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Appraisal PRELIMINARY DRAFT SUMMARY APPRAISAL REPORT 18.04 Acres of Vacant Land Outlots A and B in Pioneer Pass Chanhassen, Minnesota October 31, 2010 HAC10044-00 Copyright © 2005 by Hosch Appraisal & Consulting, Inc. All rights reserved. PRELIMINARY DRAFT November 2, 2010 Mr. Severin H. Peterson, Jr. Chief Manager Peterson-Jacques Farm Land Company, LLC 15900 Flying Cloud Drive Eden Prairie, MN 55347 RE: SUMMARY APPRAISAL REPORT OF THE 18.04 ACRES OF VACANT LAND LOCATED WITHIN OUTLOTS A AND B OF THE PIONEER PASS SUBDIVISION IN CHANHASSEN, MINNESOTA Dear Mr. Peterson: As requested by you, we are providing you with a summary appraisal of the above-referenced property to arrive at a supportable estimate of the market value of the fee simple interest in the subject property. This Summary Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Report. As such, it presents discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Most of the supporting documentation concerning the data, reasoning, and analyses is included herein, with other resource information retained in the appraiser's file. This appraisal report has been written for the intended use of our clients, Mr. Severin H. Peterson and Peterson-Jacques Farm Land Company, LLC, for purpose of estimating the market value of the donation of land to the city of Chanhassen. The depth of discussion contained in this report is specific to the needs of this client and for the intended use only. Hosch Appraisal & Consulting, Inc. is not responsible for the unauthorized or improper use of this report. We have made a complete inspection of the subject property and have fully identified the real estate in our written report. Additional supporting information may also be supplied within the Addenda of this report. After careful consideration of the many factors influencing value, it is our opinion that the subject property has an estimated market value, as of the October 31, 2010, of: FIVE HUNDRED FORTY THOUSAND DOLLARS----------$540,000 PRELIMINARY DRAFT Mr. Severin H. Peterson November 2, 2010 Page Two This appraisal does not include personal property, equipment, fixtures, or intangible items that are not real property nor does this appraisal take into consideration any going concern value created by either the buying or selling party. It is our opinion that a reasonable exposure time of up to 12 months is appropriate for the subject property at our estimated market value. Please refer to the Reasonable Exposure Time section of this appraisal for details. This report is written with the intent of meeting the reporting requirements of the Uniform Standards of Professional Appraisal Practice, 2010-2011 Edition (effective January 1, 2010). This appraisal has also been prepared in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute. The undersigned appraisers certify that they have personally inspected the subject site and have investigated information believed to be pertinent to the valuation of the property, and to the best of their knowledge and belief the statements and opinions expressed herein are correct and reasonable, subject to the limiting conditions set forth herein. Very truly yours, HOSCH APPRAISAL & CONSULTING, INC. Certified to this 2nd day of November, 2010 Nathan J. Brooberg Senior Appraiser Certified General Real Property Appraiser Minnesota License #20249946 Stephen T. Hosch, MAI President Certified General Real Property Appraiser Minnesota License #4002903 PRELIMINARY DRAFT i CERTIFICATION I certify that, to the best of my knowledge and belief: 1. I have taken into consideration the factors that have an impact on value in my development of the estimate of market value in the appraisal report. I have not knowingly withheld any significant information from the appraisal report and I believe, to the best of my knowledge, that all statements and information in the appraisal report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. 4. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. 5. I performed this appraisal in conformity with the Uniform Standards of Professional Appraisal Practice that were approved and published by the Appraisal Standards Board of The Appraisal Foundation in 2010 effective January 1, 2010. I acknowledge that an estimate of a reasonable time for exposure in the open market is a condition in the definition of market value and the estimate I have developed is consistent with the market. 6. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 7. Nathan J. Brooberg and Stephen T. Hosch have both made a personal inspection of the site that is the subject of this report. 8. No one provided significant professional assistance to the person(s) signing this report. 9. As of the date of this report, Stephen T. Hosch has completed the requirements under the continuing education program of the Appraisal Institute. 10. This appraisal assignment was not based on a requested minimum valuation or specific valuation for approval of a loan. Appraisal fees are in no way contingent upon values concluded by the appraisal firm. 11. Hosch Appraisal & Consulting, Inc. and/or the appraisers of the subject property have previously prepared appraisal reports of vacant land. Therefore, I have the knowledge and experience to meet the competency provision of the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. The appraiser will not disclose the contents of the appraisal report except as provided for in the Uniform Standards of Professional Appraisal Practice. ___________________________________ Nathan J. Brooberg Certified General Real Property Appraiser MN License #20249946 ___________________________________ Stephen T. Hosch, MAI Certified General Real Property Appraiser MN License #4002903 Copyright © 2005 by Hosch Appraisal & Consulting, Inc. All rights reserved. PRELIMINARY DRAFT ii CONTINGENT AND LIMITING CONDITIONS The value estimates and conclusions in the appraisal are made subject to these assumptions and conditions: 1. This appraisal report has been written for the intended use of Mr. Severin H. Peterson and Peterson-Jacques Farm Land Company, LLC, for purpose of estimating the market value of the donation of land to the city of Chanhassen. Possession of this report, or a copy thereof, does not carry with it the right of publication (either in whole or in part), nor may it be used for any purpose other than the one stated in the Letter of Transmittal and the Purpose of the Report, without the express, written consent of the appraiser and client. Authorized copies of this report will be signed in blue ink by the appraiser(s). Unsigned copies or copies not signed in blue ink should be considered incomplete. All unauthorized or incomplete copies of this report should also be considered confidential, and as such, must be returned, in their entirety, to Hosch Appraisal & Consulting, Inc. 2. As agreed upon with the client prior to the preparation of this appraisal, this is a Complete Appraisal because it invokes the Departure Rule of the Uniform Standards of Professional Appraisal Practice (USPAP). As such, information pertinent to the valuation has not been considered and/or the full valuation process has not been applied. Depending on the type and degree of limitations, the reliability of the value conclusion provided herein may be reduced. 3. This property is appraised in fee simple, assuming responsible ownership and management, unless otherwise indicated. This appraisal recognizes that available financing is a major consideration by typical purchasers of income-producing real estate in the market, and the appraisal assumes availability of financing to responsible and sufficiently substantial purchasers of the property in amounts similar to those indicated or implied in this report. 4. Hosch Appraisal & Consulting, Inc. and/or its employees are not qualified to render expert opinions regarding structural issues, water damage, environmental assessments (such as mold), engineering/mechanical issues, ADA and/or building code compliance, land planning, architectural expertise or soil conditions. If requested, Hosch Appraisal & Consulting, Inc. will recommend qualified experts in these fields to assist the client and/or the appraisal process. 5. The property has been appraised as free and clear of all indebtedness, under responsible ownership and good management unless otherwise set forth in the appraisal. 6. No title search has been made, and the reader should consult an appropriate attorney or title insurance company for accurate ownership data. Unless title problems are specifically brought to our attention, Hosch Appraisal & Consulting, Inc. assumes that the title is good and marketable and therefore, will not render any opinions about the title. 7. The information contained in this report is not guaranteed, but it has been gathered from reliable sources. The appraiser certifies that, to the best of his/her knowledge and belief, the statements, information, and materials contained in the appraisal are correct. 8. No responsibility is assumed for matters which are legal in nature. It is assumed (without survey) that the improvements are located within the legally described property and that the buildings comply with all ordinances except as noted. The furnished legal description is assumed to be correct. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 9. No analysis of soil conditions was required and none has been made. Unless specifically brought to our attention, all value estimates in this report assume stable soil, and that any necessary soil corrections are to be made at the seller's expense. PRELIMINARY DRAFT iii Contingent and Limiting Conditions -Continued 10. Estimates herein are based on the present status of the national business economy and the current purchasing power of the dollar. The forecasts, projections, or operating estimates contained herein are based upon current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes in future conditions. 11. A plat map or site survey may have been provided in this report to assist the reader in visualizing the general location and boundaries of the property. We have made no survey of the property and assume no responsibility for its accuracy. We may have provided a sketch in the appraisal report to show approximate dimensions of any improvements to assist the reader of the report in visualizing them and understanding our determination of their size. Surveys, plans and sketches provided may not be complete or drawn exactly to scale. 12. The market value herein assigned is based on conditions which were applicable at the time the property was inspected and may vary at a later date. 13. Hosch Appraisal & Consulting, Inc. employees shall not be required to prepare for or appear in court or before any board or governmental body by reason of the completion of this assignment without pre-determined arrangements and agreements. 14. Information in the appraisal relating to comparable market data is more fully documented in the confidential file in the office of the appraiser. All studies and field notes will be secured in our files for future reference. 15. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 16. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal report. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 17. We are assuming: 1) that any asbestos or urea-formaldehyde that may have been used in the building materials in the property are in compliance with current statutes and regulations and do not present a health hazard to the public; 2) that lead-based paint has not been used in a manner that would cause health problems for the public using the property; and 3) that the property has not been the site for the dumping of hazardous substances nor is subject to radon gas. If any or all of the above conditions exist, this could have a bearing on the market value of the property. 18. We have noted in the appraisal report any adverse conditions (such as, but not limited to, hazardous wastes, toxic substances, etc.) observed during the inspection of the subject property (or learned of) during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, we have no knowledge of any hidden or unapparent conditions of the property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the property more or less valuable, and have assumed that there are no such conditions. We make no guarantees or warranties, express or implied, regarding the condition of the property. (Hosch Appraisal & Consulting, Inc. will not be responsible for any engineering or testing that might be required to discover whether such conditions exist.) Because we are not experts in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the property. PRELIMINARY DRAFT iv Contingent and Limiting Conditions -Continued 19. The value indication provided in this appraisal report is not contingent upon this building complying with the Americans with Disabilities Act (ADA) which became effective January 26, 1992. A handicap analysis has not been completed for this building and has not been considered in the overall value conclusion. The market value of the property could change substantially if alterations are required to comply with ADA regulations. 20. The client agrees that Hosch Appraisal & Consulting, Inc. does not by performing the services rendered, assume, abridge, abrogate, or undertake to discharge any duty of client to any other entity. 21. Any use of the appraisal report, by the client, is conditioned upon payment of all fees in accordance with the agreed terms. 22. In consideration for performing the services rendered at the fee charged, Hosch Appraisal & Consulting, Inc. expressly limits its liability to five (5) times the amount of the fee paid or $50,000, whichever is less. Hosch Appraisal & Consulting, Inc. expressly disclaims liability as an insurer or guarantor. Any persons seeking greater protection from loss or damage than is provided for herein, should obtain appropriate insurance. The client shall indemnify and hold harmless the appraisal firm and its employees, against all claims by any third party or any judgement for loss or damage relating to the performance or non-performance of any services by Hosch Appraisal & Consulting, Inc. 23. Unless specifically brought to the appraiser's attention, we will assume that there are no hidden or unexpected conditions of the asset to be appraised that would adversely affect or enhance the value. 24. In the future, if Hosch Appraisal & Consulting, Inc. is compelled to produce documents or testify with regard to work performed, the client shall reimburse us for all costs and expenses incurred. 25. In the event of a dispute involving interpretation or application of this agreement, the parties agree that this agreement shall be governed under the laws of the State of Minnesota. 26. The conclusion of value reached by Hosch Appraisal & Consulting, Inc. is based upon the assumption that there are no hidden or unapparent conditions of the property that might have an impact upon buildability. It is recommended that due diligence be conducted through the local building department or municipality to investigate buildability and whether the property is suitable for development into its highest and best use. Hosch Appraisal & Consulting, Inc. makes no representations, guarantees or warranties. PRELIMINARY DRAFT v SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS Type of Property: Vacant Land Location: Outlots A and B, Pioneer Pass Subdivision in Chanhassen, Minnesota Zoning: A-2 -Agricultural Estate District Date of Inspection: October 25, 2010, with previous and subsequent informal inspections Effective Date of Appraisal: October 31, 2010 Date of the Report: November 2, 2010 Property Rights Appraised: Fee Simple Interest Land Size: Outlot A: 38,344 square feet or 0.88 acres* Outlot B: 747,538 square feet or 17.16 acres* Total: 785,882 square feet or 18.04 acres* * Per James R. Hill, Inc. Final Value Estimate: $540,000 Reasonable Exposure Time: Up to 12 months PRELIMINARY DRAFT vi TABLE OF CONTENTS Item Page No. Letter of Transmittal Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Contingent and Limiting Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii Summary of Important Facts and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v General Location Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Purpose of the Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Intended Use of the Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Intended User(s) of the Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Scope of the Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Property Rights Appraised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Definition of Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Dates of Importance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Regional Analysis -Twin Cities Metropolitan Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Brief City Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Neighborhood Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Legal Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Owner of Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Real Estate Taxes and Special Assessments Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Flood Hazard Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Property History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Subject Property Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Subject Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Highest and Best Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 The Valuation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Sales Comparison Approach to Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Reasonable Exposure Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Qualifications of the Appraisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 1 GENERAL LOCATION MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 2 PURPOSE OF THE APPRAISAL The purpose of this report is to arrive at a supportable estimate of the market value of the fee simple interest in the subject real estate. INTENDED USE OF THE APPRAISAL The intended use of the appraisal is to estimate the market value of the subject property for donation to the city of Chanhassen. INTENDED USER(S) OF THE APPRAISAL The intended user of the appraisal are our clients, Mr. Severin H. Peterson and Peterson-Jacques Farm Land Company, LLC. SCOPE OF THE APPRAISAL This appraisal analysis has not been limited in scope, and was based upon the generally accepted appraisal practices in order to comply with current USPAP Standards. Within this valuation analysis, we have completed the following functions and procedures. (Additional details of our research are included throughout the following pages of this report.) -Made an inspection of the subject property and reviewed various physical background information; -Familiarized ourselves with the neighborhood and analyzed the surrounding property trends; -Considered and reviewed the historical market, taking into account stability and/or changes; -Relied on James R. Hill, Inc. for land area calculations including upland and wetland sizes; -Based upon our market research and analysis, we have completed the highest and best use analysis for Outlots A and B; -Researched comparable land sales as a means of estimating the market value of the land via the sales comparison approach to value; and -Developed an opinion of reasonable exposure time for the subject property to effect a sale at our estimated market value. Sources utilized to obtain this information include the property owner, information contained in our office files, Carver County and the city of Chanhassen public records and discussions with other real estate experts, including brokers, buyers, sellers, assessors, and other appraisers. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 3 PROPERTY RIGHTS APPRAISED The subject real estate will be appraised by estimating the market value of the fee simple interest of the real estate. For use in this report, the market value of the fee simple interest in the real estate is subject to the following definition contained on Page 78 of The Dictionary of Real Estate Appraisal, Fifth Edition: A fee simple estate implies 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. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 4 DEFINITION OF MARKET VALUE Market value as utilized in this appraisal report conforms to the following definitions obtained from Page 122 of The Dictionary of Real Estate Appraisal, Fifth Edition, published by the Appraisal Institute. The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under duress. The corresponding definition, as defined on Page A-75 in the Uniform Standards of Professional Appraisal Practice, 2010 -2011 Edition, has been agreed upon by agencies that regulate federal financial institutions in the United States and is provided below. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. buyer and seller are typically motivated; 2. both parties are well informed or well advised and acting in what they consider their own best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. We have developed an opinion of reasonable exposure time within this appraisal. Please refer to that section of the report for details. DATES OF IMPORTANCE The market value for the subject property is estimated as of October 31, 2010. The date of inspection was October 25, 2010 with previous and subsequent informal inspections. The date of the report is November 2, 2010. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 5 REGIONAL ANALYSIS -TWIN CITIES METROPOLITAN AREA Minneapolis/St. Paul is the geographic center of the Upper Midwest as well as the center for the region’s business, finance, and industry. The Twin Cities’ economy is characterized by diversity, stability, and long-term upward growth trends, ensured by the large number of major industries with long-term commitments to the area. The vital nature of the metropolitan area’s economy is shown by its stable demographic and economic growth, corporate diversity, and its ample transportation systems. There are a number of specific definitions of the Twin Cities. Initially, the Twin Cities meant Minneapolis and St. Paul. As the cities grew and the suburbs expanded, the term more often referred to the central cities and their suburbs without any specific boundaries in mind. The many different geographic definitions have originated from a variety of places and serve many purposes. One of the most often used definitions is Region 11, the legislatively defined area of the Metropolitan Council authority which includes the seven counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. The Council was created in 1967 to plan for growth and coordinate the delivery of regional systems. The other two most widely used definitions are the 11-County Area used by the Department of Employment and Economic Development and the 13-County MSA as defined by the Office of Management and Budget (OMB) and used primarily by the U.S. Census Bureau. Government Each incorporated community within the Twin Cities Metropolitan Area (TCMA) has its own unit of government, but comprehensive planning in the TCMA is controlled by the Metropolitan Council, an agency set up for the orderly management of the 7-County area in the areas of land use planning, sanitary sewer, and waste control. The council carries out the process through internal agencies under its control. The primary function is to control random development by the counties and to coordinate activities to minimize waste and duplication. Population The Twin Cities has been combined into Metropolitan Statistical Areas (MSAs), which are groupings of whole counties meeting various criteria related to the population size of the central cities, contiguity of development, density, and commuting links. MSAs have been defined after each census since 1950 by the Office of Management and Budget (OMB). These areas are intended for statistical analysis only, although they are widely used for various administrative purposes with financial ramifications. The 13-County Metropolitan Statistical Area is defined as Anoka, Dakota, Hennepin, Ramsey, Washington, Carver, Chisago, Scott, Wright, St. Croix (WI) and Isanti Counties, with Sherburne and Pierce (WI) Counties the last to be added in 1992. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 6 Regional Analysis -Twin Cities Metropolitan Area -Continued Population -Continued In 2000, the Minneapolis/St. Paul MSA had the 15th largest population among the nation’s urban areas. The 2000 U.S. Census shows the Twin Cities’ 13-county metropolitan population at 2,968,766, a 16.9% increase over the 1990 census. Population growth of the area is expected to continue through 2010, increasing by 19.1% over the 2000 census. Overall, although the central cities are still growing in population, the following two charts show a steady, outward flow of the population growth moving from the central cities toward the suburbs. A chart showing 10-year population statistics including projections for 2010 and 2020 is shown below. POPULATION TRENDS MINNEAPOLIS/ST. PAUL MSA -1980 TO 2020 Area 1980 1990 2000 % Change 1990 -2000 Projected 2010 Projected 2020 % Change 2010 -2020 7 County Total* 1,985,873 2,288,721 2,642,056 15.4% 3,064,502 3,462,443 13.0% City of Minneapolis 370,951 368,383 382,618 3.9% 405,300 425,800 5.1% City of St. Paul 270,230 272,235 287,151 5.5% 305,000 320,000 4.9% 13 County Area Anoka 195,998 243,641 298,084 22.3% 360,600 416,090 15.4% Carver 37,046 47,915 70,205 46.5% 110,740 163,830 47.9% Chisago 25,717 30,521 41,101 34.7% 59,160 75,630 27.8% Dakota 194,279 275,227 355,904 29.3% 423,040 484,720 14.6% Hennepin 941,411 1,032,431 1,116,200 8.1% 1,223,990 1,326,740 8.4% Isanti 23,600 25,921 31,287 20.7% 45,080 57,720 28.0% Ramsey 459,784 485,765 511,035 5.2% 547,630 569,840 4.1% Scott 43,784 57,846 89,498 54.7% 140,570 182,620 29.9% Sherburne 29,908 41,945 64,417 53.6% 101,570 134,360 32.3% Washington 113,571 145,896 201,130 37.9% 257,932 318,603 23.5% Wright 58,681 68,710 89,986 31.0% 136,130 181,240 33.1% Pierce, WI 31,149 32,765 36,804 12.3% 41,695 47,008 12.7% St. Croix, WI 43,262 50,251 63,115 25.6% 87,123 113,154 29.9% 13 County TOTALS 2,198,190 2,538,834 2,968,766 16.9% 3,535,260 4,071,555 15.2% Source: Minnesota Department of Administration, WI Department of Administration, Metropolitan Council -December 31, 2009 * 7 County area includes: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 7 Regional Analysis -Twin Cities Metropolitan Area -Continued Household Trends Reflecting the nationwide trend of fewer people forming a household, the number of households in the 13-County metropolitan area grew faster than the population between 1990 and 2000. The number of households surpassed the one million mark, expanding by 18.4% between 1990 and 2000. Continued growth is expected, as the total number of households by 2010 in the 13-County area is estimated at 1,382,378, a 21.6% increase since 2000. The following chart provides figures on historical and projected household trends in the Twin Cities metropolitan area. NUMBER OF HOUSEHOLDS MINNEAPOLIS/ST. PAUL MSA -1980 TO 2020 Area 1980 1990 2000 % Change 1990 -2000 Projected 2010 Projected 2020 % Change 2010 -2020 7 County Total* 721,444 875,504 1,021,454 16.7% 1,212,119 1,397,949 15.3% City of Minneapolis 161,858 160,682 162,352 1.0% 172,700 182,000 5.4% City of St. Paul 106,223 110,249 112,109 1.7% 120,000 127,000 5.8% 13 County Area Anoka 60,716 82,437 106,428 29.1% 133,120 159,380 19.7% Carver 12,011 16,601 24,356 46.7% 41,780 62,680 50.0% Chisago 8,347 10,551 14,454 37.0% 21,770 28,850 32.5% Dakota 64,087 98,293 131,151 33.4% 162,010 191,750 18.4% Hennepin 365,536 419,060 456,129 8.8% 507,020 558,505 10.2% Isanti 7,503 8,810 11,236 27.5% 16,690 21,830 30.8% Ramsey 170,505 190,500 201,236 5.6% 219,160 231,710 5.7% Scott 13,501 19,367 30,692 58.5% 51,580 70,340 36.4% Sherburne 8,971 13,643 21,581 58.2% 35,470 48,110 35.6% Washington 35,088 49,246 71,462 45.1% 97,449 123,584 26.8% Wright 18,426 23,013 31,465 36.7% 48,000 64,530 34.4% Pierce, WI N/A 11,011 13,015 18.2% 15,359 17,797 15.9% St. Croix, WI N/A 17,638 23,410 32.7% 32,970 43,517 32.0% 13 County TOTALS 764,691 960,170 1,136,615 18.4% 1,382,378 1,622,583 17.4% Source: Minnesota Department of Administration, WI Department of Administration, Metropolitan Council -December 31, 2009 * 7 County area includes: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 8 Regional Analysis -Twin Cities Metropolitan Area -Continued Urban Development Urban development in the 7-County metropolitan area consumed nearly 221 square miles of vacant/agricultural land between 1990 and 2000. The trend has continued through 2005, as another 88 square miles of undeveloped land was used. Between 1990 and 2000, land used for commercial development increased the fastest at 34%. Residential usage increased by 22.4%, industrial usage by 17.5%, public and recreational usage by 25.3%, and highway usage by 23.5%. There were an estimated 1,047 square miles of land (excluding open bodies of water) within the 2000 Metropolitan Urban Service Area (MUSA), a subset of the 7-County metropolitan area. In 1990, there were 815.9 square miles (excluding water) within MUSA, which equates to a 28.3% growth of the area through 2000. Although the MUSA had not expanded through 2005, 17.4% of its undeveloped land was consumed. Land use trends for the 7-County area and within MUSA are shown in the chart below. LAND USE 7 COUNTY METROPOLITAN AREA -1990 TO 2005 Land Use 1990 2000 % Change 1990 -2000 2005 % Change 2000 -2005 (Square Miles) MUSA Total MUSA Total MUSA Total MUSA Total MUSA Total Residential 338.6 470.6 431.6 576.0 27.5% 22.4% 455.0 619.7 5.4% 7.6% Commercial 34.0 37.6 47.6 50.4 40.0% 34.0% 52.3 55.9 9.9% 10.9% Industrial 60.0 74.8 74.3 87.9 23.8% 17.5% 74.7 90.6 0.5% 3.1% Institutional and Recreational 122.5 244.3 181.5 306.1 48.2% 25.3% 198.0 337.2 9.1% 10.2% Major 4-Lane Highways 25.2 32.4 33.2 40.0 31.7% 23.5% 36.4 44.3 9.6% 10.8% Nonurbanized Land (Including wetlands, undeveloped and agricultural land) 235.6 1,942.0 278.8 1,721.5 18.3% -11.4% 230.3 1,633.4 -17.4% -5.1% Open Water Bodies 78.7 174.7 95.1 193.7 20.8% 10.9% 95.4 194.0 0.3% 0.2% Total 894.6 2,976.4 1,142.1 2,975.6 27.7% 0.0% 1,142.1 2,975.1 0.0% 0.0% Source: Metropolitan Council as of June 2008 * 7 County area includes: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties After an attempt to create a development plan in 2002, the Metropolitan Council devised a comprehensive framework that will help guide regional growth over the next 30 years. The Regional Development Framework was adopted in January 2004, with revisions and updates made each year since. Map copies of the 2030 Framework Planning Areas, the 2010 and 2020 MUSA, as well as the Comprehensive Plan Composite, are provided on the following pages. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 9 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 10 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 11 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 12 Regional Analysis -Twin Cities Metropolitan Area -Continued Transportation The Twin Cities is the center of the Upper Midwest’s transportation network and includes barges, trucking, rail, and air transportation. Due to its strategic location at the head of the Mississippi River, the Twin Cities is the home of a number of barge lines and served by many barge carriers. The Twin Cities comprises the nation’s seventh largest wholesale distribution center and the third largest trucking distribution center, with over 100 first-class carriers. Additionally, there are several trunk line railroads with thousands of miles of rail trackage. Numerous national, international and regional airlines serve passengers from the Twin Cities International Airport in Richfield, along with other smaller airports in the area. Eagan was home to Northwest Airlines, the sixth largest carrier in the nation. In April 2008, the airline began the process of merging with the third largest carrier, Delta Airlines of Atlanta, Georgia. The merger will be complete in 2010, as the Northwest brand was officially retired on January 31, 2010. The Twin Cities is criss-crossed by an interconnecting system of major interstate freeways, consisting of approximately 15,000 miles of streets and highways, in the 7-County area. State and federal funds go toward improving highway infrastructure each year, with numerous projects recently funded through the American Recovery and Reinvestment Act. Interstate Highway #35 is slated for many projects throughout the cities, with a major project to increase traffic capacity at the intersection of State Highway #62. In addition, State Highway #610 will be extended west to connect with Interstate Highway #94 in the northwest suburbs, which is scheduled to be completed by July 2011. Metro Transit, a division of the Metropolitan Council, offers an integrated network of buses and trains as well as providing resources for those who carpool, vanpool, walk or bike. Metro Transit is one of the country's largest transit systems, with 118 bus routes providing transportation to approximately 69 million riders annually. Metro Transit also operates Minnesota's first light rail line, the Hiawatha Line Light Rail, which opened in December 2004. The 12-mile line connects three of the Twin Cities’ most popular destinations: downtown Minneapolis, the Minneapolis/St. Paul International Airport, and the Mall of America. The number of riders on the light rail line has slowly increased since 2004. There were 10.2 million riders in 2008, which was 12.3% higher than the number of riders in 2007. In an effort to ease traffic congestion between St. Cloud and Minneapolis, Metro Transit also opened the Northstar Commuter Line in November of 2009. Construction of the new line began in September of 2007 and the project cost a total of $317 million. The line currently runs 40 miles from Big Lake to downtown Minneapolis along U.S. Highway #10, with a second proposed phase extending extending the line further north to St. Cloud and Rice. The railway is projected to carry 3,400 weekday riders during 2010 and possibly 5,900 weekday riders by 2030. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 13 Regional Analysis -Twin Cities Metropolitan Area -Continued Corporate Diversity One of the most impressive aspects of the Minneapolis/St. Paul economy is its diversity. The Twin Cities has many major industries, including electronics, machinery and instrument manufacturing, food processing, and graphic arts. This area is the nation’s largest producer of mainframe computers and related equipment and is the world’s largest grain trading center. Eighteen Fortune 500 companies have located their headquarters in the Twin Cities Area, along with Hormel Foods, which is located 100 miles south of the Twin Cities in Austin, Minnesota. Seven of the 18 Twin Cities companies are ranked in the top 500 worldwide, while 13 additional companies rank within the top 1,000. A list of those Fortune 500 companies and their 2009 rankings is located below. FORTUNE 500 COMPANIES State Rank Company City U.S. Rank Global Rank Revenues ($ millions) Profits ($ millions) 1 UnitedHealth Group Minnetonka 21 71 81,186.0 2,977.0 2 Target Minneapolis 28 100 64,948.0 2,214.0 3 Supervalu Eden Prairie 51 169 44,048.0 593.0 4 Best Buy Richfield 56 167 40,023.0 1,407.0 5 CHS Inver Grove 72 257 32,167.5 803.0 6 3M St. Paul 95 351 25,269.0 3,460.0 7 U.S. Bancorp Minneapolis 129 483 19,229.0 2,946.0 8 General Mills Minneapolis 193 -13,652.1 1,294.7 9 Medtronic Minneapolis 196 -13,515.0 2,231.0 10 Land O’Lakes Arden Hills 224 -12,039.3 159.6 11 Xcel Energy Minneapolis 242 -11,203.2 645.6 12 Mosaic Plymouth 276 -9,812.6 2,082.8 13 C.H. Robinson Worldwide Eden Prairie 300 -8,578.6 359.2 14 Ameriprise Financial Minneapolis 348 -7,149.0 (38.0) 15 Hormel Foods Austin 373 -6,754.9 285.5 16 Ecolab St. Paul 403 -6,137.5 448.1 17 Thrivent Financial for Lutherans Minneapolis 409 -6,060.6 (329.7) 18 PepsiAmericas Minneapolis 478 -4,937.2 226.4 19 Nash-Finch Minneapolis 492 -4,703.7 36.2 Source: FORTUNE, May 2009 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 14 Regional Analysis -Twin Cities Metropolitan Area -Continued Finance The Twin Cities is the financial capital of the Upper Midwest, which includes Minnesota, western Wisconsin, upper Michigan, northern Iowa, North Dakota, South Dakota, and eastern Montana. Located in the Twin Cities are the headquarters of U.S. Bancorp and the Midwest headquarters of Wells Fargo & Co., two of the largest bank holding companies in the United States. Two Fortune 500 life insurance companies, Thrivent Financial and Travelers Companies, are also located in the Twin Cities. Income According to data collected and published by the market research company Sales and Marketing Management (SMM), the Twin Cities is an affluent metropolitan area. 2000 median household effective buying income (roughly equal to disposable after-tax income) is estimated at $50,028 for the 13-County metropolitan area. 2005 estimates show EBI down from 2000 levels. This is primarily due to measurable reductions in both Hennepin and Ramsey Counties that host the highest combined percentage of households in the metro area. Income estimates by SMM for the metropolitan area appear in the table below. MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME County 1980 1990 2000 % Change 1990-2000 2005 Anoka $22,822 $35,012 $50,969 45.6% $50,290 Carver $22,201 $34,414 $51,939 50.9% $57,039 Chisago N/A $28,272 $36,349 28.6% $46,629 Dakota $21,881 $38,637 $58,793 52.2% $53,115 Hennepin $23,737 $32,746 $50,003 52.7% $46,648 Isanti N/A $26,319 $41,383 57.2% $45,435 Ramsey $22,788 $31,145 $42,732 37.2% $41,137 Scott $22,111 $32,320 $56,250 74.0% $57,228 Sherburne N/A N/A $46,144 -$49,641 Washington $23,301 $45,247 $56,222 24.3% $56,373 Wright N/A $28,954 $45,509 57.2% $48,364 Pierce, WI N/A N/A $42,459 -$44,421 St. Croix, WI N/A $32,356 $50,071 54.8% $47,713 Metro Area $22,788 $33,773* $50,028** 48.1% $47,687** State of Minnesota $20,089 $26,848 $41,098 53.1% $42,930 * 11-County Minneapolis-St. Paul metro area defined by Sales & Marketing Management ** 13-County Minneapolis-St. Paul metro area defined by Sales & Marketing Management Source: Survey of Buying Power, 1981, 1991, 2001, 2005 Sales and Marketing Management PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 15 Regional Analysis -Twin Cities Metropolitan Area -Continued Employment Nonagricultural employment in the region has grown substantially through 2000. In recent years, both Hennepin and Ramsey Counties have decreased slightly in employment. Total employment in the metropolitan area was approximately 1,350,058 in 1990 and 1,705,454 in 2000, increasing 26.3% within this time period and showing the same growth of 26.3% from 1980 to 1990. The most current estimates show that total employment increased more slowly, by 20.3% between 2000 and 2010. Job growth is expected to fall to 13% between 2010 and 2020. Employment details for the Metropolitan Area from 1980 through 2000, including 2010 and 2020 projections, are presented in the table below. MINNEAPOLIS/ST. PAUL METROPOLITAN AREA EMPLOYMENT 1980 TO 2020 County 1980 1990 2000 % Change 1990-2000 Forecasted 2010 % Change 2000-2010 Forecasted 2020 Anoka 57,806 76,783 108,912 41.8% 124,790 14.6% 14.6% 141,820 Carver 9,826 16,974 28,751 69.4% 40,500 40.9% 52,090 Chisago 5,878 8,364 12,667 51.4% 33,940 167.9% 42,390 Dakota 61,675 102,089 153,375 50.2% 186,070 21.3% 209,040 Hennepin 600,978 732,796 874,707 19.4% 950,800 8.7% 1,039,300 Isanti 5,376 6,873 9,167 33.4% 26,400 188.0% 32,530 Ramsey 269,314 294,304 333,065 13.2% 371,820 11.6% 404,090 Scott 13,219 18,525 34,689 87.3% 49,200 41.8% 58,280 Sherburne 6,000 9,946 19,087 91.9% 59,330 210.8% 76,800 Washington 27,390 41,112 67,037 63.1% 87,720 30.9% 111,560 Wright 11,432 17,536 28,851 64.5% 79,210 174.5% 102,160 Pierce, WI N/A 8,293 9,290 12.0% N/A -100.0% N/A St. Croix, WI N/A 16,463 25,856 57.1% N/A -100.0% N/A TOTALS 1,068,894 1,350,058 1,705,454 26.3% 2,009,780* 20.3%* 2,270,060* * 11 County metro area totals only Source: Minnesota Department of Administration January 1, 2008; Metropolitan Council Regional Development Framework, revised December 31, 2009 and worknet.wisconsin.gov PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 16 Regional Analysis -Twin Cities Metropolitan Area -Continued Employment -Continued Over 87,700 jobs were lost between 2008 and 2009, a decrease of 5.8% within the 13-County Metropolitan Area. A 7.2% decrease in the Trade, Transportation & Utilities industry, as well as substantial losses in the Manufacturing and Professional & Business Services industries, contributed to the employment slump in the area. Due to the general economic downturn, employment decreases were experienced in all other sectors as well. However, the second largest sector, Educational & Health Services, expanded by 3.3%. The following table gives the employment breakdown by industry classification and shows the diversity in the regional economy. EMPLOYMENT BY INDUSTRY CLASSIFICATION MINNEAPOLIS/ST. PAUL METROPOLITAN AREA ANNUAL AVERAGES Industry 2008 Number Employed % of Total 2009 Number Employed % of Total Change % Change Natural Resources & Mining 4,996 0.3% 4,865 4,865 0.3% (131) -2.6% Construction 58,831 3.9% 47,829 3.4% (11,002) -18.7% Manufacturing 198,439 13.1% 177,409 12.5% (21,030) -10.6% Trade, Transportation & Utilities 331,780 21.9% 308,045 21.6% (23,735) -7.2% Information 38,553 2.5% 29,937 2.1% (8,616) -22.3% Financial Activities 137,938 9.1% 134,081 9.4% (3,857) -2.8% Professional & Business Services 265,325 17.5% 244,913 17.2% (20,412) -7.7% Educational & Health Services 251,008 16.6% 259,375 18.2% 8,367 3.3% Leisure & Hospitality 166,155 11.0% 161,492 11.3% (4,663) -2.8% Other Services 59,690 3.9% 57,060 4.0% (2,630) -4.4% TOTALS 1,512,715 100.0% 1,425,006 100.0% (87,709) -5.8% Number Employed -As of the end of Quarter 2 of 2008 and 2009 13-County Area: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright Counties in Minnesota; Pierce and St. Croix Counties in Wisconsin Sources: Minnesota Department of Employment and Economic Development (www.deed.state.mn.us) and worknet.wisconsin.gov PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 17 Regional Analysis -Twin Cities Metropolitan Area -Continued Employment -Continued A diversified economic base has helped this area weather hard economic times better than many other parts of the United States. The unemployment rate of the Twin Cities SMSA has steadily increased to since 2001 to around 7% currently, but is still well under the 10% national unemployment rate. In summary, the Minneapolis/St. Paul SMSA is strong economically due to its diversified economic base. This base begins with 19 of the Fortune 500 companies having headquarters in the region. Having a number of well-established companies has kept unemployment rates considerably lower than the average for the United States. Culture and Education Minnesota has developed excellent primary and secondary educational systems which rank among the nation’s highest in percentage of graduating high school seniors. Minnesota also has consistently been in the top 10 states in percentage of population with college degrees. There are 15 colleges and universities in the Twin Cities metropolitan area, including the University of Minnesota with just over 51,000 students. Cultural facilities include several dozen theaters, including the famous Tyrone Guthrie Theater, a science museum, two art museums, the historical Orpheum and State Theaters, the well-known Minnesota Symphony Orchestra, and the Ordway Music Theater. Recreational There is a wide range of recreational opportunities in the Twin Cities, ranging from professional spectator sports to individual leisure sports. Within the metropolitan area is a vast array of lakes, marinas, camping areas, public and private golf courses, and county parks. In addition, there are ski resorts, riding stables, tennis courts, and skating rinks. The Twin Cities is also home to Como Zoo in St. Paul, the Minnesota Zoo in Apple Valley and both Valleyfair amusement park and Canterbury Park in Shakopee. The Minnesota Vikings (football) and Minnesota Twins (baseball) play in the Hubert H. Humphrey Metrodome, and the Minnesota Timberwolves (basketball) play in the Target Center, both located in downtown Minneapolis. In addition, the Minnesota Wild, a National Hockey League franchise, began its inaugural season in September 2000 at the Xcel Energy Center in downtown St. Paul. There has been ongoing discussions and attempts by the Vikings to construct a new stadium as their lease at the Metrodome expires in 2011. The Vikings will be working with elected officials during the current legislative session to explore funding for a retractable roof stadium in eastern downtown Minneapolis. In May 2006, the Twins secured a deal to locate a new open air stadium near the Target Center in Minneapolis, began construction in 2007 and celebrated the official opening of Target Field on April 14, 2010. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 18 CITY ANALYSIS The subject property is located within the city of Chanhassen, which lies approximately 17 miles southwest of Minneapolis in Carver County. Chanhassen was incorporated as a village in 1896 and has evolved into a large Twin Cities suburb. The city offers a blend of rural and suburban living and is home to attractions such as the Minnesota Landscape Arboretum and the Chanhassen Dinner Theater. Chanhassen is well connected to the metro area, via three major highways and several county roads. State Highway #7 runs east/west along the northern border of Chanhassen. State Highway #5 runs east/west through the center of Chanhassen, along with State Highway #212 which provides a major east/west route through the southern portion of Chanhassen. All of the State Highways connect Chanhassen to Interstate Highway #494, four miles east of the city boundaries. In addition to these major highways, State Highway #41 extends north/south through Chanhassen, connecting State Highway #7 to U.S. Highway #169, approximately six miles south of the city boundaries. With many major highways and county roads, traveling within the city or commuting to the nearby Twin Cities and surrounding suburbs is fairly easy and convenient. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 19 City Analysis -Continued Population Characteristics Chanhassen, being an outer-ring suburb, experienced rapid population expansion in the 1980's. Major growth continued between 1990 and 2000, as the population of Chanhassen nearly doubled, increasing by 73.2%, from 11,732 to 20,321. The trend should slow as only around 2,000 new residents are estimated through 2008. Neighboring cities such as Carver, Shakopee, Victoria, and Waconia have also experienced major growth, each expanding by over 70% between 1990 and 2000. The chart below shows population growth trends for Chanhassen and its surrounding communities since 1970. POPULATION GROWTH -1970 TO 2008 1970 1980 1990 2000 % Change 1990-2000 Estimate 2008 Chanhassen 4,879 6,359 11,732 20,321 73.2% 22,590 Carver 669 642 744 1,266 70.2% 2,946 Chaska 4,352 8,346 11,339 17,449 53.9% 24,048 Dahlgren Twp 1,147 1,225 1,296 1,453 12.1% 1,500 Eden Prairie 6,938 16,263 39,311 54,901 39.7% 62,610 Laketown Twp 1,750 2,424 2,232 2,331 4.4% 2,082 Shakopee 6,876 9,941 11,739 20,568 75.2% 33,969 Victoria 850 1,425 2,354 4,025 71.0% 6,665 Waconia 2,445 2,638 3,498 6,814 94.8% 9,960 Carver County 28,331 37,046 47,915 70,205 46.5% 89,615 7-County Metro Area 1,874,612 1,985,873 2,288,721 2,642,056 15.4% 2,870,250 Minnesota 3,806,103 4,075,970 4,375,099 4,919,479 12.4% 5,287,976 Source: Datanet PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 20 City Analysis -Continued Household Characteristics The number of households in Chanhassen grew by 72.2% between 1990 and 2000. Since the population had grown slightly more than the number of households, this suggests a trend toward larger household sizes. In most of Chanhassen’s neighbors, however, the population had grown at a slower pace than the number of households, indicating a general trend toward smaller household sizes. The following table depicts the growth in households for census years 1980 to 2000, including 2008 estimates. HOUSEHOLD GROWTH -1980 TO 2008 1980 1990 2000 % Change 1990-2000 Estimate 2008 Chanhassen 2,075 4,016 6,914 72.2% 8,154 Carver 218 262 458 74.8% 1,055 Chaska 3,006 4,212 6,104 44.9% 8,716 Dahlgren Twp 331 394 479 21.6% 496 Eden Prairie 5,383 14,447 20,457 41.6% 24,166 Laketown Twp 521 601 637 6.0% 644 Shakopee 3,226 4,163 7,540 81.1% 12,327 Victoria 427 756 1,367 80.8% 2,300 Waconia 988 1,401 2,568 83.3% 3,885 Carver County 12,011 16,601 24,356 46.7% 32,283 7-County Metro Area 721,444 875,504 1,021,454 16.7% 1,129,966 Minnesota 1,445,222 1,647,853 1,895,127 15.0% 2,095,574 Source: DATANET PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 21 City Analysis -Continued Household Income Median household income in Chanhassen grew 61.9% to $84,215 between 1990 and 2000. Income growth is strong within the surrounding cities, ranging from 54.3% to 88.4%, suggesting a thriving local economy. In addition, income of the cities in the area are well above the $47,111 median household income in Minnesota, indicating an abundance of high-paying jobs and a well-educated workforce. Median household income information for Chanhassen and its surrounding communities is shown in the following table. MEDIAN HOUSEHOLD INCOME -1990 TO 2000 1990 2000 % Change 1990-2000 Chanhassen $52,011 $84,215 61.9% Carver $40,833 $65,083 59.4% Chaska $34,235 $60,325 76.2% Dahlgren Twp $40,962 $63,224 54.3% Eden Prairie $52,956 $78,328 47.9% Laketown Twp $47,067 $75,000 59.3% Shakopee $37,783 $59,137 56.5% Victoria $48,973 $86,772 77.2% Waconia $29,561 $55,705 88.4% Carver County $39,188 $65,540 67.2% Minnesota $30,909 $47,111 52.4% Source: U.S. Census; DATANET PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 22 City Analysis -Continued Economic Base The city of Chanhassen offers a wide variety of businesses and services which provide employment opportunities to the residents. Many large companies have been attracted to Chanhassen, partly due to its close proximity to the Twin Cities, along with access to several major highways. Emerson Process/Rosemount Inc. and Super Value are the top two employers in the city, with 1,475 and 980 employees, respectively. All of the remaining companies on the list employ hundreds of workers and offer diversity, helping keep Chanhassen's economic base strong. Major employers in the city are shown in the chart below. MAJOR EMPLOYERS IN CHANHASSEN Employer Products/Services Employees Emerson Process/Rosemount Inc. Totalizing Fluid Meter & Counting Device Mfg. 1,475 Lifetime Fitness Corporate, Subsidiary & Regional Managing Offices 980 Instant Web Companies Advertising Material Distribution Svcs. 847 Super Value Foods Supermarkets & Other Grocery (exc. Convenience) Stores 500 General Mills Comm. Bakeries 475 Banta Marketing Other Comm. Printing 383 Chanhassen Dinner Theatres Theater Companies & Dinner Theaters 300 Byerly's Supermarkets & Other Grocery (exc. Convenience) Stores 280 Minnesota Landscape Arboretum Zoos & Botanical Gardens 230 Target Other General Merchandise Stores 160 ABC/Lyman Lumber All Other Misc. Wood Prod. Mfg. 120 MA Gedney Co Fruit & Vegetable Canning 90 Source: Minnesota Department of Employment & Economic Development PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 23 City Analysis -Continued Economic Base -Continued Chanhassen has experienced a 1.6% increase in private sector covered employment between 2006 and 2008 according to data provided from the Minnesota Department of Employment and Economic Development. The city’s largest sector, Manufacturing, decreased by 8.6% in that time period. Trade, Transportation & Utilities also experienced a .2% loss. The Professional and Business Services sector saw the largest increase of 32.9%, along with Leisure and Hospitality and Education and Health Services, both of which increased by around 15%. Covered employment includes only those workers whose employers contribute to the state unemployment insurance fund and is estimated to include 98% of all workers. The following table shows the changes in employment for 2004, 2006, and 2008, by private-sector industry classification for Chanhassen. CHANHASSEN PRIVATE SECTOR COVERED EMPLOYMENT 2004 TO 2008 Industry 2004 2006 2008 % Change 2006-2008 Natural Resources and Mining 82 72 65 -9.7% Construction 662 409 414 1.2% Manufacturing 3,468 4,205 3,844 -8.6% Trade, Transportation & Utilities 1,893 2,110 2,106 -0.2% Information 206 211 197 -6.6% Financial Activities 408 480 448 -6.7% Professional and Business Services 744 913 1,213 32.9% Education and Health Services 240 480 555 15.6% Leisure and Hospitality 1,099 1,395 1,594 14.3% Other Services 611 409 419 2.4% Total 9,413 10,684 10,855 1.6% Source: Minnesota Department of Employment and Economic Development PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 24 City Analysis -Continued Summary Chanhassen is a growing, economically stable outer-ring suburb. Situated in northeast Carver County, the city is conveniently located with easy access to the Twin Cities. The city is steadily expanding in population and the number of households. Median household income is also on the rise, with the help of an ample supply of jobs within the city. Chanhassen’s location, infrastructure, employment opportunities, quality healthcare and education, along with many scenic parks and lakes have been major factors in attracting many new residents and businesses to the city each year. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 25 CITY MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 26 BRIEF NEIGHBORHOOD ANALYSIS The subject neighborhood generally consists of a primarily residential area within the city of Chanhassen that benefits from its location relative to area thoroughfares. General neighborhood boundaries can be considered to include Audubon Road to the west, Lyman Boulevard to the north and U.S. Highway #212 to the south and east. The newly constructed U.S. Highway #212 opened in late 2007. Access to the neighborhood is convenient from Audubon Road, U.S. Highway #212 and from Lyman Boulevard. Land uses in the subject neighborhood are primarily residential, with some commercial uses along Audubon Road. A residential development is currently under construction immediately south of the subject property. The subdivision, Pioneer Pass, is to include 94 singlefamily homes when completed. The first phase consists of 41 single-family residential lots with lot/home package pricing ranging from $400,000 to $450,000. In addition to this development, there is a newer development located southwest of the subject property selling two level townhouse units. Prices for these new units begin at around $190,000. The subject neighborhood is in the growth stage of its life cycle, with a significant amount of land yet to be developed. The opening of the newly constructed U.S. Highway #212 has allowed for much easier access to the main traffic arteries of the metro area as well as a much more direct route to the Minneapolis/St. Paul core. Such conditions should have a positive effect on the subject's value within the foreseeable future. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 27 NEIGHBORHOOD MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 28 LEGAL DESCRIPTION The following is the legal description of the subject property: Outlots A and B, Pioneer Pass Subdivision in Carver County, Minnesota OWNER OF RECORD According to public records, the subject property is currently owned by Peterson-Jacques Farm Land Company, LLC. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 29 REAL ESTATE TAXES AND SPECIAL ASSESSMENTS ANALYSIS Real estate taxes in Minnesota are payable either in one lump-sum payment or can be paid in two installments which are due on May 15 and October 15. The annual real estate tax charge is based on the assessor’s estimated market value as of January 2 of the prior year. The following sections will provide current real estate taxes and assessor's estimated market value(s) for the subject property which we have identified by property identification number (PID). Real Estate Tax Data Real Estate Tax Data (Payable 2010) PIDs Base Tax Specials Total Tax 250262000 $3,412,500.00 $1,507,386.28 $4,919,886.28 The real estate taxes payable in 2010 encompass a total of 72.62 acres including the subject Outlots A and B. As such, the real estate taxes are higher than what we have observed in the marketplace. Assessor's Estimated Market Value Assessor's Estimated Market Value (Payable 2010) PIDs Land Value Building Value Total Value 250262000 $3,412,500 $0 $3,412,500 The assessor's estimated market value for payable in 2010 encompass a total of 72.62 acres including the subject Outlots A and B. Therefore, a separate assessor's estimated market value for the 18.04 acre subject parcel is not available and the total above overestimates value due to the inclusion of the remainder of the parcel. Special Assessment Information The special assessments levied against the subject property as listed above include $301,044.41 for 2005 MUSA Area Extension, $1,017,682.41 for Bluff Creek Boulevard Improvements and $188,659.46 for Highway #212 related improvements for a total of $1,507,386.28. Based on a report completed by the city of Chanhassen Engineering Department, Outlots A and B are not responsible for any portion of this amount. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 30 ZONING The subject property is located within the A-2 Agricultural Estate District in the city of Chanhassen. The "intent of the A-2 District is preservation of rural character while respecting development patterns by allowing single-family residential development." This zoning district is essentially a holding classification for the subject property as it is guided for low-density residential development with a density between 1.2 and 4.0 single-family units per acre of upland area. The subject is also included within the Bluff Creek Overlay District. The Bluff Creek Overlay District has a number purposes including: Protect the Bluff Creek corridor, wetlands, bluffs and stands of mature trees, encourage a development pattern that allows people and nature to mix spanning multiple ecosystems, promote innovative development techniques, foster the creation of a greenway connecting Lake Minnewasta Regional Park and the Minnesota River Valley, encourage cost effective site development and implement the policies and recommendations found in the Bluff Creek Watershed Natural Resources Management Plan. The current use of the subject property as vacant land conforms to permitted and accessory/conditional uses in the A-2 District and Bluff Creek Overlay. We assume that the current zoning will exist into the foreseeable future, and at this time no major changes are anticipated for the subject property's area. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 31 ZONING MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 32 FLOOD HAZARD INFORMATION According to the Flood Insurance Rate Map (FIRM), the subject property is located in Zone A and Zone C. Zone A corresponds to the area within the 100 year flood plain while zone C corresponds to an area of minimal flooding. This information is found on Community-Panel Number 2700510010B, dated July 2, 1979. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 33 FLOOD HAZARD MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 34 PROPERTY HISTORY According to public records, the subject property is currently owned by Peterson-Jacques Farm Land Company, LLC. The subject parcel (72.62 acres including the subject Outlots A and B) has been under the same ownership for over a five year period. We are aware of a recent sale and purchase agreement for a portion of the larger subject parcel. Ryland will purchase a total of 44.795 acres of the subject (located immediately south of Outlots A and B) for $3,700,000 ($82,598.50 per acre raw) not including the addition of the special assessments of $1,507,386.28 which brings the total price to $5,207,386.28 or $116,249.28 per acre. The 44.795 acres will be improved with 94 single-family lots with lot/home packages expected to sell between $400,000 and $450,000. This sale is brokenup into two phases. The purchase of the first phase recently occurred and included 25.277 acres, of which approximately 4.48 acres will be dedicated dedicated to the city of Chanhassen as the park dedication with an additional approximately 4.23 acres to be sold to the city of Chanhassen for the same per acre amount in which the property was purchased. The remaining 19.518 acres will be purchased by Ryland in 2012 for the remaining portion of the $3,700,000. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 35 SUBJECT SITE DESCRIPTION The subject site consists of a slightly irregular-shaped land parcel which contains 18.04 acres according to James R. Hill, Inc. and is located in Chanhassen, Minnesota. The entire property and Outlot B on a stand alone basis are accessed via Bluff Creek Boulevard while Outlot A on a stand alone basis must rely on access across the parcel immediately adjacent to the north via the yet-to-beconstructed River Rock Drive extension. Bluff Creek Boulevard is currently a bituminous road with one lane in each direction. Site topography is varied throughout the site but is generally sloping down toward Bluff Creek with areas that are level to slightly undulating. The site has areas that are heavily wooded with deciduous trees as well as wetland and grassy areas. Native vegetation is located throughout the site. We were not provided with any soil tests, but relied on data from James R. Hill, Inc. as to the amount of wetland and upland on the subject property. We have not been provided with any soil tests. Land features are noted as follows: Bounded By: North: Residential/Recreational South: Future Residential East: Future Residential West: Bluff Creek Boulevard Accessibility: Via Bluff Creek Boulevard (combined property and Outlot B on a stand alone basis). Via the yet to be built River Rock Drive extension (Outlot A on a stand alone basis). Number of Lanes Each Direction: One Street Surface: Bituminous Sidewalk: None Curb and Gutter: Concrete Right-in, Right-out Curb Cuts: None Full-movement Curb Cuts: One Water: Available Sanitary Sewer: Available Storm Sewer: Municipal PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 36 Subject Site Description -Continued Gas: Available by local utility Electricity: Available by local utility Telephone: Available by local utility Approximate Shape: Slightly irregular Topography: Generally sloping toward Bluff Creek with some level areas Soils: Assumed sound and stable. No evidence of contamination visualized. Landscaping/Vegetation: Appears to be in a natural state with native trees, grasses and vegetation. Observed Easements or Restrictions: Please refer to the legal description of record for specific details of any possible easements or restrictions. Total Estimated Land Area*: Upland Wetland Total Outlot A 36,609 s.f. 1,735 s.f. 38,344 s.f. Outlot B 356,162 s.f. 391,376 s.f. 747,538 s.f. Total 392,771 s.f. 393,111 s.f. 785,882 s.f. * Per James R. Hill, Inc. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 37 PLAT MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 38 AERIAL PLAT MAP (SUBJECT OUTLINED IN RED) (BOUNDARIES APPROXIMATE) PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 39 SUBJECT PHOTOGRAPHS View of the subject facing southerly. View of the subject property facing southeasterly from Bluff Creek Boulevard. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 40 Subject Photographs -Continued View of the subject facing southerly. View of the lowland of the subject facing southwesterly. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 41 HIGHEST AND BEST USE The highest and best use of the subject real estate as it will be regarded in this appraisal report will conform to the following definition found on Page 277 of The Appraisal of Real Estate, 13th Edition:Highest and best use is the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported and financially feasible and that results in the highest value. In order to determine the highest and best use of the subject property, a three-step process is followed, which we have defined as follows: 1. The highest and best use of the site as though vacant is determined. Three options are available to owners of vacant sites: (1) leaving the property vacant; (2) holding the site for a future use, or (3) developing the site. The recommended option must be legally permissible, physically possible, financially feasible, and maximally productive. 2. If development is concluded as the highest and best use of the site as though vacant, the second step would be to determine the ideal improvement. The ideal improvement would reflect state-of-the-art design techniques, legal conformance, and provide the highest value. 3. If the property is currently improved, the final step would be to determine the highest and best use of the property as improved. A comparison is made between the existing improvement and the ideal improvement in order to identify differences. To modify the existing improvements for any differences from the ideal, one of the following five options should be recommended to the owner: A. Leave the property in its current state. B. Remodel C. Renovate D. Convert E. Demolish to clear the site for redevelopment. The recommended option must be legally permissible, physically possible, financially feasible, and maximally productive. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 42 Highest and Best Use Analysis -Continued Step 1: Highest and Best Use of the Site as Though Vacant Legal Permissibility The subject property is located within the A-2 Agricultural Estate District in the city of Chanhassen. The "intent of the A-2 District is preservation of rural character while respecting development patterns by allowing single-family residential development." This zoning district is essentially a holding classification for the subject property as it is guided for low-density residential development with a density between 1.2 and 4.0 single-family units per acre of upland area. The subject is also included within the Bluff Creek Overlay District. The Bluff Creek Overlay District has a number purposes including: Protect the Bluff Creek corridor, wetlands, bluffs and stands of mature trees, encourage a development pattern that allows people and nature to mix spanning multiple ecosystems, promote innovative development techniques, foster the creation of a greenway connecting Lake Minnewasta Regional Park and the Minnesota River Valley, encourage cost effective site development and implement the policies and recommendations found in the Bluff Creek Watershed Natural Resources Management Plan. The current use of the subject property as vacant land conforms to permitted and accessory/conditional uses in the A-2 District and Bluff Creek Overlay. We assume that the current zoning will exist into the foreseeable future, and at this time no major changes are anticipated for the subject property's area. Physical Possibility The subject site consists of a slightly irregular-shaped land parcel which contains 18.04 acres according to James R. Hill, Inc. and is located in Chanhassen, Minnesota. The entire property and Outlot B on a stand alone basis are accessed via Bluff Creek Boulevard while Outlot A on a stand alone basis must rely on access across the parcel immediately adjacent to the north via the yet-to-beconstructed River Rock Drive extension. Bluff Creek Boulevard is currently a bituminous road with one lane in each direction as is expected for the future River Rock Drive. Site topography is varied throughout the site but is generally sloping down toward Bluff Creek with areas that are level to slightly undulating. The site has areas that are heavily wooded with deciduous trees as well as wetland and grassy areas. Native vegetation is located throughout the site. We were not provided with any soil tests, but relied on data from James R. Hill, Inc. as to the amount of wetland and upland on the subject property (approximately 50% upland and 50% wetland). The sloping site topography in conjunction with the wetland areas and Bluff Creek render Outlot B generally unbuildable. The majority of Outlot A is considered upland and is buildable; however, most of Outlot A will be encompassed by road right-of-way and easements related to the future River Rock Drive as River Rock Drive will be the main access to the property and future residential development adjacent to the east. We have not been provided with any soil tests. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 43 Highest and Best Use Analysis -Continued Step 1: Highest and Best Use of the Site as Though Vacant Financial Feasibility Based on conversations with the Senior Planner for the city of Chanhassen, Outlot B is unbuildable based on legal and physical aspects as previously discussed. Outlot A is buildable for a single-family residence but it does not have immediate, legal access. The Planner indicated a driveway to Outlot A would likely be approved on the location of the future River Rock Drive extension; however, the plans for the River Rock Drive extension to the property adjacent to the east would essentially wipe-out Outlot A as a buildable site for a single-family residence. Without developing Outlot A in conjunction with the adjacent land owner to the east, development would not be financially feasible as the possible development of Outlot A with a single-family residence would be beholden to the desire of the property owner to the east to extend River Rock Drive to its border. Given the access, amount and location of the wetland, terrain of the entire site, inclusion of Bluff Creek within the subject and surrounding land uses, the site would benefit from either single-family or park land use. Demand for residential land ripe for development in the Minneapolis/St. Paul Metropolitan area is generally poor; the property adjacent to the south is one of the rare exceptions. The property immediately to the south of the subject sold for $82,598.50 per acre and is currently being developed with 41 single-family lots. The property adjacent to the east does not currently have plans for development and the owner of that property is the only buyer for Outlot A on a standalone basis which would drive significant discounts for the price the owner of the parcel adjacent to the east would pay for Outlot A on a stand-alone basis. Based on this evidence as well as discussions with other real estate professionals active in the local market, it is our opinion the highest and best use for the subject would be for Outlots A and B to remain together with a recreational open space use benefitting the local and regional community. An owner would be able to extend the roadway to Outlot A to take advantage of the upland area for vehicle parking without the future loss of use as would occur in the single-family residence scenario. Furthermore, vehicles would be able to park along the Future extension of River Rock Drive and a parking lot would be possible. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 44 Highest and Best Use Analysis -Continued Step 1: Highest and Best Use of the Site as Though Vacant Maximum Productivity Based on our research within the local market, it is our opinion that recreational open space use for the subject creates the highest value while meeting the test of being legally permissible, physically possible, and financially feasible. The reasons for our opinion are as follows: 1. Compatibility of the use with the current zoning and surrounding land uses. 2. Suitability of the shape, topography, amount of wetland, inclusion of Bluff Creek, location and access to the site. 3. Close proximity to a growing residential and economic base. 4. Convenient accessibility to the entire site via Bluff Creek Boulevard. 5. Cooling of the residential market has caused the prices paid for land zoned for residential to fall. 6. Significant discounts to Outlot A on a stand-alone basis would be needed to account for the single buyer buyer aspect and location of future road right-of-way for River Rock Drive through the subject drive the value of Outlot A on a stand-along basis below its value as recreational open space as assembled with Outlot B. Step 2: Description of the Ideal Improvement Since our highest and best use of the subject property is recreational open space use, the ideal improvements for the site would be small structures and site improvements (such as a parking lot, trails, etc.) which compliment this use. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 45 THE VALUATION PROCESS The valuation process contains many facets. A wide variety of data, including the previously discussed Area Analysis, Subject Site and Improvements Descriptions, and Highest and Best Use Analysis, is compiled and utilized to value the property based upon three methods of valuation which are referred to as "approaches". These approaches to value are briefly described as follows: Cost Approach In the cost approach, an estimated reproduction or replacement cost of the building and land improvements as of the date of valuation is developed together with an estimate of the losses in value that have taken place due to wear and tear, design and plan, or neighborhood influences. To the depreciated building cost estimate, the estimated value of the land is added. The total represents the value indicated by the cost approach. Sales Comparison Approach In the sales comparison approach, the subject property is compared to similar properties that have been sold or for which listing prices or offering figures are known. Data for generally comparable properties is used, and comparisons are made to demonstrate a probable price at which the subject property would be sold if offered on the market. Income Capitalization Approach In the income capitalization approach, the rental income to the property is shown with deductions for vacancy and collection loss and expenses. The net operating income of the property is estimated. To support this estimate, operating statements for previous years and comparable properties may be reviewed, along with available operating cost estimates. An applicable capitalization method and appropriate capitalization rates are developed and used in computations that lead to an indication of value. Other methods may also be applied, such as a gross rent multiplier, which reveals the relationship between gross rental income and the sale price of a given income-producing property. Gross rent multipliers are extracted from comparable sales and analyzed, with a reconciled gross rent multiplier applied to the subject’s gross rent to render an indication of market value. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 46 The Valuation Process -Continued Inherent within the previous three approaches to value are some basic appraisal principles, which include anticipation, balance, change, externalities, substitution, and also supply and demand. These principles are briefly described below. (These definitions are derived from The Appraisal of Real Estate, 13th Edition, pages 35-43.) -Anticipation: The perception that value is created by the expectation of benefits to be derived in the future. -Balance: The principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium. -Change: The result of the cause and effect relationship among the forces that influence real property value. -Externalities: The principle that economies outside a property have a positive effect on its value while diseconomies outside a property have a negative effect upon its value. -Substitution: The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution. This is the primary principle upon which the cost and sales comparison approaches are based. -Supply and Demand: In economic theory, the principle that states that the price of a commodity, good, or service varies directly, but not necessarily proportionately, with demand, and inversely, but not necessarily proportionately, with supply. In a real estate appraisal context, the principle of supply and demand states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply. Explanation of the Reconciliation Process An appraisal is composed of a number of integrated, interrelated, and inseparable procedures that have a common objective --a condensed, reliable estimate of value. Although the three approaches are seldom completely independent, it is important to note that in certain cases, greater emphasis is placed on a particular approach. The reasons for this are as varied as the properties themselves, and each appraisal must be addressed individually. The appraiser discusses the strengths and weaknesses of each of the approaches to value, and concludes to a final value which reflects the most applicable approaches. Summary In this case, the subject property is vacant land located along Bluff Creek Boulevard in Chanhassen, Minnesota. As discussed in the previous sections of the report, the area surrounding the subject property is developed and exhibits a growing residential and economic base. After reviewing the pertinent information within our office, and having various discussions with other real estate experts, we have completed the sales comparison approach to value in the analysis of the subject property. The comparable information and our findings are further detailed in the following section. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 47 SALES COMPARISON APPROACH TO VALUE The sales comparison approach to value is defined as: The process of deriving a value indication for the subject property by comparing market information for similar properties with the property being appraised, identifying appropriate units of comparison, and making qualitative comparisons with or quantitative adjustments to the sale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements of comparison. (The Dictionary of Real Estate Appraisal, Fifth Edition, Page 175.) The major premise within this approach is that the market value of the subject property is directly related to the prices of comparable, competitive properties. Furthermore, this valuation method not only assumes that both buyer and seller are fully informed about the property, but also that both have general knowledge of the market for that type of property and that the property has been exposed in the open market for a reasonable time. Based upon the previously discussed highest and best use analysis of the subject property, comparable property sales with similar highest and best uses were gathered and analyzed from the metropolitan area. We believe these comparable sales best represent the subject property with respect to location, age, size, design, amenities, and other major characteristics. The comparable market data which is submitted in this report, in our opinion, suggests that the best unit of comparison for the subject real estate should be sale price per acre. The application of this unit of comparison produces an estimate of value for a property by comparing it with similar properties of the same type and class which have sold recently in the same or competing areas. The analytical processes utilized in determining the degree of comparability between two properties involves judgment as to their similarity with respect to many value factors such as location, date of sale, sale, physical characteristics, and terms of sale. The sale price of those properties deemed most comparable tends to set the value range for the subject property. Further consideration of the comparative data indicates a figure representing the value of the subject property, that is, the probable price at which it could be sold by a willing seller to a willing buyer as of the date of the appraisal. The data involved in the application of this process concerns these comparable properties as well as the subject property, and this data will vary with the type of property. Four categories of data, however, are basic and apply regardless of the type of property. They are: 1. Sales prices of comparable properties. 2. Conditions influencing each sale. 3. Location of each property. 4. Description of land and improvements of each comparable property. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 48 Sales Comparison Approach to Value -Continued We have conducted a survey of land sales which are comparable to the subject parcel and, as a result, have formed an opinion of market value for the subject. In our opinion, the total market value for the entire 18.04-acre parcel is estimated to be $540,000. Comparable real estate transactions which were useful in estimating this land value are individually described on the following page. Details on these sales are located in the Addenda of this report. COMPARABLE LAND SALES FACT CHART Sale No. Location Sale Date Intended Use Zoning at Time of Sale Size (Acres) Topography Sale Price Per Acre 1 8186 Afton Road Woodbury, MN 1/10 Parkland R-4 2.54 95% Upland 5% Wetland $112,205 2 SWC Camp Three Road/Zodiac Street Columbus, MN 12/08 Park/Wetland RR 15.00 35% Upland 65% Wetland $18,667 3 Part of Sec.14, Twp.27, Rg. 21 Kimbro Avenue South Cottage Grove, MN 12/07 Parkland R1, Rural Residential 15.80 100% Upland $31,646 4 xxxxx County Road 40 Carver, MN 8/07 Wetland Ag 23.55 100% Wetland $3,900 5 37xx Nichols Road Eagan, MN 5/07 Recreational/Wetland BP 10.45 5% Upland 95% Wetland $7,177 Subject Outlots A and B Pioneer Pass Chanhassen, MN 10/10 (Date of Value) Recreational/Open Space A-2 18.04* 50% Upland* 50% Wetland* ?? * Per James R. Hill, Inc. Characteristic differences between a comparable sale and the subject might require adjustments to increase the reliableness of a given sale as an indicator of value for the subject. Elements of comparison which may warrant adjustments include real property rights, financing, conditions of sale, buyer expenditures immediately after purchase, market conditions (time), and various physical characteristics, such as location, zoning, development stage, size, shape, topography/soils, and others. An explanation of adjustments, a comparable sales location map, and a chart demonstrating our adjustment analysis are provided on the following pages. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 49 Sales Comparison Approach to Value -Continued Adjustments 1. Property Rights Conveyed -This adjustment compensates for differences between the property rights conveyed within each of the sales and the subject's property rights being appraised. Because fee simple property rights were conveyed within the comparable sales and the subject was appraised in fee simple, no adjustments were required for property rights. 2. Financing -The financing adjustment considers any favorable or unfavorable financing present within the sales that may have affected the purchase price paid. There is a general tendency for buyers to pay higher prices for below market financing and lower prices for above-market financing. All sales involving financing at above or below market terms are adjusted to reflect a cash-equivalent price. Each of the comparable land sales cited is an arm's length transaction involving either cash payment or cash-equivalent financing. 3. Conditions of Sale -Considers various types of extenuating circumstances such as buyer or seller motivations and opinions at the time of sale, which may have impacted the sale price. No unusual motivations or conditions are known to have impacted any of the comparable sales analyzed; hence, no adjustments were made to the sales for conditions of sale. 4. Buyer Expenditures Immediately After Purchase -This adjustment compensates for any expenditures required by the buyer to clear the site for development. Such expenses may be related to environmental, legal, demolition, and other issues associated with a purchased property. An informed buyer would discount the asking price by the amount of the anticipated expenditure if an equally desirable property without additional expenses was available at the same asking price. None of the comparable sales required adjustments for buyer expenditures immediately after purchase. 5. Market Conditions (Time) -This is included within the adjustment process for the purposes purposes of considering any changes within the market (either positive, negative or stable) due to the passage of time and differences in buyers’/sellers’ attitudes toward the real estate market in general between the dates of the comparable sales and the date of valuation. Demand for well-positioned vacant recreational open space land parcels is softer than it had been over the last several years, as evidenced by a smaller amount of sales in the local market as the general land development market weakened. We have applied a 3% annual decrease to each of the comparable land sales between May 2007 and October 2010 based on discussions with real estate professionals active in the local market. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 50 Sales Comparison Approach to Value -Continued Adjustments -Continued 6. Physical Characteristics < Location -A location adjustment considers differences in surrounding land uses between a comparable and the subject, and their positions relative to paths of development, traffic counts, views, area amenities, accessibility and other situate characteristics. The subject property is located on Bluff Creek Boulevard near residential and agricultural land as well as rural residential development in the city of Chanhassen. Outlot B has good access while the upland area of Outlot A would require the construction of a driveway. Sales #2, #3, #4 and #5 were given upward adjustments for inferior location when compared to the subject as these sales are located further out from major paths of development and/or in areas of inferior surrounding locational characteristics. Sale #1 is located along a major artery in Woodbury with excellent access and visibility. Sale #1 was given a downward adjustment for superior locational characteristics. < Zoning -Potential land uses and performance requirements are often dictated by local zoning codes and are legal limitations on development opportunities. The subject property is located in the Agricultural Estate district; however, it is guided for low density residential development. Sales #1 and #5 are located in superior zoning districts when compared to the subject and were given downward adjustments. Sale #1 is located in a residential district allowing for a higher density development than is possible on the subject and Sale #5 is located in a business district allowing for office, industrial and some retail uses. Sales #2, #3 and #4 have inferior zoning districts when compared to the subject and were given upward adjustments. Sales #2, #3 and #4 are located in districts with much lower densities allowed than can be accomplished on the subject. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 51 Sales Comparison Approach to Value -Continued Adjustments -Continued 6. Physical Characteristics -Continued < Development Stage -There is a continuum in the development of land, which begins at the raw stage and ends at the finished retail stage at which the site is ready for construction of an improvement. The majority of sales occurring in the marketplace are either large raw acreage sales or sales of finished sites. In the early stages of development, the owner/developer spends time planning and engineering the property to obtain concept plan, preliminary plat and then final plat approvals prior to even breaking ground. As the property moves closer to its finished retail stage, the level of risk and cost associated with developing such a property decrease and a potential buyer is therefore willing to pay more. This adjustment also compares the availability and status of utilities between the comparable sales as of their dates of sale sale and the subject site when valued. Availability of common utilities such as water, sewer, electricity, natural gas, and communications cable impacts the price a buyer will pay for land. Parcels lacking one of these services will typically be discounted to compensate for attaining the service or a suitable replacement. The subject property and all of the comparable sales are recreational land parcels which will not be developed in the foreseeable future. Sales #2 and #3 do not have public water or sewer available while both are available to the remaining sales and the subject. These two sales were given upward adjustments for inferior development stage when compared to the subject while the remaining three sales were not adjusted. < Size -This adjustment is important particularly when significant differences arise in size between the subject and a comparable sale. The general tendency of the market is to pay higher unit prices for smaller parcels than for larger ones. This is because the pool of buyers for recreational land grows as parcel size decreases, resulting in higher unit prices for smaller parcels as a general rule. Only Sale #1 is significantly smaller than the subject necessitating a downward adjustment. The remaining sales are similar in size to the subject and were not adjusted. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 52 Sales Comparison Approach to Value -Continued Adjustments -Continued 6. Physical Characteristics -Continued < Shape -considers the suitability of a parcel's shape compared with the subject. The market tends to pay more for rectangular-shaped parcels than irregular-shaped parcels of similar size. This is because oftentimes irregular-shaped parcels are more difficult and costlier to develop. While development cost considerations have less impact on sale prices of recreational land than on prime development land, irregular shapes which restrict the use of the land have an adverse impact on sale prices. The subject property is slightly irregular in shape which has no effect on the performance of the land for recreational use. Similarly, all five sales have shape characteristics that do not appear to hinder or restrict the use of the land. Therefore, no adjustments are necessary for these sales. < Topography/Soils -adjusts for differences between the topography/soils of the comparable sales in comparison to the subject. Furthermore, we have accounted for wetland area specifically in an additional adjustment under the following "Other" category. Therefore, this adjustment focuses on the topography/soils of the usable upland portion of each sale. Severe slopes and poor soils can mandate inefficient land plans and increase development costs compared to level parcels with stable soils. The subject property contains both level and sloping areas and has assumed stable soil conditions. Sales #1 and #2 have superior topography/soils conditions when compared to the subject and therefore were given downward adjustments. The remaining sales are generally similar and were not adjusted. < Other -Wetland/Usable Area -considers any other differences between a comparable sale and the subject that the appraiser believes would influence value that are not applicable to a previous category. While some wetland area is viewed as favorable for recreational land uses, excessive wetland area detracts from the value of land in the local market. As with wetland, any other site characteristics that limit the use of the property will also detract for the overall value of a parcel. Sale #1 consists of 95% upland which is superior to the subject’s 50%/50% upland/wetland split. Sale #2 has a higher percentage of wetland than the subject and was given an upward adjustment. Sale #3 contains 100% upland which is superior than the subject. Sale #3 was given a downward adjustment for the higher percentage of upland. Sales #4 and #5 have higher percentages of wetland when compared to the subject (100% and 95% wetland respectively) and were adjusted upward accordingly. PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 53 COMPARABLE VACANT LAND SALES MAP PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 54 Sales Comparison Approach to Value -Continued Adjustments -Continued COMPARABLE LAND SALES ADJUSTMENT CHART Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Sale Price Per Acre $112,205 $18,667 $31,646 $3,900 $7,177 1. Property Rights Conveyed Adjustment 0% 0% 0% 0% 0% Adjusted Price $112,205 $18,667 $31,646 $3,900 $7,177 2. Financing Adjustment 0% 0% 0% 0% 0% Adjusted Price $112,205 $18,667 $31,646 $3,900 $7,177 3. Conditions of Sale Adjustment 0% 0% 0% 0% 0% Adjusted Price $112,205 $18,667 $31,646 $3,900 $7,177 4. Buyer Expenditures Immediately After Purchase Adjustment 0% 0% 0% 0% 0% Adjusted Price $112,205 $18,667 $31,646 $3,900 $7,177 5. Market Conditions (Time) Adjustment -2% -5.5% -8.5% -10% -10.5% Adjusted Price $109,961 $17,640 $28,956 $3,510 $6,423 6. Physical Characteristics Location -20% 15% 10% 25% 20% Zoning -5% 5% 2.5% 5% -2.5% Development Stage 0% 5% 5% 0% 0% Size -5% 0% 0% 0% 0% Shape 0% 0% 0% 0% 0% Topography/Soils -5% -2.5% 0% 0% 0% 0% Other -Wetland Area -15% 5% -15% 20% 15% Adjustment -50% 27.5% 2.5% 50% 32.5% Adjusted Price $54,980 $22,491 $29,680 $5,265 $8,511 Indicated Subject Value Per Acre $54,980 $22,491 $29,680 $5,265 $8,511 Indicated Acre Value Range $5,265 to $54,980 Indicated Mean Value Per Acre $24,186 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 55 Sales Comparison Approach to Value -Continued Adjustments -Continued Before adjustments for differences, the aforementioned sales indicate a range of $3,900 per acre to $112,205 per acre for the subject land. After adjustments, these sales indicate a range of $5,265 per acre to $54,980 per acre with an adjusted average sale price of $27,186 per acre. All of the transactions have been considered within our analysis of the subject property and have contributed to a value indication; however, we have placed an increased emphasis on Sales #1, #2 and #3 in our analysis as these sales have a significant portion of upland which is a characteristic of the subject. The average sale price per acre indicated by Sales #1, #2 and #3 is $35,717. After reconciling the adjustment process, it is our opinion that the subject land has a market value near the adjusted mean of the sale prices or approximately $30,000 per acre of land. 18.04 acres @$30,000 per acre $541,200 Rounded to: $540,000 PRELIMINARY DRAFT HAC10044-00.wpd Hosch Appraisal & Consulting, Inc. 56 REASONABLE EXPOSURE TIME Exposure time can be defined as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. Reasonable exposure time can differ from actual exposure time. For example, a property may have been exposed at $1,000,000 for two years, which informed market participants considered unreasonable. Then the owner lowered the price to $900,000 and began receiving offers, resulting in a transaction at $800,000 six months later. Although the actual exposure time was 2.5 years, the reasonable exposure time at a value range of $800,000 to $900,000 would be six months. We have researched exposure time for properties similar to the subject property by reviewing information gathered through sales verification and having discussions with various market participants (such as brokers, buyers, sellers, etc.). Summary After reviewing the national and local data, and having discussions with brokers in the marketplace, it is our opinion that a reasonable exposure time for the subject property at our estimated market value would be up to 12 months. Even though the market evidence for the number of days and market for churches is 88 days, we maintain a reasonable exposure time of up to 12 months due to the much larger size and smaller pool of potential buyers for the subject property. PRELIMINARY DRAFT 57 QUALIFICATIONS OF NATHAN J. BROOBERG Biographical Data and Education Raised in Fergus Falls, Minnesota. Graduated from Fergus Falls Senior High School. Bachelor of Arts degree, Gustavus Adolphus College, St. Peter, Minnesota, in Biology and Geography. Successfully completed the following real estate courses and seminars: Eminent Domain and Condemnation 10th Annual Real Estate Trends Seminar Business Practices and Ethics Residential Construction Real Estate Principles Case Studies in Highest and Best Use Real Estate Practices Income Capitalization Standards of Professional Practice Advanced Sales Comparison & Cost Approaches General Applications Professional Qualifications or Associations Certified General Real Property Appraiser Licensed Appraiser – State of Minnesota, License #20249946, Expires August 31, 2012 Professional Experience Hosch Appraisal & Consulting, Inc., Minneapolis, Minnesota Real Estate Appraiser March 2005 – present Shenehon Company, Minneapolis, Minnesota Real Estate Estate Appraiser February 2001 – March 2005 Duties and Responsibilities: Prepare professional valuations and market analysis of real estate, business enterprises, and intangible property rights. Appraisal assignments have involved numerous types of commercial, multiple family, industrial, and special purpose properties. These assignments have included mortgage financing, condemnation, tax abatement proceedings, investment counseling, potential sales and purchases, lease and rental analyses, charitable donations, internal management decisions, allocation of purchase price, and insurance indemnification. Partial Client List Allina Hospitals & Clinics Minnesota Department of Transportation (Mn/DOT) Ames Construction Minnesota Department of Natural Resources (DNR) Accent Homes Minnwest Bank BPK&Z MPCA Babcock Neilson Mannella & Klint North Haven Church Bremer Bank Oppenheimer Donnelly & Wolff LLP Boundary Waters Bank Osceola Medical Center Builders Development & Finance Peterson, Peterson & Associates, PLC Capmark Finance, Inc. Pipestone County City of New Hope Rosemount National Bank City of Shoreview Sovereign Bank Garith Anderson Trucking State Bank of Hamel Gregerson, Rosow, Johnson & Nilan, Ltd. The Business Bank Hajek & Beauclaire, LLC URS Corporation Henson & Efron U.S. Bank Lindquist & Vennum Vic’s Crane & Heavy Haul Messerli & Kramer P.A. Wells Fargo/RETECHS Metropolitan Airports Commission (MAC) Wiley Enterprises PRELIMINARY DRAFT 58 QUALIFICATIONS OF STEPHEN T. HOSCH, MAI Biographical Data and Education Born and raised in Columbia Heights, Minnesota, and graduated from Columbia Heights High School. Attended St. Cloud State University and graduated with a Bachelor of Science degree in Real Estate with an emphasis in appraisal. Successfully completed numerous real estate appraisal courses offered by the Appraisal Institute, as well as attended several seminars covering specialized appraisal topics, some of which are highlighted below: Annual IREM -2010 Annual Forecast – January 2010 Land Development & Redevelopment Conference – May 2006 Annual RERC -Industry Forecast: 2009 – January 2009 Annual RERC-Industry Forecast: 2006 – January 2006 4 Annual Minnesota Land Development Conference – May 2008 th 22nd Annual Real Estate Institute – November 2004 10th Annual Real Estate Trends Seminar – May 2008 Mortgage Foreclosures in Minnesota – March 2004 Annual RERC-Industry Forecast: 2007 – January 2007 Real Estate Outlook for 2004 – December 2003 Eminent Domain – November 2006 Legal Issues in Valuation – March 2003 Professional Qualifications or Associations Certified General Real Property Appraiser Licensed Appraiser – State of Minnesota, License #4002903, Expires August 31, 2011 Member – Appraisal Institute (MAI) Holding MAI Designation The MAI membership designation is held by appraisers who are experienced in the valuation and evaluation of commercial, industrial, residential and other types of properties, and who advise clients on real estate investment decisions. MAI members are the preferred choice among lawyers to serve as expert witnesses in trials, hearings, and other litigation matters. The Appraisal Institute conducts a mandatory program of continuing education for its designated members and also requires that they comply with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute. MAI’s and RM’s who meet the minimum standards of this program are awarded periodic educational certification. I am currently certified under the Appraisal Institute education program through December 31, 2011. Member – Institute of Business Appraisers (IBA) Member – Minnesota Shopping Center Association (MSCA) Professional Experience Hosch Appraisal & Consulting, Inc., Minneapolis, Minnesota President, February 2005 – present Duties and Responsibilities: Prepare professional valuations and market analysis of real estate, businesses and intangible property rights. Real estate assignments involve numerous types of commercial, multiple family, industrial, and special purpose properties as well as land subdivisions, bulk acreage and proposed developments. Business valuation and consulting assignments have included both operating and holding companies. The specific purposes of these assignments have included highest and best use studies, mortgage financing, condemnation, tax abatement proceedings, feasibility analysis, investment counseling, potential sales and purchases, lease and rental analyses, bankruptcy proceedings, charitable donations, internal management decisions, special assessment appeals, gift tax, and allocation of purchase price. Court experience involves testifying at commissioner hearings, depositions and trials, preparation of affidavits, and providing litigation support. Qualified as a court-appointed commissioner in Wright County. Shenehon Company, Minneapolis, Minnesota Senior Vice President – Director of Real Estate, November 2003 – January 2005; Shareholder Senior Vice President – Co-Director of Real Estate, September 2002 – November 2003; Shareholder Vice President – Co-Director of Real Estate, April 2001 – September 2002; Shareholder Appraiser/Analyst from June 1991 to March 2001 PRELIMINARY DRAFT 59 QUALIFICATIONS OF STEPHEN T. HOSCH, MAI -CONTINUED Author/Co-Author or Guest Speaker of: “Appraisal Issues in Litigation,” Various Minneapolis Law Firms, December 2007 “Creative Opportunities in the Current Real Estate Market,” Valuation Viewpoint, Summer 2004 “Business Components and the Valuation of Real Estate,” Valuation Viewpoint, Winter 2004 “Challenging Issues in Commercial and Industrial Valuation,” Commercial Real Estate Financing Conference, March 13, 2002 “Market Valuation & Appraisals,” Minnesota Commercial Association of Realtors, January 22, 2002 “Fundamentals of Special Assessments in Appraisal,” Valuation Viewpoint, Spring 1999 “A Perspective on Subdivision Appraisal,” Valuation Viewpoint, Winter 1997 Partial Client List Accent Homes Larkin Hoffman Daly & Lindgren Allied Waste Industries LeVander, Gillen & Miller, P.A. Allina Hospitals & Clinics Lindquist & Vennum Ames Construction Malkerson Gilliland Martin LLP Anchor Bank McGrann Shea Anderson Carnival Straughn & Lamb BPK&Z Merchants Bank, N.A. Best & Flanagan, LLP Messerli & Kramer P.A. Bremer Bank Metropolitan Airports Commission (MAC) Briggs and Morgan Minnesota Department of Transportation (Mn/DOT) Boundary Waters Bank Minnesota Department of Natural Resources (DNR) Builders Development & Finance Minnwest Bank Capmark Finance, Inc. Moss & Barnett City of Arden Hills MPCA City of Eagan North Haven Church City of Fargo Olympic Steel, Inc. City of New Hope Oppenheimer Donnelly & Wolff LLP City of Osseo Osceola Medical Center City of Shoreview Pace Realty Advisors, LLC City of Victoria Peterson, Peterson & Associates, PLC Dennis Properties Pinnacle Commercial Capital Fabyanske, Westra & Hart Pipestone County Falcon National Bank Rosemount National Bank Fargo Public School District No. 1 Roseville Area Schools Fredrikson & Byron P.A. Sovereign Bank Garith Anderson Trucking Speedway SuperAmerica Geneva Management Services State Bank of Hamel Gopher Resources Stearns Bank Gregerson, Rosow, Johnson & Nilan, Ltd. The Business Bank Grossman Investments, LLC Three Rivers Park District Hajek & Beauclaire, LLC URS Corporation Harstad Development U.S. Bank Hennepin County Vic’s Crane & Heavy Haul Henson & Efron Village Bank Hinshaw & Culbertson LLP Warchol Law Office Home Federal Savings Bank Wells Fargo/RETECHS James M. Neilson, Attorney at Law Wiley Enterprises