a future development parcel

An Appraisal Report

A Future Development Parcel

Located at

4475-95 Inca Street Denver, Colorado 80211

PREPARED FOR

FirstBank Loan Center - Appraisals

12345 West Colfax Avenue Lakewood, Colorado 80215

EFFECTIVE DATE:

March 29, 2019

DATE OF THE REPORT

April 3, 2019

PREPARED BY: James Derr, Commercial Appraisal Services

6655 W. Jewell Ave., #217, Lakewood, CO 80232

File # 19-113

James Derr Commercial Appraisal Services

6655 W. Jewell Ave., #217 Lakewood, CO 80232

303-462-3299

April 3, 2019

Ms. Celene Lesley Senior Appraisal Analyst FirstBank Loan Center - Appraisals 12345 West Colfax Avenue Lakewood, Colorado 80215

Re: An Appraisal Report, File #: 19-113

A Future Development Site Located at – 4475-95 Inca Street, Denver, Colorado 80211 Property Contact – Brian Lucas, 4475 Inca, LLC

Dear Ms. Lesley:

Enclosed is a complete copy of my appraisal report for a development parcel located at

4475-95 Inca Street in Denver. The appraisal provides my opinion of market value for the

leased fee property interest, reflecting the property as is, effective March 29, 2019. Pages

1 through 4 of the report provide summary information about the property and conclusions

from my analysis.

The 9,100-square foot parcel zoned I-A, for industrial, office and related development and

used for storage and parking. The parcel is improved with two garage/storage structures in

fair condition, concrete paving, gravel-covered areas and perimeter fencing. A short-term

lease, set to expire on June 30, 2019, encumbers the property. The ownership entity is

marketing the parcel for sale, though there is no set asking price.

The parcel is in reasonable walking distance to a light rail station at W. 41st Avenue and Fox

Street. After an extended delay, the station is scheduled to open on April 26, 2019, when

service along the G-line commences. Proximity to the station has prompted residential and

mixed-use redevelopment in the immediate neighborhood. Once rail and bus service is in

place from the station, the pace of redevelopment could increase. The city has adopted a

Station Area Plan to guide redevelopment in the area; the subject is within an area dedicated

for ‘urban’ residential development.

Redevelopment with a residential use would require rezoning the property. In March 2019,

the property owner completed a pre-application meeting with city planning officials exploring

rezoning the parcel to a C-MX-5 or C-MX-8 designation, though a formal application to

request the zone change has not been submitted.

Ms. Lesley Page 2 – April 3, 2019

The subject’s market value is tied to its potential for future residential/mixed-use development,

either directly or via assembly with one or more adjacent parcels for a larger project. Seeking

rezoning and holding the property for future development is considered the highest and best

use. There is precedent in the immediate area for city officials approving requests to rezone

properties from an I-A designation to a C-RX-8 designation allowing high-density residential

and mixed-use development.

This appraisal report is prepared in accordance with FirstBank’s appraisal engagement

letter, a copy of which is included as an exhibit in the appendix. This appraisal report

conforms with FIRREA guidelines as well as adhering to the current version of the Uniform

Standards of Professional Appraisal Practice (USPAP). It is subject to the Certification

Statement, as well as the Statement of Contingent and Limiting Conditions and the definition

of market value contained within the report.

The purpose of the appraisal is to develop an opinion of:

market value, as is, of the leased fee property interest.

Opinion of Value for the Real Property

Value Type Interest Appraised Effective Date Final Value Opinion

As Is Leased Fee 29-March-2019 $635,000

Thank you for the assignment. If I can be of further assistance, please feel free to call.

Respectfully submitted,

James Derr Colorado Certified General Appraiser Lic. #CG01315282, exp. 12/31/20

TABLE OF CONTENTS

Summary Information & Premises of the Appraisal

Property Identification .................................................................................................................... 1 Context of the Valuation Assignment ............................................................................................. 1 Ownership Information & Marketing History .................................................................................. 2 Summary Property Details & Description ...................................................................................... 3 Opinion of Value Summary ............................................................................................................ 4 Premises of the Appraisal Assignment .......................................................................................... 5 Scope of the Appraisal ................................................................................................................... 6 Extraordinary Assumptions & Hypothetical Condition ................................................................... 6 Definitions and Terminology ........................................................................................................ 11

Property Context - Market Analysis

Neighborhood Description ........................................................................................................... 13 Demographic Data ...................................................................................................................... 22 Denver County Housing Market Conditions ............................................................................... 27

Summary Description of the Subject Property

General Information ..................................................................................................................... 31 Parcel Description ...................................................................................................................... 31 Zoning Information ...................................................................................................................... 35

Assessment & Property Tax Data ................................................................................................ 37 Site Photographs ......................................................................................................................... 37 Highest and Best Use Analysis .................................................................................................... 39

Valuation Section Valuation Procedures & Methodology ......................................................................................... 43 Sales Comparison Analysis ......................................................................................................... 45 Adjustment for Demolition Expense ............................................................................................. 57 Reconciliation & Final Opinion of the As Is Fee Simple Market Value ....................................... 62 Estimated Exposure & Marketing Period ..................................................................................... 64 Certification Statement................................................................................................................. 66

Appendix Items

Engagement Letter; Property ILC, Contingent and Limiting Conditions; and Qualifications of Appraiser .......................................................................................................... 67

An Appraisal Report A Future Development Parcel

4475-95 Inca Street, Denver Page 1

SUMMARY INFORMATION & PREMISES OF THE APPRAISAL

Property Identification

Property Type: A Future Development Site

Property Location: 4475-95 Inca Street (West Side of Inca Street, approximately 90 feet south of W. 45

th Av.)

Denver, Colorado 80211

Legal Description: The North Half of Lot 42, the South Half of Lot 45 and all of Lots 43 and 44, Block 31, Henrich & Wallace Addition, City and County of Denver, State of Colorado

Source: Denver County Assessor records

Context of the Valuation Assignment

Client: FirstBank

Intended User: FirstBank, its affiliates and/or participants

The use of this appraisal report by any other person or party is not intended by the appraiser and is not appropriate.

The Intended Use: The intended use of the appraisal report is to assist the

Intended User’s evaluation of the subject property as collateral for a mortgage loan.

Effective Date: March 29, 2019

Date of the Report: April 3, 2019

Type of Value: This appraisal report provides an opinion of market value

for the property as is.



Property Rights Appraised: Leased Fee

A lease agreement with RDT Transport, LLC encumbers the property. The lease term extends through June 30, 2019. Monthly rent is $1,500 with the tenant responsible for utilities and maintaining a liability insurance policy.

Ownership Information & Marketing History

Owner of Record: 4475 Inca, LLC Source: Denver County Assessor records.

Marketing History:

As indicated in Denver County records, the subject property sold twice in the past three years,

with both sales closing on the same day. First, 4475 Inca Trust (Jason Nickle, Trustee)

purchased the property for $300,000 from Norman F. Legler on December 5, 2016; title was

transferred via a Warranty Deed recorded at Reception No. 2016171312. This appears to be

a normal arm’s length transaction; the purchaser paid cash.

The property resold the same day from 4475 Inca Trust to 4475 Inca, LLC (Anthony P.

Zangoglia, Manager); title was transferred from via a Warranty Deed, filed at Reception No.

2016171390 with a stated price of $374,000. The seller received cash, with the buyer

obtaining a $261,800 bank loan, paying cash for the balance. An associate of the property

contact indicated that the original intent was to redevelop the site with a residential use,

though owner has opted to focus on other projects, so the parcel has not been redeveloped.

There has been no other sale or transfer of the property in the three-year period prior to the

effective date of this appraisal.

The seller is now marketing the property for sale, placing a “for sale” sign on the front fence.

An associate of the property contact indicated that there is not a set price and that he has

fielded a few calls from the sign, though, to date, no offers have been made.



Summary Property Details

Site Area: 9,100 square feet [+/-]

[0.209 acres (+/-)]

Source: Calculated from parcel dimensions referenced on the ILC provided.

Floodplain Status: Based on FEMA Community Map No. 080046, Panel 0088H,

effective November 20, 2013, the subject property is not in a recognized flood hazard area.

Site Attributes: Rectangular parcel on west side of Inca St., approximately 90 ft. south of W. 45

th Ave.

Parcel has approximately 73 feet of frontage to Inca Street;

Depth of approximately 125 feet to a paved alley;

Adequate depth-to-frontage for size;

Generally level terrain;

Combination of chain link and wood fencing along boundaries;

Two wood frame garages in fair condition;

Concrete slab with removable aluminum-frame structure with nylon canvass covering;

Utilities available to support development.

Zoning: I-A / UO-2 (Light Industrial District)

Intended to accommodate offices & light industrial uses, enclosed within a structure, that are compatible with adjacent/nearby residential and mixed-use commercial districts. The UO-2 overlay allows for billboard signs within the district.

Summary Description - The subject property is a future development lot within Denver’s

Sunnyside neighborhood. The immediate area is in transition with industrial and older

residential land uses slowly being replaced by higher-density residential and mixed-use

projects. Currently, there are two large residential/mixed-use development projects ongoing in

the immediate neighborhood, along Inca Street, at West 41st and West 40th Avenues.

Additional projects are active to the west. The subject property is within reasonable walking

distance to a light rail station at W. 41st Avenue and Fox Street. After an extended delay, the

station is scheduled to open on April 26, 2019.

In 2009, the city adopted a plan to guide development around the station; the plan encourages

moderate density residential and mixed uses within the subject’s immediate area. The city is

also in the process of updating the long-range development plan—Blueprint Denver. The

current draft indicates that the subject’s immediate locale is an area of change, moving

towards residential and mixed -use development.

Current zoning in place (I-A) limits potential development to office, light industrial, flex and

related uses; new residential development is not allowed under this zoning designation, son

any future development consistent with the goals of the station plan and Blueprint Denver

would require rezoning. There is a trend in the immediate neighborhood to rezone parcels

from an industrial use to a higher density residential/mixed-use designation. The property



owner has had a pre-application meeting with city planning staff regarding rezoning the parcel

to a higher density, mixed-use designation, though a formal request to rezone the property

has not been submitted.

The parcel is currently improved with two wood-frame garage/storage structures in fair

condition. There is also an aluminum-framed, nylon canvas-covered temporary storage

structure over a concrete slab. Most of the open site is gravel-covered and there is a mix of

chain link and wood fencing along the perimeter, including a gate off the Inca frontage to

control access.

The property is leased to a concrete company for storage and truck parking; the lease expires

on June 30, 2019.

Opinion of Value Summary

The purpose of the appraisal is to develop an opinion of:

market value, as is, of the leased fee property interest.






PREMISES of the APPRAISAL ASSIGNMENT The Assignment, Type of Value, Effective Date, Scope of Work; & Definitions

The Assignment - The subject property is a future development lot currently zoned for

industrial/office uses, though in an area transitioning to moderate- and higher-density

residential and mixed-use development. A short-term lease, expiring June 30, 2019,

encumbers the property. The Client has indicated that the purpose of this assignment is to

obtain an appraisal report for the subject property, providing an opinion of market value of the

property as is, with respect to the leased fee property interest.

The Intended User of the report is FirstBank, its affiliates and/or participants. There are

no other intended users of this appraisal and the use of this appraisal by any other

person/entity for any other purpose is not intended by the appraiser and is not appropriate.

The Intended Use of the report is to aid in or support decisions by FirstBank, its affiliates

and/or participants personnel regarding the evaluation of the property as collateral for

lending purposes and management decisions.

The appraisal report complies with the minimum standards of the most recent promulgation of

the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989, and with

the Uniform Standards of Professional Appraisal Practice.

Type of Value – This appraisal provides an opinion of the market value for the subject

property consistent with the definition of this term found in the engagement letter and included

at the end of this section of the report.

Effective Date - The effective date of the value opinion is March 29, 2019, the date of the

property inspection. Establishing the effective date of the appraisal is a universal practice,

and it is important for an investor to consider this because value is subject to change over

time. Aside from physical changes to the property, the value of real estate is subject to the

influence of changing economic conditions under which value may remain static, increase, or

decrease. Additionally, changing views of governing authorities may restrict future

development.



Scope of Work

Scope of Work considers the type and extent of research and analyses in an appraisal

assignment. As identified in the Uniform Standards of Professional Practice (USPAP) “Scope

of Work Rule” for each appraisal assignment an appraiser must:

Identify the problem to be solved;

Determine and perform the scope of work necessary to develop credible assignment results, and

Disclose the scope of work in the report.

Problem identification includes identifying the following assignment elements:

Client and any other intended users;

Intended use of the appraiser’s opinions and conclusions;

Type and definition of value;

Effective date of the appraiser’s opinions and conclusions;

Subject of the assignment and its relevant characteristics; and

Assignment conditions.

Assignment Conditions - As identified in the USPAP Scope of Work Rule, assignment

conditions include assumptions, extraordinary assumptions, hypothetical conditions, laws and

regulations, jurisdictional exceptions, and other conditions that affect the scope of work.

Hypothetical Conditions – USPAP defines a Hypothetical Condition as ”a condition, directly

related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.”

No hypothetical conditions are invoked for this assignment.

Extraordinary Assumptions – USPAP defines an Extraordinary Assumption as “an

assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions1.

No extraordinary assumptions are invoked for this assignment.

1 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2016-2017 Edition, Washington, D.C., ©2015,

s.v. “extraordinary assumption” & “hypothetical condition”, page 3



The Scope of the Appraisal – An appraisal is a supported opinion of market value and the

appraisal process behind this report is a form of research. Specifically, it is about the real

estate market, the balance of supply and demand, information processing, terms, pricing, and

values. The objective of this appraisal is to provide an opinion of market value (as defined),

for the property as is with consideration to the leased fee property interest.

The report is intended to comply with the Uniform Standards of Appraisal Practice ("USPAP"),

as adopted by the Appraisal Standards Board of the Appraisal Foundation. The report is also

prepared in compliance with the requirements of the Code of Professional Ethics of the

Appraisal Institute. The appraisal is subject to the Definition of Market Value, Certification

Statement, Contingent and Limiting Conditions, and Special Conditions, set forth in this report.

The scope of work used in preparing this appraisal is included throughout this report in the

various descriptions and analysis. The following points give a general overview of the scope of

work, while descriptions that are more detailed are included in the appropriate sections of the

report. The general scope is shown below.

1) Competency Rule - Prior to acceptance of the assignment, the Appraiser has made a

determination that he complies with the Competency Rule of USPAP. Based on the

background and experience with this and other similar property types, as well as the research

and analysis which was performed for this and other assignments, and considering the

familiarity with the market area in which the subject is located, the appraiser who prepared this

appraisal analysis is competent to complete this assignment in an appropriate manner.

The appraiser, however, has no expertise in the identification or assessment of environmental

hazards, and the property is appraised as if none is present, while this may or may not be the

case. This aspect is beyond the scope of the appraisal.

2) Scope of Physical Property Inspection - The appraiser has personally inspected the site

on March 29, 2019, reporting pertinent data within this appraisal. The scope of the subject

property inspection is to ascertain the general quality and condition of the property; to note

any special features; any unusual conditions; and other circumstances that may affect the

opinion of value.

The lot size is calculated from parcel dimensions as referenced on the Improvement Location

Certificate provided by an associate of the property contact.

The square footage for the comparable properties presented in the appraisal report was

obtained from recorded plats, assessor records or other sources as available to the appraiser.

Parcel sizes are utilized as a tool for comparison only; the appraiser believes the data

available is reasonably correct, though he does not have the expertise to certify the accuracy

of the information or independently measure the parcels.



The history of the area is unknown and the user of this appraisal is cautioned that soils

contamination from off-site or on-site sources is always a possibility. The appraiser has made

only a visual, ‘surface’ inspection of the property. The appraiser assumes that there are no

hidden or unapparent on-site or off-site conditions of the property or subsoil that would render

the property less valuable, or affect the health and/or safety of the occupants. Unless

otherwise stated, the existence of hazardous materials was not observed by the appraiser and

the value conclusion of this report is based on the assumption that there is not asbestos, urea-

formaldehyde foam insulation, nor any other potentially hazardous materials, within the

building or soils, which may affect the value of the property. The appraiser has no expertise in

the identification of hazardous materials and does not warrant that the subject property is free

from environmental contamination or potentially destructive subsoil conditions. The appraiser

assumes no responsibility for such conditions, or for the engineering that might be required to

discover such factors.

The intended user and purchaser are encouraged to obtain appropriate environmental site

assessments and soils reports from qualified experts if this is a matter of concern.

Inspection of comparable properties cited in this report is typically limited to visual off-site

inspections. The size of the comparable sites were obtained from County Assessor’s records

unless more reliable information was obtained from other sources such as data providers,

buyers, sellers, the occupant, brokers or from appraiser files.

3) Scope of investigation as to marketability and such legal matters – A title

commitment was not available to the appraiser. The appraiser is not aware of any adverse

deed restrictions or other unusual restrictions on title. The appraiser is not an expert in these

matters, and the client is encouraged to obtain and review a title commitment for the property.

The appraiser is not aware of any adverse easements encroachments, or other conditions

affecting the property. The appraiser assumes marketability with no “clouds” or adverse

influences to value such as encroachments, liens, easements, deed restrictions, or exclusions

(including but not limited to a reservation of mineral or water rights). Legal investigation as to

clouds on title and marketability are not in the scope of this appraisal.

4) Scope of the valuation process – The valuation methods followed addresses the cost,

sales comparison and income approaches to estimating value, reconciles those approaches,

and explains the elimination of each approach not used.

As a development lot that is part of a larger subdivision, the cost approach is not considered

applicable to deriving an opinion of market value given the difficulties of determining the cost

and contribution to value of shared common infrastructure improvements that the parcel

shares with adjacent and nearby sites.

The income approach is also not used in this analysis as development parcels the scale and

utility of the subject are nearly always sold for development, rather than being leased for

development.



The highest and best use of the property is for multifamily residential development; given the

property is appraised as a development parcel, only the sales comparison approach is

deemed relevant. This approach includes research and review of finished development lot

sales similar to the subject property. After appropriate confirmation and adjustments for

amenity and physical differences are made, the sales data is utilized to develop the indication

of value based in sales comparison analysis.

Market sales data has been collected from public records and trade sources, those being

recorded deed transfers, and metro area Board of Realtors published data as appropriate.

Additional sources of data include the appraiser’s files, published data from CoStar Comps®

and published data in the multiple listing service database, REcolorado.

This body of data is greater than is indicated in the appraisal, and the appraiser has used

discretion in providing only pertinent data in a format that will allow the reader to follow the

appraiser's path to arriving the opinion of market value.

To the extent possible, the appraiser has reviewed and confirmed market data with public

records, sellers, buyers, agents, and/or other related parties. It should be recognized by the

user of the report that detailed data are not a matter of public record, and that parties

concerned are under no compulsion to reveal any information to the appraiser. Most often,

these data are only offered verbally and the quality and extent of available data will vary

depending on the source. Information, estimates and opinions furnished to the appraiser were

obtained from sources considered reliable and believed to be true and correct; however, the

appraiser can assume no responsibility for the accuracy of such data.

The State of Colorado does not require disclosure of sales prices, the terms of sale, or

mortgage details in public records. Moreover, privacy legislation precludes lenders from

revealing the mortgage terms without the written permission of the borrower. The appraiser

has accumulated the sales and data contained in this report over a period of several years

from a variety of sources considered reliable.

The approaches to value applied are reconciled to reach a final value opinion of the market

value for the subject property.

In economic terms, the real estate market is an imperfect, inefficient market. Each property is

unique and its location fixed, there are few buyers and sellers and they are not always well

informed--often making decisions based on anticipation. Moreover, while supply is relatively

inflexible, demand is volatile and change is inevitable. The reasoning, judgment and

estimations that are necessary to the appraisal process result in analysis statements and

conclusions that are statements of the individual appraiser's opinion only. These opinions do

not necessarily represent the only indication of value that may be obtained on the property--

value opinions of qualified appraisers can differ.



5) The Scope of the Appraisal Relative to the Subject Property: The appraisal of this

property is specifically limited to the value in exchange of the real estate, and does not include

the valuation of interests associated with the operation of any business, particularly those

relative to inventory, personal property, furnishings, fixtures, equipment, going concern

business value, or other intangibles.

Regional, neighborhood and property data was collected from various public and private

sources considered reliable. Sources for the neighborhood and property data include City and

County of Denver records. The property occupant provided information; additional data was

collected from the on-site inspection.

The appraiser completed a highest and best use analysis of the property that includes a

discussion of potential alternative uses, financial feasibility, and a determination of the ideal

improvements.

6) Consideration of the Market Value As Is: The opinion of "market value" provided

considers the subject property as it physically exists, with consideration to its condition and

quality, without reliance on hypothetical conditions or extraordinary assumptions as of the

effective date, unless otherwise noted within the report. The as is valuation considers the



Market Value Definition

"Market Value" is the most probable price which a property should bring in competitive and

open market under all conditions requisite to a fair sale, the buyer and seller, each acting

prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specified date and the passing

of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;

2. both parties are well informed or well advised, and each 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

5. the price represents a normal consideration for the property sold unaffected

by special or creative financing or sales concessions granted by anyone

associated with the sale.2

With respect to any unpaid property taxes, under a “market value" assignment, past due taxes

are not deducted from the opinion of value. The definition of market value states "the price

represents normal consideration" which excludes all liens and encumbrances that may exist.

The property is appraised as though it is free and clear of any such impediments.

Additionally, no reduction to the opinion of value provided is made for commissions on a

current sale.

2 Rules and Regulations, Federal Register, Vol. 55, No. 129, Page 27771



Property Rights Appraised

A short-term lease, expiring June 30, 2019, currently encumbers the property; the opinion of

value provided considers the leased fee property interest.

The property rights of any particular property are recognized as being separable. The

ownership of property in fee simple estate indicates that the property is appraised without

significant separation of the property rights, such as the presence of an encumbrance due to a

lease, and that there are no significant restrictions on the use of the property by the owner

other than normal government restrictions. Fee simple ownership implies the benefits and

encumbrances of a lease on the property. The varied related property rights are defined as

follows:

Leasehold interest (estate) – The tenant’s possessory interest created by a lease.

A possessory interest is the right to the use and occupancy of real estate, as distinguished

from any interest in title. Positive leasehold is created when the market rent is greater than

the contract rent. Negative leasehold is a lease situation where the market rent is less than

the contract rent.

Fee simple estate – Absolute ownership unencumbered by any other interest or estate,

subject only to only to the limitations imposed by the governmental powers of taxation,

eminent domain, police power, and escheat.

Leased fee interest (estate) – A freehold (ownership interest) where the possessory interest

has been granted to another party by creation of a contractual landlord-tenant relationship

(i.e., a lease).3

3 The Dictionary of Real Estate Appraisal, 5

th ed. (Chicago: Appraisal Institute, 2010), s.v. “leasehold estate”, “fee simple estate”, &

“fee simple estate”, p. 78 & 111.



Property Context – Market Analysis Area & Neighborhood Information, Demographic Data & Residential Market Conditions

Location Synopsis and Linkage Attributes -

The subject property is located in northwest Denver, part of a neighborhood historically referred

to as Sunnyside. The neighborhood extends northeast from the West 38th Avenue/Federal

Boulevard intersection, both primary arterials for the area.

Northwest Denver is a broad area with several defined neighborhoods, typically separated by

local arterials. Federal Boulevard serves as the primary east-west dividing line;

neighborhoods to the west of Federal and south of I-70 include Berkeley, West Highland,

Sloan Lake and West Colfax. Neighborhoods extending east from Federal include Sunnyside,

Highland and Jefferson Park.

Sunnyside is a mixed-use neighborhood with retail and service commercial uses typically

found along local arterial and collector streets and a significant light industrial enclave in the

north and east sections. The neighborhood has an array of residential uses including mid-

century bungalows and duplexes; the Quigg Newton Homes, Denver's largest public housing

project; and newly constructed duplex and townhouse-styled rowhouses built for individual

sale. Redevelopment and renovating existing properties remains active in the neighborhood,

following a trend that started in the adjacent Highland neighborhood to the south.

The subject’s immediate area includes the west portion of Globeville, west of Interstate 25.

Land uses in this section of Globeville are primarily light industrial in character, though also

include retail and service commercial uses, as well as limited residential development.

Inca Street serves as the east boundary of the Sunnyside neighborhood; the west side of the

street is developed, including the subject site. Terrain on the east side drops down to multiple

rail lines, including the rail line dedicated for future light rail service (G-line). The “open” area to

the east provides city/downtown views to the southeast from the subject parcel.

The neighborhood’s industrial enclave is part of a larger industrial submarket centered on the

Interstate 25 / Interstate 70 interchange and extending east along the I-70 corridor to Colorado

Boulevard. Access to Interstate 70 is provided via interchanges at Pecos Street (about one

mile from the subject parcel) and Federal Boulevard. Access to Interstate 25 is provided by an

interchange off West 38th Avenue, approximately 1.25 miles (by road) southeast of the subject

site.



Boundaries for Sunnyside are considered as follows:

Neighborhood Boundary Delineation

North Interstate 70

East Inca Street and the adjacent rail yard

South West 38th Avenue

West Federal Boulevard

Northwest Denver Neighborhoods

Development Patterns –

Sunnyside is a neighborhood in transition, supporting new residential construction, as well as

new and renovated commercial uses. Recent commercial development includes a

freestanding bank building at the northeast corner of Tejon Street and West 38th Avenue, built

in 2016.



A strip retail complex on the south side of West 38th Avenue, between, Lipan and Kalamath

Streets, was finished in two phases (late 2015 and 2017). The two-building complex provides

approximately 11,000sf of retail and restaurant space.

Cobbler’s Corner, at the southeast corner of W. 44th Avenue and Alcott Street opened in 2016.

This project represents an adaptive reuse of a former theater building, renovating the 5,200sf

structure for restaurant and retail occupancy, while constructing two new structures totaling

approximately 9,000sf providing additional retail space and live/work units.

A second renovation project at the northeast corner of 44th and Umatilla Street was completed

in 2018. An existing 4,150sf building was remodeled and expanded for mixed-use (retail

office, medical office) occupancy.

Finally, the former Catholic Charities office building at 4045 Pecos Street was renovated in

2017, providing a mix of office and co-working space. The balance of the 2.62-acre parcel is

being developed with an attached residential project.

New Commercial Development in Neighborhood

Retail Development at West 38th Ave. & Kalamath and Lipan Streets

Cobbler’s Corner



44th & Umatilla 4045 Pecos Street

Residential Development – Recent residential construction has mostly been for-sale duplex

and attached housing product. In 2015, the pace of new construction in the neighborhood

increased, a trend that remains today.

The table below provides a price/sale trends for attached housing in the Sunnyside

neighborhood, including active listings and a summary of sales activity over the past three

years. Of the 34 active listings, 20 are under contract. New construction dominated the sales

activity over the past three years; the number of closed sales spiked three years ago, related

to the increase in construction. Prices also spiked up over this period and continued to climb

the following year. Market conditions stabilized over the past year, with a relative balance in

supply and demand. The average price paid for attached units closing over the past year was

just 1.7% higher than the prior year, while the median price increased by 4.8%.

Townhouse-Styled Attached Housing Trends

Sunnyside Neighborhood

Current Listings & Sales over Past 3 years

Active & Under Contract

Sales over Past Year

(1 – 365 days)

Sales 2

Years Ago

(366–730 days)

Sales 3

Years Ago

(731–1,095 days)

Number 34 81 sales 118 sales 44 sales

Low Price $349,900 $175,000 $239,000 $250,000

High Price $899,900 $900,000 $879,900 $785,000

Avg. Price $592,468 $591,654 $581,856 $506,655

Change +1.7% +14.8% +24.7%

Median Price $562,000 $575,000 $548,463 $507,365

Change +4.8% +8.1% +45%

Avg. DOM 75 days 95 days 394 days 71 days



The table below provides a summary of recently completed attached housing projects in the

Sunnyside neighborhood. Each sold out within one to three months following completion.

Providing an indication of demand for new housing in the area. Prices for active projects in

the area range from approximately $500,000 to $900,000.

Sample of Recently Completed Townhouse Projects in Sunnyside

Project Units Comments

Zuni 44 Southwest Corner W.

44th Av. & Zuni

11 Units $500,000 to

$669,000

- Recently completed in October 2018;

- 11 units closed from October 2018 through mid- January 2019;

- Median price of $607,500.

Sunnyside 12 N/S W. 46

th Ave., west

of Shoshone St.

12 Units $449,900 to $483,250

- Recently completed in January 2018;

- 12 units closed from Feb., 2018 through mid-March 2018


Pecos ROW Northeast Corner

W. 44th & Pecos St.

14 Units $407,599 to $524,599

- Recently completed in December 2017;

- 14 units closed from Dec. 2017 through mid-April 2018;


Federal 5 3770-78 Federal Blvd.

5 Units $424,900 to $575,000

- Recently completed in February 2019;

- 5 units closed from Feb. 21st, to March 15, 2019;


Kalamath 4 4301-07 Kalamath

4 Units $499,000 to $515,900

- Recently completed in July 2018;

- 4 units closed from July through September 2018;


Shoshone 4 4601-11 Shoshone

4 Units $538,000 to $559,000

- Recently completed in November 2017;

- 4 units closed from November 2017 through February 2018


Active Projects – There are three large active projects in the neighborhood, summarized below.

Railhouse Denver, a 29-unit townhouse project, is under construction at the southeast corner

of Inca Street and W. 40th Avenue, about 4.5 blocks south of the subject site. Most units

range from 1,217sf to 1,304sf and are priced from $494,000 to $549,000. Twelve of the 29

units are under contract.

4045 Row is a 33-unit, for-rent rowhouse project under construction at the southeast corner of

W. 41st and Quivas Street. Units will range from about 1,638sf to 1,810sf in size and are

being marketed for rent at $3,030 to $3,349 per month. The project is anticipated to be

finished by summer 2019.

The largest active project is Zia Sunnyside, a mixed-use development under construction at

W. 41st and Inca Street, about 3.5 blocks south of the subject lot. The full-block project will

feature 314 for-rent apartment units and 120 for-sale condominiums when complete, as well

as 8,500 square feet of ground floor retail space facing Inca and 41st. The project will include

paired six-story and eight-story towers constructed over below grade parking. The site is

adjacent to the RTD pedestrian bridge that spans the rail yard to the east, extending to light



rail station platform. Zia Sunnyside will be a mixed-income project, with 66 apartments being

deed-restricted as affordable rental units with occupancy limited for families making 80% or

less of the area’s average median income (AMI). As for the condominiums, 12 will be

dedicated for sale to families at or below the 80% AMI requirement and 13 will be restricted for

sale to families/individuals earning 95% or less of the AMI.

Aerial Image for Immediate Area

Light Rail Station and Station Area Development Plan – The subject site is within

reasonable walking distance to the light rail station at West 41st Avenue and Fox Street,

accessible via a pedestrian bridge that extends from W. 41st and Inca, over the adjacent rail

yard, to the station platform. Vehicle access is off Fox Street, via West 38th Avenue. This is a

park-and-ride station that that will also accommodate bus service. Long-range transportation

plans call for extending either 44th or 46th Avenue over the rail yard to improve access to Fox

Street from the Sunnyside neighborhood.



Rail operations on the G-Line have been delayed due to technical issues related to the at-

grade crossing gate technology. RTD is now projecting an April 26, 2019 opening for the G-

Line, which serves the 41st and Fox station, being the first stop after trains leave Union

Station. The 11.2-mile line extends through northwest Denver, terminating in Wheat Ridge.

RTD – G-Line Map

In 2009, the City adopted the 41st and Fox Station Area Plan to help guide future development

around the light rail station. Key elements of the plan include development of a high-intensity

activity node on the east side of the station. As indicated in the Land Use Map published in

the Station Area Plan, the area west of the station is intended for higher intensity residential

and mixed land uses. The subject property is just over four blocks north from the pedestrian

bridge at Inca and W. 41st Avenue. This area is dedicated for future urban residential uses,

defined as a transition area. The area is intended to support single-family homes, duplexes,

townhouses and small apartment/condominium buildings providing a range of housing options

for residents living near the transit station.



41st & Fox Station Land Use Plan



Consistent with the Station Area’s long-range land use goals, some property owners in the

neighborhood have sought, or are seeking, a rezone of their parcels to allow higher density

development. The table below provides a summary of four rezoning requests in the subject’s

immediate neighborhood; three have been granted. The fourth request was made in February

2019 and is under consideration.

Address Parcel Size Legacy Zoning

Change

4211 Inca St.

NW Corner Inca St. & W. 42

nd Ave.

18,750 sq. ft. I-A Rezoned to a C-RX-8

designation in 2017

4232 Jason St. 6,250 sq. ft. I-A Rezoned to a C-RX-8

designation in 2017

4000-90 Jason St. & 4001 Inca St.

NW Corner Jason St. & W. 42

nd Ave.

90,740 sq. ft. I-A Rezoned to a C-RX-8

designation in 2017

4001 Jason St. NW Corner Jason St.

& W. 42nd

Ave. 20,875 sq. ft. I-MX-3

Owner is seeking a zoning change to a C-MX-5 designation.

Blueprint Denver – The City of Denver is in the process of updating the city’s primary long-

range plan—Blueprint Denver. The most recent draft was issued on March 28, 2019 and

various City Council hearings will be held in April 2019. Any future rezoning of the subject

would need to be consistent with this plan once adopted (which is anticipated following the

hearing process).

The draft version of the plan identifies the subject’s immediate area as General Neighborhood

Context, designated for future low- to medium scale-scale multiple-unit residential uses, mixed

with one- and two-unit residential properties, and allowing-higher intensity residential uses to

be mixed through the area.



Area Demographic Data –

As estimated by the state demographer, Denver’s population increased by approximately

9,300 from July 2016 to July 2017, eclipsing the 700,000-mark in 2017. County’s population

totaled 705,651 residents by July 2017, or 16.7% higher than the July 2010 estimate of

604,879 residents. Over this same period, the number of occupied housing units

(households) increased by about 45,200, or 17%. As estimated by the state demographer,

about 34,900 new housing units were created in Denver County over this period, so the

housing vacancy rate declined from 7.5% in 2010 to 3.4% in July 2017. The table below summarizes basic demographic data for Denver County as compiled by the state demographer.

Denver County Demographic Trends

All figures reflect July of the given

year.

Total Pop.

% Change

Household Population

Avg. Household

Size

Total Housing

Units

% Change

Occupied Housing

Units (Households)

% Change

Housing Unit

Vacancy Rate

2017

Denver County 705,651 +16.7% 689,269 2.22 321,513 +12.2% 310,439 +17.0% 3.4%

2010

Denver County 604,879 588,898 2.22 286,635 265,233 7.5%

Source – Colorado Department of Local Affairs, Demography Section

Neighborhood Demographic Data – Demographic data for the subject’s market area is

summarized in the table below. CoStar Property compiles the demographic data to include

2010 census results, a 2019 estimate, and a forecast for 2024. Data is provided for both a

one- and two-mile radius from the approximate center of the Sunnyside neighborhood.

Although the immediate neighborhood is well established, the demographic data indicates the

area experienced rapid growth in both population and household counts from 2010 to 2019.

The population in the one-mile radius increased by about 6,300 over the period, or about 3%

on average annually from 2010 to 2019. Over the same period, the area’s household count

expanded by more than 2,500, or nearly 30% over the 2010 census count. Steady growth in

both population and household counts is forecast through 2023, with nearly 1,100 new

households anticipated over the 2019 estimate.

Population and household counts increased at a faster rate over the past nine years in the

two-mile radius; the population increased by 4.6% per year on average and household counts

increased by 4.9% annually. Looking forward, both population and household counts are

forecast to increase 2.2% per year on average through 2023. About 5,700 new households

are anticipated in the broader neighborhood over the next five years. Owner-occupied housing is more common in the immediate (one-mile) neighborhood compared to the two-mile radius. Within the immediate area, about 52% of households reside in owner-occupied housing compared to 44% in the two-mile radius.



Average household incomes in the immediate area increased 58% from 2010 ($59,545) to 2019 ($94,312); over the same period, the median household income increased nearly 70% (from $41,861 to $71,088). Smaller annual increases in household incomes are anticipated through 2024.

Conclusion – Although the immediate neighborhood is well established, it continues to grow

at a rapid pace with active redevelopment projects, typically replacing low-density housing and

industrial properties with higher density residential projects. Forecasts for future population

and household growth point to the need for of new residential construction, including a mix of

owner-occupied and renter-occupied units, in the area.

Demographic Estimates and Projections

Radius from Subject One Mile Two Mile

Population:

2024 Projection 29,096 113,813

Growth 2019 - 2024 +10.0% +11.5%

Average Annual Rate +1.9%/yr. +2.2%/yr.

2019 Estimate 26,446 102,088

Growth 2010 - 2019 +31.3% +49.8%


2010 Census 20,150 68,144

Households:

2024 Projection 12,260 54,158

Growth 2019 - 2024 +9.8% +11.8%


2019 Estimate 11,165 48,458

2019 Owner-Occupied 52% 44%

2019 Renter-Occupied 48% 56%

2019 Average HH Size 2.30 2.00

Growth 2010 - 2019 +29.2% +53.9%


2010 Census 8,644 31,488

2019 Avg. Household Income $94,312 $98,822

2019 Median Household Income $71,088 $72,997

2019 Housing Stock

Built 2010+ 20.3% 32.1%

Built 1990 – 2009 9.7% 17.8%

Built 1960 – 1990 10.7% 12.0%

Built <1959 59.3% 38.1%

2019 Median Year Built 1951 1989



Neighborhood Map

Denver-Area Employment - Metropolitan Denver has recorded positive job growth each

quarter from mid-2010 through the current period. Annual employment growth peaked at 4%

in 2014; the pace of growth steadily declined from early 2015 through mid-2017. Employment

growth accelerated from mid-2017 through mid-2018 though has been on a declining trend

over the last eight months, in part due to renewed weakness in oil prices.

The area’s labor force expanded rapidly over the past two years, jumping by 60,000 in 2017,

and again by near 41,000 in 2018, resulting in an increase in the unemployment rate over the

period. Metropolitan Denver continues to be an attractive destination for job seekers, though

higher housing costs and slower employment growth dampened the in-migration over the past

two years.

Employment in the mining, logging, and construction sector, related to the rising oil prices and

the expansion in conventional energy industries, provided part of the underlying support for

metro area’s employment growth over the period. Employment in this sector grew at a 6%

annual rate midway through 2018, though fell to a roughly 2% year-over-year pace by year-

end of the year, following downward pressure on oil prices.



Education and Healthcare services remains a major growth sector and is anticipated to

support the highest employment growth of any sector over the next five years. The sector has

benefitted from recent large public and private investments, including the completion of the

$1.8 billion VA hospital in Aurora, the Denver Health Administration’s new headquarters in

South Midtown, and Catalyst’s 300,000 SF digital health facility in the River North (RiNo)

neighborhood.

As indicated in the table below, the total number employed in the Denver-Aurora MSA

increased by approximately 161,000 from December 2014 to December 2018. Over this

same period, the MSA’s labor force increased by approximately 163,000 to 1,648,629 by

December 2018.

The metro area’s unemployment rate steadily declined from 2014 (4.8% average) to 2.7%

average in 2017. Employment growth declined to about 26,300 in 2018 compared to near

54,300 in 2017. The metro area’s labor force increased at a faster rate, growing by

approximately 41,400 in 2018, resulting in an increase in the area’s unemployment rate,

closing 2018 at 3.7%, the highest monthly rate since June 2015 (3.9%). ‘

The table below displays historical employment trends for the Denver-Aurora MSA reported by

the Colorado Department of Labor and Employment (CDLE).

Denver-Aurora MSA Employment Trends Year-end 2014 – 2018

(Not Seasonally Adjusted)

Year-End Employed at

Year End/ Period

New Employed Over the

Year

Annual Change

Year End Unemployment

Rate

Average Annual Unemployment

Rate

2014 1,426,231 +46,469 +3.4% 4.0% 4.8%

2015 1,461,733 +35,502 +2.5% 3.1% 3.7%

2016 1,507,045 +45,312 +3.1% 2.6% 3.1%

2017 1,561,361 +54,316 +3.6% 2.9% 2.7%

2018 1,587,640 +26,279

(over Dec. 2017 +1.7% 3.7%

3.0% Avg. over past yr.

Source: Colorado Department of Labor & Employment

National and local employment growth is summarized in the graph below. Locally, the

employment growth rate has exceeded the national average, though it has been on a

declining trend from mid-2015 to the current period.

As forecast by Moody’s Analytics, both the national and local the year-over-year employment

growth rate is projected to decline each year through 2021, falling into negative territory in 2020

and 2021, prior to rebounding by the end of 2021.



As indicated in the table below, according to the Manpower Employment Outlook Survey,

about 22% of area employers are anticipating adding staff in the first quarter of 2019, down

from 25% in the fourth quarter 2018 survey and 23% in the first quarter of 2018. The number

of firms planning layoffs is 6%, down from 7% posted in the prior quarter; though up

significantly from the 1st quarter 2018 figure of 2%. The long-term decline in companies hiring

and increase in companies planning layoffs suggest slower employment growth in 2019 and

2020.



Denver County Housing Market Conditions

The broader neighborhood has supported considerable new residential development over the

past several years, and development is active at present, including a mix of for-sale units and

apartments. As indicated in the prior section, demographic projections indicate the area’s

population and household count will continue to increase at a relatively rapid rate through

2022, prompting the need for additional housing.

Denver County Residential Permit Activity The table below provides annual residential

permit activity in Denver County from 2014 through 2018, as well as year-to-date activity

through February. The data is compiled by the Home Builder’s Association of Metro Denver

(HBA).

As noted from the table, permits issued for single-family housing in Denver County increased

each year since 2014. Nearly 11,500 single-family units were permitted over the period

including 387 in the first two months of 2019, following 2,591 units permitted in 2018.

Permit activity for attached single-family housing surpassed the number issued for detached

housing for the first time in 2016, and this trend has continued through the current period.

Permits issued for attached single-family housing accounted for 64% of the total single-family

permit activity in 2019, following 60% in 2018 and 58% in 2017.

New apartment and condominium permit activity accounted for the lion share of new housing

constructed in the city over the period examined. Since 2014, over 31,000 new multifamily

units have been permitted in the city, or about 73% of the total activity over the five-year

period.

Single-Family Units Permitted by Type and Year for

Denver County – Residential Permit Activity for New Housing Units

Annual for 2014 –2018 & 2019 YTD (February)

Type / Period 2019

(Jan./Feb.) 2018 2017 2016 2015 2014

Single Family Detached 141 1,042 1,015 942 1,066 1,022

% Change Over Prior Period -14.5% +2.7% +7.7% -11.6% +4.3% +24.5%

Single-Family Attached 246 1,549 1,426 1,287 886 847

% Change Over Prior Period -0.4% +8.6% +10.8% +45.3% +4.6% +27.4%

Multi-Family/

Apts. & Condos 926 6,241 7,784 5,567 6,334 4,197

% Change Over Prior Period +88.2% -19.8% +39.8% -12.1% +50.9% +100%

Total 1,313 8,832 10,225 7,796 8,286 6,066

% Change Over Prior Period +45.2% -13.6% +31.2% -5.9% +36.6% +308%



Denver County Home Sales Activity & Prices – Conditions in Denver County generally

mirrored the overall market for both 2017 and 2018. The number of closings over the past

year was down 3.6% from 14,195 in 2017 to 13,677 in 2018; however, new listings jumped

2% over the year providing more choice for buyers.

Denver County – 2017 vs. 2018

Both average and median sales prices have increased each of the past two years. The

median price paid in 2018 was $425,000, 10.4% higher than the median price paid in 2017

($385,000); the 2017 price was 5.5% higher than the 2016 median price of $365,000.

The average price paid in 2018 was about 9% higher than the 2017 average, surpassing $500,000 for the first time last year. Average prices increased about 6% from 2016 to 2017. Average days on market remained stable at 25 in 2018, unchanged from 2017, indicating an active market.



Denver County - Year-to-Date Data – As indicated in the graphs below, through February

2019, year-to-date new listings jumped 17%, though closed sales declined 3.7% to 835 units.

The average marketing period increased to 39 days, up from 34 days over the same period in

2018. The median price paid was $405,000, off 4.7% from 2018, though the average price

increased by 2.4% to $506,649.

The graph below shows the six-month trailing average for median sold prices for properties in

Denver County and the overall MLS Area. Generally, Denver County has experienced wider

swings in prices over the period, though price changes were more stable over the past three

years. The pace of appreciation has declined since peaking in the first quarter of 2018.



SUMMARY DESCRIPTION of the SUBJECT PROPERTY

General Information - This appraisal considers the market value of the property as is. The

appraiser has inspected the subject parcel and photographs taken at this time are included

below. An associate of the property contact provided a copy of an Improvement Location

Certificate (ILC) completed in November 2016 and a Phase 1 Environmental Site Assessment

completed in October 2016. Additional information was gathered from Denver County

records. Items not available to the appraiser include a title commitment, current property

survey and a current environmental site assessment.

Parcel Description – The subject parcel is a rectangular tract, on the west side of Inca

Street, approximately 90 feet south of the intersection with West 45th Avenue. It backs to a

paved alley along its west boundary. As indicated from lot dimensions referenced on the

ILC, the parcel measures approximately 9,100 square feet (78.2 feet wide by 125.0 feet

deep).

Terrain is generally level across the parcel. There is a mix of chain link and wood fencing

along the perimeter, including a chain link gate off the Inca frontage. Most of the open area

is gravel-covered, though there is some concrete paving towards the rear of the parcel.

There is a 20’ by 30’ (+/-) concrete pad near the center-rear of the parcel that supports an

aluminum-framed, nylon canvas-covered storage area. The framing is bolted to the pad so

could be removed.

There are two garage/storage structures at the rear of the parcel. The smaller structure,

approximately 397 square feet, is positioned near the southwest corner of the parcel. It is a

wood framed structure, with painted siding, constructed over a concrete slab. The roof is

slanted to promote drainage and there is a single metal garage door.

The larger structure is approximately 691 square feet, positioned near the northwest corner

of the lot. It is also of wood frame construction, with painted siding and trim and slanted roof.

The structure is built over a concrete slab; there is a single metal garage door and a man

door. This structure appears to have electrical service. Both garages are only in fair

condition, though appear to provide reasonable covered storage.

Public utility services are available to support development including water and sanitary

sewer service.

Lease - The property is leased through June 30, 2019. The tenant, RDT Transport, LLC,

uses the property for storage and parking. The rent is set at $1,500 per month and the

tenant pays electricity charges directly to the utility provider. The tenant is required to

maintain a liability insurance policy and to maintain the property. All other expenses,

including taxes, are borne by the property owner.



Environmental and Soil Conditions - No current environmental studies or soils reports for

the subject parcel were available to the appraiser. An associate of the property contact

provided a copy of a Phase 1 Environmental Site Assessment completed in October 2016. As

stated in the document: “this assessment revealed no recognized environment conditions

(RECs) in connection with the Property.”

The tenant uses the site to park trucks and appears to also being doing ‘light’ vehicle

maintenance. There are various ‘containers’ on site, the contents of which (if any) are

unknown.

To the best of the appraiser’s knowledge, there are no soil or sub-soil conditions, potentially

hazardous materials, or toxic waste problems affecting the parcel; however, testing for and

discovery of such material and/or conditions goes beyond the scope of this appraisal and

requires specialized equipment and technical expertise in environmental analysis. The value

conclusion of this report assumes that the soil and subsurface conditions are adequate to

support the existing construction. The Client and purchaser are encouraged to obtain an

update to the Phase 1 Assessment if this is a matter of concern.

SUBJECT PHOTOGRAPHS



Floodplain Status: Based on FEMA Community Map No. 080046, Panel 0088H, effective November 20, 2013, the subject property is not in a recognized flood hazard area.

Partial Copy of Floor Map

Easements/Encroachments/Restrictions: The ILC provided does not reference any

easements or encroachments affecting the property. No obvious adverse easements or

encroachments were observed during the property inspection.

The appraiser is aware of no deed restrictions or other limitations by title; however, the

appraiser cannot guarantee that no such restrictions exist. It would be prudent for the

purchaser and client to obtain a title commitment and current property survey for review.



Partial Copy of Improvement Location Certificate Provided

Aerial Image of Parcel



Zoning: I-A UO-2 (Light Industrial District) Employment area intended to contain office, business, warehousing, and light industrial uses that are generally

The intent of the I-A district is to accommodate employment areas developed with offices,

service properties, warehousing and related light industrial uses that are compatible with

adjacent residential or mixed-use zone districts. Accordingly, I-A zoned areas serve as a land

use buffer between residential uses and more intensive industrial land uses. Allowed uses in

the district must be enclosed within a structure, unless specifically allowed to operate out of

doors; outside storage is not permitted.

The district allows a variety of light industrial uses, including warehousing, assembly, light

manufacturing, distribution, and related uses that have no significant detrimental effect on

neighboring land uses. The regulations allow for a medium intensity of development to achieve

compatibility with adjacent improved parcels. New residential use is not allowed in the district.

The area is also covered by a use overlay (UO-2) that allows billboard signs.

Zoning Requirements – I-A

Zoning Standard Requirement Subject Property Conforms?

Allowed Uses

Includes office, office/flex, warehousing, assembly, & light manufacturing industrial uses

Storage Garages Yes

Minimum Lot Size None 9,100 sq. ft. Yes

Maximum Building Height No Limit 12 feet +/-. Yes

Maximum Floor Area Ratio 2.0-to-1 < 2.0-to-1 Yes

Setbacks

Front – 20 feet

Side – 0 feet

Rear – 0 feet

Front – > 20 feet

Side – > 0 feet

Rear – > 0 feet

Yes

Yes

Yes

Minimum Lot Frontage None 73 feet +/- Yes

On-Site Parking 0.3 (+/-) per 1,000sf Ample Yes

Zoning Analysis - The subject property has appropriate zoning in place for the existing use

as storage and parking. The existing use/improvements appear to be a legal and conforming.

The zoning is compatible with the surrounding environment, providing for similar and

complementary land uses in the subject’s immediate neighborhood.

The existing use/improvements appear to be a legal and conforming.



As noted previously, development in the immediate area will be guided by the 41st and Fox

Station Area Plan as well as the update to the Blueprint Denver plan, anticipated to be

adopted this year. The draft copy of the Blueprint Denver update identifies the subject’s

immediate area as designated for future low- to medium scale-scale multiple-unit residential

uses, mixed with one- and two-unit residential properties, and allowing-higher intensity

residential uses to be mixed through the area.

The Land Use Map published in the Station Area Plan, identifies the subject’s immediate area

as dedicated for future urban residential uses, being a transition from more intense

development to the south and established residential uses in the Sunnyside neighborhood to

the west. The area is intended to support moderate density housing options (up to 3 stories),

including townhouses and small apartment/condominium buildings for residents wising to live

near the transit station.

There is precedent for rezoning properties from the I-A designation to a more intense mixed

residential designation, consistent with the Station Area’s long-range land use goals. The

property owner has completed a pre-application meeting with city zoning personnel regarding

potentially seeking a change in zoning to C-MX5 or C-MX-8. There is reasonable prospect

that the parcel could be rezoned to a residential mixed-use designation given the Station Area

Plan and other rezoning in the area, though potentially at a lower density (i.e. C-MX-3 or

similar).

Partial Copy County Zoning Map



Assessment and Property Tax Data

The table below summarizes property assessment and tax data for both properties combined.

The assessor’s combined 2018 valuation for the property is $138,500; with a 29% assessment rate, the combined 2018 assessed value is $40,170. The 2018 mill levy was set at 77.365

mills (7.7365%), providing a combined 2018 tax liability of $3,107.75, payable in 2019. Prior

year property taxes were billed at $3,098.47 and reported as paid, with no delinquencies.

2018 Assessment, 2018 taxes due in 2019 and 2017 taxes paid in 2018

Schedule Numbers: 02211-22-027-000 02211-22-028-000

2018 Assessor’s Actual Value $138,500

2018 Assessed Value (29%) $40,170

2018 Mill Levy 77.365 (7.7365%)

2018 Property Taxes Payable in 2019 $3,107.75

2017 Property Taxes Paid in 2018 $3,098.47

SUBJECT PHOTOGRAPHS

Parcel viewed from Inca Street

Looking West across Parcel Garage Improvements



SUBJECT PHOTOGRAPHS

Looking East across the Parcel Larger Garage

Looking East along the North Boundary Smaller Garage

Looking West across the Parcel



HIGHEST AND BEST USE ANALYSIS

Highest and best use may be defined as:

Highest and best use. 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

In the analysis of pertinent data, four criteria are applied in the following order to develop

adequate support for the appraiser’s highest and best use determination:

1. Legally permissible

2. Physically possible

3. Financially feasible

4. Maximally productive

These criteria are generally considered sequentially; however, the tests of physical possibility

and legal permissibility can be applied in either order, but they both must be applied before

the tests of financial feasibility and maximum productivity.

The process for determining the highest and best use of a property has four main steps. The

first two are applied in the analysis of highest and best use of the land or site as though

vacant; the third and fourth steps are applied in the analysis of the highest and best use of the

property as improved.

1. Determine the highest and best use as of the site as though vacant.

2. Determine the ideal improvement for development of the site.

3. Compare the ideal improvement and the existing improvement.

4. Conclude whether the improvements should be maintained as is or be

renovated, converted, or demolished.


th ed. (Chicago: Appraisal Institute, 2010), s.v. “highest and best use”, p.93



Highest and Best Use as Vacant

Legally Permissible – Public and private restrictions in place affect land use of both vacant

and improved properties. Zoning and other land use restrictions are considered in testing

legal permissibility, along with building codes and any private restrictions that may be in place.

Consideration is also given to the potential for modifications or changes to current restrictions.

With respect to the subject property, there are no know private restrictions, deed restrictions

or other limitations on use or title. The appraiser is not aware of any atypical building code

issues that affect the property.

Zoning and city-produced development plans for the immediate area are the primary attributes

that affects legally permissible uses on the subject parcel. The property’s current zoning was

discussed in detail in the “Zoning/Land Use” section of the report. As noted, the parcel

carries a light industrial (I-A) zoning designation that limits development to light industrial, flex,

office and related land uses.

As noted previously, proximity to the light rail station is driving development in the immediate

area. The station area plan in place as well as the Blueprint Denver plan will guide

development on the parcel. Land use plans in place identify the subject’s immediate area as

dedicated for future urban residential uses, up to 3 stories, including townhouses and small

apartment/condominium buildings for residents wising to live near the transit station.

There is precedent for rezoning properties from the I-A designation to a more intense mixed

residential designation, consistent with the Station Area’s long-range land use goals. The

property owner has completed a pre-application meeting with city zoning personnel regarding

potentially seeking a change in zoning to C-MX5 or C-MX-8. There is reasonable prospect

that the parcel could be rezoned to a residential mixed-use designation given the Station Area

Plan and other rezoning in the area, though potentially at a lower density (i.e. C-MX-3 or

similar).

Physically Possible - The next test of highest and best use is that of physically possible

potential uses. As discussed in the site description section of the report, there are no

significant physical limitations that would affect development of the subject site with the

exception of its size. At approximately 9,100 square feet, the site is large enough to support a

moderate-scale multiple unit residential project. Terrain is generally level and provides no

significant impediment to development. The site has access to utility services to support

development. The parcel is not in a recognized flood hazard area and there is no known

adverse drainage or subsurface soil issues. There are no hazardous substances or other

adverse physical conditions that would affect its development.



Financially Feasible – Financial feasibility is defined as

Financial feasibility. …the ability of a property to generate sufficient income to support

the use for which it was designed.5

Financially feasible uses are those that are physically possible, legally permissible, and that

produce a positive return to the land after considering risk and all cost to create and maintain

the use; in short, any use that result in a positive land value. The test of financially feasibility

provides evidence whether market conditions are adequate to justify use of the property in a

legally permissible and physically possible manner.

In short, for a use to be financially feasible there must be an active market that values that use

sufficiently to cover the cost of providing it, including providing appropriate entrepreneurial

profit—effectively providing appropriate support. Financial feasibility can be inferred through

market activity, as well as measured through financial analysis.

The subject is with in an area of mixed light to medium-intensity industrial land uses,

intermixed with service-commercial uses and both new and existing residential development.

Access to primary arterials (W. 38th Avenue, I-25 and I-70) is convenient from the subject’s

immediate area. Additionally, the property is in close proximity to a light rail station.

Supportive retail services are close by, typically found along 38th Avenue and Federal to the

west.

Although zoning allows industrial and related uses, the subject’s immediate area is in a state

of transition, supporting new residential development, consistent with the broader

Sunnyside/Northwest Denver market area. Given the surrounding development and lack of

exposure to a busier street, the parcel is best suited to multifamily residential development.

As discussed previously in the report, the neighborhood remains in a growth phase,

supporting new residential construction and supportive commercial/retail projects along

arterial streets. New development includes a mix of duplex style projects as well as

townhouse and apartment forms. The area is expected to continue to support redevelopment

of older, lower-density uses with higher density, multiple-unit residential uses, especially

proximal to light rail stations.

Demographic forecasts indicate annual increases anticipated for both population and

household counts within the community and the subject’s general market area. Approximately

1,100 new households are anticipated in the immediate area by 2024.

Anticipated growth in households will necessitate the need for new residential construction in

the community over the period. Given the current mix of renter-occupied housing to owner-

occupied housing, the general market area will accommodate both new owner-occupied

housing units and rental properties.


th ed. (Chicago: Appraisal Institute, 2010),.s.v. “financial feasibility”, page 79



Household incomes in the area are sufficient to support new residential construction. Based

on 2019 figures, nearly 50% of households in the one-mile area have incomes above $75,000.

New residential construction is serving to draw more affluent households into the area and

there is ample demand for attached units ranging in price from approximately $450,000 to

$800,000.

Demographic projections suggest that there will be sufficient demand to the area to support

additional apartment and multi-unit residential development. The demand for new housing is

expected to continue over the immediate to mid-term so the financial feasibility of new multi-

unit residential development at the subject site is considered supportable.

The parcel is sufficient in size for an allowed multiple unit project. Rezoning the property for

residential use and holding for future development of a multiple unit residential use is

considered a financially feasible use under current market conditions.

Maximally Productive - The maximally productive use of the subject site considers all of

the available development alternatives. Interest rates are anticipated to remain reasonably

stable over the near to mid-term and financing finished residential properties is reasonably

available to qualified buyers. The recent history of the area, anticipated future need for

additional housing to accommodate growth, as well as improving market conditions support

construction of new multiple-unit housing in the area. The neighborhood has supportive retail

services in immediate proximity, as well as established schools, recreational amenities, and

access to employment centers.

Development of a multi-unit residential complex is considered the maximally productive use of

the parcel, generating the highest residual land value. The property has a suitable location for

this type of development, which would be compatible with adjacent and nearby land uses. As

indicated in the prior neighborhood analysis, residential development is active in the

immediate neighborhood and more projects are planned.

Conclusion: The maximally productive and ideal improvement would be rezoning the

property and holding for future residential development with a multiple unit project.



VALUATION PROCEDURES AND METHODOLOGY

The estimation of a real property's market value involves a systematic process in which the

problem is defined; the work necessary to solve the problem is planned; and the data required

are acquired, classified, analyzed and interpreted as an estimate of value. In this process, the

appraiser considers three approaches to value: Cost, Sales Comparison, and Income.

Cost Analysis - In the Cost Analysis, the appraiser first estimates the value of the subject,

under its highest and best use, site by comparing it to similar sites that recently have sold.

The reproduction or replacement cost new of the improvements is estimated; appropriate

deductions for depreciation are estimated and deducted from the estimated cost to derive a

present value. The present value of the improvements combined with the opinion of value for

the land provides the resultant opinion of value derived through the Cost Analysis.

Sales Comparison Analysis - Sales Comparison Analysis involves the comparison of the

subject property to similar properties that have recently sold. The sales prices of these

properties are adjusted to reflect the respective differences of each from the subject to

indicate a value range. The value range indicated by the adjusted comparable properties is

then used to establish an indicated value for the subject property.

Income Analysis - Income Analysis involves a process in which the anticipated future

benefits are reduced to a present value figure. The appraiser is primarily concerned with the

benefits from net income and reversionary proceeds. This approach involves estimating

potential gross income by comparison with competing properties, and estimating expenses

(derived from historical and/or market experience), to determine a projected net income

stream. Under direct capitalization, the income stream is capitalized into an indication of

present value—with an appropriate capitalization rate extracted from competitive properties in

the market, and/or by using other techniques when applicable. Alternatively, the income

stream, as well as the reversion of the property, is converted into an estimate of value by use

of a discounted cash flow analysis.

Reconciliation of Value - The final analytical step in the valuation process is reconciliation of

the value indications obtained from the different approaches to value. The appraiser must

consider the reliability and applicability of each approach relative to the individual

characteristics of the subject. The final value opinion reflects the degree of strength of each

approach.



Methodology Specific to Analysis of the Subject - Three approaches are considered

in estimating the market value of the subject property. Given the highest and best use of the

property is to hold for future residential redevelopment, the parcel is appraised as a

development lot. Only the sales comparison approach is deemed relevant to this analysis. As

a single development lots in a residential area, the cost approach is not considered applicable

to deriving an opinion of market value given the difficulties of determining the cost and

contribution to value of shared common infrastructure improvements that the parcel shares

with adjacent and nearby sites. The income approach is also not used in this analysis as

development parcels the scale and utility of the subject are nearly always sold for

development, rather than being leased for development.

Completion of the cost and income approaches are not deemed necessary to provide a

credible pinion of market value for the subject property and elimination of these approaches

is not considered to result in a misleading conclusion of value.



SALES COMPARISON ANALYSIS – Land Value Analysis

The Sales Comparison Approach, also termed the Market Approach, involves the comparison

of the subject property to similar properties which have already sold, or which are currently

offered for sale, with consideration given to their respective differences from the subject. This

process tends to form a pattern of indicators from which the appraiser can estimate the value

of the subject property.

The sales comparison approach is defined as:

Sales comparison approach. The process of deriving a value indication for the

subject property by comparing similar properties that have recently sold with the

property being appraised, identifying appropriate units of comparison, and making

adjustments to the sale prices (or unit prices, as appropriate) of the comparable

properties based on relevant, market-derived elements of comparison. The sales

comparison approach may be used to value improved properties, vacant land, or

land being considered as though vacant when an adequate supply of comparable

sales is available.6

The elements of comparison are defined as:

Elements of comparison. The characteristics or attributes of properties and

transactions that cause the prices of real property to vary; include real property

rights conveyed, financing terms, conditions of sale, expenditures made

immediately after purchase, market conditions, location, physical characteristics,

and other characteristics such as economic characteristics, use, and non-realty

components of value.7

A market value indication is developed for the subject through the sales comparison approach

by comparing it to similar properties that have recently sold or are being offered for sale. By

analyzing the motivations of buyers and sellers of competing/similar properties, a value

indication can be derived through comparative analysis that considers the similarities and

differences that affect value between the comparables and the subject. Similarities and

differences refer to elements of comparison. There are two categories of elements of

comparison—transactional elements and property elements. Transactional elements are

considered in a specific sequence shown below:

property rights,

financing terms,

conditions of sale,

consideration of any expenditures after purchase required of the purchaser;

and consideration of market conditions.

6 The Appraisal of Real Estate, 14

th ed. (Chicago: Appraisal Institute, 2013), page 377.


th ed. (Chicago: Appraisal Institute, 2010), s.v. “elements of comparison”, page 66.



Property elements consider location and physical differences between the subject and the

comparable property. Legal characteristics are also considered including zoning and building

codes. Finally, consideration is given to any non-realty components included in the sale or the

contributory value of any intangible elements. The sales comparison approach is grounded in

the principles of supply and demand, substitution, balance, and externalities.

The interaction of buyers and sellers, negotiating in their best interest, set prices in active

markets; buyers provide the market demand and properties for sale, or to be offered for sale

in the foreseeable future provide the supply. Demand factors are analyzed through

consideration of potential users of a particular property type, their tastes and preferences, and

their purchasing power. The analysis of supply considers properties being offered for sale in

the market, properties being constructed, and those being planned for construction.

Every property is unique, though for nearly all properties there are reasonable substitutes or

alternatives in the market. The principle of substitution holds that the value of a property is

generally set by the cost of acquiring a reasonable substitute, providing similar utility, in a

reasonable timeframe. The process of applying the sales comparison approach includes:

Researching the competitive market for properties that are similar to the subject that

have recently sold, are listed for sale, or under contract;

Verify the comparable sales and property data through research and confirmation to

determine its accuracy, buyer motivations, economic characteristics, and other

significant factors to ensure the credibility of the comparison;

Select the relevant unit of comparison that best matches buyer / seller thinking and

develop a comparative analysis for each section;

Analyze the sales for differences with the subject using appropriate elements of

comparison;

Reconcile the various value indications produced from the comparative analysis into a

value indication for the subject property.8

Selection of Comparables - The appraiser has researched sales of other parcels with

industrial zoning in place, though by virtue of their location are suited for future

residential/mixed-use redevelopment. The focus of the search was for parcels located in

north Denver, proximal to light rail stations. Parcels ranging in size from approximately

6,250sf to 20,000sf. Sales closing over approximately the past 27 months were considered,

with a preference for the most current and similar in terms of scale.

Sales selected are considered representative of the market and the best available from

a limited number of potential sales. Within the metro Denver market area, buyers and

sellers rely on price per square foot of lot area as a means of comparison; likewise, in the

analysis below, adjustments to a sale to account for differences with the subject are applied to

the price paid per square foot for that sale.

8 Summarized from The Appraisal of Real Estate, 14

th ed. (Chicago: Appraisal Institute, 2013), page 381-382.



COMPARABLE LAND SALES SUMMARY (1 of 2)

#

Location

Neighborhood

(Legal)

Site Area

Zoning in Place (Land Use Plan

Potential)

Attributes Seller/ Buyer

Financing

Sales Date/

Price

$ Per Sq. Ft.

1

4149 Jackson St. Denver, 80216

(Eyria/Swansea)

(Lots 23 & 24, the Union Pacific Employe’s Land

Company’s Re-Subdivision of Block 7

Swansea Heights)

8,333 sq. ft. Rectangular (125’ x 66’ +/-) lot;

Corner lot with level terrain;

Across from light rail station at

Colorado Blvd. & E. 40th Av.;

Improved with 1,050sf +/- garage;

Purchased for future residential

redevelopment which will require

rezoning;

Neighborhood plan identifies area

for 2-8 story residential/mixed-use

development.

3joe, LLC Seller

04-Feb.-2019

$800,000

$96.00/sq. ft.

I-A Lt. Industrial

(TOD Mixed Use with potential for

2-8 stories)

Unbinding Word, LLC.

Buyer

Cash to Seller

2

3855 Inca Street Denver, 80211

(Sunnyside)

(Lots 25-30, Block 46, Viaduct Addition)



Walking distance to 41st/Fox light

rail station;

Improved with a 4,600sf off/whse.;

Purchased for future residential/

mixed-use redevelopment.

Zoning in place allows residential

uses up to 3 stories;

Station area plan identifies parcel

for urban residential up to 8

stories.

B-W Masonry, Inc. Seller

30-Jan-2019

$1,675,000

$89.33/sq. ft.

I-MX-3 Industrial/ Mixed-Use

(Urban Residential with potential for

2-8 stories)

East Hinsdale Office Park, Ltd.

Buyer

Cash to Seller

3

3832 Jason St. Denver, 80211

(Sunnyside)



Interior lot. mostly level terrain;

Walking distance to 41st/Fox light

rail station;

Improved with a 899sf house &

garage;


redevelopment.




for urban residential up to 8

stories.

Onqu Realty, Inc. Seller

16-Nov-2018

$430,000

$68.80/sq. ft.


(Urban Residential with potential for

2-8 stories)

Jason Street at Sunnyside, LLC

Buyer

Cash to Seller



COMPARABLE LAND SALES SUMMARY (2 of 2)

# Location Site Area

Zoning Attributes

Seller/ Buyer

Financing

Sales Date/

Price

$Per Sq. Ft.

4

3725 Jason Street Denver, 80211

(Highland)

(Lots 18 - 23, Block 52, Viaduct Addition)


Interior lot with gentle slope;

Reasonable distance to 41st/Fox

light rail station;

Improved with a 5,760sf off/whse;


redevelopment.




for urban residential up to 3 stories.

Ruby Irwin, LLC Seller

16-Nov-2018

$2,200,000

$117.33/sq. ft.


(Urban Residential with

potential for 1-3 stories)

3725 Jason St, LLC

Buyer

Cash to Seller

$1,875,000 loan from private, third

party)

5

4255 Jason St. Denver, 80211

(Sunnyside)




Reasonable walking distance to

41st/Fox light rail station;

Improved with a 7,432sf off/whse.;

Purchased by adjacent property

owner for assembly into a larger

potential redevelopment property;





Corporate Source of Colorado, Inc.

Seller

05-March-2018

$1,250,000

$100.00/sq. ft.




Martinez Estates, LLC

Buyer

Cash to Seller

New $1,163,000 CNV bank loan

6

4232 Jason Street Denver, 80211

(Sunnyside)

(Lots 6 & 7, Block 14, Viaduct Addition)


Interior lot with level terrain;

Reasonable walking distance to

41st/Fox light rail station;

Improved with a 1,932sf house with

a 749sf unfinished basement;


redevelopment.

Zoned I-A at time of sale;

subsequently rezoned to C-RX-8

after purchase;



Charles V. Fresquez

Seller

13-June-2017

$425,000

$68.00/sq. ft.

I-A Lt. Industrial



Gearheart Moore Holdings, LLC

Buyer

Cash to Seller

New $319,000 CNV bank loan



Elements of Comparison Considered:

Where necessary, adjustments are made to comparable sales to account for differences with

the subject for appropriate elements of comparison. There are two categories of

comparison—transactional adjustments and property adjustments. Adjustments for

transactional differences are made first, in a specific order as listed below.

Property Rights Conveyed – This adjustment considers the property interest transferred in

the sale. The adjustment grid provides an indication of the fee simple value for the subject

parcel; consideration of the lease in place will be addressed at the end of this section.

Sale #1 was purchased for future development potential; the parcel is improved with a 1,050sf

+/- warehouse that was vacant at closing. The purchaser acquired the fee simple property

interest.

Sale #2 was purchased for future development potential; the parcel is improved with 4,600sf

+/- of office/warehouse space. The seller vacated the property prior to closing and the

purchaser acquired the fee simple property interest.

Sale #3 was purchased for future development potential; the parcel is improved with an 899sf

+/- house and 546sf +/- detached garage. The property was vacant at the time of sale and the



office warehouse. The seller vacated the property after closing and the purchaser acquired

the fee simple property interest.


+/- office/warehouse. The seller vacated the property after closing and the purchaser

acquired the fee simple property interest.

Sale #6 was purchased for future development potential; the parcel is improved with an 899sf

+/- house and 546sf +/- detached garage. The property was vacant at the time of sale and the




Financing Terms – Differences in financing arrangements can affect the price paid for a comparable, warranting an adjustment for this factor. The subject is appraised to cash terms. For Sales #1, #2, and #3, purchasers paid cash directly and no adjustment is indicated. For Sales #4, #5, and #6, purchasers obtained financing from local banks or unrelated private

parties, paying cash for the balance; in each case, the sellers received cash so no

adjustments are warranted for this factor.

Conditions of Sale – This adjustment considers any unusual motivations of either the buyer

or seller that may have influenced the sales transaction, including concessions or credits paid

at closing by either party.

The purchaser for Sale #1 reported that the sellers were motivated to dispose of the property

quickly and accepted a discounted offer to achieve a quick closing. Based on a discussion

with the purchaser and other market data examined, the discount is estimated at 10%, serving

as the basis of the adjustment. The remaining sales sold without reported discounts, or concessions, so no adjustments are warranted.

Expenditures Made After Purchase – Prudent buyers account for known expenses anticipated after purchase to correct deficient items or to realize the full utility of the property.

Each sale examined was purchased for future redevelopment, which would require

demolishing improvements in place. This additional expense is considered expenditure after

purchase, warranting consideration of this additional cost. It is noted that the demolition

expense can be partially offset by a potential water tap credit, and potential rental income

during a holding period.

The table below provides an estimate of demolition expense and tap credits for the

comparable sales. Demolition expenses are estimated from appraiser file data, as well as

data published in the Marshall Valuation Service, and the National Repair and Remodeling

Estimator published by the Craftsman Book Company. Water tap credits were estimated

based on data provided by Denver Water. The demolition expense and potential water tap credit for the subject parcel is considered at the end of this section. Sale #1 sold with a small, unheated garage to be demolished; the parcel Is fenced, though otherwise unimproved.

Sale #2 includes a warehouse and separate office building, totaling approximately 4,600sf,

along with perimeter fencing. A water tap credit can offset part of the demolition expense.

The purchaser is marketing the property in hopes of finding a short-term tenant to provide

income over the holding period. Potential short-term (estimated at 18 months), net rental



income exceeds the net of demolition and the water tap credit, so a small negative adjustment

is warranted.

Sale #3 sold with a small house (899sf +/-), that includes a partial basement and detached

garage; improvements are suited for short-term renter occupancy while a new project is

designed and entitlements are sought. Potential short-term (estimated at 18 months), net

rental income exceeds the net of demolition and the water tap credit, so a small negative

adjustment is warranted.

Sale #4 sold with a 5,760sf office/warehouse in place. The purchaser submitted a

redevelopment plan for approval to city officials while the property was under contract. The

site will be cleared for the planned 17-unit residential project. Demolition expense is partially

offset by the water tap credit.

Sale #5 sold with a 7,432sf office/warehouse in place. To date, the purchase has left the

building vacant, though it could potentially be leased on a short-term basis to offset holding

costs. Potential short-term (estimated at 18 months), net rental income exceeds the net of

demolition and the water tap credit, so a small negative adjustment is warranted.

Sale #6 sold with a house (1,932sf +/-), that includes a partial basement; improvements are

suited for short-term renter occupancy while a new project is designed and entitlements are

sought. Potential short-term (estimated at 18 months), net rental income exceeds the net of

demolition and the water tap credit, so a small negative adjustment is warranted.

Sale #1

4149 Jackson

Sale #2

3855 Inca

Sale #3

3832 Jason

Sale #4

3725 Jason

Sale #5

4255 Jason

Sale #6

4232 Jason

Demolition Estimate

$8,900 $39,600 $22,900 $53,500 $61,900 $26,900

Deduct Potential Water

Tap Credit N/A -$10,700 -$7,405 -$10,700 -$10,700 -$7,405

Difference $8,900 $28,900 $15,495 $42,800 $51,200 $19,495

Parcel Size 8,333sf 18,750sf 6,250sf 18,750sf 12,500sf 6,250sf

Net Per SF (adjustment)

$1.07/sf $1.54/sf $2.48/sf $2.28/sf $4.10/sf $3.12/sf

Adjustment for Rental Income

$0 -$3.65/sf -$3.85/sf $0 -$4.90/sf -$4.33/sf

Net Per SF (adjustment)

$1.07/sf -$2.11/sf -$1.37/sf $2.28/sf -0.80/sf -$1.21/sf



Market Conditions – The sales closed over approximately the past two to 18 months.

Statistical data from the local MLS indicates prices paid for attached residential units have

increased over this period.

A review of statistical data in the REcolorado multiple listing database indicates average

prices paid for similar land parcels zoned for three-story multiple unit development in the

Northwest Denver market area increased approximately 6% over the past year and 13% over

the past two years (13% over 24 months).

Given the entirety of data, positive market condition adjustments are warranted to the

comparables, made at the average rate of 6% annually, or 0.5% per month, per month, to

account for appreciating prices over the period examined.

The grid for transactional adjustments is presented below. Transactional Adjustment Grid:

Comparable Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Sale #6

Property 4475-95 Inca 4149 Jackson 3855 Inca St. 3832 Jason St. 3725 Jason St. 4255 Jason St. 4232 Jason St.

Market Area Sunnyside Elyria/ Swansea Sunnyside Sunnyside Highland Sunnyside Sunnyside

Lot Size 9,100 sf 8,333 sf 18,750 sf 6,250 sf 18,750 sf 12,500 sf 6,250 sf

$800,000 $1,675,000 $430,000 $2,200,000 $1,250,000 $425,000

$96.00 per sf $89.33 per sf $68.80 per sf $117.33 per sf $100.00 per sf $68.00 per sf

4-Feb-2019 30-Jan-2019 16-Nov-2018 16-Nov-2018 5-Mar-2018 30-Jun-2017

Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple

$0 $0 $0 $0 $0 $0

Cash Cash Cash Cash to Seller Cash to Seller Cash to Seller

Purchase Purchase Purchase New Loan New Loan New Loan

Adjustment $0 $0 $0 $0 $0 $0

None Reported Motivated Seller None Reported None Reported None Reported None Reported

$0 $8.93 0% $0 $0 $0


Demolition

Demolition/ Offset by

Water Tap Credit &

Potential Interim Rental

Income


Water Tap Credit &


Income

Demolition/ Water

Tap Credit


Water Tap Credit &


Income


Water Tap Credit &


Income

Adjustment $1.07 -$2.11 -$1.37 $2.28 -$0.80 -$1.21


2 Months Ago 2 Months Ago 4 Months Ago 4 Months Ago 13 Months Ago 20 Months Ago

1.0% 1.0% 2.0% 2.0% 6.5% 10.0%


Adjusted Price Per Sq. Ft.

Adjustment Grid – Transactional Adjustments


Sale Date

Sale Price Per Sq. Ft.

Sale Price

Property Interest Conveyed

Adjustment

Financing Terms

Conditions of Sale,

Concessions or Discounts


Sale Date (rounded to nearest month)

Market Conditions Adjustment

Adjustment

Expenditures After Purchase



Adjustments for property differences are discussed below.

Location – Location attributes are typically an important factor in determining the

development potential and corresponding value of a residential-oriented development lots.

Consideration is given to quality and appeal of surrounding uses, accessibility and proximity to

highways, proximity to supportive retail services, and property values for attached residential

units. Adjustments for location are made based on the relative desirability of each property in

comparison with the subject. The comparables are located in areas of transition, from

industrial to residential; additionally each is proximal to a light rail station.

Sale #1 is located in Denver’s Elyria/Swansea neighborhood, directly across from the light rail

station near E. 40th Avenue and Colorado Boulevard. The area is in transition and there is a

development plan in place to promote transit-oriented/residential development. The location

is superior to the subject given the proximity to the rail station, warranting a negative

adjustment.

Sales #2, #3, #5, and #6 are located in the Sunnyside neighborhood and share similar

general location attributes with the subject. Specific locations vary based on proximity to the

light rail pedestrian bridge and surrounding uses. Sales #2, #5, and #6 are closer to light rail,

warranting a negative adjustment. Sale #3 is a similar distance to the light rail and no

adjustment is considered warranted.

Sale #4 is located in the adjacent Highland neighborhood, close enough to the light rail station

to be included in the Station Area Plan. The specific location in Highland is superior with

respect to the immediate area supporting higher residential values and apartment rents,

warranting a negative adjustment.

Site Attributes/Utility – The subject lot has typical site utility for an interior lot, being

rectangular, with generally level terrain. Off-site work is complete and the parcel is suited for

redevelopment. The Inca frontage provides the potential for city views from upper floors of a

future structure, though as an offsetting factor there is potential for negative noise influence

from the adjacent rail lines off the east side of the street.

Comparables are reasonably similar for shape and terrain attributes, though differ with respect

corner attributes and frontage. Corner lots, and those with substantially more street frontage,

provide superior appeal offering greater flexibility in design and the potential for more street-

facing units.

Sales #1, #2, and #5 are superior with respect to the corner attribute and superior frontage,

warranting negative adjustment.

Sale #4 is an interior lot, similar to the subject, though is superior with respect to greater

frontage, warranting negative adjustment.



Sales #3 and #6 are similar interior lots, though with inferior frontage, warranting positive

adjustment.

Zoning/Entitlements/Potential Land Use – The subject is zoned under the I-A designation

with no specific entitlements in place. Under the current zoning, the only allowed

development is light industrial, flex, office and related uses. As noted previously, future

development on the parcel will be guided by the 41st and Fox Station Area Plan, as well as the

update to the Blueprint Denver plan, anticipated to be adopted this year. The draft copy of the

Blueprint Denver update identifies the subject’s immediate area as designated for future low-

to medium scale-scale multiple-unit residential uses, mixed with one- and two-unit residential

properties, and allowing-higher intensity residential uses to be mixed through the area. The

Land Use Map published in the Station Area Plan, identifies the subject’s immediate area as

dedicated for future urban residential uses, intended to support moderate density housing

options (up to 3 stories), including townhouses and small apartment/condominium buildings

for residents wising to live near the transit station.

Sale #1 sold with I-A zoning in place, similar to the subject. The local area plan guiding future

development in the immediate area calls for transit-oriented uses, including residential and

mixed-use projects up to eight stories in height, superior to the subject, warranting a negative

adjustment.

Sales #2, #3, #4 and #5 sold with I-MX-3 zoning in place, which is considered superior to the

subject’s I-A zoning in that residential use is allowed by right, so the parcels could potentially

be redeveloped with a residential or mixed use, up to three-stories, without the need to be

rezoned. Negative adjustments are indicated for this attribute. Furthermore, Sales #2, #3 and

#5 are closer to the station and within areas dedicated for higher density land uses (potentially

up to 8 stories) as identified in the station area plan. Sale #4 is similar to the subject in that

the station area plan calls for moderate density (up to three stories) future land uses.

Sale #6 sold with I-A zoning in place, similar to the subject. However, a negative adjustment

is warranted for potential land use, as the station area plan identifies the area for higher

density residential uses.

Utility Services – All utility services are available to the subject lot in sufficient capacity to

support new development. Comparables examined are similar to the subject for this factor so

no adjustments are indicated.

Parcel Size – Comparables are adjusted based on a price paid per square foot basis. Under

this analysis, it is typical to find that the market will discount larger parcels (i.e., a discount to

the price per square foot) compared to otherwise similar smaller parcels to account for

economy of scale considerations with respect to future development; alternatively stated,

smaller parcels generally sell for higher per-square-foot prices as fixed development costs are

borne by a smaller area so tend to be higher compared to larger properties.



Sales #1 is reasonably similar in size and no adjustment is warranted. Sales #2, #3, and #5

are sufficiently larger to warrant small positive adjustment. Sales #3 and #6 are sufficiently

smaller to warrant small negative adjustment.

The adjustment grid below quantifies the relative differences in features as discussed above

for the subject property. If a comparable is inferior to the subject for a specific factor, an

upward adjustment is made; if it is superior, a downward (negative) adjustment is indicated.

Property Adjustment Grid:

Property Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Sale #6

Address 4475-95 Inca 4149 Jackson 3855 Inca St. 3832 Jason St. 3725 Jason St. 4255 Jason St. 4232 Jason St.

E

Submarket Sunnyside Elyria/ Swansea Sunnyside Sunnyside Highland Sunnyside Sunnyside

Lot Size 9,100 sf 8,333 sf 18,750 sf 6,250 sf 18,750 sf 12,500 sf 6,250 sf

Sunnyside Walking Distance to

Light Rail

Elyria/Swansea across from

Light Rail Station

Sunnyside Closer to Light Rail

Sunnyside Similar distance to

Light Rail

Highland Farther

to Light Rail



Adjustment -15% -5% 0% -20% -5% -5%

Adjustment -8% -10% 10% -5% -8% 10%

Zoning/Potential

Land Use

I-A No

Entitlements

Urban Residential

1-3 story potential

I-A No Entitlements

Urban Residential

2-8 story potential

I-MX-3 No Entitlements

Urban Residential

2-8 story potential


Urban Residential

2-8 story potential


Urban Residential

1-3 story potential


Urban Residential

2-8 story potential

I-A No Entitlements

Urban Residential

2-8 story potential

Adjustment -10% -15% -15% -5% -15% -10%

Utility Services All Available Similar Similar Similar Similar Similar Similar

Adjustment 0% 0% 0% 0% 0% 0%

Scale 9,100 sf 8,333 sf 18,750 sf 6,250 sf 18,750 sf 12,500 sf 6,250 sf

Adjustment 0% 2% -2% 2% 2% -2%

-33% -28% -7% -28% -26% -7%


33% 32% 27% 32% 30% 27%

Interior Lot

50' of frontage

Mostly level

Neighborhood View


From Transactional Adj. Grid

Location

$98.04 per sf $105.65 per sf

Corner Lot

Rectangular with

125' of frontage

Mostly Level

Neighborhood View

$73.47 per sf

Interior Lot

50' of frontage

Mostly level

Neighborhood View

$97.12 per sf $68.78 per sf

Interior Lot

150' of frontage

Gentle Slope

Neighborhood View

Net Adjustment

Gross Adj. from adjusted Price

Adjusted Value Indications

Site Attributes/

Utility

Interior Lot

Rectangular with

73' frontage

City View/

Rail Influence

Corner lot

125' +/- frontage

Mostly level

Neighborhood View

Corner Lot

Rectangular with

150' of frontage

Mostly Level

City View/

Rail Influence

Adjustment Grid – Property Adjustments

$122.01 per sf



Conclusion of Value

After adjustments, the sales form a range from $63.96/sf to $87.84/sf with an average of $72.32 per square foot. The comparables warranted similar gross adjustment ranging from 27% to 33%. Comparables #3 and #6 are at the low end of this range and provide adjusted values below the overall average, indicating a value conclusion below the average as appropriate for the subject. Comparables #1 and #6 sold with the same zoning in place (I-A) and provide adjusted values below the overall average. Comparable #4 is most similar in land use potential (urban residential up to 3 stories) and provides an adjusted value above the overall average. Active Listings – The table below provides a summary of active listings in the immediate area. Asking prices range from $91/sf to $128/sf of land area, suggesting values are increasing in the immediate area.

Address Land Area Zoning/

Land Use Potential Attributes

Asking Price $ Per Sq. Ft. of

Land

4435 Inca St. 20,132sf Land

(7,128sf industrial building)

I-A Urban Residential 2

to 8 stories

Interior Lot 162’ frontage

$1,850,000 $91.08/sf

4001 Jason St. 20,875sf Land

(10,260sf industrial building)

I-MX-3 Urban Residential 2

to 8 stories (seeking zoning

change to C-MX-8)

Corner Lot 167’ frontage

$2,610,000 $125.03/sf

3830 Jason St. 12,500sf Land

(vacant)

I-MX-3 Urban Residential 2

to 8 stories

Interior Lot 100’ frontage

$1,600,000 $128.00/sf

Given the characteristics of the data examined, as well as the attributes of the subject

property, a value indication of $69.50 per square foot is concluded from the assembled sales.

An opinion of value of $69.50 per square foot multiplied by the subject's 9,100 square feet

produces a value indication of $632,450, prior to consideration of demolition expense, and

potential rental income.

VALUE INDICATION VIA SALES COMPARISON

Fee Simple Analysis

Price/sf x Sq. Ft. = Value

$69.50/sf x 9,100sf = $632,450



Adjustments to the Value Indication – Consideration is given to the demolition expense to

clear the site for redevelopment, as well as the contributory value of rental income collected

prior to redevelopment.

Demolition Estimate – The subject parcel is improved with two garage structures, concrete

work and fencing that would be demolished when the parcel is redeveloped Demolition

expenses are estimated from appraiser file data, as well as data published in the Marshall

Valuation Service, and the National Repair and Remodeling Estimator published by the

Craftsman Book Company.

The existing improvements generate monthly rent of $1,500. The current lease will expire on

June 30, 2019; the owner is looking to sell the property so a new lease will not be signed,

though the tenant will be allowed to stay on month-to-month terms. Assuming a one-year

hold, potential income generated would total $18,000 less a vacancy allowance and deduction

for expenses.

Estimated Demolition Expense

Structures Size Cost Per Sq. Ft. Total Estimate

Garages 1,088 sq. ft. $5.50/sf $5,984

Concrete and Site Improvements

Lump Sum $1,900

Total (expense) ($7,884)

Annual Income Estimate

Rental Income $18,000

Vacancy at 20% -3,600

Effective Gross Income $14,400

Operating Expenses -5,000

Net Income $9,400

Net Adjustment

Demolition & Site Clearing -$7,884

Potential Net Income +$9,400

Net Adjustment $1,516



Adding the net adjustment to the previously concluded land value, provides a modified value

indication of $635,000, rounded.

VALUE INDICATION VIA SALES COMPARISON

Leased Fee Analysis

Price/sf x Sq. Ft. = Value

$69.50/sf x 9,100sf = $632,450

Plus Net Adjustment +$1,516

Modified Indication $633,966

Rounded to $635,000

Value Indication of the Parcel via the

Sales Comparison Approach

$635,000



Comparable Sales Maps



COMPARABLE SALE PHOTOGRAPHS

Sale Comp #1 – 4149 Jackson Street Sale Comp #2 – 3855 Inca Street

Sale Comp #3 – 3832 Jason Street Sale Comp #4 – 3725 Jason Street

Sale Comp #5 – 4255 Jason Street Sale Comp #6 – 4232 Jason Street



RECONCILIATION & FINAL OPINION of MARKET VALUE

VALUE ESTIMATION SUMMARY Per the various approaches to value, we find the following value estimations:

VALUATION ESTIMATION SUMMARY Fee Simple As Is

Cost Approach Not Applied Sales Comparison Approach $635,000 Income Approach N/A

VALUE CORRELATION

The land value is determined through use of the Sales Comparison approach. The cost

approach is not considered applicable to deriving an opinion of market value given the

difficulties of determining the cost and contribution to value of shared common infrastructure

improvements to any specific parcel. The income approach is also not used in this analysis as

development parcels in this market area are nearly always sold for development rather than

leased, resulting in a dearth of applicable data from which to derive market rental rates and

capitalization rates.

This leaves the Sales Comparison Approach as the sole methodology for valuing the subject

property. This methodology is believed to mirror the thinking of marketplace participants and

provides the most reliable method for estimating the subject’s market value. In this case, we

have six sales of similar parcels located in the subject’s general market area. Sales #3 and

#6 are particularly suited, being in the subject’s immediate neighborhood, with frontage to

South Delaware Street, and having the same zoning. Sales #1 and #4 provide solid

secondary support for the concluded value indication.

The listing data examined provide evidence of increasing land values in the area; the sales

comparison approach is considered to provide a reliable indication of the subject’s potential

market value.



The value indication concluded via the sale comparison approach is considered adequately

supported and is given all weight in the analysis.






Estimated Exposure Time/Marketing Time

Exposure Time – As referenced in the 2018-2019 edition of the Uniform Standards of

Professional Appraisal Practice (USPAP), Exposure Time is the estimated length of time it

would have taken to achieve a hypothetical sale of the property at the concluded market

value, with consideration to the property interest appraised, and consummated on the

effective date of the appraisal. It is a retrospective opinion based on analysis of past events

assuming an open and competitive market.

The exposure time for the subject is based on the reported marketing periods of a variety of

residential-zoned parcels in the subject’s market area. Marketing periods for eight sales of

are examined and the data is summarized in the table below.

Marketing times for the sales range from approximately one to 13 months; the average period

for the group is 9.7 months. Developers and land speculators are active in the market and

financing has been available to support acquisitions. This trend is anticipated to continue

through the near to mid-term.

Exposure times are typically influenced directly to a property’s pricing; over-priced properties

tend to languish on the market, while properties reasonably priced sell within a reasonable

period.

The estimated exposure time for the subject is tied directly to the concluded market value.

The opinion of value provided is within the range of recent sales, suggesting that if

appropriately priced and actively marketed, an exposure time within a six to nine-month

period is reasonable.

Estimated Exposure Time

6 to 9 months



Property Sale Date

Marketing Period Property

Sale Date Marketing Period

4201 Jackson Street

Denver, 80216

February 2019

12 months

4230 Elati Street

Denver, 80211

August 2018

9 months

333 West Vassar St.

Denver, 80223

February 2019

13 month

3974 N. High St.

Denver, 80205

August 2018

1 month

2650 S. Delaware St.

Denver, 80223

November 2018

6 months

4255 Jason St.

Denver, 80211

March 2018

5 months

3832 Jason St.

Denver, 80211

November 2018

2 months

4211 Inca St.

Denver, 80205

January 2017

10 months

Range: 1 month to 13 months Average: 9.7 months

Marketing Time – Marketing time is the amount of time it might take to sell the property if put

on the market on the effective date of this report. The pace of development remains strong in

the area and both builders and land speculators are actively seeking future development

parcels in the north Denver market area in general. Development is anticipated to remain

active through 2019 and into 2020 and activity could increase was the light rail station near

the subject opens and ridership stabilizes.

The subject parcel has a competitive location for a future development parcel given its

proximity to the light rail station. The prospect for the subject lot to be “absorbed” for a new

development project is good over the short to mid-term. With respect to the subject property,

and with consideration to market conditions at present and anticipated for the immediate

future, the concluded opinions of value are the basis for estimated marketing period of six

to nine months.

Estimated Marketing Time

6 to 9 months



CERTIFICATION STATEMENT

I certify that, to the best of my 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 my personal and unbiased professional analyses, opinions, and conclusions.

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

I have no bias with respect to the property that is subject of this report or to the parties involved with this assignment.

I have performed no service as an appraiser or in any other capacity, regarding the subject property within the three-year period immediately preceding acceptance of this assignment.

My engagement in this assignment was not contingent upon developing or reporting predetermined results.

The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan.

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

My analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

The reported analysis, opinions and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

I have made a personal inspection of the property that is the subject of this report.

No one provided significant professional assistance to the person signing this certification

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

As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute.

______________________________________

James Derr State of Colorado Certified Appraiser (CG01315282), exp. Dec. 31, 2020



APPENDIX ITEMS

Engagement Letter

Copy of ILC

Contingent & Limiting Conditions

Appraiser’s Statement of Qualifications



APPENDIX Engagement Letter - Page 1 of 4



Improvement Location Certificate Completed November 2016



CONTINGENT AND LIMITING CONDITIONS

This appraisal report, the letter of transmittal and the certification of value, are made expressly

subject to the following assumptions and limiting conditions, and any special assumptions and

limiting conditions contained elsewhere which are incorporated herein by reference.

GENERAL ASSUMPTIONS

1. Legal and Title Considerations Pertaining to the Property

- This appraisal is subject to the accuracy of the legal description furnished to the

appraiser. The Appraiser assumes no responsibility for the legal description provided or

for matters pertaining to title or legal considerations, or does the appraiser render any

opinion as to the title, which is assumed good and marketable, with ownership in fee

simple or fee simple interest, as stated.

Unless otherwise indicated, all liens and encumbrances, which may exist, have been

disregarded, and the property is appraised as though it were free and clear of any such

impediments that might affect value.

2. Illustrative Material and Information Provided by Others

- All engineering studies and architectural plans provided are assumed correct.

- Plans and illustrative material in this report may show approximate dimensions and are

included only to assist the reader in visualizing the property. The Appraiser has made no

survey of the property.

- Information, estimates, and opinions furnished to the Appraiser, and contained in the

report, were obtained from sources considered reliable and are believed to be true and

correct. However, the Appraiser assumes no responsibility for the accuracy of such

items, nor is warranty given for its accuracy.

3. Property Utilization

- Responsible ownership and competent management of the property are assumed.

- It is assumed that the utilization of the land and improvements is within the boundaries or

the property described in the report and that there is no encroachment or trespass,

unless noted in the report.

- Unless non-compliance is stated and considered, it is assumed that the property and its

operations are in full compliance with all applicable Federal, State, Local Government or

private entity regulations, laws, zoning requirements, covenants or other restrictions. It is

further assumed that all required licenses, regulations, certificates of occupancy, permits,



or other consents have been or can be obtained or renewed for any use on which the

value estimate is based, unless non-conformity is identified, described and considered in

this report.

4. Scope of the Inspection, Property Conditions

- Only a visual, surface inspection of the property has been made by the Appraiser. The

Appraiser assumes that there are no hidden or unapparent on-site or off-site conditions of

the property or subsoil that would render it more or less valuable, or affect the health or

safety of the occupants.

- Unless otherwise stated and considered, the existence of hazardous materials, which

may or may not be present, was not observed by the Appraiser and the value estimate is

predicated on the assumption that there is not asbestos, urea-formaldehyde foam

insulation, nor any other potentially hazardous materials that may affect the value of the

property. The Appraiser has no expertise in identification of hazardous materials,

therefore we recommend that parties concerned obtain independent investigation by

qualified experts. The Appraiser assumes no responsibility for such conditions, or for the

engineering that might be required to discover such factors. The Client is urged to retain

an expert in this field, if desired.

- Nothing in this report should be deemed a certification or guaranty as to the structural

and/or mechanical soundness of the building(s) and systems that relate to the functions

and operations of the property. Rather the appraisal assumes functions, operations, and

energy efficiency levels are satisfactory and consistent with the age of the property,

unless otherwise noted. The Client is urged to retain experts in analysis of such systems,

if desired.

5. Personal Property

- All personal property, furnishings and equipment, except those specifically indicated,

have been disregarded by the appraiser, unless otherwise noted. Only the real estate

has been considered.

6. Appraisals Made Subject to Completion

- On all appraisals subject to satisfactory completion, repairs, or alterations, the appraisal

report and value conclusion are contingent upon completion of the improvements

according to specifications and as stated in the report, and in compliance with all laws,

regulations and other restrictions, in a workmanlike manner, and immediately.

Represented designs and engineering are assumed correct and adequate.



GENERAL LIMITING CONDITIONS

1. Allocation of Value

- Any allocation of the total value estimated in this report between the land and

improvements applies only under the stated program of utilization. Separate values allocated

for land and improvements must not be used in conjunction with any other appraisal and are

invalid if so used.

2. Possession, Confidentiality, Distribution and Use of Report

- Possession of this report, or a copy thereof, does not carry with it the right of publication.

- Information contained in the appraisal may be utilized by the specified Client, but the

report remains the property of James Derr, Commercial Appraisal Services.

- This report shall not be used by anyone but the Client specified in the report without the

Appraiser's prior written approval, and then only in its entirety.

- Neither all nor any part of the contents of this report shall be used for any purposes by

anyone other than the Client specified in this report, or conveyed to the public through

advertising, public relations, news, sales, or other media, without the written consent and

approval of the Appraiser, particularly as to the value conclusions, identity or designation

of the Appraiser or reference to the firm or appraisal organization with which the

Appraiser is affiliated.

- All conclusions and opinions concerning the analysis, which are set forth in the report,

were prepared by the Appraisers whose signatures appear on the appraisal report. No

change of any item in the report shall be made by anyone other than the Appraisers, and

the Appraisers' firm shall have no responsibility if any such unauthorized change is made.

- Disclosure of the contents of the appraisal report is governed by the by-laws and

Regulations of the professional organizations with which the Appraiser is affiliated.

3. Limitations of the Appraisal Services

- The Appraiser is not required to give testimony or to appear in court due to this appraisal

with reference to the property in question, unless arrangements have previously been

made.

- The contract for appraisal, consultation or analytical service is fulfilled and the total fee

payable upon completion of the report. The Appraisers or those assisting in preparation

of the report will not be asked or required to engage in post-appraisal consultation with

the Client or third parties except under separated and special arrangement and at an

additional fee.



- Liability of the Appraisers is limited to the elected fee for preparation of the appraisal.

James Derr, Commercial Appraisal Services, as well as any employee, agent or officer

thereof, shall be completely indemnified against all losses, claims, damages liabilities,

costs or expenses to which the recipient and/or third party user may become subject.

There is no accountability or liability to any third party.

- Opinions of value contained in this report are estimates. There is no guarantee, written or

implied, the subject property will sell or lease for the indicated amounts.

- Acceptance and use of information in this report in any manner or purpose is

acknowledgment that the entire report has been read by the user and that he agrees with

the conclusion and the data contained in this report.

- The Client agrees to notify the appraiser of any error, omissions or invalid data within 15

days of receipt of the appraisal and return the report along with all copies to the Appraiser

for correction prior to any use whatsoever.

4. Auxiliary Reports and Related Data by Others

- Unless stated otherwise, no auxiliary studies or reports related to the property, such as

surveys, environmental impact reports, special market studies, highest and best reports,

feasibility analysis, or reports regarding modifications to the property for either

compliance with the Americans with Disabilities Act, structural, or other reasons, have

been furnished or reported to the Appraiser by the Client. Data presented with respect to

the subject's ownership, marketing, and income history is as made available through the

Client or readily accessed public sources. The Appraiser assumes that pertinent data is

not being withheld by the Client, the Borrower, or related parties. Provision of such

auxiliary data, or the discovery of it by the appraiser, is beyond the scope of the appraisal

services contracted. The Appraisers reserve the unlimited right to alter, amend, revise or

rescind any of the statements, findings, opinions, values, estimates, or conclusions upon

any discovery or provision of such data or analysis, subsequent to it becoming known to

the Appraisers.



APPENDIX Copy of Appraisal License



JAMES J. DERR Certified General Appraiser Statement of Qualifications

PROFESSIONAL EXPERIENCE:

CURRENT: James J. Derr Commercial Appraisal Services 6655 West Jewell Ave., #217 Lakewood, CO 80232 Phone: 303-462-3299 Email: [email protected]

Term: August 1999 to Present

Services Offered: Commercial, industrial, residential, and land appraisals and consulting. Covering the Colorado Front Range, including metropolitan Denver, Boulder County, Weld and Larimer County.

PRIOR: Valuation Research Corporation

Position: Senior Commercial Appraiser

Term: September 1990 to August 1999

EDUCATIONAL BACKGROUND:

University of Colorado at Denver

B.S., Business Administration w/ an emphasis in Real Estate December 1985, magna cum laude

University of Colorado at Denver

Graduate School of Urban and Regional Planning Completed courses in Real Estate Market Analysis, Environmental Planning, and Urban Planning – 1994/1995

Appraisal Institute – Recently Completed Courses & Seminars

Advance Income Capitalization

Quantitative Analysis

Advanced Concepts and Case Studies Real Estate Finance & Statistics & Valuation Modeling 7-Hour National USPAP Update Course Advanced Market Analysis & Highest & Best Use General Appraiser Site Valuation and Cost Approach

APPRAISER LICENSE & MEMBERSHIP:

Certified General Appraiser License Colorado License No.: CG 1315282 Certified Through December 31, 2020 Designated Member of the Appraisal Institute, ID # 379272

a future development parcel

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