restricted use appraisal report - auburn · appraised real estate: “raw land” and “improved...

Allen Brackett Shedd

14-0131DC – Copyright © 2010

Restricted Use Appraisal Report

Auburn Municipal Airport Leased Land Properties

Between 16th

and 30th

Streets NE

Auburn, WA 98002

FOR

Airport Management Group, LLC

Mr. Jamelle R. Garcia

Auburn Municipal Airport

400 23rd

Street NE

Auburn, WA 98002

Valbridge Property Advisors |

Allen Brackett Shedd

Smith Tower

206 Second Avenue, Suite 1001

Seattle, WA 98104

206-209-3016

Valbridge Job # 14-0131

valbridge.com

14-0131dc.doc – Copyright © 2014

September 24, 2014

Mr. Jamelle R. Garcia


Auburn Municipal Airport

400 23rd

Street NE

Auburn, WA 98002

RE: APPRAISAL OF LEASED LAND PROPERTIES LOCATED AT THE AUBURN MUNICIPAL

AIRPORT IN KING COUNTY, WASHINGTON (Our File #14-0131)

Dear Mr. Garcia:

In response to your request, we have completed an appraisal of leased land properties

at Auburn Municipal Airport, in various locations on the east side of the runway between

16th

and 30th

Streets NE, in Auburn, Washington. The purpose of this appraisal is to

provide an opinion of the market rent values for “Raw Land” and “Improved Land”

leased areas, intended to assist the client in lease renegotiations.

This report is authorized for use by Airport Management Group, LLC, the client, and its

agents and/ or representatives, including Jamelle R. Garcia. The appraisers do not

intend use of this report by others.

This appraisal values the market rent of fee simple interest of the subject properties. As

agreed, this is a Restricted Use Appraisal Report, intended to comply with the reporting

requirements of the Code of Ethics and Standards of Professional Appraisal Practice,

which include Uniform Standards of Professional Appraisal Practice (USPAP) of the

Appraisal Institute. The value conclusions herein are given subject to the specific

assumptions and limiting conditions stated immediately following this transmittal letter,

as well as others identified in the report.

Based on investigation and analysis of all relevant data, it is our opinion that the market

rent of the subject properties, as of August 25, 2014, are as follows:

Valbridge Property Advisors | Allen Brackett Shedd Page 2


Concluded Rental Rates

Annual

Rental/sf

Aviation - Improved Land $0.55

Aviation - Raw Land $0.36

If you have further questions not answered in the accompanying report, please do not

hesitate to call.

Sincerely,

VALBRIDGE PROPERTY ADVISORS | ALLEN BRACKETT SHEDD

S. Murray Brackett, MAI

David Coleman, Senior Associate

Kr, cf

Enclosures

Valbridge Property Advisors | Allen Brackett Shedd


ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal report was made after personal inspection of the property identified in this report. The

conclusions in the report have been arrived at and are predicated upon the following conditions:

a) No responsibility is assumed for matters, which are legal in nature, nor is any opinion rendered on

title of land appraised. Title to the property is assumed to be good and marketable unless

otherwise stated in this report.

b) Unless otherwise noted, the property has been appraised as though free and clear of all liens,

encumbrances, encroachments, and trespasses.

c) All maps, areas, and other data furnished your appraiser have been assumed to be correct;

however, no warranty is given for its accuracy. If any error or omissions are found to exist, the

appraiser reserves the right to modify the conclusions. Any plot plans and illustrative material in

this report are included only to assist the reader in visualizing the property.

d) It is assumed there is full compliance with all applicable federal, state, and local environmental

regulations and laws unless otherwise stated in this report.

e) It is assumed 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.

f) The appraiser has no interest, present or contemplated, in the subject properties or parties

involved.

g) Neither the employment to make the appraisal nor the compensation is contingent upon the

amount of the valuation report.

h) To the best of the appraiser’s knowledge and belief, all statements and information in this report

are true and correct, and no important facts have been withheld or overlooked.

i) Possession of this report, a copy, or any part thereof, does not carry with it the right of

publication, nor shall the report or any part thereof be conveyed to the public through

advertising, public relations, news, sales, or other media valuation conclusions, identity of the

appraiser, or firm, and any reference made to the Appraisal Institute or any professional

designation.

j) There shall be no obligation required to give testimony or attendance in court by reason of this

appraisal, with reference to the property in question, unless satisfactory arrangements are made in

advance.

k) This appraisal has been made in accordance with rules of professional ethics of the Appraisal

Institute.

l) The Valbridge Property Advisors office responsible for the preparation of this report is

independently owned and operated by Allen Brackett Shedd. Neither Valbridge Property Advisors,

Inc., nor any of its affiliates, has been engaged to provide this report. Valbridge Property Advisors,

Inc., does not provide valuation services and has taken no part in the preparation of this report.

m) No one other than the appraiser prepared the analysis, conclusions, and opinions concerning real

estate that are set forth in the appraisal report.

n) Statements or conclusion offered by the appraiser are based solely upon visual examination of

exposed areas of the property. Areas of the structure and/or property, which are not exposed to

the naked eye, cannot be inspected; and no conclusions, representations, or statements offered by

the appraiser are intended to relate to areas not exposed to view. No obligation is assumed to

discover hidden defects.



o) Unless otherwise stated in this report, the existence of pollution and/or hazardous waste material,

which may or may not be present on the property, was not observed by the appraiser. The

appraiser has no knowledge of the existence of such materials on or in the property. The

appraiser, however, is not qualified to detect such substances. The presence of substances such as

asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials or

pollution may affect the value of the property. The 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.

No responsibility is assumed for any such conditions or for any expertise or engineering

knowledge required to discover them. The client is urged to retain an expert in this field, if

desired.

p) Statements, representations, or conclusions offered by the appraiser do not constitute an express

or implied warranty of any kind.

q) Neither appraiser nor Allen Brackett Shedd shall be liable for any direct, special, incidental, or

consequential damages whatever, whether arising in tort, negligence, or contract, nor for any loss,

claim, expense, or damage caused by or arising out of its inspection of a property and/or

structure.

r) The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a

specific compliance survey and analysis of this property to determine whether or not it is in

conformity with the various detailed requirements of the ADA. It is possible that a compliance

survey of the property, together with a detailed analysis of the requirements of the ADA, could

reveal that the property is not in compliance with one or more of the requirements of the Act. If

so, this fact could have a negative effect upon the value of the property. Since we have no direct

evidence relating to this issue, we did not consider possible non-compliance with the

requirements of ADA in estimating the value of the property.

s) With regard to prospective value opinions, future changes in market conditions necessitate an

assumption that the appraiser cannot be held responsible for unforeseeable events that alter

market conditions prior to the effective date of the appraisal or date of value.

t) This report and any associated work files may be subject to evaluation by Valbridge Property

Advisors, Inc., or its affiliates, for quality control purposes.

Valbridge Property Advisors | Allen Brackett Shedd Page 1


TABLE OF CONTENTS

Page

Letter of Transmittal Assumptions and Limiting Conditions Executive Summary

Restricted Use Appraisal Report

Summary of the Appraisal Problem ................................................................................................ 2 Legal Description .................................................................................................................................... 2 History/Delineation of Title ................................................................................................................ 2 Property Rights Appraised .................................................................................................................. 2 Scope of Assignment ............................................................................................................................ 3 Hypothetical Conditions/Extraordinary Assumptions .............................................................. 4 Marketing and Exposure Periods ..................................................................................................... 5 Personal Property ................................................................................................................................... 5 Area/ Neighborhood Description .................................................................................................... 5

Immediate Neighborhood ................................................................................................... 5 Northwest Airports.................................................................................................................. 6 Industrial Market ...................................................................................................................... 7

Description of the Subject Properties .......................................................................................... 10 General Description: .................................................................................................................... 10

Highest and Best Use ......................................................................................................................... 11 Valuation Methodology .................................................................................................................... 12

Method 1 - Direct Comparison - Comparable Airports ......................................... 12 Method 2 - Sales Comparison Approach - Surrounding Off-Airport Land .... 12 Correlation and Application of Rental Rates .............................................................. 12

Method 1 - Direct Airport Comparison ....................................................................................... 13 Rate Conclusions - Direct Airport Comparison Approach .................................... 14

Method 2 - Off-Airport Land Analysis ......................................................................................... 16 Summary of Data and Valuation Conclusions ........................................................... 17 Aviation Land Lease Adjustment .................................................................................... 17 Aviation Use ................................................................................................................................... 18

Rental Rate Analysis – Fair Rental (Land).................................................................................... 19 Correlation and Conclusion of Rental Rates ............................................................................. 22 Certification of Value ................................................................ Error! Bookmark not defined. Certification of Value .......................................................................................................................... 24

Addenda

Aerial Map Qualifications of Appraisers


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1) Auburn Airport - AFS Galvin Site

2) Auburn Airport - AFS Galvin Site, looking northeast

SUBJECT PROPERTY PHOTOGRAPHS


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3) Auburn Airport - AFC 3 Site, looking east

4) Auburn Airport - AFC 1 Site, looking east



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5) View showing Westside Acreage, looking west

6) View looking northeast, showing ACHA Site



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7) Additional view of ACHA Site, looking east

8) View of ACHA Site, looking southeast



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9) View of JJ Site, looking northeast

10) View looking northeast, showing JJ and AHOA Sites



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11) View looking east showing AHOA Site

12) View showing JJ and AFC2 Sites, looking east



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13) Additional view looking east across AHOA Site



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Aerial Map

Valbridge Property Advisors Allen Brackett Shedd Page 1


RESTRICTED USE APPRAISAL REPORT

This is a Restricted Use Appraisal Report which is intended to comply with the reporting requirements set

forth under Standards Rule 2-2(c) of the Uniform Standards of Professional Appraisal Practice (USPAP) for a

Restricted Use Appraisal. As such, it presents nominal discussion of the data, reasoning, and analyses that

were used in the appraisal process to develop the appraisers’ opinion of value. Supporting documentation

concerning the data, reasoning, and analyses is retained in the appraisers’ file. The depth of discussion

contained in this report is specific to the needs of the client and for the intended use previously stated. The

appraisers are not responsible for unauthorized use of this report.

Client: Jamelle R. Garcia


Appraisers: S. Murray Brackett, MAI David Coleman, Senior Associate Valbridge / Allen Brackett Shedd

Appraised Real Estate: “Raw Land” and “Improved Land” leased land properties at Auburn Municipal Airport, in various locations on the east side of the runway between 16

th and 30

th Streets NE, in Auburn, King County,

Washington. The individual leased sites range in size from 8,892 to 147,766 square feet. The properties are improved with a number of hangars, other aircraft facilities, taxiways, and site improvements, which are excluded from the appraised values, except as discussed further in this report.

Purpose of the Appraisal: To form an opinion of market rent.

Property Rights Appraised: Fee simple and leased fee interests, subject to known title conditions.

Intended Use/Users: The intended use of this appraisal is to assist the client in decision-making, regarding lease renegotiations. The client is Airport Management Group, LLC, and its agents and/ or representatives, including Jamelle R. Garcia. The appraisers do not intend use of this report by others.

Date of Inspection/ Value: The subject properties were inspected on August 25, 2014. The effective date of this appraisal is August 25, 2014.

Date of Report: September 23, 2014

File ID: 14-0131



Summary of the Appraisal Problem The purpose of this appraisal is to provide an opinion of market rent for “Raw Land” and

“Improved Land” sites at Auburn Municipal Airport. Auburn periodically utilizes an

appraisal of its properties to support land lease rate adjustments. This report reflects

two distinct methodologies, which are reconciled into our opinion of market rent.

Legal Description No legal descriptions were provided. We have relied on maps provided by airport staff

for general identification. The properties are contained within a number of King County

Tax Parcels. A title commitment was not provided for our review. Current Leases reflect

uses restricted to fixed-base aircraft operation, maintenance and repair; construction,

management, and maintenance of aircraft hangar buildings and aircraft storage. Aside

from the above noted conditions, our assumption is there are no other adverse

conditions which would affect the value of the properties. The following chart

summarizes the land parcels currently leased at Auburn Airport along with the current

lease rates.

Auburn Municipal Airport Leased Land - Property and Lease Summary (CURRENT Rates)

Lease 5 Yr. Adj. Lease Lease Bldg. Year $/sf/Yr.

No. Propety Name Location Start Term Starting Land (sf) $/Mo.* (sf) Built Land Comments

1 Auburn Flight Services 1725 E. Street NE 02/27/78 40 06/01/83 120,580 $3,285.81 2,622 1978 $0.327 Portion of tax parcel; "Raw Land"

2 Auburn Flyers Condo III 1775 E. Street NE 08/15/05 50 01/01/11 26,765 $1,199.74 23,157 2006 $0.538 Building 9, 9 condo hangars

3 Auburn Flyers Condo I 1801 E. Street NE 06/17/02 50 01/01/09 12,164 $545.25 11,807 2003 $0.538 Building 8, 10 condo hangars

4 Auburn Condo Hangars Assoc. 2131 E. Street NE 05/31/01 50 01/01/07 147,766 $4,026.62 60,110 2003-'06 $0.327 7 buildings, 46 condo hangars;

Portion of tax parcel; "Raw Land"

5 Jacobsen's Hangar S. of 30th Street NE 06/03/02 50 01/01/09 8,892 $398.58 5,760 2003 $0.538 Portion of tax parcel; letter 7/25/03

decreased size from 10,296 sf

6 Auburn Flyers Condo II 412 NE 30th Street 01/20/04 50 01/01/04 24,948 $1,118.29 14,448 2004 $0.538 Buildings G (4 condo) and H (3

condo) hangars; letter 7/25/03

increased land from 23,544 sf

7 Auburn Hangar Owners Assoc. S. of 30th Street NE 08/01/01 50 01/01/08 98,326 $4,407.46 44,652 2003-'07 $0.538 6 buildings, 30 condo hangars

Conversations with Airport officials indicate that the airport has been increasing rates

annually based on CPI in August of each year for the following year, except every fifth

year an MAI appraisal will be completed to establish the rate.

History/Delineation of Title The Auburn Municipal Airport is a well-established general aviation airport that offers a

wide range of flight-related services. The airport has been owned for many years by the

City of Auburn and is currently operated by Airport Management Group, LLC. Leasing

activity is discussed further in this report.

Property Rights Appraised As a rental study, this appraisal reflects an opinion of the market rental rate for the fee

simple interest.



This appraisal sets forth an opinion regarding a fee simple interest (subject to existing

easements and encumbrances). Fee simple interest is defined as:1

Absolute ownership unencumbered by any other interest or estate, subject only to the

limitations imposed by the governmental powers of taxation, eminent domain, police power,

and escheat.

Market rent is defined as:2

Market rent is the most probable rent that a property should bring in a competitive and

open market reflecting all conditions and restrictions of the lease agreement including

permitted uses, use restrictions, expense obligations; term, concessions, renewal and

purchase options and tenant improvements (TIs).

In this analysis, we have given consideration to the restrictive (special) use of an airport

property, as well as similar uses at comparable facilities. The rental opinions are based,

in part, on current rents being received or asked for on comparable properties. In

providing an opinion of the economic rent for the subject land, we have: 1) generated a

land value opinion; and 2) determined an appropriate periodic rate of return based on

similar facilities and real estate investments. For the selected airport buildings, various

methodologies are employed to provide an opinion of the market rent for those

structures. The concluded rental rate does not include the leasehold excise tax

applicable to all leases on airport property. This leasehold tax is 12.84% and is

essentially in lieu of real property taxes. The typical rental term is between 20 and 50

years, with 3- to 5-year fixed rates and negotiated renewal rates.

Scope of Assignment The scope of this appraisal considered the standard approaches to value: Cost

Approach, Income Approach, and Sales Comparison Approach. As discussed in the

Summary of the Appraisal Problem section, the properties are analyzed as leased land

only. We surveyed a variety of airports in the region and analyzed the comparable rates

for properties with similar use potential. We also considered land values in the

surrounding airport vicinity which have similar characteristics to the subject properties,

utilizing the Sales Comparison Approach. The format of this appraisal is a Restricted Use

Appraisal Report.

The client provided the appraisers with relevant subject property information.

Additional information was obtained from County and City records, and on-site

inspections. In appraising the subject properties, the appraisers did the following:

1 From The Appraisal of Real Estate, Fourteenth Edition, 2013,Appraisal Institute, page 5 2From The Dictionary of Real Estate Appraisal, Fifth Edition, 2010 (Dictionary), the Uniform Standards of Professional Appraisal

Practice (USPAP) and Building Owners and Managers Association International (BOMA).



Inspected the subject properties.

Discussed pertinent information on regional airports with airport managers.

Analyzed historical and current information from the subject neighborhood and

competitive neighborhoods in Auburn.

Researched CoStar, Metroscan, CIBA, and King County databases.

Researched Valbridge/Allen Brackett Shedd’s existing database.

Confirmed all comparable land sales with buyers, selling agents, and/or public

records.

Inspected all comparable sales and airports/rentals.

The first approach includes an analysis of surrounding airports with respect to the

subject property. We review the respective land classifications, methods of valuation,

trends, and actual rental rates at Auburn, and our conclusions consider the actual usage

of the airport and the various market forces present in surrounding airport properties.

The second approach involves the analysis of land values in the subject’s immediate

vicinity, concentrating on sites with similar allowed uses. These sales are compared to

the subject, with adjustments of specific factors leading to a conclusion of value. A

market rate of return is then applied to generate an opinion of market rent by this

approach.

Our reconciliation of these two approaches reflects consideration of existing rental rate

levels at competing facilities, surrounding land values as well as market rates of return.

Hypothetical Conditions/Extraordinary Assumptions

Hazardous Waste: We have no information regarding the presence or absence of

hazardous waste on the subject property. This appraisal

assumes the absence of any and all hazardous waste on the

subject property. If hazardous waste is found to be present on

the subject property, we reserve the right to change the

valuation contained in this report.

Title Conditions: No title commitment/ report was provided for review. Other

than conditions noted in the Legal Description section of this

report, we assume any other special exceptions are typical, and

that there is no adverse impact on value. We reserve the right

to modify our valuation upon review of current title conditions.

Site Conditions: The appraisal assumes all sites are vacant, with access and

utilities extended to each site. Site improvements are

considered in this analysis as discussed for “Improved Land”

areas.


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Neighborhood Map



Marketing and Exposure Periods This is an analysis of market rents for individual land parcels at a municipal airport. The

airport will in all likelihood never be sold, and thus no marketing period estimate is

necessary. The individual parcels are leased on a long-term basis, but are not sold in fee

simple.

Personal Property There is no personal property reflected in the concluded rental rates. For assessment

purposes, however, the privately owned buildings may be classified as personal property

since they occupy leased land.

Area/ Neighborhood Description Demographic, economic, and growth data on the Puget Sound metropolitan area and

city of Auburn are widely available and well known to the client. This information can be

furnished on request.

Immediate Neighborhood

The immediate neighborhood of the subject property is bounded by West Valley

Highway (SR-167) on the west and Auburn Way N. on the east, extending from 37th

Street NE/NW on the north to 15th

Street NE/NW on the south. West Valley Highway

(SR-167) is located west of the subject and is accessed via 15th

Street NW. Emerald

Downs racetrack is located west of the subject on the east side of SR-167.

The subject properties are within Auburn Municipal Airport, also known as Dick Scobee

Field, located directly east of the racetrack and west of Auburn Way N. Facilities include

tie downs for approximately 130 aircraft and 150 open and closed hangars. There are an

additional 90± private small aircraft hangars. The airport includes a paved and lighted

runway 3,400 feet long, 75 feet wide, with GPS approach.

The airport neighborhood is characterized primarily by light industrial and

warehouse/office uses. Uses along “C” Street north of the airport are primarily

warehouse/offices built in the 1970s of metal construction. Newer concrete tilt-up

industrial development has occurred along 37th

Street, “B” Street, and throughout the

area. Auburn Way N., one block to the east of the airport, is a major north-south

arterial, leading north to Kent and south to Pacific, Sumner, and Pierce County. This

portion of Auburn Way N. has been developed with a number of new and used car

dealerships interspersed with auto repair and tire stores. It also includes some retail

services (gas stations and fast food restaurants, etc.). South of the airport along 15th

Avenue are a variety of retail and service-oriented users including fast-food restaurants,

gas stations, automobile, and other auto-related retail.


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Comparable Airport Map



The area’s mixed development pattern is typical of Kent Valley/Auburn development in

general. Overall, the subject area is considered relatively stable.

Northwest Airports

We have conducted a survey of Northwest airports in the region, including analysis of

operations, land uses and values. The airports in our survey vary according to size,

location, surrounding land values, and type of aircraft typically handled. The subject

property is a general aviation facility located within a smaller suburban city, with

industrial and commercial land surrounding it. The following chart identifies the airports

considered in our survey:

Summary of Select Regional Airports

Proximity to Size

Airport Location Auburn (ac.)

Arlington Airport Arlington 71 miles north 1,137

Auburn Auburn Subject 110

Bellingham Bellingham 115 miles north 2,055

Boeing Field Seattle 25 miles northwest 594

Bremerton Bremerton 46 miles west 1,100

Olympia Olympia 42 miles south 1,632

Paine Field Everett 51 miles northwest 1,300

Renton Municipal Renton 15 miles north 170

Skagit/Bayview Burlington 85 miles northwest 1,835

Thun Field Puyallup 12 miles south 185

Tacoma Narrows Tacoma 15 miles west 568

Troutdale Airport Oregon 163 miles south 300

Hillsboro Airport Oregon 171 miles south 900

Most of the above airports are within 100 miles of Auburn Municipal Airport, in the

relatively busy Puget Sound area. In addition to these, Seattle-Tacoma International

Airport is the major commercial service airport in the region. The following summarizes

some specifics regarding runway and navigational aid characteristics at the competing

airports:



Summary of Runway/Navigational Characteristics

Airport Lighting Tower Approach

Arlington Airport PAPI;MALSR No NonPrec. Instr.

Auburn Municipal VASI;REIL No NonPrec. Instr.

Bellingham HIRL;MALSR Yes Precision

Boeing Field PAPI; VASI Yes Precision

Bremerton VASI;MALSR No Precision

Olympia VASI;MALSR Yes Precision

Paine Field PAPI;VASI Yes Precision

Renton Municipal PAPI Yes NonPrec. Instr.

Skagit/Bayview VASI No NonPrec. Instr.

Thun Field PAPI No NonPrec. Instr.

Tacoma Narrows PAPI;MALSR Yes Precision

Hillsboro (OR) PAPI;VASI Yes Precision

Troutdale (OR) PAPI;VASI Yes Precision

Thun Field and Renton Municipal are the closest to the subject geographically. The

subject is the smallest in terms of land size. The airport has limited expansion capacity

in terms of land. The use of the airport in the future is expected to continue to support

general aviation and small corporate users.

Industrial Market

Most of the major commercial brokerage companies publish semi-annual surveys of

rent levels and vacancy rates. The data considered in each survey varies, as do the

boundaries of each submarket; so while there is some inconsistency in reporting, the

surveys do provide a broad overview of current conditions. According to reports

published by CoStar, we can look at the period between 2nd

Quarter 2009 and 2nd

Quarter 2014 for the Auburn/Kent Valley/Renton Industrial markets. The following

charts summarize some of the market statistics in these market areas:



Industrial Lease Rates

Auburn/Kent Valley/Renton

2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr %

2009 2010 2011 2012 2013 2014 Change

Auburn

Flex Ind. N/A $13.20 $9.60 N/A $9.13 $7.52 N/A

Warehouse $5.15 $5.67 $5.21 $5.60 $5.21 $5.37 4.27%

Total Industrial $5.15 $5.70 $5.23 $5.60 $5.22 $5.40 4.85%

Kent Valley (North)

Flex Ind. $11.45 $10.91 $5.91 $10.55 $9.78 $12.34 7.77%

Warehouse $5.13 $4.46 $4.62 $4.95 $5.32 $5.16 0.58%

Total Industrial $5.36 $4.57 $4.65 $4.99 $5.53 $5.22 -2.61%

Kent Valley (South)

Flex Ind. $9.95 $10.38 $8.89 $7.85 $7.70 $9.84 -1.11%

Warehouse $5.96 $5.56 $5.65 $5.39 $5.62 $5.68 -4.70%

Total Industrial $6.11 $5.69 $5.74 $5.52 $5.69 $5.87 -3.93%

Renton

Flex Ind. $14.31 $9.93 $10.27 $10.39 $9.61 $11.34 -20.75%

Warehouse $5.61 $5.01 $4.88 $5.23 $5.49 $6.13 9.27%

Total Industrial $5.81 $5.41 $5.11 $5.34 $5.66 $6.44 10.84%

As can be seen, lease rates are up in every category in the subject’s marketplace

(Auburn) with the exception of Flex space, for which there is limited data available. They

are also up sectors of the Kent Valley (North), as well as Renton. The following graph

illustrates the above figures:



The following chart shows vacancies for these same areas:

Vacancies


2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr 2nd Qtr %

2009 2010 2011 2012 2013 2014 Change

Auburn

Flex Ind. 3.7% 2.8% 3.3% 1.2% 1.8% 5.7% 54.05%

Warehouse 2.7% 7.8% 5.2% 3.6% 3.8% 3.4% 25.93%

Total Industrial 2.7% 7.6% 5.2% 3.6% 3.8% 3.5% 29.63%

Kent Valley (North)

Flex Ind. 6.9% 9.1% 23.9% 8.1% 7.9% 3.4% -50.72%

Warehouse 5.5% 12.3% 13.1% 8.8% 7.6% 7.5% 36.36%


Kent Valley (South)

Flex Ind. 5.0% 7.8% 9.2% 11.1% 7.8% 7.6% 52.00%

Warehouse 2.0% 5.6% 4.6% 5.8% 5.2% 5.3% 165.00%


Renton

Flex Ind. 39.7% 20.2% 15.7% 12.9% 5.3% 9.8% -75.31%

Warehouse 0.7% 7.7% 7.0% 5.5% 5.7% 3.7% 428.57%


The total industrial vacancy rate is up for the Auburn marketplace, as well as most

segments within the Kent Valley and Renton areas since the 2009 timeframe.

Net Absorption


2nd Qtr 2nd Qtr %

2013 2014 Change

Auburn

Warehouse -174,783 -57,040 67.37%

Total Industrial -174,783 -60,121 65.60%

Kent Valley (North)

Warehouse 337,133 178,858 -46.95%

Total Industrial 342,033 194,946 -43.00%

Kent Valley (South)

Warehouse 292,637 586,318 100.36%

Total Industrial 294,920 584,566 98.21%

Renton

Warehouse -93,952 -229,497 -144.27%

Total Industrial -93,952 -210,856 -124.43%



The dramatic swings in the absorption figures above is explained by the uncertainty that

remains with regard to the overall economic conditions that continue to exist.

Description of the Subject Properties Pertinent information regarding the subject properties are summarized as follows:

Location: The properties are a portion of Auburn Municipal Airport. They

are in various locations on the east side of the runway between

16th

and 30th

Streets NE, in Auburn, King County, Washington.

See details in the Property Summary in this report.

General Description:

“Raw Land” Auburn Flight Services, and Auburn Condo Hangars are the two

“Raw Land” leases, with 120,580 and 147,766 square feet,

respectively. Generally these larger sites have been delivered to

the lessee with nominal improvements, with the lessee making

significant site improvements, such as excavation, grading,

wetlands mitigation, drainage, extension of utilities, and paving

and striping of aircraft taxiways between building sites or other

aviation improvements. The sites are generally rectangular, with

sufficient width and depth for the construction of multiple

buildings and/or other aviation improvements. The lessees are

responsible for maintenance of their sites and facilities within

the lease areas.

“Improved Land” The balance of the leases are generally smaller airport sites, with

the buildings occupying the majority of the site areas except for

small ingress/ egress areas adjacent to the building elevations.

Sites range in size from 8,892 to 98,326 square feet. The airport,

or lessor, made the site improvements up to the lease areas,

with the sites “ready-to-build” for the lessees’ buildings. This

included excavation, grading, drainage, utilities and taxiways and

other aviation improvements, which are also maintained by the

airport.

Site Areas: The individual leased sites range in size from 8,892 to 147,766

square feet.

Topography: Level and at grade with streets and runway/taxiway

improvements.

Access: Access is via secured gates through airport fencing, generally

from “E” Street NE or 30th

Street NE, depending on the site

locations. Runway access is via taxiways to the west.

Utilities: All utilities are available, with electrical extended to all sites, and

sewer extended.


14-0131 Copyright © 2014

Zoning Map

C2 Central Business District

C3 Heavy Commercial District

LF Airport Landing Field District

M1 Light Industrial District

M2 Heavy Industrial District

Public Use District



Sensitive Areas: We have not been provided with any sensitive area studies

relating to the properties. We are aware of wetlands areas to

the west of the runway, but our assumption is there are none

affecting the properties.

Soils: We have not been provided with a specific soils study relating to

the subject properties. Based on the improved status of the

properties both surrounding and along the periphery of the

airport, we assume the soils do not prohibit typical

development.

Zoning: The subject property is zoned LF, Airport Landing Field District,

under the City of Auburn Zoning Code. The LF classification is

intended primarily to accommodate airport and related uses.

Permitted uses include aircraft operations and businesses

necessary or convenient for airport operations, including offices,

cafés, hangars, etc. The entire zoning ordinance is lengthy, and

is retained in the appraisers’ file. Surrounding the airport are

light and heavy industrial zones, as well as a heavy commercial

zone along Auburn Way N.

Improvements: No building improvements are appraised in this assignment but

are summarized for the reader. Auburn Flight was improved in

the late 1970s with a 7,600-square-foot maintenance hangar,

including offices, parts, and shop areas. There are additional

other storage improvements attached to the main building, and

30 aircraft tie-down areas. Other site improvements include

vehicle parking, concrete aprons, taxiways, utilities, lighting,

fencing, and landscaping. Site improvements include taxiways,

utilities, lighting, fencing, and nominal landscaping. The

“Improved Land” sites are improved with a variety of

condominium hangars constructed from 2003 to 2007.

Assessed Value/Taxes: The subject properties (land only) are within a portion of a larger

municipally-owned property and, therefore, no taxes are

collected. The airport lessees pay a 12.84% leasehold excise tax

for the land lease areas, plus property taxes on privately owned

improvements.

Highest and Best Use Highest and best use is defined as: 3

The reasonably probable use of property that results in the highest value…….. To be

reasonably probable, a use must meet certain conditions.

3 From The Appraisal of Real Estate, Fourteenth Edition, 2013, Appraisal Institute, page 332



A determination of highest and best use is guided by the following parameters: 1)

physically possible; 2) legally permissible; 3) financially feasible; and 4) maximally

productive. Highest and best use is analyzed both on an as vacant and as improved

basis.

As Vacant: Aviation related uses and/or supporting industrial and

commercial uses consistent with surrounding airport areas and

zoning.

As Improved: The subject improvements are not included in this appraisal, as

previously discussed.

Valuation Methodology Developing an opinion of market rent value requires an analysis of the subject

properties, as well as rates from other airports which offer similar services. In addition,

we have analyzed land sales that have occurred in the area surrounding the Auburn

Municipal Airport. These two methodologies are summarized as follows:

Method 1 - Direct Comparison - Comparable Airports

The first method of valuation is a direct comparison of rates at surrounding airport

properties. While we recognize that all airports are unique and, therefore, not “directly”

comparable, an analysis of pricing for similar services is certainly appropriate. Specific

lease information and valuation techniques were derived from several airports.

Method 2 - Sales Comparison Approach - Surrounding Off-Airport Land

The analysis of off-airport land sales is a widely used method of airport valuation. A

series of adjustments must be made which require subjective interpretation on the part

of the appraisers. We have applied specific adjustments for a series of identifiable

factors rather than a single lump sum adjustment. These are discussed within the Sales

Comparison Approach section of this report. It is important to note that the types of

uses surrounding the airport are typically industrial and commercial in nature and,

therefore, are suitable for this type of comparative analysis.

Once an appropriate land value is concluded, a rate of return is applied. This is derived

from the aviation market.

Correlation and Application of Rental Rates

Once the two methods are correlated, a final recommended rental rate is concluded

based on the relative merits of each. The application of rental rates is discussed relative

to the type of property, in this case for “Raw Land” and “Improved Land,” for aviation

purposes.



Method 1 - Direct Airport Comparison We have conducted a study of Northwest airports. They range from smaller community

airfields to larger regional airports. The subject property falls in the General Aviation

classification, with characteristics typical of medium sized airports. This is a broad

category, but common characteristics include tie down and T-Hangar aircraft storage,

FBO facility, and a variety of aviation-oriented manufacturing or service companies. In

this analysis, we directly compare the subject property to other airports, with our

conclusion reflecting market rental rates for Auburn Municipal Airport lands.

The airports in our survey vary according to size, location, surrounding land values,

volume of operations, and type of aircraft that is typically handled. The subject property

is a general aviation facility located within a smaller suburban city, with industrial and

commercial land surrounding it. The chart previously provided in this report

summarizes the airports considered, their location (distance) relative to the subject

property, sizes, and other characteristics.

Actual rates obtained by the competing airports are summarized in the chart below.

This includes rates for both aviation and non-aviation lands, when applicable.

Airport Rental Rate Trends

1996 - 2014

1996 1999 2002 2009 Current % Change

Airport Rate Rate Rate Rate Rate ('09-current)

Arlington Airport $0.09 $0.14 $0.18 $0.22 - $0.25 $0.24 - $0.31 9.09% - 24%

Auburn Municipal N/A N/A N/A $0.26 - $0.49 $0.33 - $0.54 10.20% - 26.92%

Bellingham $0.20 - $0.37 $0.45 $0.23 - $0.45 $0.50 - $0.54 $0.585 8.33%

Boeing Field $0.33 - $0.67 $0.38 - $0.76 $0.44 - $0.88 $1.12 - $1.60 $1.12 - $1.60 0%

Bremerton N/A $0.14 $0.14 $0.14 - $0.28 $0.14 - $0.28 0%

Olympia $0.15 - $0.21 $0.17 - $0.18 $0.16 - $0.18 $0.27 $0.29 7.41%

Paine Field $0.26 - $0.38 $0.30 - $0.41 $0.30 - $0.41 $0.48 $0.52 8.33%

Renton Municipal $0.30 $0.26 - $0.30 $0.30 $0.57 $0.66 15.79%

Skagit/Bayview $0.34 $0.36 5.88%

Thun Field $0.31

Tacoma Narrows $0.31

Troutdale Airport (OR) N/A N/A N/A N/A $0.27 # N/A

Hillsboro Airport (OR) N/A N/A N/A N/A $0.38 # N/A

1) # Rates for these 2 OR airports were last documented in 2013, reflects no change since that timeframe.

2) Auburn Municipal: Indicates range due to Improved (Storm Water, Asphalt paving) vs. unimproved sites.

3) Bremerton: Rate range is for Airside vs. Non-Airside land. Rates have been same since 2006 per Airport Manager.

4) Rates for Paine Field Airport vary due to step increases. Excludes BOMARC/Commercial & West/NW Commercial.

Established land rates at other regional airports range between roughly $0.14 and $1.60

per square foot per year. Boeing Field, as expected, reflects the highest rate. The

remaining airports indicate a range from $0.14 to $0.66 per square foot for airport lands,

and the subject’s current rates fall within this range. We have considered the

breakdown of rates by use among the various airports, and have found inconclusive



data to support differing land values among the various aviation uses. For the most part,

the same rate is charged for aviation (runway accessible) land regardless of use or

location on the airport. While there are some exceptions to this, the main adjustment is

due to lack of taxiway access, and even this is not universal. Bremerton Airport

continues this practice, with the lowest rate indicated in the above chart not having

direct apron or taxiway access.

The following graph charts the information provided above. It should be noted that for

those airports reporting a range, the upper end of the range was utilized in the graphs

below to avoid averaging of the categories.

$0.05

$0.20

$0.35

$0.50

$0.65

$0.80

$0.95

$1.10

$1.25

$1.40

$1.55

$1.70

1996 1999 2002 2006 2009 Current

Re

nta

l R

ate

/SF/

Yr.

Year

Airport Rental Rate Trends: 1996-Current (Approx.)

Arlington

Bellingham

Boeing Field

Olympia

Paine Field

Renton

Troutsdale

Hillsboro

Auburn

Skagit

Bremerton

Thun Field

Tacoma Narrows

Linear (Auburn)

As can be seen, there has generally been an upward trend in land lease rates since the

1996 timeframe. In terms of the subject, Auburn Airport is physically amongst one of

the smaller airports in the survey of comparable facilities. Historically at Auburn, rate

increases have been routinely applied in 5-year intervals. Rates at Bremerton have

essentially been held static since 2006 according to the Airport Manager as of June

2014.

Rate Conclusions - Direct Airport Comparison Approach

The various airports indicate rental rates between $0.14 and $1.60 per square foot per

year for aviation land. Based on our recent survey of comparable airports, although the

climate for general aviation has been uncertain due to the current economic conditions

that exist, several airports are in the process of increasing rates if they have not already

done so. Rate increases are generally moderate, and often based on appraisals that

have some basis in surrounding property values. Conversations with Mr. Rudolph at

Olympia Airport indicate that operations are up year-to-date from the previous year. In



2012-13, they had 14 straight months of increases, with equal to or greater than

projected fuel flowage.

Paine Field currently has very little vacancy, with close to 99% occupancy, although there

is land available for development along the west side. Demand in and around the

airport appears to continue, with several market based transactions of both commercial

and industrial land sales in the vicinity of Paine Field. Paine Field has historically

demonstrated stepped increases, similar to other airports in the region; however, in

terms of rates, it has generally been below airports such as Renton and Bellingham.

Unlike the subject, Renton has a relatively limited supply of surrounding land for

development. Renton is currently a general aviation airport that supports small aviation

oriented businesses, T-Hangars, and the proximity to downtown Seattle makes it

attractive location for the growing light jet and turbo prop market.

Thun Field and Tacoma Narrows have a combination of ground leases based on a per

square foot basis, as well as those that are not. Airport staff did not report to us how

the other ground leases are determined. The rates at these airports are increased based

on CPI.

The subject has historically demonstrated lower rates than Renton and Boeing Field. We

believe that airports such as Boeing Field and Renton remain better positioned due to

the scarcity of land available for on-airport development, and continue to be considered

superior, particularly in terms of location.

Land rates at other airports have shown only modest increases in recent years. It should

also be noted that Renton Airport demonstrated below-market rates that remained

unadjusted for several years. After obtaining an MAI appraisal in 2007, the airport

adjusted rates to market. Bremerton has essentially remained unadjusted since 2006.

The subject property facilities are improved for GPS approach, and it has a desirable

close-in urban location near Seattle, as well as Tacoma. Considering Auburn’s location

and services, and the trend at comparable airport, we conclude a rental rate of $0.55

per square foot per year is indicated for the subject’s “Improved Land.”

For the subject’s larger aviation sites or “Raw Land,” there is no direct support from

comparable data among the general aviation airports as to a rate discount (or

off-airport land sales data), other than Paine Field, which grants roughly a 10% discount

on its market value of parcels larger than 15 acres. In addition, it should be noted that

given the characteristics of Boeing Field and the high demand at this airport, their

methodology has transitioned to discounts for size (Boeing parcels demonstrate a 20%

discount for occupying 100+ acres) and height restrictions near the Southeast corner of

the airport. Discussions with other airports in the Puget Sound Region also indicate

waiting lists for T-Hangar development, and generally improving conditions for General

Aviation relative to the Great Recession period of the late 2000’s.



Generally, larger sites require less infrastructure by the airport and also result in more

leasable land than smaller sites developed. The majority of smaller airports do not have

large users. We believe that a discount of 35% is warranted for the subject’s larger

parcels relative to small sites, particularly given the site development requirements for

lessees under Auburn’s “Raw Land” leases. We conclude a rental rate in the range of

$0.36 per square foot per year is indicated for the subject’s “Raw Land.”

The concluded rates by the Direct Airport Comparison methodology are summarized as

follows:

Concluded Rates

Land Use Conclusion



Method 2 - Off-Airport Land Analysis This method of analysis requires a study of off-airport land values surrounding the

Auburn Municipal Airport. This study considers of lands with similar uses, which are not

actually on-airport property. It is not uncommon for airport land to be valued at a

discount from off-airport properties due to the aviation-related restrictions. Whether

such a discount is appropriate, and to what extent, depends on the characteristics of

both the surrounding land, as well as the airport facilities.

In this analysis, industrial and commercial zoned land has been considered. These

property types closely reflect the uses and characteristics of airport-related users in

Auburn. It should be noted that increasing off-airport land values may or may not

translate directly into airport land rates due to the different market dynamics for

aviation property.

A chart in this section summarizes land sales considered relevant and comparable. Full

details regarding each transaction are retained in the appraisers’ files.


14-0131 Copyright © 2014

Comparable Land Sales Map



Comparable Land Sales Chart

Sale Sale Gross Net Gross Net

Sale Identification Date Price Size (ac.) Size (ac.) Price/SF Price/SF Zoning

Auburn Sales

1 1401 W. Valley Hwy 01/2014 $740,000 2.09 2.09 $8.13 $8.13 M1

2 Industrial Site; N. side of 44th Street NW 08/2013 $954,310 2.50 2.50 $8.76 $8.76 M1

3 1580 A Street NE 01/2013 $2,766,500 6.56 5.86 $9.68 $10.84 C3

4 1600 M Street NW 08/2012 $2,350,000 9.60 6.81 $5.62 $7.92 C3

5 3136 B Street NW - Probuild Site 02/2012 $2,600,000 6.23 6.23 $9.58 $9.58 M2

Kent Sales

6 22201 W. Valley Hwy; Kent 02/2014 $1,400,000 1.61 1.61 $19.96 $19.96 M1

7 8800 S. 222nd Street; Kent 09/2013 $790,000 2.03 2.03 $8.93 $8.93 CM1

8 1061 Central Avenue S.; Kent 04/2013 $600,000 1.46 1.46 $9.43 $9.43 CM2

9 6906 S. 204th Street 08/2011 $2,531,616 5.88 5.88 $9.88 $9.88 M1

Summary of Data and Valuation Conclusions

The sales considered reflect an unadjusted value range of between $7.92 and $19.96 per

square foot. Excluding Sale 6, the sales demonstrate a much narrower range of between

$7.92 and $10.84 per square foot. The sales do not necessarily demonstrate a difference

in price due to size based on the above data. Roughly half of the comparables found

were between 1.46 and 2.5 acres in size, with 4 of the sales greater than 5 acres in size.

Considering the comparable sales, the characteristics of the typical Auburn “Improved

Land” parcels, and current market conditions, an off-airport base land value of $10.00

per square foot is concluded for these smaller, ready to develop sites.

Similar to the discount shown by the comparables for larger versus smaller sites, an

off-airport base land value of $6.50 per square foot is considered supportable for the

subject’s “Raw Land” parcels, giving primary weight to the industrial sales or commercial

sales adjacent to the airport or without major arterial exposure.

The off-airport base land values for the various categories are, therefore, summarized as

follows:

Base Land

Category Value/sf



Aviation Land Lease Adjustment

This report is primarily intended to provide a market rental rate opinion for aviation

land. As such, we have considered the effects of lease conditions and aviation use

restrictions on the value of on-airport property in comparison to off-airport land values.



Summarized below are the various factors we have considered and their relative impacts

on value.

Lease Conditions: -10%. This adjustment considers that airport land is leased only.

Thus, a user does not enjoy the same unrestricted use and

benefits of fee simple ownership of the land.

Aviation Use

Restrictions: -10%. Several adjustments are considered under this category,

including Nature of Use, Density, and Demand.

Nature of Use considers that use of airport land is limited to

those uses either dependent, supportive, or complimentary to

aviation activities, considered as a more restrictive zoning

compared to off-airport land.

Density addresses the fact that aviation dependent uses typically

require a higher land-to-building ratio than otherwise similar

off-airport uses, although this is considered a relatively minor

issue for the subject properties.

Demand considers that while airport land is in limited supply,

most continue to have land available for development. It is also

recognized that the pool of potential users of airport land is

more limited than for off-airport land. We have also considered

the airport runway/navigational characteristics and other related

airport facilities.

Due to the subject’s smaller size and close-in urban location, supply is not considered a

significant factor for the subject properties, although demand for airport land is

considered more limited. The subject’s more limited facilities compared to other

airports are also a factor.

The total downward adjustment of all factors is 20%. Based on these adjustments the

effective land values are calculated as follows:

Effective Land Value Calculation

Adjustment Criteria

Base Lease Aviation Use Total Effective

Land Category Land Conditions Adjustment Adj. Base

Aviation - Improved Land $10.00 -10% -10% -20% $8.00

Aviation - Raw Land $6.50 -10% -10% -20% $5.20



Rental Rate Analysis – Fair Rental (Land) In order to obtain a rate that can be compared with our first approach, we must derive a

rate from the airport land values concluded above. In developing a fair rental rate we

have considered methods utilized at other airports. Typical lease terms are 30 to 50

years, with rate negotiations every three to five years. These leases are exclusive of the

leasehold excise tax.

A review of the required rate for other airports can be found in the comparable airport

data chart presented. The majority of airports surveyed utilize a rate of return based on

appraised land value. Most airports presented rates between 7.5% and 10.0% of

appraised land value. The following chart breaks down the most recent rates, per our

survey of other airports:

Required Rates of Return

Required

Airport Rate

Arlington 7.50%

Auburn 8.00%

Bellingham 9.00%

Boeing Field 8.00%

Hillsboro Airport (OR) 10.00%

Olympia 8.50%

Paine Field 7.50%

Renton 8.00%

Skagit/Bayview 7.50%

Troutdale Airport (OR) 10.00%

Several of the airports surveyed utilize a rate of return based on appraised land value.

The rates provided by regional airports, were between 7.5% and 10% of appraised land

value. Many of the close-in airports are currently demonstrating rates between 7.5%

and 8.0%. Bellingham, located in the more remote Whatcom County area, recently

adjusted to a 9.0% rate of return on their land. The required rate of return has largely

been influenced by the overall economy which has shown some signs of stabilization

since the subprime mortgage collapse in the 2008-09 timeframe. Interest rates have

been held at bay due to the national recession that occurred.

Rates required in the private sector have long been in the 9% to 11% range for industrial

buildings, offices, and retail facilities. This supports the rates required by public

institutions, school districts, and municipalities.

As additional insight to the overall interest rate picture, we have examined both the

Overall Rates of Returns and Yield Rates for the period 2000 to 1st Quarter of 2014

(primarily improved properties). We have researched PwC (formerly Korpacz), which is a



nationally recognized Investor Survey Publication on a variety of real estate types. The

following charts summarize both categories:

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Ra

te (

%)

Year

Summary of Overall Rates (PwC Composite)

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Ra

te (

%)

Year

Summary of Yield Rates (PwC Composite)

As can be seen by the above charts, both the Overall Rates of Return and Yield Rates

experienced a brief rise, before showing a steady decrease after 2008.



The chart below shows the same data with an additional overlay reflecting the typical

yield on 10-year treasury notes, as well as land development IRR’s:

As shown, the spread between the safe rate as indicated by the US Treasury notes, and

the composite of market yield rates widened after the recession, and has slightly

decreased since. Real estate, being relatively illiquid, tends to react more gradually to

periodic economic fluctuations; however, severe or prolonged downturns justify

additional analysis. When land sales activity slows in response to weak market

conditions, the result is little empirical data to support value conclusions reflecting

actual current conditions.

These rates reflect broad categories of real estate and changes in rates among aviation

facilities tend to occur more slowly, as demonstrated by regional airports over the past

several years. Considering the other airports in the above survey, and the proximity of

the other airports to the close-in markets relative to the subject, we believe that 7.5% is

considered supportable. Therefore, the following rental rate is concluded:

Concluded Land Rental Rates

Base Land Total Effective Base Annual Rate Annual Lease

Land Category Value/sf Adjustment Land Value/sf of Return Rate/sf

Aviation - Improved Land $10.00 -20% $8.00 7.50% $0.60

Aviation - Raw Land $6.50 -20% $5.20 7.50% $0.39



Correlation and Conclusion of Rental Rates The two approaches indicate the following conclusions for aviation land value:

Approach Conclusions

Direct Comparison Off-Airport Analysis

Aviation - Improved Land $0.55/sf/yr $0.60/sf/yr

Aviation - Raw Land $0.36/sf/yr $0.39/sf/yr

The direct airport comparison indicated an aviation land lease rate for Auburn of $0.55

per square foot per year for “Improved” land, and $0.36 per square foot per year for

“Raw” sites. There is little empirical evidence to suggest differentiation among use

(corporate vs. general) or size. Our off-airport land analysis indicated a slightly higher

rate.

Most airports in the study have a high degree of uniformity among airport uses and

facilities, and a very clear indication of the facilities’ intended focus: i.e. general aviation

versus reliever or primary service airport. In arriving at a final conclusion, consideration

must be given to the subject’s location and built-out nature of the market surrounding

Auburn, as well as demand for aviation facilities in close proximity to the Seattle

marketplace and other nearby markets. We believe, however, that the Direct Airport

comparison is more valid in the current environment, as it provides some degree of

comparison with specific alternative facilities available to the typical tenant. Based on

our analysis of all relevant data, it is our opinion the market rent values of the subject

properties are as follows:

Concluded Rental Rates

Annual

Rental/sf




14-0131dc.doc–Copyright © 2014

CERTIFICATION OF VALUE

I, the undersigned, do hereby certify that, to the best of my knowledge and belief:

The statements of fact contained in this report and upon which the opinions herein

are based are true and correct.

The reported analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions, and are my personal, impartial, and unbiased

professional analyses, opinions, and conclusions

I have no interest, either present or prospective in the property that is the subject of

this report, and no personal interest with respect to the parties involved.

I have no bias with respect to the subject property, or to the parties involved.

My engagement in this assignment was in no way contingent upon developing or

reporting predetermined results, nor was it based on a requested minimum

valuation, a specific value, or the approval of a loan.

My compensation for completing this assignment is not contingent upon the

development or reporting of a predetermined value or direction in value that favors

the cause of the client, the amount of the value opinion, the attainment of a

stipulated result, or the occurrence of a subsequent event directly related to the

intended use of this appraisal.

The reported analyses, opinions, and conclusions were developed, and this report

has been prepared, in conformity with the requirements of the Code of Professional

Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which

include the Uniform Standards of Professional Appraisal Practice.

I have not performed valuation or consulting services on this property in the past

three years.

I have made a personal inspection of the subject property.

No one provided significant real property appraisal assistance to the person signing

this certification, with the exception of the person(s) shown on additional

certification(s), if enclosed.

The use of this report is subject to the requirements of the Appraisal Institute

relating to review by its duly authorized representatives.

As of the date of this report, I have completed the continuing education program for

Designated member of the Appraisal Institute.

Murray S. Brackett, MAI

State Cert. #27011-1100853


14-0131dc.doc –Copyright © 2014

CERTIFICATION OF VALUE I, the undersigned, do hereby certify that, to the best of my knowledge and belief:

The statements of fact contained in this report and upon which the opinions herein are based are true and correct.

The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions

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

I have no bias with respect to the subject property, or to the parties involved.

My engagement in this assignment was in no way contingent upon developing or reporting predetermined results, nor was it based on a requested minimum valuation, a specific value, or the approval of a loan.

My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

I have not performed valuation or consulting services on this property in the past three years.

I have made a personal inspection of the subject property.

No one provided significant real property appraisal assistance to the person signing this certification, with the exception of the person(s) shown on additional certification(s), if enclosed.

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

As of the date of this report, I have completed the Standards and Ethics Education Requirements for Candidates/Practicing Affiliates of the Appraisal Institute.

David Coleman, Senior Appraiser State Cert. #27011-1101543



Addenda



Qualifications of Appraisers

Valbridge Property Advisors Allen Brackett Shedd


Qualifications of S. Murray Brackett, MAI Senior Managing Director Valbridge Property Advisors Allen Brackett Shedd

Education

Bachelor of Arts in Business Administration, Western Washington University, 1985, with an emphasis on real estate.

Professional Education

Appraisal Courses: All appraisal courses required for MAI designation.

Seminars and Continuing Education (abbreviated summary of coursework):

Easement Valuation

UASFLA Seminar (Yellow Book) Real Estate Law Appraising From Blueprints Complexities of Predevelopment Land The Appraiser as Expert Witness Litigation Skills for the Appraiser The New Frontier of Takings Law Partial Acquisitions Workshop Condemnation Appraisal & Mock Trial Conservation Easement Appraisal - Certificate Course

Professional Affiliation

Member, Appraisal Institute. Received MAI Designation May 2, 1997 (Member No. 11,258)

Past President (2003), Seattle Chapter of the Appraisal Institute

Member, International Right-of-Way Association

Associate Member, Washington Airport Manager’s Association

Appraisal Experience Principal with Allen Brackett Shedd. Responsibilities include the full range of residential, commercial and industrial real estate valuation. Appraisals have been prepared on such diverse properties such as airports and airport-related facilities, park lands, subdivisions and golf courses, as well as typical commercial and industrial improved property. Airport work has included valuation of entire airports to assist in determining lease rates, valuation of adjacent properties for airport expansion, aviation related improved properties and avigation easements. Improved and Unimproved valuations have been performed for acquisitions in fee, leased fee and leasehold interests, partial takings, as well as various partial interests including the following: conservation easements, utility easements, subsurface easements, air-rights/avigation easements, and minority interests. Numerous Appraisals have been prepared for use in litigation, including eminent domain dispute resolution, condemnation and inverse condemnations. UASFLA-compliant Appraisals have been prepared for a wide variety of agencies on a wide range of property types.



S. MURRAY BRACKETT, MAI (cont.) Qualified as an expert witness in King, Kitsap and Pierce County Superior Courts, US District Court, and Federal Bankruptcy Court. Geographic experience includes assignments in Washington, California, Oregon, Idaho, Nebraska, Iowa, Kansas, South Dakota, Alaska, and British Columbia.

Other Experience Instructor: Instructor, Income Property Appraisal, Lk Wa. Voc-Tec. Qualified Level 3 Facilitator, IRWA

Presentations: October 2003 - WPMA Conference – “The Valuation of Non-Water Dependent Properties.”

September, 2009 - Valuation of Airport Properties, WAMA

December 9, 2010 - AI-Seattle Fall R.E. Conference – Panelist/presenter for Appraisal Issues relating to Partial Acquisitions in Eminent Domain cases.

Representative Client List

Cities/Counties

Cities of Bellevue, Burien, Kirkland, Seattle, Kent, Everett, Renton, Auburn, Arlington, Anacortes, Tacoma, North Bend, Snoqualmie, Lake Forest Park, Kenmore, Bothell, Lynnwood, Port Angeles, Maple Valley, Puyallup, Woodinville and SeaTac. Counties of King, Snohomish, Pierce, Kitsap, Thurston, and Skagit. Government

Ports of Seattle, Everett, Olympia, Grays Harbor, Bremerton, Port Angeles, and Friday Harbor. Washington State Parks, WSDOT (Approved Appraiser List), DNR, Federal Aviation Administration, Internal Revenue Service, King County DNR, GSA, U.S. Navy, San Juan County Land Bank, Northshore School District, Snohomish School District, Sound Transit, USACE. Financial Institutions

Bank of America, U.S. Bancorp, Key Bank, Wells Fargo Trust, Commerce Bank, Homestreet Bank, Banner Bank, Charter Bank, Union Bank. Airports

Sea-Tac International Airport, Renton Municipal, Auburn Municipal, Snohomish County Airport (Paine Field), Arlington Municipal, Bellingham International, Olympia Airport, William Fairchild (Port Angeles), Spokane Int’l, Centralia/Chehalis, Bremerton National, Pullman Airport, and Friday Harbor Airport. Corporations and Non Profits

Weyerhaeuser Company, WRECO, Tramco, Plum Creek, McDonalds Corporation, Gull Industries, Puget Sound Energy, Development Services of America (DSA), FSA, Winmar Company, Jr. Achievement, Lowe Enterprises, PACCAR, Inc., The Trust for Public Land, Cascade Land Conservancy, Fletcher General Construction, Manke Lumber Company, Simpson Timber Company, New Ventures Group, OTAK, American Forest Resources, HDR, Inc., Hancock Natural Resources Group, Sierra Pacific Industries, Quadrant, Port Blakely Communities, Lowe Enterprises, Parsons Brinckerhoff, CH2M-Hill.



S. MURRAY BRACKETT, MAI (cont.)

Attorneys

Hillis, Clark, Martin & Peterson; Kenyon Disend; Perkins Coie; Tousley Brain; Inslee Best; Graham and Dunn; Chmelik, Sitkin & Davis; Foster Pepper; Short Cressman; Davis Wright & Tremaine; Betts Patterson; Karr Tuttle Campbell; Anderson Hunter; Riddell Williams; Williams Kastner; Krutch Lindell; Curran Mendoza; Williams and Williams; and King County Prosecuting Attorney.

State Certification Number - General: 27011-1100853 Expiration: 11/21/15

(Revised 11/22/13)



Qualifications of David Coleman Senior Appraiser Valbridge Property Advisors Allen Brackett Shedd

Education

Bachelor of Arts in Economic/Urban Geography with a focus in real estate development processes and project financial feasibility analysis, University of Washington, 1995.

Professional Education

Appraisal Courses: Highest and Best Use and Market Analysis (Appraisal Institute Course 520,

September 2006) Business Practices and Ethics (Appraisal Institute Course 420, April 2005) USPAP (Appraisal Institute, March 2005) Report Writing and Valuation Analysis (Appraisal Institute Course 540, August 2003) Residential Appraisal (Mykut Real Estate School, January 2003) What’s It Worth (Mykut Real Estate School, January 2003) USPAP (Bellevue Community College, Fall 2000) Income Capitalization (Appraisal Institute Course 310, March 2000) Foundations of Real Estate Appraisal (North Seattle Community College, March 2000) Real Estate Appraisal Procedures (Bellevue Community College, Fall 1999)

Appraisal Experience

Associate Appraiser with Allen Brackett Shedd. Responsibilities have included a variety of commercial, residential, and industrial real estate valuations. Appraisals have been prepared on such diverse properties such as park lands, airport property, subdivisions, sensitive areas, and easements. Undeveloped land valuations have been performed for acquisitions in fee, as well as, various partial interests including the following: conservation easements, utility easements, and right-of-way.

Associate Appraiser with Pacific Appraisal Associates. Responsibilities included a variety of commercial, rural residential, and agricultural valuations. Undeveloped land valuations primarily consisted of partial interests for right-of-way and conservation easements.

Summary of Real Estate Experience

Past: 05/98 – 01/02 & 11/02 to Current: Associate Appraiser with Allen Brackett Shedd (formerly Bruce C. Allen & Associates, Inc.)

2002: Pacific Appraisal Associates (Dennis Johnson, MAI - Wenatchee). Associate Commercial Appraiser concentrating on a variety of right-of-way projects, as well as commercial land valuations (including agricultural).

1996-1998: Martin Smith Real Estate Services. Included a variety of duties and departments that comprised of Lease Administration and Assistant Operations/Property manager. Responsibilities included the daily operations of implementing new leases, rent increases, tenant reimbursements and lease renewals for over 20 Martin Smith managed properties. Other duties included the responsibility for overseeing repairs and maintenance requests for over 6 million square feet of office space and the renovation of the company’s communications system with building engineers.



DAVID COLEMAN (cont.)

1995-1996: Sarkowsky/Loebisser/Fagerholm (SLF) Management Company. Assistant Property Manager for The Plaza at Yarrow Bay, a Class A office building in Kirkland, Washington, and home to many prominent tenants such as AT&T Wireless, McDonald’s Corp. and Novell. Responsibilities included the day-to-day management of the project and it’s tenants, which included the coordination of cost estimates and contract work on the project.

Representative Client List Cities Counties

Arlington King County Bellevue King County Office of Open Space Kenmore Snohomish County Kirkland Maple Valley Seattle Sammamish SeaTac Public Agencies Private Agencies

Attorney General of Washington Bogle & Gates Puget Sound Energy Butcher, Willis, & Ratliff Corp. Trust for Public Land Jack McCann Company United States Navy Jones & Stokes Engineering Washington State Department of Transportation JRCO Partnership Land & Associates Airports Lang, Sly, Conner Development Arlington Municipal OTAK Chehalis-Centralia Pharos Port of Olympia Stinson Lane Vineyards Port of Port Angeles Weyerhaeuser Company Renton Municipal WRECO Snohomish County (Paine Field) Banks

Banner Bank Charter Bank Commerce Bank Frontier Bank State Certification Number – General: 27011-1101543 Expiration: 05/02/15

(Revised 11/13/13)

restricted use appraisal report - auburn · appraised real estate: “raw land” and “improved...

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