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HomeMy WebLinkAboutScanned on 07/20/2010 at 14:53:01 NO. CV 98 0492578S REX LUMBER COMPANY SUPERIOR COURT JUDICIAL DISTRICT OF V. NEW BRITAIN TOWN OF SOUTH WINDSOR OCTOBER 15, 1999 MEMORANDUM OF DECISION The plaintiff, Rex Lumber Company ("Rex"), brings this real estate tax appeal challenging the valuation placed upon its property by the assessor for the Town of South Windsor on the grand lists of October 1, 1997 and October 1, 1998. The defendant was defaulted for failure to plead on May 7, 1999. On May 24, 1999, Rex filed a claim for a hearing in damages. On July 28, 1999,the court scheduled the hearing in damages for September 8, 1999. Rex filed a notice of intention to call an expert witness on August 4, 1999. The court file reflects that Rex certified that its pleadings were all mailed to the, defendant's counsel, and a copy of the court notice shows that the notice of the scheduled hearing was mailed to all counsel on July 28, 1999. The plaintiff appeared for the scheduled hearing in damages on September 8, 1999, but the defendant did not appear.' At the hearing, Rex lOn September 13, 1999, five days after the scheduled hearing in damages was held,the defendant filed a motion to open the default for failure to plead claiming that the matter was inadvertently not placed on the calendar of its counsel. The motion was denied. i8noo H11 3anS 66e �I� 80 (I S 1 130 � '1 introduced the testimony of its appraiser, John W. Nitz, and also presented Nitz's appraisal report, a second appraisal report by Appraisal Resources of Connecticut, Inc. ("Appraisal Resources"), copies of two environmental reports on the property, and a copy of the assessor's property record card. Based upon the evidence presented by Rex, we find the following facts. Rex's property is located at 489 Sullivan Avenue, South Windsor. The subject property consists of 8.41 acres of land. The land contains a metal industrial building with approximately 182,080 square feet of space constructed in 1974 and 1978. The building is in average condition. The subject property was conveyed by Industrionics Service Company, Inc. to Cardinal Industries,Inc. on July 7, 1987 for$4,100,000. The South Windsor assessor assessed the property on the October 1, 1994 grand list based upon a fair market value of$4,193,200. Rex purchased the subject property from the Federal Deposit Insurance Company on December 20, 1994 for$1,090,000. At the request of RECOLL Management Corporation, Appraisal Resources appraised the property as of July 25, 1994. In that appraisal, the 8.41 acres of the subject property was part of a larger parcel consisting of 15.035 acres. Appraisal Resources valued the 15.035 acre parcel with the improvements at$3,275,000. Appraisal Resources concluded that the highest and best use of the property as of July 25, 1994, as improved, was its "continued present use as industrial warehouse/office." (Plaintiff's Exhibit B,p. 2.) We conclude that the highest and best use of the property as of October 1, 1994 was industrial warehouse/office use. Appraisal Resources arrived at a fair market value of the subject at$3,275,000 using the comparable sales approach. Based upon comparable sales, Appraisal Resources multiplied the 2 182,080 square feet of building by the market value of$18 per square foot of gross building area to include land to arrive at its rounded estimate of value of$3,275,000. Appraisal Resources also considered the income capitalization approach. However, the subject was 93% vacant in July of 1994. Cardinal Industries, Inc., the owner of the subject in July of 1994, was in bankruptcy. The trustee of the bankrupt estate leased 13,600 square feet of the subject to the former owner, Industrionics Service Company for 5 years commencing on August 1, 1992 for$3.17 per square foot per year. Using a discounted cash flow analysis over a period of 10 years, Appraisal Resources concluded that the value of the subject using the income approach, as of July 25, 1994, was $2,940,000. After valuing the property using both approaches, in its final reconciliation, Appraisal Resources placed exclusive reliance on the sales comparison approach. (Plaintiff's Exhibit B, P. 64.) Nitz, who testified at the hearing, basically reviewed and adopted the appraisal analysis and conclusions of Appraisal Resources. Nitz revised the value conclusion of Appraisal Resources to account for the change in the size of the parcel from 15.035 acres to 8.41 acres by subtracting $230,000, which was $35,000 per acre multiplied by 6.625 acres. Nitz raised the issue of environmental problems on the subject property and for this reason discounted his revised value by 5%to arrive at a final value of the subject as of October 1, 1994 of$2,620,000. An environmental survey made for Rex prior to Rex's purchase of the subject property did disclose some contamination by the prior owner,Industrionics Service Company, Inc. The survey reported relatively localized affected areas based on groundwater results. (Plaintiff's Exhibit D,p. 15.) Appraisal Resources did not value the subject property as affected by environmental problems since the Connecticut Department of Environmental Protection did not 3 list the subject on their"Dynamic Inventory"which includes the Comprehensive Environmental Response Compensation Liability Information System and Superf ind sites. (Plaintiff's Exhibit B, covering letter.) Accordingly, we do not find that the value of the property should be reduced for environmental stigma. We consider the market sales approach used by Appraisal Resources to be the most credible approach to value the subject property. The Appraisal Resources report is based upon 15.035 acres of land. We must reduce the value of$3,275,000 by excluding the value of 6.625 acres of land that is not now part of the subject property. We find, based on the land sales in Nitz's report, that$30,000 per acre is a reasonable unit value for the land on October 1, 1994. Subtracting a total of$198,750 ($30,000 per acre multiplied by 6.625 acres) from$3,275,000 results in a total of$3,076,250. Based upon our analysis of the sales data used by Appraisal Resources and Nitz, we conclude that the fair market value of the subject property, as of October 1, 1994, was $3,076,250. Since Rex's property was overvalued by the South Windsor assessor on October 1, 1994, judgment may enter in favor of the plaintiff sustaining its appeal. The assessor shall correct the assessment of Rex's property in accordance with this decision beginning on the October 1, 1997 grand list until the next town-wide revaluation. Arnold W. Aronson Judge Trial Referee 4 I copy NO. CV98 0492578S (RTX) SUPERIOR COURT REX LUMBER COMPANY J. D. OF NEW BRITAIN VS. TAX & ADMINISTRATIVE APPEALS TOWN OF SOUTH WINDSOR SEPTEMBER 10, 1999 Cq N co f0 z° MOTION FOR JUDGMENT The Plaintiff represents to the Court as follows: do 1. At a hearing in damages to the Court (Aronson, Judge Referee) held 30.1 on September 8, 1999, the Plaintiff presented its evidence as to Qo. =' damages resulting from an unfair and inaccurate assessment of the value of its property by the Defendant. Qo •� 2. In the event that the Court finds in favor of the Plaintiff, the W W Plaintiff will have made an overpayment of taxes on the 10/97 List z • and on the 10/98 List. o MR x 3 . Connecticut General Statute §12-117a gives the Court the power to Z. 90 order reimbursement by the Defendant to the Plaintiff including interest and costs. 0 0 m ORAL ARGUMENT NOT REQUESTED TESTIMONY NOT REQUIRED _2_ WHEREFORE, The Plaintiff moves the Court to enter judgment in favor of the Plaintiff and against the Defendant for the whole amount of such overpayment as found together with interest and costs to be taxed pursuant to Plaintiff's Bill of Costs to be filed. N REX LUMBER COMPANY 6 19 z m D BY Gerard I. Adelman • Its Attorney �o Qc.- J N Q O y N cc Q ORDER z UJ WThe foregoing Motion having been duly presented and heard, it is hereby UJ�2 ORDERED: GRANTED / DENIED ar . z BY THE COURT x z°m S • Clerk W m m a a 0 m m m CERTIFICATION This is to certify that a copy of the foregoing was mailed, postage prepaid, on this loth day of September 1999 to Atty. Barry Guiliano, 773 Main St. , Manchester, CT 06040. Gerard I. Adelman Commissioner of Superior Court Misc2:rexlumbl EIGAND, MAHON & ADELMAN $36BROAD STREET. P.O.BOX 2420 MERMEN,CONNECTICUT 06450-4336 ATTORNEYS AT LAW,P.C. JOSEPH F.WEIGAND,JR. BRIAN T.MAHON (203)238-1010 GF.R A RD I.ADELMAN - PAX(203)630-1930 email: wma@snet.net JAMES B.STREETO• http://www.wmalawyer.com MICHAEL D.QUINN JOHN F.STANTON DATE: September 10, 1999 OF COUNSEL. •ALSO MEMBER OF NEW PORK BAR - - - - - TO: Barry Guiliano, Esq- 773 Main Street Manchester, CT 06040 FROM: Gerard I. Adelman RE: Rex Lumber Co. vs. Town of South Windsor [ ] Please file the enclosed pleadings. [ ] Enclosed please find check # in`-the amount of $ for filing fee. [ ] Please sign the enclosed and return it to me at your earliest convenience. [ ]' Enclosures for your approval. [ ] Please record the enclosed. [ ] Enclosures pursuant to your request. [ ] Please sign the document in the presence of a Notary Public and return to me at.your earliest convenience. [ l Copy of my appearance.. [ ]` Case Management Agreement. ( J Other Copy of appraisal by John W. Nitz, M Gerard I. Adelman1 m.ter:.ncio..z. REAL ESTATE APPRAISAL REVIEW Real Estate Located at: 489 Sullivan Avenue South Windsor, Connecticut Owner: Rex Lumber Company Date of Review: September 3, 1999 Prepared For: Gerard I. Adelman, Esq. Weigand, Mahan & Adelman 636 Broad Street P. O. Box 2420 Meriden, CT 06450-4336 Date of Appraisal: July 25, 1994 Date of Value: October 1, 1994 Appraiser: Appraisal Resources of Connecticut, Inc. Review Prepared by: John W. Nitz, MAI John W. Nitz&Associates 15 5 Greystone Drive Plantsville, CT 06479-1856 (860) 276-0298 John W. Nitz & Associates 155 Greystone Drive Plantsville, CT 06479-1856 John W. Nitz,MAI (860) 276-0298 telephone Real Estate Appraisers (860) 276-8464 fax and Consultants September 3, 1999 Gerard I. Adelman, Esq. Weigand, Mahan & Adelman 636 Broad Street P. O. Box 2420 Meriden, CT 06450-4336 Re: Real Estate Located at: 489 Sullivan Avenue South Windsor, Connecticut Dear Attorney Adelman: A review of the above referenced appraisal has been conducted in accordance with USPAP (Uniform Standards of Professional Appraisal Practice), as required by FIRREA Title XI and adopted by the FDIC Final Rule 12 CFR Part 323. On the basis of my review, the appraisal of the above referenced property generally conforms to USPAP standards. The following review serves three purposes: 1) to establish credibility, reliability, and conformity of the appraisal prepared by Appraisal Resources of Connecticut, Inc.; 2) to update the appraisal from July 25, 1994, to October 1, 1994, the date of revaluation in the town of South Windsor; and 3) to exclude the adjacent parcel, comprised of approximately 6.625 acres, as well as reflect the stigma resulting from prior environmental factors affecting the property. Gerard 1. Adelman. Esq. -2- September 3, 1999 Conclusion Based on the information contained in the report, an inspection of the property, and a review of market data not included in this appraisal, your review appraiser has revised the market value from $3,275,000 to $2,620,000, as of October 1, 1994. Market Value as of October 1, 1994: $2,620,000 This review has been completed subject to the attached Review Appraiser's Certification. Respectfully submitted, -c t/. JeJ fi G hn W Nitz MAI rti neral Appraiser T Lic se No. 00000449 REVIEW OF MINIMUM STANDARDS (Y)es, (N)o, (N/A) Not Applicable, (P)artial DOES THE APPRAISAL: Y 1. Conform to the Uniform Standards of Professional Appraisal Practice (USPAP, revised 12/90) adopted by the Appraisal Standards Board of the Appraisal Foundation, with the exception that the Departure Provision of USPAP does not apply for an appraisal completed for a "Federally Related Transaction." Y 2. Identify the real property interest appraised and the effective date of value. Y 3. Discuss the scope of the appraisal, the purpose of the appraisal, the function of the appraisal. Y 4. Disclose any steps taken that were necessary to comply with the Competency Provision of USPAP. Y 5. Document a conclusion of market value based upon the definition set forth in Section 34.42(f) of Title XI (FIRREA) and USPAP. Y 6. Provide sufficient detail and depth of analysis that reflects the complexity of the real estate appraised, enabling the reader to ascertain the estimated market value and the rationale for the estimate. Y 7. Analyze and report in reasonable detail prior sales or current listing of the property being appraised. Y 8. Analyze and report on current revenues, expenses, and vacancies if the real estate is currently, and is estimated to continue to be, an income producing property. Y 9. Analyze and report a reasonable exposure time given the property's characteristics and market conditions, disclosing any assumptions used. Y 10. Analyze and report on current market conditions and trends, including the reporting of marketing activity on the subject property, to the extent that they affect the value of the subject. 1 REVIEW OF MINIMUM STANDARDS (Continued) (Y)es, (N)o, (NIA) Not Applicable, (P)artial DOES THE APPRAISAL: N/A 11. (i) Analyze and report appropriate deductions and discounts for incomplete/proposed construction or unabsorbed rental or sale units. Y (ii) Include the value of the property in its "as is" condition. Y 12. Include in the certification an additional statement required by USPAP that: ". . . the appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan." Y 13. Provide all information necessary to enable a reader to understand the appraiser's logic, reasoning, judgment and analysis (i.e., is the report self-contained). Y 14. Include a legal description of the real estate being appraised. N/A 15. Identify and separately value any personal property, fixtures, tangible or intangible items that are not real property, but are included in the appraisal, and discuss the impact of their inclusion or exclusion on the estimate of market value. Y 16. Follow a reasonable valuation method that addresses the cost approach, income capitalization approach, and sales comparison approach and supports the elimination of an appraisal approach not used. Y 17. Reflect that it was completed without regard to the racial, ethnic, religious, or national origin/characteristics of the applicant, buyer, seller, tenants, or neighborhood where the subject is located. Y 18. Contain a signed copy of the engagement letter in the Addenda. 2 COST APPROACH The appraisal excludes a cost approach to value; therefore, your review appraiser has included the cost approach to support the indicated values established via the sales comparison approach and the income capitalization approach. The cost approach represents the sum of the unimproved land value and the depreciated cost of the improvements. In estimating the subject land value, five comparable land sales located within the subject market area have been considered in this analysis. Units of comparison analyzed include sale price per square foot of land and the sale price per acre of land. Each land sale has been adjusted based upon financing terms, market conditions, location, and various physical characteristics. After establishing the subject land value, the replacement cost of the improvements is estimated utilizing the Marshall Valuation Service. Accrued depreciation in the form of physical deterioration, functional obsolescence, and external obsolescence is then deducted from the replacement cost estimate. The sum total of the land value and depreciated cost of the improvements represents the market value of the property via the cost approach in this analysis. The following comparable land sales have been analyzed and adjusted in this analysis. Summary of Land Sales Land Area Date Sale Price Location Acres Zone of Sale Sale Price Per Acre Lots 1 and 48A Woodlawn Road 6.8.1 PI& 02/04/94 $280,000 $419116 Berlin, CT HI 135 Great Pond Road 20.11 I-1 07/21/93 $800,000 $39,781 Windsor, CT Cedar Street 32.20 1 07/30/93 $700,000 $21,739 Newington, CT Lot 1 Helmsford Way 17.00 I-1 09/15/93 $900,000 $52,941 Windsor, CT 1046R Tolland Tnpk. 29.93 "IND 07/07/94 $1282,650 $42855 "Manchester, CT 3 COSTAPPROACH(Continued) Analysis of Land Sales The foregoing land sales indicate an unadjusted sale price per acre range of $21,739 to $52,941 per acre, or an average of$39,686 per acre. Adjustments to the land sales in comparison to the subject have been considered for various factors, including property rights conveyed, favorable financing, unique conditions of the sale, market conditions, location, and various physical characteristics. In general, the subject falls in the lower end of the value range due to the presence of inland wetlands affecting the site. Land Value Estimate The foregoing land sales have been analyzed and adjusted for various factors including 1) real property rights conveyed; 2) financing; 3) conditions of sale; 4) market conditions; 5) location; and 6) various physical characteristics, including land area, topography, soil type, inland wetlands, etc. Based upon an analysis of the land sales and the subject site, an appropriate market value for the subject land is approximately $30,000 per acre. Therefore, the land value is calculated as follows: Land Area Unit Value Land Value 15.035 acres @ $30,000/acre = $451,050 Indicated Land Value $4509000 4 COST APPROACH(Continued) Replacement Cost Estimate The actual construction costs were not available; therefore, the Marshall Valuation Service has been consulted in establishing the replacement costs of the improvements. Source: Marshall Valuation Service Reference: Section 14, Page 17 Type: Class S, Average Quality, Distribution Warehouses Building Data Gross Building Area: 182,080 square feet Age: Built 1974 and 1978 (majority) Percentage of Office Finish: 11.4% Perimeter: 1,838 feet Story Height: 18 feet - clearspan Base Cost: $21.58 HVAC Adjustment: + .49 Adjusted Base Cost: $22.07 Sprinkler Adjustment: + 1.06 Adjusted Base Cost: $23.13 Perimeter Multiplier: x .86 Adjusted Base Cost: $19.89 Story Height Multiplier: x1.086 Adjusted Base Cost: $21.60 Current Cost Multiplier: x 1.07 (October 1994) Adjusted Base Cost: $23.11 Local Cost Multiplier: x 1.12 (Windsor Locks) Adjusted Base Cost: $25.89 Entrepreneurial Profit (5%) x 1.05 Adjusted Base Cost: $27.18 Then: Gross Replacement Building,Area Unit Cost Cost 182,080 sq.ft. @ $27.18/sq.ft. _ $4,948,934 5 COST APPROACH(Continued) Entrepreneurial Profit Entrepreneurial profit (5%) has been included due to the fact that someone requiring a similar building would purchase the site and allow a general contractor (developer) to handle a majority of the general contracting duties. Accrued Depreciation Physical Deterioration The physical age-life method has been developed in estimating the total physical deterioration applicable to the property. In order to estimate physical deterioration by the economic age-life method, the ratio between the effective age and the total economic life of the building is applied to the total replacement costs. The estimated effective age is 17 years, which is close to its actual age due to the fact that minimal renovations or replacements have occurred since its construction. The total economic life is estimated to be 40 years, based on a national survey of similar distribution facilities. Therefore, physical deterioration for the subject property can be calculated as follows: Effective Age _ 17 vears Total Economic Life = 40 years = 43% Then: Percentage of Physical Replacement Costs Physical Deterioration Deterioration $4,948,934 x 43% _ $2,128,042 Replacement Costs: $4,948,934 Less Physical Deterioration: (2,128.042) Depreciated Cost of Improvements: $2,820,892 6 COSTAPPROACH(Continued) Accrued Depreciation (Continued) Functional Obsolescence A deduction of 10% of the depreciated cost of the improvements has been made for functional obsolescence to account for functional inadequacies, including the lack of handicap accessibility to lavatories and other areas; the insufficient loading dock and truck height overhead doors; as well as superadequacies in the form of office areas. Then: Percentage of Depreciated Functional Total Functional Cost Obsolescence Obsolescence $2,820,892 x 10% _ $ 282,089 Total Depreciated Cost of the Improvements: $2,538,803 External Obsolescence A deduction of 5% has been reflected to account for soft market conditions and the fact that buyers are avoiding new construction in lieu of purchasing existing facilities priced well-below construction costs. Then: Percentage of Depreciated External Total External Cost Obsolescence Obsolescence $2,538,803 x 5% _ $ 126,940 Total Depreciated Cost of the Improvements: $2,411,863 7 COSTAPPROACH(Continued) Site Improvements Macadam paved parking, driveways, and curbing (102,740 sq ft. @ S1.50/sq ft.): $154,110 Landscaping: 15,000 Miscellaneous (includes walkways, signage, and other items): 15,000 Total Site Improvements: $184,110 Depreciated Cost of the Site Improvements The site improvements typically depreciate at a greater rate than structural improvements; therefore, 48% has been deducted for site improvements, based on an effective age of 12 years and a total economic life of 25 years. Therefore, the depreciated cost of the site improvements is calculated as follows: Replacement Cost of the Site Improvements: $184,110 Less 48%Accrued Depreciation: (S 88,373) Depreciated Cost of the Site Improvements: $ 95,737 Soft Costs Brokerage fees and real estate taxes during construction have not been included because an owner-occupant would likely purchase the land and construct the facility for its own operations. Therefore, no lag time during construction or brokerage fees would be necessary. Soft costs, such as engineering and survey fees, insurance, construction interest, and other miscellaneous costs, have already been included in the Marshall Valuation:Service estimate. Summary Depreciated Cost of Improvements: $2,507,600 Land Value: 450,000 Indicated Value: $2,957,600 Rounded to: $2,960,000 Indicated Value Via the Cost Approach $29960,000 8 SALES COMPARISONAPPROACH The appraisers develop four comparable improved property sales in the sales comparison approach. The four comparable sales are good comparisons to the subject property with the exception of Sale 1 (280-320 Murphy Road, Hartford, CT). Sale 1 consists of a multi-tenant office/industrial/commercial facility containing only 73,500 square feet of gross building area. The facility lacks comparability due to the existing tenancy and the fact that an investor has different motivations compared to an owner-occupant. Leases in Sale 1 range between $4.00 and $8.00 per square foot triple net; whereas, the market rent established for the subject property in the income capitalization approach is $2.50 per square foot triple net. Sale 1 also has a high percentage of office finish, 30%, and is considerably smaller in building size. Typically, smaller buildings sell at a lower sale price per square foot than larger buildings with all other factors being equal. The appraisers adjust for office finish and building size; however, the adjustments appear insufficient. The following two supplemental improved property sales have been included in developing the sales comparison approach. 9 SALES COMPARISONAPPROACH(Continued) IMPROVED PROPERTY SALE NO. 1 Location: 210 Redstone Hill Road, corner of Emmett Street Bristol, Connecticut Grantor: McGraw Edison Company Grantee: The Rowley Spring Company Legal Reference: Volume 1132, Page 842 of the Bristol Land Records Date of Sale: June 21, 1994 Zoning: IP-1 (Industrial) Zone Land Area: 21.60 acres Type of Property: One-story, masonry, industrial complex Land-to-Bldg. Ratio: 6.11:1 Gross Building Area: 154,124 square feet Sale Price: $1,750,000 Unit Sale Price: $11.35 per square foot Financing: The Greater Bristol Development Foundation, Inc., provided a $1,750,000 loan. Interest of 4% is charged on the base amount of$1,400,000. Monthly payments are set initially at $4,666.67 interest only from August 1, 1994, to July 1, 1995; thereafter, the monthly payments increase to $10,355.63 (principal and interest) for six years, based upon a 15-year amortization schedule. The additional loan amount of$350,000 results in 36 payments of$9,722.22 from August 1, 1998, to July 1, 2001. 10 SALES COMPARISONAPPROACH(Continued) IMPROVED PROPERTY SALE NO. 1 (Continued) Comments: The sale property consists primarily of a one-story, masonry and steel, office/manufacturing facility, built in 1963, containing a gross building area of approximately 149,701 square feet. There is no basement. The office area totals 29,701 square feet or 20%; whereas, the remaining building area is manufacturing area with a ceiling height of 16 feet. The facility is fully sprinklered and air conditioned. The office area contains 37 partitioned rooms with ample lavatories. Heating to the office section is via a gas-fired steam system, convector forced hot air radiation; whereas, gas-fired suspended heaters service the manufacturing area. Two other outbuildings are part of the property including a 4,015 square foot, masonry, storage building; and a 408 square foot, bunker building. The site contains 257,250 square feet of macadam paved parking with all public utilities connected to the improvements. The site is generally rectangular and level, located at the corner of Redstone Hill Road and Emmett Street. The property is not located within a designated flood zone. Properties to the north consist of lower-income to middle-income residential condominiums; whereas, Superior Electric and the Middle Street industrial area including ESPN, are within proximity. This industrial area in Bristol has experienced growth over the past three to five years, despite recessionary conditions throughout the region. According to a representative of the mortgagee, the sale property had been vacant for approximately four to five years after Bussman Company relocated its operations. The original asking price was $2,800,000. The facility was in overall average physical condition at the date of sale. 11 SALES COMPARISONAPPROACH(Continued) IMPROVED PROPERTY CONTRACT FOR SALE NO. 2 Location: 475 Smith Street Middletown, Connecticut Grantor: Tristar Sports, Inc. Grantee: Lyman Products Corporation Legal Reference: Volume 1062, Page 338 of the Middletown Land Records Date of Sale: Pending (closing date December 28, 1994) Zoning: IT (Interstate Trade) Industrial Zone Land Area: 568,458 square feet or 13.05 acres Type of Property: One-story, steel, industrial/office facility Land-to-Bldg. Ratio: 5.83:1 Gross Building Area: 97,493 square feet Contract Price: $1,525,000 Unit Contract Price: $15.64 per square foot Financing: The grantee received bank financing (Corestates Bank, N.A.) in the amount of $1,320,000 with 59 monthly installments of $7,333.33, commencing on January 1, 1995. The principal balance of$887,333.33 is due in five years. The interest rate is .75% plus prime over the term of the loan. 12 SALES COMPARISONAPPROACH(Continued) IMPROVED PROPERTY CONTRACT FOR SALE NO. 2 (Continued) Comments: The property consists of a one-story, steel, industrial/office facility built in 1969/70. The office area totals 8,000 square feet or 8% of the building; whereas, the remainder of the facility consists of manufacturing/warehouse area divided into several large work areas with concrete block demising walls. The ceiling height in the manufacturing/warehouse area is approximately 16 feet. This area also includes a small, 720 square foot, unfinished mezzanine area, four overhead doors with dock levelers, and one overhead door with a loading dock. The entire building is sprinklered and air conditioned. Heating is via gas-fired, forced hot air systems. The front office section (exterior) has stone veneer and bronze anodized, double glazed windows. The facility was in overall average to good physical condition at the date of sale. The site is level and at grade with Smith Street before rising above grade to the grade of Middle Street. The site has 460.39 feet of frontage on Smith Street, and 1,126.02 feet of frontage on Middle Street. Approximately 83,800 square feet of macadam paved parking area is provided on-site with pole-mounted lighting. The site is not serviced with public water and sewers, but does have natural gas, telephone, and electric service. The easterly boundary parallels a water course; consequently, a portion of the site is located within a designated flood zone. The sale property is located in an industrial section of Middletown within one mile of Interstate 91. Other large plants, such as Yellow Freight Systems and Kaman, are located nearby. 13 SALES COMPARISON APPROACH(Continued) Conclusion After considering the two supplemental improved property sales, as well as the comparable sales included in the appraisal report, the indicated unit value has been revised to $17.00 per square foot, as follows: Gross Market Building Area Unit Value Value 182,080 sq.ft. @ $17.00/sq.ft. _ $3,095,360 Rounded to: $3,100,000 Indicated Value Via the Sales Comparison Approach $3,100,000 INCOME CAPITALIZATIONAPPROACH The indicated market value via the income capitalization approach appears reasonable at $2,940,000. RECONCILIATION Cost Approach: $2,960,000 Sales Comparison Approach: $3J009000 Income Capitalization Approach: $2,9409000 Most consideration has been attributed to the sales comparison approach; however, both the cost approach and the income capitalization approach are indicating a market value closer to $3,000,000. Therefore, the market value has been revised as of October 1, 1994, to $3,000,000. 14 EXCLUSION OF ADJACENT LOT MAP 110, LOT 11, SULLIVAN A VENUE, SOUTH WINDSOR, CT The appraisal report includes 6,625 acres of land which is not part of the tax appeal. The land sales previously included in the cost approach section have been implemented in valuing Lot 11, Sullivan Avenue, South Windsor, CT. The land sales indicate a unit value range of$21,739 to $52,941 per acre, or an average of $39,686 per acre. In the cost approach section, the established unit value for the subject site, comprised of 15.035 acres is $30,000 per acre; however, in valuing Lot 11, Sullivan Avenue, South Windsor, CT, the site is considerably smaller, consisting of 6.625 acres. Typically, smaller parcels of land sell for a higher sale price per acre than larger parcels of land with all other factors being equal. Therefore, a unit value of$35,000 per acre has been established for Lot 11 as follows: Lot 11 Market Land Area Unit Value Value 6.625 acres @ $35,000/acre = $231,875 Rounded to: $230,000 ENVIRONMENTAL FACTORS The subject property has suffered from contaminated soil, resulting in costs ranging between $130,000 - $195,000 with, potentially, additional costs of $50,000 per year. Typical buyers of industrial properties associate stigma with industrial properties suffering from prior environmental factors. The stigma may be minimal or substantial, depending on the level of clean-up costs. With respect to the size of the subject property, the environmental clean-up cost are considered relatively minor; therefore, a stigma of only 5% has been deducted from the appraised market value. 15 FINAL CONCLUSION October 1, 1994, Market Value Revised Market Value: $3,000,000 Less Market Value of Lot 11, Sullivan Avenue, South Windsor, CT.- ( 230,000) Less 5% Stigma: ( 150,000) Indicated Market Value: $2,620,000 Market Value $2,620,000 SUPPLEMENTAL INFORMATION During the review process, your review appraiser has asked the property owner for all expenditures relating to the subject real estate. These expenditures include the purchase of the property from the FDIC at a sale price of$1,090,000; payment of the real estate taxes, water and sewer liability of $507,584.93; and significant renovations of approximately $597,402.57 performed after the date of sale with the - majority of renovations occurring in 1996. The total cost of$2,194,987.50 is well- below the market value of$2,620,000, which indicates that the buyer paid below market value for the property. This is typical with FDIC sold properties in the early- to mid-1990's in which many FDIC properties have sold 20% to 30% below market value. Please refer to the attached itemized purchase and renovation costs included in the Addenda of this review. 16 CERTIFICATION I, John W.Nitz, hereby certify to the best of my knowledge and belief, that: 1. The address of the property that is the subject of this appraisal review is known as 489 Sullivan Avenue,South Windsor, Connecticut. 2. The statements of fact contained in this review are true and correct. Statements of fact contained in this appraisal being reviewed are specifically excluded from this certification. 3. The analyses, opinions, and conclusions contained in this review (limited only by any reported assumptions and limiting conditions) are based on my personal, unbiased, professional analyses, opinions, and conclusions. 4. I have no present or prospective interest in the property that is the subject of this review, and I have no personal interest or bias with respect to the parties involved. 5. My compensation, if any, is not contingent on an action or event resulting from the analyses, opinions, or conclusions, in or Use of,this review. 6. This review assignment is not based on a requested minimum valuation, a specific valuation, or the approval of a loan. 7. My analyses, opinions, and conclusions were developed, and this review was prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). 8. Your review appraiser has made a personal inspection of the property that is the subject of this appraisal review. 9. No one provided significant professional assistance to the person signing this review unless so specified in this review. 10. This appraisal review has been prepared and the analyses, opinions, and conclusions - were developed in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute. 11. The use of this appraisal review is subject to the requirements of the Appraisal Institute relating to review by duly authorized representatives. 12. I certify that I am competent to review and/or revise the above referenced appraisal. I have several years of appraisal experience and am guided under the auspices of the Appraisal Institute. I'U J W.Nitz MAI C rti i d /No. eral Appraiser Li ns00000449 7 ^7\ 6`k September 3, 1999 489 SULLIVAN AVE Acquisition Internal A Class Co Atixt.NoDesc"tion___.. Date — Aca Value C . B 05372.20 BLD-489 SULLIVAN AVE MILL PORTION 711/95 447,024.76 A B 05372 20 BLD-489 SULLIVAN AVE WHSE PORTION 7/1/95 894,183.64 A B 05372:20 BLD-489 SILLIVAN WHSE-ENGINEERING 8118195 3,009.15 A B 05372 20 BLD-489 SULLIVAN MILL-ENGINLERLNG 8/18195 1.504.35 A B 0537220 WHSE BLD-489 MILL LAYOU'r ANALYSIS 9118193 2,697.04 A B 05372.20 VVHSE BLD-YARD 489 SLZ,LIVAN AVE LA'9/18195 5.395.96 A B 05372:20 WHSE BLD-MILL 489 SULLIVAN(3)BLOC I I/U95 3,902.92 A B 05372 20 IT-ISE BLD-OFFICE DESIGN 489 SULLWA 11i21195 1,380.00 A B 05372:20 ROOF-489 SULLIVAN REPAIR ROOF 12/15/95 36,692.82 A B 05392:20 SPRINKLER-MODIFY SPRINKLER SYS INK 3i8/96 11,00,.00 A B 0538220 HEATERS-GAS FURNACES IN MILL AREA 3/15/96 21,860.48 A B 0540220 ELECT'-MAIN SERVICE&BLSWAYFOR(4/1/96 131,352.14A B 0541220 BACKFEED-I,"1TERNAL ELECRIC.AL BACk4/1/96 11,965.47 A B 05412:20 BACKFEED-INTERINAL EL•ECRIC.AL BA04/1196 23,934.`3 A B 0542220 MILL H[JB-GRINDING RM/M1LI,OFtICES,4/19/96 143,331.07 A B 0543220 WALL-FABRICATE WALL BETWEE\NU 4/23/96 12,896.12 A B 0543220 WALL-FABRICATE WALL BETWEEN MEL4/23/96 6,447.09 A J3 05442.20 POST-RELOCATE METAL POST(C-6)BLA4t23196 11,68C.=7 A B 05432:10 ROOF-ENCLOSURE SAWDUST LOADING 4/23190 10,015.12 A B 05462:20 COLLININ-R&R DAMAGED COLUMN 7/20196 4,420.00 A B 0545220 AC-R&R CENTRAL AC COMPR.ESOR 7/26/96 1,787.00 A B 0547220 CANOPY-R&R FRONT ENTR,LNCE CAN(7/30% 5,305.00 A B 0549210 LIGHTING-NEW LIGHTING SYSTEM FOR 8/1/96 38,350.19 A B 05491-:20 LIGHTING-LIGHTING SYSTEM FOR 489 S 81/96 39,277.59 A B 0548220 DOORS-(2)OVERHEAD DOORS IN WAREi 8/13/96 11,209.00 A B (1553'20 R&R ELEVATOR 911196 3,000,00 A B 05522:10 STORAGE AREA CONVERTED FROM TRU 9/30196 8,536.52 A B 0.551210 OFFICE RENOVATIONS TO 2ND FLOOR 9/30196 8,009.56 A B 0537220 WHSE BLD-OFFICE DESIGN 489 SULLIVAI 11/1/96 1,000.00 A B 0554220 PURLLN-REINFORCE AREA OF ROOF 11/I/96 2,400.00 A B 05552 20 STORAGE LOFT 1I/26/96 15J 12.75 A B 0557220 SNOW BARS 12/31/96 8,590.00 A B 0558220 GUTTERS 1124197 9,377.00 A B 05602:20 HEATING&COOLING SYSTEM 3/31198 40,766.23 A B 0560220 HEATING&COOLING SYSTEM 3131/98 20,058.77 A B 05662?0 4"BACKFLOW DEVICE 12/18/98 1,859.77 A B 0566210 4"BACKFLOW DEVICE 12118/98 1,859.77 A L 06073 10 LAN ID-489 SULLIVAN AVE 711/93 156,532.02 A L 01043 M RELOCATE RETENTION POND 12/31N6 3?,262.50 A Gtaad Total 2:194,987.50 ® ffliliffi� MAP LOT aWAKA NUMBER 0001246 0000873010489 SULLIVAN AVENUE 0489 1101218,2A CENSUs:TRACT 4874 122094 I 825246 --1,090,000.00 I INSPECT DATE 4114/94 ®REX LUMBER COMPANY 489 SULLIVAN AVE OLD GROSS 2,023.000 SOUTH WINDSOR CT 06074 SINGLE CARD Yes REX LUMBER COMPANY DATE OF LAST UPDATE 2/9/99 8.41 32 INDUSTRIAL BUILDING 1 2.639,950 33 INDUSTRIAL OUTBUILDING 2 24,210 — GROSS 2.934.960 OCCUPANCY WAREHOUSE EXTERIOR SIDING-1 METAL FURNACE GAS CLASS MET.SK'D/ST EXTERIOR SIDING-2 B.V.SOLID HEATING TYPE F.H.A.HOTAIR QUALITY AVERAGE ROOF TYPE GABLE #OF PANELS 0 EXEMPT No FRAMING METAUSTEEL ROOF COVER METAL SPRINKLER TYPE WET YEAR BUILT 1975 INSULATION%, 100 %OF BUILDING 100 REMODEL YEAR 1995 INTERIOR FINISH% 9 MEZZ.FINISHED AREA 570 ADDITION YEAR 0 BASEMENT FINISH AREA 0 MEZZ.UNFINISHED AREA EFFECTIVE AGE 16 AIR CONDITIONING% 9 DOCK HEIGHT FLOORS No ECONOMIC LIFE 40 -—— " WALL HEIGHT AREA/PERIM WALLS FLOORS WALL HEIGHT MULTIPLIER MULTIPLIER BASEMENT 1ST FLOOR DRY WALL CONCRETE 20 1.16 0.85 2ND FLOOR 3RD FLOOR ADD-WALL HGT ADDITION ADD-AREA ADD-STORY ADD-BSMT WALL HEIGHT PERIMETER MULTIPLIER AREAI PERIM MULL 20.640 2.00 2 8 458 .90 .96 80 1.00 4 8 48 .9D 1.11 COMMENTS 2,500LBS ELEVATOR;21 OH DOORS:2 INT COMMON WALLS; 1995 NEW ELEC IMPROVEMENTS($100000)'96-CK SPKLRS IN OFFAWK SHOP 6 MAIN - 181,280 -- 23.78 183 ADDITION 20,640 47.57 98 ADDITION 80 55.59 35 t90 y ELEVATOR 2 20.000.00 4 t00 33 FINISH MEZZ 570 28.15 1 mil - EP 160 29.76 CANOPY 1.395 2.85 MD 495 4.16 19NTL- $34 499 N15 ts0 69 15 6jp 10 199RK- OFF FIN 2,112 35.00 7 of-11oxo ENT-00M -5 4 ADEQUATE 20.0% 3,9e 37 0.0% 3.96' 0.0% 3,96 3,9E ® 8.41 ® 100.00 ® 38 4,192 B.41 100,000 .46 386,860 182,570,� 100 L.F .00 3,66o TO .00 - PAVING 101,W0 1,975 FniH taJ,JNw - •' -. .- FENCING 1.D0 260, 4 1,040 1.975 POOR 4,990.00 75 1; ysy I i SULLIVAN AWNU£ :•:- �----� N 1 Y 1 LEGEND JJ � � 1 .�i•. [fiwG Y01 G,L[ "—MCI-U-4t E -R.Y11.4 ......_- \V.}.. s._�_t_-•_��-�- ,rmb. - ..... ..........•»rrill�o-:,':1'.r<.<w<.Y+..Z ."".w«+s. < ..� •< «� w«miaw�'.-,1i.:«.i «__Ili_.. : • (3P,+ z4tY ' ✓..r• .n n . T ii •w,w w YM�.+w SCY90i,f :`lir w•«n GE,IIIIC X,IL TGi'd3!lAMW PLAN esign LEI Lustsat aD+,!rA1vY 1 DI ,�.:.«,.«.. I.ofesslon8ls, Inc. ,,� ,.,-� rE01C Mf swuvu�Aveclus 1 1MD50. CONN[CiKV1 QUALIFICATIONS AND EXPERIENCE OF JOHN W. NITZ, MAI EDUCATION University of Connecticut Bachelor of Science, University of Connecticut; May 1988 Major: Real Estate and Urban Economics Completed five-course core curriculum in the Center for Real Estate and Urban Economic Studies(CREUS) Appraisal Institute IA-1: Real Estate Appraisal Principles; lA-2: Basic Valuation Procedures 8-2: Residential Valuation IBA: Capitalization Theory and Techniques; IB-B: Capitalization Theory and Techniques 201: Principles of Income Property Appraising 2-1: Case Studies in Real Estate Valuation; 2-2: Report Writing and Valuation Analysis SPA Standards of Professional Practice(Parts A and B) Attended various seminars and workshops sponsored by the Appraisal Institute PROFESSIONAL AFFILIATIONS • Member of the Appraisal Institute (MAI), Member No. 10,643 • Received RPA (Real Property Administrator) designation in the Building Owner's and Manager's Association(BOMA), completed seven property management courses • Qualified and served as an expert witness • Currently licensed and certified by the State of Connecticut, License No. 00000449; the State of Massachusetts, License No. 4407; and the State of New York, License No. 46000030832 EXPERIENCE Associate Commercial/Industrial Appraiser Donald J. Nitz&Associates, Inc., of North Haven, Connecticut May 1986 to May 1992 Commercial Review Appraiser Society For Savings, in Hartford, Connecticut; May 1992 to May 1993 Senior Review Appraiser People's Bank, in Bridgeport, Connecticut; June 1993 to February 1994 Instructor Course 6: Real Estate Investment and Finance -BOMA; February 1995 to May 1995 Appraisal I- University of Connecticut; April 1996 -May 1996; September 1996 - November 1996; and April 1997 - May 1997 Principal Owner John W. Nitz& Associates,Wallingford, Connecticut; February 1994 to Present Properties appraised and/or reviewed include apartment and office buildings, industrial properties, shopping centers, service stations, automobile dealerships, hotels, golf courses, nursing homes, places of worship, various commercial/residential improvements, single and multi-family dwellings, condominiums, residential subdivisions, farm and raw land, building lots, and railroad trackage.