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Home My WebLink About06 Appraisal - Longacres Way Parcel (as of September 21, 2018)Appraisal Report Tukwila Parcels 242304-9034 and -9137 I Tukwila, WA as of September 21, 2018 Prepared for: City of Tukwila Derek Speck Prepared by: Stan Sidor, MAI, AI-GRS KM Job A18-1005 Kidder Mathews Valuation Advisory Services 1201 Pacific Ave., Suite 1400 Tacoma, WA 98402 253.722.1445 I Fax 253.722.1409 ssidor©kiddermathews.com kiddermathews.com October 29.201# Mr. Derek Speck City ofTukwila 5200 SOU[hC8nterB|vd. Tukwila, VVA9O1O8 RE: Tukwila Parcels 342304-G034and '9137 Tukwila, VVA9OO55 Contract#1D-15O Dear Mr. Speck: At your request, | have prepared an appraisal of the above -referenced property, which is more fully described in the attached report. As requested, | have determined the market value of the fee simple estate inthe subject real estate. The undersigned has inspected the subject property and obtained data regarding other similar real estate in the area. This appraisal is has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. Our services comply with and are subject tothe Code cfProfessional Ethics and Standards of Professional Practice of the Appraisal Institute. The intended users of this appraisal report include the City of Tukwila, Lauqor BB LLC, and their representatives. The intended use of this report will be to estimate the market value Ofboth parcels aSiflegally combined into one property, along with the separate market values of each parcel, for internal decision making and marketing purposes, and possible sale negotiation, and may not be suitable for other uses. As a result of my investigation and analysis, | have concluded that the market values of the fee Sirnp|9 interest in the subject real 6St8t8' subject 00the limiting conditions, extraordinary assumptions, and the noted Hypothetical Condition contained herein, are: Market Value, As lf Both Parcels Combined Into One Legal Property (Hypothetical as of September 212018' $8,538,000 Market Value, Lguqar13E3 LLC Parcel only, osmf September 21,2Q18' $4,560'000 Market Value, City of Tukwila Parcel only, as of September 21, 2018: $1,560,000 er �� `� `� Derek Speck RE: TuhvV|8 P@[C8|S Pag8ii The value nfthe two parcels @Sifcombined into one legal property iSbased Onemploying 8 Hypothetical Condition, which may have affected the assignment results. The sum of the parts is not necessarily equal to the value of the whole as if legally combined into one property. The property has greater market value when combined than as separate. Respectfully submitted, StanSidOr, M4lAJ-GRG YVAState Certified General Real Estate Appraiser License No. 11U05O5 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ rt.��tU. U -~ on |certify that, to the best of my knowledge and belief: 1> The statements offact contained inthis report are true and correct. 2> The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and represent my personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3> 1 have no present or prospective interest in the property that is the subject of this report and no personal interest with respect tnthe parties involved. 4> | have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5\ My engagement in this assignment was not contingent upon developing or reporting predetermined results. O> 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 tothe intended use ofthis appraisal. 7\ The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 8> 1 have made a personal inspection of the property that is the subject of this report. 9\ 1 have not provided professional appraisal or consulting services concerning the subject property within the past three years. 10) No one provided significant real property appraisal assistance to the person signing this Certification. 11) The reported analyses, n ininns.andcnncmsionsvveredeve|ooadandthksnaporthaobeen prepared in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 12) The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13) As of the date of this report, Stan Sidor, MAI, AI-GRS, has completed the requirements of the continuing education program for Designated Members of the Appraisal Institute. 1-~ VVAState Certified General Raa Estate Appraiser License No. 1180505 Kidder Mathews Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ . .�. U��U�Un 0 �� "" ..�. U U��u� .�.~°..~° Limiting conditions specific UJthis appraisal are: 1\ The appraiser has made no survey of the property and assumes no responsibility in connection with such matters. Any sketch 0ridentified survey Ofthe property included in this report is only for the purpose of assisting the reader to visualize the property. 2\ | a3SUrne that there are no hidden Or UnGpp8r8nt conditions of the property, SUb8Oi|. Or structures (including asbestos, soil contamination, or unknown environmental factors) that render itmore 0rless valuable. NOresponsibility i3assumed for such conditions Orfor arranging the studies that may berequired tOdiscover them. 3> No responsibility is assumed for the legal description or for matters including legal or title considerations. 4> The iOfonn8d0n identified in this report as being furnished by others is believed to be n8|iGb|e, but nOwarranty iS given for its accuracy. 5) The appraiser iSnot required tOgive testimony O[attendance iOcourt byreason Ofthis appraisal unless arrangements have previously been made. 0\ The allocation 0ftotal value toland, buildings, Orany fractional part orinterest 8Sshown in this report iSinvalidated ifused separately inconjunction vvith@nyothg[@pp[@iS@|. 7\ Valuation Advisory Services is 8 subsidiary 0fKidder K4Gth8wS, 8fUU service COnnnn8rCi8| nao| estate brokerage firm. On ocoaaion, employees or agents of the firm have interests in the property being appraised. When present, interests have been disclosed, and the report has been made absent ofany influence from these parties. RESTRICTION UPON DISCLOSURE &USE: Neither all nor any part of the contents of this report (especially any conclusions as to value, the identities of the appraiser or the firm with which he is connected, or any reference to the Appraisal |OSdtutg or to the MA| designation) Sh@U be disseminated to the public through advertising nl8diG' public relations rnedia, n8vvS rn8di8. So|SS media or any other public nnSonS of communication without the prior written consent and approval Cf the appraiser. NOpart Vfthis report orany 0fthe conclusions may be included in any offering statement, memorandum, prospectus, or registration without the prior written consent ofthe appraiser. Kidder Mathews Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ..................................................................................................... ......... T - of ont nts Letter of Transmittal Certification Limiting Conditions iv Summary of Appraisal 1 Introduction 10 Market Overview 16 Property Description 29 Highest & Best Use 39 Sales Comparison Approach Land Valuation 42 ADDENDUM Appraiser's Experience Data Kidder Mathews Valuation Advisory Services Page v Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 - ............................................................................................................... - Kidder Mathews Summary of Appraisal Valuation Advisory Services Page 1 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ It W� Identity mfProperty King County Assessor Parcels 2423O4-9O34and -9137 Tukwila, VVA9M055 Property Location Between the Burlington Northern Santa Feand Union Pacific railroad hghtS-Of-vv8yalong the south side Of|-405.northerly CfLong8CneSWay, in Tukwila, WA. Property Description The property consists of vacant, undeveloped land in two parcels. One parcel contains 2O2.O63aqft.orabout 4.65acres; the other parcel contains 138.382 sqft. orabout 3.18acres. Onocombined bnsis, the property consists ofasite with 341.245aqft.orabout 7.83acres. The property is zoned TUC by the City of Tukwila. Highest & Best Use As Vacant Both parcels aSiflegally combined: Multi -family residential and/or mixed -use development, based on local market demand LeUq8r parcel: MU|b-hanni|y neSid8nU@| and/or mixed -use d8vm|Opnoert. based nnlocal market demand City ofTukwila parcel: Assemblage with the LmUq8rparcel Intended Users /Use The intended users Vfthis appraisal report include the City cfTukwila, of Appraisal LeuqarBBLLC.and their representatives. The intended use ofthis report will b8tOestimate the market value Ofboth parcels 8Siflegally combined into one property, along with the separate market values Of each parcel, for internal decision making and marketing purposes, and possible sale negotiation, and may not bmsuitable for other uses. Property Rights Fee Simple Estate Appraised Extraordinary None Assumptions Hypothetical The valuation of both parcels as if combined legally as one site Conditions represents oHypothetical Condition, which may have affected the assignment results. Kidder Mathews Summary ofAppraisal Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Approaches to Value Ga|esCompahsonAoproach— As If Combined As $8,530'000 & Final Value Land One Property Conclusions Ga|gaCornpaheonApproaoh— LguqarBBLLC $4.560,000 Land Parcel Ga|esCornpahoonAupr000h— City ofTukwila $1,560'000 Land Parcel The value of the property as if combined into one legal parcel/property iS based Unemploying 8Hypothetical Condition, which may have affected the assignment results. The sum of the parts isnot necessarily equal to the value Ofthe whole GSiflegally combined into one p@rC8|/pnOpertv. The property has greater market value when combined than ifseparate. Date of Report October 29, 2018 Date nfLast 8eoternbor21. 2018 Inspection Effective Date pf September 21.2O18 Appraisal Kidder Mathews Summary ofAppraisal WEN i15 St ,SET ?. dJAi� W/WA Ss ,R 5 6195 (4 FLA.C,TS irx`.:J RfvGP 3 LOT 51?? 1FTER PER PEG. ,NG Ar 94.k'i1 17 11 A [55 ¢i DJUErE ! PARCEL 1 TOTAL PARCe1, ADJUSTEfl "' ARCEL AREA,:. 1.78,3L"1 .A.l. TO NORTHERN RjR e-282,,: _.,.AZ aym- 4 t. `.,.... f,.r--655557" 17 STOF4A# PER Pa r4 45413:r4 Site Survey Leugar BB LLC — Adjusted Parcel 1 City of Tukwila — Adjusted Parcel 2 (North is on the right) Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 7,d 4g' 4,5b7`'f Kidder Mathews Valuation Advisory Services Summary of Appraisal Page 4 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ............................................................................................................. Alpo — Aerial Photograph Kidder Mathews Sun Valuation Advisory Services Tukwila Parcels 242304-9U34and -9137 KM Job A18-1005 ~^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~^~ Subject ��K�� U U�� Photographs �� ~�� K-U U��KK� . �= U U =�� = Lono8CreS � 21 taken looking westerly, subject On right Taken looking northerly from LOng8CrRSWay along primarily City of Tukwila parcel asagll;x= Kidder Mathews AppraValuation Advisory Services Page 6 isal Northerly view from near center OfCity OfTukwila parcel Summary o[ Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ................................................................................................................ Subject Photographs Southerly view from near center of City of Tukwila parcel Northerly view along gravel access driveway on westerly portion (Leuciar) parcel View across site Kidder Mathews Summary of Appraisal Valuation Advisory Services Page 7 Subject Photographs View across site Easterly view along Longacres Way. Subject property on left. Westerly view along Longacres Way. Subject property on right. Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1011Vise* Kidder Mathews Summary of Appraisal Valuation Advisory Services Page 8 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subject Photographs View of site near its northerly boundary. 1-405 in the background abuts the site. Drainage ditch culvert klk aaltAit Kidder Mathews Valuation Advisory Services Summary of Appraisal Page 9 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ..................................................................................................... • • fb Kidder Mathews Valuation Advisory Services Introduction Page 10 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ U � �� ro 0 ^��. � U�� ~°��"~�" ' Identity ofProperty The subject of this appraisal consists of the land commonly referred to as Tukwila Parcels 2423O4-9O34and -8137. The property consists of vacant, undeveloped land. One parcel contains 202.803 sqft. or about 4.65 acres; the other parcel contains 138.382 aq ft, orabout 3.18 acres. On o combined bosia, the property consists of site with 341.245 sq ft, or about 7.O3acres. The property iazoned TUC bythe City ofTukwila. Property Addresses Neither parcel has onidentified street address. The property lies north of LongaoneaWay, south of|-4O5.and between the BN8Fand Union Pacific rail lines, inTukwila, VVA98055 Legal Description The legal description of the subject property is as follows: Ownership History Site History Adjusted Parcel 1 (bsuqar aite)— PAR 1 [)FTUNVV|LA BLA#LO0-O77 REC#20071O119000018DBLALOCATED |NE1/2{)FGVV1/4OF24- 23-04 Adjusted Parcel 2(City ofTukwila site) — PAR 2OFTUKW|LABLA#06- 077F{EC#20071011900001 8DBLALOCATED |NE1/2[)F8VV1/4OF 34-23-04 The property iscommonly identified osKing County Assessor's Tax Parcel Numbers 242304-9034 and 242304-9137. The current owner ofrecord ofParcel 2423O4-SO34iathe City cfTukwila, while the current owner ofrecord ofParcel 2423O4-9137ioLguqarBB LLC. There are nnknown sales ofeither property inthe past five years. The properties are not currently listed for S@|e' though the City of Tukwila is actively soliciting proposals t0develop the larger site, including offers tOacquire the properties. For reference, which will betaken into consideration inthe analysis and highest and best use Ofthe property, the following provides @Ooverview summary of key historic (since 1994) background of the property: � March 28, 1994 City and McLeod O9ve|Opnn8rt Company enter into @ development agreement for public and private infrastructure improvements (City contract number 94-O63). |tcovered @narea that included the parcels currently owned bythe City and L8Uq8r (APNa2423O4-8O34-O2and 2433O4-S137.reapecUve|y). MCL80d'Splan was tDbuild 8nexhibition center. � Kidder Mathews Valuation Advisory Services Page 11 Introduction Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ � January 10, 1996 McLeod Development Company and Boeing enter into GOeasement agreement providing parking 0nBoeing property tObenefit the McLeod Property. |tcovered @narea that included the parcels currently owned bythe City and LeUq8r. � March 12, 1SS8the City approves 8 short plat (requested by McLeod) creating LOiS 1 and 2which are Gportion Ofthe parcels currently owned bythe City and L8Uq8r. Recorder's No. 9803129013 w February 12.20O2the McLeod Development Company signed o memorandum confirming they have abandoned development for onexhibition center and terminating the development agreement with the City. Recorder's No. 2OO2O231OU120D � April 28.2O05Pacific Commercial Properties receives design review Gppn]v8| by Cih/'S Board of Architectural Review (City file number L05-015) and 8conditional use permit byCity'sPlanning COnlnliSsiOO (file number L05-014) to develop 394 nlu|U-f8nli|y residential units and 5.000 sfofretail space. � August 18.2OO5the City enters into 8development agreement with Pacific Commercial Properties (City contract #AGO5'O9O)that included provisions tOexchange property and grant easements for parking. n0o. This agreement was intended to enable the City tomove the Union Pacific tracks tobeadjacent tothe BNGF tracks and for Pacific Commercial Properties to develop a 300- unit mixed use development (Tukwila Station). � November 7.2OOOthe City and Fountain Park LLCenter into o development agreement (City contract #AG08-O87)that was very similar tothe previous development agreement with Pacific CVnnnnercio| Properties. Fountain Perk is e wholly owned subsidiary ofPriunn Companies. Recorder's No. 20061120001120 * May 7.2OO7the City approves mBoundary Line Adjustment requested by the City and Fountain Park LLC that created the lot configuration currently inplace. Recorder's No. 3OO71O119OOOO1 p May 24' 2007 Fountain Park, LLCg[8ntS City certain property (the parcel the City currently owns) related to the boundary line Kidder Mathews Valuation Advisory Services Introduction Pmge12 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ..................................................................................................... ......... Property Rights Appraised adjustment. Recorder's No. 20071011000106 • September 4, 2008 the City and Mastro Properties enter into a development agreement (City contract 08-082) to enable Mastro to vest to development rights previously held by Fountain Park. Vesting ended in 2011. Recorder's No. 20081003000213 • January 5, 2015 the City entered into an agreement to sell its parcel to Leuciar, LLC for a public event facility accommodating at least 15,000 attendees or parking for such a facility. Recorder's No. 20170711000012. Leuciar's purchase option expired in July 2017. This is an appraisal of the fee simple estate. The definition of "fee simple estate" is as follows: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Chicago: Appraisal Institute, 2010. Purpose of Appraisal The purpose of this appraisal is to determine market value of the subject property. The term "Market Value" is defined as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date, and the passing of title from seller to the buyer under conditions whereby: a. the buyer and seller are typically motivated; b. both parties are well informed or well advised, and acting in what they consider their own best interests; c. a reasonable time is allowed for exposure in the open market; d. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and e. the price represents the normal consideration for the Kidder Mathews Valuation Advisory Services Introduction Page 13 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ property sold unaffected bxspecial nrcreative financing Vrsales concessions granted bvanyone associated with the sale. Source: Office ofthe Comptroller ofthe Currency under 12CFR.Part 34.Subpart [- Scope of Work The subject property is appraised based on the following scope of work. � The Sales Comparison Approach was developed tovalue the properties, which consist Ofundeveloped land, with Corridor V@|u@UOn also Connp|Et8d to value the City CfTukwila pG[c8| only. Neither the Cost nor Income Approaches tovalue have been developed. Exclusion ofthese two approaches does not affect the credibility of the appraisal or v8|V8 conclusions. * The research ofdata included both general and specific data. Sources of general data that are included in the market trends and neighborhood description were obtained from various private and governmental sources. � Specific data concerning the subject was obtained from various sources including the City of Tukwila (zoning, site survey, site bockground).and King County (assessed values and real estate Data compiled in the analysis of the land sales was obtained from CoStor. CBA (Commercial Broker Association), as well as Kidder Mathevv3'Ovvnin-house data files. The Sales Comparison Approach iabased onananalysis ofprice per sqDVfland area. The area Vfresearch Vfcomparable land SG|eS was the market surrounding Tukwila, including F(8nU]n' Kent, Federal Way and Auburn. p For the valuation Ofthe Cit/Sparcel, Corridor Valuation methodology has been applied (refer to the report details) w All Ofthe sales data was confirmed with 8party involved inthe tnGnSG[ti0O and/or through public n8DOrdS and each was inspected. Kidder Mathews Valuation Advisory Services Introduction Pnge14 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Intended Use & Intended Users The intended USSrS of this appraisal report include the City of Tukwila, LguqarBBLLC.and their representatives. The intended use ofthis report will be to estimate the market value of both parcels 88 if legally combined into one property, along with the separate market values Of each parcel, for internal decision making and marketing purposes, and possible sale negotiation, and may not besuitable for other uses. Extraordinary None Assumptions Hypothetical The valuation ofboth parcels aeifcombined legally aaone site Conditions represents eHypothetical Condition, which may have affected the assignment results. Date ofReport October 29.2O10 Date mfLast Geotennber21. 2018 Inspection Effective Date of Ggotennber21. 3018 Appraisal Kidder Mathews Valuation Advisory Services Introduction Page15 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 to Kidder Mathews Market Overview Valuation Advisory Services Page 16 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,9-99•99* . • KROLL MAK COHPANK, INC. Regional Map Kidder Mathews Valuation Advisory Services 1201 Pacific Ave., Suite 1400 Tacoma, WA 98402 Kidder Mathews Valuation Advisory Services Market Overview Page 17 e•ion. •v-rvi Introduction Regional Overview Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 The subject is located in the City of Tukwila, in King County, part of the Puget Sound region of western Washington. The core of the market is comprised of King, Snohomish, and Pierce counties. Thurston County is at the south end of the region and Kitsap County is on the west side of the region. The Puget Sound region continues to be one of the best performing areas of the nation. Employment growth was nearly double (93%) the national average in 2017 following 79% higher in 2016, 38% in 2015 and 47% in 2014 and 65% in 2013. Since the depth of the recession in early 2010, the region had added 295,600 new jobs through the end of 2017. Year over year (June 2017-June 2018) has gained 38,871 jobs, a slowing of job growth from earlier YoY results this year. Growth has continued to be strong in the region's tech businesses, but also in the lower wage categories. No significant negative effect resulted from increases in State and Seattle minimum wages. The retail category has done well as retail sales have improved for 29 quarters year over year. Employment growth was 2.8% to 3.2% over the past five years. Forecasts show a slowing to 2.4% in 2018 and 1.0% in 2019. The prospect of Amazon creating a second and equal headquarters would slow their growth in the Puget Sound in coming years, a significant change from the past 10 years. Regional and National Economic Indicators Forecast Annual Change 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Puget Sound Region Employment -4.9% -1.7% 1.6% 2.3% 2.8% 2.8% 3.0% 3.2% 2.5% 2.4% 1.0% Personal Income -1.6% 2.5% 6.1% 4.9% 2.6% 6.2% 4.4% 7.5% 4.1% 4.6% 5.1% Consumer Price Index 0.6% 0.3% 2.6% 2.5% 1.3% 1.8% 1.4% 2.2% 3.0% 1.9% 2.3% Housing Permits -50.1% 31.5% 11.9% 51.8% 8.9% 16.9% 22.5% -4.9% 8.5% -7.1% -11.2% Population 1.5% 1.0% 1.0% 1.3% 1.4% 1.4% 1.7% 1.7% 1.5% 1.4% 1.2% United States Employment -4.4% -0.7% 1.2% 1.7% 1.7% 1.9% 2.1% 1.8% 1.6% 1.5% 1.2% Personal Income -1.7% 3.7% 5.1% 4.2% 2.0% 4.4% 4.4% 2.4% 3.1% 4.5% 4.9% Consumer Price Index -0.3% 1.6% 3.2% 2.1% 1.5% 1.6% 0.1% 1.3% 2.1% 2.6% 22% Housing Starts -38.4% 5.6% 4.5% 28.0% 18.7% 7.8% 10.7% 6.1% 2.8% 8.6% 2.9% Source: The Puget Sound Economic Forecaster, June 2018 With the strong employment growth and geographic constraints, the region is in demand for national and international investors. Apartments remain at a plateau at the peak of the cycle as prices continue to increase even as a large number of new units were delivered to the market and rent growth has started to moderate. Most of the office based employment growth has occurred in the Seattle and Bellevue CBDs in King County, Kidder Mathews Market Overview Valuation Advisory Services Page 18 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Population Employment and these two markets have seen the bulk ofnew development. Industrial real estate has strong occupancy and high prices with institutions looking for traditional warehouse product and owner users dominating close -in Seattle markets. The natoi| market iastrong in core trade areas. Daily needs retail —food and drugs —is the strongest sector. New home inventories are low and infiU construction is active. During the past 40years, the population 0fWashington has grown bv@n average ofapproximately 2OY6per decade, according tothe Puget Sound Regional Council (P8RC). The five counties that comprise the Central Puget Sound Region and account for 59%OfWashington's 2O1O population (7.427.57O)experienced 8population increase Of13.796during the previous decade. The F8giOn'Sg[Ovvh rate was 1.7% in 3018, 2.0% in 2017. 2.2% in 2010. and 1.6% in 2015. with in -migration fueled by job growth. The |0vvH[ pOpu|@UOD growth in 2018 nlirn3nS the slightly |Ovv8[ year over year region wide growth rate ReOk]n@| grnp|Oynlert is at an 8U-Unle high, well above the previous high |n2O00. The recovery began in2011. Year over year region wide employment growth for June 3U1Owas modest @t1.8%;1.9%inKing, Snohomish and Thurston, 1.796 in Pierce and 0.396 in P(itSGp. Non'FamnEmployment Jun-17 Jun-18 Jobs Unemp. Jobs Unemp. King 1.182.631 3.0% 1.204627 3.7% Snohomish 403.384 4.3% 410.048 4.0% Pierce 301.044 5.2% 308.585 5.1% Thurston 126.822 4.8% 128.107 4.7% Kitaap 115.308 4.896 115.600 4.696 Region 2.220.087 4.396 2.258.957 4.1% Source: Washington State Employment Security Department In the individual projections, King and Snohomish showed the fastest recovery. Pierce and Thurston took more time with the cutback Of government jobs kicking the rate back up in 2012. In January, State Farm announced they will beleaving Tacoma bythe end Of2018. 1.400jOb3 will be |VSL although OOO of these are relocating 03 DuPont, SO overall, @ net loss 0fO0Ojobs inthe County. Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ UNEMPLOYMENT RATE HISTORY � King �—Snohomish —Pierce �—Thurston—Kitsap —Region Source: Washington State Employment Security Department The unemployment rate has |Rvg|Od off but [8rnGins near -historic |ovv levels that continue b}decline, moderated slightly hvthe return h]the labor force ofthose persons uncounted (unemployed but not actively seeking employment) and Under-ennp|oy9d.both Ofwhom are not reflected inthe current calculation. Amazon has been the biggest Sing|8C0ntribUtOrhD9nnp|Oyn)8rtgrOvth. The company's employment inthe state iSabout 45,OOO'with more than J0.00Ointhe Seattle CB[). Amazon continues tohire and fill office space. That plan was underlined bythe completion Cf twO1.1 million Sqft office buildings for its Ovvn use, the starting of third, and additional |eGSeS Signed for over for 1.35 rni||iOn nq ft in other Seattle projects. As mentioned above, Amazon ianow finalizing the selection ofasecond headquarters location. Amazon plans for Seattle and the new headquarter site will house about 5O'OOOemployees each @tbuUd-OuL Microsoft had more local employees at47.113osofJune 2017and their growth rate is positive, but slower. Amazon's created atech hub in Seattle that has now prompted significant local expansions byFooebook. GooQ|e.Tob|eou. ZiUovv. Apple, eBeyand A|ibaba. The region's largest employer remains Boeing with e total of85.829 in Washington @SOfthe beginning OfJanuary 3D18.down nearly 5,3OOjobs in2O17. Almost all Ofthose employees are inKing, Snohomish, and Pierce counties. Boeing 8rnp|Oyrn9nt was 0.396 of the r8giVn'S total in 1987. This had declined tO3.O%@SOfDecember 3O17(the company now will report employees bystate only 0nanannual bosis). There isless hope of future growth as Boeing continues to diversify in other states. Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Economic The finance, insurance, and real estate (F|FlE)and construction sectors Indicators have recovered as commercial and residential construction continues to expand. Manufacturing losses were led bythose Boeing jobs, with 8 myriad Ofsmaller companies cutting back bysmaller amounts. Many of those Boeing jobs have now been lost. Retail job gains follow the increases iOretail sales volume. Sales growth continues its fifth plus year ofincreases with 8 robust gain in 2018. Growth was strongest in 2014. tapering slightly in 2015GDd again in 2016. Retail S@|gS in 2017vverg up 0.5%. and also Up9.7% through the first three months of3O18. Washington State Retail Sales ($,000) umo mxr xma 2015 *m* 2013 um, 2011 4o 41,415u90 38,412»20 35,933,056 33,372,2531,1/2,889 29,435,885 27,8e,822 3u 41J10.158 38/49/,518 yo,wo/m/ 33,249,625 28,788,875 28.*6,782 27,293,863 2o 38.657.150 36.795.596 33.883.425 30.973.320 28.998,096 26.803.035 25.613.078 10 37.550.231 34.215.275 32.364.*27 29.712.715 27.2*8.916 25.985.522 24.028.170 uu.o^o.oau Total 155.e97.//3~146.070.061,135.374.283 124.844'113'114.945.382~109.033.872~103.7*0.82e Source: Washington State Department of Revenue Personal income increased onaverage of4796between 2O1Oand 2O1O. spiking atO2% in 2014@nd dropping tU4.4% iO3O15, but increasing tO 7.5% in 2016 before settling back at4.1% in 2017. The forecast for 2O1O is to be slightly higher gt4.0Y6 and 5.1Y6 in 2019. These gains are amplified by |Ovv iOO@UOO, which averaged 1.9% Over the p@Si five years. The CPI did inCr8@S9 3.0% in 2017. and then back to the 1 .g96 average increase in3O18and uptO3.3%3O19. Regional Housing The housing market has shown varying levels nfrecovery, based on Market location and phog point. Sales started Uorecover in2012with a2OY6 increase inKing and Snohomish Counties. Pierce County remained soft, increasing only 3.5%' reflecting G lack Ofjob growth. V@|ugS also first started torecover in2012. These trends have continued through 2O17. Median prices inKing County increased by144%over 2O10'with new hOnn8 S8|8S up 7.1% @nOhOrDiSh was up 13.0% (8|SO up 8.6% in new home sales) and Pierce gained momentum, Vp11.8%(up 2O.8Y6innew home sales). Smaller increases were experienced inKitoapand Thurston oVVnU8S. Sales volume in December 2017totaled $3.34 billion, Up 15.2% from one year ago. Sales volume iOMarch 2O1Owas $3.30billion up9% from one year ago. This growth isacross the board, felt inall five counties. Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Case-Shiller Home Price Index ---Seattlewetropoman Regionn&PICasonmner Home Price Index 160.00 National 20-City Composite �_� 100.00 ---- ' �--�-- -- ' -�-----�-- Standard &PoOr'sC8S8-ShiUerIndex improved for each month since May 2012except for some minor seasonal dips showing 1O.3%average annual appreciation between 2O13and 2O17. Prices surpassed the peak reached inJuly 2O07inMarch 2010. AS0fMay 2O18.the Seattle index was 257.1S'up14.2%over the past 12months and now 31.0%above the 2007peok. The national prices are also increasing and are now back to 4.8Y6over their 2OO7O.2Y6peak, showing S.096improvement over the past 12months. Improvement was stronger inSeattle's close -in neighborhoods and onthe Eestsidearound Bellevue. |nthose markets, inventory |evg|S are |Ovv, but very recently are increasing, reducing pressure onprices. Housing -permit activity increased bv18.9%in2O14and 32.5%iO3O15, then dropped -4.9% in 2010. Activity picked back Up in 2017. increasing by8.5%. That trend iSexpected iOreverse in3O1Oand 2O18'falling by- 7.1% and -11.2% respectively as single-family and rnU|ti-f@nni|y developers work through projects already in the pipeline. Slowing those starts are the forecasts of decreasing employment growth and increasing interest rates. Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Commercial Real Estate Markets The region ranks inthe top five national investment markets. Class Acore GpGrtrnBntS. Off\D8. retail, and industrial properties are all still high On the institutional buyers' list. Demand continues although pricing has become somewhat more cautious. Vacancy rates in the region are as follows: Regional Vacancy Rates -August 2018 Segment Seattle King Pierce Snohomish Kitsap Thurston Oflina 6.5% 7.0% 81% 7.4% 7.5% 3.8% Industrial 1.9% 2.9% 3.396 3.6% 0JY6 2.5% Apartrnent 5.5% 5.5% 3.8% 4.0% 4.3% 4.3% Source: CoStar Rent growth inthe apartment market has moderated over the past three quarters, but buyers remain active and prices strong increase oscap rates [GnlGin very |Ovv' tied to |Ovv interest rates and the |Ovv perceived risk. This will b8tested 8snew construction deliveries peak in2O19/2O2Oinboth the apartment and office categories. The apartment market continues to expand with nearly 1S'OOOunits under construction iOthe region. The bulk of those are inlarger projects intheoreooroundthe8eatUeCB[}.but development has increased inthe suburban markets oawell. The office market has seen most demand inthe core markets like Seattle and Bellevue CB[}S. Amazon iSbuilding for itself and remains one Ofthe top lessees oswell for Seattle. Developers are building space for Focebook.Goog|e.and Tableau, with projects inGea1Ue.BeUevueand Kirkland. Industrial leasing isstrong. After 8slight slowdown inthe 1s'quarter Of 2018, it picked Up significantly in the 2m`quarter. Rents continue to increase. Retail has shown improvement, with vacancy down and rental rates moving up in stable and strong trade areas. Both industrial and nSt8i| markets have been buoyed byincreased retail sales. The lodging market saw improvement, reflecting the tourist draw Ofthe region and strong conference business. However, occupancy rates are beginning tndecline slowly inareas with rapid hotel development. Long term, each S8{t0['Sexpansion iSlimited hyavailable land, Gmajor n88S0n that investors rank the region so highly. Investors have begun t0back off Onsome pricing parameters with fewer rent spikes and increased terminal capitalization rates as eventual interest Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ rate growth iSacknowledged. That factor will likely have Gneffect On going -in rates otthe next increase osthe previous one was absorbed via lower equity return. Many investors do not plan to repeat that adjustment. Area Market The long-term outlook for the region continues tobebetter than most Summary markets nationwide. The recovery has been strong for five years. Job growth in 2017was 2.5Y6following the 3.2%growth in 2010. Additional growth iSforecast but the anticipated rate will belower in2019and much lower in2020. Retail sales have increased between 0.5Y6and 8.0Y6per year between 2O14and 2017with 20178t the low end Of that range. Through the first quarter Of2O1Opicked some Ofthat slack showing @n increase nf9.796. The region isexpected tooutperform most ofthe nation, based OOthe diversified core Ofthe economy anchored bv Microsoft, Amazon and Boeing. Even though Microsoft and Boeing shed jobs in2O14and 2O15(and Boeing again in2O16and 2O17).those losses were covered bythe growth OfAmazon and other tech companies. The impact ofAmazon's second headquarters onthe regional economy remains tObeseen, but itiScertain tOmoderate growth. Most of the local naa| estate rnarhgta any in some level of ascendance, or extended peak -plateau. Apartments remain perched atohigh plateau. Pending supply iS8major COnCern8ndth9r88r8SOrn9inidG|SignSOf vacancy increase and flattening rent growth. Still there are limited signs Of any significant descent any time soon. Investment activity continues tO increase primarily inthe best quality properties inall categories by institutional investors. Sales have increased inthe value -add sector ofthe office, apartment, and retail markets as the returns available on Class properties are squeezed byhigh demand. Slowing job growth iO2O18will test the apartment market since glarge number Ofunits are scheduled for completion in2O18U]2O19. This should have less effect onthe office and retail categories where demand for space tends tolag job growth byefew quarters. The real estate markets inthe region have solid fundamentals due tothe broad -based 8COOOnly. Kidder Mathews Market Overview alLat:;- 9aTac ort Prk , Family Fun Center Park , 4 Tukwila Park Tukwila "1144itettri.'%;4!‘ 4.,littitT0,14,61-4-idat iiitt..-J 1 G'reeig akar Blvd--.J.: Seutitcentettcitviali 1; I Srridr tt,triitiltPtette`itttt' l'ilifild4s7,Blvdr.==L, —1,- - upia-ffii,DF11 ! ! i i ttotetotu- Dr I I t ( 4 „ fi Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 1 ** Gta(14-- kIa 1 8 Boeing Longacres Industrial Park Neighborhood Map Kidder Mathews Valuation Advisory Services W-34-tti-St If3°-St Renton S.Wttt3t1Ittats,==tiVItI Wztzttst-,,,,tt..=-1 Kent Market Overview Page 25 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ wh 6 Introduction ��" �� ~^^ ^~°~^ 0 ea . c%��rU t. Uon The subject is located in Tukwila, WA, aonOSS 1-405 from the BuUwiOWg'S Family Fun Center and less than 3/4nni|enortheast ofthe 8outhmenter Mall at the northern end Ofthe greater Kent Valley. The property lies between and iSbounded byrailroad track lines; near the southeast corner nfthe larger site area isthe new Sounder station recently constructed. Generally, the subject's neighborhood boundaries are defined as follows: North 1-405 South G.1OOmSt. East GFl1O7 West 1-5 Neighborhood The site is located in the Citv's SnuthoonUyr District (Oictrict), which is o Overview major regional commercial hub that attracts millions ofpeople every year for work OrtO enjoy shopping, dining. and entertainment. The District is also one of the negion'e designated urban oentgra, which are areas intended for 8concentration Ofjobs and housing. The District iSseeing its first urban style growth with the recent Opening of the nineteen story Hotel |Oteru[b8nAAi[nlG[kApGrtnleOtS building, which is now the tallest building between Seattle and Tacoma. The District is anchored by Westfield 8OUihD8nt8r, which is the largest mall inthe Pacific Northwest and houses hundreds ofretailers including Nordstrom, Apple, and Uniq|o and dozens of restaurants, including [)iO ToiFung.Joey's.and K4octozurna's. Near the mall are many other restaurants and retailers including Odin 8revving, Araahi Rannen. and MiyabiGU3hi. The area has many unique entertainment venues such 8S ACME Bovv|, Family Fun Centgr, Flying Circus, Foster Golf Links, |-Fly Indoor Skydiving, the MuS8Unn of Flight, Round One, Starfine (the rmg|on'slargest soccer complex and home tothe Seattle 8eem/n|ves major league rugby), and Virtual Sports. The District iSserved byLA Fitness and by the Green River and Interurban trails which offer miles of vv8|k and cycling. The Westfield SOuthcentgr Mall is 8 3.35 nliUiOO Sq ft regional nl@U located at the southeast quadrant of|-5and |-4O5and anchored by Nordstrom, Meny'n, 8eons. Ponney's and o new Asian grocery. Over the past decade O[more, retail uses have begun tOspread south from the " Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ nlGU to areas formerly dominated by office park and light industrial uses. Most major retailers present inthe Puget Sound region are represented in the 8outhcentgranyo. Areas south and east cfthe retail district are now dominated bvoffice uses aaincreasing land values lead tumore intensive development. This i3the result Cf@recent trend Ofemployers moving hDthe South King County area due tOits lower cost Ofdoing business and convenient oonmns to major employment centers in Tanonno. Seattle, and Bellevue. Tukwila iSexpected tnexperience continued population growth because of its access to major employment centers. The subject is situated roughly within the northeast quadrant of the I- 405/1-5 Interchange. Tothe west and southwest are office buildings and several hotels. The GOuthC8Otermall and additional retail destinations are further west across the Green River. Tothe south ofthe subject ia the rail station and offices followed byindustrial uses. {]nthe east side Ofthe tracks iSthe Boeing campus including training and flight services. The Tukwila Transit station has recently been completed and serves both Amtrak and the Sounder and islocated directly opposite SVV21*St. from the subject. Development History The former LongoonssRacetrack located east cf the BN8Frailway was o & Trends horse racetrack that operated from 1933to1992. |twas the home of thoroughbred racing inwestern Washington and was the longest continually operated track Onthe West Coast. The land was sold k]the Boeing Company and the track closed inSeptember 1992. The property is now developed with the Boeing Training and Flight Services center used tOprovide training tO pilots and other aviation p[OfgSSiOnG|S. North of the subject iS|-4O5and beyond that iSthe Family Fun Center, a family -oriented amusement park. Overall, the immediate neighborhood is nearly fully built -out with 8 mix Ofcommercial US8s, however the recent addition of the Sounder Station might affect some of the uses going forward. Directly south and southeast ofthe subject iSthe Tukwila Station for the Sounder commuter train providing service from Tacoma k}the south b3 Everett tothe north. The Sounder operates onaBNGFrailway. Amtrak also uses the station. The station originally opened inFall nf2012.and has recently completed most construction adding G39Ostall parking lot and bus shelters. Kidder Mathews Market Overview Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Development in Process Conclusion completed or are in various stages of the development pipeline: ° Hotel |nterurban/AirMarkApartments —223Andover Park East. This is 19-St0rybuilding with 37Oapartments and 185 hotel rooms. Completed in2O1O. w VVood8phngSuites —15037West Valley Highway. Opened in 3018. * MarveUe-415Baker Boulevard. Under construction. Developed by AJ|ionm* Residential. 166 residential units for active seniors (55+). 8O|d in 2018fO[ $4.2 million for 53.000 Sf |0t and building (that was demolished). * TrubvHilton —S2unit hotel. Received City design [evevv approval. Parcel 2023O49O75-62.00Osquare foot parcel sold in 2018 for $2.9 million. ° Element bvWestin —177room hotel. Received City design review approval. Parcel 022340-0070. ° Alliance Residential Assisted Living — 156 units. 112 Andover Park East. * Fairfield Inn & Suites — 15470 Nelson Place. Six -story hotel with 100 guest rooms. In pre -application stage. Vietnamese Martyrs Parish —08O1 South 180th. Recently submitted plans k]renovate and add 0]existing church. Approximately 9O.000total square foot Ofnew and remodeled church. The outlook for the greater Tukwila are and surrounds isgenerally poShUvg' given population growth, excellent access, and the continuing transition from industrial tOretail service and office uses and the expanding residential base. The subject neighborhood iaexpected to remain 8desirable location, and should provide good support for the subject use. Kidder Mathews Market Overview Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 - ..................................................................................................... 1 ......... - Kidder Mathews Property Description Valuation Advisory Services Page 29 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 001 9 1 e nQCfles Parcel Map Kidder Mathews Property Description Valuation Advisory Services Page 30 I UNION PACIFIC RAI 13,29t 1.'S OLP r i_TPASKSd" ,3117Vdt, VOWED fo. 6416.5,9, 58171 St RE. PK nAK my r- , wAmskarn 0: : 1 Pis, rsgif, zi 4 1 14. N,AaS IV4. *%..1 FROPOSED rn = LOT ME tArddi 1 1 AFTER Ail&M UM r Pdtd 333 (RE&PAMT FARR 25S, E511959, u PEPE'S SEE 33ca331 & urtury OWE PEP NEC NO. . Earr. pEp K a i ADJUSTED PARCEL 2 L____Lzw___ 9609130568 , No. 910723/527 i — ---_,, 72,_ '.&''= ''= 7''= "Z= MEP& TAMS S.E_ TO(AL PARCEL J - 710.111022._ E, 74r:29 R1 :2 L1 R-dd 2 52674 .7 - Ad&d413AL&L-- BURLINGTON NORTHEN RIR 1411 &LOOT OEMS MALT (WARMER& PACAFM,1 -85 l'441:[(L172- PEP pEc. NO'S 73P31131527 & MEd EU T .59 WORM ELM CESIT , PEP WPAI ed NOS LLT&5VE1, 940330159. & 94555i3 3313 6f.-14(.`AGO., utiovivicrE & sr. R.327 A9 6.-335.112 6-2'44'1o' .1/a DARIA& 202„8,55 36R1,5SF0, 1" LI --L 107.14,E i& R1.-=425312,89.34`91 d:..-11' :!FLaTd:dSiSdP. Edil1111-17L-FEC 68.1 5" 1AJUSTED PAERJETNO 1 2. STNOM11550 \TOTAL OT 1221Npa5E0.75.,- ETINEOFTNE n. ALL LEN-'5 Or 8ADRASTunT 13E02-,;\ 5 6 - '\72------ 2,!_ V - .46 -15, SLONIN DRMS ERA( JRJR EEC. '33 13554133153 t - u ry y 3 5132 Leuciar BB LLC Adjusted Parcel 1 City of Tukwila — Adjusted Parcel 2 (North is on the right) Kidder Mathews Valuation Advisory Services Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 AMEESTA4ENTRF Property Description Page 31 LA, MOE' dARRES — \ \ \ -- \ \ 31.1E21E217 5-50315- \ - -- \ . • • • Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ �a ^ ~" 0 r � scrU t. Uon Site Description ' This appraisal includes two parcels, one ofwhich iaowned bvthe City nf Overview Tukvv|a, and the other by bauqar BB LLC. They will be appraised both individually, and as if combined together into One larger site ("the PROPERTY ADDRESSES/ LOCATION SITE SHAPES, DIMENSIONS & LAND AREAS Neither parcel has anidentified street address. The property ialocated between LOng8CnSSWay Unthe S0Uth. 1-405 On the north, and between two n3i|n}8d track lines On both the east (BN8F) and west (Union Pacific) sides of the property, in Tukwila, WA 98055. The overall site area isslightly irn»gu|orinshape. The Cit/aparcel iao ourved, nearly -rectangular shaped parcel, while the LeuqarBB LLC parcel has enirregular shape that narrows otits northerly end. Refer to the site exhibits shown 03visualize the site shapes, including 8 Site Survey as prepared byEaaiaide Consultants, Inc. in February 1998. This survey is the basis for the site 8n88S delineated be|Ovv. which | have relied OO for this appraisal (and which site GnS@S are consistent with those shown on the King County Assessor's records for each parcel). Together, the site area contains 341.245aqft.orabout 7.84acres. The Cih/'S parcel contains 138.382 Sq ft. Orabout 3.18 8cr8S. while the LeuqarBBLLCparcel contains 202.853aqft.orabout 4.66acres. Together, these parcels have about 296.42ftoffrontage along Long8CnesWay Ontheir southerly ends, with the City porCo|'swidth and frontage consisting nf1OO.38 ftand the LmuqarBBLLCporoe|'swidth and frontage consisting Cfabout 1S6.O4ft. Combined, the site narrows tOabout 125.8Oft onits northerly end (10O.02 ftCity and 25.88ftLeVq8r BBLLC). The City'Sparcel has @Oeasterly site boundary Ofabout 1.4O1.80ft.the LeuqarBBLLCparcel has owesterly boundary ofabout 984ft'while the shared nlidd|8-Of-th8'Siteboundary (east side OfLeuq8[ BB LLC site and west aide of City site) is about 1.36571 ft. For the City parcel, refer all to Easements regarding a storm drainage easement along the easterly side ofthat parcel. STREETS, ACCESS a The site fronts along the northerly side ofLongecpesWay, apaved city EXPOSURE local access street with room for one lane each ofeast-west traffic flow. The Citv'aparcel has anaccess easement over the Lguqarparcel. There is no improved street access from the east and west sides of either Kidder Mathews Property Description Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ site, nor from the north end ofeither site. Presently, @ gravel driveway has been created onornear the westerly side nfthe larger site area (on the Lguq@rBBLLCp@rCe|)'which extends from the south side Ofthe site tOnear the northern end Ofthe site. While this driveway may provide Or allow some on -site accessibility during any development Oron-site construction, itlikely would beremoved orreplaced for final site development. Freeway Access: The District where the property islocated includes the intersection Of 1-5 and 1-405. which is the busiest interchange in Washington State. The site iaadjacent to|-4O5.with nearby vehicle access. Airport Access: The District where the property iSlocated iStwo miles from S88TaCInternational Airport and King County International Airport (Boeing Field). The site is readily accessible to GauTocAirport via transit. Transit Access: The site has excellent transit access. |tlies across the street from the Tukwila Sounder StGtiOn, which is Served by 13 GOuOd8[ commuter trains between Seattle and Tacoma/Lakewood each way every weekday, which offers e2O-nninUteride b}and from downtown Seattle. |tioalso served byAmtrak Cascades with service between 800tUe and Portland and Amtrak Coast Starlight with service to California and VGnCOuv8[' BC. The Sounder station is also served by King Cnunty's Rapid Ride F Line providing frequent service between Burien and Renton with stops in between, including @tthe Tukwila light [Gi| station. The site is 8 1O-nninutewalk tO King County Metro bus route #15Uwith frequent service tqdowntown Kent and downtown Seattle. It is also the |OCoUOn for stop on the future bus rapid transit that will be built along 1-405. Exposure to/ofUla property is from LongeoreG Way, 1-405. and both railroad lines. TOPOGRAPHY & SOIL The site iegenerally fairly level and stornear grade with LongooresWay CONDITIONS (about3 ft above street gnada). |-4O5and both ofthe abutting railroad track lines lie well above the grade of the Site. There is 8 ditch running most ofthe length Ofthe property along the east side Ofthe site (refer again to Easements regarding the storm drain oesmnnmn0. | was provided acopy ofa2OO5(August 3>Geotgohioa|Engineering Report for the property, as prepared by Associated Earth Sciences. Kidder Mathews Property Description Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ VnunES ASSESSOR'S INFORMATION EASEMENTS, ENCROACHMENTS, COVENANTS & RESTRICTIONS According b]this report, the site can bgdeveloped using pile foundations and structural floor slabs. Otherwise, soil conditions are assumed adequate U]support the development Ofthe property tOits highest and best use, 8Slong 8Sthe development conforms with the recommendations bythe genteohnioe|engineers. |tioalso noted there are some mounded soils OO portions of the site, which | understand will be removed for site development. Public UU|UdeS including natural g8S, e|8Ctriohv, t9k*phOn8. water and sewer are available to the subject site from along Longacres Way. The Cit/S p8rC8| is currently owned by public entity, and UlUS has not been assessed and iaexempt from property taxes. Miscellaneous fees totaling $201.28apply tDthe City'S parcel for 2O18. The 2O18assessed value (land only) for the LeuqarBBLUCparcel ia $3,550,1100, and taxes and fees total $48,216.45. | was provided with 8n/\LTACommitment For Title Insurance report for the Citv'Sproperty (which does not include the Lguq@rBBLLCp@rC8|)' as prepared by Fidelity NGUOnG| TiU9, under their Commitment No. 8111S5951.dated asnfSeptember 20.2018. The report identifies o number ofvarious easements and agreements that pertain tothe property (refer tnthe title report and recorded donunnents). | have also referred tothe ALTASite Survey, which reflects some easements, in particular o15ftwide storm drainage easement that lies along with easterly side of the City'oparcel. |tdoes not appear that this easement, or other noted g@Sgnn8OtS' negatively impacts the Ov8r@|| utility Orthe highest and best use of either the City parcel orthe larger property. Some ofthe noted title exceptions have been, orwill be, addressed hv the City, according to their representatives, in order to ensure transfer of clean title: Exception No. 21 reportedly does not pertain tothe subject site, and the City will ask that it be removed; Exception No. 22 will he removed, since the City owns the parcel; and Exception No. 23will bg cleared by the City. Special Exception No. 14 pertains to a parking easement for up to 750 vehicles onpart ofaBoeing property (LongaorgoPark) that benefits the property (both p8[Ce|S),and which will be taken into consideration inthe analysis. Noother easements, encroachments, covenants, orrestrictions were Kidder Mathews Property Description Tukwila Parcels 242304-9U34and -9137 KM Job A18-1005 ~^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~^~ ZONING AND DEVELOPMENT STANDARDS noted that might impact the use, nn@rhqt8bi|itv or value of the subject property. This report assumes that there are nounusual easements, restrictions, covenants, or encroachments that have a negative impact on the use, value or marketability of the property. The property is zone TUC; Tukwila Urban Center, by the City of Tukwila. The TUC-T(]Ddistrict isintended toprovide omore compact and vibrant mix Ofhousing, office, lodging, and supportive retail and service uses. Examples ofpermitted uses are: offine, multi -family and mixed -use residential, townhouses, lodging, commercial indoor recreation, general retoi|, personal aervicea, athletic/health c|ube, reatauronta, daycare oentSrs, commercial parking (day use On|y), vehicle rental and Sa|8S. educational/instructional facilities, and convention/exhibition facilities. See TMCChapter 18.28for detailed zoning regulations and acomplete list ofpermitted uses. Kidder Mathews Valuation Advisory Services Property Description Poga35 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ FLOOD ZONE |n2O14.the City adopted the SouihomnigrSubarea Plan and updated the development regulations for the TUC Zone. Aspart ofthat work, the City nOrnp|q0Sd an area wide environmental ngviGvv. This means that development proposed inthe TUC will not b8subject tOenvironmental review and project speoifio8EPA-bosedodrninintretiveorjudioia|appeo|s aalong aacertain criteria are met. The criteria ensure the proposed development inconsistent with the 8outhnenterSubarea Plan and that the impacts were already considered inthe Plan Update. The complete description Ofthe criteria and 8consistency checklist isavailable in Tukwila Municipal Code (TK4C) section 21.04.105which iaavailable On the Citv'SvvgbSite. Maximum building height without iOngOUv8S is 45fe8t. Heights can be increased 0o7Ofeet when the developer provides frontage improvements. Heights can beincreased tO115feet when developer provides frontage improvements in CVnlbin@UOD with either multi -family hnusing. LEE[} oertificoUnn, or affordable housing. 8eeTIVIC 18.28.070 for additional information Onthe requirements for the height incentives. Minimum setbacks for front and side yards are 15and 1Ofeet, respectively. {}ff street perking requirements for office and retail are 3 and 4stalls per 1.O00sqftusable floor area, respectively, whereas TOO housing requires 1 space per one -bedroom unit and 2 spaces per two - bedroom unit. According hothe Flood Insurance Rate Map No. 53033COS78F.effective May 16'1S95'the southern �44Cf the subject site iSlocated iOZone AH' 8narea determined k}be0fhigh flood risk, the remainder iSlocated within Zone >(. an area outside the 100-y9arf|OOdp|8in. This nn8p is currently in effect. As 8 significant portion of this site lies within Zone /\H, 8 Special Flood Hazard Area, new development onthe site must receive eFlood Control Zone Permit issued bythe City ofTukwila. Permit requirements can bm found atTIVICChap&er1O.52. FEMAiSrevising the flood maps, and itiSpossible the designation will change once the new maps are adopted. Contact FEMAfor more information Onthe map revisions. Kidder Mathews Property Description pnopsRr/Aoomsno: 47 2224182P Tukwila Parcels 242304-9U34and -9137 KM Job A18-1005 ~^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~^~ (5NUNE.',_o,n FLOODSCAPE ZONE ux' wt Ih, �,C,APF7"� * Map thimbm, w~,wmm `==k.° STDD°0i,ex z EARTHQUAKE ZO NE The International Building Code 0BC\iathe newly adopted building code in Washington State. The |B{} uses a new parameter called the Seismic Design Category rather than seismic zones used inprevious building codes. The Seismic Design Category is a function of three panarngtgna: ground motion, soil type, and building occupancy. The typical Seismic Design Category in the Puget Sound is category ''[}^ or greater, but because these parameters interact, this category can vary. The higher the category (AiS |OvveSt, F is highest), the more stringent the structural requirements. Aothe appraisers donot possess the expertise inseismic, structural &gmo&anhnica|engineering, further analysis isrequired to determine the subject's degree of risk. In the earlier -noted G twas noted the site has a "high risk of liquefaction;" thus, the recommendations to that gOtgohnioG|Engineering Report, i Kidder Mathews Property DescriValuation Advisory Services Page 37 ption Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ use pile foundations and structural floor slabs inany building d8v9|Oprn8nL HAZARDOUS |tiaonassumption ofthis report that the site ianot contaminated with DISCLAIMER any hazardous materials. Refer toLimiting Condition No. 2. CONCLUSION In summary, the site characteristics are similar to other properties in the immediate vicinity with the gnC8otiOn of flood potential. The |OOQ and n@rn}vv shape of the City'S p8n:e| significantly innp8{tS site utility and access, oswell osdevelopment capabilities. The flood potential will need tObeaddressed with appropriate planning, flood control measures and/or proper development design. Kidder Mathews Property Description Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 - ..................................................................................................... 1 ......... - Kidder Mathews Highest & Best Use Valuation Advisory Services Page 39 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ 0 UU ,a c� = As Vacant � �6 =w "Highest & Best Use" iodefined by the Appraisal Institute as: The reasonably probable and legal use 0fvacant land 0r8n improved property that is ppossible, appropriately supported, financially feasible, and that results /nthe highest Source: The Dictionary nfReal Estate Appraisal, Fifth Edition. Chicago: Appraisal Institute, c01o. The four criteria the highest andbeatusennustnneetana|gga| pSnniSSibi|itv, physical pV3Sibi|itv, financial feasibility, and rnGxinnUnn productivity. AS the property C0OSiSts of vacant, undeveloped land, the analysis is limited to the Highest and Best Use As Vacant. /\anoted earlier under Zoning, legally permissible uses under the TUC- T{JD disth{t, which is intended 03 provide a more C0rnp8[t and vibrant mix Ofhousing, office, lodging, and supportive F8C8i| and Service uSgS' include office, multi -family and mixed -use residential, townhouses, lodging, commercial indoor recreation, general retail, personal services, athletic/health n|ubs, re9t8Ur8nts, daycare c8nt8rS. COrnnnorCi8| parking (day use on|y), vehicle rental and 3a|8s. educational/instructional facilities, and convention/exhibition facilities. The site, due toits proximity Uzthe Sounder Station, can also take advantage of the transit -oriented development overlay which additionally allows mixed use and multi -family use. ASthe zoning and use Ofnearby properties is similar, Gz0Oing change is not likely. Physically, the size and shape ofthe combined site area, and the size and shape of the L8Uq8r parcel 8|One. is conducive to building development, and can support any Ofthe legally permitted uses. The shape of the Citv'5 parcel a|ono, hOvvevor, including its limited accessibility, limits its development potential. |nterms [fmarket demand and feasibility, there are 8number and variety Ofproperties iOTukwila now under development, and retail uses are strong around the Mall. However, the property's location iSnot considered sufficient to support purely retail -oriented use. The city is in @ definite growth mode, and overall market trends for the surrounding area and the region are very positive. Many sites surrounding the Sounder and other light rail stations are being developed iOthe current . Kidder Mathews Highest & Best Use Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ market, and demand iShigh for appropriate sites for mixed use development. The multi -family market i3also very strong etpresent, and itiSnlyunderstanding that Gnumber Ofparties have expressed Gn interest in the site for this type of development, either solely O[@Sthe predominant use inomixed-use project. Thus, the maximally and highest 8ndbeSt use Ofthe combined property Orthe Leuq8rsite alone iSdevelopment with @ residential O[nniw8d-uSe, transit -oriented development. For the Cih/sparcel, given its shape and the other factors noted, development enostandalone property does not appear |ikg|y, except for assemblage with the adjoining Leuqaraite area. Kidder Mathews Highest & Best Use Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ............................................................................................................... eir al Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 42 59V istle St Arroyo Heights Ft Brighton H ly Path g Coun l‘v PJO, eer j Park ',port White Center --SoutheT HeIghts, ,- 0 co oulev;a4I .ark Seola Be ch ,,Ingl sea - t'' Riverto ,-- ,.... osi..er.4 1E vansvil e [' S 144th St -C - Bur Sunq,da Zntt es Min SeaTac -q. Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May Creek, kennydefe. iiinhingtan L8keridge90Bin Mawr Rentonntw " MuAirport,4 nL nicipal ,e Skyway„,.. 212tht Hillbp azelwood Vex - Pines Newcastlea Cc K I N on Maplewoo IIiott SHINGTON 5 19.2od St (515) SE 240th St SE 256th St Comparable Land Sales Location Map uJ L4ke You Kidder Mathews Valuation Advisory Services Sales Comparison Approach Page 43 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comparable Land Sale Parcel Exhibits Comparable 1 Ilr"4**"211/2v '114740441,00elov4.414iWOK,Ft"rr"'"—""1""' Comparable 2 %Or iitiki ,Arr )11A...g it; n A *‘, ‘4,3%,409,i309“94,,o3, 23,1,049064 9993993.99399 „, 3,9 9 333339w 339.3393 111"1„,,,tVir 44100,,,,ig3p133,,,,,,,9994tyt,19933µ,i,R 3A31M39t9,1, 39 74414%1 Kidder Mathews Valuation Advisory Services Sales Comparison ApproachPage 44 • Comparable 3 e •• • • Part of a larger MPC — refer to file rc xhi • Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 its Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 45 LAND SALE COMPARISON SUMMARY No. Identification / Location/APN L-1 6500 W. Meeker St. Kent, WA APNs 2322049034, -9084, -9085 L-2 Southside by Vintage 11203 1st Ave S Seattle WA APN 0723049183 L-3 Avalon Newcastle Site 6620 SE Coal Creek Parkway Newcastle, WA APNs 2724059006, -9040, -9099 SP Combined Tukwila Parcels Tukwila, WA APNs 242304-9034 and -9137 Leuqar Parcel Only APN 242304-9137 City Parcel Only APN 242304-9034 Buyer / Seller / Confirmation G/R Meeker St. LLC Seattle Healthcare Properties LLC Don Moody, broker 253.596.0043 Impola Homes, Inc. Coastal Community Bank Mala Virani, rep 425.462.6989 Quadrant Corporation Newcastle JV, LLC Ron Branch, broker 425.822.5100 Size sf/ Sale Date Acres Zoning Sale Price $/Sq Ft Aug-17 435,600 CCMU $4,000,000 $9.18 10.00 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 Comments Raw land. Corner site. Three parcels of about 3.33 acres each; total site area of 10 acres. Holding for future development. Sep-16 285,919 CBSO $4,300,000 $15.04 Buyer developed an affordable senior housing 6.56 complex on the site. Jan-17 386,377 MUR $17,000,000 $44.00 Finished grade site. Part of a larger Master Planned 8.87 Community. Proposed for development with 95 townhomes. Sep-18 341,245 TUC $8,531,125 $25.00 Value under hypothetical condition assuming both Appraisal 7.83 $8,530,000 Rd parcels legally combined into one site Sep-18 202,863 Appraisal 4.66 Sep-18 138,382 Appraisal 3.18 $4,564,418 $22.50 Market value, Only Leuqar parcel as a standalone site $4,560,000 Rd $22.50 ATF market value, City parcel only as a standalone site 0.50 Corridor Valuation Factor $1,556,798 $11.25 Market value conclusion $1,560,000 Rd Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 46 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ 0 o' Introduction to rU . son A 0 �� .=,== U� �-m.. .K� 0 � �-UUu��U^ ��on The Sales Comparison Approach iabased onthe premise that the market value of the property is directly related to recent S@|g prices of competitive properties and the availability Ofsubstitute properties with Sinni|Gr UU|itv and desirability. The most similar sales Ofproperties are investigated and COrnp8ned to the subject in this analysis. Asummary Ofpertinent details to the comparable sales ae|gciad has been presented on the previous page with olocation map presented 8t the beginning ofthis section. The 8O8kmiS begins with the v@|uGUOn of the entire property, including both parcels as if combined into e single legal site (this represents e Hypothetical Condition, which may have affected the assignment results). Next, the analysis and valuation will beapplied t0only the LDuqGrBB LLC parcel (Adjusted Site 1), as a standalone property. Finally, the analysis and valuation will bHapplied k}only the Cit/Sparcel (Adjusted Site 2), also as a standalone property. While the site's highest ondbeSt analysis isconcluded tobefor multi- family residential development and use, orosomixed-use project primarily with multi -family residential units along with some supporting oonnnnercio| office and/or retail use, due to the |ook of site -specific development plan the analysis will consider the value Ofthe property based onoprice per sqftunit basis, rather than aprice per residential Recent sales of similar sized sites (nearly 8 acres), whether in Tukwila or the immediate market area, were limited, and the market area searched was expanded into other areas of King COVnh/. including Kent, Burien' and the greater Bellevue area. Also, the search Urnefrannehad tobe extended back to3O1O. Three sales were identified that were considered sufficient for analysis. Comparable Land The comparable land sales range from $9.18to$44.00/eoftnfgross site Sales area. When analyzing the oonnparob|ea.adjustments are appropriate 0o properly account for differences Ofproperty rights conveyed, financing terms, conditions Ofsale, market conditions, and physical and functional characteristics. A discussion of the sales is presented be|ovv, followed by an adjustment summary grid. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Comparative Aonm|ysis—Sunnmmary of Sales: Combined Site Area Adjustment Table Land Sale No. 1closed inAugust 2017.sosome upward adjustment for market conditions is O8m9SSGry. This property is located in Kent, GD inferior location t0the subject, SO8nupward adjustment will also b8 made for this factor, despite this being G corner site fronting On two streets. This site is somewhat larger in size than the subject site, and it consists Of r@vv. undeveloped land, So upward adjustments are also made for size and Ow9[@|| Site utility. C)wg[@||' this sale is COnSidgn3d inferior tOthe subject site. Land Sale No. 2closed inSeptember 2U18.aoanupward adjustment for market conditions isnecessary. This was mbank property RE{}sale, so GO upvv@nj adjustment for CODdiUOnS Of S8|8 is also needed. This property iSlocated inBUrien.considered 8ninferior location tUthe Suhig{t' S0 an upward adjustment will also he made for this factor. This Site is slightly nnn8||er in size than the subject Site, so a dOvvnvv8rd adjustment is made for size. (]vmre||, this sale is considered inferior to the subject site. Land Sale No. 3closed inJanuary 2O17.aoonupward adjustment for market conditions will be made. This property is |On8tod in Newcastle, and iSpart Of8larger Master Plan Community, considered Gsuperior location 03the subject, S08downward adjustment will bemade for |Oc8d0n. This site is slightly larger than the subject site, s0 an upward 8diuStnnSOt is made for size. ASubStGOU8| dOvvnvv8rd adjustment is made for overall site utility, aSthis site was sold with ofinished grade ready for development. Overall, this sale iSconsidered superior tOthe subject site. Adjustments noted above for each sale are reflected inthe chart shown onthe next page. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Market Value Conclusion, Combined Site Area Property Market Value Condusion'Leuqar Parcel Only Adjustment Summary Sale Adjustments for: Conditions ofSale Market Conditions Location Site Size Site Utility Comparison to Subject: L-1 L2 L-3 $9.18 $15.04 $44.00 O + O + + + + + + ' + + O Inferior Inferior Superior Emphasis iaplaced onboth Comparable Land Sale Nos. 3and 3.with more emphasis onL-2than L-3considering that L-3has ofar superior location and was ofinished-grade site. Considering the above elements of comparison and current market trends, my opinion of the value of the fee simple interest of the subject property (both parcels as combined into one legal property) is $25.00/sq ft, or: = $8.531.125 Rd $8,530'000 Based 0n8recent proposal tOdevelop the site with UpU]3OOmulti-family units, the above value conclusion equates tO@price Ofjust over $2O'OOO/uniLwhich appears reasonable and supportable based On Ov8n9|| rnU|U-fanni|y residential land SG|e3 in the greater market. Taking the same sale comperab|esinto consideration, and despite the somewhat smaller size Ofthe L8uq@rparcel than both parcels combined, UU8 to the slightly more limited site configuration | COnC|Ud8 to 8 vR|US of the fee simple interest ofthe Leuqor parcel of$22.50/sq ft. or: Rd $4,560,000 Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Valuation ofCity of Tukwila Parcel The Cit/S parcel was originally acquired by the City in order to relocate the abutting n3i|rO8d track line that |i8S just to the east of the parcel. Thus, this parcel was intended t0bepart of8larger UOOQ8r\rail corridor. HOvvgv8r' the n3i| line was never relocated, and the City now has a long, relatively narrow p8rC9| it SSehS to sell off (liquidate). ThuS, before proceeding directly tOthe land valuation Of the Qh/ p8nCg|' it is important to discuss and note the characteristics of the methodology that must be employed in valuing @ property such as the Citv'S parcel, which represents Gnabandoned (and tObeliquidated) section Of8"corridOr' A^oonidOr"iSdefined as: Astrip ofland used for transportation or transmission purposes /e.g.,rail, highway, power, information, slurries, Source: The Dictionary mReal Estate Appraisal, Fifth Edition. Chicago: Appraisal Institute When appraising 8property that represents all Orpart [f8nexisting Or proposed corridor, those issues, factors, and methodologies that are appropriate and pertinent in valuing this type of property nnUSt be considered. The following provides 8noverview and discussion 0fissues and methodologies that play @ role iDthe analysis and valuation 0f corridor properties. Corridor Valuation There exist ovariety ofvaluation methods that may boemployed for Methodology corridors, such as: Overview 1)Replacement Cost New Less Depreciation (RCNLO); 2\Sales Comparison Approach (8CA); 3)Net Liquidation Value (NLV); 4>Going Concern Value (GCV); 5)Aoross�h� Fence A�TF\� end ' , '. . 0)Corridor Value (CV).1 1 Gary S. Valentine, ASA, SRMA, Right of Way, Nov./Dec. 1998 Issue, Pages 8 - 10. Kidder Mathews Sales Comparison Approach Valuation Advisory Services Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ REPLACEMENT COST NEW LESS DEPRECIATION The Replacement Cost New Less Depreciation (RCNLO) reflects the costs of assemblage of nonidnr, and has been recognized by the courts ae"an acceptable approach toadetermination ofjust cnrnpenS@d0n.''2 But, this approach iSseldom employed invaluing corridors that already exist. This valuation method is more applicable in the case Ofvaluing property acquired for creation Of@new corridor. 8ALE8COMPARISON The Sales Comparison Approach ia"most applicable when several sales APPROACH 3 cKoornporob|on ... have sold in the subject's market aneo.^ This approach is applicable if there are sufficient recent sales of comparable right-of-way corridors in the COnnp8Ung market area analyzed. NET LIQUIDATION VALUE The difficulty in using this method is not only |@Ck of sales Of oOrnp8rGWe ConidDrS in the nnarket, but also that confirming the data pertaining tOany 0f the sales iSusually difficult —ifnot impossible —due to the n3|u{tanCg of the involved parties sharing any of the details of the sales. Further, actual corridor sales usually consist of entire (or very lengthy portions) of corridors, rather than Snn@U Se[tiOOS (the subject site represents avery small portion ofwhat was tnbepart ofonexisting, much longer rail corridor). Net Liquidation Value (or NLV)iSthe valuation approach employed when 8corridor iSabandoned, and will OOlonger beneeded O[utilized even @S an alternate type Ofcorridor (for recreation Or UU|itv pUrp0S8S. for 8x8nnp|g\. Net liquidation value iS"the estimated aggregate price, discounted for time (and C0StS) required for sale, that adjoining Ovvn9rS pay for the tracts Ofland tOwhich the (Se||8r)has good UUS."4 In other words, the net liquidation value iS"the present value 0f the net amount the owner will realize if the corridor is SO|d pi8Cern8G|.15 after GCC0UnUng for the time Ofliquidating the parcels and the costs associated with the z |mu.Page & " Ibid. ` zo , "Rail Corridor Galeu,"Page 38O 5 Valentine, Page 8. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ GOING CONCERN VALUE The Going Concern Value (or GCNiS"the value created by@proven pn}p8dx operation ... which refers to the intangible 8|9nn8ntS Of 8 business arising from such t3ttOnS as having in place @ trained, qualified work force, @noperating plant and the required licenses, systems and pr0C8dUneS.110 Typically, non -realty elements are not considered when appraising only the [e8| estate portion of property. Further, in order to 9Sbrn8te a"going concern" or"business v8|U8^Of8corridor, which includes non -realty components, would require extensive analysis of the entire corridor operation, and then tosomehow segregate oportion ofthe tOC8| business Ur"going concern" value applicable to only the portion pertaining to the "permitted" portion of the property (@ partial interest). This methodology typically applies tO8business operation such 83G railroad. Also, there does not exist any sound methodology bywhich @ 'partia| interest' can be 'extracted' and applied to a portion of the total "going COnC8[D va|ug" of the |@rgg[ CO[ridO[ when valuing only @ Snl@U portion Of@corridor. ACROS8TMEFENCE The Across the Fence (or ATF\value ia"the estimated sale price based On the unit phC8 Vfsales Ofsimilar land adjoining the SUhie[t.^/ TO estimate ATFvalue, @ corridor is usually divided into segments of similar Highest and Best Use derived from analyzing surrounding usos, sales data for these uses is gethwred, and the ATF value is estimated from the unit rates reflected by sales of typical panog|a. The Across the Fence method is based on the principle Cf^8UbsUtVti0n.''O or as Gary S. V@|8nUO8' AGA' GR/VVAOOt8d, it "is based on the concept Ofalternative use as assignable tOland segments with the overall corridor. In theory, the SggDl8ntS are divided down the centerline as each half is joined to the adjacent parcel along with the adjacent property's highest and best use and unit value. The ATF (method) is the 8o|ee Comparison Approach modified tothe degree that shape, size, topoqrophyand access are disnogorded"9 (underline added for ennphosis). In other vvOnjS, since the corridor "is uniquely configured to meet the highest and best use as n right ofvvoy." it should not be penalized for these '^spedo| physical characteristics when cOnnp8nSd with vacant p8rC8|S in the neighborhood The underlying GSSuOnotiOn of this method is that land in the corridor in equal to the value of adjoining |8ndS.^10 « Valentine, Page 9. Also refer mthe Appraisal |nsmvte. The Dictionary vfReal Estate App,msa|, 4m Edition; and, Practitioners Publishing Company, ed,The Guide ovBusiness Valuations, Page 2O5-3U. ' Zol|."Rail Corridor Sa|oo.^Page 380. 8 "The principle of substitution states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price attracts the greatest demand and widest diwmbmion.^ Appraisal Institute, The Appraisal cxReal Estate, 12thEdition, Page 38. o Valentine, Page 8. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ This view iSshared and reiterated bvJohn (}h8reOh0: ^ATFv8|u8 assumes (that) land values are similar to vacant land values of properties adjacent to" the property being appraised, and "ignores the physical features" of the ... property "for determining highest and best uS8."11 Thus, in utilizing the /4TF rn8thOd. 8diUStrnentS are rn8d8 only for any differences inmarketing conditions 8inle\and |OC8d12 0n� These factors would need t0be taken into consideration inboth the highest and best use analysis and the valuation 0fthe property. According tOexperts surveyed 0nthe issue Ofcorridor valuation —Z0U. Valentine, and Miltenberger, GnnODg others — 8fOrrn of the ATF method applies tOall three types Of corridor valuation scenarios: 1) acquisition Ofland for creation Of8new right-of-way; 2) COOLDu8d use of an existing i (whether by rail or for conversion tnanother usm); and. 3) 8b8OdODDleOt of line requiring liquidation. 13 |neach case, according tothese experts cited, the ATFmethod iathe best method touse inestablishing obaseline market value cfproperty similar k]the appraised property, which usually would then b8adjusted however by8n"enhancement factor" or''ATFratio" (this factor Orratio will be defined and discussed later inthis Sm[tiOn). |nthe first scenario, acquisition and creation Of8new corridor, thSATF method is used but is further modified by an enhancement factor to reflect the mssmnnb|egm of various parcels to create the corridor (the resulting value estimate iSmore synonymous with @Oassemblage v@|ue). |nthe second scenario, continued use ufanexisting corridor, the ATF method and ^ATF ratios" are also used, but the ratios used are not as great osinthe acquisition scenario. m |mu. 11 John Oharenko.Selecting Valuation Techniques for Appraising Bankrupt Railroad Real Estate Property, The Real Estate Appraiser and AnalVst,Winter 1882.Page 3O. 12Valentine, Page 9. m va|omine. Pages 8 10; zon. "A Logical xppmuom to Appraising Railroad Right of Ways," Pages 347 354; Frederick A. Miltenberger, MAI."Rail Fngm*f-vvayva|"smun.^The Appraisal Journal, January, 1882.Pages 81-80. ~= Kidder Mathews Sales Comparison Approach Valuation Advisory Services Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ |nthe third Soen@hO' liquidation, Ul8ATF method is also employed, but in certain cases the /\TF factor is |qvver than 1.00 (where 1.00 equals the baseline vG|ue). For example, in the C8Se of the S@|e Of G SiOg|8 p@rCg| to GOadjacent land owner, the value can b8based Onthe ATFmethod, which may be discounted in the CaS8 of certain U38S, such as agricultural uses; that is, @ buyer will pay less than market value due tOthe ri0ht-of- vvey lying fallow for o period of time and/or for any costs to modify the parcel (such @Sgrading, fertilizing, 8tC.)until itiScapable Ofbeing integrated into the adjacent land use. Also, with the sale of multiple parcels inaliquidation scenario, odiscounted cash flow analysis is typically utilized, SOthe resulting net present value iSless than the ATF v8|Un, as the costs and time associated with SS||inO off multiple segregated parcels are taken into account. ASthe ATFmethod "in and Cf itself iSnot reflective Ofcorridor uSg'"14 it must bemodified Oradjusted bvGOapplicable enhancement factor derived from market sales activity. When the indicated ATF unit value is compared with actual corridor sales, then "it becomes an integral part of arriving at8corridor v8|Ue.^15 Thus, while the Across the Fence method forms the basis for establishing 8 baseline value from which to estimate the market value ofthe property, the ATFmethod alone cannot beused to establish an eSUnn8te of the nn8rhBt vG|V9 of corridor without being augmented by@corridor enhancement factor. This iSthe point missed byanumber ofappraisers, who merely value existing corridors byonly the ATFmethod, and dOnot complete the analysis hyapplying @O appropriate adjustment ratio, orenhancement factor. |fthe value analysis stops with anATFbaseline value estimate, and ianot completed with the application OfGnATFratio, then @ key element tOvaluation has been overlooked, and the value estimate for 8nexisting corridor will be understated. w Valentine, poge9. 15 Ibid. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ CORRIDOR VALUE The Corridor Value (C\/) method iaaform ofthe ATFmethod, modified byonenhancement factor orratio, aadiscussed above. The Corridor Value method iSalso based Onthe principle Ofsubstitution, and recognizes the value inherent in@nexisting corridor. According to Valentine: "To arrive 8t the corridor value, the appraiser must multiply the ATFvalue (by)the enhancement t@CiOr.''10 The result iS8value which iS based on the ATF rnethod, but accounts for the enhanced market value attributable tOthe existing, in -place corridor. ASnoted byFrederick O. Mi|t8nb8rg8r, K4A|. an expert on right-Of-vvaycorridor valuation, an ^ assembled right ofway represents 8resource for SOoietv.''17while John P. [>o|nnan. MAI, CRE, and Charles F. Seymour, MAI, CRE, also right-of- way corridor valuation experts, note that 8 right-of-way corridor has v8|U8 "because ofits ability toconnect two points with resulting b8nefit."that there ison"economic advantage" toconnecting these points, and that a right-Of-vv@ycorridor thus enjoys ''SpgCiG|v@|ueCh@rGCte[iSUCS.''18 ATFRATIO CR smV4mCsMsmT FACTOR In valuing 8 property utilizing the Corridor Value, the property is first considered aatoits Highest and Best Use derived from analyzing surrounding uses; then, comparable sale data for these types ofuses is gathered and analyzed; anestimate of the ATFvalue iaderived from the Unit rates reflected by the 38|eS of typical parcels, (8gain. GS noted) vvithoutadiuntnnent for size, shape, tnpoqnaphy.oraccess (the ATFvalue eSSOnU@Uy represents the contribution value tOthe adjoining property); and finally, the Corridor Value iSestimated byapplying anenhancement factor nrATF ratio to thgATF value derived from the comparable aa|ga. |nutilizing the Corridor Value approach, itiSnecessary b]describe and define what iSmeant bvGn"enhancement f@CtO['"0r^ATFr@UO.~and how itiSderived and will beutilized before proceeding tOthe actual v8|u@U0n process. Clifford A. ZOU' MA|, has addressed the valuation Of railroad right-of-vvoys, and describes the process ofdetermining the appropriate adjustment factor tO the ATF price in ''A LOQin@| Approach to Appraising Railroad Right OfWays" as h]||DvvS: "...the appraiser should consider the cost of land for other right-of-way assemblies and compare the total price paid with that assembly's total ATF p[iC8."19ThuS, to derive the ATFratio Oradjustment factor, the following formula iSused: m |mu,Page & nMiltenberger, Page 82. m Dolman and Seymour, Page 515. 19 Zoll, "A Logical Approach to Appraising Railroad Right of Ways," Pages 347 - 354. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 Actual cost of right-of-way land assemblage = ATF ratio ATF price (value) In his article "Rail Corridor Sales," Zoll states that: In estimating "corridor value" the appraiser multiplies the ATF value estimate by the figure representing the appropriate enhancement factor. This factor is determined by comparing known corridor sales to their ATF value estimates and using the factor most representative of similar corridors. So, once an appropriate ATF ratio (enhancement factor) is selected based on an analysis of the sales data, the corridor value is estimated by multiplying the ATF price (value) by the ratio, which can be summarized in the following formula: (ATF price)(ATF ratio) = Corridor Value Thus, the ATF ratio reflects an adjustment to account for the costs of assembling a corridor, and so is comparable to an "assemblage value," or plottage,20 which reflects the unique characteristics of a corridor. Appraisers who are unfamiliar with the valuation of right-of-way corridors might argue that plottage value is not "market value," and therefore if an adjustment multiplier is utilized to enhance the indicated ATF price, the result will overstate the market value of the subject property. However, unlike many other types of assemblages where a premium over market value might be paid to acquire an adjacent site in order to enhance the utility of a property, such as an owner of a commercially -zoned lot acquiring an adjacent lot to create a larger site for commercial development, the various authors either cited herein or researched (Zoll, Miltenberger, Dolman and Seymour, for example) argue that premiums paid to assemble a unique corridor which connects two points does represent the market value of that corridor. According to Zoll, "Because of their long, narrow shape ...corridors are unique properties. Their continued use ... makes a value -in -use approach appropriate, which is defined ... as 'value a particular property has for a specific use."'21 Indeed, Zoll acknowledges that, under the principle of substitution, the market value of a corridor does represent its assemblage value.22 20 Plottage: "The increment of value created when two or more sites are combined to produce greater utility." Appraisal Institute, The Dictionary of Real Estate Appraisal, Third Edition, Page 269. 21 Clifford A. Zoll, MAI, "Rail Corridor Markets and Sale Factors," The Appraisal Journal, October, 1991, Page 506. Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 56 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Function /Purpose of Corridor It is important, however, to bear in mind that ZoU' for example, d08S distinguish between estimating market u8|Ue Ufa corridor for the continued use bythe current owner, and continued use Ofa corridor where the owner iSselling the corridor t0@nalternate user, whether for G similar use nrsome other use ofthe oorridnr.23 ZoUnotes that "...when a corridor iSrequired for continued use ... the sale factor iSusually more than 1.00.1124 ESSSnU8||y, when the v8|UB of 8 corridor is being estimated under circumstances where the corridor is being sold to an alternate user (but for continued use GS8COrridOr).then the value will not reflect the CO3t tOacquire the corridor, and the ATFratio applied will tend t0b9 toward the lower end ofthe range and may even approach ofactor of 1.00(where ATFvalue = corridor value = market vo|U8). In order to select the appropriate method to employ in determining the value of corridor, it is necessary 03first consider the function (or purpose) 0fthe corridor, since the value estimate OfGright-of-vv@y corridor varies according tOits fun[tiOn.25 |nother words, does the property represent, or will it be used for: 1. Creation OfGnew right Ofway 2. Continued use ofthe rightofvvoy: A. An o railroad, for example (for use byanother railroad company, O[by8 municipality) B. Anonalternate use: 1) For recreational purposes 2\ For utilities 3) For conversion LO3roadway (or similar corridor) 3. Liquidation (abandonment Ofthe corridor) If the market value to be estimated is for current corridor user, and not onalternate user who will nevertheless continue b}use the corridor for o similar purpose, the ATFratio used should bgmore comparable to the ratio inthe acquisition scenario — that is, toward the higher end Ofthe ATFratios exhibited bythe market. This isdue tothe fact that the owner has borne the cost and effort of assembling the corridor, and will continue to use it, and thus the value should reflect this as if it represented the GCquiSiUOO of new corridor. 22 Zoll."Rail Corridor Galos,"Page 382. 23 zo . "xLogical Approach mAppraising Railroad Right orvvmw.^Page 349. :w Zol|."Rail Corridor Markets and Sale roume.^Page 5U0. zs Clifford A. Zoll, MAI, "A Logical Approach to Appraising Railroad Right of Ways," The Appraisal Journal, October, 1998, Pages 347 354. Kidder Mathews Sales Comparison Approach Valuation Advisory Services Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 So, where an existing corridor is not for sale, and will continue to be utilized by the owner, it is argued by Zoll that the ATF ratio should be higher, and should reflect the value to that owner, or assemblage value. Zoll makes some key distinctions when he notes that: It is generally believed that the adjustment ratio for ATF price to market value for the continued use of a right-of- way is not as great as that for the acquisition of a new right-of-way because the right-of-way may not be the most desirable way to get from A to B. Yet, it does connect these points, and also because the owner railroad no longer needs it or desires to sell...an existing right-of-way for continued use has greater value than its ATF price as part of a larger ownership because, in addition to the ATF land value, engineering costs, legal fees, condemnation costs, damages to the remainder, and in some instances, wrecking costs and fill, have all been paid by the owner ...of the right-of-way. This is sometimes referred to as assemblage value.26 In further support of this position, Dolman and Seymour note that: We have found that the actual assembly cost of new corridors usually reflects assemblage factors ranging from two to six times the ATF value. However, it always must be kept in mind that applying assemblage factors derived from actual assembly costs produces the upper limit of value when applying the principle of substitution. For this reason we distinguish the "assemblage" costs incurred in assembling a new "custom corridor" from the usually lower enhancement factor realized in the sale of an already existing corridor.27 26 Zoll, "A Logical Approach to Appraising Railroad Right of Ways," Page 350. 27 Dolman and Seymour, Page 520. Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 58 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Another argument which potentially could bgposed against applying @n /\TFfaCk}r (or too high 8f8StOr) in valuing a QOnidOr is that most corridors are acquired and developed byand for municipalities orother governmental entities, which hold the power 0feminent domain and COnd8rnnGtiOn. and so should not be viewed 8S''8rno'S length" transactions. However, @Snoted hyZOU'"most railroads prefer tO acquire (corridors) by negotiation rather than condemnation because it is usually less time COnSunniDg' less costly, and less destructive to the COnnnnUnity relationship. ''28 8inni|8r 9nUU8S, such GS rnUnicip8|iU8S like cities, counties, states and ports, also would much rather acquire property bynegotiation rather than condemnation for the same reasons. However, this position too would tend b]suggest, GSsome might argue, that railroads (or governmental entities) are paying excessive premiums above market value tOacquire corridors, and thus the assembled corridor values are not representative Of"market vG|ue." Thus, for further consideration Ofthe unique issues surrounding corridor valuation which might provide additional insight into estimating the market value Of corridors, and ascertaining whether assemblage value i3equivalent k} market value for CO[[idOrS' | referred to one of the 0|d8[' and SerOiD@|' articles onthe matter: John P. [)o|nnon. MA|. CRE. and Charles F Seynn0Ur, MA|. CRE. '`V8|UaUOn VfTr@nSp0rt8dOn/COnnrnVniCatiOn Corridora.^The Appraisal Journa|, C)ctober, 1978. Pages 5O9- 522. Dolman and Seymour note that: "A trGnSport@d0n/COnnrnunio@dOOcODidor basically iS8long narrow strip Ofproperty rights whose existence can b8 justified best by use for transportation and/or communication purposes, in contrast k)other possible uSeS."29 They focused Onthe development Of the "corridor (use) concept or the unique ability to provide communication between widely separated pOintS.1130 Because of the unique characteristics ofcorridors, their value tended toreflect all of the factors related t0their acquisition and use, unlike other types Ofreal property, and thus supported the application and use of/\TFfactors toreflect the market value of this property type, irrespective of the entity acquiring the corridor and whether Ornot they held the power 0feminent domain and condemnation. mmm."Rail Corridor Markets and Sale +acmm�Page 509. 29Dolman and Seymour, ^ Page 509. 30 Ibid., Page 513. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Dolman and Seymour noted that: "All land ultimately derives its value from the use oruses Umwhich itcan beput" and that, inthe case of nonidO[S in particular, "it iSthe use that creates v@|ug."31 Thus, they noted that corridors 'enjoy special value Ch@r@Ct8hEtiCS.' including '' synergism" (many parts are connected h]create the whole COrridOr). They argue that "the concept Of`p|Ottagg' illustrates this synergism: it is the increase in unit value resulting from improved usability when Snn8|| plots are combined into larger oDeS,"and that "it iSnot the cost Of assembling alone that isresponsible for p|ottogevalue. For ap|ottage increment toberealized, there must bmthe basis nfasuperior operation inuse after aaaernb|y.^and that "the character ofuse must change; a new highest and best use must bmoreoted.''32 Dolman and Seymour add: "if the property iObevalued iSjudged tOenjoy theChGr@Ct8[iSdcSOf @ transportation/ communication corridor, vv8are seeking a'value for cOrridoruS8.'"33 They note that itiSthe "enhancement factor" (ATFratio) which, when applied, addresses the question Vf"How much more Orless than ATFvalue iSthe entire corridor worth because Ufits ability to connect the end pUintS?"34 |Othe case Ufcorridors, where there iS@ demand for this special use, onassemblage value does represent its market value. Thus, the experts consulted argue that the ATFfactors reflected bv 8[tu@| corridor sales do represent and reflect the COndid0OS which U|Urnat8|y nn8k8 Up the market value of corridors, which represent 8 unique and specific property type, with Gparticular highest and best use unlike other types 0fproperty. |ti3important tOnote also that the selection ofonappropriate ATFfactor used toadjust the ATFprices indicated by the market requires the appraiser to not only be knowledgeable about the purpose ofthe appraisal and motives ofthe parties, but to exercise good judgment in deciding whether the ATF rGUO applied in valuing the subject will be at or near the higher or lower end Of the indicated range based on(ao|e)data. m |mu,Pages n14'n1c s |md, pagen1s o Ibid., pogo51& x* Ibid. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 Application of An Due to the lack of not only comparable corridor sales and/or sufficient Appropriate ATF supporting details for most corridor sales where the existing use does not Factor change (excluding cases of abandonment or conversion), and also a lack of sufficient data to ascertain what interest a sale represented; and, as most parties involved in corridor sales consider the data proprietary and are reluctant to share the basis or factors employed for analysis and valuation, it is often problematic to obtain appropriate and supportable unit price data and/or extract enhancement factors from sales. However, according to Miltenberger, "In most cases, case studies can serve as a basis for (adjusting) ATF values."35 Miltenberger summarized his study of rail corridor sales with this observation: "...those familiar with the valuation process clearly perceive that corridor values may be greater than ATF values. The independent studies of both Harris and Zoll, respectively, suggest that viable corridors have a value higher than ATF value. The Zoll study is particularly relevant because it is based on the analysis of actual rail corridor transactions. The author's investigation of rail corridor transactions suggests that enhancement of corridor values does occur. That enhancement generally is within the range of 1.10 to 3.73 found in the Zoll study:3 6 Miltenberger provided examples of actual corridor sales where the ATF ratios ranged from a low of about 1.28 to a high of 5.29, with an indicated mean ratio of around 3.28 and a median of about 2.50. As noted by Miltenberger, these ratios fall within the range Miltenberger cites from the Zoll study. I referred to two studies of rail corridor sales published by Zoll: "Rail Corridor Sales," The Appraisal Journal, October, 1985, and "A Logical Approach to Appraising Railroad Right of Ways," The Appraisal Journal, October, 1998. In the first article, Zoll summarized his study by concluding that: 35 Miltenberger, Page 81. 36 Ibid., Page 85. Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 61 Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ When eneed for mcorridor exists, areasonable ,4Tc price ratio will vary from 1.10h}2.00 depending upon the extent Dfthe need and the cost 0fsubstitution. The upper range 0fthis ratio may behigher /nspecial urban situations. s7 |tiSimportant 0Jnote however, that inthe article cited, ZOUtended Uz focus mostly Onthe sale Ofcorridors which were nOlonger needed bv their owners, and SOhis research for this publication tended tobe weighted with SG|eS data r9|8Uv8 to liquidations of corridors, and so was skewed toward the lower end of the ATF r8UO range. Conversely, in "A Logical Approach to Appraising R@i|nO@d Right OfVV@yS'" ZOU'S SG|S data reflected ATF ratios ranging from a low Of3.O2k»8 high Of 14.05 (with o mean ratio Of5.72 and @ median n8UO Of5.63) in property acquired for new right-of-vv8y. and from 0.73 to 3.34 (with 8 nn98n r8d0 of 1.52 and 8 median ratio Of1.14)iOcorridor sales which would have some continued transportation use, but which were SO|d by the original owner to an alternate user. Zol|comduded that, depending upon the nature of the sale, "the following factor ranges are found to generally apply:1138 Liquidation 0.25to0.50 Continued Use 1.00tO1.74 Acquisition 4.00 to 6.00 In all of the came data presented henein. the authors indicated that the higher ATIF factors tended to reflect the more "urban" areas. mZoll."Rail Corridor 8ale�Page 38r 38 Zoll, "Rail Corridor Markets and Sale Factors," Page 512. Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Comparable Search Scope / Zoning While the A7Fratio and certain parameters for its use have been defined, some other pertinent issues regarding the valuation Oftr8n9p0rt8hOn/hqNt- of-vvaycorhdonaneedtoa|aobgaddngoogd. The experts incorridor valuation note that, in appraising a corridor, appraisers must first section off each parcel in a corridor by zoning classification, and identify whether or not the owner holds fee simple title toall ofthe affected land. |nthe case ofo property that represents o single ponne|, where there is only o single zoning classification tObgtaken into consideration, there would not bg@need tO address issues that would be pertinent to multiple parcels with different zoning classifications, and the scope of any sales search could thus also be limited to those comparables that have a zoning classification similar to the subject, which also pertains tnthe lands abutting the subject property. Further, interms Ofownership, where the subject property owner holds the fee simple interest inthe p[Opehx' no other interests would need to U8accounted for inthe valuation process. Also, where the abutting lands adjacent tOthe subject property are owned bythe same party, this would also contribute towards simplifying the analysis: with both halves of the subject property abutting land held inthe same ownership and which has the S8nle zoning, it is unnecessary to strictly follow the ATF method valuation format, which suggests that the segments (both halves) 0fthe subject property should b8divided down the centerline, and that each half should bevalued based nnits adjacent parcel. This would not be true ifthe zoning and highest and best use Of the property adjacent tO eachoideoftheaubiectvveredifferent—forexannp|e.oneaidezonedfor residential use and the other for commercial use. Corridor Valuation There exist ovariety ofmethods that can beapplied invaluing acorridor Methodology (or aportion ofaconidoh.depending onthe characteristics and intended Summary use of the corridor. Data that is available for corridor sales varies widely depending on the location of the corridor, abutting uses and zoning, the length ofthe corridor, the width Ofthe corridor, whether the interest conveyed represents 8fU|| or partial interest only, etc. ThUS, v8|U8UOn uSVGUy requires exercise of substantial judgment by qualified persons familiar with corridor operations and uses, and needs tnpass e"sanity test" (or a "test Ofre@SOn@b|eD8SS"). |GrDone 0fonly 8handful Ofappraisers nationally inthe U.8.who isconsidered aSanexpert incorridor valuation (refer to my neSUnn8/(]u8|ific@don3. @ copy of which is included in the Addenda Ofthis app[UiS@|.\ Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034and '9137 KMJob A10'1005 '^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^''''''''''''''''''''''~''~'''~~'''~ Market Value Conclusion, City Parcel Only The two most recent corridor sales | @rn avv@r9 of locally include the Port ofTacoma's acquisition ofabout e2.O00Ifsection ofAlexander Avenue, for expansion Of the POrt'Scontainer yard operations, from the City Cf T8C0nn@. This was @nexisting, improved corridor that the city had assembled. The City agreed tnsell this corridor section tothe Port with an gOhGOC8nl8Ot factor Ufonly 2.0' in order to cooperate with the P0rt'S plans, which would ultimately serve the best interests Of the |OCa| market gC0nOnly. The other sale was k}the University OfWashington for portions Of8 former, abandoned rail line that run through the middle Ofthe UVV'S Tacoma campus, with the center portion (82Oftwidth) taken bythe City of Tacoma to improve as @ walking and biking trail. The UVVT paid @ price that was approximately equal tOanenhancement factor Of1.0. despite the fact that this was GOabandonment OfGformer rail corridor and conversion toonalternate use. However, they negotiated the price before having an appraisal of the former rail corridor in hand, and it is concluded that they overpaid for this corridor section. Now, taking Corridor Valuation principles and methodologies, and the above |nc8| market data, into consideration, | will proceed h}value the City's parcel. Asnoted, the (}it/sparcel consists ofwhat was intended toboapart ofo larger rail oOnidO[ (F8|0C@UOn of part Of the rail line), which never occurred, and now iStOb8effectively liquidated. Qvusing /\TF The Fence) methodology, the same unit price aa applied tOthe abutting L8Uq8rp8rCe| ($22.5O/Sqft)will be used as the baseline to value to the City parcel. However, because this ^cOnid0[ section" is now abandoned and to be effectively liquidated, an ATF Ratio or Corridor Factor must be applied to reflect this COOdidOD of sale. In this oose, it is my opinion thek— based on the expert research and the limited local market data available — an ATF Ratio of 0.50 is appropriate in valuing the City parcel. This rRSU|tS in 8 Unit price Of $11.25/3q ft. and a market value estimate as follows: Rd $1,560,000 Kidder Mathews Sales Comparison Approach Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 - ............................................................................................................... - As noted earlier, the sum of the parts is not necessarily equal to the value of the whole (the larger, combined parcels), due to the greater overall site utility when combined. Kidder Mathews Sales Comparison Approach Valuation Advisory Services Page 65 Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 ..................................................................................................... ......... Kidder Mathews Valuation Advisory Services Addendum Tukwila Parcels 242304-9034 and -9137 KM Job A18-1005 - ..................................................................................................... 1 ......... - Kidder Mathews Valuation Advisory Services Addendum Stan &do[ MAL AI-GRS Senior Vice President, Manager CAREER SUMMARY Stan manages the division's Tacoma branch. Stan ioavailable toprovide consultation services and valuation analysis on avariety of commercial property types, including office, industrial, and retail properties. Stan also brings expertise inthe valuation ofuvariety of special-purpose properties such as golf courses, convenience stores, automobile dealerships, marinas, athletic clubs/fitness centers, churches and schools, daycare centers, and properties impacted bywetlands orhazardous waste contamination. Stan ioalso experienced inthe valuation ofcorridors and water rights. Stan has 37years ofcombined real estate and banking experience, including 23years aua real estate appraiser. |naddition tovaluation analysis and consulting, Stan has experience in property and asset management, leasing, sales, loan underwriting and credit approval, EDUCATION ° Attended all courses inthe Masters ofScience inRealEstateApprumdpmgmmat the University ofSt. Thomas, Minneapolis, MN. ° Bachelor ofArts degree. University of Washington. " Other Counuoworkin: Real Estate Finance, Law, Louoing, Foreclosure and Repossession, Technical Inspection of RE, R*u| Estate Workouts and Lender Liability, Arguo, Credit Analysis and Dova|opment, Business Law, Financial and Tax Statement Analysis, and Accounting and Bank Accounting. LEGAL EXPERIENCE Stan is qualified as an expert witness for real estate valuation in King. Pierce, Thurston. Lewis, Grays Harbor, and Mason Counties, State of Washington. PROFESSIONAL AFFILIATIONS ° Member ofAppraisal Institute UNA0 ° President, Appraiser's Coalition ofWashington (ACOYV.2OOS 2010.2013 2014 Kidder at he S 1201 Pacific Ave, Guuo14no Tacoma, wm9840o ros&rzo.144a IFunoJuu.14no ooiuor0muuonnatxowo.00m Kidder at he S Stan S'dor MA|, AI-WlS continued PROFESSIONAL LICENSES State of Washington Certified General Real Estate Appraiser (No. 1100565) PROFESSIONAL RECOGNITION Appraiser ofthe Year, 2OOS.Seattle Chapter, Appraisal Institute SEMINARS DEVELOPED/TAUGHT ° Corridor Valuation ° Washington State Laws for Real Estate Appraiser ° Washington SXate'n New AMC Law ° Flood Plain Regulation Changes: Impacts on Valuation ~ Changing Environmental Regulations and Impacts onMarket Valuations ° 8mwnfie|do: AVo|uatinn Perspective ° AMC Legislation An Overview &Ana|yoia ofOther States Legislation ° Appraising Environmentally Contaminated Properties Stan Sidoi; MA, Al-GRS continued PARTIAL CLIENT LIST ATTORNEYS/LAW FIRMS AterWynne, LLP Brain Law Firm, PLLC Campbell, Dille, Barnett Smith & Wiley, PLLC Davies Pearson, PC Davis Roberts & Johns Davis Wright Tremaine ......... Eisenhower & Carlson, PLLC . . Forsberg Umlauf, PS ..... Fristoe, Taylor, & Schultz Gordon, Thomas, Honeywell K&L Gates, LLP Karr Tuttle Campbell Mary Urback McGavick Graves Law Firm Mikkelborg, Broz, Wells & Fryer, PLLC ..... ....... Nicoll, Black & Feig PPA Law Group, PLLC ...... Riddell Williams, P.S. ...... ...... Roberts Johns & Hemphill PLLC Schwabe, Williamson & Wyatt Vandeberg Johnson & Gandara, LLP ...... VSI Law Group, PLLC BANKS/FINANCIAL INSTITUTIONS American West Bank Bank of the Pacific BECU Commencement Bank First Citizens Bank First Horizon Construction Lending .... Foundation Bank GE Capital HomeStreet Bank/ HomeStreet Capital ..... ..... Intervest Mortgage JP Chase KeyBank of Washington Kitsap Bank Northwest Bank Rabobank Red Canoe Credit Union South Sound Bank Sterling Bank US Bank Washington Federal Savings Washington Trust Bank Wells Fargo Bank Wells Fargo Wealth Management Whidbey Island Bank Woodstone Credit Union PORTS/GOVERNMENT/SCHOOLS City of Tacoma ..... Federal Way Public Schools Mason County Public Works ..... Metro Parks Tacoma Pierce County Parks & Rec. Port of Centralia Port of Grays Harbor ..... Port of Tacoma Tacoma Public Schools Tacoma Public Utilities ..... ...... PRIVATE SECTOR Allstate Investments, LLC Busby Marine and Tank ........ City Beverages Duff & Phelps, LLC Gensco .......... Good Samaritan Hospital Group V, LLC MLK Housing Dev. Assoc. ........ Milgard Windows Millennium Ford Museum of History & Industry ..... Rubin-Pachulski Properties, LP Sound Retina Tacoma Housing Authority ..... Thurston Highlands Ticor Title Company Titus -Will ......... Toyota Motor Credit Corporation TRAP Enterprises ..... U.S. Oil Video Only Woodworth and Co. .... Kidder athe s .770no7F:VirrTt77,4: STATE OF VVASHINGTON DEPARTMENT OF LICENSING - BUSINESS AND PROFESSIONS DIVISION THIS CERTIFIES THAT THE PERSON OR BUSINESS NAMED BELOW IS AUTHORIZED AS A 1 I CERTIFIED GENERAL REAL ESTATE APPRAISER ' STANLEY R SIDOR 1201 PACIFIC AVE STE 1400 TACOMA WA 98402 161 1100565 1P41, License Number gagE:wAia7,±401*Ak,h;ng6-Qi*igi'egltIZ,.. PL-630 159 (R/3/16) 07/01/1997 Issued Date 09/15/2020 Expiration Date -59Z-6747:139))73A17174,69))),35) 5527;9 6-3 „Artio a, 4-6ea, Teresa Bentsen. Director 11