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Home My Public Portal About2007- Appraisal Report.tifReport No. 07021 APPRAISAL REPORT PREPARED FOR VILLAGE OF KEY BISCAYNE PROPERTY APPRAISED VACANT LAND NORTHEAST CORNER OF W. ENID DRIVE AND FERNWOOD KEY BISCAYNE, FLORIDA DATE OF APPRAISAL May 14th, 2007 Appraiser Robert E. Gallaher, MAI CRE TABLE OF CONTENTS Certificate of Appraisal 1-2 Summary of Important Data and Conclusions 3 Location Maps 4 Preface to Report 5 Subject Pictures 6 Purpose of Appraisal 7 Extraordinary Assumptions 7 Hypothetical Conditions 7 Intended Use 8 Intended User of Report 8 Effective Date of Appraisal 8 Interest Appraised 8 Legal Description 8 Location 8 Market Area 8-9 Accessibility 9 Street Improvements 9 Present Use 9 Zoning 10 Land Improvements 11 Building Improvements 11 Assessed Value and Taxes 11 Ownership 11 Listing of Subject 11 Shape and Size of Site 12-13 Comprehensive Master Plan 13 Utilities 13 Topography 13 Flood Zone 13 Environmental Consideration 13 Highest and Best Use 14-15 Valuation 16-25 Reconciliation 25 Market Value 25 Appendixes Appendix I Assumptions and Limiting Conditions Appendix II Land Sales Summaries Appendix III Appraiser's Qualifications GALLAHER & BIRCH, INC. Real Estate Appraisers and Consultants CERTIFICATE OF APPRAISAL APPRAISAL REPORT NO. 07021 The undersigned appraiser hereby certifies that upon application by RANDY WHITE, FINANCE DIRECTOR on behalf of THE VILLAGE OF KEY BISCAYNE., that he has made an investigation and analysis of the property legally described as follows: Tract A, less the East 179 feet thereof, KEY BISCAYNE ESTATES (PB 50/61) The undersigned appraiser further certifies that, to the best of his knowledge and belief: The statements of fact contained in the report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are his personal, impartial, and unbiased professional analyses, opinions, and conclusions. He has no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. He has no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. His engagement in this assignment was not contingent upon developing or reporting predetermined results. His compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. His analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. He has made a personal inspection of the property that is the subject of this report. The analyses, opinions, and conclusions were developed and this report prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. CERTIFICATE PAGE 1 OF 2 7400 SW 50,,' Terrace . Suite 201 . Miami, Florida 33155 • Phone (305) 663-1140 • Fax (305) 663-1130 CERTIFICATION — APPRAISAL REPORT NO. 07021 CONTINUED The use of the report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives and by those of the Florida Real Estate Appraisal Board. As of the date of this report, he has completed the continuing education requirements for the State of Florida and for the Appraisal Institute. In my opinion, the market value of the fee simple interest in the subject property, as of May 14, 2007 was: FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) Respec fully_ submitted, ROBERT E. GAL ER, MAI CRE State Certified General Real Estate Appraiser Certificate No. RZ98 DATED: MAY 21, 2007 CERTIFICATE PAGE 2 OF 2 GALLAHER & BIRCH, INC 3 SUMMARY OF IMPORTANT DATA AND CONCLUSIONS Appraisal Prepared For: Report Format: Interest Appraised: Purpose of Appraisal: Intended Use of Appraisal: Effective Date of Value: Date of Inspection: Date of Report: Legal Description Land Size: Improvements: Zoning: Highest and Best Use: Market Value: Appraisal # Village of Key Biscayne Summary appraisal report Fee simple title Estimate market value of property For potential acquisition May 14, 2007 May 14, 2007 May 21, 2007 Tract A, less the East 179 feet thereof, KEY BISCAYNE ESTATES (PB 50/61) 21,966 square feet Surface parking lot GU, Government Use Appraised as 0 or C-1 Office Development $4,500,000 07021 4 A Dade • ..,,.ar n e Richmond South Miami Height Pennsuc Medley Dora! Co pa-LocKa SSF. \Allege the ?Hann Siliggs irgini�a ai ;n 948 - '*L`uiilam •0lympia Heights Soak y Heights 2 Bay Hai boa, Islands ' 1A *Biscayne Park .Swfslde ndlarriCreek \Allege g •Miami ''Shores Haring PadA 'II octal tlorth� 0P. • Fut zP lifmtung. Pad ?1Q +Mercy Hospital •4C oeusa. Drcae DayFivm P. .South Mranll unnse Harbor h M- Hospital n i "-Pales ow. eKNs Bay Heights idler Subject CedleyRidge .fishes Os Heeoe CcnaSy Pad Altos Del Mar Pxk iketh Mae P. Village roe Country Club botch P. 1 Al Miami Beach 0 L»mx PwM �•&nbh belch Pad South Fhore Pail 4V 5oua Beach CoatPad aM,m F'ad Key Biscayne ape /nal& State P. err e, Pork est Pont 6 0Nµ1000 ,J;ey Biscayne 0,OOpGREST EAST HAR BOR E Key Biscayne W HEATHER a r Z. Q XEy Biscayne Gallen BEECHWOOD Zi D s GALEN '• ET O m 4 UNRISE ,Harbor '� E ENID F3lmr.ae?hrda- •Southwest Ports r x O 0 � O 'Zr 6LAS74 ,p �4 Satk E WOOD O EA VIEW IFEE CAPS FORMA 0 O 01909blwm. AloetM., GALLAHER & BIRCH, INC 5 PREFACE TO REPORT The subject of this appraisal report is a parcel of land adjacent to the south of the Key Biscayne City Hall. The land is improved with typical parking lot improvements; paving, drainage and landscaping and the lot provides parking for the City Hall. The appraisal assignment is to provide a current market value estimate of the fee simple interest in the property as is. The intended use of the appraisal is to establish a price for a potential acquisition from the current owner — Miami -Dade County. Valuation of the property required an inspection of the site and its environs; a review of governmental regulations restricting its use; and an investigation for market data, primarily sales of property with similar utility. Sales data was developed from available data sources that summarize transactions recorded in the public records. The property is described in detail in the following text, followed by its valuation. The report is presented in a summary report format as defined under the Standards Section 2-2(b) of the Uniform Standards of Professional Appraisal Practice. 6 View of the property looking northeasterly from the intersection 7 PURPOSE OF APPRAISAL The purpose of the appraisal is to provide a market value estimate of the fee simple interest in the property as of the appraisal date. For purposes of this report, market value is defined as follows: 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 and 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: 1. buyer and seller are typically motivated; 2. both parities are well informed or well advised, and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in cash in United States dollars or in terms of financial arrangements comparable thereto; and 5. 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.' The forgoing definitions of and the conclusions as to market value in this report refer to gross nominal values rather than net present values to the current owner and are based on market data from the time of the effective appraisal date. There are no discounts for the cost of selling the property, for the time to sell, or for carrying costs during a marketing period. EXTRAORDINARY ASSUMPTIONS There are no extraordinary assumptions assumed for this analysis. HYPOTHETICAL CONDITIONS There are no hypothetical conditions assumed in this analysis. 1 The Aooraisal of Real Estate 12th Edition; Appraisal Institute 8 INTENDED USE OF REPORT The intended use of this appraisal report is to establish the value of the property for a potential acquisition from the current owner — Miami -Dade County. INTENDED USER OF REPORT This report is intended for use by the Village of Key Biscayne, its officials and staff employees in establishing a market price. EFFECTIVE DATE OF APPRAISAL May 14, 2007 INTEREST APPRAISED Fee Simple Title LEGAL DESCRIPTION Tract A, less the East 179 feet thereof, KEY BISCAYNE ESTATES, according to the plat thereof as recorded in Plat Book 50 at page 61 of the Public Records of Miami -Dade County, Florida LOCATION The site is located at the northeast corner of West Enid Drive and Fernwood Drive, Key Biscayne, Florida. MARKET AREA The subject is located along the central commercial corridor of the Village of Key Biscayne. The community is located on a barrier island about seven miles southeast of the City of Miami, accessible by causeway. The Village has an area of about 1.25 square miles with a reported population of around 10,000 people. The Future Land Use Map designates one commercial corridor, about a mile long and 500 feet wide. This corridor lies along the west side of Crandon Boulevard from Harbor Drive to Mashta Drive. The subject is located towards the south end of this commercial corridor. Low -density residential areas are located west of the commercial corridor to the west shoreline of the Village. Medium and high -density residential areas are located east of the commercial corridor and extend to the east shoreline of the Village. 9 MARKET AREA - continued An extensive description of the Village has not been included in this report. The intended users of this document, being the Village itself has sufficient awareness of the geographic, social and political influences of its community to make comment here unnecessary. ACCESSIBILITY The subject is located at the northeast corner of the intersection of West Enid Drive and Fernwood Drive, one half block west of Crandon Boulevard, the main traffic corridor of the Village. The Rickenbacker tolled Causeway connects the Village of Key Biscayne with Virginia Key and Miami. The toll plaza is located at about the intersection of Brickell Avenue and Miami's SW 25th Street. The subject site is located about 5 miles from the Miami Rickenbacker toll plaza. Crandon Boulevard is the continuation of Rickenbacker Causeway into Key Biscayne. The boulevard runs North -South through the Village. West Enid Drive is a local connector street, running from Crandon Boulevard west to Harbor Drive, but interrupted by the elementary and middle schools, which are one block west of Fernwood. Fernwood Drive is a secondary north/south street forming the westerly boundary of the commercial corridor of the Village and running from the north limit of the Village, south to West Mashta Drive. STREET IMPROVEMENTS West Enid Drive has a dedicated width of 50 feet according to available plat books. It is paved with asphalt with one traffic lane in each direction and has sidewalks, curbs and gutters adjacent to the subject property, but not west of Fernwood Drive. There is on -street parking adjacent to the subject as well. Fernwood Drive is also dedicated to 50 feet, with asphalt paving for two traffic lanes. It too has sidewalks, curbs and gutters, but only along the subject's (the easterly) side of the street. PRESENT USE The site is improved with paving, drainage and landscaping and is used as a surface parking lot. 10 ZONING The property is zoned by Key Biscayne as "GU — Government Use District". The purpose of the district is to "permit land owned by a governmental entity to be used for any public purpose." As such, the specific permitted uses are limited to governmental buildings such as schools, post offices, community centers, etc. Building limitations (setbacks, height limits, density, etc) are established by proposed site plan for approval by the Village Council. Upon the sale of GU land to a non -governmental entity, the zoning designation is to be changed in accordance with the zoning code. Most of the land area between Crandon Boulevard and Fernwood Drive that is not devoted to governmental use or the park, is zoned "C-1, Low Intensity Commercial District" or "0 — Office District". The C-1 district permits offices, personal service uses, retail stores and restaurants. Development limitations are as follows: Setbacks Front - Front above 1St floor - Side, interior - Side facing street - Rear - Maximum height - Maximum FAR - Maximum lot coverage - Minimum lot area - 10 feet 20 feet 20 feet 10 feet 25 feet 35 feet 0.50, plus bonuses 40% 40,000 square feet The 0 district permits office use only, with slightly different development regulations: Setbacks Front - Front above 1st floor - Side, interior - Side facing street - Rear - Maximum height - Maximum FAR - Maximum lot coverage - Minimum lot area - 20 feet 20 feet 10 feet 10 feet 20 feet 35 feet 0.50, plus bonuses 40% 12,500 square feet 11 LAND IMPROVEMENTS The property was improved with various land improvements at the time of our inspection. These improvements are all related to its use as a surface parking lot and include the following: • Asphalt paving, sealed and striped for parking • Drainage system • Landscaping BUILDING IMPROVEMENTS None ASSESSED VALUE AND TAXES The 2006 tax data is as follows: Folio # - 24-5205-001-0020 Land area — 22,100 square feet Assessed value — Land - $1,768,000 Improvements - + 79,235 Total assessment - $1,847,235 Taxes - $35,282 The tax millage rate is 19.0998. There are no actual taxes paid for the property, it being owned by the taxing entity. The valuation techniques employed by the Miami -Dade County Property Appraiser's office, while appropriate for the mass appraisal process and sufficiently accurate to establish the overall tax base for the county, are not adequately focused to be indicative of the market value of a single parcel of real estate. Therefore, the above -assessed value is not considered an indication of the market value of the subject. OWNERSHIP According to county tax records, the property is held in the name of Miami - Dade County Water and Sewer Department. LISTING OF SUBJECT As of the appraisal date, the property was not listed for sale on the open market. GALLAHER & BIRCH INC 12 Digital Orthophotography - 2006 GALLAHER & BIRCH INC 13 SHAPE AND SIZE OF SITE The site is rectangular in shape with the following dimensions (based on available plats). North boundary - South boundary — frontage on Enid Drive - East boundary - West boundary — frontage on Fernwood Dr. - 221 feet 221 feet 100 feet 100 feet The southwest corner of the site is a 25 -foot radius corner Total site area — 21,966 square feet or 0.50 acres COMPREHENSIVE MASTER PLAN The subject property is shown on the Village's Future Land Use Map as Commercial. UTILITIES The following utilities were available to the property as of the appraisal date: Electric - Water - Sewer - TOPOGRAPHY Florida Power and Light Miami Dade Water and Sewer Miami Dade Water and Sewer The site is generally level and at grade with the adjacent public streets. The tract has been used for parking and is graded and appeared to be well compacted. ENVIRONMENTAL CONSIDERATION While it is beyond the appraiser's expertise to determine the presence or extent of any environmental contamination at this property, it is incumbent upon us to comment as to any visible signs or sources of potential contamination. We noted no evidence of any toxic wastes or environmental contamination at the time of our inspection. If any environmental contamination were to be discovered in the future, it could materially affect the property's value. 14 HIGHEST AND BEST USE ANALYSIS According to the 12th Edition of The Appraisal of Real Estate, a publication sponsored by the Appraisal Institute, "highest and best use" may be defined as: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest land value. The highest and best use of a specific property is determined by the competitive forces within the specific market of which the property is a part. Consequently, the analysis of highest and best use is an economic study, one in which the available possible, legal and feasible uses must be compared. "Highest and Best Use", as defined, requires that any potential use be legally permissible, physically possible, financially feasible and provide the maximum return to the owner. The analysis is required both for the site alone, as though it were vacant and for the property as actually improved as of the appraisal date when improvements are present. Legally Permissible Legally permissible uses are usually determined according to the regulations and restrictions set forth in the prevailing zoning code. However, in this case, the property is specifically zoned for governmental use and cannot be used for any economically viable or quantifiable use. For valuation purposes, we have to assume a zoning classification that would permit a more typical, economic use, one for which value can be measured based on transactions in the market. As we described earlier under Zoning, most of the area along the west side of Crandon Boulevard is zoned either C-1, Commercial or 0, Office. Based on the location of the site and the minimum area requirements of the code, we have assumed that, if the property were no longer needed by the government, it could be rezoned to 0 - Office Use. The property has residential uses across the street to the west. Office uses are often used as a transition between retail areas and residential areas, with low -density office buildings having a design that is more compatible with a transition zone; more of a residential appearance. Another limiting factor is that the subject site does not meet the minimum lot size requirement of the C-1 district. The code requires 40,000 square feet and there are only 21,966 square feet. 15 HIGHEST AND BEST USE ANALYSIS - continued Therefore, it is our opinion that, if the subject were no longer needed by any governmental entity, there is a reasonable probability that the subject site would be rezoned to 0. Physically Possible The site has sufficient area to accommodate an office building. Based on the size of the site and the provisions of the zoning code regulations, the property could be improved with an office building of no more than 10,983 square feet. 21,966 square feet of land x 0.5 FAR = 10,983 square feet of building With available bonuses, the FAR might be increased to 0.525. 21,966 square feet of land x 0.525 FAR = 11,532 square feet Financially Feasible There is a very limited supply of office and retail space on Key Biscayne and virtually no opportunity for additional development. The highly affluent nature of the area population combined with the potential for some additional development east of Crandon Boulevard, indicates high probability of demand for additional office space within the community. Therefore development of offices at this location is considered financially feasible. Maximally Productive The maximally productive use of this site is to develop it with a maximum of 10,983 square feet of offices. Conclusion The highest and best use of this site is to develop it with a maximum of 10,983 square feet of offices. GALLAHER & BIRCH, INC le Lake 932 Carol City B17 Sco, Lake __ __Bum -7Pa Lake O n at=l.ocka n -Tan Villa anminini aura r — - -Silver Blue Pinewood Park* Iwo; La: Cravero Lake Lake Arc Edison Glenwood Heigh b ML1q.11.:. se P�1 parting Lake j.1856 t'ktiwll Lake {�US Land Sale ti - 17305 N Bad; Road "lanle Biscayne Glens nning 14 L)nnrlu Land Sale S - 1 43 West Av enue 934 t ,y s and ' 4 v =lie Meade, land Bird KeyNorth Bay Vi11 3ton Park .111ornntstd? Park 1 Lake acocrctal Waterway Hn�tii.�ar' P.rka 1• r�yn'- ; Miami Rive 5 • .r. P� o em Pi% \3wi►�-�� Land Sak7 - 16S3 West Avenu4 I-iwru!es sorr P 41 Cary r t Pat3'. Js D otJ t-iv;i 'ry 4c,ii;'nari • M numenl t z rise Btscat. e Wat 1 5 ke Lake '. f zin Channel n Libra Ac =f, 4� :oulh Beach Park Miami Fislurntans C'/rannel r)s:cn P31I. oNort Size 'Miami Canal Xing Land Sale 3 - 1'1200 ('oila -c enue 'nci - a Island %,tzOieta Land Sale 4 - 17146 Collins A‘enue� Land Sale 5 - 5Ot) Sunni; leia B1v d eysrane eBisca Park Indian Creek Lake Paint Lake •Mi,ni hores Tatum W ortai tap Lake Ware! Nomranai Shoie>. rding Park Lake Beltuar. IV"r matuly geri$t Park -- �, rth Bay Park lison Island e it doter Inlet ,Bal Harbour ay ' arbor Islands rfside ncoast Collins Park ami Beach ricks!! Hammock ',fts'aya County Part Cites P it o ,,,Deering (-haunt,/ Fair Isle tat Eaj Front Part. Owner Ket Channel Coconut Grove Fisher Island, Gornrnnient Cut )1n-rs Cut Lamar Lake AV ran, a Be:1cl i C ount7 P36 Bc . r Cut Crartclon f _ nrna T'ow -ifat Channel West Pi Land Sai,: 2 - 24 r_ ianden DI, d sir, Gables rrar<-,„at Land Sal,: I - 580 Crandon Bl' d ) Ln o enar1'u I.a;o t rt7•gt7 jjlr}Or. Subject f "r t Cr ey Biscayne LAND SALES MAP 17 VALUATION There are several generally accepted approaches to the valuation of vacant land. The most common and easiest to understand is the sales comparison approach in which recent sales of similar sites are compared to the subject and their respective prices used to indicate a value for the subject. Other methods include allocation, extraction, residual, ground rent capitalization and subdivision analysis. The viability and accuracy of the sales analysis is dependent on the availability of recent sales of reasonably similar properties. There is very limited commercial land area in the Village of Key Biscayne. For its demographics and potential demand, it is the most limited commercial district of any of the municipalities in Miami -Dade County. Consequently there are few transactions in the Village for vacant land or for improved properties where the buildings are subsequently razed. We were able to find two relatively recent sales of sites within the Village that are considered comparable to the subject site. Due to this limited number of market transactions, we expanded our investigation to other high demand, limited supply areas; specifically along the barrier islands in Miami - Dade County. We also checked for sales in Coral Gables, South Miami, Pinecrest and Aventura. We found some relevant data in the Cities of Miami Beach and Sunny Isles Beach. The results of our investigations are shown on the following schedule. Sale Date Location Land Ft2 Zoning* Sale $ $/Ft2 Subject 1 Apr -03 2 Feb -07 3 Aug -06 4 Jan -07 5 Feb -07 6 Apr -07 7 Jul -06 8 Mar -05 Enid Dr at Fernwood 580 Crandon Blvd 24 Crandon Blvd 19200 Collins Ave, S.Isles 17146 Collins Ave, S.Isles 500 Sunny Isles Blvd 17395 N. Bay Rd, S.Isles 1683 West Ave, MBch 1843 West Ave, MBch 21,296 Comm'l 17,766 Comm'l $1,900,000$106.95 48,075 Comm'l 10,250,000 213.21 166,351 Comm'l 19,600,000 117.82 40,200 Comm'l 11,000,000 273.63 20,000 Comm' I 3,000,000 150.00 16,000 Resd' I 6,600,000 119.00 22,500 Comm'l 6,600,000 293.33 16,000 Comm'I 2,200,000 137.50 *Assumed zoning for valuation Sale 1 is located adjacent to the east of the subject site. This property sold in 2003 and is now being improved with a small medical office building for use by its owners. 18 VALUATION- continued Sale 2 is at the northerly entrance to the Village and is currently improved with an older commercial building, which will be demolished. The property will reportedly be improved with a retail store building. Sales 3 through 6 are located in Sunny Isles Beach. Sales 3 and 5 were purchased by the City and Sale 4 was acquired by an owner of other property adjoining the sale site. Sale 6 is a commercial improved site within a high density residential environment. Again the prices are substantially different. Sale 3 is the northwest corner of Collins Avenue and the end of the William Lehman Causeway. The City purchased the property for improvement with a park. Acquiring the site, however, committed the City to provide 400 parking spaces for an ocean front hotel located across the street. The cost of structure parking (including an additional 100 spaces for City use) is estimated at $8 to $9 million. Sale 4 is a commercial site that is improved with one-story retail stores. The property was acquired by the owner of adjacent lands. The assembled site has reportedly been submitted to the City for approval of a 15 -story mixed use project of commercial space and apartments. Sale 5 is a waterfront site adjacent to Sunny Isles Boulevard, but with circuitous access (the site is effectively under the bridge over the Intracoastal Waterway). Again, as with Sale 3, the City of Sunny Isles Beach bought the property for use as open space, but will retain some docking facilities on the property for future use as a water taxi landing site. Tax data indicates a larger land area than shown on the schedule; but only about 20,000 square feet of the site is upland. Sale 6 is a commercial property located within the Winston Towers apartment development. Winston Towers is a complex of hundreds of apartments stretching from Collins Avenue to the Intracoastal Waterway. Buried within that complex is Sale 6, a one-story commercial building, subdivided into retail stores. The site is reportedly deed restricted for only uses that benefit the residents of Winston Towers, so it is required to maintain a commercial or other service type use. Based on the land area, the price is equal to $119 per square foot. Based on the size of the building, the price is equal to $242 per foot. Sale 7 and 8 are located in the City of Miami Beach. Sale 3 is on a commercial thoroughfare, at the corner of 17th Street and West Avenue and Sale 5 has an interior location in the former industrial area north of Dade Boulevard. The two properties show substantially different unit prices, which will be discussed below. 19 VALUATION- continued Elements of Comparison According to The Appraisal of Real Estate (twelfth edition), published by the Appraisal Institute, "Elements of comparison are the characteristics of properties that cause the prices paid for real estate to vary. Adjustments are made to the price of each comparable property to make the comparable equal to the subject on the effective date of the value estimate." The basic elements of comparison are as follows. Real property rights conveyed In order to properly relate the sales to the subject, it must be determined to the degree possible what property rights were conveyed in the sale transaction. Pre-existing leases, for example, creating either a leased fee or leasehold estate can impact the price of a property. All of the sales were of fee simple interests in properties unencumbered by long term leases or other modifications to the fundamental property rights conveyed. Therefore, no adjustments are necessary for this element. Financing terms Existing mortgage financing at a favorable rate can also impact a purchase price. Hence the presence or absence of financing involved in the sales transactions must be considered. Sale 4 involved some owner financing, but that financing does not appear to have impacted the price. Conditions of sale Conditions of sale adjustments usually involve the motivations of the buyers and sellers when those motivations are considered extraordinary and when they impact the price paid. If non -market conditions of sale have significantly affected the price of a property, typically, the sale is discarded as not being indicative of market values All of the sales used in our analysis are arms length transactions and only one appears to have been impacted by extraordinary conditions that would affect the respective price. That one is Sale 3, where the City of Sunny Isles Beach purchased a parcel of land and, as part of the transaction, agreed to build a parking garage for a hotel located across the street. 20 VALUATION- continued The cost of the garage is reportedly estimated at $8 to $9 million, including an additional one hundred spaces to be used by the city. The city's 100 spaces are 20% of the total, so the cost of the spaces for the hotel is 80% of $8 to $9 million or $6.4 to $7.2 million. Using $7 million as a cost figure, the garage requirement effectively adds $42.08 per square foot to the land acquisition price and increases the overall land cost to $159.90 per foot. $7 million _ 166,351 square feet of land = $114.22 per foot $19,600,000 + $7,000,000 = $26,600,000 _ 166,351 ft2 = $159.90 Expenditures made immediately after purchase In some cases, a buyer will spend money over and above the purchase price immediately after a purchase to bring a property to a condition suitable for the buyer's intended use. In the case of the purchase of a site for development, funds may be spent, for example, to fill the site to buildable grade or to demolish existing improvements that are not part of the buyer's project. The first six sales all had older improvements that had to be demolished. The demolition costs are relatively small compared to the overall price of the properties and do not significantly impact the overall price paid. Market conditions Changing market conditions must be considered when comparing sales that may have occurred months or years earlier than the appraisal date. Property appreciation or depreciation, financing availability, changing economic conditions, building moratoria and changes in tax laws can all impact property values and the particular market conditions under which a sale occurs directly impact the price of the property. The sales used in this analysis occurred between April 2003 and April 2007. The appraisal date is May 2007. From about 2003, through 2004 and into 2005, the overall market was experiencing extraordinary demand and rapid rates of appreciation across south Florida. Developers, investors and speculators were competing for available development sites, particularly for residential construction, and prices were increasing rapidly. Since that time the market has settled down and many potential home buyers are waiting to see if there is an actual decline in end unit prices. Sale 1 was purchased in early 2003, prior to the run-up in the values across the market. Sale 6 closed in March 2005, towards the latter part of the appreciation. C.41 I AI_IGA 2 RIAPI-1 IMP 21 VALUATION- continued In order to quantify the appreciation rate for commercial real estate on Key Biscayne, we reviewed all of the sales of commercial condominium units on the island. Separating out the 2001 through 2006 sales, we found the following: Year # of Units Sold Avg. Price 2001 17 $366.05 per ft2 2002 8 336.69 2003 5 489.17 2004 0 2005 0 2006 3 1,201.14 There was one sale in 2004 and one in 2007, but that sample size is too small to be significant The first two years show a relatively flat market, which was typical of that time. The succeeding years show the dramatic increase in prices. A change from $489 per square foot to $1,200 is equal to 145% over the three year period. For valuation purposes, we have used a 100% adjustment for Sale 1 (April 2003) Increasing the indicated price of Sale 1 by 100% results in an adjusted price of $214 per square foot. An adjustment to Sale 8 (March 2005) is also necessary, but, due to a lack of activity in commercial condominiums on Key Biscayne in 2004 and 2005, we have no similar ratios to apply. Adjusting the price of Sale 8 by 20% to 50% results in an adjusted range of $165 to $206. Location The sales used in this analysis were chosen because of their locations in relatively high density communities on barrier islands, with confined geography and high barriers to entry. But amongst the three locations, Key Biscayne, Miami Beach and Sunny Isles Beach, Key Biscayne has the most limited commercial area and the smallest supply of available property at any given time. Therefore it would be expected to show the highest unit prices. The test of Key Biscayne's higher values is the prices of the commercial condominium units shown above. The only other place where commercial condominiums approach the $1,000 per square foot level shown on the Key in 2006 is on Lincoln Road on Miami Beach (none of the sales front on Lincoln Road however). 22 VALUATION- continued While we have no specific percentage adjustment to apply to the sales price of lots in other locations, we will consider the relative location of the properties in the final analysis. Physical characteristics The physical elements in valuing commercial sites include land area, street frontage, configuration and topography and differences in these characteristics precipitate adjustments to the unit values of the sales. The major physical difference between the subject site and the sales is the size of each property. The sales range from 16,000 square feet to nearly 50,000 square feet, with the one sale in Sunny Isles at 166,351 square feet (3.82 acres). While typical markets will show decreasing unit values as sizes increase, the confined nature of the markets shown here demonstrate no change in prices as properties change in size. The one exception might be the 3+ acre sale in Sunny Isles. None of the sales had significant topographic issues and all are of sufficient size and in a suitable configuration for development. No adjustments are made for size. Economic characteristics This element applies to improved properties and is not used in this analysis. Use/Zoning Differences in the highest and best use of the sales, as compared to the highest and best use of the subject must be considered in the adjustment process. Most often the use of the respective properties is governed by their respective zoning classifications. The subject sites and each of the sales is zoned and appropriate for commercial development. However, there are substantial differences in density at the various properties. Key Biscayne is a relatively low -density community; there are no high-rise commercial or mixed use buildings located along Crandon Boulevard. By contrast, Miami Beach and Sunny Isles permit higher density development. The comparable sales are repeated on the following schedule, with the respective floor area ratios (FARs) shown along with the prices expressed on the basis of dollars per square foot of potential building. The prices shown reflect the adjustments discussed above. 23 VALUATION- continued Sale Date Subject 1 Apr -03 2 Feb -07 3 Aug -06 4 Jan -07 5 Feb -07 6 Apr -07 7 Jul -06 8 Mar -05 Location Enid Dr at Fernwood 580 Crandon Blvd 24 Crandon Blvd 19200 Collins Ave, S.Isles 17146 Collins Ave, S.Isles 500 Sunny Isles Blvd 17395 N. Bay Rd, S.Isles 1683 West Ave, MBch 1843 West Ave, MBch $/Ft2 Land $214 213 156 274 150 119 293 138 FAR $/Ft2 Bldg 0.50 0.44 $486 053 406 Park use n/a 4.0± 68 Park use n/a 0.49 242 2.0 147 1.0 138 Applying the density calculation actually widens the indicated range of values and clearly isolates the two Key Biscayne sales at the high end of the range of prices. Non -realty components of value Non -realty components can include personalty, business concerns or other items that do not constitute real property, but may be included in the sale of real estate. As with economic issues, these are more likely to occur with improved properties and are not an issue in this analysis. Conclusion The adjusted prices of the sales are as follows, shown based on price per square foot of land and arrayed in unit price order: Sale Date Location Land Ft2 Zoning* Sale $ $/Ft2 7 Jul -06 1683 West Ave, MBch 22,500 17146 Collins Ave, 4 Jan -07 S.Isles 40,200 1 Apr -03 580 Crandon Blvd 17,766 2 Feb -07 24 Crandon Blvd 48,075 19200 Collins Ave, 3 Aug -06 S.Isles 166,351 5 Feb -07 500 Sunny Isles Blvd 20,000 8 Mar -05 1843 West Ave, MBch 16,000 6 Apr -07 17395 N. Bay Rd, S.Isles 16,000 Comm'l Comm'l Comm'I Comm'I Comm'l Comm'l Comm'l Resd'I $6,600,000 $293 11,000,000 1,900,000 10,250,000 19,600,000 3,000,000 2,200,000 6,600,000 273 214 213 156 150 137 119 The highest priced sale is a commercial corner on Miami Beach with a 2.0 FAR and plans for a mixed use commercial/residential development. The next highest price is for land in Sunny Isles Beach purchased by an adjoining owner. 24 VALUATION- continued The next two sales are the two sites on Key Biscayne and they form a very close range - $213 and $214 per square foot. The remaining sales are all $156 per foot or less and show the locational difference the market recognizes between Key Biscayne and the other areas. Based on the available data we have concluded that the subject land has a value of approximately $213 per square foot of potential building. As a test of the feasibility of such a price, we made the following cursory analysis: The market for commercial condominiums on Key Biscayne shows prices above $1,000 per square foot. These commercial units are ground floor retail type units. Generally office condominiums are priced lower than retail units. Currently office condominiums are being developed in other areas of the county in the $350 to $500 per square foot range. Based on the available data, it is reasonable to conclude that office condominiums developed on Key Biscayne could be priced in the $600 to $800 range. Cost figures available for an office building currently being built in Coral Gables indicated total costs for a multi -story building over ground floor parking (the likely design of a building built at the subject site) are equal to $154.23 per square foot of building area. The $213 per square foot of land value shown above is equal to $426 per foot of potential building using the 0.5 FAR shown in the zoning code and $406 per foot using the 0.525 FAR with bonuses. Deducting reasonable allowances for the other component costs of a development indicate the following: Probable Value of finished units Hard cost of building $154 Soft costs at 15% 23 Sales & marketing 30 Profit to developer at 20% + 120 Total costs - 327 - 327 Residual value to land $273 $473 $600 to $800 per ft2 The residual value range brackets the indicated value of $406 to $423 per square foot of potential building shown above. 25 VALUATION- continued Applying the unit value conclusion to the subject's land area, we find the following indication of the value of the property: $213 per square foot x 21,296 square feet = $4,536,048 Use $4,500,000 RECONCILIATION The subject land is currently zoned for government use, for which there is no measurable economic value. In order to value the site, we have assumed a commercial zoning of 0, which would allow office building development. An extensive investigation for recent sales of similar lands resulted in only two really comparable land sales, both of which are on Crandon Boulevard on Key Biscayne. Using the adjusted prices of these sales we have reached a conclusion as to the value of the subject site. The concluded value is very high from an historical perspective, but is reflective of the extraordinarily limited supply of commercial property on the Key and the high demand created by the desirable community environment. MARKET VALUE In our opinion, the market value of the fee simple interest in the subject property as of the appraisal date of May 14, 2007 was FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) APPENDIX I ASSUMPTIONS AND LIMITING CONDITIONS GALLAHER & BIRCH, INC. ASSUMPTIONS AND LIMITING CONDITIONS This is a Summary Appraisal Report which is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. As such, it includes summary descriptions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. More complete detail concerning the data, reasoning, and analyses are retained in the appraisers' files. It is assumed that the title to the subject property is good and marketable; and that the legal description of the property is correct; that the improvements are entirely and correctly located on the property described; and that there are no encroachments, encumbrances, restrictions on or questions of title to this property; but no investigation or survey has been made, unless otherwise stated. The property is appraised free and clear of any or all liens and encumbrances unless otherwise stated in this report. The market value estimate assumes prudent ownership and management of the herein appraised property. The information as to the description of the premises, restrictions, and improvements to the property involved in this report is as has been submitted by the applicant of this appraisal, or has been obtained from sources believed to be authoritative. No warranty is given for its accuracy. Unless otherwise specifically stated, the value given in this report represents the opinion of the signers as to the market value as of the appraisal date. Market values of real estate are affected by economic conditions, both local and national. Therefore, market values of real estate will vary with future market conditions affecting real estate. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in this appraisal report. APPENDIX I - ASSUMPTIONS AND LIMITING CONDITIONS GALLAHER & BIRCH INC ASSUMPTIONS AND LIMITING CONDITIONS - continued It is assumed that all required licenses, certificates of occupancy, or other legislative or administrative authority from any local, state, or national governmental, or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. Any plot, plan or sketch in this report may show approximate dimensions and are included to assist the reader in visualizing the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report unless otherwise indicated. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea -formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process. Unless otherwise stated in this report, the subject property is appraised without a specific compliance survey having been conducted to determine if the property is or is not in conformance with the requirements of the Americans with Disabilities Act. The presence of architectural and communications barriers that are structural in nature that would restrict access by disabled individuals may adversely affect the property's value, marketability, or utility. This report covers the premises herein described only. Neither the figures herein nor any analysis thereof, nor any unit values derived therefrom are to be construed as applicable to any other property, however similar the same may be. APPENDIX I - ASSUMPTIONS AND LIMITING CONDITIONS GALLAHER & BIRCH, INC ASSUMPTIONS AND LIMITING CONDITIONS - continued Possession of this report, or copy thereof, does not carry with it the right of publication. The signers of this report do not authorize disclosure of all or any part of the contents of this report to the public through advertising, public relations, news, sales or other media, without the written consent and approval of the author, particularly as to valuation conclusions, the identity of the appraisers or firm with which they are connected, or any reference to professional associations to which they belong or designations which they may hold. The market value herein is based on data available at the time of our investigation and analysis. Should any additional information be made available to us that would affect the value estimate, we reserve the right to adjust our figures accordingly. The contract for the appraisal of said premises is fulfilled by the signers hereto upon the delivery of this appraisal duly executed. APPENDIX I - ASSUMPTIONS AND LIMITING CONDITIONS GALLAHER & BIRCH, INC SUMMARY OF COMPARABLE SALES Sale # Location Tax ID # Date of Sale Land Area - Ft2 Zoning FAR ORBook/Page Seller Buyer Price Per Ft2 Subject Enid at Fernwood Key Biscayne 24-5205-001-0020 21,296 C-1 or 0 0 50 1 580 Crandon Blvd Key Biscayne 24-5205-001-0010 April 16, 2003 17,766 C-1 0 50 21193/4275 Key Island Investments Inc Parkink, LLC $1,900,000 106 95 2 24 Crandon Blvd Key Biscayne 24-4232-002-0030 24-4232-002-0021 February 27, 2007 48,075 C-1 0 50 25357/3343 North King Corporation Samoro LLC $10,250,000 213.21 3 19200 Collins Ave Sunny Isles Beach 31-2202-011-0040 August 14, 2006 166,351 BU -2 n/a 24821/633 Crescent Heights XLIV, Inc City of Sunny Isles Beach $19,600,000 117 82 4 17146 Collins Ave Sunny Isles Beach 31-2211-004-0120 January 29, 2007 40,200 Residential 4 00 25323/2758 Rascal Plaza Inc Jerry's Famous Deli, Inc $11,000,000 273 63 Sale # Location Tax ID # Date of Sale Land Area - Ft2 Zoning FAR ORBook/Page Seller Buyer Price Per Ft2 5 500 Sunny Isles Blvd Sunny Isles Beach 31-2214-007-0210 February 13, 2007 20,000 Mixed Use n/a 25397/4502 Joke Ruffalo et al City of Sunny Isles Beach 3,000,000 150 00 6 17395 N Bay Rd Sunny Isles Beach 31-2211-004-0222 April 2, 1007 54,623 RU -4A 0 49 25512/2382 Unicenter Shopping LLC Sunny Isles Unicenter LLC 6,500,000 119 00 7 1683 West Ave Miami Beach 02-3233-017-0030 02-3233-017-0020 July 26, 2006 22,500 CD -2 2 00 24763/1237 MBeach2 LLLP 1681 West Avenue LLC 6,600,000 293 33 8 1843 West Ave Miami Beach 02-3233-012-0210 March 29, 2005 16,000 I-1 1 00 23225/1022 Alex Kleiman Goldwater Realty XXII Corp 2,200,000 137 50 APPENDIX II — LAND SALES SUMMARIES GALLAHER & BIRCH, INC. Sale 1 Sale 2 ADD kIniv II I APin CAI Cc CI I /1AOICC Sale 3 Sale 4 APPENDIX II - LAND SALES SUMMARIES Sale 5 Sale 6 APPFNIlIX II - I ANI) SAI FS SI IMMARIFS Sale 7 Sale 8 APPENDIX II - LAND SALES SUMMARIES GALLAHER & BIRCH, INC., formerly known as Hedg-peth & Gallaher, Inc., was established as The Hedg-peth Company in 1967 by C. George Hedg-peth, MAI, who had been both a staff appraiser with The McCune Company and chief commercial appraiser with Dade Federal Savings and Loan Association. The company is a full service appraisal firm completing appraisal reports for all types of real estate ranging from single family residences to apartments, hotels, vacant land to shopping centers, industrial properties and office buildings. The predominance of appraisal assignments over the years has been for properties located in Miami -Dade, Broward or Monroe Counties. By generally limiting the area of practice to South Florida, but addressing the analysis of all types of property from vacant land to complex, multipurpose commercial developments, the company has been able to assure a consistent high level of service to its clients. Either through its individual appraisers or corporately, the company is an approved appraiser for a large number of local lending institutions as well as for the Federal National Mortgage Association, the State of Florida, Miami -Dade County and the cities of Miami, Coral Gables, Hialeah and Homestead. Corporate clients range from local builders and developers to national and international corporations. In addition, assignments have been completed for some of the largest and most prominent South Florida law, accounting and engineering firms. The following is a brief sample of the firm's clientele: Lending Institutions Bank United Chase Manhattan Bank Coconut Grove Bank Community Bank of Florida Florida Savings Bank Fremont Investment & Loan Hemisphere National Bank Imperial Credit Commercial Mortgage Investment Corp Northern Trust Bank of Florida SunTrust Bank Miami The International Bank of Miami Totalbank Union Planters Bank Corporations Baptist Health Systems of South Florida Wackenhut Corrections Corporation Walt Disney World Wendy's International The company has provided litigation support, cases, including those involving deficiency j eminent domain. Consultation and appraisal services offered. Law Firms Adomo & Yoss Bilzin Sumberg Baena Price & Axelrod Brigham Moore Broad & Cassell Earle & Patchen Greenberg Traurig Holland & Knight Russo & Baker Shutts & Bowen Steel Hector & Davis Hicks & Schreiber White & Case Institutional Clients Dade County School Board Florida Department of Transportation Miami Dade Community College Miami Dade Water & Sewer Authority including expert testimony, for a variety of udgments, divorce, zoning, bankruptcy and review services are an integral part of the Either corporately or through its employees, South, Commercial Real Estate Women, and the company is a member of Chamber the Industrial Association of Dade County. APPENDIX II -APPRAISER'S QUALIFICATIONS QUALIFICATIONS OF ROBERT E. GALLAHER, MAI, CRE Resident of Miami, Dade County, Florida since 1950 State Certified General Real Estate Appraiser, State of Florida (Certificate Number RZ98) Licensed Real Estate Broker, State of Florida Licensed Real Estate Instructor, State of Florida Graduate of University of Florida, Gainesville, Florida Awarded Bachelor of Science in Business Administration with Major in Real Estate, 1972 Member of: Appraisal Institute, with designation MAI. Certified Under Continuing Education Program through September 2007 Board of Directors Chapter 24 1988-1990 The Counselors of Real Estate, with designation CRE Chairman of South Florida Chapter 2004 to present Fellow of the Royal Institution of Chartered Surveyors Realtor Association of Greater Miami and the Beaches (formerly: Miami Board of Realtors) Chairman of Association for 1995-96 Chairman of Education Foundation 1993 to 1995 President 1987-1988 Board of Directors 1985-1989, 1994, 1995, 1996-1997, 2003 Florida Association of Realtors Board of Directors 1982, 1987, 1988, 1995, 1996 Education Foundation 1988 to 1989 National Association of Realtors Coral Gables Association of Realtors (1975 to 1992) President 1982 Board of Directors 1980-1982 Kendall Perrine Association of Realtors 1988 to 1994 Participated in appraisals in Miami -Dade, Broward, Monroe and other Counties in Florida of various types of residential, commercial and industrial properties. Boards of Directors Florida Savings Bank — 2001 to 2006 Advisory Board Jerome Bain Real Estate Institute at Florida International University Chairman 1998 to present ChamberSouth — 2001 to present Dade County SurTax Advisory — 1984 to 1993 Instructor, having taught seminars and/or courses for: Miami Dade College; the local chapter of the Appraisal Institute, the American Bar Association, The Florida Association of Realtors; and various local real estate associations and companies. Currently President/Owner of Gallaher & Birch, Inc., (formerly Hedg-peth & Gallaher, Inc.). Has been officer, director and stockholder of several closely held corporations, including Sanctuary Farms, Inc., a farming venture in Collier County; Marina Bay, Inc., a shopping center development in North Miami - Dade County; Burlingame Group, Inc., an office space owner in Miami; Miller Ludlam LLC an owner of retail stores; and First Reserve, Inc., a corporate holding company that owned Esslinger-Wooten- Maxwell, Inc., a general real estate brokerage firm and which participated in the development of Gables Waterway Executive Center and the University Inn Condominium. APPENDIX II -APPRAISER'S QUALIFICATIONS