphasize this sale for that reason. Land Sale #9: This property is 500 E. Cavanaugh Bay Road. This August 2020 auction was included the existing lessee and one other bidder involved. The lot had additional frontage


due to the creek flowing along the north boundary of the lot. This was the lot where the E. Cavanaugh Bay Road ends. Due to the creek, the adjacent lot to the north had a constrained parking area. The lessee felt the creek was a negative feature because of setback issues. I did not view it with quite the same opinion. This is a larger lot, but the eastern portions of the tract were of only marginal considerations. The primary site value was from E. Cavanaugh Bay Road to the existing cabin location. This lot had shallow slope to the cabin from the road and quite a large area for additional building/parking. This was rated 14-15 with the shoreline rated at 3+ but this could easily reflect a higher rating at 4. Overall, this is a highly usable lot with a low value cabin. The lessees had done some upgrading but the location, style, size & quality of the cabin, on this quality lot, suggested an under-improvement. The successful bidder was the lot owner to the north. It makes perfect sense as that lot owner could benefit by better vehicular access, development of a family compound, etc. This was appraised for $708,000 or 3,429/FF and it was upbid to $883,000 or $4,276/FF. This is an increase of 25%. The improvements had a contribution of just less than $100,000 and this also contributed to the buyer motivation. Land Sale #10: This property is located at 70 Char Lane (Lot 24, Block 1, Woody’s Point sub.). This lot contained 160 FF and a total site size of 1.14 acres. It fronted to Cape Horn Road, but the cabin was accessed using Char Lane. The overall topography rating was 13 with the road-to-building site shown at 3+ and that could easily have been classified as 4 points from Char Lane to the cabin. Also, the shoreline/beach was rated at 3 points and this, with some clearing and rock-picking, could be rated as high as 4 points. This could be as high as a 14-point total. The lot was appraised for $520,000 or $3,250/FF and it sold for $730,000 or $4,563/FF. There was no anecdotal information although the auctioneer stated there was strong interest in the lot and it was acquired by a non-lessee. Bidding included several parties with the neighbor being the successful bidder. The improvements were given marginal consideration and that is felt to have been one reason this lot sold for this higher amount. It is concluded that this lot has higher quality rating for the southern exposure & the shoreline beach features. The next sales are taken from the August 2019 auction. It is my opinion, based on discussion contained within the sales catalog, these sales should be adjusted for market condition changes. I have discussed west side sales showing 6.95% annual increase to just over 17% per year annual growth with other paired sales showing 8.62% and 7.16%. My conclusion is an adjustment of 10% for the 2019 sales to the 2020 sales. Land Sale #15: This property is a ULA sale that occurred in August of 2019. This lot had all improvements removed although there was a building site from the previous lease. This was rated 14-15 points based on the shallow lake depth and the moderate slopes for the road-to-building site. The shoreline-to-building site is level and of premium quality. The shoreline/beach was a mix of sand & grasses with some seasonal subby conditions. This had 134 FF and overall site size was just under 1 acre in size. This is 47 Pinto Point Lane and it sold for $536,400 which included the pro-rata share of the Pinto Point Community Services Lot. This was used for comparison based on a 15-point total for topography. Adjusting for market conditions, this sale indicates $4,393/FF. Land Sale #16: This property is another 2019 ULA sale. It is located at 86 Lake Trout Lane which is Lot 40, Block 1 of Woody’s Point Subdivision. The lot fronts to Cape Horn Road but is accessed from Lake Trout Lane, which is more of a shared driveway with other lots in the subdivision. The slopes for this lot are moderate which is why this was rated at 8+ points


for road-to-building-site and shore-to-building site. Shoreline/beach is rated at 4 points which recognizes the gentle sloping topography and the sandy/cobble condition of the beach. Lake depth is adequate & there was no dock challenge to depth, so this was rated at 2 points which forms the total rating of 14 points. This lot contained 149.95 FF and it was appraised for $543,000 and it sold for that amount (to a non-lessee). That is $3,621/FF. Based on the market condition adjustment of 10%, this sale indicates $3,983/FF. Land Sale #17: This property is also a 2019 ULA sale. It is located at 68 Coho Lane which is Lot 30, Block 1, Woody’s Point Subdivision. The lot fronts to Cape Horn Road but is accessed using Coho Lane, which is more of a shared driveway with other lots in the subdivision. The slopes for this lot are moderate to steeper which is why this was rated at 7+ points for road-to-building-site and shore-to-building site. Shoreline/beach is rated at 3 points which recognizes the rocky/cobble shoreline & no real developed beach area. Lake depth is adequate & there was no dock challenge to depth so this was rated at 2 points which forms the total rating of 12 points although I recognize this could be argued as high as 13 points so that is incorporated into the use of this sale. When compared to Land Sale #1 that is rated at 11-points, this property is of a higher quality by more than 1-point. Adjusted for market conditions, this sale indicates $3,221/FF for this 152.31 FF tract. Land Sale #19: This is a west side property that was improved with an older vintage style cabin. It was originally listed with more land included. The basis of the analysis is the assumption the replat occurs exactly as shown with this lot referring to Lot 1A with 0.65 acres and 99.29 FF. The cove feature complicates the dimension so this should be considered in rounded terms. Broker stated cabin will be used by buyer for a couple of years, but the primary value was in the land. I estimated the cabin at $80,100 ($75/SF) with the garage at $11,520, the boathouse at $14,400 and the dock at $6,840 with the balance in site improvements (well, lawn, etc.) The buyer assumes the LID for community sewer. Total improvement allocation is $120,000 leaving $780,000 for the vacant lot. Another broker familiar with the property indicated the cabin was very rustic and could be argued as having little value. The garage and the boathouse are also subject to buyer preference where some may want these improvements while others give them no value. Given the cove frontage, the lot could be argued as having shoreline of 154.35 feet, but the analysis was done using the plat dimensions stated above of 99.3 FF. Adjusting for market conditions, this sale indicates $9,033/FF. Land Sale #21: This is 124 Old Schneider Road. This sold October 2018 for $842,019 with $55,000 allocated to the existing improvements. Broker stated there were 2 bidders on this property which is why the sale price was slightly higher than list price. She confirmed there was no personal property such as a boat lift. I asked about improvement value or contribution and she stated the improvements held no real value to the Buyers. Both bidders were going to tear down both structures (cabin and detached garage). She felt the garage did have some value in normal circumstances but in this transaction, both considered the improvements to have no value. I have shown the analysis above to include some improvement value because these improvements were still on the property in 2019. I had previously also included an analysis without any improvement value shown and that demonstrated a price of $12,029/FF. Adjusting this sale (land only) for 15% has indicated a price of $13,492/FF for a 70 FF lot.


Land Sale #22: This property is a west side sale, directly across the small cove from Land Sale #6. This property had a small vintage cabin and small garage/storage with a small dock. The majority of the value was allocated to the land. There is some question as to whether this represented all land value, or some allocation should be given to the cabin contributing some value to the price paid. The cabin is an under-improvement for the site qualities. I gave the improvements a contribution of $72,000 because the broker confirmation suggested the buyers were going to keep the cabin, at least for the foreseeable future. The land quality shows 10 points for road-to-building site and shore-to-building site. The shoreline/beach is all sandy beach & shoreline with adequate lake depth to represent the rating of 16 points. This premium lot of 84.5 FF has indicated a land value of $678,000 or 8,024/FF. If all the value were given to the site, this sale would indicate $8,876/FF. Adjusting for market conditions at 15%, this sale indicates $9,628/FF. Land Sale #23: This is a VAFO sale. There were some private discussions between the lessee and the ultimate buyer of this lot. The lessee had developed some health problems and told the prospective buyer that he would not bid against him, but the lessee went to the auction intending to bid if the prospective buyer did not bid. This, in my opinion, virtually eliminated outside competitive bidding. At the same time, the sale reflects a non-lessee purchasing the property at appraised value. If anything, this sale could be argued as a conservative valuation based on the rating of 15 points that I acknowledged could be as high as a full 16 points. It is a premium lot in any description due to the expansive sandy beach and the predominate level to slightly elevated topography having no development challenges. I adjusted the sale at 15% for market conditions given this is a 2018 auction sale. Land Sale #24: This is a 2018 VAFO auction sale but this was purchased by the existing lessee after competitive bidding occurred. This is a premium site located at the west end of Two Mouth Creek. The level site has expansive sandy beach with buffer zone to the north given the creek flowing through the lot north of this sale. The existing lessee was the successful bidder but the competitive bidder, who had not toured the existing improvement, had already selected a number of premium lots with low value improvements that were of interest to him. At auction, this was a surprise bidder since he had not toured or shown other interest. This was considered a strong indication of value for a premium lot. Adjusting 15% for market conditions, this represents $4,692/FF for 163 FF. Located on the following pages are the sales grids reflecting the comparison of the newest sales to the subject. These are either pure land transactions or sales with some limited site improvement contribution, so the primary focus of the sale is the underlying site. I have also included sales that reflected a land residual after accounting for the economic contribution of the existing improvements, as discussed & analyzed within the sales catalog.


Categories Subject Property Land Sale #1 Adjustments Land Sale #4 Adjustments Land Sale #6 Adjustments Land Sale #7 Adjustments Land Sale #8 Adjustments

Address/Sale Price 332 Powerline Rd Lot 4, So. Shores Circle $465,000 Lot 6, Sandy Shores Ln $557,000 374 Upper Bear Creek $625,000 134 E. Cavanaugh Bay Rd $680,000 195 N. Diamond Park Rd $593,000

Property Rights Conveyed Fee Simple Fee Simple $0 Fee Simple $0 Fee Simple $0 Fee Simple $0 Fee Simple $0

Financing Terms Cash Equivalent Conventional $0 Cash $0 Cash $0 Cash $0 Cash $0Conditions of Sale Market Market $0 Market $0 VAFO/ULA $0 VAFO/ULA $0 VAFO/ULA $0Expenditures Made Immediate to Sale None None $0 None $0 None $0 None $0 None $0Sale Date/Market Conditions 2/1/2021 1/13/2021 $0 12/8/2020 $0 10/19/2020 $0 9/24/2020 $0 9/23/2020 $0

Adjusted Sale Price N/A No Adjustments $465,000 No Adjustments $557,000 No Adjustments $625,000 No Adjustments $680,000 No Adjustments $593,000

Adjusted Price ($/FF) N/A No Adjustments $3,207 No Adjustments $5,570 No Adjustments $4,921 No Adjustments $6,693 No Adjustments $3,953

Adjustments:Location Priest Lake East Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0

Size (SF) 56,628 25,700 In FF Size 13,024 In FF Size 26,136 In FF Size 87,556 In FF Size 42,253 In FF Size

Size (FF) 180.00 145.00 -$201 100.00 -$1,113 127.00 -$579 101.60 -$1,305 150.00 -$187

Topography Classification (Slope) Mostly R&B shore Mostly steep/no beach See Overall Gentle slopes/great beach See Overall Varied Slopes/R-B Shore See Overall Varied slopes/gentle beach See Overall Steep to Mod. w/good beach See Overall

Topography Rating 11 11 See Overall 15 See Overall 12 See Overall 14 See Overall 13 See Overall

Rating as % of Total - Comparison 0.6875 0.6875 See Below 0.9375 See Below 0.7500 See Below 0.8750 See Below 0.8125 See Below

Overall Topography Adjustment Rating is for Lower Quality Lot 5.00% $160 -35.00% -$1,950 -5.00% -$246 -25.00% -$1,673 -15.00% -$593

Road Frontage Eastshore Rd to Pvt Road South Shores Circle $0 Sandy Shores Ln $0 Upper Bear Creek $0 E. Cavanaugh Bay Rd $0 N. Diamond Park Rd $0

Utilities (sewer & water systems) Elec. & Phone Com Wtr&Swr -$179 Com Swr & Wtr -$260 Elec. & Phone $0 Elec. & Phone $0 Elec. & Phone $0Improvements and/or Common Areas None Huckleberry PUD -$160 Huckleberry PUD -$279 Tear Down Cabin $0 Quonset Not Incl. $0 Cabin not incl. in price $0Zoning/Land Use Reg's CC&Rs REC $0 REC $0 CC&Rs $0 CC&Rs $0 CC&Rs $0Net Adjustments -$380 -$3,601 -$825 -$2,978 -$780Indicated Value FF $2,827 $1,969 $4,096 $3,715 $3,173

Implied Subject Value $508,772 $354,340 $737,362 $668,622 $571,130

Low $354,340

High $737,362

Average $568,045

Road to cabin is a gently sloping topography with mod. Timber cover. From cabin location at higher elevation, the slope is moderately steep. Shoreline is mostly rocky & brushy with small sandy beach where dock is located. Lake bottom has good depth.

Gentle to moderate slopes with cabin location closer to shoreline which has a gentle slope to a beach area that has some seasonal subby drainage issues. The middle of the lot is steeper which is why there is a switchback. Shoreline is lawn area to gravel/sand lake bottom. Strong competitive bidding.

The road to building site is rated steep with a steep staircase down from the parking area to the cabin. The shore-to-cabin is a gentle to moderate slope up and the shoreline is a mix of sandy/gravel beach with some brushy areas. Lake depth is typical for sloping lots (deeper).

Mostly timbered lot in Huckleberry Bay with shared driveway from Lot 3 to Lot 4. Steeper lot which is like Lot 5 that, after site was cleared, it was evident this is a steeper slope from east down to west with rocky/brushy shoreline.

Gentle to moderate slopes, mix of timber & deciduous understory with good road access and great sandy beach with shared dock ($12,000 deducted from the sale price of $569,000..



Address/Sale Price 332 Powerline Rd 500 E. Cavanaugh Bay Rd $883,000 70 Char Lane $730,000 47 Pinto Point Ln $536,400 86 Lake Trout Ln $543,000 68 Coho Lane $446,000


Financing Terms Cash Equivalent Conventional $0 Cash $0 Conventional $0 Cash $0 Cash $0

Conditions of Sale Market VAFO/ULA $0 VAFO/ULA $0 VAFO/ULA $0 VAFO/ULA $0 VAFO/ULA $0Expenditures Made Immediate to Sale None None $0 None $0 None $0 None $0 None $0Sale Date/Market Conditions 2/1/2021 10/15/2020 $0 9/23/2020 $0 8/20/2019 $53,640 8/20/2019 $54,300 8/20/2019 $44,600



Adjustments:

Location Priest Lake East Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0


Size (FF) 180.00 206.50 $235 160.00 $251 134.30 -$419 149.95 -$190 152.31 -$141

Topography Classification (Slope) Mostly R&B shore Gentle slope, good beach & creek See Overall Mod/gentle slopes/good beach See Overall Mostly level/shallow lake See Overall Mod/gentle slopes/good beach See Overall Varied Slopes/R-B Shore See Overall



Overall Topography Adjustment Rating is for Lower Quality Lot -35.00% -$1,497 -25.00% -$1,141 -35.00% -$1,538 -25.00% -$996 -5.00% -$161

Road Frontage 0 E. Cavanaugh Bay Rd $0 Cape Horn Rd/Lake Trout $0 Pinto Point Ln $0 Cape Horn Rd/Lake Trout $0 Cape Horn & Coho Ln $0

Utilities (sewer & water systems) Elec. & Phone Elec. & Phone 0 Elec. & Phone $0 Elec. & Phone (Other) Adjusted SP Elec. & Phone $0 Elec. & Phone $0

Improvements and/or Common Areas None Cabin not included 0 Cabin not included $0 Pro-rata PP Com. Serv. Lot -13 Cabin not Included $0 Cabin not Included $0

Zoning/Land Use Reg's CC&Rs CC&Rs $0 CC&Rs $0 CC&Rs $0 CC&Rs $0 CC&Rs $0Net Adjustments -$1,261 -$890 -$1,969 -$1,185 -$302Indicated Value FF $3,015 $3,673 $2,424 $2,798 $2,919Implied Subject Value $542,628 $661,106 $436,328 $503,620 $525,407

Low $436,328

High $661,106

Average $533,818

From road to building site is gentle slope & this is primary portion of site. There is drive down to the cabin location and level to slight slope to shoreline. Shoreline/beach area is mix of sandy area, sand & gravel and some rocky/brushy areas. There is a creek to the north boundary which creates some setback issues but also adds to the appeal of site.

Moderate to steeper slopes from Cape Horn to Char Lane. Cabin is to the south side of Char Ln and this is a gentle slope to the shoreline. Shoreline/beach is mostly rocky/brushy area with small area near dock that has sandy beach with good access to water. There is adequate lake depth. This is strong 14 point rating.

Mostly level to slightly undulating. Shore-to-building site is mostly level/gentle slope. Road-to-building site is mix with slight-moderate slope. Shoreline is sandy/gravel beach with shallow lake bottom (lower rating); overall rating14-15 but primary part of site is 15.

Topography is varied. Upper elevation at Cape Horn is gentle slope from road to bench then moderately steep down to Lake Trout. From shore to building site is gentle slope with total rating of 8+ for overall slopes. Shoreline is mix of sandy/gravel beach & shoreline with adequate lake depth.

Irregular shoreline w/no developed beach area (rock retaining wall/seawall). Rocky/brushy shoreline. Varied topography showing mod to steeper upper elevations between Cape Horn & Coho Ln. Gentle slope from shoreline to elevated building site appx. 10' +\- above shoreline.



Address/Sale Price 332 Powerline Rd 304 Sundance Loop $780,000 124 Old Schneider Rd $787,019 350 Sundance Loop $678,000 740 Cape Horn Rd $619,604 566 State Cabin Rd $665,000


Financing Terms Cash Equivalent Cash $0 Cash $0 Cash $0 Conventional $0 Cash $0

Conditions of Sale Market Market $0 Market $0 Market $0 VAFO (Less PP Com.SL) -$1,604 VAFO $0

Expenditures Made Immediate to Sale None None $0 None $0 None $0 None $0 None $0

Sale Date/Market Conditions 2/1/2021 2/22/2019 $117,000 10/1/2018 $118,053 9/28/2018 $101,700 8/24/2018 $92,941 8/27/2018 $99,750



Adjustments:

Location Priest Lake West Side Priest Lake $0 West Side Priest Lake $0 West Side Priest Lake $0 East Side Priest Lake $0 East Side Priest Lake $0


Size (FF) 180.00 99.30 -$1,825 70.00 -$3,768 84.50 -$2,281 155.29 -$179 163.00 -$126

Topography Classification (Slope) Mostly R&B shore Level & Sandy beach See Overall Level-gentle/Sandy beach See Overall Mostly level-Sandy beach See Overall Mostly Level w/slight slp See Overall Mostly level w/slight slp See Overall



Overall Topography Adjustment Rating is for Lower Quality Lot -45.00% -$4,065 -45.00% -$5,818 -45.00% -$4,152 -40.00% -$1,831 -45.00% -$2,111

Road Frontage 0 Sundance Loop $0 Kalispell Bay to OS Rd $0 Sundance Loop $0 Cape Horn Rd $0 State Cabin Rd $0

Utilities (sewer & water systems) Elec. & Phone El., Ph.,Com. Swr (LID) Well Adjusted SP Lk Wtr, Com Swr, Elec/Phn Adjusted SP El., Ph., Well, Com Swr Adjusted SP Elec. & Phone $0 Elec. & Phone $0

Improvements and/or Common Areas None Vintage Cabin & boathouse Adjusted SP Old Vintage Cabin Adjusted SP Old 1 St Cabin Adjusted SP Vacant Cottage Site $0 Vacant Cottage Site $0

Zoning/Land Use Reg's CC&Rs REC $0 REC $0 CC&Rs $0 CC&Rs $0 CC&Rs $0

Net Adjustments -$5,890 -$9,586 -$6,433 -$2,010 -$2,237

Indicated Value FF $3,144 $3,344 $2,794 $2,568 $2,454

Implied Subject Value $565,842 $601,847 $502,920 $462,301 $441,763

Low $441,763

High $601,847

Average $514,935

Improved property with ? over contribution value of cabin; suggests a land only indication. This sale required boundary line changes from sellers adj. property so size & frontage were different from listing. High quality frontage with sandy beach/cove feature. Due to cove feature, the shoreline of 154.35 feet could be used, as opposed to the straight-across measurement of 99.3 FF. Updated for time & using the shoreline size indicates $5,811/FF.

Level & at-grade with road. The shoreline & beach is a gentle elevated building site 5' +\- above beach. This is mix of sand & grass beach & some brush. The rating is 16 points but this could be argued at 15 points. The majority of lot is level & slight bank down to beach.

Sale price of $750,000 with $72,000 allocated to small bungalow cabin & garage/storage building & vinyl dock. The property is level with slight slope to shoreline & sandy beach area. This is a premium lot with similar cove/small bay feature like 304 Sundance. This is a premium lot which was under-improved.

Tract is mostly level to gentle slope although NW area of site is steeper slope down to the building site. The shoreline/beach is expansive sandy beach with shallow depth. The mid ratings for road-to-building site & lake depth resulted in 15 rating but this could be full 16 points.

Tract is mostly level with only slight elevation above lake. Expansive sandy beach/shoreline with shallow lake depth. End of road & creek to north give privacy/seclusion. Premium lot with competitive bidding.


Reconciliation of Land Valuation: The table presented below is a summary of the land sales found on Priest Lake that are classified as Land Only indications. Although some of the sales included some minor contributions for improvements, most of these transactions are land indicators. Further, there are a number of sales that were Unleased Sites that were part of the previous 2019 and 2018 auction cycles that are considered relevant. The ULA’s were explained as not having a current lessee so the land was open to anyone interested in bidding on the lot, without concern of bidding against an existing lessee.

All 15 Indications Dollar Per FF Value IndicationMean (Average) $2,994 $538,933Median $2,919 $525,407Minimum $1,969 $354,340Maximum $4,096 $737,362

After review of the data presented in the sales grids, I have formed an opinion of the current market value for the vacant & unimproved site. The site value for this property is based on the mean price for these adjusted sale transactions. I found there to be strong support when considering all 15 sales, but I also believe there are three sales on the west side of the lake that, because of location & small lot sizes, these are classified as outliers with respect to how the balance of the market has demonstrated prices for the subject size & topography. The emphasis in this appraisal has factored the overall topography elements including, but not limited to, what is perceived to be the primary valuation; shoreline qualities & the use/location of the building site as proximate to the shoreline (slope issues). For this appraisal, I relied on market extraction for overall slope & shoreline qualities as discussed in the sales catalog. As I stated previously, the rating of 11+ points are considered well supported & that this has been the same rating for 2017. I feel that Sales #19, #21 and #22 have unduly influenced the subject valuation where these lots have much smaller site sizes (front foot ranges from 70 FF to 99.30 FF). They should not be ignored but also these sales should not, unnecessarily influence the east side location of the subject. Eliminating these three sales (#19, #21 & #22) has shown the remaining sales representing values as follows:

W/O 19. 21 & 22 Dollar Per FF Value IndicationMean $2,969 $534,448Median $2,873 $517,090Minimum $1,969 $354,340Maximum $4,096 $737,362

My conclusion is a site value of $2,975/FF and that is applied to the subject frontage as indicated herein. My emphasis in this appraisal has factored the overall topography elements including, but not limited to, what is perceived to be the primary valuation; shoreline qualities & the use/location of the building site as proximate to the shoreline (slope issues). For this appraisal, I relied on market extraction for overall slope & shoreline qualities as discussed in the sales catalog. As stated previously, the rating of 11+points are a reasonable topography rating given the shoreline/beach shelf area for water access.


Overall, the use of the mean price indication from these 12 sale indicators has shown $2,969/FF while all 15 sales have shown a mean of $2,994/FF. I weighted the mean of the 12 sales at 75% and the mean of the 15 sales at 25% and that resulted in a unit value of $2,975/FF. My conclusion of this unit value, applied to the subject site frontage results in a value for the vacant & unimproved cottage site as shown below.


$536,000


FINAL RECONCILIATION In this appraisal as a ULA (Unleased Site), there is only the sales comparison approach to be employed and this has produced an opinion of the market value of the “Vacant & Unimproved” cottage site. As discussed, lake front property on Priest Lake is in reasonably strong demand. There are sales of steeper sloping lots with older cabins where those improvements continue to add or contribute to overall value. There are premium lots where older cabins have been purchased and then demolished. It is imperative to understand the Priest Lake market has some inconsistencies in how improvement contribution is viewed. As with many recreational waterfront markets, the cost approach is difficult to gather sufficient local contractor cost data of any specificity which is why the national cost indices are sourced. The sales comparison approach has strength based on the concept of substitution (acquiring a like-kind property having similar lot size (frontage or front feet) and square footage, lot features dealing with slope, shoreline/beach, and lake depth. In this situation, the sales comparison approach has adequate market evidence to provide a supported conclusion of value. I feel it is necessary to remind the reader that as of this appraisal date, there was only one property available for sale on Priest Lake and that has a price of $4,000,000. The issue of scarcity, the price changes noted for the 2020 VAFO results as well as the other fee simple sales found on the lake all strongly support increased market demand, low inventory and higher prices. As the sales comparison approach is the only valuation approach utilized, there is no need for reconciliation. The indication presented within that approach is the final valuation. This opinion reflects my opinion of the market value of the subject property under a fee simple valuation representing the “Vacant & Unimproved” condition of the property (see hypothetical condition). Based upon my investigations, studies and analyses, it is my opinion the market value of the subject property defined herein as the “vacant & unimproved” cottage site (Land Only) reflecting the Extraordinary Assumption relative to date of report valuation, as of February 1, 2021 is:


$536,000


VALUE ESTIMATE AND CERTIFICATION The undersigned does hereby certify that (except as otherwise noted in this appraisal report): 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 analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. The use of extraordinary assumptions and hypothetical conditions within the report should be viewed within context that their use might have affected the assignment results.

• I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved.

• I have performed appraisal services regarding the subject property within the three-year period immediately preceding the agreement to perform this assignment; I appraised this property for the 2017 VAFO cycle.

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

• My engagement in this assignment was not contingent upon developing or reporting predetermined results.

• 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.

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

• I have made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property).

• No one provided significant real property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.)

• The report contains necessary discussion concerning a reasonable exposure period for the subject property within the estimated value shown.

• This report is in compliance with applicable regulations governing appraisal services and appraisal reporting requirements for the State of Idaho.

• 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 & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

• As of the date of this report, I, Steven A. Hall, MAI, CCIM, have completed the continuing education program of the Appraisal Institute.

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


Based upon my investigations, studies and analyses, it is my opinion the encumbered fee simple market value of the subject property, reflecting the Extraordinary Assumption relative to date of inspection & date of report, as of February 1, 2021 is:


$536,000

Steven A. Hall, MAI, CCIM

ID Certified General CGA-257 Expires 8/11/2021

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