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Contents SALIENT FACTS AND CONCLUSIONS Property Location: 9998 90`h St. S. Cottage Grove, Minnesota Fee Owner: Christ The Lord Evangelical Lutheran Church Tax Parcel I.D No.: 15-027-21-44-0003 Property Rights Appraised: Fee simple interest, subject to easements/ restrictions of record Date of Valuation: December 7, 2005 Property Data: Land Area: 214,370 SF or 4.921 ac. Present Use: Church Zoning: AG-1, Agricultural Preservation Land Use Plan Designation: Civic/Institutional Acquisition Areas: Perm. right-of-way easement: 17,308 SF or 0.397 acre Non Perm. drainage/util. easement: 21,389 SF or 0.491 acre Highest and Best Use: If Vacant — Hold for urban residential development in 3-4 years (agricultural interim use) As Improved - Continued use as a church Value and Value Damage Estimates: Land value prior to acquisition $649,500 ($3.03/SF & $131,985/acre) Land value after acquisition $569,600 Land value damages $ 79,900 Plus site improvements damages 5,400 Total Value Damages $ 85,300 (Just Compensation) Appraisers Paul J. Gleason Certified General Real Property Appraiser Minnesota License #4003073 Roger M. Rohrer Certified General Real Property Appraiser Minnesota License #4001238 BRKW APPRAISALS, INC. PAGE 1 PROPERTY IDENTIFICATION The subject of this appraisal is a 4.921-acre land parcel located at 9998 90th St. S. in the city of Cottage Grove, Washington County, Minnesota. The land, which is zoned AG-1, Agricultural Preservation, is improved with the Christ The Lord Evangelical Lutheran Church facility. This appraisal is limited only to the valuation of the subject land and site improvements impacted by the proposed permanent right-of-way and drainage/utility easement acquisitions by the City of Cottage Grove for road construction purposes. MIME PURPOSE/INTENT OF THE APPRAISAL/INTENDED USER The City of Cottage Grove has proposed to construct a new parkway to extend through the East Ravine area of the community. The project involves reconstructing a section of 90th St. S. in the vicinity of the subject property, at Keats Ave. S. The rebuilt section will become part of the new Ravine Pkwy. The road construction project requires the acquisition of property rights from the subject property, comprising 1) a permanent easement for road right of way and 2) a permanent drainage and utility easement for storm ponding purposes. The purpose of this appraisal is to provide an opinion of the loss in the subject property market value resulting from the partial property rights acquisition. The estimates of market value are predicated upon the definition of market value contained herein. The intent of this appraisal is to allow use by the client in negotiating the proposed acquisition with the property owner. The intended user is the client, the City of Cottage Grove. NW. SCOPE OF THE APPRAISAL This is a limited appraisal, in that the valuation does not include the entire property. The contributory value of the building improvements does not change as a result of the proposed permanent easement acquisitions. Consequently, only the land component is appraised. The only valuation applied to improvements on the property is the impact on landscaping and other site improvements due the acquisition and road reconstruction. The damage to the site improvements is measured either by the reduction in their value contribution to the property or the cost to correct deficiencies caused by the acquisition. BRKW APPRAISALS, INC. PAGE 2 The subject land is appraised on a "before and after" basis. Opinions of market value are developed reflecting the property as it exists before the acquisition and road project, and in its remainder state after the acquisition. The difference between the before and after values comprises the value damages to the land. Damages to site improvements are added to arrive at a total amount of value damages, or Just MOM Compensation, due to the property owner as a result of the acquisition. The subject land before and after market value opinions have been developed by processing the Direct Sales Comparison Approach, which involves the comparison of recently sold, similar tracts of land to the subject property. Neither the Cost Approach nor the Income Approach appraisal techniques are applicable, since typically their use becomes pertinent only when there are building improvements being appraised. The completion of the appraisal has involved the research and assemblage of pertinent information from county and city departments; sellers and buyers involved in specific researched land sale transactions; brokers/agents involved in the marketing of properties in the project area vicinity; and reference to abstracted sale information retained in our office files. For analysis of site improvements value damages, cost information has been obtained from reference to the Marshall Valuation Service and Architects Contractors Engineers Guide to Construction Costs publications, as well as from discussions with personnel at local nurseries and tree moving companies. Per agreement with the client, the appraisal is presented in a summary report format under the requirements of Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice. The property description, analysis and valuation process are presented in an abbreviated manner in this report. Additional notes, data, analyses and other documentation supporting the appraisal are retained in the office appraisal file. DATES OF INSPECTION AND VALUATION The effective date of the estimates of land value and property value damages is December 7, 2005, the last date on which the property was inspected. On November 18, 2005, Paul Gleason and Roger Rohrer, the authors of this report, met at the property with Pastor Jonathon Leach of Christ The Lord Evangelical Lutheran Church, the subject property owner, and two church members. At this time, the appraisal assignment and proposed acquisitions were discussed, and an inspection of the property was made. An additional inspection of the exterior of the property was made on December 7, 2005. BRKW APPRAISALS, INC. PAGE 3 PROPERTY RIGHTS APPRAISED The property rights appraised are those of the fee simple estate, subject to existing easements and restrictions. The source of the following definition of fee simple estate is page 113 of the Dictionary of Real Estate Appraisal, fourth edition, published in 2002 by the Appraisal Institute: "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. " EASEMENT DEFINED The term easement as defined on Page 90 in The Dictionary of Real Estate Appraisal Fourth edition, published in 2002, by the Appraisal Institute is: "An interest in real property that conveys use, but not ownership, of a portion of an owner's property. Access or right-of-way easements may be acquired by private parties or public utilities. Governments dedicate conservation, open space, and preservation easements. " LEGAL DESCRIPTIONS Total Property The east 560 feet of the south 475 feet of the SE '/ of the SE 1/4 of Section 15, Township 27, Range 21, Washington County, Minnesota, subject to right of way and utility easement. Property Acquisition As of this writing, legal descriptions of the proposed acquisitions were in the process of being finalized and were not available to the appraisers. Please refer to the preliminary easement acquisition sketch in this report, which illustrates the size and location of the proposed permanent right of way easement of 17,308 square feet and permanent drainage/utility easement of 21,389 square feet on the subject property. BRKW APPRAISALS, INC. PAGE 4 ZONING The subject land is zoned AG-1, Agricultural Preservation District, intended to preserve and enhance the use of high-quality agricultural land and protect it from encroachment by premature conversion to nonagricultural uses. Permitted uses include farm buildings and agricultural uses, as well as single-family — homes at a density of one dwelling per 40 acres. Conditional uses include churches, commercial stables, dog kennels, and public utility/public service structures, among others. Lot requirements include minimum lot size of 1 .5 acres, front yard setback of 100 _ feet, side yard setback of 25 feet, and rear yard setback of 50 feet. Lot depth must not be more than three times greater than the lot width. Comprehensive Plan: The current city comprehensive plan designates the subject land as "Low Density Residential." However, the comprehensive plan is in the process of being amended to reflect a master plan being adopted by the city for the area in which the subject property is located. The area, known as the East Ravine part — of the community, is planned for development with a mix of commercial and residential development. The residential development envisioned for the area includes _ single-family, attached townhouse, and apartment/condominium structures. The current land use map which is part of the comprehensive plan amendment designates the subject land for civic/institutional development, which reflects its current use as a church. Planned uses for areas immediately adjoining the subject land include Low "' Density Residential (1-5 units/acre) and Medium Density Residential (6-12 units/acre). y . • , t — : i- ' ` � an crtn k� a _ A 1 a I. =as Subject , itiormil J . 31 .......p p , 1 .. Ry11 -,4pn ztUr Rreservation 1111111%.-41, A92 yture . _ ..... av e .., _ !"1321--:!L:titr'eta'ell:i1r1:1:813ausuulnA51a:larci: f?.?ssrlr ssrill..., I► % iniss* is tr� tIIto.general Industry kMI -Heavy industry T ,+J 3 r" 1 ,mmerrial Excavator) It. panned Buseiels District lir....41.,, i a Fi i,_, Pwined Unit Development R 1 -Rural Res,dentiai 1 � R -Res�dantial Estate f R2 5 Residential '4RSingle Famity Residentia A r+,# `s o�ti Density Residential t + K "Il i R5-Medium Density ReStd«ntial 4 1 R6-Htgt Density Resadential • Zoning Map BRKW APPRAISALS, INC. PAGE 5 L East Ravine Pre-Design City of Cottage Grove L Neighborhood 1 Neighborhood 2 _�,11�, j 1 1 �, ` �. �.. _ — , li ( / . ---. 1t *,U A e�' r t 1 ! rst lIbM)OnStreetillIM /Neighborhood 1 North1= , r- 1 O d Cottage drove Land Use Legend I1 J Rural Residential;Less Men I Une l acro) 40 1-1 =! L. J Low Density Residential ilJ units I arae; .. i).) 1 d Medium Density Ren denial.6.12 UnlH/acro) 50th slr - .. L High Dens Residentlal;.r2 Una r acro) .. ) IIII Civic f Institutional 1 r.O. 1 III Commercial ' Neighborhood 2 L Mixed Use U ram I IIII Park I Open Space r r. L I::: 1 Partway Subject l e0m$b f! Weterbody r t r`. Neighborhood 1 South i4 1 sem'i� J,ul a:n 6 0 a T fi'll SO `tV, —_llilli.11.111111 ♦ •94,,,,, 4ii 0 600 '600 3200 .j lot 444 ej — Wm ®Howaetov Kcetle Croup Int Land Use Plan June Err. 1,4414.‘44.t. MK.)Cr,,Lk BRKW APPRAISALS, INC. PAGE 6 ASSESSMENT AND TAXATION The subject property owner is a tax-exempt organization. The outstanding balance of special assessments, if any, was not researched. The property is appraised assuming any special assessments have been paid in full. ASSESSMENT AND TAXATION Effect. Land Im prov. R.E. Tax Specials& Total Tax& Parcel I.D.# AEMV* AEMV* Total AEMV* Taxes Rate Charges Specials 05-027-21-44-0003 $ 305,500 $ 450,000 $ 755,500 $ 0.00 0.0000 $ 252.06 $ 252.06 Source: Washington County Assessor's Office *Assessor's Estimated Market Value—2004 for payable 2005 Omar HISTORY OF OWNERSHIP The fee owner of record is Christ The Lord Evangelical Lutheran Church, which has owned the property for many years. There are no apparent recorded transfers of the property within at least three years prior to the date of valuation. To the best knowledge of the appraisers, the property is not currently under listing, pending sale, or purchase option. COMPETENCY PROVISION Roger M. Rohrer has been a full time professional real estate appraiser since February 1972. Paul J. Gleason has been a full-time professional real estate appraiser since April 1992. Provided later in this report is a summary of their professional qualifications. The appraisers have extensive experience in the valuation of a wide variety of single family residential, multiple family residential, commercial, business office, industrial, retail and special purpose types of real estate, including the subject type of property. The appraisal training, experience and knowledge provide each appraiser with the necessary background to complete this appraisal assignment in accordance with the competency provision of the Uniform Standards of Professional Appraisal Practice. BRKW APPRAISALS, INC. PAGE 7 MARKET VALUE DEFINITION Market Value as defined by the United States Department of the Treasury through the Comptroller of the Currency and the Office of Thrift Supervision is: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: ♦ buyer and seller are typically motivated; ♦ both parties are well informed or well advised, and each acting in what he considers his own best interest; ♦ a reasonable time is allowed for exposure in the open market; ♦ payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and ♦ the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. This definition is also recognized by the Appraisal Foundation and is part of the Uniform Standards of Professional Appraisal Practice (USPAP). Nom Imo mom BRKW APPRAISALS, INC. PAGE 8 CONTINGENT AND LIMITING CONDITIONS This appraisal report is subject to the following Limiting Conditions and Assumptions: 1. The legal description contained herein is assumed to be correct. 2. The appraiser assumes no responsibility for matters legal in nature affecting the property appraised or the title thereto, nor does the appraiser render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership. 3. No survey has been prepared of the property by the appraiser and no responsibility is assumed in connection with such matters. Sketches in this report are included only to assist the reader in visualizing the property. 4. Information furnished by others is assumed to be reliable. However, the appraiser assumes no responsibility for its accuracy. 5. In cases where no soil tests have been submitted, the appraiser has assumed a good subsoil condition, subject to visual observations noted in the report. 6. The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil or structures, which would render it more or less valuable. The appraiser assumes no responsibility for such conditions or for engineering that might be required to discover such factors. 7. The appraiser is not required to give testimony or appear in court because of having made this appraisal with reference to the property in question, unless arrangements have been previously made. 8. The distribution of the total valuation in this report between land and improvements applies only under the highest and best use of the property. 9. The Bylaws and Regulations of the professional appraisal organizations with which the appraiser is affiliated govern disclosure of the contents of the appraisal report. 10.Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and, in any event, only with proper written qualifications and only in its entirety. Mom 11.Neither all nor any part of the contents of this report, or a copy thereof, shall be conveyed to the public through advertising, public relations, news, sales or any other media without written consent and approval of the appraiser. Nor IM" shall the appraiser, firm or professional organization of which the appraiser is a member be identified without the written consent of the appraiser. 12.The value conclusion assumes all taxes and special assessments are paid in full. Environmental Disclaimer: The values estimated in this report are based on the assumption that the property is not adversely affected by the existence of hazardous substances or detrimental environmental conditions. A routine inspection of the property did not reveal or indicate any such conditions. In that the appraiser is not qualified in this field of expertise, the client is encouraged to retain an expert in such investigations if so desired. BRKW APPRAISALS, INC. PAGE 9 COMMUNITY/AREA DESCRIPTION Community: The City of Cottage Grove is a suburb of the Minneapolis/St. Paul, Minnesota metropolitan area, located in the southeastern portion of Washington County, approximately 12 miles southeast of downtown St. Paul. The estimated 2004 population of 31,774 reflects a 3.9% increase over the 2000 Census figure of 30,582 and a 38.5% increase over the 1990 Census figure of 22,935. The city has a —. substantial amount of land available for development and expects to grow in population at a relatively rapid rate for many years. The main traffic artery passing through Cottage Grove is U.S. Hwy. 61, which provides connections to other parts of the Twin Cities as well as major freeways, including I-494 about three miles to the northwest. Hwy. 61 was recently rebuilt to a freeway-style, restricted-access design from I-494 to the south, and continues with this design through Cottage Grove. The bridge carrying I-494 traffic across the Mississippi River between Newport and South St. Paul is currently being widened and rebuilt, with anticipated completion in 2008. Both of these improvements will have a major positive impact on access to Cottage Grove and its attractiveness for development of all types. Cottage Grove has a sizable, developing industrial park and two major retail areas, both at Hwy. 61 interchanges. The next major growth area for the city is the East Ravine area near the eastern city limits, which is a master-planned area of 4,000 acres to be developed over the next 15 to 20 years with a mix of residential and commercial uses. The first phase of development is planned to commence by the beginning of NMI 2007. Area: The subject is located in the East Ravine area of Cottage Grove, which comprises a strip of land extending in a north-south direction along Keats Ave. (County Rd. 19), near the eastern city limits, which is formed by Manning Ave. (State Hwy. 95). The area contains a relatively steep ravine that drains south into the Mississipi River, but also contains a substantial amount of level farm land. Much of the ravine area, which lies east of Keats Ave., is contained within the Cottage Grove Ravine Regional Park. The East Ravine area is adjacent east and southeast of the current developed area of the city, and is slated to accommodate further expansion of the urban area in the near future, as described above. The predominant land use in the subject immediate area is agricultural, and the predominant land use in the adjoining developed area is single- family residential. There is a newer neighborhood commercial node located at the southwest corner of Keats Ave. and 70th St., around which are newer townhouses in addition to single-family homes. The subject property is located at the northwest corner of Keats Ave. and 90th St. S., which currently terminates at Keats Ave. but extends west into developed residential areas, about a half mile to the west. Farm land adjoins the property to the north, west _ and south. Across Keats Ave. to the east is the Cottage Grove Ravine Regional Park, which is largely in a natural state with grassy fields, trails, and thickly wooded areas which extend east and downward into the ravine area. BRKW APPRAISALS, INC. PAGE 10 i gt �... .. ��. St S /2rtd St S .` 7 d St ' t m 72nd St S p 0 75/6 St S ,. /fits St S 1 77ttvStS S ,. '. I 8Oth st $t S <'. ). • 3> t C� * ._.. co - 94ChSES Subject $tttStS 92 St S e�t, ret kiN 5Sltt St S: F 4ti t � y„ 3C= 9711 St3 ,.✓ Community/Area Map .1e°,1116,11.1 iMir!IIIIIrlel-r t9Ifia, .,'-titiil g'''' ,,,..„....,iii- p lip,c,,,,. ta. i Il.LSIDE TR.5. P thai4 y J06v u a19P C7R.5, ••''CRSc. : J' . i vii `� rimn ,f", °N`ag�t g Subject 7 +fit i 4 4 191sr u ` t y .. i.r IT. .t �L ,50.tip' 19 1 'Y ST. s. t,yST; .f 9I++C 6Y. r 9hitl .r. 5.� P 8 .EF'ERT ti. s �� � y 41M ST.s� 2�� ^ &JEft�!(edY '{ U.,&{SERI YE.S ,,'� \4,i ,� ,,,:i JAN1E ST. 93rQ 4X6 U.JERLEp AYE.S.tip $ 4.91st 5T.S. sW-5,,; si•. JFR LSx 7 At i sT. S. 0 at* st 5. 2 21E/ i RI g 4\4) .4,\ -.*/66 '1441).4P e \ 4> 444.4' VE 5 c ur i°o.=i COTTAGE ib . ca$- n..nr .-.a.n Mn/DOT 2004 Traffic Volume Map BRKW APPRAISALS, INC. PAGE 11 LAND DESCRIPTION PRIOR TO ACQUISITION Land Area: 214,370 square feet or 4.921 acres, net of existing roadway easement _ areas for the north half of 90th St. and the west half of Keats Ave. Land area is based on dimensions shown on county plat map and is subject to survey. Shape: Rectangular. Topography: Generally level, at grade, more or less, with fronting streets. Ground Cover: Typical lawn and landscaping improvements, together with building and parking areas. Utilities: Currently, electricity, natural gas and telephone are immediately available. Water service is located about four-tenths of a mile to the west. A sanitary sewer interceptor line runs through the south part of the property, making this utility physically immediately available. However, the property is outside the current Metropolitan Urban Service Area (MUSA) and therefore can not be developed with urban services at this time. The property is located in a MUSA expansion area which is slated to be opened up for development within the next three to four years, according to the city planning department. Access: Available along the north side of 90th St. S., about 100 feet east of the west property boundary. Ninetieth St. in this location is an older 2-lane rural design roadway with bituminous paved lanes, narrow gravel shoulders and no curb/gutter. On the north side is a bituminous walking/biking path. No direct access is available to Keats Ave., on which the subject east boundary fronts. Keats Ave. is a two-lane minor arterial roadway with bituminous paved lanes and shoulders, with no curb/gutter. Visibility: Relatively good visibility characteristics. Keats Ave., which flanks the east side of the property, is a minor arterial with 2004 average traffic counts estimated by Mn/DOT at 7,000 vehicles per day in the subject location. Soils/Environmental: No soil test borings have been submitted which would indicate subsoil composition. For the purpose of this analysis, the site is appraised assuming adequate subsoil conditions to support normal development. Also, for this analysis, it is assumed that there are no known or suspected subsoil contaminants within the subject site which would adversely affect its value; no such items are apparent. Wetlands: Reference to wetlands maps and a visual inspection of the land indicates there are no wetlands present. Easements: Typical utility easements assumed to exist along property edges. Also, the north 43 feet of the south 50 feet of the site, excluding the existing roadway easement area, is encumbered with a sanitary sewer easement in favor of the Metropolitan Council. Referred to as the Metropolitan Council Environmental -- Services or MCES easement, this encumbered area contains a sanitary sewer interceptor line. The easement covers 20,855 square feet (0.48 acre) or 9.7% of the total land area. BRKW APPRAISALS, INC. PAGE 12 I§ R I1 I, I= I b Subject 0 0 0 (0003) w z Z w P- S �J L •43 FT WIDE SEWER ANC,UfX1N EASEMENT PER DOC 3407511 _---.—._— r �) — •' SEWER ANO UTILITYEASEMENTPER DOC 3333163 �- .. I L • 90TH ST. S. - --\ ,------ -ri - COC 893999 I I S Plat Map • e=..1 `., a` -;. °°K€`""� . w by „e V1 } Ito, ' ', - .. . ,,fir.40410,4 1 Subject - di„ u: 4 te" ,r ; gg 1. ,fly .Pf_ s.....7E- x., Aerial Photograph BRKW APPRAISALS, INC. PAGE 13 DESCRIPTION OF PROPERTY RIGHTS TO BE ACQUIRED Project Description The subject property is located in a master-planned future development area known as the East Ravine neighborhood. The area is slated for gradual development over the MOM next 15 to 20 years. The first phase, at the north end of the neighborhood in the northwest quadrant of Keats Ave. and 70th St., is scheduled for development commencement around the beginning of 2007. The subject property is located in the second phase area, in the south part of the neighborhood, which is scheduled for development commencing in about three to four years. However, Washington County plans to construct a service center in the subject immediate area, to the east across _ Keats Ave., in 2006. The service center construction requires the construction of a section of Ravine Pkwy., a new boulevard that is a component of the area development master plan. Ravine Pkwy., when entirely finished, will traverse the entire East Ravine neighborhood. The roadway will extend east from Keats Ave. at 90th St., curving to the north along and across the ravine area, crossing 70th St., and then it will curve westward, crossing Keats Ave. and extending west near the north city limits to the existing developed area of Cottage Grove. Part of the existing section of 90th St. extending due west from Keats Ave. eventually will be realigned and renamed Ravine Pkwy. as well, meeting the western part of 90th St. about a quarter mile southwest of the existing intersection with Keats Ave. In 2006, the City of Cottage Grove plans to construct/reconstruct the first section of Ravine Pkwy. The roadway path includes the existing section of 90th St. extending about a quarter mile west of Keats Ave., as well as a new section east of Keats Ave. which curves northward about 1,100 feet along the westerly side of the new county government service center. At the intersection with Keats Ave., the path of existing 90th St. will need to be shifted somewhat to the north to properly align with the new section of parkway east of Keats Ave. This requires the acquisition of additional road right of way from the south and southeast portions of the subject property. A new, expanded storm pond encompassing the area currently used for the subject storm ponding also is planned to accommodate the roadway storm sewer system. The storm pond construction requires a permanent drainage/utility easement over part of the subject property. Proposed Acquisitions The subject property rights necessary for acquisition by the City of Cottage Grove for the road reconstruction project include the following: Permanent Right-Of-Way Easement: 17,308 square feet, or 0.397 acre, encumbering the south and southeast parts of the subject property, adjoining the entire Ism existing 90th St. frontage and part of the Keats Ave. frontage. The easement area is a strip which widens from seven feet on the west to about 118 feet on the east. BRKW APPRAISALS, INC. PAGE 14 Of the 17,308 square feet of proposed right-of-way easement, 11,261 square feet, or 65% is currently encumbered by the MCES sewer and utility easement. The proposed permanent easement area is generally level and open, and is improved with lawn and part of the subject property driveway which extends north into the site. Permanent Drainage and Utility Easement: 21,389 square feet, or 0.491 acre, encompassing an area north of the proposed permanent right-of-way easement, east of the subject property driveway, south of the parking lot, and west of the church signage and Keats Ave. The easement area is nearly completely rectangular in shape, with an exception in the northwest corner; the maximum east-west width is about 193 feet and the maximum north-south depth is 125 feet, more or less. Part of the proposed permanent drainage and utility easement area contains the existing storm water pond for the subject property. Topography is a mix of downward sloping, lower-elevation and generally level areas. Improvements in the encumbrance area include lawn and three hardwood trees, located on the northerly edge, which range in height between 10 and 18 feet. Of the 21,389 square feet of proposed right-of-way easement, 2,596 square feet or 12% is currently encumbered by the MCES sewer and utility easement. The city proposes to construct in the easement area a larger and in some places deeper storm water pond than the current one used by the church. The pond will cover most of the easement limits, will have 4:1 downward slopes toward the center, and will have a maximum depth of about five feet. Natural vegetation will be added to lawn improvements to maintain the integrity of the sloped areas. The new pond will collect runoff from the church property as well as parts of the new roadway sections and other impervious surfaces in the city right of way. According to the city's consulting engineering firm, Short Elliot Hendrickson, the subject property share of the pond capacity is 65%, and the city share is 35%. Or= LAND DESCRIPTION AFTER ACQUISITION Usable Land Area/Utility After the proposed acquisition, the subject land net usable area, excluding all road right of way, will be reduced by about 8%, from 4.921 to 4.524 acres, as a result of the new permanent right-of-way easement. Of this amount, 0.491 acre or 11% will be encumbered with a permanent drainage and utility easement which will contain a storm Maw water pond. It is noted that 65% of this easement area will continue to fulfill the drainage requirements already existing for the subject property, and only 35% will be needed for additional drainage from city-owned impervious surfaces. However, the easement as a whole represents a formal and permanent land use restriction in an area which previously could essentially be used for any allowable purpose the owner desired. The encumbrance results in a loss of use flexibility on the part of the property owner, immediately after the acquisition and indefinitely into the future. BRKW APPRAISALS, INC. PAGE 15 Though the portion of the drainage and utility easement area serving the storm ponding needs of the subject property still offers significant utility, the portion used — by the city contributes no utility or value to the property. If the land were vacant and the property were to be developed with housing, the permanent drainage-easement area could not be used to fulfill density or minimum lot size requirements. Shape — The proposed acquisitions result in a remainder usable area (that which can be built upon) with a significantly irregular shape, relative to the regular/rectangular shape in the before position. The remainder land area north of the right-way easement and east of the drainage easement is rather narrow and isolated from the balance of the site, resulting in a reduction in development utility due to change in shape. — Site Improvements Site improvements affected by the proposed acquisition from a value perspective — include the following: • Lawn and driveway improvements located in the permanent right-of-way easement area. Some will be permanently lost due to the widening and reconstruction of the roadway, and some will be restored, but they will be located in a public road right-of-way area and essentially be out of the possession and control of the — underlying fee owner. • 3 planted hardwood trees located in the permanent drainage and utility easement — area. The location in the easement results in the potential for the trees to be damaged or destroyed either during construction of the storm pond or as a result of being flooded with water at times when the pond fills. — There also are some lawn improvements in the drainage/utility easement area. However, the storm pond to be constructed in the encumbrance, according to the city engineering consulting firm, will be nicely landscaped with lawn, natural _. vegetation and other materials which will be at least as appealing as the improvements now in this area. Unlike the right-of-way easement area, the drainage easement area will allow shared use and possession between the subject property and the city for storm ponding purposes and thus no loss in site improvements contributory value, other than the trees, is in evidence. BRKW APPRAISALS, INC. PAGE 16 PROPERTY AND ACQUISITION AREA PHOTOGRAPHS — TAKEN 11/18/05 View to NW at property SE corner from intersection of 90`h St. and Keats Ave. } fk 'i � r t .`� �. 5'Y, �e a`. ``"�,�.�„ ,.;;rc.�• i'�,f'+6^•r am ;ami`*•. '� View to NE at property SW corner from 90`h St. S. PAGE 18 BRKW APPRAISALS, INC. 111111111111 Looking west along 90th St. frontage from Keats Ave.: Permanent right-of-way easement acquisition area is at right, foreground, and right of center of trail x ate` n I a« — Looking east from west edge of property: Permanent right-of-way easement acquisition area extends from approximate center of trail to north (left) BRKW APPRAISALS, INC. PAGE 19 • Looking west from subject driveway: Right-of-way easement is in right half of photo, drainage/utility easement is in left half a ser d` ,, , . "x it ���t� ..a,('a41tw�„�•c*"-Nr '�a. :.Yep a¢E View to east from near subject driveway: North limit of drainage/utility ease- ment is near left edge of photo, just right of parking lot and including 2 trees BRKW APPRAISALS, INC. PAGE 20 gym. .ice. k Looking south from subject driveway at west limit of drainage/utility easement, which includes small tree in foreground, far right AIM mow Immo miaow BRKW APPRAISALS, INC. PAGE 21 HIGHEST AND BEST USE ANALYSIS WNW The term highest and best use is defined in The Dictionary of Real Estate Appraisal, fourth edition, published by the Appraisal Institute, page 135, as: "The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability. Highest and Best Use Prior to Acquisition If Vacant: The subject land comprises a generally level, open, rectangular shaped tract located at the northwest corner of 90th St. and Keats Ave. in Cottage Grove. The total area of the site, excluding roadway, is 4.921 acres, subject to survey. The land immediately adjoins agricultural fields and rural residences, but is within less than a quarter mile of the current MUSA, which comprises the edge of existing urban development on the east side of the community. The property is within the East Ravine neighborhood of Cottage Grove, a 4,000-acre area which is in the process being master planned by the city for orderly, gradual development over the next 15 to 20 years. A sanitary sewer interceptor line which was recently installed in the neighborhood has sufficient capacity to serve the area, and water service is available in the current MUSA for extension into the neighborhood once the MUSA is expanded. Howard Blin, the city community development director, indicated that the first phase of development in the East Ravine master plan is the North Neighborhood, in the northwest quadrant of 70th St. and Keats Ave. Development is scheduled to begin in late 2006 or early 2007, approximately one year from the date of valuation. The subject property is located in the South Neighborhood, which is on the west side of Keats Ave. and extends for the most part from 80th St. south to U.S. Hwy. 61. Mr. Nam Blin indicated that development of the South Neighborhood and the subject land is about three to four years beyond the date of valuation, which results in a probable time line of late 2008 to late 2009 before development commences. The time lag between development of the two neighborhoods is intended to allow the North Neighborhood to be approximately 70% developed before the South Neighborhood is opened up for construction. The preliminary land use plan map, a copy of which was shown previously in this report, is subject to change, since the city comprehensive plan is in the process of being amended. However, Mr. Blin indicated that this plan is a reasonably accurate representation of the final plan that is expected to be approved. The land use plan designates the subject for Civic/Institutional use, reflecting its current use as a church. If the site were vacant, given the imminent extension of utilities, as well as trends in land values and demand for new homes, it is likely that the land would be developed with uses similar to those approved/intended for adjoining land areas. BRKW APPRAISALS, INC. PAGE 22 - Mow In this case, the land use plan calls for two types of uses on adjoining land: 1) Low Density Residential to the north and west, calling for densities between 1 and 5 units per acre in the form of single-family homes and twin homes; and 2) Medium Density Residential due south, calling from densities between 6 and 12 units per acre in the N' form of row houses and townhouses. The subject site more immediately adjoins the Low Density designated land, while the Medium Density land to the south is separated by 90th St. (future Ravine Pkwy.). However, the site abuts Keats Ave., a well-traveled minor arterial roadway. The proximity to this roadway makes the subject property a better candidate for residential development toward the higher end of the probable density range than the lower end. It is reasonable to expect that the site may be developed with a mix of single-family homes and townhouses, given the location factors. Such mixed development in our judgment would involve a probable density of between approximately 4 to 5 units per acre. It is concluded that the highest and best use of the subject land, if vacant, is to hold for future residential development, likely to take place within three to four years, and ' likely to involve a mix of single-family homes and townhomes at a density of 4 to 5 units per acre. If the site were vacant, the most likely interim use would be agricultural. As Improved: The subject land is improved with a church built in approximately 1995 and, according to the City of Cottage Grove, has a gross building area of 5,216 square feet. The church is allowable as a conditional use under current AG-1 zoning and is generally consistent with the highest and best use of the underlying land. The church improvements contribute significantly to the overall property value and the indicated highest and best use, as improved, is continuation of the current use. It is noted that the property contains a significant amount of currently unused land which has the potential to be subdivided and sold to adjoining land owners, or which could be retained to allow expansion of the church facility in the future, if desired. In '— the absence of these two scenarios, it is likely that in the future, as land in the area becomes developed, the value of the subject land as a vacant parcel may exceed the value of the property with the existing church. Given this scenario, the highest and IMO best use, from an economic perspective, would be to remove the existing improvements and develop the site to it highest and best use, if vacant (urban residential use). This is a likely option for the property owner in the future. However, it is not necessarily likely that the property owner would exercise this option, the appeal of which would be based purely on an economic/financial basis. Alternatively, if there was a major expansion to the existing church, the financial incentive for redevelopment of the site would diminish or cease to exist. Nonetheless, it is recognized that there is potential for developing the subject property with urban housing in the future as an alternative to the existing church use. In consideration of all the above factors, it is concluded that the highest and best use of the property, as improved, is continuation of the current church use. BRKW APPRAISALS, INC. PAGE 23 Highest and Best Use After Acquisition If Vacant: In the after position, the total land area remains the same at 4.921 acres. However, the property is encumbered with an additional 0.397 acre of permanent right-of-way easement, as well as with a new 0.491-acre permanent drainage and utility easement, which will contain a storm water pond to be shared between the subject property and the city. The right-of-way easement acquisition results in a reduction of the usable land area by 8%, to 4.524 acres, of which 11% retains some level of utility but is encumbered with the drainage easement. Some site improvements also are impacted by the proposed acquisitions. The shape of the buildable land area is changed from regular/rectangular to irregular. OMB The proposed acquisitions have an impact on the property. However, the impact is not sufficient to change the highest and best use. The site still offers size, utility and shape attributes favorable for urban residential development. After the proposed acquisition, the highest and best use remains to hold for future residential development with urban services, with a likely interim use of agricultural. As Improved: The subject building improvements are not affected by the permanent easement acquisitions. The church and supporting improvements will function in the same manner as in the before position. The property will share a new storm water pond with the city, but the drainage needs of the property will continue to be met in the same way as before the acquisition, and the new pond will not adversely affect the use or appeal as a church. Some site improvements will be affected by the acquisition, and the impact is addressed in this appraisal. However, the proposed easement encumbrances do not change the highest and best use of the property, as improved, in the after position, which remains to be continuation of the current church ORM use. BRKW APPRAISALS, INC. PAGE 24 MARKETING/EXPOSURE TIME The Twin Cities metro area has grown in population significantly and steadily during the past several years. The subject property is located in the steadily and relatively fast-growing east metro suburb of Cottage Grove. Sustained growth is expected to _ continue and the property is located in a master-planned area slated for MUSA expansion and urban development in the near future, factors which among others contribute to a high level of marketability for the subject property. Based on all of the above and the subject specific property attributes, it is our opinion that a marketing time of approximately six to twelve months from the date of appraisal would elapse before the property were sold at the market value estimated in this _ appraisal. The exposure time, which reflects the amount of time the property would have been on the market, had it sold on the date of appraisal at the value estimated herein, is also estimated at six to twelve months. Estimated Marketing Time: 6 to 12 Months Estimated Exposure Time: 6 to 12 Months Mom LAND VALUE PRIOR TO ACQUISITION Direct Sales Comparison Approach Estimating the value of land involves the process of researching and analyzing recent sales of land parcels that are reasonably comparable to the property being appraised. The sale properties may have varying degrees of similarity to the subject in location, size/shape, topography, soil conditions, zoning and/or highest and best use, among other factors. An indication of value is derived by making appropriate adjustments to allow for the value-related differences of the land sale properties in comparison to the land parcel being appraised. Provided on the following pages are details of four land sale properties that have been researched and analyzed for the purpose of comparison to the subject property. BRKW APPRAISALS, INC. PAGE 25 65TH ST S _ _ \\*.\\: � I ! te; a RAI 1 1.111 Idee. Pa: is �\ "s d C` 2 � 1 .Po i R t . lours r nvR cuvFr in aim:Ion — Li 1 - Ij AII'1 r'r `_ a 3 Y "n 11CJ Y'i Ll1 W Land Sale #1: 6959 65th St. S., Cottage Grove Legal Description: Part of SE 1/4 of 6-27-21 (lengthy legal retained in file) Buyer/Seller: Pulte Homes on MN Corp. / Stephen & Julie Schenk Zoning: R-2.5, Residential Utilities: All available Land Area: 12.37 acres, net of roadway Date of Sale: April 2005 Sale Price: $1,125,000 — cash sale 10,000 — cost to remove existing house $1,135,000 — total Indicated Factor: $91,754 per acre Level to sloping, partly wooded rural residential home site purchased as part of an approximately 52-acre assemblage for Timber Ridge 6th Addition, a 47-lot single- - family home subdivision in which four existing homes were retained on various-size lots and outlots. This site also had a home, but it was removed and now the land is platted with 19 lots. The data for the above sale is per county records and city officials; attempts to confirm sale with both buyer and seller were unsuccessful. There is a 33-foot-wide pipeline easement passing through the easterly edge of the property which encumbers about 7% of the total land area. BRKW APPRAISALS, INC. PAGE 26 \ ' ame) I i i e , 4.4 i I I I nn i.M i i a aI I i Z I ) - TJ n 1: 1 tt ! I au a 2 i I o I " i ux L. a NS,. 0 / (aia.1 , \.\ g,,,;, ' ' / ''w') ''''' €( ,)t term)t: ISA '- (nai)..P (arch) ( !$-�o mg 8 2 i y.; I. t2 GREY EAGLE CIRCLE w ro tamp a ---I--- I _— ....... .n a Nam) m tt i :am aa. mg I I ;loos) s Imo) (x) tom) 6 fpl..� amf ; �1 T , 12 F- A .! Ir' a `$ l 1` #' I = , - 3 z Land Sale #2: 2432 Cottage Grove Dr., Woodbury Legal Description: N. 330' of S. 660' of SE 1/4 of NE 1/4 of 14-28-21 Buyer/Seller: Thone Development LLC / James Currell — Zoning: R-4, Urban Residential Utilities: All available Land Area: 4.75 acres, net of roadway Date of Sale: April 2005 — Sale Price: $940,000 – cash sale Indicated Factor: $197,895 per acre — Acreage home site on a hillside located on west side of Cottage Grove Dr. Purchased for development with 15-lot single-family home subdivision. Four of the lots front Cottage Grove Dr., and the remaining 11, lying at a lower elevation, are accessible by a street entering the rear or west side of the property, which was platted and constructed by the buyer. Existing 1980s-vintage two-story home on the site was relocated to one of the new lots, at the southeast corner of the property. However, based on conversations with the seller, it appears that any contributory value the — house made was offset by the cost of relocating it. BRKW APPRAISALS, INC. PAGE 27 911, 11 tt _ rM :a ,zn: 1 n• _ 17 Lk 1 —2— � . r m } 37 10,1 AVE/INE a I Ike: � _ — H I ( do 1 s - u r ' a,A, _ r u E r- weivE ,F, .'�_l 1 ..., 1: — I i .. it Land Sale #3: 2" St., North and South of 10th Ave., St. Paul Park Legal Description: Parts of Blocks 74, 75 and 83, St. Paul Park Div. #2 (lengthy legal retained in file) Buyer/Seller: Ann-Greg, Inc. / Marathon Ashland Petroleum, LLC Zoning: R-1, Single-Family Residential Utilities: To be extended beginning Spring 2006 Land Area: 4.27 acres Date of Sale: August 2005 Sale Price: $525,000 — cash sale Indicated Factor: $122,951 per acre Three blocks of land which are noncontiguous but in close proximity to each other, _ reflecting groups of vacant platted 40-foot lots adjoining modest- to moderate-priced homes built between the early 1900s and the 1990s (predominantly 1970s/1980s). Buyer has replatted the land into 14 single-family lots with 75- to 80-foot widths to allow for development with new homes. The current street frontage is older bituminous with no curb/gutter; there is scattered availability of water and sewer utilities to some homes in the area, not sufficient to serve this land. New utilities will be extended beginning in the spring of 2006 as part of the planned development of land annexed from Grey Cloud Island Township about a half mile to the south. Buyer of the land above will pay assessments for part of utility extension as well as for new street and storm sewer construction, to allow construction of new houses. BRKW APPRAISALS, INC. PAGE 28 j 185TH ST.W. ' r 012 5" \\\; 1 34;,7-... 1 � f / 014-5 w I O"5-5? 030-55 Land Sale #4: 18630 Dodd Blvd., Lakeville Legal Description: Part of NE'/4 of SW1/4 of 17-114-20 (lengthy legal retained in file) Buyer/Seller: Joe Miller Farms Inc. / Francis and Lola Marek Zoning: RM-1, Medium Density Residential Utilities: Scheduled for MUSA inclusion beginning in 2010 Land Area: 19.4 acres, net of roadway Date of Sale: September 2005 Sale Price: $3,000,000 — contract for deed 15,000 — cost to remove house and outbuildings $3,015,000 — total Indicated Factor: $155,412 per acre Older farmstead property located at edge of development path with utilities in close proximity. However, land is not scheduled for expansion into MUSA until 2010 at earliest. Zoning/comp plan designation allows for up to 8 units per acre, which most likely would involve townhouses and/or condominium units. Financing is spread out over two years with no interest, involving $1,000,000 payments each in September of 2005, 2006 and 2007. BRKW APPRAISALS, INC. PAGE 29 s _` 67 l ' i ,,,, ,,,E,,,'5 „____. i 7,• Lake Triii ,He s W6 r , w 6 11,« , s t� xv fa, Sale 2. eret,";.' =;., ,0 = , „,-t- - ii if - Mgr . t t 69 k � �'""' µ� v �". i&.a. � ''-...„,%-..411z;«, . R�. -�� 1f 1 , m" Y' lik L 1 il s.,..,.;,„.4..°7--r,,• • ww #(}} �Aµ .}v�,. 5 i �G ] ¢ _ it V t svru--- ¥W ii k " '". > 's x e1 4-** «n Sale 3 , ''''(' ' --!'k,--. El! Subject _I r ,,,,,,,--1�. ao [12.1,,---,1 ,. ... --. -- ..,.....- 0 il s i t y4 r " '1,,„0/111;#f 1 ' y ,« 1 ay ' , d - m ,,. il"1°u € We ' g ".. �Er' � ' gg pp i tel. M «� 4 i I: Sale 4 li � � 1 . _ : X62 �r 11 r D At 1 A. Comparable Land Sales Location Map BRKW APPRAISALS, INC. PAGE 30 COMPARABLE LAND SALES SUMMARY — Before Acquisition Net Zoning Land Units Sale Sale Area Price Planned Per Location Date Price (Ac.)* Per Acre Use Acre Comments 1 6959 65th St. S. 4/05 $1,135,000 12.37 $91,754 R2.5 1.54 Part of assemblage for Cottage Grove Residential 47-lot Timber Ridge 6th Addn. 19 SF Lots Wow 2 2432 Cottage 4/05 $940,000 4.75 $197,895 R-4 3.16 Now developed with Grove Dr. Urban Res. Fairway Bluff Heights Woodbury subdivision. 15 SF Lots 3 2" St., north and 8/05 $525,000 4.27 $122,951 R-1 3.28 3 non-contiguous south of 10th Ave. SF Res. parcels replatted for St. Paul Park 14 SF Lots residential develop- ment. Utils. to be extended in Spring 2006. 4 18630 Dodd Blvd. 9/05 $3,015,000 19.4 $155,412 RM-1 Up to Agricultural land Lakeville Medium 8 slated for utilities Dens. Res. availability beginning Future in 2010. TH/Condo S 9998 90th St. S. --- --- 4.92 --- Agl 4-5 Level, open tract in u Cottage Grove Agric. +/- area slated for b Pres. development with SF/TH Mix utilities avail. in approx. 3 years (2009 +/-). *Net land area excludes road right of way Additional Land Sale Information The foregoing land sales are judged to be the best and most comparable to the subject land, for which reliable data were available. Sale 1 is the most recent closed residential land sale in Cottage Grove known to the appraisers. Discussions with various individuals knowledgeable of the Cottage Grove real estate market revealed that several sales of properties in the North Neighborhood of the East Ravine Pkwy. area (northwest quadrant of 70th St. and Keats Ave.) are pending. However, the earliest closings will not take place until the summer of 2006. No parties to these transactions were willing to discuss prices, given the pending nature of the sales. General and anecdotal discussions with marketplace participants resulted in the conclusion that land is going under contract for between about $130,000 and $165,000 per acre, with the predominant prices being toward the lower end of this range. BRKW APPRAISALS, INC. PAGE 31 Analysis of Land Sales — Before Taking The comparable land sales are adjusted for value-related differences in relation to the subject land. Upward adjustments are made to the comparable sale prices for characteristics inferior to the subject site, and downward adjustments are made for attributes which are superior to the subject. Following are items for which adjustments were considered and made, where applicable and necessary: Property Rights Conveyed: If property rights different than those appraised for the subject property were transferred, an adjustment may be necessary (i.e., leased fee 'M vs. fee simple). Financing: The opinions of market value in this appraisal reflect payment in cash or cash equivalent terms. Sale 4 financing involved 3 payments over 2 years. Sale Conditions: Consideration is given to whether transaction was arms-length or was influenced by conditions causing buyer or seller to be atypically motivated. Market Conditions/Time: Reflects changes in prices, if any, between date of each comparable sale and valuation date, due to changes in market conditions. Market demand for residential land has remained very strong during the past several years and remains so currently, resulting in a significant, sustained rate of price appreciation. The land sales are adjusted upward at a rate of 12% annually. Location: Takes into account location factors such as proximity to major access routes and shopping, visibility, surrounding development, and general area desirability/demand. Size: Generally, as parcel size increases, total price increases, but price per acre typically decreases. Sale 4 requires adjustment for a significantly larger site. Shape/Utility: Development utility is affected by shape and other factors. Though Sale 3 comprises noncontiguous parcels, the property has superior utility, since a lesser than typical level of work/cost outlays for development was required. OMER Soils/Topography: Stable subsoils needing no corrective measures for building, and level to moderately sloping topography are preferred in the market. Easements: A sanitary sewer line easement encumbers about 10% of the subject property, which affects the utility of the site. A pipeline easement encumbers about 7% of Sale 1; the other comparables have no such easements. Development Timing: The subject property will not be available for development for at least three years, whereas Sales 1 and 2 were immediately available. Sale 3 likely will require nearly a year from closing before utilities and new streets are in to serve the development; Sale 4 is about two years beyond the subject development timeline. Adjustments were made based on the assumption that land purchased today and held for future development could be expected to appreciate in price 5% yearly, but the future value would be discounted back to the present at the rate of 12%. BRKW APPRAISALS, INC. PAGE 32 -. Zoning/Density: The higher the density (i.e., number of dwelling units per acre) possible and/or approved for a development parcel, typically the more a developer will pay for the land on a per-acre or per-square-foot basis. The adjustments made to the comparable sales are shown on a grid below: - Land Sales Adjustment Grid - Before Acquisition Sale 1 I Sale 2 I Sale 3 I Sale 4 Sale Price ($/Acre) $91,754 $197,895 $122,951 $155,412 Property Rights x 1.00 x 1.00 x 1.00 x 1.00 $91,754 $197,895 $122,951 $155,412 Financing x 1.00 x 1.00 x 1.00 x 0.96 $91,754 $197,895 $122,951 $149,196 - Sale Conditions x 1.00 x 1.00 x 1.00 x 1.00 $91,754 $197,895 $122,951 $149,196 _ Market Conditions x 1.08 x 1.08 x 1.04 x 1.03 Adjusted Price $99,094 $213,727 $127,869 $153,672 - Location + 5 % - 35 % + 15 % - 5 % Size - 0 - - 0 - - 0 - + 5 % Shape/Utility - 0 - - 0 - - 15 % - 0 - - Soils/Topography - 0 - - 0 - - 0 - - 0 - Easements - 1 % - 4 % - 4 % - 4 % Development Timing - 18 % - 18 % - 12 % + 10 % Zoning/Use/Density + 45 % + 20 % + 20 % - 20 % Net Adjustment + 31 % - 37 % + 4 % - 14 % - Indicated Value For $129,813 $134,648 $132,984 $132,158 Subject After adjustments, the land sale comparables result in value indications for the subject land ranging from $129,813 to $134,648 per acre. The average of the value _ indications is $132,401 per acre. Excluding Sale 2, which required the most total adjustment and a large location adjustment, narrows the value indication range and results in an average value indication of $131,652. In our opinion, the subject land market value is approximately $132,000 per acre, or $3.03 per square foot. Land Area: 214,370 SF ( 4.921 ac. ) 214,370 SF @ $3.03 / SF = $649,541 Rounded to OPINION OF LAND VALUE -BEFORE ACQUISITION: $649,500 BRKW APPRAISALS, INC. PAGE 33 Allocation Of Value Between Unencumbered and MCES Easement-Encumbered As stated, 20,855 square feet or 9.7% of the subject land is encumbered with an MCES (Metropolitan Council Environmental Services) easement for an underground sanitary sewer interceptor line. This land has lesser utility and desirability than the unencumbered portion. However, it does still contribute significant value to the overall property. Though buildings can not be constructed in the easement area, the area contributes to setback and green space requirements, and can be applied in development density calculations. Rear yards and parking lots often are located within such sewer/utility easement areas. The northern limit of the 43-foot-wide easement strip extends 50 feet into the site. The typical required building setback from the road right of way for most residential development in Cottage Grove is 30 feet. The south 23 feet of the MCES easement, or 11,155 square feet of the total is within the building setback area. This area can not contain buildings with or without the easement in place. It is concluded that in this part of the easement area, the land has a rate of contributory value which is about 65% of that of the unencumbered land. The north 20 feet of the MCES easement is beyond the 30-foot setback area. This portion would be buildable if not for the easement, so the land has a reduced level of utility and contributory value. However, the land still can be used for density, yard space, parking lots, etc. It is concluded that in this part of the easement area, the land has a rate of contributory value which is about 50% of that of the unencumbered land. Based on the above conclusions, the overall land value opinion of $3.03 per square foot is allocated as shown below: MEM Allocation Of Contribution To Value Area unencumbered with MCES easement 193,515 SF @ $3.159 / SF = $ 611,314 WPM MCES easement area- within 30' setback 11,155 SF @ 2.053 /SF = $ 22,901 (65% of unencumbered area$/SF value) MCES easement area-beyond 30' setback 9,700 SF @ 1.580 / SF = 15,326 (50% of unencumbered area$/SF value) 214,370 SF @ $3.030 /SF $ 649,541 Rounded to Subject Land Value Before $649,500 BRKW APPRAISALS, INC. PAGE 34 IDENTIFICATION OF PROPERTY VALUE DAMAGE ITEMS Permanent Right-Of-Way Easement Loss of 17,308 square feet (0.397 acre) of land. Equivalent to a fee taking, since the encumbered area offers no utility to the subject property underlying fee ownership, other than for public right of way. Of the new right-of-way acquisition area, 6,047 square feet is previously unencumbered subject land, and 11,261 square is land already encumbered by the MCES easement. Of this amount, 8,271 square feet is within the 30-foot setback area and 2,990 square feet is beyond the setback. Permanent Drainage and Utility Easement Partial loss in utility of 21,389 square feet (0.491 acre) of land to be encumbered with an easement pertaining to the new storm water pond to be constructed by the city. Of the new permanent drainage/utility easement acquisition area, 18,793 square feet is previously unencumbered subject land, and 2,596 square is land already encumbered by the MCES easement. Of this amount, 270 square feet is within the 30-foot setback area and 2,326 square feet is beyond the setback. Dividing the easement area from another perspective is the fact that 65% of the shared storm pond and encumbrance area (13,903 square feet) will serve the existing drainage needs of the subject property, and the remaining 35% (7,486 square feet) will serve the city needs. Subject Property Portion Of Easement Area: In essence, 65% of the new drainage/utility easement replaces the area which already had been used by the church for storm ponding purposes and therefore this land continues to offer significant utility. However, there is a loss in property rights, given the imposition by the city of the permanent easement. Imo In the before position, the area now comprising 65% of the permanent drainage/utility easement encumbrance served the subject property ponding needs for the existing church, and this area appears to be a logical place for a storm pond given the layout of the site. However, there were no restrictions necessitating using this area only for ponding. If an expansion was to be made to the church or, alternatively, if the site was vacant and planned for development with housing, it would have been possible to locate the storm ponding area elsewhere on the site, if this maximized the development utility and appeal of the property. In the after position, the current ponding area is essentially fixed, resulting in a loss of flexibility for locating the storm pond function on the site in alternative ways. The city consulting engineering firm did indicate that there is enough available and unimproved land area in the vicinity of the proposed permanent drainage/utility easement to meet current drainage needs for both the church and city, and to allow expansion of the storm pond to accommodate a future expansion of the church building. Therefore, the easement does not preclude expansion on the property per se. BRKW APPRAISALS, INC. PAGE 35 City Portion Of Easement Area: The 35% share of the permanent easement which will serve the city has no utility or contributory value to the subject property in the after position. This area can not contain buildings, nor can it be used to fulfill density or minimum lot size requirements associated with the use and/or development of the property. The city portion of the easement offers utility only to serve the drainage needs of the city. Consequently, this portion of the permanent easement is equivalent to a fee taking. Site Improvements Permanent Right-Of-Way Easement Area: The contributory value of the driveway section and lawn surface located in this encumbrance area has been lost as a result of the acquisition. The city has virtually complete control and possession of the land covered by this permanent easement and all improvements upon it, even though the subject property ownership remains the underlying fee owner. Permanent Drainage and Utility Easement Area: Three planted trees ranging between 10 and 18 feet in height are presumed lost due to the their location in this BIM encumbrance area. The trees are located at the northerly edge of the easement area but may be lost during construction and/or are subject to destruction from flooding at times when the storm pond reaches its peak capacity. There also is lawn area located in the drainage/utility easement area. However, no loss is evident for any impact the easement and storm pond construction may have on this lawn area. The new storm pond will be attractively landscaped with lawn, natural vegetation and other appropriate materials, and offer at least the same level of appeal as the existing pond area. Moreover, unlike the permanent right-of-way easement area, the drainage/utility easement area will be an integral part of the subject property and be available for at least partial enjoyment by the property ownership, since 65% of the area will benefit the subject property. Severance Damage There is some severance damage noted due to the proposed permanent easement acquisitions. The severance damage is limited to the land only and does not extend to the improvements. In the after position, the land serving the subject storm pond function will be more restricted as a result of the drainage/utility easement, as discussed on previous pages, since it will not be available for an alternative use as it was in the after position. Also, in the after position, the usable/buildable area of the site will be more irregular given the presence of both the right-of-way and drainage/utility easements, which extend north and northwest into the central and southeast portions of the property. The easements leave a relatively small, isolated "- area of land at the southeast corner of the unencumbered remainder which has reduced development utility, given setbacks and other restrictions. BRKW APPRAISALS, INC. PAGE 36 LAND VALUE AFTER ACQUISITION Land Not Encumbered With Any Easements In the before acquisition position, the subject land located outside the MCES easement and completely unencumbered by any other significant easements was concluded to contribute to the total land value at the rate of $3.159 per square foot. In the after position, it is concluded there is a slight diminution in value of this land due to the more irregular shape of the usable/buildable area caused by the presence and location .— of the permanent right-of-way and drainage/utility easements. The primary impacted land is in the extreme southeast corner, which is about 4% of the unencumbered remainder. It is reasonable to conclude that this area has experienced about a 50% reduction in value due to reduced utility. Consequently, the overall unencumbered area has lost about 2% in value (50% x 4%), and thus the unencumbered remainder land has a contributory value which is 98% of the before-taking value or $3.096 _ per square foot ($3.159 per square foot x 98%). Land Encumbered With MCES Easement In the before acquisition position, the contributory value of this land to the overall property value was concluded to be $2.053 per square foot for the portion in the 30- - foot setback area and $1.580 per square foot for the part beyond the setback area. These values are judged to be the same in the after position. The change in shape of the subject usable/buildable land area does not impact the MCES easement area, since it is already significantly encumbered and is located along the south fringe of the parcel. -- Land Encumbered With Permanent Right-Of-Way Easement As previously discussed, this easement is equivalent to a fee taking from a value perspective. Therefore, the land with this encumbrance has no contributory value in the after position. Land Encumbered With Permanent Drainage/Utility Easement City Portion (35%): As previously discussed, this part of the drainage/utility easement, 35% of the total, is equivalent to a fee taking from a value perspective. Therefore, the land with this encumbrance to be used by the city for storm ponding purposes has no contributory value in the after position. BRKW APPRAISALS, INC. PAGE 37 Subject Property Portion (65%): This part of the drainage/utility easement still retains significant utility and contributory value, since it will continue to serve the subject property storm ponding functions. However, as previously discussed, it is recognized that some property rights have been taken. There is a permanent loss of the fee owner's ability to put the encumbered land to an alternate use, if this were desired during expansion of the church facility or for redeveloping the site with a residential use. After considering the impact of the restriction and the likelihood of an alternate use scenario arising for this land area currently used for storm ponding, it is concluded that the subject property portion of the drainage/utility easement area has been reduced in value by 15%, relative to the before position, as a result of the encumbrance. Therefore, this land area has a contributory value which is 85% of the before-taking value. It is noted that the permanent drainage/utility easement covers parts of the subject land which previously 1) were not encumbered with any easements, 2) were encumbered with the MCES easement in the 30-foot setback area, and 3) were encumbered with the MCES easement beyond the setback. The before values for these land types were $3.159, $2.053 and $1.580 per square foot, respectively. Multiplying these values by 85% results in after-position values of $2.685, $1.745, and $1.343 per square foot, respectively. Calculation Of Land Value -After Acquisition Area not encumbered with any easements 168,675 SF @ $3.096 /SF = $522,218 (98%of before $/SF value) MCES easement area Within 30' setback(65% of unenc. -before) 2,614 SF @ 2.053 /SF = 5,367 Beyond 30' setback(50% of enenc. -before) 4,384 SF @ 1.580 /SF = 6,927 Right-of-way easement area 17,308 SF @ 0.000 /SF = 0 Drainage easement area-City Portion(35%) 7,486 SF @ 0.000 /SF = 0 Drainage easement area- Subject Portion(65%) Outside MCES easement area 12,215 SF @ 2.685 / SF = 32,797 (85% of before $/SF value) In MCES easement-within 30' setback 176 SF @ 1.745 /SF = 307 (85% of before$/SF value) In MCES easement-beyond 30' setback 1,512 SF @ 1.343 /SF = 2,031 (85% of before $/SF value) 214,370 SF @ $2.657 /SF $569,647 Rounded to w OPINION OF LAND VALUE -AFTER ACQUISITION: $569,600 BRKW APPRAISALS, INC. PAGE 38 SITE IMPROVEMENTS DAMAGES Driveway and Concrete Curb As previously discussed, part of the subject property driveway is located in the new right of way and is essentially lost to the property ownership as a result of the permanent right-of-way easement acquisition. Part of the driveway in the new right way is flanked by concrete curb and gutter. This driveway section is almost new, since it was rebuilt when the MCES interceptor line was installed about two years ago. The estimated cost new is reduced by approximately 10% depreciation, as shown below: Mom Asphalt: 180 SF x $2.00/SF x 90% = $324 Curbing: 10 LF x $15.00/LF x 90% = 135 $459 rounded to Estimated Value of Lost Driveway/Curbing: $500 Lawn Area/Sod There is approximately 1,730 square yards of lawn area in the new right of way, comprising a sod cover, which essentially is lost to the property ownership as a result of the permanent right-of-way easement acquisition. The contributory value is measured as the cost to install, estimated at $2.50 per square yard. 1,730 yards x $2.50 per yard = $4,325 rounded to Estimated Value of Lost Sod: $4,300 Trees There are three planted hardwood trees located toward the northerly edge of the permanent easement area, ranging in height between 10 and 18 feet, and in trunk diameter between two and six inches. The trees are small enough to be moved relatively short distances to places where they are outside the easement area but will continue to offer aesthetic, screening and shade functions for the property. Based on the size and number of trees, the estimated moving cost is $150 per tree. Added to this is an allowance for the risk that one or more trees may not survive the move. Moving cost: 3 trees @ $150/tree = $450 Plus 30% mortality risk factor 135 $585 rounded to Tree Moving Allowance: $600 BRKW APPRAISALS, INC. PAGE 39 Summary Of Site Improvements Damages Driveway/curbing $ 500 Lawn area/sod 4,300 Cost to move trees 600 Total Site Improvements Damages $ 5,400 VALUATION SUMMARY Estimated land value prior to easement acquisitions $ 649,500 Estimated land value after easement acquisitions $ 569,600 Indicated land value damages $ 79,900 Plus site improvements damages $ 5,400 Total Estimate of Property Value Damages $ 85,300 .,. (Just Compensation) Value Damages Divided: (All figures are rounded) Permanent right-of-way easement 17,308 SF( 0.397 ac. ) @ $2.36 / SF $ 40,800 Permanent drainage and utlity easement 21,389 SF( 0.491 ac. ) @ $1.04 / SF $ 22,300 Site improvements damages (see pp. 39-40) $ 5,400 Severance damage: Loss in utility of land caused by easement encumbrances $ 16,800 Total Value Damages (Just Compensation) $ 85,300 BRKW APPRAISALS, INC. PAGE 40 CERTIFICATION The undersigned does hereby certify that in this appraisal report: 1. This appraisal assignment is not based on a requested minimum valuation or specific valuation for approval of a loan. The estimate of market value identified in this report was developed independent of any undue influence. 2. The compensation for completing this assignment is not contingent upon the development or report of a predetermined value or direction in value that favors the cause of the client, the amount of value, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of the appraisal. 3. My engagement in this assignment was not contingent upon developing or reporting predetermined results. 4. I have no present or contemplated future interest in the real estate that is the subject of this appraisal report. 5. I have no personal interest or bias with respect to the subject matter of this appraisal report or the parties involved. 6. To the best of my knowledge and belief the statements of fact contained in this _ appraisal report upon which the analyses, opinions and conclusions expressed herein are based, are true and correct. 7. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased analyses, opinions, and conclusions. 8. 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 Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 9. No one other than Roger M. Rohrer provided significant real property appraisal assistance to the person signing this certification. 10. I have made a personal inspection of the property that is the subject of this report. 11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 12. The by-laws and regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. 13. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser or the firm with which he is connected, or any reference to the Appraisal Institute or MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media, or any other public means of communication without the prior written consent and approval of the undersigned. 14. I have the knowledge and experience to complete this appraisal in a competent manner. Neither my company nor I have been sued by a regulatory agency or financial institution for fraud or negligence involving an appraisal report. Pr 0/,//6,91t, Paul J. G1 son Certified General Real Property Appraiser Minnesota License #4003073 BRKW APPRAISALS, INC. PAGE 41 CERTIFICATION The undersigned does hereby certify that in this appraisal report: 1. This appraisal assignment is not based on a requested minimum valuation or specific valuation for approval of a loan. The estimate of market value identified in this report was developed independent of any undue influence. 2. The compensation for completing this assignment is not contingent upon the development or report of a predetermined value or direction in value that favors the cause of the client, the amount of value, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of the appraisal. 3. My engagement in this assignment was not contingent upon developing or reporting predetermined results. 4. I have no present or contemplated future interest in the real estate that is the subject of this appraisal report. 5. I have no personal interest or bias with respect to the subject matter of this appraisal report or the parties involved. 6. To the best of my knowledge and belief the statements of fact contained in this appraisal report upon which the analyses, opinions and conclusions expressed herein are based, are true and correct. 7. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased analyses, opinions, and conclusions. 8. This appraisal report has been made in conformity with and is subject to the requirements of the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Institute, and the Uniform Standards of Professional Appraisal Practice. 9. No one other than Paul J. Gleason assisted in the preparation of the analyses, conclusions and opinions concerning real estate that are set forth in this appraisal report. 10. I have made a personal exterior inspection of the property that is the subject of this report. 11. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 12. As of the date of this report, Roger M. Rohrer has completed the requirements of the continuing education program of the Appraisal Institute. 13. The by-laws and regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. 14. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser or the firm with which he is connected, or any reference to the Appraisal Institute) shall be disseminated to the public through advertising media, public relations media, news media, sales media, or any other public means of communication without the prior written consent and approval of the undersigned. 15. I have the knowledge and experience to complete this appraisal in a competent manner. Neither my company nor I have been sued by a regulatory agency or financial institution for fraud or negligence involving an appraisal report. Roger M. Rohrer Certified General Real Property Appraiser Minnesota License #4001238 BRKW APPRAISALS, INC. PAGE 42 PROFESSIONAL QUALIFICATIONS PAUL J. GLEASON BRKW APPRAISALS, INC. Telephone: (651) 646-6114 1600 University Avenue, Suite 314 Facsimile: (651) 646-8086 St.Paul,Minnesota 55104 e-mail: pgleason@brkw.com PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS General Associate Member - The Appraisal Institute LICENSE Certified General Real Property Appraiser - State of Minnesota — License #4003073 EDUCATION University of Wisconsin at La Crosse, Wisconsin, 1985 Bachelor of Science Degree in Business Administration PROFESSIONAL REAL ESTATE STUDIES The Appraisal Institute The New URAR Form, 1993 Course 110: Appraisal Principles (examination passed), 1994 Course 120: Appraisal Procedures (examination passed), 1994 Course 210: Residential Case Study, 1994 Course 310: Basic Income Capitalization, 1996 Course 410: National Uniform Standards of Prof. Appraisal Practice, 2003 Course 420: Business Practices and Ethics, 2002 Course 510: Advanced Income Capitalization, 2002 Course 520: Highest and Best Use and Market Analysis, 2000 Course 530: Advanced Sales Comparison and Cost Approaches, 1999 Course 540: Report Writing and Valuation Analysis, 2001 Course 550: Advanced Applications, 2000 Prosource Educational Services, St. Paul, MN Appraisal 101: Intro to Appraisal Principles I, 1992 Appraisal 102: Intro to Appraisal Principles II, 1992 Appraisal 103: Intro to Appraisal Practices I, 1992 Appraisal 104: Intro to Appraisal Practices II, 1992 Appraisal 105: Intro to Appraisal Standards and Ethics, 1992 Appraisal 201: Appraiser's Guide to Residential Construction, 1993 Appraisal 202: Investment Property Appraisal, 1993 Minnesota School of Real Estate, Eden Prairie, MN Valuation of Residences Using Marshall and Swift, 1995 Environmental Issues in the Real Estate Transaction, 1995 BRKW APPRAISALS, INC. PAGE 43 Professional Qualifications - Paul J. Gleason Page 2 EXPERIENCE Staff Appraiser - BRKW, Inc., St. Paul, MN 10/93-present Certified Appraisers, Excelsior, MN 8/93 - 10/93 Stiles Appraisals, Inc., Plymouth, MN 4/92 - 08/93 PARTIAL LIST OF CLIENTS* Bank One Illinois Minneapolis Community Development City of St. Paul Agency Dakota County Community Neighborhood Development Alliance Development Agency Princeton Bank Bremer Bank St. Paul Public Schools Franklin Bancorp TCF National Bank Minnesota Minnesota Department of U.S. Bank Transportation Wells Fargo Bank Various communities, attorneys and individuals *Clients above include those who have approved Paul J. Gleason or those for whom appraisals were done under the direct supervision of a client-approved BRKW Appraisals, Inc. appraiser. Revised: March 2005 IMO MOM BRKW APPRAISALS, INC. PAGE 44 QUALIFICATIONS ROGER M. ROHRER BRKW APPRAISALS, INC. Spruce Tree Center, Suite 314 1600 University Avenue St. Paul, Minnesota 55104 _ EDUCATION : Graduated from the University of Minnesota in December 1966 with a Bachelor of Science degree; forestry major. Attended and successfully completed the American Institute of Real Estate Appraisers courses I, II and III between March 1969 and March 1970; Capitalization Theory and Techniques, Parts 2 and 3 in January 1982; Valuation Analysis and Report Writing in August 1983; and Case Studies in Real Estate Valuation in September 1983; Advanced Income Capitalization in May 1997; most recent completion of Standards of Professional Practice in April 2005; numerous real estate and appraisal seminars have been attended since 1972. PROFESSIONAL AFFILIATIONS : General Associate Member of the Appraisal Institute. Candidate No. M-76-371 Appraiser License No. 4001238, Minnesota Department of Commerce Certified General Real Property Appraiser EMPLOYMENT: 1967-1968: Forester for U.S. Forest Service, Dept. of Agriculture. 1969-1972: Right-Of-Way Officer in Federal Highway Administration, U.S. Department of Transportation. 1972 to Feb. 1991: Real estate appraiser with Muske -Tansey Company through February 1978 and with Muske Company 1978 to 1991. Vice President of Muske Company Inc. from January 1984 to February 1991. March 1991 to Present: BRKW Appraisals (formerly known as Bettendorf Rohrer Knoche Wall, Inc.) - Partner/Owner. CLIENTS FOR WHOM APPRAISALS HAVE BEEN SUBMITTED: Housing and Redevelopment Authority of St. Paul Port Authority of St. Paul Ramsey, Dakota, Scott & Washington Counties Minnesota Dept. of Transport. Minnesota Department of Natural Resources University of Minnesota Banking institutions in St. Paul and suburbs Numerous private companies and individuals TYPES OF APPRAISAL EXPERIENCE: Residential - Both single and multiple family. Industrial - Wide cross section including factories, warehouses, truck terminals and general manufacturing Commercial - Office buildings, central city hotels, service commercial properties, retail stores, shopping centers Other - Indian treaty lands in No. Dakota, So. Dakota, Montana, Minnesota - Special purpose properties. - Condemnation commissioner in Dakota and Ramsey Counties Last Updated: September 2005 BRKW APPRAISALS, INC. PAGE 45