Photo courtesy of Gina Aguirre-Quek (John Child & Company) Share your photos in upcoming newsletters – email barbier@hawaiiantel.net

INSIDE THIS ISSUE

UPCOMING MEETINGS & EVENTS

General Membership Meeting Plaza Club “Ho’opili” January 13, 2015 / 8:30 am-10:30am

CLICK HERE TO REGISTER NOW

Or email: barbier@hawaiiantel.net

December 2014 Issue

As 2014 draws to a close, the Hawaii Chapter would like to take this final opportunity to thank all who have given time and energy to help further the appraisal profession.

So many of you have served as past presidents, officers, board members, and committee chairs; demo report graders; candidate advisors; and mentors to aspiring appraisers. Others consistently show their support by attending our general membership meetings, courses, and socials, or by taking time to comment on a particular speaker presentation, class, or issue affecting the industry.

We also want to congratulate all who have earned designations this year and thank you, too, for your commitment to excellence. Your accomplishments are the rising tide that lifts all ships.

Finally, we want to wish everyone a very safe and Happy New Year. You made this past year of service a very rewarding one for all of us, and we hope 2015 will be equally good to you.

Sincerely,

Shelly, Stephen, and Andy

2014 Chapter Leadership ........................ 2

LDAC ........................................................ 2

Chapter Education .................................. 2

Chapter Website and Programs .............. 3

Holiday Installation Banquet................... 4

2015 Chapter Leaders ............................. 4

New Designees and Members ............... 5

Member Spotlight .................................. 6

Reviewer’s Roundtable .......................... 7

Past Chapter Presidents .......................... 9

National News ....................................... 10

January 2015 GMM ............................... 11

Hauoli Makahiki Hou and Felis Ano Nuebo!

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 2

2014 Leadership Development and Advisory Council Chris Ponsar, MAI, SRA (The Hallstrom Group, Inc.)

The Leadership Development & Advisory Council (LDAC) strives to foster creative thought from talented individuals involved in the real estate appraisal profession while developing the future leaders of the Appraisal Institute. LDAC also establishes an “appraiser-presence” in Congress and demonstrates that the Appraisal Institute is made up of professionals who recognize the importance of being actively involved in the political process.

Chris Ponsar, MAI, SRA has served the Appraisal Institute and Hawaii Chapter in various capacities, as chapter Director and chairperson for the Candidate Guidance and External Relations committees, Candidate Advisor, and Demonstration Appraisal Report grader. Chris will also serve as 2015 Secretary and Treasurer for the Hawaii Chapter. For these reasons, the Hawaii Chapter selected Chris to represent us at the three-day LDAC conference held in Washington D.C. this past May.

2014 CHAPTER OFFICERS & DIRECTORS

PRESIDENT Shelly H. Tanaka, MAI st@johnchild.com VICE PRESIDENT Stephen E. Stadlbauer, MAI ses@lcs-consulting.com SECRETARY / TREASURER Andrew Conboy andy@hcbahawaii.com EXECUTIVE DIRECTOR Barbie Rosario barbier@hawaiiantel.net EX-OFFICIO Fernando C. Benavente, MAI, SRA DIRECTORS 2014 Randolph K. Flores, MAI Liza F. Hamada 2014-2015 Chris Ponsar, MAI, SRA Brian Walther, SRA, AI-RRS 2014-2016 Paul D. Cool, MAI Shane S. Nishimoto

COMMITTEE CHAIRS Finance Andrew Conboy Nominations Fernando Benavente, MAI, SRA Government Relations Ted Yamamura, SRA, R/W-AC Public Relations Liza Hamada External Relations Chris Ponsar, MAI, SRA Education Fernando Benavente, MAI, SRA Candidate Brian Walther, SRA, AI-RRS and Shane Nishimoto Member Services/Communications Leslie Roach-Laing By-Laws Brian Goto, MAI

Chapter News

Chris

Chapter Education Fernando C. Benavente, MAI, SRA (The Hallstrom Group, Inc.)

As of January 1, 2015, all individuals who become Supervisory Appraisers and Trainee Appraisers will be required to take a Supervisory/Trainee Course per the 2015 Real Property Appraiser Qualification Criteria. This four-hour course will address the national minimum requirements, responsibilities, and expectations for Trainee Appraisers and Supervisory Appraisers that are included in the AQB’s required course outline.

The course is not currently offered on line. The chapter is hoping to bring the course to Hawaii in Spring 2015. Please contact our Education Chair at FCB@hallstromgroup.com and let him know if you would be interested in this or other courses.

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 3

Member Services and Communications Leslie Roach-Laing (Ailana Appraisals)

After many years, the chapter website was redesigned and unveiled in July!

Register for chapter events, download past speaker presentations, locate appraiser contact info, and find links to helpful resources at www.ai-hawaii.org.

A special Thank You to Chair Leslie Roach-Laing and website designer, Casey Graves for this makeover!

Program Chairs Liza Hamada (First Hawaiian Bank) Lyon Des Pres (American Savings Bank)

Thanks to the team of L&L (Liza and Lyon), the chapter held six lunch meetings in 2014, providing a range of interesting and timely topics including the status of rail transit and transit oriented development, industrial market conditions, flood map changes, Hawaii’s skyrocketing construction costs, and Peter Savio’s “Weird, Weirder, and Weirdest Deals.”

The Chapter also held a Maui island lunch meeting in December. A special mahalo to Shane Fukuda and Dominic Suguitan of ACM Consultants, Inc. for their help in organizing the luncheon!

Thank you also, to our guest speakers – all of whom generously carved out time from their busy schedules to tailor their presentations to our group and spend their lunch with us. - Paul Brussow - Executive Vice President for Rider Levett Bucknall - Brennon Morioka, PhD - Deputy Executive Director for HART - Harrison Rue, Community Building and TOD Administrator for the City & County of Honolulu - William Froelich, JD, SIOR, CCIM - Vice President and Industrial Division Manager for Colliers International - Phillip Hasha, COO of The Redmont Group, LLC - Peter B. Savio, President and Chief Executive Officer, Savio Group - Carol Tyau-Beam, PE, CFM - State National Flood Insurance Program Coordinator

Maui lunch meeting at Cary’s Hideaway, December 8, 2014 Find speaker presentations on line at www.ai-hawaii.org.

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 4

HOLIDAY INSTALLATION BANQUET Thank you to everyone who attended our installation banquet at the Oahu Country Club on December 5, 2014.

Mahalo especially to Barbie Rosario, Lillian Izumi, SRPA, and Liza Hamada for organizing the event!

2015 Officers and Directors and Installing Officer, Alan J. Conboy, MAI

WE SALUTE AND THANK YOU, JOE MAGZ!

In November, the Hawaii Chapter was fortunate to host the 2011 Past President of the Appraisal Institute, Joseph C. Magdziarz, MAI, SRA. Joe taught two weeks of courses, including the Real Estate Finance, Investment and Value seminar, Complex Litigation Appraisal Case Studies seminar, General Review Theory course, and Residential Review Theory course. Many enjoyed pau hana drinks and laughs with Joe after class at Hawaii Prince, Murphy’s, Chart House, and Hukilau.

Joe celebrated the Marine’s 239th anniversary this year. We want to take this opportunity to remember and thank all of our brave soldiers, and their families, for their sacrifices.

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 5

As Designated members of the Appraisal Institute, these individuals have made a commitment to advanced education, higher ethical requirements and elevated expectations for the appraisal profession as a whole. We wish to congratulate them on their recent accomplishments and thank them for their part in furthering our profession.

For more information on the AI designations, visit http://www.appraisalinstitute.org/designatedcandidateaffiliate/designation-requirements/

Jose Diogo - Diogo Appraisal Services, Inc. (Lihue, Kauai) John Sarmiento – Bank of Guam (Hagatna, Guam)

Maria Jezzica de la Pena (Piti, Guam) Jaelyn Meli Odani – The Hallstrom Group, Inc. (Honolulu, Oahu) Jazmin Rodrigues - The Hallstrom Group, Inc. (Honolulu, Oahu)

Thomas Werner Holliday – The Hallstrom Group, Inc. (Honolulu, Oahu) James S. Odani – The Hallstrom Group, Inc. (Honolulu, Oahu)

Sunni M. Talamantes – Hawaiian Isle Appraisal Services (Waianae, Oahu) Dwight N. Tokuda – Central Pacific Bank (Honolulu, Oahu)

Jamie McCormick – Cushman & Wakefield Western, Inc. (Honolulu, Oahu)

Steve Hayamoto, MAI, AI-GRS (Kamehameha Schools)

Awarded AI-GRS Designation in October 2014

Stephen Stadlbauer, MAI (Lesher Chee Stadlbauer) Awarded MAI Designation in December 2014

Aimee Yamamoto, SRA, AI-RRS (American Savings Bank)

Awarded AI-RRS Designation in December 2014

The Residential Review Specialist (AI-RRS) and General Review Specialist (AI-GRS) designations were established in 2013 in response to the growing and critically important role that appraisal review plays in risk management and mitigation for many clients/users of appraisal services. The new designation program is aimed at providing professional reviewers with the knowledge and skills needed to satisfy issues related to due diligence and risk management often requested by their employers and clients. The MAI membership designation is held by appraisers who are experienced in the valuation and evaluation of commercial, industrial, residential, and other types of properties, and advise clients on real estate investment decisions.

The SRA membership designation is held by appraisers who are experienced in the analysis and valuation of residential real property.

Welcome New Members!

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 6

Member Spotlight

Jose R. Diogo, President and Owner, Diogo Appraisal Services

I am a Certified Residential Appraiser in the State of Hawaii, own and operate Diogo Appraisal Services, Inc. on the island of Kauai. My appraisal career began in 1988 working as a staff appraiser for the firm of Dennis T. Nakahara, Real Estate Appraiser. My plans of becoming an architect changed while working as a waiter at a restaurant that Dennis frequented. One day Dennis asked if I would consider becoming an appraiser. Not even knowing what a tax map key number was, nonetheless an appraiser’s role, I was impressed by the feedback from coworkers and friends. I can’t forget the words of one person: “They just go to a property and give you the value...and they make a LOT of money”. That was music to my ears – what a better way of prepping for University of Hawaii than making “lots” of money while attending the local community college simultaneously. Although architecture was my initial endeavor including a 1 year attendance at the University of Hawaii (1991-1992), appraising real estate won me over.

This career is the “best of many worlds” – working indoors as well as outdoors, a mix of architecture, construction, statistics, art and a great way to meet and network with people and see places most never would in their lifetime. I am very fortunate and thankful for the 11 year experience appraising numerous properties from oceanfront to Kuleanas throughout the entire island. With this experience and knowledge of the island, its markets, neighborhoods and nuances, I decided to open my own appraisal firm in 2000 as a sole proprietor and incorporated in 2007. I received my Associates degree in 1990, obtained my SLA license in 1993 and in 2008 upgraded to a CRA.

The financial collapse of 1998 brought about many changes to the industry – a vast amount of information and policies within a short period of time that made it challenging for the appraisal industry. Staying informed, getting educated and networking is vital in providing quality appraisal services. As such, I have been a part of the Appraisal Institute as a Practicing Affiliate since 2009 and prefer to attend AI classroom courses rather than on-line courses despite the higher costs associated with travelling off-island. These courses have provided me substantially more than just the ability to renew my license. Being part of an organization that works toward improving the industry through lobbying in congress and providing vital information and education to their members has empowered me. I am privileged to have taken several courses from highly educated and experienced AI instructors such as Dawn M. Molitor-Gennrich, SRA, as well as Stephanie C. Coleman, MAI, SRA, AI-GRS, AI-RRS and remember both stressing the importance of networking amongst appraisers. Being that I have only one employee and limited feedback within my company, I realized the benefits of peer support when encountered with a challenging assignment. As such, I make it common practice to contact other appraisers for feedback such as my good friend Ron Rehkemper from Rehkemper Brothers LLC.

The dialogue and discussion is tremendous assistance to both us and is what I believe networking is about – help and guidance from the very people who encounter similar situations. Professionals such as Dawn, Stephanie and Ron have had a profound impact and influence on my career and have motivated me to pursue two AI designations.

As a means of extending that same network and support, I initiated and coordinated periodic (quarterly) meetings inviting all Kauai licensed appraisers to provide an avenue of discussion on topics affecting appraisers. Prior meetings have had guest speakers from the county’s Planning Department (zoning enforcement), Water Department (public water storage facilities, capacities) and a local private company that provides water and wastewater services in Hawaii. These meetings have been received positively by the local appraisers with the majority attending. Besides the knowledge and information gained, these informal meetings have created a comradery and friendship amongst the local appraisers despite being competitors. I also hope that these meetings will inspire Kauai appraisers to join the Appraisal Institute (Hawaii Chapter), other Hawaii and national AI members/affiliates in becoming a collaborated voice for the appraisal industry as well as pursuing designations. I encourage the local appraisers to contact each other including me when encountering challenging assignments as I have realized the benefits of such interaction.

I enjoy giving back to the very community that has provided me with a livelihood and place to call home. I currently serve on three state and county boards (chair two) and volunteer at a local soup kitchen. I’ve coached youth soccer and basketball. The many interests I have include the outdoors, arts, fast cars and travelling. I like stand-up paddle boarding, basketball, hiking and the beach. My love of the arts includes ceramics (pottery), painting, drawing and photography. The adrenaline rush within me has led me to own a classic muscle car and help pit for a close friend at the local drag strip. I have lived in Mozambique and South Africa and have visited Brazil, France and Portugal among a few of the many amazing places on earth. A proud father of one son, I am blessed to have a wonderful circle of family, relatives and friends. I am grateful to all those that have provided me with the many opportunities and support throughout my life and career.

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 7

REVIEWER’S ROUNDTABLE Lyon Charles Des Pres Commercial Appraiser, Commercial Credit Policy & Administration American Savings Bank

“I am appraising an industrial building; am I using the right square footage?”

Like most of you reading this article upon being engaged to appraise an industrial building I immediately think; “this is going to be a slam dunk…” Appraising industrial buildings under current market conditions can be much easier than many other property types: there is ample marketing reports available for the market analysis; multiple recent sales; numerous recent leases; multiple brokers willing to share data and opinions; and the most typical unit of comparison is price per gross building area.

The subject’s gross building area can be easily obtained from: City and County Real Property Assessment website and Hawaii Information Services (HIS). Sometimes the appraisal assignment is a pending sale and marketing brochures and purchase and sale agreements are available as well which can provide a description of improvements.

You need to be asking yourself – “Does the data from all sources accurately reflect what exists at the subject property?”

The following is an actual trail of events from an appraisal assignment:

• First, the engagement letter indicated that, “Per PSA, property consists of 8,884 SF ground floor warehouse and 1,284 SF mezzanine for a total of 10,068 SF of GBA…”

• Second, the subject property was openly marketed through typical channels and the professional marketing flyer by a local reputable firm indicated the following: “Building Size: 10,068 SF…”

• Third, the information from Hawaii Information Services (HIS) indicated the building square footage as 10,068 SF. Further, on the HIS and the City and County of Honolulu Assessor’s data described the subject as follows:

- Area of shell; includes 1,284 SF of ground floor

office space. Balance is warehouse.

Incorrectly sums building areas shown below. Area of office is counted twice

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 8

The information indicates an aggregate is 10,068 SF similar to the PSA, marketing flyer and letter of engagement. Therefore, it appears based upon the data presented, from multiple sources, the subject GBA is 10,068 SF. However, after inspection of the building the actual building components are as follows:

-Warehouse 6,216 SF -Office 1,284 SF -Mezzanine 1,284 SF

Total GBA 8,784 SF

So what happened? Why is there such a discrepancy? The misunderstanding of the subject square footage begins with the assessor’s office. The assessor’s description of the subject improvements is not incorrect; you just need to understand the assessor’s methodology for estimating the costs of the improvements.

Many of you utilize Marshall Valuation Service to estimate costs when completing the Cost Approach. Marshall Valuation allows you two methods of estimating costs for industrial buildings: 1) They provide a cost estimate for warehouse which includes office space that is 3% to 12% of total area as part of the base price; or 2) The publication provides an alternate method wherein you analyze the shell of the building and enclosed office space separately. The latter is the same methodology utilized by the assessor’s office. They calculate the shell cost of the building then apply a separate cost for the enclosed office space area. Utilizing the alternate method requires analyzing the warehouse portion based upon the foot print of the building which is why the assessor reports the warehouse as 7,500 SF rather than the actual warehouse area of 6,216 SF.

The moral of the story is to confirm your own measurements and not rely on third party data. At a minimum, take a wheel or measuring tape with you to the inspection. Measuring GBA is the easiest measurement to perform. Happy appraising.

2015 RESOLUTION: STAY ON TOP OF YOUR GAME

Top-notch Appraisal Institute courses and seminars come straight to your desktop with online education. Learn from any computer anywhere, whenever you have time. It’s easy, convenient and a great way to get the education you want.

Check out the current course listing now!

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 9

MORE WORDS OF APPRECIATION… The 2014 Officers and Directors would like to thank the past Chapter Presidents for their leadership and service.

AND WORDS OF WISDOM… from the gurus at Stellmacher & Sadoyama

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 10

National News (www.appraisalinstitute.org) Hotel Winds ‘Going Concern’ Tax Assessment Case

The California Court of Appeal for the 1st Appellate District issued its decision May 22 in the tax assessment appeal case of SHC Half Moon Bay vs. County of San Mateo, reversing the decision of a lower court and directing the trial court to enter judgment in favor of the property owner and against the County.

This appeal arises from a dispute over the property tax assessment of the Ritz Carlton Half Moon Bay hotel and presents “the question of how to properly value taxable property, with associated intangible assets, at fair market value.”

Appellant SHC Half Moon Bay LLC, the hotel’s owner, claims the assessment conducted by the San Mateo County Assessor and approved by the San Mateo County Assessment Appeals Board erroneously inflated the value of the hotel by including $16.8 million in nontaxable intangible assets. SHC’s principal contention was that the variation of the income approach the assessor used to assess the hotel violated California law by failing to identify and remove the value of intangible assets. Respondent County of San Mateo had urged this court to uphold the assessment.

In reversing the lower court’s decision, the Court of Appeals stated, “the method used by the Assessor and approved by the Board to calculate the value of the property violated the standards prescribed by law because it failed to identify, value and remove the value of the following intangible assets and rights from the hotel’s income stream prior to taxation: 1) the hotel’s workforce; 2) the hotel’s leasehold interest in the employee parking lot; and 3) the hotel’s agreement with the golf course operator.”

The decision also stated, “Intangible assets like the goodwill of a business, customer base and favorable franchise terms or operating contracts all make a direct contribution to the going concern value of the business as reflected in an income stream analysis and have a quantifiable fair market value that must be deducted from an income stream analysis prior to taxation.”

Read the Court of Appeals decision.

Virginia Tech Releases Results of Study on Appraisal Fees

The Virginia Center for Housing Research and the Virginia Tech Program in Real Estate released on Oct. 7, its 2013 Virginia Residential Real Estate Remuneration: Survey and Report, which analyzed the patterns for fees earned by real estate appraisers in 2013.

The research was conducted by Virginia Tech researchers and students during this spring and summer in response to the Dodd-Frank Act, which requires lenders to pay appraisers a “customary and reasonable fee” for residential real estate appraisal services in their geographic market. The Dodd-Frank Act also requires that customary and reasonable fees be calculated without the influence of assignments ordered by known appraisal management companies.

The final report noted the average AMC fee and non-AMC fee for a single-family residential appraisals in Virginia, average annual salaries and some appraiser demographics (such as age).

See the complete survey results.

AI Addresses US Green Building Council on ‘Green’ Valuations

Appraisal Institute President-Elect M. Lance Coyle, MAI, SRA, addressed the U.S. Green Building Council in Washington on Sept 17, where he talked to the organization about valuation methods and techniques used by appraisers to value high-performance buildings and about AI’s leadership role in green and energy-efficient valuation.

Coyle's presentation provided an overview of AI's professional development program on the Valuation of Sustainable Buildings, including case studies found in the four courses that make up the professional development program.

View Coyle's presentation to the USGBC.

GET INVOLVED

Nominations for the 2016 Board of Directors vacancies will be requested shortly. If interested, please email Shelly Tanaka at st@johnchild.com. All interested in serving are encouraged to apply.

Please also visit the AI’s Leadership Resource Registry and indicate your areas of interest and expertise in the Appraisal Institute Leadership Resource Registry and volunteer to serve on a committee, project team, advisory board or panel—on the National, Regional or Chapter level. The National, Regional and Chapter registries are now accepting submissions.

Volunteer Today* *log in required

HAWAII CHAPTER NEWSLETTER | DECEMBER 2014 11