Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer · Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-11/A Amendment No. 1 to Form S-11 HTML 893K
2: EX-1.1 EX-1.1 Engagement Agreement 6 35K
3: EX-3.4 EX-3.4 Second Amendment to Limited Liability Agrmt 7 33K
4: EX-4.1 EX-4.1 Form of Certificate for Units 2 9K
5: EX-5.1 EX-5.1 Opinion/Consent of Ballard Spahr Andrews 2 12K
6: EX-8.1 EX-8.1 Opinion/Consent of Ballard Spahr Andrews HTML 13K
7: EX-10.3 EX-10.3 Construction Loan Agreement 26 138K
8: EX-10.9 EX-10.9 Management Agreement With Block 66, Llc 32 141K
9: EX-23.1 EX-23.1 Consent of Schumacher & Associates, Inc. 1 7K
10: EX-23.2 EX-23.2 Consent of Rocky Mountain Valuation Spec. 1 7K
11: EX-99.1 EX-99.1 Summary Report of Complete Appraisal 134 312K
EX-99.1 · EX-99.1 Summary Report of Complete Appraisal
Exhibit Table of Contents
EXHIBIT 99.1
A SUMMARY REPORT OF A COMPLETE APPRAISAL
[PICTURE]
THE SARDY HOUSE
A BED AND BREAKFAST PROPERTY
ASPEN, COLORADO
PREPARED FOR:
DAVID MARRS
WESTSTAR BANK
ASPEN, COLORADO
EFFECTIVE DATE:
FEBRUARY 7, 2003
PREPARED BY
ROCKY MOUNTAIN VALUATION
SPECIALISTS LLC
393 SOUTH HARLAN STREET, SUITE 120
LAKEWOOD, COLORADO 80226-2680
RMVS FILE #11472
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March 5, 2003
Mr. David L. Marrs
Senior Vice President
WESTSTAR BANK
400 East Main Street
Aspen, Colorado 81611
RE: A COMPLETE APPRAISAL IN A SUMMARY REPORT FORMAT OF THE SARDY
HOUSE, A COMMERCIAL BED AND BREAKFAST PROPERTY LOCATED AT 128
EAST MAIN STREET IN ASPEN, COLORADO.
Dear Mr. Marrs:
In accordance with your instructions, the following appraisal is submitted
relative to the fee simple market value "as is" and "as completed" for the
above-identified property. The appraisal has an effective date of February 7,
2003.
The subject is configured as a bed and breakfast property that is currently for
extensive renovation by the owners into an interval ownership single family
residence. The 15,800 square foot building was formerly a single family
residence when it was constructed in 1892; it was subsequently converted into a
bed and breakfast lodging property, with a major addition added to the rear of
the residence during the 1980's. The property is located along Aspen's Main
Street in a commercial district linked to the downtown commercial district. Even
with the extensive additions and remodeling performed on the subject, it
nevertheless possesses historical significance.
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The "as is" analysis considers the current condition of the subject as a bed and
breakfast property with a fully functional restaurant, while the "as completed"
valuation considers the value of the subject with it remodeled as a large scale
single family residence under a fractional ownership configuration.
This appraisal is subject to the Certification of Value and Statement of
Contingent and Limiting Conditions contained within the report. The client has
made a determination that their requirements are such that preparation of a
Summary Report of a Complete Appraisal is adequate for their purposes, and a
self-contained report has not been requested. The Appraiser and the Client are
under agreement that the report format shall be a Complete Appraisal; per USPAP,
the departure rule has NOT been invoked.
Please note that as an appraisal prepared in a Summary Report format, the detail
of data reporting is confined to a summary of the information considered, and a
summary of the reasoning that supports the analysis, opinions and conclusions.
The user of this report should recognize that the depth of the detail presented
in a Summary Report is less than that of a Self-Contained Report. The Client and
user of this report should further recognize that the Summary Report is
structured for utilization by frequent users of appraisal services that have an
adequate degree of familiarity with local market and economic conditions, the
subject property, and the appraisal process, such that the level of detail
provided will not impair an understanding of the market, the property, or the
valuation process and conclusions. The Client and any unintended users of the
report are warned that this report is not intended to be a Self-Contained report
as defined by the USPAP, and that it cannot be understood properly without
additional information on file with the appraiser.
Based on these conclusions, our opinion of the market values of the subject,
based on the material presented in this appraisal analysis, is as follows:
CONCLUDED MARKET VALUE
$7,700,000 "AS IS"
As of February 7, 2003
CONCLUDED PROSPECTIVE VALUE
$14,300,000 "AS COMPLETED"
As of December 1, 2003
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We appreciate having had the opportunity to perform this appraisal analysis.
Should you have any questions with respect to the data, analysis or value
conclusion, please do not hesitate to call.
Respectfully Submitted,
/s/ Mark R. Linne /s/ M. Steven Kane
-------------------------- --------------------------
Mark R. Linne, MAI, CAE(1) M. Steven Kane
Managing Director Commercial Appraiser
ROCKY MOUNTAIN VALUATION SPECIALISTS LLC COLORADO CERTIFIED GENERAL
COLORADO CERTIFIED GENERAL APPRAISER #CG40013915
APPRAISER #CG01313422 EXP. 12/2002
EXP. 12/2003
1 - MAI (APPRAISAL INSTITUTE), CAE (INTERNATIONAL ASSOCIATION OF ASSESSING
OFFICERS)
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PART I
GENERAL APPRAISAL PARAMETERS
INTENDED USE OF THIS APPRAISAL
The intended use of this appraisal assignment is to evaluate the subject's
collateral potential involving a secured loan issued by the client. The intended
user of this report is identified as the client, the Bank of Colorado and its
authorized officers. No other party has been authorized to read this appraisal
report without the permission of the client.
PROPERTY RIGHTS APPRAISED
Fee Simple Estate
THE ASSIGNMENT
The appraisers have been assigned by the client to develop an opinion of the
subject's "as is" market value; the subject is an industrial office building.
The Client has made a determination that the preparation of a Complete
Appraisal, in accordance with Standard 1 (Real Property Appraisal, Development),
in a Summary Report format, prepared in accordance with USPAP Standard 2 (Real
Property Appraisal, Reporting), is sufficient for their purposes.
Under the parameters of this assignment, the following approaches to value were
considered and used in this appraisal:
[Download Table]
APPROACH CONSIDERED USED
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Cost Approach YES YES
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Direct Sales Comparison Approach YES YES
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Income Approach YES YES
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THE PURPOSE OF THE APPRAISAL
The purpose of this appraisal is to determine the probable current "market
value" of the real property on an "as-is" fee simple estate basis. It is
important for the reader to recognize that the appraisal considers the property
valuation as of an
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effective date of the date of inspection. In valuing the property, we will
consider the market value under conditions prevalent at that time. Establishing
the effective date of the appraisal is a universal practice, and it is important
for a investor to consider this because value is subject to change over time.
Aside from physical changes to the property that are likely, the value of real
estate is subject to the influence of changing economic conditions under which
value may remain static, increase, or decrease. These limitations are implicit
in the definition of "market value." For further discussion on this subject, and
a definition of "market value" refer to the section of Part I of this report
entitled "Definitions and Terminology." Please note that the valuation makes no
reduction for commissions on a current sale, unpaid taxes, or liens against the
property.
PERSONAL PROPERTY, FIXTURES, FURNISHINGS, AND EQUIPMENT
All personal property, fixed and non-fixed equipment, and furnishings have been
excluded from the appraisal and only the valuation of the real property is
considered.
THE SCOPE OF THE APPRAISAL
The scope of the appraisal is such that the report is intended to conform with
the Uniform Standards of Appraisal Practice ("USPAP"), as adopted by the
Appraisal Standards Board of the Appraisal Foundation. As a Complete Appraisal
assignment, the Departure Rule of the USPAP has NOT been invoked. The appraisal
is subject to the Definition of Market Value, Certification of Value, Contingent
and Limiting Conditions, and Special Conditions, set forth in this report.
The general scope of this assignment includes the following:
1) Prior to acceptance of the assignment, the appraisers have made a
determination that they are in compliance with the Competency Provision of
USPAP. This determination is based on the number and scope of appraisal
assignment performed by the appraisers in this market.
2) One of the appraisers performing this appraisal assignment, M. Steven Kane,
has personally performed an inspection of the subject property, and gathered
supplemental data on the property as available from county assessor records, the
owner of the subject, and other available data sources, and reported pertinent
data within this appraisal.
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3) The appraisers have analyzed data on effective revenues, expenses, and
vacancies for the property, as appropriate and as made available to the
appraisers.
4) The appraisers have analyzed and reported a reasonable exposure period for
the subject property.
5) The appraisers have analyzed effective market trends that will affect
projected income or the absorption period, to the extent that they affect the
value of the property.
6) The appraisers have analyzed appropriate deductions and discounts for any
proposed construction, or any completed properties that are partially leased or
leased at other than market rents as of the date of the appraisal, or any tract
developments with unsold units, as appropriate.
7) The valuation method followed addresses the cost, direct sales comparison,
and income approaches to estimating value, reconciles those approaches, and
explains the elimination of each approach not used. Under the scope of this
complete appraisal, all three approaches to value were considered.
8) As applicable to the property in the appraisal process, the appraisers have
collected cost data utilizing national cost estimating service published data.
Market sales data have been from public records and trade sources, those being
recorded deed transfers and appropriate Board of Realtors published data. Market
rental data has been collected from Boards of Realtors published data, or as
appropriate from the appraisers' survey of the area for advertised available
property, or solicited information from owners or tenants. This body of data is
greater than is indicated in the appraisal, and the appraisers have used
discretion in providing only pertinent data in a format that will allow the
reader to follow the appraisers' path to arriving at the value.
10) In economic terms, the real estate market is an imperfect and inefficient
market. Each property is unique and its location fixed, there are few buyers and
sellers and they are not always well informed - often making decisions based on
anticipation. Moreover, while supply is relatively inflexible, demand is
volatile and change is inevitable. It should be recognized by the user of the
appraisal that value is not a fact to be found. The reasoning, judgment and
estimations necessary to the appraisal process result in analysis statements and
conclusions that are statements of the individual appraisers' opinion only.
These opinions do
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not necessarily represent the only indication of value that
may be obtained on the property, and value opinions of qualified appraisers will
differ.
11) As a Complete Appraisal in a Summary Format, the detail of data reported is
confined to a summary of the information considered, and a summary of the
reasoning supporting the analysis, opinions and conclusions. The user of this
report should recognize that the depth of detail of a Summary Report is less
than that of a Self-Contained Report. A Summary Report is structured for
utilization by frequent users of appraisal services that have an adequate degree
of familiarity with local market and economic conditions, the subject property,
and the appraisal process, such that the level of detail provided will not
impair an understanding of the market, the property, or the valuation process
and conclusions. The client and any unintended users of the report should be
aware that this report is not intended to be a Self-Contained report as defined
by the USPAP.
EXTRAORDINARY ASSUMPTIONS
An extraordinary assumption presumes as fact otherwise uncertain information
about the subject, and includes the following:
- physical, legal, or economic attributes of the subject property.
- conditions external to the subject, such as market conditions or
trends.
- integrity of the data used in this appraisal.
There were no extraordinary assumptions used in this appraisal.
HYPOTHETICAL CONDITIONS
A hypothetical condition assumes conditions contrary to known facts about the
subject, and includes the following:
- physical, legal and economic attributes of the subject.
- conditions external to the property, such as market conditions or
trends.
- the integrity of data used in this appraisal assignment.
THERE WERE NO HYPOTHETICAL CONDITIONS ASSOCIATED WITH THIS APPRAISAL.
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ESTIMATED EXPOSURE PERIOD
The appraisers have examined and analyzed an appropriate exposure period to the
subject, in accordance with USPAP Standards Rules 1-2(c) and 2-2(a)(v) and
2-2(b)(v).
According the 2002 edition of the Uniform Standards of Professional Appraisal
Practice, Statement on Appraisal Standards Number 6, reasonable exposure time in
market value opinions, is 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 estimate based upon an analysis of past
events assuming a competitive and open market. The estimate of a time
period for reasonable exposure is not intended to be a prediction of a
date of sale or other less intensive data.
The appraisers have examined the average length of time for residential
properties that have sold within this market, as measured by the days on market.
Based on this dataset, the subject property, if professionally marketed at the
concluded value of this appraisal, would have sold within a 12 to 18-month time
frame.
DEFINITIONS AND TERMINOLOGY
1) MARKET VALUE DEFINITION
"Market Value" is the most probable price which a property should bring in
competitive and open market under all conditions requisite to a fair sale, the
buyer and seller, each acting prudently and knowledgeably, and assuming the
price is not affected by undue stimulus. Implicit in this definition 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 EACH ACTING IN
WHAT THEY CONSIDER THEIR OWN BEST INTERESTS;
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3. A REASONABLE TIME IS ALLOWED FOR EXPOSURE IN THE OPEN MARKET;
4. PAYMENT IS MADE IN TERMS OF CASH IN U.S. DOLLARS OR IN TERMS OF
FINANCIAL ARRANGEMENTS COMPARABLE THERETO; AND
5. THE PRICE REPRESENTS A NORMAL CONSIDERATION FOR THE PROPERTY SOLD
UNAFFECTED BY SPECIAL OR CREATIVE FINANCING OR SALES CONCESSIONS
GRANTED BY ANYONE ASSOCIATED WITH THE SALE.*
Although the foregoing definition includes a specification of those implicit
conditions, its interpretation varies. It is therefore felt that it is important
that this report define the parameters of this definition.
Other factors influencing value are current supply factors and anticipated
marketing time. The definition of market value generally assumes the
consummation of a sale as of a current date, with an unspecified "reasonable
time" for exposure on the open. In a market that has an oversupply of properties
both offered for sale and offered for lease, it follows that marketing time for
some properties may be protracted. Thus, costs associated with prolonged holding
periods and/or high initial vacancy rates have a direct affect on value, and
require appropriate consideration in the value analysis.
Interpretations by federal agencies indicate further that an appraisal must
report market value to a single purchaser as of the date of completion for all
properties, wherein a portion of real property rights would typically be sold to
its ultimate users over some future time period; thus requiring a "bulk sale"
value for multiple unit properties. Valuations involving such properties must
fully reflect all appropriate deductions and discounts as well as anticipated
cash flows to be derived from the disposition of the asset over time.
Appropriate deductions and discounts are considered to be those which reflect
all expenses associated with the disposition of the realty, as of the date of
completion, as well as cost of capital and entrepreneurial profit.
*From the OCC's Final Rule, 12 CFR Part 34, Subpart C- Appraisals, Section 34.42
(f), effective August 24, 1990.
2) PROPERTY RIGHTS APPRAISED
The property is appraised under a leased fee estate. The property rights of any
particular property are recognized as being separable. The ownership of
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property in a fee simple estate indicates that the property is appraised
recognizing the full body of rights accrue to the owner, except for those
limited by governmental power and any financial encumbrances.
CONSIDERATION OF MARKET VALUE "AS IS"
An estimate of the "market value" of a property in the condition observed upon
inspection and as it physically and legally exists without hypothetically
condition, assumptions, or qualifications as of the date the appraisal is
prepared.
The subject property has been inspected by the appraisers, and the valuation
conclusion considers the value of the subject as it presently exists, as a
partially completed industrial building as of the date of inspection.
Accordingly, the "AS IS" value of the subject property is indicated to be
$7,700,000.
(FEDERAL REGISTER, VOLUME 53, NO. 3, 12 CFR 571.1(b), PAGE 383, JANUARY 7, 1988)
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PART II
SUMMARY OF SUBJECT PROPERTY
SUBJECT VALUATION CONCLUSIONS: $7,700,000 "AS IS"
$14,300,000 "AS COMPLETED"
COST APPROACH: NOT USED
DIRECT SALES COMPARISON APPROACH: $8,000,000 "AS IS"
$14,300,000 "AS COMPLETED"
INCOME APPROACH: $6,700,000 "AS IS"
PROPERTY IDENTIFICATION
The subject represents a commercial site that totals 17,424 square feet in
central Aspen. The subject has a parcel identification number of 2735-124-38-005
and a schedule number of 01-01149. The property has a street address of 128 East
Main Street. The subject improvements consist of a two-story structure with a
finished attic and an attached two-story addition at the rear of the property.
The subject currently operates as a lodging property with a full service
restaurant; the proposed conversion will change the subject's use back to a
single family residence, albeit of large scale and based on a fractional
ownership of the property.
LEGAL DESCRIPTION
The legal description of the subject is:
LOTS F, G, H, AND I, LESS THE NORTHERLY 75 FEET THEREOF. ALL OF
LOTS P, Q, R AND S, AND THAT PART OF THE VACATED ALLEY BOUNDED BY
THE EXTENSION OF THE EASTERLY LOT LINES OF LOTS I AND S AND THE
WESTERLY LOT LINES OF LOTS F AND P,
ALL IN BLOCK 66, CITY AND TOWNSITE OF ASPEN,
PITKIN COUNTY, COLORADO
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OWNER OF RECORD/MARKETING
The owner of the subject is indicated to be North and South Aspen Limited
Liability Company, according to the Pitkin County Assessor's Office. There has
been no market transaction involving the subject property for the prior three
years, according to records of the Assessor's Office.
EFFECTIVE DATE February 7, 2003.
DATE OF THE REPORT March 5, 2003.
NEIGHBORHOOD ATTRIBUTES
The subject is located west of the Aspen downtown commercial district along Main
Street. The subject's location is within a secondary commercial district
clustered along Main Street. There is a mixture of both commercial and
residential development, although recent development has clearly favored the
former. Homes in this district date back to the late 1800's. The neighborhood
benefits from direct access off of Main Street, which is also known as State
Highway 82. The district is essentially built-out, although there are renovation
projects underway along this street.
Commercial development consists of office and automobile-oriented retail,
including banks and lodging properties. The Hotel Jerome and Pitkin County
Courthouse building are located along Main Street.
The neighborhood is significantly impacted by its proximity to the downtown
commercial district, as well as its close proximity to the Aspen Mountain ski
area.
Access to this neighborhood is provided by SH 82 and local two-lane streets.
Primary neighborhood access is provided by SH 82, which travels east-west to
points down valley to the west (including Glenwood Springs and I-70), and points
east over Independence Pass.
General development in the downtown commercial district east of the subject
neighborhood is defined by older commercial development (circa 1880-1890's),
with some degree of newer infill development. The construction of new properties
within downtown Aspen is very difficult to do, based on the cost of development
and stringent guidelines set forth by the city. While renovation of
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existing structures is somewhat encouraged, the outright development of new
properties has been effectively removed as viable property use option.
The shopping district is augmented by smaller office properties or units, some
located in former residential homes. The entire district has a "Victorian"
character, with newer buildings for the most part conforming to this style of
architecture. The pedestrian mall is situated along Hyman Avenue and Cooper
Avenue between Mill Street and Galena Street, with portions of Mill Street
between Hyman Avenue and Durant Avenue and along Galena Street between Cooper
Avenue and Durant Avenue. Completed primarily during the 1970's, these malls are
typified by brick walkways (using brick from demolished structures), mature
trees and seating areas, landscaping, and antique street lights. The shopping
mall area consists of 10 city blocks, surrounded by supportive commercial
development and transitional residential development. Pedestrian travel is
encouraged over automotive travel.
Commercial development includes upscale retail outlets, restaurants, and office
units. The Silver Queen Gondola, Little Nell chairlift, and Lift 1A provide
direct access to the ski mountain and are located at the southern end of this
district. The Rubey Park Transportation Center is located within this district,
as is Wagner Park. County and city governmental offices are located both along
Main Street and within this district. Parking is primarily provided by on street
metered parking.
The subject neighborhood represents a strong secondary district in the city of
Aspen, and has excellent access to the downtown commercial district, Aspen Ski
Mountain, transportation access via SH 82, and proximity to other city
residential neighborhoods. As with many of the prime mountain resorts in the
state, the commercial district of Aspen has transformed itself from an adjunct
commercial district serving the ski area to a destination draw of its own. The
subject's neighborhood location to the immediate west of this important
destination district, therefore, is determined to be very strong within this
market.
SITE ATTRIBUTES
The subject site is located at the northwest corner of Main Street and Aspen
Street. The location is within the Main Street commercial district, an ancillary
district that is linked with the downtown commercial core district. The location
is seven blocks south of the Silver Queen gondola and the base of the Aspen ski
base. Overall, the subject's location within this neighborhood is excellent. The
following map indicates the subject location within the city:
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[MAP]
PHYSICAL ATTRIBUTES
The subject site is rectangular in shape. It represents a corner site with 120
feet of frontage along Main Street and 145 feet of frontage along Aspen Street.
Main Street represents the subject frontage. The subject totals 17,400 square
feet.
The site is bounded by improved sites on its western and northern boundaries.
The alley that bisected Block 66 has been vacated and is included as part of the
subject.
The site has mature trees located on site. Of note are the two spruce trees
located along the frontage of the subject, both surpassing ninety feet in
height. There is also mature vegetation on the perimeter of the site,
particularly on the western portion where a swimming pool is located.
TOPOGRAPHY:
The topography of the site is essentially level, and is at grade with East Main
Street and Aspen Street, as well as adjacent properties. Based on its relative
elevation, the site has limited view amenities of the valley and ski mountain.
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The subject site is located within Zone X, which is an area outside of
designated flooding, per Community Panel Number 08097C 0203C, effective June 4,
1987.
[MAP]
SOIL CONDITION:
A detailed soil survey and engineer's report has not been made available for
review. To the best of the appraiser's knowledge, there are no known soil or
sub-soil conditions, potentially hazardous materials or toxic waste problems
that adversely affect the use of the property. It is assumed that the site may
be developed to its highest and best use, providing proper planning,
engineering, and construction practices are observed.
UTILITIES:
According to discussions with city officials, the site is served by the
following utilities:
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Natural Gas - KN Energy
Electricity - City of Aspen
Water - City of Aspen
Waste Water - City of Aspen
Telephone - Qwest Communications
All utility services are provided by underground lines throughout the subject
neighborhood.
ACCESS/STREET IMPROVEMENTS:
Access to the site is provided primarily by Main Street, which runs east to west
(essentially) in front of the subject. Aspen Street runs between the base of
Aspen ski mountain served by Lift 1-A to the south, and Hallam Street two blocks
to the north. Main Street is a four-lane asphalt paved boulevard, while Aspen
Street is a two-lane residential street. All roads in the subject neighborhood
are city maintained.
The major access to the area is provided by Main Street. As previously
described, Main Street is also known as State Highway 82, the primary access
route between Aspen and points west, including Glenwood Springs and Interstate
70.
EASEMENTS AND RESTRICTIONS
Easements and restrictions of record include typical access and utility
easements. A current title policy was not available for review. To the best of
the appraiser's knowledge, there are no private restrictions that limit the
economic use of the site. The appraisers cannot guarantee, however, that such
restrictions do not exist. Deed restrictions are a legal matter, and only a
title examination by an attorney or title company can identify such restrictive
covenants.
ADVERSE CONDITIONS
The appraiser did not note any apparent adverse conditions in an inspection of
the site.
ZONING:
The subject site is presently zoned O, Office, by the City of Aspen. It is also
located within an historic over lay district. The historic overlay allows for
uses outside of the O district.
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The subject, as a designated historic structure, is controlled by the Historic
Overlay District, which includes all properties within the downtown commercial
core and along Main Street. The subject received its designation from both the
City Council and the Historic Preservation Committee.
The minimum lot size in this district is 6,000 square feet, with front, rear and
side setback requirements. The maximum building height is 25 feet. For
non-residential detached structures, the Floor Area Ratio (FAR) is 0.75:1.
Additional FAR is allowed if 60% or more of the additional space is used for
employee housing, up to a 1:1 ratio. Residential uses are permitted in this
district, even without the historic overlay.
The subject has been identified as an historic structure by virtue of its age
and construction, as well as its location within the overlay district. ANY
modifications to the exterior of the building would have to be approved by the
Aspen Historic Preservation Committee.
For a more complete rendition of this data, the reader is directed to the
development stipulations contained within the zoning ordinances for the City of
Aspen.
ASSESSED VALUATION AND TAXES:
For tax purposes, the subject property is assessed by the Pitkin County
Assessor's Office in accordance with the applicable property tax statutes.
Colorado's ad valorem tax laws provide for real estate to be taxed based on its
actual value determined in a base year specified by statute. Current values are
based on a June 30, 2000 assessment date utilizing data from the previous
eighteen month period. Actual values (market value) are determined from data
occurring in the two years preceding the base period. Commercial properties are
assessed at 29% of actual value, while residential properties have an assessment
rate of 9.4%. Values are applied to the property as of January 1 of each year,
with taxes due and payable in the following year.
It is critical to note that the valuation assigned by the County Assessor is
based on previous economic valuation data, which utilizes statistically derived
valuation levels. Because the valuation is based on a retrospective analysis,
the value may or may not reflect the economic realities of the current economic
environment.
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2001 values assigned by the County Assessor increased in accordance with current
market trends as of June 30, 2000, based on values and market conditions present
at that time. Based on the economic trends detailed earlier in this report, it
is expected that the actual values will increase; in the case of the subject,
the major impact will be the change in status from a residential property
assessed at 9.4% to a commercial lodging property assessed at 29%.
It is assumed that the subject "as completed" will not be taxed in a manner that
is inconsistent with other properties in this jurisdiction. The property in its
current condition has an actual value assigned by the assessor of $3,354,800,
which reflects its current use as a lodging property, according to the assessor.
If the assessor reclassifies the subject to a residential use, the effective tax
rate could fall, based on the lower assessment ratio (9.4% versus 29%). This
would hold true even if the actual value of the subject increases.
CONCLUSION
The subject site represents a second tier location (behind a pure ski-in,
ski-out location and the downtown commercial district), albeit with very strong
attributes. These include the following:
- Close to ski-in, ski-out location to Aspen Mountain ski lifts
- Excellent access to major transportation routes (i.e. SH
82/Main Street)
- Excellent access to downtown commercial district
- All supportive city and commercial infrastructure available
and in close proximity
- No adverse physical or environmental conditions
Based on these factors, the appraisers conclude that the subject site could
support several strong development paths as part of a property renovation
project.
"AS IS" IMPROVEMENT SUMMARY:
THE FOLLOWING IMPROVEMENT DESCRIPTION WAS BASED ON A PHYSICAL INSPECTION OF THE
SUBJECT, WITH ADDITIONAL DATA PROVIDED BY THE OWNER AND COUNTY ASSESSOR.
SUBJECT HISTORY AND OVERVIEW
The Sardy House was constructed in 1893 by Jack Atkinson. Atkinson was the owner
of the Little Annie Mine and the Aspen Freight Company. At the time of
THE SARDY HOUSE - ASPEN, COLORADO PAGE 19
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its construction, it was one of the first homes in the world to have electric
lighting, central heat and indoor plumbing.
The home was sold in 1918 for $800 by a local real estate agent, Manford Smith.
The house sold again in 1935 to a local doctor. The home operated for a time as
a medial facility. The house finally sold in 1945 by Tom and Rachel Sardy. The
house, which today bears their family name, was used as a single family
residence. Since then, the property was purchased by the current owners and has
operated for the past 20 years as a well known small scale lodging property. A
large rear addition was added during the 1980's, which brought the total unit
count to 20. During its conversion to a lodging property, the separate carriage
house was attached to the single family residence.
The 1985 expansion changed the former 4,000 square foot residence into a 15,800
square foot structure, including 2,700 square feet of finished basement and a
2,100 finished attic in the front residence. The following table summarizes the
subject's improved area by major section:
[Download Table]
===========================================================
SECTION AREA TOTAL SF
-----------------------------------------------------------
-----------------------------------------------------------
Original House Basement 414.8
-----------------------------------------------------------
Level 1 1,535.9
-----------------------------------------------------------
Level 2 1,476.5
-----------------------------------------------------------
Level 3 489.4
-----------------------------------------------------------
-----------------------------------------------------------
New Addition Basement 1,166.6
-----------------------------------------------------------
Level 1 694.5
-----------------------------------------------------------
Level 2 1,159.6
-----------------------------------------------------------
Level 3 718.0
-----------------------------------------------------------
-----------------------------------------------------------
Carriage Basement 1,888.4
-----------------------------------------------------------
Level 1 898.6
-----------------------------------------------------------
Level 2 2,049.1
-----------------------------------------------------------
Level 3 2,049.1
-----------------------------------------------------------
-----------------------------------------------------------
Bridge 163.6
-----------------------------------------------------------
-----------------------------------------------------------
Old Carriage House Level 1 504.8
-----------------------------------------------------------
THE SARDY HOUSE - ASPEN, COLORADO PAGE 20
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[Download Table]
-----------------------------------------------------------
Upstairs 591.1
-----------------------------------------------------------
-----------------------------------------------------------
TOTAL 15,800.0
===========================================================
Although representing a multi-phase development, the Sardy House has maintained
its historic character in the front section, and the rear addition represents a
well designed and attractive addition.
The current owners plan to convert the subject back into a single residential
use, albeit with ancillary rental units in the rear section. The ownership of
the subject will be fractional, with approximately 25 ownership fractions sold.
Each owner will be entitled to a time span estate use of the property, based on
a pre-arranged time period. The operation of the subject will be broken down
into the main Residence, which is comprised of the original historic home, as
well as a Carriage House Suite (used by the 25 owners for an additional two
weeks) and preferred use and rates at the Guest House, a nine-unit portion that
represents the rear lodging section added in 1985.
Pre-construction pricing will be $700,000 per fractional share; this pricing
will increase after July 1, 2003. Annual dues are projected to be approximately
$19,500.
"AS IS" SUMMARY
As noted, the subject's total building area is 15,800 square feet (approximate
total improved area, including basement and attic finish). The building is
constructed of both masonry and framing materials. The original home is a
Victorian-style structure with three layers of bricks as its exterior walls
(most home of this era have only two layers of bricks). The original home is
built over a concrete slab foundation that is below grade. There is a basement
under the original home. The rear addition also sits over a concrete slab
foundation with a basement as well. Windows include wood drop sash and newer
casement units. Heating for the subject is provided by a hot water system, with
both radiator and baseboard providing the mean of heat transfer to each room.
There are seven furnace units, two serving the swimming pool and spa. The dining
room, parlor and bar on the first floor are served by a gas-fired hot water
through a forced air system.
The interior finish of the subject is true to its Victorian heritage, with
elements of modern finish as well. Lighting fixtures that were replaced
represent antique
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styling; lighting units tend to be free standing incandescent fixtures, although
there are track lighting units as well. Floor covering consist of both hardwood
and commercial grade carpeting. Walls and ceilings for the most part are painted
plaster or beadboard paneling. Trim work also is both painted or stained, with
Victorian accents. Other elements such as fireplaces and stairways are also
Victorian in styling, with dark woods and tiles.
The original home serves as the main entry into the property. The restaurant,
Jack's, is located to the right of the main entry. The front door opens into a
lobby area, with reception check-in desk. The parlor and living room are located
to the left. The restaurant area is located on the east side of the main level
and has street-facing windows, as well side windows. The lounge/bar area is
located to the rear of the dining room of the restaurant. The bar is constructed
of Cherry wood. There is also an antique fireplace in the dining room. The
ceilings on this level are 10 to 12 feet, while the dining room is finished in
wallpaper. Behind the lounge/bar is a locker room and a small commercial
kitchen. The kitchen includes several refrigerators, a commercial range with
over, a large freezer unit, and several other smaller fixtures. There are also
three guest units on this level in the original home.
One the second level of the original home are five guest units. Above that is a
finished attic, used as a conference room and a ninth guest unit. Please note
that the finished attic has "dormer" style walls, which restricts the total
utility of this level.
The basement under the original house is finished and includes a two-bedroom
employee unit, restrooms, a vault, and a shower for pool users. There is also a
mechanical room located in this basement section, which has an ice machine, and
two commercial freezers.
Access from the original building to the addition is from the second floor
across a finished "bridge," basically an extension of the second floor hallway.
The rear addition is three stories in height. The corner units are multi-story
units, while there are five interior units on the second level and another five
units on the third level. The first level of the rear addition has a central
access lobby with exits and covered (by the second and third floors) parking
spaces on either side between the lobby and the end units. The basement section
under the addition includes a two-bedroom employee unit, storage rooms, and a
laundry room.
There are a total of 20 units that are rented, in addition to the two employee
units. The units range between 325 and 700 square feet. The units in the newer
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addition average 1,250 square feet. Four of the units are multi-room suites,
while two others have separate sitting areas.
Unit finish is also Victorian-style and well-appointed. Each unit has an
adjoining bathroom. All but two unit bathrooms have a Jacuzzi tub. Flooring in
the units includes commercial carpeting and ceramic tile bathrooms. Many units
have vaulted ceilings. Two suites have steam showers. Unit 2 also has a
fireplace. The personal property in each unit is upscale and includes
televisions, heated towel racks, wood shuttered windows, and upscale
furnishings. The suites also have VCR units, mini-refrigerators, and wet bars.
The condition of the subject reflects a well maintained status. The appraisers
concluded an effective age of 10 years and an remaining economic life of 40
years.
SUMMARY DESCRIPTION OF THE RENOVATION
As noted, the renovation of the Sardy House will include three major section of
the subject. The entire renovation will take place within the current shell of
the improvements. The following summarizes the proposed changes to the subject
by section:
The Residence
Focused on the front original portion of the subject, The Residence is the major
renovation feature. This section will total 10,000 square feet and include
formal and informal living and dining rooms, jack's bar, a library and executive
office suite, a media room and exercise room, a commercial kitchen for catering
of events, and an smaller "family" scale kitchen. There will be three master
bedroom suites, with four additional bedrooms. All will have private bathrooms
and will be based on the current suites and units in the front portion of the
subject.
The fractional ownership will be based on The Residence; owners during their use
period will have use of the swimming pool and hot tub/spa, and the entire
grounds of the subject.
The Carriage House Suite
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For an additional two weeks, the owners of The Residence will also have use of a
two-level suite in the rear section of the subject, operating under the moniker
The Carriage House Inn. This unit is the eastern end unit of the rear lodging
section and includes ground level access. The first floor will have a separate
private entrance, living and dining rooms with a kitchen, and a gas fireplace.
Access to the second floor will be from a antique spiral stair case; the second
floor will have a bedroom and bathroom.
The Carriage House Inn
This will comprise the rear lodging section and will include nine rooms. Owners
of The Residence will have preferential access and rates over other users. The
owners will also have access to these rooms whenever they are staying in The
Residence and require additional rooms.
In addition, The West End Room will be available to owners and Inn patrons, and
will include a fireplace, cappuccino bar, and reception area on the west garden
level of the carriage house.
Other onsite amenities for owners will include a luxury vehicle, mountain bikes,
and permanent storage units, as well as a safety deposit box located in the
vault under the main residence.
Fractional time spans for use will be allocated based on a four round selection
system. While early purchasers will have initial preferences, the system is
designed so every owner will have some preferences for favorite time periods.
Income from the Carriage House Inn is expected to offset the operating expenses
of the subject.
Please note that the fractional ownerships can include individuals and
corporations.
The subject's redevelopment into a single family residence with lodging units is
scheduled to commence in April 2003. The schedule and major renovation
categories are as follows:
[Download Table]
Start End
Central Air-Conditioning Retrofit April 2003 August 2003
Room Reconstruction May 2003 October 2003
Painting/Wallpaper/Carpet September 2003 October 2003
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The total cost for the above is estimated to be $970,000. In addition, a general
refurnishing of the subject will take place after the construction items are
completed. This is estimated to total $550,000.
The entire renovation is set to be completed by November 2003. The subject is
expected to be completed by Christmas of 2003, under the new moniker Sardy
House, The Residence and Inn.
ACCESSIBILITY FOR PERSONS WITH DISABILITIES
The subject property appears to conform at least to the basic requirements for
person with disabilities. Please note that the Americans with Disabilities Act
requires all public buildings to comply with accessibility and disabled persons.
Buildings must have accessible rest rooms and entrances, as well as accessible
entrances and exits. The construction plans examined indicate that these minimum
standards have been met.
Please note that the ADA requirements are not enforced by any government agency
through inspection or code compliance. Enforcement is through litigation brought
about from complaints filed with the US Justice Department.
SUBJECT CONCLUSION
The redevelopment of the Sardy House will significantly reorient the current
lodging use away from typical lodging users to a fractional ownership use that
maximizes the historicity and scale of the subject. Although residential uses in
this market clearly out-perform commercial uses by a significant margin, not all
properties can be converted into residential uses. The subject, by virtue of its
original use and careful transformation into a small scale lodging property,
could be converted back into a residential use, albeit one of considerable scale
and under a fractional ownership scenario. Fractional ownership properties are
becoming much more accepted in the Aspen market. Part of this has to do with the
"large name" players in this market that are developing such properties. Another
reason for its acceptance is the desire of the city, which plays a substantial
role in any new development, toward more year-round use of properties.
Discussions with city planners indicated that the city does not desire single
ownership properties that are vacant for much of the year. Fractional ownership
developments make much greater year-round use of properties, even when factoring
in strong winter and summer seasonal draws.
The following represent photos of the subject:
THE SARDY HOUSE - ASPEN, COLORADO PAGE 25
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[PICTURE]
MAIN STREET VIEW OF SUBJECT
[PICTURE]
ASPEN STREET FACING NORTH(SUBJECT TO LEFT)
THE SARDY HOUSE - ASPEN, COLORADO PAGE 26
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[PICTURE]
ASPEN STREET FACING SOUTH TO MAIN STREET AND SKI AREA
[PICTURE]
SIGNAGE ALONG MAIN STREET
THE SARDY HOUSE - ASPEN, COLORADO PAGE 27
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[PICTURE]
MAIN TSTREET FACING EAST TOWARD DOWNTOWN CORE
[PICTURE]
MAIN STREET FACING WEST
THE SARDY HOUSE - ASPEN, COLORADO PAGE 28
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[PICTURE]
CLOSE-UP OF FRONT OF ORIGINAL HOUSE
[PICTURE]
VIEW FROM ASPEN STREET OF ORIGINAL FRONT AND REAR SECTIONS
THE SARDY HOUSE - ASPEN, COLORADO PAGE 29
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[PICTURE]
SECOND FLOOR BRIDGE BETWEEN FRONT AND REAR SECTIONS
[PICTURE]
PARKING UNDER REAR LODGING SECTION
THE SARDY HOUSE - ASPEN, COLORADO PAGE 30
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[PICTURE]
RESTAURANT ON MAIN FLOOR
[PICTURE]
FIREPLACE IN RESTAURANT
THE SARDY HOUSE - ASPEN, COLORADO PAGE 31
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[PICTURE]
FRONT SITTING ROOM ON MAIN FLOOR
[PICTURE]
UNIT ON SECOND FLOOR-ORIGINAL HOUSE
THE SARDY HOUSE - ASPEN, COLORADO PAGE 32
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[PICTURE]
TYPICAL BATHROOM OFF IN UNIT
[PICTURE]
VIEW OF SKI AREA FROM FRONT 2ND FLOOR UNIT
THE SARDY HOUSE - ASPEN, COLORADO PAGE 33
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[PICTURE]
HALLWAY ON 2ND FLOOR
[PICTURE]
SECOND FLOOR UNIT IN ORIGINAL HOUSE
THE SARDY HOUSE - ASPEN, COLORADO PAGE 34
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[PICTURE]
VIEW OF POOL FROM SECOND FLOOR UNIT
[PICTURE]
LODGING UNIT ON CARRIAGE HOUSE
THE SARDY HOUSE - ASPEN, COLORADO PAGE 35
[ROCKY MOUNTAIN LOGO]
[PICTURE]
BAR OFF OF RESTAURANT
[PICTURE]
MEETING ROOM IN FINISHED ATTIC OF ORIGINAL BUILDING
THE SARDY HOUSE - ASPEN, COLORADO PAGE 36
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[PICTURE]
UNIT IN REAR LODGE SECTION
[PICTURE]
BEDROOM IN UNIT
THE SARDY HOUSE - ASPEN, COLORADO PAGE 37
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PART III
SUBJECT MARKET AREA ANALYSIS
The subject property is located in the city of Aspen. Aspen is the county seat
of Pitkin County, located in the central mountain region of Colorado. The
following regional analysis of Aspen and Pitkin County to assist the reader in
understanding the economic, social, environmental and government factors that
help to shape the market value of the subject.
OVERVIEW
Pitkin County was established in 1881 and began its existence as a silver mining
region in central Colorado. The county today is a major destination draw from
both a national and international perspective. The City of Aspen in particular
represents an internationally known resort for many years. This are created a
significant economic phenomenon making the city the second most expensive real
estate market in the entire country.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 38
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[MAP]
PHYSICAL FACTORS
PHYSICAL PROFILE OF PITKIN COUNTY
Pitkin County is a rural county totaling 925 square miles that is located in the
mountain region of central Colorado, just west of the continental divide. Its
approximate dimensions run 54 miles east to west and 34 miles north to south at
its widest margins. The climate is generally mild, except at higher elevations;
elevations range from 6,625 feet in the Roaring Fork Valley to 14,259 feet atop
Castle Peak. The county's physical features are dominated by the Roaring Fork
River and its various tributaries. The predominant topographical features
include steep mountain terrain, tree-covered lower mountains, and striking river
valleys where the majority of the county's population resides.
CONTOUR MAP OF REGION
THE SARDY HOUSE - ASPEN, COLORADO PAGE 39
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[MAP]
As the above map illustrates, the county is dominated by mountain terrain and
two large rivers: the Roaring Fork River and Crystal River. The valleys created
by these two rivers have fostered spectacular mountain vistas and valleys where
communities have developed. The predominant growth nodes have originated in the
Roaring Fork Valley and its tributary creeks, Maroon and Castle Creeks.
Pitkin County represents a year-round destination resort centering around the
City of Aspen. The county and city are destinations to the third largest number
of skiers in Colorado (based on 2001-2002 numbers), as the following table
attests:
[Enlarge/Download Table]
=================================================================================================
% PEAK SKIABLE
RANK RESORT 2000-01 2001-02 CHANGE ELEVATION ACRES
------------------------------------------------------------------------------------------------
1 Vail 1,645,902 1,536,024 -6.68% 11,570 5289
------------------------------------------------------------------------------------------------
2 Breckenridge 1,422,783 1,468,518 3.21% 12,998 2043
------------------------------------------------------------------------------------------------
3 Keystone 1,230,100 1,069,111 -13.09% 12,200 1861
------------------------------------------------------------------------------------------------
4 Copper Mountain 992,888 1,005,913 1.31% 12,313 2450
------------------------------------------------------------------------------------------------
5 Steamboat 1,003,317 1,001,003 -0.23% 10,568 2939
------------------------------------------------------------------------------------------------
6 Winter Park 978,539 975,256 -0.34% 12,060 2886
------------------------------------------------------------------------------------------------
7 SNOWMASS 740,241 676,505 -8.61% 12,510 3010
------------------------------------------------------------------------------------------------
8 Beaver Creek 676,528 657,956 -2.75% 11,440 1625
------------------------------------------------------------------------------------------------
9 Telluride 334,506 341,370 2.05% 12,260 1700
------------------------------------------------------------------------------------------------
10 Crested Butte 367,263 336,483 -8.38% 12,162 1058
------------------------------------------------------------------------------------------------
11 ASPEN MOUNTAIN 319,343 310,381 -2.81% 11,212 673
------------------------------------------------------------------------------------------------
12 Durango 321,600 250,500 -22.11% 10,822 1200
------------------------------------------------------------------------------------------------
13 Eldora Mountain 233,741 250,000 6.96% 10,600 680
------------------------------------------------------------------------------------------------
14 Loveland 209,757 199,781 -4.76% 13,010 1365
------------------------------------------------------------------------------------------------
THE SARDY HOUSE - ASPEN, COLORADO PAGE 40
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[Enlarge/Download Table]
------------------------------------------------------------------------------------------------
15 Wolf Creek 187,116 170,847 -8.69% N/A N/A
------------------------------------------------------------------------------------------------
16 Arapahoe Basin 240,406 151,678 -36.91% 13,050 490
------------------------------------------------------------------------------------------------
17 BUTTERMILK MOUNTAIN 148,826 145,683 -2.11% 9,900 420
------------------------------------------------------------------------------------------------
18 Monarch 147,266 138,850 -5.71% 11,961 670
------------------------------------------------------------------------------------------------
19 ASPEN HIGHLANDS 140,640 136,136 -3.20% 11,675 714
------------------------------------------------------------------------------------------------
20 Sunlight 84,104 82,742 -1.62% 9,895 470
------------------------------------------------------------------------------------------------
21 Powderhorn 70,118 76,456 9.04% 9,850 510
------------------------------------------------------------------------------------------------
22 Ski Cooper 66,225 68,893 4.03% 11,700 400
------------------------------------------------------------------------------------------------
23 Sol Vista 71,303 62,837 -11.87% 9,202 287
------------------------------------------------------------------------------------------------
24 Howelsen Hill 14,000 15,208 8.63% 7,136 30
------------------------------------------------------------------------------------------------
25 Berthoud Pass 20,160 --- --- N/A N/A
------------------------------------------------------------------------------------------------
26 Cuchara Mountain DNO DNO --- N/A N/A
------------------------------------------------------------------------------------------------
27 Purgatory DNO DNO --- N/A N/A
------------------------------------------------------------------------------------------------
28 Arrowhead DNO DNO --- N/A N/A
================================================================================================
Aspen Mountain was developed in 1945 and hosted the FIS World Championships in
1950. Today it remains as one of the preeminent resort communities in the entire
nation and one of the largest ski destinations in Colorado. The following table
describes the trend in skiing for Pitkin County resorts, as compared to
statewide and regional totals:
[Download Table]
DESTINATION
RESORTS 1998-99 1999-00 2000-01 2001-02
-----------------------------------------------------------------------------
ASPEN HIGHLANDS 143,785 127,389 140,640 136,136
-----------------------------------------------------------------------------
ASPEN MOUNTAIN 333,215 331,121 319,343 310,381
-----------------------------------------------------------------------------
BUTTERMILK 177,476 158,194 148,826 145,683
MOUNTAIN
-----------------------------------------------------------------------------
SNOWMASS 777,378 707,600 740,241 676,505
-----------------------------------------------------------------------------
PITKIN COUNTY
TOTAL 1,431,854 1,324,304 1,349,050 1,268,705
-----------------------------------------------------------------------------
TOTAL - ALL 11,405,344 10,892,263 11,666,672 11,128,131
-----------------------------------------------------------------------------
RATIO 12.5% 12.2% 11.6% 11.4%
-----------------------------------------------------------------------------
In addition to the ski industry, there are many area golf courses and upscale
retail to augment the strong winter tourist draw. Today, the county benefits
from a year-round tourist-based economy, much as other Colorado mountain resort
markets.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 41
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CITY OF ASPEN
Aspen, much as Vail and Breckenridge, acts as a destination draw for this region
of Colorado, based on its international reputation as a world-class ski resort.
The effects of this cannot be overstated, based on the ripple effect the city
has had on other communities in the Roaring Fork Valley.
[MAP]
Physically, the town is 7,815 feet above sea level, and is located in the
Roaring Fork River Valley. Its natural setting provides for world-famous skiing,
as well as other recreational activities that make the area a year-round resort
destination.
The town, which is the county seat of Pitkin County, was a former silver mining
town that was established in the late 1800's. Skiing was introduced in the
1950's and created over time a large regional draw. Today, Aspen ranks as one of
the most popular ski resorts in the state.
Combined, Aspen Mountain, Snowmass, Buttermilk, and Aspen Highlands form the 3rd
largest ski resort area in the state for the 2001-2002 season, behind
Breckenridge and Vail.
TRANSPORTATION LINKAGES
THE SARDY HOUSE - ASPEN, COLORADO PAGE 42
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Primary access to the area is from SH 82, which is a four lane state highway to
the west of Aspen (for the most part). The highway continues east of the city
over Independence Pass and into the Upper Arkansas River Valley just south of
Leadville, although this route is closed during winter months. Independence Pass
is the highest highway pass in the state at just over 12,000 feet. The pass is
very narrow in certain spots and has a notorious reputation as a dangerous
mountain thoroughfare.
The primary linkage to other regions of the state is to the west, through the
Roaring Fork River Valley and via SH 82. Glenwood Springs is located 40 miles
west and provides linkage to I-70. I-70 is the primary east-west route through
the entire state and links this region of Colorado with other mountain resort
areas, as well as Grand Junction to the west and Denver to the east.
[MAP]
Transportation to Aspen is also served by the Roaring Fork Transit Authority
(RFTA). The entity provides regular bus service to communities throughout the
Roaring Fork Valley, including Aspen, Basalt, Carbondale, and Glenwood Springs.
This service has provided some relief to the already heavy traffic problem along
SH 82 between Glenwood Springs and Aspen. Plans are underway to perhaps
reconstruct rail service between these cities using the abandoned Colorado
Midland Railroad right-of-way, which parallels SH 82.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 43
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Other major linkages include the Aspen airport, Sardy Field, located west of the
city. This airport represents one of 13 commercial service airports in the state
(out of a total of 79 public-use airports) and is the third busiest airport in
terms of enplaned passengers (240,000 per year). There are over 40,000 takeoffs
each year at this airport. A 1996 stud on the economic impact of the airport
concluded that it provided over $478 million to the local economy, and was vital
to the nations overall air transportation system. The airport was founded in
1946 by the precursor to Aspen Airways. The airport was deeded to Pitkin County
in 1956, and has operated as a county airfield ever since. A 17,500 square foot
terminal was constructed in 1976. The runway is 7,004 feet long and the terminal
was expanded to 37,500 square feet in 1987. Parking was expanded in 1999.
Regular commercial shuttle service flies in and out of the airport. Together
with the Eagle County Regional Airport in adjacent Eagle County, the city is
served by full time regular major commercial airline service. The Eagle County
Regional Airport provides daily commercial air service via United, Northwest and
American airlines.
Aspen has grown along with the rest of Roaring Fork Valley communities. The
following graph tracks the population growth in the four major regional
communities since 1980:
THE SARDY HOUSE - ASPEN, COLORADO PAGE 44
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COMPARATIVE CENSUS TOTALS FOR ROARING
FORK COMMUNITIES
[LINE GRAPH]
[Download Table]
1980 1990 2000
Aspen 3,862 5,025 5,979
Basalt 627 1,066 2,817
Carbondale 1,986 3,031 5,003
Glenwood Springs 4,751 6,632 7,953
The 2000 census indicated that there were 5,914 persons living in Aspen full
time, an increase of 17.1% over the 1990 total of 5,049. This pace is expected
to slow during the early years of this decade as growth shifts to down valley
communities, where property values are lower.
Given the regional draw of the area, Aspen represents the most expensive housing
market in Colorado, outpacing all other resorts in the state by a wide margin.
Aspen homes in 1999 cost 292% more than typical US housing stock, and is nearly
double the next most expensive Colorado resort, Telluride.
The following chart tracks the average home prices in the Aspen market for 1998,
1999, and 2000:
THE SARDY HOUSE - ASPEN, COLORADO PAGE 45
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HOUSING PRICE AVERAGE BY TYPE & YEAR
FOR ASPEN MARKET
[LINE GRAPH]
[Download Table]
1998 1999 2000
Single Family $1,000,000 $1,230,000 $1,489,000
Duplex $488,000 $988,000 $867,000
Condo/TH $476,000 $515,000 $689,000
Although the average price of duplex unit fell for 2000 over the 1999 level, the
overall trend for all types of housing continues to increase. This is expected
to continue for the foreseeable future, as the factors of supply and demand
generate upward pressure on housing prices.
To offset the effects of housing affordability in this market, the city
implemented the Growth Management Quota System (GMQS), by requiring deed
restricted units at below market pricing. The following chart tracks the number
of affordable units in this market since 1990:
THE SARDY HOUSE - ASPEN, COLORADO PAGE 46
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AFFORDABLE HOUSING UNITS IN ASPEN AREA
SINCE 1990
[BAR CHART]
[Download Table]
Year 1990 1991 1992 1993 1994 1995 1996 1997 1999
Total 1180 1200 1210 1330 1350 1390 1415 1600 1495
The average daily population in Aspen is over 20,000 persons, although 48% of
the county's population resides in unincorporated areas, due to the extreme cost
of housing. This has created a "down-valley" effect, where employees of Aspen
area businesses must often live in less expensive communities as far away as
Rifle and Silt. This has also created a heavy burden on SH 82, the primary
transportation route in the region. While Aspen enjoyed a robust growth rate of
over 25% between 1990 and 2000, areas like Basalt/El Jebel and Carbondale
exploded in terms of new residents, with rates of over 450% and 70% respectively
for the same period. As this trend continues, these other communities are faced
with the same growth restriction issues and increasing housing prices.
In central Aspen (Zone 1), the last quarter of 2001 saw the average home price
reach $4.3 million, compared to an average of $3.7 million in 2000, $2.5 million
for 1999 and $2.4 million for 1998. In Snowmass (Zone 2), the average home price
for the last quarter of 2001 was $2.5 million.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 47
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DOWN VALLEY EFFECT
The demand for housing, reflected in increasing average home prices, illustrates
the "down valley" domino effect. Geographically, the growth plume for this
region has been determined by geography, where communities have developed along
two major river basins. The Roaring Fork River, which begins east of Aspen
toward Independence Pass, travels west, creating a river valley that has been
settled for over 100 years and is currently undergoing significant development.
The growth has centered around major communities, which followed the railroad
routes through the region (which in turn followed the river beds). Aspen was a
former mining community that has been a major ski resort for over 40 years.
Aspen was a silver mining community, and was a terminal for the Colorado Midland
Railroad, which transported silver out of the region. It has been the catalyst
of the current economic boom the valley has seen since the 1970's. A world-class
resort, central Aspen currently averages over $4,000,000 per home in terms of
resale activity, fueled by exogenous resort demand factors. The city has
recently been ranked the second most expensive community in the country in terms
of residential home values (the highest was Jupiter, Florida). The city is the
county seat of Pitkin County and has a jet port located west of the town.
15 miles west, and located at the confluence of the Roaring Fork and Frying Pan
rivers, the town of Basalt (and the unincorporated community of El Jebel to the
west) was incorporated in 1901, and was a railroad division point for the
Midland Railroad. The railroad failed in 1918 when World War 1 and the collapse
in silver made mining in the region unfeasible. Basalt became a typical
post-boom mountain community for much of the first half of the 20th century,
until the explosive growth in skiing created a growth plume originating from
Aspen to the east. Today Basalt is more than a stop over between Glenwood
Springs and Aspen. The town has a master plan for the middle valley region and
currently is benefiting from the same demand factors that affect other Colorado
resort communities. The development of a major golf course east of town, as well
as the commercial development occurring south of the down town district, has
revitalized Basalt. Major residential development, such as Willits, is currently
attempting to catch up with the housing demand generated by the economic growth
in the region.
Likewise, the town of Carbondale has benefited from its mid-valley location and
the domino effect. Carbondale benefits from its location at the confluence of
the Roaring Fork and Crystal Rivers, and the resulting wide valley basin. Large
THE SARDY HOUSE - ASPEN, COLORADO PAGE 48
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residential communities, such as Aspen Glen and River Valley Ranch, have helped
Carbondale actually overtake Basalt in terms of average housing prices. The
development of several large golf courses has only strengthened the economic
base of this town.
Glenwood Springs, the county seat of Garfield County, has benefited from both
the down valley effect, as well as its own important location at the confluence
of the Roaring Fork and the Colorado Rivers. The city, which is the largest
between Denver and Grand Junction, marks the termination of the Roaring Fork
River Valley and the beginning of the lower Colorado River drainage basin.
Residential growth has clearly followed the down valley pattern of lower housing
prices as one travels west. Currently, the town of Parachute and City of Rifle
enjoy the most affordable housing in the region. The following chart described
the trend in housing prices in the Roaring Fork and lower Colorado River basins,
using the average residential unit sold price for 2002 as the basis of
comparison:
"DOWN VALLEY" EFFECT BASED ON 2002 AVG SF HOME SALES
ASPEN TO PARACHUTE
[MAP]
THE SARDY HOUSE - ASPEN, COLORADO PAGE 49
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PART IV
HIGHEST & BEST USE ANALYSIS
HIGHEST AND BEST USE EVALUATION AS THOUGH VACANT:
The first test of highest and best use, that of physically possible potential
uses is relatively straightforward. As was discussed in the site description
section of the report, the site's physical attributes are sufficient to support
the predominant development options in this neighborhood, based on topography
and scale. In terms of location, the subject is situated in a mixed-use district
with both commercial and residential uses. The benefits of this location to the
subject from the very strong commercial income rates and even stronger
residential sale rates make this site potentially very productive.
The second test, that of legally permissible uses, is limited only by zoning
restrictions and the historic overlay district. As stated in the Site
Description section, the subject parcel currently operates as a lodging
property. In addition, the existing zoning allows for residential development.
The historic overlay district also controls the redevelopment of improved sites.
Were the subject vacant, it is unclear what effect the historic district would
have; the appraisers assume that the majority of legal parameters for new
development would come from the existing zoning district and the use permit the
subject has obtained. Based on these strictures, the commercial development
options for the subject were it vacant would probably be confined to a
limited-scale commercial use. In terms of a residential use, discussions with
the city indicated that both single family and limited multi-family could be
supported under current permitted uses.
The third test of highest and best use is financial feasibility. Although
current market conditions previously described indicate that most commercial and
residential development in this market would likely return an income over the
cost of development, the very restrictive development requirements of the city
would likely make most commercial development difficult to justify. One of the
exceptions to this would be a low intensity lodging use such as a bed and
breakfast; such a commercially-oriented development would be able to accommodate
issues of employee housing needs (a city requirement) by its very design
(manager's unit on site). The issue of parking requirements is also a factor
that could be mitigated by this type of use, since parking requirements for
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a smaller scale bed and breakfast are relatively minimal and it could be
demonstrated that such a use would not place burdens on the already tight
parking availability in this neighborhood. A residential use is clearly
feasible, given that parking and employee housing are not required. That factor,
plus the demonstrably strong demand for residential product, would indicate a
likely return over the expected construction costs. Based on these
considerations, both a small scale lodging and a residential use would likely be
supportable.
In terms of a maximally productive use, the appraisers examined the potential
market value based on a residential use, as well as a low density lodging use.
The one question was one of scale; it is likely that the subject if it were
vacant could support either a larger scale residential single family or a 2-3
unit multi-family use. A lodging development such as a bed and breakfast would
also represent a potentially productive use, particularly one such as a bed and
breakfast, which has many functional and economic similarities to single family
residences.
To determine which particular use would be the highest and best use were the
subject vacant, the appraisers examined recent larger scale residential home
sales in the subject's neighborhood to determine the probable market value of
such a use. The following table describes recent (2001 and 2002) residential
property sales in this market:
[Enlarge/Download Table]
===========================================================================================================
PROPERTY YEAR SALE PRICE SALE DATE IMPR SIZE SP/SF
-----------------------------------------------------------------------------------------------------------
SINGLE FAMILY
-----------------------------------------------------------------------------------------------------------
432 W Francis 1888 $5,275,000 05/2002 6,321 $ 835
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
306 W Francis 1988 $3,700,000 06/2002 4,700 $ 787
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
640 Fred Lane 2001 $4,700,000 04/2002 6,057 $ 776
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
939 E Cooper Ave 2000 $1,720,000 08/2001 3,100+sf $ 555+
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
206 N 6th Street 1991 $5,000,000 08/2001 6,366 sf $ 785
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
1095 Ute Avenue 1986 $2,650,000 10/2001 5,155 sf $ 514
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
1106 Waters Avenue 1968 $2,700,000 10/2001 2,709 sf $ 997
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
629 Smuggler N/a $1,550,000 01/2001 1,284 sf $1,207
----------------------------- -------- ---------------- ----------------- ---------------- ----------------
710 N 3rd Street 1890 $2,500,000 10/2001 3,104 sf $ 805
-----------------------------------------------------------------------------------------------------------
CONDOMINIUMS
-----------------------------------------------------------------------------------------------------------
1000 E Hopkins #6 1996 $3,775,000 05/2002 3,570 $1,057
-----------------------------------------------------------------------------------------------------------
034 Prospector Rd 1999 $5,450,000 05/2002 6,000 $ 908
-----------------------------------------------------------------------------------------------------------
625 West End 1976 $1,400,000 11/2001 1,882 $ 744
-----------------------------------------------------------------------------------------------------------
701 S Monarch St 1973 $1,910,000 06/2001 1,799 $1,062
-----------------------------------------------------------------------------------------------------------
720 E Hopkins Ave 1989 $2,525,000 04/2001 2,914 $ 866
-----------------------------------------------------------------------------------------------------------
927 E Hyman Ave 1998 $2,825,000 01/2001 2,649 $1,066
-----------------------------------------------------------------------------------------------------------
1011 E Hopkins 1996 $2,900,000 03/2001 3,085 $ 940
-----------------------------------------------------------------------------------------------------------
710 E Hyman 1988 $2,995,000 01/2001 2,584 $1,159
===========================================================================================================
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Given these totals, the appraisers expect that a residential property would
likely command a value of between $800 and $1,000 per square foot, even when
accounting for scale (the above sales did not indicate any clear diminution in
value as the size of the house/unit increased). The maximum size of home on this
lot would be equal to its lot area (based on an FAR of 1.0); at $850 per square
foot, this would result in a value of between $3,600,000 and $4,500,000. Please
note that this exceeds all larger scale commercial values in this market, save
for a quasi-commercial use such as a bed and breakfast.
Based on these parameters, the highest and best use of the subject as if vacant
would be as a residential use.
HIGHEST AND BEST USE EVALUATION AS IMPROVED/PROPOSED:
The subject is currently improved as a bed and breakfast property, which appears
to not conform to the highest and best use of the subject as if it were vacant.
A residential use would clearly result in the mostly productive use of the site,
given the above data.
The appraisers therefore have concluded that the highest and best use of the
subject "as is" would be to convert it into a residential use, albeit one of
large scale.
Based on current market conditions, there is no holding period associated with
this highest and best use. The likely owner could be either an investor or an
owner/user.
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PART V
THE APPROACHES TO VALUATION
The appraisal process is generally based on three approaches that in turn are
based on various economic principles.
The cost approach commences with an estimate of the market value of the site,
usually derived by direct comparison with similar sites that have been sold.
Next, an estimate of the replacement cost new of the building improvements is
completed. From this is deducted depreciation, which accrues from wear and tear,
changing standards of design and plan, and neighborhood defects. This
depreciated value of the improvements is added to the estimated site value,
producing the estimate of market value for the entire property. The primary
justification for this approach is that a typical investor would not be willing
to pay more for the subject property than it would cost him to produce a
suitable substitute.
The direct sales comparison approach estimates the market value of the subject
property by comparing prices paid in the market for similar properties. The
comparable sales are chosen from those properties that would generally compete
for the same investors in the market. Comparison may be made of the whole
comparable property to the subject, or of some element such as the ratio of
gross income to sales price of the sales price per square foot, per room or per
some other unit of comparison; then appropriate adjustments are made for any
differences. From the sales price or the adjusted sale prices of the comparable
sales, the most probable selling price of the subject is estimated. Primary
justification for the validity of this approach is that a typical investor would
not be willing to pay more for the subject than it would cost him to purchase an
alternate, existing structure available in the market.
The income approach is defined as that procedure in appraisal analysis that
converts anticipated benefits (dollar income or amenities) to be derived from
the ownership of property into a value estimate. The income approach is used
widely in appraising income-producing properties. In the income approach,
current and future income and reversions are converted to a present worth via
direct capitalization and/or discounted cash flow analysis. The discounted cash
flow analysis is not applicable to properties of a more simple nature, such as
the subject.
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APPLICABILITY TO THE SUBJECT
The subject "as is" represents a lodging property, awaiting conversion to a
single family use. The appraisers considered all three approaches to value to
value the subject, but based on these uses (and highest and bets use
considerations), the cost approach was simply not appropriate to value the
subject in either case. The income approach and direct sales comparison
approaches were used to value the subject "as is." The direct sales comparison
approach was used to value the subject "as completed."
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THE DIRECT SALES COMPARISON APPROACH
"AS IS"
The Direct Sales Comparison Approach to value compares the subject to similar
properties that have sold or are under contract in the same or similar market.
This approach is based on the principle of substitution, which states that no
commodity has a value greater than a similar commodity - offering similar uses,
similar utility, and similar function - that can be purchased within reasonable
time limits that the market demands. In other words, the market value of a
property is set by the price of acquiring a substitute property, which could
provide the owner with similar utility. The principle of substitution also is
crucial in reconciling all three approaches to value, as it provides linkage in
the underlying determination the subject's market value.
UNITS OF COMPARISON
Using a common unit of comparison is an effective device to adjust for
differences in physical characteristics while controlling for scale or some
other factor. This control allows the appraiser to determine the impact of
differences in attributes between the subject and comparable sale properties.
Please note that the unit of comparison is different from elements of
comparison, which are the factors that allow the appraiser to adjust the unit of
comparison to reflect differences between the subject and comparable sale
properties. Determining the appropriate unit of comparison depends on the type
of property being appraised. The most common comparison unit is the sale price
per improved area. This unit assumes an element of similarity in terms of
improvement configuration. Other units of comparison include sale price per
cubic foot (used in industrial warehouse appraisals), gross income multipliers,
where the sale price is divided by the gross income of a property (used in
lodging appraisals), sale price per unit (used in multi-family appraisals), and
even sale price per animal unit (used in agricultural appraisals). The selection
of the unit of comparison must be market based, with the following
considerations:
1. How does market typically compare across different properties of same use?
2. How would an investor look at property to purchase based on the productivity
of capital invested?
3. How are rental rates quoted?
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For example, if buyers and sellers are basing transactions on price per units
for apartment properties, it makes little sense to use price per square foot as
the appraisal unit of comparison. In each instance, the appraiser must present a
reasoned analysis regarding the selection of the unit of comparison.
Subject Unit of Comparison
Given that the subject represents a lodging use, the most commonly used element
of comparison is the sale price per unit. The following analysis will employ
this unit of comparison.
SALE SELECTION CRITERIA
To determine which sale properties are truly comparable, and therefore merit
inclusion in this analysis, the following selection criteria was used:
1. HIGHEST AND BEST USE
Based on the highest and best use of the subject, the selection of sales was
limited to lodging properties. Although the appraisers would have preferred pure
bed and breakfast sales, given the dearth of this type of property, the scope of
analysis included all lodging sales.
2. SALE PERIOD
Lodging sales occurring since January 1998 were examined. The reason for this
longer sales period concerned the lack of sale activity in this market. Recent
sales were give particular emphasis.
3. LOCATION
Sales from within the subject market area were chosen; this included the
downtown commercial district and peripheral commercial districts in Aspen.
Excluded were lodging establishments on the periphery or outside of the city
limits.
4. PHYSICAL ATTRIBUTES
For the same reasoning applied above, the appraisers were focused primarily on
all lodging properties, regardless of physical attributes.
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5. ECONOMIC ATTRIBUTES
The selected sales reflected properties of similar income capabilities to the
subject based on lodging rate data (when available).
COMPARABLE SALE RESULTS
There was limited sale data available based on the above criteria. The sales
below, however, do represent the best data available from the market. While
certainly not ideal, the data nevertheless is sufficient to derive a supportable
valuation based on this approach. Please note that this represents the subset of
a larger commercial dataset. Some of the adjustments (such as market trending)
were based on this larger dataset.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 57
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COMPARABLE SALE #1
[PICTURE]
PROPERTY: Hearthstone
LOCATION: 134 E Hyman
SITE AREA: 9,000 Square feet
IMPROVEMENT AREA: 7,488 Square Feet
CONSTRUCTION: 1962
DATE SOLD: October 1999
PRICE PAID: $2,800,000
PRICE PER ROOM: $147,368
THE SARDY HOUSE - ASPEN, COLORADO PAGE 58
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COMPARABLE SALE #1 ANALYSIS
OVERVIEW:
This comparable property sold in October 1999 for $2,800,000. The sale was a
cash equivalent sale to the seller. The property is a lodging property located
on Hyman Avenue. There were no reported special conditions or financing
arrangements that would affect the cash equivalent basis of the reported sale
price. The property had sold previously in September of 1997 for $2,600,000.
This earlier sale indicated an annual appreciation rate of 3.8% (no significant
value enhancing improvements were done between these two sales). The property is
currently owned by Crete Associates LP.
LOCATION:
This property is located in the same general neighborhood as the subject.
Although it is off of Main Street, the locations are considered to be similar.
COMPARABLE ATTRIBUTES:
The building was constructed in 1962. The property was updated during the 1990's
and today it represents a moderately priced lodging property. The quality and
condition of this property were deemed inferior to the subject at the time of
sale. The building totals 7,488 square feet on two levels and has a basement.
The lodging property has 19 rooms. Although marketed as a bed and breakfast/inn,
the property represents a hotel inn that serves a complementary breakfast. While
it advertises a "Frank Lloyd Wright-inspired" architectural style, the
appraisers did not note any significant historical character to the property.
The property has a Jacuzzi hot tub, a range of room styles, a sauna, and all
rooms have private bathrooms.
Overall, this was an inferior property.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 59
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COMPARABLE SALE #2
[PICTURE OF CHRISTIANIA]
PROPERTY: Christiania
LOCATION: 501 West Main Street
SITE AREA: 10,500 Square feet
IMPROVEMENT AREA: 13,742 Square Feet
CONSTRUCTION: 1950
DATE SOLD: October 1998
PRICE PAID: $3,900,000
PRICE PER ROOM: $177,273
THE SARDY HOUSE - ASPEN, COLORADO PAGE 60
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COMPARABLE SALE #2 ANALYSIS
OVERVIEW:
This comparable property sold in October 1998 for $3,900,000. The sale was a
cash equivalent sale to the seller. The property is a lodging property located
along West Main Street, several blocks west of the subject. There were no
reported special conditions or financing arrangements that would affect the cash
equivalent basis of the reported sale price. The property had not sold
previously within 36 months of the effective date of this appraisal.
LOCATION:
This property is located was similar to the subject.
COMPARABLE ATTRIBUTES:
The building was constructed in 1950 and consists of two 2-story buildings. The
property was updated during the 1990's and today it represents a moderately
priced lodging property. The quality and condition of this property were deemed
inferior to the subject at the time of sale. The building totals 13,742 square
feet. The lodging property has 22 rooms. Although marketed as a bed and
breakfast/inn, the property represents a hotel inn that serves a complementary
breakfast. The appraisers did not note any significant historical character to
the property.
The property has a full array of standard lodging amenities, including pool,
fireplaces (some rooms), hot tub, cabins, limited breakfast; all rooms have
private bathrooms.
Overall, this property was inferior to the subject.
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COMPARABLE SALE #3
[PICTURE OF ST. REGIS HOTEL]
PROPERTY: Saint Regis Hotel
LOCATION: 315 East Dean
SITE AREA: 128,941 Square feet
IMPROVEMENT AREA: 264,034 Square Feet
CONSTRUCTION: 1992
DATE SOLD: January 1998
PRICE PAID: $135,000,000 (adjusted)
PRICE PER ROMM: $525,290
THE SARDY HOUSE - ASPEN, COLORADO PAGE 62
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COMPARABLE SALE #3 ANALYSIS
OVERVIEW:
This comparable property sold in 1998 for $135,000,000; the original sale price
of $150,322 included personal and business property. The sale was a cash
equivalent sale to the seller. The property is the largest lodging property in
Aspen. It is located along Dean Street, in close walking distance to area ski
lifts. There were no reported special conditions or financing arrangements that
would affect the cash equivalent basis of the reported sale price; according to
the county assessor's staff, the sale was a verified transaction of the real
estate only. The property had not sold previously within 36 months of the
effective date of this appraisal.
LOCATION:
This property is located very near to the base of the Aspen Ski Mountain area.
It therefore represents a true ski-in, ski-out location. The location is
superior to the subject.
COMPARABLE ATTRIBUTES:
The building was constructed in 1992 and consists of four stories. The property
is maintained in excellent condition and represents one of the premier lodging
properties in Colorado. The building totals 264,034 square feet and has 257
rooms of varying scale and amenities, including luxury suites. Although not a
bed and breakfast lodging property, the Saint Regis is a true luxury hotel in
this (and any) market. The property has amenities that include an onsite
restaurant, valet parking, bathroom suites, indoor/outdoor pools,
banquet/meeting facilities, fireplaces in some rooms, a lounge and golf onsite.
The scale of this property makes it rather difficult to directly compare to the
subject, although its level of quality and condition are comparable. Overall,
this property provided a good indication was what luxury lodging properties can
command in this market.
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COMPARABLE SALE #4
[PICTURE OF ASPEN CLUB LODGE]
PROPERTY: Aspen Club Lodge
LOCATION: 709 East Durant Avenue
SITE AREA: 42,336 Square feet
IMPROVEMENT AREA: 50,589 Square Feet
CONSTRUCTION: 1956
DATE SOLD: March 2001
PRICE PAID: $14,100,000
PRICE PER ROMM: $151,613
THE SARDY HOUSE - ASPEN, COLORADO PAGE 64
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COMPARABLE SALE #4 ANALYSIS
OVERVIEW:
This comparable property sold in March 2001 for $14,100,000. The sale was a cash
equivalent sale to the seller. The property is a lodging property located
between the downtown commercial district and the ski base area of Aspen
Mountain, several blocks south and east of the subject. There were no reported
special conditions or financing arrangements that would affect the cash
equivalent basis of the reported sale price. The property had not sold
previously within 36 months of the effective date of this appraisal.
LOCATION:
This property is located at one of the premier locations in the city. The site
has not only a ski-in, ski-out location near the Silver Queen gondola, but also
sits adjacent to the downtown commercial district. The location was superior to
the subject property's location.
COMPARABLE ATTRIBUTES:
The building was constructed in 1956 and consists of a large three-story
building. The property was updated during the 1990's and today it represents a
moderately priced lodging property in this market. The quality and condition of
this property were deemed inferior to the subject at the time of sale. The
building totals 50,589 square feet. The lodging property has 93 rooms. The
property represents a hotel lodging property of large scale. The appraisers did
not note any significant historical character to the property.
The property has amenities that include free parking, heated outdoor pool,
banquet facilities, lounge, and a fitness center.
Overall, this property was inferior to the subject.
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DISCUSSION AND ANALYSIS
All of the comparable sales were examined to determine the necessity of
adjustment to account for differences in physical and location amenities. A
discussion of each of these factors and the rationale for the adjustments is
indicated as follows:
The following map indicates the location of each of the comparable sale
properties, followed by an adjustment grid developed based on for the above
adjustment considerations:
COMPARABLE SALES
[MAP]
THE SARDY HOUSE - ASPEN, COLORADO PAGE 66
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ADJUSTMENT MATRIX
[Enlarge/Download Table]
================================================================================================
SUMMARY OF COMPARABLE SALES ADJUSTMENTS
------------------------------------------------------------------------------------------------
SALE
BLDG NO. SALE PRICE
LOCATION YOC ROOMS DATE PER RM LOC PHYSICAL
------------------------------------------------------------------------------------------------
1 Hearthstone 1962 19 10/99 $147,368 Inferior Inferior
------------------------------------------------------------------------------------------------
2 Christiania 1950 22 10/98 $177,273 Similar Inferior
------------------------------------------------------------------------------------------------
3 St Regis 1992 257 01/98 $525,290 Superior Similar
------------------------------------------------------------------------------------------------
4 Aspen Club 1956 93 03/01 $151,613 Superior Inferior
Lodge
================================================================================================
ANALYSIS AND CONCLUSIONS:
Obviously, the lack of sale and the condition of the subject played an important
role in the adjustments applied. The relatively large amount of adjustments
applied to each sale made the determination of a "best sale" adjustment was
significantly less than the other sales. Based on a weighting scheme where Sale
3 was slightly favored over the other three sales, a unit value of $400,000 per
room was concluded.
Based on this unit value and the 20-lodging unit the subject possesses, the
value of the subject was concluded to be $8,000,000.
ESTIMATED VALUE VIA DIRECT SALES COMPARISON
$8,000,000 "AS IS"
THE SARDY HOUSE - ASPEN, COLORADO PAGE 67
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THE INCOME APPROACH
"AS IS"
This approach to value is based on the premise that most commercial properties
are expected to return a flow of income to the owner over its expected economic
life. Valuation under the income approach is measured as the present value of
this income stream. An investor or perspective purchaser will consider this
income potential and reflect this in the price they are willing to pay for a
property.
The conversion of an income stream under this approach is based on two different
methods. The first, direct capitalization, converts the stabilized income from
the subject for one year by dividing the net income by a capitalization rate,
expressed as a percent. The second method, yield capitalization, arrives at a
present value by using discounted cash flow analysis, which projects over a
define holding period the net income of the subject on an annual basis; added to
the present value of the sum of net income is the present value of the
property's net reversion value at the end of the holding period. This reversion
equates to the return OF CAPITAL expected by the owner, while the present value
of net income equates to the return ON CAPITAL. Both must be considered when
using the yield capitalization method.
Net operating income is generally arrived at through a process that determines
prevailing market rents, rates of vacancy and collection loss, and expenses
necessary to operate the property and service the tenants. Prevailing market
rates of vacancy and collection loss and operating expenses are deducted from
prevailing market rent to produce the property's projected net income.
It is important to note that under direct capitalization:
1. Vacancy and collection loss is a projection over the entire
economic life of the property, not that which occurs at a
given point in time.
2. For appraisal purposes, income taxes, depreciation, debt
service, capital improvements, franchising fees, and business
expenses of the owner, are excluded from operating expenses
since they are expenses of the owner and not of the property.
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3. The proper rental for the property is that prevailing in the
marketplace as of the appraisal date, and not that which is
carried over from old lease arrangements.
Economic net income is converted to a value indication under the direct
capitalization approach by application of an overall CAPITALIZATION RATE,
preferably derived from market sales occurring during the applicable period.
Other sources, such as market surveys and an analysis of existing sales where
the capitalization was not report, can also be used. Unlike the yield rate, the
direct capitalization rate implicitly includes provisions for a market rate of
return on the investment, as well as recapture of the investment.
UTILIZATION OF APPROPRIATE INCOME VALUATION METHODOLOGY:
These two income methodologies are each appropriate in differing sets of
circumstances.
Direct capitalization is used most frequently if a property is performing at a
stable level, in which there is little probability that the income performance
will change over time. It is also utilized by investors to determine the "as is"
value by investors who are evaluating a sub-par asset, and making a
determination as to the actual current value under the existing cash flow. The
rationale for this last methodology has been frequently used to determine the
current value if economic conditions never improve. By utilizing this technique,
investors can evaluate expected rates of return even if income performance never
improves.
Yield capitalization can be used if the income stream is expected to be uneven
or irregular, due to changing economic conditions or due to the property being
new and facing an extended leasing up period.
Based on the market expectations for the subject, and the preference of market
participants toward direct capitalization in most Front Range markets, this
method will be employed to derive an opinion of value for the subject based on
its anticipated income. The following section will derive appropriate parameters
for rental rates, vacancy, expenses, and capitalization rates.
METHODOLOGY:
In analyzing the subject as an investment, the annual income potential of the
property "as proposed" was first estimated based on comparable lodging
properties in the same marketing area as the subject property. An allowance for
THE SARDY HOUSE - ASPEN, COLORADO PAGE 69
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vacancy and collection losses was also determined, based on reported occupancy
rates in season, off-season, and during shoulder seasons for he subject. Next,
operating expenses were determined based on projected ratios for the subject,
reconciled with actual operating ratios reported by other lodging properties and
national industry sources. These operating expenses were then deducted from the
derived effective gross income. The resulting net income was capitalized into an
indication of value at rates commensurate with the return requirements for real
estate investments in this market, adjusting for the specific property
classification of the subject.
ASSIGNMENT OF ECONOMIC PARAMETERS:
A detailed survey of economic data for commercial lodging properties in the
market area of the subject was conducted to determine the income of the subject
"as is."
One of the immediately apparent situations in this market was the term "bed and
breakfast," which in the traditional sense is a former single family residence
converted to a lodging property. Generally, these properties retain much of
their single family residence attributes, and most have some inherent historical
character. In the Aspen market, however, the appraisers found that many
so-called bed and breakfast properties were in fact older motel lodging
properties that offered breakfast services. There were few true bed and
breakfast properties in this market that fit the traditional profile.
The following lodging properties represent a wide range of styles and amenities;
the appraisers believe, however, that they reflect the most comparable
properties in this market, and should present a realistic assessment of the
subject's true market income potential.
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COMPARABLE LODGING PROPERTY #1
[PICTURE OF THE LITTLE RED SKI HAUS]
NAME: The Little Red Ski Haus
LOCATION: 118 East Cooper Street
TYPE OF LODGING: Bed and Breakfast
NO. OF ROOMS: 13
RATE STRUCTURE:
IN SEASON $295-$800
OFF SEASON $195-$265
OCCUPANCY:
IN SEASON 70%
OFF SEASON 52%
MAJOR AMENITIES: Restaurant, suites, pool, meeting
rooms, television/telephones in rooms,
sauna, bathrooms w/units
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DISCUSSION AND ANALYSIS:
This comparable lodging property is located several blocks from the subject in
the West Ned neighborhood. Its location was superior to the subject, based on
access to both the downtown core and the ski area. The property represents a
renovated bed and breakfast property that opened in December 2002. As such, its
operating history has not been set. This restored Victorian property is a true
bed and breakfast property.
The property is in excellent condition and has been carefully restored. The 13
units each have a bathroom with a Jacuzzi tub and antique furnishings. Every
room has a television and telephone. The property has an onsite restaurant, as
well as a sauna and hot tub.
The in season rates range between $295 and $600 per night; the season runs
between November and April. The off-season rates range from $150 to $300 per
night, with the season running between April 22 and September 30. The average
occupancy for in season months was not available.
Overall, the Little Red Ski Haus represents a new and strong competitor to the
subject.
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COMPARABLE LODGING PROPERTY #2
[PICTURE OF SAINT REGIS]
NAME: Saint Regis
LOCATION: 315 East Dean Street
TYPE OF LODGING: Hotel
NO. OF ROOMS: 257
RATE STRUCTURE:
IN SEASON $495-$1,850
OFF SEASON $280-$1,200
OCCUPANCY:
IN SEASON 70%
OFF SEASON 70%
MAJOR AMENITIES: Restaurant, suites, pool, meeting
rooms, lounge, suites, banquet facilities,
valet service, business center
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DISCUSSION AND ANALYSIS:
This lodging property is located along Dean Street, within walking distance to
several lifts and the downtown core. The location represents a true ski-in,
ski-out location. Please refer to Sale 3 in previous section for description of
property and amenities.
The in season rates range between $495 and $1,850 per night; the season runs
between December and March. The off-season rates range from $280 to $1,200 per
night. The average occupancy was reported by the manager to be 70% overall, with
little fluctuation between seasons.
Overall, the Saint Regis represents one of the finest large hotel establishments
in the entire region and is a strong competitor to the subject, even when
considering its lack of historical character and scale.
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COMPARABLE LODGING PROPERTY #3
[PICTURE OF HOTEL LENADO]
NAME: Hotel Lenado
LOCATION: 200 South Aspen Street
TYPE OF LODGING: Inn
NO. OF ROOMS: 19
RATE STRUCTURE:
IN SEASON $175-$425
OFF SEASON $115-$275
OCCUPANCY:
IN SEASON 70%
OFF SEASON 52%
MAJOR AMENITIES: Room service, valet service,
fireplace/mini bar rooms, lounge,
hot tub
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DISCUSSION AND ANALYSIS:
This comparable lodging property is located one block north of the subject. This
property is listed as a bed and breakfast/inn, but resembles more of an inn than
a traditional bed and breakfast. Lodging comes with a free breakfast (hence the
bed and breakfast moniker). It is operated by the subject owners.
The property is in good condition. The 19 units all have attached bathrooms.
Every room has a television and telephone; six of these units are suites. There
is also a lounge located on site. The property shares the same location
attributes as the subject.
The in season rates range between $175 and $425 per night. The off-season rates
range from $115 to $275 per night. The average occupancy for in season months
was reported to be 70%, while it dropped to 52% for off season months.
Overall, this property is also a strong competitor to the subject overall.
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COMPARABLE LODGING PROPERTY #4
[PICTURE OF HEARTHSTONE]
NAME: Hearthstone
LOCATION: 134 East Hyman Avenue
TYPE OF LODGING: Inn
NO. OF ROOMS: 16
RATE STRUCTURE:
IN SEASON $208-$300
OFF SEASON N/a
OCCUPANCY:
IN SEASON 80%
OFF SEASON 80%
MAJOR AMENITIES: Limited breakfast, free parking, valet
service, television/refrigerators, steam
room
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DISCUSSION AND ANALYSIS:
This lodging property is located one block north of the subject. Please refer to
Sale 1 in previous section for description of property and amenities.
Lodging rate information was limited for this property. The manager reported
that the typical room rates ranged between $208 and 300 per room for in season;
the overall occupancy rate was 80%. No other information was provided.
Overall, this property is inferior to the subject.
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COMPARABLE LODGING PROPERTY #5
[PICTURE OF INNSBRUCK INN]
NAME: Innsbruck Inn
LOCATION: 222 West Main Street
TYPE OF LODGING: Inn
NO. OF ROOMS: 30
RATE STRUCTURE:
IN SEASON $225-$279
OFF SEASON $125-$185
OCCUPANCY:
IN SEASON 80%
OFF SEASON 80%
MAJOR AMENITIES: Free parking, television
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DISCUSSION AND ANALYSIS:
This comparable lodging property is located along Main Street. This property is
listed as a bed and breakfast/inn, but resembles more of an inn than a
traditional bed and breakfast. Lodging comes with a free breakfast (hence the
bed and breakfast moniker).
The property is in average condition. The 30 units all have attached bathrooms.
Every room has a television and telephone. The property is inferior to the
subject in terms of location.
The in season rates range between $225 and $279 per night. The off-season rates
range from $125 to $185 per night. The average occupancy was reported to be 80%.
Overall, this property represents a lesser competitor to the subject, based on
its condition, amenities, and location.
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DETERMINATION OF INCOME AND EXPENSES FOR THE SUBJECT
The "Uniform System of Accounts for Hotels," a classification system recommended
by the American Hotel and Motel Association and in general used throughout the
lodging industry as a classification scheme, will be used in this appraisal to
determine the income and expense performance of the subject.
REVENUE
ROOM REVENUE
Room revenue is tied to the average daily rate (ADR) as reported by competing
lodging properties in this market. The ADR's reported in this market do reflect
occupancy rates, but are not discounted for special incentive programs, such as
those sponsored by AAA or AARP. Based on discussions with lodging managers and
owners in this market, it was determined that these programs have little impact
in markets such as Aspen.
The following table describes the income performance of the above competing
lodging properties in the Aspen market that were used to derive the income
potential for the subject:
[Download Table]
=============================================================================
AVERAGE AVERAGE
RATE IN IN SEASON RATE OFF OFF SEASON
PROPERTY SEASON OCCUPANCY SEASON OCCUPANCY
-----------------------------------------------------------------------------
LITTLE RED SKI HAUS $ 295-$600 N/a $ 195-$265 N/a
-----------------------------------------------------------------------------
ST REGIS $495-1,850 70% $280-$1,200 70%
-----------------------------------------------------------------------------
HOTEL LENADO $ 175-$425 70% $ 115-$275 52%
-----------------------------------------------------------------------------
HEARTHSTONE $ 208-$300 80% N/a 80%
-----------------------------------------------------------------------------
INNSBRUCK INN $ 225-$279 80% $ 125-$185 80%
=============================================================================
The appraisers examined submitted rental data from the subject for 2001 and 2002
for the Sardy House. 2001 total lodging income was reported to be $851,316,
while 2002 had a total of $789,323. Both reflect the impact that the lodging
market in Aspen and in Colorado in general have experienced post 9/11.
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Clearly he 2002 totals were also impacted by the snow drought and ski industry
drop in 2001 and 2002. The appraisers developed a stabilized ADR rate, based on
historic and comparable data, assuming a typical lodging season, as follows:
[Download Table]
===================================================================
LODGING INCOME: $1,095,000
($250/ROOM * 20 ROOMS * 365 DAYS @ 60%)
===================================================================
Based on the above data, the appraisers concluded an overall average daily rate
for the subject of $250 per day times a project overall occupancy rate of 60%,
for an ADR of $150 for the subject. This reflects the project upscale attributes
of the subject, as well as the projected demand for lodging services in this
market.
This ADR OF $150 PER ROOM per night results in a net income of $1,095,000.
Please note that this includes the imputed occupancy rate of 60%.
RESTAURANT SPACE
There is also a restaurant located on site. The appraiser examined restaurant
and ground level retail rents in this market to determine the probable rental
income that the space could generate.
The following grid indicates current leases reported in the commercial district
adjacent to the subject neighborhood:
COMPARABLE LEASES
[Download Table]
============================================================================
RENTAL USE LEASE
PROPERTY RATE UNIT SIZE COMPARABILITY DATE
============================================================================
210 South Galena $95 2,000 Restaurant 4/2001
Inferior condition
----------------------------------------------------------------------------
403 East Cooper $75 1,100 Retail 1/2001
Similar in condition
----------------------------------------------------------------------------
Retail
411 East Hyman $70 660 Inferior condition, 7/2001
similar in size
----------------------------------------------------------------------------
312 South Hunter $70 2,000 Retail 9/2001
Inferior condition
============================================================================
All of these leased units were located in a superior location; all were ground
level units, which was also superior to the subject. Three of the four
properties were
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inferior in terms of condition. In terms of scale, Rent 3 was most similar,
while in terms of actual use, Rent 1 was an operating restaurant. Given the
co-mingling of restaurant and retail uses in the downtown commercial district,
the actual use of the these comparable rental properties was less significant.
The appraisers examined a rental dataset to determine adjustments for downtown
location versus peripheral locations, as well as or the subject's basement
location. The following graphs indicates these differentials:
LOCATION DIFFERENTIAL
[CHART]
[Download Table]
Location Rent/SF
1 $31
1 $26
2 $25
2 $34
2 $36
2 $43
Please note that Location 1 is outside of the downtown commercial district and
Location 2 is within the downtown.
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Basement Level Retail vs Street Level
[CHART]
[Download Table]
Location Rent/SF
1 $41
1 $31
1 $28
2 $69
2 $77
2 $79
2 $80
2 $88
2 $89
Please note that the above rents were 2 year old rents (when the survey was
performed). Based on the above differentials noted, the appraisers conclude a
rate $95/sf, NNN, for the subject restaurant. This accounts for the location
advantage both in terms of is main floor orientation and its location along Main
Street, west of the downtown commercial district.
This concluded unit value results in a gross income of $85,500 for the subject,
using a restaurant space total of 900 square feet. The appraisers further
adjusted this potential gross income rate by 5% to account for vacancy and an
additional 3% to account for property expenses that would be incurred by the
property owner under an absolute net lease. This would include a 2% management
expense and a replacement allowance ratio of 1%.
The net income from the restaurant space used in the pro forma therefore becomes
$78,788.
EXPENSES
Using the USAH classification system for lodging expenses allows for ease of
comparison across different properties and different data sources. By doing
such, comparable data and industry data, such as from Parnell, Kerr Forster's
national survey, can be applied to the subject.
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This expense classification directly applies expenses by their operating
category, such as by room. Other expenses that apply to the operation of the
property as a whole are classified as undistributed operating expenses/fixed
charges, which include real estate taxes, property insurance, are also
separately categorized.
In addition, standard appraisal practice requires the application of a
replacement allowance in the expense total to account for costs necessary to
keep the property in operating condition and remain competitive in the market.
Application to the Subject
Unfortunately, rarely do new property pro forma analyses conform to the
classifications. The appraisers often have to "fit" projected expense categories
into the USAH model to determine from an appraisal perspective the expected
operating performance of a proposed lodging property. This was clearly the case
with the subject.
The subject data was given to the appraisers. While it was not in the same
format as the subject, it was sufficient to provide for an overall comparison of
the subject, using both historic and comparable data.
The following table was used to derive market-based comparable expense ratios:
[Download Table]
-----------------------------------------------------------------------------------
EXPENSE CATEGORY SUBJECT COMPARABLE PROP INDUSTRY STDS
-----------------------------------------------------------------------------------
DEPARTMENTAL COSTS
-----------------------------------------------------------------------------------
Rooms N/a 24.0% 24.0%
-----------------------------------------------------------------------------------
Telephone N/a 1.5% 1.7%
-----------------------------------------------------------------------------------
Other N/a 1.1% 2.0%
-----------------------------------------------------------------------------------
UNDISTRIBUTED OPERATING EXPENSES
-----------------------------------------------------------------------------------
Admin/General N/a 15.7% 9.9%
-----------------------------------------------------------------------------------
Management N/a 2.0% 3.4%
-----------------------------------------------------------------------------------
Marketing N/a 10.0% 5.0%
-----------------------------------------------------------------------------------
Operations/Maint N/a 3.1% 5.4%
-----------------------------------------------------------------------------------
Utilities/Services N/a 4.5% 5.0%
-----------------------------------------------------------------------------------
PROPERTY TAXES, INSURANCE, REPLACEMENT ALLOWANCE
-----------------------------------------------------------------------------------
Taxes 4.0% 2.9% 3.5%
-----------------------------------------------------------------------------------
Insurance 1.2% 0.5% 1.2%
-----------------------------------------------------------------------------------
Replacement Allow N/a 2.5% 2.5%
-----------------------------------------------------------------------------------
TOTAL 55% 67.8% 63.6%
-----------------------------------------------------------------------------------
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Please note that the comparative properties surveyed included national franchise
flag lodging properties of varying scale. The appraisers made adjustments to
account for the smaller scale of the subject, the lack of a franchise fee, and
the condition of the subject as compared to the above comparable ratios and
industry norms.
Based on these factors, the appraisers applied an overall expense rate of 55%
for the subject.
CAPITALIZATION RATE DERIVATION:
To determine the expected overall rate for the subject, the appraisers first
examined reported overall rates for commercial properties that have sold within
the subject market since 1994. The following graph indicates these rates by
year:
REPORTED CAPITALIZATION RATES BY YEAR
[CHART]
The above rates indicate that reported overall rates for commercial properties
have clustered at the 8% ranges since 1995, with a slight downward trend. The
appraisers also examined the reported rates of the four sales; two sales
reported rates of 8% and 9%.
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In terms of the applicability of the above rate as compared to the subject, the
appraisers examined the relationship of lodging properties to general commercial
properties in other markets where direct comparisons could be made. The
difference or additional risk associated with lodging properties ranged between
0.5% and 2.0% over typical commercial properties. The appraisers examined the
Aspen lodging market, speaking with industry, city planning, and county
assessment staff to determine the expected performance in this market. Although
current rack rates and occupancy levels suggest a leveling off over the next
year, the appraisers anticipate that the overall factors that established Aspen
as a strong destination draw should maintain a long term robust resort economy.
This should translate into equally robust lodging performance. Given this
expectation, the appraisers will apply an overall rate of 8.5% to the pro forma
analysis.
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INCOME APPROACH
PRO-FORMA ANALYSIS
THE SARDY HOUSE
[Download Table]
=======================================================
ROOMS INCOME: $ 1,095,000
($250/ROOM * 20 ROOMS * 365 DAYS @ 60%)
TELEPHONE INCOME (1.5% OF ROOM): $ 16,425
TOTAL REVENUE: $ 1,111,425
LESS EXPENSES (@55% OF REVENUE) $ 602,250
/NET OPERATING INCOME: $ 509,175
ADD RESTAURANT SPACE INCOME $ 78,788
TOTAL NET INCOME: $ 587,963
=======================================================
NET OPERATING INCOME / CAPITALIZATION RATE = INDICATED VALUE
$587,963 / 8.5% = $6,917,212
* EXPENSE RATIOS BASED ON REVENUE FROM LODGING INCOME ONLY ($1,095,000).
ADJUSTMENT FOR PERSONAL PROPERTY ITEMS
The reported income generated by the subject is based on an anticipated income
per room model, supported by comparable market data presented in the previous
sections. This income stream is a function both of the real property comprising
the subject, as well as the personal property elements not included. These
personal property elements include the room furnishings, as well as common area
accouterments. To deduct the valuation for this personal property element, the
appraisers used standard cost factors for room furnishings. Given the upscale
market that the subject will be targeting, as well as the proposed renovations
and finish quality, the appraisers applied a per room rate toward the upper
range, which totaled $12,000 PER ROOM. A portion of this included a pro rated
share for common area personal property items.
The concluded value via the income approach was adjusted as follows:
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[Download Table]
==============================================
Income Approach Value Conclusion: $ 6,917,212
Less Personalty Elements
(20 Rooms @ $12,000/Room) $ 240,000
Adjusted Income Approach
Value: $ 6,677,212
Rounded to: $ 6,700,000
==============================================
INDICATED VALUATION BY THE INCOME APPROACH:
$6,700,000 "AS IS"
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THE COST APPROACH
The cost approach is widely used because its application is relatively uniform.
Its proper use can provide appropriate support to the market and income
approaches to value, as well as specifically categorize the components of value
(such as profit) that determine the market value of a property.
The application of the cost approach begins with a determination of the site
value, calculates a replacement cost for the improvements, calculates and
deducts the impact of all forms of depreciation, resulting in a depreciated
replacement cost. This depreciated figure is added to the site value, for a
concluded cost value determination.
The inherent difficulty within the cost approach is the estimate of depreciation
to be deducted from the replacement cost new. It is especially onerous to
quantify physical depreciation for older properties. The key to proper
application of the cost approach is to derive physical depreciation adjustments
from the market and correctly derive external obsolescence in an overbuilt or
depressed market.
APPLICABILITY TO THE APPRAISAL ASSIGNMENT
The Cost Approach is often used in the case of properties undergoing extensive
renovation, given the relevance of construction costs and the reduction of the
impact from physical deterioration. In the case of the subject, however, the
cost approach cannot be used with any degree of confidence due to several
significant issues, as follows:
- The lack of land sales in this area
- Preliminary nature of cost data provided to the appraisers concerning the
renovation
- Historic nature of part of property
- Difficulty in quantifying functional obsolescence
- Current development climate in aspen and its impact on development fees and
costs
For these reasons, the cost approach, though considered, will not be used in
this appraisal. The appraisers believe that its exclusion should not affect the
credibility of this appraisal, nor should it result in a misleading conclusion.
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THE DIRECT SALES COMPARISON APPROACH
"AS COMPLETED"
The Direct Sales Comparison Approach to value involves direct comparisons of the
property being appraised to similar properties that transacted in the same or
similar market in order to derive a market value indication for the property
being appraised.
The comparative sales approach rests on the principle of substitution, which
states that no commodity has a value greater than that for which a similar
commodity - offering similar uses, similar utility, and similar function - can
be purchased within reasonable time limits that the buyer's market demands. In
other words, the market value of a property is set by the price of acquiring a
substitute property that could provide the owner with similar and competitive
utility characteristics. The principle of substitution is critical in
consideration of all three of the approaches to value, as it provides a critical
linkage in the underlying rationale of their applicability to questions of
value.
The units of comparison is an effective device to adjust for differences in
physical characteristics, and allows for analysis of the impact of other
property variables when sales are reduced to a common denominator. Sales
comparables utilized in this appraisal analysis have been adjusted to the date
of the appraisal, and only those sales that are indicative of arms-length,
market transactions have been utilized. After having reduced each sale to a
comparable price per unit, the appraiser then evaluates the relative utility of
each comparable in relation to the subject, and arrives at a probable sales
price for the subject property by sales comparison.
Current analysis provides a variety of market data as a basis for the comparison
process. The factors to be considered in a direct sales comparison are referred
to as elements of comparison. These four major adjustment factors include the
following:
1. TIME OF SALE
2. LOCATION OF SALE PROPERTY
3. PHYSICAL CHARACTERISTICS
4. CONDITIONS OF SALE
THE SARDY HOUSE - ASPEN, COLORADO PAGE 91
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SELECTION OF COMPARABLE SALES:
The subject property is clearly a unique residential property, even in as unique
a market as Aspen. The appraisers chose home sales that were both older and
located in or near the central Aspen market. The following criteria were used to
value the subject:
- Sales since June 2001
- Single family residential or related use
- Similar construction quality
- Built prior t o1920
- Aspen market location
The appraisers focused the analysis on the main section of the subject, centered
around the original home and carriage house. The functional issues associated
with a single family use and the rear 1985 addition made that section too
dissimilar to include. It was dealt with separately (see below).
The following sales were extracted from recent sale database, including the
Aspen multi-list service and the county assessment records. Brokers and other
appraisers were also consulted. As noted, the following recent sales represent
the available data from the market, given the parameters of this appraisal
assignment.
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COMPARABLE SALES
[MAP]
[Enlarge/Download Table]
=====================================================================================================
AREA SALE DATE PRICE ADDRESS SF YOC SP/SF
-----------------------------------------------------------------------------------------------------
West End Jun 2002 $ 995,000 633 W MAIN STREET 1,818 1885 $ 547
-----------------------------------------------------------------------------------------------------
East Aspen Feb 2002 $1,069,000 1006 E COOPER STREET 1,130 1880 $ 946
-----------------------------------------------------------------------------------------------------
Central Core Jul 2002 $1,475,000 114 NEALE STREET 1,780 1886 $ 829
-----------------------------------------------------------------------------------------------------
Central Core Feb 2003 $1,800,000 113 E Hopkins 2,927 1888 $ 615
-----------------------------------------------------------------------------------------------------
West End Sep 2002 $1,900,000 134 W HOPKINS 1,862 1888 $1,020
-----------------------------------------------------------------------------------------------------
West End Dec 2002 $2,100,000 533 W FRANCIS STREET 2,000 1880 $1,050
-----------------------------------------------------------------------------------------------------
West Aspen Mar 2002 $2,200,000 635 W BLEEKER 1,594 1890 $1,380
-----------------------------------------------------------------------------------------------------
West End Jul 2002 $2,400,000 333 W BLEEKER STREET 1,866 1909 $1,286
-----------------------------------------------------------------------------------------------------
West End Aug 2001 $2,500,000 710 N THIRD STREET 3,104 1890 $ 805
-----------------------------------------------------------------------------------------------------
West End Feb 2002 $5,275,000 432 W FRANCIS 5,270 1888 $ 1001
=====================================================================================================
THE SARDY HOUSE - ASPEN, COLORADO PAGE 93
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[PICTURE]
SALE 1: 633 WEST MAIN
This property is located eight blocks west of the subject on the south side of
Main Street. This residence was constructed in 1885 and is situated on a site
that totals 3,000 square feet. The frame structure has a total heated living
area of 1,818 square feet. The condition of the property was reported to be
excellent at the time of sale. The site has onsite parking with no garage. There
were three bedrooms and three bathrooms; there was no basement. The property was
remodeled in 1998. The sale was conventionally financed and represented cash to
the seller. The property sold on March 31, 2002 for $1,275,000 ($547 per square
foot), after being on the market for 474 days.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 94
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[PICTURE]
SALE 2: 1006 EAST COOPER
This property is located east of the subject along Cooper Street. Cooper Street
represents the eastern exit from town toward Independence Pass; this particular
block is heavily residential with both single family and multi-family
development. This residence was constructed in 1880 and is situated on a site
that totals 4,345 square feet. The frame structure has a total heated living
area of 1,130 square feet. The condition of the property was reported to be poor
at the time of sale. The site has onsite parking with no garage. There were four
bedrooms and two bathrooms; there was no basement. The property was remodeled in
1992. The sale was conventionally financed and represented cash to the seller.
The property sold on June 13, 2002 for $1,069,000 ($946 per square foot), after
being on the market for 1,069 days.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 95
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[PICTURE]
SALE 3: 114 NEALE STREET
This property is located northeast of the subject along Neale Street. This area
is located away from the downtown core and is clearly inferior to the subject.
This residence was constructed in 1886 and is situated on a site that totals
6,000 square feet. The frame structure has a total heated living area of 1,780
square feet. The condition of the property was reported to be excellent at the
time of sale. The site has onsite parking with no garage. There were four
bedrooms and two bathrooms; there was no basement. The property was remodeled in
1992. The sale was conventionally financed and represented cash to the seller.
The property sold on May 26, 2002 for $1,069,000 ($829 per square foot), after
being on the market for 573 days.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 96
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[PICTURE]
SALE 4: 113 EAST HOPKINS
This property is located two blocks south of the subject in the West Ned
neighborhood. Although not located along Main Street, the location shares in the
same proximity with the downtown core and ski area. This residence was
constructed in 1888 and is situated on a site that totals 6,000 square feet. The
frame structure has a total heated living area of 2,927 square feet. The
condition of the property was reported to be excellent at the time of sale. The
site has a one car garage. There were three bedrooms and three bathrooms; the
home had an unfinished basement as well. The property was remodeled in 1989. The
sale was conventionally financed and represented cash to the seller. The
property sold on February 20, 2003 for $1,800,000 ($615 per square foot), after
being on the market for 192 days.
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[PICTURE]
SALE 5: 134 WEST HOPKINS
This property is located one block west of Sale 4 and two blocks south of the
subject in the West Ned neighborhood. Although not located along Main Street,
the location shares in the same proximity with the downtown core and ski area.
This residence was constructed in 1888 and is situated on a site that totals
3,000 square feet. The frame structure has a total heated living area of 1,862
square feet. The condition of the property was reported to be excellent at the
time of sale. The site has onsite parking with no garage. There were three
bedrooms and two bathrooms; the home had an unfinished basement as well. The
property was remodeled in 1995. The sale was conventionally financed and
represented cash to the seller. The property sold on June 15, 2002 for
$1,900,000 ($1,020 per square foot), after being on the market for 595 days.
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[PICTURE]
SALE 6: 533 WEST FRANCIS
This property is located northwest of the subject in the residential area known
as the North End. The area is inferior to the subject in terms of proximity to
the downtown and ski area. This residence was constructed in 1880 and is
situated on a site that totals 9,000 square feet. The frame structure has a
total heated living area of 2,000 square feet. The condition of the property was
reported to be average at the time of sale. The site has onsite parking with no
garage. There were two bedrooms and one bathroom; the home had no basement. The
property was remodeled in 1960. The sale was conventionally financed and
represented cash to the seller. The property sold on July 1, 2002 for $2,100,000
($1,050 per square foot), after being on the market for 595 days.
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[PICTURE]
SALE 7: 635 WEST BLEEKER
This property is located northwest of the subject in the residential area known
as the North End. The area is inferior to the subject in terms of proximity to
the downtown and ski area. This residence was constructed in 1890 and is
situated on a site that totals 9,000 square feet. The frame structure has a
total heated living area of 1,594 square feet. The condition of the property was
reported to be excellent at the time of sale. The site has a one-car garage.
There were three bedrooms and three bathrooms; the home had an unfinished
basement as well. The property was remodeled in 1980. The sale was an all cash
transaction. The property sold on March 3, 2002 for $2,200,000 ($1,380 per
square foot), after being on the market for 586 days. A later sale of this
property occurred after the 9,000 square foot lot was split; that selling price
was $1,550,000, or $730 per square foot for the house and 4,216 square foot
lot..
..
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[PICTURE]
SALE 8: 333 WEST BLEEKER
This property is located northwest of the subject in the residential area known
as the North End. The area is inferior to the subject in terms of proximity to
the downtown and ski area. This residence was constructed in 1909 and is
situated on a site that totals 9,000 square feet. The frame structure has a
total heated living area of 1,866 square feet. The condition of the property was
reported to be average at the time of sale. The site has a one-car garage. There
were three bedrooms and two bathrooms; the home had no basement. The property
was remodeled in 2001. The sale was an all cash transaction. The property sold
on July 29, 2002 for $2,400,000 ($1,286 per square foot), after being on the
market for 405 days.
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[PICTURE]
SALE 9: 710 NORTH THIRD STREET
This property is located north of the subject in the residential area known as
the North End. The area is inferior to the subject in terms of proximity to the
downtown and ski area. This residence was constructed in 1890 and is situated on
a site that totals 7,350 square feet. The frame structure has a total heated
living area of 3,104 square feet. The condition of the property was reported to
be average at the time of sale. The site has onsite parking with no garage.
There were four bedrooms and four bathrooms; the home also had a finished
basement. The property was remodeled recently. The sale was an all cash
transaction. The property sold on August 29, 2001 for $2,500,000 ($805 per
square foot), after being on the market for 148 days.
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[PICTURE]
SALE 10: 432 WEST FRANCIS
This property is located north of the subject in the residential area known as
the North End. The area is inferior to the subject in terms of proximity to the
downtown and ski area. This residence was constructed in 1888 and is situated on
a site that totals 9,000 square feet. The frame structure has a total heated
living area of 5,270 square feet. The condition of the property was reported to
be excellent at the time of sale. The site has a one-car garage. There were six
bedrooms and five bathrooms; the home also had a finished basement and radiant
heating. The property was remodeled in 1994. The sale was an all cash
transaction. The property sold on February 19, 2002 for $5,275,000 ($1001 per
square foot), after being on the market for 114 days.
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VALUATION CONCLUSION:
The goal of this analysis was to evaluate the subject's market value potential
using the above sales from the Aspen market as a basis of comparison. The
appraisers focused on the main residential section of the subject using the
above sales as comparisons. The remaining rear lodging section was essentially
unchanged from its lodging use and was considered separately.
Adjustments were applied both quantitatively and qualitatively. Sales 10, 7, 8,
and 4 were given the greatest weighting. Based on these factors, the appraisers
conclude a unit value of $1,150 PER SQUARE FOOT for the subject. This
represented a blended rate, based on the following building breakdown:
[Download Table]
==========================================================================
ORIGINAL HOUSE BASEMENT 414.8 $ 450 $ 186,660
--------------------------------------------------------------------------
LEVEL 1 1,535.9 $1,450 $ 2,226,983
--------------------------------------------------------------------------
LEVEL 2 1,476.5 $1,450 $ 2,140,954
--------------------------------------------------------------------------
LEVEL 3 489.4 $ 700 $ 342,601
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NEW ADDITION BASEMENT 1,166.6 $ 450 $ 524,970
--------------------------------------------------------------------------
LEVEL 1 694.5 $1,150 $ 798,675
--------------------------------------------------------------------------
LEVEL 2 1,159.6 $1,200 $ 1,391,568
--------------------------------------------------------------------------
LEVEL 3 718.0 $1,200 $ 861,612
--------------------------------------------------------------------------
--------------------------------------------------------------------------
OLD CARRIAGE HOUSE LEVEL 1 504.8 $1,450 $ 731,960
--------------------------------------------------------------------------
UPSTAIRS 591.1 $1,450 $ 857,037
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
TOTAL $10,063,020
--------------------------------------------------------------------------
PER SF $ 1,150
==========================================================================
CARRIAGE INN SECTION
The remaining area of the subject is set for use as a lodging component of the
single family use. While the appraisers were comfortable with using sales of
single family residences in Aspen to value the original structure and area that
was attached to the original structure (such as the original carriage house),
the rear section added in 1985 was clearly to remain for use as a lodging
component of the subject. The
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appraisers referred to the "as is" analysis and applied a rate of $600 per
square foot for this section.
The following table summarizes the valuation components of the subject "as
completed":
DIRECT SALES COMPARISON
CONCLUDED VALUE
[Download Table]
=====================================================================
Price/Sq Ft X Area = Value
---------------------------------------------------------------------
$1,150 X 8,751 SF = $10,063,650
---------------------------------------------------------------------
$ 600 X 7,049 SF = $ 4,229,400
=====================================================================
TOTAL VALUE $14,293,050
=====================================================================
THIS TOTAL VALUE WAS THEN ROUNDED TO $14,300,000.
CONCLUDED VALUE VIA DIRECT SALES COMPARISON
$14,300,000 "AS COMPLETED"
AS OF DECEMBER 1, 2003
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PART VI
RECONCILIATION AND
OPINION OF FINAL VALUE
The pertinent approaches to value have been extensively detailed in this
appraisal analysis. A summary of the conclusions of each of these individual
approaches indicates the following:
COST APPROACH: NOT USED
THE COST OF REPRODUCING OR REPLACING THE SUBJECT PROPERTY, LESS
DEPRECIATION FROM ALL SOURCES, PLUS THE LAND VALUE AS DETERMINED
THROUGH MARKET COMPARISON.
DIRECT SALES COMPARISON APPROACH: $ 8,000,000 "AS IS"
$14,300,000 "AS COMPLETED"
THE VALUE AS INDICATED BY RECENT SALES OF COMPARABLE PROPERTIES, AS
ADJUSTED TO ACCOUNT FOR ALL DIFFERENCES IN PHYSICAL, LOCATIONAL AND
ECONOMIC CHARACTERISTICS.
INCOME APPROACH: $ 6,700,000 "AS IS"
THE VALUE WHICH CAN BE SUPPORTED BY THE PROPERTY'S NET EARNING
CAPACITY, BASED UPON CAPITALIZATION OF THE NET INCOME IMPUTABLE TO THE
PROPERTY.
The final step in the appraisal process is the correlation of the three
approaches in such a way as to detail the strengths and weaknesses of each
approach. In evaluating these approaches, the appraiser has taken into account
the purpose of the appraisal, the quality and quantity of the appraisal data,
and the type of property. These considerations have provided indications of the
weight given to each approach.
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THE COST APPROACH
As a complete appraisal, all three approaches to value were considered to value
the subject. The cost approach, unfortunately, suffered from several severe
deficits that ultimately led to its exclusion outright as a valid approach to
value.
"AS IS" CONCLUSION
The subject represents a bed and breakfast property in very good condition.
While the income data reflected recent difficult time in terms of lodging
properties in Aspen, it should be pointed out that several new projects are
underway and that the overall economic climate in this market is expected to
become stronger through 2003 and 2004.
The direct sales comparison approach provided four recent sales of lodging
properties that represented the best available sales from the market. The
adjustments were somewhat robust, given the conditional and functional issues
associated with the subject "as is." Overall, this approach provided a good
framework to value the subject "as is."
The income approach provided support to the direct sales comparison approach,
although the configuration of the subject made it somewhat problematic. The
restaurant use and the historicity of the subject rendered the income approach
less comparable to market data. The appraisers attempted to rectify this, but
the final conclusion was less reliable than the direct sales comparison
approach. The appraisers simply felt that the income approach did not adequately
reflect the historical appeal of the subject.
Overall, the greatest weighting was afforded the direct sales comparison
approach. A reconciled value of $7,700,000 was concluded for the subject "as
is."
"AS COMPLETED" CONCLUSION
All three approaches to value were considered in determining the subject's "as
completed" value. Based on already described concerns with the cost approach, it
was excluded from consideration for the "as completed" valuation.
Likewise, the use as a single family residence made the income approach not
viable. The appraisers relied on the direct sales comparison approach solely in
this analysis. Overall, this approach was considered to be reliable enough,
given the number of sales available from the market. The data's comparability
was
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also sound and the appraisal judgment used was reasonable as well. The rear
addition did pose some valuation obstacle, given that it was clearly remaining a
lodging use. The appraisers applied a more commercially oriented rate to that
section of the subject to compensate for this.
CONCLUSION
After these considerations, it is our opinion that the market value of the
subject "as is" and "as proposed" is as follows:
CONCLUDED MARKET VALUE
$7,700,000 "AS IS"
AS OF FEBRUARY 7, 2003
CONCLUDED PROSPECTIVE VALUE
$14,300,000 "AS COMPLETED"
AS OF DECEMBER 1, 2003
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PART VII
LIMITATIONS OF THIS APPRAISAL
This appraisal report, the letter of transmittal and the certification of value,
are made expressly subject to the following assumptions and limiting conditions,
and any special assumptions and limiting conditions contained elsewhere which
are incorporated herein by reference.
GENERAL ASSUMPTIONS
1. LEGAL AND TITLE CONSIDERATIONS PERTAINING TO THE PROPERTY
- This appraisal is subject to the accuracy of the legal description
furnished to the appraiser. The Appraiser assumes no responsibility for
the legal description provided or for matters pertaining to title or legal
considerations, nor does the appraiser render any opinion as to the title,
which is assumed to be good and marketable, with ownership in fee simple
or leased fee interest, as stated.
Unless otherwise indicated, all liens and encumbrances which may exist
have been disregarded, and the property is appraised as though it were
free and clear of any such impediments that might impact value.
2. ILLUSTRATIVE MATERIAL AND INFORMATION PROVIDED BY OTHERS
- All engineering studies and architectural plans provided are assumed to be
correct.
- Plans and illustrative material in this report may show approximate
dimensions and are included only to assist the reader in visualizing the
property. The Appraiser has made no survey of the property.
- Information, estimates, and opinions furnished to the Appraiser, and
contained in the report, were obtained from sources considered reliable
and are believed to be true and correct. However, no responsibility for
the accuracy of such items is assumed by the Appraiser, nor is warranty
given for its accuracy.
3. PROPERTY UTILIZATION
- Responsible ownership and competent management of the property is assumed.
- It is assumed that the utilization of the land and improvements is within
the boundaries or the property described in the report and that there is
no encroachment or trespass, unless noted in the report.
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- Unless non-compliance is stated and considered, it is assumed that the
property and its operations are in full compliance with all applicable
Federal, State, Local Government or private entity regulations, laws,
zoning requirements, covenants or other restrictions. It is further
assumed that all required licenses, regulations, certificates of
occupancy, permits, or other consents have been or can be obtained or
renewed for any use on which the value estimate is based, unless
non-conformity is identified, described and considered in this report.
4. SCOPE OF THE INSPECTION, PROPERTY CONDITIONS
- Only a visual, surface inspection of the property has been made by the
Appraiser. The Appraiser assumes that there are no hidden or unapparent
on-site or off-site conditions of the property or subsoil which would
render it more of less valuable, or affect the health or safety of the
occupants.
- Unless otherwise stated and considered, the existence of hazardous
materials, which may or may not be present, was not observed by the
Appraiser and the value estimate is predicated on the assumption that
there is not asbestos, urea-formaldehyde foam insulation, nor any other
potentially hazardous materials which may affect the value of the
property. The Appraiser has no expertise in identification of hazardous
materials, therefore we recommend that parties concerned obtain
independent investigation by qualified experts. The Appraiser assumes no
responsibility for such conditions, or for the engineering which might be
required to discover such factors. The Client is urged to retain an expert
in this field, if desired.
- Nothing in this report should be deemed a certification or guaranty as to
the structural and/or mechanical soundness of the building(s) and systems
that relate to the functions and operations of the property. Rather the
appraisal assumes functions, operations, and energy efficiency levels are
satisfactory and consistent with the age of the property, unless otherwise
noted. The Client is urged to retain experts in analysis of such systems,
if desired.
5. PERSONAL PROPERTY
- All personal property, furnishings and equipment, except those
specifically indicated, have been disregarded by the appraiser, unless
otherwise noted. Only the real estate has been considered.
6. APPRAISALS MADE SUBJECT TO COMPLETION
- On all appraisals subject to satisfactory completion, repairs, or
alterations, the appraisal report and value conclusion are contingent upon
completion of the improvements according to specifications and as stated
in the report, and in
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compliance with all laws, regulations and other restrictions, in a
workmanlike manner, and without delay. Represented designs and engineering
are assumed to be correct and adequate.
7. APPRAISAL USE
- The use of this appraisal is specifically restricted to the intended user,
identified as the client, specified in this report and its intended use.
NO OTHER PERSONS ARE AUTHORIZED TO READ OR POSSESS THIS APPRAISAL REPORT.
If the client releases this appraisal to another party, the Client assumes
all responsibility for any unintended outcomes associated with that
release.
8. ENVIRONMENTAL DISCLAIMER
- The Appraiser makes the following standard statement on assumptions and
limiting conditions on environmental matters:
"Unless otherwise stated in this report, the existence of hazardous
substances, including without limitation asbestos, polychlorinated
biphenyls, petroleum leakage, or agricultural chemicals, which may or may
not be present on the property, or other environmental conditions, were
not called to the attention of nor did the appraiser become aware of such
during the appraiser's inspection. The appraiser has no knowledge of the
existence of such materials on or in the property unless otherwise stated.
The appraiser, however, is not qualified to test such substances or
conditions. If there is a presence of such substances, such as asbestos,
urea formaldehyde foam insulation, or other hazardous substances or
environmental conditions, it may affect the value of the property, the
value estimated is predicated on the assumption that there is no such
condition on or in the property or in such proximity thereto that it would
cause a loss in value. No responsibility is assumed for any such
conditions, nor for any expertise or engineering knowledge required to
discover them."*
*Standards of Professional Appraisal Practice of the Appraisal Institute;
Guide Note 8, "The Consideration of Hazardous Substances in the Appraisal
Process", effective January 1, 1991.
The Appraiser makes the additional statement on assumptions and limiting
conditions on environmental matters, specific to the subject property:
The subject has not been inspected by the Appraiser with respect to the
existence of hazardous environmental substances. The Appraiser is not
qualified to test for hazardous materials, and the Client and Investor
should recognize that their existence is possible on this property.
Appropriate investigation into the history of the site, and possible
inspection and testing by qualified personnel, would be a prudent
requirement of the Client and Investor. For the purposes of this
appraisal, the property is assumed to be free of contaminants, but the
Client/Investor should
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recognize that environmental contamination, if it exists on the property,
could result in substantial depletion of the value stated.
9. LIMITATIONS RELATED TO THE DEFINITION OF VALUE
- The value estimated under the specified value definition is "the most
probable price which a property should bring".
As a point of clarification, the definition of value represents what a
prudent, knowledgeable purchaser, under no necessity to buy would be
willing to pay to purchase the property in a current sale. By this, value
is representative of the price paid by the seller, not the net proceeds to
the buyer. That is, the value does not consider payment of current sales
commissions, title policy fees, legal fees, liens, past due taxes, or
other disposition costs.
10. UNAVAILABLE SURVEY DATA
- A current survey was not provided to the appraiser. It is assumed that the
property is unaffected by adverse easements, encroachments on or by the
property, or adverse limitations by title on the use of the property,
including but not limited to protective covenants.
The provision of studies to discover this information requires both direct
authorization from the property owner and contracting for separate
services other than appraisal services, and is considered to be beyond the
scope of the appraisal services. The client is advised to obtain
appropriate surveys, title reports, or other data to confirm that the
property is unaffected by matters related to adverse conditions and
restrictions or limitations on use.
11. AMERICANS WITH DISABILITIES ACT (ADA) MATTERS
- To the best of the Appraiser's knowledge, the existing subject building
has not been audited with respect to the Americans With Disabilities Act
("ADA"), and the Appraiser has made no assumptions with respect to the
need for possible modifications to the property which may be required by
the ADA.
ADA BACKGROUND
The purpose of the ADA is to bring disabled persons within the economic
and social mainstream of American life. In essence, it requires employers
to provide equal opportunities for employment and requires places which
are open to the public to give the disabled equal opportunities to
participate in commerce, within the some limits.
Title III of the ADA covers all "places of public accommodation" and all
"commercial facilities." The distinction is important because places of
public accommodation may
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be required to make changes to existing facilities whereas commercial
facilities are not required to make changes to existing facilities under
Title III. However, both must comply with the ADA and the Americans Wit h
Disabilities Act Accessibility Guidelines ("ADAAG") with respect to newly
constructed facilities and alterations.
A place of public accommodation is essentially any facility or part of a
facility which is privately operated and which is open to the public. The
term facility includes all or any portion of buildings, structures, sites,
complexes, equipment, conveyances, roads, walks, passageways, parking
lots, or other real or personal property, including the site where the
building, property, structure, or equipment is located. A commercial
facility is any facility which is intended for nonresidential use and
whose operations affect commerce. Obviously, many places of public
accommodation are also commercial facilities but not all commercial
facilities are public accommodations.
BARRIER REMOVAL IN EXISTING FACILITIES
Title III requires removal from places of public accommodation all
communication barriers which are structural in nature and all
architectural barriers if that is readily achievable. If that is not
readily achievable, then alternative methods must be employed to give
disabled persons equal access if the alternative methods are readily
achievable. Readily achievable means easily accomplished or able to be
carried out without much difficulty or expense.
ALTERATIONS:
Any alteration to a place of public accommodation or commercial facility
begun after January 26, 1992 must comply with ADAAG to the maximum extent
feasible. To the maximum extent feasible means to the extent that it is
technically feasible to comply with ADAAG. An alteration is change to a
place of public accommodation or a commercial facility that affects or
could affect the usability of the building or facility or any part
thereof. It includes remodeling, renovation, rehabilitation,
reconstruction, restoration, changes or rearrangement in structural parts
or elements, and changes or rearrangement in the plan configuration of
walls and full height partitions.
If an alteration affects or could affect the usability of or access to a
primary function area of a facility, then the paths of travel to and from
the primary function area and certain other areas serving the primary
function area must be readily accessible to an d usable by disabled
individuals. A primary function area is an are a where a major activity
takes place. If the paths of travel must b e altered to comply, they must
be altered to the maximum extent feasible.
A path of travel includes a continuous, unobstructed way of pedestrian
passage between the primary function area and the entrance, walks,
sidewalks, curb ramps, other ramps, lobbies, corridors, rooms, other
improved areas, parking access aisles,
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and elevator. The term also includes restrooms, telephones, and drinking
fountains serving the primary function area.
NEW CONSTRUCTION
Facilities designed and newly constructed for first occupancy after
January 26, 1993 must comply with the ADA and ADAAG to the extent that it
is not structurally impracticable. Structural impracticability means that
the unique characteristics of the land prevent the incorporation of
accessibility features in a facility.
FACILITIES
Generally, facilities must comply with the ADA and ADAAG to the same
extent as other facilities unless compliance would threaten or destroy the
significance of the facility.
FURTHER CONSIDERATIONS FOR APPRAISAL REPORT USERS
The client and all users and readers of this report are advised of the
following:
1. Compliance with Title III of the ADA does not insure compliance with
any other provisions of the ADA.
2. Compliance with the applicable building and other codes does not insure
compliance with the ADA.
3. The ADA is a relatively new, quickly evolving, and unsettled area of
the law with no clear guidance, especially with respect to the terms
readily achievable, structural impracticability, and to the maximum extent
feasible. The courts are the final arbiters of what is required under the
ADA.
4. Although the Appraiser has some familiarity with the ADA, the appraiser
is not an expert in ADA matters, and does not have all the necessary
business information or business expertise required under the ADA to make
a fully informed decision with respect to whether an action is required by
the ADA.
5. Analysis of possible actions required to comply with the ADA is beyond
the scope of this report and may require the services of an architect,
attorney, and other experts.
6. The client and all other users and readers of this report are advised
that this report is not intended as nor can it be relied upon as legal or
other expert advice regarding the ADA; further, the client and all other
users and readers of this report are strongly advised to seek legal and
other expert advice regarding ADA matters. The only two purposes of this
section are to set forth any ADA assumptions made by the Appraiser in
appraising the property and to provide general information about Title III
of the ADA, to the extent that it addresses accessibility in places of
public
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accommodation and commercial facilities. Any party which accepts, uses or
relies upon this report, acknowledges and accepts the foregoing.
GENERAL LIMITING CONDITIONS
1. ALLOCATION OF VALUE
- Any allocation of the total value estimated in this report between the
land and improvements applies only under the stated program of utilization.
Separate values allocated for land and improvements must not be used in
conjunction with any other appraisal and are invalid if so used.
2. POSSESSION, CONFIDENTIALITY, DISTRIBUTION AND USE OF REPORT
- Possession of this report, or a copy thereof, does not carry with it the
right of publication.
- Information contained in the appraisal may be utilized by the specified
Client, but the report remains the property of Rocky Mountain Valuation
Specialists LLC.
- This report shall not be used by anyone but the Client specified in the
report without the Appraiser's prior written approval, and then only in
its entirety.
- Neither all nor any part of the contents of this report shall be used for
any purposes by anyone other than the Client specified in this report, or
conveyed to the public through advertising, public relations, news, sales,
or other media, without the written consent and approval of the Appraiser,
particularly as to the value conclusions, identity or designation of the
Appraiser or reference to the firm or appraisal organization with which
the Appraiser is affiliated.
- All conclusions and opinions concerning the analysis which are set forth
in the report were prepared by the Appraisers whose signatures appear on
the appraisal report. No change of any item in the report shall be made by
anyone other than the Appraisers, and the Appraisers' firm shall have no
responsibility if any such unauthorized change is made.
- Disclosure of the contents of the appraisal report is governed by the
by-laws and Regulations of the professional organizations with which the
Appraiser is affiliated.
3. LIMITATIONS OF THE APPRAISAL SERVICES
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- The Appraiser is not required to give testimony or to appear in court by
reason of this appraisal with reference to the property in question,
unless arrangements have previously been made therefore.
- The contract for appraisal, consultation or analytical service is
fulfilled and the total fee payable upon completion of the report. The
Appraisers or those assisting in preparation of the report will not be
asked or required to engage in post-appraisal consultation with the Client
or third parties except under separated and special arrangement and at an
additional fee.
- Liability of the Appraisers is limited to the elected fee for preparation
of the appraisal. Rocky Mountain Valuation Specialists LLC, as well as any
employee, agent or officer thereof, shall be completely indemnified
against any and all losses, claims, damages liabilities, costs or expenses
to which the recipient and/or third party user may become subject. There
is no accountability or liability to any third party.
- Opinions of value contained in this report are estimates. There is no
guarantee, written or implied, the subject property will sell or lease for
the indicated amounts.
- Acceptance and use of information in this report in any manner or purpose
is acknowledgment that the entire report has been read by the user and
that he agrees with the conclusion and the data contained in this report.
- The Client agrees to notify the appraiser of any error, omissions or
invalid data within 15 days of receipt of the appraisal and return the
report along with all copies to the Appraiser for correction prior to any
use whatsoever.
4. AUXILIARY REPORTS AND RELATED DATA BY OTHERS
- Unless stated otherwise, no auxiliary studies or reports related to the
property, such as surveys, environmental impact reports, special market
studies, highest and best reports, feasibility analysis, or reports
regarding modifications to the property for either compliance with he
Americans with Disabilities Act, structural, or other reasons, have been
furnished or reported to the Appraiser by the Client. Data presented with
respect to the subject's ownership, marketing, and income history is as
made available through the Client or readily accessed public sources. The
Appraiser assumes that pertinent data is not being withheld by the Client,
the Borrower, or related parties. Provision of such auxiliary data, or the
discovery of same by the appraiser, is beyond the scope of the appraisal
services contracted. The Appraisers reserve the unlimited right to alter,
amend, revise or rescind any of the statements, findings, opinions,
values, estimates, or conclusions upon any discovery or provision of such
data or analysis, subsequent to it becoming known to the Appraisers.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 116
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PART VIII
CERTIFICATION OF VALUE
CERTIFICATION STATEMENT
The undersigned do hereby certify that, to the best of our knowledge and belief:
- the statements of fact contained in this report are true and
correct.
- the reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions, and are our
personal, impartial and unbiased professional analyses, opinions,
conclusions and recommendations.
- we have no present or prospective interest in the property that is
the subject of this report, and we have no personal interest with
respect to the parties involved.
- we have no bias with respect to any property that is the subject of
this report or to the parties involved with this assignment.
- our engagement in this assignment was not contingent upon developing
or reporting predetermined results.
- our compensation for completing this assignment is not contingent
upon the development or reporting of a predetermined value or
direction in value that favors the cause of the client, the amount
of the value opinion, the attainment of a stipulated result, or the
occurrence of a subsequent event directly related to the intended
use of this appraisal.
- our analyses, opinions, and conclusions were developed, and this
report prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice.
- M. Steven Kane has made a personal inspection of the property that
is the subject of this report; Mark Linne did NOT inspect the
subject.
- no one provided significant real property appraisal assistance or
appraisal consulting assistance to the persons 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.
- the appraisal assignment was not based on a requested minimum
valuation, a specific valuation, or the approval of a loan.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 117
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- that as of the effective date of this report, all appraisers
involved with the preparation and reporting of this assignment are
in good standing both with the Appraisal Institute, as well as the
Colorado State Board of Real Estate Appraisers.
- as of the date of this report, Mark R. Linne has completed the
requirements of the continuing education program of the Appraisal
Institute.
(revised 2-04-03)
CERTIFICATION OF VALUE
It is our opinion, that subject to the General Assumptions and Limiting
Conditions, Extraordinary Assumptions and Hypothetical Conditions as set forth
in this appraisal, the concluded fee simple market value "as is" and the
prospective value "as completed" of the subject property, identified as The
Sardy House, located in Aspen, Colorado, are as follows:
CONCLUDED MARKET VALUE
$7,700,000 "AS IS"
AS OF FEBRUARY 27, 2003
CONCLUDED PROSPECTIVE VALUE
$14,300,000 "AS COMPLETED"
AS OF DECEMBER 1, 2003
/s/ Mark R. Linne /s/ M. Steven Kane
------------------------------ --------------------------
Mark R. Linne, MAI, CAE, ASA(1) M. Steven Kane
Managing Director Commercial Appraiser
ROCKY MOUNTAIN VALUATION SPECIALISTS LLC COLORADO CERTIFIED GENERAL
COLORADO CERTIFIED GENERAL APPRAISER #CG40013915
APPRAISER #CG01313422
THE CERTIFIED GENERAL APPRAISER LEVEL LICENSES THE ABOVE INDIVIDUALS TO PERFORM
APPRAISALS ON ALL TYPES OF REAL PROPERTY IN COMPLIANCE WITH COLORADO STATE LAW,
SECTION 12-61-706, C.R.S., AND TITLE XI OF THE FEDERAL FINANCIAL INSTITUTIONS
REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989 ("FIRREA").
1 - MAI DESIGNATED BY THE APPRAISAL INSTITUTE, CAE DESIGNATED BY THE
INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS, ASA DESIGNATED BY THE AMERICAN
SOCIETY OF APPRAISERS
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APPRAISAL QUALIFICATIONS
MARK R. LINNE, MAI, CAE
PROFESSIONAL EXPERIENCE:
ROCKY MOUNTAIN VALUATION SPECIALISTS, LLC ( 1997 TO PRESENT)
MANAGING DIRECTOR
Valuation and real estate counseling on major urban properties and
portfolios, including financial and feasibility analysis, appraisal
reviews, consulting and expert testimony. Broad-based experience in a
variety of diverse property types, including specific expertise in office
buildings, lodging properties, developmental vacant land, shopping
centers, congregate care properties, mobile home communities, and other
diverse property types; Geographic assignments include all of the Colorado
Front Range, as well as the mountain resorts of Vail, Avon/Beaver Creek,
Silverthorne, Frisco and Breckenridge.
VALUATION RESEARCH CORPORATION ( 1991 TO 1997)
EXECUTIVE VICE PRESIDENT, MEMBER OF THE BOARD OF DIRECTORS, DIRECTOR OF
VALUATION SERVICES;
Valuation and real estate counseling on major urban properties and
portfolios, including financial and feasibility analysis, appraisal
reviews, consulting and expert testimony. Member of development team
responsible for the creation of VALUECHECK software, capable of valuing
over 750,000 residential properties along the Colorado Front Range.
THE VALEX GROUP, INC. (1992-1995)
Executive Vice President/Valuation Services
Responsible for the operation of the valuation services function of
affiliated organization: consultation with attorneys, tax consultants and
assessment professionals to coordinate ad-valorem litigation strategies;
Coordination of mass appraisal Services to assessors and their staffs;
expert witness/consulting for delineated groups; specific application
strategies for Computer Assisted Mass Appraisal (CAMA) for both domestic
and
THE SARDY HOUSE - ASPEN, COLORADO PAGE 119
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international end-users. The firm was merged in 1996 into Valuation
Research Corporation.
CITY & COUNTY OF DENVER, COLORADO (1984 - 1991)
COMMERCIAL PROPERTY APPRAISAL SPECIALIST
Progressively greater responsibilities in all facets of residential and
commercial appraisal; functioned as assistant supervisor of commercial
section responsible for the analysis and valuation of the $3.2 billion
dollar Denver Central Business District, as well as all lodging properties
within Denver; assignments included many of the most complex valuation
assignments in the State.
RELATED EDUCATIONAL BACKGROUND:
UNIVERSITY OF COLORADO:
BS: Business Administration
AMERICAN INSTITUTE OF REAL ESTATE APPRAISERS:
Real Estate Appraisal Principles
Basic Valuation Procedures
Capitalization Theory and Techniques, Part 1 & 2
SOCIETY OF REAL ESTATE APPRAISERS:
Standards of Professional Practice
Residential Valuation Techniques
Income Property Valuation Techniques
APPRAISAL INSTITUTE:
Market Analysis
Standards of Professional Practice-Part A, Part B, Part C
Real Estate Case Studies
Report Writing and Valuation Analysis
Comprehensive Appraisal Seminar
Appraisal Consulting
Subdivision Analysis
Symposium-Globalization of Real Estate
Business Enterprise Valuation
Appraisal Review: Residential and Commercial
Appraisal of Senior Housing and Care Properties
Appraisal in Litigation
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Concept and Application of Regression Analysis
Lease Abstracting and Analysis
Impact of Wetlands
Valuation of Detrimental Conditions
Market Demand Analysis Seminar
AMERICAN SOCIETY OF FARM MANAGERS AND RURAL APPRAISERS:
Conservation Easements
Federal Land Exchanges & Acquisitions
Water Rights Seminar
INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS:
Income Approach to Valuation
Development and Writing of Narrative
Appraisal Reports
Policy Developments In The Property Tax
Fifty-Sixth International Conference On
Assessment Administration, Montreal, Quebec
UNIVERSITY OF DENVER: SCHOOL OF REAL ESTATE & CONSTRUCTION MANAGEMENT:
Investment Property Appraisal
UNIVERSITY OF COLORADO:
Techniques of Real Property Appraisal
Feasibility Study Analysis
PROFESSIONAL DESIGNATIONS/ASSOCIATION MEMBERSHIPS:
APPRAISAL INSTITUTE:
MEMBER (MAI)
Ethics and Counseling Regional Panel
Appraisal Journal Review Committee
Vice Chairman
Educational Publications Committee
Editorial Revision Committee
The Dictionary of Real Estate Appraisal
Editorial Advisory Board
Valuation Insights and Perspectives
INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS:
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CERTIFIED ASSESSMENT EVALUATOR (CAE)
Colorado Professional Designation Advisor: 1991-2002
Colorado National Representative: 1990-1993
National Ad-Hoc Committee on
Computer Assisted Valuation (CAMA)
National Instructor Training Program
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COLORADO BOARD OF REAL ESTATE APPRAISERS:
Colorado Certified General Appraiser
Appraiser #CGO1313422
Certified through December 31, 2003
COLORADO ASSOCIATION OF TAX APPRAISERS
Conference Speaker
Second Vice-President
Adjunct Committee Member
Board Member
AWARDS, APPOINTMENTS AND PRESENTATIONS:
COLORADO STATE BOARD OF ASSESSMENT APPEALS:
Appointed Member by Governor; Confirmation by Senate
IAAO DONEHOO ESSAY AWARD WINNER:
Best Technical Article On Appraisal
APPRAISAL INSTITUTE SCHMUTZ AWARD:
Finalist For "Appraisal Valuation Modeling"
IAAO NORMAN REGISTER SCHOLARSHIP
APPRAISAL INSTITUTE-SOUTHERN CALIFORNIA CHAPTER:
Seminar Presentation: Valuation Modeling: 1999
EXPERT APPRAISAL WITNESS:
Qualified as an expert witness before FEDERAL DISTRICT COURT, FEDERAL
BANKRUPTCY COURT, JEFFERSON COUNTY and DENVER DISTRICT COURT and the
COLORADO STATE BOARD OF ASSESSMENT APPEALS.
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PUBLICATIONS:
TEXTBOOKS:
"A GUIDE TO APPRAISAL VALUATION MODELING" Principal Author: July, 2000
Publication by The Appraisal Institute
"PRACTICAL APPLICATIONS IN APPRAISAL VALUATION MODELING AND DESIGN"
Principal Author: Scheduled Publication by The Appraisal Institute for
2002.
PERIODICALS:
"THE NECESSITY FOR STRATEGIC ALLIANCES: OPPORTUNITIES FOR PUBLIC/PRIVATE
SECTOR SYNTHESIS", Appraisal Institute On-Line Publication, Winter, 2001.
"BREAKING THE PARADIGM: ALTERNATIVE APPRAISAL RECRUITMENT STRATEGIES",
Appraisal Insights and Perspectives, Spring, 1997.
"APPRAISERS AND STATISTICS: ADAPTATION OR EXTINCTION", Appraisal Insights
and Perspectives, Winter, 1996.
"AUTOMATED APPRAISALS DEBUT IN COLORADO", Colorado Real Estate
Journal, December, 1996.
"HOTEL AND MOTEL VALUATION: AN ASSESSMENT PERSPECTIVE", Assessment Digest,
September/October, 1990.
"LODGING AND HOSPITALITY VALUATION GUIDE", City and County of Denver,
Colorado, 1990.
"OPPORTUNITY AMID CHAOS: APPRAISAL CHALLENGES FOR
THE 1990'S AND BEYOND", Assessment Digest, September/October, 1991.
"DEFINING AND RESPONDING TO CLIENT NEEDS", Colorado Real Estate Journal,
April, 1992.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 124
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REPRESENTATIVE APPRAISAL/CONSULTING CLIENTS:
INSTITUTIONAL CLIENTS
GMAC INSTITUTIONAL ADVISORS
UBS WARBURG
MERRILL LYNCH SMALL BUS CAP
AMERUS CAPITAL MANAGEMENT
FIRST UNION SMALL BUS CAP
ABN AMRO
DEUTSCHE BANK
LENDING CLIENTS
GUARANTY BANK & TRUST
FIRSTBANKS OF COLORADO
BANK OF DENVER
AFFINITY BANK
CITYWIDE BANKS
BANK OF AMERICA
WELLS FARGO
VECTRA BANK
UNION BANK AND TRUST
WESTSTAR BANK
ALPINE BANKS
NORTHERN BANK & TRUST
COLORADO BUSINESS BANK
COMMERCIAL FEDERAL
FIRST UNITED BANK
MOUNTAIN STATES BANK
ARAPAHOE BANK AND TRUST
MESA NATIONAL BANK
COLORADO STATE BANK & TRUST
COMPASS BANK
BANK OF COLORADO
FRONT RANGE BANK
FOUNDATIONS
EL POMAR FOUNDATION
NATIONAL BAPTIST FOUNDATION
VAIL RELIGIOUS FOUNDATION
KAISER FOUNDATION OF COLO
VAIL ARTS FOUNDATION
ATTORNEYS
HOLME, ROBERTS AND OWENS
ROTHGERBER, LYONS
DAVIS, GRAHAM AND STUBBS
BERENBAUM AND WIENSCHIENK
GARY S. COHEN
CORPORATIONS
VAIL RESORTS
COLDWELL BANKER
RE-MAX INTERNATIONAL
Northglenn Mall Associates
SOLVISTA CORP.
COOPERS AND LYBRAND
FORD MOTOR/NEW HOLLAND
ARTHUR ANDERSEN LLP
WORTHINGTON-GOVERNOR CORP
MARRIOTT CORPORATION
VAIL ASSOCIATES REAL ESTATE
TOTAL PETROLEUM
GALLAGHER CORPORATION
FIRESTONE TIRE
DIAMOND SHAMROCK
GOVERNMENT AGENCIES
US DEPARTMENT OF ENERGY
National Renewable Energy
Laboratory
ARAPAHO COUNTY AIRPORT
AUTHORITY
EAGLE COUNTY HOUSING
AUTHORITY
UNITED STATES POSTAL SERVICE
TOWN OF VAIL
Federal Deposit Insurance Corp
CITY AND COUNTY OF DENVER
CITY OF LAKEWOOD
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DENVER DISTRICT COURT
EAGLE COUNTY AIRPORT
AUTHORITY
COLORADO STATE LAND BOARD
EAGLE COUNTY ASSESSOR
Tennessee Div of Property
TOWN OF CASTLE ROCK
COLORADO DEPARTMENT OF TRANSPORTATION
TRAER CREEK METRO DISTRICT
INSURANCE COMPANIES
OHIO NATIONAL LIFE INSURANCE
LIFE OF VIRGINIA
ORGANIZATIONS
SALVATION ARMY
HUMAN SERVICES, INC.
ROSE MEDICAL CENTER
WILDLIFE EXPERIENCE
PEPSI CENTER
REPRESENTATIVE APPRAISALS:
RETAIL CENTERS
SHOPPES AT PARK MEADOWS
LARIMER SQUARE
HOME DEPOT CENTER-CASTLE ROCK
HIGHLANDS RANCH MARKETPLACE
SHOPPES AT CASTLE PINES
SILVERTHORNE OUTLET STORES
NORTHGLENN MALL
SMOKY HILL SHOPPING CENTER
MAR-LEE SHOPPING CENTER
EDWARDS VILLAGE CENTER
MILESTONE SHOPPING CENTERS
DILLON RIDGE SHOPPING CENTER
VILLAGE CENTER
GOLF COURSES
SANCTUARY GOLF COURSE
MERIDIAN GOLF COURSE
RED ROCKS GOLF COURSE
FIRESTONE GOLF COURSE
COTTON RANCH GOLF COURSE
CORDILLERA VALLEY GOLF COURSE
PINEHURST COUNTRY CLUB
SOLVISTA SKI AND GOLF CLUB
SUNGLEN GOLF COURSE
FUJIKI GOLF COURSE
EMERALD RUN
HOTEL/LODGING
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EVERGREEN LODGE-VAIL
TRAVELODGE DENVER
VAIL VILLAGE INN
COMFORT INN LAKEWOOD
SUPER-8 ACADEMY PARK
MARRIOTT DENVER WEST
HOLIDAY INN-MONTROSE
MARRIOTT FOUR-POINTS-LAKEWOOD
DAYS INN-GOLDEN
BEAVER CREEK LODGE
HOLIDAY INN-KEN CARYL
SPECIALTY PROPERTIES
LARIMER SQUARE
VAIL SKI AREA (BACHELOR GULCH)
CENTENNIAL AIRPORT
SOLVISTA/SILVER CREEK SKI AREA
DENVER PAVILLIONS DEVELOPMENT SITE
WILL ROGERS SHRINE OF THE SUN
SOUTH TABLE MOUNTAIN FACILITY
CASCADE VILLAGE PARKING STRUCTURE
PEPSI CENTER DEVELOPMENT SITE
VILAR CENTER FOR THE PERFORMING ARTS
PALACE LOFTS DEVELOPMENT SITE
WILDLIFE EXPERIENCE MUSEUM
VAIL INTERFAITH CHAPEL
Three Blocks Central Business District
GOLDEN TRIANGLE DEVELOPMENT SITE
MIXED-USE DEVELOPMENTS
STREETCAR STABLES
GRAND CHEROKEE LOFTS
JOHN DEERE LOFTS
PARKWAY CENTER
VAIL COMMONS
METROPOLITAN LOFTS PROJECT
OFFICE PROPERTIES
CAREERTRACK CORPORATE HEADQUARTERS
US WEST TOWER
KEN CARYL OFFICE PARK
WILDLIFE EXPERIENCE
PEPSI CENTER
RESORT LODGING
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ANTLER'S LODGE AT VAIL
RIVER MOUNTAIN LODGE
SETTLER'S LODGE-BACHELOR GULCH
FIRELIGHT LODGE
VAIL MOUNTAIN LODGE AND SPA
VILLAGE AT ARROWHEAD
MASTER-PLANNED DEVELOPMENTS
SUNGLEN
BUFFALO RANCH
KEENE RANCH
WILDFIRE RIDGE
COTTON RANCH
CORDILLERA VALLEY
RANCH DEVELOPMENTS &
CONSERVATION EASEMENTS
GRAND RIVER RANCH
SHADOW MOUNTAIN RANCH
LAUGHING TROUT RANCH
ALBERTSON RANCH
THE SARDY HOUSE - ASPEN, COLORADO PAGE 128
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APPRAISAL QUALIFICATIONS
M. STEVEN KANE
PROFESSIONAL EXPERIENCE
ROCKY MOUNTAIN VALUATION SPECIALISTS (1997 TO PRESENT)
DIRECTOR OF COMMERCIAL APPRAISAL SERVICES / COMMERCIAL APPRAISER
Appraisal of commercial properties, including office, retail, industrial,
planned mixed-use developments, residential subdivisions, lodging,
shopping centers, vacant land, places of worship and other commercial
property types. Lead work on regional and market analysis. Statistical
analysis includes market trend analyses and econometric modeling of
commercial sub-markets. Lead commercial appraisal and quality control
manager for commercial appraisal services. Mass appraisal experience in
both commercial and residential real estate databases. Geographic
assignments include all of the Colorado Front Range, the mountain resorts
areas in Summit County, Eagle County, Garfield County, and Grand County,
and commercial properties located in Larimer, Logan, Elbert, Montrose,
Mesa and Clear Creek counties.
VALUATION RESEARCH CORPORATION (1995 TO 1997)
Chief Modeler and Econometrician for ValueCheck
VALUATION MODEL ARCHITECT FOR VALUECHECK, AN AUTOMATED VALUATION PRODUCT
MARKETED AND DEVELOPED BY VALUATION RESEARCH CORPORATION. PRIMARY DUTIES
INCLUDED THE DESIGN, IMPLEMENTATION, AND ANALYSIS OF OVER 3,000 RESIDENTIAL
VALUATION MODELS THAT COVERED THE 6 DENVER METROPOLITAN COUNTIES, EL PASO,
PUEBLO, LARIMER, EAGLE AND SUMMIT COUNTIES IN COLORADO, AS WELL AS MARICOPA AND
PIMA COUNTIES IN ARIZONA. PRESENTED AND TRAINED CLIENT STAFFS ON IMPLEMENTATION
OF VALUECHECK, AS WELL AS CO-AUTHORED USER MANUAL.
CITY & COUNTY OF DENVER, COLORADO (1988 - 1990)
RESIDENTIAL REAL PROPERTY APPRAISER
Progressively greater responsibilities in all facets of residential and
multi-family mass appraisal; modeled multi-family residential properties
in Denver County;
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functioned as tax protest contact with general public; presented
assessment case data in hearings involving public tax protest.
EDUCATIONAL BACKGROUND
APPRAISAL INSTITUTE (1998-2002)
COURSES
120 - General Appraisal Procedures (Houston TX, 10/98)
310 - Basic Income Capitalization (Houston TX, 03/99)
320 - General Applications (Boulder CO, 06/99)
410 - Professional Standards Part A (Omaha NE, 04/99)
420 - Professional Standards Part B (Boulder CO, 06/99)
510 - Advanced Income Capitalization (Minneapolis MN, 07/99)
520 - Highest and Best Use/Market Analysis (Tempe AZ, 08/99)
530 - Adv Sales Comparison & Cost Appr Analysis (Chicago IL, 10/99)
540 - Report Writing and Valuation Analysis (Edison NJ, 08/00)
550 - Advanced Applications (Houston TX, 05/00)
SUCCESSFULLY PASSED GENERAL COMPREHENSIVE
EXAMINATION IN FEBURARY 2001
SEMINARS/WORKSHOPS
Litigation (San Antonio TX, 06/98)
Highest and Best Use: Commercial Case Studies (Orlando FL, 06/99)
Conservation Easements (Las Vegas NV, 06/00)`
Gen Demonstration Report Writing Seminar (Dallas TX, 11/00)
Instructor Leadership and Development Conference (Atlanta, GA, 02/02)
INTERNATIONAL ASSOCIATION OF ASSESSMENT OFFICERS (1988-2002)
Course 1: Fundamentals of Real Property Appraisal (Denver CO, 09/88)
Course 2: Basic Income Capitalization (Denver CO, 09/89)
Course 300: Fundamentals of Mass Appraisal (Phoenix, AZ, 03/02)
OTHER COURSEWORK
USPAP, EGOS (Denver CO, 02/98)
Small Residential Income Properties, Univ of Colo (Denver CO, 04/98)
Conservation Easements, ASFMRA (Las Vegas NV, 07/00)
USPAP 2000 Update, EGOS (Denver CO, 12/00)
General Comprehensive Examination Workshop (Dallas TX, 02/01)
Modeling Vacant Land & Commercial Properties w/SPSS (Denver CO, 02/02)
UNIVERSITY OF SAINT THOMAS, MINNEAPOLIS, MINNESOTA (2001-PRESENT)
Masters in Real Estate Appraisal candidate.
MSRA 610-21 Legal Issues in Valuation
MSRA 610-51 Special Topics in Appraisal
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UNIVERSITY OF COLORADO (1991-1995)
15 hours of Statistical Analysis coursework at the Masters degree level,
including Regression Analysis, Descriptive Analysis, and Inferential
Analysis.
UNIVERSITY OF COLORADO AT DENVER (1982-1985)
24 hours of Economics coursework at the Masters degree level, including
Econometrics, Regional Economics, Applied Economic Theory, and Urban
Economics.
REGIS UNIVERSITY, DENVER, COLORADO (1976-1980)
Bachelor of Science in Economics; Applied Mathematics minor; graduated Cum
laude with honors, recipient of Joseph A. Ryan Award in Economics, 1980.
PROFESSIONAL DESIGNATIONS/ASSOCIATION MEMBERSHIPS
APPRAISAL INSTITUTE
GENERAL ASSOCIATE 1999-PRESENT
AFFILIATE 1998-1999
INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS
MEMBER 1988-1990, 2002- PRESENT
COLORADO BOARD OF REAL ESTATE APPRAISERS
COLORADO CERTIFIED GENERAL
APPRAISER #CG40013915
CERTIFIED THROUGH DECEMBER 31, 2002
PUBLICATIONS
TEXTBOOKS:
"APPRAISAL VALUATION MODELING" Principal Author: June 2000 Publication by
The Appraisal Institute
PERIODICALS:
"THE APPLICATION OF STATISTICAL ANALYSIS", Valuation Insights and
Perspectives, Third Quarter, 2000.
"APPRAISERS AND STATISTICS: ADAPTATION OR EXTINCTION", Valuation Insights
and Perspectives, Winter, 1996.
THE SARDY HOUSE - ASPEN, COLORADO PAGE 131
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Statistical Reports
Eagle County Market Monitor, General Editor, 1998-Present.
Summit County Market Monitor, General Editor, 2000-Present.
MAJOR APPRAISAL PROJECTS
ADAMS RIB PUD, EAGLE, CO
Buffalo Mountain Ranch, Silverthorne, CO
Westwood Retail Center, Arvada, CO
The Vistas at Stony Creek, Littleton, CO
Eagle Ranch Estates, Fort Collins, CO
The Elms at Meadowvale, Longmont, CO
Cardiff Glen, Glenwood Springs, CO
Silver Creek Golf and Ski Ranch, Granby, CO
The Pines Lodge, Aspen, CO
Formby Ford Dealership, Silverthorne, CO
Cucumber Patch at Shock Hill, Breckenridge, CO
The Wellington Neighborhood, Breckenridge, CO
Oak Meadows Filing 4 PUD, Glenwood Springs, CO
La Fontana Retail Center, Carbondale, CO
Coherent Technologies Building, Louisville, CO
Forest Park Office Building, Lafayette, CO
Spectrum Office Building, Boulder, CO
The Boundary at River Valley Ranch, Carbondale, CO
Cityview Lofts, Denver, CO
Perry Highlands, Denver, CO
Hearthstone at Highlands Village, Denver, CO
Brandon Park, Aurora, CO
Metzler Ranch Filing 6, Castle Rock, CO
Eagle Pointe/Elk Pointe, Castle Pines Village, CO
Frisco Trading Company, Frisco, CO
REPRESENTATIVE APPRAISALS PERFORMED FOR:
FIRSTBANK OF COLORADO GUARANTY BANK AND TRUST
BANK OF AMERICA ARCHON FINANCIAL
FIRSTSTATE BANK PARK NATIONAL BANK
FIRST COMMUNITY INDUSTRIAL BANK VECTRA BANK
STUDIO 3 LAND COMPANY PARK NATIONAL BANK
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FIRST NATIONAL BANK OF LARAMIE THE BANK OF BOULDER
PINNACLE PROPERTIES, INC. MATRIX CAPITAL BANK
PEAK NATIONAL BANK WESTSTAR BANK
SECURITY FIRST BANK UNION BANK AND TRUST
THE BANK OF DENVER MERILL LYNCH SMALL BUSINESS SERVICES
PEAK 8 PROPERTIES GE CAPITAL
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ADDENDA
THE SARDY HOUSE - ASPEN, COLORADO PAGE 134
Dates Referenced Herein and Documents Incorporated By Reference
Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)
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