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HomeMy WebLinkAboutHL015_Mesquite Ridge_Appraisal_Updated_20220916APPRAISAL REPORT of a electric utility easement to be situated on ±5.909 acres located at the NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas Parcel: HL015 Project Name: City of Denton/Eagle to Locust Property Owner: Mesquite Ridge Condos HCAD Parcel Number: 122410 Legal Description: Lot 1, Block 1 of the Mesquite Ridge Townhouse Addition, Denton, Denton County, Texas Submitted To: Nikki Costanza Manager 7Arrows Land Staff 777 Main Street Suite 600 Fort Worth, TX 76102 Prepared By: ATRIUM REAL ESTATE SERVICES 14425 Falcon Head Blvd, D-100 Austin, TX 78738 Effective Date of Appraisal: September 16, 2022 September 29, 2022 Nikki Costanza Manager 7Arrows Land Staff 777 Main Street Suite 600 Fort Worth, TX 76102 RE: Appraisal report of the electric utility easement to be situated on ±5.909 acres located at the NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas. Parcel #: HL015 Project Name: City of Denton/Eagle to Locust Property Owner: Mesquite Ridge Condos HCAD Parcel Number: 122410 Legal Description: Lot 1, Block 1 of the Mesquite Ridge Townhouse Addition, Denton, Denton County, Texas Dear Nikki Costanza: As requested, an appraisal has been completed on the above referenced property. The purpose of the appraisal is to estimate the market value of the fee simple interest of the subject whole property and the recommended compensation for the electric utility easement. The following appraisal and final estimate of value have been based upon the inspection of the property and upon research into various factors which influence value. The effective date of this appraisal was September 16, 2022. The analysis and results of the investigation are submitted in the accompanying report which has been prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the APPRAISAL INSTITUTE, the Uniform Standards of Professional Appraisal Practice as promulgated by the APPRAISAL FOUNDATION, as well as the requirements of the STATE OF TEXAS for State-Certified General Real Estate Appraisers. MARKET VALUE/RECOMMENDED COMPENSATION ESTIMATES - The market value of fee simple interest in the subject property, as well as the recommended compensation estimate for the proposed acquisition, as of September 16, 2022, was as follows: RECOMMENDED COMPENSATION SUMMARY Whole Property (Land and impacted site improvements - if any) $4,633,128 Part to be Acquired (±21,954 SF) $197,586 Remainder Before the Acquisition $4,435,542 Remainder After the Acquisition $4,435,542 Damages/(Enhancements) $0 Special Compensation/Cost to Cure $79,750 Total Recommended Compensation $277,336 _____________________________________________________________________________________________ ii Page 2 September 29, 2022 ATRIUM REAL ESTATE SERVICES appreciates the opportunity to be of service to you. Should you have any questions, or if we can be of further assistance, please contact our office. Respectfully submitted, ATRIUM REAL ESTATE SERVICES Lory R. Johnson, MAI, SR/WA President Texas Certified Appraiser #TX-1321640-G CERTIFICATION OF THE APPRAISER _____________________________________________________________________________________________ iii The undersigned do hereby certify that, to the best of my knowledge and belief: • the statements of fact contained in this report are true and correct. • the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved. I have performed services, as an appraiser or in another capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • My engagement in this assignment was not contingent upon developing or reporting predetermined results. • My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, the occurrence of a subsequent event directly related to the intended use of this appraisal. • the reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the APPRAISAL INSTITUTE. The report also conforms to the Uniform Standards of Professional Appraisal Practice as promulgated by the APPRAISAL FOUNDATION, as well as the requirements of the STATE OF TEXAS for State-Certified General Real Estate Appraisers. • Lory R. Johnson, MAI, SR/WA and Jay Sterling have made a personal inspection of the property that is the subject of this report. • Jay Sterling provided significant real property appraisal assistance to the person signing this certification. • the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, Lory R. Johnson, MAI, SR/WA has completed the continuing education program for Designated Members of the Appraisal Institute. • this appraisal report sets forth all limiting conditions (imposed by the terms of the assignment or by the undersigned) affecting the analyses, opinions, and conclusions expressed herein. • the appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. • the market data contained within this report, has been accumulated from various sources and, where possible, personally examined and verified as to details, motivation, and validity. ATRIUM REAL ESTATE SERVICES Lory R. Johnson, MAI, SR/WA President Texas Certified Appraiser #TX-1321640-G Date Signed: September 29, 2022 TABLE OF CONTENTS _____________________________________________________________________________________________ iv TITLE PAGE .................................................................................................... COVER LETTER OF TRANSMITTAL ........................................................................................ I CERTIFICATION OF THE APPRAISERS ............................................................................................................ III TABLE OF CONTENTS ............................................................................................................................................ IV INTRODUCTION SUBJECT PROPERTY PHOTOGRAPHS................................................................................................................ 2 EXECUTIVE SUMMARY ........................................................................................................................................... 8 DATE OF VALUE ...................................................................................................................................................... 11 OWNER CONTACT .................................................................................................................................................. 11 PURPOSE/INTENDED USE OF THE APPRAISAL ........................................................................................... 11 PERSONAL PROPERTY .......................................................................................................................................... 11 SCOPE OF WORK .................................................................................................................................................... 11 PROPERTY RIGHTS APPRAISED ........................................................................................................................ 13 DEFINITION OF MARKET VALUE....................................................................................................................... 13 DEFINITION OF RECOMMENDED COMPENSATION ................................................................................... 13 LEGAL DESCRIPTION............................................................................................................................................ 14 DESCRIPTIONS NEIGHBORHOOD DESCRIPTION ...................................................................................................................... 16 SITE DESCRIPTION ............................................................................................................................................... 17 IMPROVEMENT DESCRIPTION .......................................................................................................................... 27 HIGHEST AND BEST USE ANALYSIS ............................................................................................................... 29 APPRAISAL PROCESS ........................................................................................................................................... 31 THE SALES COMPARISON APPROACH............................................................................................................ 33 RECOMMENDED COMPENSATION ESTIMATE PART TO BE ACQUIRED ....................................................................................................................................... 51 VALUATION OF THE PERMANENT ROADWAY EASEMENT ....................................................................... 51 REMAINDER BEFORE THE ACQUISITION ...................................................................................................... 52 REMAINDER AFTER THE ACQUISITION ......................................................................................................... 54 DAMAGES OR ENHANCEMENTS TO THE REMAINDER .............................................................................. 56 TEMPORARY EASEMENTS AND SPECIAL COMPENSATION/COST TO CURE TEMPORARY EASEMENTS ................................................................................................................................... 58 SPECIAL COMPENSATION/COST TO CURE ................................................................................................... 58 RECONCILIATION & QUALIFICATIONS RECONCILIATION OF VALUE INDICATIONS ................................................................................................ 60 ASSUMPTIONS AND LIMITING CONDITIONS .............................................................................................. 61 QUALIFICATIONS OF LORY R. JOHNSON, MAI, SR/WA ........................................................................... 63 ADDENDA FIELD NOTES OWNER LETTER INTRODUCTION INTRODUCTION _____________________________________________________________________________________________ 2 SUBJECT PROPERTY PHOTOGRAPHS AERIAL PHOTOGRAPH Source: Google Maps Blue: Subject property boundary (estimated by appraiser) Green: Proposed permanent unobstructed visibility easement (estimated by appraiser) INTRODUCTION _____________________________________________________________________________________________ 3 SUBJECT PROPERTY PHOTOGRAPHS AERIAL PHOTOGRAPH Source: Google Maps Blue: Subject property boundary (estimated by appraiser) Green: Proposed permanent unobstructed visibility easement (estimated by appraiser) INTRODUCTION _____________________________________________________________________________________________ 4 SUBJECT PROPERTY PHOTOGRAPHS Subject property (main improvements not impacted) Date photo taken: 09/16/22 Subject property (main improvements not impacted) Date photo taken: 09/16/22 Along proposed acquisition Date photo taken: 09/16/22 HL015 INTRODUCTION _____________________________________________________________________________________________ 5 SUBJECT PROPERTY PHOTOGRAPHS Along proposed acquisition Date photo taken: 09/16/22 Along proposed acquisition Date photo taken: 09/16/22 Along W Collins St (subject on right) Date photo taken: 09/16/22 HL015 HL015 INTRODUCTION _____________________________________________________________________________________________ 6 SUBJECT PROPERTY PHOTOGRAPHS Subject property Date photo taken: 10/08/20 09/16/22 Proposed acquisition Date photo taken: 10/08/20 09/16/22 Proposed acquisition Date photo taken: 10/08/20 INTRODUCTION _____________________________________________________________________________________________ 7 SUBJECT PROPERTY PHOTOGRAPHS Proposed acquisition Date photo taken: 10/08/20 09/16/22 Proposed acquisition Date photo taken: 10/08/20 09/16/22 Along W Collins St (subject on right) Date photo taken: 10/08/2009/16/22 INTRODUCTION _____________________________________________________________________________________________ 8 EXECUTIVE SUMMARY Parcel #: HL015 Property Owner: Mesquite Ridge Condos Property Location: NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas PROPERTY COMPONENT SUMMARY Component Acres SF Whole Property ±5.909 acres ±257,396 SF Electric Utility Easement ±0.504 acres ±21,954 SF Remainder ±5.909 acres ±257,396 SF Remainder Unencumbered ±5.405 acres ±235,442 SF Whole Property Remainder After Highest & Best Use- As if Vacant: Multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. Multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres.mercial. Highest & Best Use As Improved: Multi-family residential. Multi-family residential. Shape: Irregular. Irregular. Topography: Generally level. Generally level. Floodplain %: 0% 0% Utilities: All utilities available. Additional Public Services: Fire, emergency medical services, and police protection are provided by the City of Dento and Denton County. Zoning: MN - Mixed-Use Neighborhood Easements/Encumbrances: Per the title commitment, an 8' communication easement to AT&T (Cab D, Pg. 18), a 16' utility easement to the City of Denton (Cab D, Pg. 18), a 24' utility easement to the City of Denton (Cab D, Pg. 18), a 43' utility easement to the City of Denton (Cab D, Pg. 18), a 25' building setback line along W Collins St (Cab D, Pg. 18) and a 20' building setback line along Bernard St (Cab D, Pg. 18). No restrictions or easements are known to negatively impact the developability of the property. No adverse easements or encumbrances noted. Improvements (Whole): Improved with 24 multi-family housing buildings (ranging ±2,730 - ±3,604 SF per aerial measurements with an unknown YOC per CAD) and attendant site improvements. INTRODUCTION _____________________________________________________________________________________________ 9 Appraisal Issues: The whole property size utilized herein is ±5.909 acres. The main improvements are not impacted and have not been included. The closest multi-family housing building is ±5 LF from the proposed acquisition. A retaining wall and wood privacy fencing is located within the proposed easement area. Per the client (09/2022), impacted site improvements will be repaired or replaced to like or better condition as a part of the construction process. As such, the minimal site improvements located in the acquisition have not been included herein. The subject property has a highest and best use of multi-family residential and is within an area of extensive mixed-use capabilities. Due to this highest and best use, the zoning of the subjects, compatibility of the surrounding uses and the current use of the subject, a search for comparable land sales that would have similarities such as these was conducted. Additionally, the proximity of the University of North Texas creates a very high demand for mixed-use/multi-family property within the subjects neighborhood which will drive up prices within that area as the neighborhood is very desirable/profitable. Due to the limited amount of available vacant land that is within close proximity to the university, sales were utilized that would be considered unusable due to the date of sale. The subject remainder land will be of adequate size and shape for development to its highest and best use after the acquisition. This size and shape is considered to be within acceptable comparisons to the development in the area. Per the easement document, trees and hedges that are within or encroach within the electric easement will be trimmed or removed at the expense of the electric company. Due to the subject having forty planted hedges and twenty three planted trees within the easement and there being no room to place trees onto the unencumbered area, a special compensation associated with the loss of the trees has been included. Effective Date of the Appraisal: September 16, 2022 Date of the Report: September 29, 2022 Appraiser: Lory R. Johnson, MAI, SR/WA INTRODUCTION _____________________________________________________________________________________________ 10 RECOMMENDED COMPENSATION SUMMARY Whole Property (Land only and impacted site improvements, if any) $4,633,128 Part to be Acquired (±21,954 SF) $197,586 Remainder Before the Acquisition $4,435,542 Remainder After the Acquisition $4,435,542 Damages/(Enhancements) $0 Special Compensation/Cost to Cure $79,750 Total Recommended Compensation $277,336 INTRODUCTION _____________________________________________________________________________________________ 11 DATE OF VALUE The property was inspected on October 8, 2020 and September 16, 2022, with September 16, 2022 serving as the effective date of the appraisal. OWNER CONTACT PURPOSE/INTENDED USE OF THE APPRAISAL The purpose of this appraisal is to estimate the market value of the fee simple interest of the subject whole property and the recommended compensation for the electric utility easement. The definitions of these value estimates are included herein. The client is 7Arrows Land Staff. The intended user of this report is City of Denton and 7Arrows Land Staff. Use of this report by others is not intended by the appraisers. This report is intended only for use in estimation of recommended compensation and it is understood that the opinions expressed in this report may be utilized for litigation purposes. PERSONAL PROPERTY The value conclusions contained within this report do not include any items considered to be personal property. Please refer to the following chart for any items noted as personal property, which have not been valued herein. SCOPE OF WORK As outlined, the purpose of this appraisal is to estimate the market value of the fee simple interest of the subject whole property and the recommended compensation for the electric utility easement. A survey was provided for the proposed acquisition. Using this information as well as additional information secured from the County Deed Records and the Central Appraisal District, the size of the property and its legal description were established. All information provided is assumed to be correct and has been considered in the following valuation analysis. INSPECTION SUMMARY Date of inspection: October 8, 2020 September 16, 2022 (from ROW) Letter sent to: CF Midtown Denton Owner, LLC 710 Peachtree Street Suite 100 Atlanta, GA 30308 Date of Atrium intro letter: NA Owner rep at inspection: Mike Neblett (10/08/2020) Comments: A letter was originally sent to the owner. Mike Neblett (property manager) accompanied the appraiser on inspection. Atrium appraisers: Lory R. Johnson, MAI, SR/WA Jay Sterling PERSONAL PROPERTY Type: Description: None NA INTRODUCTION _____________________________________________________________________________________________ 12 The whole property size utilized herein is ±5.909 acres. The property is improved with 24 multi-family housing buildings (ranging ±2,730 - ±3,604 SF per aerial measurements with an unknown YOC per CAD) and attendant site improvements. The main improvements are not impacted and have not been included. The closest multi-family housing building is ±5 LF from the proposed acquisition. A retaining wall and wood privacy fencing is located within the proposed easement area. Per the client (09/2022), impacted site improvements will be repaired or replaced to like or better condition as a part of the construction process. As such, the minimal site improvements located in the acquisition have not been included herein. The subject property has a highest and best use of multi-family residential and is within an area of extensive mixed-use capabilities. Due to this highest and best use, the zoning of the subjects, compatibility of the surrounding uses and the current use of the subject, a search for comparable land sales that would have similarities such as these was conducted. Additionally, the proximity of the University of North Texas creates a very high demand for mixed-use/multi-family property within the subjects neighborhood which will drive up prices within that area as the neighborhood is very desirable/profitable. Due to the limited amount of available vacant land that is within close proximity to the university, sales were utilized that would be considered unusable due to the date of sale. The subject remainder land will be of adequate size and shape for development to its highest and best use after the acquisition. This size and shape is considered to be within acceptable comparisons to the development in the area. Per the easement document, trees and hedges that are within or encroach within the electric easement will be trimmed or removed at the expense of the electric company. Due to the subject having forty planted hedges and twenty three planted trees within the easement and there being no room to place trees onto the unencumbered area, a special compensation associated with the loss of the trees has been included. In analyzing the area economy, data from the various sources was obtained. In addition, we inspected the subject property and surrounding properties, analyzed the area and subject neighborhood, formulated an opinion regarding the highest and best use, made a search for comparable sales and listings, and all other available pertinent information used in developing an opinion of value. This data is based upon research into the area market. In all cases, the data is verified with buyer, seller, landlord, tenant, agent, and/or broker, and cross-checked through public records. The valuation of the subject property will be completed in two phases. First, the overall market value of the property will be estimated. The final step will be to estimate the appropriate recommended compensation for the electric utility easement. In the valuation analysis of the subject property, the Cost, Sales Comparison and Income Capitalization Approaches to value were considered. The property is effectively vacant land (main improvements not impacted). The subject is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. As such, the Sales Comparison Approach (land only) has been developed to estimate the land value. The Cost Approach, Sales Comparison Approach- As Improved and the Income Approach were not considered applicable and have not been developed. INTRODUCTION _____________________________________________________________________________________________ 13 In the valuation of the remainder property, the Cost, Sales Comparison and Income Capitalization Approaches to value were considered. The property is effectively vacant land (main improvements not impacted). The subject is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres.minimal site improvements. As such, the Sales Comparison Approach (land only) has been developed to estimate the land value. The Cost Approach, Sales Comparison Approach- As Improved and the Income Approach were not considered applicable and have not been developed. This Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice. As such, it presents only summary discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated herein. The appraiser is not responsible for unauthorized use of this report. The appraisal was undertaken jointly by Lory R. Johnson, MAI, SR/WA, and Jay Sterling, who performed initial research, inspection and comparable data selection. Lory R. Johnson, MAI, SR/WA provided input with respect to appraisal methodology, data selection, analytical processes and report review. The final report is the result of this collaborative effort. PROPERTY RIGHTS APPRAISED The property rights appraised are the fee simple interest in the whole subject property and the electric utility easement acquisition. Fee simple estate is an 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.1 An easement is the right to use another’s land for stated purpose. An easement is an interest in real property that transfers use, but not ownership, of a portion of an owner’s property.2 DEFINITION OF MARKET VALUE Market value, as used in this appraisal report, is defined as being: "The price which the property would bring when it is offered for sale by one who desires, but is not obliged to sell, and is bought by one who is under no necessity of buying it, taking into consideration all of the uses to which it is reasonably adaptable and for which it either is or in all reasonable probability will become available within the reasonable future."3 DEFINITION OF RECOMMENDED COMPENSATION Just compensation or Recommended compensation, as used in this appraisal report, is defined as being: “...the amount of loss for which a property owner is compensated when his or her property is taken…should put the owner in as good a position as he or she would be if the property had not been taken...” 4 1 The Appraisal of Real Estate, 15th Edition, (Chicago: Appraisal Institute, 2020) pg. 60. 2 The Appraisal of Real Estate, 15th Edition, (Chicago: Appraisal Institute, 2020) pg. 74. 3 City of Austin vs. Cannizzo, et a,. 267 S. W.2d 808,815 (1954) 4 The Dictionary of Real Estate Appraisal, 5th ed., 106. INTRODUCTION _____________________________________________________________________________________________ 14 LEGAL DESCRIPTION The following legal description was obtained from the County Deed Records and is assumed to be correct. It has not been verified by legal counsel nor has an independent survey of the parcel been commissioned. Therefore, it is suggested that the legal description be verified before being used in a legal document or conveyance. Lot 1, Block 1 of the Mesquite Ridge Townhouse Addition, Denton, Denton County, Texas. DESCRIPTIONS NEIGHBORHOOD DESCRIPTION _____________________________________________________________________________________________ 16 NEIGHBORHOOD MAP The subject property is located at the NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas. The subject neighborhood can best be defined as Southwest Denton and the area surrounding the University of North Texas. Loop 288, US Hwy 77 and IH 35 provide the main north-west routes to and though the neighborhood and US Hwy 380 provides the main east-west route. Various other FM and county roads provide secondary access to the neighborhood area and surrounding areas. Overall, land uses within the neighborhood somewhat varied, with commercial developments including convenience stores, gas stations, office buildings and retail centers. However, the predominate use of the surrounding properties are utilized for multi-family as to serve as off campus living for the students at the University of North Texas. SITE DESCRIPTION _____________________________________________________________________________________________ 17 SUBJECT PLAT Source: Denton County Appraisal District SITE DESCRIPTION _____________________________________________________________________________________________ 18 TOPOGRAPHY MAP Source: Google Earth/Earthpoint SITE DESCRIPTION _____________________________________________________________________________________________ 19 FLOODPLAIN MAP Source: Google Earth/FEMA SITE DESCRIPTION _____________________________________________________________________________________________ 20 WETLANDS MAP Source: US Fish and Wildlife Service – National Wetlands Inventory SITE DESCRIPTION _____________________________________________________________________________________________ 21 ZONING MAP Source: City of Denton SITE DESCRIPTION _____________________________________________________________________________________________ 22 FUTURE LAND USE MAP Source: City of Denton SITE DESCRIPTION _____________________________________________________________________________________________ 23 SUBDIVISION MAP Source: Denton County Clerk SITE DESCRIPTION _____________________________________________________________________________________________ 24 Location: NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas Legal Description: Lot 1, Block 1 of the Mesquite Ridge Townhouse Addition, Denton, Denton County, Texas PROPERTY COMPONENT SUMMARY Component Acres SF Whole Property ±5.909 acres ±257,396 SF Electric Utility Easement ±0.504 acres ±21,954 SF Remainder After ±5.909 acres ±257,396 SF Remainder Unencumbered ±5.405 acres ±235,442 SF Whole Property Size (Per Field Notes): ±5.909 acres. The whole property size utilized herein is ±5.909 acres. Whole Property Size (Per CAD): ±5.909 acres. Shape: Irregular. Frontage: W Collins St: ±820 feet Bernard St: ±332 feet Current Roadway Design: W Collins St is a secondary street. Bernard St is a secondary street Access/Visibility: Accessible via W Collins St and Bernard St. Adequate visibility from roadway(s). Topography: Generally level. Subsoil Conditions and Drainage: An engineering study to determine the soil and subsoil conditions has not been furnished. Upon inspection of the subject and surrounding improvements, soil conditions appear adequate to support development of the subject property with adequate engineering. Floodplain: Federal Emergency Management Agency (FEMA) Flood Insurance Rate Map Panel # and date: FEMA Map Panel #48121C0360G, for Denton County, Texas and Incorporated Areas dated April 18, 2011. FEMA Zone: Zone X, an area determined to be outside of the 100-year floodplain Floodplain %: 0% is in the FEMA designated 100- year floodplain Wetlands: According to the National Wetlands Inventory compiled by the US Fish and Wildlife Service, the subject property does not contain wetlands. Jurisdiction: City of Denton and Denton County SITE DESCRIPTION _____________________________________________________________________________________________ 25 Utilities: All utilities available. Water: City of Denton Electricity: Denton Municipal Electric Sewer: City of Denton Septic: None Gas: None Comments: None Additional Public Services: Fire, emergency medical services, and police protection are provided by the City of Dento and Denton County. Zoning: Mixed-Use Neighborhood - MN. The MN district is provided to support compatibility between higher-intensity mixed-use areas and adjacent residential and commercial areas. It includes varying densities of residential, neighborhood-serving retail, restaurants, commercial and office uses that are sensitive to the surrounding built and natural context in scale and form. Development Setbacks: Front: 25’ along W Collins St 20’ along Bernard St Side: 5’ Rear 10’ Minimum Size: 4,000 SF Landscaping requirements: None Comments: Per the City of Denton Development Code (Subchapter 3) there is a maximum building height of 40 feet, the maximum building coverage can be 65% of the total area. Future Land Use: The City of Denton Future Land Use Plan designates the subject property as Neighborhood/University Compatibility Area. The purposes of this area is to create compatible form and land uses for the areas that serve both the established neighborhoods and the universities. Land Use Restrictions: According to the provided documents, there are no known deed restrictions, either public or private, that would limit the utilization of the subject property. This statement should not be taken as a guarantee or warranty that no such restrictions exist. Deed and title examination by a competent attorney is recommended should any questions arise regarding restrictions. Easements/ Encumbrances: Per the title commitment, an 8' communication easement to AT&T (Cab D, Pg. 18), a 16' utility easement to the City of Denton (Cab D, Pg. 18), a 24' utility easement to the City of Denton (Cab D, Pg. 18), a 43' utility easement to the City of Denton (Cab D, Pg. 18), a 25' building setback line along W Collins St (Cab D, Pg. 18) and a 20' building setback line along Bernard St (Cab D, Pg. 18). No SITE DESCRIPTION _____________________________________________________________________________________________ 26 restrictions or easements are known to negatively impact the developability of the property. No adverse easements or encumbrances noted. Environmental/Toxic Waste: Any environmental issues, including endangered species and endangered species natural habitats, which would pertain to the subject property are unknown. Typically, real estate appraisers are not qualified nor are they experts in detecting hazardous materials, radiological materials, archeological resources, etc.; therefore, an expert in these fields should be consulted for opinions on these matters. This report assumes no environmental hazards or special resources exist within or on the subject property. History/Current Listing: Grantor: NA Grantee: NA Date of Transaction: NA Recording Info: NA Comments: The property does not appear to be listed for sale and no offers or contracts are known to exist. No transactions have occurred in the past 5 years. Surrounding Properties: North: Multi-family South: W Collins St with multi-family beyond East: Multi-family West: Bernard St with multi-family beyond Real Estate Taxes: Taxing jurisdictions per CAD: (122410) City of Denton Denton Central Appraisal District Denton County Denton ISD 2022 CAD land value: $0 2022 CAD improvement value: $0 2022 Total assessed value: $0 Comments: Per CAD, no information exists for the subject property. IMPROVEMENT DESCRIPTION _____________________________________________________________________________________________ 27 Improvement: As of the effective date, the property is improved with 24 multi-family housing buildings (ranging ±2,730 - ±3,604 SF per aerial measurements with an unknown YOC per CAD) and attendant site improvements.The main improvements are not impacted and have not been included. The closest multi-family housing building is ±5 LF from the proposed acquisition. A retaining wall and wood privacy fencing is located within the proposed easement area. Per the client (09/2022), impacted site improvements will be repaired or replaced to like or better condition as a part of the construction process. As such, the minimal site improvements located in the acquisition have not been included herein. Improvement Description Size Retaining wall Various height and width wood beam retaining wall on grass and dirt hill ±375 feet Wood privacy fencing 6’ wood privacy fencing with wood posts ±112 feet Proximity to ROW: Closest Multi-family housing building (not impacted): ±32 LF from W Collins St ±50 LF from Bernard St ANALYSIS OF DATA HIGHEST & BEST USE _____________________________________________________________________________________________ 29 Highest and Best Use can be defined as: "The reasonably probable and legal use of vacant land or an improved property, that is physically possible, appropriately supported, financially feasible, and that results in the highest value."5 The highest and best use involves consideration of land use as though vacant, and as improved. The potential uses of the subject are affected by the real estate economic forces of the area and neighborhood. The available uses are restricted by four criteria including physically possible, legally permissible, financially feasible and maximally productive. Highest and Best Use, As If Vacant Physically Possible The first constraint is dictated by the physical attributes of the property itself. The subject property is located at the NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas. The subject contains ±5.909 acres multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. It is generally level.. The shape is irregular. According to available maps, 0% of the site is within the floodplain. According to the National Wetlands Inventory compiled by the US Fish and Wildlife Service, the subject property does not contain wetlands. The subject property has all utilities available. Therefore, based on the physical characteristics of the site, there appear to be no significant detriments to the site. Legally Permissible Legal restrictions, as they apply to the subject are private restrictions such as easements, and public restrictions such as zoning. There are no known deed restrictions, either public or private, that would limit the utilization of the subject property. With respect to easements and encumbrances, per the title commitment, an 8' communication easement to AT&T (Cab D, Pg. 18), a 16' utility easement to the City of Denton (Cab D, Pg. 18), a 24' utility easement to the City of Denton (Cab D, Pg. 18), a 43' utility easement to the City of Denton (Cab D, Pg. 18), a 25' building setback line along W Collins St (Cab D, Pg. 18) and a 20' building setback line along Bernard St (Cab D, Pg. 18). No restrictions or easements are known to negatively impact the developability of the property. No adverse easements or encumbrances noted. In consideration of zoning, the subject property is MN. The City of Denton Future Land Use Plan designates the subject property as Neighborhood/University Compatibility Area. The purposes of this area is to create compatible form and land uses for the areas that serve both the established neighborhoods and the universities. Also considered within the context of Legally Permissible is conformity with surrounding properties. “Conformity is the appraisal principle that holds that real property value is created and sustained when the characteristics of a property conform to the demands of its market.”4 As discussed in the Neighborhood Description section, residential and commercial properties are predominant throughout the neighborhood. The subject is improved with 24 multi-family housing buildings (ranging ±2,730 - ±3,604 SF per aerial measurements with an unknown YOC per CAD) and attendant site improvements. Surrounding development is predominately commercial and residential uses. 5 The Appraisal of Real Estate, 15th Edition, (Chicago: Appraisal Institute, 2020), p.333. 4 The Appraisal of Real Estate, 15th Edition, (Chicago: Appraisal Institute, 2020), p.33. HIGHEST & BEST USE _____________________________________________________________________________________________ 30 In summary, due to its location, compatibility and surrounding uses, the legally permissible component of the highest and best use analysis is considered to point toward multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. Financially Feasible and Maximally Productive This section requires that the forces of supply and demand be in balance, and that the property developed will provide sufficient income to return profit to the land. The most reasonable use of the site that generates the highest return to the land is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. Highest and Best Use Conclusion, As If Vacant Considering all of the factors which influence highest and best use, it is our opinion that the highest and best use of the subject site, if vacant, is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. Highest and Best Use Conclusion, As Improved As previously noted, the property is improved with 24 multi-family housing buildings (ranging ±2,730 - ±3,604 SF per aerial measurements with an unknown YOC per CAD) and attendant site improvements. As such, the highest and best use, as improved is multi-family residential. APPRAISAL PROCESS _____________________________________________________________________________________________ 31 In estimating the value of real property, there are three recognized approaches or techniques that, when applicable, can be used to process the data considered significant to each into separate value indications. In all instances the experience of the appraisers, coupled with objective judgment, plays a major role in arriving at the conclusions of indicated value from which the final estimate of value is made. The three approaches are commonly known as: The Cost Approach - An estimate of the present reproduction cost of the improvements, less accrued depreciation, plus land value. Depreciation includes all loss in value of the improvements due to physical deterioration, functional obsolescence, and economic obsolescence. The Sales Comparison Approach - Comparison with similar properties that have sold in the market. This Approach can be applied to land alone or to improved properties. Income Capitalization Approach - Capitalization of the net income that the property can produce. This Approach is applicable only to income producing properties. Whole Property In the valuation analysis of the subject property, the Cost, Sales Comparison and Income Capitalization Approaches to value were considered. The subject is effectively vacant land (main improvements not impacted). The subject is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. As such, the Sales Comparison Approach (land only) has been developed to estimate the land value. The Cost Approach, Sales Comparison Approach- As Improved and the Income Approach were not considered applicable and have not been developed. Part to be Acquired The Part to Be Acquired is considered to be a pro-rata share of the whole. Remainder Before The Remainder Before is a mathematical calculation of the Whole Property less the Part to Be Acquired. Remainder After In the valuation analysis of the remainder after property, the Cost, Sales Comparison and Income Capitalization Approaches to value were considered. The subject is effectively vacant land (main improvements not impacted). The subject is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres.minimal site improvements. As such, the Sales Comparison Approach (land only) has been developed to estimate the land value. The Cost Approach, Sales Comparison Approach- As Improved and the Income Approach were not considered applicable and have not been developed. First, the overall market value of the property will be estimated. The final step will be to estimate the appropriate recommended compensation for electric utility easement. THE SALES COMPARISON APPROACH THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 33 The Sales Comparison Approach will be utilized to estimate the fee simple value of the subject site. This approach is considered the most valid indicator in estimating the market value of unimproved land not typically leased in the marketplace. In valuing property via this approach, as many land sales as possible are gathered and the most comparable are used for comparison. Since properties are seldom identical, the comparable sales must be adjusted to the subject for differences in time, location, and physical characteristics to indicate a value for the subject tract. When valuing real estate via the Sales Comparison Approach, the subject and comparables must be broken down into units of comparison. Units of comparison for vacant land include price per front foot, price per lot, price per acre (buildable or total), price per square foot (buildable or total) and price per buildable unit. The method of comparison is based on the method typically used to purchase vacant tracts in a given area. The price per lot appears prevalent in the area. However, for valuation purposes the $/SF will be considered to apply to the SF of the acquisition. In undertaking our research efforts, a diligent search was made of the subject's neighborhood for properties that had sold or that were under contract. Our research included searching for vacant land tracts that exhibited similar characteristics. Included on the following page is a summary of the documented land sales that have been used in estimating the value of the subject. A location map has also been included. THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 34 LAND SALES MAP LAND SALES SUMMARY # LOCATION DATE OF SALE $/SF LAND SIZE (ACRES) 1 EL of Hwy 377 S, S of Frenchtown Rd (8595 Hwy 377), Denton County, TX 07/27/21 $18.72 ±1.594 acres 2 EL of Unicorn Lake Blvd, S of Wind River Ln (3251 Unicorn Lake Blvd), Denton, TX 08/27/21 $17.22 ±0.600 acres 3 WL of Fort Worth Dr, S of IH 35E (1208 Fort Worth Dr), Denton, Denton County, TX 06/24/22 $13.38 ±1.115 acres 4 SWC of N Loop 288 and FM 426 (E McKinney St), Denton, Denton County, TX 11/06/17 $21.73 ±1.584 acres Subject NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas ±5.909 acres Source: Atrium Real Estate Services 09/2022 THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 35 LAND SALE NO. 1 Property Identification Record ID 3164 Property Type Mixed-use Address EL of Hwy 377 S, S of Frenchtown Rd (8595 Hwy 377), Denton County, TX Tax ID 767321 Sale Data Grantor MCMO Enterprises LLC Grantee Argyle Development LLC Sale Date July 27, 2021 Deed Book/Page 2021-138661 Financing Cash to seller Deed Reviewed 10/08/2020 JKS; Inspected 10/08/2020 LRJ/JKS Verification Jamie Price, listing agent, Real Estate Station, 903-243-1222, October 22, 2020; Confirmed by: JKS Sale Price $1,300,000 Land Data Zoning None – Argyle ETJ Topography Basically level Utilities All utilities available Shape Rectangular Flood Info None Easements No adverse easements Improvements Vacant at time of sale Intended/Current Use Commercial/Under construction Land Size Information Gross Land Size 1.594 acres or 69,435 SF Front Footage Hwy 377 S: Primary roadway Indicators Sale Price/Gross SF $18.72 Legal Description Lot 3, Block A, Car Wash Argyle Addition, Denton County, Texas. Remarks The site was vacant at the time of sale. The site has generally level topography and the property is not located within the 100-year floodplain. All utilities are available to the site. According to the National Wetlands Inventory compiled by the US Fish and Wildlife Service, the site is not encumbered by any wetlands. Per the broker, the property was purchased for commercial use, however, the property was advertised for mixed use capabilities. Additionally, the property has access through adjacent properties which allows for additional ingress/egress. As of September 2022, the site is under construction of a commercial building. THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 36 LAND SALE NO. 1 (cont.) THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 37 LAND SALE NO. 2 Property Identification Record ID 2890 Property Type Commercial Address EL of Unicorn Lake Blvd, S of Wind River Ln (3521 Unicorn Lake Blvd), Denton, TX Tax ID 583095 Sale Data Grantor Cheek-Sparger Properties, LP. Grantee Egocentric Management, LLC. Sale Date August 27, 2021 Deed Book/Page Financing Cash to seller Deed Reviewed 11/23/2021 MSB; Inspected 11/18/2021 LRJ/MSB Verification Tuan Nguyen, Listing agent, AMX Realty, 214-803-9000, November 16, 2021, Confirmed by: MSB Sale Price $450,000 Land Data Zoning MR - Mixed Use Regional Topography Generally level Utilities All available Shape Rectangular Flood Info 0% in the FEMA floodplain Easements No adverse easements noted Improvements Vacant Intended/Current Use Office building/Vacant Land Size Information Gross Land Size 0.600 acres or 26,136 SF Front Footage Unicorn Lake Blvd: Secondary roadway Indicators Sale Price/Gross SF $17.22 Legal Description Lot 7, Block B, The Parks at Unicorn Lake, Denton, Denton County, Texas Remarks The property was vacant at the time of sale. The site has all utilities available. The site is not located within the FEMA 100-year floodplain. According to the National Wetland Inventory, as compiled by US Fish and Wildlife, none of the property is within a wetland. The site is generally level. Per the selling agent, the intended use is an office building. As of November 2021, the site is vacant. THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 38 LAND SALE NO. 2 (cont.) THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 39 LAND SALE NO. 3 Property Identification Record ID 3163 Property Type Mixed-Use Address WL of Fort Worth Dr, S of IH 35E (1208 Fort Worth Dr), Denton, Denton County, TX Tax ID 39440 Sale Data Grantor Rayzor Investments LTD Grantee CStore Reality Investment LLC Sale Date June 24, 2022 Deed Book/Page 2022-94851 Financing Cash to seller Deed Reviewed 09/16/22 JKS; Inspected 09/16/22 LRJ/JKS Verification David Fulton, listing agent, Randall Smith & Associates, 940- 206-0339, September 15, 2022; Confirmed by: JKS Sale Price $650,000 Land Data Zoning SC – Suburban Corridor Topography Generally level Utilities All utilities available Shape Irregular Flood Info None in the 100-year floodplain Easements No adverse easements noted Improvements Vacant at time of sale Intended/Current Use Mixed-use/Commercial Land Size Information Gross Land Size 1.115 acres or 48,569 SF Front Footage Fort Worth Dr: Primary roadway Indicators Sale Price/Gross SF $13.38 Legal Description Land situated in the Alexander Hill Survey, Abstract Number 623, Denton County, Texas. Remarks The site was improved with a commercial building at the time of sale. However, the improvements were in disrepair and required extensive renovations for the property to be rentable. The property was sold for land value only and the improvements did not impact the sales price. The site has generally level topography and the property is not located within the 100-year floodplain. All utilities are available to the site. The sale has shared access between neighboring properties which allows for additional ingress/egress. According to the National Wetlands Inventory compiled by the US Fish and Wildlife Service, the site is not encumbered by any wetlands. As of September 2022, the site is improved with a commercial building. THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 40 LAND SALE NO. 3 (cont.) THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 41 LAND SALE NO. 4 Property Identification Record ID 2447 Property Type Commercial Address SWC of N Loop 288 and FM 426 (E McKinney St), Denton, Denton County, TX Tax ID 174553 Sale Data Grantor K-7 Enterprises LP Grantee Halle Properties LLC Sale Date November 6, 2017 Deed Book/Page 2017-138326 Financing Cash to Seller Deed Reviewed 10/08/20 JKS; Inspected 10/08/20 LRJ/JKS Verification Lem Miller, listing agent, Sandia Properties, 972-768-7070, October 22, 2020; Confirmed by: JKS Sale Price $1,500,000 Land Data Zoning SC – Suburban Corridor Topography Generally level Utilities All utilities available Shape Irregular Flood Info None in the 100-year floodplain Easements No adverse easements noted Improvements Vacant at time of sale Intended/Current Use Commercial/Commercial Land Size Information Gross Land Size 1.584 acres or 69,035 SF Front Footage Loop 288: Major thoroughfare FM 426 (E McKinney St): Secondary street Indicators Sale Price/Gross Acre $946,970 Sale Price/Gross SF $21.73 Legal Description Lot 1, Block 1, Loop 288 Centre, Denton County, Texas Remarks The site was vacant at the time of sale. The site has generally level topography and the property is not located within the 100-year floodplain. All utilities are available to the site. The sale has shared access between neighboring properties which allows for additional ingress/egress. According to the National Wetlands Inventory compiled by the US Fish and Wildlife Service, the site is not encumbered by any wetlands. Per the broker, the property was purchased for development of a Discount Tires. As of November 2021, the site is improved with a commercial building. THE SALES COMPARISON APPROACH – LAND VALUE _____________________________________________________________________________________________ 42 LAND SALE NO. 4 (cont.) THE SALES COMPARISON APPROACH _____________________________________________________________________________________________ 43 THE ADJUSTMENT PROCESS In order to narrow the range of sale prices indicated by the comparable sales, adjustments will be made to the sales for differing characteristics. The adjustment process will begin with a discussion of the property rights. Property Rights Conveyed - The transaction price of a sale is always based on the real property interest conveyed. In this instance, an adjustment for this attribute is not considered necessary. Terms of Sale/Financing - The sales gathered for this report reflected cash to seller transactions or the financing terms were reported to be at market. Therefore, an adjustment for cash equivalency is not necessary. Conditions of Sale - The sales reflected properties that are concluded to be arm’s length transactions. An adjustment for conditions of sale is not necessary. Market Conditions/Time - The sale comparables utilized in the present analysis ranged in date of sale from 11/06/17 to 06/24/22. Considering the general market conditions in the area it appears that an adjustment for this characteristic is warranted. The sales have been adjusted at 3% per year (0.25% per month) beginning January 1, 2021. Location - The following table summarizes the location ratings. LOCATION RATINGS Sale Location Rating 1 EL of Hwy 377 S, S of Frenchtown Rd (8595 Hwy 377), Denton County, TX Inferior/2.0 2 EL of Unicorn Lake Blvd, S of Wind River Ln (3251 Unicorn Lake Blvd), Denton, TX Similar/0.0 3 WL of Fort Worth Dr, S of IH 35E (1208 Fort Worth Dr), Denton, Denton County, TX Inferior/1.0 4 SWC of N Loop 288 and FM 426 (E McKinney St), Denton, Denton County, TX Similar/0.0 Subject NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas Based on the general location characteristics of the properties, an adjustment for location appears necessary. Considering the general location differences of the comparables and the subject, an adjustment of 10% per rating category has been utilized. Physical Characteristics: Included in the physical characteristics adjustments are various categories including size of property, age/condition, quality of construction, additional amenities, etc. The following summarizes those characteristics which may require adjustment. THE SALES COMPARISON APPROACH _____________________________________________________________________________________________ 44 Size: The size of the property is ±5.909 acres while the sales range in size from ±0.600 acres to ±1.594 acres. Considering the variations in the properties, an adjustment for size is considered necessary. The sales have been adjusted at 5% per rating. Flood Plain /Topography: The subject tract is generally level. The site is 0% in the floodplain. According to the National Wetlands Inventory compiled by the US Fish and Wildlife Service, the subject property does not contain wetlands. All sales have similar topography, are not located within a floodplain and are not encumbered by a wetland. All sales are considered similar and an adjustment is not necessary. Zoning: The subject property is MN - Mixed-Use Neighborhood. All sales are similar for highest and best use and are considered similar. An adjustment is not considered necessary. Utilities: The subject property has all utilities available. All sales have all utilities available and are considered similar. An adjustment is not necessary. Corner/Frontage: The subject property is located at the NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, Texas. Sales 1, 2 and 3 are not located on corners and are considered inferior. The sales have been adjusted +10%. Sale 4 is located on a corner and is considered similar. An adjustment is not necessary. Other Characteristics – The subject does not have ingress/egress through adjacent properties. Sales 1, 3 and 4 have ingress/egress through adjacent properties allowing for additional access to the property. The sales are considered superior and have been adjusted -5%. Additional adjustments are not considered necessary. The following adjustment grid illustrates the adjustments applied to the sales. SIZE RATINGS Sale Size Rating 1 ±1.594 acres Superior/2.0 2 ±0.600 acres Superior/3.0 3 ±1.115 acres Superior/2.0 4 ±1.584 acres Superior/2.0 Subject ±5.909 acres ------ THE SALES COMPARISON APPROACH _____________________________________________________________________________________________ 45 VALUATION GRID Representative Comparable Sales Subject Comp No 1 Comp No 2 Comp No 3 Comp No 4 Grantor MCMO Enterprises LLC Cheek-Sparger Properties, LP. Rayzor Investments LTD K-7 Enterprises LP Grantee Argyle Development LLC Egocentric Management, LLC. CStore Reality Investments LLC Halle Properties LLC Date of Sale 9/16/2022 Effective date 7/27/21 8/27/21 6/24/22 11/6/17 Relative Location NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, TX EL of Hwy 377 S, S of Frenchtown Rd (8595 Hwy 377), Denton County, TX EL of Unicorn Lake Blvd, S of Wind River Ln (3251 Unicorn Lake Blvd), Denton, TX WL of Fort Worth Dr, S of IH 35E (1208 Fort Worth Dr), Denton, Denton County, TX SWC of N Loop 288 and FM 426 (E McKinney St), Denton, Denton County, TX Size (acres) 5.9090 1.5940 0.6000 1.1150 1.5800 Unit Price $/SF $18.72 $17.22 $13.38 $21.73 Property Rights 0% 0% 0% 0% Adjusted $SF $18.72 $17.22 $13.38 $21.73 Financing 0% 0% 0% 0% Adjusted $SF $18.72 $17.22 $13.38 $21.73 Conditions of Sale 0% 0% 0% 0% Adjusted $SF $18.72 $17.22 $13.38 $21.73 Market Conditions/Time +5% +3% +1% +5% Adjusted $SF $19.70 $17.74 $13.51 $22.87 Location Adjustment +20% 0% +10% 0% Physical Adjustment Size adjustment 257,396 SF -10% -15% -10% -10% Flood/Topo adjustment 0% 0% 0% 0% Zoning adjustment 0% 0% 0% 0% Utilities Adjustment 0% 0% 0% 0% Corner Adjustment +10% +10% +10% 0% Other Adjustment -5% 0% -5% -5% Net Location & Physical Characteristics Adjustment +15% -5% +5% -15% Indicated Unit Value $22.66 $16.85 $14.19 $19.44 Estimated Unit Value $18.00 Estimated Total Value $4,633,128 Reconciliation and Value Estimate In estimating the fee simple value of the subject via this approach, data was analyzed and adjusted, suggesting a value estimate for the subject property between $14.19/SF and $22.66/SF. For purposes of this analysis, a reconciled indicated unit estimate of $18.00/SF has been utilized. Therefore, the following is the estimate of the market value of the fee simple interest in the subject property, as if vacant: ±5.909 acres (±257,396 SF) x $18.00/SF = $4,633,128 PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 47 ELECTRIC UTILITY EASEMENT PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 48 ELECTRIC UTILITY EASEMENT PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 49 ELECTRIC UTILITY EASEMENT PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 50 ELECTRIC UTILITY EASEMENT PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 51 Description of the Electric Utility Easement The proposed electric utility easement contains a total area of ±0.504 acres (±21,954 SF) and is located along the south boundary of the property. The easement is rectangular in shape, has a width varying from ±11 feet to ±21 feet and a length of ±1,152 feet. The shapes and sizes are based on the provided description of the easement obtained from the field notes. This size will be utilized in the calculations herein and is considered to be accurate. The main improvements are not impacted and have not been included. The closest multi- family housing building is ±5 LF from the proposed acquisition. A retaining wall and wood privacy fencing is located within the proposed easement area. Per the client (09/2022), impacted site improvements will be repaired or replaced to like or better condition as a part of the construction process. As such, the minimal site improvements located in the acquisition have not been included herein. According to available information, the electric utility easement will be used in association with the City of Denton/Eagle to Locust project. Highest & Best Use Analysis of the Electric Utility Easement In arriving at an opinion of highest and best use, factors that affect the property are generally considered as to their effect on the highest and best use of the site, as vacant. The physical characteristics of the permanent easement impose limitations on its development potential. Considering the narrow configuration of the acquisition area, it is our opinion that the ultimate highest and best use of the acquisition, as vacant, would be for assemblage as a part of the whole property. Valuation of the Electric Utility Easement Due to the limited utility of the easement area, data for similar acquisitions could not be obtained. The market for this type of acquisition typically appears to be confined to entities with the right of eminent domain. This finding was not entirely unexpected as the limited use of such a piece of land would preclude its sale as an independent economic entity except in very rare cases. The easement area is considered to have relatively limited utility; however, the easement acquisition does result in a loss of a portion of the property owner's "bundle of rights". These rights include utilization of the surface, subsurface and air associated with a piece of real property. As previously indicated, the fee simple market value of the subject has been estimated at $18.00/SF. The land value in the part to be acquired is based on same unit value as the whole property. The electric utility easement will result in a loss of a portion of the property owner’s PROPERTY COMPONENT SUMMARY Component Acres SF Whole Property ±5.909 acres ±257,396 SF Electric Utility Easement ±0.504 acres ±21,954 SF Remainder ±5.909 acres ±257,396 SF Remainder Unencumbered ±5.405 acres ±235,442 SF PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 52 bundle of rights. As such, it is our opinion that 50% of the bundle of rights are impacted by the easement acquisition. As such, the chart below illustrates the compensation for the electric utility easement acquisition. Valuation of the Remainder Before the Acquisition The value of the remainder before the acquisition is a mathematical calculation whereby the value of the part to be acquired is subtracted from the value of the whole property. The difference between these figures is the indication of the value of the remainder immediately before the acquisition, and this number forms the foundation upon which the determination of damages or enhancements to the remainder can be determined. The value of the subject prior to the acquisition was estimated to be $4,633,128. The value of the remainder before the acquisition is therefore calculated to be $4,435,542 ($4,633,128 - $197,586). PART TO BE ACQUIRED Size $/SF Loss of Rights Total Electric utility easement ±21,954 SF X $18.00/SF X 50% = $197,586 Total: $197,586 PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 53 Description of the Remainder After the Acquisition The main improvements are not impacted and have not been included. The closest multi- family housing building is ±5 LF from the proposed acquisition. A retaining wall and wood privacy fencing is located within the proposed easement area. Per the client (09/2022), impacted site improvements will be repaired or replaced to like or better condition as a part of the construction process. As such, the minimal site improvements located in the acquisition have not been included herein. The subject property has a highest and best use of multi-family residential and is within an area of extensive mixed-use capabilities. Due to this highest and best use, the zoning of the subjects, compatibility of the surrounding uses and the current use of the subject, a search for comparable land sales that would have similarities such as these was conducted. Additionally, the proximity of the University of North Texas creates a very high demand for mixed-use/multi-family property within the subjects neighborhood which will drive up prices within that area as the neighborhood is very desirable/profitable. Due to the limited amount of available vacant land that is within close proximity to the university, sales were utilized that would be considered unusable due to the date of sale. Comparisons Before and After the Acquisition Whole Property Remainder Site Size: ±5.909 acres ±5.909 acres ±5.405 acres (Unencumbered) Acquisition: Electric utility easement: ±0.504 acres (±21,954 SF) (±9% of whole property) Highest and Best Use As if Vacant: Multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres. Multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres.mercial. Highest and Best Use As Improved: Multi-family residential. Multi-family residential. Utilities: All utilities available. All utilities available. Shape: Irregular. Irregular. Floodplain: 0% 0% Frontage: W Collins St: Bernard St: ±820 feet ±332 feet ±820 feet ±332 feet Access: W Collins St & Bernard St W Collins St & Bernard St Access Denial: NA Improvements Distance from R/W: Closest Multi-family housing building (not impacted): ±32 LF from W Collins St ±50 LF from Bernard St Closest Multi-family housing building (not impacted): ±32 LF from W Collins St ±50 LF from Carroll Blvd ±5 LF from proposed easement PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 54 The subject remainder land will be of adequate size and shape for development to its highest and best use after the acquisition. This size and shape is considered to be within acceptable comparisons to the development in the area. Per the easement document, trees and hedges that are within or encroach within the electric easement will be trimmed or removed at the expense of the electric company. Due to the subject having forty planted hedges and twenty three planted trees within the easement and there being no room to place trees onto the unencumbered area, a special compensation associated with the loss of the trees has been included. Highest & Best Use of the Remainder After the Acquisition In arriving at an opinion of highest and best use, factors that affect the property are generally considered as to their effect on the highest and best use of the site, as vacant. The physical characteristics of the Remainder After impose no significant limitations on its development potential than as before. Considering all of the factors which influence highest and best use, it is our opinion that the highest & best use of the subject site, as vacant, is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres.mercial. Highest and Best Use Conclusion of Remainder After, As Improved As previously noted, the subject property is effectively vacant land (main improvements not impacted). The subject is multi-family residential with the potential to be subdivided into parcels that are similar in size to other developed property in the area that range from 0.25 acres to 2.0 acres.minimal site improvements. As such, the highest and best use, as improved is multi-family residential. Valuation of the Remainder After the Acquisition The same sales utilized to value the Whole Property have been utilized to value the Remainder After. Please refer to the Sales Comparison Approach for the whole property for additional information regarding each comparable and the adjustments applied. Similar adjustments were utilized. The following charts illustrate the estimated value of the remainder after. PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 55 VALUATION GRID Representative Comparable Sales Subject Comp No 1 Comp No 2 Comp No 3 Comp No 4 Grantor MCMO Enterprises LLC Cheek-Sparger Properties, LP. Rayzor Investments LTD K-7 Enterprises LP Grantee Argyle Development LLC Egocentric Management, LLC. CStore Reality Investments LLC Halle Properties LLC Date of Sale 9/16/2022 Effective date 7/27/21 8/27/21 6/24/22 11/6/17 Relative Location NEC of Bernard St and W Collins St (600 W Collins St), Denton, Denton County, TX EL of Hwy 377 S, S of Frenchtown Rd (8595 Hwy 377), Denton County, TX EL of Unicorn Lake Blvd, S of Wind River Ln (3251 Unicorn Lake Blvd), Denton, TX WL of Fort Worth Dr, S of IH 35E (1208 Fort Worth Dr), Denton, Denton County, TX SWC of N Loop 288 and FM 426 (E McKinney St), Denton, Denton County, TX Size (acres) 5.9090 1.5940 0.6000 1.1150 1.5800 Unit Price $/SF $18.72 $17.22 $13.38 $21.73 Property Rights 0% 0% 0% 0% Adjusted $SF $18.72 $17.22 $13.38 $21.73 Financing 0% 0% 0% 0% Adjusted $SF $18.72 $17.22 $13.38 $21.73 Conditions of Sale 0% 0% 0% 0% Adjusted $SF $18.72 $17.22 $13.38 $21.73 Market Conditions/Time +5% +3% +1% +5% Adjusted $SF $19.70 $17.74 $13.51 $22.87 Location Adjustment +20% 0% +10% 0% Physical Adjustment Size adjustment 257,396 SF -10% -15% -10% -10% Flood/Topo adjustment 0% 0% 0% 0% Zoning adjustment 0% 0% 0% 0% Utilities Adjustment 0% 0% 0% 0% Corner Adjustment +10% +10% +10% 0% Other Adjustment -5% 0% -5% -5% Net Location & Physical Characteristics Adjustment +15% -5% +5% -15% Indicated Unit Value $22.66 $16.85 $14.19 $19.44 Estimated Unit Value $18.00 Remainder Unencumbered 235,442 SF x $18.00/SF $4,237,956 Remainder Permanent Roadway Easement 21,954 SF x $18.00/SF x 50% $197,586 Remainder After Value $4,435,542 Please refer to the Sales Comparison Approach (Whole Property Land Value) section for discussion of adjustments. Similar adjustments have been utilized. PART TO BE ACQUIRED, REMAINDER BEFORE AND REMAINDER AFTER _____________________________________________________________________________________________ 56 Damages or Enhancements to the Remainder The final step in the process is to measure if the property has been damaged or enhanced due to the proposed acquisition. The measure of these items is also mathematical, whereby the value estimate of the remainder after the acquisition is subtracted from the value of the remainder before the acquisition, with the net result being either damages or enhancements. In Texas, any damages are added to the recommended compensation estimate as an additional compensable amount. Enhancements can only be netted against damages and not against the part to be acquired. The following calculations indicate that the property has not been damaged or enhanced by the proposed acquisition. DAMAGES/ENHANCEMENTS Value of the Remainder Before the Acquisition $4,435,542 Value of the Remainder After the Acquisition $4,435,542 Net Damages/Enhancements $0 TEMPORARY EASEMENTS AND SPECIAL COMPENSATION/COST TO CURE TEMPORARY EASEMENTS AND SPECIAL COMPENSATION/COST TO CURE _____________________________________________________________________________________________ 58 Temporary Easements Temporary easements are not included. Special Compensation/Cost to Cure Compensation will be included to cure items requiring reconstruction on the remainder. Any recessed entrance will be cured a similar depth from the right of way as it is on the whole property. Side and cross fencing as well as entrance drives will be included as items impacted in the part to be acquired. These items will not be replaced on the remainder and do not require a cost to cure. Per the easement document, trees and hedges that are within or encroach within the electric easement will be trimmed or removed at the expense of the electric company. Due to the subject having forty planted hedges and twenty three planted trees within the easement and there being no room to place trees onto the unencumbered area, a special compensation associated with the loss of the trees has been included. In order to calculate the Cost to Cure for these improvements, cost estimates from Marshall Valuation Service and/or local contractors were utilized. In developing a property an additional 10% for soft costs has been included and 15% is included for an entrepreneurial incentive, which is the incentive for a developer or investor to undertake the project. The following chart illustrates the individual unit figures for the Total Cost-to-Cure: Type of Improvement MSV Section/Page Base Range Current Cost Multiplier Local Cost Soft Costs Entrepreneurial Incentive Adjusted range Estimate Hedge (large) Section 66 $207.00 1.08 0.92 1.10 1.15 $260.18 $325/ea. Page 8 $275.00 $345.65 Tree (small) Section 66 $248.00 1.08 0.92 1.10 1.15 $311.71 $500/ea. Page 8 $481.00 $604.57 Tree (medium) Section 66 $915.00 1.08 0.92 1.10 1.15 $1,150.07 $1,750/ea. Page 8 $1,480.00 $1,860.22 Tree (large) Section 66 $2,500.00 1.08 0.92 1.10 1.15 $3,142.26 $4,500/ea. Page 8 $4,075.00 $5,121.88 Cost To Cure Improvement Size $ per unit Cost New Included in Part to be Acquired Damages Difference Hedge (large) 40 $325.00 $13,000 $0 $0 $13,000 Tree (small) 3 $500.00 $1,500 $0 $0 $1,500 Tree (medium) 9 $1,750.00 $15,750 $0 $0 $15,750 Tree (large) 11 $4,500.00 $49,500 $0 $0 $49,500 Difference (Cost to Cure) $79,750 RECONCILIATIONS & QUALIFICATIONS RECONCILIATION & QUALIFICATIONS _____________________________________________________________________________________________ 60 In the valuation analysis of the subject property, the Cost, Sales Comparison and Income Capitalization Approaches to value were considered. Please refer to the Scope of Work and the Appraisal Process for discussions regarding the valuation approaches. In addition, an estimate of the recommended compensation for a electric utility easement has been provided. The following Table summarizes the values estimated in this appraisal as well as the total recommended compensation estimate: RECOMMENDED COMPENSATION SUMMARY Whole Property (Land only and impacted site improvements, if any) $4,633,128 Part to be Acquired (±21,954 SF) $197,586 Remainder Before the Acquisition $4,435,542 Remainder After the Acquisition $4,435,542 Damages/(Enhancements) $0 Special Compensation/Cost to Cure $79,750 Total Recommended Compensation $277,336 Please note: These value conclusions are specifically limited by the Assumptions and Limiting Conditions, with emphasis on the Extraordinary Assumptions. ASSUMPTIONS & LIMITING CONDITIONS _____________________________________________________________________________________________ 61 This appraisal report is subject to underlying assumptions and limiting conditions qualifying the information contained in the report as follows: The valuation estimate applies only to the property specifically identified and described in the ensuing report. Information and data contained in the report, although obtained from public record and other reliable sources and, where possible, carefully checked, is accepted as satisfactory evidence upon which rests the final expression of property value. No legal survey has been commissioned by the appraisers; therefore, reference to a sketch, plat, diagram, or survey appearing in the report is only for the purpose of assisting the reader to visualize the property. It is assumed that all information known to the client and relative to the valuation has been accurately furnished and that there are no undisclosed leases, agreements, liens, or other encumbrances affecting the use of the property. Ownership and management are assumed to be competent and in responsible hands. No responsibility beyond reason is assumed for matters of a legal nature, whether existing or pending. Information identified as being furnished or prepared by others is believed to be reliable, but no responsibility for its accuracy is assumed. Any appraiser, by reason of this appraisal, shall not be required to give testimony as an Expert Witness in any legal hearing or before any court of law unless justly and fairly compensated for such services. By reason of the purpose of this appraisal and function of the report herein set forth, the value reported is only applicable to the property rights appraised and the appraisal report should not be used for any other purpose. Information regarding toxic wastes or hazardous materials which might affect the subject property, has not been proved; thus, the existence of toxic waste which may or may not be present in the property, has not been considered. Soil or drainage tests have not been performed, nor have soil or drainage test results been provided. Therefore, it is assumed that there are no subsoil or drainage conditions which would adversely affect the subject or their final valuation. This report assumes no soil contamination exists within or on the subject site. The valuation is subject to modification if any such potentially hazardous materials were detected by a qualified expert in these areas. The appraisers reserve the right to modify this valuation if so warranted. One (or more) of the signatories of this appraisal report is a member (or candidate) of the Appraisal Institute. The Bylaws and Regulations of the Institute require each member and candidate to control the use and distribution of each appraisal report signed by such member or candidate. Neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations media, news media, sales media or other media for public communication without the prior written consent of the signatories of this appraisal report. ASSUMPTIONS & LIMITING CONDITIONS _____________________________________________________________________________________________ 62 No endangered species and endangered species natural habitats were evident upon site inspection. This report assumes that the subject is not encumbered by any environmental factors which would affect value. Typically, real estate appraisers are not qualified nor are they experts in detecting hazardous materials, radiological materials, archeological resources, etc., therefore, an expert in these fields should be consulted for opinions on these matters. This appraisal report is based on the condition of local and national economies, purchasing power of money, and finance rates prevailing at the effective date of value. EXTRAORDINARY ASSUMPTIONS There are no Extraordinary Assumptions QUALIFICATIONS OF LORY R. JOHNSON, MAI, SR/WA ASSOCIATIONS/STATE CERTIFICATIONS Texas Certified General Real Estate Appraiser #TX-1321640-G MAI Designation- Appraisal Institute, #81057 Appraisal Institute – Austin - President 2002, Director/Officer 1999-2006 Appraisal Institute – Austin - Chair of the Education Committee Appraisal Institute - Reg VIII Rep/Nom Committee, Reg Ethics & Counseling Panel Appraisal Institute - General Demonstration Reports Subcommittee Appraisal Institute – Candidate Advisor for Designation 2019-2021 International Right of Way Association (IRWA) SR/WA Member IRWA – Austin – President 2010, Director/Officer 2006-2011 IRWA – Austin – Newsletter Chair/Valuation Chair IRWA – Austin – Professional of the Year 2006 IRWA – Austin – Atrium Real Estate Services – Employer of the Year 2010 Austin Board of Realtors Designated Member Texas Real Estate Broker's License #354928 Texas Department of Transportation Pre-Certified Appraiser Texas Department of Transportation PREAS Appraiser EDUCATION Texas A&M University, 1986 - Bachelor of Science Degree Agricultural Economics with Services – Employer of the Year 2010 Austin Board of Realtors Designated Member Texas Real Estate Broker's License #354928 Texas Department of Transportation Pre-Certified Appraiser Texas Department of Transportation PREAS Appraiser EDUCATION Texas A&M University, 1986 - Bachelor of Science Degree Agricultural Economics with an emphasis in Finance and Real Estate Appraisal Institute professional courses as well as a variety of real estate appraisal related and project management continuing education courses and seminars. Graduate courses in Masters of Business Administration, St. Edwards University. PROFESSIONAL BACKGROUND October 1991 to present: President/CEO of Atrium Real Estate Services, a full service commercial and residential real estate appraisal and consulting company. Nov 1986 to August 1991: Appraiser w/commercial appraisal firms in Austin area. Atrium Real Estate Services (a woman owned company) was founded in 1991 by Lory R. Johnson, MAI, SR/WA. Our 30th year is 2021! Atrium features a team of 15 appraisers/trainees and administrative staff to deliver complex transportation and utility infrastructure appraisals and reviews on multi-parcel projects. Appraisal background includes consulting, analysis/valuation and expert testimony of various properties for eminent domain purposes including single and multi-parcel right of way transportation expansion and multi- parcel easement acquisition projects (conservation, temporary construction, ingress/egress, utility, subsurface, drainage, inundation, etc.). Background also includes valuing special purpose and properties associated with federal flood buy-out programs on multi-parcel projects. Lory R. Johnson, MAI, SR/WA testifies in condemnation proceedings and is qualified as a real estate expert in the State of Texas. In 2020, Atrium diversified into a complete right of way acquisition company including project management of large scale transportation projects. ADDENDA September 25, 2020 Mesquite Ridge Condominiums HOA Attn: James M. Neblett PO Box 218 Denton, TX 76202 RE: Appraisal of a proposed right of way acquisition for the Eagle to Locust project in Denton County, Texas Parcel #: HL015 Property Address: 600-800 W. Collins Street Dear Property Owner: 7Arrows Land Staff LLC has retained Atrium Real Estate Services as an independent appraiser for the above referenced project. It is our policy to provide the owner or designated representative an opportunity to accompany the appraiser at the time of the inspection. We would like to extend to you or your designated representative the opportunity to accompany us on the inspection and to disclose any information about the property you find pertinent. If applicable to your property, the following items would be helpful: -Information regarding previous sale of the subject and/or current listing, contracts pending -Surveys and/or site plans of the property -Information regarding the general use of the property -Information on any improvements on the property and improvements, if any, located in the proposed acquisition -Any unique or special features about the property that should be considered Should you have any questions, require further clarification, or wish to provide information and/or accompany us on the property inspection, please feel free to contact Lory Johnson by telephone (512) 453-7407 or by e-mail: ljohnson@atriumrealestate.com at your earliest convenience. Respectfully submitted, Atrium Real Estate Services Lory R. Johnson, MAI, SR/WA President Texas Certified Appraiser #TX-1321640-G Atrium Reference #: GOV-20-46-04.SALS