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HomeMy WebLinkAbout2016-01-06 PACKET 06.A. i REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM #� DATE 1/6/16 . � . PREPARED BY: Community Development Jennifer Levitt ORIGINATING DEPARTMENT STAFF AUTHOR * * * * * * * * * � * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * � * * * * * * COUNCIL ACTION REQUEST: 1. Hold the public hearing for the 2016 Pavement Management Project. 2. Consider adopting a resolution ordering the 2016 Pavement Management Project and authorizing preparation of plans and specifications for D2, F3, F5, 80th Street, and Oakwood Park. STAFF RECOMMENDATION: Approve the request. ADVISORY COMMISSION ACTION: DATE REVIEWED APPROVED DENIED ❑ PLANNING � � � ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑❑ � � ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS � ❑❑ � ❑ ECONOMIC DEV. AUTHORITY � ❑ ❑ ❑ SUPPORTING DOCUMENTS: � MEMO/LETTER: Memo from Jennifer Levitt and Ryan Burfeind dated 12/23/15 � RESOLUTION: Draft ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: Feasibility Report; Special Benefit Appraisals ADMINISTRATOR'S COMMENTS: '� I�J��� �`� ,r� � ; City Administrator Date * * * * * � * * * * * * * * * * * * � * * * * * � * * * * � * * * * * * * * * � * * * * * � � * COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER Cottage J Grove �here Pride andp��sPerity Meet To: Honorable Mayor and City Council Charlene Stevens, City Administrator . From: Jennifer Levitt, P.E., Community Development Director/City Engineer Ryan BurFeind, P.E., Project Engineer Date: December 23, 2015 Re: 2016 Pavement Management Project • Hold Public Hearing • Oder Project • Authorize Preparation of Plans and Specifications Background On July 3, 2015, the City Council authorized a feasibility report for the 2016 Pavement Management Project as outlined in the Capital Improvement Plan for the following areas: 1) F3/F5 Residential area generally bound by south of 80th Street, east of East Central Ravine Park, west of Keats Avenue, and north of 85th Street. 2) D2 Residential area generally bound by south of Pine Hill Elementary school, east of Hadley Avenue, west of Hamlet Park, and north of 95th Street. 3) 80th Street from Ideal Avenue to Jamaica Avenue. The City Council held a workshop session on November 18, 2015, to discuss the various ele- ments of the proposed improvements. At the workshop, staff presented the preliminary findings of several different tests that were completed on the existing pavement and utilities. Due to the poor pavement condition, along with good sub-grade soils and curb condition, a full pavement replacement and spot curb replacement were recommended for the F3/F5 residential area. With the poor pavement and curb condition and aging street light system, full pavement replacement and full curb replacement, along with replacement of the street light wires with conduit are pro- posed for the D2 residential area. Finally, testing and assessments completed along 80th Street found good subgrade soils and curb condition. Based on this, a full pavement replacement and spot curb replacement is proposed for 80th Street, along with repaving of the bituminous trails. A neighborhood meeting for this project was held on December 8, 2015, at 7:00 p.m. at Cottage Grove Middle School. There were 30 people in attendance. At this meeting a presentation was given highlighting the various improvements proposed for the 2016 project, along with infor- mation on the proposed assessments. On December 16, 2015, the City Council approved the feasibility report and called for a public hearing to be held on January 6, 2016. All notices and publications have been completed according to State Statute. Honorable Mayor, City Council, and Charlene Stevens 2016 Pavement Management Project December 23, 2015 December Page 2 of 4 Discussion Summarv of Road and Infrastructure Improvements The rehabilitation method proposed for the residential streets in area F3/F5 is to remove the ex- isting asphalt surFace and replace it with a new surFace, which will consist of two lifts of bitumi- nous. Spot curb replacement throughout the area will also be completed, along with spot replacement of sidewalk panels along Johansen Avenue and Joliet Avenue. Finally, minor utility improvements for sanitary sewer, water, street lights, and stormwater will also be included. The total estimated project cost for the F3/F5 residential area is $2,184,504. The potential assess- ment for the improvements listed above is estimated at $3,619.52 per residential buildable lot equivalent (RBLE). Single-family residential is assessed at a rate of 1.0 of the RBLE. Special benefit appraisals were completed for single-family residential lots in this area, which found the special benefit to single-family residential properties to be $5,000, which supports the proposed assessment of$3,619.52. The rehabilitation method proposed for the residential streets in area D2 is to remove the exist- ing asphalt surface and replace it with a new surFace, which will consist of two lifts of bitumi- nous. Due to the poor condition, full curb replacement is also proposed to be completed. A 28- inch wide surmountable curb and gutter section is proposed in place of the existing 24-inch wide surmountable curb and gutter. Due to the age of the system and reliability issues, replacement of the existing street light wires in conduit, along with replacement of feed points, is proposed for this project area. Finally, minor utility improvements for sanitary sewer, water, and stormwater will also be included within the D2 project area. Televising data that was completed for the 2016 Pavement Management project found large amounts of root intrusion into the 18-inch sanitary sewer trunk line that runs along the eastern boundary of area D2, within Hamlet Park. Based on this data, lining of the trunk sanitary line is proposed to be included in the project. Costs related to this lining project are not included as an assessable cost for area D2. The total estimated pro- ject cost for the D2 residential area is $2,245,565. The potential assessment for the improve- ments listed above is estimated at $4,757.02 per residential buildable lot equivalent (RBLE). Single-family residential is assessed at a rate of 1.0 of the RBLE. Special benefit appraisals were completed for single-family residential lots in this area and found the special benefit to single-family residential properties to be $5,100, which supports the proposed assessment of $4,757.02. The rehabilitation method proposed for 80th Street is to remove the existing asphalt surface and replace it with a new surFace, which will consist of two lifts of bituminous. Spot curb replacement will also be completed, along with repaving of the bituminous trails along 80th Street. Finally, minor utility improvements for sanitary sewer, water, street lights, and stormwater will also be included. Televising data for the utilities on 80th Street identified severe deterioration in the in- vert of the 54-inch storm sewer pipe that connects Pine Tree Valley Pond to Pine Tree Pond underneath 80th Street. Based on this data, rehabilitation of the 54-inch pipe is proposed as part of the project. To enhance safety at Fire Station #2 related to emergency vehicles pulling out onto 80th Street, an Emergency Vehicle Hybrid Beacon (EVHB) is proposed to be installed. The EVHB will look similar to a traffic signal over 80th Street, with mast arms and lights, which can be activated by authorized emergency personnel to stop traffic on 80th Street while emergency vehicles leave the station. The costs related to the 54-inch storm sewer pipe rehabilitation and Honorable Mayor, City Council, and Charlene Stevens 2016 Pavement Management Project December 23, 2015 December Page 3 of 4 the EVHB are not included as an assessable cost for 80th Street. The total estimated project cost for 80th Street is $1,590,733. There is only one residential property located within the 80th Street project area. Residential properties are not assessed for additional cost due to living on a four-lane street. With full pavement replacement and spot curb replacement proposed, the same assessment as F3/F5 is proposed in the amount of $3,619.52. A special benefit appraisal was completed for this resi- dential property and found the special benefit to be $6,100, which supports the proposed assessment of $3,619.52. Per the City's special assessment policy, the assessment amount for religious institutions is computed as 75 percent of the improvement costs for streets adjacent to the property. The assessment calculation for the Church of St. Rita provided an assessment amount of $87,771.18. The special benefit appraisal for the Church of St. Rita found the benefit to the property to be $36,700, so the assessment is capped at the special benefit amount. The special benefit appraisal for Crossroads Church found no benefit to the property as there is no direct access to 80th Street. Oakwood Park Improvements Improvements to Oakwood Park are also included in the 2016 Pavement Management Project scope. The improvements include reconstruction and expansion of the parking lot with curb and gutter, realignment of the entrance drive, and construction of sewer and water services into the park. Completion of these improvements is contingent upon the hotel RFP that is currently out for the vacant parcel adjacent to Oakwood Park. The total costs for these improvements is esti- mated at $360,000. Per the special assessment policy, park improvements are not included as an assessable project cost. Proiect Fundinq Analvsis The total project cost for the road work, utility, and park improvements is $6,415,019. According to the City's policy, 45 percent of the total project cost for road work and utilities is assessed against the benefiting residential properties, and 75 percent of the total cost is assessed against benefiting religious institutions. The total project value that is assessed is $1,821,319. The Cost Estimate Summary can be viewed in Appendix C of the Feasibility Report. Proiect Option Discussion Option #1: Order the project as outlined in the feasibility report. Total estimated project cost— $6,415,019 Total anticipated assessments —$1,821,319 The benefit of proceeding with the project is that soliciting for bids this winter will provide a stable bidding environment, which reduces the burden to the general taxpayers and the resi- dents adjacent to the project who are paying assessments. Another result of the new pavement is reduced maintenance costs associated with the streets in the project area. Those mainte- nance dollars and resources can then be reallocated to other parts of the community, which is a greater benefit to the general taxpayer. There are also similar benefits related to the repairs to the utilities in the project area. Honorable Mayor, City Council, and Charlene Stevens 2016 Pavement Management Project December 23, 2015 December Page 4 of 4 The CIP outlines a fiscally responsible plan to rehabilitate roads and utilities within the commu- nity and provide for park improvements. Past policy is to do park improvements/upgrades with the neighborhood street and utility improvements. By ordering the project, those plans stay true to that document and the Council's direction given in the development of the CIP. Option #2: Do not order the project as outlined in the feasibility report. If the improvements related to the 2016 Pavement Management Project are not ordered, the roads will continue to deteriorate, which will result in increased maintenance costs. Those costs are borne by all taxpayers, not just the property owners that live on those streets. Future project costs will also be increased by 2.5 percent to 8 percent annually as a result of the construction index. When a pavement management project is delayed, it creates a domino effect by delaying all future pavement management projects. The cost of the domino effect is hard to capture, since there are pavement management projects planned each year into the future. The City's approach since 1994 has been to ensure a safe condition and preserve the structural integrity of roads in a fiscally responsible manner. Independent third party benefit appraisals conducted since 2007 have concluded that this program improves property values within the project areas, as compared to the existing deteriorated condition. It should be noted to Council per Minnesota State Statute 429.031 that the resolution must be adopted by four-fifths vote for the project to be ordered and the project to proceed. Recommendation It is recommended the City Council adopt a resolution ordering the 2016 Pavement Manage- ment project and authorize preparation of plans and specifications for D2, F3, F5, 80th Street, and Oakwood Park. RESOLUTION NO. 2016-XXX A RESOLUTION ORDERING THE PROJECT AND AUTHORIZING PREPARATION OF PLANS AND SPECIFICATIONS FOR THE 2016 PAVEIUIENT MANAGEMENT PROJECT AREAS D2, F3, F5, 80TH STREET FROM IDEAL AVENUE TO JAMAICA AVENUE, AND OAKWOOD PARK WHEREAS, a resolution of the City Council adopted on December 16, 2015, fixed a date for the Council to hold a public hearing, pursuant to Minn. Stat. Chapter 429.011 to 429.111, on the proposed improvement benefitting properties that include: District D2 1. Harkness Avenue South from 95th Street South to 92nd Street South 2. Harkness Co��rt South from Narkness Avenue South to cul-de-sac (9448-9476) 3. 92nd Street South from Harkness Avenue South to Hadley Avenue South 4. Hamlet Avenue South from 95th Street South to Harkness Avenue South 5. Hames Avenue South from Hamlet Avenue South to Harkness Avenue South 6. 94th Street South from Hadley Avenue South to Hamlet Avenue South 7. Lower 94th Sfreet South from Hale Avenue South to Hallmark Avenue South 8. Hale Avenue South from Lower 94th Street South to 92nd Street South 9. Hallmark Avenue South from Lower 94th Street South to 92 Street South District F3 1. Johansen Avenue South from Jody Avenue South to Joliet Avenue South 2. Jody Avenue South from Johansen Avenue South to Joliet Avenue South 3. Joliet Avenue South from Johansen Avenue South to 80th Street South 4. Jocelyn Avenue South from Jody Avenue South to 80th Street South 5. Jocelyn Avenue South from Jocelyn Avenue South to cul-de-sac (8024-8072) 6. Jocelyn Avenue South from Jocelyn Avenue South to cul-de-sac (8033-8065) District F5 1. Johansen Avenue South from approximately 160 feet south of 85th Street South to Jody Avenue South 2. Jody Lane South loop from Johansen Avenue South to Johansen Avenue South 3. Jody Court South from Jody Lane South to cul-de-sac (8448-8478) 4. 85th Street Place South from 85th Street South to cul-de-sac (9758-9794) 5. 84th Street South from Johansen Avenue South to Jorgensen Avenue South 6. 84th Street Bay South from 84th Street South to cul-de-sac (9632-9680) 7. 84th Street Circle South from 84th Street South to cul-de-sac (9712-9744) 8. Jorgensen Avenue South from 85th Street South to 84th Street South 9. Jorgensen Alcove South from Jorgensen Avenue South to cul-de-sac (8261- 8315) 10.82nd Street South from Johansen Avenue South to 82nd Street South 11.82nd Street from 82nd Street South to cul-de-sac (9686-9772) 12.82nd Street South from Jorgensen Avenue South to County Road 19 13.Joliet Avenue South from 82nd Street South Johansen Avenue South Resolution No. 2016-XXX Page 2 of 2 Other 1. 80th Street South from Ideal Avenue South to Jamaica Avenue South Not Proposed for Assessment: 1. Oakwood Park WHEREAS, ten days mailed notice and two weeks published notice of the hearing was given, and the hearing was held, at which all persons desiring to be heard were given an opportunity to be heard thereon; and WHEREAS, the City desires to assess the cost of said improvements to all benefited properties, other than for properties not proposed for assessment. NOW THEREFORE BE IT RESOLVED, the City Council of the City of Cottage Grove, County of Washington, State of Minnesota: 1. Such improvement is necessary, cost-effective, and feasible as detailed in the feasi- bility report. The improvement shall include road rehabilitation, water, storm sewer, sanitary sewer, and street lights. 2. Such improvement is hereby ordered. 3. Bolton and Menk, Inc. is hereby designated as the engineer for this improvement. The engineer shall prepare plans and specifications for the making of such improvement. 4. The City Council declares its official intent to reimburse itself for the costs of the improvement from the proceeds of the tax exempt bond. Passed this 6th day of January 2016. Myron Bailey, Mayor Attest: Joe Fischbach, City Clerk District D-2 Cottage Grove, MN AET Job #: 28-01026 C-1 Core #: Location:Hale Ave S Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 3 ¾” Totalcore length:2 ¼” Two layers arevisible Layer 1: ¼” sealcoat Layer 2: 2” Notes: Sealcoat at surface. Core moderately stripped. Aggregate Base: Silty sand and gravel Depth: 5” Classification: A- District D-2 Cottage Grove, MN AET Job #: 28-01026 C-2 Core #: Location:Harkness Ave S (Nof Hamlet) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 3” Totalcore length:1 ¾” One lift wasvisible Notes: Core taken on crack. Sealcoat at surface. Lower1 ¾” severely stripped,remainder of the core moderately stripped. Aggregate Base: Silty sand and gravel Depth: 9” Classification: A- District D-2 Cottage Grove, MN AET Job #: 28-01026 C-3 Core #: Location: Hallmark Ave S Date Cored: August 3, 2015 CoreDiameter: 4” Downhole measurement: 4” Totalcore length:4” Twolifts were visible Lift 1: 1 ½” Lift 2: 2 ½” Notes: Sealcoat at surface. Coreseverely stripped. Aggregate Base: Silty sand and gravel Depth: 12” Classification: A- District D-2 Cottage Grove, MN AET Job #: 28-01026 C-4 Core #: Location:Hames Ave S Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4 ¾” Totalcore length:3 ¾” Twolayers were visible Layer1: 1 ¼: Layer2: 2 ¼” Notes: Sealcoat at surface. Full length of core severely stripped Aggregate Base: Depth: 12” Classification: A- District D-2 Cottage Grove, MN AET Job #: 28-01026 C-5 Core #: Location:Harkness Ave S (S of Hames) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4 ¼” Totalcore length:3 ¼” Twolayers were visible Layer1: 1 ¾” Layer2: 1 ½” Notes: Core taken on crack.Sealcoat at surface. Core moderately stripped. Aggregate Base: Depth: 16” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-6 Core #: Location:Jocelyn Ave S Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4” Totalcore length:3 ¾” Twolayers were visible Layer1: 1¾” Layer2: 2” Notes: Sealcoat at surface. Upper 2 ½” slightly stripped. The remainder of the core moderately stripped. Aggregate Base: Silty sand and gravel Depth: 14” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-7 Core #: nd Location:Johansen Ave S(North of 82) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 3 ¾” Totalcore length:2 ¾” Two layerswere visible Layer1: 1¼” Layer2: 1 ½” Notes: Sealcoat at surface. Upper 1 ¼” slightly stripped. The remainder of the core severely stripped. Aggregate Base: Sand with silt and gravel Depth: 7” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-8 Core #: Location:Joliet Ave S Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 5” Totalcore length:4” Three layerswere visible Layer1: 1” patch/sealcoat Layer2: 1 ½” Layer 3: 1 ½” Notes: Patch delaminating from surface. Core moderatelyto severelystripped. Aggregate Base: Sand with silt and gravel Depth: 4” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01016 C-9 Core #: nd Location:82Street S (E of Joliet) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 5” Totalcore length:4 ¼” Three layerswere visible Layer1: ¾” patch and sealcoat Layer2: 1 ½” Layer 3: 2” Notes: Full core moderately stripped. Aggregate Base: Sand with silt and gravel Depth: 6 ¼: Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-10 Core #: Location:Jorgensen Ave S Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4” Totalcore length:3¾” Twolayers were visible Lift 1: 1 ¼” Lift 2: 2 ½” Notes: Layer 1 delaminating. Core severely stripped. Aggregate Base: Sand with silt and gravel Depth: 18” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-11 Core #: th Location:85Street Places Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 3 ½” Totalcore length:3” Twolayers were visible Layer1: ½” Layer2: 2 ½” Notes: Layer 1 delaminating. Core severely stripped. Aggregate Base: Sand with silt and gravel Depth: 12” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-12 Core #: th Street Bays Location:84 Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 5” Totalcore length:3” Twolayers were visible Layer1: ¼”sealcoat Layer2: 2 ¾” Notes: Sealcoat delaminated. Core severely stripped. Aggregate Base: Silty sand with gravel Depth: 9” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-13 Core #: Location:Jody Lane S (N of Jody Ct) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4 ½” Totalcore length:4 ¼” Threelayers were visible Layer1: ½” sealcoat Layer2: 1 ¾” Layer 3: 1” Notes: Sealcoat at surface. Core severely stripped. Aggregate Base: Silty sand and gravel Depth: 13 ½” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-14 Core #: Location:Jody Lanes S (S of Jody Ct) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4 ½” Totalcore length:4 ½” Threelayers were visible Layer1:½”sealcoat Layer2: 2 ½” Layer 3: 1 ½” Notes: Core severely stripped Aggregate Base: Silty sand with gravel Depth: 10” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-15 Core #: th Location:Johansen Ave S (Sof 84) Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4 ½” Totalcore length:4 ½” Threelayers were visible Layer1: ½” Layer2: 2 ½” Layer 3: 1 ½: Notes: Core severely stripped. Aggregate Base: Silty sand with gravel Depth: 7 ½” Classification: A- District F-3 & F-5 Cottage Grove, MN AET Job #: 28-01026 C-16 Core #: nd Street S (W of Joliet) Location:82 Date Cored: August 3, 2015 Core Diameter: 4” Downhole measurement: 4 ¾” Totalcore length:4 ¾” Three layers were visible Layer1: 1” Layer2: 1 ¾” Layer 3: 2” Notes: Core severely stripped. Aggregate Base: Silty sand with gravel Depth: 9” Classification: A- Appendix C Pavement Report Limitations and Guidelines for Use AET Project No.28-01026 C.2.5 Most Pavement Findings Are Professional Opinions Site exploration identified subsurface conditions only at those points where subsurface tests are conducted ar samples are taken. Pavement engineers review field and laboratory data and then apply their professional judgment to render an opinion about subsurface conditions throughout the site. Actual subsurface conditions may differ, soinetimes significantly, from those indicated in your report. Retaining the pavement engineer who developed your report to provide construction observation is the most effective method of managing the risks associated with unanticipated conditions. C.2.6 A Pavement Engineering Report Is Subject to Misinterpretation Other design team members' misinterpretation of pavement engineering reports has resulted in costly problems. Lower that risk by having your paveinent engineer confer with appropriate members of the design team after submitting the report.Also retain your pavement engineer to review pertinent elements of tl�e design , teain's plans and specifications. Contractors can also misinterpret a pavement engineering report. Reduce that risk by having your pavement engineer participate in prebid and preconstruction conferences,and by providing construction observation. C.2.7 Do Not Redraw the Engineer's Logs Pavement engineers prepare fmal boring and testing logs based upon their interpretation of field logs and laboratory data. To prevent errors or omissions, the logs included in a pavement engineering report should never be redrawn for inclusion in architectural or other design drawings. Only photographic or electronic reproduction is acceptable,but recognizes that separating logs from the report can elevate risk. C.2.8 Give Contractors a Complete Report and Guidance Some owners and design professionals mistakenly believe they can make contractors liable for unanticipated subsurface conditions by limiting what they provide for bid preparation.To help prevent costly problems, give contractors the complete pavement engineering report,but preface it with a clearly written letter of transmittal. In the letter, advise contractors that the report was not prepared for purposes of bid development and that the report's accuracy is limited; encourage them to confer with the pavement engineer who prepared the report(a modest fee may be required)and/or to conduct additional study to obtain the specific types of information they need or prefer. A prebid conference can also be valuable. Be sure contractors have sufficient time to perform additional study. Only then might you be in a position to give contractors the best information available to you, while requiring them to at least share some of the fmancial responsibilities stemming from unanticipated conditions. C.2.9 Read Responsibility Provisions Closely Some clients,design professionals,and contractors do not recognize that pavement engineering is far less exact than other engineering disciplines. This lack of understanding has created unrealistic expectations that have led to disappointments, claims, and disputes. To help reduce the risk of such outcomes, pavement engineers commonly include a variety of explanatory provisions in their report. Sometimes labeled"limitations"many of these provisions indicate where pavement engineers' responsibilities begin and end, to help others recognize their own responsibilities and risks. Read these provisions closely. Ask questions. Your pavement engineer should respond fully and frankly. C.2.10 Geoenvironmental Concerns Are Not Covered The equipment,techniques, and personnel used to perform a geoenvironmental study differ significantly from those used to perform a pavement study. For that reason,a pavement engineering report does not usually relate any geoenvironmental fmdings, conclusions, or recommendations; e.g., about the likelihood of encountering underground storage tanks or regulated contaminants. Unanticipated environmental problems have led to numerous project failures. If you have not yet obtained your own geoenvironmental information, ask your pavement consultant for risk management guidance. Do not rely on an environmental report prepared for someone else. A SPECIAL BENEFITS APPRAISAL RESTRICTED APPRAISAL REPORT (BRKW File No. 7611) 3 URBAN SINGLE-FAMILY RES. PROPERTIES 1 RURAL RESIDENTIAL PROPERTY 2016 PAVEMENT MANAGEMENT PROJECT PROJECT AREA 2 DISTRICT F-3 & F-5 COTTAGE GROVE, MN 55016 VALUATION DATE: OCTOBER 26, 2015 FOR CITY OF COTTAGE GROVE ATTN: JENNIFER LEVITT, P.E. COMMUNITY DEVELOPMENT DIRECTOR / CITY ENGINEER 12800 RAVINE PARKWAY SOUTH COTTAGE GROVE, MN 55016 BY PAUL J. GLEASON, MAI AND MARK A. WARREN November 25, 2015 Jennifer Levitt, P.E. Community Development Director / City Engineer City of Cottage Grove 12800 Ravine Parkway South Cottage Grove, MN 55016 RE: Special Benefits Appraisal 3 Urban Single-Family Residential Properties 1 Rural Residential Property Cottage Grove 2016 Pavement Management Project Project Area 2 District F-3 & F-5 Cottage Grove, Minnesota Dear Ms. Levitt: In accordance with your request, we are providing you with a special benefits appraisal pertaining to four subject properties located in an area proposed for roadway rehabilitation and utility repairs through the Cottage Grove 2016 Pavement Restricted Appraisal Report Management Project. This appraisal is presented in a format, in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice. The purpose of the appraisal is to provide an opinion of the increase in market value, if any, to the subject properties as a consequence of the new street and utility improvements to be completed in 2016. The opinion of the value benefits resulting from the public improvement project is as of October 26, 2015, the date of inspection of the project area and subject properties. The intended use of the appraisal is for assisting city officials in levying in an equitable manner special assessments to properties benefited by the improvement project. The intended users of the appraisal are City of Cottage Grove officials. The project area encompasses several residential neighborhoods located west of th County Road 19/Keats Avenue, south of 80 Street South. The streets to be rehabilitated and the proposed improvements are detailed within this report. BRKW APPRAISALS, INC. 1600 UNIVERSITY AVENUE, SUITE 314, ST. PAUL, MN 55104 651.646.6114 FAX 651.646.8086 www.brkw.com The value benefits, if any, of street, utility and other such public improvements accrue to the land component of a property, not to the value of buildings and other improvements on the land. Consequently, this special benefits analysis is limited to the valuation of only the land components of the properties appraised. The before-and-after valuation methodology has been used in this appraisal, which analyzes the market value of the subject land prior to the proposed project in relation to the market value of the land after the project is completed. The difference between the before and after opinions of land value reflects the value of special benefits. In our opinion, the special value benefits to the subject properties resulting from completion of the 2016 Pavement Management Project as of October 26, 2015 are as follows: City of Cottage Grove 2016 Pavement Management Project Project Area 2 - District F-3 & F-5 Value Benefit Conclusions AddressOpinion of Special Benefit Tax Parcel I.D. No. 1.8418 Jorgensen Avenue South15-027-21-14-0041$ 5,000 2.8340 Johansen Avenue South15-027-21-13-0019$ 5,000 3.8060 Jocelyn Avenue South15-027-21-12-0076$ 5,600 4.9974 - 82nd Street South15-027-21-11-0010$ 5,900 October 26, 2015, it is assumed for valuation purposes that the proposed street improvements have been completed, when in fact they are proposed but have not yet been completed. This hypothetical condition reflects a applied in this appraisal. This appraisal assignment is not based on a requested minimum valuation or a specific valuation for approval of a loan. The opinions of market value and special benefits in the appraisal were developed independent of any undue influence. The appraised values assume all real estate taxes and special assessment balances, if any, have been paid in full. The values are gross values with no allowances made for brokerage commissions, real estate taxes or other carrying costs associated with a property during its marketing period. The values are based on an exposure time of six to twelve months. 2 BRKW APPRAISALS, INC. PAGE This appraisal report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Foundation. The facts and information contained in this report were obtained from sources that are considered to be reliable and are true to the best of our knowledge and belief, but are not guaranteed. This appraisal report is contingent upon the assumptions and limiting conditions included within this report. Your attention is directed to the following report which summarizes the data, analyses and conclusions that support the opinions of value. BRKW APPRAISALS, INC. Paul J. Gleason, MAI Mark A. Warren Certified General Real Property Appraiser Certified General Real Property Appraiser Minnesota License #4003073 Minnesota License #20415370 3 BRKW APPRAISALS, INC. PAGE TABLE OF CONTENTS IDENTIFICATION OF PROPERTIES APPRAISED/LEGAL DESCRIPTIONS .................. 1 PASPLM ................................................. 2 ROJECT REA AND UBJECT ROPERTIES OCATION AP PURPOSE/INTENDED USE OF THE APPRAISAL/INTENDED USERS ............................ 3 PROPERTY RIGHTS APPRAISED ................................................................................ 3 ZONING ....................................................................................................................... 3 SCOPE OF WORK ........................................................................................................ 3 COMPETENCY PROVISION ......................................................................................... 4 EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS ............................ 4 MARKET VALUE DEFINITION .................................................................................... 5 CONTINGENT AND LIMITING CONDITIONS .............................................................. 6 DESCRIPTION OF SUBJECT PROPERTIES.................................................................. 7 DESCRIPTION OF EXISTING INFRASTRUCTURE ....................................................... 8 SMYC ............................................................................. 9 TREETS AP EAR ONSTRUCTED PCIM ............................................................................... 10 AVEMENT ONDITION NDEX AP DESCRIPTION OF PROPOSED IMPROVEMENTS ...................................................... 11 HIGHEST AND BEST USE .......................................................................................... 12 SPECIAL BENEFIT CONSIDERATIONS AND CONCLUSIONS .................................... 13 SPECIAL BENEFIT ANALYSIS PROCESS .................................................................. 14 SPECIAL BENEFIT OPINIONS ................................................................................... 14 CERTIFICATION ....................................................................................................... 15 PROFESSIONAL QUALIFICATIONS .......................................................................... 16 COMPANY PROFILE ................................................................................................. 20 IDENTIFICATION OF PROPERTIES APPRAISED/LEGAL DESCRIPTIONS The owners, addresses, tax parcel numbers and legal descriptions of the four appraised properties are presented below. A map depicting the area of the proposed project and the location of the subject properties is on the next page. The properties are described in greater detail later in this report. Subject Properties Summary Fee OwnerAddressTax Parcel I.D. No. Legal Description 1Robert & Jennifer Patrow8418 Jorgensen Ave. S.15-027-21-14-0041Lot 9, Block 3, Pine Meadow 4th Add. 2Richard & Catherine Rudolph8340 Johansen Ave. S.15-027-21-13-0019Lot 8, Block 2, Pine Meadow 1st Add. 3Daniel & Terri Cook8060 Jocelyn Ave. S.15-027-21-12-0076Lot 7, Block 1, Eightieth Place West 4Timothy & Cynthia Barr9974 82nd St. S.15-027-21-11-0010Lot 3, Block 7, Eightieth Place 1 BRKW APPRAISALS, INC. PAGE Property 3 8060 Jocelyn Ave. S. Property 4 nd 9974 82 St. S. Property 2 8340 Johansen Ave. S. Property 1 8418 Jorgensen Ave. S. Project Area and Subject Properties Location Map 2 BRKW APPRAISALS, INC. PAGE PURPOSE/INTENDED USE OF THE APPRAISAL/INTENDED USERS The purpose of the appraisal is to provide an opinion of the increase in market value, if any, to the subject properties as a consequence of the proposed City of Cottage Grove 2016 Pavement Management Project. The intended use of the appraisal is for assisting city officials in levying in an equitable manner special assessments to properties benefited by the improvement project. The intended users of the report are City of Cottage Grove officials. PROPERTY RIGHTS APPRAISED The property rights appraised are those of the fee simple estate. ZONING PropertyZoning District 1. 8418 Jorgensen Avenue SouthR-4, Low Density Residential District 2. 8340 Johansen Avenue SouthR-4, Low Density Residential District 3. 8060 Jocelyn Avenue SouthR-4, Low Density Residential District 4. 9974 - 82nd Street SouthR-1, Rural Residential District SCOPE OF WORK The City of Cottage Grove is proposing to rehabilitate several streets in an established th residential area west of County Road 19/Keats Avenue, south of 80 Street South. Project maps herein depict the area of the proposed improvements. The project is referred to as the City of Cottage Grove 2016 Pavement Management Project. Per agreement between the client and the appraisers, three representative urban single- family residential properties and one rural residential property located in the area of the proposed improvements project are appraised in this report. The opinions of special benefits, if any, accruing to the appraised properties as a result of the project will be used by the client in determining the appropriate assessments to be levied against other properties within the project area. 3 BRKW APPRAISALS, INC. PAGE Since the benefits of public improvement projects such as street rehabilitation accrue to the land component of properties only, the valuation in this report involves land only. Opinions of the market value of the subject property land components have been developed in this appraisal using the Direct Sales Comparison Approach. The Direct Sales Comparison Approach involves the comparison and analysis of land parcels recently sold which are similar to the subject land. The application of the Cost and Income Approaches typically applies only when a property valuation includes buildings and other improvements having contributory value. The subject land parcels are valued before and after completion of the proposed street and utility improvements. The difference between the before and after opinions of market value is the special benefit value attributable to the proposed project. restricted appraisal reportformat This report is presented in a in compliance with the reporting requirements of Standards Rule 2-2 (b) of the Uniform Standards of Appraisal Practice (USPAP). The results of the analysis and the conclusions pertaining to the market value of the subject property are presented in an abbreviated manner in this report, at a level of detail sufficient for the needs of the intended user, which is the client. Additional notes, analyses, and supporting data are retained in the in this report may not be understood properly without additional information in the identified herein. COMPETENCY PROVISION Paul J. Gleason, MAI has been a full time professional real estate appraiser since 1992. Mark A. Warren has been a professional real estate appraiser since 2003. Included in this report for your review are copies of their professional qualifications. Both appraisers have completed numerous special benefit valuations, similar that contained within this report, in the past several or more years. 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. EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS An Extraordinary Assumption is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition ©The Appraisal Foundation, Page U-3, as: An assumption, directly related to a specific assignment, as of the effective date of assignment results, which, if found to be false, 4 BRKW APPRAISALS, INC. PAGE A Hypothetical Condition is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition ©The Appraisal Foundation, Page U-3, as: A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. hypothetical condition Comments: A in this appraisal is it is assumed, for the purposes of special benefits valuation, that on the effective date of valuation of October 26, 2015, in the before position on that day the streets in front of the subject properties were in their pre-improved state (old, worn and deteriorated) and later on that day, in the after position, the street rehabilitation had been completed. In actuality, the rehabilitation process had not begun on that date, but is rather planned to be completed in 2016. Applying the hypothetical condition assuming project -and-after valuation as of the effective date of valuation. See Contingent and Limiting Conditions, which are standard assumptions that apply to the appraisal, later in this report. 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). 5 BRKW APPRAISALS, INC. PAGE CONTINGENT AND LIMITING CONDITIONS This appraisal report is subject to the following Limiting Conditions and Assumptions: 1. The legal descriptions contained herein are 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. 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 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. 13. The after improvements valuation in this appraisal assumes proposed improvements have been completed in accordance with the description of the proposed work provided to the appraisers by the City of Cottage Grove. Environmental Disclaimer: The value opinions in this report are based on the assumption that the subject properties are not adversely affected by the existence of hazardous substances or detrimental environmental conditions. A routine inspection of the properties did not reveal or indicate any such conditions. In that the appraisers are not qualified in this field of expertise, the client is encouraged to retain an expert in such investigations, if so desired. 6 BRKW APPRAISALS, INC. PAGE DESCRIPTION OF SUBJECT PROPERTIES Neighborhood The subject properties are located within a residential neighborhood in the east-central part of Cottage Grove. Primary access into the area is provided by County Road 19/Keats Avenue, which interchanges with Highway 10/61 approximately two miles south. The oldest homes in the neighborhood, typically dating from the late 1980s through the early 1990s, are located in the west sector. The newest homes, built in the early to mid 1990s, are generally in the eastern portion of the neighborhood. Description Of Subject Properties Land Area Property Use/ImprovementsComments (Ac.) 1.8418 Jorgensen Ave. S.0.21Single-Family HomeLocated on the west side of Jorgensen Ave. S. The lot has 70 feet of frontage on Jorgensen Ave. S. Open landscape with minimal trees. House was built in 1995. 2.8340 Johansen Ave. S.0.25Single-Family HomeLocated on the west side of Johansen Ave. S. The lot has 92 feet of frontage on Johansen Ave. S Open landscape with minimal trees. House . was built in 1992. 3.8060 Jocelyn Ave. S.0.78Single-Family HomeLocated on Jocelyn Ave. S., at the end of a cul- de-sac. The lot has 39 feet of frontage on Jocelyn Ave. S. Heavy tree cover at the rear of lot. House was built in 1991. 4.9974 - 82nd St. S.3.41Single-Family HomeRural estate residential lot located at the northwest corner of 82nd St. S. and County Rd. 19/Keats Ave. The lot has approximately 168 feet of frontage on 82nd St. S. Topography is rolling with moderate tree growth. Site is serviced with private utilities. The western edge of the lot is encumbered with a 120-foot-wide NSP easement (overhead power lines) that travels the length of the west side of the lot in a northwest/southeast orientation. Easement encumbers approximatley half of the lot. House was built in 1995. 7 BRKW APPRAISALS, INC. PAGE DESCRIPTION OF EXISTING INFRASTRUCTURE Streets The streets in the project area are urban-residential design and were originally constructed between the late 1980s through the early 1990s, as depicted in the exhibit on the following page. Generally, the streets are 32 feet wide from face of curb to face of curb with concrete curb and gutter. The Pavement Condition Index (PCI) of the streets generally ranges from 40 to 50 on a scale of 1 to 100. Project area pavements in that range are considered to be in fair condition and generally exhibit significant or major distress. A PCI map is on a following page. In addition, sections of the existing curb and gutter have settled, cracked, or have other defects which require replacement. Coring of the pavement has shown that on average the thickness of the existing streets is approximately 4 inches of bituminous over 10 inches of base. However, throughout the project area, streets have extensive cracking, as well as stripping. The stripping degrades the strength and durability of the pavement. In order to alleviate some of the major distressed areas, the city has performed temporary patching. Due to the granular subgrade soils and good aggregate base, the pavement structure as a whole is typically structurally sound. th Walkway Located along the west side of Joliet Avenue between 80 Street and Johansen Avenue and along the north and west sides of Johansen Avenue is a 6-foot- wide concrete sidewalk. The sidewalk has approximately eight panels that are cracked. In addition, the pedestrian ramps are non-compliant with the Americans with Disabilities Act. Sanitary Sewer The sanitary sewer within the project area consists primarily of 8- inch diameter VCP, PVC, and DIP. The sanitary sewer was televised to evaluate pipe condition, and the results indicate that the pipe is generally in good condition. Some problems encountered during the televising were root intrusion, cracked pipe and sags. Also, noticed during the inspection were miscellaneous repairs including patching and lining. Water Main The water mains within the project area consist of 6, 8, and 18-inch diameter DIP. In the project area, the 18-inch trunk main extends along Jocelyn th Avenue from 80 Street to Jody Avenue, along Jody Avenue from Jocelyn Avenue to Johansen Avenue, and along Johansen Avenue from Jody Avenue to approximately 125 lineal feet south, then extending west through city green space. The water mains are believed to be in good condition. However, projects of similar eras have had instances of excessive bolt corrosion on valves. Storm Sewer The storm sewer was televised to evaluate pipe condition. In addition, storm structures were also inspected. Generally, the storm sewer mains are in good condition. Some issues encountered in the storm sewer were cracked or broken pipes and dirty lines. 8 BRKW APPRAISALS, INC. PAGE St. S. 4 ty nd Proper 82 9974 8418 Jorgensen Ave. S. 1 Property 9 PAGE Year Constructed Streets Map 8060 Jocelyn Ave. S. 8340 Johansen Ave. S. 3 Property 2 Property RKW APPRAISALS, INC. B St. S. 4 Property nd 82 9974 8418 Jorgensen Ave. S. 1 Property 10 PAGE Pavement Condition Index Map 8060 Jocelyn Ave. S. 8340 Johansen Ave. S. 3 Property 2 Property RKW APPRAISALS, INC. B DESCRIPTION OF PROPOSED IMPROVEMENTS Streets Based on the deteriorated condition of the existing paving, types of distress present and the anticipated deterioration due to asphalt stripping, the streets within the project area are proposed to undergo a full pavement removal and replacement with 3.5 inches of new pavement. The wear course will be a virgin mix, excluding the use of recycled asphalt pavement. Existing concrete curb and gutter will undergo spot replacement. The curb in poor condition will be evaluated for removal just prior to construction, but preliminary estimates indicate that approximately 35% will need to be removed and replaced. Traffic signs will be replaced to meet federal retroreflectivity requirements. Also as part of the project, the existing street light system will be evaluated for repair, and where spot curb replacement is needed, the existing direct-bury street light wire will be replaced within a PVC conduit. Walkway The eight cracked concrete sidewalk panels will be replaced. Additional sidewalk panels will also be removed and replaced with Americans with Disabilities Act (ADA)-compliant pedestrian ramps. Sanitary Sewer Inline repairs will be made to address cracks in the pipe. In areas where there are sags, the pipe will be removed and replaced. In addition, the manhole castings will be salvaged and reinstalled, and the concrete adjusting rings will be replaced with new high density polyethylene adjusting rings. Water Main As part of the project, broken valve top sections will be removed and replaced. Also, small samples of valves will be dug up and checked for bolt corrosion during the early phase of the project prior to the street work. Any corroded bolts will be replaced, and additional valves with like conditions would be dug up and checked. As a part of the process, valve boxes will be replaced in conjunction with the work. In addition, hydrant barrels will be extended on any hydrant requiring adjustments, and hydrants will be reconditioned via sandblasting and painting. Storm Sewer For the most part, the project is intended to rehabilitate the streets and not change existing drainage patterns. Where there are cracks and leaking or offset joints, in-line repairs will be made. Structures in poor condition will be replaced. Adjustment rings for manholes will be replaced with high density polyethylene rings; catch basin rings will not be replaced unless the curb adjacent to them is removed, or the ring has failed. The existing casings will be salvaged and reinstalled. Miscellaneous patching, lining, and other repairs will be performed as needed. 11 BRKW APPRAISALS, INC. PAGE HIGHEST AND BEST USE Highest and Best Use - Before Proposed Improvements As Vacant: Shown below is the concluded highest and best use, as vacant, of each property: PropertyHighest And Best Use, As Vacant 1.Single-Family Home - 8418 Jorgensen Ave. S.One single-family home 2.Single-Family Home - 8340 Johansen Ave. S.One single-family home 3.Single-Family Home - 8060 Jocelyn Ave. S.One single-family home 4.Single-Family Home - 9974 - 82nd St. S.One single-family home As Improved: Only the land components of the subject properties are being appraised and therefore the highest and best use, as improved, was not addressed. Highest and Best Use After Street Improvements After the street improvements, the highest and best use of all of the subject properties remains the same relative to the before improvements position. 12 BRKW APPRAISALS, INC. PAGE SPECIAL BENEFIT CONSIDERATIONS AND CONCLUSIONS 1. Before the proposed improvements, the streets in the project area are relatively old and deteriorated. It can be anticipated that further deterioration will result in a worsening of problems associated with advanced age, including accelerated asphalt stripping, improper drainage, uneven driving surfaces, increased formation of potholes, etc. 2. The condition and quality of streets and utilities serving and fronting commercial, residential and other properties influences the value, curb appeal and general desirability of the properties. 3. The proposed rehabilitation of roads serving the subject properties will substantially improve the safety, convenience and general appeal of access into and out of the subject properties. The project will reverse the deteriorating state of the existing streets and result in new surfacing, and in some areas, replacement of deteriorated concrete curb and gutter. 4. Safety aspects for vehicles traveling on a rehabilitated street are enhanced by the elimination of potholes, cracks, etc. Street icing problems are reduced as water is more efficiently diverted off the roadway surface that could otherwise collect in the deteriorated street areas during frost seasons. 5. The proposed repairs and minor replacements, as necessary, of water main, sanitary sewer and storm sewer utility components in the project area will preempt potential major problems and disruptions in these systems, as well as extend the life of this infrastructure, deferring the need for total replacement to a significantly later point in time. 6. The proposed project improvements in some areas may result in some general benefit to neighborhoods and properties beyond the immediate subject neighborhoods. However, a significant amount of benefit resulting from the project is special, attaching to the properties directly fronting and accessing the rehabilitated street, including the subject properties. 7. The land value increase for each property, on a percentage basis as well as on a per-square-foot basis and a per-front-foot basis, resulting from the street and utility improvements can vary, and in this appraisal they do vary in some cases. This is due to differences among the properties in parcel land value, parcel size, parcel configuration, amount of street frontage, and/or number of fronting streets. 13 BRKW APPRAISALS, INC. PAGE SPECIAL BENEFIT ANALYSIS PROCESS Arriving at an opinion of special value benefits accruing to each of the subject properties as a result of completion of the City of Cottage Grove 2016 Pavement Management Project is accomplished by developing "before improvements" and "after improvements" opinions of market value for each of the subject land parcels. The improvements on the land are concluded to have the same value contributions to the total property value in both the "before and after" improvements positions. Consequently, the extent of special value benefits from the public improvements project can be reliably derived by analyzing the value of the land only, by processing the Direct Sales Comparison Approach. The Direct Sales Comparison Approach was applied in valuing the subject properties. This approach involves the comparison of recently sold land parcels similar to the subject properties. The comparable sale prices are analyzed and adjustments are made for value-related differences relative to the subject properties. The result of the analysis and adjustments is the generation of a range of value indications for the subject land. The strengths and weaknesses of each comparable sale and its value indication are evaluated before arriving at a final value opinion for the subject land parcel. office work file for this assignment are market data, notes and other supporting information pertaining to the processing of the Direct Sales Comparison Approach in a before-and-after land value analysis for each of the subject properties. Shown below is the result of these analyses, presenting the opinion of the special benefit values as of October 26, 2015 resulting from the City of Cottage Grove 2016 Pavement Management Project. City of Cottage Grove 2016 Pavement Management Project SPECIAL BENEFIT OPINIONS Project Area 2 - District F-3 & F-5 Value Benefit Conclusions AddressOpinion of Special Benefit Tax Parcel I.D. No. 1.8418 Jorgensen Avenue South15-027-21-14-0041$ 5,000 2.8340 Johansen Avenue South15-027-21-13-0019$ 5,000 3.8060 Jocelyn Avenue South15-027-21-12-0076$ 5,600 4.9974 - 82nd Street South15-027-21-11-0010$ 5,900 The above opinions of special benefits reflect increases in property market values resulting from the proposed improvements. The market values are based on estimated property exposure times of 6 to 12 months. 14 BRKW APPRAISALS, INC. PAGE 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. Neither our engagement to make this appraisal (or any future appraisals for this client), nor any compensation, therefore, are 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 estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of the appraisal. 3. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 4. We have no present or contemplated future interest in the real estate that is the subject of this appraisal report. 5. We 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 our 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 our 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 provided significant professional assistance to the person(s) signing this certification. 10. We 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. As of the date of this report, Paul J. Gleason has completed the requirements of the continuing education program for Designated Members of the Appraisal Institute. 13. As of the date of this report, Mark A. Warren has completed the Standards and Ethics Education Requirements for Candidates of the Appraisal Institute. 14. The by-laws and regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. 15. 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/she 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. 16. We have the knowledge and experience to complete this appraisal in a competent manner. We have not been sued by a regulatory agency or financial institution for fraud or negligence involving an appraisal report. 17. No services as an appraiser or in any other capacity have been performed regarding the property that is the subject of the report within the three year period immediately preceding acceptance of this assignment. Paul J. Gleason, MAI Mark A. Warren Certified General Real Property Appraiser Certified General Real Property Appraiser Minnesota License #4003073 Minnesota License #20415370 15 BRKW APPRAISALS, INC. PAGE PROFESSIONAL QUALIFICATIONS PAUL J. GLEASON, MAI PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS MAI Member The Appraisal Institute APPRAISER 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 EXPERIENCE Principal BRKW Appraisals, Inc., St. Paul, MN, 2007-present Staff Appraiser BRKW Appraisals, Inc., St. Paul, MN, 1993-2006 Appraiser Certified Appraisers, Excelsior, MN, 1993 Appraiser Stiles Appraisals, Inc., Plymouth, MN, 1992-1993 Expert Witness Testimony For real estate litigation in numerous condemnation Professionals Workshop, Brainerd, MN Professionals Workshop, Brainerd, MN Professionals Workshop, Breezy Point, MN Appraisal assignments have been completed for the following purposes: Condemnation Partial and total acquisitions, in fee title and in easement form Property Damage Claims Litigation Special Benefits Valuation Mortgage Financing General Valuation Needs Purchase negotiations, listing prices, internal family or partnership transactions, estate planning/taxes, marriage dissolution, etc. 16 BRKW APPRAISALS, INC. PAGE Professional Qualifications Paul J. Gleason, MAI Page 2 PROPERTY TYPES APPRAISED Land Commercial, industrial, residential acreage, agricultural, finished lots Commercial Buildings Office, industrial, retail, medical office, auto dealerships Apartment Buildings/Complexes 1-4 Family Residential Single-family home, townhome, condo, duplex, fourplex PROFESSIONAL REAL ESTATE STUDIES Appraisal Institute courses, including all required for MAI designation: Course 110: Appraisal Principles (examination passed) Course 120: Appraisal Procedures (examination passed) Course 210: Residential Case Study Course 310: Basic Income Capitalization Course 410: National Uniform Standards of Professional Appraisal Practice Course 420: Business Practices and Ethics Course 510: Advanced Income Capitalization Course 520: Highest and Best Use and Market Analysis Course 530: Advanced Sales Comparison and Cost Approaches Course 540: Report Writing and Valuation Analysis Course 550: Advanced Applications Numerous additional classes and seminars for appraisal pre-license and continuing education requirements, on an ongoing basis, from Appraisal Institute and other sources CLIENTS INCLUDE Cities of Afton, Austin, Apple Valley, Cambridge, Cottage Grove, Eagan, Lino Lakes, Maplewood, Oak Park Heights, Owatonna, Prior Lake, Rochester, Savage, Wabasha and Woodbury Anchor Bank Associated Bank BMO Harris Bank N.A. Bremer Bank Bridgewater Bank Dougherty, Molenda, Solfest, Hills & Bauer, P.A. Eckberg, Lammers, Briggs, Wolff Greene Espel PLLP & Vierling, PLLP Minnesota Bank & Trust Minnesota Dept. of Transportation Spire Federal Credit Union US Bank And various other individuals, attorneys, communities and counties Revised: July 1, 2015 17 BRKW APPRAISALS, INC. PAGE PROFESSIONAL QUALIFICATIONS MARK A. WARREN PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS Candidate for Designation The Appraisal Institute APPRAISER LICENSE Certified General Real Property Appraiser - State of Minnesota - License #20415370 EDUCATION University of Minnesota , Minneapolis, Minnesota Bachelor of Arts Degree Religious Studies Major, 2003 PROFESSIONAL EXPERIENCE July 2009 to Present: Appraiser BRKW Appraisals, Inc., St. Paul, MN October 2005 to July 2009: Appraiser The Appraisal Group, Maple Grove, MN June 2003 to October 2005: Appraiser Elmquist-Warren Appraisals, St. Paul, MN PROPERTY TYPES APPRAISED Apartment Buildings Medical Clinics Restaurants Auto Service Centers Mini-Storage Buildings Retail Stores Banks Mixed Use Properties Shopping Centers Churches Mobile Home Parks Single Family Homes Condos & Townhomes Office Buildings Special Purpose Convenience Stores Office-Showrooms R & D Buildings Gas Stations Office-Warehouses Vacant Land Manufacturing Buildings Recreational Facilities 18 BRKW APPRAISALS, INC. PAGE Professional Qualifications Mark A. Warren Page 2 PROFESSIONAL REAL ESTATE STUDIES Basic Income Capitalization, Appraisal Institute, 2005 Advanced Sales Comparison & Cost Approaches, Appraisal Institute, 2006 Report Writing & Valuation Analysis, Appraisal Institute, 2006 Advanced Income Capitalization, Appraisal Institute, 2007 Highest & Best Use & Market Analysis, Appraisal Institute, 2007 National USPAP Update Course, Appraisal Institute, 2007 & 2009 Associates Guidance Leadership Program, Appraisal Institute, 2009 The New Residential Market Conditions Form, Appraisal Institute, 2009 Condemnation Appraising: Principles & Applications, Appraisal Institute, 2009 Fundamentals of Separating Real Property, Personal Property, and Intangible Business Assets, Appraisal Institute, 2012 Revised: July 1, 2015 19 BRKW APPRAISALS, INC. PAGE COMPANY PROFILE BRKWAPPRAISALS,INC. 1600 University Avenue, Suite 314 St. Paul, Minnesota 55104 Phone: 651-646-6114 Fax: 651 646-8086 email: brkw@brkw.com Website: www.brkw.com BRKW Appraisals, Inc. (formerly known as Bettendorf Rohrer Knoche Wall, Inc.) is a full service professional real estate appraisal company formed in 1991. The three principals have more than 70 years of combined experience in the valuation of a wide variety of real estate. Located in the Midway area of St. Paul, we concentrate on the appraisal of real estate primarily in the Twin Cities Metropolitan Area, as well as outlying communities in Minnesota. Our extensive professional training and experience enable us to provide the expertise necessary for consistently reliable real estate valuation. Our appraisal reports are confidential documents completed in accordance with all current standards of professional appraisal practice and ethics. All of the appraisers employed by the company have the Certified General Real Property Appraiser license from the State of Minnesota. Our appraisers stay current with advances in appraisal techniques and the changing real estate market through continuing education programs. At BRKW Appraisals, Inc. we strive to build and maintain long-lasting relationships with our clients. Our goal is to provide high-quality professional real estate valuation services in a timely manner that is consistent with the needs of our clients. Appraisal & Consulting Services Property Types Real Estate Appraisals Commercial Properties Mortgage Financing Appraisals Industrial Properties Condemnation/Litigation Appraisals Multiple Family Residential Review Appraisals Single Family Residential Real Estate Tax Abatements Subdivision Analysis Special Benefits Analysis Vacant Land Parcels Expert Witness Testimony Special Purpose Properties REO Portfolio Valuation Gas Station / Convenience Stores Feasibility Studies Schools and Churches Market Surveys Recreation Facilities Partial Interest Valuations Railroad Corridors 20 BRKW APPRAISALS, INC. PAGE APPRAISAL STAFF Marc E. Knoche, MAI Principal Marc has been an appraiser since 1982, and has the MAI designation of the Appraisal Institute. He specializes in commercial, industrial, multiple family, residential, vacant land, and special purpose property appraisals. Marc has done numerous condemnation acquisition appraisals and special benefit studies involving a wide variety of property types. Marc has extensive litigation / expert witness experience and has served as a court appointed commissioner. He is a Past President of the Metro/Minnesota Chapter of the Appraisal Institute (1992 & 1993). A graduate of Macalester College, Marc is licensed by the State of Minnesota as a Certified General Real Property Appraiser. Paul J. Gleason, MAI Principal and Managing Partner Paul has been appraising real estate since 1992, and has the MAI designation of the Appraisal Institute. He has in-depth experience in the valuation of numerous real estate property types. Over the years, he has developed special expertise in the appraisal of land, and in eminent domain as well as special benefits valuations. Paul is a graduate of the University of Wisconsin at La Crosse and licensed as a Certified General Real Property Appraiser. Sean P. Butts Principal Sean began appraising in 1992, specializing in commercial, industrial, multiple family, residential and recreational property (e.g., golf courses), and joined our firm in 1997. After leaving BRKW Appraisals in 2006 for CSM Corporation, where he spent six years in asset valuation and management, Sean returned to BRKW in 2012 to resume independent fee appraisal work. Sean is a graduate of St. Cloud State University with a Business degree with emphasis on Real Estate Appraising. Licensed as a Certified General Real Property Appraiser and a Candidate for Designation of the Appraisal Institute. Mark A. Warren Associate Mark is a third-generation real property appraiser and has been appraising since 2003. Types of property appraised include office, industrial, hotel/motel, retail/commercial, and other special use properties. Mark is a graduate of the University of Minnesota, is a Candidate for Designation of the Appraisal Institute, and is licensed as a Certified General Real Property Appraiser. 21 BRKW APPRAISALS, INC. PAGE Joseph P. Deutsch Associate Joe has been appraising real estate since 1998, specializing in commercial properties. Types of property appraised include multi-family, industrial, office, retail, and special purpose properties. Joe worked for two years as a city building inspector prior to becoming an appraiser. Joe is a graduate of the University of Minnesota majoring in accounting and is a Certified General Real Property Appraiser as well as a Candidate for Designation of the Appraisal Institute. Terry A. Ward Associate Terry has over 20 years of experience in business management, operations and marketing. Since 2002, she began applying this experience to commercial real estate appraising. Types of properties appraised include office, industrial, hotel/motel, retail/commercial, and other special use properties. She has a degree in Business Management from St. Cloud State University and a Mini Masters Degree in Real Estate Appraising from St. Thomas University. Terry is a Certified General Real Property Appraiser and a Practicing Affiliate of the Appraisal Institute. Michael J. Bettendorf, MAI Founding Principal (Semi-Retired) Active as an appraiser since 1971, Michael is one of the three founding principals of BRKW Appraisals, Inc. Though he retired as a principal of the firm at the end of 2014, he continues to appraise real estate on a part-time, semi-retired basis, completing select assignments for clients on an ad-hoc basis. Michael has the MAI designation of the Appraisal Institute and specializes in commercial, industrial, multiple family, residential, and special purpose property appraisals with extensive litigation experience. Court appointed Commissioner in Ramsey County, past President of Minnesota Chapter A.I.R.E.A. (1987). Michael is a graduate of St. John's University. Licensed as a Certified General Real Property Appraiser. William E. Petersen Associate Bill has been an appraiser since 1986 specializing in the valuation of commercial, industrial, multi-family, office and special purpose properties. He is a graduate of the University of Minnesota and practiced dentistry from 1970-1986 before becoming licensed as a Certified General Real Property Appraiser. Bill, who worked full-time at BRKW Appraisals between 1996 and 2012, currently completes appraisals for the firm on a part-time basis. 22 BRKW APPRAISALS, INC. PAGE A SPECIAL BENEFITS APPRAISAL RESTRICTED APPRAISAL REPORT (BRKW File No. 7607) 3 URBAN SINGLE-FAMILY RES. PROPERTIES 2016 PAVEMENT MANAGEMENT PROJECT PROJECT AREA 1 DISTRICT D-2 COTTAGE GROVE, MN 55016 VALUATION DATE: OCTOBER 26, 2015 FOR CITY OF COTTAGE GROVE ATTN: JENNIFER LEVITT, P.E. COMMUNITY DEVELOPMENT DIRECTOR / CITY ENGINEER 12800 RAVINE PARKWAY SOUTH COTTAGE GROVE, MN 55016 BY PAUL J. GLEASON, MAI AND MARK A. WARREN November 25, 2015 Jennifer Levitt, P.E. Community Development Director / City Engineer City of Cottage Grove 12800 Ravine Parkway South Cottage Grove, MN 55016 RE: Special Benefits Appraisal 3 Urban Single-Family Residential Properties Cottage Grove 2016 Pavement Management Project Project Area 1 District D-2 Cottage Grove, Minnesota Dear Ms. Levitt: In accordance with your request, we are providing you with a special benefits appraisal pertaining to three subject properties located in an area proposed for roadway rehabilitation and utility repairs through the Cottage Grove 2016 Pavement Restricted Appraisal Report Management Project. This appraisal is presented in a format, in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice. The purpose of the appraisal is to provide an opinion of the increase in market value, if any, to the subject properties as a consequence of the new street and utility improvements to be completed in 2016. The opinion of the value benefits resulting from the public improvement project is as of October 26, 2015, the date of inspection of the project area and subject properties. The intended use of the appraisal is for assisting city officials in levying in an equitable manner special assessments to properties benefited by the improvement project. The intended users of the appraisal are City of Cottage Grove officials. The project area encompasses a residential neighborhood located east of Hadley th Avenue South, north of 95 Street South. The streets to be rehabilitated and the proposed improvements are detailed within this report. BRKW APPRAISALS, INC. 1600 UNIVERSITY AVENUE, SUITE 314, ST. PAUL, MN 55104 651.646.6114 FAX 651.646.8086 www.brkw.com The value benefits, if any, of street, utility and other such public improvements accrue to the land component of a property, not to the value of buildings and other improvements on the land. Consequently, this special benefits analysis is limited to the valuation of only the land components of the properties appraised. The before-and-after valuation methodology has been used in this appraisal, which analyzes the market value of the subject land prior to the proposed project in relation to the market value of the land after the project is completed. The difference between the before and after opinions of land value reflects the value of special benefits. In our opinion, the special value benefits to the subject properties resulting from completion of the 2016 Pavement Management Project as of October 26, 2015 are as follows: City of Cottage Grove 2016 Pavement Management Project Project Area 1 - District D-2 Value Benefit Conclusions AddressOpinion of Special Benefit Tax Parcel I.D. No. 1.9380 Hale Avenue South20-027-21-23-0007$ 5,100 2.9193 Harkness Avenue South20-027-21-22-0018$ 5,100 3.9456 Harkness Court South20-027-21-24-0021$ 5,400 October 26, 2015, it is assumed for valuation purposes that the proposed street improvements have been completed, when in fact they are proposed but have not yet been completed. This hypothetical condition reflects a applied in this appraisal. This appraisal assignment is not based on a requested minimum valuation or a specific valuation for approval of a loan. The opinions of market value and special benefits in the appraisal were developed independent of any undue influence. The appraised values assume all real estate taxes and special assessment balances, if any, have been paid in full. The values are gross values with no allowances made for brokerage commissions, real estate taxes or other carrying costs associated with a property during its marketing period. The values are based on an exposure time of six to twelve months. This appraisal report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Foundation. 2 BRKW APPRAISALS, INC. PAGE The facts and information contained in this report were obtained from sources that are considered to be reliable and are true to the best of our knowledge and belief, but are not guaranteed. This appraisal report is contingent upon the assumptions and limiting conditions included within this report. Your attention is directed to the following report which summarizes the data, analyses and conclusions that support the opinions of value. BRKW APPRAISALS, INC. Paul J. Gleason, MAI Mark A. Warren Certified General Real Property Appraiser Certified General Real Property Appraiser Minnesota License #4003073 Minnesota License #20415370 3 BRKW APPRAISALS, INC. PAGE TABLE OF CONTENTS IDENTIFICATION OF PROPERTIES APPRAISED/LEGAL DESCRIPTIONS .................. 1 PASPLM ................................................. 2 ROJECT REA AND UBJECT ROPERTIES OCATION AP PURPOSE/INTENDED USE OF THE APPRAISAL/INTENDED USERS ............................ 3 PROPERTY RIGHTS APPRAISED ................................................................................ 3 ZONING ....................................................................................................................... 3 SCOPE OF WORK ........................................................................................................ 3 COMPETENCY PROVISION ......................................................................................... 4 EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS ............................ 4 MARKET VALUE DEFINITION .................................................................................... 5 CONTINGENT AND LIMITING CONDITIONS .............................................................. 6 DESCRIPTION OF SUBJECT PROPERTIES.................................................................. 7 DESCRIPTION OF EXISTING INFRASTRUCTURE ....................................................... 8 SMYC ............................................................................. 9 TREETS AP EAR ONSTRUCTED PCIM ............................................................................... 10 AVEMENT ONDITION NDEX AP DESCRIPTION OF PROPOSED IMPROVEMENTS ...................................................... 11 HIGHEST AND BEST USE .......................................................................................... 12 SPECIAL BENEFIT CONSIDERATIONS AND CONCLUSIONS .................................... 13 SPECIAL BENEFIT ANALYSIS PROCESS .................................................................. 14 SPECIAL BENEFIT OPINIONS ................................................................................... 14 CERTIFICATION ....................................................................................................... 15 PROFESSIONAL QUALIFICATIONS .......................................................................... 16 COMPANY PROFILE ................................................................................................. 20 IDENTIFICATION OF PROPERTIES APPRAISED/LEGAL DESCRIPTIONS The owners, addresses, tax parcel numbers and legal descriptions of the three appraised properties are presented below. A map depicting the area of the proposed project and the location of the subject properties is on the next page. The properties are described in greater detail later in this report. Subject Properties Summary Fee OwnerAddressTax Parcel I.D. No. Legal Description 1Matt & Lisa Richey-Todd9380 Hale Ave. S.20-027-21-23-0007Lot 8, Block 1, Pinehill Acres 2nd Add. 2Robert Klepper9193 Harkness Ave. S.20-027-21-22-0018Lot 4, Block 2, Pinehill Acres 1st Add. 3Ralph & Jessica Slocum9456 Harkness Ct. S.20-027-21-24-0021Lot 6, Block 4, Pinehill Acres 4th Add. 1 BRKW APPRAISALS, INC. PAGE Property 2 9193 Harkness Ave. S. Property 1 9380 Hale Ave. S. Property 3 9456 Harkness Ct. S. Project Area and Subject Properties Location Map 2 BRKW APPRAISALS, INC. PAGE PURPOSE/INTENDED USE OF THE APPRAISAL/INTENDED USERS The purpose of the appraisal is to provide an opinion of the increase in market value, if any, to the subject properties as a consequence of the proposed City of Cottage Grove 2016 Pavement Management Project. The intended use of the appraisal is for assisting city officials in levying in an equitable manner special assessments to properties benefited by the improvement project. The intended users of the report are City of Cottage Grove officials. PROPERTY RIGHTS APPRAISED The property rights appraised are those of the fee simple estate. ZONING PropertyZoning District 1. 9380 Hale Avenue SouthR-3, Single-Family Residential District 2. 9193 Harkness Avenue SouthR-3, Single-Family Residential District 3. 9456 Harkness Court SouthR-5, Medium Density Residential District SCOPE OF WORK The City of Cottage Grove is proposing to rehabilitate several streets in an established th residential area east of Hadley Avenue South, north of 95 Street South. Project maps herein depict the area of the proposed improvements. The project is referred to as the City of Cottage Grove 2016 Pavement Management Project. Per agreement between the client and the appraisers, three representative urban single- family residential properties located in the area of the proposed improvements project are appraised in this report. The opinions of special benefits, if any, accruing to the appraised properties as a result of the project will be used by the client in determining the appropriate assessments to be levied against other properties within the project area. 3 BRKW APPRAISALS, INC. PAGE Since the benefits of public improvement projects such as street rehabilitation accrue to the land component of properties only, the valuation in this report involves land only. Opinions of the market value of the subject property land components have been developed in this appraisal using the Direct Sales Comparison Approach. The Direct Sales Comparison Approach involves the comparison and analysis of land parcels recently sold which are similar to the subject land. The application of the Cost and Income Approaches typically applies only when a property valuation includes buildings and other improvements having contributory value. The subject land parcels are valued before and after completion of the proposed street and utility improvements. The difference between the before and after opinions of market value is the special benefit value attributable to the proposed project. restricted appraisal reportformat This report is presented in a in compliance with the reporting requirements of Standards Rule 2-2 (b) of the Uniform Standards of Appraisal Practice (USPAP). The results of the analysis and the conclusions pertaining to the market value of the subject property are presented in an abbreviated manner in this report, at a level of detail sufficient for the needs of the intended user, which is the client. Additional notes, analyses, and supporting data are retained in the this report may not be understood properly without additional information in the s work file. The report is intended to be read and used only by the client identified herein. COMPETENCY PROVISION Paul J. Gleason, MAI has been a full time professional real estate appraiser since 1992. Mark A. Warren has been a professional real estate appraiser since 2003. Included in this report for your review are copies of their professional qualifications. Both appraisers have completed numerous special benefit valuations, similar that contained within this report, in the past several or more years. 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. EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS An Extraordinary Assumption is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition ©The Appraisal Foundation, Page U-3, as: An assumption, directly related to a specific assignment, as of the effective date of assignment results, which, if found to be false, 4 BRKW APPRAISALS, INC. PAGE A Hypothetical Condition is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition ©The Appraisal Foundation, Page U-3, as: A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. hypothetical condition Comments: A in this appraisal is it is assumed, for the purposes of special benefits valuation, that on the effective date of valuation of October 26, 2015, in the before position on that day the streets in front of the subject properties were in their pre-improved state (old, worn and deteriorated) and later on that day, in the after position, the street rehabilitation had been completed. In actuality, the rehabilitation process had not begun on that date, but is rather planned to be completed in 2016. Applying the hypothetical condition assuming project -and-after valuation as of the effective date of valuation. See Contingent and Limiting Conditions, which are standard assumptions that apply to the appraisal, later in this report. 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). 5 BRKW APPRAISALS, INC. PAGE CONTINGENT AND LIMITING CONDITIONS This appraisal report is subject to the following Limiting Conditions and Assumptions: 1. The legal descriptions contained herein are 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. 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 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. 13. The after improvements valuation in this appraisal assumes proposed improvements have been completed in accordance with the description of the proposed work provided to the appraisers by the City of Cottage Grove. Environmental Disclaimer: The value opinions in this report are based on the assumption that the subject properties are not adversely affected by the existence of hazardous substances or detrimental environmental conditions. A routine inspection of the properties did not reveal or indicate any such conditions. In that the appraisers are not qualified in this field of expertise, the client is encouraged to retain an expert in such investigations, if so desired. 6 BRKW APPRAISALS, INC. PAGE DESCRIPTION OF SUBJECT PROPERTIES Neighborhood The subject properties are located within a residential neighborhood in the west- central part of Cottage Grove. Primary access into the area is provided by U.S. th Highway 10/61 at its interchanges with Jamaica Avenue South and 80 Street South. The oldest homes in the neighborhood, typically dating from the late 1970s, are located in the northwest sector. The newest homes, built in the late 1980s and early 1990s, are generally in the south and southeast portions of the neighborhood. Description Of Subject Properties Land Area Property Use/ImprovementsComments (Ac.) 1.9380 Hale Ave. S.0.22Single-Family HomeLocated on and fronts the west side of Hale Ave. S.; backs up to Hadley Ave. S. The lot has 75 feet of frontage on Hale Ave. S. Open landscape with minimal trees. House was built in 1981. 2.9193 Harkness Ave. S.0.29Single-Family HomeLocated on northeast side of Harkness Ave. S. The lot has 74 feet of frontage on Harkness Ave. S. Moderate tree cover at the rear of lot. House was built in 1978. 3.9456 Harkness Ct. S.0.38Single-Family HomeLocated on Harkness Ct. S., at the end of a cul- de-sac. The lot has 58 feet of frontage on Harkness Ct. S. Open landscape with minimal trees. House was built in 1987. 7 BRKW APPRAISALS, INC. PAGE DESCRIPTION OF EXISTING INFRASTRUCTURE Streets The streets in the project area are urban-residential design and were originally constructed between the late 1970s through the early 1990s, as depicted in the exhibit on the following page. Generally, the streets are 32 feet wide from face of curb to face of curb with concrete curb and gutter. The Pavement Condition Index (PCI) of the streets generally ranges from 40 to 50 on a scale of 1 to 100. Project area pavements in that range are considered to be in fair condition and generally exhibit significant or major distress. A PCI map is on a following page. In addition, sections of the existing curb and gutter have settled, cracked, or have other defects which require replacement. Coring of the pavement has shown that on average the thickness of the existing streets is approximately 4 inches of bituminous over 10 inches of base. However, throughout the project area, streets have extensive cracking, as well as stripping. The stripping degrades the strength and durability of the pavement. In order to alleviate some of the major distressed areas, the city has performed temporary patching. Due to the granular subgrade soils and good aggregate base, the pavement structure as a whole is typically structurally sound. Sanitary Sewer The sanitary sewer within the project area consists primarily of 8- inch diameter VCP, PVC, and DIP. The sanitary sewer was televised to evaluate pipe condition, and the results indicate that the pipe is generally in good condition. Some problems encountered during the televising were root intrusion, cracked pipe and sags. Also, noticed during the inspection were miscellaneous repairs including patching and lining. Water Main The water mains within the project area consist of 6, 8, and 18-inch nd diameter DIP. In the project area, an 18-inch trunk main extends along 92 Street nd from the 0.5 MG Pinehill tower (located just north of 92 Street) to Hadley Avenue, ndth and along Hale Avenue from 92 Street to Lower 94 Street, and through greenspace thth from Lower 94 Street to 95 Street. The water mains are believed to be in good condition. However, projects of similar eras have had instances of excessive bolt corrosion on valves. Storm Sewer The storm sewer was televised to evaluate pipe condition. In addition, storm structures were also inspected. Generally, the storm sewer mains are in good condition. Some issues encountered in the storm sewer were cracked or broken pipes and dirty lines. In the project area, eight storm structures are beyond the point of being patched or repaired. 8 BRKW APPRAISALS, INC. PAGE 9 PAGE Year Constructed Streets Map 9456 Harkness Ct. S. 3 Property 9193 Harkness Ave. S. 2 Property RKW APPRAISALS, INC. 9380 Hale Ave. S. 1 Property B 10 PAGE Pavement Condition Index Map 9456 Harkness Ct. S. 3 ty Proper 9193 Harkness Ave. S. 2 Property RKW APPRAISALS, INC. 9380 Hale Ave. S. 1 Property B DESCRIPTION OF PROPOSED IMPROVEMENTS Streets Based on the deteriorated condition of the existing paving, types of distress present and the anticipated deterioration due to asphalt stripping, the streets within the project area are proposed to undergo a full pavement removal and replacement with 3.5 inches of new pavement. The wear course will be a virgin mix, excluding the use of recycled asphalt pavement. Existing concrete curb/gutter and concrete pads for community mailboxes will undergo full replacement as well. Traffic signs will be replaced to meet federal retroreflectivity requirements. In addition, the street light system will be evaluated for repair, and the existing direct-bury street light wire will be replaced within a PVC conduit. Sanitary Sewer Inline repairs will be made to address cracks in the pipe. In areas where there are sags, the pipe will be removed and replaced. In addition, the manhole castings will be salvaged and reinstalled, and the concrete adjusting rings will be replaced with new high density polyethylene adjusting rings. Water Main As part of the project, broken valve top sections will be removed and replaced. Also, small samples of valves will be dug up and checked for bolt corrosion during the early phase of the project prior to the street work. Any corroded bolts will be replaced, and additional valves with like conditions would be dug up and checked. As a part of the process, valve boxes will be replaced in conjunction with the work. Hydrant barrels will be extended on any hydrant requiring adjustments, and hydrants will be reconditioned via sandblasting and painting. In addition, the access drive to the 0.5MG Pinehill Tower is proposed to be repaired. Storm Sewer For the most part, the project is intended to rehabilitate the streets and not change existing drainage patterns. Where there are cracks and leaking or offset joints, in-line repairs will be made. Structures in poor condition will be replaced. Adjustment rings for manholes will be replaced with high density polyethylene rings; catch basin rings will not be replaced unless the curb adjacent to them is removed, or the ring has failed. The existing casings will be salvaged and reinstalled. Miscellaneous patching, lining, and other repairs will be performed as needed. 11 BRKW APPRAISALS, INC. PAGE HIGHEST AND BEST USE Highest and Best Use - Before Proposed Improvements As Vacant: Shown below is the concluded highest and best use, as vacant, of each property: PropertyHighest And Best Use, As Vacant 1.Single-Family Home - 9380 Hale Avenue S.One single-family home 2.Single-Family Home - 9193 Harkness Avenue S.One single-family home 3.Single-Family Home - 9456 Harkness Court S.One single-family home As Improved: Only the land components of the subject properties are being appraised and therefore the highest and best use, as improved, was not addressed. Highest and Best Use After Street Improvements After the street improvements, the highest and best use of all of the subject properties remains the same relative to the before improvements position. 12 BRKW APPRAISALS, INC. PAGE SPECIAL BENEFIT CONSIDERATIONS AND CONCLUSIONS 1. Before the proposed improvements, the streets in the project area are relatively old and deteriorated. It can be anticipated that further deterioration will result in a worsening of problems associated with advanced age, including accelerated asphalt stripping, improper drainage, uneven driving surfaces, increased formation of potholes, etc. 2. The condition and quality of streets and utilities serving and fronting commercial, residential and other properties influences the value, curb appeal and general desirability of the properties. 3. The proposed rehabilitation of roads serving the subject properties will substantially improve the safety, convenience and general appeal of access into and out of the subject properties. The project will reverse the deteriorating state of the existing streets and result in new surfacing, and in some areas, together with replacement of all concrete curb and gutter. 4. Safety aspects for vehicles traveling on a rehabilitated street are enhanced by the elimination of potholes, cracks, etc. Street icing problems are reduced as water is more efficiently diverted off the roadway surface that could otherwise collect in the deteriorated street areas during frost seasons. 5. The proposed repairs and minor replacements, as necessary, of water main, sanitary sewer and storm sewer utility components in the project area will preempt potential major problems and disruptions in these systems, as well as extend the life of this infrastructure, deferring the need for total replacement to a significantly later point in time. 6. The proposed project improvements in some areas may result in some general benefit to neighborhoods and properties beyond the immediate subject neighborhoods. However, a significant amount of benefit resulting from the project is special, attaching to the properties directly fronting and accessing the rehabilitated street, including the subject properties. 7. The land value increase for each property, on a percentage basis as well as on a per-square-foot basis and a per-front-foot basis, resulting from the street and utility improvements can vary, and in this appraisal they do vary in some cases. This is due to differences among the properties in parcel land value, parcel size, parcel configuration, amount of street frontage, and/or number of fronting streets. 13 BRKW APPRAISALS, INC. PAGE SPECIAL BENEFIT ANALYSIS PROCESS Arriving at an opinion of special value benefits accruing to each of the subject properties as a result of completion of the City of Cottage Grove 2016 Pavement Management Project is accomplished by developing "before improvements" and "after improvements" opinions of market value for each of the subject land parcels. The improvements on the land are concluded to have the same value contributions to the total property value in both the "before and after" improvements positions. Consequently, the extent of special value benefits from the public improvements project can be reliably derived by analyzing the value of the land only, by processing the Direct Sales Comparison Approach. The Direct Sales Comparison Approach was applied in valuing the subject properties. This approach involves the comparison of recently sold land parcels similar to the subject properties. The comparable sale prices are analyzed and adjustments are made for value-related differences relative to the subject properties. The result of the analysis and adjustments is the generation of a range of value indications for the subject land. The strengths and weaknesses of each comparable sale and its value indication are evaluated before arriving at a final value opinion for the subject land parcel. file for this assignment are market data, notes and other supporting information pertaining to the processing of the Direct Sales Comparison Approach in a before-and-after land value analysis for each of the subject properties. Shown below is the result of these analyses, presenting the opinion of the special benefit values as of October 26, 2015 resulting from the City of Cottage Grove 2016 Pavement Management Project. City of Cottage Grove 2016 Pavement Management Project SPECIAL BENEFIT OPINIONS Project Area 1 - District D-2 Value Benefit Conclusions AddressOpinion of Special Benefit Tax Parcel I.D. No. 1.9380 Hale Avenue South20-027-21-23-0007$ 5,100 2.9193 Harkness Avenue South20-027-21-22-0018$ 5,100 3.9456 Harkness Court South20-027-21-24-0021$ 5,400 The above opinions of special benefits reflect increases in property market values resulting from the proposed improvements. The market values are based on estimated property exposure times of 6 to 12 months. 14 BRKW APPRAISALS, INC. PAGE 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. Neither our engagement to make this appraisal (or any future appraisals for this client), nor any compensation, therefore, are 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 estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of the appraisal. 3. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 4. We have no present or contemplated future interest in the real estate that is the subject of this appraisal report. 5. We 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 our 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 our 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 provided significant professional assistance to the person(s) signing this certification. 10. We 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. As of the date of this report, Paul J. Gleason has completed the requirements of the continuing education program for Designated Members of the Appraisal Institute. 13. As of the date of this report, Mark A. Warren has completed the Standards and Ethics Education Requirements for Candidates of the Appraisal Institute. 14. The by-laws and regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. 15. 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/she 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. 16. We have the knowledge and experience to complete this appraisal in a competent manner. We have not been sued by a regulatory agency or financial institution for fraud or negligence involving an appraisal report. 17. No services as an appraiser or in any other capacity have been performed regarding the property that is the subject of the report within the three year period immediately preceding acceptance of this assignment. Paul J. Gleason, MAI Mark A. Warren Certified General Real Property Appraiser Certified General Real Property Appraiser Minnesota License #4003073 Minnesota License #20415370 15 BRKW APPRAISALS, INC. PAGE PROFESSIONAL QUALIFICATIONS PAUL J. GLEASON, MAI PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS MAI Member The Appraisal Institute APPRAISER 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 EXPERIENCE Principal BRKW Appraisals, Inc., St. Paul, MN, 2007-present Staff Appraiser BRKW Appraisals, Inc., St. Paul, MN, 1993-2006 Appraiser Certified Appraisers, Excelsior, MN, 1993 Appraiser Stiles Appraisals, Inc., Plymouth, MN, 1992-1993 Expert Witness Testimony For real estate litigation in numerous condemnation Presenter/Speaker at Min Professionals Workshop, Brainerd, MN Professionals Workshop, Brainerd, MN Presenter/Speaker at Minnesota Department of Professionals Workshop, Breezy Point, MN Appraisal assignments have been completed for the following purposes: Condemnation Partial and total acquisitions, in fee title and in easement form Property Damage Claims Litigation Special Benefits Valuation Mortgage Financing General Valuation Needs Purchase negotiations, listing prices, internal family or partnership transactions, estate planning/taxes, marriage dissolution, etc. 16 BRKW APPRAISALS, INC. PAGE Professional Qualifications Paul J. Gleason, MAI Page 2 PROPERTY TYPES APPRAISED Land Commercial, industrial, residential acreage, agricultural, finished lots Commercial Buildings Office, industrial, retail, medical office, auto dealerships Apartment Buildings/Complexes 1-4 Family Residential Single-family home, townhome, condo, duplex, fourplex PROFESSIONAL REAL ESTATE STUDIES Appraisal Institute courses, including all required for MAI designation: Course 110: Appraisal Principles (examination passed) Course 120: Appraisal Procedures (examination passed) Course 210: Residential Case Study Course 310: Basic Income Capitalization Course 410: National Uniform Standards of Professional Appraisal Practice Course 420: Business Practices and Ethics Course 510: Advanced Income Capitalization Course 520: Highest and Best Use and Market Analysis Course 530: Advanced Sales Comparison and Cost Approaches Course 540: Report Writing and Valuation Analysis Course 550: Advanced Applications Numerous additional classes and seminars for appraisal pre-license and continuing education requirements, on an ongoing basis, from Appraisal Institute and other sources CLIENTS INCLUDE Cities of Afton, Austin, Apple Valley, Cambridge, Cottage Grove, Eagan, Lino Lakes, Maplewood, Oak Park Heights, Owatonna, Prior Lake, Rochester, Savage, Wabasha and Woodbury Anchor Bank Associated Bank BMO Harris Bank N.A. Bremer Bank Bridgewater Bank Dougherty, Molenda, Solfest, Hills & Bauer, P.A. Eckberg, Lammers, Briggs, Wolff Greene Espel PLLP & Vierling, PLLP Minnesota Bank & Trust Minnesota Dept. of Transportation Spire Federal Credit Union US Bank And various other individuals, attorneys, communities and counties Revised: July 1, 2015 17 BRKW APPRAISALS, INC. PAGE PROFESSIONAL QUALIFICATIONS MARK A. WARREN PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS Candidate for Designation The Appraisal Institute APPRAISER LICENSE Certified General Real Property Appraiser - State of Minnesota - License #20415370 EDUCATION University of Minnesota , Minneapolis, Minnesota Bachelor of Arts Degree Religious Studies Major, 2003 PROFESSIONAL EXPERIENCE July 2009 to Present: Appraiser BRKW Appraisals, Inc., St. Paul, MN October 2005 to July 2009: Appraiser The Appraisal Group, Maple Grove, MN June 2003 to October 2005: Appraiser Elmquist-Warren Appraisals, St. Paul, MN PROPERTY TYPES APPRAISED Apartment Buildings Medical Clinics Restaurants Auto Service Centers Mini-Storage Buildings Retail Stores Banks Mixed Use Properties Shopping Centers Churches Mobile Home Parks Single Family Homes Condos & Townhomes Office Buildings Special Purpose Convenience Stores Office-Showrooms R & D Buildings Gas Stations Office-Warehouses Vacant Land Manufacturing Buildings Recreational Facilities 18 BRKW APPRAISALS, INC. PAGE Professional Qualifications Mark A. Warren Page 2 PROFESSIONAL REAL ESTATE STUDIES Basic Income Capitalization, Appraisal Institute, 2005 Advanced Sales Comparison & Cost Approaches, Appraisal Institute, 2006 Report Writing & Valuation Analysis, Appraisal Institute, 2006 Advanced Income Capitalization, Appraisal Institute, 2007 Highest & Best Use & Market Analysis, Appraisal Institute, 2007 National USPAP Update Course, Appraisal Institute, 2007 & 2009 Associates Guidance Leadership Program, Appraisal Institute, 2009 The New Residential Market Conditions Form, Appraisal Institute, 2009 Condemnation Appraising: Principles & Applications, Appraisal Institute, 2009 Fundamentals of Separating Real Property, Personal Property, and Intangible Business Assets, Appraisal Institute, 2012 Revised: July 1, 2015 19 BRKW APPRAISALS, INC. PAGE COMPANY PROFILE BRKWAPPRAISALS,INC. 1600 University Avenue, Suite 314 St. Paul, Minnesota 55104 Phone: 651-646-6114 Fax: 651 646-8086 email: brkw@brkw.com Website: www.brkw.com BRKW Appraisals, Inc. (formerly known as Bettendorf Rohrer Knoche Wall, Inc.) is a full service professional real estate appraisal company formed in 1991. The three principals have more than 70 years of combined experience in the valuation of a wide variety of real estate. Located in the Midway area of St. Paul, we concentrate on the appraisal of real estate primarily in the Twin Cities Metropolitan Area, as well as outlying communities in Minnesota. Our extensive professional training and experience enable us to provide the expertise necessary for consistently reliable real estate valuation. Our appraisal reports are confidential documents completed in accordance with all current standards of professional appraisal practice and ethics. All of the appraisers employed by the company have the Certified General Real Property Appraiser license from the State of Minnesota. Our appraisers stay current with advances in appraisal techniques and the changing real estate market through continuing education programs. At BRKW Appraisals, Inc. we strive to build and maintain long-lasting relationships with our clients. Our goal is to provide high-quality professional real estate valuation services in a timely manner that is consistent with the needs of our clients. Appraisal & Consulting Services Property Types Real Estate Appraisals Commercial Properties Mortgage Financing Appraisals Industrial Properties Condemnation/Litigation Appraisals Multiple Family Residential Review Appraisals Single Family Residential Real Estate Tax Abatements Subdivision Analysis Special Benefits Analysis Vacant Land Parcels Expert Witness Testimony Special Purpose Properties REO Portfolio Valuation Gas Station / Convenience Stores Feasibility Studies Schools and Churches Market Surveys Recreation Facilities Partial Interest Valuations Railroad Corridors 20 BRKW APPRAISALS, INC. PAGE APPRAISALSTAFF Marc E. Knoche, MAI Principal Marc has been an appraiser since 1982, and has the MAI designation of the Appraisal Institute. He specializes in commercial, industrial, multiple family, residential, vacant land, and special purpose property appraisals. Marc has done numerous condemnation acquisition appraisals and special benefit studies involving a wide variety of property types. Marc has extensive litigation / expert witness experience and has served as a court appointed commissioner. He is a Past President of the Metro/Minnesota Chapter of the Appraisal Institute (1992 & 1993). A graduate of Macalester College, Marc is licensed by the State of Minnesota as a Certified General Real Property Appraiser. Paul J. Gleason, MAI Principal and Managing Partner Paul has been appraising real estate since 1992, and has the MAI designation of the Appraisal Institute. He has in-depth experience in the valuation of numerous real estate property types. Over the years, he has developed special expertise in the appraisal of land, and in eminent domain as well as special benefits valuations. Paul is a graduate of the University of Wisconsin at La Crosse and licensed as a Certified General Real Property Appraiser. Sean P. Butts Principal Sean began appraising in 1992, specializing in commercial, industrial, multiple family, residential and recreational property (e.g., golf courses), and joined our firm in 1997. After leaving BRKW Appraisals in 2006 for CSM Corporation, where he spent six years in asset valuation and management, Sean returned to BRKW in 2012 to resume independent fee appraisal work. Sean is a graduate of St. Cloud State University with a Business degree with emphasis on Real Estate Appraising. Licensed as a Certified General Real Property Appraiser and a Candidate for Designation of the Appraisal Institute. Mark A. Warren Associate Mark is a third-generation real property appraiser and has been appraising since 2003. Types of property appraised include office, industrial, hotel/motel, retail/commercial, and other special use properties. Mark is a graduate of the University of Minnesota, is a Candidate for Designation of the Appraisal Institute, and is licensed as a Certified General Real Property Appraiser. 21 BRKW APPRAISALS, INC. PAGE Joseph P. Deutsch Associate Joe has been appraising real estate since 1998, specializing in commercial properties. Types of property appraised include multi-family, industrial, office, retail, and special purpose properties. Joe worked for two years as a city building inspector prior to becoming an appraiser. Joe is a graduate of the University of Minnesota majoring in accounting and is a Certified General Real Property Appraiser as well as a Candidate for Designation of the Appraisal Institute. Terry A. Ward Associate Terry has over 20 years of experience in business management, operations and marketing. Since 2002, she began applying this experience to commercial real estate appraising. Types of properties appraised include office, industrial, hotel/motel, retail/commercial, and other special use properties. She has a degree in Business Management from St. Cloud State University and a Mini Masters Degree in Real Estate Appraising from St. Thomas University. Terry is a Certified General Real Property Appraiser and a Practicing Affiliate of the Appraisal Institute. Michael J. Bettendorf, MAI Founding Principal (Semi-Retired) Active as an appraiser since 1971, Michael is one of the three founding principals of BRKW Appraisals, Inc. Though he retired as a principal of the firm at the end of 2014, he continues to appraise real estate on a part-time, semi-retired basis, completing select assignments for clients on an ad-hoc basis. Michael has the MAI designation of the Appraisal Institute and specializes in commercial, industrial, multiple family, residential, and special purpose property appraisals with extensive litigation experience. Court appointed Commissioner in Ramsey County, past President of Minnesota Chapter A.I.R.E.A. (1987). Michael is a graduate of St. John's University. Licensed as a Certified General Real Property Appraiser. William E. Petersen Associate Bill has been an appraiser since 1986 specializing in the valuation of commercial, industrial, multi-family, office and special purpose properties. He is a graduate of the University of Minnesota and practiced dentistry from 1970-1986 before becoming licensed as a Certified General Real Property Appraiser. Bill, who worked full-time at BRKW Appraisals between 1996 and 2012, currently completes appraisals for the firm on a part-time basis. 22 BRKW APPRAISALS, INC. PAGE A SPECIAL BENEFITS APPRAISAL RESTRICTED APPRAISAL REPORT (BRKW File No. 7612) CHURCH OF ST. RITA CROSSROADSCHURCH 1 RURAL RESIDENTIAL PROPERTY 2016 PAVEMENT MANAGEMENT PROJECT PROJECT AREA 3 — 80TH STREET SOUTH, BETWEEN IDEAL & JAMAICA AVENUES SOUTH COTTAGE GROVE, MN 55016 VALUATION DATE: OCTOBER 26, 2015 FOR CITY OF COTTAGE GROVE ATTN: JENNIFER LEVITT, P.E. COMMUNITY DEVELOPMENT DIRECTOR / CITY ENGINEER 12800 RAVINE PARKWAY SOUTH COTTAGE GROVE, MN 55016 BY PAUL J. GLEASON, MAI AND MARK A. WARREN � � REAL ESTATE VALLlATION SERVICES BR REAL ESTATE VALUATIO�SERVICES November 25, 2015 Jennifer Levitt, P.E. Community Development Director / City Engineer City of Cottage Grove 12800 Ravine Parkway South Cottage Grove, MN 55016 RE: Special Benefits Appraisal Church of St. Rita, Crossroads Church And 1 Rural Residential Property Cottage Grove 2016 Pavement Management Proj ect Project Area 3 — 80t'' Street South, Between Ideal And Jamaica Avenues South Cottage Grove, Minnesota Dear Ms. Levitt: In accordance with your request, we are providing you with a special benefits appraisal pertaining to three subject properties located in an area proposed for roadway rehabilitation and utility repairs through the Cottage Grove 2016 Pavement Management Project. This appraisal is presented in a Restricted Appraisal Report format, in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice. The purpose of the appraisal is to provide an opinion of the increase in market value, if any, to the subject properties as a consequence of the new street and utility improvements to be completed in 2016. The opinion of the value benefits resulting from the public improvement project is as of October 26, 2015, the date of inspection of the project area and subject properties. The intended use of the appraisal is for assisting city officials in levying in an equitable manner special assessments to properties benefited by the improvement project. The intended users of the appraisal are City of Cottage Grove officials. The project area is a segment of 80t'' Street South between Ideal and Jamaica Avenues South. This street segment to be rehabilitated and the proposed improvements are detailed within this report. BRKW APPRAISALS, INC. 1600 UNIVERSITY AVENUE,SUITE 314,ST. PAUL,MN 55104 651.646.6114 FAX 651.646.8086 www.brkw.com The value benefits, if any, of street, utility and other such public improvements accrue to the land component of a property, not to the value of buildings and other improvements on the land. Consequently, this special benefits analysis is limited to the valuation of only the land components of the properties appraised. The before-and-after valuation methodology has been used in this appraisal, which analyzes the market value of the subject land prior to the proposed project in relation to the market value of the land after the project is completed. The difference between the before and after opinions of land value reflects the value of special benefits. In our opinion, the special value benefits to the subject properties resulting from completion of the 2016 Pavement Management Project as of October 26, 2015 are as follows: City of Cottage Grove 2016 Pavement Management Project Project Area 3 - 80th Street South, Between Ideal and Jamaica Avenues South Value Benefit Conclusions Address Tax Parcel LD. No. Opinion of Special Benefit 1. 8694 80th Street South 09-027-21-43-0004 $16,500 09-027-21-43-0005 $20,200 Total Property $36,700 2. 7955 Ivystone Avenue South 09-027-21-44-0086 $0 3. 8726 80th Street South 09-027-21-43-0001 $6,100 In the "after improvements" position on the date of valuation, which is October 26, 2015, it is assumed for valuation purposes that the proposed street improvements have been completed, when in fact they are proposed but have not yet been completed. This reflects a hypothetical condition applied in this appraisal. This appraisal assignment is not based on a requested minimum valuation or a specific valuation for approval of a loan. The opinions of market value and special benefits in the appraisal were developed independent of any undue influence. The appraised values assume all real estate taxes and special assessment balances, if any, have been paid in full. The values are gross values with no allowances made for brokerage commissions, real estate taxes or other carrying costs associated with a property during its marketing period. The values are based on an exposure time of six to twelve months. BRKW APPRAISALS, INC. PAGE 2 This appraisal report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Foundation. The facts and information contained in this report were obtained from sources that are considered to be reliable and are true to the best of our knowledge and belief, but are not guaranteed. This appraisal report is contingent upon the assumptions and limiting conditions included within this report. Your attention is directed to the following report which summarizes the data, analyses and conclusions that support the opinions of value. Sincerely, BRKW APPRAISALS, INC. .--� `� � ! �`�� �� G� C�� �'' � r � .��.r�'�i'�--�,, /� �G��.�/�f Paul J. Gl��son, MAI �rk A. Warren Certified General Real Property Appraiser Certified General Real Property Appraiser Minnesota License #4003073 Minnesota License #20415370 BRKW APPRAISALS, INC. PAGE 3 TABLE OF CONTENTS IDENTIFICATION OF PROPERTIES APPRAISED/LEGAL DESCRIPTIONS.................. 1 PROJECT AREA AND SUBJECT PROPERTIES LOCATION MAP ................................................. 2 PURPOSE/INTENDED USE OF THE APPRAISAL/INTENDED USERS............................3 PROPERTY RIGHTS APPRAISED ................................................................................3 ZONING.......................................................................................................................3 SCOPEOF WORK........................................................................................................3 COMPETENCY PROVISION.........................................................................................4 EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS............................5 MARKET VALUE DEFINITION....................................................................................5 CONTINGENT AND LIMITING CONDITIONS..............................................................6 DESCRIPTION OF SUBJECT PROPERTIES.................................................................. 7 DESCRIPTION OF EXISTING INFRASTRUCTURE.......................................................8 STREETS MAP - YEAR CONSTRUCTED ........................................................................... 10 PAVEMENT CONDITION INDEX MAP............................................................................... 11 DESCRIPTION OF PROPOSED IMPROVEMENTS ...................................................... 12 HIGHEST AND BEST USE.......................................................................................... 13 SPECIAL BENEFIT CONSIDERATIONS AND CONCLUSIONS .................................... 13 SPECIAL BENEFIT ANALYSIS PROCESS .................................................................. 15 SPECIAL BENEFIT OPINIONS................................................................................... 16 CERTIFICATION....................................................................................................... 17 PROFESSIONAL QUALIFICATIONS .......................................................................... 18 COMPANY PROFILE ................................................................................................. 22 IDENTIFICATION OF PROPERTIES APPRAISED/LEGAL DESCRIPTIONS The owners, addresses, tax parcel numbers and legal descriptions of the three appraised properties are presented below. A map depicting the area of the proposed project and the location of the subject properties is on the next page. The properties are described in greater detail later in this report. Subject Properties Sumtnary Fee Owner Address Tag Parcel LD.No. Legal Description 1 Chiuch of St. Rita of Cottage g694 80th St. S. 09-027-21-43-0004 Lengthy legal-retained in appraisal file. Grove 09-027-21-43-0005 Comm Ev. Church c/o Lot 2,Block 1,Northwest Covenant lst � Crossroads Church 7955 Ivystone Ave. S. 09-027-21-44-0086 Add. 3 Sandborgh Living Trust 8726 80th St. S. 09-027-21-43-0001 Lengthy legal-retained in appraisal file. Multiple Tax Parcel Properties It is noted that for the purposes of valuation, one of the three properties above includes more than one tax parcel. Proper real estate appraisal methodology requires identifying the "larger parcel," which is the aggregate property that possesses 1) unity of ownership, 2) unity of location (typically contiguity), and 3) unity of use, as it relates to the highest and best use of commonly owned, contiguous parcels. Propert� — The "larger parcel" rule applies to this property, comprising two adjoining tax parcels under common ownership which together form one site supporting the church building. Since the two tax parcels form one site, and since the land, if vacant, would be approached as one site for the purposes of developing it to its highest and best use, they are treated as one property in the valuation. BRKW APPRAISALS, INC. PAGE 1 _ � — i � �— �, y ' — � ��`�,r --� ''I i F < � ` -t �� � i ---; F_ ; ' � � � //� ---�I i i�� I I � ���1 �1�� � ' F � F- I ,.� i i �..� � i i �- !`- `F _-�1/ T's f��`! � �`�'1s� i i � �� '�t---`-�c� F � �- r `� � 1 I ,-_ �, , , � � �, y �� � � - I: -,�y �"` f� �I� � ", � , �- � , '�. _� �, r �- � � -� �� 1 - F—� r� �-- I _'�_ 1 r 'I � j I ��� T\,!r��J i � I F---I � . � 1_ �,� L7 ��.�. / I' �'. F__1 �^ F... I 1 � � �� �- ,� �T, i � 'ti�.". ��� � ' ,' � i �-- Property 2 �_ � i �� � f�� ��� %�� - j �',� ,''-�_ �- h_ i 7955 lvystone Ave.S. 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I I f 1 '7 �`-- `��'�` �� �`C '��� ` 3� r i_-`- \ l __ 4- �-- � � ! �� � � , � . -1 1�` � � �I r---� ��-r- �I � -1 .�. -- -- _ � T � � �- - � � � , ; �'.�' _� �� ..•�� �� �''<���� �'J� �� r -� � I� � _ . / LEGEND ' � � " �, � i 1 � �� �'� � - �� � -��� � �����_ � � � � �)� C�S� saENnu � 1�-- �� , �._ ' ���r RaPPTiAE BdLTdN Sc MENK,, INC_ CtITTAGEGROUE,MINNE50TA o zco coc cansuH;n - & 5urve � 9 trv9eeen�aa ooen�i���aassi 2ii1fiPAVEMENTMANAGEMENT Hcrizontal5calelnFeet ano�e.bsi-� mr�eo�o�.me�u«m� ASSESSABLEPARCEC4 R6URE4 Project Area and Subject Properties Location Map BRKW APPRAISALS, INC. PAGE 2 PURPOSE/INTENDED USE OF THE APPRAISAL/INTENDED USERS The purpose of the appraisal is to provide an opinion of the increase in market value, if any, to the subject properties as a consequence of the proposed City of Cottage Grove 2016 Pavement Management Project. The intended use of the appraisal is for assisting city officials in levying in an equitable manner special assessments to properties benefited by the improvement project. The intended users of the report are City of Cottage Grove officials. PROPERTY RIGHTS APPRAISED The property rights appraised are those of the fee simple estate. ZONING Property Zoning District 1. 8694 80th Street South R-3, Single-Family Residential District 2. 7955 Ivystone Avenue South R-3, Single-Family Residential District 3. 8726 80th Street South R-3, Single-Family Residential District SCOPE OF WORK The City of Cottage Grove is proposing to rehabilitate 80t'' Street South between Ideal and Jamaica Avenues South. Project maps herein depict the area of the proposed improvements. The project is referred to as the City of Cottage Grove 2016 Pavement Management Project. Per agreement between the client and the appraisers, three properties located in the area of the proposed improvements project are appraised in this report. The opinions of special benefits, if any, accruing to the appraised properties as a result of the project will be used by the client in determining the appropriate assessments to be levied against the subject properties. BRKW APPRAISALS, INC. PAGE 3 Since the benefits of public improvement projects such as street rehabilitation accrue to the land component of properties only, the valuation in this report involves land only. Opinions of the market value of the subject property land components have been developed in this appraisal using the Direct Sales Comparison Approach and, where applicable, the Development Cost Approach. The Direct Sales Comparison Approach involves the comparison and analysis of land parcels recently sold which are similar to the subject land. The Development Cost Approach addresses the net present value of land that can be subdivided and developed into multiple parcels, by deducting from total retail lot value potential the costs of development and profit requirements of the developer. The application of the Cost and Income Approaches typically applies only when a property valuation includes buildings and other improvements having contributory value. The subject land parcels are valued before and after completion of the proposed street and utility improvements. The difference between the before and after opinions of market value is the special benefit value attributable to the proposed project. This report is presented in a restricted appraisal report format in compliance with the reporting requirements of Standards Rule 2-2 (b) of the Uniform Standards of Appraisal Practice (USPAP). The results of the analysis and the conclusions pertaining to the market value of the subject property are presented in an abbreviated manner in this report, at a level of detail sufficient for the needs of the intended user, which is the client. Additional notes, analyses, and supporting data are retained in the appraiser's office work file. The rationale for the opinions and conclusions stated in this report may not be understood properly without additional information in the appraiser's work file. The report is intended to be read and used only by the client identified herein. COMPETENCY PROVISION Paul J. Gleason, MAI has been a full time professional real estate appraiser since 1992. Mark A. Warren has been a professional real estate appraiser since 2003. Included in this report for your review are copies of their professional qualifications. Both appraisers have completed numerous special benefit valuations, similar that contained within this report, in the past several or more years. 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 4 EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS An Extraordinary Assumption is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition COThe Appraisal Foundation, Page U-3, as: An assumption, directly related to a specific assignment, as of the effective date of assignment results, which, if found to be false, could alter the Appraiser's opinions or conclusions. A Hypothetical Condition is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Edition COThe Appraisal Foundation, Page U-3, as: A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. Comments: A hypothetical condition in this appraisal is it is assumed, for the purposes of special benefits valuation, that on the effective date of valuation of October 26, 2015, in the before position 80t'' Street South between Ideal and Jamaica Avenues South, in front of the subject properties was in its pre-improved state (old, worn and deteriorated) and later on that day, in the after position, the street rehabilitation had been completed. In actuality, the rehabilitation process had not begun on that date, but is rather planned to be completed in 2016. Applying the hypothetical condition assuming project completion in the "after" position facilitates completing a before-and-after valuation as of the effective date of valuation. See Contingent and Limiting Conditions, which are standard assumptions that apply to the appraisal, later in this report. 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: BRKW APPRAISALS, INC. PAGE 5 ♦ 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). CONTINGENT AND LIMITING CONDITIONS This appraisal report is subject to the following Limiting Conditions and Assumptions: 1. The legal descriptions contained herein are 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. BRKW APPRAISALS, INC. PAGE 6 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 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. 13.The after improvements valuation in this appraisal assumes proposed improvements have been completed in accordance with the description of the proposed work provided to the appraisers by the City of Cottage Grove. Environmental Disclaimer: The value opinions in this report are based on the assumption that the subject properties are not adversely affected by the existence of hazardous substances or detrimental environmental conditions. A routine inspection of the properties did not reveal or indicate any such conditions. In that the appraisers are not qualified in this field of expertise, the client is encouraged to retain an expert in such investigations, if so desired. DESCRIPTION OF SUBJECT PROPERTIES Neighborhood The subject properties are located along a segment of 80t'' Street South between Ideal and Jamaica Avenues South. This street segment is approximately 3,800 lineal feet in length. The neighborhood is located in the north central portion of Cottage Grove. Primary access into the area is provided by U.S. Highway 10/61 at its interchanges with Jamaica Avenue South and 80t'' Street South. The predominant property type in the area is urban single-family homes. In addition to the urban single-family homes, and more specifically along 80t'' Street South in the project area is one rural residential home, two churches, a city-owned garage and city-owned park land. BRKW APPRAISALS, INC. PAGE 7 Description Of Subject Properties Land Area Property (Ac.) Use/Improvements Comments 1. 8694 80th Street S. 7.53 Church of St. Rika Located on the north side of 80th Street S. built in 1990. Properry consists of two adjoining tax parcels, which are both fairly similar in size. Gross site area is 8.05 acres;excluding righ of way,net land area is 7.53 acres. Excluding right of way,tax parce109-027-21-43-0004 contains 337 acres and taY parce109-027-21-43-0005 contains 4.16 acres. The front appro�mately 80% of the sike is level and the rear 20% of the site drops sharply downward to the north in the area of a 20-foot- wide drainage and uriliky easement along the northern edge of the site. The two taY parcels are valued as one because they are contiguous, under common ownership and,if vacant,would l�lcely be developed/used together. 2. 7955 Ivystone Avenue S. 4.44 Crossroads Church Located on three streets: Ivystone Avenue South built in 1987. (to the west), 80th Street South(to the south) and Jamaica Avenue South(to the east). Access to the site is provided by Ivystone Avenue South only. Site is generally open and unwooded with a leveltopography. 3. 8726 80th Street S. 1.72 Single-Family Home Located on north side of 80th Street S. Gross built in 1967. land area is 1.95 acres;excluding right of way, net land area is 1.72 acres. Topography is level to rolling and the lot has moderate tree cover. There is a 20-foot-wide drainage and utility easement along the northern edge of the lot. BRKW APPRAISALS, INC. PAGE 8 DESCRIPTION OF EXISTING INFRASTRUCTURE Street — The segment of 80t'' Street South between Ideal and Jamaica Avenues South is approximately 3,800 lineal feet in length and was reconstructed in 1998. This segment is a 4-lane undivided minor arterial that is 47 feet wide from face of curb to face of curb, excluding turn lanes. The pavement section of this segment has average bituminous of 6 inches over 10 to 11 inches of aggregate base. The Pavement Condition Index (PCI) is 35 on a scale of 1 to 100. Pavements in this range are considered to be in poor condition and generally exhibit major distress. A PCI map is on a following page. The existing concrete curb and gutter is generally in good condition, with approximately 10% of the curb being damaged. Testing of the pavement has shown that the street is severely rutted. Rutting is a surface depression in the wheel path that may be accompanied by pavement uplift alongside the rut; it's a result of a permanent deformation in any of the pavement layers of subgrade due to traffic loading. From the observation of the core samples, the rutting is limited to the surface course of bituminous and it does not extend into the aggregate base or subgrade materials. Trail — Located along both sides of 80t'' Street South between 79t'' Street South and Isleton Avenue South is an 8-foot wide bituminous trail, and along the north side of 80t'' Street South between ivystone and Jamaica Avenues South is an 8-foot wide bituminous trail. The trail exhibits wide transverse joints every 15 to 25 feet with areas of patching. The pedestrian ramps are non-compliant with the Americans with Disabilities Act (ADA). Sanitarv Sewer — The sanitary sewer system along 80t'' Street consists of 8 to 9-inch diameter VCP and 15-inch diameter RCP. The sanitary sewer was televised to evaluate pipe condition, and the results indicate that the pipe is generally in good condition. Some problems encountered during the televising were root intrusion, cracked pipe and sags. Also, noticed during the inspection were miscellaneous repairs including patching and lining. Water Main — The water mains along 80t'' Street South consist of 6, 12, 24, 30 and 36- inch diameter DIP and CIP. The mains were installed as part of multiple projects at various times ranging from 1963 to 2008. The water mains are believed to be in good condition. However, projects of similar eras have had instances of excessive bolt corrosion on valves. Storm Sewer — The storm sewer was televised to evaluate pipe condition. In addition, storm structures were also inspected. Generally, the storm sewer mains are in good condition. Some issues encountered in the storm sewer were cracked or broken pipes and dirty lines. BRKW APPRAISALS, INC. PAGE 9 _.. � � � P operty2 r I -� IF 7955 Ivystone Ave.S. , '���� i � , , � -- - + � -� �,� �� � �fi � �;, � � nr ��" i �_,� ''��� � ; i . . i I� - Property 1 r' � / ;, Property 3 �� -a�! [h � LEGENO: � 8694 80 St.S. ���I��� �� m , � � r-__ 8726 80 St.S. � � �'- �� � STREET — - � � � � � �� . � rz � i __ - �� ' -� CONSTRUQE�1948 . � � i � �, .—.: � � � �� � � i . ����� � � SANITARYSEWER � � II __� � , - .- . . '. �':..�I . � N _+ .. , CONSTRUCSE�196S-1982 � � i � I �� � � � � ' � ^ �� z ,' :�.'� � I� WATEftMAIN 'w._ .,,�-�=9- . �� . "� W � \ . _.. i i�j-.},_�_ -__ . .� .-___I � �I� �'� �. _ {UNSTRUQE�19G3-2008 w i u �—_ i i i i i � II� . � 'i ' � f/� ���� ' 'STOftM SEWER � � �� � � �— — � ' � -- —_. CONSTRUCTED1998 -_-, 1_I L__ � I _ I a. - � - _ I _ - -_. . — —__ — I -� , --1.:� —I I� I I . .i � I �I I � —__—'— _—__ __ i�I I _I�_��� _-� I. � fF I 'i ^ � I I 'i { � i I I \ � ' `� LJ� � j 1 I I I i - / I I � I��` + F _ � �-I I - / �x � I � � \\ � �� I - - J I �// ' � � � 1 7 �I � � � � � �� y � � I � . � . I �� X � .� F /� 1 ui�`' �`l � I I ��, / ,�, �--T�_�T Y�y�f -__� �` �y, Sba`° Y 1J i �-�,'� I� �r r'F__�- J�,�_ , ', ', �� I �``� �F � � �,c'�f` F,, �- I , � r�-r��,� �_ / y . ����' �. ��,-'� � � � i� `, �' -y '� � f?� i 'i �', I �' �[� '� � _?�' � � ' 7 � �_- � � � ���I __ ._'I _�l 4 i� -r � � � r � �' �� v r � iI �',' -�_`- �'- � � `i � 1 i � � y�r � �� �___� __ � 1 '-l..y i� � i x\' �� F F-J � ���I � I J�- � Y Y` '�-�T'� � t �__ F___i�'� ', -�--- J '�- i r , �-- r__-1 - II 1 i i i i -_ � � f �i � ((""�� -''�1� �,.._e� �.__ � � t � 1 � ���_ �__ 'j___'� �r`�.��!_�/ / T�T '--��� I I I I � t �� y=�� �___1 �I rY^�i �--'i— t ( �f_ � � i T� i�� �__ �' � ��- � ;- ' � � ' _! �, I � �y'��Y --���� F --� � �-. r � ;' � ,� ��� .��,� r i� l r�,` , r i ' l ,'''r_� E J��- F ' � , _ I � � r� , � . , r ` . . �. i I__+___ I .. ,� , , � . � i . . . ,.. . ..,_ . i. - . , . . . � j� . , '_' � ��\(ol[t�i� � BQL TON Sc MENK�INC. COTTAGEGROVE,MINNESOTA ` v—���1e o�o C�ons If g E g &5 2016PpVEMENTMANAGEMENT `.MI �rL��a �a"ee STREETS-YEARCDNSTRUCTED FIGURE2 Streets Map — Year Constructed BRKW APPRAISALS, INC. PAGE 10 Property 2 ! ' _�—, ; 7955 Ivystone Ave.S. � � i� _�r-�J___ � ' f Property 1 � h-�- � � � , 8694 80�"St.S. I,-'�� ,'�'�:.._ Property 3 ,�, � �. 8726 80�"St.S. " ., _�. '�. LEGENC', . . . .+_.. � 3� i _ . _ ' = ... = i � 35 _ �r-/r__ _ ._. _ - �. . i . _ .._ .. . . . c0 _ _ _ � £ ... �- .. . __" __ __' __ _. ' srrrx._rs . :`. . . . . . .- . . .- .. . . c5 i , ' _- _ ,._ ..__ ._.. _..._..._; __ . . _ . _ —. _- __..__ .__ ._ .__ -_ _ __.. _ _ . , , . il . . . i '__..._�_ �� �i i . .. I � _ws i - . I r. 55 i F , I. .. .. � . � � � ___J . .. . � . j i . � .� /� '-�� '�� i�.� i �4i ..,�,r.,c'� � � �i ��L_ _�.p,"s� `` ! i i -� . � STR PPIfJ PR SEVT `�l `��I I � ���!`��/J �.. 9F•. � _� I ��` 1l—� v`yySdK4wV � � �� ...-TH N �'E�.FL.�1. h_ \ y ��T1 i !�r i��' ... L`�'`\ ' � I � � ..,�/i� �} � �-� _5.._ ..,��5 �. -5TiIPPNC. � � _"i !� 4/ � � ��r�-�•(� �� 1 1•..._I � T __r t I ,..__� �_ . _� 4� �{�+ '+F +r �xY�;t�_ I I I� . _ ,�- 1 i 1 � --� (�- t '� �ti+--�__� 1���'�t�..,t.lf�+t � j �r-i I - I sean � �. '�, �� � I �....__� f' I f--� � � � 'I 7� ! I�--- -�J� + 'Y I I I �', . ���-� � � P' � F--- � l , ,�. � �J � _ �_� r---j � -i �_.T - , , �� I---7 . � f _ -� �. r � r-T._ _�_ . _ _�._ n f�y I r---j i s � .. � ��" �-1�f � �� ��� � 1� �� �F � ,r r{ 1 r��� . � 4.� � 60LTON S._ M ENIC I NC. CQ iAGt CROVE,A IfJPJESDTR . ,: .�I�..�y T���. � C .W! 9 E g �5 c]5P ' 1E"1TPAA.V C 1_`IT ,r" ...- .•.. .. `.. -.. .�.- � oA`J MCN C�NQTI�JF4TIN6� �-1C11�=� Pavement Condition Index Map BRKW APPRAISALS, INC. PAGE 11 DESCRIPTION OF PROPOSED IMPROVEMENTS Street — Based on the deteriorated condition of the existing paving, 80t'' Street South between Ideal and Jamaica Avenues South will undergo a full pavement removal and replacement with 6 inches of new pavement. Due to the concrete curb and gutter being in generally good condition, spot replacement will be done on an as needed basis; preliminary estimates indicate that approximately 10% will need to be removed and replaced. Traffic signs will be replaced to meet federal retroreflectivity requirements. Also as part of the project, the existing street light system will be evaluated for repair, but since the existing wiring is located within a conduit, it is expected to be in good condition. Trail — The trail's bituminous will be replaced as part of the project, as will all pedestrian ramps. Sanitarv Sewer — Inline repairs will be made where there are cracks in the pipe. In areas where the pipe sags, the pipe will be removed and replaced. In addition, the manhole castings will be salvaged and reinstalled, and the concrete adjusting rings will be replaced with new high density polyethylene adjusting rings. Water Main — As part of the project, broken valve top sections will be removed and replaced. In addition, hydrant barrels will be extended on any hydrant requiring adjustments, and hydrants will be reconditioned via sandblasting and painting. Storm Sewer — For the most part, the project is intended to rehabilitate the streets and not change existing drainage patterns. Where there are cracks and leaking or offset joints, in-line repairs will be made. Structures in poor condition will be replaced. Adjustment rings for manholes will be replaced with high density polyethylene rings; catch basin rings will not be replaced unless the curb adjacent to them is removed, or the ring has failed. The existing casings will be salvaged and reinstalled. Miscellaneous patching, lining, and other repairs will be performed as needed. BRKW APPRAISALS, INC. PAGE 12 HIGHEST AND BEST USE Highest and Best Use - Before Proposed Improvements As Vacant: Shown below is the concluded highest and best use, as vacant, of each property: Property Highest And Best Use, As Vacant L Church of St. Rita - 8694 80th St. S. Low densiry urban residential development 2. Crossroads Church- 7955 Ivystone Ave. S. Low densiry urban residential development 3. Single-Family Home - 9726 80th St. S. One single-family home As Improved: Only the land components of the subject properties are being appraised and therefore the highest and best use, as improved, was not addressed. Highest and Best Use — After Street Improvements After the street improvements, the highest and best use of all of the subject properties remains the same relative to the before improvements position. SPECIAL BENEFIT CONSIDERATIONS AND CONCLUSIONS 1. Before the proposed improvements, 80t'' Street South between Ideal and Jamaica Avenues South is relatively old and deteriorated. It can be anticipated that further deterioration will result in a worsening of problems associated with advanced age, including improper drainage, uneven driving surfaces, increased formation of potholes, etc. 2. The condition and quality of streets and utilities serving and fronting commercial, residential and other properties influences the value, curb appeal and general desirability of the properties. 3. The proposed rehabilitation of 80t'' Street South between Ideal and Jamaica Avenues South, which serves the subject properties, will substantially improve the safety, convenience and general appeal of access into and out of the subject properties. The project will reverse the deteriorating state of the existing street and result in new surfacing. 4. Safety aspects for vehicles traveling on a rehabilitated street are enhanced by the elimination of potholes, cracks, etc. Street icing problems are reduced as water is more efficiently diverted off the roadway surface that could otherwise collect in the deteriorated street areas during frost seasons. BRKW APPRAISALS, INC. PAGE 13 5. The proposed repairs and minor replacements, as necessary, of water main, sanitary sewer and storm sewer utility components in the project area will preempt potential major problems and disruptions in these systems, as well as extend the life of this infrastructure, deferring the need for total replacement to a significantly later point in time. 6. The proposed project improvements in some areas may result in some general benefit to neighborhoods and properties beyond the immediate subject neighborhoods. However, a significant amount of benefit resulting from the project is special, attaching to the properties directly fronting and accessing the rehabilitated street, including two of the three subject properties. 7. The land value increase for each property, on a percentage basis as well as on a per-square-foot basis and a per-front-foot basis, resulting from the street and utility improvements can vary, and in this appraisal they do vary in some cases. This is due to differences among the properties in parcel land value, parcel size, parcel configuration, amount of street frontage, sources of access and/or number of fronting streets. Following are comments on specific circumstances that influence the special benefit resulting from the proposed public improvements: Propertv 1 — 8694 80t'' Street South: This is a church property with a highest and best use of the land, as vacant, for urban single-family residential lot subdivision and development. The property has street frontage on 80t'' Street South, which is proposed for rehabilitation, and is the only means of access for the property. Therefore, because 80t'' Street South is the only means of access, the 80t'' Street South frontage is necessary for development of the site. On the other hand, some internal street construction would be required to support subdivision and development with urban single-family homes. This requirement does tend to dilute the total benefit that otherwise would accrue to the property if the street to be rehabilitated were the only one serving the land as developed. Propertv 2 — 7955 Ivvstone Avenue South: This is a church property with a highest and best use of the land, as vacant, for urban single-family residential lot subdivision and development. The property has frontage on three streets: Jamaica Avenue South on the east, 80t'' Street South on the south and Ivystone Avenue South on the west. However, only one of the streets, Ivystone Avenue South, provides direct access to the property. If developed to its highest and best use with residential urban lots, it is highly likely that only Ivystone Avenue would provide direct access into the subdivision as well. Ivystone Avenue is in relatively good condition and is not in need of rehabilitation at this time. In our opinion, the Property 2 land would have no difference, before and after the improvements, relative to the land value if this site were located elsewhere in the neighborhood with frontage on ivystone Avenue only, and no frontage on 80t'' Street or Jamaica Avenue, due to its residential rather than commercial-oriented nature. Therefore, because 80t'' Street South does not provide a means of access to the property, and its frontage is not necessary for development of the site, in our opinion, the rehabilitation of the street does not result in a special benefit to the subject property. BRKW APPRAISALS, INC. PAGE 14 SPECIAL BENEFIT ANALYSIS PROCESS Arriving at an opinion of special value benefits accruing to each of the subject properties as a result of completion of the City of Cottage Grove 2016 Pavement Management Project is accomplished by developing "before improvements" and "after improvements" opinions of market value for each of the subject land parcels. The improvements on the land are concluded to have the same value contributions to the total property value in both the "before and after" improvements positions. Consequently, the extent of special value benefits from the public improvements project can be reliably derived by analyzing the value of the land only, by processing the Direct Sales Comparison Approach. The Direct Sales Comparison Approach was applied in valuing Property 3. This approach involves the comparison of recently sold land parcels similar to the subject properties. The comparable sale prices are analyzed and adjustments are made for value-related differences relative to the subject properties. The result of the analysis and adjustments is the generation of a range of value indications for the subject land. The strengths and weaknesses of each comparable sale and its value indication are evaluated before arriving at a final value opinion for the subject land parcel. The Development Cost Approach was applied in valuing Property 1, which has a highest and best use for urban residential lot subdivision and development. The Development Cost Approach addresses the net present value of land that can be subdivided and developed into multiple parcels, by deducting from total retail lot value potential the costs of development and profit requirements of the developer. Retained in the appraisers' office work file for this assignment are market data, notes and other supporting information pertaining to the processing of the Direct Sales Comparison Approach and the Development Cost Approach in a before-and-after land value analysis for the subject property. Shown on the following page is the result of these analyses, presenting the opinion of the special benefit values as of October 26, 2015 resulting from the City of Cottage Grove 2016 Pavement Management Project. BRKW APPRAISALS, INC. PAGE 15 City of Cottage Grove 2016 Pavement Management Project Project Area 3 - 80th Street South, Between Ideal and Jamaica Avenues South Value Benefit Conclusions Address Tax Parcel LD. No. Opinion of Special Benefit 1. 8694 80th Street South 09-027-21-43-0004 $16,500 09-027-21-43-0005 $20,200 Total Property $36,700 2. 7955 Ivystone Avenue South 09-027-21-44-0086 $0 3. 8726 80th Street South 09-027-21-43-0001 $6,100 The above opinions of special benefits reflect increases in property market values resulting from the proposed improvements. The market values are based on estimated property exposure times of 6 to 12 months. BRKW APPRAISALS, INC. PAGE 16 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. Neither our engagement to make this appraisal (or any future appraisals for this client), nor any compensation, therefore, are 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 estimate, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of the appraisal. 3. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 4. We have no present or contemplated future interest in the real estate that is the subject of this appraisal report. 5. We 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 our 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 our 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 provided significant professional assistance to the person(s) signing this certification. 10. We 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. As of the date of this report, Paul J. Gleason has completed the requirements of the continuing education program for Designated Members of the Appraisal Institute. 13. As of the date of this report, Mark A. Warren has completed the Standards and Ethics Education Requirements for Candidates of the Appraisal Institute. 14. The by-laws and regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. 15. 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/she 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. 16. We have the knowledge and experience to complete this appraisal in a competent manner. We have not been sued by a regulatory agency or financial institution for fraud or negligence involving an appraisal report. 17. No services as an appraiser or in any other capacity have been performed regarding the property that is the subject of the report within the three year period immediately preceding �r�cepta�ice of this assignment. f � � t �,��� � �������- . � . i < �'a' r °` �` � `�° � . •:�, ,_ Paul J. Glea�on, �AI �� � ark A. Warren Certified General Real Property Appraiser Certified General Real Property Appraiser Minnesota License #4003073 Minnesota License #20415370 BRKW APPRAISALS, INC. PAGE 17 PROFESSIONAL QUALIFICATIONS PAUL J. GLEASON, MAI PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS MAI Member — The Appraisal Institute APPRAISER 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 EXPERIENCE Principal — BRKW Appraisals, Inc., St. Paul, MN, 2007-present Staff Appraiser — BRKW Appraisals, Inc., St. Paul, MN, 1993-2006 Appraiser — Certified Appraisers, Excelsior, MN, 1993 Appraiser — Stiles Appraisals, Inc., Plymouth, MN, 1992-1993 Expert Witness Testimony — For real estate litigation in numerous condemnation commissioners' hearings, arbitration hearings and in District Court Presenter/Speaker at Minnesota Department of Transportation's 2014 Right Of Way Professionals Workshop, Brainerd, MN Presenter/Speaker at Minnesota Department of Transportation's 2012 Right Of Way Professionals Workshop, Brainerd, MN Presenter/Speaker at Minnesota Department of Transportation's 2010 Right Of Way Professionals Workshop, Breezy Point, MN Appraisal assignments have been completed for the following purposes: Condemnation — Partial and total acquisitions, in fee title and in easement form Property Damage Claims Litigation Special Benefits Valuation Mortgage Financing General Valuation Needs — Purchase negotiations, listing prices, internal family or partnership transactions, estate planning/taxes, marriage dissolution, etc. BRKW APPRAISALS, INC. PAGE 18 Professional Qualifications — Paul J. Gleason, MAI Page 2 PROPERTY TYPES APPRAISED Land — Commercial, industrial, residential acreage, agricultural, finished lots Commercial Buildings — Office, industrial, retail, medical office, auto dealerships Apartment Buildings/Complexes 1-4 Family Residential — Single-family home, townhome, condo, duplex, fourplex PROFESSIONAL REAL ESTATE STUDIES Appraisal Institute courses, including all required for MAI designation: Course 110: Appraisal Principles (examination passed) Course 120: Appraisal Procedures (examination passed) Course 210: Residential Case Study Course 310: Basic Income Capitalization Course 410: National Uniform Standards of Professional Appraisal Practice Course 420: Business Practices and Ethics Course 510: Advanced Income Capitalization Course 520: Highest and Best Use and Market Analysis Course 530: Advanced Sales Comparison and Cost Approaches Course 540: Report Writing and Valuation Analysis Course 550: Advanced Applications Numerous additional classes and seminars for appraisal pre-license and continuing education requirements, on an ongoing basis, from Appraisal Institute and other sources CLIENTS INCLUDE Cities of Afton, Austin, Apple Valley, Cambridge, Cottage Grove, Eagan, Lino Lakes, Maplewood, Oak Park Heights, Owatonna, Prior Lake, Rochester, Savage, Wabasha and Woodbury Anchor Bank Associated Bank BMO Harris Bank N.A. Bremer Bank Bridgewater Bank Dougherty, Molenda, Solfest, Hills & Bauer, P.A. Eckberg, Lammers, Briggs, Wolff Greene Espel PLLP & Vierling, PLLP Minnesota Bank & Trust Minnesota Dept. of Transportation Spire Federal Credit Union US Bank And various other individuals, attorneys, communities and counties Revised: July 1, 2015 BRKW APPRAISALS, INC. PAGE 19 PROFESSIONAL QUALIFICATIONS MARK A. WARREN PROFESSIONAL MEMBERSHIPS AND ASSOCIATIONS Candidate for Designation — The Appraisal Institute APPRAISER LICENSE Certified General Real Property Appraiser - State of Minnesota - License #20415370 EDUCATION University of Minnesota, Minneapolis, Minnesota Bachelor of Arts Degree — Religious Studies Major, 2003 PROFESSIONAL EXPERIENCE July 2009 to Present: Appraiser — BRKW Appraisals, Inc., St. Paul, MN October 2005 to July 2009: Appraiser — The Appraisal Group, Maple Grove, MN June 2003 to October 2005: Appraiser — Elmquist-Warren Appraisals, St. Paul, MN Expert witness testimony in commissioners' hearings for condemnation cases PROPERTY TYPES APPRAISED Apartment Buildings Medical Clinics Restaurants Auto Service Centers Mini-Storage Buildings Retail Stores Banks Mixed Use Properties Shopping Centers Churches Mobile Home Parks Single Family Homes Condos & Townhomes Office Buildings Special Purpose Convenience Stores Office-Showrooms R & D Buildings Gas Stations Office-Warehouses Vacant Land Manufacturing Buildings Recreational Facilities BRKW APPRAISALS, INC. PAGE 20 Professional Qualifications — Mark A. Warren Page 2 PROFESSIONAL REAL ESTATE STUDIES Basic Income Capitalization, Appraisal Institute, 2005 Advanced Sales Comparison & Cost Approaches, Appraisal Institute, 2006 Report Writing & Valuation Analysis, Appraisal Institute, 2006 Advanced Income Capitalization, Appraisal Institute, 2007 Highest & Best Use & Market Analysis, Appraisal Institute, 2007 National USPAP Update Course, Appraisal Institute, 2007 & 2009 Associates Guidance Leadership Program, Appraisal Institute, 2009 The New Residential Market Conditions Form, Appraisal Institute, 2009 Condemnation Appraising: Principles & Applications, Appraisal Institute, 2009 Fundamentals of Separating Real Property, Personal Property, and Intangible Business Assets, Appraisal Institute, 2012 Revised: Julv 1, 2015 BRKW APPRAISALS, INC. PAGE 21 COMPANY PROFILE BRKW APPRAISALS,INC. 1600 University Avenue, Suite 314 St. Paul, Minnesota 55104 Phone: 651-646-6114 Fax: 651 646-8086 email: brkw(a�brkw.com Website: www.brkw.com BRKW Appraisals, Inc. (formerly known as Bettendorf Rohrer Knoche Wall, Inc.) is a full service professional real estate appraisal company formed in 1991. The three principals have more than 70 years of combined experience in the valuation of a wide variety of real estate. Located in the Midway area of St. Paul, we concentrate on the appraisal of real estate primarily in the Twin Cities Metropolitan Area, as well as outlying communities in Minnesota. Our extensive professional training and experience enable us to provide the expertise necessary for consistently reliable real estate valuation. Our appraisal reports are confidential documents completed in accordance with all current standards of professional appraisal practice and ethics. All of the appraisers employed by the company have the Certified General Real Property Appraiser license from the State of Minnesota. Our appraisers stay current with advances in appraisal techniques and the changing real estate market through continuing education programs. At BRKW Appraisals, Inc. we strive to build and maintain long-lasting relationships with our clients. Our goal is to provide high-quality professional real estate valuation services in a timely manner that is consistent with the needs of our clients. Appraisal & Consultin� Services Propertv Tvnes Real Estate Appraisals Commercial Properties Mortgage Financing Appraisals Industrial Properties Condemnation/Litigation Appraisals Multiple Family Residential Review Appraisals Single Family Residential Real Estate Tax Abatements Subdivision Analysis Special Benefits Analysis Vacant Land Parcels Expert Witness Testimony Special Purpose Properties REO Portfolio Valuation Gas Station / Convenience Stores Feasibility Studies Schools and Churches Market Surveys Recreation Facilities Partial Interest Valuations Railroad Corridors BRKW APPRAISALS, INC. PAGE 22 APPRAISAL STAFF Marc E. Knoche, MAI — Principal Marc has been an appraiser since 1982, and has the MAI designation of the Appraisal Institute. He specializes in commercial, industrial, multiple family, residential, vacant land, and special purpose property appraisals. Marc has done numerous condemnation acquisition appraisals and special benefit studies involving a wide variety of property types. Marc has extensive litigation / expert witness experience and has served as a court appointed commissioner. He is a Past President of the Metro/Minnesota Chapter of the Appraisal Institute (1992 & 1993). A graduate of Macalester College, Marc is licensed by the State of Minnesota as a Certified General Real Property Appraiser. Paul J. Gleason, MAI — Principal and Managing Partner Paul has been appraising real estate since 1992, and has the MAI designation of the Appraisal Institute. He has in-depth experience in the valuation of numerous real estate property types. Over the years, he has developed special expertise in the appraisal of land, and in eminent domain as well as special benefits valuations. Paul is a graduate of the University of Wisconsin at La Crosse and licensed as a Certified General Real Property Appraiser. Sean P. Butts — Principal Sean began appraising in 1992, specializing in commercial, industrial, multiple family, residential and recreational property (e.g., golf courses), and joined our firm in 1997. After leaving BRKW Appraisals in 2006 for CSM Corporation, where he spent six years in asset valuation and management, Sean returned to BRKW in 2012 to resume independent fee appraisal work. Sean is a graduate of St. Cloud State University with a Business degree with emphasis on Real Estate Appraising. Licensed as a Certified General Real Property Appraiser and a Candidate for Designation of the Appraisal Institute. Mark A. Warren — Associate Mark is a third-generation real property appraiser and has been appraising since 2003. Types of property appraised include office, industrial, hoteUmotel, retail/commercial, and other special use properties. Mark is a graduate of the University of Minnesota, is a Candidate for Designation of the Appraisal Institute, and is licensed as a Certified General Real Property Appraiser. BRKW APPRAISALS, INC. PAGE 23 Joseph P. Deutsch — Associate Joe has been appraising real estate since 1998, specializing in commercial properties. Types of property appraised include multi-family, industrial, office, retail, and special purpose properties. Joe worked for two years as a city building inspector prior to becoming an appraiser. Joe is a graduate of the University of Minnesota majoring in accounting and is a Certified General Real Property Appraiser as well as a Candidate for Designation of the Appraisal Institute. Terry A. Ward — Associate Terry has over 20 years of experience in business management, operations and marketing. Since 2002, she began applying this experience to commercial real estate appraising. Types of properties appraised include office, industrial, hoteUmotel, retail/commercial, and other special use properties. She has a degree in Business Management from St. Cloud State University and a Mini Masters Degree in Real Estate Appraising from St. Thomas University. Terry is a Certified General Real Property Appraiser and a Practicing Affiliate of the Appraisal Institute. Michael J. Bettendorf, MAI — Founding Principal (Semi-Retired) Active as an appraiser since 1971, Michael is one of the three founding principals of BRKW Appraisals, Inc. Though he retired as a principal of the firm at the end of 2014, he continues to appraise real estate on a part-time, semi-retired basis, completing select assignments for clients on an ad-hoc basis. Michael has the MAI designation of the Appraisal Institute and specializes in commercial, industrial, multiple family, residential, and special purpose property appraisals with extensive litigation experience. Court appointed Commissioner in Ramsey County, past President of Minnesota Chapter A.LR.E.A. (1987). Michael is a graduate of St. John's University. Licensed as a Certified General Real Property Appraiser. William E. Petersen — Associate Bill has been an appraiser since 1986 specializing in the valuation of commercial, industrial, multi-family, office and special purpose properties. He is a graduate of the University of Minnesota and practiced dentistry from 1970-1986 before becoming licensed as a Certified General Real Property Appraiser. Bill, who worked full-time at BRKW Appraisals between 1996 and 2012, currently completes appraisals for the firm on a part-time basis. BRKW APPRAISALS, INC. PAGE 24