HomeMy WebLinkAboutAppraisal (2) THE LAND ;
Locationlzq
The subject is located south of Interstate 80 in the eastern portion of the town of
Truckee, Nevada County, California.
Land Area
The total area of the subject is 616.20 acres, according to the parcels shown in the
Nevada County Assessor's maps. The acreage, per a survey prepared by SCO
Planning and Engineering dated August 2003, is different at 603.57 acres. The taxable
portions of the subject are the single-family lots, fractional unit land and existing cabin
lots. The subject's land area per the survey is detailed in the following table by land use
type.
Parcel Land Use/Identification Size Acres
D1-D5 Existing cabins 1.43*
F-1 — F19 Cabin Lots— Phase 1 6.26
F, G, N —Cottage 23.67*
L, P, Q Future Cabin Lots 17.78*
R1-R99 Lots 52.82*
C, D, U Utilities/Roads 30.31
T Future development 8.05
A, B, J. K, O, S Common areas 104.16
Subtotal 244.48
E Fitness Center/Pro Shop 15.03
H Golf course 302.74
1 Golf course 19.$7
M Golf course 17.24
R Maintenance building 4.21
Subtotal 359.09
Total Acres 603.57
*Taxable pro2erty (for CFD
The subject's land area per the Nevada County Assessor's plats is shown in the
following table.
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Acres Assessor's Parcel No.
285. 22 19-370-08
77.69 19-430-14
79.36 19.430-15
78.87 19-430-16
78.45 19-430-17
16.21 19-430-23
616.20
The above indication of 616.20 acres is the figure attributable to the Truckee Donner
CFD. The difference in acreage between the survey and assessor's plats is considered
negligible in relation to the scope of the project and has no impact on the value
conclusions stated herein.
Shape and Topography
The subject parcel has an irregular, triangular shape,with the subject becoming wider to
the south boundary. The topography of the site is mostly level with some gently sloping
and undulating areas. Reference is made to the plat map on the facing page, which
depicts the subject site.
Zoning
The subject site is zoned under the jurisdiction of the Town of Truckee Development
Code, dated September 2, 2001. The subject site includes three different zoning
districts: REC, RR 0.1 and RS 2.0. The REC, which is a Recreation District per the
Truckee Development Code, is defined as follows: The REC zoning district is applied to
areas appropriate for active recreational activities that would be compatible with natural
resource areas. Allowed uses include camping, fishing, skiing, golfing, clustered
lodging, residences and support services. The REC zoning district is consistent with the
Open Space Recreation, Residential, and Tahoe Donner PC land use classifications of
the General Plan. The RR 0.1 zoning is defined as Rural Residential, 1 dwelling unit per
10 acres. The RS 2.0 zoning is a single-family residential zoning with an allowable
density of 2 units per acre. The following table shows the zoning by subject acreage.
Zone Acrea e
REC 285.62
RR 0.1 314.37
RS 2.0 16.21
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The subject is a master-planned development that has been approved by the Town of
Truckee and is an allowed use under the current zoning regulations.
Development Agreement
Based on the underlying zoning of the subject discussed above, the town of Truckee
entered into the Old Greenwood Planned Development, Development Agreement with
the subject Truckee Land LLC, which was recorded with the Nevada County Recorder
on August 23, 2002. This development agreement is 28 pages plus extensive
attachments. We have reviewed a copy of this development agreement and retained it
in our files. It is considered too extensive to incorporate as part of this appraisal report.
We have provided a summary of the development agreement as a separate section
after The Land section of this report.
Utilities
All public utilities are available to the subject site. Utility suppliers are listed as follows:
Electricity ................................ Truckee Donner Public Utilities
Natural Gas ............................ Southwest Gas
Water.............................. ........ Truckee Donner Public Utility District
Sewer ..................................... Truckee Donner Sanitation District
Telephone .,.............. .......... ... SBC/Pacific Bell
Cable Television ..................... USA Media
Flood Hazard Identification
The subject is located in Zone C, defined as an area outside the 500-year flood plain,
according to Flood Insurance Rate Map Panel No. 0602100507B, dated January 1,
1981
Easeme nts/Enc roach ments
We have reviewed a title report of the subject prepared by Placer Title Company dated
May 2, 2001. Schedule B of the report identified the following easements:
• Multiple right-of-way easements in favor of utility companies and pipelines, both
overhead and underground.
• A right-of-way easement in favor of Old Truckee Airport Road.
• An access easement in favor of John R. Duttweiler.
• Notice of consent to use land, executed by the Hoffman Foundation, a California
nonprofit corporation.
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The easements noted above are not considered to be detrimental or detract from the
utility of the subject land. No other adverse easements or encroachments were reported F
or observed which would adversely affect the subject land. As will be noted in the
Development Agreement Summary, there are public trails integrated into the
development plan.
Environmental Analysis
We have reviewed an Environmental Impact Report prepared by Pacific Municipal
Consultants dated February 2002, which has been retained in the appraisers'files. This
report addressed several aspects of the subject site's suitability for development. We
have specifically reviewed the sections of the report pertaining to the following
environmental issues:
Soil analysis
Seismic hazards (earthquakes)
Presence of hazardous materials on site
Groundwater resources
There were no items of concern at the subject site related to the above list. Based on a
review of the Environmental Impact Report provided, the subject site is considered
suitable for the proposed development by East West Partners with no adverse
environmental conditions.
Access
The main access point to the subject site will be from Old Airport Road on the north end
of the subject site. This road is an extension of the Prosser Village Interstate 80
highway exit ramp. Secondary access to the subject will be near the south boundary of
the site from Highland Avenue in the Olympic Heights subdivision.
Streets
Airport Road is the access road to the subject site from the Interstate 80 Prosser
Village exit ramp.Airport Road is a two-lane, asphalt-paved road that becomes Fairway
Drive once inside the subject development.
Highland Avenue is an asphalt-paved, residential street in the Olympic Heights
subdivision south of the subject site.
Conclusion
The subject site is a large tract of land that is well located with generally level
topography and good access to surrounding thoroughfares with all utilities available.
OLD GREENWOOD DEVELOPMENT AGREEMENT SUMMARY
The Old Greenwood development has been through the town of Truckee
planning process and has been approved under the specific requirements of the Old
Greenwood Development Agreement recorded with the Nevada County Recorder, dated
August 23, 2002. Due to the detail contained in this document, a summary of the development
agreement follows the overview of the project, as follows.
Overview
The Old Greenwood development consists of a master-planned golf course
based community featuring club oriented facilities, maintenance buildings, and a combination
of residential development. Old Greenwood will be developed with a focus towards clustered
development, which maximizes open space. It should be noted that the original development
agreement included a total of 849.3 acres, some of which is not a part of the Community
Facilities District appraised herein. In the overall development plan, 366.7 acres of the land will
be open space, 354.5 acres will be dedicated to the golf course, and 111.2 acres of the land
area will be developed with specified attached, full ownership and fractional ownership parcels.
As of the date of value, the development is underway in the form of road improvements and
various infrastructure, as well as the complete golf course shaping and water feature
construction. The first vertical construction of the fractional ownership cabins was also in
progress, as observed during the physical inspection of the subject property. Community
benefits offered to the public will include limited public play of the golf course and the
installation of hiking/biking trail easements through the subject for public use.
The development agreement has a term of 15 years for expiration. The
development needs to be completed by then or lose entitlements.
Agreement Summary - Permitted Uses and Density and Intensity of Uses
Open Space (OS Parcels)
The open space parcels at the subject are intended to remain primarily open. However,
the entry gatehouse, welcome center, large storage tank, monument entry sign,
neighborhood park and golf cart paths are allowed in these open space parcels.
Golf Course Parcels (Outside Development Area)
The golf course outside the development area are allowed to have all typical golf course
improvements, including golf course tees, fairways, greens and water features, as well
as the temporary real estate sign along.Interstate 80.
Golf Course Parcels (Within Development Area)
The golf course parcels within the specified development area include a golf course,
clubhouse/pro shop and cart storage facility, golf practice facility with support buildings
of 3,000 square feet, and maintenance facilities for golf course and property
management functions consisting of three buildings not to exceed a total of 22,000
square feet.
Commercial Development (Old Greenwood House) Parcel
Community lodge building not to exceed 50,000 square feet of floor space, including
main lobby, check-in/reception functions, administration functions, including property
management, restaurant not to exceed 5,000 square feet of floor space, and 20 lodging
units.
Swim/fitness center not to exceed 17,000 square feet of floor space, including a
swimming facility, deck and six exterior tennis courts.
Single Family Lot (Full Ownership) Development Parcels
104 single family lots (five lots may be converted into residential townhouse or
condominium units within the Attached Units Development Parcels).
Residential uses as permitted in the RS (Single Family Residential)zoning district of the
Development Code of the existing Land Use Regulations, including secondary
residential units and accessory uses and structures.
Fractional Ownership Units Development Parcels
79 detached fractional ownership units (five units may be converted into attached
fractional ownership units within the Attached Units Development Parcels).
Attached Units Development Parcels
15 residential townhouse or condominium units.
80 attached fractional ownership units.
20 lodging units in separate buildings from fractional ownership units provided the
lodging units are not incorporated into the commercial lodge building and the floor
space for lodging units is subtracted from the allowed floor space for the commercial
lodge building.
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Employee Housing Development Parcel
28 multi-family residential units.
Multi-family uses as permitted in the RM (Multi-family Residential) zoning district of the
Development Code of the Existing Land Use Regulations, including accessory uses and
structures.
Phasing Plan
The golf course,pro shop, cart storage, commercial lodge, swimming/fitness center and
appurtenant facilities and structures to those uses may be constructed and completed
at any time during the life of the Development Agreement.
35 percent of the 278 single-family lots, residential cottage units, and/or
detached/attached fractional ownership units shall be completed within five years of the
effective date of the Development Agreement: Employee housing shall be constructed
as required by Project Standards and Section 2.8 of the Agreement.
50 percent of the 278 single family lots, residential cottage units, and/or
detached/attached fractional ownership units, not including the employee housing units,
shall be completed within ten years of the effective date of the Development
Agreement. Employee housing shall be constructed as required by Project Standards
and Section 2.8 of the Agreement.
Employee Housing Requirement
15 units of employee housing shall be completed prior to or concurrently with the
completion of the golf course. The Community Development Director may defer
completion of these employee housing units for a period of up to two years from the
date of completion of the golf course if an off-site location for the Old Greenwood
employee housing is found and the housing has received the necessary Town land use
approvals from the Town. The Council, at its discretion, may approve an extension of up
to three additional years without formally amending the Agreement. The remaining units
shall be completed prior to or concurrently with the completion of the 200th single-family
lot, residential cottage units, and/or detached/attached fractional ownership unit. The
employee housing may be constructed within the project site, or off-site within the Town
of Truckee.
Construction of appurtenant structures, parking and accessory uses, as well as
open space uses, is provided in each of the development parcels outlined above. As of the
date of appraisal, it is the developer's intention to transferthe Employee Housing component to
the Gray's Crossing Development, which will be anticipated to commence in 2006. Additional
regulations contained in the Development Agreement relate to protecting wildlife and plant life
and minimizing the impacts of construction. The residential development standards call for the
specifications of building materials to include the use of native stone, shingle siding and stucco
exteriors, green composite wood shingles and structural use of timbers. A deed restriction will
apply to all fractional ownership units, limiting an owner to no more than a 25 percent
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ownership of an individual unit and prohibiting occupancy to more than 30 consecutive days
and no more than 90 days in any calendar year.
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DESCRIPTION OF IMPROVEMENTS
Prior to the acquisition of the subject by East West Partners, several
improvements from the previous development, Featherstone Resort, had been completed. The
following description of improvements for the Truckee Donner PUD is based on an inspection
of the existing improvements during various phases of construction, a review of building plans
for the proposed cabins and cottages prepared by Zehren and Associates, Inc., and marketing
material and other information provided by the subject developer, East West Partners.
General Description
Old Greenwood is a proposed residential, golf course based community with a mix of
residential product types, including 99 single family lots, 74 fractional ownership cabins
and 72 fractional ownership cottage units. Construction of the infrastructure and golf
course improvements began in Spring 2003. The project is intended as a high-end
community of second homes with a championship quality, Jack Nicklaus Signature
Design golf course, and other recreational amenities,including a fitness, swimming and
tennis center.
Existing Improvements
Existing improvements at the subject from the previous developer include four single-
family units. The cabins are wood frame structures with log siding exteriors and asphalt
shingle roofs. The cabins have excellent quality interior finishes, including slate flooring,
vaulted ceilings, rustic wood trim and stone fireplaces. Other existing improvements at
the subject include the welcome center gatehouse, which is 272 square feet of finished
interior space with a drive-through port-au-couchere for controlled entry to the
community.
The following table summarizes the building area of the existing cabin improvements.
Existing Cabin Summary
Size S . Ft.
Identification Bedrooms/Baths U er Level Main Level Total
Cabin A 2/2.5 244 1,725 1,969
Cabin B 3/3.5 761 1,540 2,301
Cabin C 4/4.5 1,258 1,724 2,982
Cabin D 4/4.5
""- ----- 2,902
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Single Family Lots
The subject has actually been platted with 100 single-family lots. However, there are
certain regulations and requirements related to employee and affordable housing that
change at the 100-lot threshold, which will not apply if the subject sells only 99 lots.
Therefore, our analysis has included only the 99 saleable lots. While there may be
some type of opportunity for development of the 100th lot in the future, it has not been
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considered in our analysis.
The 99 single-family lots represent the largest residential component of the subject
development. Improvements to the lots consists of the following infrastructure:
Asphalt paved roads with concrete curb and gutter
Storm drains and sidewalks
Utility extensions to the lot
The lots range in size from 0.35 to 0.93 acres (15,246 to 40,511 square feet), with an
average lot size of 0,534 acres (23,261 square feet). The lots are situated with premier
locations on the subject site and offer three different view orientations: golf course
views, open space views and combination golf course/ski area views. The table on the
following page shows the individual lot sizes and view orientations.
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Lot Acres S . Ft. View Lot Acres S . Ft. View
R1 0.48 21,000 Golf R51 0.58 25,124 Golf/Ski Area View
R2 0.48 21,000 Golf R52 0.79 34,213 Golf/Ski Area View
R3 0.50 21,709 Golf R53 0.68 29,759 Golf/Ski Area View
R4 0.52 22,447 Golf R54 0.97 42,394 Golf/Ski Area View
R5 0.53 23,035 Golf R55 0.79 34,425 Golf/Ski Area View
R6 0.50 21,688 O en S ace R56 0.68 29,436 Golf
R7 0.49 21,127 0 en S ace R57 0.77 33,383 Golf
R8 0.47 20,627 0 en S ace R58 0.80 34,637 Golf
R9 0.46 19,883 0 en S ace R59 0.83 35,943 Golf
R10 0.45 19,671 0 en S ace R60 0.85 36,947 Golf
R11 0.46 20,125 O en S ace R61 0.84 36,419 Golf
R12 0.46 20,196 O en S ace R62 0.78 33,762 Golf
R13 0.47 2Q,500 Open Space R63 0.67 28,987 Golf
R14 0.50 21,633 Open Space R64 0.52 22,457 Golf
R15 0.50 21,606 O en Space R65 0.35 15,384 Golf
R16 0.49 21,542 Golf R66 0.62 26,981 Golf
R17 0.53 23,171 Golf R67 0.55 23,863 Golf
R18 0.55 23,789 Golf R68 0.41 17,747 Golf
R19 0.49 21,226 Golf R69 0.41 18,000 Golf
R20 0.49 21,469 Golf R70 0.41 18,000 Golf
R21 0.49 21,463 Golf R71 0.41 17,722 Golf
R22 0.52 22,752 Golf R72 0.51 22,276 Golf
R23 0.44 18,989 Golf R73 0.60 25,972 Golf
R24 0.42 18,491 Golf R74 041 33,685 Golf
R25 0.46 20,001 Golf R75 0.61 27,838 Golf
R26 0.52 22,587 Golf R76 0.68 28,308 Golf
R27 0.52 22,611 Golf R77 0.45 19,551 Golf
R28 0.43 18,900 Golf R78 I 0.70 I30,424 Golf
R29 0.55 23,814 Golf R79 0.66 28,330 Golf
R30 0.60 26,126 Golf R80 0.50 22,161 Golf
R31 0.59 25,736 Golf R81 0.49 21,541 Golf
R32 0.53 22,931 Golf R82 0.49 21,305 Golf
R33 0.52 22,845 Golf R83 0.47 20,624 Galf
R34 0,53 23,142 Golf R84 0.43 18,883 Golf
R35 0.47 20,431 Golf R85 1 0.42 18,127 O en S ace
R36 0.37 16,054 Golf R86 0.43 18,894 O en S ace
R37 0.51 22,234 GolflSki Area View R87 0.39 17,014 O en S ace
R38 0.38 16.718 Golf/Ski Area View R88 0.40 17,400 O en S ace
R39 0.42 18,188 Golf(Ski Area View R89 0.38 16,561 O en S ace
R40 0.53 22,916 Oolf/Ski Area View R90 0.44 19,009 O en S ace
R41 0.63 27,505 GOIflSki Area View R91 0.44 19,009 O en S ace
R42 0.70 30,650 Golf/Ski Area View R92 0.38 16,632 O en S ace
R43 0.71 30,967 Golf/Ski Area View R93 0.44 19,168 O en S ace
R44 0.86 37,442 Goif/Ski Area View R94 0.44 19,131 O en S ace
R45 0.93 40,307 Golf/Ski Area View R93 0.41 17,860 O en S ace
R46 0.70 30,450 Golf/Ski Area View R96 0.42 18,328 O en S ace
R47 0.54 23,403 Golf/Ski Area View R97 0.43 18,542 O en S ace
R48 0.42 18,389 Golf/Ski Area View R98 0.43 18,542 0 en S ace
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R49 0.39 17,145 Golf/Ski Area View R99 0,42 18 093 0 en S ace
R50 0.40 17,485 Golf/Ski Area View Totals 2,316,907
Average 23,403
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The subject lots vary in terms of desirability based on size, location within the
development, and view. These differences are reflected in the lot pricing. It is noted that
as of the date of appraisal, 86 of the 99 lots were under binding sales contract for
purchase. The details of the lot sales will be discussed at length later in this report.
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Amenities
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Golf Course
The golf course at the subject had been graded and shaped as of the date of s
inspection. The golf course will represent the only Jack Nicklaus Signature Design
course in the Lake Tahoe area with several water features set amongst large
Ponderosa pines with some views oriented toward the Northstar-at-Tahoe Ski Resort.
The golf course will also feature a double-ended driving range and short game practice
area and a teaching academy. The golf course will be operated from a clubhouse/pro
shop building approximately 12,500 square feet in size. This building will have mountain
architecture typical of the local environment, including wood timber accents, local stone
and asphalt shingle roofing. There will also be a golf maintenance facility located on the
west side of the subject property consisting of three buildings totaling 22,000 square
feet. These buildings will be steel structures with wood siding.
The following is a summary of the Old Greenwood golf course specifications
Old Greenwood Golf Course Summary
Yarda e From Tee
Hole Nicklaus Gold B1Ue W308 P 4
1 475 433 368
2 600 550 485 466 5
3 177 163 142 114 3
4 379 346 304 239 4
6 484 453 391 330 4
6 576 540 479 425 5
7 199 170 154 122 3
8 356 328 299 266 4
g 461 421 372 343 4
Subtotal 3,707 3,414 2,994 2 447 35
10 612 548 489
11 352 322 283 228 4
12 567 542 474 421 5
13 505 453 403 356 4
14 492 460 395 357 4
15 210 178 146 124 3
16 407 371 339 305 4
17 233 212 187 164 3
18 457 419 371 4
Subtotal 3,835 3,505 3,087 2,721
21 36
Total 1 7,542 5,919 I 6,081 5,334 72
The golf course will be the focal point of the subject development, with the majority of
the lots and cabins and some of the cottages fronting on the golf course.
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Community Lodge
A proposed building of approximately 50,000 square feet called the Old Greenwood
House will contain a lobby, check-in/reception area, administrative area, 100-seat
restaurant, 5,000 square foot conference facility and 20 lodging units. This building will
be located on Lot E near the clubhouse/pro shop.
Employee Housing
A 28-unit employee housing building is included in the subject's development plan.As of
the date of appraisal, the subject developer intends to transfer this facility to an offsite
location, most likely in their future Gray's Crossing development.
Cabin Units
One component of the subject development is'74 detached cabin units that will be sold
as fractional ownerships. The cabins will offer an upscale product over the cottage units,
being larger and offering more privacy and quality finishes. The following table
summarizes the cabin product offering at the subject.
Cabin Unit Summary
Type No. of Units S . Footage/Unit Total S . Footage
3 Bedroom/3.5 Bath 48 2,470 118,560
4 Bedroom/4.5 Bath 26 2985 77,610
Totals/Averse 74 2,651 196,170
Cottages
There are 72 attached cottages proposed for the subject. The cottages will be located
on the east side of the development south of the swimming, tennis and fitness facility.
Most of the cottages will have interior locations and will not be oriented toward golf
course views; however, some of the cottage units will have golf course frontage on the
18 th hole. The following table summarizes the cottage offering at the subject.
Cottage Unit Summary
_TY2e No. of Units S . Footage/Unit Total S . Footage
2 Bedroom/2.5 Bath 36 1,270 45,720
3 Bedroom/3.5 Bath 36 1.760 63 360
Totals/Averse 72 1,515 109,080
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Construction Schedule s
The subject will be developed in phases as the land allows. As noted previously in the
development agreement, 35 percent of the development must be completed within five
years and 50 percent within ten years. As of the date of value, there were ten cabin
units under construction, with cottage construction anticipated to start within 30 days.
The first ten cabins are projected for completion as of March 2004, with the first seven s
cottage units to be completed by June 2004. The Jack Nicklaus Signature Golf course is s
projected for completion in July 2004, as is the completion of the swim, tennis and
fitness center.
Cabin and Cottage Building Specifications
Structure: Wood frame on concrete slab foundations with rough sawn
timber accents and trim, stone veneer and stone chimney.
Roof: Composite asphalt shingles with limited amounts of metal
seam roofing.
Doors: Solid wood core exterior and interior doors. Garage doors
are solid wood with vertical and horizontal planking. Some
doors have small pane windows.
Windows: Metal clad, thermal pane with interior wood trim.
HVAC: Heat: Natural gas, high efficiency forced air.
Cooling : Cased cooling coil & two-stage condensing
unit.
Hot Water: Lochinvar gas fired water heater.
Patios/Porches: All units will have a rustic wood front porch and at least one
grade-level patio of natural stone or pavers.
Garages: Three and four bedroom units will have a two-car garage.
Two bedroom units will have a one-car garage.
Design Features: Vaulted ceilings, stone fireplace in living room and master
bedroom, wood timber accents.
Interior Finish: Painted, textured sheetrock walls and ceilings, stained alder
baseboard and wood trim, combination of carpet, slate and
wood flooring, granite and ceramic tile counter tops, and
custom plumbing and lighting fixtures throughout.
All of the cabin and cottage units will be sold fully furnished with high quality furnishings
and artwork. All kitchens will be fully outfitted with GE appliances (Profile series in the
cabin units) and kitchen accessories. In addition, televisions are included in the living
room and every bedroom. Overall, the subject is considered a high quality product,with
the cabin units offering premium finishes and appointments over the cottage units.
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Swim, Tennis and Fitness Pavilion
The swim, tennis and fitness pavilion building will be approximately 17,000 square feet
and was under construction as of the date of value, with the scheduled completion by
July 2004. This amenity-based area will have an outdoor pool with zero entry for
children, as well as a small kiddie pool and hot tubs. There will be six tennis courts. The
building will have a fitness center with exercise equipment, a kiddie club area and other
member areas. This building is designed of excellent architecture and materials, and
represents a significant amenity as it relates to the overall development.
Conclusion
Overall, the improvements in the Old Greenwood project represent a mixed use of
residential product, including residential lots purchased for custom home construction,
which will have specific architectural guidelines. There will be substantial amenity
improvements associated with the golf course and a swim, tennis and fitness center
facility.
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HIGHEST AND BEST USE
Y
The highest and best use may be defined as the reasonably probable and legal
use of vacant land or an improved property which is physically possible, legally permissible,
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financially feasible, and results in the highest value.The four criteria in determining the highest
and best use of the subject property as vacant and as improved include:
1. Physically Possible -A use for which the subject is physically suitable or
adaptable.
2. Legally Permissible-A use which is or will be permitted under existing or
reasonably obtainable zoning regulations.
3. Financially Feasible - A use for which there is economic, social, and/or
market demand.
4. Maximally Productive - A use which is compatible with the nature and
condition of surrounding land uses.
The subject property is a proposed mixed-use development project with several
different types of residential product to be constructed, as well as substantial amenities. The
project construction is well underway, with infrastructure nearing completion and vertical
construction done on some portions of the development. Following is a discussion of the
highest and best use of the subject property as if vacant and as improved.
As If Vacant
Physically Possible
The Land section previously presented in this report depicted the subject site as
slightly irregular in shape with some gently rolling topography and good access from
surrounding thoroughfares. The subject site represents a 616-acre parcel of land, providing for
a wide range of physically possible uses.
Legally Permissible
The underlying zoning of the subject property was discussed previously in The
Land section of this report. This included the recreation district, rural residential district, and the
single-family residential zoning district. As of the date of value, the legally permissible uses
were more specific as per the development agreement summarized previously. This allows for
legally permissible uses related to the golf course and recreational aspects of the subject, as
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well as the single-family lots, attached cottages and cabin units. While legally permissible uses
as if vacant are related to the underlying zoning, the development agreement now takes
precedence in determining the highest and best use.
Financially Feasible
Financially feasible uses for the subject site as if vacant require an evaluation of
the surrounding land uses and the suitability of the subject property for the land uses exhibiting
the greatest demand for development in the immediate area. There is evidence of new
construction of single-family lots and homes throughout the Truckee area. This is evidenced in
existing subdivisions, as well as the recently completed Lahontan subdivision. In addition, there
is a limited supply of potential development parcels due to the relatively strict planning process
in the town of Truckee and surrounding Tahoe area. Given the success of developments such
as Lahontan in the subject's immediate area and ongoing sales evident of single-family homes
and condominiums in the area, it is our opinion that the subject development represents a
financially feasible use.
Maximally Productive
The determination of the maximally productive use for the subject property
primarily involves the same considerations as those discussed previously for financially
feasible uses. It is beyond the scope of this appraisal to actually investigate achievable net
operating income for the various types of uses and mix of uses that could possibly be allowed
on a site the size of the subject. Based on the most probable uses of the subject, it is our
opinion that the maximally productive use of the subject site as if vacant would be for some
type of recreational oriented residential development.
Conclusion - As If Vacant
As mentioned above, it is our opinion that some type of recreational oriented
residential development would represent the highest and best use of the subject site as if
vacant.
As If Improved
Physically Possible
The subject site was determined previously to have physically possible
characteristics for a wide range of uses.
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Legally Permissible
The subject value as if improved is being evaluated based on the parameters set
forth in the development agreement summarized previously.
Financially Feasible
The subject improvements represent a viable development project as evidenced
by the analysis herein. The mix of product uses associated with recreational amenities appears
to be providing a financially feasible use.
Maximally Productive
The proposed use of the subject property as a mix of fractional interest attached
and detached product, as well as single-family lots, golf course and other amenities appears to
represent the maximally productive use of the subject based on the existing development
agreement.
Conclusion -.As 1f Improved
The proposed use of the subject site, which has infrastructure and construction
underway, is considered to represent the highest and best use as if improved.
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ASSESSED VALUATION AND TAXES
2002 - 2003
The subject property is assessed by the Nevada County Assessor's Office. Taxes
in the state of California are subject to Proposition 13, with assessments based on the most
recent transaction price at the time of purchase,with increases in taxes limited to 2 percent per
year. The property is reassessed at such time in the future that it is sold. The general tax levy
determined by state law is $1.00 per$100.00 of assessed value of a property. In addition, the
property is subject to taxes related to local schools, hospital and fire districts.
As of the date of value, the subject's total tax rate was $1.0568 per $100.00 of
assessed value. In addition to the tax rate, there are special assessments related to voter
bonded assessments related to the additional school assessments, snow removal, etc. The
following table summarizes the subject's current assessed valuation and taxes, which is based
on the parcels as they were platted by the assessor as of December 31, 2002. Reassessment
will occur based on a date of assessment of December 31, 2003, based on final plat maps
approved and in place as of that date of value.
Parcel No. Assessed Value Taxes Special Assessments
19-370-07 $ 6,490,260 $' 68,687,06 $80.00
19-370-08 7,110,420 75,254.90 112.00
19-430-14 1,680,246 17,844.82 88.00
19-430-15 11716,456 18,227.50 88.00
19-430-16 1,705,848 18,115.40 88.00
19-430-17 1 696 770 18.0 99.46 88.00
$20,400,000 $216,194.14 $48.20
19-040-73 557.00 13.88 8.00
19-040-74 252.00 10.66 8.00
19-050-48 557.00 13.88 8.00
19-050-49 252.00 10.66 8.00
19-060-59 557.00 13.88 8.00
19-240-09 252.00 2266 8.00
19-430-23 43.404.00 646.68 188.00
$45,831.00 $7302.30 236.00
Grand Total $2Q445,831 $216,881.44 $284.20
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The above assessed value for the subject essentially reflects the acquisition price
s
of the land by East West Partners and does not reflect any substantial improvements which
have occurred in 2003. The estimate of taxes for the lots, cottages and cabins will be
discussed later in the discounted cash flow section of the Developmental Analysis section of s
this report. We have utilized the effective tax rate calculated for the subject, which includes the
negligible amount of special assessments. This is calculated as follows: $216,881.44 l
$20,445,831.00 = .0106.
-94.-
TRUCKEE DONNER PUBLIC UTILITIES DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 03-01
The purpose of this appraisal is to estimate the market value of the fee simple
interest in the subject property assuming completion of the infrastructure, which is to be
partially funded by the proposed CFD. The bonds to be issued fall under the jurisdiction of the
Mello-Roos Community Facilities Act of 1982. Following is a summary of the Community
Facilities District report as it applies to the subject, as well as the rate of apportionment and
applicable taxes, which will be applied to the taxable property within the subject district.
Facilities
The facilities to be installed in the CFD are briefly summarized as follows:
• Water supply and distribution and fire suppression facilities.
• Electrical supply and distribution facilities.
• Public roadways and associated curbs, gutters, sidewalks, landscaping, signage,
etc.
• Public access parks and trails.
• Storm drains and flood control facilities.
• Any other public improvements identified in accordance with the development
agreement between the Truckee Donner Public Utilities District and Old
Greenwood LLC.
The boundaries of the Community Facilities District were described previously in
this report as approximately 617 acres.
The cost estimates for the facilities to be included in the CFD are summarized in
the following table.
_y5-
Community Facilities District Cost Estimates
Facilities Budget Estimated Costs
Water $ 4,991,000
Electric 2,937,000
Fiber 615,000
Roads 3,857,000
Storm Drain 1,534,000
Formation Costs 200,000
Total Public Improvements $14,134,000
The bond debt service calculations prepared by UBS Financial Services, Inc. are
presented in the table on the following page. These indicate the total bond amount of
$12,245,000. Of this $12,245,000, $750,000 will go directly to the PUD, and the amount to be
actually utilized for construction funds allocated to the developer is $9,275,000 . Based on the
bond issues, the annual special tax per unit of taxable property within the subject property can
be summarized in the following table.
Expected land Uses and Expected Maximum Special Tax Revenues
at CFD Formation
Maximum Special Tax Total Expected
Number of Expected Per Unit/Acre for Fiscal Maximum Special Tax
Expected Land Uses Units/Acres Year 2004-2005' Revenues
Single family detached 104 Units $3,000 per SFD Lot $312,000
property and single
family attached property
in Zone 1
Single family detached 154 Units $3,400 per SFD Lot $523,600
property and single
family attached property
in Zone 2
Taxable Other Pro ert 0 Acres N/A $0
Total Ex ected Maximum Special Tax Revenues $835,600
Figures are shown in Fiscal Year 2004-2005 dollars and will escalate 2 percent per year thereafter.
-96-
Nov 10,2003 12:54 pm Prepared by UBS Financial Services Inc. (Finance 5.000 Tmckee-Donner PUD:CFDI-NMI_NOADI Page 5
BOND DEBT SERVICE
Trackee-Donner Public Utility District,CFD No. 1
Old Greenwood Project
Preliminary Sizing
Period
Ending Principal Coupon Interest Debt Service
09/012004 521,473.26 521,473.26
09/01/2005 736,197.50 736,197.50
09/01/2006 10,000 3.250% 736,197.50 746,197.50
09/01/2007 30,000 3.650% 735,872.50 765,872.50
09/01/2008 45,000 4.050% 734,777.50 779,777.50
09/O1/2009 60,000 4.3500% 732,955.00 792,955.00
09/012010 80,000 4.700% 730j345.00 810,345.00
09/01/2011 100,000 4,950% 726,585.00 826,585.00
09/01/2012 120,000 5.15001. 721,635.00 841,635.00
09/01/2013 145,000 5.300% 715,455.00 860,455.00
09/01/2014 170,000 5AWK 707,770.00 877,770.00
09/01/2015 195,000 5.50001. 698,590.00 893,590.00
09/01/2016 225,000 5.600°A 687,865.00 912,865.00
09/01/2017 255,000 5.700% 675,265,00 930,265.00
09/01/2018 290,000 5.800% 660,730.00 950,730,00
09/01/2019 325,000 5.750% 643,910.00 968,910.00
09/012020 365,000 5.850% 625,222.50 990,222.50
09/01/2021 405,000 6.100% 603,870.00 1,008,870.00
09/01/2022 450,000 6.100% 579,165.00 1,029,165.00
09/01/2023 495,000 6.100°h 551,715.00 1,046,715.00
09/01/2024 550,000 6.150% 521,520.00 1,071,520.00
09/012025 605,000 6.150% 487,695.00 1,092,695.00
09/01/2026 665,000 6.150% 450,487.50 1,115,487.50
09/01/2027 725,000 6.150% 409,590.00 1,134,590,00
09/01/2028 795,000 6.150°/u 365,002.50 1,160,002.50
09/012029 865,000 6.150% 316,110.00 1,181,110.00
09/01/2030 945,000 6,150% 262,912.50 1,207,912.50
09/01/2031 1,015,000 6.1500/0 204,795.00 1,219,795,00
09/012032 1,110,000 6.150% 142,372.50 1,252,372.50
09/01/2033 1,205,000 6.150% 74,107.50 1,279,107.50
12,245,000 16,760,18826 29,005,188.26
-96 a-
SALES COMPARISON APPROACH - LOT SALES
The subject property has been platted for 100 lots, 99 of which are available for
sale. The 1001h lot will be retained by the subject developer and possibly utilized as a
showcase lot for environmentally friendly home construction. As of the date of value, 86 of the
99 lots at the subject property were under contract with 10 percent deposits and were
scheduled to close as of November 1, 2003. We have retained a listing of the specific buyers
and their lots and specific contract dates in our files. The contract dates for the existing sales
basically occurred between July 7, 2003 and August 9, 2003. The subject lots were marketed
with some discounts made available to Founder Members and some negotiated discounts. The
average net sales price of the 86 lots under contract as of September 2, 2003 was $308,000.
There were 13 lots unsold as of the date of value, which represents mostly the higher priced
lots with the excellent ski area views. The average asking price for these lots is$639,000, and
the total average price for all lots, including the askings, is $352,000. For the purposes of our
analysis, we have rounded this figure to $350,000 for average lot pricing.
In order to evaluate the reasonableness of the subject lot pricing in relation to the
market, we have provided the following sales comparison approach lot sales in the subject's
immediate market area. Reference is made to the data sheets for the various subdivisions
located in the subject's market area and the comparable lot sales therein.
_g7_
COMPARABLE LOT SALE NO. 1
Location
Lahontan
Lodgetrail Road
Truckee
Description High-end golf community featuring a Tom Weiskopf
27-hole golf course, clubhouse, children's camp,
open space and mountain views.
Year Completed 1997
No. of Lots 509
Lot Size .5 to 1.92 Acres
Utilities Available to lot
Lot Sales Data (Re-sales)
Date of Sales March 2003 to August 2003
Average Lot Size Sold 1.04 Acres
Average Lot Sale Price $459,357
Number of Lots Sold 7
Absorption 12.73 lots per month in initial offering September
1996 to January 2000
Recent Lot Sales or Listings
Identification Lot Size Sale Price Sale Date
7725 Lahontan Drive 1.5 Acres $418,000 8/03
877 Lahontan Drive .75 Acres $310,000 8/03
604 E. I Brickell .75 Acres $275,000 7/03
355 Elias Baldwin 1.5 Acres $695,000 6/03
Comments
This is a highly successful 906-acre exclusive golf community located south of the
subject near Northstar Resort. The developer sold 509 lots in 40 months. The sales
analyzed above represent some of the most recent resales. This project had excellent
timing with regards to the dot com boom, drawing 75 percent of buyers from the Bay
area. Resale lot values have declined slightly from the original sale prices. Currently,
100 lots are for sale.
F
_98-
COMPARABLE LOT SALE NO. 2
Location #
s
Tahoe-Donner
}
Northwoods Drive
North of Truckee
Description Large scale master-planned development consisting
of single-family homes and condominiums with golf
course and ski resort.
Year Completed 1970s
No. of Lots 6,200
Lot Size .25 to .5 Acres
Lot Sales Data
Date of Sales May 2002 to July 2003
Average Lot Size Sold .46 Acres
Average Lot Sale Price $220,000
Number of Lots Sold 6
Absorption N/A
Recent Lot Sales or Listings
Identification Lot Size Sale Price Sale Date
11833 Chalet Road .5 Acres $185,000 7/03
13158 Sky View Loop .255 Acres $245,000 6/03
11512 Chalet Road .5 Acres $245,000 10102
Comments
At one time, Tahoe-Donner was reportedly the largest subdivision in the United States.
We have reviewed six lot sales in Tahoe-Donner, with specific information on three of
these sales noted above. Of the six sales reviewed, there were four golf course lots with
an average price of$236,250 per lot, and two non-golf course lots with an average price
of $187,500 per lot. This community has a mix of older cabin homes and new, good
quality homes.
-99-
.. ... . . . __. . ___ _ _ _.....
COMPARABLE LOT SALE NO. 3
Location
Northstar-at-Tahoe
Truckee
Description Recent phase of mountainside single-family lots
offered at Northstar-at-Tahoe ski resort, a master
planned community.
Year Completed Recent phases 2002-2003
No. of Lots N/A; future phases are being planned
Lot Size 0.33 to 0.50 Acres
Lot Sales Data
Date of Sales June 2003 to September 2003
Average Lot Size Sold .44 Acres
Average Lot Sale Price $685,000
Number of Lots Sold 5
Absorption N/A
Recent Lot Sales or Listings
Identification Lot Size Sale Price Sale Date
#3 Summit Drive .50 Acres $796,500 9103
#7 Summit Drive .50 Acres $990,000 9/03
1736 Grouse Ridge Road 33 Acres $525,000 8/03
Comments
The lot sales data summarized above are the most recent as the Northstar resort. The
sales on Summit Drive represent the only ski-in/ski-out lots of the summarized sales.
-i00-
y
COMPARABLE LOT SALE NO. 4
Location
Pine Forest at Truckee
Comstock Drive
(North of Interstate 80, West of Route 89)
Description 236-acre wooded subdivision; no golf course.
Year Completed 2002
No. of Lots 63 (65 Phase II Summer 2004, ten on waiting list)
Lot Size .3 to 1.1 Acres, Average 0.6 Acres
Lot Sales Data
Date of Sales October 2002 to September 2003
Average Lot Size Sold 0.54 Acres (23,540 square feet)
Average Lot Sale Price $176,017
Number of Lots Sold 12
Absorption 1.1
Recent Lot Sales or Listings
Identification Lot Size Sale Price Sale Date
Lot#71 0.46 Acres $165,000 8/03
Lot#58 0.92 Acres $225,000 3/03
Lot#69 0.46Acres $182,000 12/02
Comments
This is a non-amenitized single-family lot development west of the subject. It is located
in a heavily wooded area with good access to the highway and Truckee.
-t01-
COMPARABLE LOT SALE NO. 5
Location
Old Greenwood
Old Airport Road
Description Large master-planned mixed-use golf course
community featuring a Jack Nicklaus-designed 18-
hole golf course.
Year Completed 2004 (scheduled)
No. of Lots 99
Lot Size 0.35 to 0.97 Acres
Utilities Yes - underground
Lot Sales Data
Date of Sales June 2003 to August 2003
Average Lot Size Sold 0.50 Acres
Average Lot Sale Price $352,000
Number of Lots Sold 86
Absorption
Recent Lot Sales or Listings
Identification Lot Size Sale Price Sale Date
86 Lots Under Contract .35-.97 Acres Avg. $308,000 Scheduled Closing
11/1/03
13 Lots Available .35-.97 Acres Avg. $639,000 Net Projected Absorption by
12/31/03
Comments
The 13 unsold subject lots listed for sale represent the most premium lots in the
development located near the southeast boundary. These lots have golf course frontage
and excellent views of the Northstar ski area. The asking price range for the unsold lots
is from $498,750 to $745,000 per lot, with an average price of$688,333 per lot.
-102-
Lot Sales Summary
j
Sale Sales Lot Average Sale �
No. Identification No. of Sales Sale Dates Size Averacie Price
1 Lahontan 7 3/03 -8/03 1.04 $459,357
Lodgetrail Road
Truckee
2 Tahoe-Donner 6 5/02 - 7/03 0.46 220,000
Northwoods Drive
North of Truckee
3 Northstar-at-Tahoe 5 6/03 -9/03 .33-.50 685,800
4 Pine Forest at Truckee 12 10/02—9/03 0.5 176,017
Comstock Drive
N of 1-80, W of Rte. 89
Subject Old Greenwood 86 6/03—8/03 0,535 352,000
Lot Sales Discussion
The previously presented lot sales represent the most recent lot sales in the
Truckee area and are considered the most appropriate data for evaluating pricing for the
subject lots by the sales comparison approach. Primary considerations regarding the
comparable lot sales in comparison to the subject are as follows:
Location
Size
Amenities
Exclusivity/Privacy
View
Quality of Surrounding Development
We will utilize the average of the most recent lot sales in the respective
developments as the unit of comparison to the 99 lots at the subject. Our analysis of the
comparable lot sales is as follows.
Location
The subject is located east of central Truckee within the town limits. All of the
comparable lot sales are located in the greater Truckee area.All of the developments in which
the lot sales occurred are well located in regards to area roadways, services and the Truckee
downtown area. Lot Sale No. 1 is located south of the subject in the Martis Valley. This is a
good location that has excellent proximity to Northstar-at-Tahoe Resort. Lot Sale No. 2 is
located north of central Truckee. Lot Sale No. 3 is located at Northstar. Two of the lots in this
-103-
data are located in the newest on-mountain development with ski-in/ski-out access to
Northstar's slopes. The remaining sales in this data set are located on the golf course in the
base area of the master-planned resort. Lot Sale No. 4 is located southwest of the subject
development and generally shares the same locational characteristics with the subject.
Overall, location among the comparables and subject is considered similar.
Size
The 99 lots at Old Greenwood range from approximately 0.35 to 1.0 acre in size,
with an average size of 0.50 acres. Typically, larger single-family lots sell for a higher overall
price than otherwise comparable smaller lots. The average size of Lot Sale No. 1 isjust over 1
acre. The larger lot size of Lot Sale No. 1 is considered superior to the subject. The remaining
comparable lots sales ranged from .33 to .54 acres, and are generally considered similar to the
subject.
Amenities
The subject is offering significant amenities within the Old Greenwood
development, as well as the offsite amenities associated with the Tahoe Mountain Club
discussed previously. The ski valet and private on-mountain dining at Northstar are considered
to represent the most significant of the subject benefits. The availability of recreation-based
amenities is considered to have an influence on real estate value in a market area such as the
subject's, which is primarily recreation and/or second homeowner based.
Lot Sale No. 1 offers golf and club membership amenities that are considered to
be at least equal to those offered at Old Greenwood. Lahontan does not offer the ski-related
benefits at Northstar such as the subject. The ski benefits are considered significant in that
they contribute to a total, year-round amenity package for subject lot owners. The dining
benefits at the Wild Goose Restaurant are more difficult to quantify and have not been given
significant consideration in the amenity comparison. Overall, the subject is considered to have
superior amenities over Lahontan.
Lot Sale No. 2, Tahoe-Donner, offers a golf amenity to its residents at a
significant discount; however, the golf course lacks the signature quality of Jack Nicklaus
design and there is a much more golf demand in a community of this scope. As a result, this
amenity is, in effect, diluted. Tahoe-Donner also has a unique amenity in its onsite ski hill
However, the quality of the skiing and lodge facilities is greatly inferior to the ski operations at
Northstar, and thus this amenity is also considered diluted. Overall, the subject lots offer a
superior amenity package over Lot Sale No. 2.
s
r
-104-
Lot Sale No. 3, consisting of lots at the Northstar resort, arguably offer the most
complete amenity package of the comparables, incorporating both skiing and golf, as well as
other mountain activities such as biking and hiking. We are also aware of shuttle service
throughout the Northstar community to the ski area base, which was reported to be a key r
amenity at Northstar. Lot Sale No. 3 represents lot sales in the resort base area, short distance
i
to the Northstar Village and ski lifts, as well as lot sales on the mountain with ski-in/ski-out
locations. Based on our expertise in ski area property evaluation, we feel that there is a
considerable distinction between base area lots and ski-in/ski-out lots. The ski-in/ski-out lots
are considered to be the most desirable amenity for a ski inclined buyer. The golf amenity at
Northstar is inferior to the subject due to a high percentage of public play and the quality of the
golf course.
Lot Sale No. 4, Pine Forest, is being marketed as an amenity-free community,
and by design, is inferior to the subject (and the comparables) for this characteristic.
Exclusivity
Old Greenwood is proposed as a non-gated golf course community with access
controlled by a welcome center gatehouse as previously described. The Jack Nicklaus
Signature golf course will be mostly private, with the exception of very limited public play. One
element of the subject that is somewhat untested and is related to an identity of exclusivity is
the fractional ownership units at the subject. Although we have considered the fractional
ownership units a potential deterrent for a lot buyer, the sales record of lots at the subject
suggests that this is not a barrier affecting absorption or pricing, and thus we have disregarded
this consideration.
Lot Sale No. 1 is considered to have an overall more exclusive identity than the
subject. Foremost, it is the first development of its kind in the area and is gated with privacy
diligently maintained, creating a certain cachet. In addition, Lahontan is located in a more
private setting than the subject and is not visible from the highway. Initially, lots sold at
Lahontan exceeded $1,000,000. As a single-family lot community, Lahontan will have fewer
owners than the subject, contributing to an identity of exclusiveness. It is noted that, although
the concept of exclusiveness has a direct relationship with pricing, it is not considered
necessarily relevant to the success or absorption rates in a development.
The subject is considered to have more exclusivity appeal than the other
comparables simply because the remaining comparables are accessible to the public and
share their respective amenities with the public.
-105-
Quality of Surrounding Development
At completion,the subject will represent a high quality development with a variety
of residential products and facilities.
Lot Sale No. 1 has been developed with craftsman quality homes that integrate
the local mountain character, including native stone and rustic timbers. The quality of
development in Lahontan thus far is second to none and is considered superior to that
proposed for the subject, with the exception of the custom homes on the single family lots.
The development in Tahoe-Donner and Northstar(Lot Sale Nos. 2 and 3) ranges
greatly between the early homes built in the 1970s to newer development in the in-fill lots and
recent on-mountain phases. The newer development observed is of excellent quality. Overall,
the variety of the surrounding development is considered inferior to the subject, which will
represent all new, excellent quality development at completion.
Lot Sale No. 4 is being developed with good quality homes, similar to the
development anticipated at the subject.
Conclusion
In concluding a value for the subject lots, several factors have been considered
and discussed. By nature, these factors are subjective and it is difficult to conduct quantitative
analysis on this.basis. As a result, we have utilized the technique of bracketing to establish an
appropriate range of value for the 99 subject lots. The following table shows the position of the
subject lots relative to the comparables.
Sale No. Average Sale Price Relative Position
3 $685,800 Superior
1 459,357 _ SIi htl Su erior
Subject
2 220,000 Inferior
4 176,017 Greatly Inferior
The above table shows the subject being bracketed on the high end by Lot Sale
Nos. 1 and 3 and on the low end by Lot Sale Nos. 2 and 4. This bracketing suggests the value
of the subject lots is in the range of$220,000 to $459,357. In concluding a value for the subject
lots, we have also given primary consideration to the current contracts on 86 of the 99 subject
lots. The average net contract price indication is $308,000 based on various discounts off of
the asking prices, which averaged $347,000 for the same lots. This represents an 11.2 percent
discount, which is somewhat high as it includes Founder Members discounts utilized to
-106-
generate strong pre-sales. This value fits well within the range of value indicated by the
comparables and is considered the best indication of market value for the subject lots. It is
noted that the current inventory of unsold lots includes some of the most premium lots at the
subject with the highest asking prices. These lots are some of the largest in size, with golf
course frontage and excellent views of the Northstar ski resort. The inventory of unsold lots is
summarized in the following table.
Unsold Lot Inventory and Pricing
Available Lots Net Asking Price
32 $ 498,750
39 688,750
40 707,750
41 674,500
42 707,750
43 688,750
47 636,500
48 707,750
49 660,250
52 641,250
53 617,500
54 522,500
55 555,750
Total $8,307,750
Average $639,000
The higher pricing of these lots should result in a value conclusion higher than
the average contract price to date for the 86 lots. It is noted the current asking prices for the
unsold lots averages $673,000, and the net asking price reflects a 5 percent discount off the
asking. Founder's club member discounts are no longer available. Therefore, our conclusion of
average lot value for the subject is $350,000 per lot. The aggregate retail value of the 99
subject lots can be concluded as follows:
99 Lots @ $350,000/Lot = $34,650,000
-lo1-
Mello-Roos Bond Adjustment
Typically, an adjustment for a property's encumbrance by Mello-Roos bonds is
required to compensate for the bond costs in the lot pricing. None of the comparable
subdivisions analyzed previously had Mello-Roos bond assessments. However, we have not
applied this adjustment for the subject lots. This is due to the fact that 86 percent of the lots
have sold with the bonds in place. This clearly suggests that it would not be appropriate to
apply the bond adjustment, as there is obviously no market resistance to the bond costs
associated with the subject lots. This is due to the high price range and second home nature of
the lots.
-io8-
r
SALES COMPARISON APPROACH - DEVELOPMENT LAND SALES
The sales comparison approach is a methodology by which an analysis of land
sales similar to the subject is conducted in order to arrive at a market value of the subject.
Given the extent to which the subject property has been improved and planned as of the date
of appraisal, we consider the residual analysis,which is detailed in the Developmental Analysis
section of this report, a more reliable approach in valuing the subject property. Furthermore,
the fractional product offering at the subject is difficult to address and quantify within the
limitations of the sales comparison approach. Finding land sales of partially completed master-
planned developments is difficult and adjusting for differences would be highly subjective, in
addition to requiring detailed knowledge of the sale,which is often unavailable. Finally, the land
residual analysis applied later in this report is more relied upon by investors for a development
such as that proposed for the subject property. In summary, the sales comparison approach is
considered a secondary analysis in determining the market value of the subject property and
has been conducted as a cross check to the subject's market value by the cost approach and
residual analysis contained herein.
Typical units of comparison in the sales comparison approach are price per acre
or price per unit. Our analysis will utilize price per acre as the unit of comparison. We have
conducted a survey of subdivision development land sales in the subject's market area for the
purposes of comparison to the subject land. Our research indicated that there is a lack of
recent, large scope development land sales in the Truckee area with entitlements and
infrastructure in place, and thus the land sales utilized in this analysis represent older land
sales data. It is noted that the subject development is the most recent and significant large
scope development currently in progress in the Truckee area. The following land sales
summary includes the most pertinent land sales relative to the subject as if it were raw land
including land sales related to the Lahontan acquisition.
Due to the lack of meaningful land sales that would relate to a bulk sale of the
lots and units proposed for the subject, as well as the subject's completed infrastructure and
amenities, the sales comparison approach is not considered applicable. This section is
intended to provide an indication of raw land values in the area but does not provide any
conclusions of value by this approach.
-109-
Subdivision Land Sales Summary
Sale Sale Size Sale Price
No. Identification Date Acres Total /Acre
1 Gray's Crossing 11/00 763.32 $15,000,000 $19,651
Northeast Corner St. Hwy. 89 & 1-80
Truckee
2 Martis Valley 10/00 122.43 1,650,000 13,477
St. Hwy. 267 (Across from Northstar Entrance)
Placer Count
3 Hopkins Trust Lahontan 2/00 444.44 4,000,000 9,000
Schaffer Mill Rd. & St. Hwy, 267
Placer Count
4 Joerger 480 Acres 11/99 480.00 6,000,000 12,500
Adjacent North of Lahontan
Placer County
5 Schaffer Mill Road 6/99 2,154.00 15,500,000 7,195
West and South of Lahontan
Placer Count
6 Lahontan 2/96 720,000 6,200,000 10,973
Martis Valley
Placer Count
Subject Old Greenwood ----- 616.20 --- ----
Truckee Airport Road
Truckee
$12,133
Average
The land sales summarized above indicate a range of value for development land
in the Truckee area of$7,195 to $19,651 per acre, with an average indication of$12,133 per
acre. Most of the land sales data represents raw land with base densities of development units.
Land Sale No.1 is considered to represent the most meaningful indication of land value for the
subject property on price per acre basis for the following reasons:
• Overall land size
• Similar location and access to Interstate 80
• Similar scope and type of proposed development
• Most recent sale date among the comparables
Land Sale No. 1 was purchased by the subject developer, East West Partners,
for the Gray's Crossing development. The price per acre indication of$19,651 is similar to the
acquisition price of the subject in 2001. Based on the sales data provided above, we would
expect a value conclusion for the subject that is higher than the average indication from the
comparables. This would be expected as the comparable indications represent raw, un-entitled
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land. This conclusion considers the degree to which the subject land was entitled and planned
at the time of acquisition, as well as more current market conditions. The subject's "as is"
value, assuming completion of infrastructure, is considerably higher than the raw land values
noted above.
Multi-Unit Land Sales
The subject property represents a mixed-use development with freestanding
cabins, single-family lots and attached cottages. For informational purposes and estimating
value of any entitled but undeveloped units, we have reviewed multi-unit land sales in the Lake
Tahoe area. Reference is made to the following table, which summarizes four multi-unit land
sales.
Multi-Unit Land Sales
Sale Sale Size Zoning/ Sale Price
No. Identification Date Acres Density Total /Unit
1 Brockway Road 4103 40.00 RM15/ $4,000,000 $ 6,667
Mantis Valley 600 Units
Nevada Count
2 13053 Northwoods Blvd. 6/03 0.32 RM151 200,000 50,000
Tahoe-Donner 4 Units
Truckee
3 11263 Northwoods Blvd. 4/03 0.38 RM15/ 215,000 53,750
Tahoe-Donner 4 Units
Truckee
4 The Sentinals 6/99 1.14 Res-Cottages 341,000 34,100
Kirkwood Resort 10 Units
AI ine Countv
The above land sales indicate a wide range of per unit value. Land Sale Nos. 1
through 3 represent recent sales within the Truckee area with a substantial range in pricing due
to the very high density and number of units allowable on Land Sale No. 1, compared to the
substantially smaller number of units in Land Sale Nos. 2 and 3. Land Sale No. 4 has been
included as it represents a resort-oriented cottage development near the Kirkwood ski area. It
appears that the subject's unit value as raw land based on 146 units could be in the range of
$35,000 to $40,000 per unit, consistent with Land Sale No. 4, which is resort-oriented, and
below Land Sale Nos. 2 and 3, which were only four-unit developments. This per unit figure
would be higher upon completion of all infrastructure improvements.
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Conclusion
The previous land sales data has been included for informational purposes.
No meaningful conclusions of the subject's bulk land value with entitlements and
infrastructure in place can be made from this information. However, the raw land prices can
serve as a benchmark in evaluating the conclusions of bulk value by the developmental
analysis conducted in this appraisal.
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}
EXISTING CABIN VALUATION €
r
In order to determine a market value for the four existing cabins at the subject
constructed by the previous developer, the cost approach and the sales comparison approach
were considered. Due to market specific conditions and the amenities offered at the subject
development,we concluded that the sales comparison approach was the most reliable method
to determine the market value of the cabins. The home sales data surveyed consists of recent
home sales in Truckee area developments, both with and without amenities. The following
summary of home sales is presented below.
Truckee Area Home Sales (For Cabins)
Sale Sale Square Year Sale Price
No. Identification Date Feet Built Bed/Bath Total /S . Ft.
1 Northstar 8/03 3,293 N/A 413.5 $1,200,000 $364.41
274 Bas ue
2 Tahoe-Donner 6/03 2,418 2002 N/A 682,000 282.05
11755 Chalet
3 Sierra Meadows 5/03 1,861 2002 N/A 474,900 255.19
10215 Columbine
4 Tahoe-Donner 5/03 2,702 2002 N/A 775,000 278.58
11899 St. Bernard
5 Northstar 5/03 2,639 1998 4/2.5 1,372,500 520.08
1709 Grouse Ridge
6 Prosser Lakeview 2/03 1,848 2002 N/A 450,625 243.84
12308 Pine Forest
Total/Average 2,474 $825,837 $333.84
The sales presented above are considered the best available data to provide an
indication of value for the subject cabins. The six sales in our analysis ranged from homes in
master-planned communities such as Northstar and Tahoe-Donner to nearby subdivisions
without amenities. The amenities at the subject are generally considered superior to those
offered at Tahoe-Donner. The amenities at Northstar include access and excellent proximity to
both golf and the ski resort. Although the subject is considered to have a superior golf amenity,
the ski amenity at Northstar is considered superior to the subject. We have assumed a good to
excellent quality of construction in the home sales analyzed, as evidenced by the recent year
built indications ranging from 1998 to 2002. As noted previously, the trend of recent
construction in the Truckee area has been one of excellent construction quality in terms of
design and materials. The size of the comparable home sales ranges from 1,861 to 3,293
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square feet, with an average of 2,474 square feet, similar to the size of the subject cabins,
which average 2,539 square feet. Overall, the range of value indicated by the home sales
analyzed is $243.84 to $520.08 per square foot, with an average of$333.50 per square foot.
On a whole dollar basis, the average sold price indication from the six sales is$825,837.50. In
our opinion, the price per square foot of the subject's existing cabins should fall within the
middle of this range of value, near the average. Therefore, our value conclusion for the four
existing subject cabins is $325.00 per square foot. The value calculation for the four cabins is
as follows:
Cabin Value
Identification Size (Sq. Ft.) Per S . Ft. Value Rounded
Cabin A 1,969 $325.00 $640,000
Cabin B 2,301 325.00 750,000
Cabin C 2,982 325.00 970,000
Cabin D 2,902 325.00 940 000
Total 1 $3,300,000
Average Cabin Value $825,000
The cabins at the subject are planned to be sold in a sale/leaseback situation by
year-end 2003. This will be addressed in our developmental analysis.
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COST APPROACH
The cost approach has been reviewed as it relates to the current construction
status of the entire subject development, as well as the individual components of value in the
property. The following table summarizes the subject's development budget.
Development Budget/Expenditures
Old Greenwood, LLC
Actual & Budget
Through Year-End 2003 Remaining
Development Costs: Total Budget Project to Date Difference
Capitalized Project Costs:
Land Acquisition $ 16,957.263(1) $16,957,263 $ 0
Architectural Fees 1,718,430 1,003,312 715,118
Professional Services 1,368,200 817,434 550,766
EIR & Land Planning 1,136,275 800,573 335,702
Site Work& Infrastructure(2) 22,333,767 19,125,755 3,208,012
Tap Fees, Permits &Taxes 6,876,375 1,152,050 5,724,325
Building Construction Costs 74,482,296 5,969,911 68,512,385
Furniture, Fixtures& Equipment 13,280,674 1,427,674 11,853,000
Project Management Fees 11,275,260 3,762,260 7,513,000
Legal/Financial Expenses 3,173,040 1,688,040 1,485,000
Marketing Fractional 43,085,795 2,865,795 40,200,000
Marketing Lots 1,200,000 1,200,000 0
Marketing Tmr& Founders 500,000 500,000 0
Club Amenities Old Greenwood Allocation (3) 8.687 000 17 343 498(4) 8 687 00
Total Development Costs $206,074,375 $74,613,565 $131,460,810
(i) Reflects a $5,000,000 reimbursement made from Tahoe Mountain Club for the golf course.
(2) Excludes future Old Greenwood building.
(3) Based on allocation of cost a $3,500 per fractional share, 2,482 shares at$3,500 per share.
(4) Includes amenity cost contributions from Tahoe Club Company.
The above table indicates that the cost expended or scheduled for the entire
subject development as of year-end 2003 is $74,613,565, rounded to $74,600,000. However,
no profit is recognized in this figure. If profit is estimated at 12 percent of cost, then the cost
approach value for the project at year-end is approximately $83,600,000. This includes soft
costs and hard costs completed as of the date of value. As a crosscheck to some of the line
items in the developer's cost budget, we have reviewed cost figures from the Marshall
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Valuation Service Cost Manual.A partial list of these costs compared to the developer's budget
is shown in the following table.
Cost Approach Per Marshall Valuation Service Cost Manual
Truckee Donner PUD
S . Ft. Cost/Sq. Ft. Total
Golf Facility
Pro Shop 5,243 $110.94 $ 581,658
Cart Storage 7,257 50.0151 362,923
Accessory Building 3,000 110.942 332,820
Maintenance Building 22,000 54.353 1,195,700
Old Greenwood House 50,000 148.765 7,438,000
Pool/Tennis/Fitness Building 17,000 101.406 1,723,800
(includes pool &6 tennis courts) 7
Cabins 196,170 236.006 46,296,120
Cottages 109,080 236.009 25,742,880
Golf Course & Practice Course 18 holes 300,000/hole,° 5 400 000
Subtotal $ 89,073,901
Roads and Infrastructure 29,000 lineal feet @ 340/lineal foot 9,860,000
Third Party Reports @ 5% 2,346,682
Marketing 20% 9 386.730
Total $110,667,313
Country Club, Section 11, Page 25, D, Good
z Golf Cart Storage, Section 17, Page 15, D, Excellent
3 Country Club, Section 11, Page 25, D, Good
< Storage Warehouse, Section 14, Page 26, S, Excellent
5 Country Club, Section 11, Page 25, D, Excellent
6 Health Club, Section 11, Page 25, D, Good
7*M&S Residential Handbook
Nary Good Quality, Page 15, Very Good
s With Climate Adjustments
,6 Golf Course, Section 67, Page 1
The above table supports the cost estimates for many of the subject's
improvements. It should be considered that the subject developer, East West Partners, has
extensive experience and success in developing resort projects and their figures are reliable.
The cost of constructing the fractional cottage and cabin units has been
estimated at $240 per square foot for the cottages and $238 per square foot for the cabins.
The cottages are attached product, and the cabins are essentially upscale tract home
development. This is due to the fact there are only four floor plans (actually only two because
they are mirror image). The subject developer has retained a local contractor, the Robert Marr
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Construction Company, to build its fractional units. This builder has extensive local experience
in the Lake Tahoe area. Company representatives report they have built 14 homes in the
nearby Lahontan subdivision with costs ranging from $350 to $1,200 per square foot. Most
homes are costing in the $350 to $500 per square foot range. Costs of homes in the Tahoe
Donner subdivision are reported to be ranging from $200 to $300 per square foot. Given these
ranges, it appears the estimated costs for the subject at $238 to $240 per square foot are
reasonable for use in our analysis.
We have reviewed costs for other fractional development, as well. The Marriott
Grand Residence is a completely different type of product than the subject and yet costs were
similar at $269 per square foot. The developer of the Roaring Fork Cabins project discussed
previously in the Lake Tahoe Area Fractional/Timeshare Market Analysis section of this report
reported a cost of approximately$300 per square foot. This property is superior to the product
proposed for the subject, and thus also supports the cost estimates for the subject's fractional
units.
We have not applied the cost approach in our analysis for the subject. Rather,
the cost analysis discussed previously has served as an affirmation of the budgeted
construction and development costs prepared by the developer. It is noted that the cost
analysis indication of approximately $83,600,000 is generally supported by the value
conclusion determined by the developmental analysis presented later in this report.
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SALES COMPARISON APPROACH - FRACTIONALITIMESHARE
The subject property is proposed to be developed with 74 freestanding cabins of
three- and four-bedroom configuration, and 72 attached cottage units of two- and three-
bedroom configuration. These units are proposed to be sold as fractional interests of 1/17
ownership, as described previously herein. The primary market area for the subject is the Lake
Tahoe Basin area, and the primary competitive properties to the subject with regards to
fractional or timeshare ownership were described in detail in the Fractional Interest Market
Analysis section of this report. In our opinion, it is most appropriate to use these projects for
comparison to the subject in determining appropriate market value of the proposed fractional
units based on a 1/17 share. As noted in the Fractional Interest Market Analysis section of this
report, the subject represents a unique product, particularly its freestanding cabins. It was
necessary to go outside the Lake Tahoe region to identify similar comparables for the subject.
This comparable data will be analyzed in relation to the conclusions made by comparison to
the projects most immediately competitive to the subject. Reference is made to the following
pages, which detail and summarize the data used in our analysis.
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FRACTIONAL/TIMESHARE COMPARABLE NO. 1
Identification
Northstar Club
Northstar-at-Tahoe Ski Area
Placer County, California
Property Description
Year Built 2000
No. of Units 18: 12 3-bedroom, 6 4-bedroom in a stacked flat
Project Amenities Owner's lounge, long-term owner storage, concierge
Unit Amenities High quality build-out with good appliances, washer/dryer,
fireplace
Parking Subterranean heated parking
Fractional Interest/Timeshare Data
Fractional Share 1/7 interest 7.43 weeks
Total Shares Available 126 (developer held back 8 shares)
Ownership/Use Plan Deeded interest. Owners get 3 summer and 3 winter weeks on a
rotating priority with the balance in floating time. Private
residence club-type arrangement. No rentals.
% Shares Sold 94%
Absorption 2.4 shares/month; 17.83 weeks/month
Pricing
Unit Type Size SF Weeks/Share Price/Share Price/ Week Price/SF
313R/36A 2,000 7.43 $175,000- $23,553- $612-$767
$219,000 $29,475
46RABA 2,400 7.43 $245,000- $32,974- $715-$872
$299,000 $40,242
Average $234,500 $31,561 $746
The above pricing shows the range of original developer pricing and current listings on resales.
Prices declined in 2001 and 2002 but have increased slightly during 2003.
Exchange Program www.WorldsFinestResorts.com
FICA Dues $1,386/share annually (paid quarterly)
Market Data
Market Type Regional drive-to market; also national destination
Buyer Profile Upscale Northern California, mostly families; some from
Reno/Sparks area. Less than 5 percent fly in.
Comments
This project is a ski-in/ski-out property at the Northstar ski area near the subject.
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FRACTIONAL/TIMESHARE COMPARABLE NO. 2
Identification
Tonopalo
6731 North Lake Boulevard
Tahoe Vista, California
Property Description
Year Built Under construction. Completion project year-end 2003.
No. of Units 19 (5 2-story buildings, some stacked and some cottage style, 3
and 4 bedrooms)
Project Amenities Members' lounge, fitness room, media room, heated pool and
spa, 300' dock and 12 docking buoys, common watercraft,
concierge, long-term storage
Unit Amenities Lake views,,top quality appliances, finishes and fixtures, stone
fireplace, washer/dryer
Parking Valet
Fractional Interestirrimeshare Data
Fractional Share 1/7 interest 7.43 weeks
Total Shares Available 133
Ownership/Use Plan 6 planned weeks, additional floating time available with a
$45/night cleaning charge. No rentals.
% Shares Sold 45% (60 under contract to close by year-end 2003)
Absorption 4 shares/month (30 weeks/month since May 2002)
Pricing
Site Size
Location Bldg.# Unit Type SF Weeks/Share Price/Share Price/Week Price/SF
Beachfront 1 3/Den&4BR 3,022 7.43 $815,000- $104,690- $1,888-
$825,000 $111,036 $1,979
Interior 2 3/Den&36R 1,947- 7.43 $365,000- $49,125- $1,118-
2,286 $450,000 $60,565 $1,618
Interior 3 3/Den&36R 1,947- 7.43 $365,000- $47,779- $1,145-
2,298 $390,000 $52,490 $1,402
Interior 4 36R 1,647- 7.43 $310,000- $41,723- $1,148-
1,889 $435,000 $58,546 $1,712
Beachfront 5 3/Den& 3BR 2,070- 7.43 $700,000- $94,213- $2,159-
21270 $710,000 $95,559 $2,401
Avera e 2,095 7.43 $456,842 $61,486 $1,526
Exchange Program Storied Places developed by Intrawest
HOA Dues $9,860 to $12,968 annually (paid quarterly)
Market Data
Market Type Regional drive-to market; also national destination
Buyer Profile Approx. 50/50 from Sacramento and San Francisco areas
Comments
This project was five years in the planning process due to its lakefront location and TRPA
requirements.
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FRACTIONAL/TIMESHARE COMPARABLE NO. 3
Identification
Marriott Grand Residence Club
1001 Park Avenue
South Lake Tahoe
Property Description
Year Built December 2002
No. of Units 199 total (189 fractional, 10 whole ownership), 51 floor plans
Project Amenities Owner's club, heated pool and spas, private lockers, Heavenly
ski area
Unit Amenities Good quality build-out and appliances, fireplaces, granite
counters I
Parking Structured parking, valet available
Fractional InteresttTimeshare Data
Fractional Share 1/4 share (13 weeks)
Total Shares Available 756
Ownership/Use Plan Deed 1/4 interest on 52 weeks. Rotating weeks covers full
calendar every 4 years. Additional time on a space available
basis. Rental pool available.
% Shares Sold 85% - 86% sold (88% - 89% sold and under contract)
Absorption Approx.650 shares sold(23 shares/month since 6/01). Pre-sales
were reported at 80% upon opening.
Pricing
#Units Unit Type Size(SF) Weeks/Share Price/Share Price/Week Price/SF
49 Studio 360-737 13 $100,000- $7,692- $1,111-
$130,000 $10,000 $1,444
81 1BR11BA&28A 667-1,233 13 $200,000- $15,385- $1,199-
$275,000 $21,154 $892
59 2BR/2BA 965-2,000 13 $295,000- $22,692- $1,223-
$375,000 $28,846 $750
4 3BR/3BA 1,798- 13 $400,000- $30,769- $890
2,090 $450,000 $34,615 $861
6 Penthouse 894- 13 $450,000- $34,615- $2,013-
2,496 $620,000 $47,692 $994
Average 952 $280,000 $21,538 $1,176
Exchange Program Marriott Vacation Club and Interval International
HOA Dues $300 to $500 for 2BR; $460 to $550 for 3BR
Market Data
Market Type Regional drive-to market; also national destination
Buyer Profile Primarily San Francisco Bay area
Comments
This property is part of the larger South Tahoe Redevelopment District, which includes a
gondola serving Heavenly ski area and the Marriott Timber Lodge project. The first floor
contains commercial space and a new cinema is under construction. The South Tahoe Casinos
are just east of this project.
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. _ . ._ .. ............. _.... _.. ...... ................ _.. ... .. _. _ .
FRACTIONAL/TIMESHARE COMPARABLE NO. 4
Identification
Marriott Timberlodge
4100 Lake Tahoe Boulevard
South Lake Tahoe, California
Property Description
Year Built Phase I - December 2002
No. of Units 135-Phase I, 130 units to be built in 2 future phases, 4-story
stacked
Project Amenities Heated pool and spa, fitness center, owner's lockers, owner
lounge
Unit Amenities Average quality build-out. Fully furnished. No washer/dryer.
Parking Subterranean
Fractional Interest/Timeshare Data
Fractional Share 1 week
Total Shares Available 6,750 in Phase I, 13,250 total (based on 50 weeks sold)
Ownership/Use Plan Individual fixed weeks
% Shares Sold 29% sold or under contract (approximately 1,958 shares)
Absorption 75 shares/month since 6/01
Pricing
Season Unit Type Size SF Weeks/Share Price/Share Price/SF
12Summer 1BR/IBA 838 1 $20,000-$30,000 $1,212Avg,
16 Winter 1BR/IBA 838 1 $25,000-$30,000
24 Shoulder 1BR/1BA 838 1 $11,500
Summer 2BR/213A 1,185 1 $28,000-$40,000 $1,121 Avg.
Winter 2BR/2BA 1,185 1 $30,000-$45,000
Shoulder 2BR/2BA 1,185 1 $17,000
Exchange Program Marriott Vacation Club and Interval International
HOA Dues N/A
Market Data
Market Type Drive to regional market
Buyer Profile Mostly San Francisco Bay area
Comments
This property is part of the South Tahoe Redevelopment District described for
Fractional/Timeshare Comparable No. 3. Future phases will be built based on demand.
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FRACTIONAL/TIMESHARE COMPARABLE NO. 5
Identification
Hyatt Sierra Lodge
989 Incline Way
Incline Village, Nevada
Property Description
Year Built Fall 1999
No. of Units 60 (Three floor plans in three-story)
Project Amenities Casino, spa, fitness center, outdoor pool, pier and beach,
meeting rooms, long-term storage
Unit Amenities Good quality build-out and appliances, washer/dryer
Parking Subterranean and surface
Fractional Interest/Timeshare Data
Fractional Share 1 week
Total Shares Available 3,060 (based on 51 weeks)
Ownership/Use Plan Fixed week
% Shares Sold 70% sold or under contract
Absorption Approximately 2,142 units (36 shares/month since 9/98)
Pricing
Season Unit Type Size SF Weeks/Share Price/Share Week Price/SF
12 Summer 2BR/2BA 925-1,075 1 $20,000-$35,000
16 Winter $20,000-$37,000
24 Shoulder $13,000-$20,000
Average $21,000 $1,071
Exchange Program Hyatt Vacation Club and Interval International
HOA Dues N/A
Market Data
Market Type Drive to regional market
Buyer Profile San Francisco Bay area
Comments
This project has undergone renovations and expansions. They experienced problems with
construction, as well as registration for timeshare sales.
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FRACTIONALITIMESHARE COMPARABLE NO. 6
Identification
Kirkwood Mountain Club
Kirkwood Mountain Resort
Kirkwood, California
Property Description
Year Built 1999 (December)
No. of Units 40 three-story stacked
Project Amenities Ice-skating rink, health club, spa
Unit Amenities Good quality interior build-..out and appliances
Parking Subterranean
Fractional Interest/Timeshare Data
Fractional Share 1/8-1/4. 1/8 interests are for studio units only
Total Shares Available 112 quarter shares, 98 1/8 shares = 210 total shares
Ownership/Use Plan Deeded interest
% Shares Sold 100% as of September 2003
Absorption 4.2 shares/month, 42 weeks/month since 7/99
Pricing - 1/4 share interest
Unit T e Size SF I Weeks/Share Price/Share PriceANeek Price/SF
Studio& Studio/Loft 435-660 13 $59,000-$97,000 $4,538-$7,462 $541-$588
1BR/2-3BA 776-1,192 13 $100,000-$170,000 $7,692-$13,077 $515-$570
2BR/2-36A 1,120-1,427 13 $160,000-$205,000 $12,308-$15,769 $571-$574
Exchange Program Interval International
HOA Dues $134-$158 per 1/8 share; $258-$398 per 1/4 share
Market Data
Market Type Drive to regional market
Buyer Profile San Francisco Bay area
Comments
This property has ski-in/ski-out access at the base of Kirkwood ski area.
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FRACTIONAUTIMESHARE COMPARABLE NO. 7
Identification
Embassy Vacation Resort
901 Ski Run Boulevard
South Lake Tahoe, California
Property Description
Year Built 1997 (Spring)
No. of Units 142 units in Phase I. 4-story stacked flat, Phase II is possible
with 64 units.
Project Amenities Outdoor pool&spa, fitness center, ski storage, restaurantllounge
Unit Amenities Average quality build-out, fully furnished, lock-off feature
Parking Surface parking & valet
Fractional Interest/Timeshare Data
Fractional Share 1 week
Total Shares Available 7,242 based on 51 weeks
Ownership/Use Plan Deeded 1/51 interest. Floating week based on priority
reservation system.
% Shares Sold 70% (5,279 weeks)
Absorption 58 shares (weeks)/month since 4/96. Includes a dormant 12
months during bankruptcy of Sunterra Corp.
Pricing
Unit Type Size SF Weeks/Share Price/Share PriceNVeek Price/SF
2BR/2BA- Lockoff 1,172 1 $23,000 $23,000 $1,000
Exchange Program RCI
FICA Dues N/A
Market Data
Market Type Drive to destination, limited fly-in.
Buyer Profile San Francisco Bay area and Northern California
Comments
This property is near the lakefront. The developer Sunterra Corporation declared bankruptcy in
2000, which disrupted sales.
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FRACTIONAUTIMESHARE COMPARABLE NO. 8
Identification
Trendwest South Tahoe
180 Elks Point Road
Zephyr Cove, Nevada
Property Description
Year Built 4/02 Phase l; 4/03 Phase 11
No. of Units 59 fractional; 53 points based
Project Amenities Adult & kiddie pools, clubhouse, fitness room
Unit Amenities 45 TV/DVDNCR,fireplace, hot tub,fully furnished,washer/dryer
Parking Surface
Fractional Interest/Timeshare Data
Fractional Share 1/13 4 weeks
Total Shares Available 750 fractional
Ownership/Use Plan Deed 1/13 share. Fixed week in a fixed unit for the primary
seasons rotate annually.
% Shares Sold 9.3% (70 sold)
Absorption 2.9 shares/month since 8/01. Slow absorption due primarily to
lack of registration to sell in California. They just received their
license in September 2003.
Pricing
Unit Type Size SF Weeks/Share Price/Share Price/Week Price/SF
1BR/IBA 846-906 4 $35,000-$65,000 $8,750-$16,250 $538-$933
2BR/2BA 1,004 4 $60,000-$75,000 $15,000-$18,750 $777-$971
3BR/26A 1,239-1,270 4 $70,000-$96,000 $17,500-$20,000 $734-$983
Average $64,000 $16,000
Exchange Program Worldmark by Trendwest (65 resorts)
HOA Dues N/A
Market Data
Market Type Drive to regional market
Buyer Profile Sacramento and Bay area for fractional. Timeshare is more
national. Many retirees and empty nesters.
Comments
This project is an average project with a large building mass and very average design and
appearance. It is near the lake and casino district.
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Lake Tahoe Area Fractional/Timeshare Comparables Summary
Data #of Share % Weeks Unit Unit
No. Identification Units Size Sold Sold/Mo. Type ScL Ft. Price/Share Price/Week Price/Sq.Ft.
1 Northstar Club 18 117 94% 18 3BR/38A 2.000 $175,000-$219000 $23,553-$29475 $612-$767
Northstar-at-Tahoe 4BR/4BA 2400 $245,000-$299000 $32,794-$40,242 $715-872
California
2 Tonopaio 19 117 45% 30 3/Den+4BR 1,947-3022 $310,000-$625,000 $41723-$111,036 $1,145-$2,401
6731 North Lake Blvd. Average 2,095 $456,842 $61,486 $1,526
Tahoe Vista,CA
3 Marriott Grand Res. 189 1/4 86% 299 Studio to 952 Avg. $280,000 Avg. $21,538 Avg. $1,176 Avg.
1001 Park Ave. 3BR/3BA
South Lake Tahoe
4 Marriott Timberlodge 135 1/50 29% 75 1BR/t BA 838 $11,500430.000 $11,500430,000 $1,212 Avg.
4100 Lake Tahoe Blvd. (Ph.l) 2BR/28A 1,185 $17,000-$45,000 $17,000-$45,000 $1,121 Avg.
South Lake Tahoe
5 Hyatt Sierra Lodge 60 1/52 70% 36 2BR/2BA 925-1,075 $13,000-$35,000 $13,000-$35,000 $1071
989[notine Way
Incline Villa
6 Kirkwood Mtn.Club 40 1/4& 100% 42 Studio 436-660 $59,000-$97,000 $4,538-$7,462 $541-$588
Kirkwood Mtn.Resort 118 1BR/2-3BA 776-1,192 $100.0004170,000 $7,692-$13,077 $515-$570
Kirkwood,CA 2BRf2-36A 7120-1427 $160.0004205,000 $12,308-$15769 $5714574
7 Embassy Van.Resort 142 1151 70% 58 2BR/28A- 1,172 $23,000 $23,000 $1,000
901 Ski Run Blvd. Lockett
South Lake Tahoe
8 Trendwest S.Tahoe 59 1l13 9.3% 2.9 1BR/1BA 846-906 $35,000-$65000 $8,750-$16,250 '$538-$933
180 Elks Point Rd. 2BR/2BA 1,004 $60,000-$75.000 $15,000-$18.750 $777-$971
Zephyr Cove,NV 3BR/3BA 1.239-1,270 $70,000-$96,000 $17,500-$20.000 $734-$983
Sub. Old Greenwood 72l74 1/17 ----- 2BR/2BA 1,270
1-80@Prosser 3BA13BA 1,760
Village Exit 3BD/3BA 2,470
Truckee 4BD14BA 2,985
Sales Comparison Approach Fractional/Timeshare Discussion
The previously presented data is considered the best information for determining
the market value of the proposed subject timeshare units. Although there is generally a lack of
comparability with regards to physical characteristics, overall this is the competitive set by
which any regional buyer interested in purchasing fractional or timeshare would measure by
their comparison shopping. The subject will be compared to the above properties based on the
following elements of comparison:
• Property Rights Conveyed
• Financing Terms
• Conditions of Sale
• Market Conditions
• Location
• Amenities
• Physical Characteristics
- Quality
- Unit Type/Size
- Share Size
The data for the fractional/timeshare comparables summarized value by three
units of comparison. We have reviewed the price per share, price per week and price per
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._._ __ _ _ .__ .....__ __ _ __
square foot. For the purposes of our analysis, we consider it most appropriate to analyze the
comparables on the basis of price per square foot. In our opinion, this is the most appropriate
unit of comparison as it factors out the different share sizes and is more consistent with typical
real estate analysis of improved properties. We will provide a crosscheck of our conclusions
made by price per square foot in calculating the concluded pricing by week and share to
evaluate the final conclusion.
The price per square foot utilized in the adjustment tables presented later in this
report are based on the aggregate price per square foot, which is calculated by multiplying the
price per share times the number of shares per unit and dividing that aggregate retail price by
the unit square footage. in the case of the comparables; we have either selected the overall
averages for property share types, the pricing of the most comparable unit size, or an average
of the range indicated by the most comparable unit sizes. The sale price per square foot
indications utilized in our analysis are shown in the comparable adjustment summaries
presented later in this section of the report.
Reference is made to the following discussion related to the elements of
comparison outlined previously in our comparison of the subject to the comparable. The
cottages are analyzed first, followed by separate analysis and adjustments for the cabins.
Property Rights Conveyed
All of the comparables represent a fractional interest in real estate of some type,
and thus are considered similar for this attribute and no adjustment is required.
Financing Terms
According to the Ragatz Associates study referenced in the Fractional Interest
Market Analysis section of this report, approximately 50 percent of fractional interests are
purchased with developer financing, and the other 50 percent with outside sources, oftentimes
those that are recommended by a developer. Many developers report that most buyers
refinance their purchase within one and one-half years. Oftentimes, the developer financing is
actually at higher rates than more conventional financing. For the purposes of our analysis, we
consider it most reasonable to apply no adjustment for this attribute. This is due to the array of
choices available to most buyers. In addition, the financing does not typically influence the sale
price from the seller's perspective.
Conditions of Sale
Conditions of sale are intended to identify any unusual or atypical motivations on
the part of a buyer or seller in the marketplace. All of the fractional projects typically market
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and close their transactions in a relatively similar manner, and there is no need for adjustment
for this attribute.
Market Conditions
The market conditions element is intended to adjust for any changes in market
conditions over the time period covered by the comparables in relation to the subject. For the
most part, all of our sales data is considered relatively recent and consistent with recent
interviews with the sales or project manager personnel for each of the comparables. Therefore,
no adjustment is considered necessary for market conditions.
Location
The location attribute takes into consideration many aspects of property location.
These aspects include transportation linkages related to access of primary feeder markets,
overall desirability of the resort location and scenic quality of the location, as well as specific
locational characteristics related to golf course frontage, lake frontage, and proximity to other
amenities such as shopping, dining and casinos. We are aware that trying to combine all of
these various aspects into a location adjustment is highly subjective. However, for the
purposes of our analysis, we consider it appropriate to make ourjudgments on location based
on the wide range of criteria presented previously. Generally speaking, the subject shares the
same market area characteristics related to transportation linkages to the feeder markets,
proximity to Lake Tahoe area amenities, and the general overall region as the comparables.
The specific characteristics contemplated in this adjustment include the fact that some of the
comparables have direct ski-in/ski-out access, considered to be a highly desirable amenity for
the winter months, whereas some of the other projects have lakefront, which is a highly
desirable amenity for the summer months. The subject has a golf course integrated into the
development allowing for golf course frontage for most of the cabin lots and limited golf course
frontage for the cottages. Both the cottages and cabins will have various qualities of view and
are in a forested environment, which is considered desirable.
Comparable Sale No. 1 is the Northstar Club, which is a ski-in/ski-out property at
the base of the Northstar-at-Tahoe ski area. While this is a highly desirable attribute, it is our
opinion that this is offset by the subject unit's location on the golf course or adjacent to a golf
course, and thus no adjustment has been applied to this sale for location.
Comparable Sale No. 2 is situated on the lakefront in Tahoe Vista. Direct lake
frontage is a huge premium in the Lake Tahoe market area, and by this factor alone we
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_. _ . _....,.. ..,. . _. . ._.. ... _ __ _ . __. ....__
consider it necessary to apply a substantial downward adjustment to this comparable in
relation to the subject for location.
Comparable Sale Nos. 3 and 4 are adjacent properties within the South Tahoe
Redevelopment Agency in South Lake Tahoe. They have direct access to U.S. Highway 50,
which encircles the lake on the south end, and are adjacent to the gondola serving the
Heavenly Valley ski area. They are within walking distance to Lake Tahoe, as well as walking
distance to the Stateiine Casino District, which has several excellent quality high-rise casinos.
In our opinion, the subject does have desirable attribute being located in the golf course
community, but overall some downward adjustment is appropriate to these sales for their
superior locational attributes.
Comparable Sale Nos. 5, 7 and 8 are all located in proximity to Lake Tahoe but
have similar drive time characteristics related to getting to skiing or other recreation at Lake
Tahoe. In our opinion, no adjustment is appropriate to these sales due to the various offsetting
factors related to the subject's accessibility, proximity to the lake and golf course.
Comparable Sale No. 6 is located in Kirkwood, which is an approximate 40-
minute drive, in good weather, south of Lake Tahoe. This is a somewhat isolated location with
typical access characteristics related to enjoying the recreational opportunities around Lake
Tahoe. This property is a ski-in/ski-out project, which is a favorable attribute, but overall it is
our opinion that a substantial upward adjustment should be made to this comparable in relation
to the subject. The substantial difference is notable in comparing more traditional real estate
values in Kirkwood to those of the Lake Tahoe area.
Amenities
The subject's onsite amenities include six tennis courts, an owner's building with
fitness center, lounge, game rooms, etc., and a large pool and spa. These are good quality
onsite amenities that are significant in attracting buyers and achievable sale prices. In addition
to the onsite amenities, the Tahoe Mountain Club, which was described previously in the
Fractional Interest Market Analysis section of this report, indicates the other amenities which
buyers at the subject become able to use. This includes the proposed on-mountain restaurant
at the Northstar-at-Tahoe ski area, as well as the owner's lounge at the base of the Northstar-
at-Tahoe ski area. In addition, there are golf privileges available at the Coyote Moon Golf
Course in Truckee and the future Gray's Crossing Golf Course across the highway north of the
subject, as well as reservation privileges at the Wild Goose restaurant situated on the
lakefront. These are all favorable amenities.
-i30-
Comparable Sale No. 1 is the Northstar Club,which in our opinion does not have
a matching amenity package, and thus this sale is adjusted upwards for inferior amenities.
Comparable Sale No. 2 is adjusted downward slightly for its amenities related to
the pier, docking buoys and fleet of small watercraft available to recreate on Lake Tahoe.
Comparable Sale Nos, 3, 4 and 5 are all branded, high quality projects with
excellent onsite amenities, which due to offsetting factors, are considered comparable to the
subject and no adjustment is made.
Comparable Sale Nos. 6, 7 and 8 are slightly inferior properties as they relate to
the quality and availability of amenities, and upward adjustments are applied to these sales.
Physical Characteristics
Quality: The subject cottages are proposed to be good quality, both interior and
exterior. All of the projects analyzed are fully furnished, as will be the subject.
In our opinion, Comparable Sale No. 1 is slightly inferior in quality in comparison
to the subject as it relates to overall build-out and case goods. Slight upward adjustment is
applied to this sale.
Comparable Sale No. 2 is of the very highest quality and most excellent build-out,
and thus downward adjustment is applied to this sale in comparison to the subject.
Comparable Sale Nos. 3,4, 5, 6 and 7 are regarded as generally similar in quality
to the subject, requiring no adjustment.
Comparable Sale No. 8 is a much more conventional type of development
consisting of average quality appearance and design, as well as average quality interior, and in
our opinion an upward adjustment is appropriate to this project.
Unit Type/Size: The subject cottages are to be two- and three-bedroom
configurations, with an average unit size of 1,515 square feet. We have compared the
competitive projects to the subject for the configuration and number of bedrooms, as well as
the unit size. Typically, with all other factors equal, a larger unit will sell on a lower price per
square foot, and vice versa. However, this conventional real estate wisdom is not always
applicable as it relates to the fractional units. There is evidence in the marketplace whereby
some of the larger units are, in fact, more desirable as it relates to penthouse location or
limited supply in relation to demand for those units within a certain project. Nonetheless, it is
our opinion that some adjustment should be applied for this unit size and configuration factor.
-i3i-
. . .. ... .............................. ... ..
Comparable Sale Nos. 1 and 2 had larger unit sizes in comparison to the
subject's cottage unit size, and some slight upward adjustment is applied to these sales for this
attribute.
Comparable Sale Nos. 3 through 8 are all substantially smaller than the subject's
unit size, and thus downward adjustments have been applied to all of these comparables for
the unit sizes and configurations.
Share Size: The share size of a project influences sale price. Typically, smaller
shares need to sell for a higher price per square foot in order to cover the more substantial
marketing costs and effort required to sell more numerous smaller shares, as opposed to
larger shares. Due to this factor in marketing and pricing fractional interest, we have applied
upward adjustments to those shares that were substantially larger than the subject's 1/17
share, and downward adjustments to those timeshares whose shares were substantially
smaller than the subject.
Comparable Adjustment Summary - Old Greenwood Cottages
The previously discussed adjustments have been applied to the comparable sale
prices in order to provide an indication of value for the subject's cottage units. The following
adjustment table summarizes these units and the resulting value indications.
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Fractional Sales Adjustment Table
Old Greenwood Cottages - Average Unit Size 1,515 Square Feet
Sale No. 1 2 3 4 5 6 7 8
Sale Price/Sq. Ft. $690 $1,526 $1,176 $1,121 $1,071 $574 $1,000 $859
Unit Size/Sq. Ft. 2,000 2,095 952 1,185 1,075 1,274 1,172 1,254
Adjustments:
Property Rights Conveyed --- --- --- --- --- ---
Financin Terms --- --- --- ---- --
Conditions of Sale --- --- --- —
Market Conditions --- --- --- ---
Location --- -20 -10 1 -10 --- +25 --- ---
Amenities +5 -5 --- --- --- +5 +5 +5
Physical Characteristics:
Quality +5 -5 --- -- --- --- --- +5
Unit Type/Size +5 +5 -5 -5 -5 -5 -5 -5
Share Size +5 +5 +5 -5 -5 +5 +5
Net Adjustment +20 -20 1 -10 -20 -10 +30 +5 +5
Adjusted Price/Sq. Ft. $828 $1.221 1 $1,058 $897 $964 $746 $1,050 $902
Range: $746 to$1,221 per square foot
Average: $958 per square foot
The above table indicates that the adjusted prices per square foot for the
fractional and timeshare units compared to the subject range from $746 to $1,221 per square
foot. The average of all eight indications is $958 per square foot. Generally speaking,
Comparable Sale Nos. 1 and 2 are most similar to the subject in terms of location and provide
a range of$828 to$1,221 per square foot. It appears that adjustment to Comparable Sale No.
2, the substantially superior Tonopalo location, may not have adequately accounted for all
differences. Thus, for the attached cottage units for the subject, we consider it appropriate to
place most weight on Comparable Sale No. 1, which is the Northstar development closest to
the subject. Comparable Sale No. 3, the Marriott Grand Residence Club, is also one of the
more competitive projects, in our opinion. This project indicated a $1,058 per square foot
indication. Overall, as stated previously, none of the competitive projects represent truly
comparable types of units, and in our opinion it is appropriate to conclude near the average for
the subject's cottage units. We consider it reasonable to conclude a market value of$900 per
square foot for the subject's attached cottage units. While we recognize these conclusions as
above those of the $850 per square foot pricing proposed by the developer, we consider these
-1133-
conclusions to be generally consistent with those of the developer and in our opinion, are
consistent with the market for these size units.
Comparable Adjustment Summary - Old Greenwood Cabins
The previous discussion in terms of comparing the subject units to competitive
projects is also applicable to the cabins. The only differences would be in terms of the quality
and unit type/size characteristics. Typically, there is a premium for a detached unit compared
to an attached unit. The cabins at the subject property are proposed to be of the highest quality
with more substantial build-out and finish than the cottages, and are also of a substantially
larger size, with three- and four-bedroom configuration. Therefore, we have modified the
adjustments for these two factors, which are summarized in the following adjustment table.
Fractional Sales Adjustment Table
Old Greenwood Cabins - Average Unit Size 2,728 Square Feet
Sale No. 1 2 3 4 5 6 7 8
Sale Price/Sq. Ft. $794 $1,526 $994 $1,121 $1,071 $574 $1,000 $659
Unit Size/Sq. Ft. 2,400 2,095 2,496 1,185 1,075 1,274 1,172 1,254
Adjustments:
Property Ri hts Conveyed --- --- --- --- --- --- —'
Financin Terms --- --- --- ---- --- --- --- ---
Conditions of Sale --- --- --- --- --- --- ---
Market Conditions --- --- --- --- --- --- ---
Location
-- -20 -10 -10 --- +25 --- ---
Amenities +5 -5 --- --- --- +5 +5 +5
Physical Characteristics:
---
Quality +10 -5 +5 +5 +5 +5 +5 +10
Unit Type/Size --- -5 -10 -10 -10 -10 -10
Share Size +5 +5 +5 -5 -5 +5 +5
Net Adjustment +20 -30 0 -20 -10 +30 +5 +5
A $ t. $858 $1,068 $994 $897 $964 $746 $1,050 $902
Ra d Pr F
$1,068 per square foot
Average: $935 per square foot
The above adjustment table indicates a slightly lower range and average of value
than determined previously for the cottages. In our opinion, this is appropriate given the larger
unit size. Indeed, the difference could be larger if not for the anticipated higher quality build-out
in the cabins when compared to the cottages. Given the averages and ranges indicated by the
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above adjusted sale price indications, we consider it appropriate to conclude a market value of
$900 per square foot for the subject's cabin units. This is consistent with the competitive data,
as well as the developer's projections.
Market Value Conclusions - Old Greenwood Fractional Shares
Based on the previously concluded values per square foot for each of the subject
units, we have calculated all of the value indications for the subject by the different units of
comparison, including price per square foot, price per week and price per share. These are
summarized in the following table.
Market Value Conclusions
Old Greenwood Fractional Shares
Per Square Foot
Cottages
2BR/2.5BA 1,270 Sq. Ft. @ $900/Sq. Ft. _ $1,143,000
3BR/3.5BA 1,760 Sq. Ft. @ $900/Sq. Ft. = $1,584,000 '
Cabins
3BR/3.5BA 2,470 Sq. Ft. @ $900/Sq. Ft. _ $2,223,000
4BR/4.5BA 2,985 Sq. Ft. @ $900/Sq. Ft. _ $2,686,500
Per Week
Cottages
2BR/2.5BA $1,143,000/ 17/3 = $22,412
3BR/3.5BA $1,584,000/ 17/3 = $31,059
Cabins
3BR/3.5BA $2,223,000/ 17/3 = $43.588
413R/4.58A $2,686,500/ 17/ 3 = $52,676
Per Share
Cottages
2BR/2.5BA $1,143,000/ 17 = $67,235Rounded to $67,000
3BR/3.5BA $1,584,000/ 17 = $93,176Rounded to$93,000
Cabins
3BR/3.5BA $2,223,000/ 17 = $130,765 Rounded to$130,000
4BR/4.5BA $2,686,500/ 17 = $158,029 Rounded to$158,000
The above value conclusions are considered reasonable in relation to the
comparables as well as the developer's proposed pricing. It is noted that the developer has
projected pricing of the cabins to be approximately $50 per square foot higher than the
cottages based on superior quality finishes and freestanding construction. In our opinion, the
smaller size of the cottages in comparison to the cabins offsets the superior build-out of the
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cabins. The substantially higher per square foot pricing of the smaller units in the comparables
supports the pricing conclusions made above.
Other Resort Comparisons
As mentioned previously, we considered it most appropriate to apply adjustments
to the projects considered most similar to the subject based on their location within the Tahoe
market area. However, as noted in the Fractional Interest Market Analysis section of this
report, we considered it appropriate to review projects in other market areas. Reference is
made to the following table, which summarizes the pricing presented previously on these
projects.
Fractional Projects - Western Resort Location
Share
Identification Size Unit Tvoe Unit So. Ft. Price/Share Price/Week Price/SF
East West Partners 1120 Studio 438-602 $65,000 Avg. $25,000 $1,300
Hyatt Mountain Lodge 2BR12BA 923-1,200 (Approx.)
Beaver Creek,CO 3BR/3BA 1,318-1,353
East West Partners 1/20 Studio 498 $65,000 $25,000 $1,225
Hyatt Main Street Station 2BR/2BA 1,097 (Approx.)
Breckenridge,CO 3BR/3BA 1,550
Roaring Pork Club Cabins 1/6&1/4 3BR/36A 2,400 $366,0001/6 $42,230 $917
Basalt,CO $550,0001/4 $42,300
Jack Nicklaus Golf Course
Teton Club 1l4-1/26 2BR/2BA 1,450 $40,000NVeek $40,000 $1,324
Jackson Hole,WY 3BR/3BA 1;850 $1.038
Arnold Palmer Golf Course
The Club at Big Bear 1/10 3BR13BA 2,045 $182,000 $35,000 $890
Village 4SR14BA 2,880
Bi Bear Lake,CA $632
Grand Summit Resort 1/4 Studio 377-587 $61,400-$86,000 $4,723-$21,500 $651-$586
The Canyons 1BD/l BA 695-1,082 $109,000-$163,000 $27,250440,750 $627-$602
Park City, UT 2BD/2BA 1,190-11606 $195,000-$350,000 $48,750-$87,500 $655-$871
Penthouse 2,470-3,693 $550,000-$820,000 $137,500-$205,000 $890-$888
As was discussed in the Fractional Interest Market Analysis section of this report,
the Roaring Fork Club Cabins probably represents the most significant comparable to the
subject with regards to freestanding fractional cabins. Smaller shares were sold in these cabins
than those proposed for the subject. The per square foot pricing for the subject in the range of
$850 to $950 per square foot appears to be reasonable in relation to these other market area
comparables. In particular, a conclusion near the average at the Roaring Fork Club Cabins is
considered appropriate. While their location in the Roaring Fork Valley just down from Aspen is
considered highly desirable, the subject has a slightly superior market area as it relates to the
drive-to market rather than a destination market, and a more substantial two-season market.
-ig6-
Price Per Week
The value conclusions calculated previously for the subject units were calculated
on the basis of price per square foot and were recalculated on a price per week and price per
share basis for the purposes of comparison. Our final values will be calculated based on the
price per share rounded to a reasonable value conclusion. On a price per week basis, the
subject's cottages ranged from $22,412 to $31,059 per week. These per week prices are well
within the range indicated by the weekly pricing at the Northstar Club and substantially below
Tonopalo. They are also well within the range indicated by the weekly timeshares. The lowest
prices per week are indicated by the Kirkwood Mountain Club at $4,538 to $15,769 and
Trendwest South Tahoe at$8,750 to$20,000, both of which were acknowledged as inferior to
the subject overall. Generally, it appears the per-week pricing for the cottages is consistent
with the market.
The per-week pricing for the cabins is much higher than the cottages, in the
$43,588 to $52,676 range. These conclusions are towards the low end of the range indicated
by the superior Tonopalo development,which averages$61,486 per week and goes as high as
$111,000 per week. In our opinion, the concluded weekly price for the subject cabins are
appropriately above the Northstar Club range on a weekly basis from $23,553 to$40,242.The
per week pricing for the subject cabins is substantially higher given the larger size of the units
and their freestanding nature, providing more of a true second home environment. The
$43,588 to $52,676 range is generally above that of the Roaring Fork cabins, which were at
$42,230 per week, but for a substantially larger share. Given the relationship of the subject's
1/17 share size to the market and the general range of the comparables, it is our opinion that
the per week pricing for the cabins is generally consistent with the market, although it appears
perhaps slightly aggressive in relation to some of the competitive projects in the market area.
-13-1-
Price Per Share
The cottage share pricing ranges from $67,235 to $93,176, rounded. Per share
pricing is more difficult to compare due to the differing sizes. The cottage shares both have
price points under $100,000, which is considered appropriate. Overall, the pricing appears
reasonable. Indeed, the three-bedroom, three-bath units in the far inferior Trendwest
development range from $70,000 to $96,000 for a 1/13 share, which is the most similar share
size to that offered at the subject.
The cabin per share pricing ranges from $130,765 to$158,029, rounded. These
share prices appear reasonable relative to the much higher pricing for the larger shares. The
most similar sized shares in the other market areas range from $65,000 for a 1/20 share at the
Hyatt Mountain Lodge to $182,000 for a 1/10 share at the Club at Big Bear. Again, the overall
pricing appears to be reasonable for the subject units in relation to other market areas, as well
as the subject's most competitive market area.
Mello-Roos Bond Adjustment
Consistent with CDAC guidelines,we have evaluated the need for an adjustment
to the subject's pricing due to its encumbrance by bonds. As discussed previously, the bond
cost burden for the subject property is $3,000 per single-family lot and $3,400 per fractional
unit. The $3,400 per fractional unit is the annual cost for the entire physical unit. The tax per
unit will be further allocated to each of the 17 fractional shares to be sold in each unit. The per-
share price would be $200 per year ($3,400 V 17). The subject Mello-Roos bonds will be in
place for 30 years. In order to adjust for the Mello-Roos bond payment, we will deduct the
present value of the bond payments for 30 years, discounted at 5 percent. A 5 percent
discount rate is consistent with the safe rate on a 30-year Treasury note. The present value of
the bond payments for a 1/17 fractional share in a unit discounted at 5 percent for 30 years is
$3,682 per share. This equates to approximately$62,602 per whole unit. Reference is made to
the calculations on the following page.
Conclusion - Share Values Adjusted for Mello-Roos
Based on the previous discussion, we have calculated the average price per
share for the cottages and cabins for use in our discounted cash flow analysis. In our opinion, it
is most appropriate to apply an average as it relates to estimating sales revenues over the
holding period. The averages are considered appropriate as it is difficult to project which type
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Mello Roos Tax Adjustments
Fractional Interest Units
Mello Roos Increase per Year 2.00%
Discount Rate 5.00%
Assigned Special Tax $3,400 per unit
Assigned Special Tax $200 per share
Disc Mello Tax Pv
Year Factor W120/6 inc Mello Tax
1 0.95238 $200.00 $0
2 0,90703 $204.00 $185
3 0,86384 $208.08 $180
4 0Z2270 $212.24 $175
5 0.78353 $216.48 $170
6 0.74622 $220.81 $165
7 0.71068 $22523 $160
8 0,67684 $229.73 $155
9 0.64461 $234.32 $151
10 0.61391 $239.01 $147
11 0,58468 $243.79 $143
12 0,55684 $248.67 $138
13 0,53032 $253.64 $135
14 0,50507 $25811 $131
15 0.48102 $263.88 $127
16 0A5811 $26916 $123
17 0A3630 $274.54 $120
18 0,41552 $280.03 $116
19 0,39573 $285,63 $113
20 0X689 $291,34 $110
21 0.35894 $297.17 $107
22 0.34185 $303.11 $104
23 0,32557 $309.17 $101
24 0.31007 $315.35 $98
25 0,29530 $321.66 $95
26 0.28124 $328.09 $92
27 0.26785 $334.65 $90
28 0.25509 $341.34 $87
29 024295 $348.17 $85
30 0.23138 $355.13 $82
Totals $3,682 Per Share
17 shares per unit
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of units will sell faster, and when. Applying averages such as this are considered appropriate
and typical methodology applied in the industry. The average share prices for the subject are
calculated as follows:
Market Less Mello- Adjusted
No. of Share Roos Share
Unit TvDe S . Ft. Shares Price Ad ustment Price Rounded to
Cottages
2BR/2.5BA 1,270 612 $67,235 $3,682 $63,553 $63,500
3BR/3.5BA 1760 612 93,176 3,682 89,494 89500
Avera e/Totals 1,515 1,224 $76,500
Cabins
3BR/3.5BA 2,470 816 $130,765 $3,682 $127,083 $127,000
4BR/4.58A 2 985 442 158,029 3,682 154,347 154 000
Average/Totals 2,728 1,258 $136,500
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DEVELOPMENTAL ANALYSIS - LAND RESIDUAL
's
The developmental analysis conducted in this section assumes the Community
Facilities District funded improvements are in place, as well as developer funded
improvements. This is a reasonable assumption given the status of the installation of the
improvements as of the date of value. In our opinion, this is how a typical purchaserwould look
at the subject property "as is" as of the date of value. The developmental analysis represents
the valuation method, which most closely simulates the analysis conducted by a
knowledgeable buyer of subdivision acreage such as the subject. The assumptions on which
the discounted cash flow analysis is based are discussed in this section of the report.
Revenues
Sale revenues to be generated at the subject property are from the sale of 99
single-family lots and fractional interests in 72 cottage units and 74 cabin units. Market value of
the lots and cabins was discussed previously herein.
Lot Revenues
As discussed previously, there are 86 of the 99 subject lots currently under
contract at an average price of$308,000. The remaining lots are the higher priced lots with the
excellent ski area views and golf course frontage at the south end of the subject development.
While there was some market resistance to purchasing these in the pre-sale phase, it is our
opinion that the proposed net asking prices on these lots will be achieved now that the roads
and amenities in the subject development are completed or under construction and a more
finished appearance in the subdivision allows for completing the sales of these lots. Given the
fact that 86 of the lots are under contract, we will reflect most of the lot sales revenue in the
first quarter of our analysis. We have recognized some of the lot sales in the 2°d quarter of our
analysis to reflect the timing for the as yet unsold lots. The average lot sale price of$350,000,
including the last 13 lot sales, is applied in our analysis.
Fractional Revenues
Reference is made to the Sales Comparison Approach - Fractional Interest
section of this report in order to identify the achievable market values for the subject's cottage
and cabin units. The following table summarizes the average values concluded for the cottage
and cabin units to be employed in our discounted cash flow analysis.
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Unit Type S . Ft: No. of Shares Share Price
Cottages
2BR/2.5BA 1,270 612 $63,500
3BR/3.513A 1 760 612 89 500
Average 1,515 1,224 $76,500
Cabins
3BR/3.5BA 2,470 816 $127,000
4BR/4.5BA 2 985 442 $154,000
Average 2,728 1,258 $136,500
We have employed averages for the price per lot and price per fractional unit,
which is an appropriate methodology. This eliminates the subjectivity of trying to project which
size cottage or which size cabin will close more rapidly, and an average is a typical
methodology in the marketplace.
Existing Cabin Sales Revenues
The four existing cabins in the subject development are proposed to be sold by
the subject developer in a sale/leaseback situation. The sale of these cabins is projected to
take place in the first quarter of analysis given the favorable lease terms, which provide an
attractive investment return. The value of these cabins was determined previously in this report
at $3,300,000.
Absorption
The absorption of the single family lots at the subject property will all occur in the
first two quarters of the discounted cash flow due to the fact that 86 of the 99 lots are under
contract, and it is anticipated that construction of roads within the development and the fact
that amenity construction is underway should motivate consummation of the sales of the
remaining 13 lots by the second quarter of our analysis.
The absorption of the fractional units was discussed extensively in the Fractional
Interest Market Analysis section of this report. As concluded therein, we have applied an
annual absorption rate of 152 fractional units(38 per quarter)for each of the two product types,
cottages and cabins, to be built on the subject property. Our analysis has also assumed 25
percent pre-sales of the first ten units constructed, which equates to 42 shares in addition to
the projected average quarterly absorption of 38 units per quarter. There is no absorption of
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shares in the first two quarters of our analysis to allow for completion of construction. In the
third quarter, there are 80 sales total, 42 pre-sales and 38 sales in the quarter.
The total absorption period for the fractional product is 34 quarters, or 8.5 years.
This is considered a realistic absorption period given the total number of shares available.
Total marketing periods of four to six years were noted for smaller fractional projects discussed
in the Market Analysis section of this report.
Expenses
There are numerous expenses and costs associated with marketing, holding and
remaining costs to develop the property within the Truckee Donner CFD. These are discussed
in this section of the report.
Cost of Sales
We have conducted extensive interviews with developers of fractional projects,
as well as reviewed market data in order to identify the appropriate estimate of cost of sales for
the subject property. It is well known that the typical marketing costs for weekly timeshare
intervals generally ranges between 30 and 50 percent of sales revenue. However, marketing
costs for fractional ownership of more than one week tend to be lower due to a more low key
sales approach, which is more sophisticated than the high volume, high pressure approaches
used in selling weekly timeshares. Owner referrals are significant, and there is less reliance on
incentive offers and more focus on direct mail and specific marketing towards the target buyer.
The developer's projections for marketing costs include a 9 percent sales
commission and a 16 percent promotional cost, for a total marketing expense of 25 percent.
We have conducted extensive interviews and research with other participants in the fractional
ownership industry to determine the appropriate level of marketing and commissions.
One of the more substantial developers of the quarter-share fractional product is
American Skiing Corporation. They report that generally cost of sales in all seven of their
quarter-share developments have been less than 20 percent, usually in the range of 14 to 16
percent.
We have reviewed a report prepared by Hobson Ferrarini Associates and their
Industry Overview of the Luxury Fractional and Private Residential Club published October
2000. They have indicated that marketing and sales costs for luxury fractionals are in the range
of 12 to 20 percent, and should average approximately 15 percent of total revenue. Sales
commissions are based on the price point of the fractional product, as well as sales velocity.
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Typical in-house sales commissions reported by this research company range from 1.5 to 4
percent, averaging 2.5 percent, with 3 to 4 percent for referrals from outside brokers. It is noted
that although these cost percentages are lower than timeshare, the total sales dollars spent
are still relatively substantial because of the higher unit prices.
Marketing costs were a topic of discussion during our recent attendance at the
"Taking Fractional Development to the Next Level" seminar held in Deer Valley Resort, Park
City, Utah on September 22, 2003. The attendees at this seminar represented very active
market participants in the fractional industry. Generally, it was agreed that marketing costs
were approximately 15 to 18 percent of total revenues, excluding commissions. It was noted by
some that location could influence marketing costs as much as 3 to 4 percent. Commissions
were reported to range between 6 and 9 percent, again depending on sales, price point and
sales velocity.
We have also reviewed marketing costs for the other projects developed by East
West Partners in the Colorado area. Marketing costs for the Hyatt Mountain Lodge in Beaver
Creek were reported at 24 percent, and slightly higher marketing costs of 26 to 27 percent,
including commissions, were reported at the Hyatt Main Street Station in Breckenridge.
We have also reviewed a proposed marketing and sales cost summary, which
was the proposed budget for the Marriott Grand Residence Club in South Lake Tahoe. The
breakdown of their budget and marketing and sales costs is shown in the following summary.
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Marriott Grand Residence Club
Lake Tahoe
Marketing and Sales Cost Summary
Marketing Program 7.8%
Marketing Administration 1.0%
Sales Administration 2.0%
General Administration 2.7%
Sales Executive Compensation 4.0%
Sales Center 1 0.5%
Total (As a % of Sales Volume) 18.0%
The above table indicates that Marriott is anticipating a total marketing cost of 18
percent, including commission. Marriott has among the leanest ratios of sales cost in relation to
revenue due to the large scope of their operation and their method for generating leads.
Given the range of marketing costs and commissions discussed previously, it
appears that the subject's projected marketing costs of 25 percent, broken down as 16 percent
for marketing and promotion and 9 percent for commission, appears quite reasonable and
appropriate in relation to other developments built by East West, as well as developments in
the subject's market area and the fractional industry in general.
Homeowners Association Fees
Homeowner's association fees are part and parcel of virtually every type of
fractional interest and private residence type development. These homeowner's association
fees are for the following costs:
• Administrative costs, such as accounting, management, office supplies, and
salaries and wages associated with management personnel.
• Operating expenses, including transportation, pest control and telephone.
• Unit expenses, including laundry and linen, cleaning supplies, cleaning services,
inventory replacement and room amenities.
• Maintenance expenses, including landscaping, snow removal, painting, and
repairs and maintenance, including labor.
• Utilities expense, including cable television, water, sewer and gas.
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.............. ................. _ __ _ . ..._
• Fixed expenses, including insurance, master associations in the case of the
subject, and taxes. For the purposes of our analysis, we have shown taxes
separately from the HOA dues.
The above expense categories were reviewed for the subject's proposed
homeowner's association operating budgets. The following table summarizes the homeowner's
association budget provided by East West Partners. We have excluded property taxes from the
analysis due to the uncertainty as to how the fractional interest units will be assessed. Showing
taxes as a separate line item allows for more specific sensitivity allowance.
Homeowners Association Budget'
Ex Lenses Cottages Cabins
Administrative $ 502,139 $ 549,717
....OLerating 59,361 73,530
Unit 738,642 972,015
Maintenance 448,661 528,530
Utilities 235,032 270,923
Fixed (Excluding Taxes 468 096 577,633
Total $2,451,931 $2,972,348
Re lacement Reserves 200 000 200,000
Total $2,651.931 $3,172,348
Cottage Per Unit Allocation Cabin Per Unit Allocation
2BR 3BR 313R 46R
Per Unit .010804358 .015816295 .013192076 .015246435
$28,652.41 $41,943,72 $41,849.86 $48,367.00
Per Share .063555 .093037 .077600 .089685
$1,821 $3,902 $3,248 $4,338
Exchange Dues 209 209 209 209
Total $2,030 $4,111 $3,457 $4,547
Per Share Avera es
Cottages $3,070
Cabins $3,840
' Excluding taxes
Source: East West Partners
The above table indicates that the homeowner's association dues for the
cottages range from $2,030 to $4,111 per share, with higher dues in the cabins of$3,457 to
$4,547 per share. We have compared these projected dues with other projects in the subject's
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_ _ . ... ............ ........ .. .. __ ------
market area, as well as industry averages provided by Ragatz Associates in their study
referenced previously in the Fractional Interest Market Analysis section of this report. The
following table summarizes the HOA dues at competitive projects in the subject's market area.
HOA Dues - Competitive Projects Lake Tahoe Area
Project Annual HOA Dues Per Share Annual HOA Dues Per Week
Northstar Club $1,386 - 1/7 Share $187
Tono alo $9,860 to $12,968- 1/7 Share $1,327 -$1,746
Marriott Grand Residence $3,600 to$6,600 - 1/4 Share $277 to $508
Kirkwood $1,608 to $1,896 - 1/8 Share $247 to $292
$3,096 to $4,776- 1/4 Share $238 to $367
Subject-Old Greenwood $3,070*- 1/17 Share Cottage $1,023*
$3,840* - 1/17 Share Cabin $1,280*
Excluding taxes
The above table indicates that the subjects projected HOA dues are substantially
higher than most of the competition in the market area, with the exception of Tonopalo. Given
the large amount of amenities and the golf course at the subject property, it would be
anticipated that HOA dues should be higher than the other four properties in the Tahoe area.
The following table summarizes average fractional industry and HOA fees for traditional
fractional and private residence club developments as surveyed by Ragatz Associates.
Average Fractional Industry HOA Fees
Traditional Fractional/Private Residence Club
By Unit Type Per Week of Ownershi Subject Cottages Subject Cabins
Studio $1,475/$2,075 $150/$495 — —
1 BR $1,570/$2,310 $160/$525 --
2BR $1,800/$5,190 $180/$1,165 $ 677*
3BR $3,265/$6,030 $325/$1,300 $1,370* $1,152*
4BR NA/$10,300 NA/$2,090 ----- $1,516*
Source: Ragatz Associates Excluding taxes
The above table indicates the range of pricing by unit type and by week for
traditional fractional and private residence clubs. It is noted the range indicated by unit type for
a two-bedroom unit is $1,800 to $5,190, a three-bedroom is $3,265 to $6,030, and
substantially higher at $10,300 for a four-bedroom unit. The subjects pricing by unit generally
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falls well within this range indicated by the industry averages. Another method used to make
comparisons on an equal basis is to review the HOA fees as it relates to price per week of
ownership. The subject's dues per week of ownership are also substantially higher than the
competitive projects noted above, with the exception of Tonopalo, but are well within the
industry averages indicated by the Ragatz Associates survey. The averages for the subject are
between $677 and $1,516 per week of ownership by unit type, where the Ragatz Associates
industry data indicates a very wide range of $150 to $2,090 for a two- to four-bedroom unit
week of ownership. Generally, it is acknowledged that the subjects dues are towards the high
end of this range, which is consistent with its previous classification as somewhat of a hybrid
between traditional fractional and the higher end private residence club type project. For the
purposes of our analysis, we will utilize the average HOA dues per share for the cottages of
$3,070 and for the cabins of$3,840.
The previous analysis has indicated the reasonableness of the HOA dues
excluding taxes. All of the comparable indications included taxes. If the tax estimates made in
the following section are added in, it appears the subjects HOA dues will be at the high end of
the market.
Real Estate Taxes
Real estate taxes represent a significant holding cost for a project that has an
extended sellout period. The real estate taxes applicable to the subject were discussed in
detail previously in the Assessed Valuation and Taxes section of this report. As noted therein,
there is some uncertainty as to the methodology by which the Nevada County Assessor's
Office will appraise the subject's fractional units. In our opinion, it would penalize the subject
property to apply the tax rate to the full value of the subject property based on the 1/17 shares.
This is because the share price includes the use of off-site amenities that are part of the Tahoe
Mountain Club. The share price also needs to reflect the necessary marketing and
entrepreneurial effort to market a fractional development the size and scope of the subject. In
our opinion, it is reasonable to apply a tax rate to an estimated assessed value which is
consistent with the underlying cost and value of each of the subject units based on whole
ownership. We have reviewed the rules of Proposition 13 and the methods for assessment with
the subject developer. In our opinion, the assessment of the subject units as individually owned
units similar to other cabins and condominiums in the subject's area is the most appropriate
method and is most consistent with our understanding of the applicable taxing requirements for
-1 4-,-
the county and state. We have estimated the whole ownership assessment by a review of
condominium and home sales in the Truckee area. The following table summarizes this
calculation.
Old Greenwood Estimated Taxes Per Unit
Weighted Avg. Assessed Value Estimated Avg. X Current Estimated Taxes
Unit Size Per So. Ft. Value/Unit Tax Rate Per Share
Cottages 1,515 Sq. Ft. $400 $ 606,000 $.0106 $6,424 v 17 = $378
Cabins 2,651 Sq. Ft. $400 $1,060,000 $.0106 $11,240 v 17 =
Weighted Average Tax/Unit $8,865 ti 17 =
Weighted Average Tax/Share $521
The above table indicates the calculations for the estimated taxes per share for
the real property. In our opinion, these are reasonable estimates in relation to sale prices and
assessments of single-family homes and attached units, which we have reviewed in the
subject's market area. The amounts calculated above will be utilized in the discounted cash
flow section of this report as applied to the unsold inventory held by the developer.
It is also necessary to estimate the taxes for the vacant development land,
which will be improved in phases over the projection period. This projection is made on a
per unit basis. The cottage land valuation is estimated at $60,000 per unit, which is
approximately 10 percent of the whole ownership figure estimated previously. The cabin
lots value has been estimated at $200,000 per unit, which is approximately 20 percent of
the estimated whole ownership values estimated previously. These ratios are considered
reasonable and appropriate in estimating taxes attributable to the underlying land of the un-
built units in our developmental analysis. This calculation is made as follows:
Assessed Value Estimated Estimated Taxes
Vacant Land Current Tax Rate Lot Taxes Per Share
Cottages $ 60,000/Unit $.0106 $ 636 $ 37.41
Cabins $200,000/Unit $.0106 2,120 124.71
Weighted Average $130,959/Unit $1,388 $ 81.65
Rounded to $ 82.00
The above property tax estimates for the subject units and land are based on
reasonable methodology. It is recognized that there is some uncertainty as to how the Nevada
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County Assessor will ultimately tax the subject. However, due to the timing of the construction
and sales of product, it appears the property taxes have only a minimal impact on the bulk
value conclusion stated herein.
Mello-Roos Tax
The Mello-Roos Tax applicable to the subject was discussed previously, and the
rate of apportionment has been calculated at $3,000 per single-family lot and $3,400 per
fractional unit. The fractional unit can be further divided to the amount of Mello-Roos tax by
share, which equates to $200 per share. The pricing of these units was adjusted previously to
account for the Mello-Roos costs. This will be factored into our analysis at $3,000 per lot and
$200 per share.
Infrastructure Costs
The subject has had substantial infrastructure already installed. There are
existing roads with pavement entry into the development, and all roads have been rough-cut.
Paving was ongoing as of the date of inspection, and our analysis assumes all infrastructure
costs budgeted for 2003 have been installed by November 1, 2003. The following table
summarizes all the budgeted and remaining costs projected for the subject property.
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Development Budget/Expenditures
Old Greenwood, LLC
Actual & Budget
Development Costs: Through Year-End 2003 Remaining
Total Budget Project to Date Difference
Capitalized Project Costs:
Land Acquisition $ 16,957,263(t) $16,957,263 $ 0
Architectural Fees 1,718,430 1,003,312 715,118
Professional Services 1,368,200 817,434 550,766
EIR & Land Planning 1,136,275 800,573 335,702
Site Work& Infrastructure(2) 22,333,767 19,125,755 31208,012
Ta Fees, Permits & Taxes 6,876,375 1,152,050 5,724,325
Building Construction Costs 74,482,296 5,969,911 68,512,385
Furniture, Fixtures & Equipment 13,280,674 1,427,674 11,853,000
Project Management Fees 11,275,260 3,762,260 7,513,000
Le al(Financial Ex enses 3,173,040 1,688,040 1,485,000
.1varketing Fractional 43,085,795 2,865,795 40,200,000
Marketing Lots 1,200,000 1,200,000 0
Marketing Tmr& Founders 500,000 500,000 0
Club Amenities(3) 8 687 000 17.343 498 8 687 000
Total Development Costs $206,074,375 $74,613,565(4) $131,460,810
(1) Reflects a $5,000,000 reimbursement made from Tahoe Mountain Club for the golf course.
(2) Excludes future Old Greenwood building.
(3) Based on allocation of cost at$3,500 per fractional share (2,482 shares at$3,500 per share).
4) Includes ameni cost contributions from Tahoe Club Com an .
We have viewed the detailed budgets for each of the line items noted above and
have determined that the remaining on-site road and utility costs for completion of the subject
development is $3,208,012. This amount is anticipated to be spent over the remaining years,
as development continues in certain parcels of the subject property related to phasing of the
cottages and cabins. This amount will be deducted to reflect the "as is" value of the subject.
Amenity Costs
The subject development has amenities that are to serve a larger development
concept, which includes other projects in the Lake Tahoe region. These have been discussed
previously, and include the Northstar-at-Tahoe projects, Gray's Crossing and Coyote Moon golf
courses, and the Wild Goose restaurant. The Tahoe Club Company is a related entity to the
subject developer, East West Partners, and will oversee the development on costs of these
-1s0-
{
4
amenities. As the costs of the amenities are to be shared by all projects, we have allocated
only those amenity costs to be paid by the subject property in our analysis. These costs are
calculated in our analysis at $3,500 per fractional share, for a total of $8,687,000, They are t
recognized on a per share basis in our analysis as the shares are sold.
In addition to the fractional share amenity cost contributions, it is anticipated that #
f
the subject will need an on-site property management building,which may also serve as a club
amenity. The developer has projected this cost at$3,500,000, which we have included in our s
analysis. The total amenity costs projected on-site for the Old Greenwood development is
approximately$38,000,000 of which approximately$17,300,000 had been spent as of the date
of value. The remaining costs will be funded partially by the subject revenues noted above and
the Tahoe Club Company which is a related entity to the subject developer.
Building Costs
Costs of construction for the cottage and fractional units is deducted in order to
account for all costs associated with improvement of the subject property and reducing these
cost deductions to a land residual value. The building costs for the subject's cottages and
cabins were discussed previously herein. Based on the various sources, we consider it
reasonable to utilize the subject developer's construction cost estimates. These are
summarized as follows:
Fractional Development Costs
Cottages
36R 1,760 Sq, Ft. @ $240/Sq. Ft. _ $4222,400 + $81,200 F, F & E _ $503,6 0/ 17 = $29,624/Share
Average $25,724/Share
Cabins
36R 2,470 Sq, Ft. @ $238/Sq. Ft. _ $587,860 + $91,200 F, F & E _ $679,060/ 17 = $39,944/Share
4BR 2,985 Sq. Ft. @ $238/Sq. Ft. _ $710,430 + $109,000 F, F & E _ $819,430/ 17 = $48,202/Share
Average $42,845/Share
Based on the above table, we have utilized the per share cost allocated in our
discounted cash flow analysis. We have recognized approximately$1,000,000 of costs already
spent on the ten cabin units under construction as a deduction from the cost calculations in the
first quarter of our analysis.
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Developer's Overhead
We have allowed for developer's overhead in our analysis in order to account for
the administrative and oversight duties involved in coordinating a large development such as
the subject property. This is intended to allow for any legal or financial expenses, professional
fees such as engineering, project management fees, remaining entitlement costs, and other
overhead items. We have estimated these costs at 2 percent of gross revenues. Our
experience in the marketplace is that this allocation can range anywhere from 1 to 5 percent in
the current market. In our opinion, given the amount of infrastructure and operations already in
place at the subject, an estimate in the middle of this range is considered appropriate. We
have not applies any developers overhead to the single family lots which are completed and
under contract.
Developer's Profit
Any development undertaken such as the subject requires a profit incentive to
induce the entrepreneurial effort necessary for undertaking the risk of this type of development.
We have had discussions with several market participants in the fractional market in order to
identify profits. It is noted that there were several fractional project developers at the most
recent fractional timeshare conference sponsored by www,WorldsFinestResorts com, "Taking
Fractional Development to the Next Level,"who reported difficulties in achieving profits. Profits
are typically either recognized as a percentage of revenues or percentage of costs. However, it
is noted that East West Partners has experienced profitable development in Colorado. Our
analysis will recognize profit as a percentage of revenue. Our discussions with most fractional
projects indicated they are looking to achieve profits of 15 to 30 percent, with internal rates of
return overall in the range of 25 percent or greater. Based on various sources and
comparisons to other types of development, it is our opinion that a profit requirement of 12
percent of gross sales revenues is realistic in the current market given the status of the subject
is well into the development stage. We have not applied any developer's profit to the existing
cabin sales, Tahoe Club Company reimbursement, or Mello-Roos reimbursement, as these are
low risk income not subject to the marketing risk of the fractional product, a
s
The taking of profits and overall internal rate of return for the subject is more
complex than typical due to the influence of the 99 single-family lots, 86 of which are pre-sold.
The fact that these lots provide a large amount of near-term sales revenue is significant. In our
z
i
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opinion, the fact that the subject lots have been completed and marketed to the point of binding
sales contracts greatly reduces the profit expectation in the marketplace. For the purposes of
our analysis, we have applied a 4 percent profit to the single-family lot sales. This equates to a
profit of approximately $1,400,000 for the lots. Given the likelihood of the lot sales closing
within the first quarter of our analysis, this amount of profit may be excessive and is certainly
conservative relative to the low risk. However, in keeping with the intent of a bulk value
estimate per CDAC guidelines, we consider it appropriate to recognize this level of profit in our
analysis. In order to recognize the anticipated immediate sellout of the single-family lots, we
have recognized an offset to the effects of discounting the lot sales in the first period of our
analysis. This is considered appropriate given the large number of binding sales contracts and
projected closing dates anticipated as of the date of value.
The developer's profit line item in our discounted cash flow represents an
allocation of the net revenue after repayment of development costs. This allocation allows for
the developer to realize profits throughout the sell-out period while allowing for remaining cash
flow to be available for a return to the underlying land investment.
Discount Rate
In order to recognize the time value of money and convert the future cash flows
into an estimate of present value, we have applied a discount rate to the future cash flows. The
discount rate is often contemplated concurrently with profit. It is our opinion it is appropriate to
apply profit as a separate line item from discounting in order to be able to conduct sensitivity
analysis as it relates to the impact of these two items on the cash flow. It is our opinion that the
profit is conceptually separated from the time value of money. We have reviewed investor
surveys, including the Korpacz Real Estate Investor Survey and the RERC Investor Survey to
identify and anticipate yields on the various types of investment grade real estate available in
the market. As of Second Quarter 2003, the overall average yield anticipated for investment
grade real estate was 11.1 percent. This is for more conventional property types, including
retail, industrial and office projects. For the purposes of our analysis, we consider it appropriate
to apply a discount rate of 10 percent to the subject. This rate is coupled with the profit
percentage noted above to achieve an internal rate of return (IRR)exceeding 21 percent.A 10
percent discount rate is considered substantial as it relates to the risk of the subject
development as well as returns available on alternative investments.
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s
}
Internal Rate of Return
The internal rate of return (IRR) takes into consideration all elements of the cash
flow, including profits, current value of money and income and expenses involved in the
determination of the cash flow. The following table summarizes the range of discount rates or
internal rates of return, including developer's profit, as published in the Korpacz Real Estate
Investor Survey.
Discount Rates (IRRs)
Including Developer's Profit
Second Quarter 2003
Current Quarter Fourth Quarter 2002
Free and Clear
RANGE 11.00% - 35M% 11,00% - 35M%
AVERAGE 20.25% 20,21%
CHANGE ----- +4
Subject to Financing
RANGE 15M% - 30.00% 15.00% - 30.00%
AVERAGE 20.50% 22,08%
CHANGE ----- -158
Source: Korpacz Real Estate Investor Survey, Second Quarter 2003
The above table indicates that discount rates for leveraged developments are
slightly higher than those projected on a free and clear basis, all cash. Generally, the range of
the averages is consistent, running between approximately 20.25 and 20.50 percent as of
Second Quarter 2003. Typically, developers of fractional projects might have higher IRR
expectations due to the risks of marketing this type of real estate product. However, the subject
development has mitigated this risk with the near-term cash flow available from the single-
family lot sales, as well as the inclusion of the subject in a larger development concept
incorporating off-site amenities. Reference is made to the following discounted cash flow
analysis, which outlines the cash flows and the anticipated internal rate of return based on our
determination of profit and discount rate. The IRR calculated in our analysis is 21.43 percent,
which is consistent with the averages noted in the investor survey discussed above.
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Value Summary: Tatar Percent',
Truckee Donner CFD Total Per unit of Sales
Total trots Sold: 99
Total Units Sold(lots&fractional shares) 2,581
'Total Gross Sales Revenue $337,349,849 130,705 100.00%
Mello Roos Reimbursement $9.275,000
Tahoe Mtn Club Reimbursement $5,000,000
Sales Commissions/Marketing: 77,795,212 30,142 23.06%
Closing Casts: 1,716,624 665 0.51°f%.
Property Taxes: 1,036,423 402 0.31%
Onsite Road&utility Cost: 3,797,675 1,471 1.13%'
Club Amenities 3.595,399 1,393 1,07%
Fractional Share Amenity Costs: 9,870,333 3,824 2,93%
Direct Construction Costs(Fractional) 95,663,136 37.064 28.36%
HOA Dues 1,216,360 471 0.36%
Mello Roos Taxes(Developer share) 1,827,330 708 0,54%
Developer's Overhead. 6,123,400 2,372 1.82%
Interest Expense: 62,856 24 0.02%
Total Developer's Profit: 37 593 982 14 566 11.14%
Total Reductions 240,298:730 93,103 71.23%
Present Value of Cash Flow
Discounted at 10.00% $84,987,870
Present Value of Mortgage L
Value to Single Purchaser: $84,987,870
Value Per unit: $32,928
Value Per Acre: $141,646
TOTAL INDICATED VALUE $86,000,000
INTERNAL RATE OF RETURN 21.43%
-154 a-
Summary of Assumptions
Truckee Donner CFD
No.of Lots 9f3
No.of Cottage Shares 1224
No.of Cabin Shares QM
No,of Acres 60C :.
No.Periods/Year 4
Average base prioetet $360,000
Average base prica/oottage share $76,506
Average base price/cabin share $136,5.00
Sate Comm&Promo%lots 8.50 ro
Safe Comm&Promo%Fractional Shares
Closing costs
Periods until Sellout 34
RE Land Taxlahare $80
RE TaxfCattage Sharetyeer 53?3
RE TaxfCabin Shannyea€ a:061
Mello Roos Tax per sharetyear $204
Club Amenitiesr'tractionai share $3,500
Onsite Road&Utility Cost: 93.20Y',.G12
:Direct Construction Costsecars Cottages $25,724 -
Direct Construction Costsishars Cache $42..845
HOA Dues Cottages $3 3/0
HOA Dues Cabins $3,840
Developers Overhead%(fractional units) 2.00/, -
Onglnal Loan 90
Annual interest rate 8 0010"✓.1� -
Release% 9&001?1 -
Developers Profit Presoid Inventory-lots 4 00 K, _ -
Developers Profit-Fractional Product '12'*%
Discount Rate 10.(110 o
Annual Appreciation rate 84C I'll
.
lat Quarter Discount Adjustment 441,500
Prior to appreciation 2
Expense Inflation Rate(Ann) 3,00% -
Tax Inflation Rate 2.00%
Original Mortgage Balance: $0
Mortgage Balance Per Lot. $o
Releaser Percent 961A.
Release Price Per Unit: $178.283
Interest Rate Per Period: 2.QtF%
-134 �-
�,Discountad Gash Ftoa
Cuatter pot Cuv!er p-4, Cuartsr (?uannr pwrtm 9uatta Wattx Gnmq
APPrgo Wa Rats' „r
,...
Cumulgare Lrna CamoietM. ��0 ;n 5z� +: v ' ... .� � 9q
an
8 Avceaga Lm Prtce: MOOD 3,'ICI,GR:. 352,828 356270 45I 9S3 380,84Y 3&3,323 ?EFft043 883£a4 37i sW Saiga�r PervM.
CumWative tma Sdd. Bfl 99 99 09 94 Jfi 98 49 W, gqi
Cuty 84mxs bx^.pwtmt: 5C 50 £0 3 3 38 38 39 33 39 CueiWxsaa Cmu,ro st,..Cc+npmletr 50 4W 170 170 170 208 248 7,84 m w
Avaragg Comic,,, N6 Pow- S76,Ko 70, 77,074 77862 78,234 £8,821 79,412 n,3pE 6g808 $1,212
C,,rQ shares soCP Pena5: 0 0 80 m 88 38 38 3B 38 36 GumulatWg Crxnege Sttvas Sow 0 0 60 118 1 hu 292 7,70 3U8 348
JegoIQ fRWv1IlTy CatggeSnwau 5P Im 4t! 52 t4 14 14 34 14 14
Catlin Shun c mpwea S8 57 57 0 4 39 :8 9? 36 38 Cumuide+a Cxo6n Sx3araq Canpw,ad: 98 113 170 170 110 2C3 24a 284 322 380
Avmepg Cabh Pckx' 13 uo iwFFW 137524 11F556 ;3 6N }tr3,641 141886 to?75& 143,83G 144,5W.8 Cahn snwg sales Px Pax!oa. c o ec 36 3 39 33 ae
CVarWaUM1'g Caton Sheraa Solt: 3d 33
P p ✓w a52 i`4 sfA ?14 214 1 's14 UnaN!!mza.^Xory CaEN Sheraa. ?a5 1ed vM. 52 t4 to 14 !4 tt 14
88taT lnm4met 83t,MC 53,4$iIM 81£.567.8W Sd.21H,895 SA277484 $8.33H. 5 w402,112 S8AAS128 5&52R.85G` S3,L,42,581
2xi5Wv§Calm Shea. 3,39p fht9 0 0
0 P 9 p p
atitla MI,CWtr RdimdxsxneeP tl 0 v4IlYJ,GH1 G
Cvmrfam+e itic2ne. &43725.M6 fr4S.:22,0 M,9,3928'St £77ROi s 885& 150 533225"0 41tl0,327,827 E++t y^n cM Sf 198215n 3123,214,153
Expenses:
9a}ea Ca(fliAW$wnMMaYkAtmq $2.647 TM.xt $2975'A 32.053,988 F,1MS,371 S2084dfr1
C." $2,iC0.32a $2,218262 32 f32.154 :2,148,115
Gkeing 2GF.125 17, p 85,&34 41M 41,3v 41.6&, 42,011 4232N 42,643 42,9+.3
f° 1Fa'1° 54,&W 79(X4 TIM"s Usso 45,122 41. 46,1, 43,b 41,8%, 4U 332
327358 32@843 332287 334.779 2a 021 ?9m 29.5GE 3"n,523 171 557 2fl0.f47
A C t.CW.ffiN 1.G22,@89 t06561% 519= 0 C g p
G 0 5G2,432 272 flan VA 070 276sd0 2'i2.127 2K Ow dBq 284.5xd
lIm118 4_"72 0 0 2M,IW 2725,ta9 2,£4592fi 27%,,125 2,7 R71 -
A2.1M15 s9i,Zi0 4584J5 @.an 24,ies :f.395 24,M 24,IM 24i85 24.te5 63 a4163 71995 72,W 4fNL5'At 87(pt R1,4W eRm- 88439 82919
Cevetcpelg;h»t^patl aG.:>p 1@ IM 15Q.t0: m,100 i8Q100 t&'t,SW t8pp S10 1%11CC 16R.100 16tLffq t^ttreet EY.oettBs: 0 D 2,VA q 2 Q Il Ta[&G4'vrltsne: (&.de0At1) iR 925[aft! (it,}:9,C3&1
(412.51 L38i4474)Aa � Le t3'x']4dS ` i6897478) ES,Betk4saJ
4,?a W t1 inslP 4.12e,I 4 3619474 6M3,4u 5,517," $551 EA3 -5,82i,478 5,880.g84
rtw Rlwn.RF.Ra . 4..ZZS,M UNAM2'3J9X.@ ! fl..?L6. t` 4,2rS.S5S 5..:3.4.�2x' ,_+@3a,2 a§S.f29 52ffiS,}d §.5 saw
Cash Flaw Ratare Raysam a87254:,0 3,5eX1.(kVf t873M 8,21o&A4 82774% D2ma 5 9.k13A53 8,48>,12p 8,52&8ta B,SfrZ,S51
Rghase aeyom+t PI SM 3ZtUN 11V;449 4. .a44 HSi5.<.7< fr, r'.9Y5 $.`tti.399 5.. ?.@?"x �,@27,Axe "2, .4fr9
Cash flan ARer RgbRae x744 ,05 1717110 7'M 359 4,Mq 321 4,456,010 2,3,' 070 2W2M 2,91 276"Im 2,717117
Tam Davy V.Pr 72MM 0 ?,Jwz!l 53 5..2 h r 91Z.frt"` IM472 D C S.Q:A.ZZ4 ` 9S $Sfr.24_
€'Aft pvai Frofli FS}6199,6% 8t 71 7,11V S£.i31 m82,®53,0.44 k4,aWI07 51,51&94B $1874,733 S1$9$7% £1,75740 $1M,a76
Modoap Schedule:
eeg¢g AMrtgage E&NiC9' &0 SP R{.ta2,g(8 SR S0 £4 bG
4nhHBefEWansa Prtr peiEad'
Q ` 8U
8285E 6 0 0 G 0 UNL S P.4aa P ParipY G
as to 4W 78 0
]8 78 75 T3 73 e8
A;idgCltal l,nae;G1'a'x. aM01 4,925d9& 11,1Nem g528.540. 3$19AT4 9,IN13,i9S 55S7908 5-5}6U 5827,478 SEB0.R9d rtdatnetlVxa t¢rai freixnce- @]'bXM 4,Q$J9 , i4,2i2,449 4Aa544 3,819h>4 C,G'i244S 5,SSt.9P4 tJ,S514543 fid]),4Y& SfiNCi.9fM
i R " Y�TaMr 62KQ11 1742,W 14.272446 4In544 3914,4£4 M34A 5.51£.9b9 555i,@43 8.92J,Erx(uaw%Ft~9efw * 0 3,f42.8J¢ 0 .. u 0 471 599J,4S43 a 0 0
-------------
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Avotago Lot Prim $74,346 377,154 379,03 MA32 385704 3W,5% 391,511 334,447 397.406 400,,W
sm.s,tt,potl , r L 0 11 C
CUmtA No Lore Sa 99 99 99 99 99 99 % 99 99
cotsp Shares C.mPwed 38 38 38 m 38 38 39 38 Is
cwm,4ahm Cottage Sh"C.pwd 436 474 512 626 e454 702 740
Awttn,Cft"Sham Rvke, 81,821 82,435 B3,053 8$678 84,304 84M 85,573 FA,215 86,882 81,513
Cottage Smm,Sdd Par PWW 38 3W 38 w 38 38 38 m 38 m
CwnWatWe Coen.shf..Sod, 384 422 460 448 $IV 574 612 650 m 726
umotd Imattrtty coft"o SNMS 14 14 14 14 14 14 14 14 14 14
Cebit,Shams cmoatN, Se 38 36 38 38 w 38 38 38 38
Cun, tall Ca A Slum cmwftcl 3% 438 474 612 5w 588 626 6e4 702 74Q
A.av CabM P,bc 145,996 147 OW 14el�, 149,305 160,424 151,553 152,689 MIAN4 1 t"Ratt IWAM
CaNn sm*.Sma,Pffl P�. m 38 38 38 as 3e 38 38 38 3e
C.M'A.V'o CWD Sham Sold 384 422 460 498 53�6 574 612 m w 726
umm 4wwtmy Qtb, Shwas: 14 14 14 14 14 14 14 14 14 14
Sales Income: YY,W8B.025 S8.721.953 $8M8 368 $88512n WR19,613 $9 0531�1 $9,121,674 $9 IW,288 $9 259,215
Lvs*v C.0t,Sa S, a 0 0 0 0 0 0 0 a 0
Ta"W Cub ftmimMusemant 0 0 0 0 0 0 0 0 0 0
V A 4nu^ ,., 0 C, I
ComOshvo in.. SIW 67t,178 $145,593.131 $154,3WA $153 233,772 St 72 153,445 V81140 0,15 $1%*3 $1t,315 B88 $208.W8,148 321?,70,362
Expenses:
S N cmr SSf ri waxk&kv01 $2 IfN'M $2180.468 S21%,842 $2 213 M $1229,918 $224 M3 $2,263,492 S2,280489 S2,297,M $2314804
Cb,tlng Coals. 43,286 43,610 t3,917 44 286 44.M 44 M 45,27O 45,6M 45,R5I 46,2W
P,q ny T..S �, ,"4 37216 55,658 34100 52,42 30, E 2"26 27,M 26310 24J52
292,$25 294,820 0 0 0 0 215,985 241,242 247,0$2 248 m
M.637 288.787 2W.9511 293,135 795,33l 297 54a 298780 3W2 028 3C ,576
8A97,773 2 828 891 2,&48 W 2,871,423 2AR2,968 29146m 2,91M 515 2,958,538 ZiM,725
24166 24.185 2085 24"" 24,185 24,185 24,185 24,1& 24,1W 24,165
79 aw 75,877 T3,d 2 SN,773 6e,208 6Z638 W,626 56,M 53,3 49,840
D"Ok,w 0"rhend 180100 IM1100 IWADO 180,100 180,100 MIND 1%,100 M 100 M,1W 180100
TOW ExptvtcnS (5095,%3) tg 76,-,639) (5,80104) (6,M,364i 0,121,006) (6,159,5257 {8196,371}
Agwtmad L"n 01e 5917,033 5,01914 5.M,063 53W,300 F,765,WS 5,801,M4 0,055,WS 8,121,OC6 8159525 8198,371
Not R"MVI BIf.R,*w M59-09 §�2§q 8787AM 5,45M $Mmll 2 9-01519IA9 9,13.l'a74 91 KIM U�Pzl 5
cest,Fb EIIKe Rme. BMTO25 8,721953 8,787,31t8 8,8S3 273 8,919,673 SA68,510 9,M,969 9,121,874 9.190,288 9259,215
R,iem Paym t: m 1-70xt S�-MIMS14 4,§5QW VNIM 51 Lfflim 9mm L2L99-5 L-5-M §Mxl
CtMhf` mAfRgR ewsea 2,709.993 2,766040 3,%2,305 3.722,973 3,1518313 MENM ZM,585 3,W0,M 1,030,784 3,060,844
Total DftWWor,t PMR, 911�-07 96114 iaM LW-I w LLDIM LLL4_�JQ -QLM I=" _.W_67 IgLLZK
CF Aft�D�ef P,�t SI'780,�5 $1,7�,226 szm,Swe S2,029,933 $2,04Z N2 S2,M 176 S1,449,080 $I.e5o.%4 $toft,9" $1,ww
MortgW ScItedula:
B.Onnitv monga"Rwama $0 $0 SO so $0 $0 $0 $0
NC w Evmn.Pet Psdo4 0 0 D 0 a 0 0 0 0 0
Unit SSAS Per PerMtl 78 75 78 76 76 76 7E 76 78 76
5M7,033 5,853,914 730 300 5 rall,wg S.Wi584 645535 6 121 we 6359$26 0,198,371
Bale , 5,917,033 Sa"014 6,695083 5,730,3m 5765,839 5,W1984 6,055,w 8,121,tW 0,159,525 6198,371
5,9170,13 5.963914 5,6%,m 5730,UM 5 7m,W9 A,055,30. 6121 A98 6,159,525 6,M,371
EmMig mWoo'.Fteiar ce. 0 Q 0 0 0 0 0 0 0 0
15 t
Appli,,nafl.l Rrte i, iWl, w_"I?:
LO.CWWWed C, Q
C.".10m Let,C,x,,NONW Di, "N'
A"ra,e Lr Pit. 403,M 4N,414 409,403 412,5" 415625 08,745 421,635 425,041? 428,237
sates W Pinta@ i i C, I, no 1' 99
ciewbieo�Ole$md: 99 99 99 as 99 99 99
38 U 38 38 38 38 38 38 38 38
C-q"liid 778 M 854 892 m 986 luce I044 I(£62 112C
A,,.Moe C.QN.tthwl Praia 88169 N,ml 89,497 W,168 9il.844
Cede"Shane.Sad Per PeGirl m ari 36 3$ 36 38 36 38 38
38
cr"J.a'.Cohaire Share.SW 764 002 m 878 016 914 992 1,030 I'M 1,108
14 14 14 14 14 14 14 14 14 14
IQ w ul n 35 38 ze 38 38
Cwn,aAWe Gain sbares co"Praeb, 778 ele 81" 892 0) 968 IQQ5 1'M I'M 1,120
Average Cabin Pitu, 157322 Ii8'502 159,6&1 M,888 162,096 163,110 164,535 165,7& 157,013 1 M,265
Cabin shm SQte.Par Perim, 38 38 3S 3a 36 as 36 36 38 35
(CenOeW.Cabin Shine,SrAd 764 802 840 87e 916 WA 9S2 Im toae 1106
Umlld Qrault"Cohn StMlft 14 14 14 14 14 14 14 14 14 14
Sates Incornar S9328,60 $9,396624 $9464,114 $9,640,132 $9,611,683 ib),683.771 $9,756,399 p32A,572 $9,9D3,294 $9,977,559
EASON Cabin satear C, 0 0 0 G
Table Mb,CW ReintM,,errnit 0 0 0 0 0
li-11 r4 m-i
rl,rlr4trwe jme $227 IN4,021 3236,492,W $245 961,760 $Me 501,892 s265,113,576 S274.797,347 VM,553,741t 5294,3&9X9 $304,286.613 $314,26A,182
Expenses:
Sakr$ $ZI12,165 $2.349QF S2,3V,279 S2,385.033 VA02.921 52,420.843 $2,439,100 $2p57,393 S2476.824 $2,494,392
Ch,A,v cooE 46M3 46,9q3 47,343 47,701 48,0" 48,419 48,782 49,148 49516 4988E
Prapett,T"m 23,194 21 A36 M078 1$,520 19,952 15,4b4 13 a4b 12,288 16730
250,802 0 0 D 0 0 0 0
KAM 311,192 313,525 315,877 318,46 320,631 323A36 325.460
302-IN17 3,W 2" 3,071,181 CW4,195 v i 7 401 3,140,782 altnt,3W 3151,00
s. 34,185 24,185 24,185 24,1$5 24185 24,185 24 IS', 24 185 24,185 24,155
35 355 MA25 32,4m 28,E 24,851 2im 17,646 13,770
pevale ate Overhand: ISO 100 Iw1w 180,100 Im Im WADO 180,100 180,100 190..*4 180,100 1w,100
Intel EVerim (Q 2W31rr) (6,025,145) (6,03,D28) r6,101736) (6,140,3w1 (8,I n I w, (6.21823H) (6,7577U, (6,297a84)
ivtli bio 10.1 Draw 6,238,1384 a,025145 e,061,028 6,161,235 5 1410,3M 6179,109 u16209 8,757703 8,M5 N2 15.337,W
Net Pbw.mia Befm Rate0ft pinmg 4,193 ISM
1_1 4 M%M. U81-
Ceep,Rw Beftra R.,eba. 9,32a,6s0 4,398024 9,449714 9,640,M ad4t683 9,883,771 9,756,35E 5V9,572 9,W3,2" 8977,589
Ritielft Plymrt §.VI04 5,025,141 6-M-OZO IMI'm LtIlm §-lnag umim §Zzm 4,ZE_8§3 ?L4�39q?
Cash Mat After Reitbaw, 3.M,275 3,371480 3,406.066 3,438e97 3,471174 3504,8R2 3,538,160 3571870 3,605,412 3838.63I
T,ArQ De.tbpaies PNOA =.� lj2mAl laaLM laQ3 6I4 lZIN-1 imm =3-az
CV Met,D.,eia Preft $2,008,679 $2,192,762 $2,213,19,50 $2,235,283 S2,255,M S2,278,031
Mortgage 94hodula:
afewrift MOAGAP SQUe"ce $0 so so so $Q $0
MNIaml EAratnea Per PefQQ 0 0 0 0 0 0
U,it Sate,$Per ftilmid 76 76 ?6 76 76 M 7e 76 76 76
Addit),xbl L.(It" 6,236,384 U2510 aM 028 e,101,236 a 140,: 6,179,I09 6,218,239 6,25Z,703 6,T?,882 6,817,07
friumm eAwe,Low BSWW 8238,384 e,025 W 90s3,028 fl,101,236 6,140,3 6,179,109
Total Rieke.Pai,,.M a m.164 6,025 145 6,m 028 6 1O1,2,16 6 257,?03 62W?Q82 6 a17 937
Efdaig mvbaias Bels..
guano Auatie: Q.,t Qtlerter
4mtrab.n
A"Mqe Lot Pr 434686 437,945 41r,230 444,539
S.is W Pe 0 G I I
C+a Aa e Lo44 S,Sj 99 R % 99
C<ft"Sha compwet 38 38 28 0
Cu W,e Coaep SbFm Q.PJS 1158 t1" 1224 12N
A"lage Cogage Share priw, 95,010 95,722 W440 97 Im
Ccnn-Staves Sold Per Pelloj 38 3g 38 4
Conrwi"C-ftne Shims S"PI, 1,144 i,iR2 1,220 1,224
unsow kwa y COUP Shale$ 14 14 4 0
rat,M Shupe c,,lFpww 38 36 38 24
cu=wl,a C."Shares cw,,Jatd, 1158 I.nf 1,234 1,258
Average Cahn P6l,,, 189,527 170,799 172,4So 173370
Cabin&^:.la Bake w Pat4W 38 m 'M 38
CumukEkvcr CaSn shares sow, 1Sm 1162 1220 125a
U'.om inventory cabNsSh5re, 14 14 74
Sal"Income; $104U 41,11 $10,127,7 4 $10,203,752 55.976,721
T.hm Mt,,GW kej,,blxaearent 0 0 0 0
$324,116 583 SOg,444 373 5,4 ,rA 6,123 $'51.624,W
Expenses:
Saks $2,615 Im $2,531 N8 $2 ssogla Vj",i w
C4.k,g CasM, 50,282 'Ken $1019 34,8&
?S14 6 M 3,553
0 0 0 0
0 0 19 9
IM,107
3,2W U 1 3284 IF4 2.WI2,Tce 1J15.325
24,M 24 f85 16,510
0
S,R& 6018 2,185 0
IKM IMAW In'loo TW,100
vrcaeaxl E.M. 4 is 2 9
Ts#atF> nw. (6,316,334) (6,419074) ($,124,8W, OA63,a )
AMroml Low,Draw
6,378,X4 $419,074 6 124,860
MetR�A Wom R,�v 3,463,095
I'o Q5,11501 IQIW-7�4
Cash Flaw Beve Rntefte IOM2,401 10 127,7 4 10,203752 O978.72i
RWmaa Poymante
MZ614-M Q14191474
Ca Flow After 1674,067 11,708,720 4,078,BQ 3,513,825
Tote OtvekW.P,.flt
OF SAW D"ei ProM p
$2.W143 $2,410,WB $3,4S8,a08 $3,513,526
Mortgage Uhoduia;
aoqask moltas"
"M E"�Par $0 so so so
IM
0 0 0 0
U.9 Sputa PM potl , 76 7e 78
Adft�t 42
8,378334 6AM74 6 124,860 3,433,096
nttamxakm 64rsna, 8XSJ34 $419074
TOW ROom*Payment3,�a,oge
394 BA19074 6,124,8W 34l3S,o98
aalaFeq 0 0 0 0
F
TRUCKEE DONNER CFD VALUE ALLOCATION t
The Mello-Roos Community Facilities District(CFD) No. 03-01 has been divided s
into two separate zones. These zones have separated the subject property into a total of 100
single-family lots and four existing cabins in Zone I. As noted previously, there is one single-
family lot that is not intended for sale. Zone 2 represents all of the land to be occupied by the
fractional product. As requested, we have prepared a value allocation attributable to each of
these zones within the CFD. It should be noted that because of the shared infrastructure and
other items, a completely precise allocation is not possible. However, based on the proposed
revenues and the analysis of the entire CFD as conducted previously, we do believe that a
reasonable value allocation can be made.
The allocation of value to Zone 1 and Zone 2 requires an allocation of the Mello-
Roos bond proceeds to each zone. This allocation is calculated in the following table.
Mello-Roos Fund Allocation
Total Mello-Roos Bond Issue $12,245,000
Total Mello-Roos Funds to Project 9,275,000
Source: UBS Financial
Annual Debt Service Taxable Property Pro Rate Share Fund Allocation
Zone 1
104 Units @ $3,000/Unit= $312,000 38.6% x$9,275,000 = $3,580,150
Zone 2
146 Units @ $3,400/Unit= 496.400 61.4% x$9,275,000 = 5 694 850
Total $808,400 100% $9,275,000
Recognizing the near-term value of the lot and cabin sales in Zone 1 and
assigning the balance of the total bulk value of the CFD to Zone 2 best appropriates the
allocation of value for the two zones in the subject. These calculations are shown in the
following table.
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Zone 1 Value Allocation
Revenue
Lot Sales Revenue 99 Lots @ $350,000/Lot . $34,650,000
Existing Cabins 4 Cabins @ $825,000/Cabin 3 300,000
Total Gross Sales $37,950,000
Expenses
Sales Commission on Lots $2,945,250
Closing Costs 189,750
Present Value Discount 441,500
Developer's Profit(Bulk Sale Discount)on Lots 1 666.000
Total Expenses 5,242.500
Market Value Zone 1 $32,707,500
Plus Zone 1 Pro Rata Share of Mello-Roos Reimbursement 3.580.150
Total Zone 1 Value Allocation $36,287,650
Rounded to $36,300,000
Zone 2 Value Allocation
Total CFD Market Value $85,000,000
Less Zone 1 Value Allocation 36,300,000
Total Zone 2 Value Allocation $48,700,000
The above calculations have allocated the total bulk value of the subject CFD of
$85,000,000 determined previously. The Zone 1 allocation is $36,300,000 and Zone 2
allocation is $48,700,000.
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g$
S
VALUATION
We have prepared an appraisal of certain portions of Community Facilities
District (CFD) No.03-01 (referred to as Old Greenwood) which will be subject to special taxes
levied by the district. As a result of the appraisal and analyses made, and based upon the
certification, assumptions, and limiting conditions stated herein, the opinion is formed that the
market value of the fee simple interest in the subject property as of November 1, 2003,
assuming completion of infrastructure and "as is" are as follows:
Market Value Conclusion for Taxable Portion of CFD 03-01
"As Is" Assuming CFD Reimbursement
EIGHTY FIVE MILLION DOLLARS
�85.000.000
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ASSUMPTIONS AND LIMITING CONDITIONS
This report is made expressly subject to the following assumptions and limiting
conditions:
1. No responsibility is assumed by the appraisers for matters that are legal in
nature.
2. No opinion of title is rendered, and the property is appraised as though free of all
encumbrances and the title marketable.
3. The appraisal covers the property described only, and the legal description is
assumed to be correct.
4. No survey of the boundaries of the property has been made. All areas and
dimensions furnished to the appraisers are assumed to be correct.
5. Information concerning market and operating data, as well as data pertaining to
the property appraised, was obtained from others and/or based on observation.
This information has been verified and checked, where feasible, and is used in
this appraisal only if it is believed to be reasonably accurate and correct.
However, such information is not guaranteed, and no liability is assumed
resulting from possible inaccuracies or errors regarding such information or
estimates.
6. The data contained herein comprises the pertinent data considered necessary to
support the value estimate. We have not knowingly withheld any pertinent facts,
but we do not guarantee that we have knowledge of all factors, which might
influence the value of the subject property. Due to rapid changes in the external
factors, the value estimate is considered reliable only as of the effective date of
the appraisal.
7. The appraisers assume there are no hidden or unapparent conditions of the
property, subsoil, or structures that would render it more or less valuable. The
appraisers assume no responsibility for such conditions, or for engineering
required to discover such factors. It is assumed no soil contamination exists as a
result of chemical drainage or leakage in connection with any production
operations on or near the property. In addition, the existence (if any) of
potentially hazardous materials, such as asbestos, used in the construction or
maintenance of the improvements or disposed of on-site, has not been
considered.
The undersigned appraisers acknowledge they are not qualified to render an
opinion with regard to the presence of toxic materials, and recommend an
environmental scientist be retained to determine the exact status of the property.
No environmental impact studies were requested nor performed with regard to
this appraisal, and the appraisers hereby reserve the right to alter, amend,
revise, or rescind any portion of the value or opinions expressed herein based on
any subsequent data discovered which could significantly impact the market
value of the property.
8. The distribution of total valuation estimate in this report between land and
improvements (if any) applies only under the existing or reported program of
utilization. The separate valuation for land and improvements (if present) must
not be used in conjunction with any other appraisal and is invalid if so used.
9. The assumption has been made that all required licenses, consents, permits or
other legislative or administrative authority, local, state, federal, and/or private
entity or organization have been or can be obtained or renewed for any use
considered in the value estimate.
10. The property is appraised as though operated under competent and responsible
ownership and management.
11. Opinions of value contained herein are estimates. There is no guarantee,written
or implied, that the subject property will sell for such amounts. It assumes there
is full compliance with all applicable federal, state, local environmental
regulations and laws unless noncompliance is stated, defined, and considered in
the appraisal report.
12. it is assumed that all applicable zoning and use regulations and restrictions have
been complied with unless non-conformity has been stated, defined, and
considered in the appraisal report.
13. The appraisers are not required to give testimony or to be in attendance in court
or before other legal authority by reason of this appraisal without prior agreement
and arrangement between the client and appraisers.
14. Disclosure of the contents of this appraisal report is governed by the By-Laws
and Regulations of the Appraisal Institute.
15. The appraisers assume no responsibility for any costs or consequences arising
due to the need or the lack of need for flood hazard insurance. An agent for the
Federal Flood Insurance Program should be contacted to determine the actual
need for flood hazard insurance.
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16. The liability of the appraisers' company, its owner and staff, is limited to the
Client only, and to the amount of the fee actually paid for the appraisal services
rendered, as liquidated damages, if any cause of action should arise. Further,
there is no accountability, obligation, or liability to any third party. The appraisers
are in no way to be responsible for any costs incurred to discover or correct any
deficiencies of any type present in the property; physically, financially, and/or
legally.
17, The liability of the appraisers' company, its owner and staff, is limited to the
Client only, and to the amount of the fee actually paid for the appraisal services
rendered, as liquidated damages, if any cause of action should arise. Further,
there is no accountability, obligation, or liability to any third party. The appraisers
are in no way to be responsible for any costs incurred to discover or correct any
deficiencies of any type present in the property physically, financially, and/or
legally.
i
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BROWN, CHUDLEIGH, SCHULER, DONALDSON AND ASSOCIATES #
CERTIFICATION
The undersigned appraisers certify that they have personally analyzed the
property herein known as the Community Facilities District No. 03-01 (Truckee Donner Public
Utility District), Truckee, California; and to the best of their knowledge and belief, f
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions and are our personal unbiased
professional analyses, opinions, and conclusions.
3. We have no past, present, or prospective direct or indirect interest in the
property that is the subject of this report and we have no personal interest or
bias with respect to the parties involved.
4. We have no bias with respect to the property that is the subject of this report or
to the parties involved with this assignment.
5. Our engagement in this assignment was not contingent upon the development or
reporting predetermined results.
6. Our compensation is not contingent upon the reporting of a predetermined value
or direction in value that favors the cause of the client, the amount of the value
estimate, the attainment of a stipulated result, or the occurrence of a subsequent
event. The appraisal assignment was not based on a required minimum
valuation, a specific valuation, or the approval of a loan.
7. We are competent to appraise the property that is the subject of this report
based on our previous experience appraising similar type properties.
8. Our analyses, opinions, and conclusions were developed, and this report has
been prepared in conformity with the Uniform Standards of Professional
Appraisal Practice.
9. The use of this report is subject to the requirements of the Appraisal Institute
relating to review by its duly authorized representatives.
10. The Appraisal Institute has a policy of continuing education. "As of the date of
this report, I, Christopher T. Donaldson, MAI, CCIM, have completed the
requirements under the continuing education program of the Appraisal Institute."
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BROWN, CHUDLEIGH, SCHULER, DONALDSON AND ASSOCIATES
The reported analyses, opinions, and conclusions were developed, and this
report has been prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Appraisal Practice of the
Appraisal Institute.
11. Christopher T. Donaldson, MAI, CCIM, finds the content and conclusions of the
appraisal and the report were to be in accordance with the Uniform Standards of
Professional Appraisal Practice adopted by the Appraisal Institute. ChristopherT.
Donaldson, MAI, CCIM, has personally inspected the subject property and
comparable properties.
12. D. Tyler Dustman provided significant professional assistance to the persons
signing this report.
Respectfully submitted,
BROWN, CHUDLEIGH, SCHULER, DONALDSON
AND ASSOCIATES
Christopher T. Donaldson, MAI, CCIM
California State-Certified General Appraiser
License No.AG011161 Expires 05/20/05
CTD:kf
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BROWN, CHUDLEIGH, SCHULER, DONALDSON AND ASSOCIATES
ADDENDA
BROWN, CHUDLEIGH, SCHULER, DONALDSON AND ASSOCIATES
QUALIFICATIONS
CHRISTOPHER T. DONALDSON, MAI, CCIM
CHRISTOPHER T.DONALDSON,MAI,CCIMCHRISTOPHER T.DONALDSON,MAI,CCIMCHRISTOPHER T.DONALDSON,MAI,
CCIMCHRISTOPHER T.DONALDSON,MAI,CCIMCHRISTOPHER T.DONALDSON,MAI,CCIMCHRISTOPHER T.DONALDSON,
MAI,CCIM
EMPLOYMENT Brown, Chudleigh, Schuler, Donaldson and Associates
Medford, Oregon and Park City, Utah
Independent real estate appraisers and consultants providing appraisal, feasibility and
consulting services throughout the country.
First Gibraltar Bank, F.S.B.
Dallas, Texas
1990- 1991
Senior Appraiser responsible for reviewing appraisals for regulatory and standard=s
compliance.Also conducted specialized in-house appraisal assignments.
John D. Bailey and Company
Dallas,Texas
1986- 1990
Associate Appraiser
PROFESSIONAL
AFFILIATIONS Member,Appraisal Institute(MAI designation)
Member#9157
Member,Commercial Investment Real Estate Institute,Certified Commercial Investment
Member(CCIM designation) Member#7625
State Certified Appraiser in the following states:
Arizona License#30707
California License#AG011161
Colorado License#CGO1319868
Oregon License#C000331
Texas License#TX-1322246-G
Utah License#CG00042231
EDUCATION Bachelor of Arts, English
Coe College 1978