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101308 EDA 1. Call to order 2. Roll call CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North October 13, 2008 EDA Meeting will commence upon adjournment of the City Council Meeting President Martin Opem Sr. Commissioner John Elder Commissioner Andy Hoffe Commissioner Karen Nolte Commissioner Daniel Stauner 3. Approval or regular meeting minutes or August 25, 2008 4. Resolution approving low interest loan request or BCD Holdings, LLC (improvement project no. 844) J. Adjournment EDA Minutes Regular Meeting CALL TO ORDER ROLL CALL APPROVE MINUTES HCHRAFUNDS Item 4 EDA RESOLUTION 08-11 Item 4 EDA Meeting Page 1 CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 August 25, 2008 City Hall President Opem called the meeting of the Economic Development Authority to order at 8:25 p.m. Present: Martin Opem Sr., President John Elder, Commissioner Andy Hoffe, Commissioner Karen Nolte, Commissioner Daniel Stauner, Commissioner Staff Present: Kirk McDonald, City Manager Curtis Jacobsen, Director or Community Development Valerie Leone, City Clerk Steve Sondrall, City Attorney Jason Quisberg, City Engineer Motion was made by Commissioner Nolte, seconded by Commissioner Elder, to approve the Regular Meeting Minutes or July 28, 2008. All present voted in favor. Motion carried. President Opem introduced for discussion Item 4, Resolution authorizing the expenditure of Hennepin County Housing and Redevelopment Authority (HCHRA) funds from the Hennepin County Affordable Housing Incentive Fund to be received and expended by West Hennepin Affordable Housing Land Trust (WH.J.\HLT) within the city of New Hope. Mr. Curtis Jacobsen, community development director, explained that West Hennepin Affordable Housing Land Trust (WHAHL T) has found it necessary to apply ror 525,000 in runding to assist with the purchase or the property at 4315 Nevada Avenue North. Commissioner Nolte introduced the rollowing resolution and moved its adoption: "RESOLUTION AUTHORIZING THE EXPENDiTURE OF HENNEPIN COUNTY HOUSING AND REDEVELOPMENT AUTHORiTY (HCHRA) FUNDS FROM THE HENNEPIN COUNTY AFFORDABLE HOUSING INCENTIVE FUND TO BE RECEIVED AND EXPENDED BY WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST WiTHIN THE CITY OF NEW HOPE." The motion ror the adoption or the foregoing resolution was seconded by Commissioner Elder, and upon vote being taken thereon, the rollowing voted in favor thereof: Opem, Elder, Hoffe, Nolte, Stauner; and the follovving voted against the same: None; Abstained: None; Absent: None; whereu!Jon the resolution was declared duly !Jassed and ado!Jted, signed by the president which was attested to by the executive August 25, 2008 ADJOURNMENT EDA Meeting Page 2 director. Motion was made by Commissioner Nolte, seconded by Commissioner Stauner, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:30 p.m. Respectfully submitted, ~~ Valerie Leone, City Clerk August 25,2008 EDA Request for Action Originating Department Approved for Agenda Agenda Section Community Development October 13, 2008 EDA Item No. 4 By: Curtis Jacobsen, Director of CD By: Kirk McDonald, City Manager Resolution approving low interest loan. request of BCD Holdings, LLC (improvement project no. 844) Requested Action Staff requests the COlli1Cil approve the resolution approving a low interest loan for BCD Holdings ill conjlli1ction with the Holiday Station redevelopment project at 7180 42nd Avenue North in New Hope. Policy/Past Practice The Council considers and approves commercial loan requests on a case by case basis as may be beneficial to the city's redevelopment efforts. Background On February 25, the Council authorized staff and the city attorney to begin yvorking with BCD Holdings, LLC to draft the appropriate loan documents for a $60,000 business loan for the redevelopment of 7180 42nd Avenue North. The attached resolution authorizes the President and Executive Director to take anv and all - necessary steps to fw1d a low interest loan in the amolli1t of $60,000 to BCD Holdings, LLC for a term of 10 years at an aImual interest rate of 3 percent. The city attorney can provide a more detailed explaI1ation of the lOaI1 documents. Staff reconunends approval of the resolution. As the Council is aware, subsequent to an agreement on the initialloaI1 amolli1t, the developer requested additional nmding for the project. Several discussions at the staff level that included Mayor Opem and COlli1Cil Member Stalli1er resulted in aI1 agreement whereby the storm water costs would be paid for via aI1 assessment agreement (which will be presented at the October 27 Council Meeting). Motion by Second by To: /) ,r, /7 /1 L-- '/f /~,<,/, C~.J -' / c;/---.) I:\RFA \PLANNLI'-JG\PLANNING\Q & R - EDA Holiday Loan lO-13-08.doc Funding The loan hmds will come from the EDA reserves. Attachment(s) e Resolution e Mortgage DEED e Term Promissory Note €) Guaranty o City Manager letter o Resolution BCD Holdings e Resolution Five D Limited e Personal Financial Statement (on file - not provided due to data privacy) o Appraisal Report e Endorsement a Budget for New Hope store EDA RESOLUTION NO. 2008-11 RESOLUTION APPROVJI:NG LOW INTEREST LOAN REQUEST OF BCD HOLDING, LLC (improvement project no. 844) BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: \YHEREAS, BCD Holdings, LLC, a Minnesota limited liability company (hereafter BCD Holdings) has entered into a Conditional Use Pennit Site Improvement Agreement with the City as pari of New Hope Planning Case 08-06 for the redevelopment of its property at 7180 42nd Avenue North, and \YHEREAS, as pari ofplanmng case 08-06 BCD Holdings has requested that the New Hope EDA provide it with a low interest business loan to assist with the finarlcing of various public improvements required by the City as part of plamling case 08-06, and WHEREAS, the EDA hereby detennines it is in the best interests of the City to approve BCD Holdings loan request for the redevelopment of its property which will provide additional jobs within the City and add significantly to the City's tax base. NO\Y, THEREFORE, BE IT RESOLVED by the Economic Development Authority in arld for the City of New Hope as follows: 1. BCD Holdings, LLC's loan request for 560,000.00 from the New Hope EDA is hereby approved. 2. The President and Executive Director are hereby authorized and directed to take any and all necessary steps to fund a low interest loan in the i\mount of 560,000.00 to BCD Holdings, LLC for a tenll of 10 vears at an annual interest rate of 3% as more fullv set out in the loan . - documents as approved by the Ne\v Hope City Attomey in connection with said request. Dated the 13th day of October 2008. Martin Opem Sr., President Attest: Kirk McDonald, Executive Director -1- MORTGAGE DEED THIS MORTGAGE, effective as of November 1, 2008, between Five 0, Limited, a Minnesota corporation (hereinafter called the "Mortgagor", regardless of whether one or more persons or entities), and the Economic Development Authority in and for the City of New Hope, a Minnesota municipal corporation, (hereinafter called the "Mortgagee"). WITNESSETH, that to secure the payment of Sixty Thousand and 00/10Oths Dollars ($60,000.00), with interest, according to the terms of a Term Promissory Note bearing even date herewith, together with any renewals or extensions thereof, and all other liabilities and indebtedness of the Mortgagor to the Mortgagee, due or to become due, now existing or hereafter arising, the Mortgagor hereby mortgages to the Mortgagee the tract of land lying in the County of Ramsey, State of Minnesota, described as follows, to-wit: See Exhibit A attached hereto and made a part hereof (the "Premises"). 1. In addition to making and including in this Mortgage the covenants and other provisions set forth in Minnesota Statutes, Section 507.15, or any future Minnesota Statute providing for a statutory form of real estate mortgage, the Mortgagor covenants and agrees with the Mortgagee: (a) The Mortgagor will permit the Mortgagee, or its agents, at all reasonable times, to enter upon and inspect the Premises. 2. The Mortgagor covenants with the Mortgagee the following statuto.ry covenants: (a) To warrant title to the Premises. (b) To pay all taxes and assessments promptly before a penalty might attach for nonpayment thereof. (c) To keep the buildings and other improvements now existing or hereafter erected on the Premises insured against fire for the amounts specified by the Mortgagee and against other hazards under the usual extended coverage endorsement and all other hazards and risks of direct physical loss occasioned by any cause whatsoever, subject only to the exceptions and exclusions, if any, agreed to by the Mortgagee. The policy or policies of such insurance shall be in a form acceptable to Mortgagee and shall have a loss payable provision in favor of and in a form acceptable to Mortgagee. In the event of foreclosure of this Mortgage, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale. (d) That the Premises shall be kept in good repair and no waste shall be committed. (e) That all indebtedness secured by this Mortgage shall become due after default in the payment of any installment of principal or interest, at the option of the Mortgagee. 3. If default has been made in any payment or covenant herein, the Mortgagee is hereby authorized and empowered to declare the whole amount secured by this Mortgage due and payable. The Mortgagee shall have the authority and power to proceed to protect and enforce its rights by suit or suits in equity or at law, either for the specific performance of any covenant or agreement contained herein or in the indebtedness secured by this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other appropriate legal or equitable remedy and, in the event of foreclosure, shall be entitled to the immediate appointment of a receiver to operate and protect the Premises and to collect all rents during the pendency of the foreclosure, and, in addition, the Mortgagor authorizes the Mortgagee to sell the Premises, as one tract or otherwise, at public auction and convey the same to the purchaser and, out of the proceeds arising from such sale, to pay all indebtedness secured hereby, with interest, and all legal costs and charges of such foreclosure and the maximum attorney's fees permitted by law, which costs, charges and fees the Mortgagor hereby agrees to pay. The Mortgagor hereby expressly consents to the sale of the Premises by advertisement, pursuant to the Minnesota Statutes, Chapter 580, which provides for sale after service of notice thereof upon the occupant of the Premises and the publication of said notice. Service may not be made upon the Mortgagor personally, and no hearing of any type is required in connection with the sale. Except as required by the aforesaid statutory provision, the Mortgagor hereby expressly waives any and all rights to notice of sale of the Premises and any and all rights to a hearing of any type in connection with the sale of the Premises. 4. If the Mortgagor fails to perform any of the covenants and agreements contained in this Mortgage or if any action or proceeding is commenced which does or may adversely affect the Premises or the interest of the Mortgagor or the Mortgagee therein, then the Mortgagee, at Mortgagee's option, may perform such covenants and agreements, defend against and/or instigate such action or proceeding and take such 794775.1 2 other action as the Mortgagee deems necessary to protect the Mortgagee's interest. Any amounts disbursed by the Mortgagee pursuant to this paragraph, including reasonable attorneys' fees, with interest thereon, shall become additional indebtedness of the Mortgagor secured by this Mortgage. Such amounts shall be payable upon notice from the Mortgagee to the Mortgagor requesting payment thereof and shall bear interest from the date of disbursement at the rate set forth in the Note which this Mortgage secures. Nothing contained in this paragraph 4 shall require the Mortgagee to incur any expense or do any act hereunder. 5. Any delay by the Mortgagee in exercising any right or remedy hereunder or otherwise afforded by law or equity shall not be a waiver of or preclude the exercise of such right or remedy or any other right or remedy hereunder or at law or equity. 6. All remedies of the Mortgagee are distinct and cumulative to any other right or remedy under this Mortgage or afforded by law or equity and may be exercised concurrently or independently and as often as the occasion therefor arises. 7. The covenants and agreements herein shall bind and the rights hereunder shall inure to the successors and assigns of the Mortgagee and the heirs, personal representatives, successors and assigns of the Mortgagor. 8. In the event any provision or clause of this mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without conflicting provisions, and, to the end, the provisions of this Mortgage are declared to be severable. 9. The Mortgagor acknowledges and agrees that this right of inspection allows the Mortgagee, or the Mortgagee's agents, to enter the premises at reasonable times to conduct environmental tests to establish the presence, or absence, of hazardous substances or pollutants upon the premises. 10. The Mortgage shall be governed by the laws of the State of Minnesota. 11. The maximum principal indebtedness secured by this Mortgage is $60,000.00. 12. This Mortgage is subject to the attached Exhibit B which is incorporated into this mortgage by reference. , the Mortgagor has duly executed this Mortgage the day and year first above written. Five 0, Limited (a Minnesota corporation) By: Charles E. Durand Its: 794775.1 3 STATE OF MINNESOTA ) ) SS. COUNTY OF ) The foregoing was acknowledged before me this 20 , by , the , on behalf of the day of of a Notary Public THIS INSTRUMENT WAS DRAFTED BY: MURNANE BRANDT 30 EAST SEVENTH STREET SUITE 3200 ST. PAUL, MN 55101-4919 Telephone: (651) 227-9411 794775.1 4 EXHIBIT A LEGAL DESCRIPTION The following described real property located in the County of Ramsey and State of Minnesota: Silverview Estates Lot 1, Block 1 794775.1 5 TERM PROMISSORY NOTE (BCD Holdings, LLC) Amount: $60,000.00 Interest: 3% per annum Term: 10 years New Hope, Minnesota Effective November 1, 2008 FOR VALUE RECEIVED, BCD Holdings, LLC, a Minnesota limited liability company (the "Borrower"), agrees and promises to pay to the order of the Economic Development Authority in and for the City of New Hope, a Minnesota municipal corporation, its endorsees, successors and assigns (the "Lender"), at, 4401 Xylon Avenue, New Hope, Minnesota 55428, or such other place as the Lender may from time to time designate, the principal sum of Sixty Thousand and 00/100 Dollars ($60,000.00), as set forth in the Loan Agreement referenced below, together with interest on the Principal Balance (as later defined) at the rate or rates of interest hereinafter set forth, payable in the following manner and on all the following terms and at the following times: 1. Definitions. For purposes of this Note, the following terms shall have the following meanings: a. "Business Day" shall mean any day that national banks are open for business in New Hope, Minnesota. b. "Loan Documents" shall mean this Note, the Mortgage and any other instruments given to evidence or secure this Note. c. "Maturity Date" shall mean November 1, 2018 "Mortgage" shall mean the Mortgage Deed dated the same date as this Note and given by FIVE 0, LIMITED to the Lender, pursuant to June 30, 2008 corporate resolutions of FIVE 0, LIMITED and Borrower, granting a lien on Property owned by FIVE 0, LIMITED described in that Mortgage as security for this Note and granting a security interest to the Lender. e. "Principal" shall mean the sums of money from time to time disbursed by the Lender pursuant to this Note. T. "Principal Balance" shall mean the amount of Principal remaining unpaid from time to time. g. shall mean the real property described in the Mortgage. "Term" shall mean the period from the date of this Note through the Maturity Date. ? Interest Rate. The Principal Balance of this Note outstanding at the close of each day shall bear interest ("Interest") at the rate of three percent (3%) per annum ("Interest Rate"). 3. Basis of Computation. Interest shall be calculated by multiplying the actual number of days elapsed in the period for which interest is being calculated by a daily rate based on a 360-day year. 4. Late Charge. In the event that any payment required hereunder is not paid when due, the Borrower agrees to pay a late charge ("Late Charge") of $.05 per $1.00 of the unpaid payment to defray the costs of the Lender incident to collecting such late payment. This late charge shall apply individually to all payments past due and there will be no daily pro rata adjustment. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights the Lender may have, including the right to declare the entire Principal Balance and accrued interest immediately due and payable. 5. Terms of Payment. This Note shall be payable as follows: Commencing on November 1,2008 Interest will accrue at a rate of 3% per annum and beginning May 1, 2010, and on the first day of each and every month thereafter until the Maturity Date, when the entire unpaid principal balance and accrued interest thereon shall be due and payable, monthly installments of principal and interest shall be paid, each of such installments to be applied first to the payment of late charges, if any, then to the payment of interest and then to the reduction of principal. The monthly installment of principal and interest payable on May 1, 2010, and thereafter shall be Six Hundred Five and 63/100ths Dollars ($605.63). The monthly payments recited herein are based upon an assumed amortization schedule of ten (10) years. 6. Application of Payments. All payments shall be applied first to any Costs of Collection, then to Late Charges, then to accrued interest and then to Principal Balance, except that if any advance made by the Lender under the terms of any instruments securing this Note is not repaid, any monies received, at the option of the Lender, may first be applied to repay such advances, plus interest thereon, and the balance, if any, shall be applied as above. If any payment of Principal, Interest, Late Charge or other sum to be made hereunder becomes due and payable on a day other than a Business Day, the due date of such payment shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable interest rate during such extension. Upon a Default (as herein defined) any monies received shall, at the option and direction of the Lender, be applied to any sums due under this Note or any instrument securing this [\lote in such order and priority as the Lender shall determine. 7. Security. This Note IS the Note referred to in and secured by the 2 Mortgage dated the same date as this Note herewith each encumbering the Property (the "Collateral"). 8. Default. If (a) any payment not be made within fifteen (15) days after the date when due in accordance with the terms and conditions of this Note (other than on the Maturity Date when payments shall be due on such date), or (b) an Event of Default (as defined therein) occurs under the Mortgage, (all of the above being herein singularly and collectively referred to as a "Default"), the entire Principal Balance, together with accrued interest thereon and Late Charges, if any, shall become immediately due and payable at the option of the Lender hereof upon notice to the Borrower. 9. Time of Essence. Time is of the essence. No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other remedy under this Note. A waiver on anyone occasion shall not be construed as a bar to or waiver of any such right or remedy on a future occasion. 10. Costs of Collection. In the event of any default hereunder the Borrower agrees to pay the costs of collection, including reasonable attorneys' fees and costs incurred, all other costs and fees incurred in litigation, mediation, bankruptcy and administrative proceedings and all appeals therefrom and all other costs and expenses incurred in the collection of the amounts due under this Note ("Costs of Collection"). 11. Waiver of Presentment, Etc. Presentment for payment, protest and notice of non-payment are waived. Consent is given to any extension or alteration of the time or terms of payment hereof, any renewal, any release of any part or all of the security given for the payment hereof, any acceptance of additional security of any kind, and any release of, or resort to any party liable for payment hereof. To the extent permitted by law all rights and benefits of any statute of limitations, and any moratorium, reinstatement, marshaling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead laws are waived. 12. Savings Clause. It is expressly stipulated and agreed to be the intent of the Borrower and Lender at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Lender to contract for, charge, take, reserve, or receive a greater amount of interest than permitted under state law) and that this section shall control every other covenant and agreement in this Note and any other Loan Document. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under this Note or under any other Loan Documents, or contracted for, charged, taken, reserved, or received with respect to the indebtedness evidenced by this Note ("Indebtedness"), or if the Lender's exercise of the option to accelerate the maturity of this Note, or if any prepayment by the Borrower results in the Borrower having paid any interest in excess of that permitted by applicable law, then it is the express intent of the Borrower and Lender that all excess amounts theretofore collected by Lender shall be credited on the Principal Balance and all other amounts theretofore collected by Lender shall be credited on the Principal Balance and all other Indebtedness (or, if this Note and all other Indebtedness have been or would 3 thereby be paid in full, refunded to the Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Indebtedness shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Indebtedness until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the maximum lawful rate from time to time in effect and applicable to the Indebtedness for so long as the Indebtedness is outstanding. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. 13. Notices. Any notices and other communications permitted or required by the provisions of this Note (except for telephonic notices expressly permitted) shall be in writing and shall be deemed to have been properly given or served by depositing the same with the United States Postal Service, or any official successor thereto, designated as Certified Mail, Return Receipt Requested, bearing adequate postage, or deposited with reputable private courier or overnight delivery service, and addressed as hereinafter provided. Each such notice shall be effective three (3) days after being deposited or delivered as aforesaid. The time period within which a response to any such notice must be given, however, shall commence to run from the date of receipt of the notice by the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice sent. By giving to the other party hereto at least ten (10) days' notice thereof, either party hereto shall have the right from time to time to change its address and shall have the right to specify as its address any other address within the United States of America. Each notice to Lender shall be addressed as follows: Economic Development Authority in and for the City of New Hope 4401 Xylon Ave New Hope, Minnesota 55428 Attn: Kirk McDonald, City Manager Notice to Borrower shall be addressed as follows: BCD Holdings, LLC 7180 42nd Ave. North New Hope, MN 55427 Attn: Chuck Durand 4 14. Governing Law. Notwithstanding the place of execution of this instrument, the parties to this instrument have contracted for Minnesota law to govern this instrument and it is agreed that this instrument is made pursuant to and shall be construed and governed by the laws of the State of Minnesota without regard to the principles of conflicts of law. 15. WAIVER. THE BORROWER WAIVES TRIAL BY JURY IN ANY JUDICiAL PROCEEDING TO WHICH ANY PARTIES TO THIS INSTRUMENT ARE INVOLVED AND WHICH DIRECTLY OR INDIRECTLY IN ANY WAY ARISES OUT OF, is RELATED TO, OR IS CONNECTED WITH THIS iNSTRUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE DATE OF THIS INSTRUMENT. Executed as of the date first above written. BCD Holdings, LLC (a Minnesota limited liability company) By: Charles E. Durand Its: Chief Manager 794602.1 5 GUARANTY New Hope, Minnesota Effective Date: November 1, 2008 FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, and further in consideration of the credit given by the City of New Hope, (hereinafter called the "Secured Party") to BCD Holdings, LLC, a Minnesota limited liability company (hereinafter called the "Debtor"), I, Charles Durand, hereby guaranty the payment, whether at maturity or earlier by reason of the acceleration, or otherwise, of that certain note of even date herewith from the Debtor to the Secured Party in the original principal amount of Sixty Thousand and no/100 DOLLARS ($60,000), and any extensions, renewals, replacements or modifications of the interest rate, maturity, other contractual terms applicable thereto. Such debt, liability, obligation and all costs and expenses for the collection thereon, including but not limited to, reasonable attorney's fees for trial or for the pursuance of, or defense of, any appellate procedure are hereinafter collectively referred to as the "Obligations." 1. This is an absolute guaranty delivered by me to the Secured Party at his request. 2. I waive notice of acceptance of this guaranty by the Secured Party as to present and future Obligations of the Debtor to the Secured Party, and I waive presentment, demand, protest, notice of protest and notice of dishonor as to each and all items constituting the Obligations hereby guarantied. No renewal, modification or extension of the time for payment of any of the Obligations shall affect my liability hereunder, whether made before or after written notice of revocation of this guaranty is given. 3. This guaranty is not conditioned upon any other person or party signing the same. 4. My liability hereunder, however, shall not at any time exceed the Obligations, plus all costs and expenses, including reasonable attorney's fees and legal expenses incurred by the Secured Party in connection with the protection, defense or enforcement of this guaranty in any bankruptcy or litigation or insolvency proceedings. 5. I specifically agree that in the event of the sale of any personal property securing the Obligations guarantied hereby and in the event of a deficiency resulting therefrom, I shall be, and hereby am, expressly made liable to the Secured Party for the amount of such deficiency, notwithstanding any provision of Minnesota law which may prevent the Secured Party from enforcing such deficiency against the Debtor. 6. I agree to deliver to the Secured Party: 591730.1 1 (i) Such other financial information respecting my financial condition as the Secured Party may from time to time reasonably request. 7. I further agree that, if at any time all or any part of any payment theretofore applied by the Secured Party to any of the Obligations of the Debtor is or must be rescinded or returned by the Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Debtor) or if at any time all or any part of the Obligations of the Debtor shall be discharged or released in bankruptcy, such Obligations shall, for the purposes of this guaranty, to the extent that such payment is or must be rescinded or returned or to the extent that such Obligations are discharged or released in bankruptcy, be deemed to have continued in existence, notwithstanding such application by the Secured Party or such discharge or release in bankruptcy, and this guaranty shall continue to be effective or be reinstated, as the case may be, as to such Obligations, all as though such application by the Secured Party or discharge or release in bankruptcy had not been made. 8. Any demand or notice by the Secured Party may be given to me by, and will be effective upon, depositing it first class in the U.S. mails to the address set forth below, or such other address as I may notify the Secured Party of in writing. SHOULD IT BE NECESSARY FOR THE SECURED PARTY TO BRING LEGAL ACTION AGAINST ME ON THIS GUARANTY, I HEREBY CONSENT TO JURISDICTION IN THE COURTS OF THE STATE OF MINNESOTA AND TO VENUE IN THE COUNTY OF HENNEPIN. 9. This guaranty shall be construed in accordance with and governed by the laws of the State of Minnesota. Wherever possible, each provision of this guaranty shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this guaranty. 10. Nothing shall affect the liability of me or the liability of my heirs, executors, administrators and assigns on this guaranty, except the receipt of a written notice of the cancellation and surrender of this guaranty by the Secured Party. 11. THE SECURED PARTY AND THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALL YWAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (\NHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTY MAKING THE LOAN EVIDENCED BY THE NOTE. 591730.1 2 Address: Charles Durand Social Security No. STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing Guaranty was acknowledged before me this , 2008, by Charles Durand as his free act and deed. day of Notary Public 591730.1 3 September 29,2008 FNE D, LllvIITED c/o Charles Durand, Director 12533 Everest Trail Apple Valley, MN 55124 RE: Mortgage Subordination Agreement Lot 1, Block 1 SBverview Estates Dear Mr. Durand: I am the Executive Director of the Economic Development Authority in and for the City of Nevv Hope. I have been authorized and directed by the EDA to provide this letter agreement to Five D, Limited regarding the mortgage given by Five D, Limited on the referenced property to secure the $60,000.00 loan given to BCD Holdings, LLC by the EDA for the construction and development of a Holiday Convenience Store and Gas Station located in the City of New Hope. The New Hope EDA acknowledges the referenced property is encumbered by an existing Mortgage, Security Agreement and Fixture Financing Statement executed by Five D, Limited on May 27, 1998 and filed May 29, 1998 as document number 3061201 in the Ramsey COlmty Recorder's office and filed July 15, 1998 as document number 1500998 in the Office of the Registrar of Titles, Ramsey County, Minnesota. The EDA further acknowledges the Mortgage was assigned to 'Western Bank by an Assignment of Mortgage filed June 5, 2002 as document number 3505680 (Abstract) and document number 169086 (TolTens) and the leases and rents were assigned to Western Bank by Assignment of Leases and Rents filed June 5, 2002 as document number 3505681 (Abstract) and document number 169087 (TolTens). The New Hope EDA agrees that ifthis existing Mortgage, Security Agreement and Fixture Financing Statement evidenced above is refinanced by Five D, Limited, the Ne\v Hope EDA will subordinate its $60,000.00 mOligage to any refinancing of the existing MOligage provided the subordination is limited to a refinanced indebtedness not exceeding the then existing principal indebtedness of Five D, Limited on the Mortgage dated May 27, 1998. ~.-.~~..~~~~~ ), ~~ '\ ~~,,--..J Kirk McDonald Executive Director, Nev./ Hope EDA cc: New Hope Economic Development Authority O.1C Nr~- . J!........ .~~, 4401 Xylon Avenue North <7 New Hope, Ivlinnesota 55428-4898 <7 www.ci.new-hope.nm.us City Hall: 763-531-5100 <7 Police (non-emergency): 763-531-5170 ~ Public Works: 763-592-6777 ~ roD: 763-531-5109 City Hall Fax: 763-531-5136 ~ Police Fax: 763-531-5174'> Public Works Fax: 763-592-6776 RESOLUTIONS OF THE BOARD OF DIRECTORS And MAJORITY SHAREHOLDERS OF BCD HOLDINGS, LLC The undersigned being directors and majority shareholders of BCD Holdings, LLC a Minnesota limited liability company, do hereby adopt the following resolutions effective as of this ]? day of -)lJ /'v~ 2008: WHEREAS, BCD Holdings, LLC, has acquired property in the City of New Hope for constructing and operating a Holiday StationStore, and WHEREAS, as part of the closing process and approval with the City of New Hope, the Economic Development Authority in and for the City of New Hope has agreed to provide BCD Holdings, LLC a low interest loan in the amount of $60,000.00 to assist BCD Holdings, LLC with the development, and WHEREAS, BCD Holdings, LLC does hereby request Five 0, Limited, a Minnesota corporation to secure this referenced loan with the New Hope EDA by giving the New Hope EDA a mortgage to be placed on the property owned by Five 0 Limited, located in the city of Moundsview, county of Ramsey, and as legally described as follow: Silverview Estates Lot 1, Block 1 WHEREAS, Five D, Limited, has a direct or indirect interest in BCD Holdings' development of the Holiday StationStore in New hope which will constitute sufficient and adequate consideration for the requested mortgage. that BCD Holdings, LLC does hereby request Five 0, Limited to give a mortgage in favor of the Economic Development Authority in and for the City of New Hope to be placed on its property located in Ramsey County, as legally described above, in connection with the BCD Holdings, LLC / City of New Hope transaction and low interest loan. L Charles urand, Director and Shareholder'" tf;~~ rJ #/~ ~ ~ Rob'Brt Durand, Director and Shareholder 803146.1 RESOLUTIONS OF THE BOARD OF DIRECTORS and MAJORITY SHAREHOLDERS OF FIVE 0, LIMITED The undersigned being directors and majority shareholders of Five 0, Limited, a Minnesota corporation, do hereby adopt the following resolutions effective as of this ~~0 day of June 2008: ...-- WHEREAS, BCD Holdings, LLC, has acquired property in the City of New Hope for constructing and operating a Holiday StationStore, and WHEREAS, as part of the closing process and approval with the City of New Hope, the Economic Development Authority in and for the City of New Hope has agreed to provide BCD Holdings, LLC a low interest loan in the amount of $60,000.00 to assist BCD Holdings, LLC with the development, and WHEREAS, BCD Holdings, LLC has requested Five 0, Limited to secure the referenced loan with the New Hope EDA by giving the New Hope EDA a mortgage to be placed on the property owned by Five 0 Limited, located in the city of Moundsview, county of Ramsey, and as legally described as follow: Silverview Estates Lot 1, Block 1 WHEREAS, Five 0, Limited, Limited hereby agrees to provide the requested mortgage and acknowledges and agrees it has a direct or indirect interest in the development of the Holiday StationStore in New hope which constitutes adequate consideration for the requested mortgage. IT that Five D, Limited authorizes and agrees to give a mortgage in favor of the Economic Development Authority in and for the City of New Hope to be placed on its property located in Ramsey County, as legally described above, in connection with the BCD Holdings, LLC / ;ity of f=fupe-tr~tion. / / ", ?:: e-( ~ J' ""./ , Charles Durand, Director and Shareholder ') {,I ~'( Robert Durand, Director and Shareholder 803147.1 2008 67wlrh A REAL PROPERTY APPRAISAL REPOl~T Holiday Stationstore Convenience Store wi Car Wash & Fuel Service 2732 County Highway 10 NE Mounds View, MN 55112 Appraisal Report Date: June 17, 2008 Effective Date or the Appraisal: '}4s Is" June 10, 2008 Prepared For: Ms. Cynthia Carlson Vice President Western Bank 2711 Highway 10 NE Mounds View, Minnesota 55112 6511290-7866 By: o C: 708 Cleveland A venue S. W. Suite 150 New Brighton, MN 6511604-9182 Jack Prill, MSA Ryan D Herlofs/w Holiday Stationstore 2732 County Highway 10, Mounds View, MN Five D Limited Documentation for Financing Commercial SUMMARY OF SALIENT FACTS AND CONCLUSIONS Age of ImprovementslYear Built: Leaallnformation Property Identification Number: Assessor's Market Value (01/09): 2008 Tax Levy: Zoning: Value Bv Cost Approach: Value of Site: Value Bv Sales Comparison Approach: Value per Square Foot: Value Bv The Income Capitalization Approach: Overall Capitalization Rate: Appraiser's Estimate of fl17arket Value: Appraisal Report Date: Effective Date of the APlJraisal: Appraisers: ::> n- ...,Cl ~~ "'- -1::!:! ~2:1 ::>- ,.,0 -12 ,., 71,438 square feet or 1.64 acres per the county Convenience Store 4,489 square feet Car Wash 2.500 square feet Total 6,989 square feet 10 years, constructed in 1998. c:::: """ In''1: ::=0' 2! ~, "",' -. ""'. 06-30-23-43-0038 $1,500,000 $52,004 PUD d == ::=0 .... c::: ,..,., $3,141,000 $1,072,000, $15.00/sq. ft. := 3 2 := '" == c::: '" ::: E i"7 $3,075,000 $440.00 $3,142,000 10.0% ~ ; .~ Land Value: Improvement Value: Equipment Value: Total $1,072,000 $1,543,000 $ 525.000 $3,'140,000 June 17, 2008 June 10, 2008 As Is Jack Prill, Ryan D Herlofsky 1 OF SUBJECT PROPERTY :::l ~6 :"')rM""I: :c""':::: --0: ~=n- a:c=;g ,,~- ::0-.... ~~ :=> c::= en~ .....:::: ::.-..... SS~ t::;:S<> en= -,." enc:r. -< - = <::: ::.- E ..... Subject Property Looking Southwesterly ::.- -= -= ::0 = :::=0 ~ -; = <::: ::::=> E ;;-M -l C North and West Elevations of the Convenience Store 2 OF SUBJECT PROPERTY => .,.,- ,,,,c:::l 2~ ""- ....::!:! ~~ =>8 !::lz t= c:::2 en!:: i"'l"l::l ::=oM 2~ ~e en'" _rl en '" -; = <: ::=0 .- c::: ...... South and East Elevations of the Convenience Store ::=0 -c -c :::l Q ::=0 """ == -; Q ...::: ::> .... <::: r'M - :; E ,., East and North Elevations of the Car Wash 3 OF SUBJECT PROPERTY ::;, ~5 2~ "'- ....::!! =c:-: ;.;~ ::;,- ",,0 ....:;;: ", c::: ""'c M"l: ::;::.r :;;:: ~s "",,, _r ""''''' " " . c a; <- ::=o- r- _ c::- M"JS ~ View of the Roof Looking Easterly :::::::'c:. '"CI:: -c::I'.r- ::::l'l 0.. ::=0.. ~s d5 <= ::=0- -'" '=:5 M'"1C:::: ~ C: -13l c." :;a: ~..: c::..: M"lS; ~ 4 Remodeled Main Entrance OF SUBJECT PROPERTY = 'M - 'n t: :":IE:! :::l~ :c= -I:! 25: 'M= =- ",S -1~ '" c:: c:r. ,.." ::= 2 ::= ::;; "'" ;::;; ;: ~ ~ Remodeled Holiday Pantry Area Main Sales Floor as Viewed from the Check-out Counter 5 OF SUBJECT PROPERTY 6 ::l n- ."c ,..,M"I. ~;3: ...:!! ="'" Ti::; ::>- ",,0 ...2: "" c::= en , E"'M : :;::.r 2:: ~~ en. -, en. -.l o -=::: :;::. r- c:: M"I ~ s ~ c: ::: F c: ,., ~ PHOTOGRAPHS OF SUBJECT PROPERTY ::l 'M " ,.. :c '6 .... == 'M ::l ~ Rear Storage Area Interior Trash Area 7 HS OF SUBJECT PROPERTY "" '1"1- "'C ~n"l. :oz, :s :::!C -I:::::! . ~~! ""_. ",,= -12: "" <::= enC m= :;::.' 2:~ ~, enS cnc -l = c:: :;::. E 1"\"1 Car Wash Entrance c:= :=J ~ <: .:r"'. 8 OF STREET SCENES ::l Tl- ",c ~~35 ""_c ......:::!!""'O :=c::"':)rT1 Ti~~ ='(:5< !:j;;a: "" c:::= ""'~ M"I ::c :::=0"'" g;~ !<l<'> "",= _1"'1"1 "",en -l c:'"> c d~ S;=6 E:;g .-n~ c:'"> == County Highway 10 Looking Westerly :::=0", .....::: ......... ::eM C'" :::=Oe:- ~5 d~ c::::5 :::=0- ,....c:. =5 I"'l"l~ -< <::> c:::: ::::= E ..... County Highway 10 Looking Easterly 9 OF STREET SCENES :::0 ~6 ;;~;g :s-o -I:!!-= =c:":l~ ~~::;! ",,= .....2 "" c::25 "",,,,,, l"'M:C >I"M $~ !<~ "",= _I"M "'" cr.> -; ..., = -I~ Q> <-0 :!::-o C:::S M"'1~ g Silver Lake Road Looking Southerly ...-<::1 >cr.> -0::;:::. -0,... ::::3'n"l Qcr.> >..., s::::::= -:;;:;: -1-0 Q> <::::I :z:,- ,...c:n c::0 ,.,.,Z ~ "" <: 3?! <~ ~=i ~.., m~ ~ ~j :;; .;.; ~~ T Silver Lake Road Looking Northerly at Intersection with County Highway 10 10 AERIAL c::= en~ 1"":"1= ::=om ~~ !<~ en= -,.,., en"'" -< C:"'> o -I"'" 0-< ~:!6 =3$ m~ g ::=0 en ""::=0 ...,.- ::::I,.,., ="'" ::=oC:"'> $20 :;jES: =~ c::::::::l Fer.; c::= m:;;;: ~ C":> = -1= o~ c::::::=> ::=>..., r-..., C::c M"lQ ::=> ~ ""'M::l -.i"'M 6~.g -r:...lf"""'"Z ==::M1 C"":) :a=en- E.~I:: !i"'1'lES:2':l ~s f'7'J~ :-;. <=I ;:::l """ Z = :=> 11 ',tim. ~fS ~;in IL pa?l'fj""" ~'Ve ".,,~:... j "..,,'1 -.'" _.,,_,._ 'c'-'. '.,_-' i" U' '-~'>'''-'''''''oj !,.'''':h- , ~, ,ver ;~i ~." IL~,~~~r '- . ' '<<i" ,~.. ;,.-r. ~mo' ........J](;;.~. ~~~I~ORCo?~~C;.~,r- G ,..... 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'i~:;';;;;.?~'~:l ".3,;,;(; "5~",, 'lob Hili, 'i ,", fo' :~:~{?~s:~ ),;, -,F,.gPo,j;-~ ;~t "Xi':;"''''. ~" t';::~Q'.i; '.r;'::;::::;" ~~'" ~"hS'.W ~ "",,'" ~:~',> L;~~:~~ ~~,'i') ;~~:.~h;;i '-'",,:',:.::','" -"" --; l!1A5iING5 " ~<" uoc, e!i" \~~~~~~' '" . ;::~Jf;:_:' " C"> o --l.~ 0::::> ==-c :== -c :=6 m::=- ~ 0, ~~ .",.... ::c M' 0"'" 5C"': _c -;;;: .....- 0:;: ==::: :==- E:~ ..,.,a ~ ~ /i C(QW"r; ~~~"-..' -;... ,.]! / M1NiNEA _fOF.KINS-Y~ ;;:;,~;~i . .., 55tf;1\'~1.~ ~. 10 -' ::::i == ;:: ~ .--,. ....;.;;,.,--- . o ~: 69 .~- I~ . ""'" !;J E' =:: ;::: ~ 12 TABLE OF CONTENTS FACTS AND CONCLUSIONS .,. ... ........ ....... ..,...... ". ,.. .... ............ ........ ...,. ..... ,..., ........ ........., .... ................. 1 PROPERTY ,.... ....... ..... ..,....,..... ,.. ,..... .... ...... ... .......... ......,...... ,... .... .,....... .......... .,.. ... ,......... ....... .,.., 2 14 APPRAISED PROPERTY ....,...,.... ..... .... ". .............. ,.... .... ....... ..... ... ... ..,. ......... .......... ,.... ............ ........ ........... 14 PROPERTY RIGHTS TO BE VALUED........................,............,...................................,.....,......................... 14 APPRAISAL ....... .,. ......... ,..,. ,... .......... ............ ,... ...... ". ". ..... ,. ,...... ..., ........ ,... ..... ,.... .....,. .... ,. ,... ... ..................,.. 14 15 DEFINED ........ .,. .,. .......,..... .......,. ........... ..... ... .....,. ,...... ,....,."..,.. ,.. ,. ..,.. ...... "....,... ...... .......... .....,...... ... ...... ..... ,..,. 15 16 OF SCOPE OF APPRAiSAL.......................................................,.,...,...............................,..............,.....,...............16 ASSUMPTIONS AND LIMITING CONDITIONS ............................................................................................................18 21 DESCRIPTION ". ..,. ,. .,..,...,........ ...,. .... ,. ,...,...... ,.. ....... ......". ...... ,....... ,..,. ,......... ,..... ,.... ..................,.. ..... ,..,.... ,.. ,. 24 DATA....,.,.. ...,...,. ...,..... ,... .....,...... ,. ... ....,.. ,... ,. ....... ,..... ............ ... ...... .... ,.... ..... .... ...... .... ..... ...... ..... ........... ....,.. ,..... ,.. ,......... ...,.. 25 DESCRIPTION ........... .....,. ,. ,..,......'. ,..,........,...... ,. ,.,. ..,. ,... .....,. ..,.... ". ,.... ... ,.. ,. ..,. ,... ..., ..... .... ,. ,.... .... "...., ,...' ....... .... ........ 31 AND BEST USE ANALYSIS ......................................................,.......................................................................,........,... 35 APPROACH. .... ...... ..,.. .......... .....,...... ... ...... ,..., ,...,...... ........ ...... .,....., ....... ,. .... ,.. ", ,....",..., .,.,........,....,.... ,.., ......... ...., ,.....,.. ..... 45 SALES COMPARISON APPROACH............,...... .......,...,.......,............. ..... .......................... .........,............. ........,....,. .....,..........."... 53 INCOME CAPITALIZATION APPROACH......,.....,..................,.............................,...............,.,.,.,., ....,.....,.....,....,..,' .........,.........,... 66 RECONCILIATION AND FINAL ESTIMATE OF VALUE .............................................................................................................,...74 EXPOSURE TIME ....,......,.....,.,...,......,................,...""......,..........".,.,............,.,.,.,........................."......,............. ,............,..,....,..... 75 MARKETING TIME....,. ,............. ..,., ...... ,.... ,., ,... ,..,...,. ..,. ,....,.,., ,..."...,.."... ..."..,...,.,.,' ,.",..,. ,. ,...,....,.,.'.. ........... ,.,. ,..,...,.. ,. ,... "...,..,. ,. 76 CERTIFICATION ....... ...........,... ...... ..... .....".., ....,.".........,..,....,........,...,... ..........""...."".......,....."",.,......,..,...........,...................,.,.. 77 QUALIFiCATIONS................. .............................,....,...........,...,.........,.........,.,..."..,......,..................... .........,....."..".,.......,..,",........ 78 ADDENDA ...', ...., ".. ...,., .,....".. ,... .,... .... ,.... ". .... ,.,. ,., ,. ,..'".. .... ,..... ...... ..... ,........". ,....,., ,.,."..,' ,.. ,.. ,... ,. ... ... .....,... ,., ,.,.. ,..,."..,.., ,.,..",.,., 82 13 ::0 ....- "c ;S~;g ~ 5:! 56 ~~m ::00-< !:j:a:: '" c::= enC'> ,..,.,::: ~~ ;:::...... !<l?> en= _M"l en~ .... o en .....-'1 0_ 0==:- ;:::.'""" ......'""" c::::::l !.""l"'3~ g .-<::1 ;:::. en -0 ;:::. '""" r- ::::l1'T'l o en ;:::..... 5:20 -~ .....-0 0;:::. O==:::::l ;:::.- E~ ;-7"'l.Z ;:;;; 0-: C a~ =:::::0 ;::::::.-:: ~~ C? :::l C).~ .-r11.=- ===:.In ::::="" EEi .r::"J;; ,.. The convenience store contains 4,489 square feet and the car wash contains 2,500 square feet. There is also a 48 square foot cashier booth near the car wash. OF APPRAISED PROPERTIES Holiday Stationstore 2732 County Highway 10 NE Mounds View, MN 55112 Convenience store with a car wash and fuel service. 71,438 square feet or 1.64 acres according to Ramsey County. =:5 enC"> ,.,,= ::=>r-n ~~ !<s:l'" enc:! _r-n en en ..... We were not provided with an equipment list. However, we have estimated the value of the equipment, which includes the fuel tanks, fuel dispensers, car wash equipment and convenience store fixtures and equipment, at $525,000 as explained in the Cost Approach. .<; ..., o -:J~ 0-' <::;;;; ::=>-c E:s l""n:::=- ~ LeOlal Description: ;:=0"" -c;:=o -c..... :=>m 0"" ~C"': _ c:: -:5 .....-c 0::= <::= ::=>- .-"" c<= m:;:;: Lot 1, Block 1, Silverview Estates, Ramsey County, Minnesota. IDENTiFICATiON OF PROPERTY RIGHTS TO BE VALUED ..... o <:: ~ i""'n Fee Simple: The subject real estate will be appraised in fee simple interest. Fee simple interest is defined as: absolute ownership unencumbered by any interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.1 INTENDED USE OF APPR~ISAL The valuation process is applied in this report to estimate Market Value (as defined by the Office of the Comptroller of the Currency under 12 CFR, Part 34, subpart C) of the fee simple interest. This appraisal addresses the "As Is" value of the subject property. 1 The Appraisal of Real Estaie, Tenth Edition, pg. 122 14 _ continued is the manner in which a client employs the information contained in the value estimate may be used to determine price, amount of loan, basis for of a lease, eminent domain, etc. This appraisal is to be used by: User: Ms. Cynthia R. Carlson, Vice President, Western Bank. For the sole purpose of assisting the client in undervwiting financing. i/appraised value Include market value, use value, going concern value, investment ~sessed value, and insurable value, The defined value of the subject property to be ted in this report is "Market Value". c:::= CIO~ M"I :::c ;:::.M"I $~ ~: _I'Tl CIO CIO -'l probable price which a property should bring in a competitive and open market under requisite to a fair sale, the buyer and seiler each acting prudently and and assuming the price is not affected by undue stimulus. Implicit in this is the consummation of a sale as of a specified date and the passing of title from to buyer under conditions whereby: c:"'> = d~ ~::s E:l5 rn~ g ~ Buyer and seller are typically motivated; ;:::. CIO -c;:::. -c,- 6~ ~..... -= -:;s -'l -c =;:::. <::=> ;:::.- ~~ ;;"'MZ 2, Both parties are well informed or weil advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market; 4, Payment Is made In terms of cash in U,S, dollars or In terms of financial arrangements comparable thereto; and -'l Q == :==> E 1l'71 5, The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale,' APPRAISAL REPORT DATE: June 17, 2008 APPRAISAL EFFECTiVE DATE: June 10,2008 "As Is" 'F'","""OO"'""'" R'form, R",O'eO' "d E,,,,,,m'" Act of 1989 (FIRREA), Thf, wuld be mod",d to p,O'rde for ","," with specified financing terms. 15 _ continued PROVISION: Member of the National Association of Master Appraisers with a Master Senior M~A) designation, has been a full-time commerclai real estate professional since ~\ng as an appraiser for the Equitable Life Assurance Society of the United States for liias a branch manager for Mortgage Associates, Inc., as a mortgage banker for the id Flnanciai Corporation, and as a principal of Commercial Appraisai & Consulting Group Q~imateiY 15 years. He has extensive experience in the appraisal and finance of a wide iltcommercial, industrial" multi-family residential and resldentiai land developments, and, Q[~, has the experience and knowledge to complete this appraisal assignment. c::= enC'> r-n ::x:: ~~ :::=-- !::;:$?O en= _r-n en en -< Herlofsky has been a full-time commercial real estate appraiser since October of 2001. 'QliJs the designation/license of "Certified General Reai property Appraiser" from the State ib'nesota, after completing all necessary education and appraisal experience requirements. 5as experience appraising a wide range of commercial property types including car washes convenience stores with fuel service. ..., o -1.~ 0:::0 <-::l ::=>.... E:== r'M~ g -<'l subject of this appraisai is a Holiday Stationstore. This property includes a 4,489 square foot store, a 2,500 square foot car wash and full fuel service. The improvements were constructed in 1998; ::=> en ....:::0 ......... ==,.." oc:r.> ~..., _0 -=s; -.... 0:::0 <== ::=>- ,-CI:I ~~ The subject site totals 71,438 square feet and is situated on the southeast corner of the intersection of County Highway 10 NE and Silver Lake Road in Mounds View. The current owner indicated that he purchased the site for $5.00 per square foot in 1998 and has owned the property since. a < 2: ~ The convenience store was recently remodeied at a cost of $143,866.69. This renovation includes a new check-out area and the Holiday Pantry. A new sign was also recently Installed at a cost of $35,000. DESCRIPTION OF SCOPE OF APPRAISAL Q ""'T1 :; E rr'l The subject property has been appraised utilizing all three recognized standard approaches to valuation; the Cost APProach, Sales Comparison APproach and the Income capitalization Approach. This appraisal aiso includes an estimate of value for equipment, but not for inventory or the business enterprise. 16 continued rlofsky inspected the subject property with the owner, Chuck Durand, on June 10, information on comparable land and improved sales, researched data files, past sales, inspected and photographed comparables. and analyzed the data and applied the Cost, Sales Comparison and Income ation Approaches. In the Income Capitalization Approach, the appraiser used direct ation. members of the local real estate community, including brokers and other They also provided information to assist us in the valuation of the subject c::2: =c:o ,..,.,:::c ::::>M"I ~~ !:;'2"'" == _I"T'I == -l no Hypothetical Conditions, supplemental Standards or Jurisdictional Exceptions in See the following General Assumptions and Limiting Conditions section for further the scope of work. .,.., o -l~ 0::::> c::::""" ::::>""" E::::::l M'1~ ~ previously, we are appraising the subject under the Extraordinary Assumption subject property is free and clear of any environmental issues. It was also appraised the Extraordinary Assumption that the information provided by the owner, including the income and expense information, is accurate. ::::>= """ :=> """...- :::::l1"T'l 0"'" ::;=..,.., 5:20 -:s: -l""" o::;=. c:::: ::0 :=>- ...-"'" c::0 1"Mz ;:;:;: .,.., o -l :s: Cii"'M <::::> re:g c_ .t"'?1s g -?"l C)~ -r;.r- <:::::::M"3 .:::=:>(:1'; .r---l c: ;;; m:;:;S ~ 17 AND LIMITING CONDITIONS certification presented in this appraisal report is subject to the following conditions ~cific and limiting conditions as are set forth by the Appraiser in the report: ibility is assumed for the legal description provided or for matters pertaining to legal or title Title to the property is assumed to be good and marketable unless otherwise stated. is appraised free and clear of any or all liens or encumbrances unless otherwise stated. ownership and competent property management are assumed. furnished by others is believed to be reliable, but no warranty is given for its accuracy. c::::= "",CO) ,.,,== ~~ ~~ "",= -,." "",,,,,, -l studies are assumed to be correct. Any sketches or illustrative material in this report are to help the reader visualize the property. that there are no hidden or unapparent conditions of the properties, subsoil, or structures that it more or less valuable. No responsibility is assumed for such conditions or for obtaining the studies that may be required to discover them. assumed that the property is in full compliance with all applicable federal, state and local environmental and laws unless the lack of compliance is stated, described and considered in the appraisal .... o -4.~ 0;::. ==: -c 2;:-c C:::6 r-:'1~ g It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a nonconformity has been identified, described and considered in the appraisal report. 9. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 10. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 11. Unless otherwise stated in this report, the existence of hazardous materials, which mayor 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, and other potentially hazardous materials may affect the value of the property. The value estimated 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 such conditions or for any expertise or engineering knowledge required to discover them. :;:::::'Go'? -c ;::. ....,.- ::::::IM""il 0= ~.C"':I _0 -:s: -..., 0;::. ==: ::0 ~.~ ~z ~ g -l:::E OR ==: - ~; 12. Any allocation of the total value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate values allocated to the land and buildings must not be used in conjunction with any other appraisal and are invalid if so used, :l ~~ 13. Possession of this report, or a copy thereof, does not carry with it the right of publication. 14, The appraiser, by reason of this appraisal, is not required to give further consultation or testimony or to be in attendance in court with reference to the properties in question unless arrangements have been previously made. :=;e ~~ 18 Hans and Limiting Conditions - continued c:::= =C") .....= ::::=..... ~~ !<l2'> == -..... == -I s with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a Iiance survey and analysis of this property to determine whether or not it is in conformity with the iled requirements of the ADA. It is possible that a compliance survey of the property, together led analysis of the requirements of the ADA, could reveal that the property is not in compliance ore of the requirements of the Act. If so, this fact could have a negative effect upon the value of Since we have no direct evidence relating to this issue, we did not consider possible non- the requirements of ADA in estimating the value of the properties and assume no for measuring the effects of any non-compliance with this act on the value of this property. any part of the contents of this report (especially any conclusions as to value, the identity of the the firm with which the appraiser is connected) shall be disseminated to the public through public relations, news, sales, or other media without the prior written consent and approval of the estimates provided in the report apply to the entire property, and any proration or division of the fractional interests will invalidate the value estimate, unless such proration or division of interests has set forth in the report. by the Appraiser of the contents of this appraisal report is subject to review in accordance with the and regulations of the professional appraisal organizations with which the Appraiser is affiliated. "'" o -l~ 0:::- ':::-0 ::::=..., i:== mO :::- g This appraisal report and its contents must be regarded as a whole. Any excerpts from this appraisal cannot be used separately, and if used separately, this appraisal is not to be considered valid. 20. The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. 21. Acceptance of and/or use of this appraisal report constitutes acceptance of the foregoing general assumptions and general limiting conditions. ::::::-c:...<':l -0::::= -0,... == M'l 0= ::::="", ~o -:g; -..., 0::::= .:::== ::::=- ,...= c:::0 1l"'7"I:=:;;:: z C"? o -l:g; 'OM":! :::::::::;:: :::::>-= E;g mo ~ g -r'J Z o~ -nr- ....:::::.?"M ::;::::..c.::: .~-1 .~~ ~ m 19 COMPLIANCE WITH USPAP teasonable valuation method that addresses the Sales Comparison, Income, and Cost ches to market value, reconciles those approaches, and explains the elimination of each chnot used. and separately value any personal property, fixtures, or intangible items that are not real flY but are included in the appraisal, and discuss the impact of their inclusion or exclusion estimate of market value. ~ must be a sufficient documentation to support the appraiser's logic, reasoning, judgment, analysis to enable the client to determine the reasonableness of the final market value ate. must be written and in a narrative format descriptive enough to lead the client to a of the estimated "Market Value" and an understanding of the basis upon which such an estimate is made, and detailed enough to reflect the complexity of the appraisal. The reports must be based upon "Market Value" as defined by USPAP. 6; Disclosure of the manner in which the appraiser satisfies the "Competency Provision" of USPAP. 7. Conformance to the Uniform Standards of Professional Appraisal Practice (USP AP), "Scope of Work." 8. There must be a statement in the certification that the appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or approval of any proposed financing. 9, The appraisal must include an estimate of a reasonable marketing period for the property. 10. The report must discuss any appropriate deductions or discounts for any proposed construction, partial leases, below economic leases, or tract development with unsold units. 11, The report must include a legal description of the property in addition to the description required by USPAP, 12, Analyze and report any prior sales of the property one (1) year prior for 1 - 4 family residential properties, or three (3) prior years for all other properties. 13, (For income producing properties) an analysis of current or expected revenues, vacancies, and expenses (even though the property may be encumbered under a triple net lease). 14. The appraisal must include mention of current conditions and trends that may affect projected absorption and income as they, in turn, affect the market value of the subject property COMPLIANCE WITH FIRREA Yes No v ^ 1, 2, 3, A ..,., Conform to USPAP? Be written and contain sufficient information? Deductions/discounts to value "as is"? Correct value definition? Be performed by State-licenses or certified appraisers? v ^ v ^ NA v ^ 5, 20 Paqe # 36-77 NA ALL ALL c:::E ""C'O m= :::=om $~ !<l:<'> ",,= -"' """" -' 14 16 c:"> c:::> -,"" C::>-' ==:::=0 :::=0-0 ~:g m$ ~ 16 77 76 :::=0"" -0 :::> -0.- ;::::I", C::>"" :::>C'"> !nc::> ......~ -'-0 c::>:::> ==;::::1 :::>- E~ r-n =-- NA 14 16 ~ c:::> -iJ:s; ~;;;; ::;=>- ..-....:0 <=:;0 ~o :=:> ~ 66-73 75 ..-:::! -M :: C)~~ -::-3'-~ ~~~ 1---= m~::: a?:.iE .rr;;:i ;: M' i & Percentage of City Developed: Economic Basel Employment Analysis: The subject property is located in the City of Mounds View, which is a north central suburb of the Twin Cities metropolitan area. Mounds View is a third ring suburb of both S1. Paul and Minneapolis. Interstate 35W extends along the eastern boundary of Mounds View which separates Mounds View from Arden Hills. It is also traversed by U.S. Highway 10 (new alignment) and County Road 10 (old U.S. Highway 10 alignment). Population 2005 2000 1990 Est. Census Census Mounds View 12,442 12,738 12,541 Ramsey County 515,258 511,035 485,783 Metro Area 3,207,067 2,968,806 2,538,776 Source of Estimate: State Demographer, U.S. Census c:::= "",C':l r"':"I ::c :::=-..... s;~ r.;;::~ "",= -..... ""'''''' -l 1980 Census 12,593 459,784 2,198,190 -4~ As of 2000, there were approximately 5,018 households with an average of 2.53 persons per household living in the City of Mounds View. Of the total number of households, 59% of them resided in single family dwellings, 30% lived in multiple family dwellings, and 11 % lived in mobile homes. .... o -I"'" 0-1 -=::> ~""'C :-~ =0 '""'> ~ .........::::l: The City of Mounds View is a developing community. The city is well known for its large residential lots and wooded areas. A large amount of vacant land is still available for development. >"", ""C> ""C,- ::c ..... 0= >.... ::::0 .....:5: a~ -=:: ::c ==-- -= l:::0 M'12 The largest employers in Mounds View are presented below: -1 o -=:: ;::: i::: 'M"ll Employer Sysco Minnesota Liberty Enterprises Multi-tech Systems Midwest Medical Services Mounds View School District Tyson Companies Vitran Express Mermaid Supper Club & Banquet 'Center Products/Services Special Food Services Printing & Related Activities Comm. Equipment Mfg. Home Health Care Svcs. Elementary & Sec. Schools General Freight Trucking General Freight Trucking Other Amusement & Recreation # 615 308 264 192 183 175 140 110 o ..,., -=:: > ~ The total labor force in Ramsey County is estimated at 298,605 workers. The annual average unemployment rate is 4.2% for Ramsey County compared to 2.9% for the City of Mounds View. 21 ity. pata - continued rrowth Patterns! :onstruction Starts: ')ther Significant =actors: The City of Mounds View has never been an explosive growth area but has experienced consistent demand and growth. The relatively slow development is reflected in its land prices, which are below the average for the Metro Area. Mounds View is relatively small, encompassing only four square miles. Access to the city from the interstate freeway system is good, and a high quality workforce is available in the area. c::::= cn~ m= ::=="' ~~ !<"" cn= _;"':"'1 cncn -4 "'" o -4cn 0-4 ;;~ s;g rng g ::::>cn -c::== -c,- ::0 i""M c::>cn ::=="", ::::!o -:::s; -4-c c::>::== c:::: ::0 ::::>- ,-cn c::::C::> rn~ 2 c:-> -1~ O.rT1 <==, ::==-:::l ~-= mE; ==' g "'M 2 o==' -:"J.;- ~E =~ ~~ ~ 22 'CORDJWiit . 8j~ ~_-" J .\ II ~~:'~~^'r~ r-:-~ .' ;::-~~.::: W:t :::i4':u..J -1'1 ~;1~ .~l ~IEi 81 . Slt~D W NE !"., L I~ CITY OF MOUNDS VIEW c::::5 ""l::':l rn ::c ==="" ~~ !:::;2S:=O ",,= _1"T'l """" ~ """ o -,,,,< c;: <..... ::=-..... E::15 =::=- ~ , :\ 5} >-, :51 -01 I 'li i ?31J """t: : -(; .....J .l C> $>'11 ~t<l~ .rdS\)~~'1' r'l;....: .,,~...--~~ '~";;,<",' . j; "~,., ,Jj .;~ '\i/)" ::=-"" .....::=- -0,- :::::l1"T'l 0"" ::=-""" s:;:!o -as: -1-0 o::=- <:::::l ::=-- -"" c:::O rnZ ~ o a~ <::=- E:g -:::I mo ::=- ~ ~ 5'J tit: r: ;1 i~ :\h~~: c::l '-' . i~lfiir~~l~ ..,., 5: ==== -T':!;-=' c~ :;=."" ,...~ ~~ ;:::;j :rn 23 3oundaries: North: South: East: West: U. S, Highway 10 County Road H2 Long Lake Road Highway 65 c:= ""e::> '""= >'"" ~~ !:;2s:?o ",,= _I'M """" -< IEIGHBORHOOD DESCRIPTION .......... -:0- The subject neighborhood is located in the west central portion of the City of Mounds View. .ocation in City: Geographical Factors: The land is relatively flat in the subject neighborhood with a good deal of wetland and few distinctive natural features. General Description of Land Uses: Uses along County Road 10 are mostly commercial with a relatively small number of residential properties interspersed among the commercial properties. The properties immediately surrounding the subject include a newer CVS pharmacy to the west, a day care center to the northwest, Western Bank to the north, an office building to the east and a large apartment complex to the south. .... o -~ ~~ >.... E:e M"!> .... ::c Environmental Considerations: We are not aware of any environmental problems in the immediate area of the subject property. We are not trained in environmental discovery, however, and accept no responsibility for such discovery. ::=-= ....:::= .......... :=,.,.., 0= >.... ~o -:;5 -.... 0:::= <::::l ::=-- _"" <:::0 rM~ Economic Considerations/ Factors Influencing Value of Subject: The high traffic volume on County Road 10 and the exposure of the subject neighborhood to that traffic are the major factors influencing its value. This section of County Road 10 carries traffic between Interstate 35W and Highway 65, Northtown Shopping Center, and State Highway 610. z s:2 :::1.~ -rn ;;;;::::;:::::. E:E me:; :::= ~ Trends/Change/ Life Cycle: The subject neighborhood is considered to be in the growth phase of its life cycle, with limited development in recent years. -' ~i :;E:, 0:::=, -T'J~ c:::: .;r'M :;::::.;::..., r--1 S;~ ~.. ::} 1"";""il 24 ;ITE. QAT ~ - )wner: ~oning: Real Estate Tax Information: Size: Shape: Comer influence: Land to Building Ratio: Site Coverage Ratio: Five D Limited The zoning designation currently applied by the City of Mounds View to the subject property is PUD, Planned Unit Development District. Reference is made to the applicable excerpts from the city's zoning ordinance presented in the Addenda and to the zoning map shown on a following page. General Discussion of Zoning: The purpose of the PUD, Planned Unit Development District is to provide a district for a wide variety of uses allowed as determined by the city council. The subject use is a legal, conforming use. The following tax information was obtained from Ramsey County: 2009 Assessor's Market Value Land: $ 571,000 Building: $ 929.000 Total: $1,500,000 2008 Tax Data General Tax: Special Assessments: Total: $52,004 $ 0.00 $52,004 71,438 square feet or 1.64 acres according to Ramsey County, Trapezoidal. The subject is located on the southeast corner of the intersection of County Highway 10 and Silver Lake Road. 10.2 to 1 including the convenience store and the car wash. 9.8% including the convenience store and the car wash. 25 == ""C':l n"I= ~~ :::=>-4 !<!:O ",,= -'"'" """" -4 c:-> o -i~ 0;:::. <'"t:l :::=>'"t:l ::;::::> :-n~ ~ =S~ '"t:l,- :;:::Jr"'f"l ocr.> ~C"'> _0 -:;:s --:::> o::=- <::0 ;:::.- _Vol ,=0 =~ z C"'> o -l:;:S Om <;:::. :;;;:::'-c ~-;: =::::: ~de ~ ~- ~~ :;;F5 c:: .i"?'l.~ ~~i ~~~ ~: ~ M ::a i te Qata - continued ite Improvements: :asements: :ncroachments: Utilities: Parking: Flood Data: Access: Visibility: Soils: Topography: Paving: Curbs: Walks: Bituminous and concrete Concrete Concrete on-site and along Silver Lake Road; bituminous along County Highway 10. None None Sod, with some trees and shrubs. Alley: Fences: Landscaping: We were not provided with a survey, but we assume typical roadway and utility easements. c:::= c:nC"> m::%: :::=om s;~ c;:~ c:n= _m c:n c:n ..... We were not provided with a survey, but no encroachments were noted during our inspection. Electric: Gas: Sewer: Water: Storm: Excel Energy Centerpoint Energy Metropolitan Council Environmental Services Mounds View Municipal Mounds View Municipal c:-> o -l~ 0:::=0 -=: ..", :::=0 ""Cl r- ::c C:::o 1""'1:::=0 g Ample on-site parking along with a large fueling area under a 45' by 130' canopy. :::=0 c:n ""Cl :::=0 """O.r- ::c 1""'1 oc:n :::=0 c:-> ~o -;:s: -l-c 0:::=0 -=: ;:::l :::=0- _en eO ,.,.,2 Zone C, area of minimal flood hazard according to FElVlA Map #2703790001 C, dated March 2, 1983. 2 c:-> o .....;:s: Om -=: :::> S:E mS g One curb cut each from County Highway 10 and Silver Lake Road, along with two curb cuts to the driveway on the southern portion of the site that leads to Silver Lake Road. The site has excellent visibility from County Highway 10 and Silver Lake Road. :!! o~ ""'M;- ~~l ?;; :g; : ~: ri We were not provided with a soil test report. We did not observe any unusual settling of the improvements during our inspection and assume the soils provide sufficient support for the improvements. The site slopes gradually away from street grade. 26 ther: The site layout is very well planned to accommodate building functions, access, and parking. c::::5 CI':lC'> ,..,.,= ~~ ~~ CI':l= _t"T'I CI':lCl':l ..... Data - continued rironmental :tors: We have not received an Environmental Site Assessment on the subject property. At the time of our inspection, we did not observe any site conditions that would lead us to believe there might be a problem. However, we are not trained in the assessment of environmental hazards and accept no responsibility for such discovery. affic: The average daily count on County Highway 10 at Silver Lake Road is reported by the Minnesota Department of Transportation to be 21,600 vehicles per day, with 5,900 along Silver Lake Road south of County Highway 10 on the 2007 traffic count map. .." o .....~ 0;::0 C::::-C :::O-c E:;::C .."g .." == :::OCl':l """C:;:::. -c,- ::c ,..,., OCl':l :::0.." ""0 =~ ....,t-c 0;::0 c:::: ::c :::0- ,-CI':l =0 M"':lz 2 .." o -l~ =...,., :;;2.'C c-c mS ==" g ~ ~~ =~c:-: -rl~~ ~~::: E;::!$i ...,.,~- 242 ~':2 6 c ~ 27 ZONING MAP rx: 0- I ~1 Ul ~: c..\ \ I \ c:::= "",C'> m= :=om $~ !:<l2" "",= -= ""'~ c:-> c:::> -~ C:::>:=o -== ...., F-c c:::S =:=0 g ..-<::: ;:;."'" """;:;' """r- ::0 m c:::>"'" ;:;'c:-> 5:2c:::> -:;g -""" c:::>;:;. -== =" ;:;.- r-c:r. c:::C ,.,.,2 -l == "" ~ ~ 28 " =:5 "",= M"I == ===-~ ~-4 !::;:l2" "",== _M"1 ""'~ PLAT MAP -r:.;. J:-/ .tp t> -.( , , l /i j"""" L-- ~:4 ~/ 110 ~l " ,,~ /':: /'~ 'v~/ 100 / ~ ,,'V:., //~S ,:cp, . ~ ~ ''"'", / A , / ' ~, I"~>' 107 ~ ,-:;> .j' em '~ .:;:;,'fJ 't ,,f '~0, /.,L. .'. l"3) ',- ''.i -...:::(c;.., -< ~., '" 106 "(, ..... "V'. ~/ ()~ ""l2 .w .I '" / "-..,/ <0 ~.5' .1}. ,I ~ (Oil I, 110r,,~! ' \....() . . s/, ! '>~ ' '"'' ~r- \1:?r ,,;I ~~ ~ 1: 2 ~J)-I'J. ~ \ O~ "~)' \ ~" . 5, ,,;';1 ~t""- G r 1 1 (51) ". ~..?-" ..,~ ..... ~" '. kf..~? '-"" . ,./b ~ ,/ ~ .i ' '" " ' ,/ .:';;.., l.~ v~(~ //fJ '-,'" r ........' j , t i 1 '-,/" ,7 (3'1 /'~" ,'~ / ~,// iI" " " '< . :1"" '- /' U ' " I.~?" I ~ ~~ I~ G~ ~ \ I!,i~ ~-4'''''''''~ / ' &",er "'<~ , / C' ' ..' 'I "' ", ~ / r"\' ,^,.,c '" .... 1 / """- . "". 2 ;:,"" 1 u,' . ' ~ ' , \' \ 1 0" '" .~ " t", I, "- 4. \ /,1,.... 4;-" -\ - ,~ ~." ",.e ' .U~,' ,.;:3' I.;; " . , .. ,r .... ."~ ^O ' t'i>. >:: -,V ' ' 1 IX . ,,/ '-.... . , ..} i "" 4 " ",0/ " ' #", . .,. i ' ' '.' ,--> ,"" . d . '" ,." ""'. ' .. '- ~ / d , " ' .' ,'. ' /~ \ $'~"'^" 'R, iv~ /.. .3 ,~..~rr ".;.. / " // \' l ."" {,,'''' .' ~ l\ l " //,,:' ''0'. .l;,';-~ ,-,,' (;<) N o 'vV~ <t~ , . " 7'- "", I"' ; , , "" '" "0",,' ,/" '-'....,-. K' 1 8 ,:1 ~ \ ", .. .. ~'~~::. / '~" "",:-.. "" & I, ." .,'~"~~.~ /'-~" ,.', n , ,:,' I. · ._.".o~w' p ",,,,,,) '-. ,)~\ $<" _ ~ /~\ : ~..~ r ~y~,~\\v . b ~ ~ ~'." ,4' ^' . ._" ,_ _" r. y ~ _ ""'w;;:. 1.' ,_" :\', /.... ""''''''~ /I, -"Y . , I ,.,_ :. ". .v-,.--) ~3.. ~ i," V ~1 '--...-----~/ '"=,~" : ~ j ... ",~,,' . . ------- "' ,_i..-----.--- ~~~ .{)-. ~l W:;. ~~ ". ~ .y r:-.~ /-i ~ '" (4) ~ \~ ~ ,...-:.' :0:-. ,: "" I' ,\ .' 1 . \ ~ .;, @ t;; >6 o '" . ~ .';;;, ~?'./' ((,,, ...., c::::> a~ <===- ===-'"'" .-'"'" =::::0 M"IC::::> ~ ..:.::~ _ _ J~2J' ~F.D. ESti1-. / o 26 C-"':l -0::;::::' s~ ===-"'" <:")c:"'> :::= -~ =;g <::::0 ===-- ,-"'" =c::::> .-n2 ..., , .... ~'.::'- ~qj,", ....... 3 ......... :;E ...., c::::> 3~ .===:~ ====- E::g rnS = g [i:F) ~ ----:..'*19' ~~ O:::=-S: ::::~?a :;; c:t:l :: ::-.;;.....<J t"'" ~g~ ~E .rn:1 W.~.1"EII.. W{)i:Z:S 'SSM"! DO:. InOer ~f:2;T'"i:: i: ~ 29 Prepared for: Commercial Appraisal & Consuliing Mounds View. MN W\,/w.interfiood,com . 1-80Q-252-6633 l~ ; !: ,~:..~:~/ I; //~'// -.-- --'j l~{f i <{, ./~j//,:--, /I ;- .<~ ~ /;;;/'",- I. /1'7 \\ ~ ///1 '\ \ -----5 ...-:'~~~--::~- /~"'.(/ \1. Nv3lOE R'O..~D- .-~ .....:/?;7 -=::~'1'" --)f1 II ~// '~~,// i i tf )/ / I . e H/I II '10 // ii /" u /;:/ .' I .---1LJ ~ ,<.~./ ir--"': r ~ /:;>>ZONE It p '-:::, (/~/' (EL 905 !~: ~~i:}:)' ,~ ' )"f <, \~\; /';</"~', 1/ \. i " /;::2/ "~" /' ! i ~I ///,,-, l lL Ct1iLD AVENUE------:--. ,ty ~.~J,~= /'l" ~ ,/ il _Al;l "-~-=-/ '~ LS;LvEn ROAD ~.,--. '< -. -7 I ~ @)~ ~ ~:/ ~ / ! QA K LA AK 1JR1 ve. POND SILVER LI\KE ROAD=- ...- _ZONE AH (El. 90 '1) "'. .,,) Fbod Hazards Map Ii . i Map Number Ilil\I 2703790001 C Effective Date March 2, 1983 @ 1999.2008 Source Prose andlor FloodSouroe Corpomlons. ;<1 ri9hts reserved. Patents 6,631,326 and 6,673,615. Other patents pending, For Info: Info@flcodsource.com. 30 " I i I I I, I' I ~ I :1 \ ~ I ! : \ I I i i I c:::= enE;a l"'n- >rM ~~ !::;2l<?<> en= _M'1 en en -! c:-:> o -l~ 0> .::::..", >..", E:E:5 """> ~ >CI> ""';:=. -0...... ::::Jl""M CCI> >c:-:> c:-:>o =ES -<..", o;:=. .::::== ;:=.- ,-CI> c:::O 'O"'Mz ~ c d~ -==::=0 :;;:::'-c s;S .no > g ..) -:"'l : ~r o~2 -:.""5 ~ :: ::::::M"1C :';::::I en.. E ::!~ mES. ~( n'1 : ;:: == :2 ~ I..DING DESCRIPTION -- - 1eral Description: (onological Age: oss Building Area: Exterior Description: A. Substructure: 1. Footings: B. Superstructure: 1. Framing: 2. Floor System: 3. Exterior Walls: 4. Wall Height: 5. Exterior Doors: 6. Windows: 7. Roof 8, Drain System: 8. Special Features: The subject is a typical Holiday Stationstore. It consists of a slab-on-grade, masonry convenience store and a masonry. conveyor-type tunnel car wash. 10 years, constructed in 1998. Convenience Store Car Wash Total 4,489 square feet 2.500 square feet 6,989 square feet There is also a 48 square foot cashier's booth near the car wash. c::::= ""C':> m:: s=~ ~l2" ",,= _m "" "" - Continuous poured concrete footings with reinforcement steel bars for both buildings. e-> o _"" 0- -=:;;::=0 ~:E Egg "";::=0 g Steel frame with concrete block walls for the convenience store and concrete block with a concrete panel roof for the car wash. poured concrete slab-on-grade for the convenience store and car wash. 25"" ...,2 ::::0;"'" 0"" ;::=Oe-> ::::0 -::6 -..., 0;::=0 -=:; :::0 ::=c;; Eo ,.,,"'" Concrete block with brick veneer for the convenience store and the car wash. 14' for both buildings. 2 e-> o -1::6 OM,'"1 ::::::~ F::g =::::0 '''0 ::>> g The entry doors for the convenience store are typical single pane glass, aluminum frame doors. The rear service doors are metal. There is an 8' by 8' overhead door for the convenience store and two 8' by 10' overhead doors for the car wash. Fixed double pane glass, aluminum frame storefront windows. ~~ o;::;g -no '2 ~~~ :::';2 ~:;a The convenience store has a rubber membrane roof with river rock ballast. The drainage is via a scupper and downspout system. A fuel service island with a 45' by 130' canopy and three underground fuel tanks. ;::;: c ~ :;a: ~ 31 Building Description - continued II. Interior Description: A. Interior Walls: B. Doors: C. Ceiling Height: O. Interior Finish: 1. Walls: 2. Floor Covering: 3. Ceiling: Gypsum board throughout the convenience store. The car wash has exposed concrete block. The interior doors are mainly hollow metal service doors. The ceiling height is ten feet in the convenience store and 13 feet in the car wash. The convenience store walls are mainly painted gypsum board in the customer service area, with ceramic tile in the restrooms and fiberglass wall covering in the food prep area. c::= enC':> ....,::t: >"' ~~ !<~ en= -"' en= -; 41 Quarry tile throughout the convenience store, ceramic tile in the restrooms and sealed concrete in the rear storage areas and in the car wash. .... o d~ -=:> ;:::.""C E;g .I"'M~ ~ The ceilings in the convenience store are dropped 2' by 4' acoustic ceiling tile with recessed florescent lighting. The ceiling in the car wash is exposed concrete panels. ....c:::::l Plumbing system for two three-fixture restrooms as well as plumbing for the sinks in the food prep area and for the convenience store. The car wash has the appropriate plumbing for a conveyor-type car wash. ;:::.= ""C;:::. ""C,- ::::>l"n 0= ;:::'C"':l ::;20 -::is a;g -=: ::::> ;:::.- ,-= cO M;"'l:=;::: Ill. Eauipment and Mechanical Systems: A. Plumbing System: 1. Piping: B. Energy Systems: 1. Heating System/ Air Conditioning: 2. Electrical Systems: IV. Miscellaneous Equipment: A. Fire Protection: B. Elevators/Escalators: C. Alarms/Call Systems: O. Unloading Facilities: ~ -; Q ;;; E ...., 1 wo combination rooftop HV AC units in the convenience store. 600 amp service. Rigid conduit wiring. Duplex outlets. o .." ;;; ~ IT; Wet type sprinkler system. None Fire alarm and security systems and cameras. Service door. 32 Description - continued . Renovations/Additions: Deferred Maintenance: V/I. Qualitv & Condition: A. Quality: The interior of the convenience store was recently renovated at a cost of $143,886.69. This renovation included a new check-out area, a new Holiday Pantry area and a new exterior sign. Nothing major of note, considering the improvements are only ten years old and the convenience store was recently remodeled. Excellent masonry construction for both buildings. c::: en ,..,., ;::. z ;::. !< en c:;:; B. Condition: Good. V/II. Environmental Conditions: Our inspection of the subject property indicates that the property is constructed of the latest design and materials and that no adverse environmental condition is evident within the improvements. However, we are not experts in this matter and will not be held liable for any conditions subsequently found that may affect the property. 33 OJ ~ =" = Q, =. ::l (J'J " (j) I""Ii' (1 :r *, J I I I I, 0:: 0:: i I l' I ' I \ I ... I \, , I \, I 1\ I \. I I"'i \&,1. \---> .) *---~----p.f ,I\l ./ \, " I , I I, I I \ 'I , I, t " \ I. In V~ I, \, '\ \ \, \, ~\ \. '\0\ Lr2 '::;q, \ - " " \"" " ....\ "--l lJi.' ,W .' - ! \, " \" /' , ..,/ \, \ " .J{ 'f \. 0.) .+::> == ~ w- o I: @ ~~ 5:;;;: o:::='" .uc ~l- ~ u.l """::::> 0-, =c::: 2='" c:::o c.. t- a:::c 0.... ....c::: =0 u..t c:: -' c.. c::: 0- = c::: G3 C:::LU 0::> g::;i c.. ='" c:::o t;- o .... ~:!2 LUcn =:::; ""=: t;~ .......... E;cn =::::1 HIGHEST AND BEST USE ANALYSIS DEFINITION: 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 value.,,4 Highest and Best Use Analysis identifies the most profitable, competitive use to which a property can be put. PURPOSE OF HIGHEST AND BEST USE ANALYSIS Highest and Best Use of the subject property is examined on an "As Vacant" and an "As Improved" basis. The Highest and Best Use of land or a site "As Though Vacant", assumes that a parcel of land is vacant or that it can be made vacant through the demolition of any improvement. The question to be answered in this analysis is, if the land is or were vacant, what use should be made of it? What type of improvements, if any, should be constructed on the land and when? The purpose of estimating Highest and Best Use for land or a site is to identify the potential uses of the land. C"'> o --"'" 0;; <-0 :::=-0 r-::::I C:::O M"t:::= ~ "As Improved", Highest and Best Use analysis identifies the property use that can be expected to produce the highest overall return for each dollar of capital invested and to identify comparable properties. ~ As long as the value of the property "As Improved" is greater than the value of the site as unimproved, the Highest and Best Use is the use of the property "As Improved". Once the value of the vacant land exceeds the value of the improved property, the Highest Best Use becomes use of the land as though vacant. :::="", -0:::= -Or- ::::Il"M 0"'" ==-C"'> 5:20 -:5 ;;:l;g <= ~~ l"l"l~ CRiTERIA IN HIGHEST AND BEST USE ANALYSIS The Highest and Best Use of both land "As Though Vacant" and property "As Improved" must meet four criteria. The Highest and Best Use must be legally permissible, physically possible, financially feasible, and maximally productive. In this case, "As Improved" will refer to the subject as it is to be completed. ~ c:-: C -l <: =?R ~~ E:::E .IT'l~ ~ The tests of legal permissibility and physical possibility must be relevant before the tests of financial feasibility and maximum productivity can be examined. AS THOUGH VACANT 2 0:::= -n. .r-' <r"M .F=.~ .~~ 2:< n"'J Legaliy Permissible - The zoning designation currently applied by the City of Mounds View to the subject property is PUD. The purpose of the PUD, Planned Unit Development District is to provide a district for a wide variety of uses allowed as determined by the city council. A complete descriptive copy of the zoning ordinance is found in the Addenda. A commercial use.is legally permissible. 3Appraisal of Real Estate, Tenth Edition, Appraisal Institute, Chicago, Illinois; 1992, pg. 275, 35 Highest and Best Use Analysis - continued physically Possible - The size, shape, terrain and accessibility of a parcel of land affect the uses under which it can be developed. Frontage, depth and ease of access determine its utility. The capacity and availability of public utilities as well as topography and subsoil conditions also determine its potential use. The subject site can physically accommodate a variety of retail, office or general commercial developments. It is well located on the corner of a busy intersection with excellent visibility from both roadways. Public utilities are available, and the entire site is buildable. Financially Feasible - Of the potential uses discussed previously, we believe that the use of the subject parcel based on our income analysis and the character of the neighborhood have determined that most general commercial uses could likely produce a positive return and, therefore, be financially feasible.. A use is financially feasible if the net revenue generated by the use satisfies the required rate of return on the investment and provides the requisite return on land. A total feasibility study is beyond the scope of this report. Maximally Productive - Of the financially feasible uses, the use that produces the highest residual land value consistent with the rate of return warranted by the market is the Highest and Best Use. We are of the opinion that a variety of retail, office and general commercial uses could produce the highest value of the subject property and are, therefore, its Highest and Best Uses. .,., o .....en 0..... -=::= :::=> - ..--c <::::0 f":'2$ ~ AS IMPROVED Legally Permissible - The subject use is a legal, conforming use under the current PUD zoning. :::=>en ""t:J:::::;:::. '"1:1..- ::0 r"M oen ::::-c:"':) ~o -:is d~ -=:: ::0 ;:e;; ,=0 ;-;-:2 Physically Possible - The subject has been developed to conform to the physical characteristics of the site. The layout is typical for a convenience store with a car wash and fuel service. Therefore, it meets the criteria of being physically possible. Financially Feasible - The potential uses of the subject property were discussed above. The current use of the property has proven to be economically feasible since its construction in 1998. ~ c ....."" 0;::;: -=::;; ::=>..." .-- c: -= TMe E Maximally Productive - Of the financially feasible uses, the use that produces the highest residual land value consistent with the rate of return warranted by the market is the Highest and Best Use. We are of the opinion that the current use produces the highest value of the subject property and is, therefore, its Highest and Best Use. -n :2 o:::=> -n.~ CONCLUSION c::::rn :;::::::'Gr.> .-- 5~ .-.~ iYJ Hiohest and Best Use, as Vacant - Based on the preceding analysis, it is our conclusion that the Highest and Best Use of the subject property "as though vacant" is for general commercial development. HiQhest and Best Use, as Improved - Based on the preceding analysis, it is our conclusion that the Highest and Best Use of the subject property is for the existing improvements as a convenience store with fuel service and a car wash. <: M :2 ~ 36 There are three recognized approaches to value that may be used in real property valuation. These three approaches provide for analysis of market data from three different premises when all are available. These three approaches are the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. One or more of these approaches are used in all estimations of value. The Cost Approach provides an estimate of value based on the cost of replacing or reproducing the. property with a property of similar utility (replacement) or the cost of reproducing an exact replica (reproduction). It first involves valuation of the site, usually by comparison with sales of similar sites. The cost of the improvements, less any applicable depreciation, is then added to the site value to obtain an indication of total property value. The Sales Comparison Approach involves obtaining an indication of the property's value from analysis of the most recent sales of the most comparable properties available, with adjustments for characteristics of the comparable sales property or for other items of comparison to the subject property. The Income Capitalization Approach provides an indication of value based on the discounting of an anticipated net income stream to present value by means of an overall capitalization rate, which includes recapture of the original investment. The Discounted Cash Flow Method can also be used to discount the anticipated net income to present value, with the discounted value of the net sale proceeds from the property at the end of the income projection period being added to the value of the income stream to obtain the total indicated present value of the property. c:-:> o ~OI> 0"'; ..::~ >..., E== M"lo > g ~ The indications of value obtained from the applicable approaches to value are then correlated into a final estimate of value after carefully weighing all the factors in each approach which may affect value and the relative strength of each approach utilized. In some cases, not all of the approaches to value are relevant. In those cases, the appraiser is required to explain the reasoning involved in eliminating any approach that is not applicable. ::::'.Ct':) "'0> ;g~ 001> >c:-:> no ~:s ~"'O 0> ..:::::> i=:g; <::0 r-nZ ~ '" .S a~ ;;;~ .-.., <:::: r-:"iIs ~ !l1! 0:::: -r:l:l""" '"' c:.< ~ == 37 SITE VALUATION BY SALES COMPARISON APPROACH The Sales Comparison Approach is the most commonly used method utilized in valuation of land that is actually vacant or land that is being considered as though vacant for appraisal purposes. Sales comparison is the most common technique for valuing land, and it is the preferred method when comparable sales are available. To apply this method, sales of similar parcels of land are analyzed, compared, and adjusted to provide a value indication for the land being appraised. In the comparison process the similarity or dissimilarity of the parcels is considered. The appraiser gathers data on actual sales and ground leases as well as listings, offers, and other data; identifies the similarities and differences in the data; ranks the data according to relevance; adjusts the sale prices of the comparables to account for the dissimilar characteristics of the land being appraised; and forms a conclusion as to the most reasonable and probable market value of the subject land. In arriving at the market value of the subject site, we have relied entirely upon the sales and offerings of vacant land. We have investigated the terms and conditions of the comparable sale transactions to determine the attitude and intent of the purchaser, and we have attempted to be objective in the analysis of the comparable sale transactions without inferring motivations. It should, however, be realized that there is a wide spectrum of buyer and user motivations and purposes in the commercial real estate field. A comparison has been made on the basis of the subject property having a Highest and Best Use lias if vacantll for commercial development similar to that of most of the comparable properties. The sales and offerings of land considered possessing the highest degree of similarity to the subject property and, therefore, to provide the best available indicators of the value of the subject site are presented on the following pages. .... o -1"'< 0-' 0::::> ;::0.'"'0 ~;g n-:~ g 25~ -0.- :0' m OCl:l >- M..... ~Q -s a~ O::::::::l ::::.C;; r-Q .~:=;;: ~~ ~~ >- r-_ ?ii ;;a ~r= ::::::'17 =:~ ~~ M" 38 ~ CD < 0,) C- O,) - o' ::l OJ '< C/) 0,) CD (j) () o :3 "0 0,) ..... (ii' o ::l )> U u a 0,) (") :::; I (") o ::l c:t ::l C CD Q.. CIJ C S S )> ~ o 'Tl r )> Z a CIJ )> r m (') o s y )> ;0 en " z CIJ )> (j) c :3 ::l ....) 0,) ..... '< o -+. (") o :3 "0 0,) ..... 0,) 0- CD 0,) ::l Q.. 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Z -0 ,. g ~ ~ c. :2 J: .s: !:grtll Blvd N'N Z '" 1 051h Ln t-,'\'V .i1: .0 10:Hh LI'i NV\' 1 ::5 '-LJ Z 1b ;::: !i2i UJ Z s: 1i5 ;,.. _C:' a' FUlmore Par-k i ('1.?11-1 A\'e, NE 1.:.' 1.:.' ~~ q 'b .i:: Q;' ;:: B 9:l !<. ~ .gi'3l Ra'tl S' '8' ;:.:~ N N E s 9211"1 A...'f:: ~~E i 'LeI Z 5t7th A..." NE: :~ . < ...\~ <:)-' - tr.":!df' ,,",' ~ .0 ~ -,p~ Jfl1."".-!"" .;'~:'. ....... \ 1 C'/;1h A:...'f!. NE J 't LeI Z ~ ~. f!J ~ z ;;; (71 ;:>- III o 'all ~ w z Airoort. ?~rk 1"5 ':.:: ~ 1t}lstAi~~ NE iOl,;tA' o A ';!;i e. .~~ '" g COltntjl-Blaine ~ AirpM ~, 95111 .I\.'<P. NE ..... o -Ic:n 0-1 o::::;:=. ;:=.::::2 E~ M"1:::;:::. ~ i..": . - Clo~~r~E~~ .~ -, to. . , "lvI' NE II 93-,<1 Ln NE . 1 Blaine CJ LU UJ Z Z "C 0::: (;) ~ ::; ~ ~c:n "'Cl;:=. "'Clr- :=,.,., oc:n ~..... s:2o ~ES ~;g 0:::::::> Fe:; c:::o ,.,.,2 $--./ ':;H,tA'/e"" ,'i91h .1\.'.'", !.JE i 10 ! LU Z 871tl Ln NE(;) ~ ~ M,mo' b~ tJ1 :='_"'101" (iGth A:Q'9 NE:: . I'~~ 5"- ~ '" -< 2:: z ;:: rfj ai i- '" g:~. i;;j .f-' spring La' " ' . .. - ':!J ~!).:111 ~'"\\'~ Nt:. ..:::. ! 411 Unit~' Hospital '<(\'2. ,,<::- " v~ NE t~_,~'5~ --.)$ -- LeI Z 1> ~ ~ ~ '~ ~ Natiati:81 Spcrts C6?f",ter ':;:.3c'.;~ A'le N E ! 37! Kane fvi ead CiVtS LV Z en .=:" ,', ,:5 'Cl o 3:! ! ~~ 0 g ~:.: ~]u- 0 11 '" ::f ~ ""' ::: -JES O,i"'M ~~ c:::'"'" """S ;:=. ~ Lak"s ltl-= t='ark HiII',i.,,'il Rd T em':e Dr Road i 75th Ave ~~E: . ()i1cfldaga Sl NE j ~51 L.!..;l z !~l '0 SlIW2f 0::: \/['''''11 9 ... '_Jl. m Park -' ii Gi ~ '" ....J Vie1.Jad ~] '" i; 1 1 :f.nileS;~ ~, c -n ~ o:=- -;"';! zo- ;;;:::::.'r7"il ;::::..et:;l ;--1 c:::- ,.,.,ES 2:3 ,..,., "'0 .~ ~. Riely' 'l.f~l(lIJtjale Or i 1:tJ i h. :::0 <:: <:: m 2 Cl ~ 40 Site Valuation By Sales Comparison Approach - continued ADJUSTMENT ANALYSIS The Sales Comparison Approach requires adjusting and analyzing comparables to derive a value estimate for the subject. The various sale prices are adjusted after identifying relevant adjustment factors and after quantifying the effect of a difference between the comparable and subject. Before any adjustment can be identified or quantified, a sale must be sufficiently comparable to the subject. Even if sufficiently comparable, a determination must be made as to the adequacy of information collected concerning a sale. The elements of comparison include property rights, legal encumbrances, financing terms, conditions of sale (motivation), market conditions (sale date), location, physical characteristics, available utilities, zoning, and Highest and Best Use. The most variable elements of comparison are the physical characteristics.of the site, which include its size and shape, frontage, topography, location and view. The difficulty in quantifying adjustments is a result of real estate being unique in nature, with no two properties being identical. Additionally, not all differences require an adjustment. This is true if the market does not pay a premium or lower the price for a difference between similar properties. The appraiser typically will have to rely on reason and experience to decide which differences should be adjusted, as well as the magnitude of any adjustment. ..., o -""" 0- <==- ==-"'"' E;;5 I"'M~ g ANALYSIS OF LAND SALES ~ The subject is located on a high traffic county highway in a well established suburban community. We have selected five properties that are all in similar locations in Spring Lake Park, Mounds View and Blaine. One comparable is one lot removed from County Highway 10, two are nearby on Highway 65, one is in the Blaine Town Center commercial development at Radisson Road and 109th Avenue and one is on County Highway 10 east of Highway 65. They were all used for commercial developments. Four of the properties represent sales and the fifth comparable is a current listing. ==-<:- ",",- ;g~ 0,,", ==-C" 2s -J~ Q~ <= Fe; c:::C ~2 ADJUSTMENT ANALYSIS -; o < ==- E r':M: The necessary adjustments are as follows: No adjustments were necessary for "Property Rights Conveyed" or "Financing Terms". Comparable #5 was adjusted downward for "Conditions of Sale" because it is a listing, not an actual sale. All the comparables were adjusted upward at 3% per year for "Market Conditions" to reflect market increases for inflation, and appreciation, adjusted to the effective date of the appraisal "As Is" as of June 10, 2008. This adjustment reflects the demand for vacant land in the metro area, especially in areas that are fully developed like the subject neighborhood. o -:"l < :::= ~ m All of the comparables except for comparable #3 were adjusted for location. Comparable #1 was adjusted upward significantly. It has limited visibility from County Highway 10 because it fronts Manor Drive, not the highway. 41 Site Valuation By Sales Comparison Approach - continued Comparable #2 was adjusted downward for location because it is on the corner of a superior intersection of Highway 65 and 93rd Avenue, just north of U. S. Highway 10 (not County Highway 10). Comparable #4 was adjusted upward sli~htly for location. It is located in the new Blaine Town Center area at the intersection of 109t Avenue and Radisson Road. It is a popular new commercial area, but development has slowed and this intersection lacks the traffic of County Highway 10 near the subject. Comparable #5 was adjusted slightly upward for location even though it is on County Highway 10 because it is in an inferior location east of Highway 65. All of the comparables were adjusted for size using Size Adjustment Tables as a guide on the premise that usually the larger the site, the lower the unit price. This adjustment is based on the entire site area of 71,438 square feet because the entire subject site is buildable. Only comparable #5 was adjusted for zoning. It was adjusted downward because it is zoned for residential use. The adjustment was minimal, however, because the City of Mounds View has already indicated that they would be amenable to a zoning change. The other four comparables were not adjusted because they were all zoned for commercial uses like the subject. """ o -Ic:n 0-< ==::== ::=> ~ E;g I"'MO ::=> g No other adjustments were deemed to be necessary. ::=>c:n '" ::=> '" r- ::::>I"'M oc:n ::=>""" ~o ~:s: -<", o::=> ==:: ::::> >g; Eo M"'l~ Q ~ E .n"'l o -n ==:: :;::. E .?'n 42 ~ CD < !:l) e- !:l) .- o' :J 0- '< (j) !:l) CD (J) () o :J ...J -0 !:l) -. Vi' o :J )> -0 -0 -. o !:l) () ::; 1 8 ~ S' c (l) Q.. Zo 0 0 oy,()o 0 0 olllO(j) IIlN~(j)(j)d:OC;:~OI1-oF):>):> -i 0 c ::;.0 =< 0 S !:l) 0 S' -. 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CO I '?ftOOO~ ONOOOO 0(0 W 0)-" ~ 11 ~ NOOO6" <.J1"':'-..J000 (l) -" '?ft~~~~ ~~~~~~ 0"(;.) I . OWOOOO O,.!:::. -...! 0)(;.) 0 ~ :J~ ~<.J1000) <.J1"':'0 1 00 ~N oN 0<.J1 0 0 ~~~~~ "'N"'~"'''' 0)' 0 ...... <0 to =",.!:::. (l) - z o ?-f ..92 U )> ~(Oo. ~~C. (0 (0 en o.:J..... , 1li 3 (!:l(O (0 :J illUl 0.- -.0 C "'" en ..... 3::; (0 (0 :J :::!1 ....."'" en~ u- (0 0 _c o "'" "'" (0 ;:::;: .....(0 ::;3 (0 en W -' en :J ..... ..... .....;::r ::;(0 (D)> (0 0. ~c. (0 en 3 3 en (0 ~ :J ;::r..... o' )> ;::r:J ill~ "",,< (0 en ill (ii' 8:0 -. "'" ;:fa: (0 ill rog :J < 0.(0 ~ ill (0 "'" (0 :J () ~c ro:3 o.c ow cO: .....< ill (0 - .....ill (0 :J ::0. ffi3 () c c~ :3 u c (0 w() 0: ill <- (0 CI ill!:. g.~ '(0 ~o. 3u (0'< ;:;.3 en c ::J"'a: illU <-< (0 -' :J c:r(!:l (0..... (0::; :J (0 ~~):> (l) (l) 2- 0. ill . _,_ C ill,-' (J) :J):>ro ):>.9: 0. o.c""" 1--. en \J c ..... ::!. (J) (l) () roo.(l) 0.-0::::0 -0 ::!. 0) ...., () ::l -' (l) t.O ~ (l) ~~~ -" -" -" ,.!:::. vi (;.) o,:"""0.:J 0)0).j:>. .- o ~ -" ~ o o .J:::,. W u.J :3 <:::: ==- <::> I- Site Valuation by Sales Comparison Approach - continued CORRELATION OF ADJUSTED LAND SALES 71,438 x $ 15.00 $1,071,570 $1,072,000 Square Feet Rate per Square Foot Indicated Value for Entire Site Site Value Rounded The subject site has been valued as if vacant. It was compared to the properties listed above. The range in adjusted sale/listing prices of the foregoing properties is $13.34 to $18.00 per square foot. The mean adjusted price is $15.16 and the median adjusted price is $14.66. Comparable #1 is the least comparable property even though it is near the subject on County Highway 10 because it does not front the highway. The mean adjusted price of the remaining four properties is $15.62 per square foot and the median is $15.11 per square foot. Based on our analysis, it was concluded that a value of $15.00 per square foot reflects the current market attitude for the subject site. This value is between the overall mean and median prices and near the median of our four best comparables. THE iNDICATED VALUE OF THE SUBJECT LANDIS: ..., o a~ ==:;:::=> ;:::.-0 E:;:5 mO ;::. ~ ONE MILLION SEVENTYDTWO THOUSAND DOLLARS $1,072,000 ;:::'en ""'C:;:::::. -Or- :::::;1m oen ;:::...., :::=0 ~:;;;; d~ .:::= ;:::.- r-en <::0 n;;2 z ..., Q -;:;;;; Oi""n ;;;:;0 ,.- '"'Cl <::::::J '""'0 ::::. ~ ..,.,: -r Q$~ -n~_ ==== r"'M: :z:=,c:,.?.. E:~5 ,.,.,:;;;; - .~.~ ::::. c Q M'1 :;;;: o ::::. 44 "=- In the Cost Approach to Value, the cost to develop a property is compared with the value of an existing property or a similarly developed property. The Cost Approach reflects market thinking by recognizing that market participants relate value to cost. Buyers tend to judge the value of an existing structure by considering the prices and rents of similar buildings and the cost to create a new building with optimum physical condition and functional utility. Buyers adjust the prices they are willing to pay by estimating the costs to bring an existing structure up to the physical condition and functional utilities they desire. THE COST APPROACH TO VALUE In applying the Cost Approach, an attempt is made to estimate the difference in worth to a buyer between the property being appraised and a newly constructed building with optimal utility. The appraiser estimates the cost to construct a reproduction of, or replacement for, the existing structure and site improvements (including direct costs, indirect costs, and an appropriate entrepreneurial profit), and then deducts all the accrued depreciation of the property being appraised from the reproduction or replacement cost of the structure as of the effective appraisal date. The value of the site is then added to this figure, with the result being an indication of the value of the fee simple interest in the property. PROCEDURE: The following steps are used to derive a value indication by the Cost Approach. 1. Estimate the value of land as though vacant and available to be developed to its Highest and Best Use. 2. Estimate the reproduction or replacement cost of the primary structure as of the effective appraisal date. This estimate includes both direct (hard) costs and indirect (soft) costs. 3. Estimate other costs (indirect costs) incurred after construction to bring the new vacant primary structure up to market conditions and occupancy levels. ::::> <:10 ""C::::> -cJr- :::::1'M"'J 0<:10 ::::>..." s:;:!o ::;:5: O~ ..:::= ::::>- ,-<:10 c:::0 i-nZ 4. Estimate an appropriate entrepreneurial profit from an analysis of the market. 5. Add estimated reproduction or replacement cost, indirect costs, and the entrepreneurial profit, often expressed as a percentage of total direct and indirect costs, to arrive at the total reproduction or replacement cost of the primary structure. 7, Deduct the estimated accrued depreciation from the total reproduction or replacement cost of the primary structure to derive an estimate of the depreciated reproduction or replacement cost. ~~ Or ~2 l::: ~s ~ 6. Estimate the amount of accrued depreciation in the structure which is divided into three major categories; physical deterioration, functional obsolescence, and external obsolescence. 8. Estimate reproduction or replacement costs and depreciation for any accessory buildings and site improvements and then deduct the estimated depreciation from the reproduction or replacement costs of these improvements. Site improvements in minor buildings are often appraised at their net value, i.e. directly on a depreciated cost basis, 9. Add the depreciated reproduction or replacement cost of the primary structures, accessory buildings and the site improvements to obtain the estimated total depreciated reproduction or replacement cost of all the improvements, 10, Add the site value to the total depreciated reproduction or replacement cost to arrive at the indicated value of the fee simple interest in the property, - o~ -n r ..::: ::::> .- ~ '11, Adjust the indicated fee simple value to reflect the property interest being appraised, if necessary, to arrive at the indicated value of the interest in the subject property being appraised, 45 In estimating the reproduction costs new of the subject property, we have utilized the Marshall & Swift Valuation SelVice, a nationally recognized cost data service. TI,e Cost Approach to Value - continued For purposes of this appraisal the Reproduction Cost Approach will be used in estimating total construction costs. . Reproduction cost is the estimated cost to construct, at current prices as of the effective appraisal date, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design layout, and quality of workmanship, and embodying all of the deficiencies, superadequacies, and obsolescence of the subject building. Reproduction cost is sometimes difficult to estimate because identical materials may be unavailable and construction standards may have changed. Reproduction cost does provide a basis for measuring depreciation from all causes. The use of replacement cost eliminates the need to estimate some forms of functional obsolescence, but many forms of functional obsolescence, physical deteriora~ion, and external obsolescence must be measured. Replacement cost is the estimated cost to construct, at current prices as of the effective appraisal date, a building with utility equivalent to the building being appraised, using modern materials and current standards, design, and layout. The Marshall and Swift Valuation SelVice is a complete, authoritative appraisal guide for developing replacement costs, depreciated values, and insurable values of buildings and other improvements. It provides costs for a wide range of construction classes and types of occupancies, from warehouses to medical buildings. This service is an aid in determining values of nearly every kind of improved property where replacement or reproduction cost is desired. Modifiers are included to make the cost applicable to any size building in any locality. We have utilized this nationally recognized cost data service to estimate the reproduction cost of the subject improvements. ==...., -0:;::, -0,- =l"M =...., ==...., ~= ::;::is o;g -::= :;::,- ,-"'" <::0 M"':Z WHAT THE COSTS CONTAIN 1. The actual costs used are final costs to the owner and will include average architect's and engineer's fees. These, in turn, include plans, plan check and building permits, and survey to establish building lines and grades. ~ ...., o --!::is Om <:;,. ==-0 r--o c:: ..,., r-n5 :;,. .~ 2. Normal interest on building funds during period of construction and processing fee or service charge is included. Typically, this will average half of the going rate over the time period plus the service fee. 3. Sales taxes on materials. -n: Q~: -nr-~ ~~S ~ -il .~ ~~; ~< .;r-n: 4. Normal site preparation including finish grading and excavation for foundation and backfill. 5. Utilities from structure to lot line figured for typical setback except where noted in some Unit- in-Place cost sections. 6. Contractor's overhead and profit including job supervision', workmen's compensation, fire and liability insurance, unemployment insurance, equipment, temporary facilities, security, etc. :;,. <:::I g:; :;;;: <:::I == 46 3. Costs of land planning or preliminary concept and layout for large developments inclusive of developer's overhead and profit are not included, nor is interest or taxes on the land, feasibility studies, E.I.R., appraisal or consulting fees, etc. The Cost Approach to Value - continued WHAT THE COSTS DO NOT CONTAIN 1. Costs of buying or assembling land such as escrow fees, legal fees, property taxes, demolition, storm drains, or rough grading, are considered costs of doing business or land improvement costs. 2. Pilings or hillside foundations are priced separately in the manual and are considered an improvement to the land. This also refers to soil compaction and vibration, terracing, etc. 4. Discounts or bonuses paid for financing are considered a cost of doing business, as are funds for operating start up, developmental overhead or fixture and equipment purchases, etc. 6. Yard improvements including signs, landscaping, paving, walls, yard lighting, etc. 6. Off site costs including roads, utilities, park fees, jurisdictional hook-up, tap-in, impact or entitlement fees and assessments, etc. 7. Furnishings and fixtures, usually not found in the general contract, that are peculiar to a definite tenant, such as seating or kitchen equipment, etc. 8. Marketing costs to create first occupancy including model or advertising expenses, leasing or broker's commissions or temporary operation of property owners associations. >c:n ::E;:: :::5m oc:n >C"':l C"':lo :=:$ -;-c 0> <= Fen c:::o ,..,.,z z C"':l o ->$ Oi-n <::= :;='-c E-= -= "'0 :;=. g z 0= -n~ C::::::i"'"M :;:::'CI:l .~-i =~ M"'1l:=; m 47 "'-- NUMBER OF STORIES MULTIPLIER: HEIGHT PER STORY MULTIPLIER: FLOOR AREA/PERIMETER MULTIPLIER: HEIGHT & SIZE MUL IIPLlER: 1.000 1.040 0.896 0.932 The Cost Approach to Value - continued LOCATED AT: OCCUPANCY/USE: BUILDING CLASS & QUALITY: EXTERIOR WALL: NO. OF STORIES & HEIGHT PER STORY: AVERAGE SQUARE FOOT FLOOR AREA: AVERAGE PERIMETER: REGION: CLIMATE: SECTION & PAGE 2732 Cty. Highway 10 NE, Mounds View Convenience Store w/ Gas & Car Wash Class C; Excellent Quality for Both Brick One Story; 14 Feet for Both Buildings 4,489 & 2,500 Square Feet 282 & 250 Feet Central Extreme Section 13, Page 22 & Section 64, Page 5 BASE SQUARE FOOT COST: HEATING, COOLING & VENTILATION: SPRINKLER: ADJUSTED SQUARE FOOT COSTS: ::=>"", -;:! === ~r- =!":"l 0"'" ::=><:'":> 5::0 =:j:s 0;;;: <=::= ::=>- r-= =0 r-n:::Z: A -<44 2 <:'":> o -!:s Qm <=::::=> ::=>-c ~;5 o ::=> s:= -:"1= -~ o~C' -n;;- ~ <me :;::::'c..?: ~~~ ~~ ;::: c ,...., 2 <::I ::=> 48 The Cost Approach to Value - continued DEPRECIATION Accrued depreciation is the difference between the reproduction or replacement cost new of the improvements on the effective date of the appraisal and the market value of the improvements on the same day. Depreciation is caused by deterioration or obsolescence in the property. Deterioration is evidenced by wear and tear, while functional obsolescence is caused by internal property characteristics, functional inadequacy or superadequacy. External obsolescence is caused by conditions outside the property such as changing property uses in the area or lack of demand. phvsical Depreciation ~ Modified Economic Aqe/Ufe Method: Marshall & Swift guidelines for a convenience store of Excellent Class C construction indicate that the typical building life is 45 years. Marshall & Swift guidelines for a car wash of Excellent Class C construction indicate that the typical building life is 30 years. This is a forecast of the time period over which the improved property is expected in accordance with market standards to be a competitive economic entity. Both structures were constructed in 1998, and have been well maintained for ten years. We, therefore, believe the effective age for both buildings is five years. Therefore, the subject improvements have an estimated 40 and 25 years of Remaining Economic Life. This is a forecast of the remaining time period over which the entire improved property is expected, in accordance with market standards and investor-purchaser behavior, to be a competitive economic entity. C~Store 1 0 years 45 years 5 years 40 years Car Wash 1 0 years 30 years 5 years 25 years Actual Age Total Economic Life Effective Age Remaining Economic Life ::=- <:I:> -c ::=- -c,- ::;::I....... 0<:1:> ::=-c-:> s:20 ~EE: -l-c o::=- -=: ::;::I ::=-- ,-<:1:> =0 rnZ The physical depreciation factor for the convenience store and the car wash are 4% and 9% respectively based on the Marshall & Swift Cost SelVice depreciation table for commercial property. The Marshal/ & Swift depreciation tables are based on market experience which has shown that the rate of depreciation is not a constant annual percentage. Rather, experience shows that the rate (percentage of original cost) begins at a low percentage and increases over the effective life of the improvements. -, c::i -=: :::=0 ...... = M'l We will apply the stated depreciation rates to the total costs based on the proportionate amount of area. Therefore, we will apply a 4% depreciation rate to 64% of the total costs minus land value and a 9% depreciation rate to 36% of the total costs minus land value. This equates to an overall depreciation rate of 6%. Given the recent $144,000 renovation to the convenience store, we will apply a percentage slightly lower than this weighted average, say 5%. The total physical depreciation of the subject improvements, therefore, is estimated at $81,257 (5% of $1,625,136, the total costs minus land value), rounded to $81,000. ~ ~ ~ 49 -.- ~ Functional Obsolescence: Gost Approach to Value - continued Functional obsolescence is a loss in value resulting from defects in design. It can also be caused by changes that, over time, have made some aspect of a structure, such as its materials or design, obsolete by current standards. The defect may be curable or incurable. Curable functional obsolescence may be divided into three subcategories: 1) deficiency requiring addition, 2) deficiency requiring substitution or modernization, 3) superadequacy. The subject improvements are only ten years old and were recently renovated. They were constructed with the latest materials and are of the latest design, typical of other recently constructed Holiday Stationstores with detached car washes. There is nothing that would indicate any functional obsolescence. Market Analysis Suggests: No Functional Obsolescence External Obsolescence External obsolescence, the diminished utility of a structure due to negative influences emanating from outside the building, is usually incurable on the part of the owner. External obsolescence can be caused by a variety of factors, e.g., neighborhood decline, the property's location in a community, state, or region, or local market conditions. The resulting loss of value is measured by capitalization of the net rent loss. The subject property is in a good commercial location on a high traffic county highway in Mounds View. It is in a commercial area that is well established and is experiencing some redevelopment. The demand for vacant land in this area is steady. Therefore, we believe there is no external obsolescence associated with this property. >"" "'C;::. "'C...- =>M"l 0"" >- c:"') - . _0 ~s -l-o 0;::> o:::=> ;::>- _"" ,=0 .rn:;;;;:: Market Analysis Suggests: No External Obsolescence TOTAL ACCRUED DEPRECiATiON FROM ALL CAUSES I Physical Depreciation $81,000 [ Functional Obsolescence -0- l External Obsolescence -0- IAL ACCRUED DEPRECIA.TION $81,000 ~~ o~ 0:::- >= ...-..: c:::..: M"li .., :ii 0::: -nr 0:::- E~ m~ EQUIPMENT VALUE The equipment value in our cost estimate is a rough estimate. It is based on the total costs of the equipment as given to us by Joel Geil, the Project Manager/Construction Supervisor with Holiday Stationstores, Inc. for a very similar Holiday Stationstore that is currently under construction in New Hope. The equipment, including all of the fuel tanks, dispensing equipment, the canopy and the convenience store equipment totaled $788,000. 50 Cost Approach to Value - continued The estimated life of the equipment varies from approximately 30 years for the underground tanks to ten years for the convenience store equipment according to Marshall & Swift. The improvements are ten years old and much of the interior was remodeled at a cost of $143,886.69. We have, therefore, estimated that overall the equipment has depreciated approximately one third of its original costs. Based on the cost new of $788,000, the resulting equipment value would be $525,333, rounded to $525,000. Our estimate of value for the subject's equipment equates to $75.12 per square foot of gross building area. Four of the sales used in the Sales Comparison Approach had equipment value allocations (all had car washes). The equipment value averaged $78 per square foot of gross building area. This average is very near our estimate of value for the subject's equipment and helps support our estimate. ==-"", """C::::= '"'Cl ...- ::=J.l"'n 0"'" ==-<:"'> <:"'>0 ::X:s -l"'t:l o;::=. <:=> ==-- ...-"'" c::0 :"M.::::: .4 ~ <:"'> o =!s -,.,., <> ;::=.- E;g i'T'Jo ;::=. ~ -n::l 2M o;::=.=- "",..u-S c:::::rn,:: >""'- ~:2$ n"lS- :=tc: m:;! :::=0 C C ,.,., :;;;: C :::=0 51 Cost Approach to Value - continued REPRODUCTION COST NEW Convenience Store 4,489 sq. ft. @ $138.85/ sq. ft. Car Wash 2,500 sq. ft. @ $153.22 / sq. ft. Cashier's Booth* 48 sq. ft. @ $169.58 / sq. ft. Total Base Construction Cost of Buildings $623,298 $383,050 $8,140 $1,014,488 SITE IMPROVEMENT COSTS Paving, Striping & Curbs Landscaping, Irrigation Concrete Fuel Eq. Installation Signage Total Site Improvement Costs 47,000 sq. ft. @ $3.50 / sq. ft. 11,600 sq. ft. @ $4.50/ sq. ft. 6,000 sq. ft. @ $5.00/ sq. ft. $164,500 $52,200 $30,000 $95,000 $35,000 $376,700 INDIRECT COSTS (NOT INCLUDED IN MARSHALL & SWIFT Appraisal Fee Land Taxes (3 mos. const.) Offsite Costs** Legal, Title & Recording Fees Total Indirect Costs (Rounded) $3,500 $5,000 $30,000 $19,000 $57,500 SITE VALUE BY SALES COMPARISON: SUBTOTAL OF COSTS: PROFIT: ;':'""" -c;,:, -c r- ::::::I..,., 0""" ;,:,..." S:::o .....:;s: c:i~ <:::::::1 ~~ ..-n:;Z;;: *The cost of the cashier's booth is a flat amount of $148.75/sf as found on Pg. 10, Sec. 63, plus current (1.00) and local (1.14) cost multipliers. **Includes hook-up fees, utility extensions, park and other city fees (excluding building permits), ~ ...., o -i:;S: Oi""'M ~~ 0::::"::: M":Q ;,:, s:: ~ ~F c::::r-n :::== E~ 'rTI~ m 52 "- THE SALES COMPARISON APPROACH The Sales Comparison Approach is the process in which a market value estimate is derived by analyzing the market for similar properties and comparing these properties to the subject property. Market value is estimated by comparing the subject property to similar properties that have recently sold, are listed for sale, or are under contract (recently drawn up purchase offers accompanied by a cash or equivalent deposit). The major premise of the Sales Comparison Approach is that the market value of a property is directly related to the prices of comparable properties. The concepts of anticipation and change, together with the principles of supply and demand, substitution, balance, and externalities, are basic to the Sales Comparison Approach. The Sales Comparison Approach is applicable to all types of real property interest when there are sufficient reliable transactions to indicate value patterns or trends in the market. When the number of market transactions is insufficient, the applicability of the Sales Comparison Approach may be limited. It usually provides the primary indication of market value in appraisals of properties that are not purchased for their income producing characteristics. Buyers of income producing properties usually concentrate on a property's economic characteristics, most often focusing on the rate of return on an investment made in anticipation of future cash flows. PROCEDURE: A general outline of the basic procedure follows: 1. Research the market to obtain information on sales transactions, listings, and offers to purchase or sell properties that are similar to the subject in terms of characteristics such as property type, date of sale, size, location, and zoning. 2. Verify the information by confirming that the data obtained is factually accurate and that the transactions reflect arms-length market considerations, Verifications may also illicit additional information about the market. 3, Select relevant units of comparison, e.g., dollars per square foot, and develop a comparative analysis for each unit. 5. Reconcile the various value indications produced from the analysis of com parables into a single value indication or a range of values. In an imprecise market subject to varying occupancies and economic factors, a range of values may be a better conclusion than a single value estimate, 2 ~ o -;:;5 0= -==:::> ::::==""'::1 r--c =::c """0 :::> ~ 4. Compare comparable sale properties with the subject property using the elements of comparison and make appropriate adjustments of the sale price of each comparable property to the subject property or eliminate the sale property as a comparable. The application of the Sales Comparison Approach is found on the following pages. Comparable sales data is presented, summarized, and analyzed in an adjustment grid. Relevant adjustments to the sales are made for rea! property rights conveyed, financing, conditions of sale, and market conditions. In addition, the properties are adjusted for location, physical differences, and any other characteristics deemed appropriate. ..,., 2 0:::> -nr- ::::::::M""l :::>c:r. r--; :=Fi~ ~ 53 COMPARABLE SALE #1 PROPERTY DA T A ADDRESS: CITY/COUNTY: MAP INDEX: LEGAUPID#: BUILDING DA TA: GROSS BUILDING AREA: STORIES: CONSTRUCTION TYPE: YEAR BUILT: CONDITION: SPECIAL FEATURES: SITE DATA SITE AREA: PARKING: ZONING: LAND TO BUILDING RATIO: SALE DA TA: SALE PRICE: EQUIPMENT INCLUDED: ASSESSMENTS: PRICE PER SQ.FT, OF GBA: DATE OF SALE: BUYER: SELLER: SOURCE: COMMENTS: Former Kwik Trip 14160 Wilds Path NW Prior Lake / Scott 500 B2 25-434-0010 7,665 SF (Inc. car wash) One Steel/Masonry 2005 Good None noted 155,944 square feet Adequate surface parking C1 20.34 to 1 :E C":l o -I:;;;: 0,.., -====- ==-"", .-"'" c:::_ i"'1nS ==- S2 $5,500,000 $4,500,000 for real estate, $1,000,000 for equipment. None $717.55 07/26/07 Shakopee Mdewakanton Sioux Community Convenience Store Investments Files / Buyer -' o~j -nr-! ~.~~ ..~:!~ \"l'l:;;;:: ~c .i"":'1: This property was a former Kwik Trip that was purchased and renamed the Shakopee Dakota Convenience Store and reopened on October 8,2007, The purchase price of $5,500,000 included $1,000,000 towards 13 fuel dispensers, car wash equipment, canopy, and other FF&E. It is a less developed area, but it is on a high traffic county road near the Wilds golf course. == c::: c::: m 2 c:l == 54 COMPARABLE SALE #2 PROPERTY DA T A ADDRESS: CITY/COUNTY: LEGAUPID#: BUILDING DA T A: GROSS BUILDING AREA: STORIES: CONSTRUCTION TYPE: YEAR BUILT: CONDITION: SPECIAL FEATURES: 2960 West 82nd Street Chanhassen / Carver 25-0760010 6,320 SF One Masonry 2000 Good Car wash attached to the convenience store. SITE DATA SITE AREA: PARKING: ZONING: LAND TO BUILDING RL\TIO: 81,457 square reet Ample surface parking PUD 12.9to1 2 "'"'" Q d~ ~~ E:s; .r-n:s ::= g SALE DA T A: SALE PRICE: EQUIPMENT INCLUDED: $3,000,000 $2,750,000 for real estate, $200,000 for equipment and $50,000 for non-compete clause. l\lone $474.68 01/11/2007 Cash to ne'vv financing. FAE Holiday Chanhassen, LLC Michael & Jane Schlanger County records 2""" =::=g -r";l~2 <!/Tile:""';) ::= en - -......- .~~~ ==<0 .rM:;;:: ASSESSMENTS: PRICE PER SQ.FT, OF G8A: DATE OF SALE: TERMS/FINANCING: BUYER: SELLER: SOURCE: COMMENTS: This property is located on the northeast corner of the intersection of Highway 41 and 82nd Street East, approximately one half mile south of Highway 5. This is .a comparable secondary location on a high-traffic roadway, === c C rn Z <::l === 55 COMPARABLE SALE #3 PROPERTY DA T A ADDRESS: CITY/COUNTY: LEGALfPID#: BUILDING DA TA: GROSS BUILDING AREA: STORIES: CONSTRUCTION TYPE: YEAR BUILT: CONDITION: SPECIAL FEATURES: SITE DATA SITE AREA: PARKING: ZONING: LAND TO BUILDING P~TIO: SALE DA T A: SALE PRICE: EQUIPMENT INCLUDED: 5970 Highway 61 White Bear Township / Ramsey 01-30-22-22-0024 5,130 SF One Masonry 1996 Good Car wash attached to the convenience store. '100,623 square feet Ample surface parking B2 19.6 to 1 z """ Q cl~ 0::::> >- i:~ ms > ~ ASSESSMENTS: PRICE PER SQ.FT, OF GBA: DATE OF SALE: TERMS/FINANCING: BUYER: SELLER: SOURCE: COMMENTS: $2,250,000 $2,000,000 for real estate, $200,000 for equipment, $50,000 for non-compete clause, None $438.60 01/09/2007 Cash to new financing. FAE Holiday White Bear Lake, LLC Steven D. and Sharon L. Bartness County records This property is in a slightly inferior location on Highway 61, It is surrounded by a large amount of vacant land, Z Q:::> -n: r- =:::m ::;::::.et: ~i m 56 "'- 9,115SF One Masonry 1999 Good Car wash attached to the convenience store. COMPARABLE SALE #4 PROPERTY DA T A ADDRESS: CITY/COUNTY: LEGAUPID#: BUILDING DA T A: GROSS BUILDING AREA: STORIES: CONSTRUCTION TYPE: YEAR BUILT: CONDITION: SPECIAL FEATURES: SITE DATA SITE AREA: PARKING: ZONING: LAND TO BUILDING PATIO: SALE DA T A: SALE PRICE: EQUIPMENT INCLUDED: ASSESSMENTS: PRICE PER Sa.FT. OF GBA: DATE OF SALE: TERMS/FINANCING: BUYER: SELLER: SOURCE: 1605 Annapolis Lane Plymouth / Hennepin 27 -118-22-31-0019 102,272 square feet Ample surface parking CC 11 .2 to 1 $2,900,000 Purchase for real estate only according to CREV. None $318.16 11/01/2006 Cash to new financing, HD Plymouth MN, Outlots, LLC Annapolis, LLP County records ~ c:-> o -i:;s Oi'"M c:::> >-0 E;g """0 > g -;,= 2r"'n =>2 -:;"'}r-::E: C:::"""c:-> >"""- E:=!s; I"l"l:;s-; :'0 .r-.-::;:;:;: COMMENTS: This property is in a superior location in a newer retail area anchored by a new Home Depot on the northeast quadrant of 1- 494 and County Road 6, "" :::= c c ...,.., z c > 57 PROPERTY DA T A ADDRESS: CITY/COUNTY: LEGAUPID#: BUILDING DA TA: GROSS BUILDING AREA: STORIES: CONSTRUCTION TYPE: YEAR BUILT: CONDITION: SPECIAL FEATURES: SITE DATA SITE AREA: PARKING: ZONING: LAND TO BUILDING RF-TIO: SALE DA TA: SALE PRICE: EQUIPMENT INCLUDED: ASSESSMENTS: PRICE PER SQ.FT, OF GBA: DATE OF SALE: TERMS/FINANCING: BUYER: SELLER: SOURCE: COMMENTS: COMPARABLE SALE #5 11430 Jefferson Court N Champlin / Hennepin 31-120-21-24-0075 8,676 SF One Masonry 2002 Good Car wash attached to the convenience store. 69,452 square feet Adequate surface parking PUD 8.0 to 1 ;;;: """ <=> ;:::;:;s rn -==:::> :::>..", r-..", c::::::; l""no :::> g $3,440,000 $2,479,000 for real estate, $961,000 for equipment. None $396.50 01/23/2006 Cash to new financing. Wash n' Fill Property Champlin, LLC Jenibu Properties, LLP County records ~ -n=: 2n c::>:::>a: -n;-::: -==:n'"'I-::, :;':::'.CI? - E=.! ~ IT! :;s ::: :92 m;a This property is in a superior location on the northwest quadrant of Highway 169 and Elm Creek Boulevard, an intersection surrounded by retail development. :::> c <::l ,.,., "'" C :::> 58 ~ MAP OF COMPARABLE SALES '",n <, ""'._r_!1~'\,, ~","'., m_" "L,~k;:; N;:;tiz Jr-iFurE';st L2J,; t: ~, ,~ "~:'. "";" Ham Lakff I".',r-:I;" ";". . '" Ra rnsey, Andover" . -~~~~I;)en'Y'ldE'; i1Cl1i ..,' ....._....... y 0 11" ~:-.:--_ - I --..:::.::". .'::.... ) 'i(;hae~ "BerrJng f"lifi A;~;~ka= ,'411 Jahns',~:ia L ino La kes ~1i:~::. '-~~:::;, RO:1ers 0 0 ., ..-' .. " "", -' Th''lm'' ~-Ei9hjF.~~;':;;~.~_:..'c_ __~~y:;:?~-;... ....,I~...'. ilio...er" Hassat, ~i=:~~~~'-12' ' ~'l:lcOon Rapids N-'- Ill" ',,:~. \\ L"-_'y.:,r".~",(J-r</ CIr{;lff Pines I',.... Hugo . -'..:;\ al ne ~,t! ,. '"" f '$?" \" '",0 ,;; ['f' ,,,I oBurschville \~\ ,-"'T~~~ .. i"? 'l,IVi~h!'{l'<I'ti \>'" .' .. . . '~._;. If, Dup.c)f1;orC::X211" Maple G'fO~,;g___ -,\ '. '13rO-OkI'y,r Park ''..lr' 8.~ld1.Ea';Jle". "'~"/hitff 8e8= E V.--..:::.4L_"'-'.".lI ., )1.,.0 If". cWhireBearLak /1. Ir-:';~~r ~.;!l3to-ok,lyn_.;,~L1.,. . Share-VIew,', .1/ \1 :". .' .;t Cl,nte\" ....7~ ijr--<:::~; 0':. Ii "1,1 r::httm I, I.c >f ,."", Colurnb-ia! .......,<;,>.. >/f .p'..., (:. New Ho!'\.Oo '. ""F\I;.,Ok! q!,. "LJ ' 'If' .......'_-,_____ 1,1"'.....p I r--o',; \wi .rw'''',p n"'IQI)1S " ,,-----~-__=-, " P!ll"n II '011' ',', -.,'1 Rosel/ilia.' ~';'I ~ mou. "Mlssion Farms )"1 55' V, 0 1,1_ _ t~orzl St Pa'JI , " , .-----.... :l.5~' "11 Dlt:t=r II Golden .F.-...... l~~.'/.;,~ -'- -----'1_, "~lIiehIAwood . <',":.. Medid:l~ Lal;e;:"j Valley ,', d:D:J'\J'=lg,,~,,! $11 Gla:l,;:'.::r'f! r- '" . II nrflt','-' u., II I 0 1\ ~-. if II,=- II ' 0" ....., ..... - u ~f,,,,::.:.,,?-:::.~'!:t__ ~ - _ ...."-1 .... .""..... ~0 ,I I" I t~I:IO\I~=j,e a~uaae . "-;~."Q,,--.~ 1.~;-:--~{~ <:~f.llt1il1_nea~?HS 1St PaUl,.," II l/I,<'C:Jod:f::r'd" 11/, '~.6.9 I' $t Louis Pad!: ~..:::- ~-==_-=---::~I~.<-, 1__ . <,.'.,,.,.., III POll J,r.",I. L"'r"~;"''1......,,-12 MbW\d .""prIng ~c;.rr, Q'"" - )J ".~_ '-'t Pa JI - ~,"', ,I, . " Q Minneton!<~ I" ,-p.'" ~,' - . ,;-' 'N" " . I "If. 'II , .1;. ',"lest s: Paul ~? 0' ooe Greenwood" Df:f!pha\'ffn \1 HopkHiS loedllia I LiI~d8,:~,," ,I! ...,.i/ ,I [I ' r - \' d f~ '"t l "E"(.;t=lsiar \1 -.' JI ,J' G'2 ---:;'-'" "<SlJu:h St Pa:J: (~ -.:, 10rewoo ~ ~l" f'212'-~-~J~RlehfiE!ld='"II-:- ~/. ,,(J' ,140, i':'1 ""-:;::'l"'( ',' .,1 I. 'i 0 . f "~r"'(Jf"" ,'I ,'--, _." " ,\ frO JI J .... i' !,ilt:;; l..;.: "~II ---;."--l-J I iict:xia ._ Ed.en F'ra. .!!:!:e-=- 1-:----.lL_l. _J-l;;"igt!~., '-;:=:;.::::;:Y" II o::t:'1;",',p-:)r: _, " ;3'i2rc J~---',. ~:;; 'llr----ll 'i" i I' (;. P"ul wari': j~! ;}/"" (~ .~' ... .... m j "?-"!f( 1 ._/? -.1 \c~~~. ._'~ _ . '! \: l,\ I ~.: 113 ! /)l - .. i ;;1 L ,1'\\>.. oLOttcg( <'Hazeltin-e 8loomington-r eatlan '-'9nver G~ov'" . '.', o [,I. . \h ~/..'u ~ t' ,- '. L.~ ,,( . ,. Heigh!!;s ''C.. . ~ . .rt~C&d~r GIt)'.'(i; .=iHI1i:;:.=:. ;si~ae! ..lfIJ o 9 l( oB!:,::ns~~n~ Apple V:::'lIey' ./ 0 Or.;.;hard G,~rci-=;-l G;-ai:-IVlo.:::d .:0 14 " .,Priur L2.k& I( DEer F'.?J,-~~ l- v ,/~;!J..:gc,nlla -. ~ , f r t..redt Rlvenl o I' ii, V'.'e;.1on '" tl:apliZ 1 ""r",tt/., 0-'" -.- $5 Meui:la " dzh~ SZ::t2 r'iil! - " I ifaclus t~tiEtri~::;rl1 " ROSe;II(JUnt " Unh/~rshy Dr Min,18Sd:a, RG'SE';:Tlbunt Re-se@td! CfH; tfior f"{;;;::~i'i:::~;W c:; ,..----.-..-.-.. -..:::.-~--- - - ::.e:nd :, E.~st Union tlE;y'skl'/CS <:t ,. B,;;deno Sprin~~ 55 ;;;;:: c:-;: o -:;g; Oi"'M "'=::=. ::='-0 r--c <== mo ::=. ~ C.arver::'., " /} Sedil <, ~ "L!'di;:; " A~lra;~ P,;.:k I,' fi ri Lakevme o Ernpire,,: ! f>o^: 10 miles -n ::0 ;;;;::,..,-. O::;:.C:-;: ""M~~ <i""T'3c:"':) :;::::'.c:.'?- .E::!S;; .rn~::::! .....,0 r7".lZ 2.i:'I~ Hf:lenB FCl.-r'I'p"1t"'n " .....- ~ . . t:'~... ::=. c C M"l Z C ::=. 59 Sales Comparison Approach - continued SUMMARY A summary of comparable improved properties is presented below. Comp Sale Date Year Built GBA Car Wash Sale Price $/SF #1 07/26/07 2005 7,665 sf Yes $5,500,000 $717.55 #2 01/11/07 2000 6,320 sf Yes $3,000,000 $474.68 #3 01/09/07 1996 5,130 sf Yes $2,250,000 $438.60 #4 11/01/06 1999 9,115 sf Yes $2,900,000* $318.16* #5 01/23/06 2002 8,676 sf Yes $3,440,000 $396.50 Sub. 1998 6,989 sf Yes *Real estate only. Because comparable #3 is a real estate only transaction, we will have to estimate the value of the equipment. We will compare it to the other four comparables for which we have an allocation for equipment value. The average equipment value for those four properties is $78.22 per square foot overall. We will, therefore, add $78 per square foot to the sale price for comparable #3. ADJUSTMENT ANALYSIS The elements of comparison are the characteristics of properties and transactions that cause the prices paid for real estate to vary. The appraiser considers and compares all reasonable differences between the comparable properties and the subject property that could affect their values. Adjustments for differences are made to the price of each comparable property to indicate the value of the subject property as of the effective date of the appraisal. This adjustment analysis utilizes generally utilizes accepted adjustment categories. The first four categories, "real property rights conveyed", "financing", "conditions of sale", and "market conditions" are cumulative. Normally a sale should be adjusted for the cumulative adjustments before the remaining adjustments ("location", "physical", and "other") are applied. "Location", "physical characteristics" and "other" adjustments are additive and may be made in any order. 1. Rea! Properly Rights Conveyed - A transaction price is always predicated on the real property interest conveyed. A preliminary step in the valuation process is to determine the real property interest to be appraised. The appraiser can then relate the market data to the subject. Adjustments must be made to reflect the difference between properties leased at market rent and those leased at rents either below or above market. In practice, the sale of a fee simple interest is typically not compared to a leased fee or leasehold estate. Typically, comparability requires omitting sales of different property interests. ~ o -!:S;: ol"1'l o:::::=> ::=>" ......" =;:0 f"'Mo ::=> ~ -<:G However, a sale of a leased fee estate may be used (if appraising a fee simple interest) if the appraiser is convinced that the rental structure is at market, if there is a short time left on existing leases and the effect of the leases can be adjusted, or if substantial information is available to adjust for the value of the leased fee to fee simple (for example having an indication of the value of the leasehold estate). ""'::1: 2~ sa;:;::..~ ... r;-_ ~.~~ ~~~ :!:1c M"'i:2 All comparable sales are of comparable fee simple interests, so no adjustments were necessary for this factor. ;::=. Q Q ,.,., ~ Q ;::=. 60 ""'- Sales Comparison Approach - continued 2. Financing - The transaction price of one property may differ from that of an identical property due to different financing arrangements. An appraiser investigates the sale prices of comparable properties that were sold with apparent non-market financing to determine whether adjustments to reflect typical market terms are warranted. Market evidence must support the adjustment. Adjustments are calculated for atypical financing by analyzing paired data sets or discounting the cash flows created by the mortgage contract at market interest rates. The most commonly used market value definition requires appraising to cash, with typical institutional financing or other stated terms. Furthermore, if the subject is assumed to have other than typical institutional terms, the terms and the effects of the financing on the appraised value should be set forth in the report. None of the comparable sales required adjustment for financing, since they are all cash transactions or indicate market financing terms. 3. Conditions of Sale (Motivation) - Adjustments for conditions of sale usually reflect the motivations of the buyer and the seller. In many situations the conditions of sale significantly affect transaction prices. Although conditions of sale are often perceived as applying only to sales that are not arm's-length transactions, some arm's-length sales may reflect atypical motivations or sale conditions due to unusual tax considerations, lack of exposure on the open market, or the complexity of eminent domain proceedings. If the sales used in the sales comparison approach reflect unusual situations, an appropriate adjustment must be made for motivation or conditions of sale. Plottage value, purchasing additional land for expansion or parking, and other typically motivated sales may have an adjustment that may be inferred from the market by comparison or from information provided by the buyer or seller. No adjustments for conditions of sale were considered necessary. 4. Market Conditions (Time) - Comparable sales that occurred under different market conditions than those applicable to the subject on the effective date of the value estimate require adjustment for any differences that affect their values. A common adjustment for market conditions is made for differences occurring since the date of sale. Since the time the comparable sales were transacted, general values may have appreciated or depreciated due to inflation or deflation and investors' perceptions of market conditions may have changed. z """ o --i:s; Qr-n :::::::::==:0 ::;::::. -= r- -0 =- 1"7"10 :=- g ......::::::1 Although the adjustment for market conditions is often referred to as a "time" adjustment, time is not the cause of the adjustment. Market conditions which shift over time create the need for an adjustment, not time itself. If market conditions have not changed, no adjustment is required, even though considerable time may have elapsed, ~ z 0== ..,.,r- c:: ,.,., :::=(.1:1 ~~ 2:; i"'7"l Conservative adjustments of 3% per year changes "market conditions" were made to reflect inflation and appreciation as the commercial rea! estate market in the metro area remains fairly steady despite the downturn in the overall economy. This adjustment is calculated to the "As Is" effective date of appraisal, June 1 0, 2008, C t: !: ~ 61 No adjustments were made to the comparables for this chara.cteristic. ~ales Comparison Approach - continued 5. Location - An adjustment for location may be required when the locational characteristics of a comparable property are different from that of the subject property. Although no location is inherently desirable or undesirable, an appraiser can conclude that the market recognizes that one location is better than, equal to, or worse than another. Properties selected for comparison to the subject should be of similar Highest and Best Use. Generally, it is inappropriate to use sales of properties differing in Highest and Best Use from that of the subject property and to then attempt to adjust the differences for location. All the comparable sales were considered to have commercial purposes as their Highest and Best Use. Adjustments were, however, made for location as follows: Comparables #1, #3, #4 and #5 were adjusted for location. Comparables #1 and #3 were adjusted upward because they are in less developed areas. The adjustment was minimal because they are both on high traffic roadways. Comparable #4 was adjusted downward because it is essentially an outlot for a new Home Depot that abuts Highway 169. Comparable #5 was adjusted downward because it is located on the corner of Highway 169 and Elm Creek Boulevard, a high traffic intersection surrounded by dense retail development. 6. Economic Factors - Adjustments for economic factors may be required when the economic characteristics of a comparable property are different from that of the subject property. 7. Land to Building Ratio - The "land to building ratio" reflects the size of the subject lot relative to the size of the improvements. The adjustments are calculated by subtracting the lowest ratio from the highest ratio, multiplying the difference by the marginal value per square foot, and dividing by the comparable's "Cumulative Adjusted Price per Sq. Ft." in the Market Sales Adjustment Grid. The adjustments for this category were as follows: The adjustments for Iandatoabuilding ratio were estimated by a.ssigning a va.lue to the land needed to equalize the ratios. Neither the subject nor any of the comparables have excess land (land that could be sold off separately), so the adjustment is based on what is considered surplus land. When the land is defined as surplus land not excess land, the value assigned to that land is typically half of the market value. The subject site is valued at $15.00 per square foot in the Cost Approach. therefore, apply a value of $7.50 per square foot to the surplus land. z ~ o -l:;s .t:::>l,"".;"'J ===:;::.. >-0 r-'"t:l =:= n""1o :::=0 s:::: -n ::;:::; 2.~ o~g -n.~::;;:;:: ==:.r?'Jn .::=Gr.I- _-"1'- ,=--'$ .n1~~ '-'0 f"":'i~ 8. Other Physical Characteristics - If the physical characteristics of a comparable property and the subject property differ in many ways, each of these differences may require comparison and adjustment. Physical differences may include differences in building size, quality of construction, architectural style, building materials, age, condition, functional utility, site size, attractiveness, and amenities. On-site environmental conditions are also considered. :::=0 t::l t::l ,.,., ~ t::l :::=0 62 Because real estate is unique and there are generally numerous differences between properties, only quantifiable or significant differences should be adjusted. The physical differences are best obtained (as are all adjustments) from a direct comparison of comparables. However, because properties generally differ in terms of more than one characteristic, physical (and other) adjustments are not easily abstracted from sales. Sales Comparison Approach - continued No other adjustments were deemed necessary. The adjustments for this category were as follows: Only comparable #1 was adjusted for the age, quality and condition characteristic. It was adjusted downward because it is significantly newer. The other comparables are all of a similar age and condition as the subject. ;;;;: ..." = -;:;s OJ''''Z"';] ==:;::,. ~-c r-..., =::0 M"lo ;::,. ~ -n::::: -IT o$~ -nr-2 C::::!"'MC"': ;::,.cn- E;=:!:= M"ls2 ~2 ""'2 ;:::. c C l'Tl 2: C ;:::. 63 """" (j) m CD (J) o o :3 "0 m ..... Cir o ::l )> "0 "0 a m () :::J , () o ::l ~ ::l r- CD 0.. z.. .yrCJ... .moC/) m)>rC/):boC::5:0'"'i1-oF)>)> =l (Q m ..0 =< 0 S moS' ...., m =l r j::>.CD ~c ~)>c::::!..::l m.g ~mm o ,8:;CJ=lF89:::lCDmO-o o 0 0' CD j::> 0 j::> ~ -0--": g. :::l- Z '"'i1 ;;0 _c, -Z=lO -''<=' - ::! :::. OJ 2;1 , - 0 ~ (Q :::0 W C/) 0 <:: _ C 0 CJ <::::J =l -. F\ )> m m ':.< ;: -:b m 9: Q, CD c.e.. 'Y r -0 o S' C/) j::> j::>!:::..::J::::' 'Tl m m j::> 0 (Q N':Ai 0 0 ~ :j (J) CJ ;;0 E::J;;oCDj::> b~CD(J)OO C/) c:9:m CJ c: Os 0 !:::_ =l CJ) ::l ~ ~ o' m =I. a3 ~ )>c - - :Ai m '< :Ai :s;; U5 0 CD_;;o m =l y 0..CJ) m ~ CJ:Ai 0 '"'i1 (J'J (S Z 0 m 0 y =l m ;Aj (f) p =n :-I -'" '"'i1 - """ CD c.... -"'~O') :::;;:;:::::"CD r- <.ot'V'(o :s:: c.g8:;8:; 5 <.o_eo < c;:.^^~ 0' eoO<.o CDCD~ -'" _ - "0 eo V1 V1 , --.! c....-..j 0;-"'0 v;WeNOOO c-'" 00~ ~@~~~~ '-..j c;:.~o 0.0000 o. o 0 -..j Q1 co Q1 V1 c....V1 ,!::>. m .+:>. o@.+:>.ooo ::l-..j ~W~~~~ ,..f::>. 0.0000 O' ~ -..j0'l --.! eo V1 c....V1 ,!::>. m .+:>. v;(J'I..f::>.OOO eN ~~~~~~ =teo 0.0000 O' ,.J,. -..j0') ,!::>. 0 V1 z~ ,!::>. eN 6,,.J,.Q1000 0<.0 o(J'l~~~~ 'f0') c;:..oooo O' @ r'<'>-'" ""'" ...n O'l ~ c....~ ,!::>. m eN 6,N-..jOOO <.0 o'+:>~~~~ =to') c;:..oooo O' N 0')Q1 ~ 0 <: o !if 0) )> 0..0.. c'c' (J) (J) 33 (l) (l) ::J :::i cnc:;r Ue)' (l) ..... -. o ..... ..... ;::r (l) (l) g:~ (l) (J) ..... ro-. (J) 0 .....c ..... ..... :;:;- -- com (l) 3 -. (J) CD -. 3 ::. (J) ;::r ~ (l) ;::r)> -. 0.. () ~. ;::rc 0) (J). .....<::r (l) ::j 0) (l) o..:::::l 0....... ;::;:)> -':::::l < 0) (l) _ 0)(;5 :::::l -. 0..(J) 0) G) co 5: :::::l 0) ~u .....0 (l) < o..(l) o ro c ..... .....(l) ro C"l ~c ~ 3 =:c (i) fli C"l <' C (l) 3 ro C :::::l roo.. Z3 (l) C 0) ~ ..9:u C (l) ~C"l 3Q1.. (l) C"l :::::l C .....- (J) ro ;::rm ro 0.. <u (l),< u3 ~ !;. :::i ~ O)"g" "0 ':5. "O:::::l =(0 (l) .- o..;::r . (l) "0 (l) -. C"l (l) :::::l .- ro (0 (l) )>)>)> 2:2:2: C C C (J) (J) (J) ~"-+-I"""+' CD CD CD 0..0..0.. :5::5:-0 CD CD :::l. o..m() is)'::J CD ::J-o;;o -O:::l.~ :::l. @ (Q () .. CD ~ .. LO~~ :r;,:.+:>.&5 .+:>.-..jeo -"'Q1-..j N~~ eN.+:>.eN - o V1 0') O'l v; -'" -..j O'l .+:>. < Q 2 r..u Q Q < s:=; =~'-'-' ~r=g =GI:)O::::: ~~;:: 0<0 ~E <3 < OL:..! C:::;, 0---1.. Q....< <~ !..Uo ""'1- e ~ ~ Sales Comparison Approach - continued CORRELATION OF THE SALES COMPARISON APPROACH The range in adjusted sale prices of the foregoing properties is from $387.72 to $665.17 per square foot. The mean adjusted price is $475.14 per square foot. The median adjusted price is $441.23 per square foot. Comparable #1, even after adjustments, is significantly higher than the remaining four comparables. The mean adjusted price of the remaining four properties is $427.63 per square foot. In consideration of the data presented and after analysis and adjustment of the previously reported comparable sales, we have estimated a value between the overall mean and median adjusted prices, near the mean adjusted price of the comparables excluding comparable #1. We have determined that $440.00 per square foot is a reasonable estimate of the current market value for the subject. Therefore: 6,989 x $ 440.00 $3,075,160 $3,075,000 - $ 525.000 $2,550,000 Sq uare Feet Value per Square Foot Total Value Rounded Value of the Equipment Value of the Real Estate INDiCATED VALUE, INCLUDING EQUIPMENT, BY THE SALES COMPARISON APPROACH: THREE MiLLION SEVENTY=FIVE THOUSAND DOLLARS $3,075,000 :1E c:-> o -is 0"" ~?c <=;;g me ::::= ~ -n:;::i zl"'"n c:=::-2 -nr-::;:: .;::::.Il""t"'.l~ >.~- ~-J~ ~~2:::i :;0 "" :;z;: ::::= Cl Cl ,.,., Z Cl ::::= 65 INCOME CAPITALIZATION APPROACH The Income Capitalization Approach to value consists of methods, techniques, and mathematical procedures that an appraiser uses to analyze a property's capacity to generate benefits (i.e., usually the monetary benefits of income and reversion) and convert these benefits into an indication of present value. All income capitalization methods, techniques, and procedures attempt to consider anticipated future benefits and estimate their present value. This may involve either forecasting the anticipated future income or selecting a capitalization rate that implicitly reflects the anticipated pattern of change in income over time. The principle of supply and demand and the related concept of competition are particularly relevant in forecasting future benefits and estimating rates of return in the Income Capitalization Approach. The prices, rents, and rates of return for property tend to be set by the prevailing prices, rents, and rates of return for equally desirable substitute properties. A good balance between the types and locations of income producing properties creates and sustains value; an imbalance in efficient land use may result in a decline in value. External forces can then affect the value of income producing property either positively or negatively. The net operating income and pre-tax cash flow expectancy of a property are analyzed to determine its earning power. The appraiser examines: 1) the income and expense history of the subject property; 2) the income and expense histories of competitive properties; 3) recently signed leases, proposed leases, and asking rents for the subject and competitive properties; 4) actual vacancy levels for the subject and competitive properties; 5) published operating data; 6) market expectations; and 7) tax assessment policies. INCOME CAPITALIZATION APPROACH METHODS Two capitalization methods - direct capitalization and yield capitalization - are used. These methods are based on different measures of expected earnings and include different assumptions concerning the relationship between expected earnings and value. Direct Capitalization Direct capitalization is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step - either by dividing the income estimate by an appropriate income rate or by multiplying the income estimate by an appropriate factor. A satisfactory rate of return for the investor and recapture of the capital invested are implicit in the rates or factors applied in direct capitalization because they are derived from similar investment properties. The income expectancy considered is frequently the anticipated income for the following year. -n: :::::: o~g -n;.r-:a;: O::::rMn :;:::'.CI:I- .E;=:!$ ...,.,:5-; ~= r-n:~ Yield Capitalization Yield capitalization is a method used to convert future benefits into present value by discounting each future benefit at an appropriate yield rate or by developing an overall rate that explicitly reflects the investment's income pattern, value change and yield rate. :=> c c ,..,.., 2: C :=> 66 Income Capitalization Approach - continued The procedure used to convert periodic income and reversion into present value is called discounting; the required yield rate of return is called the discount rate. The discounting procedure presumes that the investor will receive a satisfactory return on the investment and complete recovery of the capital invested. The method is referred to as yield capitalization because it analyzes whether an investment property will produce the particular level of profit or yield required, Yield capitalization is also called discounted cash flow analysis because a discount rate is used to calculate the present value of anticipated future cash flows. The subject property is the type of real estate which if leased would be a completely net leased facility, whereby the operator is responsible for the total maintenance, repairs, and replacement concerning the subject, property. The tenant is responsible for all of the ongoing expense, including utilities, real-estate taxes, insurance, and any and all other expense. The only expense an owner may be charged with would be a slight allotment for management, releasing expense and reserve expense. It is our experience, however, that the rental of gas/convenience stores varies widely depending on their operating history and cost. Rentals can range from $15 per square foot to as much as $50 per square foot according to our records. It is difficult to correlate a rental, as this type of property is more of a business than traditional real estate. Also, most convenience stores are owner occupied. According to the 2007 State of the Industry: Convenience & Petroleum Retailing Totals, Trends and Averages, published by the Association for Convenience & Petroleum Retailing (NACS), 60.9% of all convenience stores were owner occupied in 2006. This type of property is typically bought and sold on an economic basis. We have, therefore, analyzed the subject based upon its actual operating history instead of using rent comparables. EXPLANATION OF THE OPERATING STATEMENT We will calculate the income to the real estate by first projecting the 2008 income and expenses. These projections will be based on the three previous years' statements and budgets as well as industry averages. From these projections we arrive at the EBITDARL, or earnings before interest, taxes, depreciation, amortization, rents and leases as defined in the 2007 State of the Industry report and in the book Convenience Stores and Retail Fuel Properties: Essential Appraisal Issues available through the Appraisal Institute. EBITDARL includes the income attributable to three different components, real property, tangible personal property or FF&E, and intangible business assets. The following portion of the Income Capitalization Approach involves the analysis of the operating statements of the subject. We were provided with the overall summary of the subject's actual performance for the years 2005 through 2007. However, the detailed expense information wasn't provided because the ownei's computer with all of the relevant information was recently stolen. The owner was able to find the budgets for 2006 and 2008 which did have detailed expense information, All of these statements can be found in the Addenda. ..,., Z c::::= -nr- c:::: r"M ::::== :---:J: ~~ ::;; m ::= c C m ~ c ::= 67 J I 1 l 1 I I I Income Capitalization Approach - continued I J j I j i The actual operating statements provided include two summaries for 2006 that do not match. The l I owner couldn't explain the difference, but indicated that the first statement is probably the flawed ~ statement, as it was created immediately after the year's end, whereas the information in the I second statement is probably more accurate, because there has been time to go over the I numbers thoroughly. We have, therefore, relied upon this second statement for the purposes of I this analysis. The owner explained that the expense totals in both the actual income and expense statements and the budgets are somewhat misleading. A large portion of the expenses included are not applicable to the operation of the store and are instead applicable to the owner's outside business and personal expenses. We have then compared the subject's operating information with the industry averages as published in the 2007 State of the Industry report. We have included the information for the industry averages overall, as well as for the first quartile based on performance (which includes the subject). On the following page is a reconstruction of the 2006 and 2008 budgets along with the NACS industry averages and our projections for 2008. ..,.., :FiE c:::= -nr- :::::: i-n 2::::::3 <:::"'"" rn~ "-l l"\'"I :::- c C l"\'"I "'" C :::= 68 Ai. m C) o z en =i Ai c: C) =i m '=' o i:i m Ai ~ Z ~ en ~ ~ m s: m z =i -{CCClOcn aOO:5;(j)!lL !lL5~Qe;~ roQ:;EQ !lL (f) 0' 5l m OJ en ~ CIl1O::;9, (fJ (fJ (1) * -- ....j -_ __ en .... -:::;'7 "':;77... .. O)+:-N--J-" 0) --J W CD ()1 .... 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The reason we are focusing on gross profit versus gross sales (which was more common in the past) is the recent history of significantly increasing fuel prices. These increases will skew any ratios based on gross sales because the fuel cost increases have far outpaced increases in gross profits. For example, gross sales increased 24% from 2006 to 2007. However, the gross profit only increased 5%, mainly because the cost of goods sold for fuel increased 34%. So to base projections off of gross sales from year to year in this market of rapidly increasing fuel prices would not be a true reflection of actual performance and would be misleading. Our projection of gross profit is based on the owner's projection for 2008. The owner indicated that year-to-date the sales and gross profits for 2008 are on pace with the 2008 budget. The gross profit according to the 2008 budget is $1,258,460, which is an increase of 6.8% over the 2007 figures. The increase from 2005 to 2006 was 17.9% and the increase from 2006 to 2007 was 4.9%. The projected 6.8% increase in gross profit from 2007 to 2008 is less than the average increase of the previous two years and, therefore, appears to be appropriate. As mentioned previously, the 2008 budget from the owner as presented in the Addenda includes a number of expenses that are not a part of the calculation of EBITDARL. The expenses that are not included in the calculation of EBITDARL by definition include depreciation, amortization, interest, occupancy costs, SBA amortization, and equipment rental. In addition, there are outside business and personal expenses included in the budget that are not direct expenses of running the convenience store. The personal expenses that were excluded from the 2008 budget are as follows: $8,000 $5,500 $6,000 $10,500 Excess wages taken by the owner ($48,000 remains for management wage). Car payments. Personal and outside business phone expenses. Personal and outside business accounting. Personal and outside business gas costs. $55,000 The only remaining expenses that differ from the 2008 budget are property taxes and repairs and maintenance. For property taxes we have applied the actual 2008 taxes according to Ramsey County. For repairs and maintenance we have applied the NACS average for stores in the first quartile, because the actual expenses for repairs and maintenance are inconsistent, as would be expected. -:-;:::;:1 2r'1'1 o::;::::.c::"':) -rn- ~ C::::l'"l"'l,,", F~E ;:;:;~:::, 2ns ,.,.;~ It must also be noted that the maintenance and repair expense according to NACS includes both what is typically classified as repairs and maintenance as well as replacement reserves. Because of this, there is not a separate line item for reserves. Our projection of expenses equates to 31.6% of gross profits. This total is between the overall NACS average (29.84%) and the average for the top quartile (35.44%). Our projection of expenses, therefore, appears to be reasonable. Based on our projections of income and expense for 2008, the resulting EBITDARL is $397,535. > o C r"M ~ C :::=0 70 Income Capitalization Approach - continued ALLOCATION OF EBITDARL As explained previously, EBITDARL includes the income attributable to three different components, real property, tangible personal property or FF&E, and intangible business assets. In order to arrive at the income to the real estate, we must subtract the income applicable to the other components. For the calculation of the income applicable to the FF&E, we began with the estimated costs of the equipment as given to us by Joel Geil, the Project Manager/Construction Supervisor with Holiday Stationstores, Inc. These costs are for a very similar Holiday Stationstore that is currently under construction in New Hope. The equipment, including all of the fuel tanks, dispensing equipment, the canopy and the convenience store equipment totaled $788,000. Being that the estimated life of the equipment varies from approximately 30 years for the underground tanks to ten years for the convenience store equipment, we will apply a total term in the middle, say 20 years. The resulting annual amount at these terms, $788,000 based on a 20 year amortization at 10%, equals $92,558 annually. We have allocated $43,257 for the intangible business assets category. This is the average pre- tax profit in 2006 for stores that are part of chains with 201 to 500 stores according to the 2007 State of the Industry report (Holiday Stationstores, Inc. has just over 400 stores according to their website). The overall average for all stores was $45,177. Pre-tax profit is the category that most closely relates to intangible business assets according to the Convenience Stores and Retail Fuel Properties book. This results in a net income to the real estate of $261,720. This is the amount that will be capitalized to arrive at a value for the real estate. VACANCY AND CREDIT LOSS ALLOWANCE The subject property is valued based upon its operating history. Projections are based upon actual experience, and vacancy is not a part of the analysis. SELECTION OF THE CAPITAliZATION RATE An overall capitalization rate can be estimated by the following techniques: 1) derivation from comparable sales; 2) band of investment or 3) mortgage and equity components; 4) land & building components and; 5) by debt coverage formula. When significant data on sales of similar properties are available, deriving capitalization rates from comparable sales is preferred. The capitalization rate for each sale is derived by dividing the net income by the sale price. The capitalization rate to be applied to the subject property is then selected based on correlation of the indicated rates. -:"'!::= 2:n-. ~::::=g """'r1.r-z =f"":"IC"":) F~E ~~s .....0 n-i::;;;;:;: --<: We have estimated the capitalization rate based on comparable sales. We have reviewed the sales of convenience store properties with fuel service in suburban locations throughout the metro area. These sales indicate a range of capitalization rates of between 8.0% and 12.0%, with an average of 9.9% (see market derived capitalization rate summary below). 71 :;:;. c C M"'l Z C :;:;. ''lcome Capitalization Approach - continued I Ii SALE II Ii #1 Ii I II #2 I[ i ADDRESS YEAR BUILT I GBA BP Service Station 9001 Lyndale Ave. S Bloomington, MN NET OPERATING INCOME $114,680 $1,103,145 1970 3,595 sf BP Gas Station 7905 Great Plains Blvd. Chanhassen, MN 01/27/06 $109,000 $1,093,809 10.0% #3 1990 2,156 sf BP Service Station 304 E. Wheelock Parkway St. Paul, MN 01/26/06 $56,000 $700,000 8.0% #4 1971 3,432 sf BP Gas Station 1569 Woodlane Drive Woodbury, MN 1988 2,860 sf Oakdale Convenience 8, Gas 7445 North 15th St. Oakdale, MN 07/27/05 $40,491 $390,000 10.4% 10/27/05 $118,788 $1,368,667 8.7% #5 #6 1987 2,457 sf Kwik Mart 234 First Avenue West Shakopee, MN 04/29/05 $33,000 $275,000 12.0% According to the 2008 First Quarter Korpacz Real Estate Investor Survey, the average overall cap rate for the non-institutional grade national strip shopping center market is 8.75% with a range of 7.00% to 11.00%. The average overall cap rate for the institutional grade national strip shopping center market is 7.28% with a range of 5.80% to 9.00%. We have presented the figures for the strip shopping center market because it is the most appropriate category for the subject property. The subject, considering its age, size, condition and favorable location, should have a cap rate within the above ranges. SUMMARY -n ::::: zi'"7'1 o2:;g """M. Z C::::f"":"l~ :;:::::.c:n- f::=$ M"l~= ....,0 M'iz As summarized in the table above, our market capitalization rates range from 8.0% to 12.0% with an average rate of 9.9%. The subject is comparable to these six properties and should have a cap rate near the average. We have determined the appropriate overall capitalization rate for the subject property to be 10.0%. This rate is within the range for both institutional and non-institutional retail strip centers according to the Korpacz report. ~ "'" c <= i"M Z <= "'" 72 Income Capitalization Approach - continued DIRECT CAPITALIZATION METHOD Indicated Value = Net Operating Income (NOI) + Overall Capitalization Rate (OAR) $ 261,720 10.0% $2,617,200 $2,617,000 {- $ 525,000 $3,142,000 Net Operating Income Capitalization Rate Indicated Value of the Real Estate Rounded Value of the Real Estate Value of the Equipment Total Value INDICATED VALUE, INCLUDING THE EQUIPMENT, BY THE INCOME CAPITALIZATION APPROACH IS: THREE MILLION ONE HUNDRED FORTY=TWO THOUSAND DOLLARS $3,142,000 -r. == 2.M"':l CI:;::.,g -n~:::;: =:::::f"71n 2::~? ~~~ '2::;5 m~ """ Q ~ Q ::=> 73 COST APPROACH: Equipment Value: Land Value: SALES COMPARISON APPROACH: INCOME CAPITALIZATION APPROACH: $3,141,000 $ 525,000 $1,072,000 $3,075,000 $3,142,000 RECONCILlA TION AND FINAL ESTIMA TE OF VALUE In summary, the value indications for the approaches to value utilized in this appraisal are as follows: In the appraisal process, the Reproduction Cost new generally tends to set the upper limit of value for a property, since an informed buyer cannot be expected to pay more for an existing property than it would cost to construct a new building of equal quality and utility. The Sales Comparison Approach is based on the analysis of sales of generally comparable industrial properties. These sales were thoroughly analyzed, and adjustments were made for those dissimilarities between the comparable sales and the subject property. The sales comparables selected were of similar newer convenience store properties with car washes and fuel service in the Twin Cities market. This approach is considered to be a reliable indicator of value. The Income Capitalization Approach is generally emphasized in the appraisal of income producing properties. A potential buyer or developer is primarily interested in the income producing capability of a property, while underwriters are also interested in the income producing aspects as a measure of the property's ability to cover the mortgage debt service in an amount representing an adequate debt coverage ratio (OCR). We have utilized the actual income and expenses for this property and have compared this information to industry averages. This type of property is typically bought and sold on an income basis. This approach is considered to be a reliable indicator of value for the subject property. In correlating the three approaches into a final estimate of value, we have considered the purpose of the appraisal, the type and plans for the property, and the adequacy of data processed in each of the approaches. These considerations influenced the weight to be given each approach. The Income Capitalization Approach was given the most consideration in our final estimate of value. It is our opinion that the value of the subject property HAs Is", including equipment, as of June 10, 2008, the effective date of this appraisal, based on an exposure time of one year, is: THREE HUNDRED FORTY $3,140,000 DOLLARS Composed of: Land Value Improvement Value Equipment Value $1,072,000 $1,543,000 $ 525,000 = c:; c:; r-n ~ C ==- 74 EXPOSURE TIME When estimating market value. the appraiser should be specific as to the estimate of "Exposure Time" linked to the value estimate. Reasonable exposure time may be defined as follows: The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based upon an analysis of past events assuming a competitive and open market.4 The estimate of the time period for reasonable exposure may be expressed as a range and can be based on one or more ofthe following: 1. Statistical information about days on the market. 2, Information gathered through sales verification. 3. Interviews of market participants. Reasonable exposure time is different for various types of real estate and under various market conditions. It is noted that the overall concept of reasonable exposure encompasses not only adequate, sufficient and reasonable time but also adequate. sufficient and reasonable effort. This statement focuses on the time component. The fact that exposure time is always presumed to occur prior to the effective date of the appraisal is substantiated by related facts in the appraisal process; supply/demand conditions as of the effective date of the appraisal; the use of current cost information; the analysis of historical sales information (sold after exposure and after completion of negotiations between the seller and buyer); and the analysis of future income expectancy estimated from the effective date of the appraisal. The subject property is located on a high traffic, county highway in the third ring suburb of Mounds View. The demand for commercial properties in Mounds View and in the surrounding area has remained stable. We were not able to obtain information on the exposure time for any of the sales comparables included in this report. According to area brokers, a property that is priced properly and adequately marketed should have an exposure time of less than one year. ::.> <:::> <:::> ,.,., z ~ 4 USPAP Advisory Opinion G-7 75 MARKETING TIME Reasonable "Marketing Time" may be defined as follows: An estimate of the amount of time it might take to sell a property interest in real estate at the estimated market value during the period immediately after the effective date of an appraisal.5 The estimate of the time period for reasonable marketing time may be expressed as a range and can be based upon one or more of the following: 1. Statistical information about days on the market. 2. Information gathered through sales verification. 3. Interviews of market participants. The estimate of a reasonable marketing time period may also be expressed as a range and can be based on the same criteria listed as items numbered 1, 2, and 3 above but with one additional item to be considered - anticipated changes in market conditions. In the case of the subject property, we do not anticipate any significant changes in market conditions and estimate a marketing time of one year or less to coincide with the exposure times being experienced in the market. o USPAP Advisory Opinion G-7 :;:. <:::> <:::> I"":": ~ <:::> :::= 76 CERTIFICATION We certify that, to the best of our knowledge and belief: the statements of fact contained in this report are true and correct. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. we have 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. THREE MILLION ONE HUNDRED FORTY THOUSAND DOLLARS $3,140,000 we have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. neither our engagement to make this appraisal (or any future appraisals for this client), nor any compensation, therefore, are contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. our engagement in this assignment was not contingent upon developing or reporting predetermined results. our 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. our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. Mr. Herlofsky made a personal inspection of the property that is the subject of this report on June 10, 2008. no one provided significant professional assistance to the persons signing this report. It is our opinion that the value of the subject property "As Is" as of June 10, 2008, the effective date of this appraisal, based on an exposure time of one year, is: Composed of: J\~ st: Prill, fVISA Certified General Real Property Appraiser #4001494 National Association of Master Appraisers #8312 Land Value $1,072,000 Improvement Value $1,543,000 Equipment Value $ 525,000 ~i~./. I /! I ! 1'/ -\-,t- ,1/'- ~ i 'tf\./~ Ryan D Herlofsky Certified General Real Property Appraiser #20285610 General Associate Member of the Appraisal Institute ::=0 C C \"'M 2: ~ Warehouses Supermarkets Apartments Condominiums Hotels Auto Washes Manufacturing Plants Office Buildings Retail Stores Churches Research and Development Buildings Auto & Boat Dealerships Shopping Centers Truck Terminals Medical Buildings Greenhouses Restaurants Sub-Divisions QUALIFICA TlONS Jack Prill, MSA Certified General Real Property Appraiser #4001494 National Association of Master Appraisers #8312 Tvpes of Appraisals Experience includes appraising and financial analysis of many types of commercial real estate including: Appraisals of Special Interest A small sample of specialized appraisals includes: IDS Center, Minneapolis, MN Brandon Mall, Brandon, Manitoba Kennedy Mall, Dubuque, IA Murphy Mart Center, Youngstown, OH Governor's Square, Columbus, OH Five Lakes Center, Fairmont, MN Hawthorne Suites Hotel, Duluth, MN Wingate Inn, Coon Rapids, MN American National Bank Building, St Paul, rvlN Central National Bank Building, Des Moines, IA Glen Pond Estates (300 Unit Apartment) Eagan, MN Grant Park Plaza Shopping Center, Winnipeg, Manitoba Ridgedale Shopping Center, Minnetonka, MN Giants Ridge Hotel, Biwabik, MN Country Inn & Suites, Hastings, MN Hampton Inn & Suites, Uno Lakes, MN Business Experience ili Commercial Appraisal & Consulting Group - Owner. ili Senior Commercial Real Estate Appraiser, Forsythe Appraisals, Inc, ili The Equitable Life Assurance Society of the United States, City Mortgage Department from 1964 to 1972. Completed Equitable's formal two-year training program in commercial real estate finance, construction, and appraisal; and subsequently headed the appraisal staff in the Minneapolis office. Education University of Minnesota, BA English Specialized Education "Fundamentals of Real Estate Practice", "Real Estate Law", and "Real Estate Appraisal", 1965 University of Minnesota, "Real Estate Appraisal I" Indiana University, 1968 and "Real Estate Appraisal II", University of Missouri, 1968, sponsored by the Appraisal Institute. Accredited Real Estate Schools, Minneapolis, Minnesota: (Continuing Education) "Investment Analysis," "Syndication for Profit," and "Legal Documentation," 1984; "Commercial & Industrial Financing," "Condemnation Valuation," "Financial Concepts," "Investment Property Sales Analysis," 1987; "Introduction to Small Business Sales," "Investment Cash Flow Analysis," "How to Put Together a Real Estate Exchange," "Real Estate Investment and Taxation," "How to Put Together a Real Estate Syndicate," "Business of Real Estate," 1990; "Condemnation and Tax Appeals," "Financing with Contract for Deed," and "The Power of Appraisals," 1991; "Intro to Standards & Ethics," "Fair Housing," and "Advanced Yield Capitalization," 1992; "Obtaining Market Data by Abstraction," "Direct Capitalization," "Discounted Cash Flow Analysis," "Retail and Shopping Center Trends," "Appraiser Licensing and Certification Issues," 1993; "Appraisal Standards & Regulations," "How to Avoid Environmental Hazards Liability," 1994; "Expert Testimony," "Contract for Deed", and "Real Estate Closing," 1995; "Special Purpose Properties," and "Hotel/Motel Valuation," 1996; "Real Estate Exchanges," "Real Estate Practice Update" 1997; "Minnesota Real Estate," "The Farm Sale," 1998; "USPAP Update," Energy Efficient Housing," 1999; "Environmental Issues affecting Real Estate," 2000; "MN Building Codes," 2001; "Appraisal Standard and Ethics," 2002 and 2005; "Appraisal Investment and Financial Analysis," 2005; "Advanced Residential Construction," 2005; "National Uniform Standards of Professional Appraisal Practice(USPAP) Update," 2006; "2006 USPAP Update and Scope of Work," "Appraisal Liability: Are you Exposed?," Houses from the Ground Up," and "F-AL-2007 Agency/Fair Housing: Culture, Custom and Communication," 2007. STATE OF MINNESOTA PRILL, JOHN M 12085 - 284 TH ST CHISAGO CITY, rvlN 55013 Department of Commerce The Undersigned COMMISSIONER OF COMMERCE for the State of Minnesota hereby certifies that JOHN M PRILL 12085 - 284TH ST CHISAGO CITY, MN 55013 has complied with the laws of the State of Minnesota and is hereby licensed ,0 transact the business of Resident Appraiser: Certified General License Number: 4001494 unless this authority is suspended. revoked, or otherwise legally terminated. This license sha!! be in effect until August 31,2009, IN TESTIMONY WHEREOF, I have hereunto set my hand this October 12, 2007. ,)A~ )/~ COMMISSIONER OF COMMERCE Continuing Education: Minnesota Department of Commerce CE Requjrement Tvoe CE Reauired Homs Licensing Division 85 7th Place East. Suite 500 St. Paul. MN 55101.3165 Telephone: (651) 295.6319 Ema!l: Iicensing.commerce@state.mn.us \\iebslte: commeiC6.state,mn.us Total.. Appraiser USPAP 30 .Contin,uif!9 Educ~tio~: 'i 5 hours is requjreq in th~ ,first rene:.vaI pgnod. \.vhich includes 8 7 hour USP,A,P course. 3D hours IS requlrearor eacn sUDsequent rens)'/zl penod, Wnlcn lncluaesa l !'lour USpp.,p course. Notes: Appraisers: You must hold a licensed Residenti~l, Certir"ied Residenti81, or Certified General QU8lfflc8tion in order to perroml appraisals for fedem\!y-related tmnsDctions. Trainees do not qualify. For further det81ls, p!ense v!sit our website m commerce.stme.mn.us. ::=0 C C l"':":l 2: C :::= QUAL/FICA TJONS Ryan 0 Herlofsky Certified General Real Property Appraiser #20285610 General Associate Member of the Appraisal Institute Tvpes of Appraisals Experience includes appraising and financial analysis of many types of commercial real estate including: Retail Mixed-Use Vacant Residential Land Day Care Facilities Convenience Stores Institutional Properties Student Housing Industrial Subdivision Analysis Vacant Commercial Land Religious Facilities Office Condominiums Mini-storage Office Multi-Family Residential Vacant Industrial Land Auto Repair Facilities Industrial Condominiums Golf Courses Professional Experience Real Estate Appraiser Commercial Appraisal & Consulting Group October 2001-Present Participant Services Advisor The Vanguard Group August 1999-June 2000 Education University of Minnesota, BA in Philosophy September 1998 Specialized Traininq Appraisal Institute Comprehensive Exam Successful Completion of all Four Modules August 2007 Appraisal Institute Courses Course 420: Business Practices and Ethics Course 520: Highest & Best Use and Market Analysis Course 550: Advanced Applications Course 530: Advanced Sales Comparison & Cost Approaches Course 540: Report Writing & Valuation Analysis Course 510: Advanced Income Capitalization Course 310: Basic Income Capitalization August 2007 June 2007 February 2007 November 2006 May 2006 March 2006 April 2004 General Education Appraisal Institute: General Demonstration Appraisal Writing Appraisal 1 07: How to Perform FHA Appraisals Appraisal Institute: Effective Appraisal Writing Seminar Appraisal 1 06: Appraisal Investment & Financial Analysis 45 Hours of Minnesota Certified Real Estate Appraisal Training January 2008 October 2003 July 2003 June 2003 May 2001 Real Estate Appraisal License Certified General Real Property Appraiser License #20285610 ::=0 C C r-n 2: C ::=0 STATE OF M!NNESOTA HERLOFSKY, RYAN D 2853 ULYSSES ST. NE r.,lINNEAPOLlS, r.,.lN 55418 Department of Commerce The Undersigned COMMISSIONER OF COMMERCE for the State of Minnesota hereby certifies tho.t RYAN D HERLOFSKY 2853 ULYSSES ST. NE Mli~NEAP()US. MN 55418 has cornplied v./ith the lavv's of the State of t\:linnesotD and is hereby licensed to trallst:tct the business of Resident Appro.iser : Certified General License Number: 20285610 unless this authority is suspended. revoked. or othersise legally terminated. This Ecense shail be in effect until August 31, 200Si. IN TESTIMONY 'vVHEREOF, I have hereunto set my hand this October 15, 2007. } f /}/~I ~. ~j: / ~r"./" / ?ffr,r,4v ,. COMMISSIONER OF COMMERCE Continuing Educo.tion: [.liinnesota Department of Commerce CE Reouirenlent Tvoe Licensing DiVision 8.5 7th Place East, Suite 500 st. Paul. i\:1N t15101-3155 Total - A.ppraiser USPAP 30 Telephone: (6::.1j 296-6319 Email: Iicensing.commerce@state.mn.us Viebsite: conlmeice.state.mn.us Notes: Continuinil Edllcatiol1: 1:. hClU[S is reqUired In 1$ required roE" :sac;; su;:rseque::: rens\l:ai pen::}'"::. \\'nich lnclJcesa 7 hour USPAF course. 30 11()UrS USP.t.,p course. ~PEr?~s~rs:,-~~~ ~)}ls}.:~OI~~~ IIC:p~:...~ p~~~de~~~i~l,... C~r:iV9d P.eslde:i~al, O~ .r;:8r1rfi~.~ ,~:n~r~l..'::waiific~tj:::.n ;.,1'::"IiO'lli appH~I~1..11.:;) 10, lo:;;deia;IY-p=l~i:;;:"" tc;;s3....d,~n.;::. lramees do no!" quality. r-Ol ;...11l19. j;1.81'S. pie.;;:.>:;:" at commercs.st3te.mn.u8. ::=0 C C \"'M 2: C ::=0 CONTENTS OF ADDENDA ZONING CODE TAX DATA INCOM & EXPENSE STATEMENT BUDGETS ENGAGEMENT LETTER ZONING CODE 1119.01 1119.03 CRA-PIER 1119 FeD, PL.:!_'\'::'\ED "Cl'\IT DEVELOP::\IE::'\T DISTRiCT SECTION: 1119.01: 1119.02: 1119.03: Pmpose Pe11lutted Uses Special Procedu.res 1119.01: FURPOSE: Ill;;: 1Jumose of the PUD. Planned Unit Development District is to . . 1)1'oyide :for the intezration and coordination of land 1XU'cels as Iye11 as the combination of -.-a1'vin9: . ~ ~ - types of residential, commercial and industrial uses, (1988 Code S40.23) 1119.02: PER?\llTIED rSES: All pel111itted accessory' 01' conditional uses contained in Chapters 1106 tlll'ough 111 S of this Title shall be treated as p:::nnitted uses to elinunate the 1. 1" .' . ,. '1' d' '1 ' . '. .00 C' 1 .,' 0 ') -" over applllg proeee ural reqU1l'ememS ot 1llCtlY1C ual COll' 11:10118. use prOV1S10llS. (1 Y 00 .oe e S-'f .-j) 1119.03: SPECLi..L PROCEDURES: Ihe establishment of a PUD, Plal111:::cl Unit Development District shall be subject to the mnenclm:::llt requirements as outlined in Section 1 1 .., = r 1 "1' -' 1 11 1 1 l' ., 1 1 .,) 1 1 -" ..' ~'1 ....;).J. or L11S ilLe p.llS tle procec.ures nn(, COl1C,ltlOllS l111posec; DY C.lapter u..;,iJ ot tillS l._lapter. (1988 Code S40.23) Cffy ofJbw;a's Vhnr 1120.01 11:20.01 CHAPTER 1120 PLA_ '\7::\ED UNIT DEYELOP::\IE::\TS SECTION: 1120.01: 1120.02: 1120.03: 1120.04: 1120.05: Pmpose and Intent General Requirements and Standards. Special Requirements and Standards. Procedure Submittals 112Cl.01: PURPOSE A::\D I::\TE:XT: The plUl)os.e of this Chapter of the Zoning Code is to provide :1:'01' the grouping of land parcels for development as. an integrated. coordinated unit as opposed to traditional l)arcel by parcel. piecemeal. sporadic and unplanned approach to development. This Section is intended to introduce :t1exibility of site design and architecmre for the consen;atioll of land and open space through clustering of buildings and activities through conditional use provisions. It is nllther int;;nded that planned unit developments are to be characterized by central management. integratd planning and .architecmre. joint or common use of parking. maintenance of open space and other similar facilities and a harmonious selection and eft'icient distribution of uses. Specifically. it is intended to encourage: ('iry Q.rjfC'IO~'('ls F~;elr Subd. 1. Innovations in residential deyelopment to the end that the groy\'ing demuncb for housing or all ecol10111ic L:;\:-els 111a\:" be 1l1et b'v Q:l'eater ",,,'-arielv~ ill ttllure~ l'!.'"De.desiZll 811d sitil1s! of .. '" '- ... ...,l". '- -- chvdlings and by the conselyatioll and more e:fficlem use ofland in such deye1opments. Subcl. 2. Higher standards of site and building design through the use of trained and experienced lund pbnners. architects und landscupe architects. Subd. 3. ?\-10re convenience in lOCution of accessor::..,' commercial and service areZ1. Su,bd. 4. Tile preser\:'8tioll alId enhancel11el1t of desirable slte Cl1arGcterlS hes. :;lJch ~s llutur81 topography and geologic :features and the preyemlon of soil erosion. Subd. 5. _A~ creatiye use of land und related physical development Yi'hich a11ol,1,'s a phased snd orderly transition of land frorn rural to urban uses. 1120.01 1120.02 Snbd. 6. A.n efficient me or land resulting in smaller nen\'orks of utilities r.uc1 streets., thereby lov.'eril1g housing cons tillc1 public il1,;:estmeuts. SnbeL A de....-dopmeut pattern in harmony with the objecti'\'es or the )'.Iounds \'~ie'.;,' COlllprehens:l,,'e Plau. (~tiJ q(}.lQunds r~\n'; SnbeL 8, A more desirable environment than '.vonld be possible through the strict application or zoning ,md subdivision regulations of the City'. SnbeL 9. Io gi'.-e the lando'\'\'ner and developer reasonable assurtillce of ultimate appro'.-al before expending complete design monies v:hile pro\'ic1ing Cit:r officials veith aSSUri:mces that the project \'ril1 retain the characterem-isionec1 at the titne of concurrence. Subd. Hi. Io allo'.\' ...-ariatio11 from the pro,.-isiollS of this Title. including setbacks. height. lot area. \\'idth tillc1 depth, yarek ere. 0988 Code ~40.24) 1120.02: GEl\"ERAL REQUIRL\fFSTS A_"~D SIAXDARDS: SubeL 1. Ownership: An application for PUD approval must be filed b;.' the lando,,o:ner or jointly by aU 1a11do-:,,'ners of the property' included in a project. The application and all submissions must be directed to the c1e1.'e1opment of the property i;S a unified \\'hole. In ;:he case or multiple o\;,'nership. the appro':al of the final plat shall be binding on all o'.vnel's. Subc1. ') Comprehensiw Plan Consistency: Ihe proposed PCDshaU be consistent with the adopted City Com.prehensive Plau. SubcL .). C o 1111210n Open Space: C 0111111011 opell space at least sufficient to meet the mi1ll11lUm reqmre1l1enrS estabhsl1ed in this Chapter and such complememar:r struCl1.1.re'" a.ne! 1111prOi:ellle'nts as. are 11cCeSSf't.1):' and apl)fopriarc :tor tlle bel1efit EtHCL C'11]O-\111'e!lt or th~ residents of the FUD "hall be 1Jro','ided within the area of the PUD. Snbd. 4. Operaring and 2vIaimenance Requiremems for PUD Corm.non Open Space Facilities: \Vheueyer common open space Of sen'ice facilities are pro-,'idecl within the PUD. the PUD plan shall contain pro..'isiol1S to assure the continued operation and maintenance of such OpC>11 'space aIle! s~rr~.4ice facilities to a predeter111ined reasollablt 'sra.lldard. ('0111111011 opel1 space and selTice facilities ,.':ithin a PUD may be placed under the O\\'nership or on-': (1: or more ofthe following ct" approved the Council: a. La11dlord controL v;here only use by tenants is amicip21teeL 1 ,. -.. 11' r ~,. (' 1 _ ' ,. ,. . . , . - ::>te lme ,)J J 01 ill.:s .0ClC wr SU,1C1',1SWl1 regutatlons. TAX DATA PROPERTY ADDRESS I ABBREVIATED TAX DESCRIPTION It Ramsey County Property Records and Revenue P.O. Box 64097 Saint Paul, MN 55164-0097 "VE D LIMITED .132 HIGHWAY 10 MOUNDS VIEW MN 55112-4042 For taxes Payable For taxes Payable in 2007 in 2008 S 0.00 0,00 76,946.01 80,440,20 25,190.01 28,436.20 0.00 0.00 51,756,00 52,004.00 8,119.41 9,025.04 772.33 763.71 73.40 76.29 580,98 633.55 7.287,55 7,730.45 14,288.56 14,370.09 4,343.24 4,425,80 2,968.27 3,110.53 522.24 559.41 578,08 700.03 0.00 0,00 12,221.94 10,609,10 0.00 0.00 51,756,00 52,004.00 0,00 0,00 0,00 51,756,00 0.00 S 52,004.00 Web: WW1v.co.ramsey.mn.us Email: ProoertvTaxlnfo@co.ramsev.mn.us Phone: 651,266.2000 Located at: 90 West Plato Blvd, Saint Paul, MN 2732 COUNTY HIGHWAY 10 SILVERVIEW ESTATES LOT 1 BLK 1 06.30.23.43.0038 5917 o 1, Use this amount on Form M1 PR to see if you're eligible for a property tax refund, File by August 15, If box is checked, you owe delinquent taxes and are not eligible. 2. Use this amount for the special property tax refund on schedule 1 of Form M1 PR Your property tax and how it is reduced by the State of Minnesota 3, Your property tax before reduction by state-paid aids and credits 4. Aid paid by the State or Minnesota to reduce your property tax 5. Homestead and Agricultural credits paid by the State of Minnesota to reduce your property tax 6. Your property tax after reduction by state-paid aids and credits Where your property tax dollars go 7. Ramsey County a, Regional Rail Authority b. Public Safety Radio System c. County Library 8. City or Town - MOUNDS VIEW 9. State General Tax 10. School District a. Voter approved levies b, Other local levies 11. Special taxing districts a, Metropolitan special taxing districts b. Other special taxing districts c, Tax increment 0 d. Fiscal disparity Non-school voter approved referenda levies Total property tax before special assessments Special assessments/service charges added to this property tax statement for taxes payable in 2008 12, 13. 14. a, b. c, d, e. Contamination Tax 15. Total Property Tax and Special Assessments me 2008 Estimated Market Value and Classification shown in the box below will be used to determine the payable 2009 taxes. Prior lear comparisons are shown for your convenience. If you do not believe you could sell your property for the Estimated Market shown for J.anuary 2, 2008 I payable 2009 (line 17), you may appeal this proposed value by attending the Open Book indicated below. For tips on how to prepare for this meeting and other important appeal information see the back of this 16. 17. 18. 19. 20, 21, 22. 23. 24. Assessment Date / Tax payable year Estimated Market Value Limited Market Value Value or New Improvements Green Acres Value Plat Deferment This Old House Exclusion Taxable Market Value Classification January 2,2006/ payable 2007 January 2, 2007/ payable 2008 I S 1,524,900 S 1,601,200 January 2,2008/ payable 20091 $ 1,500,000 I I I I I I l 1,500,0001 COfvHviERCIAL I 1,524,900 1,601,200 COMMERCIAL COMfviERCI.,,-L Please read the back of this statement for Important Appeal information and Definitions INCOME & EXPENSE STATEMENT i i I I l JUN-11-2008 B3:37 WESTERN BANK 553 b::>l C::l10 O~OD ..." .. -. -..... . \ol: ....Vtll. r"tll I ~ 1J1J::l/UUi:j FIVE D LIMITED - STATION STATEMENT OF OPERATIONS ANP R&1AINEO EAP_~INGS (DEFICIT) YBhRS END~ OECEM~ER 31, 2006 AND 2005 2006 % 2005 ~ SM.ES Ga.s Mercna...."dise Car wash Other Sales 'reeal Sales S 4,774,661 66.1 $ 4.,0'18,514 66.5 1.723,27G 23 .S 1,535,OSZ 25.S 26J.,n7 3.1 155,<1:74 2.6 50a.BOS i.O 184, ;l27 3.1 7.228.062 100.0 5,953,997 100.0 COST OF GOODS SOLD Gas Merchandise <a.JS2,ll3 ..0.2 3.i2Q.!7n 62.6 1.7'70.305 24.5 ~.2i3,2'75 2,J,.'1. 6,122,416 S4.'7 5,000,197 !l~.O 1,lO$,~44 15.3 953,SOO 1.6.0 1,007,566 lJ.9 915,'sH 15,4- S-€,Oi~ l.~ :3 7,876 O.e Total Cost of GOO~$ sel~ GROSS PRonT QPE.i:.~TING EXPENSES ~~T:rNG rnCOME ..... OTHER INCOM~ ~~~ (EX?ENSE) Interest Income RETAIN&D ~~~bNGS (PEFIC:rT)-E~ of 'te~r :22 ClH,079) (1. 6) (l08,645) ( 1. eJ) (lH,OS7) (;)...6) (108,8~S) (loll) O,S, ;>7$') (0.2) (70, %9) (1. 2) (195,OOS) (79, -tOO) (l4>,636) (14,06) !? (1S;S,620) $ (165,005) ~, ~<<'7",~ Intere~t E~pense Total oeher Incom~ ~nd (~~nge) NET INCOME; (L.QSS) R~T~bNED E~JL~!NGS (DEFICIT)~~e~innin~ gf YGa~ 't'~SFli:P.s (ro) I?RC>>,~ CO~l?Ol?.J\.TB '...' · /i/ / ~' \1 ~ I .. ! ~. }/.j JV~ See aeee~~eanel$ ~eport. ~age j JUN-11-2008 09:37 WESTERN BRNK &53 b::>l ,o';:jl::J I:HDD FIVE D LIMITED - STATION W~STATEMENT OF OP~RATIONS AND REThINED EARNINGS (DEFICIT) - YEARS ENDED DECEMBER 31, 2007 AND 2006 e~ Sales :'i'.t,,f.... . ~?:rotal Sales ~j~:."~: .".". . t:....~. ~~.OF GOODS SOLD Gas Merchandise Tota.l Cost of Goods Sold lOSS PROFIT ?E:PJ\TING EXPENSES ?::R.:'TING INCOME' rHE:l?, !NCOME AND (EXi? ENSE) Interest Income ~nte=est Expense Total Other Income .and (EX?ens~) ~'i' INCOME (LOSS) ~!ll.!NED EAR..1\l!NCS (DEFICIT) -Beginning of Year ?~SFERS (TO) FROM COR?O?~TE STiUe-TED E~.p..:NniGS (DEF!C!T) -End of Year 2007 $ 6,257,758 1,855,492 255,780 102,179 8,47l.209 l; 2006 73.9 $ 4,774,661 21.9 1,722,724 3.0 221,317 1.2 100.0 ~ :t I 5 , 82 9 , 0 0 1 ~";lo 6 g . 8 1,463,556 17.3 7,292,557 86.1 ,,. 1~.{) J; 1,178,652 1,104,136 74,516 (lll,B02) (111,B02) (37,286) (398,717) 60,364 $ (375,639) See account~~t'S report. Page 3 13.9 l3.0 0.9 (1. 3) (L3) (0.4) 101,394 6,820,096 r.~C: 'l; 70.0 25.3 3.2 1.5 :1.00.0 '? (. / 1>/ 4 , 3 52 ,113 g~ ,; 6 3 . 8 :..' 1,343,88377.7;'19.7 5,695.996 S~.5 1,124,100 1,026,022 :ltl; OiS (114,079) (114,057) (15,979) (368,103 ) (H,€36) $ (398.716l 16.5 15.0 .i"..a: 22 (1. 7) (1. 7) (0.2) BUDGETS iday Mounds View 2006 Budget Mounds View 06 Budget -c Oetroleum Sales I......dles ICOS Cpns Petroleum Gross Profit ions Sold 5S Profit Per Gallon I Price Per Gallon Inside Merch Sales chandise Ik Bar/Deli lmissary ery Jaid Comm ~llnside Merch Sales Inside Merch cas ch bates 'e Cpns Ik Bar/Deli nmissary ery Jaid Comm. Total Inside Merch cas ~ide Merch Gross Profit chandise 3rettes 1k Bar/Deli/Alcohol nmissary :ery Paid Comm. Tota!!nside Merch GP Car Wash Wash / Vac Wash COS 5,154,100 (4,815,800) (2,000) 336,300 1,990,000 0.170 $ 2.59 1,059,230 740,220 1,799,450 752,053 (3,000) 621,785 1,370,838 310,177 118,435 428,612 235,000 (25,000) Carwash Gross Profit Other Income tery/lotto sales ,-'{Iotto cas nCA~ement fee M income Ire Services Ire Services cas ner Income Gross Profit Total Gross Profit Pavroll & Benefits 1ges Inagement Fee rWash Wages :INGE yroll Taxes lfit Sharing lployee ins benefits Total Wages & Fringe Controllable Expenses lployee Disc lre Supplies/mgt gas Image Car Wash !iforms/Rugs )S Stamps/copies ivrt General ivrt Car Wash ivrt Holiday ij Debt Ink Charges lntributions edit Card Fees Jes iPt Music ipt Sign Rent iPt telxon let Disc Charge anchise fee gas anchise fee merch SUrance Liab lint store aint Car wash l3C Exp lice Supplies 'of fee acct 'of fees Radiant 'af fees Inventory 'af fees SBA 210,000 400,000 (378,000) 48,000 12,000 16,000 (8,000) 90,000 1,064,912 277,000 65,000 29,000 20,000 391,000 1,600 23,000 1 ,400 675 5,000 16,000 5,000 6,500 87,000 720 1,330 254 8,000 15,600 40,000 16,000 14,000 12,000 1,000 4,000 4,983 1,750 6,562 'fees CDC 4,678 : fees Legal . fees CSA 750 fees Payroll 700 1,350 he. Ishort 5,500 NIGras ~r Paid outs 't ne Relay 1,380 Jrity 250 lses & Permits 1,100 phone 7,000 h 4,500 ies Elec 52,000 ies Gas les water 6,000 ::xp 3,000 Total Controllable Exp 360,582 Controllable Expenses iJDepreciation 132,000 ing Rent 3st Exp 115,000 9rty Taxes 52,000 Non Controllable Exp 299,000 Total Expenses 1,050,582 lrofit/(Loss) 14,330 flow 146,330 ~R 261,330 Fran Fee 60,600 Acct 4,000 SBA 11,990 Life Ins 1,800 Managemant fee (48,000) Car 3,000 Telephone 5,700 Mgt Gas 10,350 Excess Sal 100,000 Sign 1,330 Ins Liab 16,000 music 720 Total 167,490 .R with extra exp 428,820 Vaule at 8 3,430,559 12.50% Vaule at 7.5 3,216,149 13.33% Vaule at 7 3,001,739 14.29% Vaule at 6.5 2,787,329 15.38% Vaule at 6 2,572,919 16.67% u~~rr 00 ~ OCf)<~ -i O~ ~ Q Q 0~~ (3-imOO mm (1)5' co.o-,(1) 0 co' CD < 0' III miDo s:-~;::: ~~ -.... (fJ""""'lCD(=3 Ej fJJ' (0 = U'J_",:,- -g oJ CD (1) ~~ Q.!!!. CDg::T - &-"0 ~ 0 00Cf) :::J S' ca '? '? m m -' oJ ~ d 0 CD 5' 5' ~ iil ::!. 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CCl ~ ~ ~ ~o~~,o ~ QQ,~A~"" N N WO~"" 0 CCl QQ ....00.... N co CCl WOW~ 0 W ~~ ~~O~ N ENGAGEMENT LETTER RN Web page:http://www.western.bank.com Member FDIC Equal Housing Lender @ June 4, 2008 Mr. Ryan Herlofsky Commercial Appraisal & Consulting Group 708 Cleveland Ave. SW New Brighton, MN 55112 RE: Five D, Ltd. Dba Holiday StationStore Mounds View; 2732 NE Co Rd 10, Mounds View, MN 55112 Dear Ryan: This letter shall serve to prOVlae you with instrucLlons for appraising the above referenced property per bank policy. It is required that the requested appraisal would comply with FIRREA in all respects. I understand the appraisal fee for this assignment will be $3,500.00, and the report will be completed by July 2,2008. The appraisal relates to anticipated refinancing of subordinated debt. Please provide the requested appraisal in accordance with the following instructions: 1. The appraisal must be in compliance with USPAP and Lne individual appraiser should disclose his or her comp_Llance vIi th the USPAP competency provision as i^iell as disclose his or her certification level or designation. In addition, the appraisal should include the scope of work performed in the assigD_rnent. 2. The appraisal should estimate the project f s market value, whereby market value is defined as the most probable price which the property should bring all conditions requisite to - fair sale, the buyer ana the seller, eacn aCLlng prudently, and knm1ledgeably, and assuming the price is not affected by undue stimulus whereby: i) buyer and seller are typical motivated; ii) both parties are well advised, each acting in !tihat considers his own best interest; iii) a reasonable time is allowed for exposure In Lne open market; i y-) payrn.ent is made in terms OI castl in US dollars, or terms or financial arrangements comparable 0; and v) the price represents a normal consideration for., property~ sold, unaffecteci Djl soecial or creat.l\Ie ~ , , Illlanclng associated sales or ,granted "Cn the sale. h~ - wy concesslons an ~VOlle ~niv~~s!ty ~ve;ue ,ul, I'IIN 5::> 10" 290-8100 1740 Rice Street MaoJevJood. IvlN 55113 (651) 290- 7822 1155 Hadley ,A.ve. N. Oakdale, MN 55128 (651) 290-7844 2711 N.E. Highway 10 ivlounds View. MN 55112 (651) 290-7866 3033 University Avenue S.E. Minneapolis, MN 55414 (651) 290-7888 4700 Vv. 77th Street, Suite 160 Edina, i'iIN 55435 (952) 857-170i property,':::: S, V.l.. tal'lg l "[SITtS 1: are ilU L- real property but are included in the appraisal, and discuss the impact of their inclusion or e:x:.clusiorl on the estimate of market valueo If the estimated market value does not said personal property-r, fii-:tures or inta.ngible l "[SIns / that fact should be stated in t report. Mr. Ryan Herlofsky June 4, 2008 'age 2 3. The written appraisal must be sufficiently descriptive to enable a reviewer to readily ascertain the estimated value reported and the rationale for all assumptions leading to the valuation estimate. The appraisal must also contain appropriate disclosures to allo'd the reviewer to understand the research and analysis performed in the assignment. 4. The appraisal must analyze and report any prior sales of the property for a three year period (one-year period for one to four-family residential properties only). 5. The appraisal should disclose current income produced by the property, and the appraised value with respect to the income approach should be predicated upon current rents, expenses, and vacancies for the subject project or, if a proposed proj ect, based upon pro forma rents, expenses and vacancies that can be realistically achieved under current market and economic conditions. 6. The appraisal must disclose the assQ~ed marketing period needed to sell the appraised property in light of the property's characteristics and current market conditions, 'dhich assumption should be reflected in the arrived-at value. 7. Current market trends, including: vacancy rates, rent concessions, and sale prices or market values, should be disclosed in the appraisal report. 8. The appraisal is to state II as is II the value Hhich is the value of the property in its current physical condition and subJ'ect to zonin~ in-effect as of the date of the appraisal. '" - - Appropriate deductions or discounts for items such as leasing cowmissions, rent losses, and tenant improvements, are to be made from an estimated retail or stabilized value to arrive at the market value as of the date or valuation~ 9. The appraisal must contain a legal description of the property being appralsed. 10. The appraisal must identify and separate ~v-al ue personal 11. The three approaches to value: direct sales comparison, income approach, and cost approach, should be utilized, or an explanation should be included if one of these approaches is not utilized (i.e. the income approach for residential owner- occupied real estate). Likewise, if any information required for the completion of the appraisal is unavailable, it should be disclosed and explained in the appraisal report. Mr. Ryan Herlofsky June 4, 2008 Page 3 12. In the market or direct sales approach, an analysis of comparable sales should include both narrative explanation of adjustments and a tabular adjustment grid. 13. If the estimated absorption period is greater than 12 months, or if substantial additional expenditures, e.g. leasing co~missions, tenant improvements, or other landlord expenses need to be made over the near term, or otherwise warranted, the discounted cash flow method of valuation should be utilized. 14. The appraisal report itself must recite these instruction, as well as the attached appraiser certification (Exhibit A) . Please contact Chuck Durand at 612-803-0080 to arrange for an inspection of the property. Please do not hesitate to contact me regarding any questions on the above instructions or the project itself. Sincerely, \tJestern Ban}: ;; <,' /1 l/lt.vr!&~ L--c'G v~ Cindy Carlson Vice President 4 . To the best of our knowledge and belief, the statements fact contained in this appraisal report, upon which analysis, opinions, and conclusions expressed herein based, are true and correct. of the are EXHIBIT A CERTIFICATE OF APPRAISAL The undersigned do hereby certify as follows: 1. We have inspected the property. 2. We have no present or contemplated 1:Ui:ure interest in the real estate that is the subject of this appraisal report or the parties involved. Our compensation is not contingent on an action or event resulting from the analysis, opinions, or conclusions in, or the use of, this report. 3. We have no personal subject matter of involved. interest or bias with this appraisal report respect or the to the parties 5. This appraisal disclosure of assigrnnent. report sets the research forth the scope of work and a and analysis per1:ormed in the 6. No one other than the undersigned assisted in the preparation of the analysis, opinions, and conclusions concerning real estate that are set forth in this appraisal report. 7. This appraisal report has been made in conformity with and lS subject to requirements of the Uniform Standards of Professional Appraisal Practice (USPAP) r adopted by the Appraisal Standards Practice (USPAP) r adopted by the Appraisal Standards Boord of the Appraisal Found2tion. 8. This appraisal assignment minimwu valuation or spe loan. 'tias f~(' not based on G requested '\Talu.ation or appro"\Jal 0-F \...i.... 9. We have ~he appropriate knowledge of the specific mar ana relevant experience appraising propert s Slml~ar size ana complexi ty to the property under consideration to complete s assignment ;,yi th COITlDetence. (State appraiser's designation and license number) Pile No. TC- 74190 (A) ENDORSEMENT OWNERS LOAN o [Z] Attached to and forming a part of Loan Policy No. 24 0070 107 00005909 Issued By CHICAGO TITLE INSURAl'TCE COI\iIPAi"iY Item No.1 of Schedule A is amended to read: Western Bank, its successors a~d/or assigns The following is added to Item No. 4 of Schedule A: The insured mortgage was subsequently assigned to Western Ba~k, by AssigD~ent of Mortgage filed June 5, 2002 as Document Number 3505680 (Abstract) a~d as Document Number 1690986 (Torrens). The following is added to Item No.1 of Schedule B, Part II: The above Assignment of Leases and Rents was subsequently assigned to Western Bank, by Assignment of AssigD~ent of Leases and Rents filed June 5, 2002 as Document Number 3505681 (.~stract) and as Doc~~ent Nwuber 1690987 (Torra~s). This endorsement is made a part of the policy or commitment and is subject to all the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of Lhe terms and provisions of the policy or commitment and prior endorsements, if any, nor does it extend the effective date of the policy or cOlThilitmem and prior endorsements or increase the face amount thereof. Dated: October 6, 2002 Land Title, Inc. Ac~ l Authorized Signatory Gregory A. Booth Note: This endorsement shall not be valid or binding until countersigned by an authorized signatory. CHICAC-o TITLE INSDl::{A.I'\ICE COlVIP ft.J'bf"J{ By: Patrick F. Stone President By: Brad Brigante Secretary Form 3594 R 6/89 CTIF3594 /L' I ."<' / ~ i ~ LOAN r \. SCHEDULE A OFFICE FILE NUMBER POLICY NUMBER DATE OF POLICY AMOUNT OF INSURANCE 1 2 l1ay 29, 1998 (Abstract 4 'I'C - 74190 (A) 24 0070 107 00005909 July 15, 1998 (Torrens) $ 1,219,598.00 1. Name of Insured: Signal B~~k National Association, its successors and/or assigns 2. The estate or interest in the land which is encumbered by the insured mortgage is: Fee Simple 3. Title to the estate or interest in the land is vested in: FIVE D, LIMITED, a Minnesota corporation 4. The insured mortgage and assignments thereof, if any, are described as follows: combination Mortgage, Security Agreement and Fixture Financing Statement executed by FIVE D, LIMITED, a Mi~~esota corporation, dated May 27, 1998, filed May 29, 1998 as Document Number 3061201 in the office of the Co~~ty Recorder, and filed July 15, 1998 as Document Number 1500998 in the office of the Registrar of Titles, within ~~d for Ramsey COlli~tYI Mi~~esota, in the original w~ount of $1,219,598.00, in favor of Signal BaP_~ National Association, a National Banking Association. 5. The land referred to in this Policy is described as follows: Lot 1, Bloc~ 1, Si1verview Estates SCHEDULE A. Loan Fonn Reorder Fonn No. 3524 (Rev. 1/89) This Policy valid only if Schedule B is attached. ~ " '. -- LOAN ( .-~; SCHEDULE B Policy Number: 24 0070 107 00005909 Loan EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: Special Exceptions: 1. The lien of all taxes payable in the year 1999r and thereafterr and taxes and assessments levied subsequent to the date of this pOlicy. First half taxes are due and payable on or before May 15, 1999. Second half taxes are due and payable on or before October 15, 1999. (Taxes payable in the year 1998, and prior, have been paid in full.) 2. Subject to Certificate in favor of the City of Mounds view, filed October 22r 1965 as Document 'Number 491880. 3. Subject to a perpetual easement for signage purposes and a perpetual eaS6.rnent for design improvement purposesr including the purposes of constructing, layingr operatingr inspecting and maintainingr alteringr replacingr repairing and putting into operation all necessary public facilities and appurtenances in favor of the City of Mounds view as contained in DOClli~ent dated April 3, 1998, filed April 30, 1998 as Document Number 3055239. 4. Subject to Developers Agreement as contained in Doc~rnent dated April 20, 1998r filed April 30, 1998 as Document Nlli~er 3055236. SCHEDULE B (EXTENDED COVERAGE) Schedule B .of this Polley consists of 2 pages. Owners Form Reorder Form No. 3526 (Rev. 1/89) ( Form 15S8 Attached to Policy No. 24 0070 107 00005909 SCHIEDULE B PART II In addition to the matters set forth in Part I of this Schedule, the title to the estate or interest in the land described or referred to in Schedule A is subject to the following matters, if any be shown, but the Company insures that such matters are subordinate to the lien or charge of the insured mortgage upon said estate or interest: 1. Assignment of Leases and Rents by FIVE DI LIMITED 1 a Minnesota corporation, to Signal Bank National Associationl dated May 27, 1998, filed May 29, 1998 as Document Number 3061202 (Abstract) and filed July 151 1998 as Document Number 1500999 (Torrens). 2. Combination Mortgage, Security Agreement and Fixture Financing Statement executed by FIVE D, LIMITED, a Minnesota corporation, dated May 27, 1998, filed May 29, 1998 as Document NUmber 3061203 (Abstract), and filed..July IS, 1998 as Document Number 1501000 (Torrens), in the amount of $729,000.00, in favor of Signal Bank National Association, a National Banking Association. 3. Assignment of Leases and Rents by FIVE D, LIMITED, a Minnesota corporation, to Signal Bank National Association, dated May 27, 1998, filed May 291 1998 as Document Number 3061204 (Abstract) and filed July 15, 1998 as Document Number 1501001 (Torrens). ' LOAN MODIFICATION AGREEMENT Loan Number: 130Q aD I (e}- Current Balance: $1,036,808.82 Original Balance: $1,219,598.00 This agreement made this 17th day of April, 2002, between Western Bank (hereinafter referred to as Lender) and Five D, Limited (hereinafter referred to as Borrower). Whereas, on May 27, 1998, Signal Bank National Association made a loan to Borrower in the amount of $1 ,219,598.00 ;-and Whereas, on April 17, 2002, said Loan has been assigned by Signal Bank National Association to Western Bank. Whereas the Borrower and Lender mutually desire and agree to modify certain terms of the Promissory Note dated May 27, 1998 in the original principal amount of $1,219,580.00. It is therefore mutually agreed that: 1. The interest rate shall be fixed at 7.5% per annum until April 17, 2007. On April 17, 2007 the interest rate shall be adjusted to a current market interest rate that is determined by the Lender. 2. The monthly payments shall be due on the 1st day of the month beginning June 1, 2002. 3. Monthly principal and interest payments shall be $9,096.37 assuming interest is paid through May 1, 2002, and the final amortization date is February 1, 2019. Payments will be changed on or around April 17 , 2007 based on the new interest rate. . 4. The monthly payment shall be increased to include an amount necessary to escrow for property taxes. Initially the monthly amount shall be $3,234.00. 5. The final payment date (Maturity Date) shall be February 1, 2009. 6. There shall be a .pre-payment penalty if the loan is pre-paid any time until 12 months prior to the 5th anniversary of the loan. The pre-payment penalty shall be equal to 2% of the current loan balance as of the date of this agreement. Borrower may, however, make principal reductions up to an additional 20% of the January 1st balance each year without any penalty assessed. All other terms and conditions shall remain the same. It is mutually agreed that said security instruments shall continue as a first lien upon the collateral and that neither the obligation evidencing the aforesaid indebtedness nor the security instruments securing the same shall in any way be prejudiced by this agreement, but said obligation and security instruments and all the covenants shall remain in full force and effect except as herein expressly modified. IN WITNESS WHEREOF, the parties have signed, sealed and delivered this agreement on the date above written. FiveD/'le~( ~ BY:~/{ ITS: President Western Bank By:~j;1/%~ y~~ ITS: Vice President New Hope Budget " First Second Third Year Year Year Petroleum Sales Fuel Sales 7,677,600 8,797,250 9,916,900 Fuel cas (7,389,600) (8,467,250) (9,513,900) Gas Cpns Petroleum Gross Profit 288,000 330,000 403,000 Gallons Sold 2,400,000 2,150,000 3,100,000 Gross Profit Per Gallon 0.120 0.120 0.130 Avg Price Pel' Gallon $ 3.199 $ 3.199 $ 3.199 Inside Mel'ch Sales Merchandise 800,000 1,000,000 1,200,000 Cigs 425,000 600,000 750,000 Pop Drink Bar/Deli Commissary Bakery Prepaid Comm Total Inside Mench Sales 1,225,000 1,600,000 1,950,000 InsidleMei'ch cas IV]erch 528,000 660,000 792,000 V rebates (18,000) (18,000) (18,000) Multi Store Disc. (15,000) (15,000) ( 15,000) Cigs 391,000 552,000 690,000 Pop Drink Bar/Deli Commissary Bakery Prepaid Comm, Total ~nside cas 886,000 ,1 r~ , 27.67% 26.31 % 25.69% ~nsidle Merch Gross Profit Merchandise 305,000 373,000 441,000 Cigarettes 34,000 48,000 60,000 Pop Drink Bar/Deli/Alcohol Commissary Bakery Prepaid Comm. Cigs 34,000 48,000 60,000 Total Inside Merch GP 339,000 421,000 501,000 Car Wash Car Wash / Vac 225,000 225,000 250,000 Car Wash cas (28,000) (28,000) (30,000) Carwash Gross Profit 197,000 197,000 220,000 Other Income Lottery/lotto sales 251,867 251,867 251,867 Lottery/lotto cas (238,014) (238,014) (238,014) Management fee A TM income 12,000 12,000 12,000 Propane 18,000 20,000 22,000 Store Services cas Other Income Gross Profit 43,853 45,853 47,853 Total Gross Profit 867,853 993,853 'i, 171,853 PavroH & Benefits Wages 240,000 240,000 250,000 Management Fee 48,000 48,000 48,000 Car Wash Wages FR!NGE Payroll Taxes 19,000 19,000 20,000 Profit Sharing Employee ins benefits 10,000 10,000 12,000 Total Wages & 317,000 317,000 ControUableExoenses Employee Disc 1,800 1,800 1,800 Store Supplies 6,000 6,000 6,000 Damage Car Wash 500 500 500 Uniforms/Rugs '1,500 1,500 1,500 cas Stamps/copies Comm Freight 4,225 4,225 4,225 Advrt Car Wash 5,000 5,000 5,000 Advrt Holiday 10,000 11,000 12,500 Bad Debt 1,000 1,000 1,200 Bank Charges 6,500 6,500 6,500 Contributions Credit Card Fees 125,185 145,671 166,157 Store/Gas Coupons 12,000 12,000 13,000 Eqpt Music Eqpt Sign Rent 2,688 2,688 2,68~ Eqpt telxon Fleet Disc Charge 2,200 2,200 2,400 Franchise fee gas 20,625 20,625 23,250 Franchise fee merch 30,250 30,250 34,375 Insurance Liab 16,000 16,000 16,000 Maint store 8,000 8,000 8,000 Maint Car wash 8,000 8,000 8,000 Misc Exp Office Supplies 1,000 1,000 1,000 Prof fee acct 7,000 7,000 7,000 Prof fees Radiant 5,000 5,000 5,000 Prof fees Inventory 1,800 1,800 1,800 Prof fees SBA Prof fees CDC Prof fees Legal Prof fees CSA Prof fees Payroll ADP 1,300 1,300 1,300 Cash over/short 5,500 5,500 5,500 Snow/Gras 1,000 1,000 1,000 Other Paid outs Theft Frame Relay 1 ,400 1 ,400 1 ,400 Security 1,000 1,000 1,000 T&E Licenses & Permits 2,000 2,000 2,000 Telephone 2,000 2,000 2,000 Trash 2,500 2,500 2,500 Utilities Elee 52,000 52,000 55,000 Utilities Gas Utilities water 7,200 7,200 7,400 Car Exp Total Controllable 352,1 i3 373,659 406,995 Non Controllable Expenses David Lasky 50,000 Deprecation 144,000 144,000 144,000 Interest Exp 154,050 154,050. 154,050 Property Taxes 15,000 15,000 25,000 Non Controllable Exp 313,050 313,050 373,050 Total Expenses 982,223 1,003,709 1,110,045 Net Profit (114,370) (9,856) 61,808