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4.3. SR 11-02-2015 EOty1� ,.,�� Request for Action River To Item Number Mayor and City Council 4.3 Agenda Section Meeting Date Prepared by Consent November 2, 2015 Amanda Othoudt,EDD Item Description Reviewed by Purchase Agreement between E&R Investments, Cal Portner, City Administrator LLC and the City of Elk River Reviewed by Action Requested Approve,by motion, a purchase agreement between the City of Elk River and E&R Investments,LLC for the purchase of real property located at the intersections of Highway 10,Joplin Ave, and Business Center Drive. Background/Discussion Staff has worked with a developer on a complex land assembly project that includes four parcels. The city owns two parcels while Sherburne County and the heirs of Hogan A. Wingness and heirs of Harry and Sue Lakoduk own the others. The developer proposes up to three commercial/retail buildings on the site for a national client with a drive thru, a regional client, and an opportunity for local business development in a multi-tenant building. The Council approved the Letter of Intent to purchase real property and authorized a property appraisal on June 15, 2015. The purchase agreement reflects the appraised-value purchase price and the seller's acquisition costs,including,but not limited to, appraisal fees, court filing fees, and attorneys' fees. Purchase agreement between the city of Elk River and E&R Investments,LLC Purchase Price: $81,000 Earnest Money: $1,000 Escrow: $10,000 Upon execution of the purchase agreement, the developer will deposit$10,000 into an escrow account for reimbursement of the city's acquisition costs. Any remaining funds will be returned without interest. The developer is required to deposit additional escrow if the acquisition costs exceed $10,000. Financial Impact None Attachments ■ Appraisal dated 7/21/2015 prepared by Nagell Appraisal& Consulting,Inc. ■ City Council Staff Report dated June 15, 2015 ■ Parcel Exhibit ■ Draft Survey ■ Purchase Agreement between the city of Elk River and E&R Investments,LLC POWERED 6T Template Updoted 4/14 INAWRE1 Report Type Appraisal Report Effective Date 7/21/2015 Client Submect Propert RiverCity of Elk Commercial Amanda • .. Business0. Orono PRiver, MN 55330 Elk River, MN 55330 s 1U 75 X28-0102 ' ti 75-597-0115 75-132-2428 - .`•,.. --_- Prepared By: Molly J. Lewis, Appraiser -' 75-,32310,1 4 William R. Waytas, Appraiser 75-1323106 F _ Nagell Appraisal & Consulting, Inc 12805 Highway 55, Suite 300 File # Plymouth, MN 55441 G1507003 Tel: 952.544.8966/ Fax: 952.544.8969 Nagell Appraisal & Consulting 12805 Highway 55, #300 Minneapolis: 952.544.8966 Plymouth, MN 55441 St. Paul: 651.209.6159 Established in 1968 Central Fax: 952.544.8969 City of Elk River July 28, 2015 13065 Orono Parkway Elk River, MN 55330 Attn: Amanda Othoudt In accordance with your request, an appraisal report has been made on the following described property: Subject Property: Commercial Land NEC of Joplin & Business Ctr Dr Elk River, MN 55330 The property is legally described herein. The appraisal assumes that the property meets all current environmental standards. The appraisal analysis and conclusions are subject to certain limiting conditions and assumptions described herein. Final Value Opinion $81,000 July 21, 2015 Appraised value reflects real estate only. No business value, FF&E or personal property is included. Our company has 12 employees, has been in business since 1968 and has sufficient knowledge, education, experience, resources and/or contacts to competently complete this assignment. The accompanying report contains data secured from my personal investigation and from sources considered to be reliable; however, correctness is not guaranteed. To the best of my knowledge and belief, the statements contained in this report are true and correct. Neither my employment to make this appraisal, nor the compensation, is contingent upon the value reported. This report has been prepared in conformity with the code of professional ethics and standards of professional appraisal practice of the Appraisal Institute and appraisal standards set forth by Uniform Standards of Professional Appraisal Practice. Sincerely, Molly J. Lewis William R. Waytas Certified General MN 20391975 Certified General MN 4000813 www.nagelimn.com TABLE OF CONTENTS General Information Page Summary of Important Facts and Conclusions 1 Introduction 2 Intended Use of Report, Date of the Appraisal 2 Scope of the Appraisal 3 Property Rights Appraised, Property Components Appraised 4 Identification, Real Estate Taxes 5 Subject Sales, Building & Lease History 6 Descriptive Data Regional Data 7 Regional Map 18 City & Neighborhood Description 19 Neighborhood Map 22 Market Conditions Overview 23 Site Description 26 Zoning Description & Map 27 Flood Map 28 Plat Map 29 Aerial Plat Map 30 Aerial Map Surroundings 31 Subject Photographs 32 Valuation Highest and Best Use 34 Cost Approach 36 Income Approach 36 Sales Comparison Approach 37 Reconciliation 48 Exposure/Marketing Time 49 Definition of Market Value, Environmental & Building Conditions 49 Certification 50 Extraordinary Assumptions & Hypothetical Conditions 51 Assumptions and Limiting Conditions 51 Qualifications 54 Addenda 57 SUMMARY OF IMPORTANT FACTS & CONCLUSIONS General Information Street Address NEC of Joplin&Business Ctr Dr City/State/Zip Elk River, MN 55330 County Sherburne Report Type Appraisal Report Current Property Use Vacant Land Effective Date 7/21/2015 Proposed Property Use Commercial Dev. Inspection Date 7/21/2015 Property Owner City of Elk River Report Date 7/28/2015 Interest Appraised: Fee Simple Prosp Date/Completion N/A Site Information Useable Site Area (SF) 32,670 Topography/Shape Mostly Level /Very Irregular Gross Site Area (SF) 103,237 Low Yes Building Improvements None Frontage/Access Average Flood Zone/Map Appears No;See Flood Map Visibility Above Average Utilities Assumed Available Location Rating Average Governmental Information Assessing Authority Sherburne Current Zoning BP, Business Park Property ID# 751323101 & 755750010 Land Use Plan Highway Business Current Tax Year Payable 2014 Current Use Permitted? Yes Assessor's Value $71,900 Zoning Change? None Reported Taxes Payable $0 Zoning Variance None Reported Delinquent Taxes? None Noted Tax Grievance None Noted Assessed Value The subject is tax exempt. The assessed value appears in line with the market given the property characteristics. Highest& Best Use As Vacant Commercial Development Extraordinary Assumptions/Limiting Conditions Yes; See Rear of Report Cost Approach Not Applied Not Applied Income Approach Not Applied Not Applied Sales Comparison Approach $81,000 $2.48 per SF Final Value Opinion $81,000 $2.48 per SF Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com INTRODUCTION This report reflects the data found and the opinions concluded from an appraisal of a property located at the Northeast Corner of Joplin Street and Business Center Drive in Elk River, Minnesota. The property is a vacant land parcel guided for commercial development. VALUE TYPE, CONDITION & STABILITY OF PROPERTY Market Value Type of Value: See Definitions Section for Market Value Defined As-Is Value Condition of Value: As of the effective date of the appraisal. Stabilized Stability of Property: The subject is considered vacant land. INTENDED USE OF THE APPRAISAL Decision-Making This appraisal assignment was requested by the named client for its sole use. No party, Intended Use: other than the named client, may use or rely upon any part of this report without the prior written authorization of both the named client and the appraiser. This report is not valid unless it contains the original signatures in blue ink. Any unauthorized third party relying upon any portion of this report does so at its own risk. Intended User: City of Elk River City of Elk River Attn:Amanda Othoudt Client: 13065 Orono Parkway Elk River, MN 55330 DATES OF APPRAISAL Effective Date: 7/21/2015 Inspection Date: 7/21/2015 Date of Report: 7/28/2015 2 Nagell Appraisal&Consulting 952-544-8966 1 www.callnagell.com SCOPE OF THE APPRAISAL REPORT USPAP defines Scope of Work as: The type and extent of research and analyses in an assignment. For each appraisal, appraisal review and appraisal consulting assignment, an appraiser must: 1) Identify the problem to be solved, 2) Determine and perform the scope of work necessary to develop credible assignment results; and 3) Disclose the scope of work in the report. 1) Provide a reasonably supported value opinion as it relates to the intended use & scope. Per assignment request (see addenda for engagement letter), the following degree of 2) research and analysis has been made. The narrative format used is an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 of USPAP. See individual approaches for further detail. The scope of work for this appraisal includes: • a) Property Identification: Public record, plat maps, zoning maps and aerial photographs were used to identify the subject property. • b) Property Inspection: A viewing of the subject property and neighborhood by the appraiser. Financial factors: The appraiser requested from the property representative income, rental and expense information on the property. Physical factors: The appraiser requested from the property representative building/site plans, and property issues. Based on property viewing and conversations with the client, city and county officials. Lot size is based on county information. Economic Factors: Consisted of gathering of information from market experts, city and/or county offices, and internet about the region, community, neighborhood, zoning, utilities, and any pending projects in the area that may affect the subject property. 3) • c) Extent of Data Researched: Sales data of competing properties within the subject market area were given primary consideration. The most relevant data is used in this report. Sources include, appraiser data files, assessor, internet, developers, agents, MLS, periodicals, in-office library, etc. In addition, during the course of appraisal practice and of this appraisal process, the appraiser has had ongoing discussions with market participants (buyers, sellers, property managers, real estate agents/brokers, appraisers, etc.) and/or viewed market data in relation to how the current real estate market may impact the subject value. The appraiser has not researched the title or ownership records. • d) Type and Extent of Analysis Applied at Opinions or Conclusions: An extensive review of market data was performed. The most recent, similar and proximate data has been used. The data used will be adjusted on a grid. Reasonable and appropriate collection, verification, analysis and viewing has been performed in the valuation approaches, given the purpose and intended use of the report. A final value opinion will be discussed and correlated. The data used was obtained from sources considered credible, yet its accuracy is not guaranteed. If found otherwise the value could differ. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 3 PROPERTY RIGHTS APPRAISED Real property ownership consists of a group of distinct rights. There are two primary property rights, Fee Simple and Leased Fee (as defined by The Appraisal of Real Estate, 13th Edition, Appraisal Institute). Fee Simple Interest: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Note: This would typically reflect an owner-occupied property. When the property rights appraised are the unencumbered fee simple interest of the real estate, the appraised value is subject to normal easements for drainage, public streets and utilities, if any. The effect of any existing mortgage or delinquent taxes on the subject property has not been considered in this appraisal. Leased Fee Interest: The ownership interest held by a lessor (landlord), which includes the right to the contract rent specified in the lease plus reversionary right when the lease expires. The lessor's interest in a property is considered a leased fee interest regardless of the duration of the lease, specified rent, the parties to the lease, or any of the terms in the lease contract. A leased property, even one with rent that is consistent with market rent, is appraised as a leased fee interest, not as a fee simple interest. Even if the rent of the lease terms are not consistent with market terms, the lease fee interest must be given special consideration and is appraised as a leased fee interest. (The Appraisal of Real Estate, 13th Edition, Page 114) The subject is vacant land. As such, the property rights appraised are the Fee Simple Interest of the real estate. PROPERTY COMPONENTS APPRAISED Real Estate: The appraised value includes the real estate value opinion. The methods utilized for the real estate valuation include: • Sales Comparison Approach FF&E: The appraised value does not include FF&E or personal property value. Business Value: The appraised value does not include business value. 4 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com IDENTIFICATION Address: NEC of Joplin & Business Ctr Dr Elk River, MN 55330 County: Sherburne PID: 751323101 & 755750010 Legal: Lengthy; See Addenda. Fee Owner: City of Elk River Interest Appraised: Fee Simple Report Type: Appraisal Report REAL ESTATE TAXES Taxes, per County Records Payable 2015 Payable 2016 Tax $0.00 N/A Tax Ratio 0.0% N/A Assessments, Fees, Other $0.00 N/A Total Tax&Assessments $0.00 N/A Delinquent Taxes None Noted Tax Grievance None Noted COUNTY ASSESSOR'S VALUE Payable 2015 Payable 2016 Land $71,900 $71,900 Building $0 $0 TOTAL $71,900 $71,900 $/SF (useable) $2.20 $2.20 The subject is tax exempt. The assessed value appears in line with the market given the property characteristics. Typical Tax Ratios by Property Type Commercial retail,office, industrial, hotel,other,etc. 1.5%-4.0% Residential multi-family, apartment,etc.) 0.9%-1.5% Single-family dwellings 0.8%-1.5% The appraised value given in this report assumes any/all special assessments, and/or liens are paid in full and that there are no delinquent taxes, deferred taxes, fees, payments, association dues, etc. Should it be found that any of these exist the amount should be deducted from the appraised value. Appraiser did not research these items; typically, a title search would reveal any of these. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 5 SUBJECT SALES & BUILDING HISTORY Listing History No listings for the subject property. Sale Price: N/A Sale Price/Acre: N/A Sale Date: N/A Buyer: N/A Sales History: Seller: N/A Terms: N/A Source: N/A No known or reported sales of the subject property within the past 3 years. Building History: None;the subject is vacant land. Lease History: None;the subject is vacant land. Leasehold Interest: None;the subject is vacant land. Association Dues: None;the subject is not part of a common interest community. 6 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com REGIONAL DATA Metro Area Minneapolis-Saint Paul is the most populous urban area in Minnesota, and is composed of 186 cities and townships. Built around the Mississippi, Minnesota and St. Croix rivers, the area is also nicknamed The Twin Cities for its two largest cities, Minneapolis and Saint Paul. Saint Paul is the second largest city in Minnesota, as well as the state capital. The area is part of a larger U.S. Census division named Minneapolis-St. Paul-Bloomington, MN- WI, the country's 16th-largest metropolitan area, composed of eleven counties in Minnesota and two counties in Wisconsin. This larger area, in turn, is enveloped in the U.S. Census combined statistical area called Minneapolis-St. Paul-St. Cloud, MN-WI with an estimated population of 3.5 million people in 2006, ranked the 13th most populous in the U.S. In both of the fully developed central cities--Minneapolis and St. Paul--the population has declined due to smaller household sizes, yet growth in other areas of their counties has been more than offsetting. Below is detailed where this growth has occurred: POPULATION Census Census Census Forecast Growth Growth County 1990 2000 2010 2015 2000-2010 2010-2015 total annual total annual Hennepin 1,032,431 1,116,200 1,152,425 1,165,830 3.3% 0.3% 1.2% 0.2% cu Ramsey 485,765 511,035 508,640 491,820 -0.5% -0.1% -3.3% -0.7% Dakota 275,227 355,904 398,552 437,520 12.0% 1.2% 9.8% 2.0% m' N Anoka 243,641 298,084 330,844 374,350 11.0% 1.1% 13.2% 2.6% 3 N Washington 145,896 201,130 238,136 257,760 18.4% 1.8% 1 8.2% 1.7% Scott 57,846 89,498 129,928 186,820 45.2% 4.5% 43.8% 8.8% Wright 68,710 89,986 124,700 159,640 38.6% 3.9% 28.0% 5.6% ci Carver 47,915 70,205 91,042 114,870 29.7% 3.0% 26.2% 5.2% Sherburne 41,945 64,417 88,499 119,040 37.4% 3.7% 34.5% 6.9% 0 Chisago 30,521 1 41,101 53,887 67,880 31.1% 3.1% 26.0% 5.2% Isanti 25,921 31,287 37,816 51,730 20.9% 2.1% 36.8% 7.4% Total 2,455,818 2,868,847 3,116,653 3,427,260 9.8% 1.0% 10.0% 2.0% Overall, the area has experienced moderate to good income growth. Annualized income growth of 2.5% to 3.5% is consistent with national averages. MEDIAN HOUSEHOLD INCOME Census Estimate Growth County 2000 2012 2000-2012 total annual Hennepin 51,711 63,559 22.91% 1.91% Ramsey 45,722 53,152 16.25% 1.35% m' N Dakota 61,863 73,288 18.47% 1.54% H Anoka 57,754 69,916 21.06% 1.76% Washington 66,305 80,747 21.78% 1.82% Scott 66,612 84,571 26.96% 2.25% ci Wright 53,945 70,930 31.49% 2.62% 2 Carver 1 65,540 1 83,275 27.06% 2.26% 0 Sherburne 57,014 72,041 26.36% 2.20% Chisago 52,012 66,592 28.03% 2.34% Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com 7 Regional Data -continued Economic Trends Interest rates for a typical 30-year residential mortgage are around 4-5%. Commercial rates are around 5-7%. Rates are expected to be relatively stable over the next year. The current state of the macro economy (international, national, state, etc.) is fair since its peak in 2006, with ongoing signs of stabilization. "The Great Recession" is considered to be over. However, recovery timing is uncertain, and could span several years. Some property types experienced significant decline, particularly special use, recreational, high-end and outlying development properties. Currently, most property types are experiencing relatively stable values. Certain market segments/areas are experiencing growth, particularly the multi-family residential market. Although well diversified, the TCMA and surrounding Minnesota economy is not immune to the recent soft/declining trends of the overall economy. Minnesota Index and U_S_ Index 17E1.0 165.0 160.0 � 155.0 150.0 145.0 140.0 135.0 -MN -tl,S_ 130.0 125.0 rn Source:Minnesota DEED Minnesota's index plunged along with the national index during the worst months of the recession but bottomed out earlier and dropped less than the national index. Minnesota's economy seems to be recovering at a similar rate as the national index. f • Economic The rerlional economic climate is boomina 5.0 5.3 21? 21.1 17.4 The regional economic climate is level 23.8 25.3 23.1 9.9 17.8 The regional economic climate is mode-ately positive 48.8 55.8 40.4 61.2 52.6 Tlieregiontal ec:onorniCclimaleis slagiidnl 10.0 3.2 1.9 0.7 1.5 The regional economic climate is weak 12.5 9.5 13.5 7.2 11.1 Source=CCIM Institute.NATIONAL ASSOCIATION OF REALTORS' 8 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Regional Data —continued TWIN CITIES LABOR FORCE, EMPLOYMENT UNEMPLOYMENT 0 EMPLOYMENT •LABOR FORCE ! UNEMPLOYMENT RATE L9 8 .2 &8 ___AW — 1.8 5-3 .3 1.75 14.8 A I 1.7 R 7� 3.4 3.0 — 0 w 11. 5 2 d ua 1.6 P CL Nov'04 wpe'05 Nov% Nov'07 Nov'OB faa+`09 NaV110 raov'11 Ncy'12 wN'I3 N(N'14 So+jrr'r+ngL-wa Nprtmcrm of Empcym m and ftommic-C'F**oDTe-- �Source: Northmarq July 2014 Over the past ten years, unemployment rates have gone from near historical lows in 1999 to at/near historical highs by year end 2009. Overall, unemployment has gradually decreased since 2009. Unemployment Rates 12.0 11.0 1{1.0 9.0 8. I IL0 7.0 6-0 em 5.t} 4.0 i'd 1 17% 11A L Ir WJVM� 3.0 h rl I I"A I 2.0 1.0 U.{1 (p M1 pp pp r N ['] lfY ib r� td di O r N M M iO fx M M O r N M L'] M M W M O N C2 xt L2 n n n n oo co 00 0o co m m oo m m rn rn m rn rn m m m rn m o 0 0 0 0 0 0 0 0 0 rn m rn rn rn m rn en en os m rn Fs rn Fn rn m rn F m m m rn m R 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 r r r r r r r r r r r r r r r r r r r r r r r r N N N N N N N N N N N N N N N N us Source:DEED LaborMarket Information Offce Minnesota Loco kee UnemploynnentStatistics f L4J$ The Minnesota unemployment rate is typically lower than the national rate Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 9 Regional Data —continued METROMULTI-FAMILY TWIN CITIES RENTANDVACANCY ■AVERAGE MONTHLY RENT •VACANCY 1,200 9 1,000 $1,007 -_ 8 7 800 — 6 600 5 1— Z 4 Q 400 3 Q 2.3% 7 Q 200 -- w O 1 � p w 0 1L. '04 05 '06 '07 108 109 '10 11 1 '12 113 14 �e•.M ara�er e Advi scrs "Source:Northmarq January 2015 After years of decline, multi-family rates are starting to stabilize somewhat. RETAIL ABSORPTION, • • ■ABSORPTION ■CONSTRUCTION •VACANCY 55 II 10.1 5 10 4.5 8.3 9 4 7.9 8 3.5 6.9 6.3 7 3 3.1 3.105.7 6 Z 2.90 O 2.5 5 J 2.04 J 2 4 Z Z - 1.5 I. 3 d LU 0.93 I E U LU I 074 2 7 Lu 5 O.0 051 I I— � 0.17 0.18 Z LU Q p 0 U CY (0.05) � cn (S) (0.20) (1) wct 104 105 '06 '07 108 109 110 '1 1 '12 13 '14 Sc�r�e:Cls a- 1J 01eld `Source:Northmarq January 2015 After years of decline, retail rates are starting to stabilize somewhat. 10 Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com Regional Data -continued OFFICE ABSORPTION, • • AND VACANCY ■ABSORPTION ■CONSTRUCTION i VACANCY 5 18:3 196 _ 19.9 20 18.0 17.4 16.1 15.2 15.2 15.9 16.6 4 Ib Z 3 12 O J Z 2 8 1.47 1 35 Z 0.95 0.97 4 Q �' I ?3 0.I b 0.33 0.48 0.62 U � 0.52 0.18 0.52 0.27 Q LL 0 0.00 0.00 0.02 0.00 E 0.00 0 LU {015) {0.00) Z Lii (I) (4) U CLU Y {1.83) (8) '04 105 '06 '07 08 109 '10 '1 1 '12 '13 '14 &N kefield l Nortl N[ - "Source: Northmarq January 2015 Office vacancy is still the highest of the four major building sectors. New construction is typically limited when vacancy is over 10%. Although current vacancy is high, vacancy has been gradually trending downward over the past four years. INDUSTRIAL ABSORPTION, • • ANDVACANCY ■ABSORPTION ■CONSTRUCTION •VACANCY 5 20 Ib.4 16.1 4 15.6 177, 15.2 16 13.2 12.9 128 11.8 12.a 3 2.52 9 12 v, 2.16 Z 2 1..92 O 1.24 1.09 9 1.04 1.01 0.61 - 4 ~ 0.43 0.27 0.30 Z 0.04 0.00 0.00 0 Q 0 J Ld � Q � (1) 7Fj (4) � Lu Z Q (2) (8) U d ( (2.38) (12) 3) '04 105 '06 '07 08 109 0 '1 1 '12 '13 '14 Source. _c ar&Wakefield!NorthMarq "Source: Northmarq January 2015 The industrial market continues to show signs of recovery with the larger drop in vacancy of the four major building sectors. The vacancy rate is sub-10%, which has been met with increasing new construction around the Twin Cities Metro Area. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 11 Regional Data —continued SALIESVOLUMEAND CAPITALIZATION F • Twin Cities Office,Industrial, Retail Properties M MARKETHOLUME s CAP RATE $5 11 $45 103 S4- 10 $33 43 $3 7 ..9 V5 $2.5 8.4 8.2 8S Z $2 7 7.8 B J 755 J $IS 1 - 7.3 7.3 75 7.0 W $1 6.7 -46 - 7 z $OS 6.5 d $0 6 rL JUNE'04 JUNE'05 JUNEW JUNE'07 JUNE'08 JUNE'09 "U"E'ID JUNE'!I JUNE'17 JUNE'13 JUNE'14 %rad�xsl ArW t,s Im In general and for most properties types, capitalization rates have been steadily declining since 2010. Recent data is showing stabilizing rates. The Twin Cities commercial real estate market enjoyed continued success in first half 2014 as the vacancy rate remained stable at 11.8%, which is equal to pre-recession levels. Further, the market recorded 384,000 SF of positive absorption, pushing activity into the next- tier cities for land, residential and industrial sectors. Commercial real estate investors are increasingly coming to the Twin Cities in search of yields higher than those available in larger, more expensive top tier markets. Investor demand in the Twin Cities continues to chase multiple offerings in the market. The most in demand product types include class A core office buildings in downtown Minneapolis and select suburban locations. Capital is also chasing apartment properties, grocery-anchored retail centers and modern industrial distribution buildings with minimal office finish. Outlook: The U.S. economy added 288,000 jobs in June, making it the fifth consecutive month that employment growth has exceeded 200,000. This marks the first time since 1999- 2000 that the U.S. economy has generated such sustained strong job growth. This is great news for the commercial real estate sector. More than 2.9 msf of space is expected to be added to the overall market in second-half 2014 thanks to multiple industrial, medical office and retail projects currently under construction coming on line. If the majority of the completion dates are met, the Twin Cities will enjoy its highest historical construction level since 2007. Source: The Compass, Northmarq, July 2014 12 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Regional Data —continued 2414 Annual Report on the Twin Cities Housing Market QUiGk Facts MINNEAv4LIT AREA A,So[ialion FlonkilgsimIudo geogrsFieawrdi i5mIK or more.CLutbs,frwnft6and hinrlcerwlis ncigttcrtwods we rmtincludod. l REA LTO RS' New Listings I Pending Sales 52.915 68.884 7`'.':_:- _. .-: 49,360 49••,510 x5,910 42.059 39.193 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 TDp5 Areas-Change in New Lisdngs from 2415 Top 5Awn:Change in Pending Sales iron 2013 Saint Francis z 81.5% Arnbrota +61.1% OeIhVood +53.856 Circle Pines +53.0% Zumbrota +46.796 Li3ydala +40.996 Watertown +4x:156 Newport +38.246 Tonka Bay +44.7% Wayzata +34.2% Button 5 Areas:Mange in New Listings from 2013 Battem 5 Areas:Change in Pending Sales iron 2013 Lauderdale -222% Long Lake -37.5% Saint Bonifacius -23-6% Greenfield 40.546 Loretta -33-3% Spring Park 47.1346 Stacy -37.3% Grant -57.1% assert -426% Lauderdale -80.846 Closed Sales Inventory of Homes for Sale At the end of the yees 5315 22,575 4x,914 41}.541 38,287 41.9ox 17,472 13.050 12.748 11.x&22 -22-416 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Tap 5 Areas:Change in Closed Sales tram 2013 Top 5 Areas:Change in Holes for Salo from 2013 Wayzata +37.746 Excelsicr +250.09x' Maple Lake +33.91/. Lauderdale +100.0% Zumbrota +29.546 —or ka�ay +80.046 Circle Pines +27.89/. Spring Park +75.046 Mayer +22.246 Sion ng Lake Park +83.6% Button 5 Areas Change in Closed Sales fron 2013 Bottum 5 Areas Change ht gemos far Sale from 2013 Lakeland -35.4% Ztrrlbrota -44.93:: Marina on St.Croix -3a1% Satire Paul-Wcgt Seventh -46.2% Lauderdale -41.9% Stacy -51.8% Greenfield -44-7% Saint Paul-Como Park 53.8% Spdng Pads -52246 Minneapolis-Phillips -(19.294 C.,,t 2IMMdid®1—narraderML&laarercdby 1OK Aesearch"Ming. 3 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 13 Regional Data —continued 20141 Annual Report on Vie Twin Cities Housing Markt Quick Facts MINNEAPOLIS AREA Assodaiium lanki}gs rdude geograx es ms-,h 15�a1w.or more.Umbes•tow E ps snd Mnn�apoIisr&gNxd*Ddeare notineluded. �f REALTORS' Median Sales Price A {overage Sales Price $192,000 $205.739 $236285 $252,6A=. 51�9.9�7fY $147,9[9(9 $211,338 $.193.341 $210.726 $A 50,000 2010 2011 2012 2413 2014 2010 2011 2012 2013 2414 Tug 5 Areae Change in Median Sales Price from 2013 Top 6Arsas:Change in Avg.Sales Price from 2413 Wayzata +60.3% Wayzata -48.3% Spring Park +63.796 Lilydale -47.6% Dollwood +50.7% Greenfield -43.6% Cologne +44.996 6ellwood +42.6% Greertfeld +41.5% Lakeland +40.0% Bottom 5 Areas:Change in Median Sales Puce from 2013 Button 5 Areas:Change in Avg.Sales Prins trum 2013 Arden Hills -1&1% GrocmNrod 12.8% Greemv4od -1&996 Loretto 14.596 Dayton -24.3% &orowoed -15.896 Loretto -21.596 aaephaven 16.8% Lauderdale -32.7% Lauderdale -17.2% Cumulative Days on Market Until Salle Percent of Original List Price Received 647 `- 95.7% 949 A 3C1 117 92.3%83 78 -1% +3896 .2296 :. 2WO 2011 2012 2413 2014 2010 2011 2012 2013 2014 Tog 5 Aram Change in Cumulative Days on Markel from 2063 Top 5Areas:Change in PCL of Ong.Price Received from 2013 airchwood Village +74.1% Marine on St.Croix -13.695 Dayton +22.2% BirohwoodVllage +5:9x5 Saint Paul-StmmitHill +16.596 Norwood YoungAn2rica +5.2% Careoran -13.696 Bayport +4.0% Paribault -12.756 Osseo +3.845 Bottom 5 Aram Change in Cumulative Days an Markel from XIS Button 5Areoit Changa it Pee of Orig_Price Rec*d from 2063 Mayor -49-0% 1 owth10rt -3.7% OSsw -40.4% Laudecdala -3.6% Lake Elmo -49-5% C*ato -5.195 :�ognrs -50.8% Excelsior -5.3% :ockford -61.4% Grant -6.6% 0--t-d.�,yy e,2015.M dotle ern 1,.t..rML&Powered by 1 On P--h and Mario n 14 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Regional Data —continued 2914 Annual Report on the Twin Cities Housing Market Property Type Review 'IFt gLIS AREA R€setlel or lianac�.gs,rcluda gmgmPacs a-h 16mi cr maE LCULCa,mw m,x and hfnr pnlis r>AHMmodnare notinducted. -f REALTORS Top Areas:Townhouse-Und®Attached Market Share in 2014 81 f Twin C ias RegiIm 24496 f Minneapolis-Central 99-9% Saint Paul-Downtown 97-696 Average Cumulative Days on Average Cumulative Days on Lilydale a9-756 Market SinglL�Family Market Townhouse-Cando Minneapolis-University 75.1% Hugo 55.4% SprDays on Market Until Sale Mi ng Park 54 Cumulative Da Y M��-..:: :-= II as 54..3563% Thad...—r 1dnq 12-reonth v ge[a h dm paie. M.-.--_�,_ :- )Gun-Isle 5i 556 �5&yle-F.rrr —icrx m—C-16 LL.:::--J31a 5o-496 ,m Salr:.maul-St Arit"Pad[ 48-496 I l I I Wayzata 48-496 m --t— -- ---t----t---- Apple Valley 44-496 Vadnais Heights 43.7% Hopkins 42.7% SaimPaul-Summit-University 42-756 Little Canada 41-596 m ---- ----�-- - ----- Inver Grove Heights 41596 I I Burnsville 41.0% ---- ---- -----� --�---- Oakdale 40.5% m I I I Woodbury 40-496 I I Maple Grove 4o-a% m ---- ---- ---- -- Eden Prairie 2969G Y �— r— I I I Rowninou rr 38.3% I I I Chart m s-i- 37396 i-win 1-011 1-2512 1-mg 1-MIA Eagan 37.5% + 6.6% + 8.2% 9J.6�"lfv 196.0'°10 Orte-Year Change in Price one-Year Change in Price Pct.of Ong.Price Received Pct.of Ong.Price Received Singla-Family Detached Townhouse-Condo Attached Single.Family Detached Tmnhouse-Cortin Attached Median Sales Price Percent of Original List Price Received. E2010 02011 m2012 m2613 ■2314 r_�na m3611 m2]12 X2013■2615 S=K 969% 32t7K 92.r•# 9'..7 -..... ...z.. 51.3.1E oe-,m 56.3% 3187K85216' ;MK 1ir671L 31e8K 1 1'k'K11 514 16 Sr13K3125K� 11 Single-Family Detached Townhouse-Condo Attached Single-Family Detached Townhouse-CondoAttached cursrt�d.r.,Jery 5,2RP15.ew ddn herr,rt�y�o:;:-., :_r 1 nK a�drsh„d r.�ert,�c�,; Nagell Appraisal&Consulting 952-544-8966 1 www.callnagell.com 15 Regional Data —continued 2014 Ann uaI Report on the Twin Cites Housing Market Distressed Homes Review M INNEAPOUS AREA.A-6I— la o ro s r.-133.}--q Vr K-n x r _-n if-um e res &,O hl�s-y-_MrnespDiIs m4yr8atrDow.3rew lnd"J f REALTORS' Top Ames:Uistrwwd Market Share in 2414 15.5% - 41 .8% Saaint P -Daaygt'onn's Bluff $1A stecy 34.4% Percent of Closed Sales in Cw*-Veer Change in Sales or Suint Paul-Thomas-Dale 34.D% 3094 That were Distressed ©istsssed Properties Rush City 32.896 Spring Lake Park 31.996 Seim,Paul-Payne-Phalan 31296 Percent of Sales That Were distressed Mira 31.0% m Minneapolis-Caden. 31.fl96 Brooklyn Center 30.996 BC AY Marine on St.Crom 30.8% 47.9% Saint Paul-+'eater Eam Side 30.896 Princeton 29.$96 Saint Paul-Banle Creek 1 Higkma d 29.896 Saint Paul-North End I South Como 29.1% Minneapolis-Near Nonh 29.0% 3B: Greenfield 28.6% 0EIERO 28.13% 14.596 Pine City 28.6% Saint Francis 28.896 Altertuille 28.4% North Branch 27.9% Harr.nxd 27.9% INS South Saint Paul 27A% 2010 2011 2012 2013 2014 Newport 27.9% Lots&-& 27.096 + 37.2% + 10.5% + 17.0% + 27.4% Foix-Year Change in Price Four-Year Change in Price FCur-'Year Change in Prise Four-Year Change in Rice All Ftopertiea Traditional Propubes Shan Sales Foreclusures Median Sales Price m20r, ■2012 .2013 ■2014 V--on.aw Kul," 9164." $181.806ilil[i F132 W $137A25 5115800 t6.5% I it Traditional Short Saks Foreclosures 16 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Regional Data —continued 2014Ann uaI Report on the Tinrin Cities Housing Market New Construction Review MIt1NEARgtIS AREA A550-6,n- ramlrm.n iuce NDT:pnk:wm l i sj-i x.-mre.1.;,rru2€Iunrincs ax Mi-nespoiE mwdurxss are nm innumv =7 R E A LTO R S` Top Areas_New Construction Market Share in 2414 Aar '10 1D Twin Cities Region bled re 38.1968.1% Hanover 35.3% Peak ce Drop in New f rcbm 45ctca E 33.3% New Ccnstructicn Inventory Inventory from Paek Colo 30.8% Chisago 29.7% cuega 29.5% North New Construction Hames for Sale Rogers 24.3396% ala 26. R oak trove 22.996 Delano 21.11% Minneapolia-Central 20.896 Blaine 20.9% 2:399 I -1_— -�--- Elko New Umket 19.7% IBWport 19.5% --- - I Oayzingcrt 19.496 �� r---i----t----i-- Minnetriste 16.096 I I Monticello 17.7% 1,999 —�---- ---- Lakeville 17.1% I I woo&ury 16.5% Stacy 16A% ---�-- hum 15.596 Ramsey 15.1% North Brench 14A% s90 I Greenfield 14.2% 13om 1-Ym1 113"2 1-mia 13014 Ham Lake 13.6% .6 2.6 100.2% 95.3% Yemr-End Mancha Supply Year-Erd Months Supoi Pct.of Drig.Noe Received Pct.c!Cry.Price Received New Consiruclicn Previously Owned New Constuction Previously Owned MI itIiS Supply of Ilnventory Percent of Original List Price Received -r}c.crarl..:..s noseca 12. -h a R rn m.A p[NL N0019 02911 2012 E2913®2044 �pLyy GalEit1167ar1 �PdYMalG/f� 8.1 7A 7.2 ms fS� 5.3 53 vas 3.0 v,pc ars Now Consbuction PrBMID my OwrmdDamm ami ria 1�® ami c'taranl�cr Jevaay 4.2915.Al�m Txn Mrtltcieill&.Fcvnarad tilt 1011 reas�rr.ae�tl MaYs9rtg. ? Nagell Appraisal&Consulting 952-544-8966 www.callnagell.com 17 REGIONAL MAP Location Map _ 4 West Lake Francis Shores North Branch g5 5 Oxlip ° Is nti 5 Qranc Bodum 10 Weber I S A I $ Orrock 4 Crown 47 $ 12 14 H E R B U E ........... ..... ........ ...+...............!.... 30 CHISAG 20 11 169 72 ethel 76 Sta 5 70 28 Lin 651 ' 15 Franci East B hel 85 Chisago City Salida 1 SUBJECT j 74 Li c 75 25 Oa Gr ve Wyomi a ile 13 88 24 icello iver Cedar 22 81 J 8 7 58 ° 39 sego 5 78 — 18 f g3 A r 17 orest Lake 82 Candia 37 R H T 56 ¢Ramse am Lake 19 97 Albertvil 101 $ AMd01le 23 ,. 5 3 St.Michael¢ _ 144 4' Ana i 242 116 14 Ln 4 Da 35 R s, 10 Hanover amplin° 12 pt enter I Circ ugo 55 117 116 81 121 ( Pi21 8A 20 30 Qsseo Brooklyn blain 7 10 T al rk Park gI 1 4}ite BW'- j5� 11 ockfor 50 Cor ran 252 Lake Park Qeach 19 109 o V_ Maple Gro►re oremew eighton ° Fridley ° "White Bear L 96 12 Brooklyn Center Hilltop Vadnais He hts 12 `J 92 ew Brighton ° a Pa 9" Loretto 55 New Hope Crystal ' bDe]ano <-�v, 90 Maple PlyH th ° ° 47 Riose►iille 6' Ind�pen en Plain ,-t ° ° North St.Paul WASHINGTON H E N N E P I rd Golden Lauderdale: Falcon 6 ono Valley Heights 30 Maplewood . Lyndale' Ong Lake Wayzata ° 40 (D ° 65 Saga Hill Woodland 100 Minneapolis St Paul O 24 15, Minnetonka ° 48 Mound a Spring Park ° St.Louis Landfall Minuet istaU Hopkins Park �� ` " o dbu Tonka Bay- . West St:.Pau4. f, Deephaven 169 Shorewood,. .i4E Qel�ior 50 Edina 35 Lilydale 212 62 °Richfield .' 14 South St Pa I 18 Maple`71 11 Mendota Eden Prairie 13 Heights 52 New+po Victoria Chanhassen 5 ° C 55 St.Paul Park 10 43 41 101 1 77 10 o r 95 28a °` ...Bloomington :' E gaper Grove H- . nal re r oat C A `-'� N .t ', Benton 140 ° o ee 0& 32 71 ` Dahlgren"—� 118 Burnsville 13 fipple 3 f Carv` 15 11 i 13 42 Valley f Hastings....: 53 14 17 semou i— GothaDO 40 45 j pring keq ke Coates 5olitf7 k 46 31 48 91 1 27 23 D A K O A g5 47 52 S T 2 1 5 81 erm on Jardarr 61 �zxuirc Cep+rt River 66 Emp re 18 Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com CITY& NEIGHBORHOOD DESCRIPTION Type of Neighborhood: Outlying Northwestern Suburban Community Percent Built-Up: 60% Developed Stage of Development: Stable Subject Neighborhood: City Limits Major Transportation: Highway 169/101, US Highway 10 Single Family Residential 45% Two- & Multi-Family 5% Commercial/Industrial 10% Predominant Type & Conformity: Other/Vacant Land 40% Total 100% Average Conformity Reputation of the Area: Average Typical Property Age: New to 65 + Years; Predominant Under 20 Years Single-Family Home Sales: $100,000 to $400,000+ Apartment Sales: $30,000 to $75,000+ per Unit Office Property Sales: $40.00 to $150.00+ per SF Retail Property Sales: $75.00 to $200.00 + per SF Industrial Property Sales: $30.00 to $100.00+ per SF Capitalization Rates: 8% to 12% Historic Detrimental Influences: No Major Apparent Comments: The subject is located in Elk River, which is an outer-ring suburban community about 45 minutes northwest of Downtown Minneapolis. Due to the expanding Metro Area, the city experienced significant commercial, industrial and residential growth from 2000-2008. However, due to declining economy, rising gas prices, and an oversupply of residential and commercial properties, outer-suburban communities, including Elk River, experienced significant drops in property values. The Northstar Commuter Rail, a commuter train that connects the Northwest Suburban Community (beginning in Big Lake) to Downtown Minneapolis, runs through the city. Most major shopping is within the city. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 19 City & Neighborhood Description -- continued Subject County & City: The subject is located in Elk River, which is in the southern portion of Sherburne County. City Data c Population in 2x13: 23,447 (82% urban, 18% rural;,. PDpulaticn change since 20x0: +42.6% ca Q Males: 11.702 (49.9%) a° Females: 11,745 (50.1%) Q 0 Estimated median house or condo value in 2013: $105,526 (it was $146,000 in 2000) Elk River: 5106,526 MN: 5180,100 as Unemployment in June 2014: Here: 4.6% Minnesota: 4.6% Unemployment by year{' ) y 10 Q 0 CL E Source:City-Data 20 Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com City & Neighborhood Description -- continued Home Sales in Elk River, MN cores Priee 500 S2av,00o 450 A $180,000 400 S160,000 350 — $140,000 CauN of 300 — $120,000 How Solea 250 — — $100,000 Pef Ommler 200— — — — — — — 580,000 150—I— - - — - - - - - - - — — 560,000 100- - - - — - - - - — - - - - - - - - - — - - — -$4t1,000 � 50— — — — — — — — — — — — — — — — — — — — — — —520,000 Med"Price N 0 SO ry 41 4243 44 41 42 4344 41 4243 4441 42 4344 41 42 43 4441 42 43 C 2009 2010 2011 2012 2013 2014 ■,. 2 ca E Single-family new house construction building permits: Q 1997-219 buildings,average cost:$109,500 a 1998-223 buildings,average cost:$126,600 0 1999-204 buildings,average cost:$125,000 • 2000-230 buildings,average cost:$142,900 IM 2001-178 buildings,average cost:$182,100 • 2002-252 buildings,average cost:$177,900 • 2003:542 buildings,average cost:$159,500 • 2004-546 buildings,average cost:$174,800 • 2005-344 buildings,average cost:$166,000 • 2006-250 buildings,average cost:$182,200 • 2007-113 buildings,average cost:$170,100 • 2008-24 buildings,average cost:$175,500 • 2009:20 buildings,average cost:$187,300 • 2010:15 buildings,average cost:$205,900 • 2011:10 buildings,average cost:$226,400 • 2012:36 buildings,average cost:$183,000 Comments: Home sale prices are on the rise. Although gradual, the number of new construction building permits is also increasing. m d •y CollegelUniversity in Elk River: L • Minnesota School of Business-Elk River 0(Full-time enrollment:104,Location:11580 193rd Ave NW;Private,for-profit,Website:elkriver.msbcollege.edu!) d •� Collegesluniversities with over 2000 students nearest to Elk River:Anoka-Ramsey Community College(about 16 miles.Coon Rapids,MN;Full-time enrollment_4,104) Hennepin Technical College(about 18 miles;Brooklyn Park,MN,FT enrollment 2,552) 06 North Hennepin Community College(about 18 miles,Brooklyn Park,MN;FT enrollment:2,985) W Bethel University(about 28 miles;Saint Paul,MN;FT enrollment:3,411) Q Northwestern College(about 28 miles;Saint Paul,MN;FT enrollment_2,046) Minneapolis Community and Technical College{about 28 miles;Minneapolis,MN;FT enrollment:4,477) y Capella University(about 29 miles,Minneapolis,MN;FT enrollment 2;361) O U Source:City-Data Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 21 NEIGHBORHOOD MAP Location Map d 186th Ave NW �f+jp "gSm Ln 90 Orono Pa+ Jolpin Rd 10 b: rD yr � �Jp� 6 Westbound Liquor Store Elk River YMCA ■ 1�~r u Orono Rd NMI a Metal Craft Machine ■ Eiusires u� 8 Engineering,Inc Subway Z4_ 7�PfOr NW Faribault food ti Slrerburrw County Fair ■ 7- z c CL 183rd Ave NW ®<° Pkwy NW �aLn t� 183rd I� Country Crossings Park 2 c 0 �8? 0 z x r 182nc �4q� a = N m Fresno Parl ~r �° to S z -n u"h Avp Nti^; Z. — a 22 Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com MARKET CONDITIONS OVERVIEW Market Listings Location SF List Date List Price $/SF Hwy 10 & 171st, Elk River 43,560 May-15 $259,000 $5.95 Elk Comments: Commercial lot with frontage along US Highway 10. Access to city sewer and water. \000(Business Center Dr, 264,845 Current $397,777 $1.50 Elk River Comments: Nearby lot--larger site. City sewer and water available. Zoned commercial. Fronts on US Highway 10. )0=Main Avenue NE, Albertville 21,780 Current $80,000 $3.67 Comments: Small commercial lot with access to city sewer and water. Development Land Market Development Land Sales: $0.50 to $5.00 plus per SF Commercial Building Sales: $50 to $125 plus per SF Market Balance Market Area: 7-County Metro, Wright & Sherburne Counties Scope: Commercial Lots (0 to 2 acres) Supply: 80 Listings (MLS) Demand: 19 2014 Sales (MLS) Market Balance: 4.2 Year Supply Over Supply Market Participant Comments&Observations In general, raw(development)land value spiked up significantly between 2000 and 2007. However, in 2007 to 2010, the market was correcting for atypical increases. Development costs remained somewhat stable as costs for raw materials for construction were increasing and labor costs were declining. Demand for land in closer-in communities (Plymouth, Maple Grove, Chanhassen, Woodbury, Blaine, Lakeville, etc.)is average to good. Demand continues to be soft in more outlying locations closer to the development fringe (Albertville, Otsego, Lino Lakes, Elko/New Market, Ramsey, etc.). Due to the availability of land in secondary locations, demand is much slower to recover. Demand continues to be highly variable depending upon use and location. Demand for office land is generally fair in the subject location and across the TCMA. Demand for retail and industrial land has shown improvement in recent months, and is considered average. Overall Market Condition: Somewhat Stable Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 23 Subject Market Overview -- continued • LAND e Land Market Driven by Industrial Users as Residential Cools Throughout 2014,residential and bulk distribution facilities.Developers United Properties purchased 22 acres industrial uses were the primary drivers are now being forced to expand of land in Maple Grove for a planned of activity in the Twin Cities land geographically in their search for 320,000-sf building. market.Specialty users,like hotels and potential sites,including cities like . wurth Adams purchased IS acres of automotive,are also actively purchasing Shakopee,Lakeville,Rosemount,and land in Brooklyn Park for a planned well-located sites as the strengthening Lake Elmo to name a few. 165,000-sf building, economy translates into increased tourism and car sales.Other land uses, Knowing how strong demand is,cities • United Properties purchased 36 such as office and agriculture,have gone have eased their requirements.Some acres of land in Brooklyn Park for a quiet.Overall,though,it was a very cities now requiring a lower percentage planned redevelopment. productive year, of office finish,especially in cities like Scannell Properties purchased 76 Maple Grove,Arden Hills and Brooklyn acres of land in Rogers for a new INDUSTRIAL Park.The demand is pushing buyers to industrial park. The market saw a sharp increase put hard money into deals. Liberty Property Trust purchased In speculative land purchases by 24 acres of land in Dayton for a developers.The Northwest market is Some notable industrial Pard sale 240,000-sf distribution budding, driving activity due to its connection to transactions in second-half 2014 currently under construction,and an the interstate and high concentration included the following additional 80,000-sf building. of potential employees for industrial Roberts Management Group businesses.Most of the premier sites purchased 27 acres of land in Arden Several large space users are looking for have already been taken,mainly for Mills for a planned business park. 500,000 to 2,000,000 sf of industrial space.A requirement ofthis size is expected to drive more activity in TRANSACTIONSLAND NOTABLE INDUSTRIAL LAND • • the land market since few options of that size are available in the current Rotas inventory.It is anticipated that at least DAYTON half of these users could successfully acquire sites,which would drive up eio industrial land prices across the metro. _ O SSEO RESIDENTIAL BROOKLYN Residential land sales were strong PARK in the second half,but the end of MAPLE 169. increasingresidential values is near. GROVE ® Single-family developers have slowed r their plans significantly.Some are r N trying to renegotiate pricing for deals that they put under contract 6-12 Submarket reports available at www.northmargcompass.corn ,111116 CUSHMAN& NORTHMAR4 4;� WAKEFIELD 24 Nagell Appraisal&Consulting 952-544-8966 www.callnagell.com Subject Market Overview -- continued Helping You Navigate Today's Commercial Real Estate Market THE COMPASS f JANUARY 2015 months ago by almost 30%.Land paying a premium for the"A'areas OUTLOOK values have come down as things have in the Twin Cities market.Some of In 2015,land sales for industrial users slowed.With the significant increase these areas include Robert Street are expected to remain strong.More In construction costs but lack of home in Inver Grove Heights,Brooklyn speculative industrial projects are price increases,developers are cautious. Boulevard Brooklyn Center,along anticipated,and land sales activity While development in the"A'markets I-394 in Minnetonka and St.Louis Park, will likely accelerate outside ofthe is expected to continue,the majority and along 1-494 in Bloomington.For Northwest market.In comparison, of single-family land is expected to be example,Kia will open a new 26,000- developers are more cautious on stagnant until spring. sf dealership in St.Louis Park along the residential side.Values for both 1-394 next summer.If dealerships multi-family and single-family land have In comparison,the multi-family are not pursuing new sites,they are plateaued,and many developers will market has been at full throttle with expanding on their existing sites.This wait until the Parade of Homes in the approximately 5,000 units delivered is the case with Richfield Bloomington spring to see what demand there is. In 2014—the highest concentration of Honda,where construction is which have been in the North Loop underway on a 160,000-sf expansion and Uptown areas of Minneapolis at its location on 77th Street between and the West End area in St.Louis Nicollet and Penn avenues. Park.Rents are good and leasing is strong,but build costs and deal costs HOTEL are high for developers.Most believe In the"A"areas,hotel chains and there is still more room for growth in investors are aggressively pursuing stronger suburban communities like sites.Occupancy levels and average Woodbury,Maple Grove,Eden Prairie daily rates are up across the metro. and Plymouth. One example that demonstrates the strength of the Twin Cities market is Overall,the residential land sector is the entrance of Value Place,the largest forecast to recalibrate in 2015,but economy extended-stay hotel chain in select deals in well-located markets will the United States.The Wichita,Kansas- continue as planned. based chain is pursuing a few sites in the Twin Cities metro. AGRICULTURAL The market saw few land sales for MEDICAL OFFICE agriculture use in second-half 2014, The land market for medical office With the limited sales,most buyers properties has been active in pockets were neighbors of adjacent farms. throughout the metro,Parcels sold in Values continue to decline—by 5-10%in several communities,including Maple the past year,The price for agricultural Grove,Lakeville Woodbury,Plymouth land is tied to commodity prices,which and the Mirneapolis CBD as the major declined significantly in 2014.As a result, healthcare providers and other private land values have trended down. practices position to open sites closer to their patients.One example is of�CUSHMAM6 AUTOMOTIVE Park Niccilet closing on a site In The t•r WAKEFIELD, NQRTHMaRq Building on the momentum from first- Grove,Ryan Companies'mixed-use 3500 American Blvd W,Suite 200 half 2014,land sales for automotive development off 1-94 and Maple Grove Minneapolis,MN 55431 use continue to be active in the Twin Parkway in Maple Grove,across from 952.831.1000 Cities market Auto dealerships are the Maple Grove Hospital. info@cushwakenm.com www.cushwakenm.com ISGWM€AThis report was crcarcd by Cwhman&VJakef Id hWrthMarq evperts us,ng Twm Crtks rornmercia�prolxrty data from the ion soe momhs of 2014 The tlata used forth¢rep—has heen oba ed from wu es which we deem relit able.Whie eery elPor2 Fns been made w reparc accura[e data Cushman&Wakefie:a I NorlhMlarq eannotguaaantee me acaracy ofths mvrket yart Furti,ernvrc.we cannot assume responsmJrty for amY omss�m Mdata wh¢h may ottur.h a ourntem to pro-hde the beet posse nformmion mgarding etre off e,mwstrial,hand,2tail,multi-Wrvy.and evest,rdvet mvkets whiff�eeamg Me reahrthe espttair of tl e o f avon holo e u g h ¢port kr trwiness aMlarf a de io The Compass eatom mdeom nrrmation kr muld,e mo9tee.'indusval and-al projects greater than 20000 sa it and n.,,t"i for em pvnpe,wes.Nat mcs,�M are owner-occuped g>verranem or 4nge-tcnam baiidieV Not au inhrma and mst[r we've colktt d wn be published in any gin wlu Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 25 SITE DESCRIPTION Dimensions: Irregular; See Plat Useable Site Size (est.): SF: 32,670 Acres: 0.75 Non-Useable Site Size (est.): SF: 70,567 Acres: 1.62 Gross Site Size (per county): SF: 103,237 Acres: 2.37 Topography/Shape /Low: Nbstly Level/Very Irregular/Yes Soil Conditions/Drainage: Assumed Stable in Upland Areas/Appears Average Utilities: Electricity/Gas Assumed Available Water/Sanitary Sewer Assumed Available Off-Site Improvements: Street/Curb/Gutter: Bituminous/Concrete/Concrete Sidemalk/Alley: Concrete/None Street Lights: Standard Storm Sewer: Storm Access to Site: Assumed Average Frontage: Joplin&Business Center Drive Ingress/Egress: Average Visibility/Exposure: Above Average (although no direct frontage, the subject site has visibility/exposure to US Highway 10) Flood Hazard Zone: Appears No; See Flood IVlap Apparent Easements: Typical Utility&Drainage, Access Easement Encroachments/Conditions: None Apparent Use: Commercial Land Building Improvements: None N: Commercial, US Highway 10 Surrounding Uses: S: Sherburne County Fairgrounds E: Business Park W: Commercial Distance to Major Road: The subject is located 1 lot south of US Highway 10. Comments:The subject is located just south of the US Highway 10/Joplin Street intersection. Although no direct frontage,the site has visibility/exposure from US Highway 10. Due to a recent road realignment project,the subject is very irregularly shaped and includes a large amount of ROW, overhead powerline easement and low area. The useable site area is estimated to be around 0.75 acres or 32,670 SF. If found to be otherwise,value could differ. The subject is city-owned. The owner is in the process of assembling the subject site with an adjacent property to the north,which is state-owned. The city also indicated that adjacent strips of land located north of the site will likely be vacated to the subject site in the future. Appraised value does not consider the future assemblage and/or vacation. Appraised value reflects the subject site as-is. Although no formal access easement exists,the gas station/c-store to the north has an access driveway across the subject property. Not considered adverse. Value assumes the continuation of the existing access arrangement now and into the future. 26 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com ZONING BP, Business Park I j ' L R4 AYE C 1 D� E PARK LAKE 165th A COY PC PRif` pD3 O ONO TER OR pAv= fl S Wam=MER on ANO:.R ypK6 AT�iLETI TY CCMLE co��sIN ca CRQ jpfis nur.or a 8��,,prER _ AT OA{SAVANNA.kkIAll L 11Z I Purpose (a) Purpose. (1) The business park district is established to encourage a planned,integrated environment for certain industrial,office,and commercial uses,which are compatible with and complement each other as well as the surrounding land uses.The underlying land use designation within the district may vary and may be either light industrial or highway business.Development within the business park district will correspond with the land use designation,Industrial and office uses are allowed where the land use designation is light industrial,and commercial uses are allowed where the land use designation Is highway business. (2) It is the intent of this section that development reflect common themes using compatible architectural design and consistency in signage,landscaping and lighting.It is also the intent to encourage businesses,which generate a high number ofjobs per square foot rather than predominantly warehouse type uses Permitted Uses Light manufacturing, R&D labs, business/professional offices,warehouse, showroom, etc. Site Requirements Minimum Lot Size =43,560 SF Minimum Lot Width = N/A Parking Parking requirements vary with use. Land Use Plan The subject is guided commercial. Comments The subject is currently zoned business park. However, given the subject's proximity and visibility to US Highway 10, surrounding uses, small site size and land use plan designation of commercial, a commercial use appears more likely. Current Use Permitted? Yes Zoning Change Applied For? None Reported Zoning Variance Applied For? None Reported Source:City of Elk River Zoning Code,Zoning Map and Land Use Map. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 27 FLOOD MAP Pre,pared for:Nagetl Appraisal&Consulting In}e r F l o o d Business Center Dr Elk River,MN 55330 k pit n tj 182-,Lf Ave NV LP b,ng 1Q ~ . rr. �•. MAP DATA VAn t EGENp FEMA Special Flood Hazard Area.No areas inundated by 506-year flooding � arntecled Areas Map Numher:27141C0304F zone,X Areas inundated by t 00•year rxm nO Fibpdway Map Dais:November 16,2011 Vaiocity Hazard 0 Subject Area TIPS-W141 Per I nterFlood 28 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com AERIAL PLAT MAP f 175-547=0115 i� ` �• 75-1322425 F. 75-132 2426 r'1 ��► , . ai'► ~ ' � � 75-1 i► 1 � F- xlift 75-132100 Fy W.,qb W 75$16-0110 r t' ._, 75-132105 PL Per Sherburne County GIS (subject outlined in yellow/ est. useable site area outlined in red) Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com 29 • • ' ' • Idke eN4y � 8 IhLYViNN + f [Orono nark v_ vlpr��Rd- w 2' Westbound Lrquor Sloree! Elk River YMCA O 0 aIRd�NW 'i'k _ � D chine` ng.Inc SubwaY� r faribaul F I �r �� y r � 4 Sherburne CountyiFyir� y Ile 183rd Ave NW w_ 41 Pk HW 'i .010 6100, ` ` 1 ra�Ln � AF ,�" .: '- s �- 183rd Ave NW St uir;s r�.�,k $ t • - � [. � C F J x 187nd Ave NW r. c 4 81st Ln`NWL181st Crr•NW° 181st Ln NW c y I I y Mississippi"d�� 18ti',t►",3� ► SUBJECT PHOTOGRAPHS Opp Mo Site View from the Northeast Corner p . ! .aka - �' ..:-.. .. �. � •., p � .'i.. xn.._Y.. lw. __ ._. Site View from the North Edge Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 31 Subject Photographs —continued ti Storm Water Retention Pond r owl - n. .".�fp yy YAW�.fi. •- '- _. 4.. ... Access Easement 32 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Subject Photographs —continued Street Scene Looking Southwest on Business Center Drive ro, 1 I _ r - Street Scene looking North on Joplin Street Nagell Appraisal&Consulting 1 952-544-8966 www.callnagell.com 33 HIGHEST & BEST USE Highest and best use as defined in The Appraisal of Real Estate, 13th Edition, by the Appraisal Institute is: "The reasonably probable and legal use of vacant land or an improved property, that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value." Highest and best use is analyzed in two ways, site as vacant and site as improved. Since the subject is vacant land, only the site as vacant is analyzed. Typically there are four criteria in highest and best use analysis: - Legally permissible use: What uses are allowed by zoning? - Physically possible use: What uses are physically possible on the site? - Financially feasible use: Which possible & permissible uses produce a positive return? - Maximally productive use: Of the financially feasible uses, which use produces the highest return warranted by the market (the ideal improvements)? Site as Vacant: "Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements."The Dictionary of Real Estate Appraisal 5"'Edition Legally Permissible Uses: The current BP, Business Park, zoning allows for light industrial and office uses. The subject is guided for commercial, which is more logical given the subject's proximity/visibility to US Highway 10 and small size of the site. Minimum site size is 43,560 SF. Physically Possible Uses: The physical characteristics of the site appear suitable for development. City sewer and water are assumed available. The site has average access and above average visibility/exposure. The site will allow for a number of potential uses. Financially Feasible Uses: Surrounding uses, market demand and the availability of financing typically drive financial feasibility. • Surrounding Uses: The subject is located in a small commercial district that is situated at the intersection of US Highway 10 and Joplin Street. Surrounding uses include commercial to the north and west, the Sherburne County fairgrounds to the south and recreational to the east. Given the site's location, proximity to commercial and the Highway 10/Joplin Street intersection, a commercial use is considered logical. • Financing: Availability of financing is currently average. Value assumes the subject has no site issues that would restrict typical financing for well qualified buyers. As market demand recovers, positive economic returns on new development should return. • Market Demand: Demand for commercial in the subject area is improving. Although development in outlying locations has been more gradual, demand is rated average for locations with good appeal (convenient access, highway exposure, stable site conditions, etc.). Maximally Productive Use: Given the above discussion and keeping in mind market demand, financing, site amenity, zoning and the subject's surrounding uses, commercial development is considered most feasible. 34 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com COST APPROACH Since the subject is vacant land, the Cost Approach is not applicable. INCOME APPROACH Very limited rental data of vacant land renders the Income Approach an unreliable indicator. Therefore, the Income Approach is not included. SALES COMPARISON APPROACH The Sales Comparison Approach to Value is predicated upon sales of properties with similar characteristics as the subject. The primary premise of this approach is that the market value of the subject is directly related to the prices of competing properties after adjustment. Adjustments are made to competing properties for significant differences. Land Value: Land value is estimated as if the land were vacant and available for development to its highest and best use. There are several different methods to analyze land values: sales comparison, allocation, extraction, subdivision development, land residual, and ground rent capitalization. One or more of these methods may be applicable depending on market conditions and the type of land. The preferred and most reliable approach is the sales comparison; however, when sales data is very limited, some of the other methods may be employed if appropriate data is available. For purposes of this appraisal, the sales comparison method has been utilized. A number of sales were reviewed in the subject's marketing area. Of the data analyzed, the most relevant sales were selected and used on the following pages. The Following Outline Is Used In The Sales Comparison Approach: - A location map of the comparable sales. - Comparable sales are listed. - An adjustment grid using the comparable sales. - A discussion of adjustment and conclusion of value. Primary Data Selection Criteria/Scope: • Emphasis on similar Northwest Metro communities. • Small commercial lots with access to city sewer and water. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 35 Sales Comparison Approach -- continued Comparable Location Map West a e Francis Shores 5 Oxlip °East Lake Francis OYeS I S AIT I10 47 Orrock 4 $ Crown 4 7 5 SALE 3 R .. ......................................................... 5 H E R B U E 11 72 j 16970 28 24 — I Franci 1 24 Salida arn lus 66 I SUB3ECT ial 10 Oa Grove Big La 22 Cedar Bailey N E SALE 1 onticello r ` 39 c River,_ 64 A 50~ fpr •..' 25 segos A 5 Lang h Park - Heights SALE 2 59 SALE 7 q. : 03 20 70 37 SALE 4 42 SALE 6 18 SALE 5 56 r �- Alberts le 57 47 9 j 10 116 36 hado Wood Park St.Michael 144 rning Mi Dayto 35 raw-Has Galloway ark 242' oun#y P k gers 169 19 203 121 n .p Hanover am 10 117 116 109th e N 12 14 �R.3 123 Hidd n Teal L 202 1 Bu chvllle 30 P r 103 20 PE rk 610 o s 10 o 109 ook"Parik Cor ran 101 81 Palmer 13 ckford 50 152 252; 4 61 H E N E I 169 36 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Sales Comparison Approach -- continued COMPARABLE 1 75E790240 756]9-0110 rsbT4-0zafi 75-674-0416 11 79-0234 T56T4-0144 4 1q�v_ . 714 1 TsbT40210 - ' 111 ]50190420 " 1 Ftl„ItP14 @INV 40 � •7.� TSfiT9022fi ; T5-0]90106 �� ]5079-0224 �.R � 75-079-0111 �`+ 75-079-0[10 4' 75874-0104 �y e 170th r..e NJY 95t''�NG OIse00 .- `h 3rl _ - 'M Ln.MIN: maven 91sr Sr.ve s14� ,un se Ne w 89[N 5.NE 1�. BTIh 51 N4= �.' ESM S[NE � 10];h 4n NN O �8' 83rd A N� 83rd -a kamsey 1-51 NE .w Property Data 17175 Yale Street NW, Address: PID/Legal: 756790106 Elk River Property Use: Commercial Physical Characteristics: Average Site Size (SF): 43,560 Utilities: Available Comments: Sale of a commercial lot in the City of Elk River. Sale Data Sale Price: $50,000 Price per SF: $1.15 Sale/Close Date: 7/22/2015 Property Rights: Fee Simple Buyer: N/A Financing: Cash Seller: Shadymoon Properties, LLC Conditions: Typical Source/Verification: MLS Comments: Appears to be a typical market transaction. Openly marketed. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 37 Sales Comparison Approach -- continued COMPARABLE 2 �r -_ ]s-sol-0zua +f252 '+ ........... 11 v .f 71 u 181st Ave NN e a Invcfi 'Rs` 18GM u'NW A iPC'_ 158CM1 M Nw •5gth Ln NW 1!E NE h''.. n i551M1 Ave M'4 541M1 In rnw � Ln Mry rX� iSGll'i Ave MN, I I m a I AlPlne Dr FJJV nl�ntl �I`rtl Ln MN m .. 55 �� _.. � 152nd Awe M^f Plne m ,In SY NE 15'isl Ln XNV 1 ar - I. 2l at st.Ave MN w 5 @M1 L' " x w'Lake @Ivtl K S 5) - Property Data 97XX US Hwy 10, Address: PID/Legal: 750241107 Elk River Property Use: Commercial Physical Characteristics: Storage Bldg Site Size (SF): 50,530 Utilities: 1 Not Available Commercial lotlocated in Elk River. The propertincludes a small storage building. Location Comments: is not serviced with municipal utilities. Sale Data Sale Price: $95,500 Price per SF: $1.89 Sale/Close Date: 10/1/2014 Property Rights: Fee Simple Buyer: B&D Holdings Co, LLC Financing: Cash Seller: RM &CJ Atkins Conditions: Typical Source/Verification: CREV, MLS Comments: Appears to be a typical market transaction. Openly marketed. 38 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Sales Comparison Approach -- continued COMPARABLE 3 '� 95L17-1 ZeH HH91T=13Q] - 94 ,T F T 85 1-01ffi 952Ti-x105 55-d]iLOIU W4)F`-WW � 9S 9$-0t]-x F08 88d30ONp �E�- T.SZ tHd 93ax9c115 9s-azao+as a - 9s-uT-03Hs 9s-dzr-ol5s� 45-43T-0135 83633-03053 106 - i,. � l0ii�51 %i3T-0130 y5_ I ]1 s[Ave 69th Ave 691N v _` e 2681h 81h A `s 86[ 66th v �o° 651N Ave MN t Ave � SALE 3 _ 25 st A mortl Ave 81 s1 Ave Zi r L 5 � � A 55th Ave MN 54[N e G 45 � .53rd Rve 54nd Property Data XXXX Fremont Avenue,Address: PID/Legal: 954710105 Zimmerman Property Use: Commercial Physical Characteristics: Average Site Size (SF): 47,044 Utilities: Available Comments: Commercial lot located in a more outlying community. Sale Data Sale Price: $120,000 Price per SF: 1$2.55 Sale/Close Date: 4/10/2015 Property Rights: Fee Simple Buyer: Casey's Retail Financing: Cash Seller: The Bank of Elk River Conditions: Bank-Owned Source/Verification: CREV, Buyer's Rep. Comments: Bank-owned sale price appears to be somewhat discouted. Openly marketed. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 39 Sales Comparison Approach -- continued COMPARABLE 4 a r. z A � 1 a w s� a A F� 111 rn D a L 5 7545 :1G1 5Q0 7 tl' Z w w - t � T18b7800'1'470 He � 1;a1M1 9.5t Sl NE 6ise90 �r c 9+NE / — - 17-Ln �(i5 SPLE4 1,1 ']9tl Au�MV I Bta g � z BCtlM1 St Nf 88tH 51 YE � rN .. B]Ih 5[Pff C 3ai:.'[NE 2 83rd l NE 831d < � `�"1ES1M Avs NW I - f CneN'1 f� IF—fill Y&IN S] � � 18 8A4e MY 75IM1 4 Property Data XXXX Quantrelle Ave NE, Address: PID/Legal: 118217000110 Otsego Property Use: Commercial Physical Characteristics: Average Site Size (SF): 105,000 Utilities: Available Comments: Commercial property located in close proximityto the City of Elk River. Sale Data Sale Price: $260,000 Price per SF: $2.48 Sale/Close Date: 11/4/2014 Property Rights: Fee Simple Buyer: WFCIII, LLC Financing: Cash Seller: GCI Capital, Inc. Conditions: Bank-Owned Source/Verification: CREV, Buyer's Rep. Comments: Bank-owned sale price appears to be somewhat discouted. Openly marketed. 40 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Sales Comparison Approach -- continued COMPARABLE 5 _ za, ,t a F Y � A R,Iliclpel • CBI1V - 241 .3tY.S:p 401h St NE t R<1$E (I Mfpes!Ck 3 370 e!ME �w Property Data 14-2nd Street SE, 1 1 45001 32224,1 1 40 1 201 1 062, Address: PID/Legal: St. Michael 114012011061,114012011063 Property Use: Commercial Physical Characteristics: Average Site Size (SF): 19,000 Utilities: Available The property appears to be the result of an assemblage by the city after a road Comments: realignment project. Sale Data Sale Price: $30,000 Price per SF: $1.58 Sale/Close Date: 5/15/2015 Property Rights: Fee Simple Buyer: Central Ave RE, LLC Financing: Cash Seller: City of St. Michael EDA Conditions: Gvt. Sale Source/Verification: CREV, Buyer's Rep. Comments: Sale price appears to have been somewhat discounted due to government ownership. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 41 Sales Comparison Approach -- continued COMPARABLE 6 dz I...r.. i 1v- Ir, xe— ....y Pa1rk ra�ah�NW ,Ah Ln NWan .. • to Mw 1391h Ave MN " c 13*4 Ln AWs3 c" NW © *N Ate NW Bek r�e Park `z Bunker Leke EW NW >, Bunker Lake Blyd NW z Bunker Lak®81,q NW i , Biatien pkv a z TParke a 133rA le s R 'r+i I 341 Ave NE< T, Nyy 'Sa�A.NW a� y Rinker ne y� k glonal Nr Park m z N _Rew 132nd Are NE. 191st Ave NW n �My P"/k ahE Property Data 1730-139th Lane NW, Address: PID/Legal: 343224110011 Andover Property Use: Commercial Physical Characteristics: Average Site Size (SF): 57,064 Utilities: Available Comments: Superior proximity to the TCMA. Sale Data Sale Price: $203,400 Price per SF: 1$3.56 Sale/Close Date: 5/5/2015 Property Rights: Fee Simple Buyer: Griffen Property Holdings,LLC Financing: Cash Seller: Andover EDA Conditions: Gvt. Sale Source/Verification: MLS, CREV Sale price appears to have been somewhat discounted due to government ownership. Comments: Openly marketed. 42 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Sales Comparison Approach -- continued COMPARABLE 7 ''► �� eta► ■ 7161h Sk N lesih aye rvw - �' sartlrt„ __ NE C—ty > 6` a�8 15 6larrteeb � W WF $f o- 9t yO m yy 71h 51 W VZi L aN 1n rn Ak,,,tlkx 4. � r a me Chelsea Rd „ sx „Or _..._ Property Data XXXX-7th Street E, Address: PID/Legal: 155029002050 Monticello Property Use: Commercial Physical Characteristics: Average Site Size (SF): 123,275 Utilities: Available Comments: Located in a competing community outside the TCMA. Sale Data Sale Price: $290,000 Price per SF: 1$2.35 Sale/Close Date: 10/21/2014 Property Rights: Fee Simple Buyer: Nu\ision Mgt, LLC Financing: Cash Seller: KG& ML Maus Conditions: Typical Source/Verification: CREV, Buyer's Rep. Comments: Appears to be a typical market transaction. Openly marketed. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 43 Sales Comparison Approach —continued Listed below is the adjustment grid for the comparables listed on the previous pages. Comparable items of significant difference are adjusted for. SALES COMPARISION ADJUSTMENT GRID Subject Sale 1 Sale 2 Sale 3 Sale 4 Sale 5 Sale 6 Sale 7 NEC of Joplin& 17175 Yale 97X(US Hwy )0=Fremont )0=Quantrelle 14-2nd Street 1730-139th )0=-7th Address Business Ctr Dr, Street NW, 10, Avenue, Ave NE, SE, Lane NW, Street E, Elk River Elk River Elk River Zimmerman Otsego St.Michael Andover Monticello Proximity Subject 4 miles SE 6 miles SE 12 miles N 4 miles SE 7 miles SW 16 miles SE 12 miles W Property Rights Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Financing Market Cash Cash Cash Cash Cash Cash Cash Conditions Typical Typical Typical Bank-Owned Bank-Owned Gvt.Sale Gvt.Sale Typical Sale Date Current Jul-15 Oct-14 Apr-15 Nov-14 May-15 May-15 Oct-14 Location Average Avg/Good Avg/Good Fair/Avg Average Average Good Avg/Good Use Commercial Commercial Commercial Commercial Commercial Commercial Commercial Commercial Site Size 32,670 43,560 50,530 47,044 105,000 19,000 57,064 123,275 Phys,Char. Average Average Storage Bldg Average Average Average Average Average Utilities Available Available Not Available Available Available Available Available Available Sale Price Current $50,000 $95,500 $120,000 $260,000 $30,000 $203,400 $290,000 Price/SF $1.15 $1.89 $2.55 $2.48 $1.58 $3.56 $2.35 Adj ustme nts Property Rights Fee Simple Financing Market Conditions Typical 5% 5% 5% 5% Net Adjust 0% 0% 5% 5% 5% 5% 0% Part Adj.$/SF $1.15 $1.89 $2.68 $2.60 $1.66 $3.74 $2.35 Sale Date Current Equalized$/SF $1.15 $1.89 $2.68 $2.60 $1.66 $3.74 $2.35 Location Average 10% 10° -10% Use Commercial Site Size(SF) 32,670 5% 10% Phys,Char. Average -5% Utilities Available 15% Net Adjust -10% 0% 10% 5% 0% -20% 0% Adjusted Price/SF $1.03 $1.89 $2.95 $2.73 $1.66 $2.99 $2.35 Note: Wide variation in sale price is not uncommon given the current market and outlying location. 44 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Sales Comparison Approach —continued Discussion of Adjustments Property Rights: Refers to the ownership interest conveyed at the time of sale. Properties with leases or other encumbrances in place can sell for more or less than a comparable property that sells fee simple interest. All sales, regardless of leased fee or fee simple interest appear to have sold at market. Financing: The impact financing may have had on the sale price, favorable interest rate or term. All sales were cash or estimated to be near or at market rates. Conditions of Sale: Reflects non-market conditions which may or may not impact market value, such as differing motivations of buyer or seller (related parties, distressed or liquidation sale, assemblage, listings, pending sales, etc.), impending eminent domain proceedings, influence due to tax ramifications, lack of market exposure, vacancy, or leased-fee and fee- simple adjustments. Comparables 3, 4, 5 and 6 sale prices appear to have been discounted somewhat due to bank-ownership or government sale. Market Conditions: The market has been relatively stable starting in 2011 through year-to- date 2015. Location: This adjustment is based on the appraiser's judgment. It takes into consideration surrounding land uses, intended use, neighborhood characteristics and access. Comparables 1, 2, 6 and 7 adjusted for superior highway frontage. Comparable 3 adjusted for more outlying location. Comparable 6 also adjusted for closer proximity to the TCMA. Intended Use: All comparables rates similar. No adjustment necessary. Site Size: Adjustments recognize smaller parcels of land typically sell for more per SF than larger sites. Comparables adjusted accordingly. Physical Characteristics: Comparable 2 adjusted for having a small storage building on site at the time of sale. Utilities: Comparable 2 adjusted for no access to municipal sewer/water. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 45 Sales Comparison Approach —continued Conclusion: Comparables used are rated to be the most indicative of data analyzed and bracket the subject regarding overall appeal. Other sales reviewed were older, more distant, and/or needed more adjustment. The comparables utilized in this analysis each have several characteristics in common with the subject. While none are totally identical to the subject, each represents a viable alternative to a prospective buyer of the subject property and, after adjustment, can be utilized as an indicator of market value for the subject property. Variance in sale price is common in the current market. Data Summary Minimum Maximum Average Median Before Adjustment $1.15 $3.56 $2.22 $2.35 After Adjustment $1.03 $2.99 $2.23 $2.35 The adjusted figures are similar to the unadjusted figures. All comparables given about equal weight, as together, they bracket the subject characteristics. Useable Site Area: The subject's irregular shape and somewhat limited development potential due to location of easement and low areas is off-set by the site's above average visibility/exposure, but no frontage. Therefore, a rate near the mid-range is concluded for the subject, say $2.25 per SF. Non-Useable Site Area: Value attributable to non-useable site area typically ranges from 5% to 15% of useable site area value, depending on overall amenity. Based on concept drawings for the site, it appears the low areas have the potential to be filled in and developed. However, a significant portion of the non-useable area is ROW. As such, a rate at the lower end of the range is considered appropriate. Therefore, a rate of approximately 5% will be applied ($2.25 per SF x 15% _ $0.11 per SF). Useable Site Area 32,670 SF x $2.25 per SF = $73,508 Non-Useable Site Area 70,567 SF x $0.11 per SF = $7,7623 Total (rnd) $81,000 FINAL VALUE OPINION BY SALES COMPARISON APPROACH $81,000 46 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com RECONCILIATION Value Opinion by Cost Approach Not Applied Value Opinion by Income Approach Not Applied Value Opinion by Sales Comparison Approach $81,000 $2.48 per SF The subject is vacant land. Therefore, the Cost Approach is not applicable. The Income Approach is not used. Very limited rental data of vacant land renders the Income Approach an unreliable indicator. The Sales Comparison Approach to value analyzed recent sales of properties as compared with the characteristics of the subject property. Adjustments were made to the comparables to make them as similar to the subject as possible. This results in an indication of market value at which the typical buyer would be willing to pay for the subject property. The comparables used are all competing properties located in the subject market and are considered to provide a reliable estimate of market value. Sales data for the subject property was average. Conclusion: The Sales Comparison Approach is considered the only relevant indicator of value. Therefore, the appraised value opinion is: Final Value Opinion Final Value Opinion $81,000 $2.48 per SF Note: Properties that are unstable, distressed, or have unusual condition and/or motivated sellers tend to sell below market value. Based on market observations and discussions with various market experts, discounts for such properties can range from 10 to 50% + when compared to normal market transactions. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 47 EXPOSURE TIME/MARKETING TIME Final values reflect "market exposure" time of under 1 year before the Exposure Time: effective date of the appraisal. Changes in the market, use, lease and/or building subsequent to the effective appraisal date could impact value. Marketing Time: Marketing times for appropriately priced properties is generally 6 to 18 months DEFINITIONS MARKET VALUE - The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: a) buyer and seller are typically motivated; b) both parties are well informed or well advised, and each acting in what they consider their own best interest; c) a reasonable time is allowed for exposure in the open market; d) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and e) the price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Source: The Dictionary of Real Estate Appraisal,51h Addition. Appraisal Institute ENVIRONMENTAL & STRUCTURAL ISSUES Regarding any adverse environmental and/or improvement structural conditions (such as, but not limited to, hazardous wastes, toxic substances, mold, construction defects or inadequacies etc.) present in the improvements, on the site, or in the immediate vicinity of the subject property, none are apparent, however, appraiser is not an expert in this field, value assumes no hazardous or significant structural conditions exist. Value assumes any abandoned wells will be properly sealed. If any of these conditions exist the appraised value could differ significantly. 48 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com CERTIFICATION I certify that, to the best of my knowledge and belief: 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 my personal, impartial and unbiased professional analysis, opinions, and conclusions. 3) 1 have no (or specified) present or prospective interest in the property that is the subject of this report, and no (or the specified) personal interest with respect to the parties involved. 4) 1 have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5) My engagement in this assignment was not contingent upon developing or reporting predetermined results. 6) My compensation for completing this assignment is not contingent upon the development or reporting of predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7) My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 8) For William R. Waytas, the reported analyses, opinions and conclusions were developed, and this report has been prepared in conformity with the requirements of the Appraisal Institute's Code of Professional Ethics and Standards of Professional Appraisal Practice, which includes the Uniform Standards of Appraisal Practice. 9) Molly J. Lewis has made a personal viewing of the property that is the subject of this report. William R. Waytas has been by the property (If more than one person signs the report, this certification must clearly specify which individuals did and which individuals did not make a personal viewing of the appraisal property). 10) No one provided significant professional assistance to the person signing this report. (If there are exceptions, the name of each individual providing significant professional assistance must be stated.) 11) In accordance with the competency provision of the USPAP, we have verified that our knowledge, experience and education are sufficient to allow us to competently complete this appraisal. See attached qualifications. 12) As of the date of this report, William R. Waytas had completed the requirements of the continuing education program of the Appraisal Institute. 13) The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representative. 14) I/we have performed no services, as an appraiser or otherwise, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Molly J. Lewis William R. Waytas, SRA, CRP Certified General MN 20391975 Certified General MN 4000813 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 49 EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS As stated by USPAP; Extraordinary Assumption: An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions of conclusions. Appraised value makes the following assumptions: • The useable site area is around 0.75 acres (32,670 SF). • The continuation of the existing access arrangement across the subject property now and into the future. • Commercial development is permitted. If any of the above are found to be otherwise, value could differ. Hypothetical Condition: That which is contrary to what exists but is supposed for the purpose of analysis. None ASSUMPTIONS AND LIMITING CONDITIONS 1. The appraisers assume no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor do the appraisers render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership and good management. 2. The furnished legal description is assumed to be correct. 3. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraisers have made no survey of the property. It is assumed unless otherwise noted that no survey has been viewed and that all improvements are located within the legally described property. 4. The appraisers are not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefore. 5. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 6. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraisers assume no responsibility for such conditions, or for engineering, which might be required to discover such factors. 50 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Assumptions & Limiting Conditions —continued 7. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, radon gas, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. 8. Information, estimates, and opinions furnished to the appraisers, and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, the appraisers can assume no responsibility for accuracy of such items furnished the appraisers. 9. Disclosure of the contents of the appraisal report is governed by the Bylaws and Regulations of the professional appraisal organizations with which the appraisers are affiliated. No part of the contents of this report, or copy thereof (including conclusions as to the property value, the identity of the appraiser, professional designations, reference to any professional appraisal organizations, or the firm with which the appraiser is connected), shall be disseminated to the public through advertising, public relations, news, sales, or any other public means of communications without the prior written consent and approval of the appraisers. 10. The appraisers have no present or contemplated future interest in the property appraised; and neither the employment to make the appraisal, nor the compensation for it, is contingent upon the appraised value of the property. The appraisers have no personal interest or bias with respect to the parties involved. 11. The appraiser has personally inspected the subject site (unless noted otherwise). The comparable sales data has been viewed via aerial maps, photographs and/or online street views along with file pictures, when available. To the best of the appraiser's knowledge and belief, all statements and information in this report are true and correct, and the appraisers have not knowingly withheld any significant information. 12. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is our personal, unbiased professional analyses, opinions, and conclusions. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 51 Assumptions & Limiting Conditions —continued 13. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of the property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. 14. No one provided significant professional assistance to the person(s) signing this report. 15. This appraisal assignment was not based on a requested minimum valuation or specific valuation or approval of a loan. 16. To the best of our knowledge and belief, the reported analysis, opinions, and conclusions were developed, and this report was prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. 17. The appraised value opinion assumes all leases (if any) are current and paid in full as of the effective date of the appraisal. 18. Excel grids and tables may have slight deviations due to rounding, which may have a nominal impact on value. 19. The appraised value opinion assumes all formulas used in the Excel grids throughout the report are accurate. 20. Unless noted, value assumes no apparent adverse site, building or zoning issues or conditions. 21. Site and building sizes are based on public record, data services, client and/or appraiser measurement at the time of appraisal and are considered reliable, but not guaranteed. 22. If any of the above if found to be different, value could change. 52 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com CURRICULUM VITAE Appraisal Experience: Presently, and since July of 2003, Molly J. Lewis has been employed as a full time real estate appraiser. Currently a commercial appraiser at Nagell Appraisal & Consulting, an independent appraisal firm (8 appraisers) who annually prepares 1,500 +/- appraisal reports of all types. Ms. Lewis was employed with Paul Folland of Eagle Appraisal for part of 2003. Education: Graduate of Northwestern College, St. Paul, MN. B.S. Degree in Business Administration. Prosource Educational Services • Appraisal 100 Introduction to Construction Principles • Appraisal 101 Introduction to Appraisal Principles I • Appraisal 102 Introduction to Appraisal Principles 11 • Appraisal 103 Introduction to Appraisal Practices I • Appraisal 104 Introduction to Appraisal Practices 11 • Appraisal 105 Introduction to Appraisal Standards and Ethics Appraisal Institute, Pre-licensure and Continuing Education Courses • Basin Income Capitalization • Income Valuation of Small, Mixed-Use Properties • General Applications • Numerous courses covering USPAP, trends and various real estate and appraisal topics • Fundamentals of Separating Real Property, Personal Property & Intangible Business Assets Licenses Held: Resident Appraiser: Certified General License #20391975 Appraisals Performed: Commercial Appraisal • Agricultural, Residential and Commercial Land • Retail • Restaurant • Office • Industrial • Mixed-Use • New Construction • Residential Subdivision • Special Use Properties: Marina, Golf Dome, Church, Airplane Hangar • Eminent Domain, Condemnation Residential Appraisal • Single Family • Two-Family • Multi Family Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 53 Curriculum Vitae -- continued Appraisal Experience Presently and since 1985, William R. Waytas has been employed as a full time real estate appraiser. Currently a partner and President of the Nagell Appraisal & Consulting, an independent appraisal firm (12 employees) who annually prepare 1,500 +/- appraisal reports of all types. Mr. Waytas was employed with Iver C. Johnson &Company, Ltd., Phoenix, AZ from 1985 to 1987. Properties appraised: • Commercial - low and high-density multi-family, retail, office, industrial, restaurant, church, strip-mall, fast-food, convenience stores, auto-service and repair, hotel, hotel water park, bed &breakfast, cinema, marina, numerous special use properties, and subdivision analysis. • Residential — single-family residences, hobby farms, lakeshore, condominiums, townhouses, REO and land. • Eminent Domain — extensive partial and total acquisition appraisal services provided to numerous governmental agencies and private owners. • Special Assessment — numerous street improvement and utilities projects for both governmental and private owners. • Review—residential, commercial and land development. • Clients - served include banks, savings and loan associations, trust companies, corporations, governmental bodies, relocation companies, attorneys, REO companies, accountants and private individuals. • Area of Service - most appraisal experience is in the greater Twin Cities Metro Area (typically an hour from downtown metro). Numerous assignments throughout Minnesota. Professional Membership,Associations &Affiliations License: Certified General Real Property Appraiser, MN License#4000813. Appraisal Institute: SRA, Senior Residential Appraiser Designation, General Associate Member Employee Relocation Council: CRP Certified Relocation Professional Designation. International Right-Of-Way Association: Member HUD/FHA: On Lender Selection Roster and Review Appraiser DNR: Approved appraiser for Department of Natural Resources Testimony -- Court, deposition, commission, arbitration &administrative testimony given. Mediator -- Court appointed in Wright County. Committees -- President of Metro/Minnesota Chapter, 2002, Appraisal Institute. -- Chairman of Residential Admissions, Metro/MN Chapter, Al. -- Chairman Residential Candidate Guidance, Metro/Minnesota Chapter, Al. -- Elm Creek Watershed Commission, Medina representative 3 years. -- Medina Park Commission, 3 years. 54 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com Curriculum Vitae -- continued Education -- Graduate of Bemidji State University, Minnesota. B.S. degree in Bus. Ad. -- During college, summer employment in building trades (residential and commercial). -- Graduate of Cecil Lawter Real Estate School. Past Arizona Real Estate License. -- General & Professional Practice Courses & Seminars -- Course 101-Introduction to Appraising Real Property. -- Numerous Standards of Professional Practice Seminar. -- Fair Lending Seminar. -- Eminent Domain &Condemnation Appraising. -- Eminent Domain (An In-Depth Analysis) -- Property Tax Appeal -- Eminent Domain -- Business Practices and Ethics -- Scope of Work -- Construction Disturbances and Temporary Loss of Going Concern -- Uniform Standards for Federal Land Acquisitions (Yellow Book Seminar) -- Partial Interest Valuation Divided (conservation easements, historic preservation easements, life estates, subsurface rights, access easements, air rights, water rights, transferable development rights) Commercial/Industrial/Subdivision Courses & Seminars -- Capitalization Theory&Techniques -- Highest& Best Use Seminar -- General & Residential State Certification Review Seminar -- Subdivision Analysis Seminar. -- Narrative Report Writing Seminar(general) -- Advanced Income Capitalization Seminar -- Advanced Industrial Valuation -- Appraisal of Local Retail Properties -- Appraising Convenience Stores -- Analyzing Distressed Real Estate -- Evaluating Commercial Construction -- Fundamentals of Separating Real Property, Personal Property and Intangible Business Assets Residential Courses &Seminars -- Course 102-Applied Residential Appraising -- Narrative Report Writing Seminar(residential) -- HUD Training session local office for FHA appraisals -- Familiar with HUD Handbook 4150.1 REV-1 &other material from local FHA office. -- Appraiser/Underwriter FHA Training -- Residential Property Construction and Inspection -- Numerous other continuing education seminars for state licensing &Al Speaking Engagements -- Bankers -- Auditors -- Assessors -- Relocation (Panel Discussion) Publications -- Real Estate Appraisal Practice (book): Acknowledgement -- Articles for Finance &Commerce and Minnesota Real Estate Journal Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 55 ADDENDA TO APPRAISAL REPORT 56 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com NAGELL APPRAISAL & CONSULTING 12805 Highway 55 Minneapolis: 952-544-8966 Plymouth, MN 55441 St.Paul 651-209-5959 Established in 1968 Central Fax 952-544-8969 Client:City of Elk River June 23.2015 Attn:Amanda Othoudt 1W65 Orono Parkway Elk River,MN 55330 RE: Appraisal of a commercial land lbuslnems park zoning} NEC of Joplin street&Business Center Drive Elk River,MH 55330 tear Amanda Thank you for your Interest in obtaln.ng appraisal services regard+ng the propery above Per our conversation,you indicated a report with the following research and analysis is needed Report Use: The report use is for decision making. Value Type:Curren',market value as it relates to the acquisition reflecting highest and best use per Uniform Standards of Professional Appraisal Practice will be provided Properly Description: A triangular piece of land on the NEC of Joplin Street&Suslress Center Drive The site contains about 2 37 acres Contact for access: Scope of Report:(1)View the property and neighborhood. fly Report the physical andior economic tactors that could affect the properly (3) Appropriate reuarch, collection. verification. analysis and viewing of pertinent market data will be Conducted. The appropriate approach(es)to value wiff be applied. (4) Report findings and conclusions. Report Format:An Appraisal Report(narrative formal will be used. It has a summary of statements of the data analysis and conclusions. Appropriate photos, maps and exhibits are included. An electronic (PAF)copy wN be providod. add'ionat meetings,appraisal reports,any discovery,preparation and testifying would be extra and Client named above is responsible for payment in a timely manner Due Date. The report can be completed in Information needed by the appraiser: Ste survey,if available Our Company: has 12 employees and has been in business since 1968 and has sufficient knowledge, experience, education, contacts and resources to competently complete this assignment. Neither the employment to make the appraisal,nor the compensation for it is contingent upon the appraised value of the property. It you agree to the above terms,please sign below and return by fax or mail. If you have any additional questions,please do not hesitate to contact me Sincerely t Signa�wre _ `Y William R Waylas r�]r }' Cert �-F-Iified Ganera14000813.MN Date m 17 www.nagLilmn.com Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com 57 Legal Descriptions: Parcel ID 75-132-3.01 Pa-cel nr'a Parcel Type RE Property Address Plat nla Sec-T;vp-Rn8 Sec32T33N R26W Legal Description THAT PT OF W 1-2 OF NE1-4OFSW1-4 DES AS FOLLOWS:COM AT NW CO RN ER OFW1-2OFNE 1,4 OF SW 1-4.THENCE S 00 DEG 48 MIN 04 SEC E,AN ASSUMED BEARING ALONG W LI VEA C OF 377.74 FT TO PT OF BEG OF LAND TO BE DES,THENCE N 64 DEG 33 MIN 16 5 E C EA DIS OF 205.29 FT,THENCE NE LY 142.39 FT ALONG A TANGENTIAL CURVE CON CAVE TO'1W HAVING A. RADIUS OF 513 FT&CENTRAL ANGLE OF 21 DEG 29 MIN 15 SEC,THENCE NELY&ELY,ALON_..-. REVERSE CURVE CONCAVE TO SE-TOTHEINTERSECTIONWITH WLYEKTOFSLY ROFWLINE OF MAIN SFAS DEDICATED IN THE PLAT OF GOSPODDRSORO NG LAKE ADDACCORDING To SAID PLATON FILE&OF RECORD IN OFFICE OFTHE COUNTY RECORDER,SHERBURNE COUNTY- SAID CIJRVE BEl NG TANGENT TO LAST DES CURVE&TAN GE NT TO SAID WLY E KTDf SLY ROFW LI ME,TH ENCE N 88 DEG 33 M I N 43 SEC W,ALONG SAI D WLYE?CFOFSLYROFWLINE-A DIS OF 548.71 FT TO THE INTER SECTION WITH SAID W LI VE OF W 1-2 OF NE 1-4 OF SW 1-4,THENCE S 00 DEG 48 MIN 04 SEC E,ALONG W LINE A DIS DF 300.67 FT TO PT OF BEG- (Note:Legal descriptions here are for tax pu rposes only.Do not use them for recording purposes.) Parcel ID 75-575-0010 Parcel rk'a Parcel Type RE Property Address Plat 575-COUNTRY CROSS VG E.I_S 14 ESS CENTER Set-Tvrp-Rn3 5ec-32 T3 3N R26W Legal Description OUTLOTA (Note:Lega I descriptions here are for tax purposesonly-Do not use them for recording purposes.) Last Recordi ng NIA Class 776-M unici pa I-Al I Other Occupancy NON-HOMESTEAD Deeded Acres 0.59 Tax District ELK RIVER CITY School District 728-E LIC RIVER 58 Nagell Appraisal&Consulting 1 952-544-8966 1 www.callnagell.com City ol Request for Action RiVeor" To Item Number Mavorand City Council 43 T Agenda Section Meeting Date Prepared by 0:)nsent June 15, 2015 Arnanda Othoudt, F"conornic Development Director Item Description Reviewed by Letter of Intent to PurchArSC Propertyr and -Cal Fortner, City Administrator Authorize Appraisal on Real Propetty Iodated at Reviewed by Corner ofJoplin Street and Highway'10 Action Requested Approve, by motion, the letter ofintentto purchase real property located at the Intersection of Highway 10 and Joplin Street and authorizing an -appraisal to be conducted on the property. Background/Discussion Staff has been working with developer interested in the development of city-owned property located at the corner of Joplin Street and Highway 10. The developer is proposing improvements to the site with tip to three cornryiercl-al/retail buildings. The developer has indicated that these cornmercial/ret-all buildings may include a national client with a drive thru, a regional*onal client, and alloxv for local business development in a multi-tenant building. Internally, staff met to discuss any concerns with the sale and development of the subject property. No immediate concerns were addressed in relation to the sale of the property. The project is still subject to site plan review with staff once a purchase agreement is reached and a formal land use application is submitted. Staff recommends entering into an agreement with the developer through the I titter of Intent and authorizing a property appraisal to determine the current market value. Further discussion and negotiations regarding the sale price of the property,will be discussed with the developer once the appraisal is obtained. Financial Impact None: Attachments Elbert Construction Letter of Intent to Purchase P (11 W I H I P fli T Template V 1pcfaed<}/1W INATURE . I June 10, 2015 Amanda Othoudt Econornic Development Director City of Elk River 13065 Orono Parkway Elk River,N4N 55330 RE: City owned property I-]Nvy 10&Joplin SE Comer City of Elk River: We are pleased to present an offer to purcluise the attached referenced properties for site asserriblage & development. Purchaser: Ebert Coustruction 233541 County Road 10 Corcoran,NN 55357 Phone 763-498-7844 Seller: City of Elk River A Minnesota Municipal Corporation 13065 Orono Parkway Elk River,MN 55330 Phone 763-635-10(10 Property-, Approxiniatelv 88.000 square of land, net of roads and easernents, located at the SE corner of Hwy 10 and Joplin St (Legal to conform), Site sketch attached, Purchase Price: MD by appraisal prepared by city The Purchase Price will be adjusted to reflect the actual square footage as determined by survey provided by Seller. AMMOMM Initial Earnest monev: $1.000-00 to be deposited with escrow agent, Conimercial Partners Title upon the execution of a purchase agreement. The Earnest Money shall be credited against the Purchase Price at Closing. Conditions to Purchase: 'The Purchaser shall have a period of one year froiri the date of a fully executed purchase agreement to satisfy, or waive the following Conditions to Closing: (i) Seller entering into with MnDOTa rigIrt to purchase excess ROW (n) Purchaser having authorization to purchase City Parcels, remnam M"DOT parcel,inisc. rights of way (ROW).utility and drainage parcels. (iii) Purchaser obtaining a satisfactory environmental study, (iv) Purchaser obtaining satisfactory soil tests. (v) Purchaser obtaining all necessary governmental approvals for the development of retail/cornmercial& single story office building and ancillary items including but not limited to parking lot,garbage bins and signage. (vi) Purchaser obtaining all governmental approvals, not Ifirifted to the City of Elk River&MnDOT, (vii) Purchaser having acceptable improved access from Business Center Drive. (viii) Purchaser reviewing and accepting title insurance commitment. (ix) Purchase reviewing and accepting Seller's Inforniation as defined below, Purchaser must satisfy or waive the above Conditions to Purckise within the one year time period oaf the date of the~ Purchase Agreement, If, despite Purchaser's best efforts, Purchaser is unable to satisfy or waive the above Conditions to Purchase. Purchaser shall have the right to extend the Condition Date by two additional ninety (90) day periods. Above time frarnes arc: subject to Purchaser actively pursuing redevelopment of the property. Defined as applications Nvith the City/.EDA for assembly & redevelopincirt, In no event shall the Purchase Agreement be (ennimated if Purchaser is still actively pursuing and waiting on City schedules for final review approvals(planning commission, EDA,City Council or MriDOT) AdM111M if Purchaser does not send Seller a written notice of Purchaser's waiver of the Conditions to Purchase, or right to exterid, the purchase agreement sliall be deemed temlifulted. Purchaser's Earnest Money shall be returned to Purchaser and the parties shall have 110 further rights,or obligations to each other. Seller sliall cooperate Yvithand reasonably aid Purchaser in the satisfaction of the aforementioned contingencies. Seller Information: Wiflun thirty (30) days of execution of the purclmse agreement, Seller shall provide Purchaser with the following: (i) All inforniation Seller has related to the conditions of the site including environmental and soil conditions. Seller will provide Purcliaser with copies of any reports previously obtained or information previously received, including without limitation any information or reports of any goverrunental agency concerning the property that are in the Seller's possession or control. (ii) A copy of any current suncy,engineering drawings or plats. (iii) Copies of all architectural drawings and plans previously prepared for the site. Closing Date: Thirty (30)days from the Purchaser's ivaiver of the Conditions to Purchase, Title Inspection.- Within tliirt-v (30) days of the execution of a purchase agreement, Seller will provide Purchaser a title insurance commitment. It will be the Purchaser's responsibility for any owner's policy of title insurance and associated premium. Purchaser will have thirty, (30) days after receipt of the title insurance corrunimient to notify' Seller of any objections to title and Seller shall have sixty (60) days to cure any defects. Seller Warranties: Seller warrants to Purchaser at the time of execution of the purchase agreenicut and upon Closing that the following are true and correct: I) Seller is in good standing and has all the appropriate authority. 2) Property is in full compliance with all applicable codes,laws and orders, 3) Convey good and niarketable tide. 4) No action or litigation pending. 5) No leases,easements.options or right of first refusal exist, 6) Cooperation with Purchaser in obtaining any necessary approvals. 7) Seller will locate and cap all wells located upon property. 8) No em-ironinental issues other than those that are disclosed, Real Estate"Faxes: Real estate taxes payable in the year of`closing shall be pronated between the Seller and Purchaser. All prior years paid in full by Seller. The Property shall become a new separately platted parcel and shall be separately assessed for real estate faxes. Assessments: Seller sliall pay all levied,pending and/or deferred special assessnleots at Closing, Assignment of Purchase Agreement: Prior to Closing, the Purchaser irwy assign the obligations of the purchase agreement to ,in affiliate of Purchaser provided the assignee has sufficient FinancO ability to Close on the Purchase. Brokerage: No brokers are involved with this transaction. This letter is intended to be an expression of interest by the partiessignjug,or accepting this letter to the transaction herein. Notwithstanding anything to the contrary', in no event shall this letter be deemed to be or constifine a binding contract agreement or other legally enforceable obligation between said persons or entities as to such matters, Upon signing of this letter agreement, the parties agree to negotiate the terms of a binding purchase agreement, Sincerely, Greg Hayes VP Real Estate& DevOopment IPuirchaser: Seller: Ebert Constniction City of Elk River By: By: Its: Its:: Date: Date:! ME= cn Q- co Q � o ° Q Certificate of Survey y v for Sherburne CountyAttorney's Oce Section n Township.73.Range 26 +• ......, .ter.a...P..... p, w .. rl•� �� }.•\� .e,r... wrr,.,!•W+��4.w.. .1-..wr�a.,.w.U•...�w . I h.+•+e r;W p:MW�fN.� �.r li i�lre.r �w 1..�' ✓�.:!Aprr r .rw M b...t rk 42if{Ir•^l Y�tlw b!•A�/✓•'lN„� A I VA rs•-,N•... � n: •I 4 I N .e ' rY�Yn'.*:3 PrWF'K4Y •.. .. k v-r..Tt�_ �11�'�'e.4".vA w y.rtr+.K Rro-'r•i*. $'rnr..r rN I — --.. — - - — -. *moi aCF.t_. - n _-_ }..n..Y iwl.•r.ww !%ay.,•rwwmr rAW-AW I 9 8NffUx}xrvlr•YrYPUFUf-UVRK<•5l;xVKWa9['.n nY77e'R m m , m a s m m �a�ana a o 0 3 3 x a a� a a m m m m ISI 6 o , u m m = E 10 w b� N m � � m m I o .eas. s � I o e m m 4 m m a m x , m o m m w � At. ro I� P �� o x I• � I' a m vm \ m mlo m I mI m ° O' x m m ; O IM 3 � s I ` �0 Z00 _ � m 55� 00 e � — — — — — — — — PURCHASE AGREEMENT THIS PURCHASE AGREEMENT ("Agreement") is made and entered into as of the Effective Date (as defined below in Section by and between E&R Investments, LLC, a Minnesota limited liability company ("Purchaser") and the City of Elk River, a Minnesota municipal corporation ("Seller"). In consideration of the mutual covenants and agreements contained herein, including the costs and expenses incurred by Purchaser to perform due diligence related to the acquisition of the Property, and for other good and valuable consideration, Purchaser and Seller do hereby make and enter into this Agreement upon the following terms and conditions: ARTICLE 1 -PURCHASE AND SALE 1.1 Agreement of Purchase and Sale. Seller agrees to sell to Purchaser, and Purchaser agrees to buy from Seller, the real property that Seller owns, or will own or have control over, within the land located in the City of Elk River, County of Sherburne, State of Minnesota, as depicted in Exhibit A, together with any improvements thereon, and all easements and rights benefitting or appurtenant to the property (collectively the "Property"). The Property is identified in this Agreement by reference to four different parcels. Purchaser acknowledges that Seller is not the current owner of Parcels 1 and 3 of the Property and that Seller is in the process of acquiring these parcels from their current owners. The Property and the parcels are depicted in Exhibit A and further described as follows: Parcel 1: Hogen A. Wingness is the fee owner of Tract B of Parcel 1 and Harry R. Lakoduk and Sue Lakoduk are the fee owners of the other portion of Tract A of Parcel 1. This parcel is also encumbered by a Minnesota Department of Transportation ("MnDOT") right-of-way easement. Seller shall use reasonable efforts to obtain deeds from the fee owners of the parcels or their heirs, or in the event that Seller is unable to locate the fee owners or the fee owners are not willing to convey Parcel 1 to Seller, Seller shall acquire Parcel 1 through eminent domain. Seller shall also use reasonable efforts to obtain a release from MnDOT of the right-of-way easement. Timing of the conveyance from the fee owners and the release of the easement from MnDOT shall be consistent with the timing under this Agreement. Parcel 2: Seller is the fee owner of Parcel 2. Parcel 3: Sherburne County ("County") is the fee owner of Parcel 3. The County has represented to Seller that it is willing to convey Parcel 3 to Seller. Seller shall reasonable efforts to obtain a deed from the County for Parcel 3. Timing of the conveyance from the County shall be consistent with the timing under this Agreement. Parcel 4: Seller is the fee owner of Parcel 4. 1.2 Purchase Price and Manner of Pam. The purchase price for the parcels of the Property shall be as follows: (a) For Parcels 1 and 3 the purchase price shall be the consideration amount that the fee owners agree to convey these parcels to Seller in any offer letter or other agreement with Seller or, in the event that Seller must obtain the property using eminent domain, the amount paid by Seller to the fee owners as compensation and the amount charged by MnDOT for releasing its easement. There shall be no mark-up or additional cost charged for the purchase price of these parcels, but Purchaser shall be responsible for paying Seller's acquisition costs, including, but not limited to, appraisal fees, court filing fees, 469680v2 SJS EL185-36 and attorneys' fees. Such fees are estimated at$10,000.00. (b) For Parcels 2 and 4, the Purchase Price shall be $81,000.00. (collectively, the"Purchase Price"). The Purchase Price, subject to prorations and adjustments set forth in this Agreement, shall be payable in full at Closing in cash, by wire transfer of immediately available funds or by a Title Company check to Seller. 1.3 Earnest Money. Within five days after this Agreement is fully executed, Purchaser shall deposit with the Title Company (as defined below) the sum of$1,000.00 ("Earnest Money") in good funds, either by certified bank or cashier's check or by wire transfer. The Title Company shall hold the Earnest Money in accordance with the terms and conditions of this Agreement and any escrow agreement entered into by Seller, Purchaser and Title Company. Interest, if any, accruing on such sum shall become a part of the Earnest Money and shall be distributed as Earnest Money in accordance with the terms of this Agreement. The Earnest Money shall be refundable as set forth in this Agreement. The Earnest Money shall be applied towards payment of the Purchase Price for Parcels 2 and 4. 1.4 Subdivision. Parcel 3 is part of a larger parcel owned by the County that needs to be subdivided. The parties understand that the subdivision is necessary to procure a legal description of the Property for Seller's deed, Purchaser's mortgage, if any, and obtaining acceptable title insurance for the Property. Purchaser may also wish to combine the parcels into a fewer number of parcels or plat the Property. The subdivision or platting of the Property shall be done in compliance with applicable state, county and municipal laws, ordinances and regulations relating to the subdivision or platting of property. Purchaser shall, at its cost, be responsible for the subdivision of the Property and obtaining such platting and subdivision approvals as are necessary so that the Property will be a legally subdivided tax parcel or parcels as of the date of Closing. All costs assessed or charged (whether by special assessment or otherwise) or incurred for offsite improvements, utility improvements or other public improvements required by the City of Elk River or other governmental authority related to the subdivision or development of the Property as part of the Closing shall be the responsibility of Purchaser. Purchaser shall also be responsible, at its cost, to select a surveyor to assist in the subdivision of the Property, and for the filing documents creating the subdivision contemporaneously with the Closing. Purchaser shall not complete any subdivision of the Property and shall not file the plat or other subdivision documents until the Closing. The obligations of Purchaser contained in this Section shall survive and be enforceable after Closing and delivery of the deed. 1.5 Acquisition Cost Escrow. As stated in Section 1.2 of this Agreement, Purchaser shall be responsible for reimbursing Seller for its acquisition costs in acquiring Parcels 1 and 3, which include, but are not limited to, appraisal fees, court filing fees and attorneys' fees. Seller shall be entitled to reimbursement of these costs, regardless of whether or not the parcels are acquired by Seller, Purchaser decides not to purchase one of the parcels or the Property or this Agreement is terminated. Upon execution of this Agreement, Purchaser shall deposit $10,000.00 into an escrow account with Seller for reimbursement of Seller's acquisition costs as outlined above. If any funds held under this Agreement remain after payment of the above, such funds will be returned to Purchaser without interest. If it appears that the actual costs incurred will exceed $10,000.00, Purchaser and Seller will review the costs required to complete the acquisition(s) and Purchaser agrees to deposit additional sums in escrow with Seller. ARTICLE 2—TITLE AND SURVEY 2.1 Title Examination. Purchaser has obtained an ALTA title insurance commitment ("Title Commitment") from Commercial Partners Title ("Title Company") covering the entire Property. The Purchase Agreement Page 2 of 13 469680v2 SJS EL185-36 Title Commitment shows all matters affecting title to the Property and binds the Title Company to issue at Closing an ALTA 2006 form B owner's title insurance policy to Purchaser in the full amount of the Purchase Price ("Title Policy"). The Title Commitment includes copies of all recorded documents affecting the Property with proper searches for bankruptcies,judgments, liens and assessments. Purchaser shall pay the cost of the premium for the Title Policy and any endorsements required by Purchaser. 2.2 Survey/Plat. Purchaser shall, at its option and cost, employ a surveyor, licensed or registered by the state where the Property is located, to prepare an ALTA survey or plat of the Property ("Survey/�"). The Survey/Plat shall include the requirements and items determined by Purchaser, including the proposed square footage of the Property and any proposed lots/outlots. A copy of the Survey/Plat shall be delivered to Seller when obtained by the Purchaser. 2.3 Title Objections, Cure of Title Objections. Purchaser shall have until the later of the expiration of the Due Diligence Period or the date that is 10 days after receipt of both the Title Commitment and Survey to notify Seller in writing of such objections as Purchaser may have to anything contained in the Title Commitment or Survey ("Objections"). Purchaser's failure to make Objections within such time period will constitute a waiver of Objections. However, any matter which is not referenced in the Title Commitment and is first recorded, discovered or disclosed after the effective date of the Title Commitment, whichever is later may be objected to by Purchaser in the manner described herein. Purchaser need not object to mortgages or other liens. If not sooner satisfied, Seller shall cause the Property to be released from any mortgages or other liens against the Property at the closing. Any matter shown on the Title Commitment, other than a mortgage or other lien and not objected to by Purchaser shall be a "Permitted Encumbrance" hereunder. Within seven days after receipt of Purchaser's Objections, Seller shall notify Purchaser in writing if Seller elects not to cure the Objections. If such notice is given within said seven day period, Purchaser may either waive the Objections or terminate this Agreement by giving written notice of termination to Seller within 10 days after Seller's notice is given to Purchaser. If written notice by Seller is not given within the 10 day period, Seller shall use commercially reasonable efforts to correct any Objections within 30 days after the expiration of the 10 day period ("Cure Period"). If the Title Company is willing to issue a title insurance policy to Purchaser that does not except from title insurance coverage an item Purchaser has objected to, the objection relating to such item shall be deemed cured. If the Objections are not cured within the Cure Period, Purchaser shall have the option to do any of the following: (a) Terminate this Agreement by giving written notice to Seller within 10 days after the expiration of the Cure Period and neither Seller nor Purchaser shall have further rights or obligations hereunder. In such event Seller shall return all Earnest Money to Purchaser. (b) Waive the objections and proceed to close without reduction in the Purchase Price. ARTICLE 3 - INSPECTION AND CONTINGENCIES 3.1 Right of Inspection. As of the Effective Date, Purchaser and its agents shall have the right to access the Property to make physical and visual inspections, investigations, surveys and testing as the Purchaser deems necessary. Purchaser agrees that its on-site activities at the Property shall be conducted at reasonable times and shall not unreasonably interfere with the use of the Property by Seller. Seller agrees to meet with the parties conducting any inspections, investigations, surveys and testing and to Purchase Agreement Page 3 of 13 469680v2 SJS EL185-36 cooperate in answering questions concerning the Property as requested. Purchaser shall pay all costs and expenses of such inspections, investigations, surveys and testing conducted by Purchaser. Purchaser shall repair and restore any damage to the Property caused by Purchaser's activities at the Property to substantially the same condition as existed prior to such entry. Purchaser agrees to indemnify and hold Seller and the Property harmless from all claims, costs, expenses or damages, including reasonable attorneys' fees, for injuries or damages resulting from such activities. Seller agrees to hold Purchaser harmless from all claims, costs or damages, including reasonable attorneys' fees, for damages resulting from Purchaser's reporting of any hazardous substances revealed by Purchaser's actions under this Section. These obligations of Purchaser shall survive Closing or any termination of this Agreement. 3.2 Due Diligence Period. The "Due Diligence Period" shall be from the Effective Date through the date that is 180 days after the Effective Date. 3.3 Extension of Due Diligence Period. Purchaser shall have the right to obtain up to two consecutive 60 day extensions of the Due Diligence Period upon written notice to Seller. Upon such extension by the Purchaser the definition of Due Diligence Period shall be changed to such extended date. To exercise the first 60 day extension, Purchaser shall provide written notice to Seller prior to the expiration of the Due Diligence Period. To exercise the second 60 day extension, Purchaser shall provide written notice to Seller prior to expiration of the first extension period. The consideration for these extensions shall be the due diligence costs that Purchaser has incurred in the development of the Property, and no additional monetary consideration shall be required. In the event one of the parcels needs to be acquired by eminent domain or a release of the easement over one of the parcels has not been obtained from MnDOT or the County has yet to approve the conveyance of Parcel 3, the Due Dilligence period shall automatically be extended an additional 30 days after the conclusion of the eminent domain action, receipt of the MnDOT release letter or date of approval by the County, whichever occurs last. Purchaser and Seller understand MnDOT can only release its easement upon request by the fee owner or the City of Elk River. 3.4 Purchaser's Contingencies. The obligations of Purchaser under this Agreement are contingent upon each of the following: (a) Title and Survey. Title and Survey shall have been found acceptable by Purchaser as provided in Article 2. (b) Testing and Inspection. Purchaser shall have determined, in its sole discretion, on or before the expiration of Due Diligence Period, that it is satisfied with the condition of the Property and the results of all inspections and testing of the Property, including, but not limited to, all soil tests, well tests, engineering inspections, property condition reports, hazardous waste and environmental reviews of the Property. (c) Due Diligence Materials and Other Documents Provided By Seller. Purchaser shall have determined, in its sole discretion, on or before the expiration of the Due Diligence Period, that it is satisfied with the Due Diligence Materials and other documents and information concerning the Property provided by Seller under this Agreement. (d) Government Approvals. Purchaser shall have determined, in its sole discretion, on or before the expiration of Due Diligence Period, that it is satisfied that all governmental approvals, permits or authorizations necessary or desired by Purchaser for the Property have or will be obtained. Purchaser shall have determined, in its sole discretion, on or before the expiration of the Due Diligence Period, that all applicable zoning ordinances, Purchase Agreement Page 4 of 13 469680v2 SJS EL185-36 building and use restrictions and codes, required building permits, and any requirements with respect to licenses, permits and agreements necessary for the lawful use and operation of the Property as Purchaser elects, have been or will be issued or complied with. (e) Third PartyApprovals. Purchaser shall have obtained from any third party, on or before the expiration of the Closing, all agreements, covenants, approvals, easements and adequate assurance that Purchaser, in its sole discretion, deems necessary or appropriate for use of the Property as contemplated by Purchaser. (f) Flood Plain. Purchaser shall have determined, in its sole discretion, on or before the expiration of the Due Diligence Period, that the Property is not located within an flood area unacceptable to Purchaser. (g) Development Feasibility. Purchaser shall have determined, in its sole discretion, on or before the expiration of Closing, that it is satisfied with the feasibility of its development of the Property. (h) Anchor Tenant. Purchaser shall have obtained, on or before the Closing, a signed non- contingent lease or sale agreement for the Property from a third-party user that is acceptable to Purchaser in its sole discretion. (i) Financing. Purchaser having obtained a financing commitment in order for Purchaser to purchase and develop the Property, on or before the Closing, at market rates and terms acceptable to Purchaser, in its sole discretion. (j) Subdivision. Purchaser, on or before the final Closing, shall have received all approvals for the subdivision of the Property and met all conditions imposed to subdivide the Property, all so such subdivision is acceptable to Purchaser in its discretion. (k) Purchase Price. Purchaser, on or before any Closing, shall have determined, in its sole discretion, on or before the Closing, that it is satisfied with the consideration being paid to the County for Parcel 3, to the fee owners for Parcel 1 and to MnDOT to release the easement over Parcel 1. 3.5 Right of Termination. Seller agrees that in the event Purchaser determines in its sole discretion that a contingency contained in Section 3.4 has not been satisfied on or before the date specifically set forth for the contingency, Purchaser shall have the right to terminate this Agreement by written notice to Seller on or before three days after the expiration of Due Diligence Period, or three days after the date specifically set forth for the contingency, as applicable. Upon such termination, the Earnest Money shall be returned to Purchaser. If Purchaser acknowledges the satisfaction or waiver of a contingency by written notice to Seller, or if Purchaser does not provide a written notice of termination by the date required, Purchaser shall no longer have a right to terminate this Agreement under this Section because of such contingency. All the contingencies set forth in Section 3.4 are specifically for the benefit of the Purchaser. 3.6 Conditions to Close. In the event Seller cannot obtain the fee interest in Parcel 1 or 3 or MnDOT is unwilling to release its right-of-way easement over the parcel, then Purchaser shall have the right to either elect to not purchase such parcel or terminate this Agreement. Purchaser must provide Seller written notice of its intent. In the event that Purchaser elects not to purchase a particular parcel, it shall no longer have any right to purchase such parcel under this Agreement and all relevant provisions shall be Purchase Agreement Page 5 of 13 469680v2 SJS EL185-36 adjusted to account for such parcel not being purchased. In the event Purchaser elects to terminate this Agreement, upon such termination, neither party shall have any further rights or obligations under this Agreement, except to the extent any rights or obligations expressly survive such termination. ARTICLE 4 - REPRESENTATIONS AND WARRANTIES 4.1 "As Is" Sale and Release. Subject only to the express representations and warranties made under this Agreement, Purchaser is purchasing the Property "as is" and "where is" based on its own investigation and inquiry and is not relying on any representation or warranty of Seller. Subject only to the express representations and warranties made under this Agreement, Purchaser waives any and all warranties pertaining to the Property whether express, implied, statutory or other. Subject only to the express representations and warranties made under this Agreement, Purchaser hereby forever waives, releases and covenants not to bring any demand, claim, cost recovery action or lawsuit it may now or hereafter have or accrue against Seller, its officials, employees, agents, contractors and assigns arising from any environmental release or matter related to the Property, including, but not limited to: (a) any hazardous substances currently located or which come to be located within the Property; or(b) the release of any hazardous substances into, from or through the Property, whether or not attributable to the handling, storage, generation, transportation or disposal of hazardous substances or the mere presence of hazardous substances within the Property; or (c) any hazardous substances which have migrated, leached or traveled onto or off of the Property from any source. This section shall survive and be enforceable for an unlimited period after the date of Closing and delivery of the deed. 4.2 Representations and Warranties of Seller. Seller represents and warrants to Purchaser as follows: (a) Organization and Authority. Seller is a municipal corporation duly organized and validly existing in good standing under the laws of Minnesota. Seller has the requisite power and authority to enter into and perform this Agreement. Seller has or will have the requisite power and authority to transfer all of the Property in accordance with this Agreement. The persons signing this Agreement and Seller's closing documents on behalf of the Seller are authorized to do so. (b) Exclusive Right to Purchase. With the exception of discussions with the fee owners of Parcels I and 3, Seller and its agents shall not conduct any discussions or negotiations or respond in writing to any solicitations by third parties relating to the purchase of the Property during the term of this Agreement. Seller has not entered into any other contracts for the sale of the Property, nor has Seller granted any rights of first refusal or options to purchase the Property or any other rights to others that might prevent the consummation of this Agreement, and Seller will not enter into any such contracts relating to the sale of the Property with any other parties. (c) Due Diligence Materials and Other Documents Provided by Seller. Seller shall deliver to Purchaser, within five days after the Effective Date, copies of all of the following relating to or affecting the Property which Seller has access to or are in Seller's possession or control: soil and environmental reports and tests; inspection notices, reports and results; surveys; site plans; title work;property tax and special assessment bills together with any notices concerning assessment, valuation or property tax or special assessment; agreements with any governmental authority; notices of violation from and other correspondences with governmental authority; governmental authority and third party consultants responses and conclusions with respect to review of the Property; and any other material correspondences and documents, notices and items relating to or affecting Purchase Agreement Page 6 of 13 469680v2 SJS EL185-36 the Property. Seller shall also deliver to Purchaser, within five days after the Effective Date, correct and complete copies of all existing agreements or contracts related to or affecting the Property, including, but not limited to: any MnDOT, maintenance, management and service contracts, whether or not being assumed by Purchaser. The obligation of Seller to provide the above referenced items is ongoing through Closing in the event that Seller gains access to, or possession or control of, any additional or updated above referenced items after the Effective Date. Seller shall cooperate in all reasonable respects with Purchaser's due diligence efforts. Seller shall not be entitled to any compensation in connection with such cooperation. (d) Proceedings. There is no action, litigation, investigation, condemnation, eminent domain or proceeding of any kind pending or threatened against the Property to Seller's actual knowledge. Seller has not received any notice from any governmental authority as to the violation of any law, ordinance or regulation or from any third party as to the breach of any covenants or easements affecting the Property. (e) Wells, Individual Sewage Treatment Systems and Storage Tanks. There are no wells or individual sewage treatment systems, whether in use or abandoned, at the Property. To the Seller's actual knowledge, there are no underground or above ground storage tanks of any size or type at the Property. (f) Seller Activities shall not Change the Property. Seller shall not perform or authorize any activities that change the physical characteristics of the Property from its existing state as of the date of the Effective Date. Seller shall not perform or authorize any removal or alteration of any improvements, trees or vegetation at the Property and shall not perform or authorize any excavation or earth moving after the Effective Date. (g) Seller's Cooperation. Seller shall cooperate in all reasonable respects and in good faith with Purchaser in obtaining governmental and third party approvals, consents and agreements, and shall execute such applications, permits, agreements and other documents as may be reasonably required by Purchaser,provided that such items may be effective as of the Closing. This obligation shall include, but not be limited to, the cooperation of Seller in the subdivision of the Property by Purchaser so that the Property is legally subdivided tax parcels and the execution of any plat and other governmental agreements and documents required for this subdivision. Seller shall not be entitled to any compensation or reimbursement of costs in connection with such cooperation. The representations and warranties contained in this Section shall survive and shall be true and correct on the Effective Date and as of the Closing. Seller shall indemnify and hold Purchaser harmless from, any expenses or damages, including reasonable attorneys' fees, that Purchaser incurs by reason of, or arising out of, any breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. This indemnification obligation of Seller shall survive Closing or any termination of this Agreement. ARTICLE 5 - CLOSING 5.1 Time and Place. The parcels of the Property may be purchased in multiple closings at different times. Each closing ("Closing") shall occur as follows. Purchaser shall be required to purchase both Parcels 2, and 4 together in one Closing, but may purchase one, all or none of Parcel 1 in the same or Purchase Agreement Page 7 of 13 469680v2 SJS EL185-36 separate Closings. The Closing for Parcel 2, Parcel 3 and Parcel 4 shall occur 30 days after the expiration of Due Diligence Period; provided that any extension of the Closing under this subsection shall be only allowed for administrative issues or final city approvals as needed for any closing and shall not be greater than 10 days or upon such earlier date agreed upon by the parties. The Closing for Parcel 1 may be extended by Purchaser in the event that an eminent domain or related action has been initiated by Seller to attempt to obtain the fee interest in this parcel. Seller shall provide notice to Purchaser of the extension of the Closing for Parcell, the reasons for the extension, and an estimated date of Closing. The Closing for Parcel 1 may be extended by Purchaser for up to one year after expiration of Due Diligence Period if Seller is pursuing an eminent domain or related action to attempt to obtain the fee interest in these parcels. Seller shall use reasonable efforts to give at least 10 days' notice to Seller of the extended Closing for Parcel 1. This Closing may occur by deed and money escrow. 5.2 Seller's Obligations at Closing. At each Closing of a parcel of Property, Seller shall deliver to Purchaser a duly executed quit claim deed in recordable form, conveying to Purchaser fee simple marketable title to the parcel of the Property being conveyed to Purchaser and all rights appurtenant, free and clear of all mortgages, liens and encumbrances together with a seller's affidavit, FIRPTA affidavit, evidence as to the authority of the persons executing documents on behalf of Seller, well certificate and all other documents reasonably necessary to consummate the transaction contemplated by this Agreement. Seller shall also deliver possession of the parcel of Property being purchased to Purchaser at the Closing. 5.3 Purchaser's Obligations at Closing. At each Closing of a parcel of Property, Purchaser shall pay to Seller that portion of the Purchase Price for the parcel of Property being purchased as set forth in Section 1.2, as increased or decreased by prorations or adjustments set forth in this Agreement, and shall deliver to Seller all other documents reasonably necessary to consummate the transaction contemplated by this Agreement. Purchaser and Seller agree that the Earnest Money shall be delivered to Seller at the Closing of the first parcel of Property being purchased and applied towards payment of the Purchase Price for the first parcel. 5.4 Closing Costs. Seller and Purchaser agree to the payment of costs in connection with each Closing as follows: (a) Seller and Purchaser each will pay one-half of any reasonable and customary closing fees or charges imposed by the Title Company for the Closing; (b) Seller shall pay all state deed tax for the recording of the deed; (c) Seller shall pay the cost of recording all documents necessary to place record title in the condition warranted by Seller in this Agreement and Purchaser will pay the cost of recording the deed conveying the Property to Purchaser; and (d) any other costs required to be paid by Purchaser or Seller at Closing pursuant to this Agreement. ARTICLE 6 - REAL ESTATE TAXES AND SPECIAL ASSESSMENTS 6.1 Real Estate Taxes and Special Assessments. On or before the Closing, Seller shall pay all general real estate taxes for the parcel of the Property being purchased due and payable in years prior to the year of Closing. General real estate taxes for the parcel of the Property being purchased due and payable in the year of Closing shall be apportioned between Purchaser and Seller based on a 365 day calendar year as if Purchaser were vested with title to the Property on the Closing. Purchaser shall pay or assume all special assessments levied or pending against the Property as of the Closing. General real estate taxes for the parcel of the Property being purchased shall be calculated by uniformly allocating the general real estate taxes for the Property and the other property being subdivided that is retained by Seller on a square foot basis. Seller shall remain responsible for the payment of all general real estate taxes, all levied and pending special assessments and all deferred taxes for that portion of the property being subdivided that is retained by Seller. If required as a result of the subdivision, Purchaser Purchase Agreement Page 8 of 13 469680v2 SJS EL185-36 and Seller agree to prepay at the Closing their share of the general real estate taxes and special assessments allocated to their property for the entire year of Closing. The obligations of Purchaser and Seller contained in this Section shall survive Closing and delivery of the deed. ARTICLE 7 - COMMISSIONS 7.1 Brokerage Commissions. Seller represents and warrants that it has not been involved with any real estate brokers or agents on its behalf in connection with the transaction contemplated under this Agreement and that no commissions or costs are owed or being paid to any real estate broker or agent in connection with this transaction. Purchaser represents and warrants that it has not been involved with any real estate brokers or agents on its behalf in connection with the transaction contemplated under this Agreement and that no commissions or costs are owed or being paid to any real estate broker or agent in connection with this transaction. Purchaser and Seller agree to indemnify and hold harmless the other party from any loss, liability, cost, damage or expense resulting from, or relating to, the breach of its representation under this Section and any claim for real estate commissions or costs resulting from the indemnifying party's actions in connection with this transaction not provided for above. These obligations of Purchaser and Seller shall survive Closing or any termination of this Agreement. ARTICLE 8 EMINENT DOMAIN 8.1 Eminent Domain. If eminent domain proceedings, other than any eminent domain proceedings that the Seller may decide is necessary for Seller to acquire Parcel I are commenced prior to the Closing against all or any part of the Property prior to it being conveyed to Purchaser, Seller shall immediately give written notice to Purchaser, together with a legal description of the property being taken, and Purchaser shall have the right, at its option, to terminate this Agreement by giving written notice within 15 days of Seller's notice. If Purchaser gives notice of termination of the Agreement under this Section, the Agreement shall terminate and the Earnest Money shall be returned to Purchaser. If Purchaser does not give notice of termination, then the parties shall proceed to Closing, with no reduction in the Purchase Price, and Seller shall assign to Purchaser all of Seller's right, title and interest to appear in and receive any award from such proceeding. In the event any awards are made prior to Closing, Seller shall place such awards in escrow with the Title Company, which will release such awards to Purchaser upon Closing or to Seller upon termination of this Agreement. ARTICLE 9 - DEFAULT AND REMEDIES 9.1 Default. Purchaser or Seller shall be in default under this Agreement if either fails to observe, perform or comply with any term, condition or obligation of this Agreement and such failure continues for a period of 10 days after written notice of the failure to the Purchaser or Seller from the other party. 9.2 Remedies. Upon default by a Purchaser or Seller, the other party shall have the following remedies: (a) Purchaser's Remedies. Upon Seller's default under this Agreement, then the remedies available to Purchaser shall be (1) to terminate this Agreement pursuant to law by written notice to Seller and to receive the return of the Earnest Money prior to the Closing of the first parcel of Property, and (2) to seek specific performance of this Agreement on or before six months after Seller's default during which time the Closing will be postponed until such time as Seller has cured its default, and (3) to seek any remedy or damages available at law or in equity. All rights, powers, options or remedies available to Purchase Agreement Page 9 of 13 469680v2 SJS EL185-36 Purchaser pursuant to this Agreement shall be cumulative and not alternative, and the exercise of one right, power, option, or remedy shall not bar any other rights, powers, options or remedies allowed hereunder or by applicable law. The rights and remedies of this Section shall survive Closing or any termination of this Agreement. (b) Seller's Remedies. Upon Purchaser's default under this Agreement prior to the Closing of the first parcel of Property, then the sole and exclusive remedy available to Seller shall be to terminate this Agreement pursuant to law by written notice to Purchaser and upon such termination to receive the Earnest Money as liquidated damages. Upon Purchaser's default under this Agreement after the Closing of the first parcel of Property, then the sole and exclusive remedy available to Seller shall be to terminate this Agreement pursuant to law by written notice to Purchaser without payment of any additional liquidated damages. Upon such termination, Purchaser shall be released from all liability hereunder and neither party shall have further rights or obligations under this Agreement. Seller expressly waives its rights to seek damages in excess of the liquidated damage amount in the event of Purchaser's default. Seller has agreed to these liquidated damages because of the difficulty of ascertaining Seller's actual damages given the uncertainties of the real estate market, fluctuating property values and differences of opinion with respect to such matters. The rights and remedies of this Section shall survive Closing or any termination of this Agreement. ARTICLE 10 - MISCELLANEOUS 10.1 Successors or Assigns. This Agreement shall be binding upon and inure to the benefit of the parties, and their respective successors and assigns. 10.2 Severability. In the event any provision of this Agreement shall be held to be invalid, unenforceable or in conflict with the law of the jurisdiction, the remaining provisions of this Agreement shall continue to be valid, enforceable and not be affected by such holding. 10.3 Waiver. No term or condition of this Agreement will be deemed waived or amended unless expressed in writing. The waiver of any condition or the breach of any term will not be a waiver of any subsequent breach of the same or any other term or condition. 10.4 Assignment. Purchaser may not assign its rights under this Agreement, without prior written consent of Seller, such consent will not unreasonably withheld,provided that the Purchaser is transferring its rights to an entity owned or controlled by the Purchaser. In the event that the Seller approves an assignment by the Purchaser, in no event shall the Purchaser be released from liability hereunder. 10.5 Notices. Any notice required or permitted pursuant to this Agreement shall be in writing and delivered by (a) personal delivery, (b) reputable overnight delivery service, or (c) United States mail, postage prepaid, either certified or first class mail,. All notices shall be sent to a party at the address set forth below, or to such other address or person as the party shall have designated in writing. Notices shall be deemed given upon the earlier of the date of actual receipt or(i) as of the earlier of the date of delivery or the date of first attempted delivery if by personal delivery or overnight delivery, or (ii) as of the earlier of the date of delivery or the date the post office first leaves notice of the mailing if by certified mail. If to Purchaser: E&R Investments, LLC Attn: Gregory R. Ebert 23350 County Road 10 Purchase Agreement Page 10 of 13 469680v2 SJS EL185-36 Corcoran, MN 55357 Fax: (763) 498-9951 Email: gebert@ebertconst.com With a copy to: If to Seller: City of Elk River Attn: City Administrator 13065 Orono Parkway NW Elk River, MN 55330-5600 With a copy to: Kennedy& Graven, Chartered Attn: Sarah Sonsalla 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 10.6 Further Assurances. Each party agrees that it will execute and deliver such other documents and take such other action, whether prior or subsequent to Closing, as may reasonably be requested by the other party, to further consummate the transaction contemplated by this Agreement, without further consideration. 10.7 Termination. If this Agreement is terminated by either Purchaser or Seller pursuant to a right of termination expressly set forth in this Agreement, neither party shall have any further rights or obligations under this Agreement, except for the obligations concerning the Earnest Money and to the extent any rights or obligations expressly survive such termination. 10.8 Time of Essence. Time is of the essence of this Agreement. 10.9 Calculation of Time Periods. Except as specifically set forth in this Agreement, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is on a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next business day following such Saturday, Sunday or legal holiday. As used herein, the term "legal holiday" means any state or federal holiday for which financial institutions or post offices are generally closed in the state where the Property is located. 10.10 Governing Law. This Agreement shall in all respects be interpreted, construed and enforced according to the laws of the state where the Property is located. 10.11 Counterparts. This Agreement may be executed separately and independently in any number of counterparts and each and all of which together shall be deemed to have been executed simultaneously and regarded as one agreement dated the Effective Date. 10.12 Captions. The captions and headings contained in this Agreement are for convenient reference only and shall not affect the interpretation of this Agreement. Purchase Agreement Page 11 of 13 469680v2 SJS EL185-36 10.13 Attorneys' Fees and Costs. Purchaser and Seller will pay their own attorneys' fees for the transaction contemplated by this Agreement, except as outlined in this agreement for the purchase of the parcels. . 10.14 Survival. All of the terms of this Agreement, including, without limitation, the representations and warranties contained herein, shall survive and be enforceable after the Closing and delivery of the deed. 10.15 Entire Agreement/Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter herein and fully supersedes all prior written or oral agreements between the parties with respect to such matters. No other agreement, statement or promise made by any party and no amendment, modification or other change of any provision of this Agreement shall be effective unless in writing signed by the parties. 10.16 Effective Date. The date that the last party executed this Agreement as evidenced by the dates in the signature block of this Agreement. If either party fails to date this Agreement by its signature, the date by the signature of the other party shall constitute the Effective Date. Upon execution, a party shall promptly forward a signed original to the other party. signature page follows Purchase Agreement Page 12 of 13 469680v2 SJS EL185-36 IN WITNESS WHEREOF, Purchaser and Seller have executed this Purchase Agreement as of the Effective Date. PURCHASER: E&R Investments, LLC a Minnesota Limited Liability Company By: Print: Gregory R. Ebert Title: President Dated: SELLER: CITY OF ELK RIVER By: Print: John Dietz Title: Mayor By: Print: Tina Allard Title: City Clerk Dated: Purchase Agreement Page 13 of 13 469680v2 SJS EL185-36 Exhibit A to Purchase Agreement Depiction of Property [to be added] 469680v4 SJS EL185-36 Exhibit B to Purchase Agreement Description of Parcels 1,2,3 &4 Parcel 1 (Wingness/Lakoduk Parcel) Part of the following described Land, which description must be determined by a survey: Tract A (Wingness Parcel): That part of the South half of the Northwest Quarter of Section 32, Township 33 North, Range 26 West, Sherburne County, Minnesota,which lies within a distance of 112.5 feet on each side of the following described line: Beginning at a point on the center line of High Street, distant 353.5 feet North of its intersection with the center line of Line Street in the Village of Elk River, according to the plat thereof of on file and of record in the office of the Registrar of Deeds in and for Sherburne County; thence run westerly at an angle of 89 degrees 54 minutes with said center line of High Street (when measured from South to West) for a distance of 545.6 feet; thence deflect to the right at an angle of 26 degrees 01 minutes for a distance of 2,118.7 feet; thence deflect to the left at an angle of 28 degrees 21 minutes for a distance of 2,251.8 feet; thence deflect to the left on a 2 degree 30 minutes curve, delta angle 28 degrees 12 minutes for a distance of 1,128 feet; thence on a tangent to said curve for a distance of 1,459.2 feet; thence deflect to the right on a 2 degree 30 minute curve, delta angle 30 degrees 51 minutes, for a distance of 1,234.0 feet; thence on a tangent to said curve for a distance of 250 feet and there terminating; Together with all that part of the Southwest quarter of the Northwest quarter of said Section 32 lying Southeasterly of the above described strip, excepting therefrom the right of way of existing highway. AND Tract B (Lakoduk Parcel): That part of the Northwest Quarter of the Southwest Quarter of Section 32, Township 33 North, Range 26 West, Sherburne County, Minnesota; which lies Northwesterly of a line run parallel with and distant 112.5 feet Southeasterly of the following described line: Beginning at a point on the center line of High Street, distant 353.5 feet North of its intersection with the center line of Line Street in the Village of Elk River, according to the plat thereof now on file and of record in the office of the Register of Deeds in and for Sherburne County; thence run westerly at an angle of 89 degrees 54 minutes with said center line of High Street (when measured form South to West) for a distance of 545.6 feet; thence deflect to the right at an angle of 26 degrees 01 minutes for a distance of 2,118.7 feet; thence deflect to the left at an angle of 28 degrees 21 minutes for a distance of 2827.5 feet; thence deflect left at an angle of 28 degrees 12 minutes for a distance of 2,034.9 feet; thence deflect to the right on a 2 degree 30 minute curve, delta angle 30 degrees 51 minutes for a distance of 1,234.0 feet; thence on a tangent to said curve for a distance of 250 feet and there terminating; 469680v4 SJS EL185-36 Together with all that part of the above described track lying Southeasterly of the above described strip and Northerly of the Southerly right of way line of Temporary Trunk Highway No. 10, as same is now located and traveled over and across the above described tract; excepting therefrom the right of way of existing highway. Parcel 2 (City of Elk River Parcel) Outlot A, Country Crossing Business Center, Sherburne County, Minnesota. Parcel 3 (County of Sherburne Parcel) All that part of the West Half of the Northeast Quarter of the Southwest Quarter of Section 32, Township 33, Range 26, Sherburne County, Minnesota lying Southerly of the center line of Old U.S. Highway No. 10 and Northerly of the Southerly right-of-way line of Main Street as dedicated in the plat of Gospodor's Orono Lake Addition. Parcel 4 (City of Elk River Parcel) All that part of the West Half of the Northeast Quarter of the Southwest Quarter of Section 32, Township 33, Range 26, Sherburne County, Minnesota, described as follows: Commencing at the Northwest corner of said West Half of the Northeast Quarter of the Southwest Quarter; thence South 00 degrees 48 minutes 04 seconds East, assumed bearing, along the West line of said West half of the Northeast Quarter of the Southwest Quarter, a distance of 377.74 feet to the point of beginning of the land to be hereinafter described; thence North 64 degrees 33 minutes 16 seconds East a distance of 205.29 feet; thence Northeasterly a distance of 192.39 feet along a tangential curve concave to the Northwest having a radius of 513 feet and a central angle of 21 degrees 29 minutes 15 seconds; thence Northeasterly and Easterly along a reverse curve concave to the Southeast, to the intersection with the Westerly extension of the Southerly right of way line of Main Street as dedicated in the plat of Gospodor's Orono Lake Addition according to said plat on file and of record in the office of the County Recorder, Sherburne County, Minnesota, said curve being tangent to the last described curve and tangent to said Westerly extension of the Southerly right of way line; thence North 88 degrees 33 minutes 43 seconds West, along said Westerly extension of the Southerly right of way line a distance of 548.71 feet to the intersection with said West line of the West Half of the Northeast Quarter of the Southwest Quarter; thence South 00 degrees 48 minutes 04 seconds East, along said West line, a distance of 300.67 feet to said point of beginning. And The right-of-way of Business Center Drive. 469680v4 SJS EL185-36